THE TRANSFER OF

CHAPTER 1 PROPERTY ACT, 1882

CHAPTER COVERAGE

Introduction & Its Elements

Movable & Immovable Property
Reversion & Remainder
Some Doctrine’s:-
• Rule Against Inalienability
• Doctrine Of Accumulation Of Income
• Transfer For The Benefit Of Unborn Person
• Vested And Contingent Interest
• Doctrine Of Election
• Doctrine Of Lis Pendens
• Doctrine Of Fraudlent Transfer
• Doctrine Of Holding Out
• Doctrine Of Feeding The Grant By Estoppel
• Doctrine Of Past Performance.

Detailed Provision relating to Mortgage,

Charge, lease, Tenancy, Sale and Gifts
Actionable Claims
 ECL THE TRANSFER OF PROPERTY ACT 1882

The term transfer means a process or an act by which some property is

handed over to another. Para 1 of Section 5 defines transfer or property
as follows:
WHAT IS TRANSFER
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.

ESSENTIAL ELEMENTS OF TRANSFER OF PROPERTY

1. Transfer: The essence of the term transfer is transfer of property within the meaning of Section
to convey. It therefore implies conveyance of 5.
property by a person entitled to it to a person a) Family arrangements
having no title to it. b) Settlement of disputed claim
c) Release relinquishment and surrender
2. Living person: A transfer usually involves d) Partition.
two distinct living person. The term living person
includes a company or association or body of 4. Property: the term property is not defined in
individuals, whether incorporated or not. the act Section 9 of the Act however says that
property of any kind may be transferred. This
3. Conveyance: Section 5 while defining the means the term property is used in the act in very
term transfer of property says that transfer of wide sense and is left open for Judicial
property means an act by which a living person Interpretation.
conveys property.
5. In present or in future: Transfer of
The word conveys is used in Section 5 in a very property may take place in present or in future but
wide sense. The following do not constitute a the property must be in existence.

IMMOVABLE AND MOVABLE PROPERTY

Movable property
• The Act does not define movable property but it may be said that any property which is not
immovable property is movable property.
Section 2 (9) of the Registration Act 1908 defines movable property as including standing timber
growing crops and grass , fruit upon and juices in trees and property of every description except
immovable property.

IMMOVABLE PROPERTY

• The act does not define immovable property • As per Section 2 (6) of the registration Act
Section 3 only states that immovable property 1908, the expression immovable property is
does not include standing timber, growing crops defined to include land, building, hereditary
or grass etc. allowances, right to ways , right of ferries,
fisheries or any other benefit arise out of land and
• According to Section 3 (26) of the General thing attached to earth but does not include
clauses Act 1897, immovable property includes standing timber, growing crops or grass.
land, benefits arise out of land, thing attached to
Immovable property includes not only physical
the earth or permanently fastened to anything
objects like land and building but also every
attached to the earth:
benefit arising out of it and every interest in it.

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Recognized as immovable Property Does not recognized as immovable property

A right to way A copyright

A right of ferry Standing timber

A right of fishery Growing crop

Right to receive future rents and profit of Grass

ESSENTIALS OF A VALID TRANSFER

1. Property must be transferable (Sec-6) 4. Consideration and object must be lawful
The general rule is that subject to exceptions [Section 6 (h) (2)]
mentioned in Section 6, every kind of property
can be transferred.
5. Transfer must not be opposed to nature
of interest [Section 6 (h) (1)]
2. Transferor must competent (Section 7)
The following cannot be transferred:
Every person competent to contract and entitled
to transferable property or authorized to dispose
of transferable property not his own is competent I. Res communes: i.e., thing of which no one in
to transfer such property either wholly or in part particular is the owner such as light, air, water of
rivers or the Sea.
and either absolutely or conditionally in the
circumstances to the extent and in the manner
allowed and prescribed by any law for the time ii. Res extra commercium: i.e., thing thrown
being in force. out of commerce such as things dedicated to
public or religious uses…… ex.- pooja's Prasad.

Persons who cannot assign

6. Transfer must be in the prescribed
their interest [Section 6 (i)]
manner [Section 9]
• A tenant having an un-transferable right of The transfer of property must be made in the
occupancy cannot assign his interest as manner and form prescribed by the Act.
such tenant.
• The farmer of an estate in respect of which
default has been made in paying revenue The following transfers, in
cannot assign his interest as such farmer. which writing is must

3. Transferee must be competent [Section • Sale of immovable property of the

6 (h) (3)] value of Rs. 100 or more.
As a general rule every living person, even a • Simple mortgage irrespective of the
minor can be transferee or property. But, amount secured.
person legally disqualified cannot be a • All other mortgages for Rs. 100 or more
transferee.

