OBJECTIVE OF TRANSFER OF PROPERTY ACT
THEORIES AND CLASSIFICATION OF PROPERTY
Movable and Immovable Property
Section 3(36) in The General Clauses Act, 1897, Movable property shall mean property of every description, except immovable property.
Section 2(9) in The Registration Act, 1908 Movable property includes standing timber, growing crops and grass, fruit upon and juice in trees, and property of every other description, except immovable property.
Section 3(26) in The General Clauses Act, 1897 Immovable property shall include
Benefits arising out of land, and
Things attached to the earth, or permanently fastened to anything attached to the earth.
Section 2(6) in The Registration Act, 1908 Immovable property includes land, buildings, hereditary allowances, rights to ways, lights, ferries, fisheries or any other benefit to arise out of land, and things attached to the earth or permanently fastened to anything which is attached to the earth, but not standing timber, growing crops nor grass.
Section 3(26) TPA defines immovable property as-property which shall include land, benefit arising out of land, anything attached to the earth, or permanently fastened to anything attached to the earth. S.3 TPA, does not include standing Timber, growing crop or grass.
According to S.3 of TPA 1882, ATTACHED TO EARTH means-
Rooted in the earth, as in the case of trees and shrubs;
Imbedded in the earth, as in the case of walls or buildings; or
Attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached.
Distinction between them was made by Justice Holloway J in an old case-
Movability may be defined to be the capacity in thing of suffering alteration of the relation of place immovability in the capacity 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. Certain things such as land are in all case immovable. Other things such as trees attached to the ground so long as they are so attached immovable, when the severance has been affected they become movable.
STANDING TIMBER (Movable)
They are trees fit for use for the purpose of building or repairing houses. In order that trees may be considered standing timber, they must be trees whose wood is suitable for building houses, bridges, ships, etc. If a tree is a growing tree drawing sustenance from the soil, it is immovable. But if it has to be cut soon, the amount of sustenance it will draw from the soil is negligible and is to be disregarded-said Lord Coleridge J in Marshall v Green. A fruit bearing tree is also not a standing timber. It has to be seen from the Intention of the parties whether to severe the tree or just allow for fruit harvesting which will be immovable property. Duration is also a factor. If fruit harvesting contract is for 10 years, then immovable property.
Sheikh Ibadullah v Lachmi Narain 1926
That timber under Registration Act 1908 must be deemed to imply only such trees, as are fit to be used in building and repairing houses. A Neem tree was treated to be a timber.
Ramman Lal v Ram Gopal 1916 (IMPORTANT)
Whether a tree is a standing timber has to be assessed from the following circumstances-
Purpose-Trees whose wood can be used for building or repairing houses or for other industrial purposes,
Intention-Implies an intention, sooner or later, to sever the trees from the soil.
Nourishment-The amount of nourishment it takes, if it is felled at a reasonably early date, is so negligible that it can be ignored for all practical purposes.
Totality of facts and circumstances
Shrimati Shantabai v State of Bombay 1958 (IMP) (NOURISHMENT)
Timber is well enough known to be-wood suitable for building houses, bridges, ships, etc., whether on the tree or cut and seasoned.(Webster’s Collegiate Dictionary). Therefore, ‘standing timber’ must be a tree that is in a state fit for these purposes and, further, a tree that is meant to be converted into timber so shortly that it can already be looked upon as timber for all practical purposes even though it is still standing. If not, it is still a tree because, unlike timber, it will continue to draw sustenance from the soil. Now, of course, a tree will continue to draw sustenance from the soil so long as it continues to stand and live ; and that physical fact of life cannot be altered by giving it another name and calling it ‘standing timber’ But the amount of nourishment it takes, if it is felled at a reasonably early date, is so negligible that it can be ignored for all practical purposes and though, theoretically, there is no distinction between one class of tree and another, if the drawing of nourishment from the soil is the basis of the rule, as I hold it to be, the law is grounded, not so much on logical abstractions as on sound and practical common-sense. It grew empirically from instance to instance and decision to decision until a recognizable and workable pattern emerged ; and here, this is the shape it has taken.
District Board Banaras v Ghurahu Rai 1956 (REAL TEST IS INTENTION)
Facts, UP Government sanctioned a scheme for planting trees by the roadsides in district board areas under which a person has to plant and look after the trees and when they are grown, a sanad would be issued recognizing their title over them. Ghurahu Rai in 1934, obtained sand in respect of 56 trees. However the new Chairman of the District board cancelled the Sanad. And he also issued orders for the cutting of all those trees in order for widening of the road. The respondent claimed title to cut the trees. But Smt Ram Dasi, the appellant in the connected appeal, appeared on the scene and laid claim to 8 Sheesham and 2 mango trees. She is the zamindar through whose Zarnindari the road in question passes. Her contention was that the trees which she claimed were not on the road itself but were within her Zamindari, and as such she owned them. The Board also, which had for some time past been disputing the respondent’s title based on the Sanad of 1934, denied the respondent’s rights, to cut the trees. The learned Munsif held that the Sheesham trees were movable property and the suit in respect of them was time barred under Section 192 (3) of the District Boards Act.
