Topa

THE TRANSFER OF
PROPERTY ACT
(Act IV of 1882)
Ву
Noshirvan H. Jhabvala
[B.A., LL.B.]
Advocate (O.S.), High Court, Mumbai
C. JAMNADAS & CO.

Educational & Law Publishers
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Antop Hill, Wadala (East), MUMBAI - 400 037
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BOOKS RECOMMENDED FOR FURTHER READING
MULLA : The Transfer of Property Act
SHAH : Principles of the Law of Transfer

P. P. SAXENA Property Law
MITRA The Transfer of Property Act
CHITALEY & RAO : The Transfer of Property Act
SHUKLA : The Transfer of Property Act
ROW : The Transfer of Property Act
SENGUPTA : The Transfer of Property Act
RAY : The Transfer of Property Act
SHANGARI : Supreme Court Encyclopaedia

on the Transfer of Property Act
CONTENTS
Chapter Subject Page No.
Introduction 1-2
1. Preliminary 3-12
Definitions 3
2.
Transfer of property, whether movable or immovable 13-64
A General 13
B. Illegal restrictions on certain alienations 25
C. Transfer for benefit of unborn persons 32
D. Transfer to a class 40
E. Vested interest 41
F. Contingent interest 45
G. Conditional transfers 48
H. Election 58
1. Apportionment 62
3. Transfer of immovable property 65-106
A. Transfer by person other than full owner 66
B. Protection of third person's rights 75
C. Transfer by person having authority to revoke a former transfer 81
D. Transfer by co-owners 82
E. Joint transfers 83
F. Priority of rights created by transfer 84
G Transferee's rights under policy 86
H. Bona fide holders under defective title 87
I. Transfer of property pending suit relating thereto (Lis Pendens) 89
J. Fraudulent transfer 96
K. Part-performance 101
4. Sale of immovable property 107-116

'Sale' defined - Sale how effected 107
'Contract for sale' defined 109
Rights and liabilities of buyer and seller 110
114
Marshalling by subsequent purchaser
Discharge of encumbrances on sale (S. 57) 115
117-171
5. Mortgages of immovable property and charges
117
A Mortgages
118
Six kinds of mortgages and their characteristics
1. Simple mortgage 118
2. Mortgage by conditional sale 119
121
3. Usufructuary Mortgage
4. English Mortgage 124
126
5. Mortgage by deposit of title-deeds (Equitable mortgage)
6. Anomalous mortgage 128
131
Mortgagor's rights
131
I. Right of Redemption
II. Right to Transfer to third party instead of
141
Re-transference to the Mortgagor
142
III. Right to inspection and production of documents
IV. Right to Accession 142
V.
Right to Grant a Lease 145

.
to
VI
Waste
Reasonable
Right
145
146
Liabilities of the mortgagor
1. Covenant for title 146
2. Covenant for defence of title 146
3. Covenant for payment of public charges 146
4. Covenant for payment of rent 147
5. Covenant for payment of prior encumbrances 147
Rights of the mortgagee 147
1. Right of foreclosure or sale 147

2. Right to sue for mortgage-money 149
3. Right to sell without the intervention of Court 150

4. Right to appointment of a receiver 151
5. Right to accession 153
6. Right to renewal of mortgaged lease 153
7. Right to spend money 153
8. Rights to proceeds of revenue sale or compensation on acquisition 154
9. Right of mesne mortgagees 154
Liabilities of the mortgagee 156
1. Mortgagee to bring one suit on several mortgages 156
2. Liabilities of the mortgagee in possession 156
Law as to priority of securities 157
Tacking 158
Marshalling and contribution 160
Contribution 163
B. Charges 165
Definition 165
Doctrine of merger 170
6. Leases of immovable property 172-189
Definition 172
Duration and Termination of leases 177
Rights and liabilities of the lessor 178
Rights of the lessee 179

Liabilities of the lessee 180
Rights and liabilities of lessor's transferee 181
Determination (i.e. termination) of a lease 182
Forfeiture of lease 183
Relief against forfeiture 185
Tenancy by holding over 187
7. Exchanges 190-193
8. Gifts 194-201
9. Transfer of actionable claims 202-208
'Actionable claim' defined 202
Transfer how effected 203
204
Rights of a transferee of an actionable claim
206
Rights of an assignee of marine and fire policies
10. General observations on how to execute

different kinds of Transfers under the Act 209-210
Summary of the Transfer of Property Act 211-240
• Multiple Choice Questions (With Solutions) 241-260

THE TRANSFER OF PROPERTY ACT
(Act No. IV of 1882)
Introduction
The Preamble to the Transfer of Property Act, 1882, lays down that it is
an Act to define and amend the law relating to transfer of property by act of
parties (i.e., not by operation of law). The Act came into force on 1st July,
1882.
OBJECTS OF THE TRANSFER OF PROPERTY ACT – "The chief objects

of the Transfer of Property Act are two : first, to bring the rules which regulate MCQ Nos. 1 and 2
the transmission of property between living persons into harmony with the
rules affecting its devolution upon death, and thus to furnish the complement
to the work commenced in framing the law of intestate and testamentary
succession; and secondly, to complete the code of contract law, so far as it
relates to immovable property."
ACT NOT EXHAUSTIVE - The Act is not, and does not purport to be, an ( M.U. = Mumbai
exhaustive enactment. In other words, it does not cover the entire dimension University )
of transfer of property.
WHETHER ANY PART OF THE ACT APPLIES TO MOVABLE
PROPERTY ALSO- The Act deals mainly with transfers of immovable property.
It lays down general rules relating to transfer of property and envisages the
following six types of transfer:
1. Sale 2. Mortgage 3. Lease MCQ Nos. 3, 4
4. Exchange 5. Gift 6. Actionable claim and 5
Although these transfers relate to immovable property, the provisions of

the Act relating to exchanges apply to movable and immovable property.
SCOPE OF THE ACT – The Act is limited to the transfer of property by
act of parties, as distinguished from a transfer by operation of law, e.g., in case MCQ Nos. 6, 7,
of inheritance, insolvency, forfeiture or sale in execution of a decree. It relates 8 and 9
to transfers property inter vivos, i.e., voluntary transfers between living

persons, and has no application to the disposal of property by will (which is
governed by the Indian Succession Act). Thus,
Transfer may be :
By act of parties By operation of law, e.g., Execution,

Insolvency, Succession, etc. (Not
covered by the T.P. Act)
Inter vivos (T.P. Act) Testamentary (Indian Succession Act)

1
2
The Act applies only to transfers inter vivos, i.e., transfers by one living
MCQ Nos. 10
person to another. Transfer of property is either by act ofparties or by operation
and 11
of law. If X sells or mortgages or gifts away his house, it is a case of voluntary
transfer by act of parties. But, if X becomes an insolvent, his property vests in
the Official Assignee of Receiver, whether X likes it or not. So also, if X's property
is sold in execution of a decree against him, it would be a case of a transfer
much against the will or desire of X. This is, therefore, known as transfer by
operation of law.
Now, transfer by act of parties is of two kinds :
(i) Transfer inter vivos, and
(ii) Transfer by will, i.e., testamentary disposition of property.
Thus, if X sells his property to Y, it is a case of transfer between living
persons. If the property is movable, the Sale of Goods Act will apply, and if it is
immovable, the Transfer of Property Act will govern the case. If, however, X
bequeaths his property to Y under his will, Y will get nothing as long as X is
MCQ Ns. 12
alive, but as soon as X dies, Y will get the property. It is, therefore, sometimes
said that this is really a gift from the dead to the living. This is known as
testamentary disposition of property. Transfer inter vivos is governed by the
Transfer of Property Act, if the property transferred is immovable. Transfer by
will, known as testamentary disposition of property (whether movable or
immovable), is governed by the Indian Succession Act.
Therefore, the Transfer of Property Act relates to the transfer of property
inter vivos, and has no application to the disposal of property by will. It does
not deal with cases of succession.
The following Table shows what part of the "law of transfer” is covered by
this Act.
THE SCHEME OF Transfer
1
By Act of parties By Operation of Law

(e.g., Succession, Insolvency,
Execution, etc.)
Testamentary Inter vivos

(Indian Succession Act) (T.P. Act)
(A) Transfer of property whether (B) Transfer of Immovable Property

Movable or Immovable (Ch. II : (Ch. II : Ss. 38-53A & Chs. III to
Ss.5-37 & Ss. 122-137) VIII: Ss. 54-137)
Sales Mortgages & Leases Exchange Gifts Actionable

(Ch. Ill: Charges (Ch. IV: (C. V: (C h. VÌ: (Ch.
Ss. 54-57) Ss. 58-104) Ss. 105-117) Ss. 118-122) Ss. 123-129) (Ss. 130-137)
1
PRELIMINARY (Ch.1 : Ss. 1 - 4)
Application of the Act
As originally enacted, the Transfer of Property Act did not extend to the
then State of Bombay, (now, Maharashtra and Gujarat), although it could be
extended to the State of Bombay by a notification in the Official Gazette by the
State Government. Accordingly, it was extended to the erstwhile State of Bombay
by a notification. Therefore, the Act now applies to the whole of India, including
the States of Maharashtra and Gujarat.
Section 2 of the Act saves certain enactments, rights and liabilities before
the Act came into force. This indicates that the Transfer of Property Act is not
retrospective in its effect. Statutes affecting substantive (not procedural) rights
are not retrospective. The Transfer of Property Act, being pre-eminently a
codification of substantive rights, and not merely of procedural law, therefore,
has no retrospective effect.
As stated earlier, the Act does not apply to transfers by operation of law
(e.g., succession, forfeiture, insolvency, court-sales etc.), but is limited to
transfers by act of parties. All the same, some of the general provisions of the
Act may be applied even to such transfers on principles of justice, equity and
good conscience.
DEFINITIONS (S. 3)
1. Immovable property
The Act has not defined this term. S. 3 merely lays down that immovable What is Immov
property does not include standing timber, growing crops or grass. able property.
(2 marks)
Nor does the Act define the term property. The law recognises two broad M.U. Dec. 2014
categories or kinds of property, movable and immovable. Apr. 2016
S. 3(25) of the General Clauses Act defines “immovable property" as Nov. 2017
follows: Apr. 2018

Dec. 2019
"Immovable property" shall include land, benefit to arise out of land, things
attached to the earth or permanently fastened to anything attached to the earth.
A definition of immovable property is also to be found in the Indian
Registration Act, where it is provided as follows: Write a short note
on : Kinds of
"Immovable property includes land, buildings, hereditary allowances, rights Property.
to ways, lights, ferries, fisheries, or any other benefits to arise out of land and M.U. Apr. 2008
things attached to earth, but not standing timber, growing crops or grass." Nov. 2008
(See definition of "attached to earth”, discussed later in this Chapter.)
3
4 THE TRANSFER OF PROPERTY ACT
MCQ Nos. 13, 14, The following have been recognised by Courts as being immovable
15, 16 and 17
property:
(a) Right of way
(b) Right to collect rent of immovable property
(c) Right to collect dues from fairs held on a plot of land
(d) Right to ferry
(e) Right of fishery
Define Immovable
(f) Office of a hereditary priest of a temple
property and give
two examples of (g) A Hindu widow's life-interest of the income of the husband's property
what are not im
movable property.
(h) A mortgagor's right to redeem the mortgage
(2 marks) (i) Right to collect lac from trees
M.U. Apr. 2013 () A factory.
MCQ Nos. 18,

The following, however, have been held not to be immovable property
19 and 20 (i) A right of worship
(ii) The right of a purchaser of property to have it registered in his name
(iii) Royalty
(iv) A piece of machinery which is not permanently attached to the earth
and which can be shifted from one place to another
(v) A decree for the sale of mortgaged property.
(vi) A right to recover maintenance allowance-even if such an allowance
is charged on immovable property
(vii) Government promissory notes
(viii) Standing timber, growing crops and grass.
In an old Madras case, Holloway J. explained the distinction between
movable and immovable property thus : “Movability may be defined to be a
capacity in a thing of suffering alteration of the relation of place. Immovability
is incapacity for such alteration. If, however, a thing cannot change its place
without injury to the quality by virtue of which it is, what it is, it is immovable."
The reason for providing that standing timber, growing crops and grass
are not to be regarded as immovable property is to be found in the purpose for
which such things are sold. When, for instance, timber is sold, it is to be cut
and taken away. It will no more have any connection with the land, and is,
therefore, not immovable property. If, on the other hand, A gives a right to B to
remove all the trees which may grow in A's forest for the next ten years, this is
not a transfer of movable property. The trees thrive on the land and continue to
be dependent on the land for the next ten years, and therefore, it is a transfer
of an interest in land, i.e., immovable property.
The term “standing timber” refers to trees which are fit for use for building
or repairing houses. In order that trees may be considered to be standing
PRELIMINARY 5
timber, they must be trees where wood is suitable for building houses, bridges,
ships, etc., as for instance, the oak or the elm tree in England and the neem or
teak tree in India. However, this does not mean that all such trees are standing
timber. They would be so only if they are in such a state that, if cut, they could
be used as timber.
MORTGAGE-DEBT WHETHER IMMOVABLE PROPERTY — Is a debt
secured by mortgage of immovable property to be treated as movable or
immovable property? Before the amendment of the definition of 'actionable
claim' in section 3 of this Act, a debt secured by a mortgage of immovable
property was held to be an actionable claim; but after the amendment (made
in 1900), the definition of an 'actionable claim'expressly excludes a debt secured
by a mortgage of immovable property, and such a debt will now be treated as
immovable property, and can be transferred only in the same way as immovable
property is transferred (viz., by a registered instrument): Perumal v. Perumal,
44 Mad. 196 (200, 201)
MOVABLE PROPERTY The Act does not define movable property
-
which has been defined in the General Clauses Act as meaning "property of
every description except immovable property." In other words, all property which
is not immovable property is movable property.
2. Instrument
"Instrument" means a non-testamentary instrument.

As seen earlier, the Act does not deal with testamentary transfers. What is mean by
"instrument"?
Therefore, the term “instrument" does not cover testamentary instruments like
a will or a codicil, which are governed by the Indian Succession Act. (2 marks)
M.U. Nov. 2017
Apr. 2018
3. Attested (S. 3)
“Attested", in relation to an instrument, means attested by two or more MCQ Nos. 21
witnesses, each of whom has and 22
(a) seen the executant sign or affix his mark to the instrument;
or
(a) seen some other person sign the instrument in the presence of, and
by the direction of, the executant;
or
(a) received from the executant, a personal acknowledgement of his

signature or of the signature of such other person;
and
(b) signed the instrument in the presence of the executant.

It is not necessary that all the witnesses should be present at the same
time. Also, no particular form of attestation is necessary.
6
ATTESTATION – To attest means to sign and witness any fact, viz., the
fact of execution by the executant. The word “attested” in this section means
that a person has signed the document by way of testimony of the fact that he
saw it executed. The party who sees the document executed is, in fact, a
witness to it; if he subscribes as a witness, he becomes an attesting witness.
Now, the law does not require all documents to be attested. Thus, mortgages
and gifts must not only be in writing, but must be attested; documents effecting
sales, exchanges and leases need not be attested.
For a valid attestation, there must always be two or more attesting
witnesses, and it is ordinarily necessary that each witness must see the
executant sign or affix his mark to the instrument, or see some other person
sign the instrument in the presence, and by the direction, of the executant.
The following three points about attestation may be noted:
(1) An attesting witness need not witness the actual execution of the
deed, inasmuch as he can attest on the acknowledgement of
execution by the executant himself.
(2) All the attesting witnesses need not attest at the same time.
(3) Each witness must attest in the presence of the executant. The word
“personal" (in the expression “personal acknowledgement") shows
that the acknowledgement must be by the executant himself, and
not vicariously or through agents. "Personal acknowledgement" does
not mean express acknowledgement. An acknowledgement may be
personal, although conveyed by means of gestures.
There is nothing in the law which lays down that the signatures of an
attesting witness must appear in any particular place. Thus, even if the attesting
witness signs the document against the signature of the receipt clause, instead
of against the signature of the executant, where he has executed the document,
it is sufficient and adequate attestation of the document. (Kaderbhai Ismailji v.
Fatmabai Golamhusein, 45 Bom. LR 911)
The Supreme Court has laid down the essential conditions of a valid
attestation under the Transfer of Property Act, as follows:
(1) Two or more witnesses should have seen the executant sign instru
ment or should have received from him a personal acknowledgement
of his signature.
(2) With a view to attest or to bear witness to this fact, each of them
should have signed the instrument in the presence of the executant.
It is essential that the witness should have put his signature for the
purpose of attesting, i.e., confirming that he has seen the executant
sign, or has received from him a personal acknowledgement of his
signature. If a person puts his signature on the document for some
other purpose, for example, to certify that he is a scribe or an identifier
PRELIMINARY 7
or a Registering Officer, he is not an attesting witness. (M.N. Abdul

Jabbarv. H. Venkata Sastri & Sons, A.I.R. 1966, SC 1147)
Animo attestandi — As stated above, no particular form of attestation is
prescribed by the Act. However, it is necessary that the attesting witness must
sign animo attestandi, i.e., for the purpose of certifying that he saw the executant
sign the document. Therefore, if a person puts his signature on a document for
any other purpose (e.g. for signifying his approval to the transaction), he is not
an attesting witness.
Attestation does not estop the attestant — Attestation of a deed, by itself,
does not estop a person from denying anything whatsoever, except that he
witnessed the execution of the deed. The mere attestation of a document is no
proof that the attesting witness is aware of the contents of the document. The
burden of proving that he had such knowledge, and was a consenting party to
the transaction, lies upon the party who relies upon the document. But where
an attesting witness was present at the transaction and attested the deed after
having heard the contents, it was held that he was estopped from challenging
the right of the transferee. (Bhagwat v. Gorakh, A.I.R. 1934 Pat. 93)
Effect of invalid attestation - If the attestation is invalid, the document
cannot be enforced in a Court of law. If the deed is a mortgage, it can neither
operate as a mortgage, nor as a charge under S. 100.
ENGLISH LAW Under English law, the attesting witness should be
-
present at the time of execution, and should be able to testify that the deed
was voluntarily executed by the proper person. This requirement is not
necessary under Indian law.
4. "Attached to the earth”
The expression "attached to the earth” means anything –

(a) rooted in the earth, as in the case of trees and shrubs; or
(b) imbedded in the earth, as in the case of walls or buildings; or
(c) attached to what is so imbedded, for the permanent beneficial
enjoyment of that to which it is attached (as for instance, doors,
windows etc.)
"ATTACHED TO THE EARTH". This expression occurs at two places What is meant by
in the Act, viz., in sections 8 and 108 of the Act. These words are apparently the expression
"attached to the
used to denote what are termed 'fixtures' in England.
earth"? (2 marks)
FIXTURES — In England, the law as to fixtures is based on the maxim M.U. Nov. 2012
“quicquid plantatur solo, solo cedit" (whatever is planted on the soil belongs to Dec. 2014
the soil). Regarding fixtures, it may be noted that if a thing is imbedded in the
earth (or attached to what is embedded), for the permanent beneficial enjoyment
of that to which it is attached, then it is a part of the immovable property. But, if
the attachment is merely for the beneficial enjoyment of the chattel itself, then
it remains a chattel, 1.e., movable property, even though fixed for the time
being so that it may be enjoyed.
Thus, where the tenants installed an oil engine as part of a cinema in the
leased premises, not with the intention of making a permanent improvement
to the premises, but with the object of utilising the machinery for their own
profit so long as they had the use of the premises and selling it if and when
their lease terminated, a security bond pledging the oil engine was held not to
be a transaction relating to immovable property.
5. Actionable Claim
[ The law as to actionable claim (including its definition) is discussed in

Chapter IX. ]
6. Notice (S. 3)
A person is said to have "notice" of a fact -
(a) when he actually knows that fact (actual or express notice); or
(b) when, but for
(i) wilful abstention from an enquiry or search which he ought to
have made, or
(ii) gross negligence,
he would have known it (constructive or implied notice).
NOTICE: ITS ESSENTIALS - Notice, to be binding, must be definite
information given by a person interested in the thing in respect of which the
notice is issued. It is a settled rule that a person is not bound to attend to vague
rumours or statements by strangers, and that a notice, to be binding, must
proceed from some person interested in the thing. A mere casual conversation,
in which knowledge of a certain thing is implied, is not notice, unless the mind
of the person has, in some way, been brought to an intelligent apprehension of
the nature of the thing, so that a reasonable man or any man of ordinary
prudence would act upon the information and would regulate his conduct by it.
In other words, the party imputing notice must show that the other party had
knowledge which would operate upon the mind of any rational man or a man of
business, and make him act with reference to the knowledge he has so acquired.
A vague or general report or the mere existence of suspicious circumstances,
is not in itself notice of the matter to which it relates.
KINDS
OF NOTICE - Noticekinds
is of two -
1. Actual (express) notice; and
2. Constructive (implied) notice.
What is Actual
1. A person is said to have actual (or express) notice of a fact when he
Notice"? (2 marks) actually knows it. An actual notice, to constitute a binding notice, must be
M.U. Dec. 2016 definite information given by a person interested in the thing in respect of which
Nov. 2017 the notice is issued, and it must be given in the same transaction. Thus, as
PRELIMINARY 9
stated above, vague reports or rumours, or suspicion of the existence of a fact What is the differ
will not amount to express notice. ence between

actual notice and
2. The legal presumption of knowledge (constructive notice) can arise in constructive now
the following five cases: tice? (2 marks)
M.U. May 2012
(1) Wilful abstention from an inquiry or search Nov. 2012
(2) Gross negligence Jan. 2019
(3) Registration
(4) Actual possession
(5) Notice to agent.
(1) Wilful abstention from an inquiry or search, and
(2) Gross negligence
If a person would have known a fact, but for his gross negligence, or but
for the fact that he had not made an inquiry (or search) which he ought to have What is Construc
made, he is deemed to have notice of such fact. tive notice?
M.U. Nov. 2013
Thus, a person refusing a registered letter sent by post is deemed to Dec. 2014
have constructive notice of its contents, and he cannot afterwards plead Apr. 2015
ignorance of its contents, because he had wilfully abstained from receiving it May 2017
and acquainting himself with its contents. (Jogendra v. Dwarkar, 15 Cal. 681) Apr. 2018
Dec. 2019
So also, a prudent purchaser should not rest content with merely seeing
a mutation entry in the land records, if it does not cover the whole of the land
he is purchasing. He ought to ascertain what are the entries in the Record of
Rights, and whether the vendor has got full proprietary rights. If he fails to do
so, there is want of care or wilful abstention from enquiry or search.
Lloyds Bank Ltd. v. P.E. Guzdar & Co., 56 Cal. 686 - A deposited title
-
deeds of his property with Bank N to secure an overdraft. A then asked for a
return of the deeds saying that he wished to sell property and clear the overdraft.
The usual practice is for the prospective purchaser to inspect the title-deeds in
the office of N's solicitors. But, A said that he would not get a good price if the
purchaser came to know that the bank had the deeds, whereupon the bank
returned the deeds to A. A then borrowed money from Bank Lon the deposit of
the same deeds, falsely representing that there was no encumbrance on the
property. In these circumstances, it was held that Bank N is guilty of gross
negligence in surrendering the title-deeds to A, and therefore, the mortgage to
L would have priority over the mortgage to N.
Alwar Chetty v. Jagannatha, (54 Mad. L.J. 109) — B borrowed money
from C, and by way of an equitable mortgage, deposited with C, the sale-deed
by which he had purchased his property from X. There was a recital in this
deed that part of the purchase money had been retained by B to meet X's
debts, which B had not paid, and of which C made no inquiries. Upon these
facts, the Court held that C had constructive notice of X’s lien for the unpaid
purchase money, and that the mortgage was subject to X's lien.
10
As pointed out by RomerJ., the real difference between gross negligence

and ordinary negligence is to be found in the extent of the duty to take care
imposed in either case. Thus, when a purchaser is told that the title-deeds are
with a bank for safe custody and such a person omits to make inquiries at the
bank, it is a case of gross negligence which will amount to notice, if it later
turns out that the deeds were actually pledged to the bank.
However, notice to a purchaser by his title documents in one transaction
will not be notice to him in a subsequent and independent transaction in which
the instruments containing the recitals are not necessary to his title, as illustrated
in the following example:
B buys two properties X and Y from A, and leaves part of the purchase
money unpaid. He then sells X to Cand informs C of A's charge for the unpaid
purchase-money. In these circumstances, C's purchase of X will be subject to
A's charge. But, if in the following year, C also purchases Y from B, and B does
not inform C of A's charge, the information which C received whilst purchasing
X will not operate as a notice, so as to make his purchase of Y subject to A's
charge.
(3) How far registration amounts to notice (S. 3, Explanation I)

In order that registration of an instrument may operate as a notice of its
contents, the following three conditions must be satisfied:
MCQ No. 23 (1) The instrument must be compulsorily registrable.
Registration is notice only where the instrument is required to be registered.
In cases where registration is not compulsory, but it is only optional, the mere
fact of registration does not constitute notice.
(2) The registration of the document must be completed in the manner
prescribed by the Indian Registration Act.
(3) The instrument (or its memorandum, as the case may be) and the
particulars regarding the transaction to which it relates must be
correctly entered in the registers and indices kept under the
Registration Act.
However, registration of a sub-mortgage does not operate as a notice to
the mortgagor. Thus, A mortgages property to B, who creates a sub- mortgage
in favour of C. A, in ignorance of the sub-mortgage, pays the mortgage-debt to
B. Here, the fact that the sub-mortgage is registered does not amount to notice
of the sub-mortgage to A, so as to vitiate the payment. (Sahadev v. Shekh
Papa, 1905 29 Bom. 119)
(4) When actual possession amounts to notice (S. 3, Explanation II)
Actual possession, i.e. de facto possession, of property by another must
MCQ No. 24 put the purchaser of such property on his guard. Possession, therefore, amounts
to notice of title in another. It is, therefore, laid down that any person acquiring
PRELIMINARY 11
any immovable property (or any share or interest in any such property) is MCQ No. 25
deemed to have notice of the title (if any) of any person who is, for the time
being, in actual possession thereof.
It will be seen that this provision makes the factum of possession operate
as notice. Therefore, an intending purchaser of a piece of land will be said to
have constructive notice of a third party's claim to that land when that third
party is in actual possession thereof, instead of the vendor.
The reason behind the rule is that it is considered unreasonable that a
person entering into a transaction involving immovable property should be
allowed to ignore the question of possession, or should neglect to inquire into
the nature of the possession or the title of the person who is in fact occupying
such property, if he is not the person with whom he is dealing.
It should be noted that notice here is not extended to possession which is
merely of a constructive nature, as it would be too much to expect a man to
find out every possible person who, though not on the spot, is operating from
behind the scene. Therefore, possession, to operate as notice, must be actual,
and not constructive possession.
(5) When notice to agent amounts to constructive (also called 'Imputed')
notice to principal (S. 3, Explanation III)
A person is deemed to have had notice of any fact if his agent acquires
notice thereof:
(i) whilst acting on his behalf,

(ii) in the course of business,
(iii) to which business, that fact is material.
However, if the agent fraudulently conceals the facts, the principal cannot
be charged with notice thereof as against any person who was (i) a party to or
(ii) otherwise cognizant of, the fraud.
TO AFFECT THE PRINCIPAL WITH NOTICE, FIVE CONDITIONS MUST
BE FULFILLED, VIZ. :
(i) The agent must have received the notice during the agency.
(ii) The knowledge must come to him as agent.
(iii) It must be in the same transaction.
(iv) It must be material to the transaction.
(v) It must not have been fraudulently withheld from the principal.
On this principle, it has been held that knowledge or information obtained
by a Solicitor or Muktear in any case will bind his client : Raja Gokul Das v.
Eastern Mortgage & Agency Co., (1905-6) 10 C.W.N. 216.
NOTICE THROUGH AGENT AS CONSTRUCTIVE NOTICE : THE
DOCTRINE OF IMPUTED NOTICE - Explanation III makes notice to an agent
12
operate as constructive notice to the principal.The principle of this rule

based on the maxim 'Qui facit per alium facit per se', i.e., he who does
another, does by himself.
It will be seen that the above rule imposes certain limitations on the gener
rule that the knowledge of the agent is the knowledge of the principal. In th
first place, such knowledge should be acquired by the agent while he is actin
on behalf of the principal and in the course ofbusiness he is employed in, ar
the fact brought to his knowledge must be material to the business in hand
the notice is obtained while the agentis not acting on behalf of the principa
and not in course of the business in question and the factum of notice is 'n
material to the business in hand,his knowledge will not bind the principal,
Moreover, the agent's knowledge will not operate as knowledge of th
principal, where the agent fraudulently conceals the fact in question from th
principal, and the other side, imputing notice to the principal, acts in collusic
with the agent or knows of the agent's fraud, and stands by. The case of Ra
Gokul Das v. Eastern Mortgage Agency & Co., is a good illustration of th
above rule. The Mortgage Agency Company, who were the subseque
mortgagees, employed an articled clerk of a solicitor to complete a mortgac
transaction. The articled clerk had previously taken part in proceedings whic
ought to have put him on an enquiry with respect to the claims of a pri
mortgagee, Gokul Das. This was construed as notice to the principal compar
Problem : Without B's authority, A purchases, as agent of B, immovab
property with notice of an encumbrance. Later, B pays the price and ratifi
the purchase. In these circumstances, the law considers A to be B's agent
initio and the agent's knowledge is imputed to B. (Coote v. Mammon, 1724
Bro. P.C. 355)
Registration, possession and notice to an agent are all different kinds
constructive notice. This can be summarised as follows:
NOTICE
Actual Constructive, (or 'Implied']
1. Registration : 2. Possession : 3. Notice to agent :

(S. 3, Expin. I) (S. 3, Expln. II) (S. 3, Expl. III)
LIS PENDENSAS CONSTRUCTIVE NOTICE - This is discussed un

S. 52 in a later Chapter.
2
TRANSFER OF PROPERTY, WHETHER
MOVABLE OR IMMOVABLE (Ss. 5-37)
This Chapter is discussed under the following nine sub-heads:

A. General : s. 5-9.
B. Ilegal Restrictions on Certain Alienations : Ss. 10-12 & Ss. 17-18.
C. Transfer for the benefit of Unborn Persons : Ss. 13-14 & S. 18.
D. Transfers to a Class : Ss. 15-16 & S. 22.
E. Vested Interest : Ss. 19-22.
F. Contingent Interest Ss. 21-24.
:
G. Conditional Transfers : Ss. 25-34.

H. Election : S. 35.
1. Apportionment: Ss. 36-37.

APPLICATION OF Ss. 5 TO 53A OF THEACT TO MOHAMMADANS
S. 2 of the Act provides that the provisions of this and the next Chapter, i.e.
Ss. 5 to 53A, shall not affect any rule of Mohammadan Law. In other words, if
there is a rule of Mohammadan Law which conflicts with a rule contained in
these sections, the rule of Mohammadan Law will prevail. The reason for this
provision is that some of the rules of that law differ from the general rules as to
transfer of property enacted in these sections of the Act. Thus, a Mohammadan
may settle property in per petuity for the benefit of his descedants, provided
there is an ultimate gift to charity, whereas, under Ss. 13 and 14 of the Transfer
of Property Act, property cannot be tied up for per petuity. Such a rule of
Mohammadan Law is thus not affected by Ss. 13 and 14 of the Act.
A. GENERAL (Ss. 5-9)

"Transfer of Property" defined (S. 5)
The expression “transfer of property is defined to mean any act by which Define 'Transfer of
a living person conveys property, in present or in future, to - Property'. What

are the essentials
(i) one or more other living persons; or of a Valid Trans
fer? What property
(ii) himself (as for instance, when a person vests property in trust and
may be trans
himself becomes the sole trustee, or when a man transfers property ferred? What are
in one capacity, to himself in another capacity, as when a man makes the ten excep
tions?
a transfer in his capacity as an executor, to himself in his private
M.U. Apr. 2016
capacity); or
(iii) himself and one or more other living persons.
13
It may be noted that the word “person" includes, not only human beings
but also a company or an association or a body of persons, whether incorporater
or not.
TRANSFER The definition of the term “transfer" in S. 5 (above) does
not require that the person who conveys property should necessarily be the
owner thereof.All that is required is that there should be an act of conveyance
by some living person. Thus, a deed of appointment amounts to a transfer.
Define transfer of Moreover, the term "transfer" does not mean conveyance of all the interest
property.
M.U. Nov. 2010
of the transferor in the property. Thus, a mortgage or a lease is treated as a
transfer under the Act, although it does not exhaust the whole interest which
the transferor is capable of passing.
The above definition of transfer of property" does not exclude property
"
situated outside India or in territories where the Act does not apply. If the transfer
is effected at a place where the Act is in force, the rights and liabilities of the
parties will be determined by the provisions of the Act, and it is immaterial that
the property is situated outside India. (Prethi Singh v. Ganesh, A.I.R. 1951, All.
462)
KINDS OF TRANSFER - The Act contemplates the following kinds of
transfers — (i) Sale, (ii) Mortgage, (iii) Lease, (iv) Exchange, and (v) Gift. Sale
is an out-and-out transfer of ownership of a particular property. Exchange and
gift resemble a sale in this respect, but differ from it as regards the consideration
for the transfer. In a sale, the consideration is a price (in money) paid or
promised, or partly paid and partly promised. In an exchange, the consideration
is not money, but another thing. In a gift, there is no consideration. Mortgage is
a transfer of a limited interest in property. A lease is the transfer of a right to
enjoy immovable property for a certain time or in per petuity. (All these forms
of transfer are discussed in later Chapters.)
LIVING PERSON — The expression “living person" in the section includes
corporated and incorporated companies, registered and unregistered
associations and partnership firms. So, all these bodies can effect transfer of
property in their business collectively or in firm names. An idol is a juristic
person, capable of owning property, but is not a living person, and therefore, a
dedication of property to an idol is not a transfer, and need not be made in
writing or by a registered instrument under S. 123 of the Act.
What is transfer of PROPERTY — The word "property" has not been defined in the Act, but
property ? What has been used in its widest and most generic sense. It includes an actionable
are the necessary
conditions for a claim and a right to a reconveyance of land, but not a power of appointment.
valid transfer?
TRANSFER OF FUTURE PROPERTY, HOW FAR VALID -As pointed
M.U. Dec. 2014
out by the Supreme Court, the words “in present or in future” in S. 5 qualify the
Apr. 2015
word "conveys", and not the word "property". (Jugalkishore v. Raw Cotton Co.
(1955), S.C.R. 1369)
TRANSFER OF PROPERTY : MOVABLE OR IMMOVABLE 15
MCQ No. 26
The expression “property of any kind" does not include future, non-existent
property. Therefore, a transfer of future property is not, as such, valid in India.
But a conveyance of such property may be valid as a contract to assign, and
when the property comes into existence, equity fastens upon the property, and
the contract to assign becomes a complete assignment. (Purna v. Birma, I.L.R.
(1939) 2 Cal. 341)
It will be noticed that the words used in Section 5 are "in present or in
future". If property is to come into existence in future, this can only be a contract
to transfer such property when it does come into existence, and such a contract
will, of course, have to be supported by consideration. If the transfer is for
consideration, equity will allow specific performance of the agreement. But, if
the transfer is gratuitous (i.e., a gift) there will be no enforceable contract.
Thus, a gift of future property is void. This is known as the rule in Holroyd v.
Marshall.
Whether certain transactions amount to a “transfer of property” for the

purposes of the Act will now be examined.
PARTITION Prior to a 1965, there was a conflict of judicial decisions
on whether a partition amounts to a "transfer" as defined in S. 5.
In Soniram v. Dwarkabai (53 B.L.R. 325), the Bombay High Court held
that a partition amounts to a transfer, inasmuch as it involves a conveyance by
the co-sharers of their respective right, title and interest in the property. The
same view was reiterated by the Bombay High Court in two later decisions,
Jagannath Puri v. Godabai (A.I.R. 1968 Bom. 25) and Dahyabhai v. State of
Bombay (62 B.L.R. 348).
The Lahore High Court has also accepted the view that a partition is a
"transfer" within the meaning of S. 5 of the Act. (Sadhu Ram v. Pirthi Singh,
A.I.R. 1936 Lah. 220)
The Kerala High Court had earlier held the view that a partition amounts
to a transfer. However, a Full Bench of that Court overruled the earlier decisions,
and held that a partition does not amount to a transfer as defined in S. 5 of the
Act. (Panchali v. Panniyodan Manni, A.I.R. 1963 Ker. 66)
The Madras High Court has also held that a partition is not a transfer
either for the purposes of S. 53A of the Act (Radhakrishnayya v. Sarasamma,
- I.L.R. 1951 Mad. 607) or within the meaning of 16(3)(a)(iv) of the Income
tax Act, 1922. ( Stremann v. C.I.T., A.I.R. 1962 Mad. 26)
This question then came up before the Supreme Court (though not directly
under S. 5 of the Act), and the Supreme Court, in C.I.T. v. Keshavlal, (A.I.R.
1965 S.C. 866) expressed its approval of the two decisions of the Madras High
Court, cited above, to the effect that, in a partition, there is no transfer of assets.
COMPROMISE - Conflicting views have been expressed by different
High Courts on whether a compromise between parties to a suit amount to a
transferThe Bombay High Court and the Nagpur High Court have heldt
compromise of a doubtful claim does notamount to a transfer. Mutya
However, the Madras High Court has held (in Sonepalli
Veerayya, A.I.R. 1946 Mad. 452) that where one of the parties to a settler
gives up a claim to receive a certain sum of money from the othe
consideration of the latter's giving up the right to certain property claime
him, it would amount to a transfer.
Following this decision, the High Court of Madhya Pradesh has held
similar facts, that a compromise arrangement between the parties amoun
a transfer. However, the Court rightly added that this is a question of fact to
answered with due regard to the facts andcircumstances of each case. (Hus
Banu v. Shivnarayan, A.J.R. 1968 M.P. 307)
FAMILY ARRANGEMENT - In Sudhu Madho Das v. Pandit Mukand R
(1955) 2 S.C.R 22, the Supreme Court has observed that, in the case
family arrangement, there is an antecedent title of some sort in the part
and the agreement acknowledges and defines what that title is, each pa
relinquishing all claims to property other than that falling to his share
recognising the right of the others as they had previously asserted it, to
portions allotted to them respectively. Therefore, a family arrangement is n
transfer.
Explain the basic
conditions for a
RELINQUISHMENT — A relinquishment or a Release Deed necessa
valid transfer. involves the extinguishment of a right, and therefore, it cannot amount t
Discuss whether transferwithin the meaning of S. 5 of the Act, as there is nothing left to trans
the following are (Provident Investment Co. v. C.I.T., A.I.R. 1954 Bom. 95). Thus, a relinquishm
transfers:
by a reversioner of his reversionary interest does not amount to a trans
(i) Surrender
(Barati Lal v. Salik Ram, 38 All. 107)
(ii) Charge
(iii) Exchange However, if the person in whose favour the release is executed, g
(iv) Partition certain rights by virtue of such a release, the transaction may amount to
M.U. Apr. 2011 "transfer”. (Muniappa Pillai v. Periasami, (1975) I.M.L.J. 236)
SURRENDER – The Calcutta High Court has held that the surrender
MCQ No. 27
a lease is not a transfer within the meaning of S. 5 of the Act, as it is the merg
of a lesser estate with a greater one. (Makhanlal v. Nagendranath, 60 C
379)
On the question as to whether surrender of a life-estate by a Hindu wido

amounts to a “transfer", the High Court of Bombay and Allahabad had earl
held that it does. However, the Supreme Court has subsequently held th
such a surrender is not a transfer, since it amounts only to an act to se
effacement by the widow, and accelerates the succession to her husband
estate. (Natvarlal v. Dadubhai, 56 B.L.R. 447)
EASEMENT — The Calcutta High Court has held that the creation of
easement does not amount to a transfer. (Sital Chandra v. Delanney, 20 C.W.
1158). This view was also taken by the Patna High Court in Traders Miners L
v. Dhirendra (23 Pat. 115).
CHARGE — A charge on property is not a "transfer” within the meaning

of S. 5 of the Act, as the only right created by such a charge is the right to
payment out of the property subject to the charge. (Gobinda v. Dwarkanath, 35
Cal. 837)
WILL – A will does not fall within the definition of "transfer", as a will
operates from the death of the person making it, whereas the definition
contemplates a transfer by a living person".
WHAT PROPERTY CAN AND WHAT PROPERTY

CANNOT BE TRANSFERRED (S. 6)
S. 6 of the Act enumerates thirteen kinds of property which cannot be "Property of any
transferred. They form exceptions to the general rule that property of any kind kind can be
transferred under
may be transferred.
the Transfer of
Property of any kind may be transferred except as otherwise provided by Property Act.
Discuss.
-(i) this Act (Clauses 1 to 13 below) or by (ii) any other law for the time being
in force. M.U. Nov. 2009
S. 6 of the Act provides that the following thirteen rights or interests cannot
be transferred:
Who is an heir
1. The chance of an heir-apparent succeeding to an estate (also referred
apparent?
to as spes successionis or a mere hope of succession) cannot be
(2 marks)
transferred. (See spes successionis, discussed below.)
M.U. May 2012
2. The chance of a relation obtaining a legacy on the death of a kinsman Apr. 2018
(spes successionis) cannot likewise be transferred.
3. Any other mere possibility of a like nature, that is, of a nature similar
to those in clause 1 or 2 above cannot also be transferred. MCQ Nos. 28, 29
SPES SUCCESSIONIS This clause excludes the chance of an heir Define "transfer of
apparent succeeding to an estate from the category of transferable property. property" and
The technical expression for such chance is 'spes successionis', meaning 'hope state what
of succession'. Now, such a chance is not property as contemplated by the property cannot be
transferred.
Act. If, therefore, such a chance or expectancy is transferred, the transfer is
M.U. May 2012
wholly void. Apr. 2013
A good illustration of a “mere possibility of aa like nature" (clause 3 above)
is the next cast in a fisherman's net. No one can guarantee that any fish will be
caught, and the fisherman himself has no interest in the fish until they are What property can
be transferred?
caught in his net.
What are excep
The right of a presumptive reversionary heir under the Hindu Law or the tions?
bare chance of surviving another and succeeding to his inheritance, is just a M.U. Dec. 2014
spes successionis (hope of succession) or expectancy. “A Hindu reversioner Apr. 2015
has”, observed their Lords of the Council, “no ght interest in

presenti in the property which the female owner holds for her life. Until it vests
in him on her death, should he survive her, he has nothing to assign or to
18
relinquish, or even to transmit to his heirs. His rightbecomes concrete only on

her demise, until then, it is a mere spes successionis" (Amrit Narayan v. Gaya
Singh, 45 Cal. 590 P.C.).
AT A
ASSIGNMENT OF A RIGHT TO RECEIVE FUTURE OFFERINGS
TEMPLE — There is a conflictof decisions on whether a rightto receive future
-
offerings at a temple is a "mere possibility". Some cases have held that this is
a mere possibility which cannotbe transferred, while others have held that the
right is notuncertain and variable, and hence,may lawfully be transferred.
The Calcutta High Court has held that if a pujari transfers the right of
receiving the offerings that might be made in a temple on future holy days,
such a transfer willnotbe effective, because the chance thatfuture worshippers
will give such offerings is a mere possibility within the meaning of this clause.
However, the AllahabadHigh Court hastaken an opposite view on theground
that “the fact that offerings, large or small, are bound to be made is a certainty,
and not a mere possibility.”
The Allahabad High Court has held that the future wages of a servant,
before they are earned, are a mere expectancy, and therefore, cannot be
attached or sold. (Devi Prasad v.Lewis, (1909) 31 All.304)
ENGLISH LAW — Under the English Law also, an expectancy cannot be
assigned. But under that law, such an assignmentis not expressly prohibited,
and if made for value, it will operate in a contract to assign when the expectancy
becomes an interest.
Problem : A has a wife B, and a daughter C. In consideration of 500
paid to her by A, C executes a release of her right to share in the inheritance to
A's property. A dies, but C claims her share in the inheritance. B resists the
claim, and sets up as a defence, the release signed by C. Will B succeed?
Ans. :B will not succeed, as the release is no defence, as it is a transfer
of a spes successionis, and C is entitled to her share in A's property. However,
C is bound to bring into account the five hundred rupees receiv by her from
her father, A. (Samsuddin v. Abdul Husein, 1906 31 Bom. 165)
4. A mere right of re-entry for breach of a condition subsequent cannot
be transferred to any one except the owner of the property affected
thereby
The right of re-entry is a right which the lessor has against the lessee for
breach of an express condition which provides that on its breach, the lessor
may re-enter. This is a right which a transferor reserves to himself after having
parted with the whole estate. Such a right cannot be transferred to any one
except the owner of that property.
No. 30
5. An easement-apart from the dominant heritage, cannot be transferred.
Section 4 of the Easements Act, 1882, defines an easement as a right
which the owner or occupier of a certain land possesses as such for the
beneficial enjoyment of that land, to do and continue to do something, or to

prevent and to continue to prevent something being done, in or upon or in
respect of, certain other land which is not his own. There is no such thing as an
easement in gross, which can exist in its own right, and not as an appendage
to property for whose benefit it exists. It follows, therefore, that an easement
cannot be transferred by itself, unless it accompanies the transfer of the property
to which it is attached.
An easement necessarily involves the existence of a dominant heritage

and a servient heritage. It is a right over one property for the benefit of another
property, and therefore, it cannot exist apart from the property to which it is
attached. It is, of course, one of the legal incidents of the property to which it is
attached, and will pass on to the transferee, if the property is transferred. But it
is not property by itself.
Thus, A, the owner of a house, has a right of easement to walk throught
B's garden to reach his (A's) house. Now, if A sells his house to C, the easement
would pass to C. However, A cannot transfer only the easement, that is, only
the right to walk through B's garden to C.
6. An interest in the property restricted in its enjoyment to the owner
personally (e.g., religious offices, services tenures, an inalienable
raj, etc.) cannot be transferred.
Most of the cases falling under this clause deal with attempted transfers
of service tenure rights, pre-emption rights etc., all of which are restricted to
the person to whom such rights belong. Thus, the right of pre-emption cannot
be transferred, because strangers should not be allowed to be introduced as
co-sharers in the property and because such a right is a personal privilege
given to the pre-emptor. Similarly, a trustee cannot alienate his office because
it is based on personal confidence.
7. A right to future maintenance, in whatsoever manner arising, secured

or determined, cannot be transferred.
A right to future maintenance is altogether inalienable. A right to receive MCQ No. 31
maintenance is a personal right, although any particular property or the income

thereof may be charged with it. It is in accordance with public policy that those
rights which are generally created for the maintenance or personal enjoyment
of a qualified owner (e.g., a Hindu female) ought not to be alienable.
However, in some old cases, it has been held that if the amount of
maintenance is fixed by an agreement or by a decree, it can be assigned (see
5 Bom. 99, 38 Cal. 13 (22)]. Although an agreement or a decree would make
such right definite, it is nevertheless a right created for the personal benefit of
the qualified owner, and is not alienable. It will be seen that Sec. 60 of the Civil
Procedure Code, which protects a right of maintenance from attachment and
sale, does not make any exception in the case of maintenance fixed by
agreement or decree.
20
The above reasoning, however, does not apply to arrears of maintenance

which have accrued. Therefore, arrears of maintenance are excluded from
MCQ Nos. 32, 33
this clause, which is restricted to future maintenance only.
8.
A mere right to sue is not capable of being transferred.
Claims for — (i) past mesne profits, (ii) for damages for breach of a
contract, after breach, (iii) for suing an agent for accounts, and (iv) for pre
emption, are all “mere rights to sue", and cannot be transferred. Thus, the
Calcutta High Court has held thata bare right to sue for mesne profits cannot
be assigned, as mesne profits are unliquidated damages, and not a debt. (Durga
Chunder v. Kailas Chunder, 1897 2 Cal. W.N. 43)
But where the right to sue has merged in a decree, the right under the
decree is assignable. Thus, a right to mesne profits under a decree is
assignable.
Examples
1.
B publishes a libel of A. Here, A has a right in law to sue B, and he
assigns this right to recover damages to C. This assignment is invalid,
as it is an assignment of a mere right to sue, and C will not be able to
recover damages from B.
2.
A has maliciously procured the attachment of B's property. B assigns
his right to recover damages to C. The assignment is invalid, as it is
one of a mere right to sue.
3.
Xagrees to sell to Y, a certain quantity of gunny bags deliverable on
a future day. The contract is not of a personal character. Before the
date of delivery, Y assigns his beneficial interest in the contract to Z.
Thereafter, X commits a breach of the contract. Here, Z can sue x
for damages for not delivering the gunny bags, because this is not
an assignment of a mere right to sue, but of an actionable claim, and
is therefore valid.
Problems
1. A is the owner of land of which B is wrongfully in possession. A is

entitled to mesne profits from B. A transfers his right to C to recover the same
from B. Will C succeed?
Ans. :C will not succeed as a right to past mesne profits, being a mere
right to sue, is not transferable.
2. A assigns to B, his right to sue A's tenant C, for recovering arrears of
rent due to A. If B files the suit, will he succeed against C?
Ans.: No. As a mere right to sue cannot be transferred under the Act, B's
suit against C will not succeed.
9. A public office or the salary of a public officer, whether before or after
MCQ Nos. 34, 35 it has become payable, cannot be transferred.
Public policy frowns on the transfer of the salary of a public officer, for the
salary is given for upholding the dignity of the office and the proper performance
of its duties. Such salary cannot, therefore, be transferred.
As observed in Corporation of Liver pool v. Wright, (28 L.J. (Ch.) 868) —
"Where the law assigns fees to any office, it is for the purpose of upholding
the dignity and performing properly the duties of that office, and the policy of
the law will not allow the Officer to bargain away those fees to the appointor or
anyone else."
10. Stipends allowed to military, naval, air-force and civil pensioners of MCQ No. 36
Government, as well as political pensions, cannot be transferred.

Thus, civil and military pensions are not transferable, and they are also
exempt from attachment under the Civil Procedure Code. Similar provisions
are to be found in the Pensions Act, 1871.
11. No transfer can be made which is opposed to the nature of the interest MCQ No. 37
affected thereby. Thus, an attempted transfer' of a service inam by

the inamdar or a purported 'transfer' of res nullius like air or water
from a river, will be void.
As seen above, an interest restricted to an individual personally [described
in cl. (4)] is such an interest that cannot possibly be transferred. So also, there
are other things, which from their very nature are not transferable. Thus, things
commonly called res communes, i.e., things of which no one in particular is the
owner, and which all men may use are not property, and therefore, cannot be
transferred. Res nullius (things belonging to nobody), such as air and water,
being incapable of appropriation, are excluded from the category of transferable
property. Res extra commercium (things thrown out of commerce), e.g., property
dedicated to a deity, though originally ranking with transferable property, also
cannot be transferred.
12. No transfer can be made for an unlawful object or consideration within

the meaning of S. 23 of the Indian Contract Act.
13. Lastly, no transfer can be made to a person who is legally disqualified
to be a transferee. Thus, for instance, S. 136 of the Act (discussed in
a later Chapter) lays down that a judge, a legal practitioner or an
officer connected with any Court of Justice cannot purchase an
actionable claim. So, an attempted sale of an actionable claim to a
judge would be void.
MCQ No. 38, 39
Persons competent to transfer (S. 7)
Every person competent to contract (under S. 11, Indian Contract Act] What persons are
competent to
and entitled to transferable property, or authorised to dispose of transferable
transfer propery?
property which is not his own, is competent to transfer such property, either (2 marks)
wholly or partly, and either absolutely or conditionally. M.U. Nov. 2013
MCQ No. 40
TRANSFER IN FAVOUR OF MINOR OR LUNATIC — S. 7 lays downas
to who is competent to transfer. It does not say who is competent to be a
transferee. Itmay be noted that under S. 7, the transferor should be competent
to contract. Thus, the disability which attends the making of a transfer does
not attach to the acceptance thereof. All that S. 6 (discussed earlier) lays down
is that a transfer cannot be made to a person legally disqualified to be a
transferee. A minor (or lunatic) being incompetent to contract, cannot be a а
transferor at all. But there is nothing in the Transfer of Property Act to nullify a а
transfer to a minor (or a lunatic). Thus, a minor can be - (i) a mortgagee
provided there is no covenant for him to perform; (ii) a purchaser - provided
the sale does not impose any obligation upon him; (iii) a donee of a gift
provided the gift is not onerous.
It may be noted that the Section also covers persons who may not be
entitled to the property, but who are authorised to dispose of such property, as
for instance, a Karta of a Hindu joint family, a guardian, an executor or
administrator, a trustee, and so on.
It may also be noted that Sec. 136 of the Act prescribes that certain officers
connected with Courts of Justice cannot trade in actionable claims.
Persons who cannot assign their interest (S. 6)

S. 6 enumerates the three types of persons who cannot assign their
interest. Thus,
(i) A tenant having an untransferable right of occupancy cannot assign
his interest as such tenant.
(ii) The farmer of an estate in respect of which default has been made in
paying revenue, cannot assign his interest as such farmer.
(iii) The lessee of an estate under the management of a Court of Wards
cannot assign his interest as such lessee.
Operation of transfer (Effects of transfer) (S. 8)

Section 8 of the Act deals with the effects of a transfer. It lays down that,
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.
Thus, under S. 8:
Where property transferred is Legal incidents (of the property)

which pass to the transferee are –
1. Land -
1. (i) The easements annexed
thereto;
(ii) the rent and profits accruing

after the transfer; and
(iii) all things attached to the earth.
23
TRANSFER OF PROPERTY : MOVABLE OR IMMOVABLE
MCQ No. 41
2. Machinery attached to the earth - 2. The movable parts thereof.
3. House - 3. (i) The easements annexed
thereto;
(ii) the rents thereof accruing
after the transfer; and
(iii) the locks, keys, bars, doors,

windows, and all other things
provided for permanent use
therewith.
4. Money or other property yielding 4. The interest (or income thereof)
income accruing after the transfer takes
effect.
5. Debt or other actionable claim - 5. 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.
"ACCESSORY FOLLOWS THE PRINCIPAL" — Section 8 is a legislative What are acces
recognition of the legal maxim “accessory follows the principal”. It signifies sory rights?
(2 marks)
that when a man acquires property, he becomes the owner also of all that
M.U. Nov. 2012
appertains to it as accessory. As the section does not apply to transfers by
operation of law, the rules laid down in this section do not apply to Court sales. MCQ No. 42
To take a simple illustration, pictures put on the wall will not be regarded
as part of the house, the reason being that they can be easily removed. On the
other hand, a window or a door, which has been fitted into the wall, cannot be
taken out easily, and will, therefore, form part of the house.
With regard to rights to underground strata (as for example, mines and
minerals), everything will depend on the terms of the transfer- deed. Although
an absolute sale would also pass such things to the transferee, in the case of
a lease or a mortgage, in the absence of an express provision, the right to
work minerals will not pass to the lessee or the mortgagee.
Oral transfer (S. 9)

A transfer of property may be effected without writing, where writing is not What is Oral
expressly required by law. Transfer?
(2 marks)
There are some instruments which are required to be in writing, though M.U. Nov. 2015
they may not be registered; also, there are some instruments which must be in
May 2019
writing and must also be registered. Dec, 2019
MCQ Nos. 43, 44

Writing is necessary in the case of the following instruments:

(1) Sale of immovable property of the value of 100 or upwards - SOM
54.
(2) Sale of a reversion or other intangible thing – Sec. 54. (3) Simpl
-
mortgage, irrespective of the amount secured — Sec. 59,

(4) All other mortgages for securing * 100 or more.
Write a short note
on : Oral transfer (5) Leases of immovable property, —
of property (i) from year to year; or
M.U. Nov. 2009
(ii) for any term exceeding one year; or
(iii) reserving a yearly rent : Sec. 107.
(6)
Exchange. : Sec. 118
(7) Gift of immovable property : Sec. 123.
(8) Transfer of an actionable claim : Sec. 130.
(9) Notice of transfer of actionable claim : Sec. 131.
The following transfers under the Act must be effected by a registere
instrument, that is, these transfers must be in writing and registered, namely,
(i) Sale of a tangible immovable property of the value of 100 or more
S. 54.
(ii) Sale of a reversion or an intangible thing : S. 54.

(iii) Mortgage (other than a mortgage by deposit of title- deeds), wher
the principal money secured is 100 or more: S. 59.
(iv) Charge created by act of parties.
(v) A lease of immovable property, -
(i) from year to year; or
(ii) for any term exceeding one year; or
(iii) reserving a yearly rent: S. 107.
(vi) Gift of immovable property: S. 123.
ESSENTIALS OF A VALID TRANSFER OF PROPERTY -

The following may be said to be the eight essentials of a valid transferi
property:
1. The transfer must be between two or more living persons : S.
Therefore, the transferor and the transferee cannot be exact
identical.
2. The property transferred must be transferable : S. 6.

3. The transfer must notbe
(i) opposed to the nature of the interest affected thereby : S. 6.

(ii) for an unlawful object or consideration : S. 6.

(ii) to a person legally disqualified to be a transferee : S. 6.
4. The transferor must be (i) competent to contract and entitled to
transferable property, or (ii) authorised to dispose of transferable
property which is not his own : S. 7.
5. The transfer must be made in the mode prescribed by the Act : S. 9.
Thus, all necessary formalities (like attestation, registration etc.) must
be complied with.
6. If, on a transfer, an interest is created in favour of an unborn person,
subject to a prior interest created by the same transfer, it must exhaust
the whole of the remaining interest of the transferor : S. 13. (This is
discussed later at length.)
7. The transfer must not offend the rule against perpetuity : S. 14. (This
is also discussed later at length.)
8. If the transfer is conditional, the condition must not be illegal,
impossible, immoral or opposed to public policy : S. 25. (This is
discussed later in this Chapter.)
B. ILLEGAL RESTRICTIONS ON CERTAIN

ALIENATIONS (Ss. 10-12 and 17-18)
Ss. 10, 11, 12, 17 and 18 declare as void certain restrictions on transfer
of property. The cumulative effect of these Sections is that if the following four
restrictions are included in a transfer, they are void, and therefore, of no effect.
1. Condition restraining alienation (S. 10)

It is a matter of common sense that A cannot sell a house to Bon condition MCQ Nos. 45, 46
that A shall never alienate the house, that is, never sell, gift, lease or mortgage
it. The power of alienation is a legal incident of property. In the words of Dart,
“a right of alienation is incidental to, and inseparable from, the beneficial
ownership of property." Consequently, any restriction on such power or right is
necessarily repugnant to the every notion of property, and therefore, not allowed
by the law.
Section 10, therefore, provides that if any property is transferred subject
to a condition or limitation which absolutely restrains the transferee (or any
person claiming under him) from parting with or disposing of his interest in the
Write a short note
property, such condition or limitation (and not the transfer itself) is void, except on : Condition
as stated below. restraining alien
This rule is, however, object to the following two exceptions: ation of property.
M.U. Apr. 2009
(a) In the case of a lease, where such a condition is for the benefit of the
Jan. 2019
lessor (or those claiming under him), the condition is valid. May 2019
26
(b) A transfer to, or for the benefit of, a woman (not being a
Hindu
Muhammadan or Buddhist), which provides that she would not have
the power, during her marriage, to transfer or charge the same or her
beneficial interest therein is valid.
SCOPE — Cls. (a) and (b) are exceptions to the general rule paid down
in S. 10. Now, a restraint absolutely prohibiting the transferee from alienating
the property is void. Thus, if A gives property to B and his heirs, and adds a a
condition that if the property is alienated, it should revert back to A, such a

condition is void.
Write a short note
on : Partial But, when a restrictive condition does not amount to an absolute prohibition
restraints on under this section, it may be upheld. In other words, though one cannot
transfer. absolutely restrain a transferee from alienating his interest, still one can impose
M.U. Nov. 2010 partial restraints on his power of free disposition, provided one does not thereby
materially interfere with his freedom of enjoying his property according to his
will.
For example, A sells a piece of immovable property to B. One of the

conditions of the sale is that should B wish to part with the property, he would
Discuss the state sell it to A. The question then arises as to whether B would be entitled to sell
ment : The law the property, to C without any reference to A? Now, it will be seen that this is
always favours merely a covenant to secure A the right of pre-emption, i.e., to give him an
alienation of prop opportunity of buying the property (at the market price) and is therefore, valid,
erty rather than its
accumulation. as it does not amount to an absolute prohibition. Therefore, B should first
M.U. Nov. 2010 make a reference to A. But, such a covenant cannot have effect for an indefinite
period. If the covenant for pre-emption prejudicially affects the power of free
disposal, it would be void.
In Rosherv. Rosher, (26 Ch. D. 801), where a condition was imposed on
the transferee that he should first offer the property to the transferor's wife at a
fixed price, much below the real market price, the condition was held to
constitute an absolute restraint on alienation.
Similarly, a stipulation in a sale deed that the vendee could sell back the
property to the vendor only, and to no one else, is more than a mere partial
restraint, and therefore, invalid. But a condition that the purchaser should not
alienate the property in favour of a particular person, who is the vendor's enemy,
is only a partial restraint, and may, therefore, be allowed.
Problem : A devised his estate to his son with a proviso that if the son
should desire to sell the estate or any part of it during the life-time of his wife,
she would have the option to purchase the same at * 3,000, and the same
should be offered to her at such price. On the death of the testator, when the
market value of the property was at least 15,000, the question arose whether
the son was entitled to sell, lease or mortgage the property without offering it to
the widow. Advise the son.
Ans. : The condition is void. Rosherv. Rosher, (1884) 26 Ch. 801 followed
in Re Cackerill, (1929) 2 Ch. 131. (But in Ratanlal v. Ramanujadas, (1944) AIR
Nag. 187 the Napgur High Court held a similar condition to be a partial restraint
and, therefore, valid.]
This section is based on the principle that a right of transfer is incidental

to, and inseparable from, the beneficial ownership of property.
Under this Section, absolute restraints are declared void; however, partial
restraints may be allowed if such restraints are reasonable and if they are not
absolute restraints disguised as 'partial' restraints. In one English case, Jessel
M.R. observed : "You may restrict alienation in many ways;....you may restrict
alienation by prohibiting a particular class of alienation, or you may restrict
alienation by prohibiting it to a particular class of individuals, or you may restrict
alienation by restricting it to a particular time."
Thus, in Mohammad Raza v. Abbas Bandi, the Privy Council held that if
the only condition was one of restraining the transferee from transferring the
property outside the family, it would not be an absolute restraint, but only a
partial one.
Needless to say, if an apparently partial restraint in fact amounts to an
absolute restriction (as in Rosher v. Rosher above), it will be invalid.
Problem : A, B, C and D effected a partition of joint family property, and
agreed that if any one of them should have no issue, he would have no power
to sell his share, but should leave it for the other sharers. A sold his share and
died without issue. Can B, C and D sue to recover the share ?
Ans. : B, C and D cannot sue to recover the share, as the condition is
void, as it amounts to an absolute restraint within the meaning of S. 10.
(Venkatasammanna Brammanna, 1986 4 Mad. H.C. 345)
EXCEPTIONS — As seen earlier, there are two exceptions to the above
general rule. The first exception is in favour of a lessor, when the condition is
for his (lessor's) benefit or for the benefit of those claiming under him. The
lessor can always fetter his lessee's liberty of alienation. The logical reason for
this exception is that a landlord should be free to choose the person who shall
be in possession of his land. X, the landlord, may have leased his land to Y, the
tenant, because he has confidence in Y. He may not have the same confidence
in Y's friend, Z. Therefore, as long as X is the owner of the land, he should be
allowed to pick and choose his own tenants.
The second exception is for the benefit of a married woman, not being a
Hindu, Muhammadan or Buddhist, so that she has no power, during her
marriage, to transfer or charge the same or her beneficial interest therein. So,
it is quite possible to restrain a transferee, who is a Parsi, Jew or Christian
married woman, from transferring her interest during her coverture (that is, her
marriage).
28
The second exception embodies the doctrine of restraint in anticipation

and is borrowed from English Law, where such a restraint is recognised to
protect a woman against her husband. In India, it is intended that this exception
should apply only to those communities which follow the English Law. Therefore
Hindus, Muhammedans and Buddhists are not covered by this exception.
Amir uddaula v. Nateri, 6 M.H.C.R. 356 — A Muhammedan father, during
his son's minority, gave certain property to him, and on delivery of possession
the son signed a document that he would not alienate the property. The Coun
held that, by the Muhammadan Law, as well as by the general principles of
law, such a restriction on alienation, especially after the gift had become
complete, is absolutely void.
2. Restriction on free enjoyment of property (S. 11)

Section 10 (discussed above) invalidates any general restraint against
alienation. Section 11 invalidates restrictions imposed on the free enjoyment
of the interest created by the transfer after it has become absolute, and lays
down that when, on a transfer of property, an interest in the property is created
absolutely in favour of any person, but the terms direct that such interest is to
be applied or enjoyed by him in a particular manner, the transferee is entitled
to receive and dispose of the property as if there was no such direction.
However, there is one exception to the above rule. If any such direction
has been made in respect of one piece of immovable property for the purpose
of securing the beneficial enjoyment of another piece of such property, such a
direction can be enforced.
SCOPE - Section 10 applies to all transfers, whereas section 11 will not

apply unless the transfer is absolute, and the condition or restriction is imposed
by the terms of the transfer. Thus, where a man transfers his land to another,
reserving a right of residence to himself, and the terms of the transfer enjoin
on the transferee that he shall not have the right to drive away the transferor,
will the condition be valid? Yes, it will be, because the transfer is not made
absolutely.
Again, where the property transferred is already under a charge, which is
but a condition, section 11 will not apply, as in that case, the condition is not
imposed by the terms of the transfer. If an absolute interest is created by a
deed of transfer, it takes effect, notwithstanding subsequent words in the deed
restricting the right of full ownership. This, however, does not mean that the
transferor cannot reserve some right in his own favour during his lifetime. It is
to be remembered that under Sec. 10, an absolute restraint is void, whereas
under Sec. 11, only a restriction repugnant to the interest created by the transfer
is void.
It follows that an agreement not to partition property will also be hit by S.