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Q PROPERTY WHICH CANNOT BE TRANSFERRED

a) Chance of an heir apparent or “SPES • The right of pujari in a temple to receive

SUCCESSIONIS” [Section 6 (a)] offerings
Explanation:- The technical expression for the • The office of a mohunt of mutt.
chance of an heir apparent succeeding to an
estate is called “spes successsionis” which
means a means chance of succession e) Right of future maintenance
(I) Chance of relation obtaining a legacy on the [Section- 6](d)]
death of a kinsman. A right to future maintenance is solely for the
personal benefit of the person to whom it is
granted, and it cannot be transferred.
b) Right of re-entry [Section 6 (b)]
Example-The right of Hindu widow to
Explanation:- This is right which the lessor has maintenance, is personal right hence cannot
against the lessee for breach of an express be transfer.
condition of the lease which provides that on its
breach the lessor may re-enter.
f) Mere Right to sue [Section 6 (e)]
A mere right to sue cannot be transferred. This
c) Transfer of easement [Section6 (c)] prohibition is based on the ground of public policy.
Explanation:-Easement means an interest in The object of this prohibition is to prevent
land owned by another that entitles its holder to a trafficking in litigation.
specific limited use or enjoyment.

g) A public office cannot be transferred nor

d) Restricted interest or personal interest the salary of a public officer.
[Section 6 (d)]
Explanation:-The case which fall under this head
include the following: h) Stipends allowed to military, naval , air
force and civil pensioners of the government
and political pensions.

REVERSION AND REMAINDER(USED IN ENGLISH LAW)

REVERSION REMAINDER
It is the residue of an original interest which is left When the owner of the property grants a limited
after the grantor has granted the lessee a small interest in favour of a person or persons and gives
estate. the remaining to others, it is called a “remainder”.
For example:-A the owner transfer the property
to B for life and then to C. Here the interest of B is
For example:- Rampat has given a property on
limited for life and after B death property is
lease for 5 years to Dheeraj Tyagi Classes. Now
transferred to C. In this case the granter has
after end of 5 years property will revert back to
transferred some interest to Mr.B. and remaining
Rampat. This is called reversion.
interest to C. this remaining interest is known as
Remainder.

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Difference between Reversion and Remainder

In the case of a “remainder”, the property will not come back to the
owner, but it goes over to the other person.
In the case of a “reversion”, the property will come back to the original
owner after the expiry of lease.

Some rule's and doctrine used in this act are discuss below

Restraint on transfer or Rule against inalienability SEC:- 10,11,12

AS PER THIS RULE

APPLICATION OF SEC-10 APPLICATION OF SEC-11 APPLICATION OF SEC-12

CONDITION RESTRINING RESTRICTION ON ATTEMPTED
ALIENATION. ENJOYMENT ALIENATION

1. Condition restraining alienation Examples of absolute restraint

(Section-10)
• A transferred property to B and his heirs with a
Alienation means conveyance or transfer of covenant that if the property is alienated, it should
property to another. Public policy requires that revert back to A. This restrain is void.
property should be freely alienable. A right of
alienation is incidental to and inseparable from
2). Restraint on enjoyment (Section11):
the beneficial ownership of property.
Rule is such when property is transferred all rights
Consequently, a transferor should not be allowed
are transferred, and there must not be any
to put a clog or restriction on the right of a
conditions which put restriction on property.
transferee so as to be repugnant to the absolute
interest of the transferee in the estate Section 10 Example: - A sells his house to B he adds a
lays down the rule in this regard as follows ; condition that B only shall reside in the house the
condition is invalid.
Restraint on alienation of property is of
two types:-
a)Absolute, or b)Partial 3).Condition making interest determinable
on insolvency or attempted alienation
Absolute restraint or alienation of property is (Section 12):
void.
Partial restraint qualified as to time, place Section 12 embodies the rule, that if a person
or person may be valid and binding. transfer's property to anyone subject to a
condition that if the transferee becomes insolvent
the property should revert back to the transferor
such condition is void.

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DOCTRINE OF ACCUMULATION OF INCOME (SEC 17)

Section 17 does not allow accumulation of income II. The provisions of portions for children or any
from the land for an unlimited period without the other person taking interest in the property
income-being enjoyed by the owner of the under the same transfer, and
property. The laws allow accumulation of income
III. The preservation or maintenance of the
for certain period only. The period for which such
property transferred.
accumulation is valid is:-
Example : A settles the sum of Rs. 5, 000 for the
benefit of B on 1st January, 1979 and directs the
The life of the transferor; or period of trustee to invest the money in units of the Unit
eighteen years from the date of transfer, trust of India and to deliver the total accumulated
income and the units to B on the turn of the
Any direction to accumulate the income beyond
century.
the period mentioned above is VOID.
B would be entitled to the accumulated income
and the units before the stipulated period, i.e. on
EXCEPTION 1st January, 1997 i.e. 18 years after 1st January,
1979. The accumulation of incomes is valid up to
I. The payment of the debts of the transferor or
31st December, 1996 and would be void beyond
any other person taking any interest under the
the period.
transfer, or

TRANSFER FOR THE BENEFIT OF UNBORN PERSON

Section 13 may be analyzed as under:- (d) The unborn person must be given the whole of
the remaining interest of the transferor in the
(a) No transfer can be directly made to an unborn property.
person.
Examples: A transfers property, of which he is
(b) The interest in favour of the unborn person the owner, to B in trust for A, and his intended
must be preceded by a prior interest. It is not wife successively for their lives, and after the
permissible to confer only a life estate on such death of the survivor, for the eldest son of the
person. intended marriage for life, and after his death for
A's Second Son.
(c) The prior interest must be also created by the The interest so created for the benefit of the
same transfer. eldest son does not take effect, because it does
not extend to the whole of A's remaining interest
in the property.