Issue-whether the property was movable or immovable?
Held, Ordinarily a suit for declaration is governed by six years’ rule of limitation under Article 120 of Schedule I of the Limitation Act. Since UP legislature has laid down special rule of law for suits against the District Boards, the special rule supersedes the general law and the period of limitation will be that prescribed by this section and in case of movable property it will be governed by six months, rule of limitation. On a perusal of the language of this section 4(23,29) of UP General Clauses Act, it will follow that the trees, being attached to earth are immovable property unless they fall within the description of standing timber. In many of the previous case Neem, Babool trees, etc have been held to be standing timber But in our opinion the nature of the tree is not the criterion to determine as to whether it is a standing timber or not. A fruit bearing tree e.g. a mango tree, will not come within the definition of timber if purchased by a person with the intention of maintaining it, allowing it to grow and using its fruits in future. But the same tree may become timber and, therefore, movable property, if the intention of the purchaser is to cut and remove it and to use its wood for making planks or to put it to any other use for building purposes. Therefore the real test for judging whether a tree is movable or immovable property is not the nature of the tree but the way in which it is intended to be dealt with. If the intention of the parties in respect of a particular transaction is that the tree, whether it be a Neem tree or a mango tree, is to be cut by the purchaser and removed, it will become timber. But if the intention is that it should, after the purchase, continue to grow arid to yield fruit or shade, it may not be timber. In the present case It is to be remembered that the dispute arose because the District Board decided to widen the road by cutting the trees. The intention of the parties was to cut and remove the trees; whether the cutting was done by the plaintiff or by Shrimati Ram Dasi or by the District Board. It is, therefore, obvious that the respondent was contemplating to cut and remove the trees and if this was the intention then the trees of course are movable properties.
State of Orissa v Titaghur Paper Mills AIR 1985 (READY TO BE FELLED)
Thus, trees which are ready to be felled would be standing timber and, therefore, movable property. What is, however, material for our purpose is that while trees (including bamboos) rooted in the earth being things attached to the earth are immovable property and if they are standing timber are movable property trees (including bamboos) rooted in the earth which are agreed to be severed before sale or under the contract of sale are not only movable property but also goods. 65.
As pointed out in Mahadeo v. State of Bombay  the distinction which prevailed in English law between fructus naturales (part of land, natural growth of trees and timbers) and fructus industrials (crops, grass, etc. Movable, no transfer of interest in land) does not exist in Indian law, and the only question which would fall to be considered in India is whether a transaction concerns “goods” or “movable property” or “immovable property'” The importance of this question is twofold : (1) in the case of immovable property, a document of the kind specified in S.17 of the Registration Act 1908 requires to be compulsorily registered and if it is not so registered, the consequences mentioned in Sections in Sections 49 and 50 of that Act follow, while a document relating to goods or movable property is not required to be registered; and (2) by reason of the interpretation placed on Entry 54 in List II in the Seventh Schedule to the Constitution of India by this Court a State cannot levy a tax on the sale or purchase of any property other than “goods”.
Duncans Industries Ltd. v State of UP 2000 (Fertilizer Plant case)
Facts, Fertiliser Plant & Machinery embedded in earth. Whether movable or immovable property?
Held, The question whether machinery embedded in the earth is movable property or immovable property depends upon the facts and circumstances of each case, and the Court has to take into consideration whether the intention of the parties involved, when it decided to embed the machinery, was to make such embedding temporary or permanent. In the instant case, the machineries which have been embedded in the earth to constitute a fertilizer plant are definitely embedded permanently with a view to utilize the same as a fertiliser plant. The plant and machinery of the fertiliser plant are immovable property and cannot be treated as movables.
Anand Behera v State of Orissa (Fishing Contract)
Fishing Contract for 25 years, Movable or immovable? Unless severed from land, fish cannot be owned. Future goods are not part of sale of goods Act. Applied Marshal v Green test, fish get nutrients from land/pond till they remain in pond. Fish become movable property only when removed form the pond.
Banaras v Ghuhi Rai AIR 1956 All 680
Real test is intention of parties. Whether they want to pluck fruits or cut it altogether? It has to be coupled with Time period of the contract and Profit Prendre. So these things have to be looked into-
Intention of Parties
Profit of Prendre
Fructus Naturales-part of land, natural growth of trees and timbers.
Fructus Industrales-crops, grass, etc. Movable, no transfer of interest in land.
Electricity has been held to be a movable property. AP v NTPC Ltd AIR 2002 SC 1895
Where there is a transfer of interest in land, it is immovable property.