11. A right of partition is a natural incident of joint property, and any condition
purporting to deprive a joint-owner of this right would be void. Thus, in one

case decided by the Bombay High Court, it was held that a direction not to
partition property until all the sons attained majority would be invalid, even
though the restriction is for a limited time.
EXCEPTION — The exception to the general rule (given above), allows
a transferor to give a direction to the transferee that for the beneficial enjoyment
by the transferor of another property, the transferee is to enjoy the transferred
property in a particular manner. Such a direction would be valid and enforceable.
Thus, if A makes an absolute gift of a house to B, and directs that B shall
not raise it higher, so as to obstruct the passage of light and air to A's adjoining
house, the direction will be valid.
Again, where A grants a lease of his zamindari to B, reserving to himself
all the minerals and a few plots of land in the middle of his zamindari for working
the mines and storing minerals, and directs B to allow passage to his miners to
and from the reserved plots, the direction is binding.
Similarly, an owner of two adjoining houses with a common drainage
route can, while selling one of them, impose a condition on the transferee that
he must keep his portion of the drain in proper order, because the direction is
"in respect of one piece of immovable property for the purpose of securing the
beneficial enjoyment of another piece of such property." A condition imposing
on the lessee the obligation to clear up jungles and erect houses, may, on the
same ground, be justified.
The most common instance of the exception is to be found in those cases
where a person who owns a house and an adjoining land, sells the land and
enters into a covenant with the purchaser that the latter shall keep a portion of
the transferred land vacant and free from buildings, so as not to obstruct the
air and light of the vendor's house. Such a covenant, being one intended for
the beneficial enjoyment of the vendor's house, is enforceable as against the
purchaser.
Jafri Begum v. Seyd Ali, 28 I.A. 111 An arbitrator made an award
between two sisters giving each a half-share of partible estate and appointing
the husband of one sister the manager, but directed that neither sister would
have a right to claim partition. One sister died and her son sued for partition.
The Court held that the arbitrator had no power to alter the course of legal
devolution in a mode at variance with the ordinary principles of the sister's
son's personal law, in the absence of a special custom prevailing in his family.
He had no power to make property which was divisible by law, indivisible forever.
Illustrations
MCQ No. 47
1. X makes an absolute gift of a house to Y, with a direction that Y shall
reside in it. Here, the gift is absolute and the direction is void; Y may
or may not live in the house.
30
2.
A conveys an absolute interest in a farm to B, by way of a sale. The
sale deed contains a direction that B shall not cut down the trees
The direction is invalid, and B can cut the trees.
3.
A assigns a life-interest in a farm to B for her maintenance. The deed
contains a direction that B shall not cut down the trees. Here, the
direction is valid, as there is no absolute transfer in favour of B.
MCQ No. 48 3.
Condition making interest determinable on insolvency or
attempted alienation (S. 12)

Under S. 12, when property is transferred, it is not open to the transferor
to provide that if the transferee (i) becomes insolvent, or (ii) endeavours to
transfer or dispose of such property, — his (i.e. the transferee's) interest therein
would cease. Such a condition or limitation in a transfer is void.
However, this rule does not apply to a lease, if such a condition is for the
benefit of either the lessor himself or persons claiming under him.
Thus, A settles property in trust for himself until his death or bankruptcy,
and then, on the occurrence of either of these events, on his wife. A is then
adjudged insolvent. A's interest in the property vests in the Official Assignee or
Official Receiver, and not in his wife.
This section may be regarded as an exception to the rule contained in
Sec. 31, which permits a condition in a transfer making the transferee's interest
deter minable on the happening of a contingency. Though one can agree that
the transferee's interest should come to an end if a certain event happens, still
one cannot say that the transferee will forfeit his interest in the property. It may
be noted here that on insolvency, the property of the insolvent vests by operation
of law in his assignee in bankruptcy; so, the transferor could deter mine the
transferee's interest on insolvency, the provisions of the laws of insolvency
would be defeated.
There is yet another reason for this rule. If X gives property to Y subject to
such a condition, such condition would not be known to third parties, who
would be induced to give credit to Yin the belief that such property is sufficient
security. It would, therefore, not be fair to such persons if, at the time of Y's
insolvency, the property is suddenly withdrawn from Y's assets, and is given
back to X. The law, therefore, provides that such a condition is not valid.
Problem: A transfers property to B subject to a condition that if B becomes
insolvent, the property is to go to C. If B becomes insolvent, can C claim the
property?
Ans. : The condition is hit by S. 12 (above), and is therefore, void. Thus,
on B's insolvency, C cannot claim the property.
EXCEPT IN ASE OF A LEASE The principle enunciated in this
section is made subject to an exception in the case of a lease. A restraint as
regards alienation will be void where property is granted in absolute right (sec.
10); but where land is merely granted for use of cultivation, either free of rent
or at a favourable rate of rent, any condition restraining alienation would not be
inconsistent with the rights which are conferred. Hereditary rent-free tenancies
of a perpetual character may exist without any right of alienation attaching to
them.
Write a short note

4. Direction for accumulation of income (Ss. 17-18) on : Direction for
accumulation of
(A) When such direction is void (S. 17(1)] income.
Where the terms of a transfer of property direct that the income arising M.U. Oct. 2008
from the property is to be accumulated (either wholly or in part) during a period Apr. 2011
longer than —
MCQ No. 49
[a] the life of the transferor, or
[b] a period of 18 years from the date of the transfer,
such a direction is void to the extent to which the period during which the
accumulation is directed exceeds the longer of the periods mentioned above.
At the end of such period, the property and the income thereof can be disposed
of, as if the period during which the accumulation has been directed to be
made, has elapsed.
DIRECTION FOR ACCUMULATION OF INCOME It is well-known that
land is to be enjoyed by the profits that arise out of such land, and just as the
law frowns upon attempts at restraint on alienation, so also, it dislikes any
attempt to prevent the income being enjoyed by the owner of the land for the
time being. The law, therefore, says that a direction to accumulate either the
whole, or even a part, of the income, would be regarded as void, if it is beyond
the period prescribed by S. 17.
Where the terms of a transfer of property direct that the income arising
from the property is to be accumulated either wholly or in part, such a direction
will be good for the longer of the following periods, viz, -
(1) the life of the transferor, or
(2) a period of 18 years from the date of the transfer.
If, however, the direction is for a period longer than the two periods
mentioned above, the direction automatically stands modified, so as to reduce
it to the aforesaid period. At the end of the said period, the accumulated income
and the property can be disposed of, as if the entire period for which the
accumulation was directed by the transferor has expired. Thus, A transfers
property to B, with aa direction that B should accumulate the income arising out
of this property for a period of 25 years. When 18 years expire from the date of
the transfer, B is free to dispose of the property.
ENGLISH LAW - S. 17 is based on an English Act, popularly known as
the Thellusion Act (so called because it was passed after the Court had decided
a case where Mr. Thellusion was the transferor of certain property). The Act
32
contained provisions which are now to be found in the Law of Property

(Amendment)Act, 1925, underwhich income may be accumulated during any
of the following periods, viz.:
(i) the life or lives of the transferor or transferors; or
(ii) twenty-one years from the death of the transferor; or
(ii) during the minority of any person living at the death of the transferor
or
(iv) during the minority of any person, who would be entitled to the
property, if he was of full age.
(B) When such direction is valid and allowed [Ss. 17(2) & 18]
However, such a direction for accumulation of income (even beyond the
periods stated above) is valid, if such direction is for the purpose of —
(i) the payment of the debts of the transferor (or any other person taking
any interest under the transfer); or
(ii) the provision of portions for children or remoter issues of the transfero
(or of any other person taking any interest under the transfer); or
(iii) the preservation or maintenance of the property transferred; or
(iv) when property is transferred for the benefit of the public or for the
advancement of religion, knowledge, commerce , health, safety, or
any other object beneficial to mankind.
In all these four cases, the condition is valid even if it extends beyond the
lifetime of the transferor and beyond eighteen years from the date of the transfer.
Exceptions (i) and (ii) are taken from the English Act and exception (iii) is
based on the English case, Vine v. Raleigh.
C. TRANSFER FOR BENEFIT OF UNBORN PERSONS

(Ss. 13-14 & 18)
Write a short note
Sections 13, 14 and 18 of the Act deal with the law relating to transfers to
on : Transfer of an
Unborn Child.
an unborn person, that is, a person who is not born on the date of the transfer.
Now, one of the essentials of a valid transfer is that the transferee must be a
M.U. Apr. 2016
living person. Therefore, a transfer cannot be made directly to an unborn person.
MCQ Nos. 50, 51 But, on a transfer of property, an interest therein may be created for the benefit
and 52 of such a person, subject to certain restrictions set out in Ss. 13 and 14. The
conditions to be complied with are as under:
1. The interest of the unborn person must be preceded by a prior interest
to one or more living persons.
2. The unborn person be in existence when the prior interest (or
the last prior interest) comes to an end and he must have the interest
at the latest when he attains majority.
3. The interest created for the benefit of such unborn person must MCQ Nos. 53, 54,
55 and 56
comprise the whole of the remaining interest of the transferor in the
property; in other words, a life-estate cannot be conferred on an
unborn person.
The phrase 'the whole of the remaining interest of the transferor' has
been a subject of judicial discussion. Though the decisions are not directly
under the Transfer of Property Act, they are under a similar provision of the
Indian Succession Act, and therefore deserve careful attention.
1. Putlibai v. Sorabji Naoroji [(1923) 25 Bom. L.R.1099] : In this case,
a Parsee testator had bequeathed a life interest to his children, and after them,
to his grand-children, with a condition that if any of the legatees ceased to
profess the Zoroastrian faith or married a person not belonging to the
Zoroastrian faith, then the interest in his favour would come to an end. The
Privy Council had to decide whether the legacy given, coupled with such
condition for the benefit of grand-children, some of whom were not in existence
on the date of the death of the testator, would amount to the whole of the
remaining interest of the testator. The Privy Council decided that as the interest
given to such unborn person was subject to a condition subsequent, it was
less than the whole of the remaining interest of the testator, and therefore,
void.
2. Sopher v. Administrator General of Bengal (71 I.A. 93) : In this

case, S died, leaving a widow and two sons. In his will, he had directed the
trustees to pay his wife a monthly sum for her own use for her life, and to his
children and his grand-children on the happening of certain contingencies.
The Privy Council held that such a contingent interest given to an unborn person
was void. (It is to be noted that this case was decided under the Indian
Succession Act, and as held in the next case (below), its ratio would not apply
to cases under the Transfer of Property Act.)
3. Phramroze Dadabhai Madan v. Tehmina (49 Bom. LR 882): In this
case, there was a settlement under which a contingent interest in favour of an
unborn person was created. The Bombay High Court held that the decision in
Sopher's case could not be applicable to the Transfer of Property Act, and
therefore, the settlement was valid. Their Lordships came to the conclusion
that the words "extends to the whole of the remaining interest of the transferor
in the property" in sec. 13 of the Transfer of Property Act were directed to the
extent of the subject-matter and to the absolute nature of the estate conferred,
and not to the certainty of vesting.
As stated earlier, all the three cases referred to above arose under the
Indian Succession Act (which has a similar provision).
Under S. 13 of the Act, when on a transfer of property, an interest in such
property is created for the benefit of a person who is not in existence at the
date of the transfer, subject to a prior interest created by the same transfer, the
34
Discuss the
provisions of TOP interest created for the benefit of such unborn person will not take effect,unless
Act 1882 relating it extends to the whole of the remaining interest of the transferor in the property
to transfer for the
benefit of unborn Illustration : A transfers property of which he is the owner, to B in trust
persons, for A and his intended wife successively for their lives, and after the death of
M.U. Apr. 2008 the survivor, for the eldest son of the intended marriage for life, and after his
Nov, 2008 death for A's second son.The interest so created for the benefit of the eldes
son does not take effect, because it does not extend to the whole of A's
Write a short note remaining interest in the property.
on : Transfer to
unborn person S. 13 of the Transfer of Property Act is an attempt to import into India,
M.U. Dec. 2014 what used to be known in England rule in Whitby v. Mitchell" or “the rule
as “the
Apr, 2015 against double possibilities".According to this rule, giving an estate to the child
of an unborn person, after a life-estate to the unborn parent, is void.
The principle underlying the rule is that a person disposing of property to
another should not be allowed to fetter the free disposition of that property in
the hands of more generations than one. The rule is quite distinct from the rule
against perpetuity, although both these rules restrict the postponement of
vesting of property and both rules may apply in the same case.
In other words, the section provides that an unborn person cannot be
given property only for his life-time, the property going to his child after him,
because it is an obvious contingency (as in the above example), that A might
never have a son. Besides, there is another possibility also. A might not have
a second son or the second son might predecease the eldest one.
Suppose A gives property to B for life, and afterwards to his son, (who is
unborn at the date of the transfer), subject to the condition that if the son
changes his religion, the property should be forfeited. Here, the condition
regarding change of religion fetters the estate, and does not therefore comply
with S. 13, which speaks of the whole of the estate.
Thus, the effect of S. 13 is that there cannot be a direct transfer to a
person who is not in existence (unborn person) on the date of the transfer. It is
for this reason that the said section uses the expression "for the benefit of"
and not "transfer to" an unborn person.
Under English law, a limited interest (as for instance, a life interest) can
be created in favour of an unborn child-but not thereafter.
Rule against perpetuity (Ss. 14 & 18)

The term 'per petuity' literally means eternity or infinity. In the context of
Which is the rule transfer of property, it refers to the creation of an interest in present, but which
against perpetu is to take effect after an infinitely long time. Significantly, the term does not
ity? Discuss with connote any specific number of years. Thus, what is struck down by S. 14 is an
reference to Ss.
14, 18, 20 and 20 of interest created in perpetuity, that is, an interest which will not vest until an
the T. P. Act. infinitely long period of time. The rule against perpetuity ensures that one cannot
M.U. Nov. 2012 postpone the vesting of property in a transferee beyond a certain limit. The
period for which vesting may lawfully be postponed is called the per petuity
period. The rule against perpetuity defines the perpetuity period, and is to be
found in S. 14 of the Transfer of Property Act.
Suppose, for instance, that X gives a piece of land to his friend A for life, MCQ No. 57
and afterwards to his friend B for life, then to his friend C for life, and then to
the son that may be born to A for his (the son's) life, then to the son that may be
born to B for life, and then ultimately to the son that may be born to C for ever.
If such is the disposition of the land, A cannot alienate the property, because
he has only a life interest. For the same reason, neither B nor C, nor the sons
of A or B can alienate the property. Only when the property finally vests in C's
son, will it be alienable by him. This would certainly act as a restraint on the
free alienation of land for a considerably long period, and to prevent this, the
law provides that one cannot tie up property and prevent its being taken
absolutely by a person beyond a certain limit. It is provided that one can tie up Write a short note
property and prevent its free alienation only for one generation, because all on : Rule against
friends now living must die within that time, as they are all (in the words of Lord perpetuity.
M.U. Nov. 2007
Nottingham) “candles lighted together”.
Apr, 2009
S. 14 of the Act makes a provision for such contingencies, and provides Nov. 2013
that no transfer of property can operate to create an interest which is to take May 2017
effect after the lifetime of one or more persons living at the date of such transfer, Nov. 2017
and the minority of some person who should be in existence at the expiry of Apr. 2018
that period, and to whom, the interest created is to belong if he attains the age
of majority
This section may be compared with Sec. 114 of the Indian Succession
Act, 1925. The two illustrations to that section are cited below as elucidating What is the rule
the meaning of the section: against perpetu
ity? What are the
Illustration (a): A fund is bequeathed to A for his life, and after his death,
provisions of the
to B for his life, and after B's death, to such of the sons of B as shall first attain
T.P. Act regarding
the age of 25. A and B survive the testator. Here, the son of B who shall first transfer to unborn
attain the age of 25 may be a son born after the death of the testator. Such a person?
son may not attain 25 until more than 18 years have elapsed from the death of M.U. Nov. 2013
Dec. 2014
the longer liver of A and B, and the minority of the sons of B. The bequest after
Nov. 2015
B's death is void.
Dec. 2016
[Note : In this illustration, the interest created in favour of the son of B is May 2019
void, because it is intended to be postponed beyond the minority of a person
not in existence on the date of the transfer. The illustration, however, states
that such interest is void because such son may not attain 25 until more than
18 years have elapsed from the date of the longer liver of A and B. It, however,
appears that this reasoning is not consistent with the Indian Law as contained
either in Sec. 14 of the Transfer of Property Act or in Sec. 114 of the Indian
Succession Act. ]
36
Illustration (b): A fund is bequeathed to A for his life, and after his death,
to B for his life, and after B's death, to such of B's sons as shall first attain the
age of 25. B dies in the lifetime of the testator, leaving one or more sons. In this
case, the sons of B are persons living at the time of the testator's decease,
1
and the time when either of them will attain the age of 25 necessarily falls
within his own lifetime. The bequest is valid.
RULE EXPLAINED — When it is intended to benefit living persons by a
transfer, there is no limit to the number of successive interests that may be
created in their favour. Thus, A, B, C and D are all living when a transfer is
made by a man in favour of A for life, afterwards in favour of B, C and D.
successively for their lives. Here, all the successive interests are valid, as the
persons benefited are all in existence at the date of the transfer. But when
unborn persons are intended to be benefited, a three-fold restriction is put on
the power of the transferor:
1. The unborn person must be given all that remains after the termination
of the intermediate interests. (S. 13, seen earlier.)
2. Such interest must vest within the maximum period provided by S. 14.
Ordinarily, an estate ought to vest in the remainder man immediately upon the
termination of the life-estate, but this section makes a concession, and allows
the delaying of the vesting during the minority of a person who is not born at
the date of the transfer.
3. The unborn person must come into existence on or before the expiry
of the existing life or the last existing life, that is, the last life-estate. This condition
is intended to prevent the property from remaining in abeyance indefinitely.
Moreover, regard is to be had to possible and not to actual events. For example,
a transfer is made to A (a bachelor) for life, and then to his wife for life, and the
remainder to other persons. The gift is invalid, because it is possible that A
may marry a wife who was not born at the transferor's death. In other words, it
is possible that an unborn person will take a mere life-interest, and not all that
remains. This mere possibility will vitiate the whole transfer, though in reality,
in a particular case, A's wife may not be an unborn person at the transferor's
death. In other words, a transfer is invalid, even if there is a sheer possibility
that a unborn person would take a life-interest.
Examples
1. A's property is transferred to B for life, and after his death, to such
son of B as shall first attain the age of 25 years, B having no son on
the date of transfer. Here, the life-estate in favour of B, a person in
existence at the time of transfer, is perfectly valid, but the interesi
created in favour of B's son, who was not in existence on the date o
transfer is void, as the vesting of the interest is intended to bu
postponed beyond the minority of an unborn person.
2.
Property is transferred to A for life, and then to B for life. Both A and
B are living at the date of the transfer. The transfer is valid.
3. Property is transferred to A for life, then to B for life, and then to such
of B's sons as shall first attain the age of 18 years. The transfer is
valid.
4. Property is transferred to A for life, then to B for life, and then to such
of B's sons as shall first attain the age of 18 years and one day. The
transfer is void.
As seen above, the interest created must vest within the prescribed limits.
It is not sufficient that it may vest within such limits. If at the time of its creation,
the limitation is so framed, that it may or may not so vest, the whole devise is
bad, and it cannot be validated by subsequent events. In other words, as stated
earlier, in determining whether a gift is good or bad according to the Rule
against Perpetuity, regard is to be had to possible, and not actual, events. So,
where a transfer is made to take effect in favour of an unborn person at a
particular age in excess of the age of minority, the gift may possibly fail, and
therefore, the law will not allow such a transfer.
In other words, in deciding whether a limitation offends this rule or not,
one does not have to wait and see what actually happens, but one must be
able to say with certainty, at the date of the transfer, that the limitation will not
be void. To quote Rivington (Law of Property in Land), “It is not a case of 'wait
and see'. What does in fact happen is immaterial. The limitation is either good
or bad from the start. If there is any chance, however small, that it may not vest
in due time, the limitation is bad." "
Applying the above rule, a person can say: "I give to A for life, after his
death to B for life and then to a son of B to be born thereafter when he attains
17," but if he said that the son of B was to get when he became 19, i.e., after
attaining majority, the transfer would be void. At the latest, the time for division
must arrive at the expiry of 18 years from the death of the last person living at
the testator's death.
PRINCIPLE UNDERLYING THE RULE It is a well-established policy

of English law to discourage the creation of perpetuities. Property cannot be
tied up longer than for a life in being and twenty-one years (in England)
thereafter. This is called the rule against perpetuity. The necessity of imposing
some restraint on the power of postponing the acquisition of the absolute interest
in property will be obvious if one considers, for a moment, what would be the
state of a community in which a considerable portion of the land and capital
was locked up. The free and active circulation of property, which is one of the
springs as well as the consequences of commerce, would be obstructed, the
capital of country withdrawn from trade, and the incentives to exertion in every
branch of industry diminished. Indeed, such a state of things would be utterly
inconsistent with national prosperity. Thus, those restrictions which were
38
intended by the donors to guard the objects of their bounty against the effects
of their own improvidence would be baneful to all.
Problem : The Shebaits of a temple agreed to appoint the family of A as
Pujaris from generation to generation, to perform services of the temple and
make provisions for the expenses and remuneration of the office. Discuss the
validity of the agreement.
Ans. : The rule against perpetuity does not apply to personal agreements,
i.e., agreements which do not create any interest in property. Therefore, the
agreement under consideration is valid and not affected by the rule against
perpetuity. (Nafar Chandra v. Kailash, 1921 25 C.W.N. 201)
English and Indian law compared
ENGLISH LAW The corresponding rule in English law is sometimes
referred to as the double possibility rule.Thus, if A gives property to B on B's
marriage, and adds that he should enjoy it during his (B's) life-time, and then
give it to his first (unborn) son for life and then to his second (unborn) son,
there are two contingencies to be got over before A's wishes are fulfilled. First
of all, A should have a son. Thereafter, that son should also have a son. The
law regards this as going too far, and therefore, frowns upon such a transfer,
This rule is now known in England as the rule in Whitby v. Mitchell, because it
was in that case that the question was fully discussed for the first time in
England.
According to the English law, the vesting property can be postponed
for any number of lives in being and an additional term of 21 years afterwards,
and for as many months in addition as are equal to the ordinary period of
gestation, should gestation exist. Further, the additional term of 21 years is
independent of the minority of any person to be entitled, i.e., irrespective of the
fact whether such person is aa minor or not.
The Indian law, however, allows the vesting to be delayed beyond the
lifetime of persons in being for the period only of the minority of some person
born in their lifetime, and the addition of an absolute period of 21 years has not
been adopted by S. 14. So, whereas under the English law, the additional
period allowed after lives in being is a term of twenty-one years gross, without
reference to the infancy of any person, under the Indian law, the term is the
period of minority of the person to whom, if he attains full age, the thing
bequeathed is to belong at 18 in all cases.
In short, under English law, the additional period allowed after lives in
being is a term of 21 years in gross, without any reference to the infancy of any
person. In India, the additional period is confined to the minority of the person
concerned, and is not to be taken in gross.
S. 14 deals only with interests arising in futuro , whereas the corresponding
rule in English law deals with interests created both in futuro and in praesenti.
Under our Act, there is no express prohibition regarding interests in praesenti,

which are sought to be made of indefinite duration.
As regards the age of majority under Indian law, the Privy Council in the
case of Soundar Rajan v. Natarajan, (52 IA. 310) has held that the age of
majority, for the purpose of the rule against perpetuity is, in all cases 18, and
it cannot be contended that where a guardian of an infant has been appointed
by a Court, the age of majority will be reached at 21, for the simple reason, that
at the testator's death (or on the date of the transfer, as the case may be), it is
not certain that a guardian would definitely be appointed for any of the children.
Exceptions to the rule against perpetuities
The following are the eight exceptions to the rule against perpetuity:
1. Vested interests are not effected by the rule, for when an interest
has once vested, it cannot be bad for remoteness.
2. The rule has no application where land is purchased or property is
held, by a corporation.
3. Gifts to charities do not fall within the rule; thus, in case of a transfer
for the benefit of the public for the advancement of religion, knowledge,
commerce, health, safety, or any other object beneficial to mankind,
the rule does not apply. (S. 18)
4. Property settled upon individuals for memorable public services may,
by express legislation, be exempted from the operation of this rule.
5. The rule against perpetuity applies when interest in property is created
and has no application to personal contracts.
As seen above, in one case, the shebaits of a temple agreed to
appoint the family of X as pujaris from generation to generation to
perform the services of the temple, and make provision for the
expenses and remuneration of the office. The Court held that such
an agreement is valid, and is not affected by the rule against perpetuity.
(Nafar Chandra v. Kailash, referred to earlier).
6. A covenant of redemption in a mortgage does not offend the rule.
7. The rule does not apply to contracts for perpetual renewal of a lease.
8. The rule also does not apply where only a charge is created on some
property, and such a charge does not amount to transfer of any interest
in that property.
9. Covenants for pre-emption in respect of land, unrestricted in point of
time and expressed to be binding on the parties, as well as upon
their heirs and successors, also do not offend the rule against
perpetuities.
40
Summary of the law relating to transfers to unborn persons

When interest in property is soughtto be created for the benefit of unborn
persons, the following three rules must be kept in mind:
1. The unborn person must be given the entire interest of the transferor
in the property. Whatever intermediate interests may be created in
favour of living persons, the unborn person must ultimately take ali
that remains.
2. No interest in the property sought to be transferred should reach any

unborn person after the lifetime of one or more intermediate persons
living at the date of transfer and the minority of that unborn person,
3. The beneficiary who is not in existence at the date of the transfer
must come into existence on or before the expiry of the existing life
or lives named by the transferor.
D. TRANSFERS TO A CLASS (Ss. 15-16 & 22)

The law as to transfers to a class of persons is laid down in Ss. 15, 16
and 22 of the Act. A gift is said to be to a “class" of persons, when it is made to
all those who come within a certain category or description defined by a general
or collective formula. A number of persons are popularly said to form a class
when they can be designated by some general name, as for instance, “children",
"grand-children", "nephews”, etc.
1. Transfer to a class, some of whom come under

Ss. 13 & 14 (S. 15)
If, on a transfer of property, any 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 Ss. 13 and 14, such interest fails in
regard to those persons only, and not in regard to the whole class.
The principle underlying this section can be explained with the following
illustration:
If A transfers property to B for life and then to his children for life. Now, if
on the date of the transfer, B has two children, a third being born after the date
of the transfer, the question may arise regarding the validity of the transfer to
the children of B for life. Under S. 13, if the transferor does not give the whole
of the remaining interest for the benefit of an unborn person, the transfer is
void. The problem here is, amongst the children of B, there being a person not
in existence on the date of the transfer, whether the transfer in favour of all the
children is void under S. 13, or whether the transfer in favour of the unborn
child only is void.
According to the English rule of law laid down in Leake v. Robinson, the
transfer for the benefit of all the children of B would fail. However, S. 15 ofthe
1 Act abrogates this rule, and provides that the two children of B who are in
existence on the date of the transfer would be entitled to benefit under the
transfer, and only the unborn child would not be entitled to it. Thus, the rule in
Leake v. Robinson does not apply in India.
2. Transfer to take effect on failure of prior interest (S. 16)

Where, by reason of any of the rules contained in Ss. 13 and 14, an MCQ No. 58
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.
LIMITATION UPON LIMITATION — The rule embodied in this section is

-
a rule of English law that a limitation following upon a limitation void for
remoteness, is itself void, even though it may not itself transgress the rule
against perpetuity. For instance, if A settles property in trust for B and his
intended wife successively for their lives and then on their eldest son for life,
and then to the eldest son of such eldest son for his life, and then on C, the
prior interest in favour of the son of B fails in the first instance under S. 13, and
-1
therefore, the subsequent interests, both in favour of the grandson of B and in
5 favour of C, also fail.
It must, however, be noted that the prior interest must fail only by reason
of either S. 13 or S. 14 before S. 16 can be invoked. If the prior interest is
invalid, or fails for some other reason, the subsequent interest does not fail.
EXCEPTION – The restrictions contained in Ss. 14, 16 and 17 do not,
however, 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. (S. 18)
3. Transfer to members of a class who attain a particular age

(S. 22)
Where, on a transfer of property, an interest therein is created for the
1
benefit of such members only of a class as shall attain a particular age, such
1 interest does not vest in any member of the class who has not attained that
age.
Thus, a gift is made to such of the children of A, who shall attain the age
> of 18. No child of A has a vested interest until he has attained that age, as till
then, he does not fall within the description of the transferee.
E. VESTED INTEREST (Ss. 19-22)

The Transfer of Property Act deals with two kinds of interests vested
and contingent. Ss. 19 to 22 deal with the former, while Ss. 21 to 24 deal with
the latter. (Ss. 21 and 22 refer to both the kinds of interests.)
42
What is vested
interest? 1.
"Vested interest' (S. 19)
(2 marks)
M.U. Dec. 2014 Where on a transfer of property, an interest therein is created in favoura
a person
Apr, 2016
Apr, 2018 (1) without specifying the time when it is to take effect, or
(ii) in terms specifying that it is to take effect
(a) forthwith, or
(b) on the happening of an event which must happen,
such interest is vested, unless a contrary intention appears from the terms o
the transfer.
Moreover, a vested interest is not defeated by the death of the transferes
before he obtains possession.
MCQ No. 59, 60
and 61 It may also be noted that an intention that an interest shall not be vester
is not to be inferred merely from the following four circumstances. In other
words, a vested interest remains a vested interest even if –
(i) the enjoyment thereof is postponed, or
(ii) a prior interest in the same property is given or reserved to some
other person, or
(iii) the income arising from the property is directed to be accumulated
until the time of enjoyment arrives, or
(iv) there is a provision that, if a particular event happens, the interest is
to pass to another person.
Write a short note
on : "Vested Inter VESTED INTEREST - An interest is said to be vested when it is no
est".
subject to any condition precedent, i.e., when it is to take effect immediately or
M.U. Apr. 2010 on the happening of an event which is certain. A person takes a vested interest
Dec. 2016 in property when he acquires a proprietary right in it, but the right of enjoyment
May 2017 may be deferred till a future event happens, and this is an event which is
bound to happen (as for instance, the death of a person).
So, if a man transfers property to his wife for life and then to his son, the
MCQ No. 62
son takes a vested interest in the property from the very beginning - as the
death of the wife is an event which is bound to happen. But, if a person transfers
property to his brother with a proviso that if the brother gets married, such
property is to go to the transferor's son, the son does not get any vested interest
on the date of the transfer, as the marriage of the brother is an event which
may or may not happen.
Thus, if a Hindu widow adopts a son, but there is an agreement postponing

the son's estate during the lifetime of the widow. The interest created in favour
of the adopted son is a vested right, as does not depend upon a condition
precedent (e.g., the performance of an act); it is to take effect on the happening
of an event which is certain (viz., the widow's death); the adopted son has a
present proprietary right in the estate, the right of possession and enjoyment
being deferred
So also, where under a compromise decree, it was settled that A was to
hold an estate till his death, after which it was to go to B, the Court held that the
interest acquired by B under the decree was a vested interest, because the
interest which was created in favour of B was bound to take effect from the
death of A, which is a certain event. (Sunder Bibi v. Rajendra, 47 All. 496)
A simple transfer of a property in favour of a person confers a vested
interest with an immediate right to the possession and enjoyment of the property.
Such vested interest is not defeated by the death of the transferee even before
getting possession of the property. The Act thus regards a vested interest as
property which is divisible, transferable and heritable. (Elokasee v. Darponarain,
3 5 Cal. 59)
Thus, on April 1, 2015, A transfers property to B for life and thereafter to

C for life. C gets a vested interest in the property, as on April 1, as the death of
B is an event which is bound to happen. So, if C dies before B, on B's death,
C's heirs will get the property.
In a vested interest, the interest is complete, but on the happening of a
7 specified event, it may be divested. The true criterion is the certainty or
uncertainty of the event on the happening of which the gift is to take effect.
Where the event is certain though future, and the payment or enjoyment is
postponed by reason of the circumstances connected with the estate or for the
convenience of the estate, as for instance, where there are prior life interests,
7
the ulterior interest to take effect after them will be vested. Thus, if A makes a
will, under which certain property is gift, under which certain property is given
to B when A's wife dies, B's interest vest on the date of the gift - and not on the
date of the death of A's wife.
A will provided as follows: "When I die, my wife named Suraj is owner

of the property. And my wife has powers to do the same way as I have absolute
powers to do when I am present, and in case of my wife's death, my daughter
Mahalaxmi is owner of the said property after that death." The Court held that
the gift to Mahalaxmi was not contingent on her surviving Suraj, but depended
upon the death of Suraj, which was a certain event, and that Mahalaxmi took a
vested interest in the property subject to the life-interest given to Suraj. (Lallu
V. Jagmohan, 22 Bom. 409)
Problem : A transfers property to B in trust for C and directs B to give
possession of the property to C when he attains the age of 25. What interest
does C take and when?
Ans. : A condition postponing enjoyment does not prevent the interest

from vesting immediately; but it is itself void for repugnancy after the transferee
has attained majority. Therefore, C has a vested interest and is entitled to
possession at the age of 18.
MCQ No. 63
The following are the three main characteristics of a vested interest:
1. A vested interest does not depend upon the fulfillment of a conditior
it creates a present and immediate right, though the enjoyment ma
be postponed to a future date. It may, therefore, be vested i
possession, or vested and yet not in possession.
2. A vested interest is not defeated by the death of the transferee befor
obtaining possession; it will pass on to his heirs.
3. A vested interest is transferable as well as heritable.
RIGHT VESTED IN INTEREST' AND 'IN POSSESSION' There ar
two stages of a vested interest. It may be an interest vested in possession, a
where a transfer is made in general terms, without specifying the time when
is to take effect, or is expressed to take effect for thwith;or it may be an interes
vested and yet not in possession, which means that there is a preser
indefeasible right to future possession or enjoyment, as when enjoyment
postponed by some prior interest created by the same transfer.
An interest is said to be “vested in possession and enjoyment" when
gives a present right to immediate possession of property, as when the propert
is transferred to A without specifying the time when it is to take effect.
An interest is said to be “vested and yet not in possession” or “vested i
interest only", when it gives a present right to the future possession of property
1
An interest may be vested and not yet in possession -

(a) by a provision postponing enjoyment, or
(b) by the intervention of a prior interest, or
(c) by a provision for accumulation of income.
Examples
1. A executes a deed of gift in favour of B, but directs that B is not to
take possession of a portion of the property until after the death ci
both A and A's wife. B has a vested interest in the property; only its
enjoyment is postponed.
2. Property is settled in trust for A for life, with aa direction to the trustees
to pay A* 1,000 a year out of the rents and profits, and to apply the
balance to the discharge of a mortgage, and after A's death, to convey
the land to B. Even if B does not survive A, B's interest is vested in
A's lifetime.
3. A bequeaths to B 100 to be paid to him “in case he attains the age
of 18" or 'when he shall attain the age of 18". Here the interest of Bis
only contingent. It is not a vested interest because there is a condition
precedent, namely attainment of a specified age, to be fulfilled before
the interest can take effect (Illustration 2 to Section 120 of the Indian
Succession Act, 1925)
2. When unborn person acquires vested interest (S. 20) MCQ Nos. 64, 65
S. 20 enacts as to when an unborn person takes a vested interest in

property transferred to him. It lays down as follows:
Where, on a transfer of property, an interest therein is created for the
benefit of an unborn person, he acquires, upon his birth, a vested interest,
although he may not be entitled to the enjoyment thereof immediately on his
birth.
3. S. 21, Exception
The Exception to S. 21 gives one more instance of a vested interest. It
runs as follows:
Where, under a transfer of property, a person becomes entitled to an

interest upon attaining a particular age, and the transferor also gives to him
absolutely the income to arise from such interest before he reaches that age,
or directs the income to be applied for his benefit, such interest is not contingent
(i.e. it is vested).
4. Transfer to members of a lass who attain a particular age MCQ No. 66
(S. 22)
Where, on a transfer of property, an interest therein is created in favour
of only those members of a class who attain a particular age, such interest
does not vest in any member of the class who has not attained that age.
This section is similar to S. 121 of the Indian Succession Act. So long as
the donees are below the specified age, they possess only a contingent interest,
which will mature into a vested interest as soon as they attain the specified
age.
F. CONTINGENT INTEREST (Ss. 21-24)

Contingent interest' (S. 21)
Where, on a transfer of property, an interest therein is created in favour Write a short note
on : Contingent
of a person to take effect only on the happening or not happening of a specified interest.
uncertain event, — such a person acquires a contingent interest in the property. M.U. Nov. 2013
Such interest becomes a vested interest on the happening of the event in Dec. 2016
the first case, and when the happening of the event becomes impossible in the May 2017
second case.
MCQ Nos. 67, 68
A contingent interest is one in which neither any proprietary interest nor a
right of enjoyment is given at present, but both depend upon future uncertain What is contingent
events. interest?
An estate is contingent when the right to enjoyment depends upon the (2 marks)
happening of an uncertain event which may or may not happen. M.U. Apr. 2015
46
Thus, where an estate is bequeathed to A until he gets married, and after

that event to B, B's interest in the bequest is contingent, because it depends
upon a condition precedent víz., the marriage of A, an event which may or may
not happen. B has, at present, no proprietary interest in the estate, and he
cannot alienate it. But as soon as A marries, the contingent interest of B
becomes a vested interest because of the happening of the event (A's marriage)
a
on which it was contingent till then. In a contingent interest, the transfer is not
complete until the specified event happens or does not happen, as the case
may be.
ITS CHARACTERISTICS — The following are the three main features of
a contingent interest:
1. A contingent interest is solely dependent upon the fulfillment of a
condition, so that in case of non-fulfillment of the condition, the interest
falls through
2. If the transferee dies before obtaining possession, the contingent
interest fails, and the property reverts to the transferor.
MCQ Nos. 69, 70 3. It is transferable. It is quite different from a mere chance : Ma Yait v.
Official Assignee, 57 1. A. 10. Whether it is heritable or not depends
on the nature of the contingency.
DIFFERENCE BETWEEN VESTED AND CONTINGENT INTEREST
There are five points of distinction between the two:
VESTED INTEREST CONTINGENT INTEREST
1. Definition : Where, on a transfer of property, an interest therein is

created in favour of a person
Write a short note
(i) without specifying the time when I (i) to take effect only on the
on : Distinction
it is to take effect; or happening of a specified
between a vested
interest and a con uncertain event; or
tingent interest (ii) specifying that it is to take effect (ii) if a specified uncertain event
M.U. Oct. 2009
forthwith, or on the happening of shall not happen, such person
Apr. 2013
an event which must happen, thereby acquires a contingent
such interest is vested. interest in the property.
2. Fulfillment of condition
Explain the dis
tinction between a Does not depend upon the fulfillment | Is solely dependent upon the
vested interest of any condition; it creates an fulfillment of the condition, so that if
and a contingent immediate right, though the the condition is not fulfilled, the
interest.
M.U. Nov. 2010
enjoyment may be postponed to a interest falls through.
future date.
3. Effect of transferee's death

Not defeated by death of transferee Whether it passes on the death of Distinguish
between contin
before he obtains possession. the transferee or not depends on the gent and vested
nature of the contingency. interests.
M.U. Nov. 2012
4. Whether transferable and heritable Jan. 2019
(a) It is both transferable as well as (a) It is transferable. Whether it is
heritable
heritable or not depends on the
nature of the contingency.
(b) If the transferee of a vested (b) If the transferee of a contingent
interest dies before actual interest dies before obtaining
enjoyment, it passes on to his possession, the contingent
heirs. interest fails and does not pass
on to his heirs.
5. Present right of enjoyment -

In a vested interest, there is a present There is no present right of
immediate right, even when its enjoyment; there is a mere promise
enjoyment is postponed. for giving such right if the condition
is fulfilled; and such promise may be
nullified by the failure of the condition.
Transfer contingent on happening of specified uncertain event in

cases where no time is specified for the happening of that event
(S. 23)
Where, on a transfer of property, an interest therein is to accrue to a
specified person if a specified uncertain event shall happen, and no time is
mentioned for the occurrence of that event, the interest fails, unless such event
happens before or at the same time as, the intermediate or precedent interest
ceases to exist.
Under S. 23, when a contingent interest is created in favour of a specified
person, and no time is mentioned for the happening of the contingency, the
contingency must happen before the termination of the prior interest. In other
words, the occurrence of the event on which the vesting depends must take
place before the prior interest ceases; otherwise, there will be an interval
between the cessation of the prior interest and the vesting of the subsequent
interest, during which the property will remain in abeyance, which is contrary
to law.
For example, a gift of property is made to A for life, and afterwards to B if MCQ No. 71
B returns from England. Here, B's returning from England is a contingency

and no time is mentioned for its happening; so this contingency must happen
before the determination of A's interest i.e. B must return from England in A's
lifetime, if B is to get the property.
48
But this rule does not cover the case where a fixed time is mentioned for
the occurrence of the event. When a time is specified for the occurrence of the
contingency, (e.g., where it is provided that if B returns from England within 10
years), and such time extends beyond the cessation of the prior interest, there
must be some trustee to hold the property during the period intervening between
such cessation and the happening of the contingency; otherwise, the property
will lapse into abeyance and the interest will fail.
Transfer to such of certain persons as survive at some period not
specified (S. 24)
Where, on a transfer of property, an interest therein is to accrue to such
of certain persons as are surviving at some period, but the exact period is not
specified, the interest goes to such ofthem as are alive when the intermediate
or precedent interest ceases to exist, unless a contrary intention appears from
the terms of the transfer.
Illustration : A transfers property to B for life and after his death, to C
and D, equally to be divided between them, or to the survivor of them. C dies
during the life of B. D survives B. At B's death, the property passes to D.
SUMMARY
The following is a short tabular summary of the law as to interests in the

Transfer of Property Act -
INTEREST
Vested (Ss. 19-22) Contingent (Ss. 21-24)
In possession Not in possession
By a provision By the intervention By a provision for

postponing enjoyment of a prior interest accumulation of income
G. CONDITIONAL TRANSFERS (Ss. 25-34)

Transfers may be absolute (as when a father gives a car to his son as a
Explain condi gift), or conditional (as when a father agrees to give a car to his son, provided
tional transfers. the son passes his law examination).
M.U. Nov. 2008
Conditional transfers mean transfers to which conditions are attached.
Ss. 25 to 34 of the Transfer of Property Act deal with conditions, their fulfillment,
and the effects of their fulfillment or non-fulfillment.
A condition is a provision which makes the existence of a right dependent Write a short note
on : Conditional
on the happening or non-happening of a thing. Conditions are of three kinds, transfer.
viz., (i) conditions precedent, (ii) conditions subsequent, and (iii) conditional M.U. Apr. 2009
limitations.
Nov. 2013
(i) A condition precedent is one which delays the vesting of a right until Nov. 2015
the happening of an event, as when B promises to give a house to his daughter Apr. 2018
B, provided she marries a young man with his approval. May 2019
(ii) A condition subsequent, also called a condition of defeasance, is one MCQ No. 72
which destroys or divests the right upon the happening of an event, as when A What is a condi
gives a house to his daughter B, with a condition that if she marries a person tional transfer?
not approved by him, the house would revert back to A. (2 marks)

M.U. Nov. 2013
(iii) A conditional limitation is a combination of a condition precedent and Dec. 2014
a condition subsequent; it is one containing a condition which (i) divests an
Apr. 2015
estate that has vested, and (ii) vests it in another person. As regards the prior Apr. 2016
interest, it is a condition subsequent, but as regards the ulterior interest, it is a May 2017
condition precedent. This would happen when, for instance, A gives a house to Nov. 2017
his daughter B, with a condition that if she marries a person not approved by
him, the house would go to his son, C. Here, as far as B is concerned, it is a
condition subsequent; but as far as C is concerned, it is a condition precedent. What is conditional
This can be expressed in a tabular form thus : transfer? Explain
the differences be
tween a condition
TRANSFER
precedent and a
condition subse.
quent.
Absolute Conditional M.U. Apr. 2010
Precendent : Subsequent : Write a short note

Ss. 25-27 Ss. 28-34 on Condition
.
precedent and
CONDITION PRECEDENT AND CONDITION SUBSEQUENT — When condition subse
an interest is created on a transfer of property and is made to depend on a quent.
condition, the transfer is said to be a conditional transfer. When the interest is M.U. May 2012
made to accrue on the fulfillment of the contingency, the condition is said to be
a condition precedent; but if the interest already created is to cease to exist or
is to pass on to another on the happening of the condition superadded, it is
called a condition subsequent.
Thus, a gift is made to A on condition that she marries B. This is a condition
precedent, as the condition has to be fulfilled before the transfer can take
effect. Again, a property is transferred to A, but if A digs any excavation, so as
to diminish the value of the property or to affect the buildings adjoining the
property, he is to forfeit his interest. This is a condition subsequent, as the
50
transfer takes effect, but A can be subsequently divested of his interest if he

commits a breach of the condition.
Characteristics of a condition precedent: The following are the four
main characteristics of a condition precedent:
1.
A condition precedent is one which must happen before the estate
can vest.
2.
Where the condition is precedent, the estate does not vest in the
transferee until the condition is performed.
3.
In the case of a condition precedent being or becoming impossible
to be performed, or being immoral or opposed to public policy, the
transfer will be void.
4.
A condition precedent is fulfilled if it is substantially complied with
(This is discussed later.)
Characteristics of a condition subsequent : The characteristics of
condition subsequent are also four, namely:
1.
A condition subsequent is one, by the happening of which, an existing
estate will be defeated.
2. In the case of a condition subsequent, the estate immediately vest:
in the transferee, and remains in him till the condition is broken.
3. In the case of an impossible or immoral condition subsequent, the
estate becomes absolute and the condition will be ignored.
Thus, where a gift was made with a condition superadded tha
the donee should marry a particular person on or before she attained
the age of 21, and the person named died before she attained tha
age, it was held that the fulfillment of the condition subsequent having
become impossible, the estate became absolute. In other words, th
gift became absolute, and the condition was to be ignored. A gift";
which an immoral condition subsequent is attached, remains a goo
gift, though the condition is void. [Ram Sarup v. Bela, 6 All. 313 (P.C.
4. A condition subsequent must be strictly fulfilled . (This is discusse
later.)
(The points of distinction between a condition precedent and aa condition
subsequent are given later in a tabular form.)
TRANSFER ON IMPOSSIBLE, ILLEGAL OR

FRAUDULENT CONDITIONS (S. 25)
S. 25 enunciates a general rule regarding all kinds of conditional transfers
An interest created on a transfer of property and dependent upon
condition fails, if the fulfillment of the condition is :
(i) Impossible
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) Agives 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.
(ii) Forbidden by law
Illustrations : A transfers 500 to B on condition that she shall murder C.
The transfer is void.
(iii) law,
Of such
or
a nature that, if permitted, it would defeat the provisions of any
(iv) another;
Fraudulent,
or
or involves or implies injury to the person or property of
(v) Such as the Court regards it as immoral or opposed to public policy.
Illustration : A transfers 500 to his niece C if she will desert her husband.
The transfer is void.
VOID TRANSFER AND VOID CONDITION DISTINGUISHED — Care is

to be taken not to confuse a void transfer with a void condition, whether
precedent or subsequent. There is a clear distinction between an immoral
consideration for a gift, and an immoral condition which is attached to a gift. If
the consideration itself is immoral, the transfer cannot take effect. On the other
hand, if a condition subsequent which is immoral is attached to a gift which is
otherwise valid, the condition will be void but the gift will be valid. Thus, a
transfer for the benefit of an unborn person which (i) is not subject to a prior
interest created by the same transfer, and (ii) which does not exhaust the
whole of the remaining interest of the transfer (S. 13), or a transfer that tends
to create an interest in perpetuity (S. 14), is itself void.
But the following are instances of void conditions. Here, the transfer
remains good, but the condition, being void, is to be ignored:
1. A condition or limitation absolutely restraining the transferee or the
person claiming under him from parting with or disposing of his interest
in the property transferred: S. 10.
2. Restrictions repugnant to the interest created, except restrictive
covenants for the beneficial enjoyment of the transferor's property :
S. 11.
3. Except in the case of a lease, a condition making the transferee's

interest determinable on insolvency or attempted alienation : S. 12.
4. A direction for accumulation of interest exceeding the limits prescribed
by S. 17.
52
These are all void conditions. In such cases, the transfer stands good
though the condition is void. The transfer, in such cases, is considered to be
unconditional.
CONDITIONS PRECEDENT (Ss. 26-27)

1. Fulfillment of condition precedent (S. 26)
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 is deemed to
have been fulfilled if ithas been substantially complied with.
Illustrations
(a) A transfers 75,000 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.
(b) A transfers 35,000 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.
THE DOCTRINE OF CY-PRESS. 26 lays down the important English

doctrine of Cy-pres. It enacts that when there is a condition precedent to the
accrual of an interest, the condition is deemed to have been fulfilled if it has
been substantially complied with. In case of a condition precedent, subsequent
fulfillment of the condition is not sufficient compliance. Thus, in the second
example, where B takes the consent of C, D and E (assuming, of course, that
E does not die) after his marriage and not before, the condition is not fulfilled,
and he cannot take any interest.
Under the doctrine of Cy-pres, when the literal performance of the
antecedent condition is rendered impossible for some reason or the other,
substantial performance in conformity with the original intentions of the transferor
will suffice. Where a literal execution of the intention of the transferor becomes
inexpedient or impracticable, the Court will execute it, as nearly as it can,
according to the original purpose. Thus, where the consent of several persons
is necessary for the marriage of the transferee, and some of the persons
become insane or die, the consent of the rest will do. Where time is not the
essence of the condition, fulfillment of the condition within a reasonable time is
sufficient compliance. Silence on the part of the man whose consent is
necessary may be equivalent to his consent.
Cases
1. X made a gift to "my nephew Y if he shall be living and able duly to

discharge my executors”. Y was a minor and therefore unable to give a
discharge. The Court held that he could fulfil the condition and duly discharge
the executors by a suit in Chancery. (Leward v. Hassels, 1856 2 K. & J. 370)
2. X made a gift to nieces who should then be living in England. It was

held that nieces settled in the U.S.A. were excluded, but not so a niece who
was living in Ireland where her husband's regiment was quartered, or a niece
who was staying with her. (Woods v. Townely, 1853 11 Hare. 314)
2. Conditional transfer to one person coupled with transfer to
another on failure of prior disposition (S. 27] (Doctrine of
Acceleration)
Sometimes, a prior disposition is made to depend on a condition, and it is
provided that, on the failure of the prior disposition for non-fulfillment of the
condition, the property is to go to another person. In such a case, the ulterior
disposition, instead of failing on the failure of the prior disposition is, on the
contrary, accelerated and takes effect forthwith.
This principle is enacted in S. 27, which lays down that, when 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 fails, the ulterior disposition
takes effect upon the failure of the prior disposition, although the failure may
not have occurred in the manner contemplated by the transferor.
Illustration : A transfers 3 500 to B on condition that he shall execute a
t
certain lease within 3 months after A's death, and if he should neglect to do so,
to C. B dies in A's lifetime. The disposition in favour of C takes effect.
t
But, where the intention of the parties to the transaction is that the ulterior
disposition is to take effect only in the event of the prior disposition failing in a
particular manner, the ulterior disposition will not take effect, unless the prior
disposition fails in that manner.
Illustration : A transfers property to his wife; but, in case she should die
in his lifetime, transfers to B that which he had transferred to her. A and his
wife perish together, under circumstances which make it impossible to prove
that she died before him. The disposition in favour of B does not take effect.
ULTERIOR TRANSFERS (Ss. 27-30) — The earlier discussion dealt only
with transfers with conditions precedent and conditions subsequent attached
to one particular transfer of property. What follows is a discussion of cases
where, with these conditional transfers, further transfers in respect of the same
property are created as a part of the same transaction.
For instance, A transfers * 1,000 to B on condition that B resides with A,
otherwise to C. It will be seen that the condition attached to the transfer to B is
a condition precedent, with the result that if B does not reside with A, he will not
get 1,000 and the transfer to him will fail, and C will thereupon get that
amount. Here, the transfer in favour of C is an ulterior transfer, and it takes
effect on the failure of the prior transfer. This is the case contemplated by
S. 27, which also provides that the failure of the prior disposition may take
54
place in any manner also, unless the parties have agreed that the failure should
take effect in a particular manner.
It may be observed that the condition on which the prior interest depends
must be valid under S. 25. If not, the subsequent disposition will also fail together
with the first. If it is invalid as offending against the rule against perpetuity, then
also the ulterior disposition becomes invalid. It is only when the prior disposition
is valid in its inception, and fails because the condition is not fulfilled, that the
ulterior disposition is accelerated.
DOCTRINE OF ACCELERATION — The section enunciates the doctrine
of acceleration. Where, in a series of successive limitations, a particular estate
is void, the remainder, which is immediately expectant upon such estates,
accelerates. In other words, when a prior disposition is made to depend on a
condition, and it is provided that on the failure of the prior disposition for non
fulfillment of the condition, the property is to go to another person, the ulterior
disposition, instead of failing on the failure of the first disposition, is accelerated,
and takes effect at once.
Thus, where there is a gift in remainder, expectant on the termination of
an estate for life, and the prior life-estate becomes void for so reason, the
gift does not fail, but is accelerated. (Adjudhia v. Rakhman, 10 Cal. 482)
As seen above, for the purpose of S. 27, it does not matter whether or not
the prior disposition fails in the manner contemplated by the transferor. But,
where the intention of the parties to a transaction is that the ulterior disposition
is to take effect only in the event of the prior disposition failing in a particular
manner, the ulterior disposition does not take effect unless the prior disposition
fails in that manner.
Thus, in Underwood v. Wing (4 De G.M., and G. 633), property was given
to a wife with a condition that in the case of her death before the husband, the
property was to go over to X. Both the husband and wife died in the same
shipwreck, leaving it unascertained as to who died first. Here, the disposition
in favour of X will not take effect.
It should be remembered that the principle of acceleration does not apply
when the prior disposition fails by reason of Ss. 13 and 14. In that case, the
ulterior disposition also fails.
CONDITIONS SUBSEQUENT (Ss. 28-34)

1. Condition that transfer will cease to have effect in case
a specified uncertain event happens or does not happen
(Ss. 31, 32)
On a transfer of property, an interest therein may be created with the
condition superadded that it will cease to exist in case a specified uncertain
event happens or in case a specified uncertain event does not happen.
(S. 31). Such a condition, however, must not be invalid. (S. 32)
Illustrations
(a) A transfers a farm to B for his life, with a proviso that in case B cuts
down a certain wood, the transfer shall cease to have any effect. B
cuts down the wood. He loses his life-interest in the farm.
(b) A transfers a farm to B, provided that, if B shall not go to England
within three years after the date of transfer, his interest in the farm
shall cease. B does not go to England within the term prescribed.
His interest in the farm ceases.
Problems
1. A who is under a sentence of transportation for life, transfers his field

to B, with a proviso that in case he returns from Port Blair, B's interest shall
cease. A returns from Port Blair. Can he claim back his field?
Ans. : When A returns from Port Blair, B's interest in the field ceases.
Therefore, he can claim back his field. (Venkatarama v. Aiyasami, 1922 43
Mad. L.J. 340)
2. A transfers his field to B with a proviso that if B becomes insolvent, B's

interest in the field shall cease. When B is adjudged insolvent, what happens
to the field?
Ans. : When B is adjudged insolvent, the field will vest in the Official
Receiver or the Official Assignee, as the case may be.
2. Transfer conditional on performance of act, no time being
specified for performance (S. 33)
Where, on a transfer of property, an interest therein is created subject to
a condition that the persons taking it must perform a certain act, but no time is
specified for the performance of the act, the condition is broken when he renders
the performance of the act impossible, either permanently or for an indefinite
period. (S. 33)
3. Effect of fraud preventing fulfillment or non-fulfillment of an

imposed condition (S. 34)
Where a transfer is made in favour of a person, with a condition (precedent
or subsequent) imposed on him, and a time is specified for the performance of
the act, if such performance within such time is prevented by the fraud of a
person who would be directly benefited by non-fulfillment of the condition, such
further time is to be allowed to him for performing the act, as is required to
make up for the delay caused by such fraud. But, if in such cases, if no time is
specified for the performance of the act, then, such conditions are to be deemed
to have been fulfilled. (S. 34)
This section is based on the principle that no man can take advantage of
his own fraud.
56
4.
Ulterior transfer conditional on happening or not happening
of specified events (Ss. 28-30)
(a) On a transfer of property, an interest therein may be created to accrue
to any person,with the condition superadded that in case a specified uncertain
event happens or does not happen, such interest is to pass to another person
(S. 28)
Illustrations
1. A sum of money is transferred to A, to be paid to him at the age of 18
if he shalldie before he attains that age, to B. A takes a vested interest in the
transfer, subject to be divested and to go to B, in case A shall die under 18.
2. A sum of money is transferred to A for life, and after his death to B, but
if B shall then be dead leaving a son, such son is to stand in the place of B. 8
takes a vested interest in the transfer, subject to be divested if he dies leaving
a son during A's lifetime.
This section speaks of an "ulterior transfer" or an "ulterior disposition",
Such a transfer or disposition is effected by a conditional limitation. In such a
limitation, there is a condition which divests an estate from one person and
vests it in another. It is a condition subsequent, as far as the first estate is
concerned, but as regards the second interest, it is a condition precedent. A
conditional limitation is thus both a condition precedent and a condition
subsequent, depending on the angle from which it is viewed.
(b) Secondly, an ulterior disposition mentioned in S. 28 does not take
effect, unless the condition is strictly fulfilled. (S. 29)
Illustration : A transfers 500 to B, to be paid to him on his attaining
majority or marrying, with a proviso that if B dies a minor, or marries without
C's consent, the said 500 shall go to D. B marries when only 17 years of age,
without C's consent. The transfer to D takes effect.
The reason for this rule is very obvious. The law does not favour the
divesting of an estate which has vested as much as it favours vesting of an
estate; therefore, before any property can be divested, the condition producing
that effect must be strictly fulfilled.
(c) Moreover, if such ulterior disposition is not valid, the prior disposition
is not affected by it. (S. 30)
Illustration : A transfers a farm to B for her life, and if she does noi
desert her husband, to C. B is entitled to the farm during her life as if no condition
had been inserted.
Although a condition subsequent must be strictly complied with, in such
cases, if such a condition is invalid, the result is that the prior interest becomes
absolute, and the ulterior disposition, which depends upon such condition, fails.
This is provided by S. 30. The principle of this rule is that if the prior transfers
are good in themselves, they cannot be invalidated by a subsequent illega
disposition of the residue or remainder. Tagore v. Tagore, (1872) 1.A. Supp.

Vol. 47; Kristoromani v. Narendra, (1888) 16 I.A. 20)
In Tagore's case (above), there was a gift to A for life, and after him to his
heirs in tail male. The subsequent disposition was held to be in valid b y reason
of its being opposed to the principles of inheritance and transfer recognised by
Hindu law; but A's life estate was not affected.
Problem : X transfers his field to Y, with a proviso that if does not set
fire to Z's house within 60 days, the field would belong to A. Are the transfers to
Yand A valid? What is the differ
Ans. : The disposition to A is not valid, but the interest of Yis not affected. ence between
"condition prece
DIFFERENCE BETWEEN dent" and "condi
tion subsequent?"
CONDITION PRECEDENT CONDITION SUBSEQUENT M.U. Nov. 2010
1. As to vesting of estate
(a) Precedes the vesting, i.e., the (a) Follows the vesting, i.e., interest
condition comes before the is created before the condition
What is a condi
tional transfer?
creation of the interest. can operate to determine it.
Explain differences
(b) Vesting of estate is postponed till (b) Vesting is complete and not between a condi
the performance of the condition. postponed. tion precendent

and a condition
(c) Interest once vested can never (c) Interest, even though vested, is subsequent
be divested by reason of non- liable to be divested by reason M.U. Apr. 2010
fulfillment of the condition. of the non-fulfillment of the
condition.
(d) Estate is not vested in the (d) Estate immediately vests in the
grantee until the condition is grantee and remains in him till the
performed. condition is broken.
(e) Affects the acquisition of an (e) Affects the retention of the estate.
estate.
2. Where the condition is (i) impossible of performance, or (ii) immoral,

or (iii) opposed to public policy —
Transfer will be void. Transfer becomes absolute, and the
condition will be ignored.
3. Validity of condition
Must be valid in law. Need not be so; invalidity of the
condition to be ignored.
4. Applicability of the doctrine of Cy-pres
A condition precedent is fulfilled if it A condition subsequent must be MCQ No. 73
is substantially complied with (S. 26), strictly fulfilled (S. 26), i.e., the Cy
i.e., the doctrine of Cy-pres applies. pres doctrine does not apply.
58
H. ELECTION (S. 35)

What is meant by
Election? Where a person
(2 marks) professes to transfer property which he has no right to transfer,
M.U. Apr. 2018 and
as part of the same transaction, confers any benefit on the owner o

the property, such owner must elect either to confirm the transfero
to dissent from it.
If he dissents from it,

Discuss the doc
trine of election.
(i) he must relinquish the benefit so conferred;
M.U. Nov. 2007 and
Nov. 2009
Nov. 2015
(ii) the benefit so relinquished reverts to the transferor (or his
representative) as if it had not been disposed of.
Dec. 2016
May 2017 However, when such benefit reverts to the transferor, it is subject to the
Nov. 2017 charge of making good to the disappointed transferee the amount or value o
Jan. 2019 the property attempted to be transferred in two cases, namely,
May 2019
(a) where the transfer is gratuitous, and the transferor has, before the
Dec. 2019
election, died or otherwise become incapable of making a fresh
transfer; and
Write a short note (b) where the transfer is for consideration.

on: Election. Illustration : The farm of Sultanpur is the property of Cand worth 7800
M.U. Apr. 2010
A, by an instrument of gift, professes to transfer it to B, giving by the same
Apr. 2011 instrument * 1,000 to C. C elects to retain the farm. He forfeits the gift of 7
Nov. 2012
1,000. In the same case , A dies before the election. His representatives must
Apr. 2013 out of the 1,000, pay 800 to B.
In other words, under the circumstances mentioned in (a) and (b) above.
the benefit relinquished by the elector-owner (also known as “refractor
transferee') will not fully revert to the transferor, but compensation willbe paid
out of it to the disappointed transferee to the extent of the value of the property
sought to be transferred to him.
Cooper v. Cooper: The basis of the doctrine of election was explained
by the House of Lords in the leading case of Cooper v. Cooper. In that case X
gave a certain property to trustees on trust to sell it after his widow's death and
to hold the sale proceeds in trust for his children in such form as his widow
may decide before a certain fixed period. The widow executed a deed before
the expiry of the fixed period directing the proceeds to be divided equally among
the three sons A, B and C. Later, she made a will by which she gave the
property to A, the eldest son, and a legacy of her own property to the other two
sons, B and C and to the sons of B. B predeceased the testatrix. The
appointment under the will was inoperative, inter alia, as the will took effect
long after the date fixed for the appointment. A brought an action to compel
and the sons of B to elect between their claims under the deed of appointment
and under the will. It was held that since the testatrix was not the owner of the
property, her attempt to dispose of it by her will when she had no longer a
disposing power over it raised a case of election against the persons who,
taking under her will, had an interest in that property. Lord Hatherley explained
the principle underlying the doctrine of election thus:
“There is an obligation on him who takes a benefit under a will or other
instrument to give full effect to that instrument under which he takes a benefit;
and if it be found that instrument purports to deal with something which it was
beyond the power of the donor or settlor to dispose of, but to which effect can
be given by the concurrence of him who receives a benefit under the same
instrument, the law will impose on him who takes the benefit the obligation of
carrying the instrument into full and complete force and effect."
After laying down the doctrine of election in broad terms, S. 35 eleborates
the doctrine with the following six rules:
Rule 1 : Belief of the transferor is not relevant
The doctrine of election applies whether the transferor does or does not
believe that the property he professes to transfer is his own.
Rule 2: Who need not elect
A person taking no benefit directly under a transaction, but deriving a
benefit under it indirectly, need not elect. Moreover, a person who, in one
capacity, takes a benefit under the transaction, may, in another capacity, dissent
therefrom.
Thus, an estate is settled upon A for life, and after his death, upon B. A
leaves the estate to D, and 10,000 to B, and * 5,000 to C, who is B's only
child. B dies intestate shortly after the testator, without having made an election.
C takes out administration to B's estate, and as administrator, elects to keep
the estate in opposition to the will, and to relinquish the legacy of * 10,000. C
may do this, and yet claim his legacy of 5,000 under the will. (It will he seen
that here, C takes the benefit in one capacity and dissents from the transfer in
another capacity.)
Rule 3 : Only that particular benefit is relinquished -
Where a particular benefit is expressed to be conferred on the owner of
the property which the transferor professes to transfer, and such benefit is
expressed to be in lieu of that property, if such owner claims the property, he
must relinquish that particular benefit; but he is not bound to relinquish any
other benefit conferred upon him by the same transaction.
Rule 4: What constitutes election
If a person accepts such benefit for two years, it is to be assumed that he

has elected in favour of the transfer.
Acceptance of the benefit for two years by the person on whom it is
conferred constitutes an election by him to confirm the transfer, if he is aware
of his (i) duty to elect, and (ii) of those circumstances which would influence
the judgment of a reasonable man in making an election, or if he waives enquiry
into the circumstances.
Rule 5: Knowledge or waiver when to be inferred
Knowledge or waiver may be inferred from any act of such person which
renders it impossible to place the persons interested in the property professed
to be transferred in the same condition as if such act had not been done.
Illustration : A transfers to B an estate to which C is entitled, and, as part
of the same transaction, gives C a coal-mine. C takes possession of the mine,
and exhausts it. He has thereby confirmed the transfer of the estate to B.
Rule 6 : Consequence of not making an election for one year —
If the owner does not within one year after the date of the transfer, signify
to the transferor (or his representative), his intention to confirm or to dissent
from the transfer, the transferor or his representative may, upon the expiry of
that period, require him to make his election. If he does not comply with such
requisition, he is to be deemed to have elected to confirm the transfer.
In case of disability (as for instance, in the case of a minor), the election
is postponed until the disability ceases or until the election is made by some
competent authority.
RULE OF ELECTION In the context of transfer of property, election
may be defined as "the choosing between two rights, where there is a clear
intention that both were not intended to be enjoyed".
The principle of the doctrine is that "a donee shall not be allowed to
approbate and reprobate, and that if he approbates, he shall do all in his power
to confirm the instrument which he approbates." (Cavendish v. Dacre, 31 Ch.
D. 466)
The rule of election has thus been stated by Lord Justice Lopez in Dalton
v. Figerald, (1897) 2 Ch. 86: “A person having no title to land settles it on A for
life, with remainder to B. If A enters and takes possession, and deals with the
property as tenant for life, that person is estopped from telling the truth; his
mouth is shut. He has availed himself of the settlement for the purpose of
obtaining possession of the land, and he cannot afterwards seek to invalidate
that which enabled him to obtain possession, and this though subsequently he
may have acquired a good title."
Thus, it is an essential condition of the doctrine, that the person sought to
be estopped must have obtained possession of the property under the deed. It
is also clear that the party estopped does not have any title to the property
other than the title derived from the deed.
The principle underlying S. 35 is that a person taking the benefit of an

instrument must also bear the burden. In other words, one cannot eat the
cake, and have it too. One cannot blow hot and cold at the same time.
The doctrine of election was first applied to wills. Later, it was extended
in England to conveyances and settlements also.
The doctrine cannot, however, be used to cure an illegality. Thus, a gift
which infringes the rules against perpetuity cannot be sheltered by raising a
case for election. Nor can the doctrine be applied to lead to inequitable results.
Problem : X, a Hindu widow, died after having made a will in respect of
property inherited by her from her husband. She bequeathed * 2,000 as a
legacy to the plaintiff, and the immovable property to K, the defendant's father.
The plaintiff and K were the heirs of her husband. The plaintiff sued for the
legacy under the will, and for one-half of the immovable property as an heir.
Will he succeed?
Ans. : The plaintiff will be put to his election. He has to elect whether to
take the legacy under the will or one-half of the property as heir of the testator's
husband. (Mangaldas v. Ranchhoddas, 14 Bom. 438)
ENGLISH LAW English law applies the principle of compensation,
and not that of forfeiture adopted by Indian law. Thus, in the first illustration to
S. 35 (regarding the farm of Sultanpur), if C elects to retain the farm, after
paying * 800 to B, the balance * 200 would go to A or his representative.
Under English law, the remaining 200 would go to C.
Secondly, English law does not specify any time within which election is
to be made (corresponding to the one-year period laid down by S. 35).
DIFFERENCE BETWEEN
ENGLISH LAW INDIAN LAW
1. Compensation 1. Forfeiture -
Under English law, a transferee, Under the T.P. Act (S. 35), the rule
by electing against the transfer, does is that the refractory donee forfeits
not incur a forfeiture of the benefit the thing transferred. In India, the
conferred on him, but is merely doctrine of forfeiture is applied.
bound to make compensation out of
it to the person disappointed by his
election. In England, the doctrine of
compensation is applied, i.e., the
person electing against the transfer
gets what remains after compensat
ing the disappointed transferee.
The English doctrine of election
rests on compensation, and not on
forfeiture. Thus, dealing with the
same illustration again, a farm is the
property of C and worth 800. A, by
62
an instrument of gift, professes to

transfer it to B, giving by the same
instrument * 1,000 to C. C elects to
retain the farm. He forfeits the gift of
Rs. 1,000. On C's election to retain
the farm, the gift of * 1,000 would
under the English law not revert to
A, but would be taken by C, subject
to a charge in favour of B for 800.
2. Period of election 2. Period of election
There is no time fixed by English S. 35 has laid down a period of
law for making an election, except one year for making an election.
when time is limited by the instrument
itself.
I. APPORTIONMENT (Ss. 36-37)

