Property Law Nores

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 THE TRANSFER OF PROPERTY ACT

It came into existence in 1882. Before that, the transfer of immovable property was
governed by principles of English law and equity.

OBJECTIVES OF THE LEGISLATION

(The preamble of Act sets out)

1. Uniform law
2. For living persons only
3. Complements Contract law, CPC, specific relief, Stamp duty, etc.

SCOPE:
1. It applies only to transfer by the act of parties and not by operation of
law.
2. This Act deals with a transfer of property inter vivos, i.e., a transfer
between living persons.
3. It contains transfer of both movable and immovable property but a
major portion of the enactment is applicable to the transfers of
immovable properties only.
4. The Act is not exhaustive.

Nature:
1. It is a Substantive Law. (deals with the essential substance of rights under law
i.e., that part of law that creates, defines, and regulates rights. Eg. law of
contracts, torts, wills, and real property)
2. It is not absolute: (Absolute laws cannot be changed)
# Substantive law and procedural law are the two main categories within the law.

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 SCHEME OF THE ACT
Transfer
By Act of parties By operation of law

Testamentary Inter vivos (b/w 2 LP, TPA) (e.g., Execution, insolvency, succession)
(Takes effect after death &
by Indian Succession Act)

Transfer of Property (mov.& Immvo) Special transfer of Immov. property.

Sales Mortgage & Leases Exchanges Gifts Actionable

(Ss. 54-57) charges (Ss.105-117) (Ss. 118-121) (Ss.122-129) Claims
(Ss.58-104) (Ss. 130-137)

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Property is defined as a thing that is recognized as having some value by the society
and that which is being held by a person.

# Property needs to be acquisitive (Can be acquired and owned)

Salmond defined four modes of acquiring property. They are
1. Possession/ Easement: - Possession of a material object on which the
title to the ownership of it exists in a person. In general, the first
possessor of it will acquire a valid title over the object against the
world. (Easement: right to use)

2. Prescription: When property is acquired for non-payment. Lapse of time

could create a right or destroy a right. Hence this mode can be
positive or negative.

3. Agreement: It is a legal ownership on the property to the transferee. The

agreement could be in oral or written form

4. Inheritance: This can be of the form of testamentary succession.

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 CONCEPT OF PROPERTY

• The term ‘property’ includes every species/types of estate, real and personal,
and everything which one person can own and transfer to another.
• It extends to every species of right and interest capable of being enjoyed as
having money value.
• Property: Sale and despotic dominion in which one man exercises over the
external things of the world in exclusion of the rights of any other individual
in the universe. By Ehrlich Blackstone (1959)
• The concept of property is abstract, so instead of referring to some material
object, like ‘piece of land’ or the tractor that cultivates it, it refers to a
bundle of rights that may be exercised with respect to that object.
- Right to possess
- Right to use and enjoyment
- Right to dispose
- For infinite period
Subject to residual character
- Right over a determinate thing indefinite part of users
- Unrestricted in part of disposition
- Unlimited in part of duration

• The term “Property” has not been defined in Transfer of Property Act (TP
Act). However, in the Act, the word has been used in the widest and generic
sense. Property denotes every kind of interest or right that has an economic content.
• Absolute interest: It means ownership which consists of a bundle of rights,
rights to possessions, right to enjoyment etc. or any other way so that an
owner can deal or dispose of.
Possession Ownership

Claim Claim
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 De facto de jure

Short term Long Term

CONCEPT OF OWNERSHIP AND POSSESSION

1. Both ownership, as well as possession, can be simply defined as a state of or act

of, or right of owning something. In legal terms, they have different meanings.

2. Often ownership and possession are merged in one person i.e. when I say "This
is my pen", I have ownership and possession. If I give my pen to a friend to use it
then I will still own the pen but the friend will have possession being a form of
property in the pen.

3. The main difference between possession and ownership is that possession is

requiring a physical custody or control of an object while ownership is the legal
right through which something goes to someone

4. Ownership refers to the legal right to possesses anything. Ownership can

mention to owning an object, land as well as intellectual properties; ownership of
property can be classified as private, collective or common. Defining one’s
property ownership includes determining who has the rights or duties over the
property.

DEFINITION OF OWNERSHIP
Austin defines:
1. Ownership means a right which avails against everyone, who is subject to the
law.
2. It is a right indefinite in point of user, unrestricted in point of disposition and
unlimited in point of duration.”
Subject Matter of Ownership
Normally ownership implies the following:

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· The right to manage
· The right to posses
· The right to capital
· The right to the income

TYPES OF OWNERSHIP:

1. Corporeal and incorporeal ownership

Corporeal ownership is the ownership of a material object. Ownership of a
house, a table or a machine is corporeal ownership.
Incorporeal ownership is the ownership of a right. Ownership of a
copyright, a patent or a trademark is incorporeal ownership.
2. Sole ownership Vs. joint ownership
Sole ownership – is when a piece of real estate is owned by only one legal
owner.
Co-ownership/Joint ownership—is when property is owned by two or
more legal owners.
3. Legal ownership Vs Equitable ownership:
Legal ownership– Entity that has an enforceable claim or title to an asset
or property, and is recognized as such by law. For example, a lender is the
legal owner of a property (mortgaged as a collateral for payment of a loan)
by a borrower
Equitable ownership: equitable title is the right to obtain full ownership of
property, where another maintains legal title to the property. When a
contract for the sale of land is executed, equitable [interest/title] passes to
the buyer.

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4. Trust Ownership V Beneficial Ownership
Trust Ownership: To create a trust, the property owner (called the
"trustor," "grantor," or "settlor") transfers legal ownership to a person or
institution (called the "trustee") to manage that property for the benefit of
another person (called the "beneficiary"). The trustee often receives
compensation for his or her management role.
Beneficial ownership: Beneficial owner is the person with the right to
enjoy or benefit from the property – this can include the right to occupy or
enjoy any income from the property. A person can be both a legal and
beneficial owner which is very common.
5. Vested Ownership and Contingent Ownership
Vested ownership – a person who has vested ownership of a thing has the
full legal rights to it. In other words, it belongs exclusively to him or her.
Contingent Ownership – ownership in which title is imperfect but is
capable of becoming perfect on the fulfilment of some condition. In this
kind of ownership the owner does not have full right to the property.
6. Absolute and limited ownership
An absolute owner is the one in whom are vested all the rights over a thing
to the exclusion of all. When all the rights of ownership, i.e. possession,
enjoyment and disposal are vested in a person without any restriction, the
ownership is absolute.
But when there are restrictions as to user, duration or disposal, the
ownership will be called a limited ownership.
For example, prior to the enactment of the Hindu Succession Act, 1956, a
woman had only a limited ownership over the estate because she held the
property only for her life and after her death; the property passed on to the
last heir or last holder of the property.

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 POSSESSION

Possession is defined as “it is continuing exercise of a claim to the exclusive

use of it.”
It does not cover incorporeal possession. Possession is different from
ownership but normally possession and ownership lie together.
Possession helps in realization of ownership.
Power and purpose to control a thing are significant in the theory of
possession. Ownership is an assurance by law whereas possession is physical
control. Ownership is not required for possession.
Generally it is short term in nature.
When you claim ownership – Question of Law
When you claim possession – Question of fact

DEFINITION OF POSSESSION BY 7 DIFFERENT JURISTS

Locke defines “Possession is a reward for a labour given by an owner.” Everyman

has a right to own that thing on which he has mixed his labour.

Rose: Possession is a reward for useful labour

Pullock defines “A man is said to be in possession of a property when he is in

apparent control of it; and from the use of which he has apparent power of
excluding others.

Savingny: Intention coupled with physical power to exclude others from the use
of material object.

In law, possession is the control a person intentionally exercises toward a

thing. (That is, to possess something, a person must have an intention to
possess it.)
There are two essential elements of possession, i.e., animus (act of
mind)and corpus (act of body) . (terms borrowed from Roman law)
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1) Actual power over the object possessed. i.e. corpus possessionis and

2) Intention of the possessor to exclude any interference from others. i.e. animus
possidendi.
John Salmond: According to John Salmond, both corpus and animus must be
present to constitute Possession. Ownership is a legal concept whereas Possession
is factual as well as legal concept.

- Animus is the intent or mental condition or activity or claim of

exclusive use of the thing possessed.
Example: Cloth at tailor’s shop is in possession of tailor but he may
not intend to exclude the owner or subject of the owner.
- Animus may be legal or illegal.
- Corpus is essential and completes possession. The object possessed
must be evidenced by physical facts.
Example: Pen in my pocket, ring on my finger, or goods in my home,
are corpus of my possession of each of these.

CATEGORIES OF POSSESSION
Possession is divided into two categories.
a) Possession in fact and
b) Possession in law.
Possession in fact is actual or physical possession. It is physical relation to a thing.
Possession in law means possession in the eye of law. It means a possession which
is recognized and protected by law. (There is sometimes a discrepancy between
possession in fact and position in law, although usually possession exists both in
fact and in law in the same person.)
POSSESSION DE FACTO (IN FACT) & POSSESSION DE JURE
(IN LAW):

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 • Some discordance in law and fact occurs. Law something presumes which
may not actually exist. Normally ‘possession in law’ and ‘possession in fact’
exist in a person but it may vary.
a) Possession in fact or de facto : De facto Possession exists where the thing is in
the immediate occupancy of a party. The person in de facto possession has the
physical control of the thing to the exclusion of others and has Animus and
Corpus over the material object. De facto possession may be described as actual
Possession.

- It can be seen landlord and tenant where tenant holds possession of house
physically or de facto, but it is not possession in law or de jure.
b) Possession in law or de jure: De jure possession can be described as possession
in law. Legal possession may exist with or without property in possession. It is also
called constructive possession. A servant may possess car, but in the eyes of law, it
is possession of master.

- Also called Juridical Possession, it means possession in the eyes of the law.
- This may not be accompanied by De facto Possession.
- Even when the property is lying locked, the De jure possessor is the De
facto possessor of the property.
IMMEDIATE POSSESSION & MEDIATE POSSESSION

1. a) Immediate possession: is also called as “direct possession”. If the possessor

possessed the thing himself it is called immediate possession.

- If your purchases a book from the book shop personally and have it
with you, it is immediate possession.
- I own a house and reside in it. It is in my immediate possession.
- The pledge has immediate possession of the thing pledged. I ride my
bicycle. It is immediate possession.
b) Mediate Possession: is also called as “indirect possession”. It is the
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 Possession of a thing through another, either through his friend, servant for
agent. As the thing remains, in possession with another, the possessor has
lesser degree of physical control over such thing.

- 'X' has a car, which he leaves with his driver. The possession of the driver
will be immediate whereas the Possession of 'X' will be mediate.
- 'A' purchased a house through his agent and the agent got the possession.
A's possession is said to be the mediate possession.
- I let my house to you. You are bound to hand over the house to me
whenever I desire. You have immediate possession, and I have mediate
possession of house through you.
- I send my servant on my cycle to purchase vegetables. I have mediate
possession of my cycle through my servant. My servant has immediate
possession of cycle.
CORPOREAL & INCORPOREAL POSSESSION
Corporeal: Those things, which are having physical or material existence, wherein
direct relationship with the thing, are possible. Therefore corporeal possession is
the possession of material things, movable as well as immovable such as the Car,
book, pen, wristwatch, etc.

Incorporeal: These are the things, which do not have physical existence and
therefore cannot be perceived by our senses. For example - Copyright, Trademark,
Patent, Goodwill etc.

According to Salmond, corporeal possession is Possession of an object whereas

incorporeal possession is the possession of a right.

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MODES OF ACQUIRING POSSESSION: SEC 3(3) OF GENERAL
CLAUSE ACT

HOW THE POSSESSION IS ACQUIRED?

- Lease, renting out, pledge, mortgage, theft, fraud, and bailment etc. is the
general mode of acquisition of possession.
POSSESSION ACQUIRED BY CONSENT:
Most property possessed is obtained with the consent of someone else who
possessed it. They may have been purchased, received as gifts, leased, or borrowed.
The transfer of possession of goods is called delivery.

For Example: For land, it is common to speak of granting or giving possession.

ACQUISITION OF POSSESSION:
Possession is acquired when both the animus and corpus are acquired:

1. By taking: Taking implies an act exclusively on the part of the person who
physically takes the Possession. It is acquisition of the Possession
without the consent of previous Possessor. Sometimes it is said to
be unilateral act. Transferee acquires the possession without the
knowledge or consent of the former Possessor of the thing. It may
or may not be lawful. If it is lawful then it is legal possession.
i.e. possessio-juri.

2. By delivery: Delivery completes voluntary act from one person to another. The
transferor gives actual possession to the transferee. It is usually a
lawful mode of possession.

Delivery may be actual or constructive.

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Actual delivery: In actual delivery the thing is physically delivered. Actual delivery
is a kind in which goods are delivered.

Constructive delivery: Constructive delivery refers to an act amounting to a

transfer of title by operation of law when actual transfer is impossible.
That is, a delivery that is assumed to have happened even though it hasn't
physically.
PROPERTY

Corporeal Incorporeal

[Tangible (can be touched)] [Intangible]

Moveable Immoveable Re propria Re aliena

(attached to the land) (IPR) (Encumbrances)
Real Personal Lease mortgage lien?
# Encumbrances means property having debt on it.
a) Real property - The real property includes all rights over land with such
additions and exceptions, as the law has deemed fit.

b) Personal property - The law of personal property includes all other proprietary
rights whether they are in rem or in personam.

THREE ELEMENTS OF PROPERTY ARE:

# Title: Title is a legal term; it means the ownership right to property. Title can be
created by operation of law. Title is acquired by transfer or by operation of law
such as ‘succession’. Title is the legal way of saying you own a right to something
Deeds, on the other hand, are actually the legal documents that

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transfer title from one person to another.

# Right # Interest (Enjoyment of property)

Property may be broadly classified into:

• Moveable property

• Immoveable property
The Transfer of Property Act has not defined the term “Immoveable Property”.
It only says that “immoveable Property” does not include standing timber, growing
crops or grass. Thus the definition under TP Act is neither comprehensive nor
exhaustive.

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 DEFINITION OF IMMOVEABLE PROPERTY

According to The General Clauses Act, 1897 defines the term “immoveable property”
as follows:

“Immoveable Property shall include land, benefit to arise out of land and things
attached to the earth or permanently fastened to anything attached to the earth.”

According to The Registration Act, 1908 defines “immoveable property” as follows:

“Immoveable property shall include land, buildings, hereditary allowances, rights to

ways, lights, ferries, fisheries or any other benefit to arise out of land or things
attached to the earth or permanently fastened to anything which is attached to the
earth but not standing timber, growing crops or grass.”

By combing both definitions, we may say that, the term includes land, benefits
to arise out of lands, and things attached to the earth, except standing timber,
growing crops and grass.

(a) Land: Land includes the following elements in legal aspects:

➢ It means a determinate portion of the earth’s surface which may be
covered with water.
➢ Column of space above the earth’s surface.
➢ The ground beneath the earth’s surface.
➢ All objects on/under the surface of land in their natural state, e.g.,
minerals under the land,
➢ Land also includes lakes, rivers and ponds which are land covered
with water.

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 ➢ All objects placed by human agency either on or under the surface of
land with the intention of permanent annexation (take over). For
example, buildings, fencing and walls etc.
(b) Benefits Arising out of Land: All the benefits arising out of land are also
considered as immoveable property. Right to collect lac, leaves etc. from trees,
revenue from agricultural land, right to take out minerals, to collect fish from
ponds, rent from tenanted property are all benefits arising out of land.
However, standing timber, growing crops, grass have been excluded in The
Registration Act, 1908.

(c)“Things attached to the earth”: Section 3 of the Transfer of Property Act,

1882 says that “attached to the earth” means: (1) things rooted in the earth,
(2) things embedded in the earth, (3) things attached to what is so embedded, and
(4) chattel attached to earth or building.
i) Things rooted in the earth:
Things which are rooted in the earth e.g. trees and shrubs come under the
category of immoveable property.
1. Those trees which are used as standing timber (i.e., For example, shisham,
neem, babool or teak trees are grown for their wood.) fall under moveable
property.
2. The trees which are fruit-bearing are considered as immoveable property.
3. The fruit-bearing trees can be either moveable or immoveable depending
upon the circumstances. If the intention is to use them for their fruits, they will
fall under immoveable property but if they are to be used as standing timber
they will fall under the category of moveable property.

4. Growing crops: Growing crops includes creepers like pan, angoor, etc.,
millets (Wheat, Sugarcane, etc.), Veg like Lauki, Kaddo, etc. These crops don’t
have any own independent existence beyond their final produce.
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 5. Grasses: It can only be used as fodder, and no other use is possible.
Therefore it is movable.
# But a contract to cut grass will be an interest in chattel, so is immovable
property.

(ii) Things embedded in the earth:

1. Things imbedded in the earth mean those things which rest by their own
weight on earth. Examples, houses, walls buildings etc.
However certain things like an anchor imbedded in the land to hold a ship is
not an immovable property’
2. The test of immovability is whether or not the thing rests by its own weight
on earth and whether it can or cannot change place and be removed from one
place to another place.

(i) Degree and Mode of Annexation:

1. If a thing is so annexed to land that it cannot be removed from its place without
great damage to the land, it is regarded as annexed in perpetuity so considered
as immoveable property.
2. Therefore, anchors of a ship embedded in earth, bricks lying in a heap,
tapestries attached to a house which can be removed without damaging the house,
and a hut which merely rests by its own weight on earth, are all considered as
moveable property.
(ii) Object(ive)of Annexation: If the intention is the permanent improvement
of the premises, the chattels(things/belongings) or movables fixed or annexed
become fixtures. A well, a machinery embedded in the earth, brick pillars
erected on land are all immovable property.
Therefore, it can be said that if the article simply stands on the earth with its
own weight, it will not be part of the land but if it is caused to go deeper in the
earth by external agency then it becomes part of the land.

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(iii) Attached to what is so embedded:
1. Where a thing is attached to something embedded in the earth for its
permanent beneficial enjoyment, the thing attached becomes immoveable
property too. Examples: doors, windows, etc.
2. However, electrical appliances, fitting etc. though fastened to the walls,
doors etc. are not considered immoveable because these are not permanent but
only temporary and not necessary for the permanent beneficial enjoyment of
walls, doors, house etc.

(iv) Chattel attached to earth or building: i.e., If movable property is attached to

earth or building, then it is immovable property. The degree, manner, extent
and strength of attachment are the main features to be regarded in
determining the question.
- Standing timber, growing crops and grasses are regarded as severable from
land and they are regarded as movable property.
- However if they and the land on which they stand is sold, such standing
timber, growing crops or grasses will pass to purchases.

THE FOLLOWING HAVE BEEN JUDICIALLY RECOGNISED AS

IMMOVABLE PROPERTY:

• A right of ferry

• A right of way

• Right to collect rent of an immovable property

• A right to catch and carry away fish

• Hereditary offices i.e. office of a hereditary priest of a temple

• Right to collect dues from holding a fair on a piece of land

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 • Right to collect lac from trees

• Right to redemption of mortgaged property

• Reversion in property leased

• A factory

• The interest of a mortgagee in immovable property

Movable Property

The Transfer of Property Act has not defined “movable property”. According to
the General Clauses Act, “movable property means property of every description
except immovable property”.

Things held not to be immovable property

• A royalty

• A decree for sale of immovable property

• A decree for arrears of rent

• Machinery which is not permanently attached to the earth

• Government promissory notes

• A right to recover maintenance allowance

• Standing timber, growing crops and grass

‘Attested’ – definition u/s 3

According to Section 3 of the Transfer of Property Act, “attested”, in relation to

an instrument, means and shall always be deemed to have meant attested by two or
more witnesses each of whom has –

(1) seen the executant sign or affix his mark to the instrument, or
(2) seen some other person sign the instrument in his presence and by the

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 direction of the executant, or
(3) has received from the executant a personal acknowledgement of his
signature or mark, or of the signature of such other person, and
(4) each of whom has signed the instrument in the presence of the executant,
but
(5) it shall not be necessary that more than one of such witnesses shall have
been present at the same time, and
(6) no particular form of attestation shall be necessary;

Explanation:

• Section 3 of the TP Act provides that attesting means a person has signed
the document by way of testimony of the fact that he saw it and executed
and this act of giving evidence or becoming witness is called attestation and
witnesses are called attesting witnesses.
• Object of attestation:
1) It makes clear that only executant has executed the document. Thus
Attestation ensures the authenticity of the execution of a document.
2) The document has been executed by the executant without force,
fraud or undue influence i.e. with free consent.
Executant – a person who has a certain right over a property and makes a
document to make changes to his right over that property.