As pointed out in Mahadeo v. The State of Bombay  Su. 2 SCR 339 the distinction which prevailed in English law between fructus naturales and fructus industrials does not exist in Indian law, and the only question which would fall to be considered in India is whether a transaction concerns “goods” or “movable property” or “immovable property'” The importance of this question is two fold-
In the case of immovable property, a document of the kind specified in S.17 of the Registration Act 1908 requires to be compulsorily registered and if it is not so registered, the consequences mentioned in Sections in S.49 and 50 of that Act follow, while a document relating to goods or movable property is not required to be registered; and
By reason of the interpretation placed on Entry 54 in List II in the Seventh Schedule to the Constitution of India by this Court a State cannot levy a tax on the sale or purchase of any property other than “goods”.
Fishing-Profit that arises out of land is immovable.
Limitation Period-3 year for movable property and 12 years for immovable
Profit of Prendre-it is an interest in the land and must be in writing and includes goods, chattels, produce of land, etc.
DOCTRINES OF FIXTURES
THINGS ATTACHED TO EARTH (S.3 TPA) ARE IMMOVABLE
According to S.3 of TPA 1882, ATTACHED TO EARTH means-
Rooted in the earth, as in the case of trees and shrubs;
Imbedded in the earth, as in the case of walls or buildings; or
Attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached.
General rule in respect of all trees, plants, herbs and shrubs is that they are immovable property.
Exceptions to General rule-
Grass, Paan Leaves, Tendu Leaves, Sugarcane and Tendu Plants, etc
Right to rear lac?
Benefits arising to out of land is generally immovable. Actually it depends upon the nature of contract
THINGS IMBEDDED IN THE EARTH (S.3 TPA)
Two English Doctrines in this regard-
Quic Quid Plantatur solo-solo credit-Whatever is rooted on earth is owned by the owner of the land. S.3(a)-rooted in the earth, as in the case of trees and shrubs;
Quic Quid inaedificatur solo-solo credit-Whatever is embedded/installed on land, land owner owns all of that. S.3(b)(c)-imbedded in the earth, as in the case of walls or buildings; or attached to what is so embedded for the permanent beneficial enjoyment of that to which it is attached;
Degree or mode of annexation and consequences of detachment-
Object and intention of annexation
By whom annexed
Tube well pump, though embedded in earth not immovable because as per S.3 a thing in order to be construed immovable must be there for permanent beneficial enjoyment. But if the tube-well installed by owner of the land, then immovable.
Holland v Hodgson 1872 (THINGS EMBEDDED IN EARTH-mortgage of mill case)
Owner of a mill mortgaged it to Plaintiffs. Subsequently, mortgagor assigned all his property to the Hodgson as trustees for the benefit of his creditors. Under this deed the defendants seized certain looms which were in the mill that was mortgaged. These looms were attached to the stone floors of the room of the mill by means of nails driven through holes in the feet of the looms, in some cases into beams which had been built into the stone, and in other cases into plugs of wood driven into holes drilled in the stone for the purpose. It was impossible to remove the looms without drawing the nails; but this could be done easily and without any serious damage to the flooring. The defendants under this last deed took possession of everything. The plaintiffs brought suit for recovery. Whether Looms were immovable or immovable?
Held, If the intention is apparent to make the articles part of the land, they do become part of the land. Thus blocks of stone placed one on the top of another without any mortar or cement for the purpose of forming a dry stone wall would become part of the land, though the same stones, if deposited in a builder’s yard and for convenience sake stacked on the top of each other in the form of a wall, would remain chattels. On the other hand, an article may be very firmly fixed to the land, and yet the circumstances may be such as to shew that it was never intended to be part of the land, and then it does not become part of the land. The anchor of a large ship must be very firmly fixed in the ground in order to bear the strain of the cable, yet no one could suppose that it became part of the land, even though it should chance that the shipowner was also the owner of the fee of the spot where the anchor was dropped. An anchor similarly fixed in the soil for the purpose of bearing the strain of the chain of a suspension bridge would be part of the land. Perhaps the general rule is that articles attached to the land by their own weight are to be considered as part of the land, unless the circumstances are such as to show that they were intended not to be part of the land, the onus of shewing that they were so intended lying on those who assert that they have ceased to be chattels, and that, on the contrary, an article which is affixed to the land even slightly is to be considered as part of the land, unless the circumstances are such as to shew that it was intended all along to continue a chattel, the onus lying on those who contend that it is a chattel. This is a question of fact depending on the circumstances of each case, and principally on two considerations; first, the mode of annexation to the soil or fabric of the house, and the extent to which it is united to them, whether it can easily be removed integrè salve et commode or not without injury to itself or the fabric of the building; secondly, on the object and purpose of the annexation, whether it was for the permanent and substantial improvement of the dwelling, in the language of the civil law, perpetui us–s causâ, or in that of the year book, pour un profit del inheritance, or merely for a temporary purpose and the more complete enjoyment and use of it as a chattel.”