Story, in his Equity Jurisprudence, points out that the term 'apportionment'
is used in two senses: (1) to denote the distribution of a common fund among
the several claimants; and (2) to denote contribution made by several persons
having distinct rights to discharge a common burden. In the present context,
the word apportionment is used only in the first sense.
Apportionment means division. S. 36 deals with apportionment of
periodical payments as between the transferor and the transferee and S. 37
deals with apportionment of an obligation in the event of the division of the
property to which it relates. Thus, S. 36 deals with apportionment by time,
whilst S. 37 deals with apportionment by estate. TP-5
1. Apportionment of periodical payments on determination of

interest of person entitled: Apportionment by time (S. 36)
Write a short note When property is transferred, all rents, annuities, pensions, dividends
on : Apportion
ment.
and other periodical payments in the nature of income are deemed, as between
the transferor and the transferee, to accrue due from day to day, and to be
M.U. Apr. 2008
Nov. 2008
apportionable accordingly. However, the actual payments are to be made only
on the days appointed for the payment thereof.
This rule can, however, be excluded by a local usage or a contract to the
contrary.
APPORTIONMENT Sec. 36 embodies a rule of justice, equity and

good conscience, and can be applied to apportion the rent as between the
lessee and the purchaser of his right in execution, though execution sales are
not covered by the Transfer of Property Act by Sec. 2(d).
Apportionment by time — Several properties yield income. The division

of this income between the transferor and the transferee is called its
apportionment. S. 36 lays down that all periodical payments in the nature of
rents, annuities, pensions and dividends are deemed to accrue from day to
day and be apportioned between the transferor and the transferee on that
basis.
Thus, A has let his house at a rent of 1,000 payable on the last day of
each month. A sells the house to B on the 15th of June. On the 30th June, A is
entitled to rent of 500 from the 1st to the 15th, and B is entitled to 500 from
the 15th to 30th. It is to be noted, however, that the tenant holds under a
monthly contract, and he cannot be made to pay the rent of 15 days to A on the
15th June. He will pay the rent as usual on the 30th of June; only he will pay it
in the proportion indicated above.
The essence of the rule of apportionment by time is that, although rents,
annuities, dividends or payment of any other kind by way of income are to be
made at fixed periods or intervals of time, they will be deemed to accrue from
day to day as between the transferor and the transferee, and to be apportionable
by time accordingly. Nonetheless, they will be payable only on the days fixed
for the purpose.
The expression 'other periodical payments' must be construed ejusdem
generis (i.e., of the same type) with rents, annuities, pensions and dividends.
The profits of partnership which accrue only after the adjustment of accounts
or the profits in a share of a village, are not periodical payments in the nature
of income'.
This rule, however, can be excluded by a local usage or a contract to the

contrary. Thus, A selling a house to B in the middle of a month, may agree that
B should have the whole rent for that month which might be payable at the end
of the month under a contract of tenancy. Similarly, there may be a local usage
or custom which would debar the operation of this rule in the locality where
that usage or custom prevails. Agricultural leases are not excluded under this
section, though they are excepted under S. 37, which deals with apportionment
by estate.
S. 36 does not apply to transfers by operation of law (S. 2(d)]. A person
who buys property at an execution sale acquires title by operation of law, and
the rule in S. 36 does not apply to him. Similarly, it has been held that the
section does not apply to cases of partition.
2. Apportionment of benefit of obligation on severance :

Apportionment by estate (S. 37)
If, in consequence of a transfer, property is divided and held in several
shares, and thereupon, the benefit of any obligation relating to the property as
a whole passes from one to several owners, in the absence of a contract to the
64
contrary,the corresponding duty is to be performed in favour of each of such

owners in proportion to the value of his share in the property.
This
rule would, however, apply only if the duty can be severed, and th.
severance does not substantially increase the burden of the obligation. But,
the duty cannotbe severed, or if the severance would substantially increast
the burden of theobligation,the duty is to beperformed for the benefit of such
one of the several owners as they jointly designate.
However, no person on whom the burden of the obligation lies, can be
answerable for failure to discharge it in the manner provided by this section
unless and until he has reasonable notice of the severance.
This section does not (unless the State Government so directs) apply to
leases for agricultural purposes.
Illustrations
(a) A sells to B, C and D, a house situated in aa village and leased to Ea

an annual rent of * 300 and deliver y of one fat sheep, B having provided hali
the purchase-money, and C and Done quarter each. E, having notice of this,
must pay * 150 to B, * 75 to C and 75 to D, and must deliver the sheep
according to the joint direction of B, C and D.
(b) In the same case, if each house in the village being bound to provide
10 days' labour each year on a dyke to prevent inundation, and E had agreed
as a term of his lease to perform this work for A, then, B, C and D, may severally
require E to perform the ten days' work due on account of the house of each.
But E is not bound to do more than ten days' work in all, according to such
direction as B, C and D may join in giving.
Apportionment by estate Where a property is given on a transfer to
several persons by portions, each transferee is entitled to all the advantages,
accruing from the property in proportion to his interest in it; provided that the
person who has to perform the corresponding duty must have information that
the original single owner has divided his property, and that the payment is to be
made and the duty has to be performed to several owners. Thus, Ahas let his
house at a rent of 1,000. A sells half the house to B. A tenant having notice or
the sale must pay, from the date of the sale, rent at the rate of 500 to A ana
*500 to B.
Like the previous section, this section (S. 37) is subject to S. 2(d), and
therefore, does not apply to involuntary transfers or to cases of succession. It
has been held that the heirs of a deceased creditor can only jointly enforce the
right which the deceased, if alive, could singly enforce. (Kanahiya Lalv. Chandar,
7 All. 313)
Further more, the rule contained in S. 37 applies only in the absence of a
contract to the contrary between the parties.
3
TRANSFER OF IMMOVABLE PROPERTY
if
(Ss. 38-53A)
The topics which lay down various rules relating to transfer of immovable
property are discussed in this Chapter under the following eleven heads:
A. Transfer by a person other than full owner:
(1) Transfer by a person authorised only under certain circumstances to
transfer : S. 38
(2) Transfer by an ostensible owner : S. 41

(3) Transfer by an unauthorised person who subsequently acquires
interest
S. 43
in that property: Doctrine of feeding the grant by estoppel:
B.
Protection of third person's rights:
(1) Transfer where a third person is entitled to maintenance: S. 39
(2) Burden of obligation imposing restriction on use of land: Restrictive
: covenants: Covenants running with the land: S. 40
C. Transfer by a person having authority to revoke a former transfer : S. 42.
D. Transfer by co-owners:
(1) Transfer by one co-owner:
(2) Transfer by co-owner of share in common property: S. 47
E. Joint transfers:
(1) Joint transfer for consideration: S. 45

(2) Transfer for consideration by persons having distinct interests: S. 46
F. Priority of rights created by transfer:
(1) Priority of rights previously created: S. 48
(2) Postponement of prior mortgage: S. 78
G. Transferee's right under a policy: S. 49
H. Bona fide holders under a defective title:
(1) Rent paid to holder under defective title: S. 50
(2) Improvements made by bona fide holders under defective title: S. 51
1
. Transfer of property pending suit relating thereto (Lis Pendens): S. 52

J. Fraudulent transfer : S. 53
K.
Part-performance : S. 53-A
65
66
A. TRANSFER BY PERSON OTHER THAN FULL OWNER

(Ss. 38, 41 & 43)
The following three topics will be discussed here:
(1) Transfer by a person authorised only under certain circumstances
transfer: S. 38
(2) Transfer by an ostensible owner: S. 41
(3) Transfer by an unauthorised person who subsequently acquire
interest in the property transferred: Doctrine of feeding the grant b
estoppel: S. 43
(1) Transfer by a person authorised only under certain circum

stances to transfer (S. 38)
When a person is authorised to dispose of immovable property only unde
certain circumstances (which are variable in nature), and he transfers suc
property,
(a) for consideration,

(b) alleging the existence of such circumstances,
those circumstances are deemed to have existed as between the transfere
on the one part and the transferor and the persons affected by the transfer o
the other part, if the transferee, after using reasonable care to ascertain th
existence of such circumstances, has acted in good faith.
Illustration — A, a Hindu widow, whose husband has left collateral heirs
alleging that the property held by her as such is insufficient for her maintenance
agrees, for purposes neither religious nor charitable, to sell a field, part o
such property, to B. B satisfies himself by reasonable enquiry that the incom
of the property is insufficient for A's maintenance and that the sale of the fiel
is necessary, and acting in good faith, buys the field from A. As between Bo
the one part and A and the collateral heirs on the other part, a necessity for th
sale shall be deemed to have existed.
ESSENTIALS In order to make this section applicable, the followin
-
six conditions should be satisfied:
(1) The transferor has a limited power of alienation over the property.
(2) The transferor is, under special circumstances (which are variable i
nature), authorised to dispose of such property.
(3) The transferor transfers the property for consideration.
(4) The transferor must allege the existence of such special circum
stances at the time of the transfer.
(5) The transferee must use reasonable care to ascertain whether thes
circumstances exist or not.
TRANSFER OF IMMOVABLE PROPERTY 67
(6) The transferee must act in good faith and must honestly believe in
the existence of these circumstances.
So when a transfer is made and all these conditions are fulfilled, an
irrebuttable presumption will arise in favour of the existence of the alleged
special circumstances,
It will be seen that this provision is meant to protect the transferee, if it

5
subsequently transpires that the alleged special circumstances did not exist
as a matter of fact and he has been deceived. It will be sufficient if the transferor
alleges their existence and the transferee has honestly satisfied himself of
such existence. The transferee will be protected if he exercises good faith,
whether he is negligent or not. Thus, where the guardian of a minor mortgages
the minor's property alleging necessity, and the mortgagee, after bona fide
r enquiry, is satisfied about such necessity, the latter will be protected, even if he
า
does not see to the application of the money.
The most common case of an alienation authorised under special
circumstances is that of a Hindu widow disposing of the corpus of her husband's
estate. In order to sustain an alienation by her, she must allege legal necessity,
e.g., her own maintenance, and it will be enough if the transferee, after
reasonable enquiry, has believed in its existence.
This section appears to be based on the leading case of Hanooman Persad
v. Mst. Babooi. It may be noted that the onus of justifying the circumstances
referred to above is on transferee.
The circumstances under which the person is authorised to dispose of
> the property should be variable, and this includes such circumstances as
f
constitute legal necessity, and which vary according to the status of the person
2 and other surrounding circumstances. The persons covered by S. 38 are
persons having a limited power to transfer. Thus, the Karta or manager of a
า Hindu joint family, the father of a Mitakshara son, the Shebait of a Hindu idol or
2 mutt, a woman holding a Hindu widow's estate, a mother and other natural or
de facto guardian ( Hanooman Persad v. Babooi Munraj Koonwaree, 6 M.I.A.
393) are all persons authorised to dispose of immovable property only under
circumstances which are variable.
The first marriage of a member of a Hindu joint family is a lawful family
necessity, and sometimes a second marriage also may be such for which
alienation of family property will be justified. (Bhagirathi v. Jokhu Ram, 32 All.
575; Sundrabai v. Shivnarayan, 32 Bom. 81)
Problem: A, a natural guardian of a Hindu minor, sold the property of the
minor to D. The minor sold his right in the property to G after attaining majority.
G filed a suit against D for avoiding the sale and getting possession of the
property. Can he succeed?
Ans. : G can succeed only if D cannot prove any legal necessity or that
he made reasonable inquiries.
68
(2) Transfer by an ostensible owner (S. 41)

(1) Where, with the consent (express or implied) of the persons interested
in immovable property,
(ii) a person is the ostensible owner of such property, and
(iii) transfers the same for consideration,
the transfer is not voidable on the ground that the transfer was not authorised
to make it.
Explain in detail
the provisions However, in such a case, it is necessary that the transferee, after taking
dealing with
transfer by an
reasonable care to ascertain that the transferor had power to make the transfer,
ostensible owner. must act in good faith.
M.U. Nov. 2010 PRINCIPLE — The principle of the rule contained in S. 41 is the same as
that of estoppel contained in S. 115 of the Evidence Act. If someone makes a
false representation and somebody else acts on the representation to his
detriment, the person making such representation must stand by that
representation and cannot say otherwise.
This section is based on the principle that where one of two innocent
persons must suffer from the fraud of aa third party, the loss should fall on him
who has created, or could have prevented, the opportunity for the fraud. In
such cases, hardship is caused by the strict enforcement of the general rule
that no one can confer a higher right on property than what he himself
possesses. Nemo dat quod non habet.
It is a principle of equity and natural justice that where one man allows
another to hold himself out as the owner of an estate, and a third person
purchases it for value from the apparent owner, in the belief that he is the real
owner, the man who so allows the other to hold himself out cannot be permitted
to recover upon his secret title. In such cases, he can defeat the title of the
purchaser by showing that either he (the purchaser) had a direct notice or
something which amounted to constructive notice of the real title, or that there
existed circumstances which ought to have put him upon an inquiry, which if
prosecuted, would have led to a discovery. (Ram Coomar v. McQueen, 18
MCQ No. 74
W.R. 166)
Write a short note OSTENSIBLE OWNER An ostensible owner is one who has all the
on : Transfer by
indicia of ownership without being the real owner. He is a person who is
ostensible owner.
apparently the full and unqualified owner as such, and not a person who is only
M.U. Apr. 2011
May 2012
a qualified owner, such as a mortgagee or a hirer of goods. He may be any
Nov. 2012 person, a co-sharer, manager, agent or even a complete stranger. The
Nov. 2013 expression "ostensible owner” excludes such persons who hold possession of
Apr. 2015 property professedly as agents, servants, guardians or in any other fiduciary
Nov. 2015 character.
Apr. 2018 Benami transactions afford the best illustrations of the application of this
May 2019 section. A benami transaction is one where, for instance, A buys property in
3
the name of B. Here, the purchase price is paid by A, but the property officially Who is
osterisible owner?
an
stands in the name of B. When a benamidar sells the benami property for What are the
consideration, without disclosing the real owner, the latter, if he remains in the requirement of a
background, cannot avoid the alienation, without showing that the purchaser transfer by an
was tainted with notice of the benami nature of the transaction and that he had ostensible owner?
not acted in good faith. M.U. May 2012
Dec. 2019
It may be noted that the section contemplates only transfers for

2
consideration. Gratuitous transfers (e.g., gifts) are altogether outside its scope. What do you mean
The case of Sarat Chandra v. Gopal Chandra (20 Cal. 226) is a good illustration by Ostensible
of an estoppel, and furnishes an instance of a transfer by the ostensible owner Owner?
5 holding with the consent of the real owner. (2 marks)

M.U. Nov. 2017
The consent referred to in this section must be free consent, as defined
>
in S. 14 of the Indian Contract Act. If it is brought about by a misapprehension
t of legal rights, S. 41 will not apply.
The consent of the true owner may be express or implied. However, the
t acquiescence or absence of interference on his part, while another man asserts
1 ownership in himself, will not defeat his claim. Express consent presents no
า difficulty. Whether consent is impliedly given or not is to be gathered from the
2 circumstances of each case. No presumption of implied consent arises in a
f case where there is no question of estoppel. The conduct of the true owner
should be such as to cause the transferee to do something which he would not
have done, had not the true owner behaved himself in that way.
2
The consent referred to here is the consent of the true owner. Therefore,
consent of the owner's guardian may not suffice. A minor is incapable of giving
consent, and therefore, the ostensible owner cannot transfer with his consent.
e
The section is limited only to voluntary transfers, and does not extend to court
sales.
WHEN PURCHASER WILL BE PROTECTED In order to obtain the

protection afforded by this section, it is necessary for the transferee to prove
(1) that he has given valuable consideration; (2) that he has acted in good
faith; and (3) that he has taken reasonable care, or made reasonable inquiries,
to ascertain that the transferor had power to make the transfer. Where any one
of these essential elements is missing (e.g., where the transferee omitted to
-
make proper enquiries as to the transferor's title), the transferee is not entitled
1
to the protection provided by this section.
This section makes it incumbent on the transferee to take reasonable
care to ascertain that the transferor had the power to make the transfer and to
act in good faith. The expression “reasonable care” means such care as an
ordinary man of business or a person of ordinary prudence would take. It is
obvious that the first step which the transferee is expected to take is to search
the registration office to ascertain what transfers, if any, have been made by
the transferor. When the transferee fails to do so, it cannot be said that he has
taken reasonable care, and, he cannot claim the benefit of this section.
70
Where the subsequent purchaser, while making a search in the Registry

Office in the ordinary way, could not discover a mortgage, owing primarily to
the negligence of the mortgagee in not giving a properdescription of the proper
ties and consequent failure to enter it in the proper index, the subsequent
purchaser was preferred to the mortgagee. (Galliara v. U. Thet,A.I.R. 1929
Rang. 117, 7 Rang. 118, 117 1.C. 500)
Problems
1. A husband entered his land in the revenue records in his wife's name
and went on a pilgrimage.Before his departure, he had allowed her to mortgage
the land. After his departure, she sold the land, and the buyer paid off the
mortgage. On his return, the husband wished to recover the land or redeem
the mortgage. Can he do so?
Ans. : No, the case is covered by S. 41, and the husband can neither
recover the land nor redeem the mortgage. (Niras Purve v. Mst. Tetri Pasin,
1916 20 Cal. W.N. 103)
2. A, a Hindu husband, purchased land in the name of his wife, B. The
land was then entered in B's name in the revenue records. After A's death, B
mortgaged the land to C, who took the mortgage after inquiry, believing in
good faith, that B was the owner. Cobtained a decree for sale on his mortgage
and purchased the land. However, at that time, D was in possession, as Dhad
purchased the land in execution of a money decree against A. C's suit against
D for possession was decreed. Who will get priority, D or the mortgagee?
Ans. :D was the successor in interest of A, who had held out his wife as
the ostensible owner, and cannot defeat the mortgagee who was a transferee
in good faith from the ostensible owner. (Annoda Mohan v. Nilphamari, 1922,
26 Cal. W.N. 436)
3. X, a Hindu, dies leaving a daughter, Y, who takes a limited estate by
inheritance. Y makes a statement to the revenue authorities that X's separated
brother, Z, is the heir and allows Z to take possession of the estate. On Y's
death, her son claims to succeed as the reversionary heir of X. Can Z claim
protection under S. 41 of the Transfer of Property Act?
Ans. : Z cannot claim the protection of S. 41 of the Act, for his ostensible
ownership has not been created by the real owner, X, but by the limited owner,
Y. (Sambhu Prasad v. Mahadeo Prasad, 1933 55 All. 554)
4. A tahsildar, being forbidden by departmental rules from acquiring land
within his tahsil, purchased land in the name of his minor sons, and entered
their names in the revenue records. The sons afterwards sold and mortgaged
the land to X, who acted in good faith and in reliance on the entries in the
revenue papers. Are the purchasers and mortgagees entitled to the protection
of S. 41?
3
Ans. : The purchasers and mortgagees are not entitled the protection
of S. 41, as they should not have been satisfied with entries in the revenue
nt records. (Partap Chand v. Saiyiaa Bibi, 1901 23 All. 442)
5. X is the owner of property, which is entered in the revenue records in
the name of Y, who mortgages the property to Z, who accepts the mortgage,
relying on the revenue register. If Z had made further inquiries, he would have
found out that X had objected to the entry of the property in Y's name, and that
the property had been left to X under a will. Can Z claim the protection of S.
41?
Ans. : No, Z cannot in the circumstances, claim protection under S. 41.

(Nageshar Prasad v. Raja Pateshri, 1915 20 Cal. W.N. 265)
wober
ar
(3) Transfer by an unauthorised person who subsequently
7, acquires interest in the property transferred (S. 43) (Doctrine
of feeding the grant by estoppel)
Where a person:
— fraudulently or erroneously represents that he is authorised to transfer
-
immovable property,
and Tests
- proposes to transfer such property for consideration,

such transfer operates, at the option of the transferee, on any interest which
S
the transferor may acquire in such property at any time during which the contract
of transfer subsists.
This section does not, however, impair the right of a transferee in good
faith for consideration, without notice 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.
d
Of these fields, Z does not belong to A, it having been retained by B on the
S
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.
FEEDING THE GRANT BY ESTOPPEL — The principle of law on which
-
Discuss transfer by
e
the provisions of the section rest is a well-known rule of estoppel, sometimes an unauthorised
T, referred to as feeding the grant by estoppel. This means that if a man who has person who subse
quently acquires
no title whatever to property grants it by conveyance, which would carry the interest in the
legal estate, and he subsequently acquires an interest sufficient to satisfy the property trans
grant, the estate instantly passes. An estoppel arises against him by reason of ferred.
his conduct, and the law obliges him to "feed” that estoppel by reason of his M.U. Nov. 2007
2 subsequent acquisition. This principle has, however, no application to property

า which is inalienable by law.
In cases falling under this section, the estoppel rests on the representation
made by the transferor that he is authorised to transfer, which representation
subsequently turns out to be erroneous.
72
As observed by the Supreme Court, S. 43 provides that a person wh

makes a representation will notbe heard to allege the contrary against a perso
who acts on such a representation. In such cases,it is immaterial whether th
transferor acts bona fide or fraudulentlywhenhe makes the representation.
There is some difference of opinion as to whether this section will be
applicable when the transferee knows the truth of the facts reported to hin
The Privy Council has held in Mohori Bibi v. Dharmodas (30 1.A. 114) that r
estoppel can arise by reason of a false statement where truth is known to bor
parties. However, a Full Bench of the Allahabad High Court has held in Ram
Nand v. Champa Lal (A.I.R. 1956 All. 225 (FB), that even if the truth is know
to the transferee, he can rely on this section. In that case, X sold a shop to
who knew that Xowned only a half-share in it. Later, X acquired the other hai
share. The Court held that Ywas entitled to this otherhalf also, when it accrue
to X. The Allahabad High Court was of the view that the principle in Section 4
was based on the maxim of equity that "equity treats that as done which ough
to have been done."
The following are the four main requisites of this section:
(a) a fraudulent or erroneous representation of ownership;
(b) a transfer by such owner;
(c) the transfer should be for consideration, and
(d) a subsisting contract of transfer.
If these conditions are satisfied, the transferee can exercise his option
but only during the continuance of the contract, and only with respect to th
interest which the fraudulent or erroneous transferor may acquire in suc
property. So, when the contract has subsided because of the repayment of th
purchase-money, the purchaser cannot exercise any option. If the contra
does not subsist, e.g., where it is cancelled by mutual agreement or by su
the section becomes inapplicable.
The words “at the option of the transferee" in S. 43 show that suc
transferee may or may not take advantage of the provisions in his favour in
43. He has other remedies also. He may, for example, repudiate the contra
or he may elect to sue for damages. Thus, the relief under S. 43 is additiona
and not exclusive.
The principle of this section applies to a transfer by way of lease, sal
mortgage, exchange; it also applies to Hindu as well as to Mahomeda
conveyances.
But the rule has no application to the case of a compulsory sale, i.e.,
sale in execution of a decree. This is so because the decree-holder does n
guarantee the title of the judgement-debtor, and the intending purchaser know
that, under the law, he cannot acquire anything more than the right, title ar
interest of the judgement-debtor. (Prasanna Kumar v. Srikanta Rout (1918 2
Cal. L. J. 283).
This section also does not apply where there is a statutory prohibition to
transfer the property on grounds of public policy. (Sannamma v. Radhabhayi,
41 Mad. 418)
There have been some conflicting decisions on whether the principle of
this section applies to spes successionis. The Madras High Court had earlier
held in Official Assignee of Madras v. Sampat Naidu (145 1.C.
456) that the doctrine of feeding the grant by estoppel would not be
applicable, when a person transfers property to which he expects to
succeed and to which he has no title at the time of the transfer, on the ground
that if the section was allowed to be applied, it would defeat the provisions of
section 6, Clause (a) regarding spes successionis.
However, the Supreme Court has held, in Jumma Masjid v. Kadimaniandra
Deviah (1962) SUPP. 2 S.C.R., 554, that the section applies to all transfers
which fulfil the conditions prescribed therein. According to the above decision
of the Supreme Court, even where a person having a mere spes successionis
represents that he is the owner thereof and transfers it to another, the section
is applicable when he later succeeds to the property.
Cases
Jagannath v. Diboo (31 All. 53): A, representing himself to be the sole

.
owner of property X, made a gift of it to B by a registered instrument. It was

found that on the date of the gift, A had no title to the property; but it belonged
to C. A subsequently purchased the property from C, and after the said
purchase, B filed a suit against A for possession of the property. The Court
held that B's suit should be dismissed since the transfer was without
consideration, being a gift.
Hatikudurv. Andar (28 M.L.J. 44): X, an owner of immovable property,
died leaving behind him his widow, and a divided brother. In the life-time of the
widow, the brother B sold the property to A, falsely representing that he was
the owner of it. Two years after the sale, the widow died and A could not get
possession of the property from the widow.
The Court held that A could require B to deliver the property to him.
Sulin Mohan v. Raj Krishna (25 Cal. W.N. 42): A, B and C had equal
shares in a piece of property. A and B leased out the property to X, representing
that the entire property belonged to them. Later, C died, and under his will, his
share accrued to A and B. The Court held that this perfected X's title as lessee
of the whole property.
Mahadeo v. Har Buksh (1928 106 I.C. 489): A Hindu wife executed a
mortgage of her husband's property as if it belonged to her five years after he
had disappeared. The mortgage was invalid, as the presumption of death does
not arise until seven years. However, when the mortgagee filed a suit when
seven years had already elapsed, the mortgage was held to be valid, as she
had then acquired a widow's estate.
74
Problem : A, a Hindu husband, purchased some land in the name of this

wife, B. The land was then entered in B'sname in the revenue records. After
A's death,B, the widow, mortgaged the land to C,who took the mortgage after
due inquiry, believing in good faith that B was the owner.Cobtains a decree for
sale on his mortgage and purchased theland. But D was then in possession
for Dhad purchased the land in execution of a money decree against A.C now
wants to file a suit against D for possession. Can he succeed?
Ans. : C will succeed. D was the successor of A,who had held out his
wife as the ostensible owner, and cannot defeat the mortgagee who was a
transferee in good faith from the ostensible owner.
Problem: A sells his land to B falsely representing to him that he is solely
:
entitled to it. B believes A. If B had made a proper inquiry into the title, he would
have discovered that A's cousin C is the owner of a share. A then inherits C's
share. B claims this share from A. Will he succeed?
Ans. : B will succeed, in spite of his negligence.
Sale by ostensible owner distinguished from feeding the grant by estoppel
The following are the seven features which distinguish a sale by an
ostensible owner (S.41) from
the doctrine offeeding the grant by estoppel (S.
43):
1. In a sale by an ostensible owner, the transferee does not depend upon
the representation of the transferor, but, in good faith, he must have taken
reasonable care to inquire about the authority of the transferor to transfer.
But, under the doctrine of estoppel, the transferee believes the statement
of the transferor to be true and pays consideration in that belief.
2. Under S. 41, the transferee gets a property which does not belong to the
transferor, but to a person who allows the transferor to hold himself out
as its owner, whereas under S. 43, though the transferee gets a property
which does not belong to the transferor, he cannot enforce that transfer
against its owner until, by some chance in the future, such property, or
any part thereof, falls to the lot of his transferor, when he can call upon
him to deliver it to him.
3. Under S. 41, the estoppel works against the real owner, while under
S. 43, it works against the transferor.
4. The transferee under S. 43 takes from an ostensible owner, but the
transferee under S. 43 takes from a real owner.
5.
The transferee under S. 41 must inquire about the authority of the
transferor, whereas the transferee under S. 43 has to pay consideration.
6.
The transferee under S. 41 must not have notice of the true owner's title,
whereas the transferee under S. 43 should have no notice of the option in
favour of the first transferee.
7. Both must take the transfer in good faith, 1.e., the former must honestly
believe that the ostensible owner has got an authority to transfer, and the
lattermust believe that his transferor transfers the property to him for the
first time.
B. PROTECTION OF THIRD PERSON'S RIGHTS

(Ss. 39-40)
Two topics are considered under this head, viz.:
(1) Transfer where a third person is entitled to maintenance (S. 39)
(2) Burden of obligation imposing restriction on use of land: Restrictive
covenants: Covenants running with the land (S. 40)
(1 ) Transfer where a third per son is entitled to maintenance
(S. 39)
When a third person has a right -
(i) to receive maintenance, or from the profits of immoveable
(ii) to a provision for advance- property,
ment or marriage
and such property is transferred,
the right may be enforced against the transferee
(i) if he has notice thereof, or
(ii) if the transfer is gratuitous;
BUT NOT —
(i) against a transferee for consideration, and

(ii) without notice of the right,
nor against such property in his hands.
OBJECT AND SCOPE OF SECTION — The object of this section, so far
as it relates to maintenance, is to declare in what cases a right of maintenance
may be enforced against transferees of the property from which the
maintenance is recoverable.
The section lays down that where a third party has a right to receive
maintenance or a provision for advancement or marriage out of the profits of a
certain immovable property, which is subsequently transferred, the right of
such third party can be enforced against the transferee (i) if the transferee had
notice thereof, although the transfer was for valuable consideration or (ii) if the
transfer was a gratuitous one · irrespective of the question whether the
transferee had or had not notice of the right. Thus, a gratuitous transferee has
protection against the maintenance holder; and a transferee for consideration
has protection only if he takes the transfer without notice of the right of the
76
person entitled to maintenance or for whom the provision for advancement

has been made.
In order to apply this section, the right to receive maintenance should be
from the profits of immovable property; it should go with the property, and no
merely be a personal right against the owner or holder of the property.
Two other conditions should be noted in this connection:
(1) The person protected by this section has no proprietary interest in
; he has a mere right to besatisfied
the property, nor a charge upon it
from the profits of the property.
(2) The person so protected is a third person, i.e., a person other than
the transferor and the transferee. When a widow's right of
maintenance is made a charge for a fixed sum upon her husband's
estate by a decree, it becomes a right in rem, and as such, is available
against all the world, even against a bona fide transferee for valuable
consider action without notice. How ever, if the maintenance is made
a charge by agreement, sec. 100 applies.
This section does not deal with charges, but with a right which falls shon
of a charge. A charge does not arise until it is fixed by a decree or by agreement
or by operation of law.
Even when a person is entitled to receive only a part of his maintenance
from the profits of a particular village, the case is governed by this section, and
such right cannot be enforced against a transferee for consideration and without
notice of the right, nor against such property in his hands. (Kesho Prashad v.
Upper India Bank, A.I.R. 1933 Oudh 76)
The right protected by this section is a right of maintenance; but the claim
of a Hindu widow to reside in the family house stands on much the same
footing as a claim for maintenance, and can be claimed against a purchaser
with notice of the claim for residence, (Yamunabai v. Nanabhai, 12 Bom. L.R.
1075), but not where the property is sold to pay off her husband's debts.
In Dan Kuer v. Sarla Devi, the Judicial Committee has summarised the
law on this subject as follows:
"Two obligations confront a joint Hindu family : (1) The obligation to pay
the debts (for instance, of the father) binding on the family; and (2) the moral
obligation to provide maintenance to the widows of the family. The latter
obligation would, under certain circumstances, ripen into a legal obligation, as,
for instance, when a charge is created on specific property of the family either
by agreement or a decree of the Court; that so long as neither of these two
obligations has taken the form of a charge on the family property, the obligation
to pay the binding debts will have precedence (as, for instance, in the course
of the administration of the estate) over mere claims of a female member's
maintenance; but, if either of these obligations assumes the shape of a charge,
it would take precedence over the other.”
In the case before the Privy Council, the maintenance claimed had
assumed the shape of a charge under an award and was held to prevail over
the simple money debts of the family.
PROVISION FOR ADVANCEMENT Advancement “is a payment to
-
persons who are presumably entitled to, or have a vested or a contingent

interest in, an estate or legacy before the time fixed by the will for their obtaining
the absolute interest in a portion or the whole of that to which they would be
entitled”. It represents a sum paid out of capital to secure a permanent benefit
or advantage in life for the person advanced.
The principle of English law is that when a property is purchased or a
deposit is made in the name of a wife or a child, it would be presumed that the
purchase or deposit was intended for her or its advancement. However, this
rule does not hold good in India. (Paulv. Gopal Nath, A.I.R. 1931 All. 683). But
in the case of Europeans and Parsees, there may be a presumption of such
advancement
The section mentions "a provision for advancement". A person is said to
receive an advancement when, for instance, a father purchases a property in
the name of his child. Such a purchase is not to be regarded as colourable or
benami. This kind of provision, does not, however, exist in India. Under the
English law, it is recognised that a child who receives an advancement must
bring the amount into hotchpotch in case of the father's intestacy. But there is
no such rule in India, and the presumption that would be raised in case of a
father purchasing a property in the name of his child would not be raised here,
except in the case of Parsees and Europeans.
(2) Burden of obligation imposing restriction on use of land:

Restrictive covenants: Covenants running with the land
(S. 40)
Where, a third person
(a) has for the more beneficial enjoyment of his own immovable property,
and independently of -
(i) any interest in the immovable property of another, or
(ii) any easement thereon,
a right to restrain the enjoyment of the latter property in a particular
manner, or
(b) is entitled to the benefit of an obligation -

(i) arising out of contract, and
(ii) annexed to the ownership of immovable property, but not
amounting to an interest therein or easement thereon,
such right or obligation may be enforced against -
78
(i) a transferee with notice thereof, or

(ii) a gratuitous transferee of the property affected thereby,
BUT NOTagainst a transferee for consideration and without notice of
the right or obligation, nor against such property in his hands.
Illustration- A contracts to sell Sultanpur to B. While the contract is still
in force, he sells Sultanpur to C,who has notice of the contract; B may enforce
the contract against C to the same extent as against A.
SCOPE OF S. 40 — This section protects certain rights of a third party
(which before the transfer, were enforceable against the transferor) against
the transferee with notice of the same and against a gratuitous transferee. The
rights so protected are either (i) the rights existing for the more beneficial
enjoyment of the land of the person entitled and imposing restriction on the
enjoyment of the land which is transferred; or (ii) the rights arising out of a
contract between the person entitled and the owner of the property which is
transferred, and involving an obligation on the latter. But these rights should be
independent of and should not amount to (a) interests in immovable property
and (b) easements.
WHAT IS A COVENANT - A covenant is an agreement in writing creating
an obligation. It may be : (i) affirmative or positive, stipulating the performance
of some act or the payment of money; or (ii) restrictive or negative, forbidding
the commission of some act.
RESTRICTIVE COVENANT — The first paragraph of this section deals
-
with what are called restrictive covenants, which are enforced in equity in
England on the ground that the person entitled to the right has an equitable
interest in the land or a right in the nature of an equitable easement. Now, a
restrictive covenant is one which would entitle a third person to interfere with
the free use which the transferee may choose to make of the property which is
the subjectmatter of the contract.
A covenant which runs with the land is a restrictive covenant because it is
something which restricts the user of the land. A positive covenant never runs
with the land, either in law or in equity. If there is a restrictive covenant and the
purchaser takes the property with notice of such covenant, the person in whose
favour the covenant is made can restrain the purchaser from acting contrary
thereto. A covenant by a vendor not to build a beer-house or tavern on the
plots of land remaining unsold is a restrictive covenant, and enforceable against
the purchaser.
In one case, M was allowed by the zamindar of certain lands to build
houses on the lands on condition that if M sold any of the houses so built, he
should pay one-fourth of the purchase-money to the zamindar. M sold one of
the houses to R who had notice of the covenant in favour of the zamindar, who
thereupon sued R (as well as M) to recover one-fourth of the purchase-money.
The Court held that the covenant was a restrictive covenant, binding M not to
79
transfer its interest without the zamindar receiving his one-fourth share of the
purchase-money; the covenant was,therefore, enforceable against Ras much
as against M (jointly and severally). (Prabhu Narain v. Ramzan, 41, All. 417)
Tulk v. Moxhay (2 Ph. 774): In this case, X, the owner of vacant land
and several houses surrounding it, had sold the vacant land to E, who
covenanted that he would keep it in the same condition, i.e., unburdened with
buildings. Y then purchased the land from E, and Y wanted to construct a
building thereon, although he had notice of the covenant. The Court held that
Y could not do so. The decision in this case is familiarly referred to as “the rule
in Tulk v. Moxhay”.
COVENANT RUNNING WITH THE LAND When a person transfers
his immovable property, the transferee is often required to enter into a covenant
whereby the transferor imposes on the transferee conditions restraining the
enjoyment of land transferred for the benefit of his adjoining land.
A covenant is said to run with the land, when either the liability to perform
it, or the right to take advantage of it, passes to the assignee of the land. For
example, a covenant in a lease for renewal thereof is one running with the
land, and may be enforced against all transferees. Similarly, a covenant for
title runs with the land.
According to English law, a covenant may run with the land (i) at law or (ii)
in equity.
(i) A covenant runs with the land at law, when the benefit of the covenant
passes to the assignee of the covenantee, or where its burden passes to the
assignee of the covenantor, and in either case, independently of notice. Under
the Transfer of Property Act, covenants of which the benefit runs with the land
are covenants for title implied in sales under S. 55(5), the covenants implied in
mortgages under S. 56, and in respect of leases, the covenant for quiet
enjoyment implied in S. 108(c). As these covenants run with the land at law,
they are enforceable by any person in whom the interest in the property of the
covenantee is vested, irrespective of wh ther or not the third party had notice
thereof.
(ii) A covenant runs with the land in equity, when the burden of the covenant
can be imposed on the assignee of the covenantor under the rule in Tulk v.
Moxhay (Seen above). Under the Transfer of Property Act, covenants that run
with the land in equity are the restrictive covenants referred to in the first part
of S. 40; they cannot be enforced against a purchaser for value without notice.
All covenants are binding as between the transferor and transferee.
Sometimes, they are enforceable even against the purchasers from the
transferee, and they are then said to "run with the land" (i.e. such covenants
are attached to the land, irrespective of who is the owner of such land). A
coven which runs with the land is one which binds the land its inception,
or which affects the nature, quality or value of the land; it must be one that
80
touches or concerns the land, by which is meant that it must be imposed

the benefit, or to enhance the value, of the land retained by the transferor
some part of it.
A covenant running with the land must fulfil the following two conditior
(1) it must be made with a covenantee who has an interest in the land
which it refers; and
(2) itmustconcern or touch the land, - i.e.,it must enhance the value
the land or benefit it in some other way.
If it does not fulfil these conditions, it is a personal covenant, and is bindin
only between the contracting parties and their personal representatives.
In the case of a covenant which runs with land,(1) the liability to perfor
it, or (2) the right to take the advantage of it, passes to the assignee of th
land. It is enforceable against the purchaser from the transferee,whether
purchases with or without notice of the covenant. Instances of covenants runni
with the land under the Transfer of Property Act are —
(i) covenants for title, implied in sales under S. 55(2);
(ii) covenants implied in mortgages under S. 65; and
(ii) covenants for quiet enjoyment of leases implied under S. 108(c).
Problem: In an agreement between Rand S, R stipulated that 'If S sha
require a site in his property H, for erecting Mandir and Dharmshala and f
doing repairs, etc., my heirs and, I shall give land, stones and timber fro
property H. If my heirs and I refuse to give, in that case, S shall take the sam
of his own power. Subsequent to this agreement, B acquired a househo
interest in Hand resisted S when he tried to erect a temple in a portion of H.
sued B on the strength of the agreement. Will he succeed?
Ans. : The agreement conferred on S no present estate or interest in
property H, and is not enforceable against B as a covenant, since it does n
run with the land and it also infringes the rule against perpetuity.
COURT SALES — A purchaser at a Court sale is a transferee by operatic
of law, and is, therefore, not covered by S. 40. As observed in Nur Mahomed
Dinshaw (1922 45 Mad. L.J. 770), “Judicial sales would be robbed of all the
sanctity, if vague references to antecedent contracts could be held to invalida
the buyer's title."
Covenants are either (i) affirmative or positive; or (ii) restrictive or negativ

An affirmative or positive covenant is one which stipulates the performanc
of some act or the payment of money. Such a covenant is collateral, and
never runs with the land, either at law or in equity; it cannot be enforced again
a purchaser from the transferee.
Exception : In the case of a lease, the covenant to pay rent is annexed
the land, and the benefit of this covenant passes to the lessor's assignee
81
(S. 109) Similarly, the lessee's assignee is liable to the lessor by privity of estate.
(S. 1080)
A negative or restrictive covenant is one which forbids the commission of
some act, e.g., a covenant not to erect buildings. A covenant to repair, which
(as was once said) "can only be enforced by making the owner put his hand
into his pocket," is a positive covenant, and not a restrictive one. Restrictive
covenants are not binding upon a purchaser without notice. They can be
enforced only as against (i) transferees with notice, and (ii) gratuitous
transferees. (S. 40).
A restrictive covenant runs with the land, only if it is -
(1) created for the benefit of the land conveyed or of that of which the
grantor remains the owner, and
(2) intended to be annexed to such land.
The following tabular analysis will further clarify the position:
Covenants
Restrictive or Negative Affirmative or Positive
Running with Not running Relate to Do not relate

the land with the land use of land to use of land
At Law In Equity
C. TRANSFER BY PERSON HAVING AUTHORITY TO

REVOKE A FORMER TRANSFER (S. 42)
Where aa person transfers any immovable property, reserving the power
to revoke the transfer, and subsequently transfers the property for consideration
to another transferee, such transfer operates in favour of such transferee as a
revocation of the former transfer to the extent of the power.
Illustration : A lets a house to B, and reserves the power to revoke the
lease if, in the opinion of a specified surveyor, B should make a use of it
detrimental to its value. Afterwards, A, thinking that such a use has been made,
lets the house to C. This operates as a revocation of B's lease, subject to the
opinion of the surveyor that B's use of the house was detrimental to its value.
The principle of the section is that if a person has a right to transfer property,
after exercising a right to revoke a previous transfer, a transfer of such property
by him will imply an exercise of the right of revocation.
82
D. TRANSFER BY CO-OWNERS [Ss. 44 & 47]

The following two topics deal with transfers by co-owners:
(1) Transfer by one co-owner (S. 44)
(2) Transfer by co-owners of share in common property. (S. 47)
(1) Transfer by one co-owner [S. 44]

Where one co-owner of immovable property transfers his share, the
transferee of such share acquires the transferor's right (i.e., the co-owner's
right) –
(a) to joint possession or other common or part-enjoyment of the property

(This right, however, is not available in cases where such property is
a dwelling house belonging to an undivided family, and the transferee
is not a member of that family); and
(b) to enforce a partition of the same.
(This right, however, will be subject to the conditions and liabilities
affecting the share so transferred.)
TRANSFER BY ONE CO-OWNER — Where one co-owner of immovable
property transfers his share, the transferee acquires, as to that share (1) the
right of joint possession, and (2) the right to partition, to the extent enjoyed by
the transferor. This would apply to a transferee of all kinds, including mortgagees
and lessees. But where the transferee of a dwelling house belonging to ar
undivided family is not a member of the family, he is not entitled to join
possession or other common or part-enjoyment of the house.
This principle is deducible from the judgment of Westrop, C.J., where he
observed : "We deem it a far safer practice, and less likely to cause serious
breaches of peace, to leave a purchaser to a suit for partition, than to place
him by force in joint possession with the members of a Hindu family, who may
be not only a different caste from his own, but also different in race and religion"
This section is based on the principle of subrogation or substitution. Thus
A, B and C mortgage their field to X. C then transfers his share of the field to D
Under these circumstances, D will have the right to joint possession with A and
B, and also a right to claim partition and separate possession of his share. Bu
the recently acquired share of D is still subject to the mortgage.
(2) Transfer by co-owners of share in common property (S. 47)

Where several co-owners of immovable property transfer a share in such
property without specifying that the transfer is to take effect on any particula
share or shares of the transferors, the transfer, as among such transferors
takes effect on such shares equally, where the shares were equal, and where
they were unequal, proportionately to the extent of such shares.
Illustration : A, the owner of an eight-anna share, and B and C, each the

owners of a four-anna share, in mauza Sultanpur, transfer a two-anna share
in the mauza to D, without specifying from which of their several shares the
transfer is made. To give effect to the transfer, a one-anna share is taken from
the share of A, and half-anna shares from each of the shares of B and C.
Scope of the section : When part of the property is transferred by its co
owners, the effect of the transfer is to reduce their shares proportionately. This
section is thus helpful in ascertaining the shares of the co-owners in the property
retained after the transfer. Since the section predicates a possible difference
in the quantum of the interests of the co-owners, it is clear that it deals with
tenants in common.
E, JOINT TRANSFERS (Ss. 45-46)

The two provisions regarding joint transfer are:
(1) Joint transfer for consideration (S. 45)
(2) Transfer for consideration by persons having distinct interests
(S. 46)
(1) Joint transfer for consideration (S. 45)

Where immovable property is transferred for consideration to two or more
persons, and such consideration is paid out of a fund belonging to them in
common, they are, in the absence of a contract to the contrary, entitled to
interests in such property, identical to the interest to which they were respectively
entitled in the fund.
Where, however, such consideration is paid out of separate funds, they

are entitled, in the absence of a contract to the contrary, to interests in such
property in proportion to the share of the consideration advanced by them
respectively.
Where there is no evidence as to- the interests in the fund to which
they were respectively entitled or
the shares which they advanced,
such persons are to be presumed to be equally interested in the property.
(2) Transfer for consideration by persons having distinct interests MCQ No. 75
(S. 46)
Where immovable property is equally, where their interests in the
transferred for consideration by property were of equal value; and
persons having distinct interests proportionately to the value of their
therein, the transferors are, in the
respective interests, where such
absence of a contract to the
contrary, entitled to share in the
interests were of unequal value.
consideration
84
Illustrations
(a) A, owing a moiety, and B and C each a quarter share, of Mauza

Sultanpur, exchange an eighth share of that Mauzafor a quarter share of Mauza
Lalpura. There being no agreement to the contrary, A is entitled to an eighth
share in Lalpura, and B and C to a sixteenth share in that Mauza.
(b) A being entitled to a life interest in Mauza Atrali,and B and C to the
reversion, sell the Mauza for 3 1,000. A's life interest is ascertained to be
worth 7600, the reversion 400. A is entitled to receive 3 600, out of the
purchase-money, B and C to receive 400.
Involuntary transfer: The principle ofthe Section applies to an involuntar
transfer. (Reazaddi Bepari v. Yakub Bepari, AIR 1941 Cal 416)
Personal Laws as to nature of tenancy : The forms of co-ownership
found in India have been explained in the light of the personal laws of the
Indians in the previous sections.(Debrajv. Ghanshyam, AIR 1979 Ori 162)
F. PRIORITY OF RIGHTS CREATED BY A TRANSFER
(Ss. 48 & 78)
Priority of rights created by a transfer fall under two heads:
(1) Priority of rights previously created (S. 48)
(2) Postponement of prior mortgage (S. 78)
(1) Priority of rights previously created (S. 48)
Where a person purports to create by transfer, at different times, rights in
or over the same immovable property, and such rights cannot all exist, orbe
exercised to their full extent together, each later created right shall, in the
absence of a special contract or reservation binding the earlier transferees, be
subject to the rights previously created.
QUI PRIOR EST TEMPORE, POTIOR EST JURE Two successive
transfers of the same property by sale or mortgage cannot co-exist; the later ir
date must give way to the earlier. Where there are two encumbrances on the
same property, the first encumbrancer must be first satisfied, and if necessary
he can exclude the second,
The principle underlying this rule is one of natural justice, and has beer
well-expressed in the maxim of Equity, “Qui prior est tempore, potior est jure,
i.e., he who is prior in time shall prevail in law. This principle, it is to be
remembered, will not apply unless the conflicting equities be otherwise equa
and special contracts (to bind earlier transferees) do not exist.
Firstly, it may be noted that the rule is invoked only when the interests
created by transfer either at the same or at different times conflict with one
other. Thus, a mortgage and a sale of the same property cannot conflict
because the first is the acquisition of a limited interest in the property, while the
latter is an assignment of the mortgagor's residuary right, viz., the equity of
redemption. And therefore, the rule as to priority cannot be invoked. But where
two mortgages of the same property are created, the above rule will apply. If
they are created on the same day, the rule is applied by showing which of the
two mortgages was executed first. If, for want of proper evidence, this cannot
be proved, the two mortgages take as tenants-in-common or joint-tenants.
Secondly, the transfer creating such interests must be valid and complete
transfers. Thus, if the first mortgage, being compulsorily registrable, is not
registered and the second is registered, the second has priority over the first,
because the first mortgage cannot be said to have been a complete transaction
for want of registration. If, in the same case, the second mortgagee has got
notice of the first, though unregistered mortgage, he cannot claim priority over
the first, because the case would then fall under S. 40. But if the second
mortgage is executed and registered during the period between the execution
and registration of the first mortgage, the second mortgage cannot have priority
over the first mortgage, because registration operates retrospectively from the
date of execution (S. 47 of the Registration Act).
There are, however, several exceptions to the above rule. The following
are eleven exceptions to the rule that priority is determined by order of time :
1. Section 50 of the Registration Act, under certain circumstances, gives
priority to a registered mortgage over an earlier unregistered deed of
which registration is optional.
2. Another exception to the rule is salvage lien, i.e., advances made for
the purpose of protecting a priority from revenue sale, forfeiture or
destruction.
3. When a mortgage is constituted a first charge, it takes precedence

over prior mortgages by an order of the Court.
4. Land revenue falling in arrears subsequent to a mortgage takes
precedence over the mortgage.
5. A debt owing to the Government (even if subsequent) takes
precedence over all other debts, secured or unsecured, in accordance
with statutory provisions.
6. When the prior encumbrancer misleads a subsequent encumbrancer
by fraud, misrepresentation or gross neglect, he loses his priority.
7. When the priority is barred b yy estoppel, a subsequent transferee
takes precedence.
8. A mortgage executed by a receiver for the purpose of preserving
the property, takes precedence over all other loans.
9. Advances made to save a mortgaged property from loss or destruction
are payable in priority to all other charges.
86
10. A transfer operates from the date of execution of the deed, although
it may have been registered at a later date : S. 47, Registration Act
11. Anon-testamentary document, which is duly registered, has priorit
over any oral transfer, though made earlier, except in the case of
mortgage by deposit of title-deeds : S. 48, Registration Act.
(2) Postponement of prior mortgage (S. 78)

1. Where through the fraud, misrepresentation or gross neglect of a
prior mortgagee, a subsequent mortgagee is induced to advance
money on the security of mortgaged property, the prior mortgagee is
to be postponed to the subsequent mortgagee : S. 78.
2. When a mortgage is made by an order of the Court as a first charge
it takes precedence over a prior mortgage.
3.
Land revenue falling in arrears subsequent to a mortgage takes
precedence over it.
4.
A debt due to the Government (even if subsequent) takes priority
over all other debts, secured or unsecured.
(S. 78 is dealt with in detail in the Chapter on Mortgages.]
G. TRANSFEREE'S RIGHTS UNDER A POLICY (S. 49)

Where immovable property is transferred for consideration, and:
such property (or any part thereof) is, at the date of the transfer
insured against loss or damage by fire,
in case of such loss or damage, the transferee may, in the absence
of a contract to the contrary, require any money, which the transfero
actually receives under the policy (or so much thereof as may b
necessary) to be applied in reinstating the property.
Thus, if the transfer is a mortgage, the mortgagor, as the insured person
would receive the money, and the mortgagee has a right to require it to be
applied in restoring the security. This right extends even as against a credito
of the mortgagor who has attached the insurance money. Otherwise, he woul
have a right under S. 68(h) to sue for his mortgage money.
Similarly, the lessee may require the lessor receiving the insurance mone
to restore the property. If the property is wholly destroyed or rendered unfit fo
the purposes for which it was leased, he has also an option to avoid the least
under S. 108(e). If he exercises this option, he cannot claim any right to the
insurance money. In the case of a sale, the vendor is, in fact, a trustee for the
purchaser in respect of the insurance money. Nevertheless, the purchase
can get its benefit under this section.
It may be noted that the right under S. 49 arises only when the transfero
actually receives the insurance money. If he does not choose to enforce his
claim against the insurance company, the transferee has no remedy either
against the transferor or the insurance company. The safest course to follow,
therefore, in all such cases, is to get the policy of insurance assigned to the
transferee at the time of the transaction.
ENGLISH LAW — The law on this point in England is very curious. There,
the transferee can require the transferor to apply the insurance money in
reinstating the property, only if there is a provision in the contract to that effect.
Otherwise, the vendor, who has received full value of the property from the
purchaser and ex hypothesi having suffered no loss, would be bound to refund
the money to the insurance company. The reason for this rule is that a contract
of insurance is one of indemnity, and is a personal contract.
(As for the law as to insurance of mortgaged property, see Ss. 72 and 76
below.)
H. BONA FIDE HOLDERS UNDER DEFECTIVE TITLE

(Ss. 50-51)
This topic will be considered under the following two heads:
(1) Rent paid to holder under defective title (S. 50).
(2) Improvements made by bona fide holders under defective title
(S. 51).
(1) Rent paid to holder under defective title (S. 50)

S. 50 provides that no person can be charged with any rents or profits of
any immovable property, which he has, in good faith, paid or delivered to any
person of whom he, in good faith, held such property, notwithstanding it may
afterwards appear that the person to whom such payment or delivery was
made had no right to receive such rents or profits.
Illustration : A lets a field to B at a rent of 500, and then transfers the
field to C. B, having no notice of the transfer, in good faith, pays the rent to A.
B is not chargeable with the rent so paid.
S. 50 of the Act protects payment of rent made in good faith to a holder of
immovable property under a defective title. If a tenant or any other person,
who has to make periodical payments in respect of an immovable property
makes a payment in good faith to a person from whom he held the property, he
cannot be compelled to make a second or further payment to another person,
even if it should turn out, later on, that the person who received the payment
had no right to receive it.
S. 109 similarly provides that if the lessee, not having reason to believe
that the lessor has transferred the property leased, pays rent to the lessor, the
lessee not liable to pay such rent again to the transferee.
88
(2) Improvements made by bona fide holders underdefective title

(S. 51)
When the transferee of immovable property makes an improvement on
the property, believing in good faith that he is absolutely entitled thereto, and
he is subsequently evicted therefrom by any person having a better title:
the transferee has a right to require the person causing the eviction;
either
(i) to have the value of the improvement estimated and paid or secured
to the transferee:
or
(ii) to sellhis interest in the property to the transferee, at the then market
value thereof, irrespective of the value of such improvement.
The amount to be paid or secured in respect of such improvement is to
be the estimated value thereof at the time of eviction.
If the transferee has planted or sown (on the property) crops which are
growing when heisevicted therefrom,he is entitled (i)to such crops, and (ii) to
free ingress and egress to gather and carry them.
The law relating to improvements made on lands by a bona fide person
holding under a defective title is laid down in Sec. 51 of the Act. The section
involves two main
principles of law, viz., (i) no personcan pass off a greater
interest than he himself actually possesses; and (ii) he who seeks equity must
do equity. A transferee of an owner with adefective titleacquires no real interest
in the property. But if he makes improvements on the property, believing
good faith that he is absolutely entitled thereto, he will have two alternate
remedies when the real owner seeks to evict him. Either he will be entitled to
the cost of his improvements, or he will be entitled to have the property sold to
him at the market price, irrespective of the value or cost of his improvements.
This section cannot, however, apply unless the transferee made the
improvements in good faith. Carelessness to make enquiries about the title
will not however make his conduct mala fide.
This section is based upon the principle that he who seeks equity must
do equity. In order to entitle a person to the benefit of this section (i.e., to the
improvements made by him or to their value) fourthings are necessary :
Firstly, he must be a "transferee". A mere stranger or a trespasser is not
entitled to the benefit of this section. The word “transferee" does not include an
auction-purchaser of the property, in view of clause (d) of section 2.
Secondly, he must believe himself to be absolutely entitled to the
immovable property. A person who is aware of his imperfect title, or who knows
that his title is terminable, such as a lessee or tenant i mortgagee, is not
entitled to the benefit of this section. (Gokulapathi v. Venkatarama Sharma
(1971) 2 M.L.J. 320)
Thirdly, he must believe in good faith. If a person has made improvements

in good faith, as a bona fide occupant of the land and in the belief the land is
his own, he may be entitled in equity to recover the value of the improvements.
A person in wrongful possession cannot recover the costs of improvement.
Lastly, property must not have been claimed by inheritance. Thus, in
Topanmal v. Chanchalmal, (A.I.R. 1940 Sind 77), A, believing that he had
become the owner of a property by inheritance, made improvements in the
property and spent about 2,000. A was subsequently evicted by a person
having a better title. The Court held that A had no remedy inasmuch as S. 51
does not, in terms, apply to a person who claims property by inheritance,
because S. 51 of the Transfer of Property Act relates to conveyances between
living persons.
Problem : A builds on land which he thinks is his, but is really B's. B,
knowing of A's mistake, encourages A to build. Discuss the rights of A and B.
Ans. : The owner of land cannot sue for ejectment where he sees another
person erecting a building upon it, and knowing that such other person is under
the mistaken belief that the land is his own purposely abstains from interference.
A cannot be evicted by B, and the question of A's right to claim compensation
under S. 51, which arises only on eviction does not arise.
Case : Durgozi v. Fakeer Sahib, (30 Mad. 197): The mother of a
Mohamedan minor, acting as the de facto guardian, sold the minor's property
to A, believing in good faith that she had authority to do so. When A was evicted
by the minor, it was held that A was entitled to compensation for the
improvements made by him.
I. TRANSFER OF PROPERTY PENDING SUIT RELATING

THERETO (LIS PENDENS) : (S. 52)
An interesting conflict of rights between two innocent parties can arise in
the following way. Suppose a litigation is pending between A and B with regard
to the ownership of certain property. If A wins the suit, he would be entitled to
the property, and conversely, if the suit goes in B's favour, he would get the
property. But suppose that pending this suit, B, claiming to be the owner of the
property, sells it to X, who does not know anything about the suit pending Write a short notes
between A and B. Ultimately, the suit ends in A's favour. The question that will on : Doctrine of Lis
arise is : Between X and A, who is to be preferred? It is precisely this question Pendens,
that is answered by S. 52 of the Act, which contains the doctrine of lis pendens. M.U. Jan. 2019
Doctrine analysed
During the pendency in any Court - having authority in India (excluding
Jammu and Kashmir) or established
beyond such limits by the Central
Government,
90
of any suit or proceeding - which is not collusive, and in which

any right to immovable property
is directly and specifically in
question -
Discuss the Doc
trine of Lis Pen the property cannot except under the authority of
dens. be transferred, or the Court and on such
M.U. Nov. 2008 otherwise dealt with, by terms as it may impose,
Apr. 2009 any party to the suit or
proceeding, so as to
affect the rights of any
other party thereto
Write a short note
on : Lis pendens.
under any decree or
M.U. Nov, 2013
order which may be
made
Apr, 2015
Nov. 2015
Apr. 2016 Pendency, when deemed to commence

May 2019 The pendency of a suit the presentation of the in a competent Court.
or
proceeding is plaint or the institution of
deemed to commence the proceeding →
from the date of
Continuance of pendency
Such pendency
is the suit or proceeding (i) been obtained, or
deemed to continue has been disposed of (ii) become unobtain
until by a final decree or able, by reason of
order and complete the expiry of the
satisfaction or period of limitation.
discharge of such
decree or order has
LIS PENDENS (PENDING LITIGATION) — This section embodies the

What is Lis pen doctrine of lis pendens, as expressed in the maxim, "Ut lite pendente nihil
dens?
innoveteur,” which means that nothing new should be introduced in a pending
(2 marks) litigation.
M.U. May 2012
Nov. 2012 Where a suit or proceeding is pending between two persons with respect
Dec. 2019 of an immovable property, and one of the parties thereto sells, or otherwise
transfers the subject-matter of the litigation, then the transferee will be bound
by the result of the suit or proceeding, whether or not he had notice of the suit
or proceeding. This rule is known as the rule of lis pendens. This rule affects
the purchaser, not because the pending suit or proceeding amounts to notice,
but because the law does not allow litigants to give to others, pending the
litigation, any right to the property in dispute, so as to prejudice the other party.
Thus, the rule of lis pendens is based on the necessity for final adjudication;
it aims at the prevention of multiplicity of suits or proceedings. A transaction
entered into during the pendency of a suit cannot prejudice the interests of a
party to the suit who is not a party to the transaction. The object of the rule is to
protect one of the parties to a litigation against an act of the other.
The leading case on this subject is Bellamy v. Sabine. In that case F, the Discuss the
doctrine of lis
heir at law of E filed the suit impeaching a sale by E to S of the fee simple in the pendens. What is
suit property. Pending the action that is, after the institution of the suit, S the effect of his
transferred the property to B. F continued the action against S without impleading pandens?
B as party. B had no notice of the pendency of the proceedings against S. The M.U. Apr. 2010
action ended in favour of F and the sale deed was set aside subject of F
making certain payments to S. It was held that B, the alienee from Spending
the suit, although he was not aware of the pending lis, was bound by the decision
in the suit and was, therefore, entitled as against F to no more than Swas
entitled to.
Doctrine not based upon constructive notice