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Execute – the act of an executant writing and signing on an instrument.
Sunder Kaur v. Shah Uday Ram – The Supreme Court held that by attesting the
document, witnesses do not confirm that they have knowledge of the
contents of that document.
• Requirements for valid attestation:
Requisites for valid attestation are:
1) Age of majority
2) Sound mind
3) A party to the transaction cannot be himself an attesting witness but a
person who has some interest in the transaction can act as an
attesting witness. Example: A takes some loan from B by mortgaging
his immovable property. Now, if B who lends money has no
sufficient money with him and takes some money from his friend C
and gives the full amount to A, then C would be a person who is
interested in the mortgage deed although he is not a party to it.
Kumar Harish Chandra v. Banshidhar Mohanty – The Supreme Court held that
the person who has some interest in the transaction can be an attesting
witness.
• Essentials for valid attestation:
1) There must always be two or more attesting witnesses.
2) Each attesting witness must see –
✓ The executant sign or put his thumb impression, or
✓ Some other person sign the instrument in the presence of and
by the direction of the executant, or
✓ The witness should have received from the executant a
personal acknowledgement of his signature or mark or of a
person signing on behalf of the executant.
3) Each witness must sign the instrument in the presence of the
executant. In Abinash Chandra v. Dasarath, the Supreme Court has held
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 that not only the executant should sign the document in the presence
of the attesting witnesses, but the witnesses too should sign it in the
presence of the executant.
4) Each witness must sign only after the execution is complete.
5) All the attesting witnesses need not attest at the same time.
6) There is no particular form prescribed for attestation in the Act.
7) The acknowledgement must be by the executant himself and not by
any agent.
8) Attestation cannot take place before the signature of the executant.
9) When the executant is a pardanashin woman: Lala Kundal Lal v.
Mushrafi Begam – The executant was a pardanashin woman who was
sitting behind a curtain. She took her hand out of that curtain and put
her thumb impression on the deed which was seen by the witnesses.
Thereafter her husband signed the deed and then it was signed by the
attesting witnesses. The Privy Council held that the attesting
witnesses have signed the deed in the presence of the executant.

‘Instrument’ – definition u/s 3

Generally speaking, an instrument is a legal document.

Section 3 of the Transfer of Property Act 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.

Notice’ – definition u/s 3

As per Section 3 of the TP Act, “a person is said to have notice" of a fact when he
actually knows that fact, or when, but for wilful abstention from an enquiry or
search which he ought to have made, or gross negligence, he would have known it.
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Explanation:

• “A person is said to have notice” of a fact when –

✓ He actually knows the fact,
Or, when –
✓ But for wilful abstention from an enquiry or search which he ought to
have made, or gross negligence he would have known it.
• Notice may either be –
1) Actual Notice, or
2) Constructive Notice.

• Actual Notice: It is the matter of fact. A person is said to have actual or

express notice of a fact when he actually knows that fact. Essential elements
for an actual notice are:
1) Information must be definite,
2) The notice should be made to that person who is interested in the
transaction,
3) The knowledge or information must be about or related to the
transaction in question.
• Constructive Notice:
✓ It is the matter of law. This principle is based on equity. Where a
person has no knowledge about the fact but the court presumes that
under the circumstances he must be deemed to have knowledge of
that fact, the notice is constructive notice.
✓ Constructive notice is a legal presumption by the court.
✓ The court can presume that a person must have knowledge of the fact in following
circumstances:
➢ Wilful abstention from an enquiry or search
➢ Gross negligence – Lloyds Bank Ltd. v. P.E. Guzdar & Co.
(AIR 1930 Cal 22)
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 ✓ Registration as notice (explanation 1) – Where a document has been
registered, it is presumed that all the persons concerned have
constructive notice of the material facts. In other words, the
execution of a registered deed of sale is to be treated as a notice in
terms of Section 3.
For treating the instrument of registration as notice, following necessary conditions
must be fulfilled:
➢ The documents should be compulsorily registrable.
➢ All the formalities prescribed under the Registration Act are
duly completed.
➢ The memorandum regarding the transaction must be correctly
entered in the register.
✓ Actual possession as notice of Title (explanation 2): Any person acquiring
any immovable property or any interest in such property is deemed to
have notice of the title of the person, who is for the time being is in
actual possession of the property.
✓ Notice to the agent is notice to the principal (explanation 3) – for the applicability
of this rule the following conditions are necessary to be fulfilled:
➢ The notice must be given by the agent and by no other person.
➢ The notice should relate to the particular business or
transaction.
➢ Notice must be acquired by an agent during the course of
agency.
➢ Notice must be relevant to the transaction.
➢ The agent must not have fraudulently concealed the notice.

‘Registered’ – definition u/s 3

According to the Transfer of Property Act, 1882, “registered” means registered in

any part of the territories to which the Act extends under the law for the time

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being in force regulating the registration of documents.

Explanation: For registration, it is necessary to fulfil all the requirements of the

Registration act. According to the Registration Act, the description of the property
must be sufficiently given so that it can be easily identified; registration must be
done in the area where the property is situated and the registration must be by the
prescribed authority and the document for registration must be presented by the
proper person, etc.

‘Actionable Claim’ – definition u/s 3

According to the Section 3 of the Transfer of Property Act, “Actionable Claim”

means a claim to any debt, other than a debt secured by mortgage of immovable
property or by hypothecation or pledge of movable property, or to any beneficial
interest in movable property not in the possession, either actual or constructive, of
the claimant, which the civil courts recognise as affording grounds for relief,
whether such debt or beneficial interest be existent, accruing, conditional or
contingent.
Explanation:

• “Actionable Claim” means:

1) A claim to any debt, other than a debt secured
✓ by mortgage of immovable property or
✓ by hypothecation or pledge of movable property. Thus,
actionable claim means claim to an unsecured debt.
2) Or, a claim to any beneficial interest in movable property not in the
possession either actual or constructive, of the claimant,
✓ which the Civil Courts recognize as affording grounds for relief,
✓ whether such debt or beneficial interest be existent, accruing,
conditional or contingent.
• In simple words, Actionable Claim means:
26
 1) Unsecured debt – where the creditor gives the loan to debtor without any
security, the debt is unsecured debt. Thus according to Section 3 of the
TPA, only unsecured debt is an actionable claim.
Here ‘debt’ means not only loan but any obligation to pay a certain or definite
sum of money may be called a ‘debt’.
Debt may be:
✓ Existent debt
✓ Accruing debt
✓ Conditional debt
✓ Contingent debt
2) Claim to beneficial interest not in possession of the claimant – Right of a
person to take the possession of a movable property from the possession of
another, is the Actionable Claim of that person but the claimant should have
beneficial interest in the property.
For constituting an Actionable Claim, these are the following necessary elements:
✓ The claim is to be about some movable property.
✓ The movable property is in the possession of another person.
✓ The claimant’s beneficial right i.e. the right of possession is recognized
by the courts.
✓ Thus we can say that the movable property must not be possessed by
the claimant himself and besides this fact the claimant must have right
of possession, that is, beneficial interest in that property.

27
The Actionable Claim is intangible movable property and it can be transferred.

A debt may be secured or unsecured debt. Where the debtor gives security for
repayment of debt to the creditor, it is known as secured debt but where no
security is given, that is unsecured debt

• An actionable claim, as its nomenclature suggests, is only a claim. A claim

might connote a demand but in the context of the definition it is a right,
though an incorporeal one (having no physical/ material existence). Every
claim is not an actionable claim. It must be a claim either to a debt or to a
beneficial interest in movable property in itself, and may be existent,
accruing, conditional or contingent. The movable property in which such
beneficial interest is claimed, must not be in the possession of the claimant.
An actionable claim is therefore incorporeal real right.
• Claims which are held to be actionable claims:
➢ Claims for arrears of rent,
➢ A share in partnership,
➢ Claim for the money due under any insurance policy,
➢ Claim for the return of earnest money,
➢ Right to get back the purchase money when sale is set aside,
➢ Muslim women’s claim for her unpaid dower,
➢ Maintenance allowance payable in future,
➢ The benefit of an executory contract for the purpose of goods is a
beneficial interest in the movable property,
➢ The right to proceeds of a business

• Claims which are held not to be actionable claims:

➢ A decree,
➢ Right to recover damages under the law of torts or for breach of
contract,

28
 ➢ A copyright,
➢ Debt secured by mortgage of immovable property or hypothecation
of movable property.
➢ Transfer of Actionable Claim (Section 130): According to Section 130, the
transfer of both types of actionable claims, i.e., with or without
consideration are effected by the execution of an instrument in
writing. The instrument must be signed by the transferor or his duly
authorised agent.
Banking business includes recovery. Thus, the assignment of a debt, a non-
performing asset, with right to collect the debt amount by the State Bank of
India to a banking company was held to be a valid transaction. Such a
transaction is not prohibited by the Transfer of Property Act, nor it is in
violation of any principle of public policy. [Kotak Mahindra Bank Ltd. v.
Caopra Fabricator & Manufacturer Pvt. Ltd., AIR 2011 All 19].
➢ Mode of Assignment: Mode of assignment of an actionable claim is
given in Section 130. It must be effected by an instrument in writing
signed by the transferor or his duly authorised agent. It is not
necessary that the assignment should be made by a separate
document. Only an endorsement on the back of a document
containing the actionable claim is sufficient for the purpose.

DEFINITION OF TRANSFER OF PROPERTY (SECTION 5)

According to Section 5 of the TPA, “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 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.”

29
Explanation/ Analysis:

• “Transfer of Property” means an act by which a living person –

➢ Conveys property,
➢ In present or in future,
➢ To one or more other living persons,
➢ Or to himself,
➢ Or to himself and one or more other living persons.
• “to transfer property” is to perform such act.

• “Living person” includes a company or association or body of individuals

whether incorporated or not.
• Transfer of property is an act by which a property or interest in that
property is transferred by a living person in favour of another living person.
It is not necessary that the transferor should be the owner of that property.
• The transfer of property is to be made by a living person. Here the living
person means that the transferor must be in existence when the transfer is
made. Living person also includes juristic persons such as companies,
corporations, universities, etc.
• In transfer of property the transferor conveys the property which means it
creates certain new titles or interests in that property in favour of the
transferee. A mere agreement to sell does not have the effect of conveying
and, therefore, it does not operate as a transfer of property.
• The property may be transferred in present or in future date but the
property must be in existence on the date of transfer.
• The word ‘property’ includes properties of all description i.e. movable
properties as well as immovable properties.
• The property must be transferred to another living person. The transferee
may not be a competent person (i.e., of majority age or of sound mind).
• In transfer of property one cannot transfer a property to himself but one
30
 can transfer a property to himself in some other capacity, for example, a
Trust.
• Transaction not amounting to transfer of property are:
(1) Family settlement – done through mutual settlement.
(2) Partition – Share decided through mutual settlement.
(3) Compromise – Compromise means an agreement for settlement of
doubtful claims between the parties in respect of some property. Claim
decided through deed; No new title or interest created.
(4) Charge – securing a payment; no conveyance of any interest in the
property; no new title or interest created.
(5) Surrender – In surrender, smaller interest is merged with larger interest.
Surrender of a lease is not a transfer of property. Landlord has right of
ownership and tenant has right of residence. When the tenant vacates
the house before the tenancy period, he surrenders his right of residence.
There is no transfer of property.
(6) Easement – Section 4 of the Easements Act, 1882 defines easement as a
right which the owner or occupier of certain land possesses as such for
the beneficial enjoyment of that land to do and to continue to do
something or to prevent and continue to prevent something being done
in respect of certain land, not his own. No conveyance is done in an
easement and therefore easement is not a transfer of property. No new
title or interest is created in an easement.
(7) Will – Property is automatically transferred. The provisions of the TP
Act are not applicable to testamentary successions which are governed by
the Indian Succession Act, 1925. A transfer is a conveyance of an
existing property by one living person to another. A will does not involve
any transfer, rather it is a legal expression of the wishes and intention of
a person in regard to his properties which he desires to be carried into
effect after his death.
31
 LEGAL RULES FOR A VALID TRANSFER

• Property must be transferable.

• Transferor and transferee must be competent.
• Consideration and object of transfer must be lawful.
• Transfer must take place as per method prescribed under the Act.

Section 6: What may be transferred

Property of any kind may be transferred, except as otherwise provided by this Act or by any other
law for the time being in force.

(a) The chance of an heir-apparent succeeding to an estate, the chance of a relation obtaining a
legacy on the death of a kinsman, or any other mere possibility of a like nature, cannot be
transferred.
(b) A mere right of re-entry for breach of a condition subsequent cannot be transferred to
anyone except the owner of the property affected thereby.
(c) An easement cannot be transferred apart from the dominant heritage. (Servient Heritage
means an inherited property over which the dominant owners have a right to use it to
their advantages and Dominant Heritage means inheriting a right over another's
property without owning it.)

(d) An interest in property restricted in its enjoyment to the owner personally cannot be
transferred by him.
(dd) A right to future maintenance, in whatsoever manner arising, secured or determined,
cannot be transferred.
(e) A mere right to sue cannot be transferred.
(f) A public office cannot be transferred, nor can the salary of a public officer, whether before
or after it has become payable.
(g) Stipends allowed to military, naval, air-force and civil pensioners of the government and
political pensions cannot be transferred.
(h) No transfer can be made (1) insofar as it is opposed to the nature of the interest affected
32
 thereby, or (2) for an unlawful object or consideration within the meaning of section 23 of
the Indian Contract Act, 1872 (9 of 1872), or (3) to a person legally disqualified to be
transferee.
(i) Nothing in this section shall be deemed to authorise a tenant having an untransferable
right of occupancy, the farmer of an estate in respect of which default has been made in
paying revenue, or the lessee of an estate, under the management of a Court of Wards, to
assign his interest as such tenant, farmer or lessee.
--------------------------------------------------------------------------------------------------------
-

The first line of the Section 6 of the Act says that property of any kind may be
transferred. Thus transferability of property is the general rule. But there are certain
exceptions of this general rule provided under Section 6 of the TP Act.

(A) Non-transferable under any other law

There are other laws e.g. Hindu law and Muslim Law under which the
transfer of certain properties is prohibited. Those properties are also non-
transferable under Section 6 of the Act e.g. a property dedicated to God,
waqf properties etc.
(B) Non-transferable under Section 6 of the Act – Exceptions to the
general rule of transferability
Section 6 lays down ten kinds of non-transferable properties:
1. Section 6 (a): Spes successionis,
2. Section 6 (b): Right of re-entry,
3. Section 6 (c): Easementry right,
4. Section 6 (d): Restricted interest,

33
 5. Section 6 (dd): Right to future maintenance,
6. Section 6 (e): Mere right to sue,
7. Section 6 (f): Public office,
8. Section 6 (g): Pensions and Stipends,
9. Section 6 (h): Nature of interest, Unlawful Object, Disqualification of
Transferee
10. Section 6 (i): Untransferable right of occupancy.
1. Section 6 (a): Spes Successionis

• Spes Successionis means expectation of getting a property in future.

Expectation of succession is a mere possibility or chance of getting a
property through succession i.e. inheritance or will.
• The things referred to in this clause as non-transferable are –
(i) Chance of an heir-apparent succeeding to an estate,
(ii) Chance of a relation obtaining a legacy on the death of
kinsman,
(iii) Any other mere possibility of like nature
2. Section 6 (b): Mere right of re-entry

• Right of re-entry means to get back the possession of property on

breach of certain conditions imposed by the owner of the property.
• A mere right of re-entry cannot be transferred to anyone except the
owner of the property.
• For example, where X grants a lease of plot of land to Y for a period
of 5 years. At the expiry of 5 years he transfers his right to re-entry to
Z. This transfer is valid as a transfer to the entire remaining rights of
X.
• Where A leased his land to B for 5 years on the express condition that
B will not dig a well on his leased land. However, B digs a well on the
land. A transfers his right of re-entry upon the breach of the
34
 condition by B to C and asks him to take possession of the land from
B. Here C cannot take possession from B because A has transferred
him the mere right of re-entry which is not transferable.
3. Section 6 (c): Easementry right

• An Easement right cannot be transferred apart from dominant

heritage.
• In simple words, easement is a right which exists for the beneficial
enjoyment of a land and is exercised upon the land of another person.
• Here the land for whose benefit this right exists is called dominant
heritage and the land upon which this right can be exercised is called
servient heritage.
• Easement is an incident of ownership of the dominant heritage. It is a
right attached with the property. It has no independent existence.
Therefore, it cannot be detached from the dominant heritage and
transferred separately.
• For example, A, who is the owner of a house, has a right of way over
the land of B which is adjoining to his land. A transfers his right of
way over land of B to C. A cannot do this because easement itself is
not a property which can be transferred. However, if A transfers his
house to C, then the right of easement attached with his house will go
to C.
4. Section 6 (d): Restricted interest

• An interest in property restricted in its enjoyment to the owner

personally cannot be transferred by him. This means that a person’s
right or interest which is only for his enjoyment cannot be
transferred by him.
• Restricted interest is an owner’s personal right and therefore this
right cannot be transferred to any other person.
• This right is created in favour of a person only due to his personal
35
 qualifications. In case any interest is created in favour of a person for
specific purpose or use, this interest is also non-transferable.
• Where a person A gives a land to another B for his personal use only.
B cannot extend that use of land to any third person. Transfer of
such interest would defeat the whole purpose of the restriction.
However, it is open to the donor to transfer by gift title and
ownership of the property and at the same time reserve its
possession and enjoyment to himself during lifetime.
5. Section 6 (dd): Right to future maintenance

• A right to future maintenance of a person is his personal right and

therefore it cannot be transferred to any other person.
• This right is given solely for his own benefit.

• Example: The right of a Hindu widow to maintenance is a personal

right which cannot be transferred.
6. Section 6 (e): Mere right to sue
• Mere right to sue cannot be transferred. This means that bare right to
sue cannot be transferred. Right to sue for a definite sum of money is
an actionable claim and can be transferred but right to sue for an
indefinite sum of money is not transferable.
• Right of action for damages in tort or breach of contract are bare
rights to sue, and therefore, cannot be transferred.
• Example: A commits an assault on B. B can file a suit to obtain
damages; but he cannot assign the right to C and allow him to obtain
damages.
7. Section 6 (f): Public office

• Clause (f) constitutes the exception to the general rule of

transferability. It provides that a public office cannot be transferred
nor the salary of a public officer, whether before or after it has
become payable. These interests are made non- transferable to ensure
36
 the dignity of the office held by him and proper performance of his
duties.
The Act has neither defined the term “public office” nor “public
officer”. A government servant holding a public office will be known
as public officer. In fact, everyone who is appointed to discharge a
public duty and receives compensation in whatever shape whether
from government or otherwise may be a public officer.
8. Section 6 (g): Pensions and Stipends

• Stipends allowed to military, naval, air force and civil pensioners of

the government and political pensioners cannot be transferred.
• A will can be executed only in respect of an estate. The family
pension of the deceased is not in the nature of an estate and it being
not transferable cannot be bequeathed by a will. However, other
benefits like the provident fund, gratuity and other retiral dues would
be in the category of an estate.
• Pension means a periodical allowance or stipends granted not in
respect of any right to office but on account of past service or
particular merit. A bonus or reward is not a pension. Allowances
granted for other considerations can be transferred.
9. Section 6 (h): Nature of interest, Unlawful Object, Disqualification
of Transferee
• Transfer opposed to the nature of interest: If the nature of the property to be
transferred does not admit of such transfer, the transfer is not valid.
There are certain things known as “res communes” which are in their
natural form belong to no one or “res nullies” which are not owned by
anyone like air, water, space, sea, light etc. These things are given by
the nature to be used by each individual on earth. It is not possible to
hold and possess them separately. If anyone tries to transfer such a
thing it would be opposed to its nature.

37
 • Transfer for an Unlawful Object or Consideration: A transfer cannot be
made if it is for unlawful object or consideration. A property
otherwise transferable may not be transferred if the transfer is for an
unlawful object or consideration.
Under Section 23 of the Indian Contract Act, 1872, a consideration
or object is unlawful, if –
(a) It is forbidden by law,
(b) It is of such a nature that if permitted it would defeat the
provisions of any law,
(c) It is fraudulent,
(d) It involves injury to the person or property of another, or
(e) It is immoral or opposed to public policy.