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VESTED AND CONTINGENT INTEREST

VESTED (Section 19) CONTINGENT INTEREST (SECTION 21)

Vested Interest: The term 'Vested' is thus used in “Where, on a transfer of property, an interest
two senses, i.e. therein is created in favour of a person to take
effect only on the happening of a specified
(a) Vested in possession, or uncertain event, also known as “condition
(b) Vested in interest only precedent” or if a Specified uncertain event shall
not happen, such person thereby acquires a
An interest is said to be 'Vested in possession' contingent interest in the property.
when it is a right to present possession of Such interest becomes a vested interest, in the
property. An interest is said to be 'Vested in former case, on the happening of the event, in the
Interest only' when it gives a present right to the latter, when the happening of the event becomes
future possession or enjoyment of property. impossible.”

Example: A transfers his land to B for life and Contingent interest is not heritable although it is
then to C, B in this case, has vested interest in transferable.
possession. He has the immediate right to the
possession of land. C has also vested interest in Examples: property is given to A for life and then
the land even during the lifetime of B with a to B, if he marries C. B should marry C before A
present fixed right to enjoyment of land on the dies. If he does so, his interest is converted into
death of B, the interest of C is not subject to any vested interest. Before B marries C his interest is
uncertain conditions, as B is bound to die sooner contingent.
or later. If C dies before B, C's heirs will inherit the
land.
Vested interest is not defeated by the death of
the transferee:

DIFFERENCE BETWEEN VESTED INTEREST AND CONTINGENT INTEREST:

Basis Vested Interest Contingent Interest

Fulfillments of Vested Interest does not depend Contingent Interest' depends upon the
Conditions: upon the fulfillment of any condition, fulfillment of some condition precedent
which may or may not happen.

Right of There is a present immediate right Contingent Interest' right of enjoyment is to

Enjoyment though its enjoyment may be accrue on the happening of an event which
postponed to some future date is uncertain.

Effect of Vested Interest is not defeated by Contingent Interest' does not take effect in
transferee's the death of the transferee before the event of the transferee's death before
death he obtains possession. the fulfillment of the condition.

Transferability Vested Interest is both transferable Contingent Interest' is not transferable, but
and heritability as well as heritable. whether it is heritable or not depends on
the nature of the contingency.

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DOCTRINE OF ELECTION (sec 35)

A man cannot blow hot and cold at same moment of time.

This principle is underlying the doctrine of election The person, who is at point of
is that a man is not to be heard who says two election rejects the property
things contradictory to each other. than property will revert back to
In other words a man cannot approbate and transferor and he will
reprobate or blow hot and cold. compensate the disappointed
In simple words, it means that a man taking a
person. AND if transferor dies
benefit under an instrument must also bear the
before election than his representative will
burden.
satisfies the disappointed person.
Example: A transfers his house to B, by a gift and in
Example: The farm of Meerut is the property of C
the same gift deed asks B to transfer his shop to C.
and worth Rs. 800,000. A by an instrument of gift
If B wants to have the house, he must transfer his
professes to transfer it to B, giving by the same
shop to C. B is now put to election. He may elect to
instrument Rs. 10,00, 000 to C. C elects to retain
have the house in which case he will have to
the farm. He forfeits the gift of Rs. 1, 000,000.00.
transfer his shop to C, or he may reject the transfer
If A dies before the election, his representative
in which case neither he gets the house nor the
must, out of
burden of transferring the shop to C.
Rs. 1,000,000.00 pay Rs. 800, 000.00 to B.

WHEN ELECTION IS POSSIBLE

The question of election arises only when a transfer is made by the same document. if the transferor
makes a gift of property by one deed and by another asks the done to part with his own property then –
“NO QUESTION OF ELECTION”

WHEN ELECTION IS SAID TO BE MADE

Election can be made express or implied by Period of election:- If the owner does not within
conduct. one year after the date of transfer signify to the
transferor or his representative his intention to
Example: A transfers to B an estate C is entitled confirm or to dissent from the transfer, the
and as part of the same transaction gives C a transferor or his representatives may upon the
coal mine. C takes possession of the mine and expiration of period, require him to make election.
exhausts it . He has thereby confirmed the If the owner does not comply with such requisition
transfer of the estate to B. within a reasonable time after he has received it,
he shall be deemed to have elected to confirm the
transfer.

WHEN ELECTION TO BE MADE

BY EXPRESS MODE BY IMPLIED MODE

CAN BE DONE IN :- WRITTEN FORM CAN BE DONE BYACT OF PARTIES.