The principle of the doctrine is thus explained by Turner L.J. in the said
case of Bellamy v. Sabine, (1857)| De G. & J. 566 : “It is, as I think, a doctrine
common to the Courts both of Law and Equity, and rests, as I apprehend, upon
the foundation that it would plainly be impossible that any action or suit could
be brought to a successful termination, if alienations pendente lite were
permitted to prevail. The plaintiff would be liable in every case to be defeated
by the defendent's alienating before the judgment or decree, and would be
driven to commence his proceeding de novo, subject again to be defeated by
the same course of proceedings."
The doctrine of lis pendens cannot be availed of by the transferor and it is
really intended for the protection of the other party, i.e., the party in the suit
other than the transferor. (Rabindranath v, Sarat Chandra, A.I.R. 1971, Cal.
159)
The rule of lis pendens will apply between co-defendants if the relief
claimed in the suit involves a decision between them. (Krishnappa v. Mallya,
41 Mad. 458)
Suits decreed ex-parte also fall within the scope of the doctrine of lis
pendens, provided they are not collusive. (Krishnappa v. Shavappa, 31 Bom.
363)
Compromise decrees:A compromise decree also falls within the scope
of the doctrine of lis pendens, — provided the compromise is not the result of
a fraud. (Annamalai Chettiar v. Malayandi, 26 Mad. 426)
The Rajasthan High Court has also held that the doctrine of lis pendens
applies in cases where pending litigation is ultimately compromised by the
parties and a decree is passed by the Court in terms of the compromise.
(Mohammad Aleem v. Maqsood Alam, A.I.R. 1989 Raj. 43)
92
Involuntary transfers : Although the section applies only to transfers

act of parties, and S. 2(d) makes the whole Chapter inapplicableto transfer
byoperation of law, it isnow settled law thatthe doctrine oflis pendens, as lai
down in the section, applies to involuntary transfers also.Therefore, a purchase
of a property at an execution sale during the pendency of a suit in respect
the same
As
property is affected by the doctrine. sales lik
seen above, S. 52 does not, in terms, apply to involuntary
Court-sales. But though the section itself may not apply to involuntar
alienations, the principle of lis pendens applies to such alienations.Here, th
transfer is made, not by an act of one of the parties to the litigation,butat th
instance of a third person and through the instrumentality ofthe Court and th
rule ofIn lis pendens applieswith equal force.
Radha Madhub v.Munshur (15 1.A. 97), A mortgaged his property to E
Later B sued A on the mortgage and obtained a decree for sale. Whilst this su
was pending, a third party, c, obtained a money decree against A, and th
property was sold to C in execution of this money decree. In thes
circumstances, the Privy Council held that C's purchase was subject to th
doctrine of lis pendens.
The rule of lis pendens does not apply to a transfer by a person who
subsequent to the transfer, is added as a party to the pending suit. A transfe
by a person before he is made a party is not affected by the rule of lis pendens
Itmay be noted that the effect of the rule of lis pendens is not to invalidat
or avoid the transfer, but to make itsubject to the result of the litigation. This
provision operates even if the transferee pendente lite had no notice of the
pending suit or proceeding at the time of the transfer.
Problem: A agrees to sell immovable property to B in 2008. B files a sui
in 2009, against A for the specific performance of the contract to sell and fo.
the recovery of the said property. Pending the suit, A sells the property to Cir
2009 by a registered deed. In 2010, B's suit is dismissed on the ground that he
had committed a breach of a contract of sale. In 2011, C files a suit against
for recovering possession of the property sold to him by A in 2009. A resists
C's claim on the ground that the sale to C was effected during the pendency o
the suit of B against A. How would you decide?
Ans.: S. 52 does not invalidate transfers pendente lite. It only enacts that
the purchaser pendente lite is bound by the result of the litigation. As B's suit
pending which A sells the property to C, has been dismissed, C's suit for
possession must be decreed,
Its essentials In order to constitute a lis pendens, the following si
elements must be present:
(i) There should be a suit or a proceeding.
(ii) The suit or proceeding must be one in which a right to immovable
property is directly and specifically in question.
MCQ No. 76
(iii) The suit or proceeding must not be a collusive one.
(iv) The suit or proceeding must be pending.
() The suit or proceeding must be pending in a Court of competent
jurisdiction.
(vi) The property directly and specifically in question in the suit must be
transferred during such pendency.
Pending Litigation : The most important condition is that a suit or
proceeding must be pending. The meaning of the expression “pendency of a
suit or proceeding" is given in the Explanation added to the section. This
pendency continues from the time the plaint is presented to the proper Court
till it is finally disposed of, and complete satisfaction or discharge of the decree
is either obtained or has become unobtainable because it is time-barred.
Thus, if the plaint is presented in a wrong Court, and a transfer of an
immovable property to which the plaint relates is made during the pendency of
the suit in such a Court, the doctrine of lis pendens would not apply. If the plaint
is returned for being presented to another Court of competent jurisdiction, the
pendency of the suit does not begin until the plaint is presented to the proper
Court.
Similarly, if a plaint is presented with insufficient Court-fee and is returned

by the Court, and the plaintiff presents it again after paying the proper fee, and
then the plaint is registered as admitted on the later date, it is the later date
which must be taken as the date of institution of the suit. A transfer of property
made between the date of the original presentation and the later date is not
affected by lis pendens, as no suit was pending at that time. (Mahendra Nath
v. Par meshwar, 60 1.C. 439).
In a pauper suit, the pendency commences as soon as the application for
leave to sue in forma pauperis is made to the Court. (Ambika Pratap v. Dwarka
Prasad, (1908) 30 All. 95)
It may also be noted here that the pendency of the suit must be in a
competent Court in India. The reason behind this rule is that in foreign Courts,
not only the procedure, but even the remedy may be different from that prevailing
in India.
Problem : A sells land to B in respect of which C has a right of pre
emption. C files a suit to pre-empt the land against A and B. A week after the
institution of the suit, B re-sells the land to A, and files a written statement that
C has no cause of action. How will you decide the suit?
Ans. :A suit for pre-emption involves a right to specific immovable property
and is, therefore, within S. 52. No dealing with the property after pre-emption
suit has been filed can affect the rights of the plaintiff. The resale by B to Awas
pendente lite, and it cannot affect C's right. C's suit will be decreed.
94
Bona fide
litigation : The suit or proceeding mustnot be collusive. A
collusive suit is not a real suit at all, but a sham fight. Although the result in
such a suit is binding on the immediate parties, it does notbind their transferees
The doctrine of lis pendens does not apply where the proceeding is tainte
with fraud. But a suit, bona fide atits inception, may become collusive by reason
of a collusive compromise subsequently arrived at between the parties. Bu
the mere fact of compromise is no warrant for presuming that the entire
proceeding is sham and collusive.
Right to property must be in dispute : The right to an immovable
property must be directly and specifically in issue in the suit or proceeding
This will happen in a suit for specific performance of a contract to transfer
immovable property.
whichThus, if the suit
specifically is onthe
affects a promisor y-note,
defendant's it cannot be regarded as a sur
property , although it may happen
that the money decree will ultimately have to be satisfied out ofthe defendant's
property. Similarly, a suitfor damages in tortor contractis not a suit specifically
affecting the immovable property of the defendant.
But, a mortgage suit is one in which a right to immovable property
directly and specifically in question. So also, a suit forspecific performance or
a contract for the sale or lease of land would fall under S. 52.
In a case where there is a claim for maintenance, coupled with a prayer
for a declaration of a chargeon specific immovable property, the doctrine of lis
pendens is applicable. The transfer of such property by the defendant would
attract
M.L.J. the
65) application of section 52.(Varadammalv. Ambalal J. Vyas, (1971
The leading Indian case on the doctrine of lis pendens is Faiyaz Husain
Khan v. Prag Narain, (34 IA 102). In this case, a mortgagee sued to enforce his
mortgage, but before the summons were served, the mortgagor effected a
subsequent mortgage. The prior mortgagee continued his suit and obtained a
sale-order from the Court, without making the subsequent mortgagee, a party
to the suit. The Court held that the sale extinguished the subsequent
mortgagee's right to redeem the prior mortgage.
Transfer during pendency of the litigation only : For the purpose of
this doctrine, the transfer must be made only during the pendency of the suit on
proceeding. Naturally, therefore, a transfer before the suit will not be affected
by lis pendens. It does not matter that the deed is registered after the suit is
filed, provided it was executed prior to its institution.
The decree of the first Court does not always put an end to the litigation
Therefore, even after the dismissal of a suit, a purchaser is subject to lis pendens
if an appeal is thereafter filed. Thus, the rule of lis pendens applies to a transfer
made after the decree of the Court but before the filing of an appeal.
Transfer by a party to the litigation : Another important element for the

application of the doctrine is that property must be transferred or otherwise
dealt with by any of the parties to the suit or proceeding . Therefore, a transfer
by a person whose title is paramount to that of the parties to the suit or whose
title is not in any way connected with them, is not affected by the doctrine.
Similarly, the doctrine does not apply where the transfer was made pending
the suit by a person who was not a party to the suit at the time of the transfer
and who was subsequently made a party as a representative of the defendant.
Exception : In spite of the doctrine, however, it is quite open to the Court
to permit any party to the suit to transfer the property on terms which it may
think fit to impose. Such order should not have been obtained by fraud; otherwise
any transfer made under it will fall under the doctrine.
Problem: A 's suit is dismissed for default on March 15, 2011. On March
27, 2011, A transfers the property in suit to B. On June 5, 2011, the suit is
restored to file. Is the transfer in B 's favour subject to /is pendens?
Ans. : If a suit is dismissed for default and then restored, the order of
restoration relates back, and a transfer after dismissal and before restoration
is subject to /is pendens.
LIS PEN DENS AS CONSTRUCTIVE NOTICE - In England, formerly /is
pendens was itself regarded as good notice, but by a recent enactment (The
Conveyancing Act), the law has been altered. Now, /is pendens will not bind a
purchaser or mortgagee unless express notice is given thereof. As observed
by Lord Cran worth in Bellamy v. Sabine, it is not a perfectly correct mode of
stating the doctrine, when one states that /is pendens is based on the principle
of implied notice. If /is pendens could be held as implied notice to all the world ,
the result would be that even a stranger to a suit will be supposed to have
constructive notice of every fact appearing in it, but that would be rather absurd;
there is an infinite number of suits , and every man cannot be expected to have
such vigilance as to take notice of all of them.
In short, /is pendens is founded, not on the doctrine of notice, but upon
the broad principle that otherwise there would be no finality in litigation.
In Greater Bombay, however, it is necessary to register the notice of /is
pendens under Section 18 of the Indian Registration Act. Otherwise, a pendency
does not affect any transaction .
Problem: A makes a gift of land to B . C sues A for possession of the
land. While this suit is pending, B transfers the land to D . A dies, and C obtains
a decree for possession against B, as the legal representative of A . Is D's title
affected by the rule of /is pendens, so as to be subject to C's decree?
Ans. : No, for two reasons, viz. -
(a) A 's gift was before the suit; and
(b) B was not a party to the suit at the time of transfer of the property
from B to D. (Bala Ramchandra v. Dau/a, 27 B.L.R. 38)
Ex mpl s of appllc tton of s. 52

1· A mortgaged his property to B B sued and obtained a decree nls/'
foreclosure, Before the decre~ was made absolute by th e Co_urt,
sold the property to X. When the decree was made absolute, It W:i.
held that X was not entitled to redeem the mortgage, because ~.
purchase was pendents lite, and he was bound by the decree. If
had purchased the property before the suit was filed , ,he could hav,
redeemed the mortgage, though not a party to the suit.
2. A mortgaged his property to a. B filed a suit on the mortgage an,
obtained a decree for sale. While this decree was being executed
A leased the property to X for ten years. At the sale of the pro pert~
B purchased the property himself. As the lease to X was affecte1
by the rule contained in S. 52 , the Court held that B was entitled Ir
evictX.
3. A mortgages his property to Bin 2014, and to C in 201 5. C sues A or
the mortgage and pending this suit, A sells the property to B. As the
sale is made pendente lite, it is subject to the decree of the Court in
C's suit. However, B's right under the prior mortgage is not affected
J. FRAUDULENT TRANSFER (S. 53)

MCQ No. 77
S. 53 deals with two types of fraudulent transfers.
Explain the doc- Under the first rule, if immovable property is transferred to defeat or delay
trine of fraudulent
transfer.
the creditors of the transferor, such transfer is voidable at the option of any
M.U. Apr. 2011 such creditor.
The above rule does not, however, -
(i) impair the rights of a transferee in good faith and for consideration;
or
(ii) affect any law 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 transferor, must
be instituted on behalf of a// the creditors.
In other words, a suit instituted by a creditor to set aside a frau dulent
transfer should be instituted on behalf of a// the creditors. Thus , it is competent
for one creditor to sue, but he must sue, not in his individual capacity, but in a
representative capacity, and the decree will accrue to the benefit of all the
creditors.
Under the second rule, every transfer of immovable property made without
consideration, with intent to defraud a subsequent transferee , is voidable at
the option of such transferee.
For the above pur pose, no transfer made without consideration Is to be Write a note on :
Fraudulent trans ..
deemed to have been made with intent to defraud, by reason only that
fer.
subsequently, a transfer for consideration was made. M.U. May 2012
As far as the first rule is concerned, when the consideration for the transfer Nov. 2012
and good faith on the transferee's part are present, the Intention of the transferor Nov. 2013
.
to defeat or delay his creditors is immaterial. A mere fraudulent intention on Apr. 2015
Nov. 2015
.
the part of. the grantor will not invalidate the transfer, if it is for valuable
cons1derat1on and there is no want of good faith on the part of the grantee. The
Apr. 2016
Oec. 2016
transaction may defeat or delay; the transferor may intend that it should; the
May 2017
transferee may know that it will ; the consideration may be inadequate; and yet, Nov. 2017
unless the transferee himself has been wanting in good faith, his rights will not Jan. 2019
be impaired. (Bhagwantv. Kedari, 26 Born . 202). \ Dec. 2019
\
The doctrine of constructive notice given in Sec. 3 should not be imported
Into this section. So, the mere knowledge of an impending execution of a decree \
against the transferor is not sufficient to make the transferee a transferee Wha~ is fraudulent
transfer? Explain
otherwise than in good faith, when he does not share the intention of the with exceptions.
transferor to defeat or delay his creditors nor does he participate in the M.U. Apr. 2011
commission of the fraud . (/shan Chander v. Bishu Sardar, 24 Cal. 825)
Under this clause, good faith is more essential than consideration, so
that if the element of good faith is not present, the transaction will be avoided
even when there is consideration . It is not sufficient to render a deed valid that
it should be made upon good consideration ; it must also be proved that it was
made in good faith.
SCOPE OF S. 53 -The section is restricted to immovable property, and
has no application to movables. The benefit of this section is not restricted to
existing creditors alone, but it extends to subsequent creditors as well. This
section does not render a transaction void ab initio, but only voidable, and that
too, only at the option of any person defeated, delayed or defrauded.
The Madras High Court has held that the essential ingredient for
invalidating a transfer under S. 53 of the Act is a fraudulent intention to defeat
or delay the creditors. The Court observed that the transferee must share the
fraudulent intent and must actively aid and assist the transferor in carrying out
this intention. (Saroj Ammal v. Sri Venkateswara Finance Corp., A.I .R. 1989
NOC 4 Mad.)
There is a distinction between a fictitious and a fraudulent transfer. In the
former, there is no transfer at all, e.g., a benamitransaction . In the latter, there
is a transfer, but as it is the result of a conspiracy between the transferor and
the transferee to defeat the claim of others, it can be avoided by those others
if they wish to avoid it.
Under the Transfer of Property Act, a transfer of immovable property by a
debtor may be set aside by his creditor -
( 1) if the transfer is made with intent to defeat or delay the transferor's

creditor; and
(2) if the transferee is not a transferee in good faith and for consideration.
A transferee from such debtor will be protected -
(a) If he acquires property for value and in good faith, i.e., without being
a party to any design on the part of the transferor to defeat or delay
his creditors, even if the debtor's intention may have been fraudulent;
or
(b) if he himself is a creditor and the transfer is made in satisfaction of
his pre-existing debt
The English rule on the point is also similar, and there too, each case is
decided on its merits. In England, as in India, mere absence of considera tion
is not positive proof of an intent to deceive. However, the embarra ssed
circumstances of the transferor, the hurried nature of the transaction and other
circumstances (such as secrecy or the relationship between the parties) would
serve as indications of an intention to deceive.
Ex parte Mercer(17 Q.B. D. 290): In this case, Xbroke his engagement,
and married another girl. His former sweetheart sued him for damages for
breach of promise. At about the same time, X got a legacy, which he immediately
settled on his wife. The outcome of the suit was that he had to pay£ 500 , but
X could not do so. He had no assets. He satisfied the Court that at the time he
made the settlement on his wife, he was able to pay his debts, and that the
settlement was not, in any way, influenced by the pending suit. In these
circumstances, the Court refused to set aside the settlement, i.e., the Court
ruled that there was no fraudulent transfer.
Ebrahim Bhai v. Fulbai (26 Borri. 577) : In this case, a person who was
leading a life of dissipation transferred all his property to his wife , so that he
might not be tempted to lead such a life in the future. But unfortunately, he
drifted back to his old ways, and began to contract heavy debts. In a suit by his
creditors to set aside the transfer to his wife, it was held that there was no
indebtedness at the time of the transfer, the consideration involved was natural
love and affection, and therefore, no ma/a tides could be presumed , merely
because the transfer might have prejudiced the claims of subsequent creditors.
CREDITOR'S REMEDIES -The following three remedies are open to a
creditor against the transferee of the debtor's proper ties for consideration,
who has notice of the fraudulent intent of the debtor to defraud his creditors:
1. The creditor may institute a suit to avoid the transfer under S. 53 of
the Transfer of Property Act. This suit must be on behalf of, or for the
benefit of, all the creditors. This would be a representative suit filed
under Order I, Rule 8 of the Civil Procedure Code.
2. The creditor may manifest an Intention to avoid the transfer otherwise

than by filing a suit, e.g., by attaching the property, if' he is a judgement-
creditor.
3. The suit to set aside a fraudulent transfer is not the only remedy;
S. 53 of the Transfer of Property Act can also be pleaded as a defence
to a suit brought by the transferee. Although a creditor cannot sue
only on his own behalf, he is not obliged to defend a suit on behalf of
the whole body of creditors. S. 53 may be pleaded as a personal
defence, by a defeated or delayed creditor, although he has not himself
filed a representative suit to avoid the transfer.
WHETHER PREFERENCE TO ANY PARTICULAR CREDITOR IS
FRAUDULENT UNDER S. 53 -There is nothing in S. 53 to prevent a debtor
from paying debts in any order he pleases, and consequently from preferring
the creditor of his choice. Apart from considerations of bankruptcy law, a debtor
may make preference among his creditors, even to the extent of transferring
a// his property to one creditor to the exclusion of the others. Such a preferential
transfer cannot be declared fraudulent, even though the debtor, in making it,
intended to defeat the other creditors and though the favoured creditor had
knowledge of such intention.
Probl~m : A-obtains a decree for his debt against his debtor, B. In execution
of the decree, the debtor's property is attached on the 23rd of August and sold
to C. Before the attachment, B had, on the 13th July, deliberately sold the
property to his relative, D, in part satisfaction of a debt due to her. Discuss D's
rights as against.C.
Ans. : B has deliberately given preference to D, a creditor, who is his
relative. But this i_
s not.a fraudulent under S. 53, for a debtor may pay his debts
in any order he pleases and prefer any creditor.
But a transfer which is not hit by S. 53 because it amounts to an assignment
of all the transferor-'s ' property for-the benefit of a particular creditor, may be
void as amounting to a fraudulent preference within the meaning of Sec. 56 of
the Presidency-towns Insolvency Act and Sec. 54 of the Provincial Insolvency
Act. Therefore, it has now peen expressly provided that nothing contained in
S. 53(1) shall affect the law of insolvency.
Case: A creditor sued a Mohamedan, his debtor, and obtained a money-
decree against him. Soon thereafter, the debtor transferred his property to his
wife for her dower. As the Court found that the dower debt was due to the wife
at the time of the transfer, it was held that the case was merely one of preference,
and that the transfer was therefore not voidable . What is the differ-
BENAMI TRANSACTIONS-A fraudulent transfer is to be distinguished ence between a
fraudulent transfer
from a benami transaction, which takes place when A buys property in the
and a benami
name of B. The word 'benami', in Persian, means 'without a name'. In such transfer?
transactions, the real beneficiary is not the person in whose name the property M.U. Nov. 2012
is purchased.
In order to curb such transactions Parliament passed the Ben am;

Transactions (Prohibition) Act in 1988. Under the Act, a benami transaction is
one in which property of any kind is transferred to one person for a consideration
paid or provided by another person.
The said Act prohibits benami transactions and makes them punishable
with imprisonment upto three years, or fine, or both. The Act also prohibits any
suit, claim or action in such cases by the person claiming to be the real owner
of such property. So, if property is purchased in the name of A, but the
consideration is provided by B, at a later stage, B cannot sue A for such property,
claiming that he is the owner thereof.
The said Act also provides that all benami properties can be acquired by
the government without payment of any compensation .
Problems
1. A, being in embarrassed circumstances, wished to convert his property
into cash, sq as to conceal it from his creditors. B, being aware of A's object,
assisted him by purchasing the property. Is the sale valid?
Ans. : No, the sale is voidable under S. 53. (Palamalai v. South Indian
Export Co., 1910 33 Mad. 334)
2. A man of extravagant and dissolute habits was persuaded to reform,
and make a settlement of his property on his wife and children. He subsequently
relapsed and incurred debts. Is the settlement voidable under S. 53 at the
instance of the subsequent creditors?
Ans. : No, the settlement is not voidable under S. 53 of the Act.
(Ebrahimbhai v. Fulbai, discussed above.)
3. A, a trader at Jabalpore, was in emba'rrassed circumstances. He
purchased a stamp paper at Agra, and secretly executed a usufructuary
mortgage of all his property to his uncle, B, the consideration being a fictitious
bookdebt. One of the terms of the mortgage was that B should, out of the
usufruct, pay allowances to the wife and children of A. Is the mortgage valid?
Ans.: The mortgage is voidable under S. 53, as it put all of A's property
out of the reach of his creditors and reserved a benefit for A. Also, the secrecy
with which the transaction was effected is evidence of A's fraudulent intention.
(Ghansam Das v. Uma Pershad, 1919 21 B.L.R, 472)
4. A sued B for a debt. B obtained an adjournment, and during the
adjournment, sold her land to her sister, C. B allowed the suit to be decreed ex
parte, and when A attached the land, C objected that it was hers. B professed
to have sold the land to raise money to pay a debt, but it was shown that no
demand had been made for payment of the debt, and B was not solely liable
for its payment. Is the sale valid?
Ans. : No, the sale is voidable under S . 53, as being in fraud of the
creditors. (R.R.O.O. ChettyarFirm v. Ma Sein Yin, 1927 5 Rang . 588)
5. A sells property to Bin fraud of his creditors. One of the creditors, C,

attaches the property in execution of a decree against A B objects to the
attachment, and C maintains that he has a right to attach the property. B's
objection is dismissed. B then sues for a declaration of his right to the property.
Can C plead S. 53 in defence?
t Ans. : Yes, C can plead in defence that the transfer to B was in fraud of
A's creditors. (Ramaswami Chettiarv. Mallappa Reddiar, 1920 43 Mad. 760)
MCQ No. 78
K. PART PERFORMANCE (S. 53A)
(i) forconsideration, Write a short note
(ii) any immovable property, on : Part Perfor-
mance
Where any person contracts to (iii) by writing signed by him (or on his M.U. Nov. 2007
transfer- behalf) from which the terms necessary Nov. 2010
to constitute the transfer can be May 2012
ascertained with reasonable certainty, Nov. 2012
and the transferee - Apr. 2013
Dec. 2014
of the contract, taken possession of the May 2017
property (or any part thereof), or Nov. 2017
(ii) being already in possession, continues Apr. 2018
(i) has, in part performance
in possession in part performance of the Dec. 2019
contract, and has done some act in

Explain fully the
furtherance of the contract, and has doctrine of Part
performed or is willing to perform his Performance
part of the contract, under the Transfer
of Property Act.
othe instrument of transfer (if any) has not M.U. Apr. 2008
then notwithstanding that - been completed in the manner prescribed Nov. 2009
{ by law for the time being in force, -
?
the transferor (or any person claiming under him) is debarred from enforcing What is Part Per-
against the transferee (and persons claiming under him) any right in respect of formance? What
such property, other than a right expressly provided by the terms of the contract. are the conditions
to be fulfilled by
The above rule does not, however, affect the right of a transferee for Transferee who
consideration who has no notice (i) of the contract, or (ii) of the part performance wants to defend or
thereof. protect his pos-
x HISTORY OF THE SECTION - Before S. 53A was introduced into the
session?
d M.U. Nov. 2015
Act, in an old case decided in Madras (Kurr i Veerareddi v. Kurr i Bapireddi, May 2019
D
1906 29 Mad. 336), a Full Bench of the Madras High Court had ruled that the
English doctrine of part performance was not applicable to Indian law.
However, in a later case, the Privy Council, in 1914, in Md. Musa v. Aghore
Kumar Ganguli (42 I.A.I. ) held that the doctrine of part performance was
applicable in India on principles of justice, equity and good conscience.
102
. But in a subsequent decision [Ariffv. Jadunath (1928 , 55 Cal. 1990)] the

Pnvy Council, distinguishing Md. Musa 's case, held that the doctrine of Part
pe~ormance was inconsistent with the imperative statutory provisions of the
Ind ~an Registration Act and the Transfer of Property Act (S . 54) and could not
be ,~ported in India, thus going back to the view of the Madras High Court in
Kum Veerareddi's case.
To remedy the situation created by this decision of the Privy Council , the
1929 Amendment Act introduced s. 53A into the Act, to incorporate the equitable
doctrine of part performance in a modified form . S. 53-A was then amended,
and what is reproduced above is the amended section.
What is Doctrine
of Part Perfor- DOCTRINE OF PART PERFORMANCE - Section 53A gives statutory
mance? What con- recognition to what had hither to been regarded as the Doctrine of Part
ditions must be Performance, and applied by the Indian Courts to cases where the transfer
satisfied before was not effected by a registered instrument. The general ground upon which
the Doctrine of
the doctrine is based is prevention of fraud. It is clear that where one party has
Part Performance
can be applied? executed his part of the agreement in the confidence that the other party would
M.U. Dec. 2016 do the same, it is obvious that if that latter should refuse, it would be a fraud
Jan.2019 upon the former to allow this refusal to work to his prejudice. When a transferee
Dec.2019 has, in the faith that the transfer would be completed according to law, taken
possession, it would be inequitable to allow the transferor to treat the transferee
as a trespasser.
At the same time, care is taken in framing Sec. 53-A that the law of
registration is not evaded, and that the introduction of the doctrine does not
lend to perjuries and frauds which it is the object of the doctrine to prevent.
This section merely lays down, that by reason of part performance, the
transferor will not be entitled to eject the transferee; but it does not give any
title to the transferee. In order that the transferee may acquire a perfect and
marketable title, execution and registration of the deed of transfer would still
be necessary. The benefit of this section does not extend to oral agreements.
Under the present section, the doctrine cannot be applied unless there is a
written document evidencing the transaction with reasonable certainty.
The doctrine of part performance cannot also be applied to void
agreements . No am~unt of part performance can validate a void agreement.
Its principle : The principle on which the doctrine of part performance
rests is that if a man has made a bargain with another, and allowed that other
to act upon it, he will have created an equity against himself, which he cannot
resist by setting up the want of a formality in the evidence of the contract out of
which the equity in part arises.
REQUISITES OF THE DOCTRINE-The defence of part performance,
as embodied in S. 53-A, requires the following four conditions to be fulfilled :
(1) There should be a contract to transfer, for consideration, any
immovable property by a writing signed by the transferor or on his
behalf, from which the terms necessary to constitute the transfer

can be ascertained with reasonable certainty.
It may be noted that a person who has entered into an oral contract cannot,
under this section, invoke the doctrine of part performance . The agreement
must be in writing, and signed by the person (or his agent) whom it is sought to
bind . Thus, where the transferee under the contract seeks protection under S.
53-A, the contract must be in writing.
For this purpose, an incomplete deed of transfer, though not attested , is
regarded as a contract in writing . What is necessary is that such a deed must
have been signed by the transferor or his agent.
Banerji v. Kuch war Lime & Stone Co. : In this case, the Secretary of State
granted quarrying leases to Kuchwar Lime & Stone Co. Ltd. The lease was
liable to be forfeited if the company made an assignment of the leasehold
interest. The company entered into an agreement with a third party for the sale
of its interest but did not execute a sale deed. The Secretary of State thereupon
forfeited the lease and granted permission to Banerji to work the quarries.
The company instituted a suit against the Secretary of State for an
injunction and succeeded in the suit on the ground that since there was no
actual assignment by the company the forfeiture of the lease was invalid. Banerji
had to give up possession in the course of contempt proceedings for failure to
comply with the interim injunction orders granted by the Court. The contempt
proceedings, however, were quashed by the Privy Council and thereupon
Banerji applied for restoration of possession. He was met with the plea that he
was only a trespasser and so was not entitled to have possession. He contended
that he was not bound by the result of the suit brought against the Secretary of
State and that therefore; he could still plead that the company's lease was
validly forfeited and that he was lawfully in possession of the property.
The basis of the argument was that under Sec. 53-A of the Transfer of
Property Act, the agreement to assign the company's interest itself took effect
as a complete assignment and that the forfeiture clause therefore does not
become operative. The Privy Council rejected this contention, holding that Sec.
53-A does not convey a title and merely creates certain rights of personal
estoppal between the proposed transferee and transferor. The application for
restoration of possession was accordingly dismissed .
The Allahabad High Court has held that when the vendor denies having
signed the Agreement, and the hand-writing expert is also of the view that the
thumb-impression appearing on the Agreement is not that of the vendor, the
doctrine of part performance will not apply. (Hamida v. Hu mer, A.I. R. 1992, All.
346)
The Orissa High Court has held that if parties execute an unregistered
sale deed without prior per mission of the competent authority, the transaction
is void, and the benefit of S. 53-A cannot be claimed . (Sadhu Meherv. Rajkumar
Patel, A.LR. 1994 Orr. 26)
10
(2 ) The transferee should, in partperformance of the contrac_t, have taken

possession ot· the property or any part thereof, or, if already i~
possession, should have continued in possession in part performan~
of the contract, and should have done some act in furth erance of th~
contract.
It is of the essence of the section that the transferee must be in possession
th
of e property in dispute. His possession under a contract or an incomplete
deed of transfer aJone would induce the transferor to file a suit for ejectmeni
against him, treating him a trespasser- a right which would not be with in the
terms of the contract. And therefore if at all the transferee does not succeed
• I I
in procuring a regular conveyance from the transferor, or if his right for speci·fic
performance is time-barred , he must stick to the possession of the property,
and repel all illegal attempts of the transferor to eject him .
Further, such possession must be referable only to the contract w hich is
pleaded, and to nothing else. And the contract, in turn , must be such that its
·! e~s can be ascertained w ith reasonable certainty. If, however, the transferee
is in possession when the contract is entered into, some further act in pursuance
of the contract is necessary, as for instance, payment of an increased reni
under the terms of the new agreement.
(3) The transferee should have performed, or should be willing to perform,
his part of the contract.
No equities can arise in favour of a party who is not willing to perform his
part of the contract. A prospective vendee who has taken possession cannot
resist dispossession if he is not willing to pay the price agreed upon. In
considering whether a person is willing to perform his part of the contract, the
sequence in which the obligations under a contract are to be performed must
be taken into account.- If, therefore, under the terms of the contract, the
obligations of the parties have to be performed in a certain sequence, one of
the parties to the contract cannot require compliance with the obligations by
the other party without in the first instance performing his part of the contract
which in the sequence of obligation~ is to be performed by him earlier. (Nathu
Lalv. Phool Chand, A .I.R. 1970 SC 546)
(4) The rights of any other subsequent transferee for consideration
without notice should not be affected .
If all the above four conditions co-exist, in spite of the fact that the
instrument of transfer has not been completed in the matter prescribed therefor
by law, e.g. , where it is not attested, though required to be attested , the transferor il
(or any person claiming under him) will be debarred from claiming any rel ief, in
respect of the property as against the transferee which is inconsistent with the .
terms of the contract.
EXCEPTION - As seen above, an exception is made in the case of a
transferee for consideration, who has no notice of the contract or its part
perfonnance. It is to be noted, however, that ordinarily, possession will constitute

notice of the title of the person in possession .
The doctrine of part performance cannot defeat the right of a transferee
for value and without notice of the previous contract or of its part performance.
Under S. 40, such a transferee would acquire a good title to the property, and
the previous transferee holding possession under his contract must deliver
possession to him . In other words , a person claiming the benefit of S. 53-A is
protected from ejection by the transferor or any person claiming under him, b
ut not from dispossession by a bona fide transferee for value from the transferor.
The doctrine can, however, be availed of against a gratuitous transferee and
also a transferee for value if he has notice of the contract or of its part
performance.
BASIS OF THE DOCTRINE - S. 53-A is based on the following three
maxims of equity
(1) He who seeks equity must do equity.
(2) Equity treats that as done which ought to have been done.
(3) Equity looks to the intent rather than to the form .
In the leading English case, Walsh v. Lonsdale (1882 21 Ch . D. 9), L
agreed in writing to grant a seven years' lease of a mill to Wat a rent payable
quarterly in arrear, but with a year's rent payable in advance, if demanded. W
entered into possession without any lease- deed having been executed , and
paid his rent quarterly. Subsequently, L demanded a year's rent in advance,
and on W refusing to pay, put in a distress. W claimed an injunction and
damages for illegal distress, on the ground that, at law, he was tenant from
year to year at rent not payable in advance, and that the legal remedy of distress
was, therefore, not open to L. The Court held in favour of L, and observed that
a tenant who had entered on the land and enjoyed the benefits of the lease
would be prevented by equity from taking advantage of the absence of a deed
to repudiate the covenants of the lease.
The difference between the English equitable doctrine of part

performance and the provisions of section 53-A:
(1) Under English Law, as equity treats that as done which ought to have
been done, even an oral agreement is sufficient to attract the application of the
doctrine.
This rule is known as the equity in Walsh v. Lonsdale; but in India, it is
specifically provided that the agreement must be contained in a written
document.
(2) Under English Law, the doctrine can be used both by the plaintiff and
the defendant. If a person has been dispossessed of the property in question,
he can base his action on the strength of the doctrine .
. .... --........ .. . . ~•-----·

106 TH.E TRANSFER OF PROPERTY ACT
MCQ No. 79 In India, it is only the defendant who can plead the provisions of Section
53-A. It is said that the equity of part performance in India is a negative equitY,
but not a positive equity. It can be used as a shield, but not as a sword. The
equity of part performance is negative, because it gives only a rig ht of
possession, which has already been obtained . It does not give any other right,
e.g., to sue the other party. By virtue of S. 53-A, the defendant, if already in
possession, may hold on to the possession.
In one surprising decision of the Bombay High Court, Sulleman v. Pate/
(35 B.L.R. 722), this section was allowed to be used as a ground of attack, and
the important legal principle on which the section is based was apparently
overlooked. It is submitted that such a decision fails to realise the limited scope
of S. 53-A.
T9 the rule that an unregistered written agreement cannot be used by a
plaintiff, there are two exceptions:
(a) If a person has been evicted, but such eviction is not in due course
of law, then under Section 6 of the Specific Relief Act, the evicted
person can claim possession of the property.
(b) The written agreement can be the basis of a suit for the specific
performance of the contract.
***
4
'
SALE OF IMMOVABLE PROPERTY
(Ss. 54-57)
"Sale" defined (S. 54)

"Sa/e»is a transferofownership in exchange for a price paid or promised , Define Sale.
(2 marks)
or part-paid and part-promised.
M.U. Nov. 2015
ESSENTIALS OFA VALID SALE-The following are the eight essentials
of a valid sale:
1. The seller must be a person competent to transfer : see S. 7.
2. The buyer must be a person competent to be a transferee. He may
be any person who is not disqualified to be a transferee under S. 6.
3. The subject-matter must be transferable immovable property : see
S. 6.
4. There must be a transfer of ownership.
5. The transfer must be in exchange for a price.
6. The price must be paid or promised or partly paid and party promised.
7. There must be a registered conveyance in the case of-
(i) tangible immovable property of the value oft 100 and upwards;
or
(ii) a reversion of an intangible thing of any value.
8. In the case of tangible immovable property of a value less than Explain the char-
acteristics of a
t 100, there must either be - sale.
(i) a registered conveyance, or ,·1
M.U. Apr. 2011
(ii) delivery of property.
Sale how effected (S. 54)

1. In case of-
(i) tangible immovable property of
the value of t 100 and upwards,
a sale can be made only by
or
a registered instrument.
(ii) a reversion , or
(iii) any other intangible thing :
2. In case of tang ible immovab le a sale can be made
property of a value less than of (i) by a reg iste red
? 100: instrument, or
107 (ii) delivery of the property.

. Delivery of ta_ngible immovable property takes.place ~hen the sel.ler places

11
the buyer, -or ~·s9me other person as the buyer directs, in possession of the
property.
Case
D orally transferred his lands of over ? 100 in value , in favour of the
plaintiff, his first wife, in discharge of her claim for future maintenance.
Subsequently, he executed registered instrument of sale in respect of the same
property in favour of the defendant. The plaintiff sued for a declaration that in
view of the prior transfer in her favour, the sale to the defendant was ineffective.
The defendant resisted the suit contending that the transfer in favour of the
plaintiff was a sale that 'failed for want of a registered instrument. Keeping in
mind the facts.and circumstances of the case, the court held as follows:
(1) The transfer in question is not a sale for, no "price" is paid or promised
by the plaintiff.
(2) '"Price' means money, but not necessarily money handed over in
current coin at the time, but includes money which might be already
due or might be payable in the future."
(3) The transaction does not amo.unt to a "gift" for it cannot be said that
the transfer is without consideration. Nor is it an "exchange" for the
· plaintiff did not transfer the ownership of anything in return.
(4) The transaction not being-one required to be in writing by the T.P.
Act, may be·effected orally. .
(5) The plaintiff, therefore, acquired a valid title under the oral transfer
and her suit was decreed.
Consideration in addition to money : If there is some consideration in
addition to money, the transaction is not a sale. , !
In Zamindar of Polavaram v. Maharajah of Pittapuram, a mortgagee

decree-holder brought the mortgaged property ~o sale and purchased it himself
with the permission of the Court. After the time for setting aside the sale had
expired, he transferred part of the property for a certain sum of money and a
promise by the transferee to abstain ·from raising objections to the auction-
sale of the mortgaged property. The Madras High Court, following Madam Pil/ai's
case, held that since the consideration included, besides money, a forbeara nce
from taking legal proceedings, the transaction was not a sale. On appeal , the
decision was reversed by the Privy Council. It was held that the transaction
was a sale and that the vendor could claim a charge for the unpaid purchase-
money. Sir Shadi Lal, delivering the judgment of the Privy Council observed :
"It is true that. the deed of compromise mentions also the prom ise in
question but apart from the fact that the promise was valueless , there is
hardly any instrument of sale which does not contain some stipulations
by the parties; and if the addition of a covenant by the transferee would
SALE OF IMMOVABLE PROPERTY 109
change its real character, it would be difficult to find a transaction which

could be held to be a sale. There can be little doubt that both the parties
intended the transfer in question to be a sale and in substance it was
nothing but a sale."
The decision of the Privy Council does not disapprove the principle of law
applied by the High Court as derivable from Madam Pillai v. Badra Kali.
According to the Privy Council, on the facts of that case, it was not reasonable
to hold that there was any other consideration in addition to the price fixed for
the sale.
"Contract for sale" defined (S. 54)

A contract for the sale of immovable property is a contract that a sale of What is 'Contract
for Sale'?
such property shall take place on terms settled between the parties. It does
(2 marks)
not, of itself, create any interest in, or charge on , such property.
M.U. Dec. 2016
DIFFE~ENCE BETWEEN IND/AN AND ENGLISH LAW-The English
law as to a contract for sale is quite different from that in India. Urider the
English law, the purchaser, by virtue of the contract for sale, becomes, in equity,
the owner of the property. from the date of the contract. ( Walsh v. Lonsdale, 21
Ch. D. 9). But, under the Transfer of Property Act, a contract for sale doe~ not,
of itself, create any interest in, or charge upon, the property. InI India, under
such a contract, the intending purchaser acquires no interest in the property;
he has only the right to get a conveyance in the terms of the contract; the
vendor's ownership over the property remains unaffected.
As seen above, in India, a contract for the sale does not, of itself, create
any interest in, or charge on, such property, and the title in the property passes
only upon the delivery of possession or registration of ~e document. The result
is that in case of accidental loss of the property, the buyer is (!_ot affected. The
case is different under the English law, where the buyer is the ~quitable owner
of the property from the date of the contract. Hence, he is-liable to pay the
consideration money, although before the execution of the conveyance, the
property is accidentally destroyed. ·_ ,
DIFFERENCE BETWEEN SALE AND CONTRACT FOR SALE :
1. A sale of immovable property is a transfer of ownership. A contract for MCQ No. ao
the sale of immovable property is a mere agreement that a sale of such property
is to take place in the future on terms settle_d between the parties. It does not,
of itself, create any interest in or charge on such property. Even after the contract
for sale, the ownership remains in the vendor.
2. Passing of property-A sale A contract for sale does not, ·of itself,
passes an absolute interest in the create any interest in, or ch'arge upon,
property to the purchaser; that is, it the property, in favour of the buyer. It
conveys a legal title to the purchaser. does not convey any title to the
purchaser.
3. A sale creates a right in rem. A contract for sale creates a rig ht in

personam, i.e., only the promisee can
compel the promisor (as well as a
subsequent purchaser with notice) to
execute the promised conveyance.
4. Registration -A sale must be A contract for sale need not be regis.
evidenced by a registered instrument tered at all (Explanation to S. 17,
in case of- Indian Registration Act).
(i) tangible immovable property
of the value of f 100 or
more;
(ii) a reversion; and
(iii) any intangible thing .
RIGHTS AND LIABILITIES OF BUYER AND SELLER

{S. 55)
What Is "Sale"?
What are the rights The rights and liabilities of the parties to a sale can be discussed under
and liabilities of a the following heads:
buyer and seller? I. Buyer's rights:
M.U. Nov. 2008
Apr. 2009
(a) Be·fore completion of sale.
Apr. 2010 (b) After completion of sale.
May 2012 II. . Buyer's liabilities:
Apr. 2016
Apr. 2018
(a) Before completion of sale.
(b) After completion of sale.
Ill. Seller's rights:
IV. Seller's liabilities:
I. BUYER'S RIGHTS [S. 55(6))

(a) Before completion of sale, i.e., where ownership has not passed to t
him [S. 55(6)(b)]
The buyer ( unless he has improperly declined to accept delivery of the
property) is entitled to -
1. A charge on the property for the purchase-money properly paid by
him in anticipation of the delivery.
2. Interest' on such purchase-money.

3. The earnest and costs awarded to him in a suit to compel specific
pe.rformance of the contract or to obtain a decree for Its rescission -
in case he properly declines to accept delivery.
T he following points may be noted in connection with the buyer's rights Write a note on :
under a contract for sale: Rights of a buyer.
M.U. Apr. 2010
(i) If he has already paid the purchase-money, he can acquire a charge
on the property.
(ii) If he has obtained possession of the property agreed to be sold, his
possession will , under S. 3, operate as 'notice' to all subsequent
transferees of the property, who will be bound by it.
(iii) He may enforce execution of the agreement to sell.
(iv) In case of a breach of contract, he can bring a suit for specific
performance against the seller.
(v) If he succeeds in showing that by a re-sale of the property, he would
have made a fair profit, he will be entitled to such profit.
(b) After completion of sale, i.e., where ownership has passed to him
[S. 55(6)(a)]
The buyer is entitled to -
(i) the benefits of any improvement in , or increase in val ue of, the
property, and
(ii)the rents and profits thereof.
II. BUYER'S LIABILITIES [S. 55(5)]

(a) Before completion of sale [S. 55(5)(a) & (b)]
The buyer is bound -
1. To disclose to the seller any fact as to the nature or extent of the
seller's interest in the property of which the buyer is aware, but of
which he has reason to believe that the seller is not aware, and which
materially increases the value of such interest. (An omission to make
such disclosures amounts to fraud.)
2. To pay or tenderthe purchase-money to the seller or such person as
he directs. Where the property is sold free from encumbrances, the
buyer may retain, out of the purchase-money, the amount of any
encumbrances on the property existing at the date of the sale , and
pay the amount so retained to the person entitled thereto.
(b) After completion (S. 55(5)(c) & (d)]
The buyer is bound -
1. To bear any loss (not caused by seller) arising from destruction, injury,
or decrease in the value of the property.
'1 12 THE TRANSFER OF PROPERTY ACT
2- To pay public charges and rents which may become payable in respeq
of the property, the principal moneys due on any encumbranee~
subject to which the property is sold, and the intere st th ereon
afterwards accruing due.
Ill. SELLER'S RIGHTS [S. 55(4)]

(a) Before completion of sale [S. 55(4)(a)]
The seller is entitled to rents and profits till ownership passes to buyer.
(b) After completion of sale (S. 55(4)(b)]

The seller is entitled to a charge upon the property in the hands of (i) the
Write a short note buyer, or (ii) any transferee without consideration , or (iii) any transferee With
on : Rights of a notice of nonpayment, for the amount of the unpaid purchase-money.
seller.
M.U. Nov. 2009 The seller is entitled to such charge, only when the whole or part of the
Apr. 2010 purchase-money is unpajd, and the ownership of the property has passed to
Jan. 2019 the buyer.
IV. SELLER'S LIABILITIES [S. 55(1), (2) & (3)1

(a) Before completion of sale [S. 55(1 )(a) to (g)]
The seller is bound -
1. To disclose to the buyer any material defect in (i) the property or
(ii) the seller's title thereto, of which the seller is, and the buyer is not
aware, and which the buyer could not, '(Vith ordinary care, discover.
(An omission to make such disclosures amounts to fraud .)
2. To produce to the buyer, on his request, for examination , all
Define sale . documents of title relating to the property which are in the seller's
Discuss the rights possession or power.
and liabilities of
the seller. 3. To answer, to the best of his information, all relevant questions put to
M.U. Nov. 2010 him by the ~uyer with respect to the (i) property or (ii) the title thereto.
Apr. 2011 4. On payment or tender of the price, to execute a proper conveyance
of the property when the buyer tenders it to -him for execution at a
proper time and place.
5. Between the date of the contract of sale and the delivery of the
property, to take as much care of the property and all documents of
title relating thereto, as a man of ordinary prudence would take.
6. To pay all public charges and rent accrued due in respect of the
property upto the date of the sale, the interest on all encumbrances
on such property due on such date, and [except where the property
is sold subject to encumbrances] to discharge all encumbrances on
the property when existing.
(b) After completion [S. 55(1 )(f), S. 55(1 ), (2) & (3)]
1• The seller is bound to give to the buyer, or to such person as he
directs, such possession of the property as its nature admits.
2. Where the whole of the purchase-money has been paid to the seller,
he is also bound to deliver to the. buyer, all documents of title relating
to the property which are in the seller's possession or power.
(a) Where the seller retains any part of the property comprised in
such documents. he is entitled to retain all the documents.
(b) Where the whole of such property is sold to different buyers, the
buyer of the lot of the greatest value is entitled to such documents.
The seller, or such buyer of the lot of the greatest value, (as the case may
·~ be) is bound, upon the buyer's request, to produce the said documents, and
furnish true copies thereof, and in the meantime, the seller or the buyer of the
greatest value, as the case may be, must keep the said documents safe,
uncancelled and undefaced, unless prevented from so doing by fire or other
inevitable accident.
3. Covenant for title - The seller is deemed to contract with the buyer
that the interest which the seller professes to transfer to the buyer
subsists, and that he has power to transfer the same.
When the sale is made by a person in a fiduciary character, he is further
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.
The benefit of the contract mentioned in this rule is annexed to, and goes
with, the interest of the transferee as such, and may be enforced by every
•l person in whom that interest is vested.
s
COVENANT FOR TITLE - The above clause lays down an important
rule of presumption for the benefit of all purchasers of immovable property. It
a
says that in every conveyance, the seller is to be deemed to contract with the
o.
buyer that the interest which he professes to transfer to the buyer subsists and
. ;e that he has the power to transfer the same. The guarantee which is thus implied
a in law is absolute and unconditional, and the breach of this guarantee at any
time after the conveyance would fix the seller with a liability in damages to the
buyer and his transferees.
This implied covenant for title applies to any lawful eviction by a paramount
title and imports an absolute warranty of the title professed to be transferred
,e and of the seller's power to deal with it. It, therefore, supersedes the strict rule
s of English law by which the doctrine of caveat emptor applies after the buyer
has accepted the conveyance.
'I
n MARKETABLE TITLE BY SELLER-A seller is bound to give a marketable
title; therefore, a sale conveys with it a warranty of title on the part of the seller,
and if the warranty is broken, the buyer is entitled to compensation from the
seller for the loss caused by the breach of this implied warranty.
It may also be noted that the covenant for title referred to above is a
covenant Which is annexed to, and which goes with, the intere 5t of lhe tranSferee
as such. It Is a covenant running with the land. Therefore, every person in
whom the interest Is vested can benefit under this covenant.
Thus, in Rogers v. Hosegood, (1900 2 Ch. 388), the purchaser of a plot of
land covenanted not to erect more than one dwelling house on th e plot, and
further that such a dwelling house would be used for private residence only,
The Court held that such a covenant runs with the land, and can , therefore , be
enforced by an assignee of the covenantee.
The right of action arises on the execution of the conveyance, and not on
discovery of the defect of title; it is lost to the purchaser by (i) fraud , (ii) notice,
(iii) waiver, or (iv) an express contract to the contrary.
Such implied covenant may be excluded either by a contract to the
contrary, i.e., by a special covenant for title, or by proof that the buyer, having
knowledge of the facts, was content to take such utle as the seller might in fact
have, in which case the buyer obviously could not complain if it turned out that
there was no title.
If the vendor is found to have no title at all, the buyer can repudiate the
~on tract and is entitled to a refund of the purchase-money. If the vendor has a
t_itle, but it is defective, the buyer can claim damages.
Problems
1. A sells an enclosed field to B. Before accepting the conveyance, B
discovers that the public have a right of way across the field, of which there is
no visible indication on the land. Wt,at are the rights of B?
Ans. : Here, there Is a defect both in the property and in the seller's title.
As A had not disclose9 this defect, B can refuse to complete the sale and also
claim damages. If A files a suit for specific performance, B can also successfully
resist such a suit
2. A sells property to B. After accepting the conveyance, B discovers
that, under a decree for partition, a portion of the property had been allotted to
C. What are the rights of B?
Ans. : As A had failed to disclose, the conveyance is fraudulent, and B
can file a suit to set aside the conveyance. ( Gajapathi v. Alagia, 1886 9 Mad .
89)
Marshalling by subsequent purchaser (S. 56)

Write a short note If the owner of two or more propertjes mortgages them to one person , and
on: Principle of then sells one or more of the properties
marshalling.
to another,
M.U. Apr. 2010
the buyer is, in absence of a contract to the contrary, entitled to have the
mortgage-debt satisfied out of property or properties not sold to him, so far as
the same will extend.
However, this cannot be done so as (a) the mortgagee, or

to prejudice the rights of-
(b) persons claiming under him , or
(c) any other person who has
acquired any interest in any of the
properties for consideration .
Sec. 56 of the Transfer of Property Act contains the doctrine of marshal/Ing
as applied to a subsequent purchaser. Similarly, Sec. 81 deals with the rule of
marshalling as applied to the subsequent mortgagees.
The rule laid down by this section may be explained by an illustration.
Suppose A is the owner of two properties X and Y, both of which are mortgaged
to C. B purchases the property X. He will be entitled to insist that his vendor A
should satisfy his mortgage-debt out of the property Y (which is still unsold) in
the first instance, as far as possible. If after the property Y is exhausted, and
there still remains any balance of debt unsatisfied, then and then only, the
property Xmay be drawn upon. This section does not absolutely relieve property
X, but only postpones it to the other property Yin the hands of the vendor-
mortgagor.
It may be noted that the question of notice is not at all material for claiming
the benefit of this rule. It may be availed of by the purchaser, whether or not he
has notice of the fact that the property is subject to a mortgage.
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 for consideration acquired interest in any of the properties, is
not affected thereby.
But the parties may contract to the contrary, and agree that the purchaser
should not claim the benefit of this section. For instance, in one case, one of
the two properties subject to a mortgage was sold. It was agreed in the sale
deed and in a separate agreement which was executed by the vendee, that in
case it was necessary to pay to the mortgagee more than what the vendor left
with the vendee, the vendor would provide the balance, and in case of failure ,
the same could be recovered from him personally, with interest and costs. It
was held that the stipulation in the sale deed as to the vendor's personal liability
was a contract to the contrary, and excluded the statutory charge provided by
S. 56 on the other property. (Prithiraj v. Rukmin, (1926) 24 A.L.J. 527)
Discharge of encumbrances on sale (S. 57)

(a) Where immovable property, subject to any encumbrance, is sold by the
Court, or in execution of a decree, or out of Court, the Court may, on the
application of any party to the sale, direct or allow payment into Court:
in case of an annual or monthly sum of such amount as, when invested in

charged on property, or of a capital securities of the Government of 1nd ia,
sum charged on a determinable will be sufficient, by means of the
interest in the property, - interest thereof, to keep down or
and in any other case, of a capital sum otherwise provide for that charge; of
charged on the property - the amount sufficient to meet the
encumbrance and any interest due
thereon.
In either case, such additional amount as the Court considers sufficient
to meet the contingency of further costs, expenses and interest, and any other
contingency, must also be paid into the Court.
(b) Thereupon, the Court may, if it declare the property to be freed frorn
thinks fit, and after notice to the the encumbrance, and make any order
encumbrancer, for conveyance, or vesting order, for
giving effect to the sale.
(c) After notice is served on the persons interested in, or entitled to, the money
or fund in Court, the Court may direct payment or transfer thereof to the
person entitled to receive or give discharge for the same, and generally
may give directions respecting the application or distribution of the capital
in income thereof. ·
(d) An appeal lies from any declaration, order, or direction under this section
as if the same were a decree. '
I
This section prescribes the procedure for discharging an encumbrance

on a property which is sold free from encumbrances. The power which is given
to the .Court under this section is intended to facilitate the alienation of
encumbered estates by relieving the land, from the encumbrance and 1
substituting for the land another form of security. It will be seen that this rule
has been enacted to facilitate the ~ealisation of a fair value of encumbered
estates.
***
5
MORTGAGES OF IMMOVABLE
PROPERTY AND CHARGES (Ss. 58-104)
A. MORTGAGES (Ss. 58-99 & 102-104)

Definition [S. 58(a)]
11
A mortgage" is the tra nsfer of an (a) the payment of money advanced What Is the
definition of a
interest in specific immovable property or to be advanced by way of loan,
mortgage?
for the purpose of securing -
(b) an existing or future debt, or (2 marks)
M.U. Apr. .2013
(c) the performance of an engage-
Dec. 2014
ment which may give rise to a
Nov. 2015
pecuniary liability. May 2019
1
The transferor is called a mortgagor', and the transferee a 'mortgagee'.
The principal money and interest of which payment is secured for the time MCQ Nos. 81 , 82
being are called the mortgage-money, and the instrument by which the transfer
is effected is called a mortgage-deed. The words 'mortgagors' and 'mortgagees'
also include persons deriving title from them respectively.
In an old case, Mahmood J. observed : "A mortgage, as understood in
this country, cannot be defined better than by the definition adopted by the
Legislature in section 58 of the Transfer of Property Act. That definition has
not, in any way, altered the law, but, on the contrary, has only formulated in
clear language, the notions of a mortgage, as understood by all the writers of
text-books on Indian mortgages. Every word of the definition is borne out by
the decisions of Indian Courts of Justice." (Gopalv. Parsotam, 1883 SAIi. 121 )
AGREEMENT TO MORTGAGE - Under English law, an agreement to
mortgage (at a future time) may amount to an equitable mortgage, and would
be enforceable accordingly. The Indian law does not recognise such an
agreement as a mortgage. In India, such an agreement gives rise only to a
personal obligation, and is not capable of specific enforcement.
Covenant against alienation not a transfer : An undertaking by the
borrower not to alienate the property until the loan is repaid does not create a
mortgage, since it involves no transfer of any interest in the property to the
creditor. In Mohan Lal v. lndomati, Piggot, J., observed :
"A coven~nt against alienation may be said to be a covenant divesting
the executant of the document of a portion of his interest in the property
in question, but it does not vest that interest in any one else."
For this reason such a covenant cannot constitute a mortgage. Nor does
it constitute a charge.
117
MCQ No. 83
SIX KINDS OF MORTGAGES AND THEIR CHARACTERISTICS
What Is a mort- (Ss. 58, 62-65, 96 & 98)
gage? What are The Transfer of Property Act, deals with the following six kinds or
the d ifferent types mortgages:
of mo~ages? Ex-
1· Simple mortgage: S. 58(b).
plain e ch in brief.
M. U. May 2012 2· Mortgage by conditional sale : Ss. 58(c), 59 & 67.
Apr. 2013 3- Usufructuary mortgage : Ss. SS(d) & 62-68.
Apr. 2015
4· English mortgage : S. 58(e).
Dec. 2016
May 2017 5- Mortgage by deposit of title-deeds (or equitable mortgage) : Ss. 58(~ I
Nov. 2017 &96.
Apr. 2018 6. Anomalous mortgage : Ss. 58(g), 67(b) & 98.
What is a simple
1. Simple mortgage [S. 58(b)J
mortgage? When-
(2 marks) (a) possession of the mortgaged property is not given (to the mortgagee)
M.U. May 2012 and ',
(b) the mortgagor-
(i) binds himself personally to pay the mortgage-money; and
(ii) agrees that, if he does not so pay, the mortgagee will have a
right to cause the mortgaged property to be sold (by the Court),
and the proceeds of such sale to be applied in payment of the
mortgage-money,
the transaction is called a simple mortgage~
The mortgagee, in such cases, is called a simple mortgagee.
INGREDIENTS OF A SIMPLE MORTGAGE - In a simple mortgage,
one finds the following elements:
(a) a personal obligation on the part of the mortgagor to pay the debt;
(b) an express or implied power given to mortgagee to cause the property
to be sold through the intervention of the Court;
(c) no transfer of ownership._
So, invariably in a simple mortgage, the mortgagee must have the power
to sell the property. But the sale cannot be made out of Court. The words
"cause to be sold" plajnfy indicate that it must be through the intervention of the
Court. Thus, in order to avail himself of his security, the mortgagee should first
get a decree directing the sale of the mortgaged property.
In a simple mortgage, the mortgagee is not put into possession of the l
property pledged to him. The debtor merely parts with the right of sale and I
nothing more. It is a right in rem realisable by sale given to a creditor by way of
accessory security.
MORTGAGES OF IMMOVABLE PROPERTY & CHARGES 119
REMEDIES OF A SIMPLE MORTGAGEE - A mortgagee of this type of

mortgage cannot foreclose (I.e. keep the property in lieu of the mortgage-
money). He acquires only the right of sale, and that too, on ly through the Court.
He can also sue on the personal covenant (under s. 58), inasmuch as the Discuss : Mortgage
simple mortgagor binds himself to repay. by conditional sale.
(The concepts of "foreclosure" and "sale" are explained at length later in M.U. Apr. 2011
this Chapter.)
2. Mortgage by conditional sale (Ss. 58(c), 59 & 67]

Where the mortgagor ostensibly sells (i) on default of payment o f the
the mortgaged property, on condition mortgage-money on a certa in
that- date , the sale is to become
absolute; or
(ii) on such payment being made, the
sale is to become void; or
(iii) on such payment being made, the
buyer is to transfer the property to
the seller, -
the transaction is called a 'mortgage by conditional sale' . However, in such
cases, the condition should be embodied in the document which effects the
sale : S. 58(c).
MORTGAGE BY CONDITIONAL SALE - In this form of mortgage, there
is no personal liability on the part of the mortgagor to pay the debt. The remedy
of the mortgagee is by foreclosure only. The mortgagee remains content with
the property mortgaged and cannot look to the other properties of the mortgagor,
the latter not having any personal liability.
A mortgage by conditional sale is an ostensible sale which is to ripen into
an absolute sale on breach of the condition as to payment; in other words, on
the breach of the condition, the contract executes itself, and the transaction is
closed, and becomes one of absolute sale to be enforced in a particular manner
called foreclosure . A mortgage is foreclosed by obtaining a declaration from
the court to the effect that the mortgagor will be debarred of his right of
redemption. Such a declaration ripens the ostensible ownership of the mortgage
Into absolute ownership.
A mortgage by conditional sale is non-possessory (i.e., no delivery of
possession is given under it), and therefore, the mortgagee does not have the
advantage to repay himself, as is the case in a usufructuary mortgage.
The right of a mortgagee (in this type of mortgage) is to close the
transaction in case of default of repayment on the due date, and claim the
property as an absolute owner. But this right can be enforced , not privately, but
only by a suit for foreclosure. The mortgagee does not acquire any personal
right against the mortgagor as in the case of a simple mortgage; nor is he
120
entitled to the possession of the property. In fact, by virtue of this mortgage, he

c~n ~nly acquire ownership over the property which, however, will not vest in
him in spite of a default of payment on the due date, until there is a decree for
foreclosure.
In a case before Gujarat High Court, the first part of the document spoke
of an outright sale, whereas the second part contained provisions for redemption
of the land. The Court observed that the document must be read as a whole
and held that it was a mortgage by conditional sale, and not a sale with a right
to re-purchase. (/small Khatri v. Muljibhai Brahmabhatt1A.I.R. 1994 Guj. 8)
Problem : Separate documents of sale deed and deed of reconveyance
are executed between the parties in the same transaction and in respect of the
same property. The owner wishes to redeem the property and contend s that
the transaction is in the nature of a mortgage by conditional sale. Will he
succeed?
Ans. : In a mortgage by conditional sale, it is absolutely necessary that
the condition effecting the sale as a mortgage should be embodied in the safe
deed itself. As this is not so in the present case, the "mortgagor" cannot say
that the transaction was in the nature of a mortgage by conditional sale. (Suni/
K. Sarkarv. Aghor K. Basu, A.I.R . 1989 Gau. 39)
How effected (S. 59)
Such a mortgage can be effected -
(a) where the principal money secured is f 100 or upwards, by a
registered instrument signed by the mortgagor and attested by at
least two witnesses;
(b) when the principal money secured is less than f 100, by a registered
instrument signed and attested as aforesaid or by delivery of the
property.
Mortgagee's remedy (S. 67)

The remedy open to the mortgagee by conditional sale is by foreclosure
only and not by sale.
DIFFERENCE BETWEEN A MORTGAGE BY CONDITIONAL SALE AND
A SALE WITH A CLAUSE FOR REPURCHASE : TEST-Whether a particular
transaction is a mortgage by conditional sale or an out-and-out sale with a
right of repurchase is to be determined by the intention of the parties as gath~red
from the terms of the deed itself. If the relation of debtor and creditor is intended
to subsist, the conveyance will amount to a mere security, and therefore, a
mortgage.
In the case of a sale with a clause for repurchase, the whole transaction
is a bona fide sare, there is no relation of debtor and creditor subsisting between
the parties, and the right of repurchase must be exercised within the fixed
time, as time is regarded as the essence of the contract. If such a right is not
exercised within the fixed time under the contract, there will be a discharge of
the contract, and the seller will not be able to enforce the right of repurchase,
whereas in the case of a mortgage by a conditional sale, the right of redemption
84
continues to subsist even after the fixed period . Once a mortgage, always a MCQ No.
mortgage. Therefore, the mortgagor can redeem the mortgage, so long as the
1aw of limitation permits him or before the mortgagee obtains a decree of
foreclosure.
The difference in the legal effect of a sale with a condition of repurchase
and a mortgage by conditional sale is clear, but there remains the practical
difficulty of distinguishing between the two . S. 58 states that the transaction
becomes a mortgage by conditional sale if the condition is embodied in the
document which effects the sale. But the problem is, should every transaction,
where the sale and the condition are contained in the same document be treated
as a mortgage by conditional sale? There was a difference of opinion among
the various High Courts on this point. This conflict of decisions was set at rest
by a decision of the Supreme Court in Chunchun Jha v. Shaikh Ebadat Ali
(1954 S.C.J . 469) , where the Court observed as follows : "If the sale and
agreement to repurchase are embodied in separate documents, then the
transaction cannot be a mortgage, whether the documents are
contemporaneously executed or not. But the converse does not hold good.
That is to say, the mere fact that there is only one document does not necessarily
mean that it must be a mortgage and cannot be a sale" .
In the above case, the Supreme Court further held that whether the
transaction contained in the document amounts to an absolute sale with an
agreement of repurchase or a mortgage by conditional sale must depend on
the intention of the parties, which must be ascertained from the surrounding
circumstances.
MCQ No. 85
3. Usufructuary mortgage [S. 58(d) & 62-93]
Where the mortgagor -
(a) delivers possession , or expressly or by implication binds himself to Discuss : Usufru-
ctuary mortgage.
deliver possession, of the mortgaged property to the mortgagee, and
M.U. Apr. 2011
(b) authorises 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 What is a usufru-
ctuary mortgage?
(iii) to appropriate them in lieu of interest or, (2 marks)
in payment of the mortgage-money, (or M.U. Nov. 2012
partly in lieu of interest and partly in Dec.2014
payment of the mortgage-money), - Apr. 2015
the transaction is called a usufructuary mortgage, and the mortgagee is called

a usufructuary mortgagee.
122
. . USUFRUCTUARY MORTGAGE - In this form of mortgage, the propert

is given as_a security to the mortgagee, who is let into possession oris ~errnitte~
to repay himself out of the rents and profits of such property. Two pomts rnus
1
be carefully noted with respect to a usufructuary mortgage : (i) possessio
~ust ~e given to t~e mortgagee, or the mortgagor must ex~ressly or implied!~
~md himself to deliver possession; and (ii) the mortgagor will not be persona11
Write a short note hable, unless there is a distinct agreement to the contrary. Y
on : Usufructuary A usufructuary mortgagee, having the opportunity of repaying himself, 13

mortgage.
not ~u~ .to ~he necessity of going to Court. This position accounts for the
M.U. Apr. 2009
proh1b1tton in Sec. 67 denying him the right of foreclosure and sale.
Its characteristics : The following are the five main characteristics of a
usufructuary mortgage:
(i) There is delivery of possession to the mortgagee.
(ii) The mortgagee is to retain possession until repayment of the money
and is to receive rents and profits in lieu of interest, or in payment of
the mortgage-money or partly in lieu of interest and partly in payment,
of the mortgage-money.
(iii) The mortgagor is entitled to redeem when the amount due fs
personally paid or the debt is discharged by rents and profits received •
by the mortgagee : S. 62.
(iv) If the mortgage is for f 100, or more, it must be registered ; if below
f 100, it may be by a registered deed or by delivery of property:
S. 59.
(v) No time-limit is fixed for repayment.
REMEDIES OF A USUFRUCTUARY MORTGAGEE - A usufructuary
mortgagee cannot sue, either for sale or for foreclosure. His only remedy is to l
retain possession of the mortgaged property till the mortgage-money is paid •
up, and to appropriate the rents and profits thereof till then, as per the terms of
the mortgage-deed. It may be noted, however, that if the mortgagee is not in
possession or if he loses such possession, he may sue to obtain possession
and also mesne profits (i.e., past profits); he may also sue for the mortgage-
money under S. 68.
Neither the remedy of foreclosure northat of a sale is open to usufructuary
mortgagee, as he realises his right by possession and enjoyment of the profits.
When his possession is disturbed, the usufructuary mortgagee has a personal
remedy under S. 68 to sue for the mortgage-money.
Rights of usufructuary mortgagor to recover possession (S. 62)

A usufructuary mortgagor has a right to recover possession of the property
(together with the mortgage-deed and all documents relating to the mortgaged
property which are in the possession or power of the mortgagee) in the following
two cases, viz., -
1 (i} where the mortgagee is authorised to pay himself the amount of the
4\ Mortgage-money from the rents and profits of t~e property when the
t'\ mortgage-money is paid;
Y (ii) where the mortgagee is authorised to pay himself from such rents
Y and profits - when the term (if any) prescribed for the payment of
the mortgage-money has expired, and the mortgagor pays or tenders
i~ to the mortgagee the mortgage-money or the balance thereof or
deposits it in Court.
Accession in the case of a usufructuary mortgage (S. 63)

Where, in a usufructuary mortgage, an accession has been acquired at
the expense of the mortgagee, the profits arising from the accession are , in
the absence of a contract to the contrary, to be set off against interest, if any,
payable on the money so spent.
1
f DIFFERENCE BETWEEN :
t ENGLISH MORTGAGE USUFRUCTUARYMORTGAGE
1. There is a personal liability to 1. There is no personal liability to

repay the loan. repay the loan .
2. The property is absolutely 2. The mortgagee does not get
transferred to the mortgagee, on ownership in the property; only
condition of its being possession is transferred to him,
retransferred to the mortgagor on which he is entitled to retain until
his repaying the debt. he is paid off.
3. The mortgagee can sue for sale, 3. The mortgagee cannot sue for
and has, in certain cases, a sale; neither has he a power of
power of sale without the sale without the intervention of
intervention of the Court. the Court.
ZUR-1-PESHGI LEASE - Zur-i-peshgi literally means a payment in

advance or a lease for a premium. It also means a usufructuary mortgage in
the form of a lease. In a Zur-i-peshgi lease, the mortgagee is the lessee and
has physical possession of the property. The mortgagor receives an advance
by way of future ren( and he purports to execute a lease, pure and simple. It is
recited In the deed that, in consideration of the 'advance rent' received, the
person advancing the money will remain in enjoyment of the property for which
the rent has been paid for a certain number of years , and that, after the expiry
of the period , the lessee is to give up possession . In such cases, the money is
received as a loan , and property is given as security.
Zur-i-peshgi leases were devised to evade the laws against usury, as well
as the canons of the Koran which forbade lending money at interest. If there
was no debt, there could be no usury, and yet the rent might be so low as to
leave a handsome margin for interest on the loan . By this device , the
mortgagees entered into possession not as mortgagees, but as lessees a,

fixed re nt.
Mortgage distinguished from a lease

In Maharaj adhiraj Sir Kamesh war Singh v. State of Bihar (A.I.R. 1959 Sc
13 03) , the Supreme Court has laid down the following four tests to ascertai~
Whether a particular transaction is a lease or a mortgage:
(a) Is there any express term which makes the loan returnable, either by
payment or by enjoyment of the usufruct?
(b) Is the interest fixed?
(c) Is the right of redemption granted?
(d) Is there any provision for personal liability, if any amount remains
outstanding after the term of the lease?
4· English mortgage [S. 58(e)]

Where the mortgagor _
(a) binds himself to repay the mortgage-money on a certa in date, and
What ls a mort- (b) transfers the mortgaged property absolutely to the mortgagee, but
gage? Define an subject to a proviso that he will re-transfer it to the mortgagor upon
English mortgage payment of the mortgage-money as agreed ,
and discuss the
mortgagee ' s the transaction is called an "English mortgage".
power to sell the CHARACTERISTICS OF AN ENGLISH MORTGAGE - The foll owing
mortgaged prop-
erty without the
are the main characteristics of an English mortgage:
intervention of the (i) It is followed by delivery of possession.
court.
(ii) There is a personal covenant to pay the amount.
M.U. Nov. 2008
(iii) It is effected by an absolute transfer of property, with a provision for
re-transfer in case of repayment of the amount due.
(iv) Power of sale out of Court is conferred on certain persons under
certain circumstances stated in S . 69.
Remedy open to an English mortgagee: His remedy is by sale, and
not by foreclosure.
Though Section 58(e) states that the mortgagor transfers the property
absolutely, yet it must be noted that an absolute transfer can never be a
mortgage. The very definition of a mortgage is that there is the transfer of a
limited interest for the purpose of securing the debt. Therefore , the word
absolutely is not to be understood in its literal meaning ; it merely emphasises
that the characteristics of a sale are more pronounced in the case of an English
mortgage, but it does not suggest that there is an absolute transfer in the
nature of a sale.
11
Thus, the use of the word absolutely" in the definition of an English
mortgage, is only a matter of form , and not of substance. What really passes is
MORTGAGES OF IMMOVABLE PROPERTY & CHARGES 12S
only an Interest in the property, and not the whole property. This point has
been amply clarified by the Privy Coun ci l in th e case of Ramkinkar v.
Satyacharan (66 I.A. 50), where it was observed as foll ows : "Their Lordships
thi nk that the sub~section (e) upon its true construction does not declare 'an
English mortgage' to be an absolute transfer of property. It declares only that
such a mortgage would be absolute were in not for the proviso to retransfer."
DIFFERENCE BETWEEN :
ENGLISH MORTGAGE SIMPLE MORTGAGE
1. What is transferred to the mortgagee
Property is transferred absolutely to Only the right of sale is transferred .
the mortgagee.
2. Right to possession -
The mortgagee, being the owner of The mortgagee has no right to enter
the property, has a right to enter into into immediate possession of the
immediate possession of it. property.
3. Sale out of Court-
An English mortgagee has, in certain A right of sale without the intervention
cases, a right of sale without the of the Court is not conferred on a
intervention of the Court. simple mortgagee.
ENGLISH MORTGAGE MORTGAGE BY
CONDITIONAL SALE
1. Personal liability to pay-There 1. There is no such personal liability

is a covenant to repay, or some to pay.
personal liability on the part of the
mortgagor.
2. Conveyance of property to 2. The sale is ostensible, and not
mortgagee - Property is real or absolute . It becomes
conveyed absolutely to the absolute on failure of payment of
mortgage, subject to a condition mortgage-money if a decree of
of reconveyance on payment of foreclosure is obtained.
the mortgage-money.
3. Right of possession - An 3. A conditional mortgagee has no
English mortgagee has the right such right.
to enter into immediate
possession of the property.
w ,
4. Change in conveyance-Abso- 4. The sale is ostensible, i.e., the

lute conveyance is converted into mortgage is liable to be
a mortgage. converted into an absolute sale,
when a decree of foreclosure is
obtained.
5. Remedy - Remedy of an 5. The remedy of a conditio nal
English mortgage is by sale. mortgagee is by foreclosure.
Mca No. ss 5. Mortgage by deposit of title-deeds (Equitable mortgage)