• Disqualification of transferee – Legal Disqualification of transferee: A legally

disqualified person cannot be a transferee i.e., the property cannot be
transferred to him. Section 136 of the TP Act disqualifies certain
persons to be transferee of any actionable claim. A Judge, a legal
practitioner or an officer connected with courts of justice are
disqualifies from purchasing any actionable claim.
10.Section 6 (i): Untransferable right of occupancy
• This clause provides that nothing in this section shall be deemed to
authorise a tenant having an untransferable right of occupancy. The
farmer of an estate in respect of which default has been made in
paying revenue cannot transfer his interest. Example: Tenant can’t
transfer his right of tenancy and farmer can’t transfer his right to land
if he himself is a lessee.
• Un-transferrable Interests: Delhi Rent Control Act
1. No decree for recovery of possession in favour of land lord.
Exception: Residential purpose

38
 2. No recovery of possession for 5 years if acquired by transfer

Section 7: Persons Competent to transfer

Every person competent to contract and entitled to transferable property, or authorised to dispose of
transferable property not his own, is competent to transfer such property either wholly or in part,
and either absolutely or conditionally, in the circumstances, to the extent and in the manner,
allowed and prescribed by any law for the time being in force.

--------------------------------------------------------------------------------------------------------
-

Section 7, which deals with competency to transfer provides that the transferor –

(i) must be competent to contract, and

(ii) must have title to the property or authority to dispose of the transferable
property, if it is not his own.
Person competent to contract: Competency to contract has been defined in section 11 of
the Indian Contract Act, 1872 which says that every person shall be competent to
contract –

(a) Who is of the age of majority according to the law to which he is subject,
(b) Who is of sound mind, and
(c) Who is not disqualified from contracting by any law to which he is subject.

39
Age of majority: Generally the age of majority is 18, except when a guardian of
minor’s person or property has been appointed by the court, in which case it is 21.

Sound mind: According to Section 12 of the Contract Act, a person is said to be of

sound mind for the purpose of making a contract, if at the time when he makes it,
he is capable of understanding it and of forming a rational judgment as to its effect
upon his interest.

A person who is usually of unsound mind but occasionally of sound mind,

may make contract when he is of sound mind.
A person who is usually of sound mind but occasionally of unsound mind,
may not make a contract when he is of unsound mind.
Not Disqualified from contracting by any law: A person must be qualified to contract
according to law to which he is subject. Only then he will be capable or qualified to
transfer a property.

Person Authorised to dispose of Property: Any person who is authorised to dispose of the
property is competent to transfer it too e.g. ‘Karta’ of Hindu joint family, a
guardian, a trustee, an executor or administrator etc. A tenant cannot transfer the
tenanted property because he is not the owner of the property. Similarly, a person
authorised for collecting rents and managing an estate of the landlord is not
empowered to transfer the land as landlord’s agent.

Property can be sold through a power of attorney. A power of attorney is not an

instrument of transfer of any right, title or interest in any immovable property. It is
a method of creating an agency authorizing the agent to do acts specified in the
power of attorney document which will bind the grantor of power to the same
extent on an act done by him.

A will is also a method of transferring property.

The conditions necessary for a valid transfer of property can be summarized

as follows: (Revision)

40
 (i) The property must be a transferable property. Section 6 of the TP Act
contains certain exceptional cases where property is not transferable.
(ii) The transferor must be competent to contract. Transferor must be a living
person at the time of transfer. He may be a human being or a juristic person
like company or association etc. He must be an adult of sound mind and
must not be disqualified to contract by any law to which he is subject.
(iii) Transferee must be a living person at the time of transfer. The Act has not
laid down any criteria for competency of the transferee. He must be a
human being or a juristic person. Section 6 (h) (3) provides an exception.
Judges, legal practitioners or officers connected with any court of justice are
incompetent transferees in dealing with actionable claims.
(iv) The transferor must have the right to transfer the property being
transferred. He must be entitled to transfer the property or authorised to
dispose of the property, if it is not his own.
(v) The transferor may transfer the property either wholly or partly and either
absolutely or conditionally. All the formalities prescribed by the Act must be
complied with. The property must be transferred in the manner provided by
the Act.
Transfer in favour of a minor

A minor being incompetent to contract cannot transfer a property. But the

question arises that whether he can accept the transfer of property in his favour or
not. Section 7 of the TP Act gives only the competency of a transferor not that of
a transferee. Section 6 (h) (3) says that a person legally disqualified cannot be a
transferee. Nowhere it is said that the transferee may be a competent person in
respect of his age, soundness of mind etc. Only he must be alive at the time of
transfer. Therefore, a minor can accept transfer of property in his favour.

41
SECTION 8: 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;
• 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;
• 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;
• where the property is money or other property yielding income, the interest
or income thereof accruing after the transfer takes effect.”
ORAL TRANSFER SECTION 9:

This section essentially mandates that a transfer of property may be made without
writing in every case in which writing in not expressly mentioned/required by law
but it is also essential to note here that the act is not exhaustive of such kinds of
transfers.

• Under section 54, a sale of tangible immovable property of value more than hundred
Rupees (Rs 100/-) is required to be made, only by a registered instrument.
• In Section 59 of the T.P. Act, a writing is necessary in the case of simple mortgage or in case
of all other mortgages except a mortgage by title-deed deposit where the principal
amount or sum secured is more than hundred rupees (Rs 100/-).
• Also, in section 107, a lease of immovable property from year to year, or for any term

42
 exceeding one year, or reserving a yearly rent, is required to be made in writing.
• Section 130 mandates that all transfers of actionable claims have to be made by writing and
u/s 118, all exchanges are subject to the same rules as are applicable to sales.
It can be deducted that when the law requires that there should be an instrument in
writing and the said instrument should be registered then the ownership can only
be transferred by that method. But, where no writing is required by the Transfer of
Property Act or any other law, the transfer may be made orally.

Section 10: Restraint on transfer - If any property is transferred subject to a

condition or limitation which absolutely restrains the transferee from parting
with or disposing of his interest in the property such condition or limitation and
not the transfer itself is void.

• Restraint on alienation of property may be either absolute or partial.

Absolute restraint: Absolute restraint is void and transfer is valid, while partial
restraint as regard to time, place or person is valid. Example: If A transfers
property to B and his heirs with a condition that if the property is alienated, it
should revert back to A. Such a condition, being absolute, is void.

Partial restraint: A transfers property to B with condition that he should not

alienate it in favour of D who is his trade competitor. It contains partial restraint
and therefore valid.

EXCEPTIONS TO RULE OF RESTRAINT ON TRANSFER:

• In case of lease transition, lessor can impose condition that the lessee shall not
sub lease it.
• In case of married woman, a condition that she will not have right during her
marriage, to transfer the property.

Section 10: Condition restraining alienation

Where property is transferred subject to a condition or limitation absolutely restraining the

43
transferee or any person claiming under him from parting with or disposing of his interest in the
property, the condition or limitation is void, except in the case of a lease where the condition is for
the benefit of the lessor or those claiming under him:

PROVIDED that property may be transferred to or for the benefit of a woman (not being a
Hindu, Muhammadan or Buddhist), so that she shall not have
power during her marriage to transfer or charge the same or her beneficial interest therein.

A restriction for a particular time or to a particular or specified person has

been held to be absolute restriction. A compromise by way of settlement of
family disputes has been held to be valid in Mata Prasad v Nageshwar Sahai [(1927)
47 All 484]. In this case, dispute was as to succession between a widow and a
nephew. Compromise was done on terms that the widow was to retain possession
for life while the title of the nephew was admitted with a condition that he will not
alienate the property during the widow’s life time. The Privy Council held that the
compromise was valid and prudent in the circumstances of the case.

• In simple words, while an absolute restraint is void, a partial restraint may

not be. For instance, a partial restraint that restricts transfers only to a class
of persons is not invalid. However, if the transfer is restricted to being
allowed only to specific individuals, then it is an absolute restraint and
hence, void.
• In order to determine whether a restriction is absolute or partial, one must
look at the substance of the restraint and not its mere form. Ordinarily, if
alienation is restricted to only family members, the restriction is valid.
• However, where in addition to that restriction, a price is also fixed which is
far below market value and no condition is imposed on the family members
to purchase, then the restraint is an absolute one and hence, void, although
in form, it is a partial restraint. Even if such a substantially absolute
restriction is limited by a time period, that is, it applies for a specific time
period only, it remains void.

44
 In simple words, though absolute restraints are bad in law, partial restraints are
valid. If there are conditions which restrain the transferee not to alienate the
property outside the family, it has been held by the Courts that they are partial
restraints. For example, whenever there are conditions in a family settlement
whereby the members are not allowed to sell their shares to a stranger, such
conditions are valid. But it is not permissible to restrict the alienation to a
particular time. Such a restriction is not partial but an absolute restraint and as such
invalid.

• Exceptions to the general rule: There are two exceptions to the rule that absolute
restraints are void – one in favour of lessors and the other in favour of a married
woman.
(i) Lease: Conditional transfer is valid in the case of lease where the condition is for
the benefit of the lessor or those claiming under him. Lease is a transfer of a
limited interest where the lessor (transferor) reserves the ownership and transfers
only the right of enjoyment to the lessee (transferee). A lessor can impose a
condition that the lessee will not assign his interest or sub-lease the property to any
other person. Such a condition will be valid.
• This exception is applicable to permanent leases too. The Supreme Court
has held that this section does not carve out any exception with regard to
perpetual or permanent lease. Thus, any condition restraining the lessee
from alienating leasehold property is not invalid.
• A condition in the lease that the lessee shall not sublet or assign his interest
to anyone during the tenure of the lease is valid. The reason for validity is
that the lessor may not have confidence in the third person who gets the
sub-lease.
• Similarly, a stipulation in the contract of lease that the lessee would not
sublet the premises and if he does, he would have to pay a fourth of the
consideration as nazaar to the lessor, is valid and enforceable.
• A condition in the lease deed that the lessee would compulsorily have to

45
 surrender the lease in the event the lessor needs to sell the property again is
valid.

(ii) Married women: This section constitutes another exception which is in favour of
married women. It says that property may be transferred to or for the benefit of a
woman (not being Hindu, Mohammedan or Buddhist), so that she shall not have
power during her marriage to transfer or charge the same or her beneficial interest
therein. The Married Woman’s Property Act, 1874 contains the similar provision
Conditional Transfer (Section 25) see also Section 10

Conditional transfer An interest created on a transfer of property and dependent

upon a condition fails if the fulfilment of the condition is impossible, or is
forbidden by law, or is of such a nature that, if permitted, it would defeat the
provisions of any law, or is fraudulent, or involves or implies
injury to the person or property of another, or the court regards it as immoral or
opposed to public policy.

Illustrations
(a) A lets a farm to B on condition that he shall walk a hundred miles in an hour.
The lease is void.
(b) A gives Rs. 500 to B on condition that he shall marry A's daughter C. At the
date of the transfer C was dead. The transfer is void.
(c) A transfers Rs. 500 to B on condition that she shall murder C. The transfer is
void.
(d) A transfers Rs. 500 to his niece C, if she will desert her husband. The transfer
is void.
SECTION 26: FULFILMENT OF CONDITION PRECEDENT.—
Where the terms of a transfer of property impose a condition to be fulfilled before
a person can take an interest in the property, the condition shall be deemed to have
been fulfilled if it has been substantially complied with.

46
Illustration:
(a) A transfers Rs. 5,000 to B on condition that he shall marry with the consent of
C, D and E. E dies. B marries with the consent of C and D. B is deemed to have
fulfilled the condition. (i.e., though only partially fulfilled) intention of the
agreement is important.

(b) A transfers Rs. 5,000 to B on condition that he shall marry with the consent of
C, D and E. B marries without the consent of C, D and E, but obtains their
consent after the marriage. B has not fulfilled the condition.

# derived from the maxim; equity looks at the intent rather than the words or
form. That is, Condition should be valid/ performable and reasonable.

Doctrine of cy-pres: Cy pres is a legal doctrine used by the courts to alter the
terms of a charitable trust. When a person creates a charitable trust, the express
charitable purpose of the trust may become impossible to fulfill. Instead of
terminating the trust, the courts will then alter the purpose of the trust to allow it
to continue, while keeping it as closely in accordance to the original intention of
the settlor as possible.
For example, A trust is created to build an old age home and help the old people
live a dignified life, the infrastructure is created for the purpose, but due to certain
reasons no one turns up to live there. In such a situation the trust wants to use the
infrastructure for starting an orphanage, then the court can alter the terms
regarding the purpose of the trust Instead of terminating the trust because the
nature of work is similar

DOCTRINE OF ACCELERATION
Acceleration: A hastening; a shortening of the time until some event takes place.

47
A person who has the right to take possession of property at some future time may
have that right accelerated if the present holder loses his or her legal right to the
property. If a life estate fails for any reason, the remainder is accelerated.

The principle of acceleration can be applied when it becomes clear that one party
to a contract is not going to perform his or her obligations. Anticipatory
Repudiation, or the possibility of future breach, makes it possible to move the right
to remedies back to the time of repudiation rather than to wait for the time when
performance would be due and an actual breach would occur.

Repudiation of a contract means a refusal to perform the duty or obligation owed

to the other party. Anticipatory Repudiation is an act or declaration before
performance is due under a contract that indicates that the party will not perform
his or her obligation on the future date specified in the contract.

SECTION 27: THE TRANSFER OF PROPERTY ACT, 1882

Conditional transfer to one person coupled with transfer to another on failure of prior
disposition.—Where, on a transfer of property, an interest therein is created in favour of one
person, and by the same transaction an ulterior disposition of the same interest is made in favour
of another, if the prior disposition under the transfer shall fail, the ulterior disposition shall take
effect upon the failure of the prior disposition, although the failure may not have occurred in the
manner contemplated by the transferor. But, where the intention of the parties to the transaction is
that the ulterior disposition shall take effect only in the event of the prior disposition failing in a
particular

48
manner, the ulterior disposition shall not take effect unless the prior disposition fails in that
manner. Illustration

(a) A transfers Rs. 500 to B on condition that he shall execute a certain lease within three
months after A’s death, and, if he should neglect to do so, to C. B dies in A’s life-time. The
disposition in favour of C takes effect.

(b) A transfers property to his wife; but, in case she should die in his life-time, transfer to B that
which he had transferred to her. A and his wife perish together, under circumstances which make
it impossible to prove that she died before him. The disposition in favour of B does not take effect.

SECTION 27:

In the same transaction,

• if a property is transferred to one person (prior disposition) and then to

another person (ulterior disposition), if the prior disposition fails, the
ulterior disposition will be effective even if the failure did not occur in the
manner contemplated by the transferor.
• But, where the intention of the parties to the transaction is that the ulterior
disposition shall take effect only if the prior disposition fails in a particular
manner, the ulterior disposition shall not take effect unless the prior
disposition fails in that manner.

Illustration:

a) A transfers property to B on the condition that he would execute certain lease

within 3 months of A’s death, and if B fails to do so within 3 months then the
property would go to C. In case B dies during the life time of A, then the property
would go to C.

b) A transfers property to his wife; but, in case she should die in his life-time, the
property will be transferred to B which he had transferred to his wife. A and his
wife perish together (e.g., in an accident), under circumstances which make it
49
impossible to prove that she died before him.
The disposition in favour of B does not take effect, because the intention of the
transferor might have been that the property which was to be enjoyed by the wife
also included the interest of their children as long as she lived.

Doctrine of part performance: Sec. 53A TPA (Transfer of Property Act 1882)

MODULE 3 : SALE

3.1 Definitions, Contract for sale and contract of sale (Section 54)

Section 54: “Sale” defined

"Sale" is a transfer of ownership in exchange for a price paid or promised or part-paid and part-
promised.

Sale how made: Such transfer, in the case of tangible 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 immovable 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.

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Section 54 deals with the following three different subjects:

50
 • Definition of sale

• Mode of transfer by sale

• Contract for sale

Definition of Sale

• Section 54 says that “sale” is a transfer of ownership in exchange for a price paid or
promised or part-paid or part-promised. Therefore, sale is a transfer of ownership
for money consideration.
• Sale implies an absolute transfer of all rights in the property sold. No rights
are left in the transferor.
• Sale has to be distinguished from mortgage, lease and hire-purchase.
In mortgage, there is transfer of an interest in the property. In lease, there is
transfer of right to enjoy the property. In hire-purchase agreement, the
transferee is given the right to terminate the agreement in comparison to
sale whereas in sale, the transferee has to pay the entire money (purchase
price) at once and all the rights of the transferor are transferred to him.
# Hire purchase agreements are agreements whereby an owner of goods allows a
person, the hirer, to hire goods from him for a period of time by paying instalments. The
hirer has an option to buy the goods at the end of the agreement if all instalments are
being paid.
• Essentials of a sale
(1) Parties
(2) Subject-matter
(3) Money-consideration
(4) Conveyance
• Parties: There must be at least two parties in a sale. The person who
transfers the property is known as transferor or seller or vendor. The person
purchasing the property is known as transferee or purchaser or vendee.
➢ For constituting a valid sale, both the seller and purchaser must be competent on the

51
 date of sale. The seller must be competent to contract, i.e., he must be of sound mind
and must have attained the age of majority. Besides that, he must be the owner of
the property which he is going to sell. He must have a legal title to it, only then he
can sell the property. For example, a tenant does not have the power to sell
the tenanted property.
➢ The purchaser must not be disqualified by any law for the time being in force
from purchasing a property. For example, under section 136 of the TP Act, a
judge, a legal practitioner or an official of court is incompetent to purchase
actionable claims.
➢ The seller and buyer may be natural persons or juristic persons, e.g.
corporations or other legal persons.
➢ K. Sivanandam v. Maragathammal (AIR 2013 Mad 30): The property was owned
by a Hindu, and on his death, his wife married a Christian and got converted
into Christianity, and then disposed of the property. The Court held that she
was not, by reason of conversion, deprived of her right of inheritance. The
sale was valid.
➢ Jagtar Singh v. Gurmit Singh (AIR 2006 P&H 62): The defendant and plaintiff
were real brothers and were residing jointly in a single house. The defendant
executed an agreement to sell his share in the house of his brother (plaintiff).
Subsequently he sold his share to another purchaser. There was nothing on
record to show that the subsequent purchaser had knowledge about the
earlier sale agreement. Hence, he was a bona fide buyer. The plaintiff was
allowed to recover back the earnest money which he had paid to his brother.
➢ Annamalai v. Shanmugam (AIR 2008 Mad 2889): The seller (first defendant)
was the Karta of the Hindu joint family and the second defendant was a
minor. The property sold was family property. The sale was for the welfare of
the family and the minor, though there was no financial necessity. The sale
was held to be valid.
➢ Ratanbai v. Basantibai (AIR 2008 MP 1172): Two sisters were the only legal
heirs of their deceased father. They inherited his property as class I heirs. The
52
 husband of one of them purchased the property from their widowed mother
taking advantage of her old age. It was held that the widow alone had no right
to inherit the property. The sale was not binding on class I heirs to the extent
of their shares.
• Subject-matter: The TP Act deals with the transfer of immovable
properties only. Therefore, the transfer of ownership must be in some
immovable property only. (The Sale of Goods Act, 1930 deals with sale of
movable properties)
• Money-Consideration: The money consideration, i.e., the price is the
essential element of a sale. At the time of contract of sale, the price must be
ascertained for which the property is going to be transferred. The price may
be paid at the time of execution of sale, before it, in advance or after the
sale.
➢ Non-payment of sale consideration does not vitiate a sale if it is
promised to be paid. But if an assertion is made that the
consideration has already been paid and it is found to be incorrect,
the transaction does not amount to a sale.
➢ In case of an agreement to sell immovable property, the law requires
that it must with certainty identify the property agreed to be sold and
the price fixed as consideration paid or agreed to be paid. Price has
not been defined in the Transfer of Property Act but that expression
has to be understood in the same sense as is understood in the Sale of
Goods Act. (Misahul Enterprises v. Vijaya Srivastava, AIR 2003 Del
15)
➢ For the validity of a sale, inadequacy of consideration is not any
relevant factor. Even where the price or consideration is found by the
court to be less than the market value of the property, the sale is held
to be valid. (Hakim Singh v. Ram Sanchi, AIR 2001 All 231).
➢ The consideration must be reasonable. Where the consideration is

53
 found to be too low or illusory, the court may infer fraudulent or
sham transfers. The court may even presume fraud, coercion or
mistake and the sale may be invalidated on any of these grounds.
➢ Payment of price is not a necessary condition for the validity of a sale,
i.e., it is not sine qua non for the completion of a sale. As the Act itself
lays down that the price may have been paid or promised to be paid
or partly paid and partly promised to be paid. 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. Otherwise the document must be held to be
one conveying title.
➢ The real test is the intention of the parties. The intention is to be
gathered from the recital in the sale deed, conduct of the parties and
the evidence on record. Sale deed: It is an instrument in writing
which transfers the ownership of the property or properties in
exchange for a price paid/consideration. This is a document that
requires to be registered compulsorily.
➢ Transfer without consideration is gift.