OR, ORAL FORM.

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• election generally to be made within ‘reasonable period’ of time ie. within 1year.

• If within one year no decision is taken by the person who is put on election then,
it is to be treat as, deemed rejection.

• The time of one year is only applicable in case of ‘express mode’.

CONDITIONAL TRANSFER

When an interest is a created on the transfer of divests the right upon the happening or non-
property but is made to depend on the fulfillment happening of event.
of a condition by the transferee, the transfer is
For example:- A transfer a certain property to B
known as a conditional transfer.
provided that B will not run a CS institute like
Dheeraj Tyagi classes for 5 years. Mr.B has not
Such a transfer may be subject to a condition
run a CS institute for further 5 years from the date
precedent or a condition subsequent.
of transfer. This is condition subsequent.
If the interest is made to accrue on the fulfillment Difference between condition precedent and
of a condition, the condition is said to be condition subsequent
condition precedent.
In condition precedent, the condition comes
For instance, A agree to sell his land to B if B before the interest; whereas in condition
marries C. This is a condition precedent. subsequent, the interest is created before the
Condition subsequent is one which destroys or condition.

DOCTRINE OF LIS PENDENS (Sec.52)

Nothing new can be added Condition necessary for the doctrine:
during the pendency of a suit
• These must be pendency of a suit or proceeding.
LIS means dispute, LIS PENDENS means a • The suit or proceeding must be a right to
pending suit, action, petition. immovable property is directly and Specified in
The doctrine of LIS PENDIS is expressed by the question.
maxim“ut lite pendente nihil innovetur “which • The suit of proceeding must be pending in
means nothing new should be introduced during competent Court.
the pendency of a suit .
Example:- A court returned a plaint on the ground
Example : There is a dispute between A and B that it had no pecuniary jurisdiction .A fresh plaint
with regard to ownership of property X. A files a was field in a proper court two years later .In the
suit against B in a law court. A may either win or mean time, the defendant gifted the property to
lose the suit .If he wins he gets the property .If he his wife and son. Held the gift was not affected by
loses B gets the property .Now assume during the lis pendens as there was no suit pending in a
pendency of the suit .A professing to be the competent Court at the time of alienation.
owner of the property Sells it to C .If the suit ends
in A's favour, no difficulty arises .If it ends in B's
favour. C cannot retain the property C is bound by • There must be transfer of property in dispute by
the decree of the court and must return the any party to the litigation.
property to B .He cannot even take the plea that • The alienations must affect the rights of the
he had no notice of the pending litigation .This is other party to the suit or proceeding.
the doctrine of LIS PENDENS.

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A suit in foreign court cannot operate as LIS PENDENS and also this doctrine not
applicable on moveable property.

DOCTRINE OF FRAUDLENT TRANSFER (Sec.53)

A debtor may sometimes, with intent to defer or (ii) Transfer with intent to defraud
delay his creditors, transfer his property to one of subsequent transferee: - Every transfer of
his friends or relative's .He may also do so in immovable property made without consideration
fraud of a subsequent purchaser. If there is any with intent to defraud a subsequent transferee
such transfer, it can be avoided under Sec. 53 shall be voidable at the option of such transferee.
which consist of two sub section dealing with the
two situations just refers to: Further no transfer made without consideration
shall be deemed to have been made with intent to
(i) Transfer with intent to defeat delay the differed by reason only that a subsequent transfer
creditors – Every transfer of immovable property for consideration was made .
made with intent to defeat or delay the creditors of
transferor shall be void able at the option of any
creditor so defeated or delayed.

DOCTRINE OF HOLDING OUT

TRANSFER BY OSTENSIBLE OWNER OR ESSENTIALS OF TRANSFER BY

DOCTRINE OF HOLDING OUT ( SEC-41) OSTENSIBLE OWNER OR DOCTRINE
HOLDING OUT
Where with the consent express or implied of the
person interested in immoveable property a 1. The transferor is the ostensible owner.
person is the ostensible owner of such property
and transfer the same for consideration, the 2. He is so by the consent express or implied of
transfer shall not be voidable on the ground that the real owner.
the transfer was not authorized to make it ,
3.The transfer is for consideration and
provided that the transfer after taking reasonable
care to ascertain that the transferor had power to 4. The transferor has acted in good faith taking
make the transfer has acted in good faith. reasonable care to ascertain that the transfer
has power to transfer.

5. If any one of these elements is absent the

transferee is not entitled to the protection of
this section. The section makes an
exception to the rule that a person cannot
confer a better title than he has.

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DOCTRINE OF FEEDING THE GRANT BY ESTOPPEL (SEC-43)

Applicability:- Where a person fraudulently or Example:- A Hindu ,who has separated from his
erroneously represents that he is authorized to father B, sells to C there fields X ,Y and Z
transfer certain immoveable property and representing that A is authorized to father the
professes to transfer such property for same .Of these fields .Z does not belong to A ,it
consideration ,such transfer shall at the option of having been retained the contract of sale may
the transferee ,operate on any interest which the require A to deliver? Z to him .Thus where a
transferor may acquire in such property at any grantor has prop orated to grant an interest in
time during which the contract of transfer subsists. land which he did not at that time possess ,but
subsequently acquire ,the benefit of his
Non Applicability:- Nothing in this section shall subsequent acquisition goes automatically to the
impair the right of transferees in good faith for earlier grantee or as it usually expressed feeds
consideration without notice of the existence of the estoppels .
the said option .