[Ss. 58(f) & 96]
Where a person -
(a) in the towns of Calcutta, Madras and Bombay, and in any other town
which the State Government concerned may, by notification in the 1
Official Gazette specify In this behalf, (e.g., Ajmer, Allahabad, Delhi, i
Jaipur, Mysore etc.),
(b) delivers to a creditor (or his agent), documents of title to immovable
property,
MCQ No. 87 (c) with intent to create a security thereon, -
the transaction is called a 'mortgage by deposit of title-deeds' .
The provisions which apply to a simple mortgage apply, so far as may be,
to a mortgage by deposit of title-deeds.
EQUITABLE MORTGAGE - A mortgage by deposit of title-deeds is
What. is Equitable popularly called an equitable mortgage on the analogy of a similar expression
Mortgage? used in English law. In England, this form of mortgage creates a mere equitable
(2 marks)
security, as distinguished from an actual mortgage, which is ordinarily called a
M. U. Apr. 2016
legal mortgage, and is, therefore, unenforceable against a bona fide purchaser
for value of the legal estate without notice. But in India, it creates, not merely a
right in personam, but a right in rem, which cannot be defeated by any defence
of bona fide purchaser without notice. Consequently, it will operate also against
a subsequent legal mortgage of the same estate. In England, this form of
mortgage is rightly called an equitable mortgage, but in India , the latter
expression is a misnomer, because here, it is, in fact, a legal mortgage under
the Transfer of. Property Act.
A mortgage by deposit of title-deeds may include lands outside the limits
of the towns mentioned above. But it should be made in any one of those
towns. When such a mortgage was created by deposit of title-deeds relating to
immovable properties situate partly inside and partly outside the town of Calcutta
as security, Jenkins J. held that it was a valid mortgage.
Characteristics of a mortgage by deposit of title-deeds
(i) It can be created in the towns of Calcutta, Madras and Bombay (and
other towns notified in the Official Gazette). It can be created in such
towns by deposit of title-deeds, even though the property Is outside

those towns. ·
(ii) It is not necessary that a// the deeds should be deposited. It is sufficient
if material documents are deposited . It is effected by deposit of
material title-deeds.
(Hi) No delivery of possession of property takes place.
(Iv) It is made to secure a debt or advances made, or to cover future
advances.
(v} No registration is necessary, even if there is a writing recording the
deposit : S. 59.
(vi) It prevails against a subsequent transferee who takes under a
registered instrument.
(vii) It prevails against all who are not bona fide purchasers for value
without notice.
REMEDIES AVAILABLE - S. 96 of the Act puts equitable mortgages on
the same footing as simple mortgages. Therefore, the remedy of the mortgagee
by deposit of title-deeds is by a suit for sale; he is not entitled to sue for
foreclosure. He can also sue for the mortgage-money. (Nityanand v. Rajpur
Chhaya Bani Cinema Ltd., 1953 A.C. 208)
The mortgagor's remedy is a suit for redemption, and not an action to
recover the title-deeds.
Problem : A borrowed a sum of money from B in Bombay. As a security
for the loan A deposited with B in Bombay, by way of equitable mortgage, the
title-deeds of his property in ltarsi (which is not a notified town). B filed a suit in
Bombay for sale of the mortgaged property. A argued that there was no valid
or enforceable mortgage in B's favour, as the mortgaged property was situated
outside the towns notified under S. 58 . Will A's contention succeed?
Ans. : No, A's contention will not succeed, because a mortgage of property
situated in any place (whether notified or not) can be effected by a deposit of
title-deeds in Bombay. (Central Bank oflndia v. Nusserwanji, 34 B.L.R. 1384).
DIFFERENCE BETWEEN ENGLISH LAW AND IND/AN LAW AS
REGARDS EQUITABLE MORTGAGES
ENGLISH LAW INDIAN LAW
1. What right is created -

In England, it creates a mere In India, It creates, not merely a right
equitable security, as contrasted with in personam , but a right in rem .
a legal mortgage.
2. Whether enforceable against a purchaser -

In England, it is not enforceable In India, it is enforceable against such
against a bona fide purchaser of the a purchaser, and prevails against a
estate for value without notice. subsequent legal mortgage of the
same estate.
3. True nature of the mortgage -
It can rightly be called "equitable". It is wrongly so called, because in
India it is, In fact, a legal mortgage.
4. Whether 'tacking ' and 'consolidation' a//owed-
Yes. No ; they are abolished by t he
Transfer of Property Act.
~
ENGLISH MORTGAGE MORTGAGE BY DEPOSIT

OF TITLE-DEEDS
1. The mortgagor binds himself to 1. There is no personal liability to
repay the money. repay the loan.
2. Mortgaged property is trans- 2. Mortgaged property is not abso-
ferred absolutely to the mort- /utely transferred to the mort-
gagee. gagee.
3. Operation is not restricted to any 3. Operation is restricted to certain
place. centres of commerce.
4. Must be effected by a registered 4. Can be affected by a me re
instrument - (i) where the delivery of the title-deeds, with
principal money secured is ~ 100 intent to create a secu rity
or upwards; or (ii) where there is thereon. Whatever be the
no delivery of the property. principal money secured , no
writing is required.
5. In certain cases, the mortgagee 5. The mortgagee has no power of
has a power of sale without the sale without the intervention of
intervention of the Court : see the Court.
S. 69.
6. Anomalous mortgage [S. 58{g) & 98]

A mortgage which is not - (i) a simple mortgage,
(ii) a mortgage by conditional sale,
(iii) a usufructuary mortgage,
(iv) an English mortgage, or
(v) a mortgage by deposit of title-
deeds,
1
is called an anomalous mortgage'.
The rights and liabilities of the (I) by their contract, as evidenced In
parties to such a mortgage are to be the mortgage-deed, and failing
determined - that,
(II) by local usage .
. I
I~
ANOMALOUS MORTGAGE-An anomalous mortgage is a transaction
which is, in fact, a mortgage (as defined in the Act), but is not any of the types
of mortgages considered above. In other words, it is a mortgage other than
those categorically defined in the section. Instances of such mortgages are
the kanom, otti and peruartham mortgages of Madras and the san mortgage
of Gujarat.
Characteristics of anomalous mortgage
(i) It would include a simple mortgage usufructuary and a mortgage
usufructuary by conditional sale.
(ii) Possession may or may not be delivered.
(iii) If for~ 100 or upwards, it must be registered; if below~ 100, it may
be by a registered deed or by delivery of possession: S. 59.
REMEDY OF THE MORTGAGEE -The mortgagee's remedy is by sale
....
and foreclosure, if the terms of-the mortgage permit it: S. 67(a) .
The remedy of a mortgagor, if he becomes a trustee or legal representative
I
l of the mortgagee, is by a su;t for sale only: S. 67(b). ·
REMEDIES AVAILABLE TO DIFFERENT MORTGAGEES : REMEDY OF :

1. A simple 2. 3. 4. 5.
English and Mortgagee by Usufructuary Anomalous Mortgagee of
I
Equitable conditional mortgagee mortgagee public works
mortagagee sale
Sale. No Foreclosure. Neighter sale Ordinarilly, Appointment
foreclosure: No sale : S. nor sale. Foreclo- of receiver.
S. 67(a) 67(a) foreclosure : sure allowed [Neither
S. 67(a) if so provided foreclosure
in Mortgagee nor sale]:
deed : S.67(a) S. 67(c)
NATURE OF RIGHTS TRANSFERRED IN EACH KIND OF MORTGAGE
Type of Mortgage Nature of the right transferred
1. A simple mortgage 1. The right of sale.
2. A usufructuary mortgage 2. The right of possession and
enjoyment of the usufruct.
3. A mortgage by conditional sale 3. The right of ownership subject to

a condition .
4. An English mortgage 4 . The right of ownership subject to
a condition .
5. A mortgage by deposit of title- 5. The right of sale.
deeds
SUB-MORTGAGE-A mortgage-debt being an immovable property, the

mortgagee can assign his interest in the mortgaged property. A mortgage by
the mortgagee of his interest under the original mortgage is called a sub.
mortgage. A sub-mortgagee is entitled to a decree for sale of the mortgage.
rights of his mortgagor.
A puisne mortgage arises where A mortgages his property to B by a legal
mortgage and then mortgages it again to C either by an equitable mortgage or
by creating a charge on the same property.
MORTGAGE WHEN TO BE BY ASSURANCE, i.e., WHEN TO BE
REGISTERED AND ATTESTED (S. 59)
Where the principal (a) f 100 or upwards - signed by the mortgagor
money secured is - a mortgage, (other and attested by at least
than mortgage by two witnesses.
deposit of title-
deeds ), can be
effected only by a
registered instru-
ment -
(b) Less than t 100, a (i) either by a reg is-
mortgage may be tered instrum ent
effected - signed by the mort-
gagor and attested
by at least two
witnesses , or
(ii) (except in the case
of simple mortgage)
by delivery of the
property.
TRANSFER WHEN COMPLETE -The completion of the mortgage does

not depend upon the payment of consideration , unless there is a contract to
the contrary. The transfer is complete as soon as the mortgage deed is
executed , orwhere there is no deed, as soon as possession is delivered .
EFFECT OF NON-REGISTRATION - If the transaction intended to be a
mortgage, and requiring registration, is not registered , the mortgage is not
converted a charge under S. 100, but may be used to establish a personal

lc:i liability. (Vaniv. Bani, 20 Born. 553). The mortgagor cannot sue for redemption,
the mortgage being 'invalid, but he can sue for possession on his offering to
repay the loan. (Maung Tung v. Maung Aung, 2 Ran. 313).
Although a deed may be invalid for want of registration , if, possession
has been delivered under it, the doctrine of Part-Perfor"1ance (S. 53A) may
come into play.
MORTGAGOR'S RIGHTS MCQ No. 88

(Ss. 60-61, 63-66, 83-84, 91-92 & 102-108)
A mortgagor has the following six rights:
I. Right of redemption : Ss. 60-61 , 83-84, 91-92, 95 and 102-103.
II . Right to transfer to a third party instead of re-trans·ference to the
mortgagor : S. 60-A.
Ill. Right to inspection and production of documents : S. 60-B: Explain "mort-
gage ". What are
IV. Right to accession : S. 63-64. the rights and
Ot V. Right to grant a lease : S. 65-A. liabilities of a
• I
' -
,,
St mortgagor?
VI. Right to reasonable waste : S. 66. M.U. Nov. 2009
Jan.2019
I. RIGHT OF REDEMPTION ,,
(Ss. 60-61, 83-84, 91-92, 95 & 102-103)
The following nine topics are discussed here:
1. Right of redemption
2. Ri~ht of redemption, how extinguished
3. Effect of redemption
4. Right to redeem a part of the mortgaged property
5. Right to redeem separately or simultaneously
6. Who can sue for redemption Write a short note
7. Right of subrogation on : Right of
redemption.
8. Right of redeeming mortgagor to claim expenses
M.U. Apr. 2011
9. Mortgagor's right to deposit money in Court. May 2012
Dec. 2019
1. Right of redemption (Ss. 60, 83-84) ,
At any time afterthe principal money has become due, and on payment
or tender of the mortgage-money, the mortgagor has the right to get back his
property, and demand - Define Right of
redemption.
(a) the return of the mortgage instrument, together with all the title-deeds;
(2 marks)
(b) delivery of possession of the mortgaged property (when the M.U. Apr. 2013
mortgagee is in possession); and Nov. 2013
(c) a re-transfer of the property (at the mortgagor's coSf} or an

acknowledgment in writing of the extinction of the mortgagee's right.
(S. 60)
However, the above right cannot be exercised if it has been extingu ished
by any act of the parties or by a decree of the Court.
The right conferred by this section (S . 60) is called a 'right to redeenf,
and a suit to enforce it is called a 'suit for redemption '.
Moreover, S . 60 does not render Invalid any provision to the effect that -
(i) if the time fixed for payment of the principal money has been allowed
to pass, or
(ii) if no such time has been fixed, - the mortgagee is to be entitled to
reasonable notice before payment or tender of such money.
RIGHT OF REDEMPTION - Redemption means paying off the mortgage.
money and getting back the mortgaged property. Redemption takes place when
the mortgagor discharges his obligations under the mortgage, and thus
becomes entitled to have his property re-vested in him, free of the charge. The
mortgagor's right to have his property returned to him contemporaneously with
the discharge of his obligation is called the right of redemption.
Its nature- Under the Indian law, the terms "right to redeem" and "equity
of redemption" are synonymous. There is no distinction between the legal right
of redemption and the equity of redemption (which distinction is recogn ised
under English law). The mortgagor's right to redeem, even after the expiry of
the date fixed for payment, is not an equity; it is a statutory right recogn ised by
S. 60 of the Transfer of Property Act.
ONCE A MORTGAGE, ALWAYS A MORTGAGE-The right to red eem
is a natural incident of a mortgage. Notwithstanding any stipulation to the
contrary, a mortgagor, at any time affer the principal money has become payable
and before his equity of redemption has been foreclosed (by a court) , has, on
payment of his debt, the right to get back his property free of all cond itions or
liens. This right of redeeming the mortgagor's property is an indefeasible right,
and cannot be taken away from him by any law or contract. The right of
redemption cannot be detached from the mortgage. This rule is well expressed
by the maxim "Once a mortgage, always a mortgage."
The mortgage may be redeemed at any time after the principal money
has become due. Therefore , unless the money becomes due, the mortgagor
cannot insist on redeeming his property, nor can the mortgagee attempt to
foreclose . Again , the right of redemption subsists until the mortgage is actually
foreclosed , that is, till a decree is passed in a foreclosure suit. So, generally,
these two rights accrue at the same time and subsist upto the same time, and
this incident is often described by saying that the right of redemption and
foreclosure are co-extensive. This maxim , of course, assumes the absence of
any valid stipulation (express or implied ) to the contrary.
Clog on Redemption
The right of redemption ls statutory right, and it is so absolute that it cannot
be defeated even by the parties themselves. Nor can this right be fettered by
any condition. It may be noted that in section 60, there are no such words as
11
1n the absence of a contract to the contrary." The legal position is that any
condition contained in mortgage deed, which obstructs the right of redemption ,
will be considered as a clog on redemption, and will be null and void .
However, it may also be noted that the doctrine of clog on redemption
relates only to dealings which take place between the parties to a mortgage at
the time when the contract of mortgage is entered into. It does not apply where
I~ they subsequently vary the terms upon which the mortgage may be redeemed .
Pollock has described this d(?ctrine as "an anachronism", and has Write a short note
on : Clog on
suggested that it should be limited to cases of oppressive or unconscionable
redemption.
bargains. However, both in England and in India, it is now settled that a mortgage M.U. Apr. 2008
cannot be made irredeemable; nor can the right to redemption be made illusory
or superfluous.
Vaddiparthi v. Appalanarasimhalu (41 Mad. L.J. 563): A mortgaged
his land to B for five years, with a provision that rents and profits would be set
off against interesl The deed further provided that if the mortgage was not
redeemed within 20 years, the mortgagee should treat the land as sold to him
absolutely. This was held to be a clog on redemption, and the mortgage was
held to be redeemable even after 20 years.
Shankar v. Yeshwant (22· B.L.R. 965) : X mortgaged his land to Y with
possession, and the mortgage deed provided that in default of redemption
after 20 years, Ywould become the owner of half the land. This provision was
a clog on the equity of redemption. But, four_ years after the expiry of the 20
years period, while Ywas still in possession, X executed a deed by which half
the land was conveyed to Y and Y released the other half from the mortgage.
The Court held that this was an arrangement for the discharge of the mortgage,
and it was valid.
Poma/ Govindjiv. Vrajlal Purohit(A.I.R.1989, S.C. 436): The Supreme
Court has held that a long term for redemption, by itself, is not a clog on the
equity of redemption. But, a very long period for redemption (99 years in the
present case), taken with other relevant factors (as for instance, inflation and
rise in prices) could create a presumption that it was a clog on the equity of
redemption .
Problem : A mortgaged his land to B with possession for 5 years, the rent
and profits to be set-off against interest. The mortgage further provided that if
the mortgage was not redeemed within a period of 20 years from the due date,
the mortgagee should treat the land as sold to him absolutely. A filed a suit for
redemption after 20 years from the due date. Will A succeed?
Ans. : The provision to treat the land as sold is invalid as being a clog on
the equity of redemption, and the mortgage is redeemable even after 20 years.
The right of a mortgagor to redeem a mortgage has been the subject of
anxious protection in law. Any attempt made to obstruct such right is known as
clog on the equity of redemption . The clog on the equity of redemption might
be in any one of the following forms:
(1) The mortgagor may be totally prevented from redeem ing the
mortgage.
(2) The terms of the mortgage might give a collateral benefit to the
mortgage or impose a collateral burden on the mortgagor, which is
expected to last even after the discharge of the debt and the
redemption of the mortgage.
So far as any direct attempt at preventing a mortgagor from redeem ing
the mortgage is concerned, it has been held that such terms are null and void.
This is based on the principle, "Once a mortgage, always a mortgage ". So far
as collateral advantages or disadvantages are concerned, it was held in Noa kes
v. Rice (1902 A.C. 24) that such collateral stipulations which do not cease to
operate on the redemption of a mortgage are also in the nature of a clog on the
equity of redemption, and are therefore void.
In Noakes v. Rice, R mortgaged his premises to N and Co., brewers , with
a condition that R should not, whether during the continuance of the mortgage
or afterwards, sell on the premises any other liquors than those prepared by
the company. Such a condition was held to be a clog.
However, in a subsequent case, Kreglinger v. New Patagonia Meat
and Cold Storage Co. Ltd., (1914)A.C. 25, it was held that a stipulation for a
collateral benefit in a mortgage does not cease to operate immediately on
redemption, if -
(a) it is not unfair or unconscionable;
(b) it is not in the nature of a penalty clogging the equity of redemption;
and
(c) it is not inconsistent with or repugnant to the contractual or equitable
right to redeem.
Therefore, in English law, the collateral conditions which satisfy the test
laid down in Kreglinger's case will be deemed to be valid.
Kreglinger's Rule and Indian Law
In view of the wordings of S. 60 of the Act, it has been held that the rule in
Kreglinger's case is not applicable in India. Therefore, a stipulation which is
intended to operate beyond the redemption of a mortgage is a clog, and cannot
operate beyond redemption. (Bhimrao v. Sakharam, 46 Born. 409)
Probl ms
1. X borrows money from Y, and executes a usufructuary mortgage for
the amount, redeemable in any month of Jeth. X then borrows a further sum
from Y, and executes a simple money bond, in which he covenants not to
redeem the mortgage untH the money due on the second bond is paid. Is such
~l
a covenant valid?
I
Ans. : No, this covenant is not valid, as it amounts to a clog on redemption .

(Sheo Shankar v. Parma Mahton, ( 1904) 26 All. 559)
2. X borrows ~ 500 from Y, and executes a usufructuary mortgage for
, 300, the rents and profits to be taken in lieu of interest X covenants in the
deed that the payment of the balance of t 200 with interest at 2% per month
would be compulsory at the time of redemption . Does this covenant amount to
a clog on redemption?
Ans. : No, this covenant is not a clog on redemption; it only creates a
further charge for ~ 200. (Jeut Koeri v. Mathura, (1926) 24 AIL L.J. 125)
Right of Redemption
(a) How exercised (Ss. 60, 83-84)
The right of redemption can be exercised in three ways, viz -
(i) By-paying or tendering the mortgage-money to the mortgagee outside
Court. [Ss. 60 and 102-103] -
(ii) By depositing the amount due on the mortgage in the Cqurt. [Ss. 83-
84).
(iii) By a regular suit for redemption.
ln 2. Right of redemption, how extinguished (S. 60)

The right of redemption is extinguished: ,
(i) by act of parties (S. 60) as when the mortgagor- sells his equity of
1; redemption and thereby extinguishes his right.
(ii) by an order of Court (S. 60). Thus, where a decree is passed in a
e foreclosure suit, or when the mortgaged property is sold by an order
of the Court, the mortgagor's right is lost.
I -
;t 3. Effect of Redemption (Ss. 60-60A & 62-64)

All the effects of redemption are discussed below at the appropriate places.
Shortly stated, they are as follows:
1. The mortgage must return the documents and possession of the
mortgaged property to the mortgagor: Ss. 60 and 62.
2. The mortgagor may require the mortgagee that , instead of
retransferring the property to the mortgagor, the mortgagee shall
assign the mortgage-debt to a third person named by the mortgagor:
S. 60A.
3. The mortgagor becomes entitled to (a) accessions to the mortgage(!

property (S . 63); (b) improvements made thereon (S . 63A); ane1 1
(c) the renewed mortgage-lease : S. 64 .
4. Right to redeem a part of the mortgaged property (S. 60)

A person interested in a share only of the mortgaged property is not entitled
to redeem his own share only, on payment of a proportionate part of the amount
remaining due on the mortgage, except where a mortgagee (or if there are
more mortgagees than one, a// such mortgagees) has (or have) acquired , in
whole or in part, the share of a mortgagor : S . 60.
A mortgage is one and indivisible. The general rule is that, the mortgage.
debt being indivisible and the mortgaged property being held in its entirely as
security for the debt and every part of it, the property can only be redeemed in
its entirety on payment of the whole debt. In other words, the holder of a pa rtial
interest in the equity of redemption cannot redeem a part of the property on
payment of a proportionate part of the debt. So also, one of the mortgagees
cannot claim to realise a portion of security for a proportionate part of the debt.
All the mortgagors are entitled to be made parties to one proceeding , and are
not to be exposed to a variety of proceedings .
This general rule is deducible from sections 60 and 67 of the Transfer of
Property Act. But there are exceptions to the rule, and in the following four
cases, a mortgagor can claim to depart from the rule:
1. Where the terms of a mortgage provide for partial redempti on ; in
other words, the rule is to be applied subject to a contract to the
contrary.
2. Where the co-mortgagors have distinct and separate interests.
3. Where the mortgagee recognises a partition of the mortg aged
property amongst the co-mortgagors : Mahadaji v. Gampatishet, 15
Born. 257.
4. When the mortgagee himself acquires a portion of the mortgaged
property (Moro v. Balaji, 13 Born. 45), but not the whole of the
mortgaged property. When a mortgagee acquires, in whole or in part,
the share of a mortgagor, the indivisible character of the right of
redemption is destroyed, and the mortgagor will be allowed to redeem
his share.
5. Right to redeem separately or simultaneously (S. 61 )-Consolidation

abolished
A mortgagor who has executed two or more mortgages in favour of the
same mortgagee is, in absence of contract to the contrary, when the principal
money of any two or more of the mortgages has become due, entitled to redeem
any one of such mortgages separately, or any two or more of such mortgages
together.
..
MORTGAGES OF IMMOVABLE PROPERTY & CHARG ES 137
ABOLITION OF CONSOLIDATION - By consolidation of mortgages is

meant the mortgagee's power to compel the mortgagor to redeem together all
the securities in his hands, orto prevent the mortgagor from redeeming one o f
uch securities without redeeming the others. As such a consolidation may
cause considerable hardship to the mortgagor, section 61 abolishes it, by
providing that a mortgagor, who has executed several mortgages in favour of
the same mortgagee, may redeem one or more of such mortgages when they
become due, without redeeming the other mortgages.
If there are several mortgages between the parties, the mortgagor can
redeem separately or simultaneously, according to his convenience . The rule
contains no reference to the property which has been mortgaged , so that it will
not make any difference whether the different mortgages are on the same
property oron different properties oron different portians of the same property.
The doctrine of consolidation (which is not applicable in India) enables
the mortgagee of two different properties mortgaged by the same mortgagor
to consolidate those mortgages, and force him to redeem all of them, or to
prevent him from redeeming one of them without redeeming the other. Of
course, there could be no question of consolidation as regards any mortgage
where the time for redemption has not expired . The doctrine was supposed to
be based on the maxim : "He who seeks equity must do equity." However, in
practice, it led to inequitable results, and has, therefore, been abolished by S.
61 of the Transfer of Property Act.
The words "in the absence of a contract to the contrary" in S. 61 indicate
that the parties may allow consolidation by mutual consent. Such a provision ,
however, must be clear and explicit.
However, it. may be noted that, under Sec. 67 A, a mortgagee who holds
two or more mortgages executed by the same mortgagor is bound to sue on
all the mortgages in respect of which the mortgage-money has become due,
provided such mortgages entitle him to obtain the same kind of decree. Thus,
to a limited extent, consolidation of mortgages is necessary, though the doctrine
has been abolished so far as the right of the mortgagor to redeem the mortgage
is concerned.
6. Who can sue for redemption (S. 91)

The following three categories of persons can sue for redemption under
S. 91, viz-
(i) Any person (other than the mortgagee) having -
(a) any interest in, or
(b) charge upon,
the property mortgaged , or
- the right to redeem the same.
Persons falling under clause (i) fall into two groups, viz. -
(a) those having an interest in , or charge upon , the mortgaged property,
as for instance, puisne mortgagees who have a charge on the
mortgaged property; and
(b) those having a right to redeem the property, as for instance, the
purchaser of the equity of redemption .
(ii) Any surety for the payment of the mortgaged debt or any part thereof.
Under clause (ii), a surety of the mortgagor is also entitled to redeem.
This is In keeping with the principle of law that a creditor may recover the debt
either from the principal debtor or from the surety. If the debt is recovered from
the surety, the latter becomes entitled to all the securities which the cred itor
had in respect of the debt. Thus, a surety may choose to pay off the debt of the
mortgagee and subrogate himself to the position of a mortgagee.
What is (iii) Any creditor of the mortgagor who has, in a suit for the administration
redemption? Who
of his estate, obtained a decree for sale of the mortgaged property.
can redeem a
mortgage besides Clause (iii) is based on the English case, Christian v. Field (1842-2 Hare,
the mortgager? 177). A right to redeem is given to such a creditor of the deceased mortgagor,
M.U. Nov. 2013 so that he may get the benefit of his decree.
Nov. 2015
Dec.2016 7. Right of subrogation (S. 92)
May 2019
PERSONS ENTITLED TO BE SUBROGATED - Any of the persons
referred to in S. 91 above (other than the mortgagor) and any co-mortgagor,
MCQ Nos. 89, 90
have, on redeeming the property subject to the mortgage (so far as regards
redemption, foreclosure or sale of such property is concerned), the same rights
Write a note on : as the mortgagee whose mortgage he redeems may have against the mortgagor
Subrogation.
or any other mortgagee. (This is known as legal subrogation.)
M.U. Nov. 2007
Nov.2009 A person who has advanced to a mortgagor, money with which the
Nov. 2012 mortgage has been redeemed is subrogated to the rights of the mortgagee
whose mortgage has been redeemed, if the mortgagor has, by a registered
instrument, agreed that such person be so subrogated . (This is known as
What is conventional subrogation.)
subrogation?
(2 marks)
The right conferred by this section is called the right of subrogation, and
M.U. May 2019 a person acquiring the same is said to be subrogated to the rights of the
mortgagee whose mortgage he redeems.
The right of subrogation cannot be conferred unless the mortgage in
respect of which the right is claimed has been redeemed in full.
What is SUBROGATION - 0
Subrogation" is a Roman law term mean ing
'Subrogation'?
"substitution". It is the right of a person to stand in the place of a creditor. When
State properties
which cannot be a mortgagee transfers his mortgage-debt, his assignee becomes vested with
transferred. all his rights , i.e. , his assignee is substituted or subrogated in the place of the
M.U. May 2017 mortgagee. In order to be entitled to subrogation , a person must pay off the
entire amount of a prior mortgage, because subrogation takes place by

redemption, and unless there is redemption , there can be no subrogation .
S. 92 makes it very clear that the doctrine of subrogation cannot be invoked
unless the prior mortgage is discharged as a whole . The principle of this rule is
that there cannot be subrogation without redemption . Therefore , a partial
payment of the mortgage-debt cannot give rise to a claim for a partial
subrogation.
LEGALAND CONVENTIONAL SUBROGATION - Subrogation is of two
kinds : (1) legal, and (2) conventional. S. 92 covers both . Legal subrogation
takes place by operation of law, when the mortgage-debt is paid off by some
person who has some interest to protect, e.g., where a subsequent mortgagee
pays off a prior one.
Legal subrogation may occur in four ways:
(i) A subsequent mortgagee may redeem a prior mortgage.
(ii) A co-mortgagor may redeem a mortgage.
(iii) The mortgagor's surety may redeem the mortgage.
(iv) The purchaser of the equity of redemption may redeem the mortgage.
Conventional subrogation (also sometimes called subrogation by
agreement) takes place where the person paying off the mortgage-debt is a
stranger and has no interest to protect, but he advances the money under an
agreement, express or implied, that he would be subrogated to the rights and
remedies of the mortgagee who is paid off. (Gurudeo Singh v. Chandrika Singh,
(1 909) 36 Cal. 193). A provision for conventional subrogation is also made in
the section, and it requires the agreement of subrogation to be in writing and
registered .
BASIS OF THE DOCTRINE-The essence of the doctrine of subrogation
is that the party who pays off a mortgage gets clothed with all the rights of the
mortgagee. The doctrine is based on principles of justice, equity and good
conscience, and the Supreme Court has held that the doctrine would apply
even in those parts of India where the Act itself is not applicable. (Ganeshi Lal
v. Jyoti Pershad, A.I.R. 1953 S.C. 1)
DOCTRINE NOT APPLICABLE WHEN MORTGAGOR REDEEMS-The
doctrine of subrogation cannot be invoked if the mortgagor himself redeems .
The mortgagor who discharges a prior debt is not entitled to be subrogated to
the rights and remedies of his creditor. This is because , by discharging a prior
encumbrance created by his own self, he is merely discharging his own
obligation to his creditor. (Narain v. Narain , A.I.R. 1931 All . 40)
WHETHER BENEFIT TO MORTGAGOR OR MORTGAGEE
NECESSARY - The Madras High Court has held that when a subsequent
mortgagee redeems a prior. mortgage, no question arises as to whether the
payment is for the benefit of the mortgagor or the mortgagee. All that is
necessary for the application of S. 92 is to see whether the person claiming

the benefit of the section was a mortgagee at the time when he made tha
payment. (Nagayyarv. Govindayuyar, A.I.R. 1923 Mad . 349)
8. Right of redeeming co-mortgagor to claim expenses (S. 95)

Where one of several mortgagors redeems the mortgaged property, hel
is , in enforcing his right of subrogation under S. 92 against his co-mortgagors,
entitled to add to the mortgage- money recoverable from them , such proportion ,
of the expenses properly incurred in such redemption as is attributable to their•
share in the property.
9. Mortgagor's right to deposit money in Court (Ss. 83-84)

At any time after the principal money has become due and before a suit
for redemption is barred:
the mortgagor, or any other person entitled to sue for redemption
under S. 91, may deposit,
In any Court in which he might have instituted the suit for redemption,
to the account of the mortgagee,
the full amount remaining due on the mortgage.
The Court thereupon causes a written notice of the deposit to be served
on the mortgagee, who may, by a petition, state the amount then due on the
mortgage and his willingness to accept money in full discharge of such amount
He may, after depositing all documents in the Court, receive the money so
deposited. All the documents so deposited are to be delivered to the mortgagor.
Where, however, the mortgagee is in possession of the property, before
paying the amount so deposited, the Court must direct him -
(i) to deliver possession thereof to the mortgagor;
(ii) to transfer the property to the mortgagor or his nominee at the cost
of the mortgagor; or
(iii) to execute and (where the mortgage is effected by a regi stered
instrument) have registered an acknowledgment in writing , that any
right in derogation of the mortgagor's interest transferred to the
mortgagee has been extinguished .
When the mortgagor has tendered or deposited in Court the full amount
due on the mortgage, the interest ceases to run from the date of the tender; or
in the case of deposit where no previous tender of such amount has been
made, as soon as the mortgagor has done all that has to be done by him to
enable the mortgagee to take such amount out of the Court, and notice has
been served on the mortgagee.
However, if the mortgagor has deposited such amount, without having
made a previous tender thereof, and has subsequently withdrawn the same or
any part thereof, interest on the principal money is payable from the date of
such withdrawal.
Moreover, nothing in the above rules can deprive the mortgagee of his
right to interest when there is a contract that he would be entitled to a reasonable
notice before payment or tender of mortgage-money, and such notice has not
been given.
Service on, or tender to, agent (Ss. 102-103)

Where the person on whom or to whom any notice or tender is to be
served or made, does not reside in the district in which the mortgaged property
is situated, service on or tender to an agent would be deemed to be sufficient.
If such a person or agent cannot be found, the person making the tender may
deposit the amount in Court, and such deposit has the effect of a tender of
such amount.
Where the person making or accepting a notice or tender is incompetent
to contract, a legal curator or a guardian ad /item may be appointed for the
purpose.
II. RIGHT TO TRANSFER TO THIRD _PARTY INSTEAD OF

MCQ No. 91
RE-TRANSFERENCE TO THE MORTGAGOR (S. 60A)
Where a mortgagor is entitled to redemption, he may . require the
mortgagee, instead of re-transferring the property, to assign the mortgage-
debt and transfer the mortgaged property to such third person as the mortgagor
may direct; and the mortgagee is bound to assign and transfer accordingly.
The rights conferred by this section belong to and may be enforced by,
the mortgagor or by any encumbrancer, notwithstanding an intermediate
encumbrance. However, a requisition of any encumbrancer would prevail over
a requisition of the mortgagor, and, as between encumbrancers, the requisition
of a prior encumbrancer, prevails over that of a subsequent encumbrancer.
The above rules do not, however, apply in the case of a mortgagee who
is, or has been, in possession of the property.
A new provision is made in S. 60A, on the lines of S. 95 of the English
Law of Property Act, 1925, which enables the mortgagor to require the
mortgagee to assign the mortgage-debt to a person whom he nominates,
instead of having a re-transfer of the property, as provided in S. 60, to himself
or any other person as he may direct.
The distinction between these two rights of the mortgagor is to be carefully
noted. Under S. 60, the mortgagor pays off the money and gets back the property
free from the encumbrance, and he may accordingly ask the mortgagee to
reconvey the property to himself or any other person of his choice. Under this
section (that is, 60-A), the mortgagee is, of course, paid off, but he is required
to keep the mortgage alive, and transfer it to some person whom the mortgagor
142 THE TRAN.Sf ER OF PROPERTY ACT
nominates. The obligation thus imposed upon him Is absolute, and he is no

concerned with any arrangement that the mortgagor may have made with th
proposed assignee in regard to the question of paying him off. In this case , th
mortgage as such ls not extinguished, but it is assigned by the mortgagee t
another person .
This provision, it will be noticed is intended to help the mortgagor to Pa
off the mortgagee by raising a loan from another person on the same security,
A lot of trouble and expense would be saved by this method of assignment o
the mortgage Instead of first getting the reconveyance and then creating a
fresh mortgage in favour of the new creditor.
This right is exercisable not only by the mortgagor and any person cla iming
through him, but also by any puisne mortgagee. The requisition of a puisne
mortgagee will prevail over that of the mortgagor, and as betwee n the
mortgagees themselves, the requisition of a prior mortgagee will take
precedence over that of a subsequent one.
Exception : The benefit of this provision , is, however, not available where
the mortgagee is, or has been , in possession of the mortgaged property. The
reason is that such a mortgagee remains liable to account for the rents and
profits of the property even after the assignment of the mortgage. The request
of the mortgagor for an assignment, if allowed in such a case , would certainly
debar him from calling the mortgagee to account for the acts of the assignee;
yet, the liability might be enforced by subsequent encumbrances , unless they
have also agreed to the assignment. But for this exception , the mortgagee
may permit the mortgagor to make use of this mortgage as the first
encumbrancer to keep out the other creditors. The exception is, therefore,
enacted with a view to protect the interest of the subsequent encumbrancers
~
and persons interested in the equity of redemption.
' ..~~-·,:·s...
~F·a
- .
-
Ill. RIGHT TO INSPECTION AND
- PRODUCTION OF DOCUMENTS (S. 608)
As long as his right of redempUon subsists, a mortgagor is entitled, at all
reasonable times, at his request and at his own cost, to inspect and make
copies of (or extracts from) documents of title relating to the mortgaged property,
which are in the custody or power of the mortgagee.
IV. RIGHT TO ACCESSION (Ss. 63-64)

ACCESSION - Accession denotes physical accretion of add itions,
whether brought about by natural or artificial means.
The general rule is that an accession to the mortgaged property ensures
to the benefit of the mortgagee and his security (S. 70), and at the same time,
is subject to redemption (Ss. 63 and 64 ), no matter whether it is the mortgagor
or the mortgagee who makes the accession. But this general rule is subject to
modification in matters of detail. All natural accessions and those acquired by

the mortgagor go with the property and ultimately belong to the mortgagor; but
artificial accessions, if made by the mortgagee, sometimes belong to the
mortgagee and sometimes not, and S. 63 makes provision for adjustments of
the rights of the parties.
I Accessions I
I I
Natural Artificial
[e.g. , - an alluvion. [e.g., - erection of building .
See Illus. (a) to S. 70] See Illus. (b) to S. 70]
I
I I
Those acquired by Enlargement of interest
physical addition [e.g. - renewal of lease: (S. 64)]
[ Note : As regards a mortgagee's right to accession, see Ss. 70-71 below. ]

Thus, there are two kinds of accessions : (1) natural; and (2) artificial.
Artificial accessions may again be divided into two classes : (a) those which
are acquired by physical addition ; and (b) those which result from enlargement
of interest.
All natural accessions enure to the benefit of the mortgagor on redemption;
artificial accessions sometimes enure to the benefit of the mortgagor and
sometimes not. (See. S. 63, below.) When the mortgagor proposes to take the
accession, he must pay the cost thereof, except where the accession is
voluntary, and is not separately enjoyable. It should further be noted that section
63, as well as section 70 are subject to a contract between the parties. So, any
of the above provisions may be altered by agreement.
When the mortgagor is entitled to accession (S. 63)

(1) Where the mortgaged property is in the possession of the mortgagee,
and the mortgagee has, during the continuance of the mortgage,
received any accession , upon redemption, the mortgagor is,1in the
absence of a contract to the contrary, entitled , as against the
mortgagee, to such accession.
(2) When such accession is acquired at the expense of the mortgagee,
and is-
(a) capable of separate possession or enjoyment without detriment
to the principal property, the mortgagor desiring to take the
accession must pay to the mortgagee the expense of acquiring
it;
(b) not capable of separate possession or enjoyment, the accession ,

must be delivered with the property. In such a case, the mortgagor
is bound to pay the cost of the acquisition as an addition to the
principal money, with interest at the same rate as is payable on
the principal, or where no such rate is fixed , at the rate of 9 Per
cent per annum, provided that the accession was (I) necessary
to preserve the property from destruction or forfeiture , or (ii) the
accession has been made with the mortgagor's assent. The
profits, if any, arising from the accession are to be cred ited to
the mortgagor.
a
In the case of usufructuary mortgage, if the accession has been acquired
at the expense of the mortgagee, the profits arising from the accession are, in
the absence of a contract to the contrary, to be set off against any interest
payable on the money expended as the cost of acquisition.
Improvement to mortgaged property (S. 63A)

Where the mortgaged property in possession of the mortgagee has, during
the continuance of the mortgage, been improved, in the absence of a contract
to the contrary, upon redemption, the mortgagor is entitled to such improvement,
and he is not liable to pay the cost thereof. But, he is liable to pay proper costs,
in the absence of a contract to the contrary, if such improvement was effected
at the cost of the mortgagee, and (i) was necessary (a) to preserve the property
from destruction or deterioration; or(b) to prevent the security from becoming
insufficient; or (ii) was made in compliance with the lawful order of any public
servant or public authority.
In order to make this section applicable, three points should be noted:
(1) The mortgaged property should be in the possession of the
mortgagee.
(2) The improvements should have been affected during the continuance
of the mortgage.
(3) The improvements must have been effected at the cost of the
mortgagee.
The cardinal principle which is to be borne in mind is that "You cannot
improve a mortgagor out of his estate". The Court will never rega rd an
improvement as reasonable if it is one which will jeopardise the mortgagor's
right of redemption, as for instance, when the improvement puts the matter of
redemption beyond the mortgagor's means. The principles underlying cases
of accessions and improvements are very much the same, with this difference
that the latter do not admit of separate enjoyment, and therefore , the illustrations
relating to accessions may be referred to in connection with improvements
also.
Renewal of mortgaged lease (S. 64)

Where the mortgaged property is a lease, and the mortgagee obtains a
renewal of the lease, upon redemption , the mortgagee has the benefit of the
new lease, in the absence of a contract to the contrary.
However, if the lease is renewed by the mortgagor during the continuance
of the mortgage, the renewal will enure to the benefit of the mortgagee and his
security. This rule is contained in S. 71, which also provides that if the mortgaged
property is a renewable leasehold, the mortgagee may charge the mortgagor
with the cost of its renewal.
V. RIGHT TO GRANT A LEASE (Ss. 65 & 65A)

A mortgagor, while lawfully in possession of the mortgaged property, has
the power to make leases thereof which are binding on the mortgagee.
However, the above provision applies only if a contrary intention is not
expressed in the mortgage-deed.
S. 65A further provides that every such lease should satisfy the following
eight conditions:
(a) It should be such as would be made in the ordinary course of
management of the property concerned.
(b) It should be in accordance with any local law, custom or usage.
(c) It should reserve the best rent that can reasonably be obtained .
(d) No premium should be paid or promised .
(e) No rent should be payable in advance.
(f) The lease should take effect within six months from the date on which
it is made.
(g) It should not contain a covenant for renewal.
(h) In the case of buildings, the duration of the lease cannot exceed
three years. Further, such a lease must contain a covenant that if the
rent is not paid within a specified time, the lessor can re·-enter on his
property.
The above provisions may be varied or extended by the mortgage-deed :
S. 65A.
Vl RIGHT TO REASONABLE WASTE (S. 66)
A mortgagor in possession of the mortgaged property is not liable to the
mortgagee for allowing the property to deteriorate; but he must not commit any
act which is destructive or permanently injurious thereto, if the security is
insufficient or will be rendered insufficient by such act.
A security is deemed to be insufficient, unless the value of the mortgaged
property exceeds by one-third, or if consisting of buildings, exceeds by one-
half, the amount for the time being due on the mortgage.
Under th is section , the security will be sufficie nt if th e valu e of the

mortgaged property exceeds the mortgage-amount by one-third. Thus, if the
mortgage amount is ~ 12 lakhs, the value of the property should be at least~]
16 lakhs. But in the case of buildings, it should exceed , not by ~n~-thi ~d but by
one half. Thus, in the above illustration, if the security is a build ing , its Value)
should be at least ~ 18 lakhs.
LIABILITIES OF THE MORTGAGOR (S. 65) IMPLIED

CONTRACTS BY THE MORTGAGOR (S. 65)
There are five implied contracts which the mortgagor is deemed to enter
into with the mortgagee, in absence of a contract to the contrary.
1. Covenant for title [S. 65{a)]

The mortgagor is deemed to contract that the interest which he professes
to transfer to the mortgagee subsists and that the mortgagor has power to
transfer the same .
There is an implied warranty of title by the mortgagor in the property
mortgaged by him . If the title turns out to be defective, there is a breach of this
warranty, and the mortgagee can sue (i) 'for the principal money, as wel l as (ii)
for damages, even before the stipulated period .
2. Covenant for defence of title [S. 65( d)]

The mortgagor is also deemed to covenant that he will defend, or if the
mortgagee be in possession of the mortgaged property, enable him to defend,
the mortgagor's title to the property.
There is an implied covenant on the mortgagor's part to indem nify the
mortgagee against all expenses incurred in protecting his title. The mortgagor
is bound to defend, or enable the mortgagee to defend his (i.e., the mortgagor's)
title. This rule is based on the principle that the mortgagor is bound to keep the
mortgage security intact by guarding it against all invasion or intrusion .
MCQ No. 92 3. Covenant for payment of public charges [S. 65{c)]

The mortgagor is also deemed to contract that he will , so long as the
mortgagee is not in possession of the mortgaged property, pay all public charges
accruing due in respect of the property.
There is an implied contract on the mortgagor's part during the time of his
remaining in possession, to pay Government revenue and other public charges.
If a sale results from the breach of this implied contract, the mortgag ee may,
under section 68 , sue for the mortgage-money; and if there are an y surplus
sale-proceeds after such revenue sale , the mortgagee w ill have a charge on
them under section 73.
4. Covenant for payment of rent [S. 65(d)]
I Where the mortgaged property is a /ease, the mortgagor is deemed to

contract with the mortgagee that the rent payable under the lease, the conditions
on ined therein, and the contracts binding on the lessee, have been paid ,
p rformed and observed , down to the commencement of mortgage; and that
th mortgagor will pay the rent reserved by the lease (or, If the lease be renewed ,
the renewed lease), and perform the conditions contained therein, and observe
the contracts binding on the lessee, and indemnify the mortgagee against all
claims, sustained by reason of the non-payment of the said rent or the non-
performance or non-observance of the said conditions and contracts .
It may be noted that there is no covenant to renew the lease.
5. Covenant for payment of prior encumbrances [S. 65(e)]

Where the mortgage is a second or subsequent encumbrance on the
property, .the mortgagor is deemed to contract that he will pay the interest
accruing due on each prior encumbrance when it becomes due, and will, at
the proper time, discharge the principal money due on such prior encumbrance.
The above covenants run with the land. (S. 65)
The benefit of all the above contracts are annexed to, and go with the
interest of the mortgagee as such , and may be enforced by every person in
whom that interest is, for the whole or any part thereof, from time to time,
vested.
The benefit of these implied covenants passes or runs with the land; so,
a mortgagee's assignee is also entitled to the same. But, the burden of these
covenants is confined to the mortgagor alone, and does not pass to a purchaser
of the equity of redemption . Thus , where the mortgagor's vendee allows
Government revenue to fall in arrears and himself purchases the property at a
revenue sale, he (i.e., the purchaser) is not liable to the mortgagee whose
security has been extinguished. His position in this respect is different from
that of the mortgagor. The mortgagee, in such a case, can only look to the
surplus sale proceeds, if only. Therefore, he should be on the alert to prevent
revenue sales.
The covenants implied by S. 65 are subject to any contract to the contrary.
It has been held, for example, that such a contract may be presumed when the
mortgagee was fully aware of the nature and extent of the mortgagor's title.
RIGHTS OF THE MORTGAGEE (5s. 67-73 & 94)

1. Right of foreclosure or sale (S. 67)
At any time after the mortgage-money has become due and before
redemption or before the money has been paid or deposited in Court, the
4. Covenant for payment of rent [S. 65(d)]

Where the mortgaged property is a /ease, the mortgagor is deemed to
contract with the mortgagee that the rent payable under the lease, the conditions
contained therein , and the contracts binding on the lessee, have been paid ,
performed and observed , down to the commencement of mortgage; and that
the mortgagor will pay the rent reserved by the lease (or, if the lease be renewed ,
the renewed lease), and perform the conditions contained therein , and observe
the contracts binding on the lessee, and indemnify the mortgagee against all
claims, sustained by reason of the non-payment of the said rent or the non-
performance or non-observance of the said conditions and contracts .
It may be noted that there is no covenant to renew the lease .
5. Covenant for payment of prior encumbrances [S. 65(e)]

Where the mortgage is a second or subsequent encumbrance on the
property, the mortgagor is deemed to contract that he will pay the interest
accruing due on each prior encumbrance when it becomes due, and will, at
the proper time, discharge the principal money due on such prior encumbrance.
The above covenants run with the land. (S. 65)
The benefit of all the above contracts are annexed to, and go with the
interest of the mortgagee as such, and may be enforced by every person in
whom that interest is, for the whole or any part thereof, from time to time,
vested.
The benefit of these implied covenants passes or runs with the land; so,
a mortgagee's assignee is also entitled to the same . But, the burden of these
covenants is confined to the mortgagor alone, and does not pass to a purchaser
of the equity of redemption. Thus, where the mortgagor's vendee allows
Government revenue to fall in arrears and himself purchases the property at a
revenue sale, he (i.e., the purchaser) is not liable to the mortgagee whose
security has been extinguished. His position in this respect is different from
that of the mortgagor. The mortgagee, in such a case, can only look to the
surplus sale proceeds, if only. Therefore, he should be on the alert to prevent
revenue sales.
The covenants implied by S. 65 are subject to any contract to the contrary.
It has been held, for example, that such a contract may be presumed when the
mortgagee was fully aware of the nature and extent of the mortgagor's title.
RIGHTS OF THE MORTGAGEE (Ss. 67-73 & 94)

1. Right of foreclosure or sale (S. 67)
At any time after the mortgage-money has become due and before
redemption or before the money has been paid or deposited in Court, the
mortgagee has the right to obtain from the Court a decree for foreclosure
the mortgage or for sale of the property.
State any two
A suit to obtain a decree that a mortgagor shall be absolutely debarred,
rights of a mort-
gagee. his right to redeem the mortgaged property is called a "suit for foreclosure"
(2 marks) RIGHT TO FORECLOSURE-As the mortgagor has the right to redeem
M.U. Apr. 2013 a corresponding right is given to the mortgagee, known as the right l
foreclosure. This right implies that when the time fixed for repayment of th
Define Right of mortgage-money has expired, and the mortgagor's right to redeem has becorn
Foreclosure.
complete, and he has failed to avail himself thereof, the mortgagee has th~
(2 marks)
M.U. May 2017
right to institute a suit for a decree that the mortgagor be absolutely debarre
of ~is right to redeem the property.
Write a short note The general principle as to redemption and foreclosure is that in tht
on : Foreclosure. absence of any stipulation, express or implied, to the contrary, the right ta
M.U. Dec. 2016 redeem and the right to foreclose are co-extensive, and that where there is -
stipulation to pay a mortgage-debt within say, ten years, the mortgagor canno
redeem at an earlier date.
It may be noted that the right of redemption cannot be modified b)
agreement between the parties, but such is not the case with the rig ht o
foreclosure.
Who cannot foreclose or sell (S. 67. els. (a), (b), (c) & (d)]
(i) A simple mortgagee cannot foreclose.
(ii) A usufructuary mortgagee cannot foreclose or sell.
(iii) A mortgagee by conditional sale cannot sell.
(iv) A mortgagee's trustee or legal representative happening to be "
mortgagor and possessing the power of sale cannot foreclose.
(v) A mortgagee of works of public utility cannot foreclose or sell.
(vi) An English mortgagee cannot foreclose. (vii) A person interested in
part only of the mortgage-money cannot institute a suit relating to di
corresponding part of the mortgaged property, unless the mortgagees
have, with the consent of the mortgagor, severed their interests under
the mortgage.
A fractional mortgagee cannot sever his interest, and sue alone for the
corresponding part of the mortgaged property without the consent of the1
mortgagor and the other mortgagees. A similar correlative restriction foll ows
as a corollary from the rule that every mortgage is indivisible.
"OPENING THE FORECLOSURE" - Under the English Law, every
mortgage contains within itself a personal liability to repay the amount advanced.
The mortgagor's liability to repay the mortgage-money and the mortgagee's
obligation to reconvey the mortgaged property are reciprocal. Consequently,
after foreclosing, a mortgagee cannot sue on the personal covenant, unless
he still retains the mortgaged property in his hands. If a mortgagee sues on the
personal covenant after foreclosing, he cannot require the mortgagor to repay
his loan or the balance thereof, unless he is himself ready and willing to
surrender the security; he, by taking an action on the personal liability of the
mortgagor, gives him a renewed right to redeem the property. This is known as
·opening the foreclosure." In India, there is nothing like "opening the foreclosure ".
DIFFERENCE BETWEEN FORECLOSURE AND SALE

1. Foreclosure is allowed only in the case of a mortgage by conditional
sale and an anomalous mortgage, if under its terms, the mortgagee is entitled
to foreclose. A suit for sale can be brought in the case of a simple mortgage,
an equitable mortgage, an English mortgage (in which the mortgagor makes a
personaJ covenant to pay the mortgage-money on a certain date) and an
anomalous mortgage, if a power of sale is expressly given or can be implied
from the terms of the mortgage.
2. Foreclosure is possible only by a suit. Sale is possible either out of
Court or by a suit.
3. Foreclosure absolutely discharges the mortgage-debt. The mortgagee
cannot, thereafter, proceed against the mortgagor on the personal covenant.
In the case of sale, the mortgagee can recover the balance amount if the sale-
proceeds are not sufficient to satisfy the mortgage-debt.
2. Right to sue for mortgage-money (S. 68)

The mortgagee has a right to sue for the mortgage-money in the following
four cases, and in no others, viz. -
1. Where the mortgagor binds himself to repay the same. However, a
transferee from the mortgagor or from his legal representative, is not liable to
be sued for the mortgage-money.
2. Where, by any cause other than the wrongful act or default of the
mortgagor or mortgagee, the mortgaged property is wholly or partially destroyed
or the security is rendered insufficient, and the mortgagee has given the
mortgagor a reasonable opportunity of providing further security, enough to
render the whole security sufficient, and the mortgagor has failed to do so.
(This clause covers cases where the security may be destroyed by accidental
causes, such as fire or flood or any vis major, without the fault of either party.)
It is to be noted that when a suit is brought under the above two clauses,
the Court may, at its discretion, stay the suit and all proceedings therein ,
notwithstanding any contract to the contrary, until the mortgagee has exhausted
all his available remedies against the mortgaged property or what remains of
it, unless the mortgagee abandons his security, and , if necessary, re-transfers
the mortgaged property to the mortgagor.
150
3 - Where the mortgagee is deprived of the whole or part o-f his security;
by, or in consequence of I the wrongful act or default of the mortgagor.
Example : A executes a usufructuary mortgage of his house In favour o
B, but rem ains In possession as B 's tenant. Failure on the part of A to pay th
rent does not entitle B to sue under Section 68 .
4. Where the mortg agee is entitled to possession of the mortgage I
property and the mortgagor fail s to deliver the same to him, or to secure the
possession thereof to him without disturbance by the mortgagor or any person I
claiming under a title superior to that the mortgagor.
Fateh Din v. Kishen Lal (73 I.C. 902) : A made a usufructuary mortgage
of 10 plots of land to B. Two of these did not belong to A, and therefore , B was
unable to obtain possession of them . The Court held that B was entitled to sue
for the mortgage-money.
PERSONAL LLABILITY TO PAY - Personal liability is an essential
ingredient of (i) a simple mortgage, (ii) an English mortgage, and (iii) a mortgage
by deposit of title-deeds. (Nityanand v. Rajpur Chhaya Cinema Ltd., 1953 AC.
208) In these cases, the mortgagor "binds himself' to repay the mortgage-
money. The personal obligation to repay may be express or implied. Personal
liability is not an essential ingredient of any other mortgage described in S. 58;
here, the personal liability can be created only by a covenant expressed or
clearly implied.
3. Right to sell without the intervention of Court (S. 69)

JC.plain the mort- A mortgagee (or any person claiming on his behalf) has the power to sell,
,gee's power to
or concur in selling, the mortgaged property (or any part thereof) in default of
c!ll the mortgaged
property without payment of the mortgage-money without the intervention of the Court in the
the intervention of following three cases, - and in no others, - namely :
the court.
1. Where the mortgage is an English mortgage, and neither the mortgagor
M.U. Apr. 2010
nor the mortgagee is a (i) Hindu , (ii) Muhammedan , or (iii) Buddh ist, or (iv) a
member of any other race, sect, tribe or class from time to time specified by
the State Government in the Official Gazette.
2. Where the Government is the mortgagee, and a power of sale without
the intervention of Court is expressly conferred by the mongage-deed .
3. Where the mortgaged property is situated in Kolkata, Chennai or
Mumbai, or any other Gazetted town or area, provided that the power of sale
without the intervention of Court is expressly conferred by the mortgage-deed.
However, this power can be exercised only -
(i) When the principal money (or part thereof) has remained unpaid for
three months after service of notice in writing requiring paym ent on
the mortgagor or one of several mortgagors; or
(ii) When interest not less than~ 500 in amount is in arrears and remains
unpaid for 3 months.
MORTGAGES OF IMMOVABLE PROPERTY & CHARG ES 151
Any one of the above two conditions will justify a private sale. Of course,
8 notice of demand cannot be given before the due date.
If the mortgage•money is payable by installments, the power of sale is
exercisable when any instalment has become due. (Payne v. Cardiff Rural
'ouncil, (1932) K.B. 241)
It has been held by the Bombay High Court that the power of sale cannot
be exercised when Interest alone is due unless the principal money is al so
due. (Baba Miya Mohiddin Shakkarv. Jehangir Dinshaw Belgaumwa/a, 43 Born.
L. R.)
Effect of sale under this power: The effect of such a sale is to destroy
the equity of redemption and to transfer an absolute estate to the purchaser.
WHO MAY PURCHASE AT SUCH SALE-The mortgagee himself cannot
b.UYthe property directly or through an agent, for a man cannot sell to himself.
Thus, a sale by a building society to its secretary is void, and does not prevent
the mortgagor from redeeming the mortgage, unless he has assented to such
a purchase.
Remedy for improper exercise of the power of sale [(S. 69(3)1
When a sale has been made in the professed exercise of such a power,
the title of the purchaser is not impeachable on the ground that no case had
arisen to authorise the sale, orthat due notice was not given , orthat the power
was otherwise improperly or irregularly exercised, but any one put to any loss
by an unauthorised or improper or irregular exercise of the power, has a remedy
in damages against the person exercising the power.
Sale proceeds how to be disposed of [S. 69A(4)]
The proceeds of the sale have first to be applied in discharging any prior
encumbrances subject to which the sale is made, in paying the amount due in
respect thereof into Court under Sec. 57.
As regards the balance, the mortgagee is constituted a trustee for three
purposes : (1) for the payment of the costs of sale; (2) for the payment of the
mortgage-money, including costs due in respect of the mortgage, under which
the sale is made; and (3) for the payment of the surplus to the person entitled
to the mort.gaged property, i.e., the subsequent encumbrances, and ultimately
the mortgagor.
4. Right to appointment of a receiver (S. 69A)

A mortgagee having the right to exercise a power of sale without the
intervention of Court (under S. 69) is entitled to appoint, by writing signed by
him or on his behalf, a receiver of the income of the mortgaged property.
Appointment how made [S. 69A(2)]

Any person named in the mortgage-deed, and willing and able to act as a
receiver may be appointed as receiver. If a fresh appointment is to be made, it
1S2 THE TRANSFER OF PROPERTY ACT
must be with the consent of the mortgagor, and on failing to obtain such consent
the mortgagee is entitled to apply to the Court for appointment of a receiver
and any person appointed by the Court is to be deemed to have been dul
appointed by the mortgagee.
Removal of the receiver [S. 69A(2)]

A receiver can be removed : (i) by a writing signed by the parties; or (ii) by1
the Court, on the motion of either party.
Position of the receiver [S. 69A(3)]

The receiver will be regarded as an agent of the mortgagor, who is
responsible for his acts or defaults - provided that such acts or defaults are
not due to the improper intervention of the mortgagee and the mortgage-deed
does not provide otherwise.
His powers [S. 69A(4)(5)]

The receiver has the power to demand and recover all the income of
which he is appointed receiver, and give valid receipts for the same, and to .
exercise any powers which may have been delegated to him by the mortgagee.
Even when the appointment of the receiver is invalid, a payment to him will I
exonerate the person paying from liability.
His remuneration [S. 69A(6)]

The receiver will be remunerated at a rate not exceeding 5 per cent as is
specified in his appointment, and if no rate is fixed, at 5 per cent on his gross
collections. It is, however, open to the Court to allow him a different rate.
His duty to insure [S. 69A(7)]

On a written requisition from the mortgagee, the receiver is bound to
insure the property.
Money in his hands, how applied [S. 69A(8)]

The money in the receiver's hands should be applied as follows:
(i) in discharge of all rents, taxes, land revenue and outgoings whatever,
affecting the property;
(ii) in payment of all annual sums and interest on all principal sums,
having priority to the mortgage;
(iii) in payment of his commission and of the premium on insurance
properly payable, and the cost of executing proper repa irs ;
(iv) in payment of the interest falling due under the mortgage; and
MCQ No. 93 (v) in discharge of the principal money, if so directed in writing by the
mortgagee.
The residue, if any, is to be paid to any person otherwise entitled to the
mortgaged property.
s. Right to accession (S. 70)

lf, after the date of a mortgage , any accession is made to the mortgaged
oroperty, the mortgagee, in the absence of a contract to th e contrary, is for the
purposes of the security, entitled to such accession .
mustrations
(a) A mortgages to B a certain field bordering on a river. The fi eld is
increased by alluvion. For the purpose of his security, Bis entitled to
the increase.
(b) A mortgages a certain plot of building land to B, and afterwards erects
a house on the plot. For the purpose of his security, B is entitled to
the house as well as the plot.
problems
1. M mortgages his plot of land in Chembur to N. Afterwards , M raises a
skyscraper on the same plot. Is N entitled to the skyscraper for the purposes
of his security?
Ans. : As a mortgagee is entitled to all accessories for the purpose of his
security under S. 70, in this case, N would be entitled to the skyscraper also ,
as far as his security is concerned.
2. S mortgages to Ca field on the river Koyna . The field is increased by
alluvion. Is C entitled to the increase for the purpose of his security?
Ans.: For the reason given above, yes.
6. Right to renewal of mortgaged lease (S. 71)

When the mortgaged property is a /ease for a term of years and the
mortgagor obtains a renewal of the lease, the mortgagee, in the absence of a
contract to the contrary, is, for the purposes of the security, entitled to the new
I
lease.
I The section is based on the principle of Rakestraw v. Brewer (1729 2
P.Wms. 511), llthat the new lease is treated as engrafted on the stock of the
old lease and forming part of the mortgage security'.
7. Right to spend money (S. 72)

A mortgagee may spend such money for the following purposes as is
necessary, and may, in the absence of a contract to the contrary, add the
amount so spent to the mortgage-debt with interest at the stipulated rate or at
9 per cent per annum -
(1) for the preservation of the mortgaged property from destruction,
forfeiture or sale;
(2) for supporting the mortgagor's title to the property;
(3) for making his own title thereto good against the mortgagor; and
(4) for renewal of the leasehold mortgaged to him , where property is a

renewable leasehold.
Charges for insurance of the mortgaged property (S. 72)

Where the property is by its nature insurable (e.g. being liable to destruction
by fire, etc.), the mortgagee may insure it for an amount not exceeding the
amount specified in this behalf in the mortgage-deed, or if no amount is
specified, two-thirds of the money required to reinstate the property in case of
total destruction, and he may add the insurance premia to his principal amount
with interest at the same rate as is payable on the principal money, or where
no such rate is fixed, at the rate of 9 per cent per annum. But the mortgagee is
not entitled to insure where the mortgagor has insured for the specified amount
and keeps up the insurance.
8. Rights to proceeds of revenue sale or compensation on

acquisition (S. 73)
1. Where the mortgaged property is sold owing to failure to pay arrears
~f revenue or public charges or rent due in respect of such property, and such
failure did not arise from any default of the mortgagee, the mortgagee is entitled
to claim payment of the mortgage-money out of any surplus of the sale proceeds
remaini_ng after payment of the arrears, charges, deductions, etc.
2. Where the mortgaged property is acquired under the Land Acq uisition
Act, 1894, or any other like enactment, the mortgagee is entitled to claim
payment of the mortgage-money, out of the amount due to the mortgagor as a
compensation. Such claims prevail against all other claims, except those of
prior encumbrances, and may be enforced, notwithstanding that the principal
money on the mortgage has not become due.
SUBSTITUTED SECURITY - Section 73 enunciates the doctrine of
substituted security. By virtue of this doctrine, the rights and interests of the
mortgagee in the mortgaged property attach to the property or to the
compensation which may replace the mortgaged property.
If the mortgage contains a personal covenant, the substitution of security
would not affect the mortgagee's remedy on that covenant.
9. Right of mesne mortgagees {S. 94)

Where a property is mortgaged for successive debts to successive
mortgagees, a mesne mortgagee has the same rights against mortg agees
posterior to himself as he has against the mortgagor.
A mortgage-debt being on immovable property, the mortgagee can assign
his interest in the mortgaged property. A mortgage by the mortgagee of his
interest under the original mortgage is called a sub-mortgage. A sub-mortgagee
is entitled to a decree for sale of the mortgage rights of his mortgagor. A puisne
- ------------ -
,norlgage arises where A mortgages his property to B by a legal mortgage and

t en mortgages it again to C either by an equitable mortgage or by creating a
charge on the same property.
"REDEEM U P, FORECLOSE DOWN" - The ri ghts of a mesne (also
called 'puisne') mortgagee are well summed up in the maxim , 'Redeem up ,
foreclose down '. This maxim means that a mesne mortgagee has, as far as
the redemption, foreclosure and sale of the mortgaged property are concerned ,
the same rig hts against him or them, and the same rights against subsequent
mortgagees, as he has against th e mortgagor. In other word s, a mesne or
ubsequent mortgagee can redeem any prior mortgage just as much as his
own mortgagor. And he can exercise the same rights of foreclosure and sale
against any subsequent mortgagee as he may do against his mortgagor.
Accordingly, where there are several mortgagees of the same property, the
later can always redeem the earlier, but the earlier cannot redeem the later,
except by consent. (Chimna v. Venkat, (1917) 40 Mad . 77).
Maxim illustrated-A mortgages his property first to B, then to C, then to
o and then to E. C, as assignee of part of the equ ity of redemption of A, has
the right to redeem B. Similarly O can redeem B, or C, or both . For the same
reason, E can redeem any or all of the three prior mortgages. But neither C nor
o nor E can foreclose any prior mortgage . On the other hand , B can foreclose
all or any of C, D and E. Similarly, C can foreclose Dor E or both , and D can
foreclose E. E can only foreclose A, the mortgagor. He has none else to
foreclose because there is no mortgagor subsequent to his own. The right to
Qredeem up" is given by S. 91 (a) , and the right to 'foreclose down ' by S. 94 .
Where , however, the third mortgagee , in ignorance of the second
mortgagee, pays off the first mortgagee, in the absence of fra ud, he acquires
all the rights of the mortgagee, which he can use as shield against the second
mortgagee seeking to enforce his mortgage. The principle has been laid down
in S. 92.
Under S. 91 (a), any person having an interest in the equity of redemption
may redeem. Where a property is mortgaged for successive debts to successive
mortgagees , all the mortgagees are not on the same footing . They are
assignees of a part of the equity of redemption only. A puisne mortgagee,
l.
being an assignee of the equity of redemption , is entitled to redeem a prior
mortgagee. Thus, suppose A mortgages his property first to B, then to C, and
then to 0 . Here, C is the assignee of part of the equity of redemption of A
against B; therefore C can redeem B. On the same ground , 0 can redeem C
or B or both . This is what is meant by "redeem up".
S. 94 gives a prior mortgagee same rights against mortgagees subsequent
to himself as he has against the mortgagor, i.e., he may foreclose a puisne
mortgagee. Thus, in the above illustration , B can foreclose (or bring to sale) A.
B can foreclose (or bring to sale) C or O or both. This is what is meant by
"foreclose down".
.1S6 THE TRANSFER OF PROPERTY ACT
LIABILITIES OF THE MORTGAGEE