Bamdev Panigrahi v Manorama Raj (Moving cinema case)
Facts, Plaintiff’s husband obtained a possessory mortgage in 1957 from the Raja of Mandasa in respect of a site which contains a bungalow in it, for a sum of Rs. 4,000 with a view to run to a cinema in that place. The plaintiff’s husband built a temporary cinema structure and named it Kumar Touring Talkies. Finding no time to manage the cinema concern he entrusted the management of the cinema to his friend Bamdev and exuded confidence in him. The defendant taking advantage of his position, as being the person in management, colluded with the Raja Saheb and got an endorsement, of discharge made on the mortgage bond dated 1-9-1957 and subsequently obtained the mortgage in his name on 6-3-1961. After death of plaintiff his wife filed the suit for declaration that she is the owner of the cinema equipment such a projector and diesel oil engine etc., embodied in the plaint schedule site relating to the cinema concern known as Kumar Touring Talkies, and for directing the defendant to remove the said cinema equipment and deliver the same to the plaintiff, or in the alternative, for recovery of a sum of Rs. 19833/-
Issue, Whether theatre, projector and gunny bags movable or immovable? Whether, on facts and in circumstances, the Plaintiff’s husband and after his death, the Plaintiff was entitled to the cinema equipment and the diesel oil engine and their accessories?
Held, court said that there is no statutory test determine movable or immovable. It has to be decided from totality of facts and circumstances and intention of the parties. The object and purpose of installing the cinema equipment in question, was only to have the beneficial enjoyment of the very equipment during the period of the lease or mortgage. That apart, the diesel oil engine and the cinema projector were not attached to the earth and also not permanently fastened to anything attached to the earth. Hence, the machinery in question must be held to be movable property.
Duncan Industries v State of UP (Fertiliser Plant)
Facts, Fertiliser Plant & Machinery embedded in earth. Whether movable or immovable property?
Held, The question whether machinery embedded in the earth is movable property or immovable property depends upon the facts and circumstances of each case, and the Court has to take into consideration whether the intention of the party, when it decided to embed the machinery, was to make such embedding temporary or permanent. In the instant case, the machineries which have been embedded in the earth to constitute a fertiliser plant are definitely embedded permanently with a view to utilize the same as a fertiliser plant. The plant and machinery of the fertiliser plant are immovable property and cannot be treated as movables.
EXAMPLES OF MOVABLE PROPERTY
Standing timber, growing crops and grass;
Royalty:-Intellectual Property Rights
Yajman Vriti, Right to Receive offerings in cash or kind from Yajman;
Right to enjoy the benefit of Fruit Trees;
Electricity in the case of State of AP v NTPC Ltd AIR 2002 SC 1895
Lee v Taylor 1902-Tapestries are movable
Meghraj v Chandra
Subramanian v Chidambaram
Perumal Naikar v Ramaswami 1980 Mad
EXAMPLES OF IMMOVABLE PROPERTY
Definition S. 3(26) TPA 1882
Benefit arising out of land
Things attached to Earth-attached to earth means-
Rooted in the earth, as in the case of trees and shrubs;
Imbedded in the earth, as in the case of walls or buildings; or
Attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached.
Permanently fastened to anything attached to the earth. (S.3 TPA, does not include standing Timber, growing crop or grass)
Right under lease;
Right to extract gold, silver, or other; minerals from their mines;
Right of Fishery;
Right to Ferry;
Right to take forest produce;
Loan secured by mortgaging an immovable property;
Interests in the Property
Transfer of right to cut Standing Timber and Registration?
Right to enter into land cut timber tree for ten years.
Right to enter into land cut timber tree for six months.
Equity of redemption-S.60 of TPA says that once a property is mortgaged, its nature for all purposes always remains a mortgage and in absence of redemption it does not become the property of mortgagee. For example if a person mortgages his estate worth 70K for 10 years with a condition that after 10 years, he will pay the money with interest and property will be released by the mortgagee. But if the mortgager is not interested in taking it back then mortgagee will file a suit for the recovery of the money. If court orders for the sale of the estate and 1 lac is fetched through the sale, then the remaining 30K will be returned back to the mortgager. But if the mortgagor has managed the amount then there will be no sale as mortgage is mortgage and it cannot give the mortgagee more right than a mortgage. Mortgagee can file for redemption of the property even before the expiry of the lease period if the mortgage was unreasonable. Court will consider the whole circumstances and then decide accordingly.
A Profit a Prendre
Sugar cane fields
Confer rights to enter into the land and cut grass for a period of five years
A corrugated iron shed rested by its own weight on the foundation
NOTICE, ATTESTATION, REGISTRATION
Notice/Bayana (Hindi/Urdu) means knowledge and is used to determine the rights and claims of two and more persons who are involved in unconscionable bargain. It is written in S.3 read with S.7 of TPA. Notice/Knowledge also decides the liability.
Actual Notice-Means actual knowledge, person actually knew about it. It is a definite information given to, or obtained by a person, as against vague rumours, statements or casual comments given by the strangers.