ESSENTIALS:- IN ORDER TO INVOKE THE SECTION THE

“TRANSFEREE” MUST PROVE THAT

(I) There was a representation the fraudulent or erroneous.

(ii) It was to the effect that the transferor is entitled to transfer the immoveable property.
(iii) The transferor is found to have subsequently acquired the interest
which he professed to transfer.
(iv) The transfer of property was for consideration.
(v) The transferee has not rescinded the contract.
(vi) The transferee acted in good faith for consideration and without notice of the
rights under the prior transfer.

DOCTRINE OF PART PERFORMANCE

Applicability :- A contract for the sale of land has 2. It must be consideration.

been entered into between A and B the transferee
3. The contract should be in writing and signed by
has paid the price entering into possession and is
the transferor himself or on his behalf.
willing to carry out his contractual obligations .
4. The terms necessary to constitute transfer
must be ascertainable with reasonable
As registration has not been effected .The certainty from the contract itself
transferor seeks to evict B from the land .Can he
5. The transferee should have taken the
do so. No, B will not be allowed to suffer simply
possession of the property in part
because the formality of registration has not been
performance of the contract .
through .
6. The transferee must have fulfilled or ready to
Essentials
fulfill his part of the obligations under the
1. There must be a contract to transfer contract.
immoveable property.

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RULE AGAINST PERPETUITY (SEC. 14)

The rule against perpetuality prohibits the vesting In the simple words, “perpetuity period” is the life
of interest beyond a certain reasonable period. or lives in being and the further period of minority
of a person.
It prescribes the maximum period within which a
future interest must vest, and if the vesting is There can be any number of transfers between
postponed beyond such period, the vesting is void living major persons, but if the ultimate, transferee
for remoteness. Such maximum period is called is a minor, the ultimate transfer to him should
the perpetuity period. transfer all of the interest in the property to h i m .
T h i s i s t o e n s u r e t h a t t h e property is not
As per Sec. 14 the perpetuity period consists of inalienable for any indefinite period after the death
the life time of one or more persons say A, B and of the original transferor.
C, all living at the date of transfer of property and
the further period of minority of a person, say the Following are the exceptions to the rule against
eldest son of C, (who shall be in existence at the perpetuity:
expiration of that period) to whom the interest is to
belong. a) Gift or Charity.
b) Personal agreement i.e.; agreement which
do not create any interest in the property.
c) Contracts for perpetual renewal of leases.

TRANSFER TO TAKE EFFECT OR NOT ON FAILURE OF PRIOR INTEREST (SEC. 16)

Sometimes an interest is intended to take effect For e.g. A transfers his property to B and his
after or upon the failure of a prior interest by intended wife successively for their lives and
reason of rules contained then to their eldest son for
in sections 13 & 14. In such a case when the his life and then to C. The prior interest in
prior interest fails, the subsequent interest also favor of the son of B fails u/s 13 & therefore
fails. the subsequent interest in
favor of C also fails.

SALE OF IMMOVABLE PROPERTY

“ Sale “ according to Sec. 54 is a transfer of Mode of sale

ownership in exchange for a price paid or
promised , or part –paid and part promised. 1. By registered instrument: - Sale in the case
of tangible immovable property of the value of
ESSENTIAL OF SALE Rs.100 or more or in the case of a reason or other
intangible thing, can be made only by a registered
• Transfer of ownership. instrument.
• The SUBJECT MATTER of sale is immoveable
property. 2. By delivery of possession:- If value of
• The consideration must be in money property is less than Rs.100 in value.
• Price.

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MORTGAGE

Meaning:- It relates to transfer of intrest in 3. Usufructuary mortgage:- The word 'usufruct'

immoveable property from one person to another means the right of enjoying the use and
as a security for money. advantages of another person's property .In case
of usufructuary mortgage , the mortgagor delivers
Types of mortgage
possession of the mortgaged property .He further
Sec. 58 classified the mortgage into the following authorities the mortgagee to receives the rents
six types. and profits accruing from the property and to
appropriate the same in lieu of interest and the
1. Simple mortgage.
principal sum .
2. Mortgage by conditional sale.
4. English mortgage:- Here, property first sell in
3. Usufructuary mortgage. favour of mortgagee, if mortgagor repay amount,
then sale will become void, otherwise will become
4. English mortgage.
absolute In that case, if mortgagee now sell
5. Mortgage by deposit of title deeds. property to recover his loan so for any shortage in
repayment mortgagor is personally laible.
6. Anomalous mortgage.
1. Simple mortgage:- In case of simple
5.Mortgage by deposit of title deeds :- Where a
mortgage, the mortgagor without delivering the
debtor declares to a creditor or his agent
prossession of the mortgaged property, gives a
documents of title to property , with intent to
person undertaking to the mortgage to repay the
create a security.
amount due under the mortgage.
6. Anomalous mortgage: - A mortgage which
2. Mortgage by conditional Sale:- Here,
does not belong to any of the above categories is
mortgagor, first sell the property, in favour of
called an anomalous mortgage.
mortgagee, with a condition to revert it back to
him, if he is repay his loan with interest, otherwise
mortgagee will become absolute owner.