(Ss. 67 A & 76-77)
1• Mortgagee to bring one suit on several mortgages (S. 67 A)
A mortgagee who holds two or more mortgages executed by th e samp
mortgagor, in respect of each of which he has a right to obtain th e same klnr
of decree under section 67 and who sues to obtain such decree on any one ot
1
the mortgages, is, in the ab sence of a contract to the contrary, bound to sue on
a// the mortgages in respect of which the mortgage-money has become due.
MORTGAGEE WHEN BOUND TO BRING ONE SUIT ON SEVERAL
MORTGAGES - Under S. 61, a mortgagor who has executed two or more
mortgages in favour of the same mortgagee is entitled to redeem each mortgage
separately. But, if the mortgagee holds two or more mortgages of the sarne
property or of different properties from the same mortgagor, he must enforce
all or none, in the absence of a contract to the contrary (S. 67 A).
In other words, although "consolidation " is abolished by S. 61 , so far as
the mortgagor is concerned , it is applied to the mortgagee under S. 67A, Where
he has a right to the same kind of relief in respect of each of the mortgages I
and sues to obtain it onJy on one of them. In such a case, the section lays down
that he must bring one suit to enforce all the mortgages.
This provision is, however, subject to a contract to the contrary that may
be made between the mortgagor and the mortgagee. Accordingly, the mortgagor
may agree that in spite of the rule of consolidation, he may enforce any one or
more of the mortgages at one time according to his own choice. Such a covenant
will be binding upon the mortgagor and all other persons entitled to redeem
under S. 91.
2. Liabilities of the mortgagee in possession {Ss. 76-77)

When , during the continuance of the mortgage, the mortgagee takes
possession of the mortgaged property, he is bound -
( 1) to manage the property as a person of ordinary prudence would
What are the
liabilities of a manage it if it were his own;
mortgagee in (2) to use his best endeavours to collect the rents and profits thereof,·
possession?
M.U. Apr. 2010
(3) in the absence of a contract to the contrary, to pay Government
revenue and other charges of a public nature and all rent, out of the
income of the property;
(4) in the absence of contract to the contrary, to make such necessary
repairs as the income of the property permits;
(5) not to commit any act which is destructive or permanently injurious
to the property;
(6) where he has insured the whole or any part of the property against
MORTGAGES OF IMMOVABLE PROPERTY & CI-IARGES 157
loss or damage by fire , in case of such loss or damage , to reinstate

the insured property with the money obtained from the insurance
policy or to discharge the mortgage-debt with it if the mortgagor so
directs;
(7) to keep clear, full and accurate accounts of all sums received and
spent by him as mortgagee, and give them to the mortgagor when
asked for;
(8) to debit receipts from the mortgaged property, or where such property
is personally occupied by him , a fair occupation rent thereof (after
deducting the expenses of management, the collection charges,
revenues and costs of repairs) first against the intere st on the
mortgage-money and then against the principal;
(9) to account for the receipts from the property, when the mortgagor
tenders and deposits the due amount.
But where there is a contract between the mortgagor and the mortgagee
that, so long as the mortgagee is in possession of the property, the receipts
from the mortgaged property are to be taken in lieu of interest on the principal
money (or partly in lieu of interest and partly in lieu of defined portions of the
principal), the question of paying receipts from the property to the mortgagor
does not arise.
LIABILITIES OF MORTGAGEE FOR LOSS OCCASIONED BY HIS
DEFAULT- If the mortgagee fails to perform any of the duties imposed upon
him by this section, he may, when accounts are taken, be debited with the loss
(if any) occasioned by such failure .
LAW AS TO PRIORITY OF SECURITIES

(Ss. 78-79 & 93)
Where, through the fraud, misrepresentation, or gross neglect of a prior
I
•
mortgagee, another person has been induced to advance money on the security
of the mortgaged property, the prior mortgagee is to be postponed to the
subsequent mortgagee (S. 78)
QUI PRIOR EST TEMPORE, POT/OR EST JURE - The rule as to priority
of mortgages is stated in the equitable maxim qui prior est tempore, potior est
jure, enunciated in S. 48 (He who is first in time is first in law.) S. 78 is an
exception to the above principle. It lays down that the prior legal estate would
be postponed to a subsequent estate where the owner of the legal estate had
I
assisted in, or connived at, the fraud which led to the creation of a subsequent
equitable estate without notice of the prior legal estate.
I The mortgagee who is first in time has priority over a subsequent

mortgagee of the same property (S. 48). But the following are two exceptions
to this general rule:
•
158
1. The prior mortgagee loses his priority by (i) fraud, (ii) misrepresenta
tion or (ii) gross negligence. (S. 78.)
2. Where A mortgages his property to B to secure a present advance
as well as future advances upto a fixed maximum , then any further\
advance made by him (B) within that maximum , will be treated as
part of the first mortgage to C, provided C had notice of B's mortgage,
(S. 79)
Problem : A deposited the title-deeds of his property with Bank N to
secure an overdraft. A then asked for return of deeds saying that he wish ed to
sell the property and clear the overdraft. The usual practice was for the
prospective purchaser to inspect the title-deeds in the office of the mortgagee's
solicitors. But, A said that he would not get a good price if the purchaser came
to know that the Bank had the deeds; and the Bank Manager retu rned the
deeds to A. A then borrowed money from Bank L on the deposit of the same
deeds, falsely representing that there was no encumbrance. As between Bank
N and L who has the priority?
Ans. : To permit a mortgagor to have possession of the title-deeds is to
put him in a position where he can raise money on a mortgage of that property,
by representing that no mortgage thereof by way of deposit of title-deeds has
been effected . Bank N Is guilty of gross and wilful negligence in surrendering
the title-deeds to A. Therefore, the mortgage to Bank L has priority over the
mortgage to Bank N. (Lloyds Bank Ltd. v. P.E. Guzdar and Co. , 56 Cal. 686)
TACKING (5s. 79 & 93)

WHAT IS TACKING - Under English law, where there are three
mortgagees over the same property, of whom the first only has the lega l estate
and the third mortgagee has taken his security without notice of the second
mortgage, such third mortgagee can acquire a preference over the second
mortgagee, by redeeming the first mortgage and taking delivery of his legal
estate. This is so because, by redeeming the first mortgage, the third mortgagee
gets an equal equity, and by taking the legal estate as well, he acq uires a
priority on the strength of the maxim "Where the equities are equa l, the law
shall prevail". In other words, a third mortgagee, by acquiring the rights of the
first legal mortgagee, can tack his security to the prior security and insist on
his security being first paid off. Thus, he can unite the two mortgagees, and
thereby 'squeeze out' the intermediate mortgagee. This principle is commonly
known as tacking.
In India, where law and equity are not separately administered , the doctrine
of tacking cannot apply, and the mortgagees rank according to their priority. S.
93 abolishes tacking, by laying down that a mortgagee, by paying off an earlier
mortgage, does not acquire any priority in respect of his original security over
an intermediate mortgagee. The different mortgages rank only according to
their priority in time.
______,,
Prohibition of tacking (S . 93)

Under S. 93, no mortgagee can , by paying off a prior mortgage (whether
with or without notice of ara intermediate mortgage), thereby acquire any priority
in respect of his original security; and, except in the case provided for by section
79 (below), no mortgagee, making a subsequent advance to the mortgagor
(whether with or without notice of an intermediate mortgage) can thereby acquire
any priority in respect of his security for such subsequent advance.
Tacking when allowed, and to what extent (S. 79)

The prohibition against tacking of subsequent advances adm its of one
exception which is provided for in S. 79 , which can be analysed as follows:
If a mortgage, made to secure - (i) future advances ;
(ii) the performance of an engage-
ment, or
(iii) the balance of a running account,
expresses the maximum to be secured thereby,
a subsequent mortgage of the same property if made with notice of
the prior mortgage, is to be postponed to the prior mortgage
in respect of all advances or debits not exceeding the maximum,
though made or allowed with notice of the subsequent mortgage.
Illustration : A mortgages Sultanpur to his bankers, B & Co., to secure
the balance of his account with them to the extent of~ 10,000. A then mortgages
Sultanpur to C, to secure ~ 10,000, C having notice of the mortgage to B &
Co., and C gives notice to B & Co., of the second mortgage. At the date of the
second mortgage, the balance due to B & Co., does not exceed~ 5,000. B &
Co. subsequently advance to A, sums making the balance of the account against
him exceed the sum of~ 10,000. B & Co. are entitled to the extent of~ 10,000,
priority over C.
It will be seen that two points must be ascertained in such a case: (1)
whether first mortgage fixes the maximum amount to be secured by it, and (2)
whether the subsequent mortgagee had notice of the first mortgage.
Now, it is not difficult to prove notice where the first mortgage is registered,
even if the subsequent mortgagee had no direct notice under S. 3 of the Act. It
is only where the first mortgage is effected otherwise than by a registered
instrument, as where the amount secured is less than t 100, or the mortgage
is effected by deposit of title-deeds, that the question of notice will present
some difficulty. However, it may be observed that a mortgage made to secure
less than t 100 is hardly a practical possibility, and even if it is, it will rarely be
of a type in which future advances may have to be made. In the case of an
equitable mortgage , the title-deeds will remain with the ~ortgage~, and
therefore, if the second mortgagee advances the money without asking for
Prohibition of tacking (S. 93)

Under S. 931 no mortgagee can, by paying off a prior mortgage (whether
with or without notice of aQ intermediate mortgage), thereby acquire any priority
in respect of his original security; and , except in the case provided for by section
79 (below)., no mortgagee, making a subsequ ent advance to the mortgagor
(whether with or without notice of an intermediate mortgage) can thereby acquire
any priority in respect of his security for such subsequent advance.
Tacking when allowed, and to what extent (S . 79)

The prohibition against tacking of subsequent advances admits of one
exception which is provided for in S. 79, which can be analysed as follows:
If a mortgage, made to secure - (i) future advances;
(ii) the performance of an engage-
ment, or
(iii) the balance of a running account,
expresses the maximum to be secured thereby,
a subsequent mortgage of the same property if made with notice of
the prior mortgage, is to be postponed to the prior mortgage
in respect of all advances or debits 'no( exceeding the maximum,
though made or allowed with notice of the subsequent mortgage.
Illustration : A mortgages Sultanpur to his bankers, B & Co., to secure
the balance-of his account with them to the extent oft 10~000. A then mortgages
Sultanpur to C, to secure t 10,000, C having notice of the mortgage to B &
Co. , and C gives notice to B & Co., of the second mortgage. At the date of the
second mortgage, the balance due to B & Co., does not exceed ( 5,000. B &
Co. subsequently advance to A, sums making the balance of the account against
him exceed the sum off 10,000. B & Co._are erititled to the extent of { 10,000,
priority over C.
It will be seen that two points must be ascertained in such a case: (1)
whether first mortgage fixes the maximum amount to be secured by it, and (2)
whether the subsequent mortgagee had notice of the first mortgage.
Now, it is not difficult to prove notice where the first mortgage is registered ,
even if the subsequent mortgagee had no direct notice under S. 3 of the Act. It
is only where the first mortgage is effected otherwise than by a registered
instrument, as where the amount secured is less than~ 100, or the mortgage
is effected by deposit of title-deeds, that the question of notice will present
some difficulty. However, it may be observed that a mortgage made to secure
less than ~ 100 is hardly a practical possibility, and even if it is, it will rarely be
of a type in which future advances may have to be made. In the case of an
equitable mortgage, the title-deeds wi ll remain with the mortgagee , and
therefore, if the second mortgagee advances the money without asking for
160
T~tE TRANSFER OF PROPERTY ACT
th
e~,,. he will be doing so at his own risk , and he will be affected with constructiv
notice of the equitable mortgage.
DISTINCTION BETWEEN
CONSOLIDATION TACKING
1. Nature of right -
In consolidation , the right is to throw In tacking, the right is to throw
together ~n one estate, several debts together several debts lent on the
lent on different estates, and to do same estate, and to do so under the
so without reference to any priority priority and protection afforded by the
or protection afforded by the legal legal estate under the maxim ;
estate, but solely upon the equitable "Where there is equal equity, the law
maxim "He who seeks equity, must shall prevail. "
do equity."
2. Whether possession of legal estate necessary?

No. I Yes.
3. Notice -
Notice at the time of lending money Such notice is fatal to any
on the second estate is wholly subsequent right of tacking.
immaterial as regards the rights of
consolidation .
MARSHALLING AND CONTRIBUTION (Ss. 81-82)

MARSHALLING SECURITIES (S. 81)
'
Doctrine explained (S. 81)
If the owner of two (or more) properties mortgages them to one person,
and then mortgages one (or more) of the properties to another person,
the subsequent mortgagee is, in the absence of a contract to the
contrary, entitled to have the prior mortgage-debt satisfied out of the
properties not mortgaged to him, so far as such property will extend
but not so as to prejudice the rights of the (i) prior mortgagee, or (ii)
of any other person who has, for consideration, acquired an interest
in any of the properties.
Write a short note MARSHALLING OF SECURITIES - It is the right of a puisne (i.e.
on : Marshalling of subsequent) mortgagee to demand of a prior mortgagee that he should satisfy
Securities.
his debt first out of the property not mortgaged to the former. A rig ht of
M.U. Apr. 2016
Dec. 2016
marshalling is conferred on a subsequent purchaser by S. 56, and S. 81 confers
a similar right on puisne mortgagees.
The right arises when the owner of two or more properties mortgages
them to one person and then mortgages one or more of them to another person.
MORTGAGES
OF IMMOVABLE PROPERTY & CHARGES 16i
11,0 subsequent mortgag .

Write a short note
to i,ave the prior mortga ee is entitled , unless there is a contract to the contrary, on : Prtnciple of
rtgaged to him, so fa Qe-debt satisfied out o·f the property or properties not Marshalling.
111 0 r as the sa . . d'
he rights to the prior mortg me w,11 extend, -but not so as to preJu ,ce M.U. Apr. 2010
t quired an interest in an/ 9te or any other person who has for consideration,
~~es not depend on the lat~r ~; properties . Further, the exerci~e of this right
he principle of th rtgagee having notice of the prior mortgage.
T e doctrine of M .
·ng English case Aldrisl arshalling has been thus stated in the
1eadI 1 v, Cooper (8 V 38 " d'
have taken securities for th . e_s. 2) : If there are two ere ,tors
0
wh . confined to both and th e,r respective debts, and the security of the
one ~ the Court will arr~n e or:security of other is confined to one of those
fund , . g arshal the assets so as to throw the person
who has two fun~s ha?le t~ his demand on that whi~h is not liable to the debt of
the seco nd creditor, ,.e ., it shall not depend upon the will of one creditor to
disappoint another. "
Suppose A is the owner of two properties X and Y. He mortgages both X
and y to B, and later mortgages y only to c , thus_
A (Owner)
I
Mortgaged to B { ~} Mortgaged to B
Now, in these circumstances, if B seeks to realise the mortgage-debt out of

property Y, C ?an compel~ to p~o~eed first, agai~st X, and real_ise_ as much as
he can out of It. If B's debt Is sat1sf1ed out of X, Y Is left for C quite intact. If B is
not able to realise the whole of his debt from X, he is entitled to recover the
balance out of Y, and C will have no right to prevent him from doing so .
The section clearly lays down that the right cannot be exercised so as to
prejudice the rights of the prior mortgagee in regard to his securities. It must
be noted here that the right must be exercised at the time when the first
mortgagee seeks or threatens to realise his security. ( Unnamalai v. Gopala
Swami, (1931) 54 Mad. 59)
It is -also to be noted that under the doctrine (as laid down in S. 81) the
right cannot be exercised so as to prejudice the rights of any other person who
has, for consideration, acquired an interest in any of the properties. Thus , if A
mortgages X and Y to B, and then X to C and Y to 0, thus -
A (Owner)
I
Mortgaged to C { X} Mortgaged to B
Mortgaged to D { Y
Here, C cannot compel B to realise his debt only from Y because that would
leave nothing for 0 . B's debt would , therefore, be recovered rateably both from
X and Y, and C would get the surplus of the sale-proceeds realised from X, and
• t
D would get surplus realised from Y. But, if D instead of being a mortgagee i

only a donee, C can certainly insist that B should realise this debt fi rst frorn Yi
a nd he is not bound to see that there must be something left of Y for th e benefi
of D,
Marshalling applies only when -
( 1) there is a common debtor;
(2) two or more properties of the debtor have been first mortgaged to)
one person, and subsequently one (or more) of the same properties
is (or are) mortgaged to another person ;
(3) it does not prejudice (i) the prior mortgagee or (ii) third parties claiming
as purchasers; and
(4) there is no contract to the contrary.
lnderdawan v. Govind (23 Cal. 790) : A mortgages properties X and Y
to B . Later, he mortgages X to C. c obtains a sale-decree for X and purchases
it himself. B then obtains an order for sale on his mortgage. Under these
circumstances, C is entitled to require B to bring Y to sale first and rea lise his
security as far as possible out of Y.
As seen above, the principle of marshalling does not apply:
(i) So as to prejudice the prior mortgagee. If the property not mortgaged
to the subsequent mortgagee is not sufficient to satisfy him (i.e., the
first mortgagee), he can proceed against the other property as well.
(ii) So as to prejudice the interest of a third person who has, for
consideration, acquired an interest in any of the properties. Thus,
when property not comprised in the security of the second mortgagee,
who can exercise the right of marshalling, is mortgaged to or
purchased by, a third party, a subsequent mortgagee cannot marshal
to the prejudice of third party.
(iii) Unless the same person is liable to both the creditors and is also the
owner of the properties.
(iv) Unless the first mortgagee has equal rights over the two properties
mortgaged to him. Thus, he has a charge on one property but on the
other he has a right of set-off, there can be no marshalling , as the
securities are not equal.
(v) Where only a portion of the property already mortgag ed is
subsequently mortgaged to another person, i.e., it does not con sider
different fragments of the same property to constitute different
properties.
MARSHALLING AND SUBROGATION - Marshalling and subrogation
are closely related to each other, both being adjustments of the rights of different
encumbrances according to equity. Thus, for example, properties X and Y are
mortgaged to A. and then Xis mortgaged to B; here, B can compel A to resort

to property Y in the first instance. This is marshalling . But if A satisfies his
claim out of property X, B will be entitled to be subrogated in the place of A. for
then the sum obtained by A (out of X) , for his satisfaction will be deemed to
have been obtained from B. By reason of this fiction of B's subrogation to A's
rig hts, B gets from property Y what he loses in property X. By marshalling, Xis
kept intact for B; or by subrogation, B's loss in Xis made up by a gain in Y.
Thus, it will be seen that subrogation restores matters to their original
condition, and thereby achieves the same object as marshalling would have
done though in a slightly different way; in other words, marshalling is subrogation
in another shape.
CONTRIBUTION (S. 82)

Contribution to mortgage-debt (S. 82)
DOCTRINE OF CONTRIBUTION-The doctrine of contribution provides
that several properties mortgaged to secure one debt are liable to contribute
to that debt rateably in proportion to their values at the date of tt1e mortgage,
the amount of the previous mortgage or charge being deducted . The rule of
contribution applies, not on/ywhere several properties are mortgaged and their
owner is compelled to satisfy the whole mortgage-debt, but also where only
one property held by several co-owners is mortgaged and the portion of one
co-owner is made to satisfy the mortgage.
Two simple rules are laid down in this connection:
1. Where property subject to the mortgage belongs to two or more
persons having distinct and separate rights of ownership therein, the
different shares or parts of such property owned by such persons
are, in the absence of a contract to the contrary, liable to contribute
rateab/y to the mortgage-debt.
VALUE OF PROPERTIES HOW CALCULATED - For the purpose of
such contribution, the value of the different properties, that is, the interests of
different co-owners, are to be calculated as at the date of the original mortgage,
making proper allowance for any other mortgage or charge to which the
properties may happen to be subject.
2 . Where, of two properties - (i) belonging to the same owner,
(ii) one is mortgaged to secure one
debt,
(iii) and then both are mortgaged to
secure another debt,
(iv) and the former debt is paid out of
the former property, -
164
each property is, in the absence of a contract to the contrary, liable to contribute
rateably to the latter debt, after deducting the amount of the former debt frorn
th0
value of th e property out of which it has been paid .
. However, nothing in the above ru les applies to a property liable under
section 81 to th e claim of the subsequent mortgagee.
The principle of the doctrine of contribution is that the law requires that a
property ~ hich is equally liable with another property to pay a debt, should not
escape , Just because the creditor has been paid out of that other property
alone. But a claim for contribution cannot arise until the whole of the mortgage~
debt has been satisfied. (/bn Hasan v. Brijbhusan, 26 All. 407)
As seen above, the mortgaged properties are liable to contribute rateably
to a mortgage-debt only in the absence of a contract to the contrary. The words
"contract to the contrary'' mean a contract between the mortgagor and
mortgagee, and not between the mortgagor and his vendor or between the
mortgagors.
Example
Two estates X (the value where of is t 1,000) and Y (valued at t 800) are
mortgaged to D for ~ 1,000, X having been previously mortgaged to C for
t 200; X and Y are sold to E and F respectively. What amount would E and F
each have to pay to satisfy the debt? After deducting t 200 from ? 1,000 (the
original value of X) it is seen that X and y become equal ; therefore, E and F
would each have to pay ( 500.
Cases
1. A mortgages two properties X and Y to B. A sells X to C, alleging that
the mortgage to B has been discharged. Thereafter, B realises his mortgage
by the sale of Y only. In the circumstances, A is not entitled to contribution from
C.
2. A mortgages 8 villages to B. A then sells his interest in 3 of the villages
to C. B realises his mortgage by the sale of 2 of A's villages. A is entitled to
contribution from C.
MARSHALLING AND CONTRIBUTION DISTINGUISHED- Contribution,
if it differs from marshalling, does so in species rather than generally, and in
form rather than in nature.
(i) Marshalling arises when the competing mortgagees hold from one
mortgagor; contribution arises when the mortgaged properties belong
to several owners.
(ii) By marshalling, a creditor having several securities is so to exercise
his right as not to injure the right of another creditor on some of those
securities. In contribution all the securities are to contribute rateably
and the whole liability is not thrown on one security only.
(iii) If there is a conflict between the two, marshalling will prevail.
Definition (S. 100)B. CHARGES (Ss. 100-101)

Where immovabl e Pro .
one person is - P0 rty of (a) by act of parties or operation of Define Charge.
law, (2 marks)
M.U. Nov. 2015
(b) made security for the payment of
May 2019
money to another,
and the transaction does not a . .
, , mount to a mortgage , the latter person ,s said to
have a charge on the property.
All the provisions which apply to a simple mortgage apply to a charge .
Exception : S. 1 00 does not apply to the charge of a trustee on the trust-
property for expenses properly incurred in the execution of his trust.
· Moreover, no charge can be enforced against any property in the hands
of a person to whom such property is transferred for consideration and without
notice of the charge.
WHAT IS A CHARGE- It may be that in a particular case , there may not
be an actual mortgage of an immovable property, in the sense that any interest
in_the property is transferred to the transferee, and yet a person may have a
right to recover a debt from that property. Where such a right exists , it is called
a 'charge', and the person who is entitled to it is called a charge-holder, and
the right is exercisable by a suit for sale of the property for realising the money
charged on it.
No particular form of words is necessary to create a charge; all that is
necessary is that there must be a clear intention to give property as security
for payment of money in praesenti. (J & K (Bombay) Pvt. Ltd. v. New Kaiser-i-
Rind Spg. & Wvg. Ltd., A.I.R. 1970 SC 1041)
Exceptions
1. The section lays down an exception, not to the definition of 'charge',
but to the rights of a chargee, namely, that a trustee who has incurred expenses
in execution of a trust, though having a charge on the trust property in respect
of such expenses, is not entitled to sue for a sale of the trust property in order
to realise the same, for it would have the effect of destroying the trust estate.
He can only sue for recovery of the money: Akbar Saheb v. Soran, (1915) 38
Mad. 260; Pearyv. Narendra, (1910) 37 Cal. 229 (P.C.). Or, he may reimburse
himself out of the income of the trust property and prohibit any disposition of
the property with~ut previous payment of such ·expenses. (See S. 32 of the
Indian Trusts Act.)
2. The section also lays down another exception as regards the extent of
the enforceability of a charge, namely, that no charge can 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. This exception
marks an important distinction between a charge and a mortgage. A mortgage,
166
TH TRANSFER OF PROPERTY ACT
being a · ·
JUs rn rem , can be enforced against the mortgaged property in th
~'lan~s of any transferee from the mortgage, irrespective of notice. But a charg&
15 1
a ~~ ~d rem, and can be enforced against a transferee for consideration,
only ,f ,t ,s shown that he has taken the transfer with notice of the charge. In
olher wo rd s, a charge cannot be enforced against a bona fide purchaser for
value who was not aware of the charge : Royzauddi v. Nath, (1906) 33 Cal.
985
; Akhoy v. Corporation of Calcutta, (1915) 42 Cal. 625.
A charge may be created by an act of parties (e.g., when property is
MCQ No. 94
cbarged for the maintenance or education of another) or by operation of law
(e.g.,_ a vendor of immovable property has a charge on the property sold for his
unpaid purchase-money : S. 55(4) (b) or the charge of buyer for advances
.made by him : S. 55(6)(b ); etc.)
Problem : A sues Bon a promissory note. In a compromise decree passed
in the matter, it is directed that B shall not dispose of his share in a factory until
satisfaction of the entire decretal amount. Has A any right to proceed aga inst
the property?
Ans. : A charge may be created ( 1) by act of parties or (2) by operation of
law. A charge created by a compromise decree is a charge created by the act
of the parties to which S. 100 applies. In the present case , A has a charge on
the property specified , and he has a right to proceed against the property.
Charges by act of parties - Instances
A charge by act of parties can be created by an instrument inter vivas or
by will. Thus, a document stating "I have willingly fixed an annual allowance of
~ 1000 in cash in perpetuity out of the profits of the said village for my eldest
brother" creates a valid charge. Similarly, a will devising immovable properties,
and directing the devisee to pay certain debts of the testator from these
properties, creates a charge in them in respect of these debts.
Charges by operation of law
Charges by operation of law are based upon the consideration of duty or
Give two examples
implied intention on the part of the owner of the property to make it answerable
of charge by
operation of law. for a specific claim .
(2 marks) Instances of charges created by operation of law
M.U. Apr. 2013
(a) A Hindu widow's charge on the family property for her maintenance,
May 2017
if created by a decree (See Sec. 39).
(b) A vendor's charge for unpaid purchase-money- Sec. 55(4).
(c) A party entitled to claim contribution under Sec. 82 also acquires a
charge in respect thereof.
REQUISITES OF A CHARGE BY ACT OF PARTIES
1. A charge does not contemplate any transfer of an interest in the
immovable property.
2. The property should be specified, and it should be made security for

the payment of money.
3. In order to constitute a charge, what is important is the inten tion of
the parties, and the form of words is immaterial ; it is not necessary to
use any technical terms . (Nathan v. Durga Das, A .LR . (1931) Al l.
62.)
4. A charge must be created in favour of a particular person ; i.e. such a
person must be specifically named .
5. A charge may be created orally, although if it is created by an
instrument in writing, it must be registered , unless made by a will , or
unless the amount secured is less than one hund red rupees .
6. A charge cannot be created on a future contingency. (Mohani v. Puma
Shashi, A.I.R. (1932) Cal. 451)
7. A charge on future property is valid and operates on such property
when it comes into existence .
How a charge can be enforced
A charge, even when created by a decree, can be enforced only by a suit.
How a charge is extinguished
Under S. 100, all the rules which apply to a simple mortgage also apply to
a charge. So, a charge can be extinguished by an act of parties, i.e., (i) by a
release by the chargee of the debt or security; or (ii) by novation , or (iii) by
merger.
Cases
1. A inherited an estate from his maternal grandmother and executed an
agreement to pay his sister B, a fixed annual sum out of the rents of the estate.
8 has a charge on the estate. (Chalamanna v. Subbamma (18~4) 7 Mad. 23)
2. A sued Bon a promissory note. The compromise decree directed the
payment of the money and further directed that B shall not dispose of his
share in a factory until satisfaction of the entire decretal amount. In the
circumstances, it was heldthatA had a charge on the specified property. (Narain
Oas v. Murli Dhar (1929) 121 I.C. 81)
ENGLISH LAW - Under the English law, when a mortgage fails for want
of some formality, the transaction may be valid as an equitable charge. Thus,
a mortgage which fails because of improper attestation or for want of
registration, is transformed into a charge.
But this equitable doctrine cannot be applied in India in the face of statutory
provisions which make a charge a distinct kind of security as contrasted with a
mortgage. A charge arises only when the transaction evinces an intention for
creating it. It is not the necessary corollary of the invalidity of a mortgage. The
words "and the transaction does not amount to a mortgage" (in section 100 of
168
the T f h . t
. . rans er of Property Act) signify that if the relation created by t e ms rumen,
,s not that of a mortgagor and mortgagee and immovable property has bee
made s~curity for the property of money, there is a charge on t~e property. Th
expression does not signify that if the transaction on the fact of it purports to b
a mo~age, but the instrument is not operative as such by reason of def~ctive
~xe~ution or non-compliance with the formalities prescribed by th e law, ,.e., i
it fails as a mortgage on account of some technical defects , the transa ction is
converted into a charge (as under English law).
Thu s , the broad distinction between mortgage and a charge is that,
whereas a charge only gives a right to payment out of a pa~icu!ar fund or
property, a mortgage is in essence a transfer of an interest in specific immovable
property.
In U. P. Government v. Manmohan Das, a Full Bench of the Allahabad
High Court held that even a charge involves the transfer of an interest in property.
Yorke J., observed : -
"While it is true that even according to the definition in Sec. 100 of the
Transfer of Property Act, a 'charge' may be called something 'less than a
mortgage' since one of the features of it by definition is that it 'does not amount
to a mortgage', yet in its ultimate character, a 'charge' is clearly of the nature of
a mortgage, and if, therefore, a simple mortgage is a transfer of property, it is
difficult to see how something which partakes of that nature and which when
put into effect gives the charge-holder the same rights as accrue to a simple
mortgagee can be held not to amount to a transfer. I am fortified in this
conclusions by the fact that 'charge' is one of the subjects dealt with in the
Transfer of Property Act. That very fact, as I understand it, means that for this
country by Act of the Legislature a charge is to be regarded as coming within
the ambit of transfers of property."
DIFFERENCE BETWEEN
MORTGAGE CHARGE
1 . As to security -
(a) A mortgage is a security for the (a) A charge is a security for the
payment of a debt. payment of money (and such
money may or may not be a
debt.)
(b) A mortgage may be a security for (b) Such is not the case w ith a
the performance of an engage- charge.
ment giving rise to a pecuniary
liability.
2. Covenant to pay-
There may be a covenant to pay. I There is no covenant to pay.
MORTGAGES OF IMMOVABLE PROPERTY · CHARGE
3. Transfer of interest -
rn rtg ge involves a transfer of an
A charge does not operate to transfer MCQ Nos. 95, 9&
inl r, t in specific immovable any interest in the property In favour
p ~ of the charge-holder. It merely gives
the charge-holder the right to have a
clai m satisfied out of a particular
pro perty, without transferring that
property to him . It is only under a
decree for sale that an Interest in the
property is transferred in the case of
a charge.
4. As to creation -
Amortgage can only be made by act A charge may arise either by an act
of parties. of parties or by operation of law.
5. Right in rem -
A mortgage gives rise to a right in A charge does not create any such
rem. right. It is available only against a
particular, set of persons, i.e., persons
who are affected with notice of the
charge. A charge becomes a right in
rem only when a decree has been
', '
obtained to that ~ffect.
6. As to following the security -
(a) A mortgagee can follow his (a) A charge-holder cannot do so.
security into whatsoev~r hands it
goes.
{b) A mortgagee can follow a bona (b) A charge-holder cannot do so.
fide purchaser for value without
notice.
7. Defence of purchase for value~without notice -
'
It is a good·defence In the case of a Such a defence is not available in the
mortgage. case of charge.
DISTINCTION BETWEEN
CHARGE LIEN
1. A charge may be created both by 1. A lien arises by operation of law.
an act of parties or by operation
of law.
170
2. A charge can exist on immovable 2. A lien can exist on both movable

property only. and immovable property.
3 · A c_harge-holder can satisfy his 3. A lien-holder satisfies himself by
cla,~ by se lling the property (i) private sale, or (ii) retaining ,
subject to his charge. possession of the property.
4 · A charge is not possessory in its 4. A lien is possessory in nature.
nature.
---
DOCTRINE OF MERGER (S. 101)
WHAT IS MERGER' _ The general principle of Jaw is that when two
1
eS t ates in the same property become united in the same person, a merger
~esults as a necessary consequence, that is, upon such union of the two
~nterest~ in the same person, the smaller interest is regarded as having merged
in the bigger one.
Under English Law, a mortgage or a charge can be extinguished by a

merger. A merger occurs (1) by the union of a lower and a higher security, or
(2) by the union of a lesser estate and a greater estate . Thus , a debt which is
sued upon merges in the judgment obtained in respect of it. The judgment
here is a higher security. Similarly, an equitable mortgage merges into a formal
legal mortgage when executed. ·
But there will not be a merger if the remedies in respect of the two securities
are not co-extensive. For instance, a promissory note will not merge in a
mortgage for the same debt. Accordingly, even if a judgment is obtained on the
promissory note, the mortgage remains unaffected, and any remedy available
under the same may be sued for.
A mortgage effects a division of interest in the mortgaged property as
between the mortgagor and the mortgagee. The bundle of interest which
remains with the mortgagor is one estate, and the bundle of interest which
pass to the mortgagee is another estate. Where these two estates combine
themselves and vest in one of the parties, there is a merger, and the mortgage
is extinguished. The reason for this merger is either that the lesser estate is
drowned in the greater and a man cannot be his own debtor.
A merger in respect of a mortgage can arise (1) by the mortgagee acquiring
the equity of redemption; or (2) by the mortgagor redeeming the mortgage; or
(3) by the purchaser of the equity of redemption redeeming the mortgage.
S. 101 abolishes this doctrine of merger in plain terms. In other words,
the object of S. 101 is to 'keep alive' a charge.
No merger in case of subsequent encumbrance (S. 101)

Any mortgagee of, or a person having a charge upon, immovable property,
or any transferee from such mortgagee or charge-holder, may purchase or
otherwise acquire the rights in the property o'f the mortgagor or owner (as the
case may be), without thereby causing the mortgage or charge to be merged
as between himself and any subsequent mortgagee of, (or person having a
subsequent charge upon), the same property.
Moreover, no such subsequent mortgagee or charge-holder is entitled to
foreclose or sell such property without redeeming the prior mortgage or charge.
Case : A mortgages property to 8 . B sues A to realise the mortgage-debt.
During the pendency of the suit, B purchases the equity of redemption in
execution of a money decree against A. In these circumstances, the mortgage
is extinguished by merger, and B's suit would be dismissed.
Problem : A mortgaged property, first to B, and then to C. B obtains a
decree on his mortgage and instead of bringing that property to sale, makes a
further advance to A, and takes a fresh mortgage for the decretal amount as
well as the further advance. C claims priority for his mortgage over B. Advise
B.
Ans. : B's first mortgage is not extinguished by merger, as there is a
subsequent mortgage. Therefore, Bis entitled to priority over C in respect of
the decretal amount.
***
6
LEASES OF IMMOVABLE PROPERTY
(Ss. 105-117)
Definition (S. 105)

A /ease of immovable property is a transfer of a right to enjoy such propertyl
for a certain time (express or implied) , or in perpetuity in consideration of (i) a
price paid or promised , or (ii) money, (iii) a share of crops, (iv) service, or (v)
any other thing of value , to be rendered periodically, oron specified occasions,
to the transferor by the transferee, who accepts the transfer on such terms.
In the case of a lease, the price is called the premium, and the money,
share, service or other thing to be rendered is called the rent; the tran sferor is
called the lessor, and the transferee is called the lessee.
THE FOLLOWING ARE THE ESSENTIAL ELEMENTS OF A LEASE :
What are the 1. The Lessor- He must be competent to contract and he must have
essential charac- title or authority.
teristics of a
2. The Lessee - He also must be competent to contract at the date of
lease?
M.U. Apr. 2013
execution of the lease. A sale or a mortgage to a minor is valid . But a
lease to a minor is void as the lease is to be executed both by the
'
lessor and the lessee: S. 107.
MCQ Nos. 97, 98,
99, 100 and 101 3. The subject;..matter of the lease must be immovable property.
4. There must be a transfer of a right to enjoy such property.
What are the 5. Duration of the lease - A lease must be made for a certain time,
characteristics of express or implied , or in perpetuity.
a Lease? Discuss
the Rights and
6. Con'sideration . Like every agreement, a lease must have
Liabilities of the consideration, which may be premium plus rent, as well as premium
Lessor and the alone or re~t alone. Premium is the price paid o r p romis ed in
Lessee. consideration of a transfer by way of lease. Any payment by the lessee
M.U. Nov. 2015 that is part of the consideration of the lease is rent.
Apr. 2016
May 2017
7. The lessee must accept the transfer.
Apr. 2018 8. It must be in the mode indicated by S. 107.
Jan.2019 In an interesting decision delivered by a majority of the House of Lords, it
May 2019
was held that a man could not grant a lease to himself: (Rye v. Rye, 1962 A. C.
Dec. 2019
496). It is submitted that if the question arose in India, the Indian courts would
take an identical view.
Define lease. LEASES IN PERPETUITY- Under English Law, a lease in perpetu ity is
(2 marks) unknown. In India, however, such leases (generally agricultural leases) are
M.U. Apr. 2015 created by an express or a presumed grant.
172
,
LEASES OF IMMOVABLE PROPERTY
173
The Calcutta High Court wa f . .
/ease for 999 years is legal ,s aced_ with the question as to whether a
duty can be saved by exe~~t~~ec,ally in view of the fact that substantial stamp
nothing illegal in executin g such a lease. The Court held that there was
I
is saved thereby, the tran;a:t~ase for 999 years , and just because sta~p duty
be to amend the law r I f . n does not become unlawful. The solution may
long leases. But unti~t~ '~~ to stamp duty or prohibit parties from entering into
Haque v. G Mullick A I Ra 11s done, such leases remain valid and lawful. (M.
, · · . 993 Cal. 58)
AGR~EMENT
. .
:0 LEASE - It may be noted that a contract to let and a
/ease are different things · a contr
,
tt I t · · · ·
ac o e , Just like a contract to sell t gives rise
to no n~ht m rem. _It creates only a personal obligation, which may be enforced
by a swt for sp~cific perfo~m~nce ~~der the Specific Relief Act, provided that
the agr~ement ~o lease rs in writing and is accompanied by delivery of
possession. In this respect, it materially differs from an agreement to sell. The
latter ~greement may b~ specifically enforced, even if oral and unaccompanied
by delivery of possession ; but not so with respect to an agreement to let or
leas~. A l~ase does, but an agreement for lease does not, establish the legal
relat1onsh1p of landlord and tenant between the parties. This is so, because a
lease i~ a transfer of a right to enjoy property, whereas an agreement to lease
is not.
'Demise': An agreement to lease, not creating a present demise, is not a
lease, and does not require either writing or registration. The term 'demise' is
not defined in the Transfer of Property Act. It is a term of English law, and it
denotes a transfer of a lease. When it is said that a particular agreement ·o f
lease creates a present demise, what is meant is that though in form of an
agreement, it actually effects a transfer by lease, i.e., transfer of a right to
enjoy a specific immovable property. The real test for determining whether an
agreement to lease effects a present demise, is not whether the transfer is to
operate immediately, but whether the right to enjoy the property is actually
transferred or not. Once the right is transferred, the agreement creates a present
demise, though the right is to operate sometime in the future . Such an
agreement to lease creating a present demise requires writing and registration,
and therefore, without such registration, it will not be admissible in evidence.
Whether a mineral lease is a "Lease" : In English law, it appears a
mineral lease is not strictly speaking a lease, for it involves the destruction or
consumption of the subject-matter. Thus, in Coltness Iron Co. v. Black, approval
was expressed of the Scotch case of Gowan v. Christie, in which Lord Cairns
observed.
" ..... although we speak of a mineral lease or a lease of mines, the
contract is not, in realty, a lease at all in the sense in which we speak of
an agrkultural lease. There is no fruit; that is to say, there is no increase,
there is no sowing or reaping in the ordinary sense of the term ; and there
are no periodical harvests. What we call a mineral lease is really, when
174
properly considered a sale out and out of a portion of land . It is: liber
given lo a particular individual for a specific length of tim_e, to g~f ~er~a
1 9
th ' 11 9 8 there if he can find the~ . and to take them away, JU Sl as
bought so much of the soil "
DIFFERENCE BETWEEN ~
LEASE AGREEMENT TO LEASE ~
1. Right 'in rem " - ·A lease creates 1. An agreement to lease does notl
a rig ht in rem. create any such right.
2. Relationship of landlord and 2 _ An agreement to lease dohel s not -
tenant -A lease establishes the create any such relations p.
relationship of landlord and 3 _ An agreement to lease does not
tenant between the parties . operate as a transfer.
3. Transfer - A lease operates as
a transfer.
LEASE AND SALE- In a sale there is an absolute transfer of all right

1
in the property which is sold . The tra nsferor parts with all his rights therein . I
a lease, on the other hand, there is a partial transferor demise of the pro~erty,
and some rights over the property are transferred to the lessee. The rights
which are left with the transferor are called the reversion rights.
LEASE AND LICENCE DISTINGUISHED - Ordinarily, a lease is a granij
of property, for a time, by one who has a greater interest in the property, the
consideration being usually the payment of rent. A licence, on the other handf
is governed by the Indian Easements Act, and is a permission to do some act
which, without such permission, would be unlawful. In both , certain rights are
Distinguish bet-
ween lease and conferred on the lessee or licensee. Both have several elements in common,
licence. When can but the following are the points of difference between the two :
a licence be
1. In a lease, there is a transfer of an interest in the immovable property.
revoked?
M.U. Apr. 2015
In the case of a licence, there is no transfer of interest, although the licensee
acquires a right to occupy the property.
MCQ No. 102 For determining whether an interest in land is transferred or not, the main
test is the delivery of "exclusive possession". If the exclusive possession is not
with the grantee, and the subject-matter is in the control and possession of the
grantor, then it is a licence, and not a lease. It is always open to a licensor to
have access to the property, possession being with him, and not transferred to
the licensee.
2. If during the continuance of the lease, any accretion is made to the
property, such accretion is deemed to be comprised in the lease. A licensee
has no property in the land, and therefore, he acquires no right by accretion .
3. A lease is transferable and heritable. A licence being purely a personal
privilege, is non-transferable and non-heritable.
LEASES OF IMMOVABLE PROPERTY 175
A~ exception .is made in the case of a licence to attend a place of public

entertainment, which can be transferred by the licensee unless a different
1
intention is expressed or necessarily implied . (S . 56, lndia n Easements Act)

4_. A_lease can be te~minated by forfeiture. There is no corresponding
provision in the case of a licence in the Indian Easements Act.
5. A le~se can be terminated only in one of the eight different ways
enumerated in S . 111 of the Transfer of Property Act. A licence can be revoked
at pleasure, unless (i) it is coupled with a transfer of property and such transfer
is in force; or (ii) the licensee , acting upon the licence, has executed a work of
a permanent character and incurred expenses in the execution. Therefore,
·1
unlike a lessee, a licensee, is not _e ntitled to a notice to quit before eviction.
6. The lessee's interest is not liable to be defeated by a subsequent
transferofthe leased property : S. 109 of Transfer of Property Act. A licence is
determined when the granter makes an assignment of the subject-matter of
the licence : S. 59 of the Indian Easements Act.
7. A lessee is entitled to maintain a suit in his own name against
trespassers and strangers. A licence does not create an interest in property in
favour of a licensee and , therefore , he is not entitled to maintain suits in his
own name.
8. Death of either party does not affect a lease, whereas a licence is
terminated in such circumstances.
The following tabular analysis sammarises the points of distinction between
a lease and a licence:
DIFFERENCE BETWEEN
LEASE LICENCE
1. In a lease, there is a transfer of 1. In a licence, there is no transfer

interest in the property. of interest. Write a short note
2. Accretions are deemed to be 2. A licensee acquires no interest in on Lease/
Licence.
comprised in the lease. accretions.
M.U. Apr. 2008
3. A lease is transferable and 3. A licence is neither transferable;
heritable. nor heritable.
4. A lease can be terminated by 4 . There can be no termination by
forfeiture . forfeiture in the case of a licence.
Distinguish bet-
5. A lease can be terminated by one 5. A licence is usually revocable by ween a lease and a
of the eight ways prescribed by pleasure, except in the two cases licence.
S. 111 of the Act. mentioned above. M.U. Apr. 2010
Dec.2014
6. A lessee's interest is not defeated 6. A subsequent transfer of the
by a subsequent transfer of the property terminates a licence.
property.
176
THE 'TRANSFER OF PROPERTY ACT
7
· A lessee can sue trespassers 7_ A licensee cannot sue trespass4
art d st rangers in his own name. ers and strang e rs in hi s own
name.
8. Death of either party does not a. A licence is terminated by death
affect a lease. of either party.
Natesa v. Tungarelu, (JS Mad. SJ) : A grants a a "lease" for two years t
tap toddy from the trees in his garden , but B is not to cut the _leaves . Thi
creates no interest in the Immovable property, and is actually a licence .
In one case, the question before the Delhi High Court was wh eth er an
agreement amounted to a lease or a license. It was provided that th e licensee 1
would be entitled to use the premises, but would have no right, title or interest
to po~sess the premises . A license fee per day was to be paid to the owner. In
th e circumstances, the Court held that it was a licence, and not a lease. (Hind
Trading & Mfg. Co. v. Didi Modes Pvt. Ltd., A.I.R. 1993 Del. 301)
In Mineral Development Ltd. v. Union of India, it was observed that if one
takes the plain meaning of the words used in Section 3(d) of the Mines Act, 1t
is clear that the term 'mining lease' means any kind of lease granted for the
purpose of searching or winning, etc. of minerals or for purposes connected
therewith. It is significant that the definition does not require that the lessor
must be the proprietor. So, on a fair reading it would include a lease executed
by the proprietor as much as a lease executed by the lessee from such a
proprietor. If we turn to the definition of lease in Section 105 of the Transfer of
Property Act, what a lease requires is a transferor and a transferee and a
transfer of immovable property on the terms and conditions mentioned in
Section 105. How the transferor gets his title to make a lease is immaterial so
long as the transaction is of the nature defined-in Section 105. Applying therefore
the plain words of Section 3( d) of the Act and the definition of lease as contained
in Section 105 of the Transfer of Property Act, it is perfectly clear that there is
a transferor in this case (appellant), and a transferee (sub-lessee) who has
accepted the transfer; the transaction is with respect to immovable property
and creates a right to enjoy such property for a certain term and for consideration
on the conditions mentioned in it. Though, therefore, the document may be
termed a sublease in view of the fact that the transferor is not the owner of the
property transferred which is itself a lease, the transaction between the appellant
and the sub-lessee is nothing but a mining lease.
How can a lease be LEASES HOW MADE {S. 107)
made? When can a
lease be termi- A lease of immovable property Can be made
nated?
M.U. Apr. 2009 1. (i) from year to year, or
(ii) for any term exceeding one only by a registered instrument.
year, or
LEASES or: IMMOVABLE PROPERTY 177
(iii) rese,ving a Yeari/y 1ent

. _
2. In any other case _ '
{i) eitherby a registered instrument,
or
{ii) by oral agreement accompanied
by delivery of possession.
It is to be noted that in the case 0 f .
two or more instruments th . a lease by a registered instrument, or
bY ecuted by both the le;s e mdstrument, or each of the instruments, must
b0 ex or an lessee.
DURATION AND TERMINATION OF LEASES {S . 106)

A lease of immovable is deemed to be a lease terminable, on the part
property for: from:
of either lessor or
lessee, by:
i---
1. Agricultural or year to year MCQ Nos. 103, 104
six months' notice.
manufacturing
purposes
2. Any other purpose, month to month fifteen days' notice.
- s. 106 also clarifies that the period of notice mentioned above commences
from the date of receipt of the notice. It is also provided that even if a shorter
!n
period is mentioned the.notice , as long as the suit or proceeding is filed after
the expiry of the penod stipulated above, the notice would not be invalid.
The above statutory presumptions as to duration arise only when there is
no agreement between the parties or a local law or usage to the contrary.
Requisites of notice (S. 106)

Every notice under S. 106 must be in writing, signed by or on behalf of the
persons giving it, and must either be sent by post to the party who is intended
to be bound by it or be tendered or delivered personally to such party, or to one
of his family or servants at his residence, or (if such tender or delivery is not
practicable) affixed to a conspicuous part of the property.
Waiver of notice to quit (S. 113)

Notice to quit is deemed to have been waived, when , with the express or
implied consent of the person to whom it is given , the person giving it does an
act 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.
178
(b) A, the lessor gives B the lessee notice to quit the property leased .
Th · ' . 1
t B as lessee
e notice .expires and B remains in possession . A gives · 0 a
'
second notice to quit. The first notice is waived.

Wh en a Iandlord, serving. . ·f It of payment of rent
a notice to quit on de au . ults i '
serves a subsequent notice and demands a larger amount, it res n th e
waiver of first notice. (Tayabaliv. Messrs. Ahsan & Co., A.I.R. 1971 , S.C . 102 )
. COMPUTATION OF LEASES (S. 110)

1. Where the time limited by a lease of immovable property is expresse~ as
commencing from a particular day, in computing that time, such d~y is to
be excluded. Where no day of commencement is named , the time so
limited begins from the making of the lease.
2. Where the time so limited is a year or a number of years, in the a?sence
of an express agreement to a contrary, the lease is to last du ring the
whole anniversary of the day from which such time commences .
MCQ No. 105 3. Where the time so limited is expressed to be terminable before its
expiration, and the lease omits to mention at whose option it is so
terminable, the lessee, and not the lessor, is to have such an option .
RIGHTS AND LIABILITIES OF THE LESSOR

[ S. 1 OS(a) to (c)]
Define lease. State 1. The lessor is bound to disclose to the lessee, any material defect in
the rights and lia- the property with reference to its intended use, of which the former is, and the
bilities of a lessor.
latter is not, aware, and which the latter could not with ordinary care discover:
M.U. Nov. 2010
S. 108(a).
It has been held that a defect in the lessor's title cannot be said to be a
What is a lease? material defect in the property within the meaning of this clause (Syed Mukhtar
How is it made? v. Rani Sunder Koer, 17 C.W.N. 960)
What are the rights
and liabilities of a 2. The lessor is bound, on the lessee's_request, to put him in possession
lessor? of the property : S. 108(b ).
M.U. Nov. 2009
If the lessor fails to give such possession, the lessee can sue both the
lessor as also a third person in possession .
3. The lessor is also deemed to contract with the lessee that, if the latter
pays the rent reserved by the lease and performs the contract bind ing on the
lessee, he may hold the property (during the time limited by the lease) without
interruption : S. 108(c ).
This covenant is called a covenant for quiet enjoyment, and is absolute
and unconditional. It protects the lessee against the disturba nce of his
possession by the lessor or by persons claiming under the lessor, but not
against any disturbance by a trespasser.
. The benefit of the above contract is annexed to, and goes with the lessee's
interest as suet\ and may be enforced by any one in whom such interes t is
vested : S. 10B(c).
RIGHTS OF THE LESSEE [S . 108(d) to (j)]

1. If during the continuance of the lease, any accession is made to the Expla in the ri ghts
and liabilities of a
property, such accession (subject to the law relating to alluvion for the time
Lessee .
being in force) is deemed to be comprised in the lease : S. 108(d). M.U. Apr. 2010
2. If by fire , tempest or flood , or violence of an army or of a mob or other Apr. 2011
irresistible force, any material part of the property is wholly destroyed or rendered Apr. 2013
substantially and permanently unfit for the purpose for which it was let, at the
option of the lessee, the lease becomes void. (However, if the injury is
occasioned by the wrongful act or default of the lessee, he is not entitled to
Define " lease ".
avail himself of this benefit.) : S. 108(e). Enumerate the
3. If the lessor neglects to make, within a reasonable time after notice, rights & duties of a
any repairs which he is bound to make to the property, the lessee may make lessor & lessee.
the same himself, and deduct the expense of such repairs (with interest) from M.U. May 2013
Nov. 2012
the rent or otherwise recover it from the lessor : S. 108(f).
Nov. 2013
4. If the lessor neglects to make any payment which he is bound to make, Nov. 2017
and which, if not made by him, is recoverable from the lessee or against the
property, the lessee may make such payment himself, and deduct it with interest
from the rent or otherwise recover it from the lessor : S. 108(g).
5. The lessee may, even after the termination of the lease, remove, at
any time whilst he is in possession of the property leased, but not afterwards,
all things which he has attached to the earth, provided he leaves the property
in the state in which he received it: S. 108(h).
6. When a lease of an uncertain duration determines by any means except
the fault of the lessee, he or his legal representative is entitled to all the crops
planted or sown by the lessee and growing upon the property when the lease
determines, and to free ingress and egress to gather and carry them : S. 108(i).
7. The lessee may transfer absolutely, or by way of mortgage or sub-
lease, the whole or any part of his interest in the property, and any transferee
of such interest or part may again transfer it. In such a case, the lessee does
not, by reason only of such transfer, cease to be subject to any of the liabilities
attaching to the lease : S. 108U).
When a transfer of a lease is made, the question as to whether the
transferee of the lessee becomes directly liable to the lessor or not deserves
consideration. As S. 108 makes it clear, the lessee is not relieved from his
liability unless the lessor consents to the transfer or releases him from the
liability. So far as the liability of the transferee is concerned , it should be noted
that there is no privity of contract between the lessor and the transferee of the
180
lessee. But it •is a principle of English law that when there Is a privily of estata
between the lessor and the transferee, the transferee will be liable to the lessor.
It '\~as once doubted as to whether this principle of English law could be
~pplied m India in view of the provisions of the Transfer of Property Act. ~ owever,
it has now been held that such principle of privity of estate is applicable in
India. (Keshavlal v. Magan/al, 36 Born . L.R. 197)
But it must be noted that such privily of estate is created between the
lessor and the transferee only where there is a transfer of the wh ole of the\
lessee's interest. No privity of estate arises when a subsidiary interest is carved
out of the lessee's interest. Only where the lease is absolutely assign ed to the
transferee, there will be a privity of estate, and such transferee becomes directly
liable to the lessor in respect of the covenants that are binding upon the lessee
either under the terms of the lease or under S. 108 of this Act.
LIABILITIES OF THE LESSEE [S. 108(k) to (q)]

1. The lessee is bound to disclose to the lessor, any fact as to the nature)
or extent of the interest wh ich the lessee is about to take, of which th e lessee
is, and the lessor is not, aware, and which materially increases the value ofl
such interest : S. 108(k) .
2. The lessee ls bound to pay or tender, at the proper time and place, the1
premium or rent to the lessor or his agent in this behalf : S. 108(1).
3. The lessee is bound to keep , and on the termination of the lease, to,
restore , the property in as good condition as it was· at the time when he was
put in possession , subject only to the changes caused by reasonable wear,
and tear or irresistible force , and to allow the lessor and his agents , at all
reasonable times during the term , to enter upon the property and inspect the
condition thereof, and give or leave notice of any defect in such condition; andl
when such defect has been caused by any act or default on the part of the1
lessee, his servants, or agents, he is bound to make it good within three months
after such notice has been given or left : S. 108(m).
4. If the lessee becomes aware of any proceeding to recover the property
or any part thereof, or of any encroachment made upon, or any interference
with the lessor's rights concerning such property, he is bound to give, with
reasonable dil igence, notice thereof to the lessor : S. 108(n).
5. The lessee may use the property and its products (if any) as a person
of ordinary prudence would use them if they were his own ; but he must not
use, or permit another to use, the property for a purpose other than that for
which it was leased, or fell or sell timber, pull down or damage buildings
belonging to the lessor, or work mines or quarries not open when the lease
was granted, or commit any other act which is destructive or permanently
inj urious thereto : S. 108(0).
6. The lessee must not~without the lessor's consent, erect on the property, MCQ No. 106
anY permanent structure, except for agricultural purposes : S. 108(p ).
7. On the termination of the lease, the lessee is bound to put the lessor
into possession of the property : S. 108(q).
RIGHTS AND LIABILITIES OF LESSOR'S TRANSFEREE

(S. 109)
If the lessor transfers the property leased or any part thereof, or any of
his interest therein -
1. The transferee, in the absence of any contract to the contrary
possesses all the rights, and if the lessee so elects , is subject to all the liabilities
of the lessor as to the property or part transferred , so long as he is the owner
of it.
However, the lessor does not, by reason only of such transfer, cease to
be subject to any of the liabilities imposed upon him by the lease, unless the
lessee elects to treat the transferee as a person liable to him .
Example : A leases a house and a stable to B, who agrees to keep the
premises in good repair. During the term of the lease, A sells the stable to C. C
can enforce the covenant to repair as regards the stable .
2. The transferee is not entitled to the arrears of rent due before the
transfer. If the lessee, not having reason to believe that such transfer is made,
pays rent to the lessor, the lessee is not liable to pay such rent over again to
the transferee.
The lessor, the transferee, and the lessee may determine what proportion
of the premium or rent reserved by the lease is payable in respect of the part
so transferred, and, in case they disagree, such determination may be made
by any Court having jurisdiction to entertain a suit for the possession of the
property leased.
Problem: A lets a field to Bat a rent of~ 50,000 and then transfers the
field to C. B pays rent to A in good faith even after the transfer, having no notice
of the transfer. C files a suit against B for recovery of rents due after the transfer.
How will you defend B?
Ans. : Under S. 109 of the Act, if the lessor transfers the leased property,
and the lessee, not having reason to believe that such a transfer is made, pays
rent to the lessor, the lessee is not liable to pay such rent over again to the
transferee. Here, B has paid rent to A in good faith, having no notice of the
transfer. Therefore, C will not be able to recover the rent from B.
182
THE TRANSFER. OF PROPERTY ACT
MCQ No. 107

DETERMINATION (i.e. TERMINATION) OF A LEASE
{Ss. 111 -113)
Define " lease".
Explain determina- . A lease of immovable property determines (i.e. terminates) In the following
tion of a lease. eight cases:
M.U. Nov. 2007 1. By efflux of the time limited thereby.
Thus, a lease created for a certain term (e.g., two years) term inates on
the last day of the term , without any formality, such as a notice on either side.
Write a short note 2. Where such time is limited conditionally on the happening of sorne
on : Determination event, by the happening of such event.
of a lease.
Thus, for instance, if a lease for 20 years is, at the same time, made
M.U. Dec. 2014
conditional upon the life of the lessee, the lease terminates on the death of the
lessee, even if this takes place within the stipulated period of 20 years; if the
lessee does not die within this period, the lease terminates at the end of the
period .
3. Where the interest of the lessor in the property terminates on , or his
power to dispose of the same extends only to, the happening of any event, by
the happening of such event.
This clause operates in cases where the lessor has only a limited interest
or a limited power to grant a lease. Thus, it has been held that a lease by a
Hindu widow who is entitled only to a life-estate, terminates on her death.
(Raghobir v. Jethu, 2 Pat. 171)
Similarly, a lease granted by a mortgage in possession and extending
beyond the term of the mortgage, terminates on redemption . (Jha gru v.
Ragunath, A.1.R . 1929 Pat. 630)
4. Merger, i.e., when the interests of the lessee and the lessor in the
whole of the property become vested at the same time in one person in same
right.
How can a lease be
made?When can a
The lease determines when the right of the lessee merges in that of the
lease be termi- lessor. The same man cannot be a landlord and tenant of the same property at
nated? the same time in the same right.
M.U. Apr. 2009
Merger may take place either (i) by act of parties, e.g. , when the lessor
releases his interest in favour of the lessee, or (ii) by operation of law, e.g.,
when the lessee takes the lessor's interest by succession. When a superior
owner acquires a subordinate's tenure, merger is the inevitable result , and if
he intends to avoid merger, he must evince a clear intention to keep the inferior
interest alive.
5. By express surrender, i.e., in case the lessee yields up his interest
under the lease to the lessor by mutual agreement.
In the case of an express surrender, no formalities are required. The
lessee must merely express his intention to surrender and the lessor must
agree to it. This must be followed by delivery of possession .
MCQ Nos. 108, 109

6. By implied surrender.
Thus, if a lessee accepts from his lessor a new lease of the leased property,
to take effect during the continuance of the existing lease, this is an implied
surrender of the former lease, and such lease terminates thereupon .
It has been held that mere execution of a usufructuary mortgage in favour
of the lessee in respect of the same property does not automatically result in
implied surrender. Whether or not there is an implied surrender in such a case
would depend upon the terms and conditions of the two transactions . (Ramrao
v. Palwmal, A .I.R. 1963 M.P. 296)
7. By forfeiture . (See below.)
8, On the expiry of a notice to terminate the /ease , orto quit (or of intention
to quit) the property leased, duly given by one party to the other : S. 111 (h) .
such notice may be waived with the express or implied consent of the person
to whom it is given, by an act on the part of the person giving it, showing an
intention to treat the lease as subsisting : s. 113.
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) If in the above example, B remains in possession even after the expiry
of the notice and A gives a second notice to quit, the first notice is waived.
· A valid notice must satisfy the following three requisites, viz. -
(a) It must expressly convey the intention to terminate the tenancy
although it is not necessary to state any ground for the notice to quit.
(b) It must specify the date on which the tenancy is to expire.
(c) It must be unconditional. Thus, a notice given by a tenant that he will
quit when he gets another suitable accommodation is not valid.
(Farrence v. Elkington, 1811 2 Camp. 591)
FORFEITURE OF A LEASE (Ss. 111-112 & 114-115)

Definition [S. 111(g)]
A lease determines (i.e. terminates) by forfeiture, if the lessee ·-
(i) breaks an express
condition, which
provides that on
breach thereof, the
lessor may re-enter;
or
(ii) renounces his char-
acter, as such, by -
t ...
- - ,
184 TH E TRAN SFER OF PROPERTY ACT
(a) setting up a ti tl e provided that - the les sor (or his

in a third person, or transferee) gives notice
(b) by claiming title in in writing to the lessee
himself [this is known of his intention to
as forfeiture by denial determine the lease .
of landlord's title]; or
(iii) is adjudicated insol-
vent, and the lease
provides that the les-
sor may reenter on
the happening of
such event,
~Vrlte a short note FORFEITURE-The lessee will forfeit the lease in any of the three cases
n : Forfeiture of a mentioned above bys. 111(g). However, there will be no forfeiture even in
ase. such cases, unless a power of re-entry is distinctly reserved by the lessor.
M.U. Apr. 2009 Therefore , where there is no provision for re-entry in the lease, the lessor ca
sue only for damages or an injunction, but not for ejectment.
As seen earlier, the lessor has the right to impose a cond ition on the
lessee restraining him from alienating the property. On the lessee's attempt to
break this condition , the lessor may restrain him by an injunction , or in case o
an actual breach thereof, he may sue for damages. Under such circu mstances,
a case of forfeiture will arise, only if there is a distinct provision for re-ent
attached to the lease.
After forfeiture has been incurred, it is further necessary that the lesso
should give a notice in writing to the lessee of his intention to determine (i.e.
terminate) the lease. Thereafter, the landlord, i.e. the lessor, can maintain a
suit for possession, provided he does not waive his right.
A condition restraining assignment by the lessee does not cover the case
of a mortgage of the leasehold property, inasmuch as an assignment means
only an absolute transfer. But, by virtue of Sec. 12, it is possible for a lessor to
impose a condition on his lessee that on the latter becoming insolvent, the
lease would stand terminated . Such a condition will operate as a termination
of the lease, or have the effect of forfeiture, only if a right of re-entry upon the
lessee's bankruptcy is distinctly reserved, and further if a written notice
announcing the lessor's intention to terminate the lease is given. For the purpose
of the above rule , it is immaterial that the lease is a permanent one.
In other words, there can be no forfeiture of the tenancy on any of the
grounds specified in S. 111 , unless there is a right of re-entry and unless a
written notice of the intention to determine the lease is given to the lessee . The
expression "right of re-entry" means a right to re-enter the land . It is a personal
right and implies no interest in property. The mere institutjon of a suit for.
jectment is not tantamount to giving notice as contemplated herein , because

the forfeiture must be comp leted and the lease determined before the
commencement of the suit. Service of notice is a condition precedent to the
determination of the tenancy, and therefore to the institution of the ejectment
suit.
Forfeiture by denial of landlord's title arises as soon as the lessee disclaims
his lessor's right by setting up a title in a third person or by claiming title in
himself, and the lessor does some act showing his intention to determine the
lease.
Problem: A is a tenant of B, but C claims to be the landlord . B sues A for
rent, and A in his written statement states "I have never paid rent to 8 . C now
claims the rent. I am ready to pay whosoever is the rightful owner". B on the
ground of disclaimer wants to eject A by suit. What are his chances?
Ans. : He has no chances. This is not a disclaimer by virtue of which B
can evict A.
Waiver of forfeiture (S. 112)

A forfeiture is waived-
(i) by acceptance of rent which has become due since the forfeiture, or
(ii) by distress for such rent, or
(iii) by any other action on the part of the lessor showing an intention to
treat the lease as subsisting.
The above rule applies only if the lessor is aware that the forfeiture has
been incurred.
Furthermore, if the rent is accepted after the institution of a suit to eject
the lessee on the ground of forfeiture, such acceptance does not amount to a
waiver.
RELIEF AGAINST FORFEITURE (Ss. 114-114A)

(i) For non-payment of rent (S. 114)
Where a lease of immovable property has determined by forfeiture for
non-payment of rent and the lessor sues to eject the lessee, - if at the hearing
of the suit, the lessee -
(a) pays or tenders to the lessor, the rent in arrear, together with interest
and costs, or
(b) furnishes security for such payment within 15 days, the court may,
instead of making a decree for ejectment, pass an order relieving
the lessee against the forfeiture, and thereupon, the lessee continues
to hold the property as if the forfeiture has not occurred .
(ii) In certain other cases (S. 114A)

Where a lease of the lessor has served specifying the particular
immovable property has on the lessee a notice breach compla ined o(
determined by forfeiture in writing - and if t he brea ch is
for a breach of an capabl e of rem edy,
express condition , which requiring the lessee to
provides that on breach remedy the breach ;
thereof, the lessor may and the lessee fails , within rea sonable time
re-enter, no suit for from the date of service of the notice, to rem edy
ejectment lies, unless the breach if it is capable of remedy.
and until-
The above provisions do not, however, apply to an express condition
against the assigning, under-letting, parting with the possession , or disposing
of the property leased, or to an express condition relating to forfeiture in case
of non-payment of rent.
Effect of surrender and forfeiture on under-leases (S. 115)

The surrender, express or implied, of a lease of immovable property does
not prejudice an under-lease of the property (or any part thereof) previously
granted by the lessee, on terms and conditions substantially the same (except
as regards the amount of rent) as those of the original lease; but, unless the
surrender is made for the purposes of obtaining a new lease, the rent payable
by, and the contracts binding on, the under-lessee, are to be respectively payable
to, and enforceable by, the lessor.
The forfeiture of such a lease annuls all such under-leases, except -
(i) where such forfeiture has been procured by the lessor in fra ud of the
under-lessees; or
(ii) relief against the forfeiture is granted under sec. 114.
SURRENDER AND FORFEITURE DISTINGUISHED

1. Surrender of a lease, which means a yielding up of the lessee's interest
to the lessor, moves from the lessee. Forfeiture of a lease is at the instance of
the lessor.
2. Surrender of a lease implies mutual consent on the part of the lessee
and the lessor. Forfeiture of a lease does not imply any consent on the part of
the lessee.
3. Sun-ender of a lease does not prejudice a sub-lease previously granted
by the lessee on the terms and conditions substantially the same (except as
regards the amount of the rent) as those of the original lease. In case of forfeiture
of a lease, the sub-lease falls with the lease from which it is derived, except
where (i) such forfeiture has been procured by the lessor in fraud of the under-
lease, or (ii) relief against forfeiture is granted under S. 114.
LEASES OF IMMOVABLE PROPERTY 1 7
TENANCY BY HOLDING OVER (TENANCY-AT-WILL) S. 116

If a less~e ~r under-lessee of a property remains In possession thereO'f
after the termtnat~on of the lease granted to the lessee, and the lessor (or his
1egal r~presentat,ve) accepts the rent 'from the lessee or under-lessee, or
otherwise assents to his continuing in possession , the lease Is, in the absence
of an agreeme_nt to the contrary, renewed from year to year, or from month to
n,onth , according to the purpose for which the property is leased, as specified
in section 106. In other words , if the original lease is for agricultural or
n,anufacturing purposes, it will be an annual tenancy and when for any other
purposes, it will be a monthly tenancy.
Examples
(a) A lets a house to B for 5 years; B underlets the house to C at a
monthly rent of t 100. The 5 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.
(c) A lets out lands for manufacturing purposes to B for 1O years. After
the expiry of the term , B is allowed to remain in possession with the
consent of A for two years more. If A then wants to eject B, to what
notice would be the latter be entitled?
The lease being for a manufacturing purpose, the holding over gives rise
to an annual tenancy termina?le ~ith 6 mon~hs' notice. But in this case, notice
will be necessary as the holding 1s for two years only with consent; therefore ,
the lease will come to an-end by efflux of time.
If, however, B is allowed to hold over indefinitely and not for a definite
period of two years, 6 months' notice will be necessary.
TENANCY BY HOLDING OVER - When termination of the lease takes
lace the lessee is bound to surrender possessio~ of the property, and on
~efau,lt, he may be ejected without notice. But if he r~mains in possession of
the property and if the lessor consent~ to the c~ntmuance of the lease by
accepting rent or otherwise assents to 1t, -there will be ~ new tenancy by the
tenant's so holding over. The new tenancy so created 1s called a tenancy by
holding over, sometimes also referred to as tenancy-at-will.
But so long as the lessor does not assent to the continuation of the lease,
there is no holding over, and by continued possession, the tenant becomes
what is known as tenant-at-sufferance, i.e., a tenant who comes in by right and
holds over without the consent of the landlord, and therefore, without right.
DIFFERENCE BETWEEN
Define a lease .
TENANT HOLDING OVER TENANT-AT-SUFFERANCE
what are its essen- l------_:_...::::.:~:..=..~:-=~_ _L_~---- - - - - ------....
ti a Is? Explain
Tenancy-at-will
1. Interest in the property- .
and Tenancy-at- A tenant holding over remains in A tenant-at-sufferance merely enjoys
sufference. possession with the assent of the possession of the property, without
M.U. Nov. 2008 lessor, and has therefore some right having any interest In the property.
to the property.
2. Privily of estate
Write a short note There is some priv ily of estate Though a tenant-at-sufferance is not
on: Tenancy-at-will between a tenant holding over and strictly a trepasser, in the sense in
and tenancy-at-
his landlord . which criminal law understands it,
suffrance.
M.U. Nov. 2010
yet , there is no privity of estate
Apr. 2016 between him and the landlord .
3. Whether heritable?
Yes. He cannot transfer any interest in the
property to anybody ; nor canhe
transmit any right to successors. So,
when a tenant-at-sufferance dies, his
heirs in possession of the property
may be treated as trespassers.
4 . Notice to quit, if necessary
A tenant holding over cannot be A tenant-at-sufferance is not entitled
ejected without notice to
quit under to any such notice.
Sec. 106.
Tenant-at-will
A tenant-at-will is the result of a tenancy arising from the implication of
law and sometimes by agreement. It is a tenancy which is terminable at the will
eitherofthe landlord or of the tenant. It may arise in the following circumstances:
(a) It may arise when a person is in possession of premises with the
consent of the owner, there being no agreed period for wh ich he
should be so.
(b) It may also arise by an agreement to let, for an indefinite term, for
compensation accruing from day to day, so long as both parties agree.
(c) A tenancy-at-will may also arise when a person enters into possession
under a void lease.
Such a tenancy is terminable by either party giving notice. In such a
tenancy, the tenant is liable to pay compensation for use and occupation. The
tenant is not liable to pay rent as there is no demise to hir1i. Therefore, obviously
such a tenancy is not alienable and it is terminated by the death of the tenant.
A lease is not exun ul .