• Conveyance: Section 54 has provided two modes of transfer of immovable

property:
(1) Delivery of possession, and
(2) Registration of sale-deed.
Delivery of Possession: Section 54 says that where the property is tangible
immovable property of value of Rs. 100 and upwards or in the case of a
reversion or other intangible thing, transfer can be made only by a registered
instrument.
Where the property is tangible immovable property of a value less than Rs.
100, the transfer may be made either by a registered instrument or by delivery of
possession of the property.

54
 Delivery of possession means transferring of physical control of the
property.
Registration of sale-deed: Where the value of the tangible property is Rs.
100 or more, the sale of such property requires the registration of the deed.
Where the property is intangible immovable property of any valuation, it will
require registration for completion of sale.
# Intangible immovable: It generally refers to statutory creations such as
copyright, trademarks, or patents. It excludes tangible property like real
property (land, buildings, and fixtures) and personal property (ships,
automobiles, tools, etc.).
The transfer of an immovable property can only be effected by executing a
registered document, mere making of agreement of sale or execution of
power of attorney would not transfer the right, title or interest in an
immovable property.
In Bishundeo Narain Rai v. Anand Devi, AIR 1998 SC 3006, the Supreme
Court held that a combined reading of sections 8 and 54 of the Transfer of
Property Act suggests that through an execution and registration of a sale-
deed, the ownership and all interests in the property pass to the transferee,
yet that would be on terms and conditions embodied in the deed indicating
the intention of the parties. The intention of the parties can be gathered
from the averments in the sale-deed itself or by other attending
circumstances.
Where the sale-deed was executed by the Karta of a Hindu joint family when
the plaintiffs were minors, it was held that the plaintiffs had the right to
challenge the deed in toto.
Contract for sale:

• Section 54 says that a contract for the 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,

55
 or charge on, such property.
• A sale may be preceded by a contract of sale. In a contract of sale of an
immovable property, the parties decide that on what terms and conditions
the sale will be effective.
• The question arises that does a contract of the sale of immovable property give any
right in the property to the purchaser?
• The Section 54 says that a contract of sale does not of itself create any
interest in or charge on such property. The English law in this respect is
different. In English law, a contract for sale transfers an equitable estate to
the purchaser, but, this rule is not applicable in India. In India, the purchaser
may sue for the specific performance of the contract and he may also
enforce the obligation arising out of the contract against the transferees.
Therefore, if the purchaser has paid some price, he may acquire a charge
upon the property for the money paid by him and he becomes entitled to
get it back.
• Where the charged immovable property is converted into another property
or money, the charge will fasten on the property or money into which the
conversion has taken place (Delhi Development Authority v. Skipper Construction
Co. (P) Ltd., AIR 2000 SC 573).
• The contract for sale is merely a document creating a right to obtain another
document i.e. duly executed sale-deed.
• A contract for sale does not confer any title in the immovable property. If a
person entered into possession of immovable property under contract of
sale and is in peaceful and settled possession of property with the consent of
the person in whom the title vests, he is entitled to protect his possession
against the whole world except a person having a better title than what he or
his vendor possesses. If he is in possession of

56
 property in part-performance of contract of sale and requirement of section
53A are satisfied, he may protect his interest even against the true owner
(Ramesh Chandra Ardawatia v. Anil Panjawani, AIR 2003 SC 2508)
Contingent Agreement

A contingent agreement of sale cannot be specifically enforced unless the

contingency is fulfilled. In Nandkishore v. Lalbhai Mehta, AIR 2015 SC 3796, the
agreement was dependent upon fulfilment of three conditions. One of the
conditions was settlement with labour and the labour agreeing with the
contemplated sale. The labour refused to give their consent. It amounted to non-
fulfilment of the condition. The transferor could not be compelled to complete the
sale. The purchaser was allowed refund of earnest money with 18% interest.

Sale in Violation of Contract

In Tara Devi v. Raj Shekhar, AIR 2007 All 143, a portion of the land in a residential
colony was earmarked as a park. The contract between the vendor and residents of
the colony was that the land would remain reserved for beneficial enjoyment of all
residents of the colony. Even so the vendor transferred the land to a third person.
The transfer was held to be voidable.

Difference between Sale and Contract of Sale

1) A sale of an immovable property is the transfer of ownership whereas a

contract for sale is merely an agreement for the sale of property in future on
terms agreed between the parties. After sale, all the rights and liabilities of
the owner transfer into the vendee but in contract of sale no interest of the
vendee is as such created in the property. The ownership of the property
remains with the vendor.
2) A sale conveys a legal title to the purchaser because absolute interest of the
vendor passes to the vendee (purchaser). A contract of sale does not convey
a legal title to the purchaser. It does not create any right in the property or

57
 charge upon the property in favour of party to the contract.
3) A sale creates right in rem whereas a contract of sale creates right in personam
where only the promisee (purchaser) can compel the seller-
promisor or a subsequent purchaser with notice to execute the promised
conveyance.
4) A sale requires a compulsory registration where the sale is of tangible
immovable property of Rs. 100 or more, a reversion and any intangible thing
whereas a contract of sale does not require any registration.

3.2 Rights and liabilities of buyer and seller before and after sale (Section 55)

Section 55: Rights and Liabilities of Buyer and Seller

This section deals with rights and liabilities of both the buyers and sellers. The
obligations imposed by this section are covenants (agreements) and are in the
nature of statutory obligations.

Section 55 says that in the absence of a contract to the contrary, the buyer and the
seller of immovable property are subject to the liabilities, and have rights
mentioned in the rules mentioned in Section 55.

Rights and liabilities of the buyer and seller can be categorized into two:

• Before completion of sale

• After completion of sale

Completion of sale means sale-deed is executed and Delivery/ possession of
property is made to the transferee.

Duties/ Liabilities of the seller – Section 55 (1), (2) & (3)

(A) Before Completion of Sale

(i) Duty to disclose material defects – Section 55 (1) (a)

58
 ➢ In the property e.g. right of way or some nuisance with the neighbour
➢ In the tite of the property e.g. some covenant or easement rights
Seller is bound to disclose any material defect. Buyer is not aware of
the material defect and could not discover it with ordinary care.
(ii) Duty to produce title-deeds for inspection – Section 55 (1) (b)
➢ On buyer’s demand, the seller is bound to produce all the documents
of title relating to property which are in seller’s possession or power.
➢ If no inspection is done, the court shall presume that there has been a
constructive notice of any defect in the title-deed.
(iii) Duty to answer questions as to the title – Section 55 (1) (c)
➢ Even after inspection of the title-deed, the buyer has any question as
to the title, the seller is bound to answer his question to the best of
his information.
(iv) Duty to execute a proper conveyance – Section 55 (1) (d)
➢ Conveyance literally means the action or process or carrying someone
or something from one place to another. In law, it means the legal
process of transferring property from one owner to another.
➢ Conveyance can be through two means:
✓ By signing the sale-deed, or
✓ By putting thumb-impression on the sale-deed.
➢ Conveyance must be done at proper place and at proper time.
➢ Within reasonable time after the tender i.e. after payment of the
consideration amount.
(v) Duty to take care of the property and title-deed – Section 55 (1) (e)
➢ Between the date of contract of sale and the delivery of possession.
➢ Seller is bound to take care of the property and all the documents of
title which are under his possession, during the period between the
date of contract of sale and delivery of possession.

59
 ➢ The care should be such as an owner of ordinary prudence would
take.
(vi) Duty to pay all outgoings (public charges and rent accrued) – Section 55(1) (g)
➢ Seller is bound to pay –
(a) all public charges & Rent (like revenue, taxes etc.) accrued in
respect of property up to the date of sale.
(b) the interest on all encumbrances on the property due on that date
➢ Seller is bound to discharge all encumbrances, except the property is
sold subject to all encumbrances.
(B) After Completion of Sale

(i) Duty to give possession – Section 55 (1) (f)

➢ Seller is bound to give possession of the property to the buyer or his
authorised person.
➢ whenever he requires
➢ in a way as the nature of property admits – in case of tangible
property, by giving its possession; in case of intangible property, by
giving its possession symbolically.
(ii) Implied Covenant for title – Section 55 (2)
➢ Implied covenant(agreement) means that the seller shall be deemed to
contract with the buyer that the interest which is to be transferred is
subsisting and that the seller has power to transfer it.
➢ Covenant is implied and not required to be expressly mentioned. In
case of the contrary, the buyer can sue for damages and claim return
of the amount of consideration paid.
➢ Where the seller is in a fiduciary character (e.g. a trustee or a father
selling a minor’s property), he shall be deemed to contract with the
buyer that the seller has done no act whereby the property is
encumbered or whereby he is hindered from transferring it. In this

60
 case covenant is not required.
➢ Covenant is annexed to, and shall go with the interest of the
transferee as such.
(iii) Duty to deliver title-deeds on receipt of price – Section 55 (3)
➢ The duty of the seller is to deliver the title-deeds when whole of the
purchase price has been paid.
(a) Where the seller retains any part of the property comprised in
the deed, he is entitled to retain all of the documents.
(b) Where the whole of property is sold to different buyers, the
buyer of the lot of greatest value is entitled to such documents.
(c) But in case (a), the seller and in case (b), the buyer of the lot of
greatest value, is bound, upon every reasonable request by the
buyer, or by any of the other buyers, to produce the said
documents and furnish such true copies thereof, at the cost of
the person making request.
(d) In the meantime, the seller, or the buyer of the lot of greatest
value, as the case may be, shall keep the said documents safe,
uncancelled and undefaced, unless prevented from so doing by
fire or other inevitable accident.

Rights of the seller – Section 55 (4)

(A) Before Completion of Sale

Right to take rents and profits – Section 55 (4) (a)

➢ The seller is entitled to the rents and profits of the property till its
61
 ownership passes to the buyer. Sale is completed when ownership
is transferred. Seller continues to be the owner till the date of
transfer. Therefore, the seller is entitled to the rents and profits of
the property.
(B) After Completion of Sale

Charge upon property for Unpaid Price – Section 55 (4) (b)

➢ Where the ownership has passed to the buyer before payment the
whole of purchase-money, the seller is entitled to a charge upon
the property for the amount of the purchase money, or any part thereof
remaining unpaid, or for interest on such demand or part from the date on
which the possession has been delivered in the hands of:
✓ the buyer, or
✓ any transferee without consideration, or
✓ any transferee with notice of non-payment

Duties/ Liabilities of the Buyer – Section 55 (5)

(A) Before Completion of the Sale

(i) Duty to disclose the facts materially increasing the value of property – Section 55 (5) (a)
➢ The buyer is bound to disclose to the seller any fact of which the seller is
not aware of, but buyer is aware of such fact, which materially increase the value
of the property before completion of the sale.
Summers v. Griffiths (1866) – An old lady contracted to sell a property
at much less price believing that her rights in the property were not
absolute. The buyer had knowledge of the fact that the lady’s interest in
the property was perfect and absolute but he did not disclose it to the
lady. He was held liable for fraud and the sale was set aside.
(ii) Duty to pay the price – Section 55 (5) (b)
62
 ➢ The buyer is bound to pay or tender the purchase money to the seller
or to such person as he directs at the time and place of completing
the sale.
➢ The buyer may retain out of the purchase money, the amount of any
encumbrances on the property existing at the date of sale, and shall
pay the amount so retained to the persons entitled.
(B) After Completion of the Sale

(i) Duty to bear loss to the property – Section 55 (5) (c)

➢ Where the ownership of property has passed to the buyer, he is bound
to bear any loss arising from destruction, injury or decrease in the value
of property not caused by the seller.
(ii) Duty to pay outgoings – Section 55 (5) (d)
➢ Where the ownership of property has passed to the buyer, as between
himself and the seller, the buyer is bound to pay
✓ All public charges and rent which may become payable in
respect of the property,
✓ The principal money due on any encumbrances subject to
which the property is sold, and
✓ The interest thereon afterwards accruing due.
Rights of the Buyer – Section 55 (6)

(A) Before Completion of the Sale

Right to charge for price prepaid – Section 55 (6) (b)

➢ Unless the buyer has improperly declined to accept delivery of the

property, he is entitled to:
✓ a charge on the property
✓ as against the seller and all persons claiming under him

63
 ✓ to the extent of the seller’s interest in property
✓ for the amount of any purchase-money paid by the buyer
✓ in anticipation of the delivery and for interest on such amount
➢ And when he properly declines to accept delivery, he is also
entitled to:
✓ the earnest money (if any) and for the costs (if any)
✓ awarded to him of a suit to compel specific performance or
to obtain a decree for its rescission
(B) After Completion of Sale

Benefit of increment – Section 55 (6) (a)

➢ Where the ownership is passed to the buyer, he is entitled to:
✓ the benefit of any improvement in the property
✓ the increase in value of the property
✓ the rents and profits of the property
3.3 Marshalling by a subsequent purchaser (Section 56) refer to 81(mortgage)

Section 56: Marshalling by a Subsequent Purchaser (right of purchaser)

If the owner of two or more properties mortgages them to one person and then sells one or more of
the properties to another person, the buyer is, in the absence of a contract to the contrary, entitled
to have the mortgage-debt
satisfied out of the property or properties not sold to him, so far as the same will extend, but not so
as to prejudice the rights of the mortgagee or persons claiming under him or of any other person
who has for consideration acquired an interest in any of the properties.

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• According to this section –

(1) If the owner of two or more properties,
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 (2) mortgages them to one person and then sells one or more of the
properties to another person,
(3) the buyer is entitled to have the mortgage-debt satisfied out of the
property or properties not sold to him (subject to the contrary contract)
so far as the same will extend.
(4) but this will not prejudice the rights of –
(a) the mortgagee, or
(b) persons claiming under him, or
(c) of any other person, who has for consideration acquired an
interest in any of the properties.
• This section protects the interest of the buyer and applies only between
buyer and the seller and not as between the subsequent purchasers.
• The section is based on the principle that when a person purchases some
property free from encumbrances, his absolute interest should not be
prejudiced. Marshalling by purchaser is exercisable only between the buyer
and the seller. It cannot be exercised detrimental against the rights of the
mortgagee or other person claiming under him or any person having an
interest in any of the properties. The subsequent purchaser can claim the
right of marshalling only if the interest of the prior mortgagee or persons
claiming under him or any other person who has acquired interest in any of
the properties under consideration is not affected thereby.
Illustration: A mortgages three properties X, Y and Z to B. Subsequently he sells
property X to C (in case of simple mortgage it is possible) free from encumbrance.
Under marshalling, C shall be entitled to insist that B should realise his debt first
from properties Y and Z which are unsold. If after exhaustion of Y and Z any part
of the debt remains unsatisfied, then only, B can

65
draw upon X. Here although C has paid full price for X to A in taking it free from
encumbrance, B still has a right to proceed against X unless he has agreed with A
and C on payment of a part of the mortgage-debt, otherwise he would have no
right to do so. In case there is no such agreement, if B proceeds against X as the
last resource, C will be entitled to claim from A the amount actually realised by B
from C.

RELEVANT TERMS

Mortgage: Mortgage means transfer of an interest in specific immovable property

for the purpose of securing payment of money advanced by way of loan.
Mortgagor has right to redeem property provided as security. Redemption means
to take back the mortgaged property by paying the mortgage money at any time
after stipulated date for repayment.

Pledge & Hypothecation: The pledge is defined as the form of bailment in

which goods are held as security for the payment of the debt or the performance
of an obligation. Hypothecation is a legal term that refers to the granting of a
hypothec to a lender by a borrower (slightly different from the pledge), in
which the collateral asset is not delivered to the lender.

1. In the pledge, the possession of the asset is transferred, but in the case
of hypothecation, possession lies with the debtor only.
2. In the pledge, when the borrower default in payment, the lender can exercise his
right to sell the asset to recover the debt amount. Conversely, in hypothecation,
the lender does not have the possession of goods so he can file a suit to realize his
dues to take the possession first and then disposing off them.

- Stamp duty is revenue

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 - List of terms and conditions on the ground for which the sale is to be
made is Agreement for sale
- Deed of conveyance is agreement of sale
- Contract of sale is the sale deed
# Auction sale is not a transfer because it is not by operation of parties #
Sale , gifts , mortgage are nothing but agreement
Succession: The last ‘will’ will always prevail, not the previous ones

Lease and tenancy: In tenancy , one can merely possess it, but in case of lease,
one is more than in mere possession, one can have possession as well as might do
the erections

LEASE & LICENCE:

A lease is a transfer of interest in land. 2 A lease involves a transfer of interest

followed by possession of the property in question

A licence is merely a personal right and does not amount to any interest in
immoveable property. A licence does not transfer any interest in the property and
the licence has no right of possession.

Non-encumbrance : no charge on the property i.e., no liability

Easement: It is an interest or right exercised over others land for the beneficial
object or use of that land. Easement cannot be transferred. When dominant
heritage is transferred then the easement can also be transferred.

Decree – it is the operative part of the judgment

EARNEST MONEY & ADVANCE MONEY

Earnest money: is a deposit made to a seller indicating the buyer's good faith in

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an arrangement. Often used in real estate transactions, earnest money allows the
buyer additional time when seeking financing. Earnest money is typically held
jointly by the seller and buyer in a trust or escrow account.
Advance money: A payment on an obligation that is paid well in advance. For
example, if one pays May's rent in April, the payment is an advance payment.
Often, though not always, the advance payment results in a discount on the
amount owed. It is also called a payment in advance.

Gift means transfer of certain existing movable or immovable property made

voluntarily and without consideration, by one person to another.
• Person who transfers property is known as donor. Person in whose favour
property is transferred is known as donee.

Cases under Section 8

Section 8: Operation of transfer: Unless a different intention is expressed or necessarily
implied, a transfer of property passes forthwith to the transferee all the interest which the transferor
is then capable of passing in the property and in the legal incidents thereof.

Such incidents include, when the property is land, the easements annexed thereto, the rents and
profits thereof accruing after the transfer, and all things attached to the earth; and, where the
property is machinery attached to the earth, the movable parts thereof; and, where the property is a
house, the easements annexed thereto, the rent thereof accruing after the transfer, and the locks,
keys, bars, doors, windows, and all other things provided for permanent use therewith; and, where
the property is a debtor 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.

Cases regarding Annexation of immovable Property

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Holland v Hodgson (1872) LR 7 CP 328

The owner of a mill purchased some looms for use in his mill. They were attached
to the stone floor by nails driven into wooden beams. They could quite easily be
removed. The owner then mortgaged the mill and failed to keep up the payments
and the mill was repossessed. The question for the court was whether the looms
were fixtures forming part of the land or whether they remained chattels.

Held: The looms had become fixtures and thus formed part of the land mortgaged.
The Court introduced the degree and object of annexation test.

Degree of Annexation Test: It was held that an article which is affixed to the land, even
slightly, is to be considered as part of the land, unless the circumstances are such as
to show that it was intended to all along continue a chattel, the onus lying on those
who contend that it is a chattel. Under this test, the question to be asked is
whether the chattel was attached to the land
to enable the object to be better enjoyed as a chattel, or for the more convenient
use of the land.

Object of Annexation Test: The Court observed that the blocks of stone placed one
on the top of another without any mortar or cement for the purpose of forming a
dry-stone wall would become part of the land, though the same stones, if deposited
in a builder's yard and for convenience sake stacked on the top of each other in the
form of a wall, would remain chattels.

Northern Press & Engineering Co. Ltd. v. Shepherd, 1908 52 SJ 715

The issue in this case was whether items attached to fixtures become themselves
fixtures.

The issue in this context was whether the fact that the machines were attached to
the driving mechanism which itself was attached to the property caused the
machines to be fixtures.

69
It was held that the printing machines remained chattels. This position was reached
on the basis that the printing machine and the driving device were separate devices
and it would be wrong to hold that the attachment to the driving device, which
could easily be disconnected, had the effect of altering the characteristic of the
printing machine to the extent that it would be considered attached to the
property. Doing so would give too much importance to the connection at the
expense of the machine’s characteristic.

Attestation of document by party

Party to document is debarred from attesting a document which is required by law

to be attested. It has been laid down that it would defy common sense, if a party
to a deed could also attest the same. Thus, a party to an instrument cannot be a
valid attesting witness to the said instrument, for the reason, that such party cannot
attest its own signature.

Harish Chandra Singh Deo & Anr. v. Bansidhar Mohanty & Ors., AIR 1965
SC 1738.