SUB MORTGAGE AND PUISNE MORTGAGE

(i) Sub-mortgage:- When a mortgagee further (ii) Puisne mortgage: Puisne (pronounced as
mortgages the property mortgaged with him by pyunii) mortgage is the second mortgage by
way of security the mortgage is called a sub- the mortgagor himself on a property which is
mortgage. already subject to mortgage. The word puisne
means 'junior in rank or next in order.
Example :- Mr.A mortgages his house to Mr.B
for a sum of Rs. 20,000. If Mr.B further Example- Mr. A Mortgages his house worth
Mortgage that property then he creates sub- Rs. 50,000 to Mr. B for Rs. 20,000 .He is need
mortgage. of more money creates another mortgage in
favor of Mr C PME on the same house for a
further sum of Rs. 15,000. The second
mortgage is a puisne mortgage.

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SOME OF OTHER PROVISION RELATED TO MORTGAGE

Priority of debt on mortgage:- Example of Marshaling :- O the owner of

The general rule of priority of different mortgages three properties P1 , P2 P3 mortgages them to
on the same property is that the successive M subsequently O mortgage the property P1 to
mortgage is paid after the prior mortgage has B here B has right of marshalling i.e.
been satisfied. But where the prior mortgages he can compel M to satisfy his
suffers from fraud, misrepresentation, the mortgage debt out of properties P2
subsequent mortgage shall have priority over and P3 so far as it will extend .
prior mortgagee.

Marshaling by subsequent mortgagor Subrogation:- Under Section 91 of the T.P. Act,

(Section.81) :- If the owner of two or more enumerates the persons who may sue for
properties mortgages them to one person and redemption. The primary right to redemption is
then mortgage one or more of the properties to given to the mortgagor under Section 60, but in
another person , the subsequent mortgagee is in addition to the mortgagor certain other persons
the absence of a contract to the contrary , entitled are also entitled to redeem.
to have the mortgage-debt satisfied out of the
property or properties and sold to him , so far as a) Any person who has any interest in
the same will extend , but not so as to prejudice
the rights of the mortgage of person claiming b) Any surety for the payment of the mortgage-
under him or of any other person who has for debt.
consideration acquired an interest in any of the
properties . c) Any creditor of the mortgagor.

RIGHTS AND LIBILITIES OF MORTGAGOR

RIGHTS OF MORTGAGOR
a) Right of redemption (Sec.60):- The first and any provision inserted in the mortgage deed to
the most important right of the mortgagor is the prevent, evade or hamper redemption is void.
right to redeem i.e., take back the mortgaged Any condition which prevent the mortgagor
property by paying the mortgage money at any from redemption the property is called “clog” on
time after the stipulated date for repayment. the equity or right of redemption and is void.
But the mortgagor is not entitled to redeem
before the mortgage money becomes due on c) Right of partial redemption:- A mortgage, as
the date fixed for repayment of the loan. a rule, being one and indivisible for the debt
and every part of it, the mortgage cannot
Example:- A borrows money on a mortgage and redeem piecemeal; he must redeem the whole
agrees to pay it back after 5 years. A has won a property.
lottery and wants to pay the loan at the end of 3 But Section 61 of the act gives a right of partial
years and redeem his property. He cannot to do, redemption stating that “a mortgagor who has
because the right to redeem arises only when the executed two or more mortgages in favour of
money has become due at the end of 5 years. the same mortgagee shall, in the absence of a
contract to the contrary, when the principal
b) Right against clog or equity of money of any two or more of the mortgages has
redemption:- Clog means prevent mortgagor become due, be entitled to redeem any one
from redeeming the property and it is void. such mortgage separately or any two or more of
Right of redemption or equity of redemption is such mortgages together.
the essence of a mortgage, and
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Example:- A mortgages property X to B and Rs.1,000.A redeem the first mortgage of Rs.2000
obtains a loan of Rs.2,000.A again mortgages the or he can redeem both together.
same property to B and obtains a further loan of

LIABILITIES OF MORTGAGOR

1. Covenant for title. 2. Covenant for payment of public charges.

RIGHTS AND LIBILITIES OF MORTGAGEE

RIGHT OF MORTGAGEE LIABILITIES OF MORTGAGEE

1. Right to foreclosure or sale. 1. Only one suit for several mortgage

2. Right to sue for mortgage –money. 2. Liabilities of mortgagee in possession

a) Management
3. Right of sale without intervention of the b) Collection of rents and profits
court. c) Payment of revenue etc.
d) Repairs
4. Right of appoint receiver. e) Insurance

DIFFERENCES IN MORTGAGE AND PLEDGE

Mortgage Pledge
1. It relates to immovable property. 1. It relates to movable property.
2. There is a transfer of an interest in some 2. There is only obligation to repay money.
specific immovable property. 3. The possession of property which
3.The property on which mortgage is is pledged is handed over to the
created may or may not be transferred to creditor pledge.
the mortgage. 4. This is just not possible in case
4. There is no bar on creating a number of of pledge.
mortgage on one property.