Constructive Notice-Court imputes on a person. It is presumption of the Court. When there is a wilful abstention from facts, constructive notice is presumed. A person may claim that he did not know a fact, but if the circumstances surrounding him are such, that as a reasonable prudent person, he ought to have known the fact, he will be deemed to have known it. Though originating in equity, this presumption of notice is now a part of our statute and we have to interpret it as such. Wilful abstention suggests conscious or deliberate abstention and gross negligence is indicative of a higher degree of neglect. Negligence is ordinarily understood as an omission to take such reasonable care as under the circumstances is the duty of a person of ordinary prudence to take. In other words it is an omission to do something which a reasonable man guided by consideration which normally regulate the conduct of human affairs would do or doing something which a normally prudent and reasonable man would not do. The question of willful abstention or gross negligence and, therefore, of constructive notice considered from this point of view is generally a question of fact or at best mixed question of fact and law depending primarily on the facts and circumstances of each case and except for cases directly falling within the three explanations, no inflexible rule can be laid down to serve as a straight-jacket covering all possible contingencies. The question one has to answer in circumstances like the present is not whether the purchaser had the means of obtaining and might with prudent caution have obtained knowledge of the charge but whether in not doing so he acted with wilful abstention or gross negligence. Being a question depending on the behavior of a reasonably prudent man, the Courts have to consider it in the background of Indian conditions. Courts in India should, therefore, be careful and cautious in seeking assistance from English precedents which should not be blindly or too readily followed.
Notice to Agent
Illustration 1-‘A’ gives certain property to B with the condition that B will continue to give 10K per month to C. B sells the property to D. D must continue the 10K monthly payment to C.
Constructive Notice-D can look at the terms and conditions of the contract either himself or can ask the seller about the provision of payment of 10K per month to C.
Illustration 2-A wanted to sell his properties. B paid him earnest amount of 10K. ‘A’ in the mean while sells the property to C.
Position of C depends upon his knowledge of the Ernest money paid by B.
Constructive Notice-C should have inquired about the transaction of A with B, otherwise it will be presumed that he was aware of that.
An executant is a person who is transferring the property such as Lessee, licensor, mortgager and transferor.
Asharam v Bhanwarlal 1974 (CONSTRUCTIVE NOTICE)
Facts, The property was owned by Asharam. In 1947 he borrowed a sum of Rs. 300 from Bhanwarlal and executed a usufructuary mortgage (58D TPA-those mortgages where possession is transferred but transferor is not bound to return the loan amount but that will be recovered by attachment of properties) of the suit property in security thereof. Subsequently, In 1949 the suit property was sold by Asharam to Kishanlal. In 1964 Asharam brought a suit for redemption of the mortgage alleging that the Bhanwarlal had declined to redeem the mortgage. Bhanwarlal resisted the suit and alleged that subsequent to the mortgage, Asharam agreed to sell the said property to him for Rs. 850/- and after adjusting the mortgage amount of Rs. 300 he received Rupees 550 in cash from him. Both the Courts below have held that the agreement dated 18-6-1948 entitled Bhanwarlal to the benefit of doctrine of part performance(S.53TPA) and dismissed the suit. Hence this appeal.
Held, The Transfer of Property Act thus contemplates three kinds of notices, namely, (1) actual notice, (2) constructive or implied notice (that is, when, but for wilful abstention from an inquiry or search which he ought to have made, or gross negligence, he would have known it) and (3) notice to agent. In the present case, the subsequent transferee, Kishanlal, must be taken to have implied notice of the agreement dated 18-6-1948 and of the part performance thereof because he would have had actual notice as to the title of the defendant but for his willful abstention from an enquiry at the time of purchasing the property which was admittedly in possession of the defendant. Title includes the right arising out of the part performance. Under the proviso to Section 53A of the Transfer to property Act, The plaintiff Kishanlal therefore cannot be heard to deny notice of the title of the defendant under which the latter held the property. He will be deemed to have notice unless otherwise proved as to the title of the defendant.
Ashique Husain v. Chaturbhuj, 1974 (definite information)
Notice is a definite information given to, or obtained by a person, as against vague rumours, statements or casual comments given by the strangers. The knowledge or notice must be definite.
Warwick v Warwick 1746 (Notice must be in the same transaction)
Notice must be in the same transaction, as notice given in previous transaction may have been forgotten.
Plumb v Fluitt (1791), Eyre, C.B.-constructive notice I take to be in its nature no more than evidence of notice, the presumptions of which are so violent that the Court will not allow even of it’s being controverted.
RULE OF CAVEAT EMPTOR
In property transactions, a transferee ought to ascertain and verify certain facts for safeguarding his own interest. A failure to that would result in the imposition of constructive notice of any fact that is ascertainable, by making inquiries or/and verification and content of the relevant documents relating to this property.
S.7 of TOPA defines person who is competent to transfer. But there is obligation on part of Transferee as well to ascertain-
Competency of the transferor
Charges due over the property
Any other claim/title due over the property
He must go through all relevant documents including the registration register
Doctrine of Constructive Notice can be applied in:
When there is a Wilful Abstention from making an Inquiry
Failure to inquire registration of Document/Transaction
Actual Possession is not with the vendor
WILFUL ABSTENTION FROM MAKING INQUIRY
Deliberately avoiding to take notice of a fact which a reasonable man would have taken in the normal cause of life.