Ives on his heirs l'k 9 shed by the death of the lessee holding over, and
devo fIal difference b ~e any other interest in immovable property. That is the
assen t . d e een a tenant holding over and tenant-at-will A tenancy-
·11 ·s
1 de ermine by th ·
. ~ death of either tenant or his landlord . But in case of
9tW' •
9 tenant holding over, hts interest is heritable and alienable. (Kariya v. Vishnu
(1971 ), K.L.T. 340) ,
~egal implications of tenacy-at-will and tenancy-at-sufferance

Tenancy-at-sufferance is merely a fiction to prevent the possession from
beinQ a trespass._It can arise only by implication of law when a person has
b en in possession under a lawful title, and continues in possession after that
f~e has come to an end, without the consent of the person entitled. According
1
t the Madras High Court, the concept has no place after the enactment of the
;ransfer of Property Act: Govindaswamyv. Ramaswamy, (1916) 30 Mad. L.J .
492 . But Sir D.F. Mui/a points out that the Act is not exhaustive, and the term is
useful to distinguish a_possession rightful in its inception but wrongful in its
continuation, ·from a trespass wrongful both in its inception and its continuance.
exemption of lease for agricultural purposes (S. 117) MCQ No. 110
ss.
105 to 117 do not apply to leases for agricultural purposes. But the
State Government may, by notification (published 6 months before it takes
effect), make all or any of the above provisions applicable to agricultural leases
also.
***
7
EXCHANGES
(Ss. 118-121)
MCQ Nos. 111,
112 and 113
Definition (S. 118)
When two persons mutually transfer -
Define exchange. th e ownership of one thing for the ownership of an° th er,
(2 marks)
M.U. May 2012 neither thing or both things being money only, the transaction is called
Nov. 2012 an exchange.
Jan. 2019 EXCHANGE - It may be noted that an exchange also includes a barter
Dec.2019 of goods or movable property. The provisions will, therefore, apply to exchanges
both 9f movable and immovable property.
Write a short note

. T~e essential condition of every transaction in ~e nature of an ex~hange
on : Exchange. is that it must be a transfer of a thing for another thing , and both or e 1th er of
M.U. Nov. 2007 these things may be movable or immovable. Thus, there may be an exchange
Nov. 2008 of Xs pen for Y's book, or of X's house for the house of Y. But, according to the
definition, there cannot be an exchange of a table for t 100, or of a horse for
~ 5000. These are sales, because one of the items transferred is money, and
they will be governed by the principles applicable to sale. If the sale is of
immovable property, the provisions of ss. 54 to 57 will apply. If, on the other
What is exchange?
hand, the sale is of movable property, the provisions of the Sale of Goods Act,
What are the rights
and liabilities of 1930, will apply.
parties to an It must, however, be observed that the definition does not exclude the
exchange?
payment of money altogether. What it says is that no transfer of a thing for
M.U. Nov. 2013
money only can amount to an exchange. It follows, therefore, that if one of the
Dec.2014
two properties which are to be exchanged exceeds the other in value , the
Apr. 2015
Nov.2015
transaction would nonetheless be an exchange, even if some money is paid
May 2017 by the owner of the property in addition, in order to equalise the value of both
Apr. 2018 properties. For example, if A's house worth t 50 lakhs is to be.exchanged for
Jan.2019 B's field which is worth ~ 49 lakhs, and in pursuance of this bargain, B pays t
May 2019 1 lakh in cash to A, the transaction is not a sale but an exchange. (Ismail v.
Saleh Muhammed, (1927) 7 Lah. L.J. 18)
Similarly, where the Government of India, as owners of the G. I. P. Rly.,
exchanged lands valued at 89 lacs of rupees for lands belonging to the Bombay
What is
'Exchange'? What Port Trust valued at 86 lacs of rupees and rupees 3 lacs paid in cash by the
properties can not Port Trust, it was held that the transaction was an exchange and not a sale,
be transferred? having regard to the relative value of the lands and the money paid for equality
M.U. Nov. 2017 of exchange. (In the Matter of the Indian Stamp Act, 1899, (1934) 36 Born. L.R.
497)
190
EXCHANGE 191
exchange how effected (S. 11a)

A transfer of property in co I I ·
.. mp et on of an exchange can be made only m
the manner provided for the tra nsfer of such property by sale.
EXC ~AN GE HOW . EFFECTED - The mode of transfer by way of
exchange IS the same as in the case of sales. Thus, a registered instrument is
necessary in an exchange of -
(i) tangible immovable property of the value of ~ 100 and upwards; and
(ii) a reversion or other intangible thing .
In the case of tangible immovable property, of a value less than f 100,
exchange can be effected by a registered instrument or by delivery of the
property.
In the case of movable property, the relevant portions of the .Indian Sale
of Goods Act will apply.
SALE AND EXCHANGE DISTINGUISHED - Sections 1,1a, 119 and 120
show that the Legislature has put an exchange on the same footing as a sale
in almost every respect For example, a transfer of property by way of an
exchange can be made only in the manner provided for the transfer of such
property by sale. Moreover, each party has the rights, and is subject to the
liabilities, of a sel/er as to that which he gives, and has the rights and is subject
0
to the liabilities of a buyer as to that which he takes.

The only distinguishing point between sale and exchange is that while a
sale is always for a pr_ice, which means money or the current coin of the realm ;
in exchange, there is no price, but one specific thing is transferred for another;
money may, however, be added to the thing to equalise the consideration.
If one of the things transferred is money, _the transaction is not an
exchange, but a sale. If both things transferred are money, the transaction is
not a sale, but an exchange. In -an exchange of money, there is an implied
warranty as to the genuineness of money. (S. 121)
DIFFERENCE BETWEEN
EXCHANGE PARrlTION
1 . As to its nature -
(a) An exchange .is the mutual (a) A partition is a mere Write a short note
transfer of respective ownership arrangement, by virtue of which on : Difference
between exchange
of two persons in two different the several co-owners hold in and partition.
specific properties. severalty the lands which · they M.U. Dec. 2014
had before held in common .
(b) Exchange is brought abo~t by a (b) Right of partition is a natural
contract between the parties. incident of property.
-------.. . ·---
192
2 . Interest in property -
1n an exchange , the persons lnthecaseofa partition, each pers?n •
exchanging properties are has as much intere st in the ~ntire •
respectively the parties to the property as the other. There 1~ ~o
exchange. One person cannot say question of exclusive ownership in
that he had , previous to the caseofpartition .
exchange, any interest in the property
he got by the exchange.
MCQ Nos. 114• 11 5 Right of party deprived of thing received in exchange (S. 119)
If any party to an exchange (or any person claiming through or under
such party) is, by reason of any defect in the title of the other party, deprived of
the thing (or any part of it) received by him in exchange, -
- then, unless a contrary intention appears from the terms of the
exchange, such other party is liable to him (or to any person claiming through
or under him) -
(i) for any loss caused thereby; or
(ii) at the option of the person so deprived , for the return of the th ing so
transferred, if it is still in the possession of-
(a) such other party, or
(b) his legal representative, or
(c) a transferee from him without consideration.
MCQ No. 11s Rights and liabilities of parties to an exchange (S. 120)
As stated above, except as otherwise provided above, each party has the
rights and is subjected to the liabilities of a seller as to that which he gives, and
has the rights and is subjected to the liabilities of a buyer as to that which he
takes.
Exchange of money (S. 121)

On an exchange of money, each party thereby warrants the genuineness
of the money given by him.
So, when money is paid for forged bills or forged curren cy notes, the
money may be recovered.
SALE, MORTGAGE, EXCHANGE AND LEASE COMPARED - These
are all different forms of transfer. A sale transfers the entire ownership in the
property. A mortgage transfers only some interest in the property. A lease
transfers only the right of enjoying the property.
"Money" includes coins as well as currency notes. (In Re Mathur Lalbhai,
1901 ILR 25 Born 702)
-----,
EXCHANGE 193
A sale is a transfer of ownership for a price. An exchange also implies a

transfer of ownership, but not for a price; in an exchange, the ownership of
one thing is transferred for the ownership of another thing , neither thing being
money only. In a sale, the price is always money. If we substitute a thing for
money, a sale will become an .. exchange".
***
8
GIFTS
(5s. 122-129)
"Gift'' defined (S. 122)

Define a gift.
A gift is the transfer
(2 marks)
M.U. Nov. 2013
of certain existing movable or immovable property,
made (i) voluntarily, and
MCQ Nos. 117, 118 (ii) without consideration,
by one person (called the donor) to another (called the donee), and
accepted by (or on behalf of) the do nee.
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 acceptance, the gift
is void.
Gift how effected (S. 123)

A gift of-
What is a gift?
(a) immovable property must be (i) signed by (or on behalf of) the
What are the
essentials of a effected by a registered donor, and
gift? How are gifts instrument - (ii) attested by at le ast two
affected??
witnesses.
M.U. Nov. 2012
Nov. 2017 (b) movable property may be either by a registered instrument
Apr. 2018 effected- signed and attested as above , or by
delivery. [Such delivery may be made
MCQ No. 119 in the same way as goods sold may
be delivered.]
MCQ No. 120 REQUISITES OF A VALID GIFT-
(1) There should be a donor and a donee.
(2) The subject of the gift must be certain and existing and capable of
transfer.
(3) The gift should be made voluntarily and without consideration.
(4) There should be a transfer on the part of the donor.
(5) There should be an acceptance by or on behalf of the donee during
his life-time.
(6) The acceptance must be at a time when the donor is alive and capable
of giving.
194
GIFTS 195
(7) Therefore it nee .

both be . '. essan 1Y follows that the donor and the donee must What are the
1tvmg persons. essential Ingre -
11
dients of a "Glft 7
(S) ~hen th e property is immovable there must be a registered When can a gift be
mstrument property attested. ' revolved?
(9) In case of movabf . M.U. Apr. 2009
. · e property there must be either a registered Oec. 2014
t
mS rument properly attested o~ delivery of possession .
Dec. 2016
122
. S. lays st ress on the acceptance of the gift. Acceptance implies May 2017
existence of the property· th f ·• · Oec. 2019
. ti " d , ere ore, the definition uses the words "certain
exis ng , an consequently, there can be no gift of future property.
E_mphasis is _al~o laid on the voluntary character of the transaction to
make it sure that it 1s not made under undue influence, duress etc., and to
repel an argument that a gift, by reason of absence of consideration, is not a
contract like the other forms of transfer.
Problem: A executes a gift in favour of B. The given land is worth t 90. MCQ No. 121
The deed is not registered but B is put in possession . Is the gift valid?
Ans. : A gift of immovable property, of whatever value, can only be made
by a registered instrument. A deed cannot be dispensed with even for a property
of small value, as in the case of a sale. Even if the intended donee is put in
possession, a gift of immovable property is invalid without a registered
1
instrument. '
GIFTS UNDER HINDU LAW AND MAHOMEDAN LAW - The Hindu

law, which requires delivery of possession to complete a gift of immovable
property, has been abrogated by S. 123 of this Act. So also, c;i gift of movable
property may be made simply by a registered instrument without delivery of
property.
Under Mahomedan law, the essentials of a gift are: (i) a declaration of gift
by the donor, (ii) acceptance of the gift by the donee, and (iii) if possible, delivery
of possession. This rule of Mahomedan law is, by virtue of S. 139 (below) of
the Act, unaffected by the provisions of S. 123, and consequently a registered
instrument is not necessary to validate a gift by a Mahbmedan of an immovable
property. So, it follows that even a registered deed of gift is not effectual under
the Mahomedan law, if it is not accompanied -by delivery of possession.
REGISTRATION - Registration is compulsory in the case of a gift of
immovable property, whatever be the value of the property. But it is not
necessary that the deed should be regi~tered by the ~fonor himself.
It may be noted that a gift becomes irrevocable once the deed of gift is
delivered to the donee, even before it~ registration. Once the deed is executed,
it will be registered according to the Indian Registration Act, even though the
donor has changed his mind subsequently. Once the deed is executed and the
gift is accepted during the life...time of the donor, the deed of gift may even be
registered after the death of the donor. But an unregistered deed of gift cannot
be used under the doctrine of part-performance.
196
The Delhi High Court has reiterated that in case of a gift of i~movable
property, if th e document is not registered mere delivery of possession can no
pass a title to the donee. (Dawarv. Dha,.,;a, A.I.R. 1993 Del. 19)
Problem : A deed of gift is executed, attested and delivered to th e do nee
The donee accepts the gift. Before registration o·f the Deed , th~ don?r seek~ to
revoke the gift, contending that the gift is not complete until reg1strat1on . Advise
the donee.
Ans. : A deed of gift becomes irrevocable once it is executed , atte 5ted
and delivered to the donee and accepted by the latter. Thereafter, the deed
may be registered later on , even if the donor has changed his mi nd , a nd even
after the death of the donor. Thus, in the present case, the gift is complete, and
the donee is entitled to it.
DIFFERENCE BETWEEN
GIFT SALE
1. Attestation -
Is compulsory. I Not so.
2. Registration -
Compulsory for a gift irrespective of It is not altogether compulsory. Thus,
the value of property. a sale of property below { 100 may
be effected by delivery of possession .
3. Acceptance
Is a necessary condition for a gift. Acceptance is implied when
consideration passes.
KIND·s OF GIFTS (Ss. 6, 122 & 124-127)

1. Void gifts {Ss. 6, 122 & 124-126)
What are the
The following gifts are void, viz-
characteristics of
a valid gift? What 1. Gift made for an unlawful purpose : S. 6.
are the different
2. Gift depending on a condition, the fulfillment of which is impossible,
types of gifts?
When can gifts be or forbidden by law: S. 6.
revoked? 3. Where the donee dies before acceptance: S. 122.
M.U. Apr. 2015
4. Gift by a person incompetent to contract, e.g., a minor, lunatic etc. :
Apr. 2016
S. 7.
5. A gift comprising existing and future property is void as to the latter :
S. 124.
Problem : X gives to his daughter a gift of his bungalow, Prabhu Prasad ,
built in 2010, and also of a Maruti Car which Xwas to buy in future . Is the gift
valid?
GIFTS 197
Ans.: S. 124 of the A . . ,

property is void as t ti ct provides that a gift comprising existing 8nd future
is valid (as it is exist~n ie latter. In th is case, therefore, the gift of the _bungalo~
void (as it is future g property) , but the gift of the car to be bought in future is
property) .
6. A gift of a th· t
·t · . mg to two or more donees of whom one does not accep
I , is void as to the interest which he would have taken, had he
accepted : s. 125 _
f ~h;n a gift, is made to two or more persons jointly it does not fall in its
nt ,re Yit, 'f othne of the donees does not ·accept The gift i~ void only as to the
ei
n eres · o e donee hO ·
. w does not accept.
7. ~ gift Which, under an agreement between the parties, is rev~cable,
holly or in part, at the mere will of the donor, is void wholly or ,n part,
as the case may be : S. 126.
. MISTAKE - A gift is not liable to be set aside merely on the grou nd of
st
mi ake, provided it is not vitiated by fraud, undue influence, etc.
GIFT FOR PAST ILLICIT COHABITATION - A gift requires no
co~sideration, and past illicit cohabitation can be a motive for a gift, but not its
obJe~t or consideration, and a gift in consideration of past cohabitation is immoral
8nd mvalid. (Subama v. Yamanappa, 35 B.L.R. 345)
Und_er S. 2(d) of the Indian Contract Act, past illicit cohabitation cannot be
th0 consideration for an agreement or a transfer of property, and such an
a~r~ement or transfer is void. If such a void agreement precedes a gift and the
gift is made in discharge of that agreement, then the gift also is void. (/stak
Kamu v. Ranchhod Zipru, 38 Born . LR. 775)
2. Onerous gifts (S. 127)

A gift may not always be of a purely beneficial character, but may, at
times, be burdened with an obligation, e.g., when shares in a company subject
to heavy calls form the subject-matter of a gift. Such a gift is called an 'onerous
gift'. The law as to onerous gifts is laid down in S. 127 of the Act.
1 . Where a gift is in the form of a single transfer to the same person of What is onerous
several things, of which one is, and the others are not, burdened by an obligation, gift? (2 marks)
the donee can take nothing by the gift unless he accepts it fully. M.U. Dec. 2014
Apr. 2015
Illustration : A has shares in X, a prosperous joint-stock company, and Apr. 2016
also shares in Y, a joint-stock company in difficulties. Heavy calls are expected
in respect of the shares in Y. A gives Ball his shares in joint-stock companies.
B refuses to accept the shares in Y. He cannot take the shares in X.
2. Where a gift is in the form of two or: more separate and independent
transfers to the same person of several things, - the donee is at liberty to
accept one of them and refuse the others, although the former may be beneficial
and the latter onerous.
. . Illustration : A having a lease for term of years of a house at a ren t

8
~htch he and his representatives are bound to pay during the term , 0nd wh ich
,s more than the house can be let for, gives to B the lease, and also , as a
separate and independent transaction a sum of money. B refu ses to accept
the lease. He does not, by his refusal, forfeit the money.
S . 127 Is based on the simple principle that he who wants the roses must
not fear the thorns . Qui sensit commodum, debt et sentire onus. The rule is
analogous to the doctrine of election, as the donee has to elect to accept the
whole gift or not to accept anything at all. What he cannot do is to retain the
benefit of the transaction and reject its burden . The law will not allow the
1
donee to blow hot and cold at the same time.
Onerous gift to disqualified person (S. 127)

If a donee, who is not competent to contract, accepts property burdened
.by any obligation, he is not bound by his acceptance. But, if after becoming
competent to contract, and being aware of the obligation, he retains the property
given, he becomes so bound.
A disqualified person (e.g., a minor) may be a donee, but he cannot create
obligations against himself. So, when an onerous gift is made to him and he
accepts it, he is not bound by the obligations with which the gift is bu rdened .
The result is that when the disqualification is removed, he may avoid the
obligation by returning the property to the donor within a reasonable time. But
where a minor is the donee of an onerous gift and after attaining majority,
retains the property given, he will be bound by the obligation with which the gift
is burdened.
UNIVERSAL DONEE (S. 128)