CHARGE

Sec. 100 of Act defines a charge as follows “When specified an it must be absolutely clear as to what
immovable property of one person is by act of property is exactly charged. It the description of
parties of operation of law made security for the the property is vague and indefinite, the charge
payment money to another, and the transaction will be void for uncertainty.
does not amount to a mortgage , the letter person is
said to have a charge on the property and all the (ii) The immovable property must serve as
provisions which herein before contained which security for the payment of money.
apply to a simple mortgage shall so far as may be ,
apply to such charge” (iii) The charge may be the act of parties or it
may come into existence by operation of law.
The essentials of a charge:-
(iv) The provisions of the Act which apply to a
(i) It must be in receipt of immovable property simple mortgage, so far as may be apply
which must serve as a security .the property on also to a charge.
which charge is created must be specific and

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DISTINCTION BETWEEN MORTGAGE AND CHARGE

Mortgage Charge

1. It is transfer of an interest in specific 1. It does not involve transfer of any interest

in the property although it serves as a
immovable property made by a
security for the payment of the loan .
mortgagor as a security for the loan.
2. It may be created by act of parties or
2. It is created by act of parties. by operation of law.
3. It can be enforced against any 3. It cannot be enforced against bone fide
transferee whether he takes it transferee for consideration having no
with or without notice or mortgage. notice of charge.
4. In a mortgage the mortgage can 4. A charge –holder cannot foreclose the
foreclose the mortgaged property. property on which he has a charge .
5. In a mortgage ,there can be security He can however get the property sold
as well as personal liability as in a simple mortgage.
5. In a charge created by act of the parties
when a particular property is specified
the remedy of the charge-holder is
against the property only.

DISTINCTION BETWEEN CHARGE AND LIEN

Charge Lien

1. It may created by act of the 1. It can arise only be operation

parties or by operation of law of law

2. It is confirmed only to immovable 2. It may confirmed both to movable

property and immovable property

Extinguishment of charge
A charge can be extinguished by –
1. A decree of the court obtained by the charge –holder
2. Act of parties this includes

(a) Release of the debt or security or

(b) Novation or
(c) Merger.

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LEASE

Meaning and nature of lease:According to (3) It is made for consideration which is either
Section 105, a “lease” of immoveable property is premium or rent or both.
a transfer of a right to enjoy property. Since it is a
transfer to enjoy and use the property. (4) The transfer must be accepted by the
transferee.
Essential
Formalities for lease:- For years to year lease,
(1) It is a transfer of a right to enjoy immoveable registered instrument is required, while in case of
property. lease of less than 1 year, oral agreement is
required.
(2) Such transfer is for a certain time or perpetuity.

TENANCY

Definition
In case of tenancy the right to enjoyment of a particular property is basically transfer from one person to
another person for a price/consideration/premium and for the limited period of time. the relationship
originated among two person in this case is known as tenancy.

Types Of Tenancy

Tenancy From Year Tenancy By

Tenancy At Will
To Year Sufferance

In This Case Tenancy If Tenant Stays In Property If Tenant Stays In Property

Is Granted For Specified of Landloard After The Expiry Of Landloard After The
Expiry Of Specified
Time But of Specified Time And Give Time
And without consent of

after expiry of time Him Rent As Per His Will

property still in possession And Consent Of Landloard his landloard
of tenant only which gives is taken.
rent to landloard.

Tenancy At Will. Tenancy By Sufferan

Year To Year Tenancy
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TYPE OF TENANCY
Following are the various types of tenancies In this example, A lets the house on tenancy
from year to year to B while in case when after
a) Tenancy from year to year:- A tenancy expiry of certain period C continue to holds the
from year to year may be made by a grant of land house with the consent of A will be considered as
from year to year. The tenancy is for a year to a tenancy at will.
start with but after the expiration of one year the
lessee continues to be in possession and pays c) A tenancy by sufferance:- This is a
the rent to the landlord, the tenancy is regarded tenancy which is created by fiction of law. If a
as a year to year tenancy. tenant continues to be in possession after the
determination of the period of the lease without
b) Tenancy-at-will:- During a period when the the consent of the landlord, he becomes a tenant
tenant is in possession after the expiry of the by sufferance.
period, if the tenant stays with the consent of the
landlord till such time as further periods is fixed or Notice for termination of tenancy:- In case
a fresh contract is made, the tenant is called a year to year, 6 months notice is required and if it
tenant-at-will. is less than 1 year than only 15 days notice is
required. No notice in case of tenancy by
COMMON EXAMPLE sufferance.