The first respondent lent money to the appellant and obtained a mortgage deed
from him in the name of the second respondent. The first respondent was himself
one of the two attesting witnesses. On the failure of the appellant
to repay the amount, the first respondent instituted a suit and the suit was decreed
by the High Court. In his appeal to the Supreme Court, the appellant contended
that:

(i) the mortgage deed was not validly attested and

(ii) the first respondent was not entitled to sue.
HELD:

A person who has lent money, for securing the payment of which a mortgage deed
was executed by the mortgagor, but who was not a party to the deed, could be an
attestor.
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There is a distinction between a person who is a party to a deed and a person who,
though not a party to the deed is a party to the transaction and the latter is not
incompetent to attest the deed. The object of attestation is to protect the executant
from being required to execute a document by force, fraud or undue influence.

Though, neither the definition of "attested" in s. 3 or s. 59 of the Transfer of

Property Act debars a party to a mortgage deed from attesting it, since the
testimony of parties to a document cannot dispense with the necessity of
examining at least one attesting witness to prove the execution of the deed, it must
be inferred that a party is debarred from attesting a document which is required by
law to be attested. Where, however, a person is not a party to the deed, there is no
prohibition in law to the proof, of the execution of the document, by that person.

Jadunandan v. Suraj Deo AIR 1930 AII 223

The only point that arose in this second appeal was whether the Courts before
were correct in holding that the mortgage deed in suit was not attested in the
manner required by law.

The mortgage deed bears the signature of the executor and in the margin of the
deed there are the names of two persons purporting to be witnesses since each
name is preceded by the letter 'g' (gawah). There is a fourth name in the margin,
namely, Thakur Prasad; but this name is not preceded by the letter 'g' but by the
latter 'd' (dastkhat) showing that Thakur Prasad did not purport to
sign as a witness of the deed. The evidence shows that Thakur Prasad was in fact
the scribe of the deed.

As regards the two signatures of the persons who purport to have signed as
witnesses it has been found that one of them, namely Maheshar Ram did not sign
his name himself and that there was no proof that he had authorised the scribe to
sign for him as an attesting witness. For this reason, the lower appellate Court held
that Maheshar Ram was not a valid attesting witness. We may mention that the trial
Court found that Maheshwar Ram was not even present at the execution of the
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deed but the lower appellate Court did not come to a finding of fact on that point.

The lower appellate Court proceeds upon the view that the other witness Ramjan
Ram, whose name appears as an attesting witness, may be regarded as a valid
attesting witness, but the document cannot be considered to have been duly
attested because Thakur Prasad, who is the only other person who could be
regarded as an attesting witness did not sign the document as a witness but signed
it as a scribe. We have already pointed out that Thakur Prasad, as the scribe of the
deed, must have intended to make a distinction between himself and the other two
marginal witnesses since he only purports to have signed the deed, whereas the
other two marginal witnesses purport to have signed the deed as witnesses.
Although the scribe of a deed can be an attesting witness we do not think that he is so in the
present case since it appears that he did not intend to sign the deed as an attesting witness.

There is another objection to the validity of Thakur Prasad's signature as an

attesting witness. The definition of ''attested" which was introduced in the Transfer
of Property Act by the amending Act of 1926 to which retrospective effect was
expressly given by the amending Act of 1927, lays down the meaning which should
be attached to the word "attested" and we are bound to deem that the word always
had that meaning. Under this definition it is necessary that the attesting witness must have
signed the instrument in the presence of the executant. In the present case, Thakur Prasad deposes
that the executant signed the document in his presence, but there is no evidence that Thakur
Prasad himself signed the document in the presence of the executant. On this ground also we hold
that the signature of Thakur Prasad cannot be accepted as the signature of an attesting witness.

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Jugal Kishore Saraf v. Raw Cotton Ltd. AIR 1955 SC 376

It was a case where during the pendency of a suit for recovery of a debt from the
defendant, the plaintiff had transferred to a third person all the books and other
debts.

The Court held that the position of the transferor vis-a-vis the transferee is nothing
more than that of a benamidar (he appears to be the owner/ only to show to
others) for the latter and when the decree is passed for the recovery of that debt it
is the latter who is the real owner of the decree.

When the transferee becomes the owner of the decree immediately on its passing,
he must, in relation to the decree, be also regarded as person claiming under the
transferor.

The Court observed that the executing Court can apply its mind to the simple
equitable principle which operates to transfer the beneficent interest in the after-
acquired decree under Section 146. As the assignee from the plaintiff of the debt
which was the entire subject matter of the suit the transferee was entitled to be
brought on record and must, therefore, be also regarded as a representative of the
plaintiff within the meaning of Section 47 of the CPC.

In this case, the Supreme Court also held that the cardinal rule of construction of
statutes is to read the statute literally, that is by giving to the words used by the
legislature, their ordinary, natural and grammatical meaning. If, however, such a
reading leads to absurdity and the words all susceptible of another meaning the
court may adopt the same. But if no such alternative construction is possible, the
court must adopt the ordinary rule of literal interpretation

State of Odisha v. Titagarh Paper Mills Company AIR 1985 SC 1293

(Bamboo case)

An examination of the definitions of movable property and immovable property

73
given in the General Clauses Act, Registration Act and Transfer of Property Act,
show that things attached to the earth are "immovable property." The term
"attachment" means "rooted in the earth as in the case of trees and shrubs." Thus,
while trees rooted in the earth are immovable property as being things attached to
the earth by reason of the definition of the term "immovable property" in various
statutes namely the General
Clauses Act and the Orissa General Clauses Act and the Registration Act
read with the definition of the expression "attached to the earth" given in the
Transfer of Property Act, standing timber is "movable property" by reason of its
exclusion from the definition of "immovable property" in the Transfer of Property
Act and the Registration Act and by being expressly included within the meaning
of the term "movable property" given in the Registration Act.

The term "standing timber" has been judicially recognised as "a tree which is in a
state fit for the purposes of being used as wood for buildings,
uses, bridges, windows, whether on the tree or cut and seasoned", that is, a tree
meant to be converted into timber so shortly that it could already be looked upon
as timber for all practical purposes even though it is still standing. Thus, trees
which are ready-to be felled would be standing timber and therefore, "movable
property". While trees (including bamboos) rooted in the earth being things
attached to the earth are immovable property and if they are "standing timber", are
movable property, trees (including bamboos) rooted in the earth which are agreed
to be severed before sale or under the contract of sale are not only movable
property but also goods.

Shyamal Ranjan Mukherjee v. Nirmal Ranjan Mukherjee AIR 2006 All 568

Section 10: Condition restraining alienation – Where property is transferred subject to a

condition or limitation absolutely restraining the transferee or any person claiming

74
under him from parting with or disposing of his interest in the property, the
condition or limitation is void, except in the case of a lease where the condition is
for the benefit of the lessor or those claiming under him: PROVIDED that
property may be transferred to or for the benefit of a woman (not being a Hindu,
Muhammadan or Buddhist), so that she shall not have power during her marriage
to transfer or charge the same or her beneficial interest therein.

In this case. a deed of dedication of property to a deity contained a condition

absolutely restraining transfer. The deed was held to be not void. The Court ruled
that Section 10 does not apply to a case where the transferee is in a temple where
the idol of the deity is installed, and hence in no case it can be alienated.
Post – Mid - Term

Of Transfers of Property by Act of Parties

Section 13: Transfer for benefit of unborn person

Where, on a transfer of property, an interest therein is created for the benefit of a person not in
existence at the date of the transfer, subject to a prior interest created by the same transfer, the
interest created for the benefit of such person shall not take effect, unless it extends to the whole of
the remaining interest of the transferor in the property.

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

• Transfer to unborn person: The TP Act deals only with the transfers of property
between living persons. An unborn person means a person not in existence
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 even in the mother’s womb. A child in the mother’s womb is considered to be a
competent transferee. Therefore, the property can be transferred to a child in
mother’s womb because the child is existing at that time but not to an
unborn person who is not even existing in mother’s womb. Every transfer
of property involves transfer of interest. As soon as the property is
transferred, the transferor is divested of that interest and the interest is
vested in the transferee. For vesting the interest, therefore, it is necessary that the
transferee must be in existence. Otherwise the interest will remain in abeyance till
the transferee comes into existence. This is against the very concept of
interest.
• Section 13 provides that the property cannot be transferred directly to an unborn
person but it can be transferred for the benefit of an unborn person.
Two conditions are required to be fulfilled if the property is transferred for
the benefit of an unborn person:
(i) Prior life interest must be created in favour of a person in existence at
the date of transfer.
(ii) Absolute interest must be transferred in favour of unborn person.
Prior interest: It is necessary for a valid transfer of property to an unborn
person that before the transfer actually takes place, a prior interest must be
created in favour of a living person on the date of transfer. The unborn
person must be in existence when the prior interest comes to an end. After
the death of the person who had life interest, the property would ultimately
pass to the unborn person, who will by that time have come into existence.
For example, A transfers his property to X for life, then to Y for life and
then to Z for life and thereafter to the unborn child of Z. Here X, Y, Z are
living persons. The property may be given to more than one living persons
successively for life before it vests in the unborn child ultimately.
In Sridhar v. N. Revanna (AIR 2012 Kant 79), a property was transferred by
way of gift deed in favour of the donor’s grandson. Thereafter the property

76
 was to be vested in male children of the grandson. The Court said that the
gift deed created interest in favour of the grandson and absolute right in
favour of unborn sons. The condition of the gift restraining alienation was
held to be not void. Alienation of the property by the donee after birth of
his sons was improper. The sons were held entitled to the sale consideration
received by their father from purchasers.
Absolute interest: It is further necessary that whole of the remaining interest of
the transferor in the property must be given to the unborn person. Only
absolute interest may be transferred in favour of the unborn person and not
limited or life interest, i.e., the whole of the remaining interest is the entire
interest of the transferor less the prior life interest carved out of the
ownership.
In the illustration to the section, the transfer to unborn person (eldest son)
becomes void because it does not give the whole of A’s remaining
interest in the property to unborn person, only a life interest is given to the
unborn person.
In brief, Section 13 provides for the following:

(a) No transfer can be directly made to an unborn person.

(b) The interest in favour of the unborn person must be preceded by a prior
interest. It is not permissible to confer only a life estate on such person.
(c) The prior interest must be also created by the same transfer.
(d) The unborn person must be given the whole of the remaining interest of the
transferor in the property.
Section 14: Rule against perpetuity

No transfer of property can operate to create an interest which is to take effect after the life time of
one or more persons living at the date of such transfer, and the minority of some person who shall
be in existence at the expiration of that period, and to whom, if he attains full age, the interest
created is to belong.
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• Meaning of Perpetuity: Perpetuity means continuous or unending transaction. It

is tying up property for an indefinite period. Transfers involving generation
after generation (pidhi dar pidhi/ pusht dar pusht) are known as creating
perpetuities. The ball is set in motion by X once, it keeps on moving of its
own by the same force throughout uninterrupted. This continuous unending
process is known as perpetual transfer or perpetuity. For example, A
transfers his house to B for life and then to B’s children generation after
generation. This is perpetuity.
• Object of the Section 14: It is important to ensure free and active circulation of
property both for trade and commerce as well as for the betterment of the
property. There are people who want to retain their property in their own
families from generations to generations. This will be a loss to the society
because it will be deprived of any benefit arising out of that property. Free
and frequent circulation is important and the policy of the law is to prevent
the creation of such perpetuity. Thus, the object of section 14 is to see that
the property is not tied- up and to prevent creation of perpetuity.

• Essential ingredients of Section 14 are:

(i) There should be a transfer of property.
(ii) Transfer is to create an interest in favour of an unborn person.
(iii) Interest so created should take effect after the life-time of one or
more persons living at the date of such transfer and during the
minority of the unborn person.
(iv) The unborn person should be in existence at the expiration of the
interest of the living person.
The unborn person is the one in whose favour the interest is created. This
vesting of interest in favour of the ultimate beneficiary is preceded by the
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 life interest one or more living persons.
Life interest is always a limited interest. It is necessary that the ultimate
beneficiary must come into existence before the death of the last preceding
living person. The vesting of interest in favour of the ultimate beneficiary
may be postponed only to the life or lives of living persons and to minority
of ultimate beneficiary but not beyond that.
• Perpetuity period: It is the maximum period during which the property may be
rendered inalienable. According to section 14, the maximum possible remoteness
of vesting is the life of the last preceding interest plus the minority of the ultimate
beneficiary. For example, the owner of a property may transfer it to a living
person A, for life and after his death to B (a living person) for life and on or
before the death of B to his unborn son when he attains the age of 18 years
(or 21 years when the minor is under the supervision of the court).
However, a problem arises when an unborn person does not come into
existence at or before the expiry of the last prior interest but he is merely in
womb. In such a case, the period of gestation has to be included as a period
of grace with the perpetuity period. The period of gestation is that period
for which the unborn person has to remain in his mother’s womb. It is
normally a period of 9 months or 280 days.
Therefore, the total period of perpetuity, i.e. the period for which the
vesting of property can be postponed is as follows:
(1) Where the unborn person has come into existence either at or before
the expiry of the last prior interest, his minority period.

79
 (2) Where the unborn person is in womb at the expiry of the last prior
interest, the period of gestation plus his minority.
For example, A transfers certain properties to B for life and then to C for
life and then to an unborn person when he attains the age of majority. B and
C are living at the date of the transfer and the unborn, the ultimate
beneficiary, is not in existence even in the mother’s womb. The last prior life
interest is with C. When C dies, the contemplated unborn must be in
existence either as a born child or unborn in mother’s womb. The maximum
period up to which the vesting of property in unborn can be postponed
would be: In case of a born child, life of C plus till the child attains the age
of majority, and in case of a child in mother’s womb, life of C plus period of
gestation plus period of minority.
Exceptions to Section 14 (Rule against Perpetuities)

1) Property given to a charitable trust – Where property has been transferred

for the benefit of the public for advancement of religion, knowledge,
commerce, health, safety etc., the restriction envisaged under section 14 will
not apply there.
2) Lease – e.g. renewable lease on yearly basis.
3) Mortgage – The rule against perpetuity is not applicable to mortgages. A is
the creditor and B is the borrower. B has mortgaged his property to A. If B
fails to pay, A can acquire the secured property. Here B does not have right
of alienation until and unless repayment is complete.
Section 15: Transfer to a Class some of whom come under sections 13 and 14

If, on a transfer of property, an interest therein is created for the benefit of a class of persons with
regard to some of whom such interest fails by reason of any of the rules contained in sections 13
and 14, such interest fails in regard to those persons only and not in regard to the whole class.

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 • Transfer to a class of persons: Section 15 lays down that if in a transfer of
property, an interest is created for the benefit of some class of persons, but
due to applicability of either section 13 (transfer to an unborn person) or
section 14 (rule against perpetuity), this interest becomes unavailable to
some persons of that class, then, in such a case, the
transfer will be invalid only for those persons and not for others. The
transfer will be valid for other persons of the class.
• What is a class of persons? – Generally a number of persons are particularly said
to form a class when they can be designated by some general name as
“children”, “grandchildren”, “nephew” etc. In legal sense, the question
whether a gift is one to a class depends, not on those considerations but
upon the mode of gift itself. For example, the gift being that of one
aggregate sum to a body of persons, uncertain in number at the time of the
gift, to be ascertained at a future time, and who are all to take in equal or in
some other definite proportions, the share of each being dependent upon
the ultimate number of persons.
Section 16: Transfer to take effect on failure of prior interest Applied
only in case of transfer to unborn persons, i.e., Sec 13 &14)

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

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• Transfer when prior interest is void: A valid transfer which is subsequent to and
dependent upon a void transfer is itself rendered void. Section 16 provides
that where an interest created for the benefit of a person or of a class of
persons fails due to reasons mentioned in sections 13 and 14 (transfer in
favour of an unborn person and rule against perpetuity respectively), any

81
 other interest created in the same transaction which is to take effect after the
prior interest, also fails.
• Prior interest void only due to sections 13 and 14: This section becomes applicable
only when the prior interest is void only due to rules contained in either
section 13 or 14 and not otherwise.
In Girish Dutt v. Datadin, (1934) 9 luck 329, A made a gift to her nephew’s daughter
B for her life and then to B’s male descendants absolutely, if she had any. But if
she had no male descendant then to B’s daughter without the power of alienation.
In case B had no descendant, male or female, then to her nephew, Datadin. B died
without any child. It was held that as the gift to B’s
nborn daughters was a limited interest only, therefore transfer to nephew which
was dependent upon prior interest also failed.

SECTION 18: TRANSFER IN PERPETUITY FOR BENEFIT OF

PUBLIC
Transfer in perpetuity for benefit of public.—The restrictions in sections 14, 16
and 17 shall not apply in the case of a transfer of property for the benefit of the
public in the advancement of religion, knowledge, commerce, health, safety or any
other object beneficial to mankind.
SECTION 11: RESTRICTION REPUGNANT TO INTEREST
CREATED
If a property is transferred absolutely in favour of the transferee, then any
condition or terms of transfer, restricting the full enjoyment of the property (i.e.)
repugnant (objectionable) to the interest created, then the transferee is empowered
under sec 11 of TP Act to receive and dispose the property as if there was no such
condition.

Where, on a transfer of property, an interest therein is created absolutely in favour of any person,

82
but the terms of the transfer direct that such interest shall be applied or enjoyed by him in a
particular manner, he shall be entitled to receive and dispose of such interest as if there were no
such direction.

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

Vested Interest (Section 19)

According to Section 19, unless a contrary intention appears from the terms of
transfer, a person gets a vested interest when the interest is created in his favour -

(i) without specifying the time, when it is to take effect, or

(ii) it has been specified that it is to take effect forthwith, or
(iii) it has been specified that it is to take effect, on the happening of an event,
which must happen.
Where no time is mentioned: A person gets a vested interest in a transfer of property
immediately where the terms do not specify the time when it is to take effect. For
example, A sells his house to another person B. Here B gets the vested interest
from the day of sale though possession may not be given to him immediately.

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

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On the happening of an event: The interest is a vested interest where the operation of
the transfer is made to depend upon some specified certain event. The event must
be clearly specified, explained and it must be certain to happen. For example, death
of a person is certain to happen, likewise sunset and sunrise are bound to happen.

For example, A says to B, I will give you my property when C dies. Although it is
unlawful, it is just to explain the concept of vested interest. Here B is a human
being. The day C dies, B gets the vested interest in the property. Another example:
A says to B that I will give you my property when you marry C. Until B marries C,
B has a contingent interest in the property. The day B marries C he has a vested
interest in the property.

Time of vesting: The interest vests as soon as the transfer is complete.

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

Death of Transferee: Section 6 provides that when an interest is vested, it becomes the
property of the transferee and he can transfer it even before he has obtained
possession

Main characteristics of Vested Interest:

(i) A Vested Interest does not depend upon fulfilment of a condition and it
creates a Present and Immediate Right. The enjoyment may be postponed to
a future date.
(ii) A Vested Interest is not defeated by the death of the transferee before
obtaining possession. The interest passes on to the heirs of the transferee.
(iii) A vested Interest is transferable as well as heritable.

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Section 20: When unborn person acquires vested interest on transfer for his
benefit - Where, on a transfer of property, an interest therein is created for the
benefit of a person not then living, he acquires upon his birth, unless a contrary
intention appears from the terms of the transfer, a vested interest, although he may
not be entitled to the enjoyment immediately on his birth.
Contingent Interest (Section 21)

Contingent Interest: When an interest is vested after fulfilment of some condition

precedent, that interest remains contingent till the said condition is fulfilled. In a
transfer of property, a person gets a contingent interest in the property when –

(i) The specified uncertain event happens, the happening of which was a
condition for vesting of interest, or
(ii) The specified uncertain event does not happen, the non-happening of which
was a condition for vesting of interest and the event has become impossible
to happen.
In the case of a contingent interest, the interest becomes vested only when either
of the condition is fulfilled. For example, where A makes a gift to B provided X
survives the age of 25 years, the interest of B is contingent. Where A makes a gift
to B provided X does not survive the age of 25 years, the interest of B again is
contingent.

The specified uncertain event may be of two kinds:

(a) The happening or non-happening of the event depends upon the will and
desire of the parties like marriage or payment of a sum of money.
(b) The specified event does not depend upon the will of the parties like death
of a person on reaching a certain age.
Main characteristics of a contingent interest

(i) The contingent interest is a transferable interest.

(ii) It is not heritable. On the death of a person having a contingent interest, his
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 interest does not pass on to his legal heirs. The legal heirs of such a
transferee do not get any interest.
(iii) Death is not an uncertain event but survival of another at the death is an
uncertain event.
(iv) The charge of an heir apparent to succeed to a person as heir or similar
possibilities of like nature are not ‘contingent interest’ within the meaning of
this section.
Election when necessary (Section 35) / “doctrine of election”

Section 35 states that when a party transfers a property over which he does not
hold any right of transfer and in the same transaction the benefit is conferred upon
the original owner of property, such title holder (original owner) must elect his
option either to validate such transfer or reject it. In case of rejection, the benefit
shall be relinquished back to the transferor subject to the following:

(a) where the transfer is gratuitous (i.e. without any charge), and the transferor
has, before the election, died or otherwise become incapable of making a
fresh transfer,
(b) in all cases where the transfer is for consideration.
For example, A owns a property that is worth Rs. 800. B professes to transfer the
same to C through the Rs. 1000 instrument to A. But A, the owner elects (opts) to
retain his property and thus, forfeits gift of Rs. 1000. Thus A has the right of
accepting or rejecting the transfer proposal.