Person refuses to accept a registered envelope addressed to him.
Wilful abstention in this section has been construed to mean want of bonafides as distinguished from mere omission to make enquiries.
Actual notice of the deed (written document) is constructive notice of the contents and all other deeds to which it refers as affecting the same property.
Constructive notice is inferred only where a person has means of knowing a fact but has omitted to know it.
Alwar Chetty v Jagannath 1928 (CONSTRUCTIVE NOTICE-mortgage and subsequent sale to 3rd party)
Facts, In 1918, 1st defendant mortgaged his house to Plaintiff for securing a sum of Rs. 8,000. The mortgage was effected by a registered deed. The first defendant made continued default in payment and the plaintiff thereupon threatened to bring the property to sale. It was at this juncture that the alleged equitable mortgage was made through a letter in 1926. The letter said-‘As I personally told you yesterday, I send herewith a sale-deed, dated 9 November 1922 Kindly accept this deed as collateral security. On payment of Rs. 3,000 within the 20th instant, I shall take the above deed’. The object was to secure the payment of a part of the amount already due under the original mortgage. The contention of the 3rd defendant is, that the letter in 1926 constitutes the contract, and, that as it has not been registered, no valid equitable mortgage has been created. The question in such cases is, does the document in question constitute the bargain between the parties? If it does, the writing excludes oral evidence and no such evidence can be given. If it then be held that the contract is contained in the writing, the same becomes inadmissible in evidence for want of registration. The result is, that the equitable mortgage cannot be proved.
Issue, Whether the plaintiff is a transferee with notice of the charge?
Held, The very sale-deed, which was deposited with the plaintiff, shows that part of the purchase-money was unpaid. It was his duty to have enquired whether the 1st defendant subsequently paid the balance by discharging the debts of the vendor. This was an inquiry which he ought to have made and his abstention from that enquiry amounts to negligence.
Khetra Nath v Harsukhdas 1927 Cal (CONSTRUCTIVE NOTICE-abstention from enquiry for title deeds)
That abstention from enquiry for title deeds in a place where one knows that mortgages by deposit of title deeds are legal and usual would amount to notice of a mortgage under Section 3 of the Transfer of Property Act. But in this case there was something more. The Defendant No. 1 on being asked to produce the title dead said that he had not got it. When the Defendant No. 1 could not produce the title dead one would naturally expect that the purchaser would enquire what had become of the deed. He did not do so and for this abstention from enquiry he must be fastened with notice of the mortgage which had been effected by the deposit of the deed, and he cannot be heard to say that he was induced to purchase the property as unencumbered on account of the gross neglect of the mortgagee in parting with the title deed.
Constructive notice is imputed only in situations where a person has means of knowing a particular fact, but failed to know it. There exist circumstances which ought to put him on an inquiry, which, if prosecuted would have led to a discovery of it.
Bank of Bombay v Suleman Somji (1908) (CONSTRUCTIVE NOTICE-JHF case)
In that case the testator died in 1885, leaving by a will, to his four elder sons, certain Immovable property subject to a charge of Rs. 30,000 in favour of his widow and four younger sons and made his four elder sons executors of the will. The Sons, after their father’s death, became indebted to the Bank of Bombay and in 1899 executed a mortgage of this property in favour of the Bank without stating the charge upon it. In one of the documents of title deposited with the bank, the title of the mortgagors was indicated and had the Bank investigated the title they would have become aware of the will and the charge created thereby on the property. It was held that the Bank had constructive notice of the charge and the claim of the younger sons prevailed. It was held that, if the Bank had made proper inquiry, they would have become cognizant of the will. It further shows (and this is important) that it would then become the duty of the Bank to enquire whether the legacy had been discharged or not. In the present case, if the plaintiff had looked at the sale-deed, he would have found that there was a portion of the price which originally remained unpaid. If he had pursued the inquiry properly, he would have known that the 1st defendant did not carry out his undertaking and discharge the debts. The plaintiff, therefore, must be held to have had constructive notice of the charge. Thus, even granting that his equitable mortgage is valid (and I have held that it is not), the 3rd defendant’s charge must prevail over his mortgage.
Ram Coomar Coondoo v Macqueen (1872)
Constructive notice is imputed only in situations where a person has means of knowing a particular fact, but failed to know it. There exist circumstances which ought to put him on an inquiry, which, if prosecuted would have led to a discovery of it.
GROSS NEGLIGENCE (AMOUNTS TO CONSTRUCTIVE NOTICE)
It is the omission to do something which a reasonable man guided by those considerations which ordinarily regulate the conduct of human affairs, would do and doing something, which prudent and reasonable man would not do.
Negligence or ordinary carelessness in taking notice of a fact is not gross negligence.
Depends upon facts of each case.