Define a universal A universal donee is one to whom the donor's whole property is given,
donee. (2 marks)
and who consequently becomes liable for all the debts due by, and liabilities of,
M.U. Apr. 2013
the donor at the time of the gift to the extent of the property comprised in the
Apr. 2015
gift.
Nov. 2015
Apr. 2016 Subject to the provisions of S. 127 (seen above) where a gift co nsists of
Dec.2016 the donor's whole property, the donee is personally liable for a// the debts due
May 2019 by the donor at the time of the gift, to the extent of the property comprised
therein .
The essential condition for the application of S. 128 is that all the properties
Write a short note
on: Universal of the debtor should have been transferred to the donee. However, it has been
Donee. held that even if a life-interest in a part of the property is retained by the donor,
M.U. Dec. 2019 the donee is nevertheless a universal donee. (Shahzad Singh v. Madan Gopal,
A .LR. 1963AII. 146)
However, if only all the immovable properties are transferred , and the
donor continues to own movables, the donee cannot be called a universal
donee. (Anrudh v. Lachmi, A .I.R. 1928AII. 500)
GIFTS 199
But, if only a sm .
11
donor, the donee Will b: · insignificant part of the property Is retained by the
A,I.R. 1944 Nag . 225) treated as a universal donee. (Bapurao v. Bulakldas,
Where, in a gift-deed, th . .
8
inrespect of property mortg . donor ~ad not included the equity of redemption
t~e whole of his property aged by him, he cannot be said to have tra nsferred
Ch nd
donee. (Ram Raj v. Lat a th e donee cannot be regarded as a universal
. a ndra, A.1 .R. 1941 Oudh 205)
h
T ere 1s no rule under M . '
visions of S. 128 of th T _ ahomeddan Law wh ich conflicts with the
~~~R. 1930 Oudh, 268) e ran sfer of Property Act. (Abid Husain v. Ram Nidh,
HOW S. 128 DIFFERS F
. ROM S. 53 - S . 53 of the Act deals with
fraudulent tra~sfers of immovable property, whereas S . 128 deals with both
movable and immovable property.
Secondly, . a gift under
. S. 128 is not necessarily fraudulent· If the QI•·ft ·IS
fraudulent and 1t covers immovable property, S. 53 would apply· but if it is n 0 t
fraudulent, a remedy will still be available under s. 128. ' '
Lastly, under S. 53 , the fraudulent _gift need not comprise of the entire
property of the donor, whereas S. 128 will come·into play only if there is a gift
o'f the whole property of the donor.
REVOCATION OR SUSPENSION OF GIFTS (S. 126) MCQ No. 122
A gift once made is irrevocable_, except in the following two cases :

1. A gift is revocable if the donor and the donee have agreed that on the When can a gift be
happening of a specified event (not depending upon the will of the donor), the revoked?
gift should be suspended or revoked. (2 marks)
M.U. May 2012
Illustration: (a) A gives a field to B reserving to himself, with B's assent, Nov. 2012
the right to take back the field in case B and his descendants die before A. B Apr. 2016
dies without descendants in A's life-time. };\ may take back the field . May 2017
A gift, which the parties agree is revocable wholly or in part, at the mere
will of the donor, is void wholly or in part, as the case may be. Write a short note
on : Revocation of
(b) A gives a lakh of rupees to B, reserving·to himself, with B's assent, the a gift.
right to take back at pleasure f 19,000 out of the lakh. The gift holds good as M.U. Nov. 2010
to? 90,000, but is void as to f 10,000, which continue to belong to A. Dec.2019
2. A gift may also be revoked in any of the cases (save want or failure of
Explain " gift". Can
consideration) in which if it were a contract, it might be rescinded (e.g., when a gift be revoked?
the gift is made under coercion , undue influence, fraud, misrepresentation , M.U. Apr. 2009
etc.) Apr. 2013
The above rules do not, however, affect the rights o~ transferee for
consideration without notice.
---
200
When the gift is revoked owing to the ca uses mentioned in S. 126 , _the
donee ceases to have any interest in the property. But, if before revoc~t,on ,
th e donee has transferred the property to a third party, who take s ,t for
consideration and without notice I the donor cannot exercise his power of
revocation given to him by S. 126 to the prejudice of such third person .
Undue influence is a common ground for revocation , e.g., a gift by 8 child
to a parent, by a cestui que trust to a trustee , by a patient to his doctor or by a
client to his solicitor. Hardy, L. J. once said that ''the only competent independent
advice that should be given to a man who proposes to make a gift to his solicitor
is to tell him not to do so ."
The following gifts have been held to be revocable, if the stipul ated
condition is satisfied, namely, -
(a) A gift of house, on condition that the donee resides therein , fai ling
which the gift stands forfeited .
(b) A conditional gift of land by a convict sentenced to life imprisonment,
stipulating that the gifted land would revert to him if he were to be set
free.
(c) A gift to a Hindu widow, on condition that the gift would revert to the
donor if she remarried.
INCOMPLETE GIFT - The rule that a gift cannot be revoked except
according to the provisions of Sec. 126 does not apply to an incomplete gift.
Such a gift can be revoked at any time.
A donatio mortis causa of movable property is by virtue of S. 129 of the
Act, revocable at the will of the donor.
Saving of donatio mortis causa and Muhammadan law (S. 129)

S. 129 of the Act provides that nothing in this Chapter (relating to gifts) -
(i) relates to gifts of movable property made in contemplation of death
(i.e. donatio mortis causa); or
(ii) shall be deemed to affect any rule of Muhammadan law.
S. 129 exempts gifts of movable property made in contemplation of death
from the operation of all the foregoing provisions relating to gifts. Such gifts
are governed by S. 191 of the Indian Succession Act, 1925, as they are treated
as being in the nature of gifts by will. But, a similar gift of immovable property
must be made according to the provisions of this Act.
GIFTS BY MUHAMMADAN - S. 129 also exempts gifts made by
Muhammadan from the operation of these provisions in so far as they are
consistent with the principles of Mahomedan law. Under Muhammadan Law, a
gift of an immovable property may be made orally by simple delivery of
possession. Similarly, the rules regarding revocation of a gift are entirely different
from those enacted in S. 126. In these cases, therefore, none of the relevant
provisions of the Act will apply.
GIFTS 201
But in so far as the rules under this Act are founded upon equity and
reason and do not conflict with any rule of that law, they will be applied.
Accordingly, S. 128 about onerous gifts, being an embodiment of a rule of
equity, has been held to ~pply to Mahomedan gifts. (Abdul Satarv. Satyabhusan,
(1908) 35 Cal. 667)
GIFTS BY HINDUS - Formerly, no P.Ortion of the Transfer of Property
Act, relating to gifts, except S. 123, affected the Hindu law of gifts. But by the
Amending Act of 1929, the whole of the Transfer of Property Act was made
applicable to Hindus. Therefore, today, gifts by Hindus will be governed by the
provisions of this Chapter.
***
9
TRANSFER OF ACTIONABLE CLAIMS
(Ss. 3 & 130-137)
MCQ No. 123
'Actionable Claim' defined (S. 3)
What Is an -
actionable claim? Actionable claim means (a) any debt, other than (i) by a mortgage of
(2 marks) a claim to- a debt, secured - immov able pro-
M.U. May 2012 perty, or
Nov. 2012
(ii) by hypothecation or
Dec. 2014
pledge of movable
Apr. 2015
or property,
Apr. 2016
Dec. 2016 (b) any beneficial not in the possession
interest in movable (either act ual or
Write a short note constructive ) of the
property-
on : Actionable
claimant,
claim.
M.U. Apr. 2008 which claim the Civil Courts recognise as affording grounds for relief, whether
Apr. 2010 such debt or beneficial interest be existent, accruing, conditional or contingent.
Give two examples

An actionable claim is similar to what is known as a chose-in-action in
of actionable England. It comprises -
claims. (2 marks) (i) a claim to an unsecured debt; or
M.U. Apr. 2013
(ii) a claim to any beneficial interest in movable property not in actual or
constructive possession of the claimant.
Although negotiable instruments, debentures, stocks , sha res and
mercantile documents of title to goods might come under the definition of an
actionable claim, yet the formalities prescribed for the assignment of an
actionable claim are not applicable to negotiable instruments and transfers of
such instruments. (S. 137)
Whether a share is a 'Chose in Action' : In Colonial Bank v. Whimney,
shares in a railway company were deposited by a partnership firm with a bank
as security, but the bank did not give notice of it to the railway company. The
partners having become bankrupt, the question arose whether the shares were
in their reputed ownership and so passed to the trustee in bankruptcy. Chooses
in action other than trade debts are not goods and so if the shares are choses
in action, they would be exempt from the doctrine of reputed ownership. The
question, therefore, was whether shares in a company are choses in action.
Lindley L. J., observed :
"I confess I feel a difficulty in seeing what the registered owner of a
share can recover by action. He has the ownership of the share and he
202
TRANSFER OF ACTIONABLE CLAIMS 203
c~?not get anything more than he has got already. If he is kept out of his
~tyidends, he can bring his action for those dividends. They may be choses
in a~tlon, that I can understand , but he cannot sue for the share, as he
has it already. This appears to me to show that it cannot be a chose in
action in the ordinary sense although I do not say that it may not be so in
the extended a d 1 •
n oose sense of that expression ."
Cotton L.J., also said :
"'Shares are not a right of proceeding in a Court of law to recover

d a mag es or a debt."
Fry: l.J. • dissenting from the majority view, observed :

A share is, in my opinion , the right to receive certain benefits
corporar . from a
,
th ton and to do certain acts as a member of that corporation ; and if
ose
th bene'fits be withheld or those acts be obstructed, the only remedy
of e owner of the share is by action. A share appears to me to be closely
aki~ to a debt, Which is one of the most familiar of choses in action. No
action i_s required to obtain the right to the money in the case of the debt
th
or e nght to a dividend in the case of the share; but an action is the only
~eans of obtaining the money itself or the other benefits in specie, the
nght to Which is called in one case a debt and in the other case, a share."
From the above discussion of the question, it is clear that personal property
not in possession is what is meant by a chose in action . It includes debts,
negotiable instruments, dividends, debentures, patents, copyrights, bills of
lading, legacies, rights of action arising out of tort or under a contract, etc.
Transfer how effected [S. 130(1)]

The transfer of an actionable claim (whether with or without consideration)
can be effected only by the execution of an instrument (i) in writing (ii) signed
by the transferor (or his duly authorised agent), and the transfer is complete
and effectual upon the execution of such instrument.
[ Note : S. 130 does not require 'registration' as one of the formalities. ]
The assignment of an actionable claim under the Transfer of Property
Act combines in itself some features of the legal, and some of equitable modes
of assignment under English law.
In England, a legal assignment-
(a) must be an absolute assignment;
(b) must be in writing;
(c) takes effect from the date of notice to the debtor, as without such
notice, an assignment does not take effect;
(d) enables the assignee to sue in his own name and to give a valid
discharge.
In an equitable assignment (In England):

(a) It is not necessary that it should be an absolute assignment. It may
be by way of a charge .
(b) As the intention to assign is important. it may be expressed in any
form and writing is not necessary.
( c) Notice to the debtor is not necessary to complete th e assig.n ~~nt,
th0ugh it may be necessary to bind the debtor and to fi x th e pnont,es.
(d) The assignment must be made for value.
( e) The assignee must implead the assignor as a party.
The features of an assignment under the Transfer of Property Act are :
(a) It need not be an absolute assignment. It may be by way of a charge.
(b) It must be in writing.
(c) Notice is not necessary to complete the assignment, though it might
be necessary to bind the debtor.
(d) The assignee can sue in his own name.
Problem : M and V were rival claimants of the proceeds of a policy of life
insurance on the life of their debtor which had been paid into Court by th e
Insurance company. M relied on ~n instrument in writing constituting an
assignment in his favour, and V based his claim on a deposit of the policy wi th
him by the debtor unaccompanied by any writing . Discuss the right of Ma nd V
over the moneys deposited.
Ans. : V's claim is not sound because a written instrument is necessary
for an assignment. Hence, M will ~ucceed.
Rights of a transferee of an actionable claim (Ss. 130 & 132)

1. The rights and remedies of the transferor (whether by way of damages
or otherwise) vest in the transferee, whether any notice of such transfer is or is
not given in the manner prescribed by S. 133.
\
However, every dealing with the debt (or other actionable claim ) by the
debtor or other person, from or against whom the transferor would , but for
such instrument of transfer, have been entitled td recover or enforce such debt
or actionable claim is (save where the debtor or other person is a party to the
transfer or has received express notice thereof as hereinafter provided) valid
as against such transferee. [S. 130(1 )]
Illustration : A owes money to B, who transfers the debt to C. B then
demands the debt from A, who not having received notice of the transfer as
prescribed in S. 131 , pays B. The payment is valid, and C cannot sue A for the
debt.
NOTICE - A transfer of an actionable claim is complete when the
instrument has been executed , even if no notice has been served. But the
TRANSFER OF ACTIONABLE CLAIMS 205
question of notice has a • . .

f f n important bearing on the transferee's right Though
the trans er o an actionable cl i • •
(the transferee is nots · am is complete without notice, yet the position
oho pays off the debt to~~~:/m~ess the nec~ssary notice is given. The debtor,
w rt tO th t f editor, not having any such notice and not being
a pa Y e r~ns er, can successfully resist the claim of the transferee and
absen~e of no_tice protects him. So long as proper notice is not served, the
debtor _is not dffectly liable to the transferee. It should be noted that when the
th
debtor is a p~rty to e transfer, he becomes liable even without express notice.
The Illustration to S. 130 above makes this position clear.
s
2. The t~~n f~ree may sue or institute proceedings for the same (i) in his
own name, (II) wi th out obtaining the transferor's consent to such suit or
proceedings, and (iii) without making him a party thereto.
Exception : Nothing in S. 130 appl.i es to the transfer of a marine or fire
policy of insurance. (It may be noted that a policy of life insurance is not covered
by the Exception.)
Illustration: A effects a policy on his own life with an Insurance Company,
and assigns it to a ~ank !or securing the payment of an existing or future debt.
If A dies, the Bank 1s entitled .to receive the amount of the policy and sue on it
without the concurrence of A's executor, subject to the proviso above and to
the provisions of S. 132.
INSURANCE CONTRACTS-A contract of life insurance is not exempted
from the operation of this section. The reason for this is that while marine and
fire insurance are contracts of indemnity, benefiting only the holders of the
property at the time of loss, and not available to third persons by assignment,
the benefit of a life-policy is enjoyable by anybody to whom it has been assigned.
In the case of a marine or fire insurance, the holder of the property is not liable
to be easily defeated as he is the holder of the policy as well (see S. 135), but
the transferee of a life-policy, unless he gives notice to the insuring company,
may easily be defeated by a payment made by the company to the transferor.
Notice of transfer of an actionable claim (S. 131)
Every notice of transfer of an actionable claim must be in writing signed
by the transferor or his agent duly authorised in this behalf, or in case the
transferor refuses to sign, by the transferee or his agent, and must state the
name and address of the transferee.
Liability of transferee of an actionable claim (S. 132)

The transferee of an actionable claim takes it subject to all the liabilities
and equities to which the transferor was subject in respect thereof at the date
of the transfer.
Illustrations : (i) A transfers to Ca debt due to him by B, A being then
indebted to B. C sues B for the debt due by B to A B is entitled to set off the
debt due by A to him, although C was unaware of it at the date of the transfer.
206
(ii) A executed a bond in favour of B, under circumstances entitling the

forme~ to have it delivered up and cancelled . B assigns the bond to C for v~lue
a nd without notice of such circumstances. C cannot enforce the bo nd against
A.
SUMMARY OF TRANSFEREE'S
RIGHTS LIABILITIES
1. All the rights and remedies of his 1. He takes the claim subject to all
transferorvestin him : S. 130(1). the liabilities and equities to
which his transferor was subject
2. He may sue in his own name : S. 132.
without his transferor's consent
and without making him a party
thereto : S. 130(2).
CASE -A debt was due by A to B for work done. B gave his creditor, C,
a power of attorney, and deposited with him vouchers for the work in order to
enable him to get the payment. Before C could draw the money, the debt was
attached by another creditor. In the circumstances, C would have no lien or
charge on the money, for there was no written assignment of the debt.
Warranty of debtor,s solvency (S. 133)

Where the transferor of a debt warrants the solvency of the debtor, the
warranty, in the absence of a contract of the contrary, applies only to his solvency
at the time of transfer, and is limited where the transfer is made for consideration,
to the amount or value of such consideration.
Mortgage of an actionable claim (S. 134)

Where a debt is transferred for the purpose of securing an existing or
future debt, the debt so transferred, if received by the transferor, or recovered
by the transferee, is applicable, (i) first, in payment of the costs of such recovery;
(ii) secondly, in or towards satisfaction of the amount for the time being secured
by the transferor, and the residue, if any, belongs to the transferor, or other
person entitled to receive the same.
The mortgagee of an actionable claim has the same rights to deal with it
as any other security. He may realise the debt, but he must credit the amount
thus realised to the account of his transferor, and if there is any surplus after
his claim has been satisfied , he must pay it to the mortgagor.
Rights of an assignee of marine and fire policies (S. 135)

Every assignee (by endorsement or other writing) of a pol icy of marine
insurance or of a policy of insurance against fire, in whom the property in the
subject insured is absolutely vested at the date of the assignment, has
TRANSFE 207
R OF ACTIONABLE CLAIMS
transferred and vested in h' .

olicy had been made ·thim_all rights of suit as if the contract contained In the
P w, himself.
It may be noted here th t S . .
re policies of insuran f a . · 130 exempts the assignments of marine or
fi ce rom its · · ti ·
that a mere assignm t operation. The reason for this excep on 1s
wnership of the sub ent of such policy does not entitle the assignee to the
~nd the subject-matt!;~f-matter_of the policy. In an actionable claim , the claim
th
on the assignment of the ~ claim , though different, both pass to the assignee
tha IS;:
t. t
I
f claim . In the case of a policy of marine or fire insurance,
so. ; aclt such a policy cannot be assigned apart from the property
in~~re · ccor ing _Y, ~ - 135 says that every assignee, by endorsement or other
writing, of such policy_in whom the property in the subject insured is absolutely
veste~ at ~he date ~f the assignment gets all rights of suit as if the contract
contained in the policy had been made with himself.
Where, however, a policy of marine insurance has been assigned so as
to pass the beneficial interest therein, the assignee of the policy is entitled to
sue thereon in his own name, and the defendant is entitled to take up any
defence arising out of the contract which he would have been entitled to take if
the action had been brought in the name of the person by whom the policy was
effected.
Where the insurer pays for a total loss of the subject-matter insured, he
thereupon becomes entitled to take over the Interest of the insured. He is also
subrogated to all the rights and remedies of the insured as from the time of the
casualty causing the loss : S. 135-A(1) & (2).
Where the insurer pays for a partial loss, he acquires no title to the subject-
matter insured or such part of it as may remain, but he is thereupon subrogated
to all rights and remedies of the insured person as from the time of the casualty
causing the loss, in so far as the insured person has been indemnified by such
payment for the loss : S. 135(3).
Incapacity of officers connected with Courts of Justice (S. 136) MCQ No. 124
No judge, legal practitioner, or officerconnected with any Court of Justice
can buy or traffic in, or stipulate for or agree to receive any share of or interest
in any actionable claim , and no Court of Justice can enforce, at his instance, or
at the instance of any person claiming by or through him, any actionable claim
so dealt with by him as aforesaid . -
Saving of negotiable instruments, etc. (S. 137)

The above provisions of this Chapter do not apply to stocks, shares and
debentures or to instruments which are for the time being by law or custom,
negotiable or to any mercantile document of title to goods.
The expression 'mercantile document of title to goods' includes a bill of
lading , dock warrant, warehouse-keeper's certificate, railway receipts, warrant
order for the delivery of goods and any other document used in the ordinary
course of busin d or authorising

ess as proof of the possession or control of goo S ,
or purporting t th . . . the possessor
0 au onse either by endorsement or by delivery,
of th8 document to transfer or receive goods thereby represented ·
Certain documents in the nature of negotiable Instruments are exemp_ted
from the operat· f . . f t,·onable claims
. . ton o the provisions regarding assignment _ o a~ .
as contained m the Act. S. 137 says that none of the provisions in sections 130
to 137 ~hall apply to stocks, shares or debentures, or to instruments which are
for ~he time being , by law or custom, negotiable, orto any mercantile document
of title of goods.
Negotiable instruments are governed by the provisions of the Negotiable
nd
lnSt ruments Act. The usual mode of the assignment ls endorsement a delivery
or me_re delivery. (Ss. 27 and 28 of the Negotiable Instruments Act) But_a
negotiable instrument can also be transferred like any other actionable claim
nd
u nd er this Act. The distinction between an assignment under this Act a a
th
transfer by endorsement under the Negotiable Instruments Act is that in e
former, the assignee will acquire no more than the right title and interest of the
assignor, while in the latter, the endorsee will have all the rights and advantages
of a holder in due course.
***
10
GENERALoas
OF DIFFERe:RVATIONS ON EXECUTION
T KINDS OF TRANSFERS
UNDER THE ACT
The following six kinds of
property Act: transfers are recognised by the Trans-fer of
1. Sale : Ss. 54-57.
2. Mortgag~ of Immovable property : Ss. 58-104.

3. Lease of immovable property . S
· $. 105-117
4. Exchange : Ss. 118-1 21 _ ·
5. Gifts : Ss. 122-129, and
6. Transfer of actionable claims : Ss. 130 _ _
137
Formalities necessary to effect' each of the above transfers
Asa/e oftang~ble immov~ble property of the value oft 100 and upwards,
ora sale of a reversion or ~ther intangible thing, can be made only by a registered
instrument A s~le of t~ng1ble property of a value less than ~ 1oo may be made
either by a registered instrument or by delivery of the property : s. 54.
So far as mortgages are concerned, where the principal money secured
is t 100 or upwards, a mortgage can be effected only by a registered instrument
signed by the mortgagor and attested by at least two witnesses, but such writing
and registration is not necessary in the case of a mortgage by deposit of title-
deeds.
Where the principal money secured is less than <100, a mortgage may
be effected -
(1) either by a registered instrument signed by the mortgagor and attested
by at least two witnesses, or
(2) except in the case of a simple mortgage, by delivery of the property.
A /ease of immovable property (1) from year to year, or (2) for any term
exceeding one year, or (3) reserving a yearly rent, can be made only by a
registered instrument. All other leases of immovable property may be made
either(1) by a registered instrument or (2) by oral instrument accompanied by
delivery of possession : S. 107.
In the case of exchange, the mode of transfer is the same as in the case
of sales: S. 118.
A gift of immovable property can only be made by a registered instrument
signed by or on behalf of the donor, and atte~ted by at least two witnesses. A
209
....
gift. of movable property may be effected either (1) by a registered instrument

signed by or on behalf of the donor or (2) by delivery : S. 123.
A transfer of an actionable claim can be effected only by an instrument in
writing signed by the transferor or his duly authorised agent: S. 130 .
***
I
SUMMARY
OF
THE TRANSFER OF PROPER.TY ACT
DEFINITIONS {S. 3)
Immovable property : Immovable property does not include:
(a) standing timber,
(b) growing crops, or
(c) grass.
Instrument : Instrument means a non-testamentary instrument.
Attested: Attested means attested by two (or more) witnesses , each of What does
whom has- 'attested ' mean?
(2 marks)
(a) seen the executant sign the instrument;
M.U. Nov. 2015
or Dec. 2016
(a) seen some other person sign the instrument in the presence, May 2017
and under the direction of the executant; Nov. 2017
Apr. 2018
or May 2019
(a) received from the executant a personal acknowledgment of his
signature (or the signature of such other person);
and
(b) signed the instrument in the presence of the executant.
Attached to the earth : Attached to the earth means anything - What does
'attached to the
(a) rooted in the earth (e.g. trees and shrubs); or earth ' means?
(b) imbedded in the earth (e.g. walls or buildings); or (2 marks)
M.U. Nov. 2015
(c) attached to what is so imbedded (e.g. doors and windows).
Apr. 2016
Notice : A person is said to have notice of a fact - May 2019
(a) when he actually knows that fact; or
When is a person
(b) when, but for (i) wilful abstention, or
said to have
(ii) gross negligence, - Notice? (2 marks)
he would have known it. M.U . Apr. 2016
Registration of an instrument operates as a notke, if-

(1) The instrument is compulsory registrable.
(2) The registration is completed in the manner prescribed by the
Indian Registration Act.
(3) The instrument and its particulars are correctly entered in the
Register and in the Index.
Actual possession by any (other) person is also notice of the title, if any,
of such other person.
211
th
Notice to the agent also operates as notice to the prin cipa l, If e agent
gets such notice -
(I) whilst acting on the principal 's behalf,
(ii) in the course of business,
(iii) to which business that fact is material.
th
But, if the agent fraudulently withholds the notice from his prin cipal, e
latter is not deemed to have had notice as against any person who was a party
to, or a otherwise cognizant of, the fraud .
urransfer of property', (S . 5)
Transfer of property means any act by which a living person conveys
property, in present or in future, to:
(i) one or more ·o ther living persons; or
(ii) himself; or
(iii) himself and one or more other living persons .
What property can be transferred (S. 6)

Property of any kind can be transferred . However, the following rights or
interests cannot be transferred :
1. Spes successionis, namely, -
(i) the chance of an heir-apparent succeeding to an estate ; or
(ii) the chance of a relation obtaining a legacy on the death of a
kinsman; or
(iii) any other mere possibility of a like nature.
MCQ No. 125 2. A mere right of re-entry for breach of a condition subsequent ( unless
the trans'fer is to the owner of that property).
3. An easement apart from the dominant heritage.
4. An easement in property restricted in its enjoyment to the owner
personally.
5. A right to future maintenance, in whatsoever manner arising , secured
or determined.
6. A mere right to sue.
7. A public office or the salary of a public officer, whether before or after
it has become payable.
8. Stipends allowed to military, naval, air-force and civil pens ioners of
Government, as also political pensions.
9. A transfer-
(a) opposed to the nature of the interest affected thereby; or
(b) for an unlawful object or consideration (within the meaning of S.
23 of the Indian Contract Act); or
(c) to a person who is legally disqualified to be a transferee .
,
SUMARRV 213
persons who are competent t 0 , _
u ansfer (S 7) W ho ar p rson
Every person who is: · compet nt to
tranaf r7
(a) competent to contract ( d
un er S . 11 of the Indian Contract Act) (2 marks)
and M.U. Nov. 2015
May 2017
(b) entitled to transferable property
Nov. 2017
or Apr. 2018
authorised to dispose of tr ans fera b le property which •1s not his own,
(b) _ May 2019
is competent to transfer such property.

persons who cannot assign their interests (S. 8)
1. A tenant having an untransferable right of occupancy cannot assign
his in~erest as such tenant.
2. A farmer of an estate in respect of which a default has been made in
paying revenue, cannot assign his interest as such farmer.
3. The lessee of an estate under the management of a Court of Wards
cannot assign his interest as such lessee.
Operation (effect) of transfer (S . 8)
Unless a different intention is expressed or implied , a transfer passes to
the transferee a// the interest which the transferor is capable of passing in the
property and its legal incidents. Thus , -
(i) Transfer of land (i) (a) the easements;
(b) rent and profits after
the transfer; and
(c) all things attached to
the earth .
(ii) Transfer of machinery (ii) the movable parts
attached to the earth · thereof.
(iii) Transfer of a house passes to the (iii) (a) the easements, ,

transferee (b) rents after the
transfer, and
(c) 1'ocks , keys, bars,
doors, windows, etc.
(iv) the interest (or income)
(iv) Money (or other property
after the transfer.
yielding income)
(v) the securities therefor,
(v) Debt (or other actionable
but not arrears of interest
claim) accrued before the
transfer.
Oral transfer (S . 9)
. •t· is not expressly
.A transfer of property can be effected orally, if wn ,ng
required by law.
Condition restraining alienation (S . 10) .

5
If property is transferred subject to a condition which abs~lutely re lrains
th e transferee from parting with (or disposing of) his interest in th e property,
such condition is void, unless -
(i) such a condition Is in a lease and the condition is for the benefit of a
lessor; or
(ii) such a condition is in a transfer to a woman (not being a Hindu,
Muhammedan or Buddhist), and provides that during her marriage,
she would not have the power to transfer or charge the property (or
her beneficial interest in it).
Restriction on free enjoyment of property (S. 11)

In the case of an absolute transfer, if it is directed that the transferee is to
apply or enjoy the property in a particular manner, the direction is invalid, unless
such direction is made in respect of one immovable property for the beneficial
enjoyment of another immovable property.
Condition making interest determinable on insolvency or attempted

alienation (S. 12)
A transferor cannot direct that the transferee's interest in the property will
cease if (i) he becomes insolvent, or (ii) he tries to dispose of such property -
unless the direction is in a lease and is for the benefit of the lessor or persons
claiming under him.
Directions for accumulation of income (Ss. 17 & 18)

If, under a transfer, the income of the property is to be accumulated longer
than-
(a) the life of the transferor, or
(b) 18 years from the date of the transfer,
such direction is void to the extent that the accumulation which is directed
exceeds the longer of the above periods, and at the end of such period, the
property can be disposed of as if the accumulation period has elapsed .
But, a direction for accumulation beyond the above period is valid , if such
direction is for -
(i) the payment of the transferor's debts; or
(ii) the provision of portions for children (or remotes issue ) of the
transferor; or
SUMARRY 215
(iii) the preservation O ,
. ) th b r maintenance of the property transferred ; or
(1v e enefit of the pubrIC .
rransfer for benefit of unborn P

ersons (Ss. 13 & 14)
1 s
· !fa tr,a.n fe~ of property creates an interest in favour of a person who
st
,sh no rnb exi ence on the date of transfer (subject to a prior interest),
t e un orn perso ' ·
n s interest will not take effect unless it extends to
the whole of the transf , . .
eror s interest in the property.
2· Un?er ~he rule against perpetuity, a transfer cannot create an interest MCQ No. 126
~h,ch ts to take effect after (i) the life-time of one or more persons
living at the date of the transfer and (ii) the minority of some person
wh~ must b~ in existence at the expiry of that period , and to whom
the interest 1s to belong if he attains majority.
Transfer to a class (Ss. 15, 16 & 22)
1. If an interest is created for a class of persons, and it fails as regards
some such persons because of S. 13 or S. 14 (above), such interest
will fail only as regards such persons, and not as regards the whole
class of persons.
2. If an interest fails because of S. 13 or S. 14, any interest created in
the same transaction and intended to take effect on such failure,
a
also fails. Thus, a limitation following upon limitation which is void
under S. 13 or S.14 is also void.
3. If a transfer creates an interest only for the benefit of those persons
of a class who have attained a particular age, the interest does not
vest in any person who has not attained that age.
Vested Interest (Ss. 19-22) MCQ No. 127
1. On a transfer of property, an interest is said to be vested if it is created :

(i) without specifying when it is to take effect; or
(ii) in terms specifying that it is to take effect -
(a) forthwith (i.e. immediately), or
(b) on the happening of an event which must happen.
2. A vested interest is not defeated if the transferee dies before he
obtains actual possession of the property.
3. An interest will be a vested interest, even if:
(i) the enjoyment thereof is postponed; or
(ii) a prior interest in the same property is given to some other
person ; or
(iii) income of the property is directed to be accumulated until the
time of enjoyment arrives; or
( iv) th ere Is
· . .
a provision that, if a part,cu1ar eve
nt happens the interest
'
is to pass to another person .
4. If an interest in property is created in favour of an unborn person , he
th
acquires a vested interest immediately upon his birth, a l ough
enjoyment thereof is postponed .
5. If a person is entitled to property only on attaining a particul ar age ,
but is entitled to the income thereof before he reaches that age (or if
such income is to be applied for his benefit), the interest is said to be
vested.
6. If a transfer creates an interest only for the benefit of those p~rsons
who have attained a particular age, the interest does not veSl in any
person who has not attained that age.
Contingent interest (Ss. 21-24) .
If a transfer creates an interest in favour of a person , to take effect only
on the happening (or not happening) of a specified uncertain event, such intereSl
is contingent.
Such contingent interest becomes a vested interest on the happening (or
not happening) of that event.
DIFFERENCE BETWEEN
Vested Interest Contingent Interest
1. Definition (See above) 1. D~finition (See above)
2. Fulfillment of condition : It does 2. It is solely depend ent o n the
not depend on the fulfillment of fulfillment of a condition .
any condition.
3. Effect of transferee 's death : It is 3. Whether or not it passes o n the
not defeated by the transferee's death of the transferee depends
death, if he dies without obtaining on the nature of the contingency.
possession.
4. Whether transferable and 4. It is transferable . W hether it is
heritable : It is both transferable heritable or not depends on the
and heritable. nature of the contingency.
5. Present right of enjoyment : It 5. There is no present or immediate
confers a present and immediate right of enjoyment.
right to the property, even if
enjoyment thereof is postponed .
Conditional Transfers (Ss. 25-34)

Conditions are of 3 kinds :
(i) A condition precedent is one which delays the vesting of a rig ht unti l)
the happening of an event.
SU MARRY 217
(ii) A condition sub
the happening 0~eaquent Is one which destroys or diverts a right on
(iii) A conditional 1· . n event. ,
tmrtat" 15 •
already vested) ton one which diverts an estate (which had
' and vests it · th
Characteristics of a co . . in ano er person.
nd1t1on precedent
1. It must happen b ,
2 Th efore the estate can vest.
• e estate will nO t . .
3· If th Vf3st until the condition is performed.
e condition p .
public pol' h recedent 1s impossible or immoral or opposed to
icy, t e trans'fer is void
4. It is deemed to be ·f lfil . . .. . . .
u I led, tf 1t 1s substantially comp/Jed with.
Characteristics of a condition subsequent
1
· lt_is one, on the happening of which an existing estate is defeated (or
divested).
2
· Wh~n there is a condition subsequent, the estate vests immediately,
subject to being divested if the condition is broken . -
3. If ·t he condition subsequent is impossible, immoral or opposed to
public policy, the transfer will be valid and the condition will be ignored .
4. A condition subsequent must be strictly complied with.
Two Rules governing Conditions Precedent (Ss. 26 & 27)
1. A condition precedent is deemed to be fulfilled, if it has been
substantially complied with.
2. If an interest 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 person, if the first disposition fails, the ulterior
disposition immediately takes effect, even if the failure has not
occurred in the manner contemplated by the transferor. (This is known
as the doctrine of acceleration.)
But, if the intention of the parties is that the ulterior disposition is to take
effect only if the prior disposition fails in a particular manner, then the ulterior
disposition will take effect only if the first disposition fails in that particular
manner.
(See also Rule 4, below.)
Four Rules governing Conditions Subsequent (Ss. 28-34)
1. The ulterior disposition will not take effect unless the condition
subsequent is strictly complied with.
2. If the ulterior disposition is not valid, the prior disposition is not affected
(i.e. the prior disposition remains valid).
3. If no time is specified in a condition subsequent, the condition is

deemed to be broken if the person renders the performance of the
act impossible, permanently or indefiflitely.
4. If fulfillment of a condition is prevented by fraud, further time (equal
to the delay caused by such fraud) is to be given to the person to
perform the act. ( This rule also applies to a condition precedent.)
DIFFERENCE BETWEEN
Condition Precedent Condition Subsequent
1. Precedes the vesting of the 1. Follows the vesting of the estate.
estate.
2. Vesting is postponed until 2. Vesting is immediate.
performance of the condition.
3. Once the interest is vested, it 3. Even if interest vests , it is liable
cannot be divested. to be divested.
4. A condition precedent affects the 4. A condition subsequent affects
acquisition of an estate. the retention of an estate .
5. If the condition is impossible, 5. If the condition is impossible, etc. ,
immoral or opposed to public the transfer will be absolute and
policy, the transfer is void. the condition will be ignored .
6. The condition must be valid in 6. If the condition is not valid in law,
law. it will be ignored.
7. It may be substantially complied 7. It must be strictly complied with
with (i.e. the doctrine of cy-pres (i.e. the doctrine of cy-pres does
applies). not apply.)
Election (S. 35)

The doctrine of election arises when a person professes to transfer
property which he has no right to transfer, and as a part of the same transaction ,
confers any benefit on the owner of the property. In such cases , the owner of
the property must either confirm the transfer or dissent from it.
If the owner dissents, -
(a) he also relinquishes the benefit conferred on him;
and
(b) the benefit so relinquished reverts to the transferor.
AJthough the benefit reverts to the transferor, it is subject to the charge of
making good, to the disappointed transferee, the amount or value of the property,
if -
(i) the transfer is gratuitous, and before the election, the transferor dies
or becomes incapable of maki ng a fresh transfer; or
(ii) the transfer is for consideration.
SUMARRY 219
The following further .
0
1. It is immateri P ints are also to be kept in mind:
a I Whether tt
the property Which 1e transferor does or does not believe that
2. A person Who t k he professes to transfer Is his own property.
3
a benefit unde~
Likew·
itt n? benefit directly under a transaction , but derives
nd,rectlY, need not elect.
. ,se, a perso h
therefrom in n w O takes a benefit In one capacity may dissent
another capacity.
4. In case of a diss t
any other b . en • only that particular benefit is to be relinquished;
be relinquis~:~~t conferred on him by the same transaction is not to
5. If a person a .
ccepts a benefit for 2 years (or more) there is a
presum f ,
P ion that he has elected in favour of the transfer.
6 th
· If_ _e owner does not, within a year's time, signify to the transferor
hts intention to. con firm or d'Issent, the transferor may require him to'
make an election. If he does not comply with such requisition he is
deemed to have elected to confirm the transfer. '
DIFFERENCE BETWEEN
English Law Indian Law
1. The doctrine of compensation 1. The doctrine of forfeiture applies.
applies.
2. There is no fixed time for maldng 2. A period of one year is prescribed
an election. for making an election.
Apportionment (Ss. 36 & 37)

1. All rents, annuities, pensions, dividends and other periodical payments
are deemed to accrue from day to day. The transferor is entitled to
such payments for the period before the transfer and the transferee
for the period after the transfer. However, the actual payments are to
be made only on the appointed days.
2. When, as a result of a transfer, property is divided and held in several
shares, the benefit of any obligation relating to the property passes
from one to several owners . The corresponding duty is to be
performed in favour of each owner in proportion to the value of his
share in the property.
Transfer by person authorised to transfer only under certain circum-

stances (S. 38)
If a person is authorised to dispose of immovable property only under
certain circumstances, and he transfer~ such property,
(i) for consideration ,
(ii) alleging the existence of such circumstances,
220
!hen those circumstances are deemed to have existed , as far as the transferee
1s concerned, provided _
(a) he acted in good faith, and
(b) he took reasonable care to ascertain the existen ce of such
circumstances.
Tran s fer of ostensible owner (S. 41)

Where-
(a) a person is the ostensible owner of immovable property,
(b) with the consent of the persons interested in such property, -
and he transfers it for consideration the transfer is not voidable on the ground
I
that the transferor was not authorised to make such transfer, provided that the
transferee -
(a) took reasonable care to ascertain the transferor's power to transfer,
and
(b) acted in good faith .
Transfer by unauthorised person who subsequently acquires interest
(S. 43)
If a person -
fraudulently or erroneously represents that he is authorised to transfer
immovable property
and
proposes to transfer such property for consideration , -
if the transferee so opts, such transfer will operate on any interest wh ich the
transferor may subsequently acquire in the property.
The above rule will not, however, affect the right of a transferee who (a)
acts in good faith, (b) for consideration, and (c) without notice.
Transfer when a third person is entitled to maintenance (S. 39)

If a third person has a right -
(i) to receive maintenance, or
(ii) to a provision for advancement or marriage from the profits of
immovable property,
and such property is transferred,
- the right can be enforced against the transferee -
IF (i) he has notice thereof, or
(ii) the transfer is gratuitous;
BUT NOT (a) against the transferee for consideration , and
(b) without notice of such right.
SU MARRY 221
Burden of obu
- . 9ation Im ·i
running With lane/) (S. Pos ng restriction on use of land (Covenant
40
(a) If a third Perso h )
n as -
for the rnore b ,.
independently of_ eneftctal enjoyment of his own immovable property, and
{i) any interest i th ·
{")
11 n e immovable property of another or
any easement thereon '
a right to restrain the en· ' . . ,
manner; Joyment of the other s property in a particular
OR
(b) If a person is entitfed to the benefit of an obligation _
(i) arising out of a contract and
(ii) annexed to the ownership of immovable property (but not amounting
to an interest or easement),
such right or obligation can be enforced against -
(i) a transferee with notice thereof, or
(ii) a gratuitous transferee.
However, such right or obligation cannot be enforced against a transferee
for consideration and without notice. ·
'
Transfer by person having authority to revoke former transfer (S. 42)
On a transfer of property, if the transferor reserves the power to revoke
t~e transfer, any subsequent transfer of that property for consideration to another
transferee operates as a revocation of the earlier transfer.
Transfer by co-owners (Ss-. 44 & 47) ,
1. If one co-owner of immovable property transfers his share, the
transferee acquires the transferor's right -
(a) to joint possession of the property; and
(b) to enforce a partition of that property.
The right to joint possession will not, however, be available when the
property which is transferred is a dwelling house bel.onging to an undivided
family and the transferee is not a member of that family.
2. If several co-owners of immovable property transfer a share in such MCQ No. 12s
property without specifying that the transfer is to take effect on any
particular share (or shares), such transfer takes effect:
(a) equally, if the shares were equal; and
(b) if the shares are unequal, in the same proportion as the shares.
222
Joint transfers (Ss. 45 & 46 )

1. When immovable property is purchased by two or more per~on s and
!he consideration is paid by them from a common fund, t~eir intere~ts
tn such property will be in the same proportion as their respe ctive
interests in the fund .
But, when such purchase is made from separate funds, their interests in
th e property will be in proportion to the amounts advanced by each of th em ·
2· Likewise, when immovable property is transferred for consideration
by persons having distinct interests in the property, the transferors
are entitled to:
(a) an equal share in·the consideration, if their interests were of an
equal value; or
(b) a proportionate share in the consideration , if their interests were
not of an equal value.
Priority of rights (Ss. 48 & 78)
1. If a person transfers the same immovable property at different times,
and all such rights cannot exist together, each later right is subject to
the rights previously created. (This is, however, subject to a contract
to the contrary.)
2. If, through the fraud, misrepresentation or gross neglect of a prior
mortgagee, a subsequent mortgagee is induced to advance money
on the security of the mortgaged property, the subsequent mortgagee
gets a preference over the prior mortgagee.
Transferee's right under insurance policy (S. 49)

When immovable property, which is insured against loss or damage by
fire, is transferred for consideration, in case of such loss or damage, the
transferee can call upon the transferor to apply any money which he actually
receives under the policy (or a part of such money) to reinstate the property.
(This rule is, however, subject to a contract to the contrary.)
Bona fide holders under defective title

1. If a person has, in good faith, paid any rent (or profit) to another
person from whom he held such property, he cannot be made liable
to pay it once again) if it afterwards turns out that such other person
had no right to receive such rent (or profit).
2. If a transferee of immovable property makes an improvement on the
property, believing in good faith that he is absolutely entitled to such
property, and he is subsequently evicted by any person having a
better title, he can call upon the person causing the eviction:
(a) to pay him the value of the improvement; or
SUMARRY 223
(b) to sell his int ·
val erest in the property to the transferee at the market-
ue of the property, irrespective of the value of the improvement.
Transfer of property .
Pendmg suits (Lis Pendens) (S. 52)
When a suit or pro d' ,.
an d any ng. ht to immo cee bl mg (which .is not
. collusive) is pending in any Court ·
h va e property 1s directly and specifically in question
sue ~roperty ca~not be transferred (or otherwise dealt with) by any party t~
the suit, except with the authority of the Court.
S_uc~ pe_n dency commences from the date of the presentation of the plaint
or the institution of the proceeding in a competent court.
The pendency continues until a final decree is passed, and the decree is
completely satisfied (or if it cannot be satisfied because of limitation).
Fraudulent transfer (S. 53)
If a transfer of immovable property is made -
(a) to delay or defeat the transferor's creditors - it is voidable at the
option of such creditors;
(b) to defraud a subsequent transferee, the first transfer being without
consideration, it is voidable at the option of the subsequent transferee.
The above does not-
(i) impair the rights of a transferee in good faith for consideration;
(ii) affect any law relating to insolvency.
Part performance (S. 53A)
If a person contracts to transfer any immovable property -
(a) for consideration,
(b) by a signed document, -
and the transferee has taken possession of such property in part performance
of the contract then even if the document of transfer is not completed in the
prescribed manner, -
the transferor cannot enforce against the transferee, any right in respect of
such property, except a right expressly allowed under the contract.
This rule does not affect a transferee for consideration, who has no notice
(i) of the contract, or (ii) of the part performance thereof.
SALE
{Ss. 54-57)
Definition of "sale" (S. 54 ) . . .
. t fer of ownership in exchange for a pnce patd or promised MCQ No.129
A sale 1s a rans .
or partly paid and partly promised .
How sale is effected (S. 54)

A sale requires a registered instrument in case of :
-
(i) tangible immovable property of the value of f100 or more;
(II) a reversion ;
(iii) any other intangible thing .
In case of tangible immovable property worth less than r100, a sale can
be made by :
(a) a registered instrument I or
(b) delivery of the property.
Definition of "contract of sale"

What is " Sale '' A contract for sale of immovable property is a contract that a saJe of such
and "Contract of property shall take place on terms settled between the parties .
Sale"? How sale is
made? What is DIFFERENCE BETWEEN
mean by marshal-
ing by subsequent SALE CONTRACT FOR SALE
purchaser?
1. Sale involves a transfer of 1. There is no tran sfer of
M.U. Nov. 2017
ownership. ownership . It does not even
create an interest or cha rge on
the property.
2. Sale conveys a legal title to the 2. A contract for sale does not
purchaser. convey any legal title .
3. It creates a right in rem. 3. It creates a right in personam.
4. A registered instrument is 4. A contract for sale need not be
required in three cases stated registered at all.
above.
Rights and liabilities of buyer and seller (S. 55)

Rights of buyer
Before completion of sale, the buyer is entitled to:
(i) a charge on the property for purchase-money already paid by him;
(ii) interest on such purchase-money;
(iii) earnest and costs awarded to him in a suit for specific performance,
in case he properly declines to accept delivery.
After completion of sale, the buyer is entitled to :
(i) the benefit of any improvement or increase in the value of the property;
and
(ii) the rents and profits of the property.
~
I
SUMARRY 225
Liabilities of buyer
Before completion 0 f
. . sale, the buyer is bound:
{t) to disclose to th 8
f th seller any fact which materially Increases the value
0 8
property, and of which the buyer but not the seller, is aware;
(ii) to pay or tend th '
er e purchase-money.
After completion of sale, the buyer is bound:
(i) to bear any loss arising from destruction, injury or loss in the value o'f
the property;
{ii) to pay public charges and rents payable in respect of the property.
Rights of seller
. Before completion of sale, the seller is entitled to the rents and profits,
until ownership passes to the buyer.
After completion of sale, the seller is entitled to a charge on the property
for his unpaid purchase-money.
Liabilities of seller
Before completion of sale, the seller is bound:
(i) to disclose to the buyer, any material defect in the property of which MCQ No. 130
the seller is, but the buyer is not, aware, and which the buyer could
not discover with ordinary care;
(ii) to produce all documents of title for examination by the buyer;
(iii) to answer all relevant questions of the buyer as regards the property
and the title thereto;
(iv) to execute a proper conveyance - on payment or tender of the price;
(v) between the date of the contract of saleLand delivery, - to take prudent
care of the property and the documents of title; and
(vi) to pay all public charges and rent upto the date of the sale.
After completion of sale, -
(i) the seller is bound to give possession of the property to the buyer;
(ii) the seller is bound to deliver all documents of title to the buyer when
the entire purchase-money has been paid;
(iii) the seller is deemed to contract with the buyer that the seller's interest
subsists and that he has the power to transfer the same.
Marshalling by subsequent purchaser (S. 56)

and then sells one (or more) of such properties to another person, the buyer is
entitled to have the mortgage-debt satisfied (so far as is possible) from the
property (or properties) not sold to him.
226
However, this cannot be done so as to prejudice the rights of:

(a) the mortgagee, or
(b) any person claiming under him, or
(c) any other person who has acquired any interest in any such property
for consideration.
MORTGAGES
(Ss. 58-104)
Terms defined
A mortgage is the transfer of an interest in specific immovable property,
for the purpose of securing :
(a) the payment of money-advanced or to be advanced, by way of a
loan; or
(b) an existing or future debt; or
(c) the performance of an engagement which may give rise to a pecuniary
liability - The transferor is called the mortgagor.
The transferee is called the mortgagee.
The principal money and interest of which payment is secured is
called the mortgage-money.
The instrument by which such a transfer is effected is called the
mortgage-deed.
Six kinds of mortgages
(i) Simple mortgage
In a simple mortgage, -
MCQ No.131 (a) possession of the mortgaged property is not given to the mortgagee;
(b) the mortgagor gives a personal obligation to pay the mortgage-money;
(c) the mortgagor agrees that if he fails to pay, the mortgagee can have
the property sold through the Court.
Remedies available : Sale through the intervention of Cou rt - No
foreclosure.
(ii) Mortgage by conditional sale

MCQ No. 132 In this type of mortgage, the mortgaged property is ostensibly sold to the
mortgagee on the following conditions, viz. -
(a) if the mortgage-money is not paid on a certain date, - the sale is to
become absolute;
(b) but, if such payment is made, -
(i) the sale is to become void; and
SUMARRY 227
(ii) the b ·
. uyer is to re-transfer the property to the seller.
Remedies available : Foreclosure only - No sale.
(iii) Usufructuary mortgage
In a usufruc~uary mortgage, the mortgaged property is delivered to the MCQ No. 133
mortgagee , who is au!horised to retain such property until payment of the
mortgage-money, and m the meanwhile, to receive rents and profits accruing
from the property.
Remedies available : No sale - No foreclosure - The only remedy of the
mortgagee is to retain the property until the mortgage-money is paid.
(iv) English Mortgage
In an English mortgage, the mortgagor (a) binds himself to repay the MCQ Nos.134, 135
mortgage-money, and (b) transfers the property to the mortgagee, on condition
that when the mortgage-money is paid up, the property will be re-transferred to
the mortgagor.
Remedies available : Sale only - No foreclosure .
(v) Mortgage by deposit of title-deeds (Equitable mortgage)

In this type of mortgage (which can be created only in specified towns),
the mortgagor delivers to the mortgagee, documents of title of the mortgaged
property, with intent to create a security thereon.
Remedies available : Sale through intervention of the Court - No
foreclosure .
(vi) Anomalous mortgage

An anomalous mortgage is one which is not any of the five types of
mortgages seen above.
Remedies available : Sale, if allowed by the terms of the mortgage -
Foreclosure, if allowed by the terms of the mortgage.
Whether registration and attestation necessary for a mortgage (S. 59)
(i) If the principal-money is <100 or the mortgage (other than an MCQ No. 136
more, equitable mortgage) must be by
(a) registered document, (b) signed
by the mortgagor, and (c) attested by
at least 2 witnesses.
(ii) If the principal-money is less than the mortgage may be effected as
t100, above, or (except in the case of a
simple mortgage), by delivery of the
property
MCQ No. 137 Rights of a mortgagor
(i) Redemption
Write a short note At any time after the principal money has become due, on payment (or
on : Rights of' a tender) of the mortgage-money, the mortgagor has the right:
Mortgagor.
M.U. Dec . 2019 (a) to get back his property; and
(b) to demand :
Write a short note (i) return of the mortgage-instrument and title-deeds ;
on : Redemption.
M.U. Dec. 2.019 (ii) delivery of possession of the mortgaged property; and
(iii) a re-transfer of the property.
What is Redemp-
This right of redemption is a statutory right based on the maxim >"Once a
tion? Who can
redeem a mort- mortgage, always a mortgage". Any condition in the mortgage-deed which takes
gage besides the away this right will be a clog on redemption and will not be valid.
Mortgagor?
Redemption can be exercised:
MJU. Dec. 2019
(a) by paying (or tendering) the mortgage-money to the mortgagee; or
(b) by depositing the mortgage-money in Court; or
(c) by a regular suit for redemption .
The right of redemption is extinguished :
(a) by act of parties; or
(b) by an order of the Court.
If the mortgagor has executed two or more mortgages in favou r of the
same mortgagee, he can, in the absence of any contract to the contrary, redeem
one (or more) of such mortgages separately. Thus, the doctrine of consolidation
does not apply.
(ii) Re-transfer to a third party (S. GOA)

The mortgagor can require the mortgagee to assign the mortgage-debt
to a third party, and transfer the property to such person instead of re-tran sferring
it to the mortgagor.
(iii) Right to inspection and production of documents (S. 608)

As long as his right of redemption subsists, the mortgagor ca n, at his
cost, inspect and make copies from documents of title of the property, which
are with the mortgagee.
(iv) Right to accession (Ss. 63 & 64)

Accessions to the mortgaged property enure for the benefit of the
mortgagee's security, and on redemption, belong to the mortgagor, in the
absence of a contract to the contrary.
But, if the accession is acquired at the mortgagee's expense and is capable
of separate possession , the mortgagor must pay for it, if he desires to acquire
JMARRY 229
it. If, however it i
, snot cap b
the mortgagor With th a le of separate possession, it must be delivered to
(v) R' h e Property and the mortgagor must pay the cost thereof.
19 t to grant I
Unles ease (Ss . 65 & 65A)
s a contra r ·
mortgagor who is lawr \ intention is expressed in the mortgage-deed, the
the property, subject t u Y in _Possession of the property, can grant a lease of
0
• certain conditions laid down in S. 65A.
(v1) Right to
reasonable waste (S . 66)
A mortgagor in o . . .
deteriorate But h P ssession is not liable for allowing the property to
' e cannot
injurious to ·the pr . commit an . Y act w
· hi c h Is
· destructive
· or permanently
operty, if the security would thereby be rendered insufficient.
Implied contracts by the mortgagor (S. 65)
In the absence of a c t tt h
. . . o~ rac_ o t e contrary, the mortgagor is deemed to Enumerate any
have entered into the following five implied contracts with the mortgagee: implied contra ct
1. Covenant for title - namely that the interest wh·ich he pro fesses to trans fer by a mortgagor.
(2 marks)
to the mortgagee subsists, and that he has the power to transfer the
M.U. Jan. 2019
same.
2. Covenant for defence of title - namely, that he will defend his title to the
property, and if the mortgagee is in possession , that he will enable the
mortgagee to defend the mortgagor's title to the property.
3. Covenant for payment of public charges - · namely, that he will pay all
public charges in respect of the property, as long as he is in possession
of the property.
4. Covenant for payment of rent- namely, that when the mortgaged property
is a /ease, he will pay the rent payable under the lease and observe all
other conditions of the lease.
5. Covenant for payment of prior encumbrances - namely, that when the
mortgage is a second (or subsequent) encumbrance, the interest and
principal money due on prior encumbrances will be paid as and when
they become due.
All the above five covenants run with the land.
Rights of a mortgagee
The mortgagee has the following nine rights:
1. Right to foreclose or sell (S. 67) -After the mortgage-money is due and
before redemption, the mortgagee can obtain from the Court a decree for
foreclosure or sale of the property. (A decree of foreclosure is one where
the mortgagor is absolutely debarred from redeeming the mortgaged
property.)
2. Right to sue for mortgage-money (S. 68) -The mortgagee can sue for
the mortgage money:
(a) when the mortgagor binds himself to repay the same ; or

(b) when the mortgaged property is destroyed orthe security is rendered
insufficient (by any cause other than the wrongful act or default of
the mortgagor or the mortgagee), and the mortgagor has failed to
provide further security; or
(c) when the mortgagee is deprived of the security due to the wrongful
act or default of the mortgagor; or
(d) when the mortgagee is entitled to possession of the mortgaged
property and the mortgagor has 'failed to deliver the same to him .
3. Right to sell without intervention of the Court (S. 69)
The mortgaged property can be sold without the intervention of the Court
in three cases:
(a) in the case of an English mortgage, if neither the mortgagor nor the
mortgagee is a Hindu, Muhammedan, Buddhist or a member of a
specified race or tribe;
(b) when the Government is the mortgagee and the mortgage-deed
contains an express power of sale without intervention of the Court;
(c) when the mortgaged property is situated in Kolkota, Chennai , Mumbai
or any other Gazetted town, and the mortgage-deed contains an
express power of sale without intervention of the Court.
4. Right to appoint a Receiver (S. 69A) -A mortgagee who has the power
to sell without intervention of the Court, can also appoint a Receiver of
the income of the mortgaged property.
5. Right to accession (S. 70) - After the date of the mortgage, if any
accession is made to the mortgaged property, the mortgagee is entitled
to such accession for the purpose of the security. However, this is subject
to a contract to the contrary.
6. Right to renewal of mortgaged lease (S. 71 ) - If the mortgaged property
is a lease, and the mortgagor renews the lease, the mortgagee is entitled
to the new lease (for the purpose of the security). This is also subject to a
contract to the contrary.
7. Right to spend money (S. 72)-A mortgagee can spend such money as
is necessary:
(i) for the preservation of the mortgaged property from destruction,
forfeiture or sale;
(ii) for supporting the mortgagor's title to the property;
(iii) for making his own tme to the property good as against the mortgagor;
and
(iv) for renewal of the leasehold mortgaged to him .
SUMARRY 231
The amount spent as above can be added to the mortgaged-debt, and

reco)vered by the mortgagee, with interest at the stipulated rate (or at 9%
p.a ..
8. Rights of proceeds of revenue sale or compensation on acquisition
(S. 73)
(a) If the mortgaged property is sold for failure to pay revenue , public
charges or rent in respect of the property, and such failure is not due
to any default of the mortgagee, then the mortgagee can claim
payment of the mortgage-money from the proceeds, after payment
of such revenue, charges, rent, etc.
(b) Similarly, if the mortgaged property is acquired under the Land
Acquisition Act, the mortgagee can claim payment of the mortgaged
money out of the payment due to the mortgagor as compensation.
9. Right of mesne mortgagees - When a property is mortgaged to
successive mortgagees, a mesne (or puisne) mortgagee has the same
rights against subsequent mortgagees, as he has against the mortgagor.
This is an application of the maxim, "Redeem up, foreclose down".
Liabilities of a mortgagee
1. Mortgagee must bring one suit on several mortgages (S. 67 A)- When a.
mortgagee holds two or more mortgages executed by the same mortgagor,
if he sues to obtain a decree on any of the mortgagees, he must sue on
a// the mortgagees in respect of which the mortgage-money has become
due. However, this is subject to a contract to the contrary between the
parties.
2. Uabilities of a mortgagee in possession (Ss. 76-77) - If the mortgagee
takes possession of the property during the continuance of the mortgage,
the mortgagee is bound:
(i) to manage the property as a man of ordinary prudence would manage
his own property;
(ii) to use his best endeavours to collect rents and profits;
(iii) to pay Government revenue and other public charges out of the
income of the property, in the absence of a contract to the contrary;
(iv) to make necessary repairs, the income of the property permitting (in
the absence of a contract to the contrary);
(v) not to commit any act which is destructive or permanently injurious
to the property; ·
(vi) if he has insured the property against fire, and receives insurance
money for this reason, he must either (a) reinstate the insured property
from such money, or (b) discharge the mortgage-debt from such
money, as may be directed by the mortgagor;
(vii) to keep clear, full and accurate accounts of all amounts received and
spent by him , and give such accounts to the mortgagor, whenever
asked for;
(viii) to debit receipts from the property, first against interest on the
mortgage money, and then against the principal amount;
(ix) to account for receipts from the property, when the mortgagor tenders
and deposits the amounts due.
Priority of securities (Ss. 78 & 79)
If, on account of the fraud, misrepresentation or gross neglect of a prior
mortgagee, another person is induced to advance money on the security of
the same property, the prior mortgagee is postponed to the subseq uent
mortgagee.
This rule is an exception to the application of the maxim of equity, "Qui
prior est tempore, potior est jure". (He who is first in time is first in law.)
Tacking not allowed (S. 93)

(a) By paying off a prior mortgage, a mortgagee cannot thereby acquire
any priority in respect of his original security.
(b) Similarly, subject to one exception (below), a mortgagee making a
subsequent advance to the mortgagor, cannot thereby acquire any
priority in respect of his security for such subsequent advance.
Exception (S. 79)

However, an exception is made in the case of a mortgage to secure -
(a) future advances; or
(b) performance of an engagement; or
(c) balance of a running account.
In such cases, if the mortgage expresses the maximum amount to be
secured, a subsequent mortgage of the same property, made with notice of
the prior mortgage, will be postponed to the prior mortgage, in respect of all
advances (within the maximum amount), although made with notice of the
subsequent mortgage.
Marshalling (S. 81)

and then mortgages one (or more) of the same properties to another person ,
the subsequent mortgagee can have the prior mortgage-debt satisfied out of
the properties not mortgaged to him, to the extent possible. This is, however,
subject to a contract to the contrary.
The above rule cannot also be applied so as to prejudice the rights of the
prior mortgagee or any person acquiring an interest in any of the properties for
consideration.
SUMARRY 233
Contribution (S . 82 )
If the mart
distinct ands gaged _property belongs to two (or more) persons, who have
are liable t epar~te rights of ownership, the different shares of such property
O
subject to contribute rateably to the mortgage-debt. This rule is, however,
a contract to the contrary.
CHARGES
{Ss. 100 & 101)
When immovable property of one person is made security for the payment
of money ~o an~ther person, and the transaction does not amount to a mortgage,
a charge 1~ said to be created on the property. (This can take place either by
act of parties or by operation of law.)
All the provisions which apply to a simple mortgage also apply to a charge.
The above does not, however, apply to the charge of a trustee on the
trust-property, for expenses properly incurred by him in executing the trust.
It is also to be noted that a charge cannot be enforced against property in
the hands of a person who is a transferee for consideration without notice of
the charge.
No merger in certain cases (S. 101)

A mortgagee of immovable property (or any transferee from him) can
purchase that property, without causing the mortgage to be merged as between
himself and any subsequent mortgagee of the same property.
(The same rule applies to a person having a charge on immovable
property.)
Also, a subsequent mortgagee (or charge-holder) cannot foreclose or
sell such property without redeeming the prior mortgage or charge.
DIFFERENCE BETWEEN MORTGAGE AND CHARGE

Mortgage Charge
1. A mortgage is a security for the 1. A charge is a security for the
payment of a debt. payment of any money.
2. A mortgage may be a security for 2. Not so, in the case of a charge.
the performance of an act giving
rise to a pecuniary liability.
3 _ A mortgage may contain a 3. There is no covenant to pay in
covenant to pay. the case of charge.
4. A charge does not transfer any
4 _ A mortgage involves a transfer of
an interest in specific immovable interest in the property.
property.
5. A mortgage arises only by an act 5. A charge can arise (i) by act of

of parties. parties, or (ii) by operation of law.
6. A mortgage gives rise to a right 6 . A charge does not create any
In rem. right in rem.
7. A mortgagee can follow his 7. A charge-holder cannot do so.
security in the hands of a third
person .
8. A mortgagee can follow a bona 8. A charge-holder cannot do so.
fide purchaser for value without
notice.
9. The defence of bona fide 9. The defence of bo na fide
purchase without notice cannot purchase without notice is a good
be set up against a mortgagee. defence against a charg e.
LEASES
(Ss. 105-117)
Definition:- A lease of immovable property is a transfer of a right to enjoy
such property for a certain time (or in perpetuity), in consideration of:
(i) a price, paid or promised, or
(ii) money, or
MCQ Nos.138, 139 (iii) a share of crops, or
(iv) service, or
(v) 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.
The transferor is called the lessor.
The transferee is called the lessee.
The price is called the premium.
The money, crops, service or other thing to be rendered is called the
rent.
How made : In the following three cases, a lease of immovable property
can be made only by a registered instrument, viz. -
(a) a lease from year to year;
(b) a lease for a term exceeding one year; and
(c) a lease reserving a yearly rent.
In all other cases, a lease can be made:
(i) by a registered instrument,
SUMARRY 235
( 11.. ) by an oral or
. agreement along with delivery of possession.
Durat,on & Termination MCQ No. 140
A lease for a gncu

· Itura 1or manufactunng
. purposes
· .,s deemed to be a
lease from year to year.
It is terminable by a six months' notice.
A lease for any other purpose is deemed to be a lease from month to
month.
It is terminable by 15 days ' notice.
Rights and Liabilities of Lessor
1. The lessor must disclose to the lessee any material defect in the
property, of which the lessor is aware, but the lessee is not, and
which the lessee could not discover with ordinary care .
2. The lessor is bound, at the request of the lessee, to put him in
possession of 'the property.
3. The lessor is deemed to contract with the lessee that if the lessee
pays the rent and performs his conditions, he may hold the property
without interruption.
Rights of the lessee
1. Any accession to the property, made during the continuance of the
lease, is deemed to be comprised in the lease.
2. If any part of the property is destroyed or rendered unfit by fire,
tempest, flood, etc., the lease becomes void at the option of the
lessee.
3. If the lessor neglects to repair the property, the lessee may make
such repairs and deduct the expenses from the rent payable to the
lessor.
4. If the lessor neglects to make any payment which he is bound to,
and which payment can be recovered from the lessee, the latter may
make the payment and deduct it from the rent payable to the lessor.
5. Even after termination of the lease, the lessee may, whilst he is in
possession, remove all things attached to the earth.
6. When a lease of uncertain duration comes to an end, the lessee can
remove all crops on the property planted or sown by him. He is also
entitled to free ingress and egress to gather and carry such crops.
7. The lessee can transfer the whole or any part of his interest in the
property, and the transferee can ~o so again: H~~ever, in su_ch cases,
the lessee continues to be subJect to the hab1ht1es attaching to the
lease.
Liabilities of the lessee

1. The lessee must disclose to the lessor any fact as to the nature or
extent of the interest which the lessee Is about to take, of which the
lessee is, but the lessor is not aware, and which materially increases
the value of such interest.
2. The lessee must pay (or tender) the premium and rent to the lessor
at the proper time and place.
3. The lessee must keep the property in good condition, reason able
wear and tear excepted . (The lessor and his agents can enter the
property to inspect the same.)
4. If the lessee becomes aware of any encroachment on the property
or any proceedings to recover the property, he must inform the lessor
about the same with reasonable deligence.
5. The lessee must use the property as a man of ordinary prudence
would use his own, but he cannot use it for any other purpose or
commit any act which may destroy or permanently injure the property.
6. Without the lessor's consent, the lessee cannot erect any permanent
structure on the property (except for agricultural purposes).
7. When the lease is over, the lessee must put the lessor in possession
of the property.
1
Rights & Liabilities of lessor s transferee
1. The lessor's transferee possesses all rights, and if the lessee so
elects, is subject to a// the liabilities of the lessor, as regards the
property.
2. The lessor's transferee is not entitled to the arrears of rent due before
the transfer.
Determination (i.e. termination) of lease
A lease terminates in eight ways:
1. By efflux of time.
2. If the duration of the lease is unW the happening of some event -
when that event happens.
3. If the lessor's interest in the property is to terminate on the happening
of some event - when that event happens.
4. By merger.
5. By express surrender.
6. By implied surrender.
7. By forfeiture.
8. On expiry of a notice to determine the lease or a notice to quit.
237
SUMARRY
Forfeiture of I · .
three cases: ease : A lease determines (I.e. terminates) by forfeiture In
(i) if the les .

b see breaks an express condition., which provides that on
'i) 'freach of the condition, the lessor may re-enter;
(1 1 the les
see renounces his character,
(a) by selling up a title in a third person; or
(b) by claiming title in himself·
(iii) if the le . . . '
h ssee is adjudicated insolvent, and the lease provides that If
t at happens, the lessor may re-enter.
. However, in all such cases, the lessor must give notice in writing to the
lessee of his intention to terminate the lease.
A forfeiture is waived in three cases:
(i) by acceptance of subsequent rent; or
(ii) by distress for such rent; or
(Iii) by any action on the lessor's pa1t showing an intention to treat the
lease as subsisting.
Holding over (Tenancy-at-will)
If the lessee remains in possession of the property after the termination
of the lease, and the lessor accepts the rent (or otherwise assents to the lessee's
continuing in possession)., the lease is renewed (from year to year, or month to
month, as the case may be).
EXCHANGE
(Ss. 118-121)
In an exchange,
two persons mutually transfer the ownership of one thing for the
ownership of another thing, and
:: neither thing or both things are money only.
An exchange is to be made in the same manner as a sale.
If any party to an exchange is deprived of the property due to a defect in
the title of the other party, such other party is liable to him:
(a) for any loss caused thereby; or
(b) at the option of the party so deprived , for the return of the thing
transferred if it is still in the possession of (i) the other party, (ii) his
1
legal representatives, or (iii) a transferor from him without

consideration .
Each party to an exchange has the rights and is subjected to the liabilities
of a seller as regards that which he gives, and the rights and liabilities of a
buyer as regards that which he takes.
238
. When there is an exchange of money each party is deemed to warrant

the genuinene f '
ss o the money given by him .
GIFTS
(Ss. 122-129)
A gift is the transfer of property made -
(i) voluntarily, and
(Ii) without consideration, -
by one person (donor) to another person (donee), and accepted by the donee.
MCQ No. 141 This acceptance must be made during the donor's lifetime , and while he
is still capable of giving. If the donee dies before acceptance, the gift will be
void.
A gift of immovable property can be made only by a registered instrument
signed by the donor and attested by two witnesses .
A gift of movable property can be made by a registered instrum ent signed
and attested as above, or by the delivery of the property.
Onerous gifts
1. If the gift is one single transfer, and a part of it is burdened with an
obligation, the donee gets nothing unless he accepts it fully.
2. But if the gift is in the form of two or more separate and independent
transfers, he can accept one and refuse the others.
3. If a donee who is not competent accepts an onerous gift, he is not
bound by his acceptance. But, if after becoming competent to contract,
he retains the property, being aware of the obligation , he is bound by
the obligation.
Universal donee
If a gift consists of the donor's whole property, the donee is personally
liable for a// the debts of the donor at the time of the gifts, to the extent of the
property comprised in the gift.
Revocation (or suspension) of gifts
Once a .gift is made, it is irrevocable - except in two cases :
1. When the parties agree that ·on the happening of a specified event
(not dependE\mt on the donor's will), the gift is to stand suspended or
revoked .
2. A gift can also be revoked in those cases in which a contract can be
rescinded (e.g. for fraud, misrepresentation, etc.)
These rules do not, however, affect the rights of a transferee for
consideration without notice.
SUMARRV
Gifts not covered by the Act

The above provisions do not
(i) apply to gifts of movable property made in contemplation of death; or
(ii) affect any rule of Muhammadan law.
ACTIONABLE CLAIMS
(S. 130-137)
Definition
An actionable claim is a claim to:
(a) any debt, not being a debt secured -
(i) by mortgage of immovable property, or
(ii) by hypothecation or pledge of movable property; or
(b) any beneficial interest in movable property which is not in the
possession of the claimant, -
which the civil courts recognise as affording grounds for relief. The debt or
beneficial interest may be existent, accruing , conditional or contingent.
Transfer, how effected
An actionable claim can be transferred only by an instrument in writing
signed by the transferor.
Rights of transferee
1. All rights and remedies of the transferor vest in the transferee .
2. The transferee can sue (i) in his own name, (ii) without the transferor's
consent, and (iii) without making him a party to the suit.
(These rules do not apply to the transfer of a marine or fire insurance
policy.)
Liability of transferee
The transferee takes the transfer subject to all the liabilities and equities
to which the transferor was subject.
Rights of assignee of marine and fire policies
An assignee of a marine or fire policy has all the rights of suit as if the
· insurance contract had been made with him.
Court officers not to deal in actionable claims
Judges, legal practitioners and Court Officers are debarred from buying ,
or trafficking in, actionable claims, and no such claim can be enforced in a
court of law at their instance.
-
240
Saving of negotiable instruments etc.

The above provisions do not apply to stocks, shares, debentures and
negotiable instruments.
***
.- •
( _ _ _M_U_t_r_IP_LE_C_H_0I_CE_ Q~U_
ES_T_:
10_=-:
N-=-S_ _____.I
1. "Transfer of Property Act" is subordinate to which law?

(a) Criminal Law (b) Equity and Trust Laws
(c) Constitutional Law (d) Contract Law [ Ans. : (d); Refer to Page No. 1 ]
2. The aim of Transfer of property Act" is to complete the law related to ... ... ..
11
(a) Bank transactions (b) Movable Property

(c) Immovable Property (d) Cash Money [Ans.: (c); Refer to Page No. 1 ]
3. Which of the following properties can be transferred under the Transfer of Property Act?
(a) Salary of a public officer (b) Right to sue
(c) Both (a) and (b) (d) Neither (a) nor (b) [Ans.: (d); Refer to Page No. 1 ]
4. Which of the following doesn't fall under the scope of Transfer of Property Act ?
(a) Transfer of property by gift (b) Transfer of property by will
(c) Transfer of property to an unborn child (d) Transfer of property by exchange
[Ans. : (b); Refer to Page No. 1 ]
5. Which of the following doesn't fall under the scope of Transfer of Property Act 1882?
(a) Transfer of property by gift (b) Transfer of property by will
(c) Transfer of property to an unborn child (d) Transfer of property by exchange
[ Ans. : (b ); Refer to Page No. 1 ]
6. Transfer by operation of law will not include .. .. ... .
(a) inheritance (b) insolvency
[ Ans. : (d); Refer to Page No. 1 ]
(c) forfeiture (d) will
7. The Transfer of Propery Act applies only to .... ....

(a) intervivos (b) intravivos
[ Ans. : (a); Refer to Page No. 1 ]
( c) mesne profit (d) both (a) and (b)
_If transfer made from insolvency, forfeiture or sale in execution of a decree, what it is called
8
as?
(b) Transfer by operation of law
(a) Transfer by will
(d) None of these [Ans .: (b); Refer to Page No. 1 ]
(c) Transfer by act of parties
241
9. If transfer made from insolvency, forfeiture or sale in execution of a decree, what it is called
as?
(a) Transfer by act of parties (b) Transfer by operation of law
(c) Transfer by will (d) None of these [ Ans . : (b) ; Refer to Page No. 1 ]
10. If two persons transfer the property with mutual consent, what is it called as?
(a) Transfer by act of parties (b) Transfer by will
(c} Transfer by operation of law (d) None of these [ Ans . : (a); Refer to Page No. 2]
11. "Transfer of Property Act" applies to whom?

(a) One dead-one living parties (b) Two living parties
(c) Both (a) and (b) (d) None of these [ Ans. : (b); Refer to Page No. 2]
12. If a person derives the property from a deceased who made testament in favor of him , then
such a transfer is called .... ... .
(a} Transfer by operation of law (b) Transfer by act of parties
(c) Transfer by will (d) None of these [ Ans. : (c); Refer to Page No. 2]
13. Which one of the following is not recognized by court as being immovable property?
(a) Right to collect rent of immovable property
(b) Right to ferry (c) A Right to works hip
(d) Right to fishery [ Ans. : (c); Refer to Page No. 4]
14. Which one of the following is recognized by court as being immovable property?
(a) Royalty (b) Right to collect rent of immovable property
(c) Government promissory note (d) A right to workship
[ Ans. : (b ); Refer to Page No. 4]
15. From below which rights are calculated as rights of immovable property?
(a) Right of royalty (b) Right of way in immovable property
(c) Right of worship (d) Government promisory notes [ Ans. : (b); Refer to Page No. 4 ]
16. Which right is recognised as "Immovable Property"?

(a) Right of Way (b) Right to Royalty
(c) Right to worship (d) Right to Redemption [ Ans. : (d); Refer to Page No. 4 ]
17. Which right is not recognised as "Immovable Property''?

(a) Right of Worship (b) Right of way
(c) Right to Redemption (d) Right of Fishery [ Ans. : (a); Refer to Page No. 4 ]
PRELIMINARY
243
transfer of property from the following which is a movabl

1s. In . e property?
(a) Right of fishery (b) Life time interest in immovable propert
(c) Grass (d) Right to collect lac from trees [ Ans. : [c); Refer to Page No.
41
_From the following which is an immovable party?
19
(a) Growing crops (b) Trees & Plants
(c) Grass (d) Standing timber [Ans.: (b); Refer to Page No. 4]
20 . What is not included in "Immovable Property"?

(a) Standing timber, crops, grass (b) House
(c) Land (d) All of these [ Ans . : (a); Refer to Page No. 4)
21. Which of the following statements is true regarding definitions given under the Transfer of
Property Act, 1882?
(a) Term 'instrument' means both testamentary and non- testamentary instrument.
(b) Term 'actionable claims' include debt secured by mortgage on the residential house.
(c) The term 'attached to earth' will not means trees and shrubs.
(d) The term 'attested' means attested by two or more witness.
[ Ans. : (d); Refer to Page No. 5]
22. How many witnesses are necessary for attestation?

(a) Two (b) One male-One female
(c) Both male (d) Both female [ Ans. : (a); Refer to Page No. 5]
23. Registration amount to notice , such instrument must be ........ registered .

(a) Unauthorised (b) Voluntarily
(c) Authorised (d) Compulsorily [ Ans. : (d); Refer to Page No. 10]
24. Actual possession of property by another must put of such property on his guard, than its
amount to notice for ...... ..
(a) Purchaser (b) Municipality
(c) Seller (d) Registration office [ Ans. : (a); Refer to Page No. 10]
25. Possession consider as notice , when .... ... . possession can't be followed as notice.
(a) Actual (b) Constructive
(c) Express (d) Unconstructive [ Ans. : (b ); Refer to Page No. 11 ]
26. Property which is not in existence, can be transferred?

(a) No (b) Yes
(c) Both (a) and (b) (d) None of these [ Ans. : (a); Refer to Page No. 15]
........illlllllll-:M ~ ....
27. Which interest cannot be transferred?

(a) Gift (b) Sell
(c) Mortgage (d) Surrender of Lease [Ans. : (d); Refer to Page No. 16]
28. Transfer of Spes Succession is:

(a) Valid (b) Void
(c) Voidable (d) Either (a) or (b) [ Ans. : (b ); Refer to Page No. 17 ]
11
29. ilSpes Successionis Can not be transferred". This sentence is ....... .
(a) True (b) False
(c) Partly True (d) Partly False [ Ans. : (a}; Refer to Page No. 18]
30. Under Transfer of Property Act except .. ..... . property, easement rights can't be transferred.
(a) Dominant heritage (b} Nondominant heritage
(c) Serivient heritage (d) Nonserivient heritage [ Ans. : (a); Refer to Page No. 18 ]
31. A right of future maintenance is altogether .. ..... .

(a) Alienable (b} Inalienable
(c) Transferrable (d) Nontransferrable [ Ans. : (b ); Refer to Page No. 19]
•
32. Which of the following can be transferred under the provisions of the Transfer of Property
'
Act?
(a) The right to mesne profits
(b) A decree for mesne profits
(c) A transfer of property to a prostitute for future cohabitation
(d) A sub-lease of a farm for the retail sale of opium [Ans.: (b); Refer to Page No. 20]
33. Under the provisions of the Transfer of Property Act, 1882:

(a) a mere right to sue can be transferred
(b) a mere right to sue cannot be transferred
(c) no such provision is made in the Act
j
(d) none of the above [ Ans. : (b); Refer to Page No. 20]
34. Under the Transfer of Property Act, 1882:

(a) the salary of a public officer can be transferred
(b) the salary of a public officer cannot be transferred
(c) no such provision is found in the Act
t
(d) none of the above [ Ans . : (b ); Refer to Page No. 20 ]
PRELIMINARY 245
~ · 35. Under the Transfer of Property Act, 1882:

(a) a public office cannot be transferred (b) a public office can be tran sferred
(c) such provision is absent in the Act (d) none of the above
[ Ans. : (a) ; Refer to Page No. 20]
36 . ........ allowed to military,_naval, airforce and civil pensioners of government can 't be transferred .
(a) Salary and allowances (b) Salary
(c) Stipends and Pensions (d) Allowances [ Ans. : (c); Refer to Page No. 21 ]
t 37. Is the water of rivers or seas transferrable?

(a) Yes (b) No
(c) Both (a) and (b) (d) None of these [ Ans. : (b) ; Refer to Page No. 21 ]
k 38. The term "transfer" under the Transfer of Property Act, 1882, refers to:
r (a) partly.or whole transfer (b) absolute or conditional transfer
(c) contingent transfer (d) both (a) and ·(b) are correct.
39. Any person is capable enough to do contract, when he has right of .... .... property.
(a) Transferable (b) Nontransferable
(c) Legal (d) Illegal [ Ans. : (a); Refer to Page No. 21 ]
40. Property can be transferred in the favour of Minor person?

(a) No (b) Yes
(c) Both (a) and (b) (d) None of these [Ans.: (b); Refer to Page No. 22]
1 • 1 41. Under the Transfer of Property Act, 1882 the legal incidents also includes:
(a) machinery attached to earth and the moveable parts thereof
(b) only machinery attached to earth
(c) only moveable parts of the machinery attached to earth
(d) none of the above [ Ans. : (a); Refer to Page No. 23 l
42. Accessory follows ..... ...

(a) agent (b) principle
[ Ans. : (c); Refer to Page No. 23]
(c) principal (d) umpire
43. Under the provisions of section 9 of the Transfer of Property Act, 1882 the transfer includes:
(a) also oral transfer (b) written transfer only
23
(c) only (a) is correct (d) only (b) is correct [Ans.: (a); Refer to Page No. l
44. Under the Transfer of Property Act, 1882, where writing is not expressly required by law:
(a) a transfer of properties may be made without writing in every case
(b) a transfer of property is subject to only writing
(c) no provision of oral transfer is made
(d) none of the above [ Ans . : (a); Refer to Pag e No. 23 J
45. Under the Transfer of Property Act, 1882 the condition restraining alienation is provided in:
(a) section 10 (b) section 9
(c) section 8 (d) section 7 [ Ans . : (a); Refer to Page No. 25 ]
46. If there is a condition restraining alienation , then the .... ... .

(a) condition is void (b) transfer is void
(c) condition and transfer both void
(d) condition is void but transfer is valid [ Ans. : (a); Refer to Page No. 25]
47. A transferor makes absolute gift to transferee, with the condition that, transferee shall reside
in it. Here the direction is ....... .
(a) valid (b) void
(c) voidable (d) void ab initio [ Ans. : (b ); Refer to Page No. 29 )
48. Provisions of section 12 of the Transfer of Property Act, 1882:

(a) does not apply to lease condition in the benefit of the lessor
(b) does apply to a condition in a lease for the benefit of lessor
(c) no such condition is made under such provision
(d) none of the above [ Ans. : (a); Refer to Page No. 30]
49. Under the provisions of section 17 of the Transfer of Property Act, 1882, the income arising
from the property shall be accumulated either wholly or in part during a period :
(a) longer than life of the transferor (b) shorter than life of transferor
(c) no such period is mentioned (d) none of these
50. "Transfer in favor of unborn person cannot be done". This sentence ..... .. .
(a) True (b) False
(c) Partly True (d) Partly False [ Ans. : (a); Refer to Page No. 32 ]
51. Before giving benefit to unborn person , what can be made first?
(a) Prior Interest (b) Subsequent Interest
(c) Equal Interest (d) None of these [ Ans. : (a); Refer to Page No. 32]
PRELIMINARY
247
52. How long interest in favor of unborn person can be made?

(a) Youth (b) Major
(c) Up to Majority (d) Old age [ Ans. : {c) ; Refer to Page No. 32]
53, Which rule is correct with regards to transfer of property to an unborn child?
(a) There can be no transfer to an unborn child .
(b) Transfer can be made to an unborn child of future property only.
(c) Transfer to an unborn child must include complete remaining interest of the transferor of
the property.
(d) Only life interest can be created in favour of the unborn child .

54. Unborn person must be given ....... , interest.
(a) life (b) entire
(c) life or entire (d) neither life not entire [ Ans. : (b ); Refer to Page No. 33]
55. Which rule-is correct with regards to transfer of property to an unborn child?
(a) there can be no transfer to an unborn child
(b) Transfer can be made to an unborn child of future property only
(c) Transfer to an unborn child must include complete remaining interest of the transferor of
the property
(d) Only life interest can be created in favour of the unborn child
56. "Transfer in favor of unborn person can not be done". This sentence is ... .. ...
(a) False (b) True
(c) Partly False (d) Partly True [ Ans. : (b ); Refer to Page No. 33 ]
57. The rule against perpetuity as given in section 14 of the Transfer of Property Act 1882,
applies to:
(a) Immovable property (b) Movable property
(c) Both (a) and (b) (d) Unconditionally to (a), conditionally to (b)
58. Under the Transfer of Property Act, 1882 where an interest created for the benefit of a person
or class of persons fails then:
(a) any interest created in the same transaction intended to take effect after or upon failure
of such prior interest also fails
(b) any interest created in the same trans~ction and intended to take effect after or upon
failure of such prior interest does not fail
(c) such failure does not affect

(d) none of the above [ Ans . : (a); Refer to Page No. 41 1
59. An unequivocal and irrevocable settlement conferring enjoyment rights over the property in
present and each getting a specific share in it upon the death of the settler would create :
(a) A contingent interest in favour of each of the beneficiary
(b) A vested interest in favour of each of the beneficiary
(c) either A or B depending on the facts of the case
42
(d) Neither (a) nor (b), as it would be void [Ans.: (b); Refer to Page No. 1
60. The provision of vested interest is provided in:
(a) section 18 of the Transfer of Property Act, 1882
(b) section 19 of the Transfer of Property Act, 1882
(c) section 20 of the Transfer of Property Act, 1882
(d) section 21 of the Transfer of Property Act, 1882 [ Ans. : (b ); Refer to Page No. 42 ]
61. According to the provisions of section 19 of the•Transfer of Property Act, 1882:

(a) the vested interest is not defeated by the death of the transferee before he obtains
possession
(b) vested interest is defeated by the death of transferee before he obtains possession
(c) no such provision is made
(d) none of the above [ Ans. : (a); Refer to Page No. 42 ]
62. Which of the following is a valid example of a vested interest as defined by the Transfer of
Property Act, 1882?
(a) Ba deceased, in his will leaves a residential property to C, to be transferred on the death
of B's daughter-in-law.
th
(b) Ba deceased, in his will left ( 65,000 to A, to be paid on A!.s 50 birthday
(c) Both (a) and (b) (d) Neither (a) nor (b) [Ans.: (a); Refer to Page No. 42]
63. Which is not a characteristic of Vested Interest ........

(a) Fulfillment of prior condition (b) Transferable
(c) Heritable (d) Not fulfillment of condition
64. Under the provisions of the Transfer of Property Act, 1882, the unborn person acquires vested
interest on transfer for his benefit:
(a) upon his birth (b) 7 days after his birth
(c) 12 days after his birth (d) no such provision is made in the Act
PRELIMINARY 249
6 • Under the provisions of the Tran f .
interest on transfer upon 1"'1·b' tsh er of Property Act, 1882 an unborn person acquires vested
' s ir , although :
(a) he ~ay ~ot be entitled to the enjoyment immediately on his birth
(b) he 1s entitled after 7 days after his birth
(c) no such provision is made
(d) none of the above
[ Ans . : (a); Refer to Page No. 45 J
66. Where interest on transfer of property is created in favour of members only of a clas
shall attain a particular age: s as
(a) such interest does not vest in any member of the class who has not attained that age
(b) such interest vests in any member irrespective of class who has not attained that age
(c) no such provision is made under the Act
67. In the context of contingent interest in case of happening of a uncertain event or if a specified
uncertain event shall not happen, such person acquires a contingent interest in the property.
Such interest:
(a) becomes vested interest in the former case, on the happening of the event, in the later,
when the happening of event becomes impossible
(b) does not become vested interest
(c) vested interest does not depend upon happening or not happening of event
68. The provision of contingent interest is provided in:

(a) section 20 of the Transfer of Property Act, 1882
(b) section 21 of the Transfer of Property Act, 1882
(c) section 22 of the Transfer of Property Act, 1882
(d) section 23 of the Transfer of Property Act, 1882 [ Ans. : (b ); Refer to Page No. 45]
·sg_ Contingent interest is not .... :...

(a) Only heritable (b) Only transferable
(c) Transferable & Heritable (d) None of these [ Ans. : (c); Refer to Page No. 46]
70. "Contigent Interest can be transferred". This sentence is ....... .

(a) True (b) False
(c) AbsolutelyTrue (d) Absolutely False [ Ans. : (a); Refer to Page No. 46]
•
71 . Which of the following is a valid example of contingent interest as defined by the Tran sfer of
Property Act?
(a} B gifted his property to his daughter-in-law with a condition that the possession of the
property will transfer to her only after B's d~ath. .
(b} 8 made a gift of~ 15,000 to A, deposited in an account to be transferred to A wh en he
attains age of majority.
(c} Both (a) and (b) (d) Neither (a) nor (b) [ Ans. : (b); Refer to Page No. 47]
72. B gifts a share of business to A on the condition that in case B does not like th e futu re
daughter-in-law of B, the property will revert back to (b) Which of the following statements
will apply?
(a) The gift and condition are valid
(b} The gift is absolute, condition is invalid and discarded
(c) The gift is void in totality
(d) The gift is valid in case B's son choose not to marry [ Ans. : (c); Refer to Page No . 4 9 ]
73. Which doctrine has been involved in the provision regarding Condition Precedent?
(a) Doctrine of Acceleration (b) Doctrine of Cy-pres
(c) Rule against Perpetuity (d) Rule of Perpetuity [ Ans . : (b); Refer to Page No. 57]
74. "Ostensible Owner is not real owner", This Sentence is ... .... .
(a) True (b) False
(c) Partly True (d) Partly False [ Ans. : (a); Refer to Page No. 68]
75. Under the provisions of the Transfer of Property Act, 1882, where immovable property is
transferred for consideration by persons having distinct interests therein, the transferors are :
(a) entitled to share in the considerations equally
(b) entitled to share unequally
(c} entitled to share equally but subject to further
(d) none of the above. [ Ans. : (a); Refer to Page No . 83]
76. The basic ingredients of the doctrine of lis pendens are:

(a) The suit should be collusive
(b) Property should have been transferred or otherwise dealt with
(c) A litigation should be pending in a court of competent jurisdiction
(d) The suit must not be related to a specific immovable_property
PRELIMINARY
251
every transfer of immoveable pr .. . .
71, trans feror • operty made with intent to defeat or delay the creditors of the
(a) Shall be void

(b) Shall be voidable at the option of the creditor so delayed
(c) shall be valid as long as the main transaction is valid
(d) shall not be registrable [ Ans . (b)· R f t p N
.. , e er o age o. 96 ]
18 . ooctrine of Part Performance is applicable to .. .. ....

(a) Only Oral contract (b) Only written contract
(c) Oral-Written contract (d) None of these [ Ans . : (b) ; Refer to Page No. 101 ]
79. Who can use the doctrine of Part Performance?

(a) Both defendant-Plaintiff (b) Only Plaintiff
(c) Only defendant (d) Unborn Person [Ans .: (c); Refer to Page No. 106]
so. "A contract for sale is not transfer of ownership". This sentence is ..... ...
(a) True (b) False
(c) Partly True (d) Partly False [ Ans . : (a); Refer to Page No. 109]
81. The transferee of property is known as ... .... .

(a) Mortgagor (b) Co-owner
(c) Mortgagee (d) Executor [Ans .: (c); Refer to Page No. 117]
82. The person who mortgages the property is known as ... ... ..
(a) Mortgagee (b) Mortgagor
(c) Co-owner (d) Executor [ Ans. : (b ); Refer to Page No. 117]
83. There are ........ types of mortgages?

(a) Two (b) Six
(c) Five (d) Four [ Ans. : (b ); Refer to Page No. 118 ]
84. "Once a mortgage, always a mortgage". This sentence is .... .. ..

(a) True (b) False
(c) Partly False (d) Partly True [ Ans. : (a); Refer to Page No. 121 ]
85. In which kind of mortgage is the possession delivered?

(a) English Mortgage (b) Usufurctary ~ortgage
(c) Simple Mortgage (d) Mortgage by Deposit of title deeds
86. Mortgage by deposit of title deeds is also called as .. ... .. .

(a) Equitable Mortgage (b) Simple Mortgage
126
(c) Usufructuary Mortgage(d) Anomalous Mortgage [ Ans. : (a) ; Refer to Page No . ]
87. What is the intention of depositing of title deeds in equitable mortgage?

(a) Create a security (b) Take a possession
(c) Take a consideration (d) Take an interest [ Ans. : (a); Refer to Page No. 126]
. . . . d by the Transfer of
88. Which of the following Is the right of mortgager to redeem as conferre
Property Act, 1882?
. h rtgag ed prope rty
(a) Right to demand that the mortgagee at his cost, should transfer t e mo
to any such third person as the mortgagor directs
(b) Right to demand that the mortgagee at his cost, should transfer the mortgaged property
to the mortgagor
(c) Either (a) or (b) (d) Neither (a) nor (b) [ Ans. : (d) ; Refer to Page No . 131 ]
19. Which of the following is true regarding the 'right of subrogation' as defined under the Tran Sfer
of Property Act, 1882?
(a) Any person redeeming the property under provisions of section 91 of the A ct, has th e
same rights as the mortgagor against the mortgagee.
(b) Any person redeeming the property under provisions of section 91 of the Act, has th6
same right as the mortgagee against the mortgagor.
(c) Either (a) or (b) depending on the 'facts of the case .
(d) Neither (a) nor (b) [ Ans. : (a); Refer to Page No. 138]
•O. Subrogation as defined in the Transfer of Property Act, 1882 can be:
(a) Conventional (b) Legal
(c) Either (a) or (b) (d) Neither (a) nor (b) [Ans . : (c); Refer to Pag e No. 138]
91. The provisions of section 60A of the Transfer of Property Act, 1882 do not apply when ..... •. •
(a) The mortgagor is in possession of the property
(b) The mortgagor has recovered possession of the property
(c) The mortgagee has defaulted in receiving payment
(d) The mortgagor has not defaulted in making payments
[ Ans . : (b ); Refer to Page No. 141 ]
92. Which of the following contracts are implied in case of mortgages under the Transfer of
Property Act?
(a) That the mortgagee will pay all public charges accruing due in respect of the property.
----------· •· · · ··· •·
PRELIMINARY 253
(b) W here the property mortgaged is lease property, and mortgagee renews the lease, the
mortgagee has the right to continue enjoying the property until the lease runs out.
(c) Both (a) and (b) (d) Neither (a) nor (b) [ Ans.: (d); Refer to Page No. 146]
93. Which of the following statements hold true regarding receiver under the provisions of the
Transfer of Property Act?
(a) A person paying money to the receiver must make sure that the appointment of receiver
is valid .
(b) The receiver can use the insurance money received, subject to other provisions of the
Transfer of Property Act, 1882, for the payment of interest falling due under the mortgage ,
if so directed in writing by the mortgagee.
(c) The receiver can use the insurance money received , subject to other provisions of the
Transfer of Property Act, 1882, for the payment of princi ple money, if so directed in writing
by the mortgagee.
(d) None of the above . [ Ans. : (c); Refer to Page No. 152 ]
94. Charge can be created by:

(a) Act of parties (b) Operation of Law
(c) Both (a) and (b) (d) Neither (a) nor (b) [ Ans . : (c); Refer to Page No. 166 ]
95. What can be transferred in the mortgage?

(a) Transfer of Loan (b) Transfer of Ownership
(c) Transfer of Interest (d) Transfer of Possession [Ans. : (c); Refer to Page No. 169]
96. Which property can be transferred in mortgage?

(a) Immovable Property (b) Movable Property
(c) Immovable- movable Property (d) Rented property
[ Ans . : (a); Refer to Page No. 169 ]
97. What can be transferred in Lease?

(a) Transfer of Loan (b) Transfer of Interest
(c) Transfer of Ownership (d) Transfer of Possession
[ Ans. : (d); Refer to Page No. 172 ]
98. Amongst the following what can a minor become?

(a) Adm inistrator (b) Mortgagor
( c ) Mortgagee (d) None of above [Ans .: (c); Refer to Page No. 172]
99. A lease to a minor is ..... ...

(a ) v o id (b) voidable
(d) None of these [ Ans.: (a}; Refer to Page No. 172 ]
(c) valid
100. Under what time duration can a lease be made?

(a) Periodic (b) fixed time
(c) Perpetuity (d) Any of these [ Ans. : (c) ; Refer to Page No. 172 ]
101. Which type of consideration is given to lessor by lessee in a lease contract?

(a) Premium or rent (b) Sale
(c) Rent (d) Premium [ Ans. : (d); Refer to Page No. 172 l
102. Amongst the following which interest is not transferrable?

(a) Interest on company (b) Interest on lease
174
(c) Interest of Bank (d) None of these [Ans.: (b); Refer to Page No. 1
103. The notice period for termination of lease for residential purpose is .. .... ••, in absence of
contract or usage to the contrary.
(a) Fifteen days (b) One month
(c) Two months (d) Forty-Five days [ Ans. : (a); Refer to Page No. 177]
104. How many days notice is required to terminate lease?

(a) 15 Days (b) 30 days
(c) 45 days (d) 60 days [ Ans. : (a); Refer to Page No. 177 ]
105. In case a lease is made for a certain period mentioning that it is terminable before its expiration ,
without mentioning at whose option ....... .
(a) Only lessee will have the option of termination.
(b) Only lessor will have the option of termination.
(c) The lease will be terminable only in case of mutual agreement.
(d) Both lessor and lessee will have option of terminating the lease.
( Ans. : (a); Refer to Page No. 178 ]
106. Which of the following statements are true regarding rights and liabilities of a lessor under
the Transfer of Property Act?
(a) The lessee is bound on the lessor's request to put him in possession of the property.
(b) The lessor is bound to pay or tender, at the proper time and place, the premium or re nt to
the lessee or his agent in this behalf.
(c) Lessee must not without permission erect on the property any permanent structure, except
for agricultural purpose.
(d) Lessee must not without permission erect on the property any temporary or perma nent
structure, except for agricultural purpose [ Ans. : (c); Refer to Page No. 181 ]
PRELIMINARY 255
107. .. ..... . deals with Termination of lease under the Transfer of Property Act.
(a) Section 109 (b) Section 110
(c) Section 111 (d) Section 11 2 [Ans.: (c); Refer to Page No. 182]
108. Which of the 'following can be considered implied surrender of the lease?
(a) Non acceptance of a new lease taking effect during the continuance of the existing lease.
(b) Abandonment of possession by the lessee.
(c) A surrender by one of the two joint lessee's, implied surrender on the part of second
lessee.
(d} None of the above. [ Ans. : (b ); Refer to Page No. 183 ]
109. Which of the following can be considered implied surrender of the lease?
(a) Non acceptance of a new lease taking e'ffect during the continuance of the existing lease
(b) Abandonment of possession by the lessee
(c) A surrender by one of the two joint lessee's, implied surrender on the part of second
lessee
(d) None of these [ Ans. : (b ); Refer to Page No. 183 ]
110. ........ provides under the Transfer of Property Act exemption of leases for agricultural purposes.
(c) Section 116 (d) Section 117 [ Ans. : (d); Refer to Page No. 189 ]
111. Which of the following is the definition of the term 'Exchange' as given under the Transfer of
Property Act, 1882?
(a) When two or more persons mutually transfer the ownership of one thing for the ownersh ip
of another, neither thing or both things being money only.
(b) When two persons mutually transfer the ownership of one thing for the ownership of
another, either thing or both things being money only.
(c) When two or more persons mutually transfer the ownership of one thing for the ownership
of another, either thing or both things being money only.
(d) When two persons mutually transfer the ownership of one thing for the ownership of
another, neither thing or both things being money only.
( Ans. : (d); Refer to Page No. 190]
112. When two persons mutually transfer the ownership of another, neither thing or both things
being money only, the transaction is called .. .... . .
(a) sale (b) an exchange
(c) gift (d) None of these [Ans.: (b); Refer to Page No. 190]
113. What is aim of Exchange?

(a) Transfer of Ownersh ip (b) Transfer of commodity-property
(c) Both (a) and (b) (d) None of thse [Ans . : (b); Refer to Page No. 190]
114. Which of the following statements will hold true regarding exchange under the Transfer of
Property Act?
(a) All the liabilities and responsibilities under normal sale apply to exchange.
(b) All the liabilities and responsibilities under normal sale apply to exchange , subject to
provisions of section 119 and 121 of the Act.
(c) No liability and responsibility under normal sale will apply to exchange unless specifically
stated.
(d) Liabilities and responsibilities under normal sale will not apply to exchange under any
circumstances. [ Ans. : (b ); Refer to Page No. 192 ]
115. Which section provides for Right of party deprived of thing received in exchange?
(c) Section 1~1 (d) Section 122 [ Ans. : (a); Refer to Page No. 192]
116. Rights and liabilities of parties to an exchange compare with whom?

(a) buyer (b) seller
(c) seller and buyer (d) none of these [ Ans. : (c); Refer to Page No. 192]
117. In a gift, one person voluntarily without ..... ... transfer his ownership.
(a) Money (b) Property
(c) None (d) Consideration [ Ans. : (d); Refer to Page No. 194]
118. What is not considered as transfer of gift?

(a) voluntarily transfer (b) consideration
(c) acceptance (d) existence of the property
[ Ans. : (b ); Refer to Page No. 194]
119. A gift of immovable property must be effected by a ... ... ..

(a) Notarized instrument (b) Registered instrument
(c) Lease agreement (d) Will [Ans.: (b); Refer to Page No. 194]
120. Which of the following is valid gift under the Transfer of Property Act, 1882?
(a) A gift of interest in a house to a donee by a donor, allowing him to stay in it as long as he
pays maintenance charges of t 30,000 per month to the donor. The rental value of the
property is t 26,000.
PRELIMINARY 257
(b) A gift of land by donor to a done, in return of a stone necklace worth ~ 3,000. The value
of land being ~ 33,000
(c) A gift of single rose valued at Rs .3 to a donee, in return of the donee being a considerate
person.
(d) All of the above. [ Ans . : {c); Refer to Page No. 194]
121 . B gifts a piece of land to C, a gift deed is m~de a_nd the possession of the gift deed and the
property is transferred to C. c delays the reg1strat1on of the deed and in the meantime B dies .
The heirs of B:
(a) can claim the piece of land as valid gift has not been made
(b) cannot claim the piece of land as valid gift has been made
(c) cannot claim the piece of land, if C gets the deed registered before the heirs make a
claim
(d) can claim the piece of land, unless C transfers the same to someone else
122• Under which section there is a provision that a gift may be suspended or revoked?
(c) Section 126 (d) Section 128 [Ans.: (c); Refer to Page No. 199 ]
123. Which section provides for transfer of Actionable Claims?

(c) Section 129 (d) Section 128 [Ans.: (a) ; Refer to Page No. 202]
124. Which section provides for incapacity of officers connected with courts of justice?
(c) Section 137 (d) Section 138 [ Ans. : (b ); Refer to Page No. 207]
125. A mere right of re-entry for breach of a Condition Subsequent can't be transferred to any one,
except of the property affected by .. ..... .
(a) Seller (b) Purchaser
(c) Owner (d) Trustee [Ans.: (c); Refer to Page No. 212]
126. 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. These provisions come under:
(a) rules against retrospective transfer only
(b) rules against perpetuity
(c) rules against prospective transfer
(d) none of the above [Ans.: (b); Refer to Page No. 215]
___.... _.,.. _
127. Under the Transfer of Property Act, vested interest is ....... .

(a) Defeated by the death of the transferor
(b) Defeated by the death of the transferee
(c) Both (a) and (b)
(d) Neither (a) nor (b) [ Ans . : (d); Refer to Page No. 215 l
128. Where several co-owners of immovable property transfer a share therein without specifying
that the transfer is to take effect on any particular share or shares of the transfers! the tra n 5 fer,
as among such transferors, takes effect on such share:
th
(a) inequally where the shares were equal and where they are unequal proportionally to e
extent of such shares
th
(b) equally where the share were equal and where they are unequal proportionately to e
extent of such shares
(c) only (a) is correct
(d) none of the above.- [ Ans. : (b); Refer to Page No. 22 1 1
129. What is the aim of sale?

(a) Transfer of Commodity (b) Transfer of Ownership
(c) Transfer of commodity-property (d) Transfer of Property
( Ans. : (b ); Refer to Page No. 223 ]
130. Under the provisions of the Transfer of Property Act, 1882, the seller is duty bound to disclose:
(a) Patent defects in the property (b) Latent defects in the property
(c) Both (a) and (b) (d) Neither (a) nor (b)
( Ans. : (b ); Refer to Page No. 225 ]
131. Who is in possession of property in simple mortgage?

(a) Mortgagor (b) Mortgagee
(c) Co-owner (d) Administrator [ Ans. : (a); Refer to Page No. 226 ]
132. In which type of mortgage can the immovable property be ostensibly sold?
(a) Mortgage by Conditional sale (b) Simple Mortgage
(c) English Mortgage (d) Usufructuary Mortgage
[ Ans. : (a); Refer to Page No. 226]
133. In which type of mortgage the possession of property is delivered?

(a) Usufructuary Mortgage(b) Simple Mortgage
(c) English Mortgage (d) Anomalous Mortgage [ Ans. : (a); Refer to Page No. 227]
PRELIMINARY 259
134, Which O'f the following is nearest to meaning of the phrase •English mortgaged' as defined by
the Transfer of Property Act, 1882?
(a) Where on payment of certain sum by the mortgagee the property passes to him.
(b) Where there are two sales made, one at the start of mortgage with the condition that
after the mortgage amount is paid back, the property will sold back.
(c) Where the mortgagee gets the possession of the property with the rights of profits, rents
etc.
(d) Where the mortgage is made by submitting the title deed .
135. In which type of mortgage the property is transferred Absolutely?

(a) English Mortgage (b) Simple Mortgage
(c) Usufructuary Mortgage(d) Anomalous Mortgage [ Ans. : (a); Refer to Page No. 227]
136. Which provision is effected of charges?

(a) Simple mortgage (b) English mortgage
(c) Anomalous mortgage (d) Usufructuary mortgage [ Ans. : (a); Refer to Page No. 227]
137. Which of the following is the right of mortgager to redeem as conferred by the Transfer of
Property Act, 1882?
(a) Right to demand that the mortgagee at his cost, should transfer the mortgaged property
to any such third person as the mortgagor directs. .r ;-~-.. .
(b) Right to demand that the mortgagee at his cost, should transfer thy mortgaged_-pro.f;>erty
to the mortgagor. / ... :, · -~.: ~~- .:. __ , · -:-
1 • '• A - -
(c) Either (a) or (b) (d) Neither (a) nor (b) [Ans.: (d); Refei to Pag:~ No. 228]
.., / ) :-: ~ ••:., ~ • .' J- 1 J -.- ••
138. Which of the following is not valid consideration for establishing a'i~ase / ,_. ~--_. ~_.-. ~J
/~:- -: - ~ _- ... ..
(a) Rent partly in money and partly in kind. / ~.';; _.:' --.
(b) A stipulation to pay government assessment or taxes payab{e~~i-th1~ fessq.r. _
; • .• _ ..i :~ - • ~ • •I I
(c) A personal agreement by a tenant to pay a certain sum or,:a··cectaih quanti_ty_in,kind to the
landlord. /~ ~~ ,--~: - · ,.,:· _~:.· ,1 ·_:-_... ~·
, f • - ~: I :, l ' • • , ~
(d) None of the above. [ Aris ..-i(c); Refe( to_page No. 216]
i/1/ _ .__ ~· .- : / -~- .
139. Which of the following statements is true regarding the defiriition _~_f ref.lt of lease as given
under the Transfer of Property Act? ---.. -......... _/
(a) The rent must be in form of money and not in kind.
(b) The rent can be in form of money or service but not in kind.
(c) The rent can be in money or in kind .
(d) The rent cannot be in form of money. [ Ans. : (c); Refer to Page No. 234]
140. Which of the following is the presumption made for lease under the Transfer of Property Act,
1882, unless a contract or local usage states otherwise?
(a) The lease of immovable property for agriculture will be assumed to be for a period of
three years.
(b) The lease of immovable property for purpose other than agriculture and manufacturing
will be deemed to be for a period of one month .
(c} Both (a} and (b)
(d} Neither (a) nor (b) [ Ans. : (b ); Refer to Page No. 235 ]
141. If the donne dies before acceptance, the gift is .... ... .
(a) valid (b) voidable
238
(c) void (d) None of these [ Ans. : (c); Refer to Page No. l
***

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THE TRANSFER OF

C. JAMNADAS & CO.

MULLA : The Transfer of Property Act

SHAH : Principles of the Law of Transfer

CHITALEY & RAO : The Transfer of Property Act

SHUKLA : The Transfer of Property Act

ROW : The Transfer of Property Act

SENGUPTA : The Transfer of Property Act

RAY : The Transfer of Property Act

SHANGARI : Supreme Court Encyclopaedia

B. Illegal restrictions on certain alienations 25

C. Transfer for benefit of unborn persons 32

3. Transfer of immovable property 65-106

A. Transfer by person other than full owner 66

B. Protection of third person's rights 75

C. Transfer by person having authority to revoke a former transfer 81

F. Priority of rights created by transfer 84

G Transferee's rights under policy 86

H. Bona fide holders under defective title 87

I. Transfer of property pending suit relating thereto (Lis Pendens) 89

4. Sale of immovable property 107-116

'Contract for sale' defined 109

Rights and liabilities of buyer and seller 110

2. Mortgage by conditional sale 119

Right to Grant a Lease 145

2. Covenant for defence of title 146

3. Covenant for payment of public charges 146

4. Covenant for payment of rent 147

5. Covenant for payment of prior encumbrances 147

Rights of the mortgagee 147

1. Right of foreclosure or sale 147

3. Right to sell without the intervention of Court 150

4. Right to appointment of a receiver 151

5. Right to accession 153

6. Right to renewal of mortgaged lease 153

7. Right to spend money 153

8. Rights to proceeds of revenue sale or compensation on acquisition 154

9. Right of mesne mortgagees 154

Liabilities of the mortgagee 156

1. Mortgagee to bring one suit on several mortgages 156

2. Liabilities of the mortgagee in possession 156

Law as to priority of securities 157

Marshalling and contribution 160

Doctrine of merger 170

6. Leases of immovable property 172-189

Duration and Termination of leases 177

Rights and liabilities of the lessor 178

Rights of the lessee 179

Rights and liabilities of lessor's transferee 181

Determination (i.e. termination) of a lease 182

Forfeiture of lease 183

Relief against forfeiture 185

Tenancy by holding over 187

9. Transfer of actionable claims 202-208

'Actionable claim' defined 202

Transfer how effected 203

10. General observations on how to execute

Summary of the Transfer of Property Act 211-240

• Multiple Choice Questions (With Solutions) 241-260

OBJECTS OF THE TRANSFER OF PROPERTY ACT – "The chief objects