“Exchange” defined (Section 118)

When two persons mutually transfer the ownership of one thing for the ownership
of another, neither thing or both things being money only, the transaction is called
an "exchange".

A transfer of property in completion of an exchange can be made only in manner

provided for the transfer of such property by sale.
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2.3 TRANSFER BY OSTENSIBLE OWNER: SECTION 41

Who is an ostensible owner? The ostensible owner is not the real owner of the
property and does not have any authority to make the transfer. Nevertheless, as per
this section, the transaction entered into by the ostensible owner shall be binding
on the real owner.

• This law derives from the Rule of Estoppel u/s 115 of The Indian Evidence
Act. This section provides that no one shall be allowed later on to deny the
truth of a declaration or act that permits another person to believe a thing to
be true and to act upon such belief.
• By extension, an action or inaction (omission) or some declaration of the
real owner is held responsible for permitting the buyer to consider a third
party to be the owner of the property, ostensibly.
• The principle behind this section is that where it is imperative that one of
the two innocent persons must suffer from the fraud of the third party, the
loss should fall on him who has created or had the opportunity to prevent
the fraud.
• In this scenario, in cases of a joint family property, the purchaser must take
extra care to ensure that the person selling the property is entitled to do so.
Such a person conveying the property is not an ostensible owner.
• who is not an ostensible owner: Temporary control over the property for
some specific purpose entrusted by the real owner or, holding a property as
an agent or as the guardian of minor’s property or any other fiduciary
capacity does not make one an ostensible owner. For instance, the person
who manages an idol or is its trustee is not the ostensible owner of the
property so held by him.
• Differentiating between an ostensible owner and real owner is difficult
because an ostensible owner is in possession of all the characteristics of a
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 real owner except the legal ownership of the property. Thus, establishing
ostensible ownership of the property is the Court’s responsibility.

Section 43: Transfer by unauthorised person who subsequently acquires

interest in property transferred.—Where a person 1[fraudulently or] erroneously
represents that he is authorised to transfer certain immoveable property and professes to transfer
such property for consideration, such transfer shall, at the option of the transferee, operate on any
interest which the transferor may acquire in such property at any time during which the contract of
transfer subsists. Nothing in this section shall impair the right of transferees
in good faith for consideration without notice of the existence of the said option.
Illustration A, a Hindu who has separated from his father B, sells to C three fields, X, Y and
Z, representing that A is authorised to transfer the same. Of these fields Z does not belong to A,
it having been retained by B on the partition; but on B’s dying A as heir obtains Z. C, not
having rescinded the contract of sale, may require A to deliver Z to him.

2.4 DOCTRINE OF FEEDING THE GRANT BY ESTOPPEL:

SECTION 43
The principle embodied in Section 43 has been described as the Common Law
doctrine of feeding the grant by estoppel

The Doctrine of Feeding the Grant by Estoppel says:

- If a person is
- not the owner of property
- but he fraudulently or erroneously represents himself that he is the owner or
has the authority to transfer and
- makes the transfer of property to a transferee
- where transferee purchases it in good faith and for consideration the rights
of transferee cannot be impaired (damage). i.e the right of transferees is not
impaired because the transfer was in good faith for consideration without
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 notice of the existence of the said option.
- On realization, in this case the transferee may either rescind the contract or
may keep the contract alive.
- If the transferee keeps the contract alive and in future if the transferor
acquires interest in such property (which did not belong to him at the time
of sale) the property will automatically get transferred in the hands of
transferee.
Section 43, T. P. Act, protects the interest of the transferee
i) to whom a fraudulent or erroneous representation about the transferor’s
authority to transfer the property is made
ii) who did not have knowledge of the true factual position and had merely acted
on the belief of the erroneous or fraudulent representation made to him by the
transferor.
However,
In the Jumma Masjid case, AIR 1962 S C 847,
The Supreme Court laid down the law as follows :
"Where the transferee knew as a fact that the transferor did not possess the title
which he represents he has, then he cannot be said to have acted on it when taking
a transfer. Section 43 would then have no application "

DOCTRINE OF LIS PENDENS: SECTION 52

“Doctorine of Lis pendens”: It is a Latin term which means “during litigation

nothing new should be introduced”. This doctrine puts restriction on the Transfer
of Property during the pendency of the suit in a court competent to try it.

The doctrine of lis pendens, embodied in Section 52 of the 1882 Transfer of

Property Act, effectively provides that during the pendency of a suit in which any
right to immovable property in is question, the property cannot be transferred by
any party to the suit so as to affect the rights of either parties.
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# A and B are litigating in a court of law over property X and during the pendency
of the suit A transfers the property X to C. The suit ends in B’s favour. Here C
who obtained the property during the time of litigation cannot claim the property.
He is bound by the decree of the court wherein B has been given the property.

The Object of this Doctrine -

I. avoid endless litigation.
II. To protect the parties to the litigation against the act of the other.
III. to avoid abuse of legal process.

Essentials:
In order to constitute a lis pendes, the following elements must be present:

There must be a suit or proceeding in a Court of competent

jurisdiction.
The suit or proceeding must not be collusive.
The litigation must be one in which right to immovable property is directly
and specifically in question.
There must be transfer of or otherwise dealing with the property in disute by
any party o the litigation

uch transfer must affect the rights of the other party that may ultimately accrue
under the terms of the decree or order.

Exception:
i) Transfer can be done only with the permission of the court
Period of pendency: Starts from the date of submission of plaint or the institution
of suit (i.e., when the proceedings start) till the implementation of the final
decree or till the disposal of all appeals related to the judgement

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FRAUDULENT TRANSFER SECTION 53:

Where a person transfers his property so that his creditors shall not have anything
out of his property, the transfer is called a fraudulent transfer. A debtor in order to
defeat or delay the rights of a creditor, may transfer his property to some person,
who may be his relative or a friend. The law does not allow this.
Section 53 embodies this principle. It states:

(1) Every transfer of immoveable property made with intent to defeat or delay the
creditors of the transferor shall be voidable at the option of any creditor so
defeated or delayed.

Nothing in this sub-section shall impair the rights of a transferee in good faith and
for consideration.

Nothing in this sub-section shall affect any law for the time being in force relating
to insolvency.

A suit instituted by a creditor (which term includes a decree-holder whether he has

or has not applied for execution of his decree) to avoid a transfer on the ground
that it has been made with intent to defeat or delay the creditors of the transferor,
shall be instituted on behalf, or for the benefit of, all the creditors.

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 • The transfer is valid so long as the creditor does not challenge it in a court
of law and gets a declaration that the transfer is invalid.
• A suit instituted by the creditor to avoid a transfer on the ground that it has
been made with intent to defeat or delay the creditors of the transferor or
shall be instituted on the behalf of , or the benefit of all the creditors.
• Once the creditor sues the debtor and says that the debtor has the intention
to deceive him, the transfer can be declared invalid by the court.
• The creditor has to satisfy the Court that there was an intention on the part
of debtor to defeat his rights
• If he does not prove this, then the creditor will fail and the transfer is fail.

(2) Every transfer of immoveable property made without consideration with intent
to defraud a subsequent transferee shall be voidable at the option of such
transferee.

For the purposes of this sub-section, no transfer made without consideration shall
be deemed to have been made with intent to defraud by reason only that a
subsequent transfer for consideration was made.

DOCTRINE OF PART PERFORMANCE (SECTION 53 A)

Doctrine of Part performance prevents a transferor form taking any advantage on

account of non-registration of documents, provided that the transferee has
performed his part of the contract and in pursuance to that performance, the
transferee has taken possession of some part of the property.

Example: A contract of sale of land has been entered into between A and B. The
transferee has paid the price entering into possession and is willing to carry out his
contractual obligations. As registration has not been effected A, the transferor,
seeks to evict B from the land. Can he do so? No, B will not be allowed to suffer
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simply because the formality of registration has not been through. The legislation
grants some relief to such a transferee under Section 53A, which embodies the
doctrine of part performance.

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Essentials:

1. There must be a contract to transfer for consideration any immovable

property.
2. The contract must be in writing signed by the transferor, or by someone on
his behalf.
3. The writing must be in such words from which the terms necessary to
construe the transfer can be ascertained.
4. The transferee must in part performance of the contract take possession of
the property, or, of any part thereof.
5. The transferee must have done some act in furtherance of the contract.
6. The transferee must have performed or be willing to perform his part of
the contract.
It is settled law that Section 53-A of the TPA confers no right on a party who
was not willing to perform his part of the contract. A transferee has to prove that
he was honestly ready and willing to perform his part under the contract.

Mortgage (Section 58)

Mortgage is a security for a debt. However, mortgage in itself is not a debt.

Contrary to this, it is lender’s security for a debt. It is a transfer of an interest in
immoveable property from owner to lender, and such transfer is made on the
condition that this interest will be returned to the owner after satisfaction or
performance of terms of mortgagor. Thus, mortgage is a security for that loan,
which lender makes to borrower.

Definition of Mortgage [Section 58 (a)]

According to Section 58 (a) of the Transfer of Property Act, 1882, a mortgage is

the transfer of an interest in specific immoveable property for the purpose of

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securing -

(a) the payment of money advanced or to be advanced by way of loan, or

(b) an existing or future debt, or
(c) the performance of an engagement which may give rise to a pecuniary
liability.
Thus, mortgage is a mode by which a person can take a secured loan.

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Mortgagor: The person who transfers his property i.e. Transferor is called a
Mortgagor.

Mortgagee: The person to whom the property is being transferred i.e.

Transferee is called a Mortgagee.

Mortgage-money: The principal money and interest of which the payment is

secured for the time being are called the Mortgage-Money.

Mortgage-deed: The instrument (if any) by which the transfer is effected is

called a Mortgage-Deed.

Essentials of Mortgage

• There must be a transfer of interest.

• The transfer must be of a specific immovable property.

• The transfer must be made to secure payment of any debt, loan or

performance of any engagement which gives rise to pecuniary liability.
Kinds of Mortgage

1. Simple Mortgage
2. Mortgage by conditional sale
3. Usufructuary Mortgage
4. English Mortgage
5. Mortgage by deposit of title-deeds
6. Anomalous Mortgage
Simple Mortgage [Section 58 (b)]

There is no delivery of possession of property, i.e. the property remains in

possession of the mortgagor. In case of non-payment of loan, the mortgagee will
have the right to sale of mortgage-property by an order of the court.

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Section 58 (b) says that where –

(a) without delivering the possession of the mortgaged property,

(b) the mortgagor –
(i) binds himself personally to pay the mortgage-money, and
(ii) agrees that in the event of his failing to pay according to his contract,
the mortgagee shall have a right to cause the mortgaged
property to be sold and the proceeds of sale to be applied, in
payment of the mortgage-money,
the transaction is called a simple mortgage and the mortgagee is called simple
mortgagee.

Remedy to the mortgagee: In the case of simple mortgage, the mortgagee has twofold
security. Firstly, the mortgagor takes personal obligation and secondly, the property
which may be sold in case the mortgagor fails to pay.

Mortgage by conditional Sale [Section 58 (c)]

In this type, mortgagor first sells the property, in favour of mortgagee, with a
condition to revert it back to him, if mortgagor repays his loan with interest, and if
he fails do it then mortgagee will become absolute owner.

Section 58 (c) says that where, the mortgagor ostensibly sells the mortgaged
property-

- on condition that on default of payment of the mortgage-money on a

certain date the sale shall become absolute, or
- on condition that on such payment being made the sale shall become void,
or
- on condition that on such payment being made the buyer shall transfer the
property to the seller,
the transaction is called a mortgage by conditional sale and the mortgagee a

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mortgagee by conditional sale:

PROVIDED that no such transaction shall be deemed to be a mortgage, unless

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

• The transaction shall be deemed to be mortgage with conditional sale only

when the condition is mentioned explicitly in the document which effects
sale. It is a pre-requisite that the condition regarding payment of mortgage-
money as a condition for transfer of property to the seller must be
embodied in the sale deed itself.
• A mortgage by conditional sale is ostensible sale which ripens into an
absolute sale only on the breach of condition as to payment.

• Ostensible sale means a sale which apparently looks like a sale but in reality
it is not a sale but a security for debt.
• Remedy to the mortgagee: The remedy open to the mortgagee by conditional sale
is by foreclosure of the loan and not by sale.

Mortgage by deposit of Title-deeds [Section 58 (f)] – Equitable Mortgage

Where a person –

(i) in the towns of Calcutta, Madras, Bombay or any other town specified by
the State Government in this behalf,
(ii) delivers to a creditor or his agent documents of title to immovable property,
(iii) with intent to create security, thereon
such a transaction is called a mortgage by deposit of title-deeds or equitable
mortgage.

This is a special kind of mortgage because here the execution of mortgage deed is
not necessary. Mere deposit of title deeds of an immovable property by mortgagor
to mortgagee is sufficient.
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The rule of equity is that mere deposit of a document of title without writing or
without word of mouth, will create a charge upon the property which is referred in
the deed.

Essential elements of Mortgage by deposit of title deeds:

• There must be a debt.

• There must be a deposit of title deeds.

• The debt must be secured by deposit of title deeds.

Remedies to a mortgagee by deposit of title deeds: The remedy available to such a
mortgagee is by a suit for sale and for the mortgage money (Section 96). He is not
entitled to sue for foreclosure. However, the mortgagor’s remedy is a suit for
redemption and not for an action to recover the title deeds.
Usufructuary Mortgage [Section 58 (d)]

The word ‘usufruct’ means the right to use and take advantage of other’s property.

Where the mortgagor delivers possession or binds himself (expressly or by

implication) to deliver possession of the mortgaged property to the mortgagee and
authorizes him –

(i) to retain such possession until payment of the mortgage-money, and

(ii) to receive the rents and profits accruing from the property, and
(iii) to appropriate such rents and profits in lieu of interest or in payment of the
mortgage-money or partly in both.
the transaction is called a usufructuary mortgage and the mortgagee is called a
usufructuary mortgagee.

Thus, in a usufructuary mortgage, the possession of the property is given to the

mortgagee. The mortgagee is given the right to the usufruct of the property i.e.,
rent, produce or profits of the property. The mortgagor himself is not personally
liable to pay the mortgage-money because either the mortgagee is let into

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possession or he is permitted to repay himself out of the rents and profits of such
property.

Essential elements of Usufructuary Mortgage:

• There is delivery of possession to the mortgagee or an express or implied

undertaking of the mortgagor to deliver such possession.
• Retention of the possession by the mortgagee till the payment of the
mortgage-money or he has to receive rents and profits in lieu of interest or
in payment of the mortgage-money or partly in payment of either interest
or mortgage-money.
• There is no personal liability of the mortgagor.

• Mortgagee cannot foreclose or sue for sale of mortgage property.

• The mortgagor is entitled to redeem the property when the amount due is
personally paid or the debt is discharged bt rents and profits received by the
mortgagee. (Section 62)
• No time limit is fixed for the repayment.

• 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.
Zur-i-peshgi Lease: “Zuri-i-peshagi” means a payment in advance or a lease for a
premium. Where the right of enjoyment of an immovable property is transferred
for a fixed period of time and the rent is paid in advance in lump sum, the
transaction is called Zuri-i-peshagi lease.

The usufructuary mortgage and Zur-i-peshagi lease appear to be the same but there
are some differences between them:

(i) In a Zur-i-peshagi lease, there is no existence of debt between the lessor and
the lessee but in usufructuary mortgage, existence of a debt is must.
(ii) In Zur-i-peshagi lease, specific time limit is given after which the lessee is to
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 give back the possession to the lessor. However, in a usufructuary mortgage,
there is no fixed time limit in which the possession is to be given back.
Remedies of a usufructuary mortgagee: A usufructuary mortgagee cannot sue the
mortgagor neither for the sale nor for foreclosure. His remedy is only to retain
possession of the property till the mortgage money is paid-up and to appropriate
the rents and profits of the property till his principal money and interest due both
are paid in accordance with the mortgage-deed. If the usufructuary mortgagee loses
his possession, he may sue to obtain the possession.

• DIFFERENCE BETWEEN MORTGAGE,

HYPOTHECATION AND PLEDGE, LIMITATION OF
SUITS RELATING TO MORTGAGES

Section 60: Equity of redemption, Clog on redemption: Right of mortgagor to

redeem.
The right of redemption to the mortgagor is provided under Section 60 of the
Transfer of Property Act, 1882. The contract of mortgage comes to an end when
the mortgagor repays the amount of the loan and exercises his right to redeem the
property. The right provided under the Act is a statutory right and to enforce it
statutory provisions has to be followed.

When a mortgage takes place, the mortgagor has the right to get back his property
when he pays back the mortgage amount. This is known as the right of redemption
and arises out of equity. Anything which obstructs the right of the mortgagor to
redeem his property is void, and such obstruction constitutes a clog on the right to
redemption. This is also known as the doctrine of a clog on redemption
DOCTRINE OF CLOG ON REDEMPTION

In the judicial pronouncement of Stanley v Wilde[2] (an English case), it was held by
the Court that a mortgage means transferring the interest in an immovable
property to a third party as security for the loan that the party has advanced. The
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security is redeemable by the transferor when he pays back the loan or discharges
his obligation. If any act is done, or any provision is there which obstructs the right
of redemption on payment of the debt or performance of the obligation, then it
acts as a fetter or clog on the equity of redemption and will be held as void. This
doctrine also follows the principle of “once a mortgage, always a mortgage.”

This means that there cannot be any covenant that modifies the character of the
mortgage and would bar the mortgagor to redeem his property on payment of the
loan. The doctrine of a clog on redemption is based on the principle of justice,
equity, and good conscience. The Court recognizes the fact that the party who
forwards the loan is in a dominant position than the person who takes the loan.
The law also recognizes the fact that the dominant party may insert a clause in the
agreement which can act as a barrier to the right of redemption. Such barrier in
exercising the right is struck down by the Courts as invalid so that the mortgagor
can exercise his right of redemption.
In the case of U. Nilan v. Kannayyan through Lrs,[3] The Court held that hardship
of one person should not act as an opportunity for some other person. If a person
is taking a loan by giving his property as security, the opposite party cannot exploit
him, and the Court seeks to protect the victim.

There are a few situations where it was held by the Court that the condition or covenant
acts as a clog on redemption.

1. Long Term Mortgages

Every long term mortgage agreement cannot be said to be a clog on the right of
redemption of the mortgagor. But if a mortgage is for say 100 years, it’ll go
beyond the life of the mortgagor and seem like a clog on the right to redemption,

However, only by the virtue of a long mortgage period, the mortgage wouldn’t be
considered as a clog. There should be a condition which gives an undue advantage
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to the opposite party for the mortgage to be considered as a clog. In the case of
Ramkhilawan Ashwasi v Mullo, There was a condition that the mortgage money
will be paid after 80 years and only of Baisakh. The Court opined that such a
condition was a clog.
2. Condition of sale of property

If a condition is stated in the agreement of mortgage that, if the property is not

redeemed within a fixed period, it’ll be considered as a sale is a clog. This was held by
the Court in the cases of Rocky Flora v. Parvarthy Ammal and Hajee Fatma Bee v.
Prohlad Singh.[8] But in the case where there is a separate agreement between the
mortgagor and the mortgagee and a sale deed is executed in the favour of the mortgagee
independently, then such sale would be valid.

It was further stipulated that in case the mortgagor is unable to pay back the loan, the
property will be considered sold to the mortgagee permanently. The Court reached the
decision that these conditions acted as a clog.

In the judicial pronouncement of Kuddi Lal v. Aisha Begam, the Court allowed the
mortgagor to redeem the property by paying through her pocket and not by
transferring the property. The Court said that such alienation of the property would act
as a clog.

3. PENALTY IN CASE OF DEFAULT

In case the mortgagor has defaulted on any grounds, then the mortgagee can
impose a penalty on the mortgagor. But the penalty should be fair and
reasonable. In some situations, penalty imposed by the mortgagee can be
unreasonable, and that will beb considered as clog.

For example: In the case of default, the mortgagee charges compound interest,
instead of charging simple interest even when the original interest rate is extremely
high.

But, having only a high rate of interest does not mean that the condition will act
as a clog. There should be some undue influence of the dominant party over the
weaker party to constitute the stipulated condition as a clog on the right to

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redemption.