Tilakdhari v Khedan Lal AIR 1921 PC 112 (GROSS NEGLIGENCE-failure to search registrar in registrar’s office)
Before purchasing an immovable property, the omission to search the register kept in Registrar’s office may amount to gross negligence, so as to attract the consequences which result from notice. The real purpose of registration is to secure that every person dealing with property, where such dealings registration, may rely with confidence upon the statement contained in the register a full and complete account of all transactions by which his title may be affected, unless indeed he has actual notice of some unregistered transaction which may be valid apart from registration. The object of registration is to protect against prior transactions. Notice cannot in all cases be imputed from the mere fact that a document is to he found upon the Indian register of deeds. There may be circumstances in which omission to search the register would result is notice being obtained and the circumstances necessary for this purpose may be very slight. In a country where registration is rendered compulsory a subsequent encumbrance could secure himself against all possibility of fraud by searching the register in order to ascertain what were the prior claims upon the property and then giving notice of his mortgage to the prior mortgagees, this is one of the essential reasons for registration.
Chaturbhuj v Mansukhram 1925
Omission to inspect the title deed of an adjoining property which the seller is under no obligation to produce for selling the present property is not gross negligence.
Lloyd’s Bank v PF Guzdar (1929)
‘A’ mortgaged property to B and then to C. When he failed to repay the loan and C sought to recover it by sale of suit property, it was held that failure on part of C to exercise constructive notice.
Ahmedabad Municipal Corp. v Haji Abdul Gaffur 1971 (Auction sale purchase and Municipal tax encumbrances)
Facts, The property in this suit originally belonged to one Haji Nur Muhammad Haji Abdulmian. He apparently ran into financial difficulties in February 1949, and insolvency proceedings were started against him in March 1949. In October 1950 he was declared insolvent. This property had been mortgaged with a firm called Messrs. Hargovind Laxmichand. In execution of a mortgage decree obtained by the mortgagee this property was auctioned and purchased at court sale by Haji Abdul Gaffur Haji Hussenbhai, for Rs. 22,300 in 1954. At the time of this purchase there were municipal taxes in respect of this property in arrear for the years 1949-54, which means that the receivers had not cared to pay the municipal taxes during all these years. The property was attached by the municipal corporation by means of an attachment notice dated July 1955 for the arrears of the municipal taxes amounting to Rs. 544. As the municipal corporation threatened to sell the property, the purchaser instituted the suit for a declaration that he was the owner of the property and that the arrears of municipal taxes due from Haji Nur Mohammad Haji Abdulmian were not recoverable by attachment of the suit property in the plaintiff’s hands and that the warrant of attachment of the property issued by the municipal corporation was illegal and ultra vires. Permanent injunction restraining the municipal corporation from attaching the property for arrears of municipal taxes was also sought. Municipal Corp. contended that the buyer must be deemed to have constructive notice of the arrears of municipal taxes and as an auction purchaser he must be held liable to pay these taxes and the property purchased must also be held subject to this liability in his hands.
Held, Though originating in equity, this presumption of notice is now a part of our statute and we have to interpret it as such. Wilful abstention suggests conscious or deliberate abstention and gross negligence is indicative of a higher degree of neglect. Negligence is ordinarily understood as an omission to take such reasonable care as under the circumstances is the duty of a person of ordinary prudence to take. In other words it is an omission to do something which a reasonable man guided by consideration which normally regulate the conduct of human affairs would do or doing something which a normally prudent and reasonable man would not do. The question of wilful abstention or gross negligence and, therefore, of constructive notice considered from this point of view is generally a question of fact or at best mixed question of fact and law depending primarily on the facts and circumstances of each case and except for cases directly falling within the three explanations, no inflexible rule can be laid down to serve as a straight-jacket covering all possible contingencies. The question one has to answer in circumstances like the present is not whether the purchaser had the means of obtaining and might with prudent caution have obtained knowledge of the charge but whether in not doing so he acted with wilful abstention or gross negligence. Being a question depending on the behavior of a reasonably prudent man, the Courts have to consider it in the background of Indian conditions. Courts in India should, therefore, be careful and cautious in seeking assistance from English precedents which should not be blindly or too readily followed. Adverting now to the case before us, as already noticed, the property in question had vested in the receivers in insolvency proceedings since March 1949 by an interim order, and in October 1950 the original owner was adjudicated as an insolvent and the property finally vested in the receivers in insolvency. The plaintiff purchased the property in November 1954 and in our opinion it could not have reasonably been expected by him that the receivers would not have paid to the municipal corporation since 1949 the taxes and other dues which were charged on this property by statute. On the facts and circumstances of this case, therefore, we cannot hold that the plaintiff as a prudent and reasonable man was bound to enquire from the municipal corporation about the existence of any arrears of taxes due from the receivers. It appears from the record, however, that he did in fact make enquiries from the receivers but they did not give any intimation.
S.17 of Registration Act 1908, requires compulsory registration of immovable properties or interest in immovable properties. If no registration then the transaction has no value.