A lets a house to B for 5 years, B sublets the Determination of lease or when lease comes
house to C at a monthly rent of Rs.100.The five to an end
years expire, but C continues in possession of the
house and pays the rent to A.C's lease is • By lapse of time
renewed from month to month • By the happening of a special event like:-
• Mergers
• By surrender
• By forfeiture

DIFFEREANCE BETWEEN 'LEASE' AND 'LICENCE'

Lease Licence
A licence is merely a personal right
A lease is a transfer of interest
1. and does not amount to any interest
in land in immoveable property.

A lessee has to be served with A licensee is not entitled to

2.
notice to quit before eviction. any such notice.

3. A lease is generally transferable A licence is not transferable.

4. A lease is generally not revocable A licence is always revocable

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EXCHANGE (Sec-118) GIFT HOW EFFECTED

“When two persons mutually transfer the 1. Gift of immovable property:- For the
ownership of thing for the ownership of another purpose of making a gift of immovable property
,neither thing or both things money only the the transfer must be effected by a registered
transaction is called an exchange “ instrument signed by or on behalf of the donor
and attested by at least two witnesses .
GIFT (Sec-122)

“ Gift” is transfer of certain existing movable or 2. Gift of movable property :- For the purpose
immovable ,property made voluntarily and without of making a gift of movable property, transfer may
consideration , by one person , called the donor to be effected either by a registered instrument of
another ,called the donee and accepted by or on profession or by deliver.
behalf of the donee .
SUSPENSION OF REVOCATION
Such acceptance must be made during the OF GIFT (SEC. 126)
lifetime of the donor and while he is still capable
of giving.
Grounds for suspension of revocation
1. By agreement
Essentials of a gift 2. By rescission
1. Transfer of ownership
2. Property must be in existence CONDITIONAL GIFT
3. Voluntary transfer
4. Without consideration Like any other transfer under the Act a conditional
5. Acceptance by the donee gift can also be made .A gift which comes into
existence on the fulfillment of a condition
precedent is a conditional gift and is valid.

UNIVERSAL DONEE (SEC. 128 )

Where a gift consists of all the properties of the The liability on the universal donee is limited to
donor, the donee is called a universal donee . the extent of the property received by him.

ONEROUS GIFT (SEC.127)

If a gift of a thing which is burdened by an Example – A has shares in X a prosperous joint

obligation, the gift is called on onerous gift The stock company and also shares in Y , a joint stock
donee may not accept such a gift . It a gift made company in difficulties .Heavy calls are expected
of several things any one or more of the things in respect of the shares in Y . A gives B all his
gifted may be burdened by some obligation .In shares in joint stock company X and Y refuses to
such a case the position of the donee is as accept the shares in Y .He cannot take the shares
follows in X.
1. When there is a single transfer:- When a 2. Where there are two or more separate
gift is in the form of a single transfer to the same transfer– Where a gift is in the form of two or
person of several things , of which one is , and more separate and independent transfers to the
the others are not , burdened by an obligation , same person of several things , the donee is at
the donee can take nothing by the gift unless he liberty to accept one of them and refuse the
accepts it fully. others , although the former may be beneficial
and the letter onerous.

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Example:- A having a lease for a term of years 3.Onerous gift to disqualified person :- A
of a house at a rent which he and his donee not competent to contract and accepting
representatives are bound to pay during the term , property burdened by any obligation is not bound
and which is more than the house can be let for by his acceptance ,But if , after becoming
gives to B the lease and also as a separate and competent to contract , and being aware of the
independent transaction , a sum of money B obligation , he retains the property given , he
refuses to accept the lease .he does not , by his becomes so bound.
refusal forfeit the money .

ACTIONABLE CLAIM

‘Actionable claim' means a claim to any debt , Simple stated an 'actionable claim' means a claim
other than dept secured by mortgage of to
immovable property or by hypothecation or • Any unsecured debt or
pledge or movable property whether such debt is • Any beneficial interest in movable property not
existent accruing conditional or contingent “ in the possession of the claimant
• The debt or beneficial interest may be existent
accuring conditional or contingent .

WHAT IS A DEBT ?

The following it would be noted are not actionable (ii) A right of recover the amount which may be
claim: found to be due on taking an account.
(i) A right to recover damages for the breach
of contract .

THE FOLLOWING ACTIONABLE CLAIMS

a) A claim to recover arrears of rent due. c) A claim under life insurance policy that has
matured.
b) A claim to the provident fund that is standing to
the credit of a member of the provident fund
and that has become due .

QUESTION FROM ICSI BOOK

Q1. Discuss the object of the Transfer of property Act. Distinguished between immoveable
and moveable property.
Q2. What is the subject matter of transfer under the T.P. Act. Discuss property which
cannot be transferred.
Q3. Define a mortgage. Discuss various types of mortgages.
Q4. What is the rule against perpetuity.
Q5. Write a short note on
i) Vested and contingent interest.
ii) Actionable claims.

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