4. SUBSEQUENT AGREEMENT TO POSTPONE REDEMPTION

Any subsequent agreement which acts as an obstruction to the mortgagor by

creating any personal obligation will be considered as a clog on the right to
redemption.

Sheo Shankar v. Parma : The mortgagor transferred some property to the

mortgagee. Through a simple mortgage, the mortgagor took another loan from the
mortgagee. A condition was inserted in the simple mortgage agreement by the
mortgagee that until and unless the amount of simple mortgage was repaid the
property cannot be redeemed by the mortgagor. The Court opined that this
condition was a clog.

5. Collateral benefit to the mortgagee

A mortgagee may avail some collateral benefit during the period of the mortgage, in
which case it’ll be held valid. The mortgagee can also avail some benefits after the
mortgage gets over, but in some cases, it may be considered as void and a clog.

In the case of Bhimrao Nagojirao Patankar v. Sakharam Sabajikathak,[13] The Court

held that where a condition in the mortgage deed allowed the mortgagee to remain in
the possession of the property through permanent tenancy will be considered as a clog.
The
Court was of the view that the collateral benefit went beyond the period of redemption
and hence invalid.

4.3 RIGHT TO FORECLOSURE (SECTION 67),

The right of foreclosure is a right available to a mortgagee to recover his

outstanding money. This right is available under Section 67 of the Transfer
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of Property Act, 1882. After the principal amount has become due, and
before payment of mortgage money by mortgagor or before decree of
redemption has been passed by Court, mortgagee has a right to obtain a
decree of foreclosure from the Court. A suit to obtain a decree that a
mortgagor will be absolutely debarred from exercising his right to redeem
the mortgaged property is called a suit for foreclosure.

Conditions:

The right to foreclosure can be exercised by mortgagee only when:

The debt amount has become due for payment.

There are no contrary conditions in the mortgage deed as to the time fixed
for repayment etc.

Mortgage money has become due but mortgagor has not got a decree of
redemption of the mortgaged property.

Mortgage money has become due but mortgagor has not paid or deposited
the amount. After the mortgage money has become due, the mortgagor can
pay off his debt in three ways:

By tendering or making payment of the mortgage money directly to

mortgagee

By filing a suit for redemption.

By depositing the amount in court.

Mortgagee should not be mortgagee of public works like canal, railway etc.

A trustee or legal representative of mortgagee cannot file a suit for

foreclosure but for sale only.

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However, when mortgagor fails to redeem the property, the mortgagee does not
become the owner of the property, he has to file a suit for recovery of the amount
due. The limitation period for instituting a suit is 12 years. The final decree in a suit
for foreclosure on the failure of defendant to pay all amounts due extinguishes the
right of redemption which has to be specifically declared. A mortgagee may hold
two or more mortgages executed by the same mortgagor. In respect of each of
such mortgages, he may have a right to obtain a decree of foreclosure. In case he
sues to obtain such a decree on any one of the mortgages, he will be bound to sue
on all the mortgages in respect of which the mortgage money has become due.

Right to foreclosure and right of redemption:

The right of foreclosure is counter-part of right of redemption. Mortgagor gets a

right of redeeming his security after payment of debt amount; similarly mortgagee
has a right of foreclosure or sale in default of redemption by the mortgagor.
Section 67 protects interest of a mortgagee who has advanced a loan in pursuance
of some interest in a security and mortgagor has defaulted in payment. The right
of foreclosure of mortgagee is co-extensive to right of redemption of mortgagor.
Subject to the intention expressed in the contract, the mortgagee gets the right to
enforce his security when the mortgagor’s right to redeem accrues. But the rule
may be limited by the terms of the mortgage and if the limitation is not oppressive
or unreasonable, it will be given effect to. Right to foreclosure can be limited in
nature subject to the contract between parties, but right to redemption is an
absolute right, which cannot be limited in any way.

SECTION 81: THE DOCTRINE OF MARSHALLING SECURITIES

Section 81: of the Transfer of Property Act, deals with the doctrine of
Marshalling of securities.

According to Sec. 81 of the Transfer of Property Act:

If the owner of two or more properties –

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i) mortages them to one person,

ii)and then mortages one or more of the properties to another person,

in such a case, the subsequent mortage is entitled to have prior mortage-debt
satisfied out of property or properties which are not mortaged to him. This will not
affect the right of the prior mortagee who has aquired an interest in any of the
properties for consideration. (in the absence of a contract to the contrary).

For eg: Mr ‘A’ mortgages two of his properties namely; ‘1st’ and ‘2nd’ to Mr ‘B’.
Thereafter, Mr. ‘A’ mortgages property ‘2nd’ to Mr ‘C’. If the Mr ‘B’ mortgagee
prefers to proceed against ‘2nd’ property, then subsequent mortgagee Mr ‘C’ may
compel Mr ‘B’ to first proceed against ‘1st’ property to realize his dues. But later, if
Mr ‘B’ is unable to realize his dues from ‘1st’ property, then he may proceed
towards recovery of dues from ‘2nd’ property.

4.4 CHARGE ( SECTION100)

“Charge” as defined in Transfer of Property Act, 1882 According to Section 100 of

the Transfer of Property Act, 1882, where an immovable property of one person is
by act of parties or operation of law made security for the payment of money to
another and the transaction does not amount to a mortgage, the latter person is
said to have a charge on the property, and all the provisions which apply to a
simple mortgage shall, so far as may be, apply to such charge.

Exceptions:

Nothing in this section applies to the charge of a trustee on the trust-property for
expenses properly incurred in the execution of his trust, 2[and, save as otherwise
expressly provided by any law for the time being in force, no charge shall be
enforced against any property in the hands of a person to whom such property has
been transferred for consideration and without notice of the charge

The expenses incurred by the trustee are a charge upon the trust property but this
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charge, unlike other types of charges, cannot be enforced by the sale of the trust
property for it would have the effect of destroying the trust. Section 32 of the
Trust Act says that the trust may only reimburse itself for such expenses out of the
income of the trust estate and prohibit any disposition of the trust property
without previous payment of his expenses.
The second exception lays down that no charge shall be enforced against
any property in the hands of the person to whom such property has
been transferred for consideration and without notice of the charge.

Pledge – pledge is used when the lender takes actual possession of the property.
Say for example – You pledge your gold with the bank for a gold loan. The bank
takes the possession of gold and gives you money. So pledge is used only in the
case of movable assets. And the pledgee (lender) retains the possession of the
goods until the pledgor (i.e. borrower) repays the entire debt amount. In case there
is default by the borrower, the pledgee has a right to sell the goods in his
possession and adjust its proceeds towards the amount due. Another example
could be – Pledge of shares. So the key is to remember that Pledge means Gold
loan – movable asset – banker/lender takes possession.

Hypothecation – Hypothecation is creating charge against the security of

movable assets, but here the possession of the security remains with the borrower
itself. Say an example to remember is – When you take a car loan, the car is
hypothecated to the bank/lender. Here it is a movable asset and you (i.e. borrower)
has the possession of the asset. Thus, in case of default by the borrower, the lender
(i.e. to whom the goods / security has been hypothecated) will have to first take
possession of the security and then sell the same. So the key is to remember that
Hypothecation means Car loan – movable asset – borrower retains the possession.
(Here the RC book of the car would have the name of the Bank/lender)

Mortgage – Mortgage is used for creating charge against immovable property

which includes land, buildings etc (anything that is permanently attached to earth).

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So the key is to remember that Mortgage means Housing loan – immovable asset –
borrower retains the physical possession.

Lease (Section 105)

A lease of immovable property is a transfer of a right to enjoy such

property, made for a certain time (express or implied), or in perpetuity, in
consideration of a:
(a) price paid or promised; or
(b) money,
(c) share of crops,
(d) service. Or
(e) any other thing of value
to be rendered periodically or on specified occasions to the transferor by the
transferee, who accepts the transfer on such terms.
Lease is a partial transfer of certain rights in the property. It is a transfer of
‘right of enjoyment’ of an immovable property made for a certain period, in
consideration of a price paid or promised to be paid, or money, share of
crops, service or any other thing of value to be given periodically or on
specified occasions to the transferor by the transferee.
In a lease transaction, the transferor is called the lessor and the
transferee is called the lessee.
The price paid or promised to be paid is called the premium and the
money, share of crops, service or other thing is called the rent.
The essential elements of lease are:
The parties to lease – lessor and lessee
The subject matter of lease – immovable property.
There must be a transfer of right.
Duration of lease

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 Consideration of lease – Premium
Acceptance of transfer by the lessee.
Lease must be made in the mode under Section 107.
Section 107 of the Act provides that a lease of immovable property from
year to year, or for any term exceeding one year or reserving a yearly rent,
can be made only by a registered instrument. All other leases of immovable
property may be made either by a registered instrument or by oral agreement
accompanied by delivery of possession. Where a lease of immovable
property is made by a registered instrument, such instrument or, where there
are more instruments than one, each such instrument shall be executed by
both the lessor and the lessee.
Lease and Licence
Lease is the transfer of the right of enjoyment of an immovable property whereas
the licence is the right of a person to use the land of another while it remains in the
possession of another.

A – owner of the the flat – lives in London

B – relative of A occupied the flat.
B requested; A allowed – for 6 months – Rs. 600 service charge

After A returned back to India, he stayed in the flat. He took one of the keys of the
main door of the flat and took possession of one room of the flat. A made changes
in the fittings and equipments and allowed B to use them. Service charge was
reduced to Rs. 400. It was a friendly gesture.

The exclusive possession may be considered as a prima facie case to consider a

lease or tenancy but can be negated by facts and circumstances. The words alone
will not suffice. The parties cannot turn a tenancy into a license merely by calling it
one.

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Associated Hotel of India v. R.N. Kapoor AIR 1959 SC 1262

The respondent, R. N. Kapoor was in occupation of two rooms in the petitioner’s

hotel and carried on his business as a hairdresser.

There is a marked distinction between a lease and a licence. Section 105 of the
Transfer of Property Act defines a lease of immovable property as a transfer of a
right to enjoy such property made for a certain time in consideration for a price
paid or promised. Under sec 108 of the said Act, the lessee is entitled to be put in
possession of the property. A lease is therefore a transfer of an interest in land.
The lessee thus gets that right to the exclusion of the lessor. Whereas S. 52 of the
Indian Easements Act defines a licence as follows: ‘Where one person grants to
another, or to a definite number of other persons, a right to do or continue to do
in or upon the immovable property of the grantor, something which would, in the
absence of such right, be unlawful, and such right does not amount to an easement
or an interest in the property, the right is called a licence.’
The Supreme Court held that the following propositions may, therefore, be taken
as well-established:

(1) To ascertain whether a document creates a licence or lease, the substance of

the document and not the form must be considered;
(2) the real test is the intention of the parties - whether they intended to create a lease or a
licence;
(3) if the document creates an interest in the property, it is a lease; but, if it only
permits another to make use of the property, of which the legal possession
continues with the owner, it is a licence; and
(4) if under the document a party gets exclusive possession of the property,
prima facie, he is considered to be a tenant; but circumstances may be
established which negative the intention to create a lease.
The solitary circumstance that the rooms let out in the present case are situated in a
building wherein a hotel is run cannot make any difference in the character of the
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holding. The intention of the parties is clearly manifest, and the clever phraseology
used or the ingenuity of the document writer hardly conceals the real intent. The
Supreme Court held that under the document there was transfer of a right to enjoy
the two rooms, and, therefore, it created a tenancy in favour of the respondent.

5.2 Duration of lease (Section 106)

Section 106 of the Transfer of Property Act, 1882 lays down a general rule that a
lease of immovable property for agricultural or manufacturing purpose shall
terminate on six months’ notice by either the lessor*2+ or lessee*3+, while fifteen
days is the time period in the case of a lease of immovable property for a purpose
other than agricultural one. Every notice under this section has to be in writing,
signed by or on behalf of the person giving it; either sent by post or is delivered
personally.
The purpose of the provision in sec. 106 is to terminate the relationship of lessor
and lessee before the lessor sues for possession. He has no right of entry till the
tenancy is disrupted. Further, the idea is that every lessee must have some
reasonable notice before he is asked to vacate the premises.[4]

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5.3 Tenancy at will, Tenancy by sufferance, Tenancy by holding over
(Section 116)

• The expression 'holding over' means retaining possession. There is a

distinction between a tenant continuing in possession of a property after the
determination of lease without the consent of the landlord, and a tenant
doing so with the consent of the landlord.

The former is called a tenant by sufferance in common law. On the other

hand, the latter is called a tenant holding over a tenancy at will. In fact, a
lessee holding over with the consent of the lessor is in a better position than
a mere tenant at will. The assent of the landlord to the continuance of the
tenancy after the determination of the tenancy agreement would create a
new tenancy.

According to Section 116 of the Transfer of Property Act 1882, these

circumstances would lead to tenancy by holding over:
The lessee or under lessee of the property remains in possession after the
determination of the lease granted to the lessee
• The lessor or his legal representative either accepts rent from the lessee or
underlessee, or assents to his continuing in possession
• There is absence of an agreement to the contrary
•
• In such cases, the lease is renewed from year to year, or from month to
month, according to the purpose for which the property is leased. For
example, assume A lets a house to B for five years. B underlets the house
to C at a monthly rent of Rs 5,000.

• The five years expire, but C continues in possession of the house and pays
the rent to A. So C's lease is renewed from month to month. In another
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 example, assume A lets his house to B for the life of C. C dies, but B
continues in possession with A's assent. B's lease is renewed from year to
year.

• The possession of a tenant who has ceased to be a tenant is protected by

law. When a tenancy by holding over is given protection in any
statute, it is termed as a statutory tenancy.

In case of a statutory tenancy, the protection given to a tenant in retaining

possession, even after the tenancy is terminated, is the creation of a statute.
This is why it is called the statutory tenancy. Thus, a statutory tenancy is a
special connotation. It comprises the benefits and advantages conferred o
on a tenant by any statute.

Section 116 in The Transfer of Property Act, 1882

116. Effect of holding over.—If a lessee or under-lessee of property remains in

possession thereof after the determination of the lease granted to the lessee, and
the lessor or his legal representative accepts rent from the lessee or under-lessee, or
otherwise assents to his continuing in possession, the lease is, in the absence of an
agreement to the contrary, renewed from year to year, or from month to month,
according to the purpose for which the property is leased, as specified in section
106.
Illustrations

(a) A lets a house to B for five years. B underlets the house to C at a monthly rent
114
of Rs. 100. The five years expire, but C continues in possession of the house and
pays the rent to A. C’s lease is renewed from month to month.

(b) A lets a farm to B for the life of C. C dies, but B continues in possession with
A’s assent. B’s lease is renewed from year to year. COMMENTS Tenant at
sufferance A person who is a tenant at sufferance has no estate or interest in the
leasehold property. A tenant holding after the expiry of his term is a tenant at
sufferance, which is a term useful to distinguish a possession rightful in its
inception but wrongful in its continuance from a trespass which is wrongful both
in its inception and in its continuance. A co-owner can maintain a suit by himself
in ejectment of a trespasser or a tenant at sufferance
5.4 RIGHTS AND LIABILITIES OF LESSOR AND LESSEE
(SECTION 108),
In the absence of a contract or local usage to the contrary, the lessor and the
lessee of immoveable property, as against one another, respectively, possess
the rights and are subject to the liabilities mentioned in the rules

Determination of lease by forfeiture (Section 111) talks about determination of

lease. Further, clause (g) of the section lays down the determination of lease by
forfeiture. According to the provision, a lease of an immovable property
determines by forfeiture in the following cases:

1. Breach of Express Condition: When the lessor imposes upon lessee any express
condition and lessee fails to perform that condition, there is a breach of condition
by lessee. The lessee’s right under the lease is lost upon breach of such condition.
In Raghuram Rao v Eric P. Mathias, SC held hat Section 111(g) itself requires that
for the forfeiture of lease, the lessee should commit breach of an express condition
which must provide that on breach thereof, the lessor may re-enter.

2. Disclaimer or denial of the landlord’s title: In the second place, without any
express condition contained in the lease, a case for the forfeiture arises when the
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lessee repudiates the landlord’s right and sets up title in himself or in third person
(for example, by executing a kabuliyat in his favour ). Such conduct on the part of
the lessee is sufficient to justify the landlord in forfeiting the lease. To work
forfeiture under this sub-clause, the denial must be unequivocal for the law leans
strongly against forfeiture. However, an omission to pay rent or even refusal to pay
does not constitute a disclaimer.

The principle of forfeiture is founded on the rule that a man cannot approbate and
reprobate at the same time. Since the consequence of applying the rule is very
serious, it must be held that the denial has to be clear and in unequivocal terms.
3. Insolvency

Insolvency of the lessee is another condition for the applicability of Sec111 (g)
even though it by itself does not forfeit the lease. There must be a stipulation
between the parties that the lessee’s right shall be lost in case of his insolvency and
lessor would be entitled to resume the possession. However, lease in such case is
not determined ipso facto. A written notice must be served by the lessor to lessee
regarding the same.

This right of determination of lease by forfeiture, as defined under Sec. 111(g),

however, can be waived by the lessor. Sec 112 of the Transfer of Property Act,
1882 lays down the provision regarding the same.

WAIVER ( 112-113),

Section 112 : Waiver of forfeiture.—A forfeiture under section 111, clause (g) is
116
waived by acceptance of rent which has become due since the forfeiture, or by
distress for such rent, or by any other act on the part of the lessor showing an
intention to treat the lease as subsisting: Provided that the lessor is aware that the
forfeiture has been incurred: Provided also that, where rent is accepted after the
institution of a suit to eject the lessee on the ground of forfeiture, such
acceptance is not a waiver.

Section 113 Waiver of notice to quit.—A notice given under section 111, clause
(h), is waived, with the express or implied consent of the person to whom it is
given, by any act on the part of the person giving it showing an intention to treat
the lease as subsisting. Illustrations

(a) A, the lessor, gives B, the lessee, notice to quit the property leased. The
notice expires. B tenders and A accepts, rent which has become due in
respect of the property since the expiration of the notice. The notice is
waived.
(b) A, the lessor, gives B, the lessee; notice to quit the property leased. The
notice expires, and B remains in possession. A gives to B as lessee a second
notice to quit. The first notice is waived.

Relief against forfeiture for non-payment of rent and effect of surrender ( 114,
114A, 115, 116),

Exemption for agricultural purposes (117)

GIFT

Definition of Gift (Section 122)

• Gift is the transfer of certain existing movable or immovable property –

• made voluntarily and without consideration;

• by one person, called the donor, to another person, called the donee;

• accepted by or on behalf of the donee;

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 • such acceptance must be made during the life time of the donor and while he is
still capable of giving;
• If the donee dies before the acceptance, the gift is void.

Conversion: a civil wrong (tort) in which one converts another's property to

his/her own use, which is a fancy way of saying "steals."
Transfer how effected – Mode of Transfer (Section 123)

• Gift of immovable property – the transfer must be effected by a registered

instrument (deed) signed by or on behalf of the done and attested by at least two
witnesses.
• Gift of movable property – the transfer may be effected either by a registered
instrument or by delivery.

Section 124 debars the gift of property that is to be received or that may come
into existence at a future point of time and it therefore has no application in the
case of property that is very much in existence where something is to happen at a
different point of time.

When gift may be suspended or revoked (Section 126)

• The donor and done may agree that on the happening of a specified event.
A gift shall be suspended or revoked.
• The condition is written and if the condition is breached, the gift will be
revoked and the donor can take back the property.
• If there is coercion, undue influence, fraud or misrepresentation, then the
gift will get rescinded (revoked) or suspended.
• Gift can be revoked if there is will of both donor and done (partly or
wholly).

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Universal donee (Section 128)

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

Saving of donations mortis causa and Muhammadan Law (Section 129) –

Exception Section

Nothing in this chapter relates to gifts of movable property made in contemplation

of death (i.e. death bed gift – last wish). No provision shall be applicable to
Muhammadan law.

Marz – ul – Maut (in Muhammadan Law)

Indian Stamp Act, 1899

• Fiscal Statute

• Lays down the law relating to tax levied in terms of stamp instruments
recording transactions
Stamp Duty

• Legal tax payable in full and acts as a proof for any sale or purchase of a
property
• It varies from state to state

• Levied by the Centre

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 • Needs to be paid on all types of instruments
Importance of payment of Stamp Duty

A stamp duty paid instrument /document is considered to be a proper and legal

instrument/document and has evidentiary value i.e. it is admitted as evidence in
courts.

Instruments which attract Stamp Duty

• Agreement

• Conveyance

• Exchange

• Gifts

• Certificate of Sale

• Deed of Partition

• Power of Attorney

• Deed of Settlement
• Lease and Licence Agreement

• Agreement of Tenancy

• Lease deeds.
These have to be properly stamped before registration.

Liability to pay Stamp Duty

• Stamp Duty shall be paid by the purchaser in case of sale.

• Always paid by the transferee.

Classification of Stamp Papers

There are two types of Stamp papers:

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 1. Judicial – legal – used for court work.
2. Non-judicial – used for Agreements, Registrations etc.
Mode of Payment

• Payment of stamp duty can be adhesive stamps or impressed stamps.

• Instruments executed in India must be stamped before or at the time of

execution.

• Instruments executed outside India can be stamped within three months

after it is first received in India.
Registration office
Two types:
1. Registrar office
2. Sub-Registrar office.
Valuation of the property to be registered decides whether it shall be registered in
Registrar office or Sub-Registrar office.

Also, it depends on the area under which the structure is coming up.
District Sub-registrar Office (DSO)
Additional District Sub-registrar Office
(ADSO) Land Revenue ; Property tax is
given;

Mode of payment of Stamp duty

• The payment of stamp duty is made through adhesive stamps or impressed
stamps.
• Instruments executed in India must be stamped before or at the time of
registration.
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 • Instruments executed outside India can be stamped within three months
after it has been first received in India.

Calculation of Stamp Duty value etc.

Q. Samanta is buying a flat of 752 sq. ft. from Chaurasia

Stamp duty = 6.1 %
Registration = 2.3 %
Lawyer’s fee = 2%
Schedule
Marble Area= Rs. 900/ sq ft
False Ceiling= 300 sq ft (Rs. 100/sq ft)
Bathroom Fixtures = Rs. 2,75,000
Calculate stamp duty and registration fees.
Ans.:
First of all we have to calculate the value of the flat:
• Marble Area: 752 X 900 = Rs. 6,76, 800 [@ Rs. 900/sq ft; area of the flat
= 752 sft]
• False ceiling: 300 x 100 = Rs. 30,000 [@ Rs. 100/sft; area of the false ceiling
= 300 sft]300 sq ft (100/sq ft)]
• Bathroom Fixtures = 2, 75, 000

• Total value = 6,76, 800 + 30,000 + 2, 75, 000 = Rs. 9,81,800

Calculation of Stamp Duty etc.
• Stamp duty (@6.1%) = 6.1% of 9,81,800 = Rs. 59, 889

• Registration (@2.3%) = 2.3% of 9,81, 800 = Rs. 22,581

• Lawyer’s fee (@2%) = 2% of 9,81,800 = Rs. 19,636

• GST on Stamp duty

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 • If GST is to be given @ 18%, GST on stamp duty will be calculated = 18%
of 9,81,800

Indian Easements Act, 1882

Easement defined (Section 4)

An Easement is a right which the owner or occupier of certain land possesses for
the beneficial enjoyment of that land, to do or to continue to do something, or to
prevent or to continue to prevent something being done in or upon or in respect
of certain other land not his own.

Dominant and servient heritages and owners: The land for the beneficial enjoyment of
which the right exists is called the dominant heritage, and the owner or occupier
thereof the dominant owner; the land on which the liability is imposed is called the
servient heritage, and the owner or occupier thereof the servient owner.

Explanation:

• Land includes those things that are permanently attached.

• Beneficial enjoyment includes any convenience or advantage or any amenity.

Example:

• 'A', the owner of the house, has a right of way over B's land. This is for the
beneficial enjoyment of A’s house. This is an Easement.
• A is the owner of a house. He has a right of way over B's land to bring water
from a stream. This is an easement.
The examples of various rights are:

• Right of way.

• Right to nail fruit trees on neighbour's land.

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 • Right to discharge rain water by an eave.

• Right to bury the dead in a particular place.

Easements Classified (Section 5)

Easements are classified by the Easement Act as follows:

(i) Continuous and discontinuous easements

(ii) Apparent and non-apparent easements

Continuous and Discontinuous easements

• A Continuous easement is one whose enjoyment is or may be, continual

without the act of man. For example:
➢ A drainage from one land to another,
➢ A water channel from A’s land to B;
➢ A's right to receive light by windows without obstruction by his
neighbour.
• A Discontinuous easement is one that needs the act of man for its
enjoyment. For example:
➢ A right of way annexed to A's house over B's land.
➢ Right to use staircase;
➢ Right to go to open yard;
➢ Right to get water from a well.
Apparent and non-apparent easements

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 • An apparent easement is the one the existence of which is shown by some
permanent sign. This would be visible on careful examination. For example:
➢ There is a drain from A's land to B's land and from there it is led to
open yard. This is apparent only by inspection.
➢ Artificial water-courses or openings for taking water.

• Non-apparent easement is one which has no permanent sign & hence not
visible for inspection. For example:
➢ A right annexed to A's house to prevent B from building on his own
land. This is a non-apparent easement.
Easements restrictive of certain rights (Section 7)

Easements are restrictions of one or other of the following rights:

(a) Exclusive right to enjoy – The exclusive right of every owner of immovable
property (subject to any law for the time being in force) to enjoy and
dispose of the same and all products thereof and accessions thereto.
(b) Rights to advantages arising from situation – The right of every owner of
immovable property (subject to any law for the time being in force) to enjoy
without disturbance by another the natural advantages arising from its
situation.
Illustrations:

• The exclusive right of every owner of land in a town to build on such land,
subject to any municipal law for the time being in force.
• The right of every owner of land that the air passing thereto shall not be
unreasonable polluted by other persons.
• The right of every owner of a house that his physical comfort shall not be
interfered with materially and unreasonably by noise or vibration caused by
any other person.
• The right of every owner of land to so much light and air as pass vertically

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 thereto.
• The right of every owner of land that such land, in its natural condition,
shall have the support naturally rendered by the subjacent and adjacent soil
of another person.
Explanation: Land is in its natural conditions when it is not excavated and
not subjected to artificial pressure, and the "subjacent and adjacent soil"
mentioned in this illustration means such soil only as in its natural condition
would support the dominant heritage in its natural condition.
• The right of every owner of land that, within his own limits, the water which
naturally passes or percolates by, over or through his land shall not, before
so passing or percolating, be unreasonably polluted by other persons.
• The right of every owner of land to collect and dispose within his own limits
of all water under the land which does not pass in a defined channel and all
water on its surface which does not pass in a defined channel.
• The right of every owner of upper land that water naturally rising in, or
falling on such land, and not passing in defined channels, shall be allowed by
the owner of adjacent lower land to run naturally thereto.
• The right of every owner of land abutting on a natural stream, lake or pond
to use and consume its water for drinking, household purposes and watering
his cattle and sheep, and the right of every such owner to use and consume
the water for irrigating such land, and for the purposes of any manufactory
situate thereon, provided that he does not thereby cause material injury to
other like owners.

Easement of necessity and Quasi -easements (Section

13) Easement of necessity
An Easement of necessity is an easement without which the property cannot be
used at all. Convenience is not the test but absolute necessity is the test.

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 (i) When one person transfers immovable property to another, if an easement
in other immovable property of the transferor is necessary for enjoyment
the property transferred, the transferee is entitled to such easement. For
example:
• A sells a land used for agricultural purposes. The land is sold to B.
The land is accessible only by passing through A's land. B is entitled
to the right of way by necessity for agricultural purposes.

• A, the owner of a house sells to B a factory built on the adjoining

land. The transferee B has a right to run the factory & to pollute the
air, when necessary, with smoke and vapours from the factory.
• A sells his land over which A had a right of way to bring water. B is
the buyer. For A to enjoy his house the right of way to bring water is
absolutely necessary. Hence A has a right over the land.
(ii) When a partition is made of the joint property of several persons, if an
easement over the share of one of them is necessary for enjoyment of share
of the other, the latter shall be entitled to such easement. For example:
• In a partition, A becomes the owner of an upper room on the I floor.
B becomes the owner of the room immediately beneath it. A is
entitled to the support from B's room as it is absolutely necessary for
his safety.
Quasi-easement

When a person transfers immovable property to another then:

1) If an easement is apparent and continuous and necessary the transferee is

entitled to such easement.
2) If such an easement is apparent continuous and necessary to enjoy the said
property the transferor has a right to such easement over the property
transferred by him.
3) In a partition if such an easement is apparent and continuous and necessary
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 for enjoyment the share of one over the other, he is entitled to such
easement.
Examples:

• A right attached to B's house to receive light and air through a window
without obstruction by his neighbour A . This is a continuous Easement.
• Rights attached to A’s land to lead water across B's land by an aqueduct and
to draw off water by a stream. The drain is discoverable by careful
inspection. This is an apparent easement.
Easements are called 'quasi', as those arising out of circumstances i.e., when the
common properties are converted into tenements by sale, mortgage
partition etc. In such a case, there is an 'implied grant'. There is no express grant or
transfer. Hence, in a sale or partition, even if there is no grant of such an easement,
the courts construe that there is an implied transfer of an easement.

Prescriptive Easements – Acquisition by prescription (Section 15)

Section 15 of the Easement Act provides for the acquisition of prescriptive

easement. The essential requisites for the acquisition are:

(a) The right must be definite and certain.

(b) It must have been enjoyed independently of any agreement with the owner
of the land over which the right is claimed.
(c) It must be enjoyed:

• Peaceably

• Openly
• as of right

• as an easement

• without any interruption

• for a continuous period of 20 years.

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 (d) In respect of government land, the period is 30 years.
Computation of 20 years: This is a period ending within 2 years next before the
institution of the prescriptive easementory suit. Mere enjoyment for over 20 years
gives an inchoate (incomplete) right, but to acquire a prescriptive easement a suit
must be filed and a decree obtained from the court. For example:

• A built a house with a window facing the land of C in 1960. C built in 1979,
a-house which cut off the light and air from A's window. A objected & filed
a case in 1983 to remove the obstruction. The suit is to be dismissed: the
period of 20 years is not completed (I960 to 1979); only 19 years completed.
Also the suit has to be filed within two years.
• A sues B for obstructing the right of way. B admits the obstruction but
denies the right of way. B proves that A had taken written permission at one
point of time in 20 years. A’s suit is to be dismissed. The enjoyment is not
for 20 full years.

• A was receiving light and air through a window facing D's land for 30 years.
D built a house in 1982, obstructing the light & air. A must file a suit within
1984 against B, to remove the obstruction, (i.e., within 2 years).
Exceptions i.e. what cannot be acquired

a) A right which tends to destroy the servient tenement, cannot be acquired by

prescription. No prescriptive right can be acquired to an open area to get
light and air.
b) There is no prescriptive right in respect of surface water in undefined
channels.
c) A right to underground water channels which are undefined.
d) For overhanging of branches over another's land, there is no prescriptive
title.
Real Estate (Regulation and Development) Act, 2016 [RERA]

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Salient Features of RERA

• Act extends to residential and commercial real estate

• Registration of Real Estate Projects with Regulatory Authority – 500 square

meters and above or 8 apartments and above
• Registration of Real Estate Agents who intend to sell any plot, apartment or
building - which is required to be registered with the Regulatory Authority
• Promoter to make disclosure of all relevant project information for public
view such as -
details of promoters, layout plan, plan of development works, land
status, status of the statutory approvals, number of parking, time
period for project completion etc.
proforma of agreements to be entered into with the buyers
names and addresses of agents, contractors, architect, engineer etc.
• Promoters also comply with the following -
adherence to approved plans and project specifications
obligations regarding authenticity of the advertisement or prospectus
rectify structural defects
refund money in cases of default
compulsory deposit of 70% of the amount realized from allottees in a
separate account to cover the cost of construction and land cost
• Act provides for establishment of Regulatory Authority in each State/UT,
or one Authority for two or more States/UT, by the Appropriate
Government for implementation of Act
• Act provides for appointment of one or more adjudicating officers by
Regulatory Authority, based upon need - to settle disputes and impose
compensation and interest
• Regulatory Authority to -
act as the nodal agency towards implementation of the Act
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 co-ordinate efforts regarding development of sector; and
render necessary advice to the appropriate Government
• Act provides for establishment of Appellate Tribunal to hear appeals from
the orders of the Authority & adjudicating officer
• Act provides for establishment of Central Advisory Council to advise the
Central Government on -
implementation of the Act
major questions of policy
protection of consumer interest
growth and development of the sector

Revocation of Registration (Section 7, RERA)

The Real Estate Regulatory Authority may, on receipt of a complaint or suo motu
in this behalf or on the recommendation of the competent authority, revoke the
registration granted under section 5, after being satisfied that—

(a) the promoter makes default in doing anything required by or under this Act,
or the rules or the regulations made thereunder;
(b) the promoter violates any of the terms or conditions of the approval given
by the mpetent authority;
(c) he promoter is involved in any kind of unfair practice or irregularities.
Explanation—For the purposes of this clause, the term "unfair practice means" a
practice which, for the purpose of promoting the sale or development of any real
estate project adopts any unfair method or unfair or deceptive practice including
any of the following practices, namely:

• the practice of making any statement, whether in writing or by visible

representation which,
➢ falsely represents that the services are of a particular standard or

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 grade;
➢ represents that the promoter has approval or affiliation which such
promoter does not have;
➢ makes a false or misleading representation concerning the services;
• the promoter permits the publication of any advertisement or prospectus
whether in any newspaper or otherwise of services that are not intended to
be offered;
• the promoter indulges in any fraudulent practices.
The Authority, upon the revocation of the registration, shall debar the promoter
from accessing its website in relation to that project and specify his name in the list
of defaulters and display his photograph on its website and also inform the other
Real Estate Regulatory Authority in other States and Union territories about such
revocation or registration;

The Authority shall facilitate the remaining development works to be carried out in
accordance with the provisions of section 8;

The Authority shall direct the bank holding the project back account to freeze the
account, and thereafter take such further necessary actions, including consequent
de-freezing of the said account, towards facilitating the remaining development
works in accordance with the provisions of section 8;

Transfer of Title (Section 17, RERA)

The promoter shall execute a registered conveyance deed in favour of the allottee
along with the undivided proportionate title in the common areas to the
association of the allottees or the competent authority, as the case may

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be, and hand over the physical possession of the plot, apartment of building, as the
case may be, to the allottees and the common areas to the association of the
allottees or the competent authority, as the case may be, in a real estate project, and
the other title documents pertaining thereto within specified period as per
sanctioned plans as provided under the local laws:

After obtaining the occupancy certificate and handing over physical possession to
the allottees it shall be the responsibility of the promoter to handover the necessary
documents and plans, including common areas, to the association of the allottees
or the competent authority, as the case may be, as per the local laws.

Return of Amount and Compensation (Section 18, RERA)

If the promoter fails to complete or is unable to give possession of an apartment,

plot or building:

(a) in accordance with the terms of the agreement for sale or, as the case may
be, duly completed by the date specified therein; or
(b) due to discontinuance of his business as a developer on account of
suspension or revocation of the registration under this Act or for any other
reason,
he shall be liable on demand to the allottees, in case the allottee wishes to withdraw
from the project, without prejudice to any other remedy available, to return the
amount received by him in respect of that apartment, plot, building, as the case
may be, with interest at such rate as may be prescribed in this behalf including
compensation in the manner as provided under this Act:

Provided that where an allottee does not intend to withdraw from the project, he
shall be paid, by the promoter, interest for every month of delay, till the handing
over of the possession, at such rate as may be prescribed.

The promoter shall compensate the allottees in case of any loss caused to him due
to defective title of the land, on which the project is being developed or has been
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developed, in the manner as provided under this Act, and the claim for
compensation under this subsection shall not be barred by limitation provided
under any law for the time being in force.
If the promoter fails to discharge any other obligations imposed on him under this
Act or the rules or regulations made thereunder or in accordance with the terms
and conditions of the agreement for sale, he shall be liable to pay such
compensation to the allottees, in the manner as provided under this Act.

Removal of Chairperson and Member from office in certain circumstances

(Section 49, RERA)

The appropriate Government may, in consultation with the Chief Justice of the
High Court, remove from office of the Chairperson or any judicial Member or
Technical or Administrative Member of the Appellate Tribunal, who—

(a) has been adjudged as an insolvent; or

(b) has been convicted of an offence which, in the opinion of the appropriate
Government involves moral turpitude; or
(c) has become physically or mentally incapable; or
(d) has acquired such financial or other interest as is likely to affect prejudicially
his functions; or
(e) has so abused his position as to render his continuance in office prejudicial
to the public interest.
The Chairperson or Judicial member or Technical or Administrative Member shall

not be removed from his office except by an order made by the appropriate
Government after an inquiry made by the Judge of the High Court in which such
Chairperson or Judicial member or Technical or Administrative Member has been
informed of the charges against him and given a reasonable opportunity of being
heard in respect of those charges.

Officers and other employees of Appellate Tribunal (Section 51, RERA)

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The appropriate Government shall provide the Appellate Tribunal with such
officers and employees as it may deem fit.

The officers and employees of the Appellate Tribunal shall discharge their
functions under the general superintendence of its Chairperson.
The salary and allowances payable to, and the other terms and conditions of
service of, the officers and employees of the Appellate Tribunal shall be such as
may be prescribed.

Vacancies (Section 52, RERA)

If any vacancy occurs in the office of the Chairperson or a Member of the

Appellate Tribunal, the appropriate Government shall appoint another person in
accordance with the provisions of this Act to fill the vacancy and the proceedings
may be continued before the Appellae Tribunal from the stage at which the
vacancy is filled.

Powers of Tribunal (Section 53, RERA)

The Appellate Tribunal shall not be bound by the procedure laid down by the
Code of Civil Procedure, 1908 but shall be guided by the principles of natural
justice.

The Appellate Tribunal shall have power to regulate its own procedure.

The Appellate Tribunal shall also not be bound by the rules of evidence contained
in the Indian Evidence Act, 1872.

The Appellate Tribunal shall have, for the purpose of discharging its functions
under this Act, the same powers as are vested in a civil court under the Code of
Civil Procedure, 1908 in respect of the following matters, namely:

(a) summoning and enforcing the attendance of any person and examining him
on oath;
(b) requiring the discovery and production of documents;
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 (c) receiving evidence on affidavits;
(d) issuing commissions for the examinations of witnesses or documents;
(e) reviewing its decisions;
(f) dismissing an application for default or directing it ex parte; and any other
matter which may be prescribed.
All proceedings before the Appellate Tribunal shall be deemed to be judicial
proceedings within the Indian Penal Code, and the Appellate Tribunal shall be
deemed to be civil court for the purposes of the Code of Criminal Procedure,
1973.
Administrative powers of Chairperson of Appellate Tribunal (Section 54,
RERA)

The Chairperson shall have powers of general superintendence and direction in the
conduct of the affairs of Appellate Tribunal and he shall, in addition to presiding
over the meetings of the Appellate Tribunal exercise and discharge such
administrative powers and functions of the Appellate Tribunal as may be
prescribed.

Orders passed by Appellate Tribunal to be executable as a decree (Section

57, RERA)

Every order made by the Appellate Tribunal under this Act shall be executable by
the Appellate Tribunal as a decree of civil court, and for this purpose, the
Appellate Tribunal shall have all the powers of a civil court.

The Appellate Tribunal may transmit any order made by it to a civil court having
local jurisdiction and such civil court shall execute the order as if it were a decree
made by the court.

Penalty for failure to comply with orders of Appellate Tribunal by allottee

(Section 68, RERA)

If any allottee, who fails to comply with, or contravenes any of the orders or
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directions of the Applellate Tribunal, he shall be punishable with imprisonment for
a term which may extend up to one year or with fine for every day during which such
default continues, which may cumulatively extend up to ten per cent of the plot, apartment or
building cost, as the case may be, or with both.

Offences by companies (Section 69, RERA)

Where an Offence under this Act has been committed by a company, every person
who, at the time, the offence was committed was in charge of, or was responsible
to the company for the conduct of, the business of the company, as well as the
company, shall be deemed to be guilty of the offence and shall be liable to be
proceeded against and punished accordingly:

Provided that nothing contained in this sub-section, shall render any such person
liable to any punishment under this Act if he proves that the offence
was committed without his knowledge or that he had exercised all due diligence to
prevent the commission of such offence.

Where an offence under this Act has been committed by a company, and it is
proved that the offence has been committed with the consent or connivance of, or
is attributable to, any neglect on the part of any director, manager, secretary or
other officer of the company, such director, manager, secretary or other officer
shall also be deemed to be guilty of that offence and shall be liable to be proceeded
against and punished accordingly.

Explanation—For the purpose of this section:

(a) ''company'' means any body corporate and includes a firm, or other
association of individuals; and
(b) ''director'' in relation to a firm, means a partner in the firm.

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