The Indian Registration Act. 1908 lays down a detailed procedure for registration of documents. The registering officer is under a duty to enquire whether the document is executed by the person by whom it purports to have been executed and to satisfy himself as to the identity of the executant, Section 34(3). He can register the document if he is satisfied about the identity of the person executing the document and if that personal admits execution, [Section 25(1)]. The signatures of the executant and of every person examined with reference to the document are endorsed on the document, (Section 58). The registering officer is required to affix the date and his signature to the endorsements (Section 59). Prima facie, the registering officer puts his signature on the document in discharge of his statutory duty Under Section 59 and not for the purpose of attesting it or certifying that he has received from the executant a personal acknowledgment of his signature.
Seeni Chettiar v Shanta Nathan Chettiar 1897
Issue, Whether a document granted to the defendant giving him right to enjoy the produce of the land, cut grass etc required registration?
Held, If transfer is of PROFIT OF PRENDRE (interest in the land), then registration is necessary.
Explanation I: Where any transaction relating to immovable property is required by law to be and has been effected by a registered instrument, any person acquiring such property or any part of, or share or interest in, such property shall be deemed to have notice of such instrument as from the date of registration or, where the property is not all situated in one sub-district, or where the registered instrument has been registered under sub-section (2) of section 30 of the Indian Registration Act, 1908 (16 of 1908), from the earliest date on which any memorandum of such registered instrument has been filed by any Sub-Registrar within whose sub-district any part of the property which is being acquired, or of the property wherein a share or interest is being acquired, is situated:
Formalities to comply with for the transfer of immovable property:-
Written Document/Non-Testamentary Instrument
Signed by the Transferor
State of Bombay v Suleiman 1909
Registration of Document is a constructive notice on part of subsequent purchaser.
Tilakdhari v Kundan Lal 1921
The TPA, 1882 didn’t specifically provide it as a principle, registration would not, per se, amount to constructive notice and this issue would vary depending upon the facts and circumstances of each case.
S.29 IPC defines ‘Document’
General clauses Act defines ‘Instrument’
Under TPA, instrument only relates to immovable property and not testamentary will.
Registration Act came in 1908
TPA came 1882
the instrument has been registered and its registration completed in the manner prescribed by the Indian Registration Act, 1908 (16 of 1908), and the rules made thereunder,
The instrument of memorandum has been duly entered or filed, as the case may be, in books kept under section 51 of that Act, and
The particulars regarding the transaction to which the instrument relates have been correctly entered in the indexes kept under section 55 of that Act.
The purchaser would not be affected with constructive notice of the registered agreement restricting the use of the property, if it is shown that the agreement was index in relation to the property sold. A mere defect in the procedure would not invalidate registration, but misplaced entries will not operate as constructive notice.
No constructive Notice to be imputed in cases where Registration is not compulsory
Where Registration is not Compulsory
Documents compulsorily required to be Registered are-
Section 54 – Sale
Section 59 – Mortgage
Section 107 – Lease (If more than one year)
Section 123 – Gift
Where Registration is Optional-
Transfer of Movable Property
Gift of Property to the daughter at the time of marriage
Registration is constructive notice only for Subsequent Transferees. Time from when Registration would operate as constructive Notice.
ACTUAL POSSESSION (CONSTRUCTIVE NOTICE)
Explanation II: Any person acquiring any immovable property or any share or interest in any such property shall be deemed to have notice of the title, if any, of any person who is for the time being in actual possession thereof. When a person purchases a property from the owner knowing that it is in possession of another, he is under a duty to inquire into the nature of that possession and in the absence of that inquiry, knowledge of the title under which the possession is held should be attributed to the purchaser.
Daniels v Davison (1809) 16 VES 249-Where there is a tenant in possession under a lease or an agreement, a person purchasing part of the estate is bound to inquire on what terms that person is in possession.
Ram Nivas v Bano 2000 SC (SPECIFIC PERFORMANCE)
Facts, A person rented a shop from B. In 1978, he entered into an agreement with the vendor to purchase the suit shop for a sum of Rs. 9200/- and paid a sum of Rs. 3200 in cash and undertook to pay remaining amount of Rs. 6000 at the time of execution of sale deed. However the vendor refused to execute the sale deed and instead sold it to Respondent for a sum of Rs. 20,000 under. The tenant filed the suit for specific performance against the vendor and the purchasers. The purchasers contested the suit by taking the plea that they are bona fide purchasers of the suit shop for value without notice of Ext. 1 entered between tenants and the owner.
Held, Section 19 of Specific Relief Act, 1963 provides the categories of persons against whom specific performance of a contract may be enforced is based on the principle of English law which fixes priority between a legal right and an equitable right. If ‘A’ purchases any property from ‘B’ and thereafter ‘B’ sells the same to ‘C’ the sale in favour of ‘A’ being prior in time, prevails over the sale in favour of ‘C as both ‘A’ and ‘C acquired legal rights. But where one is a legal right and the other is an equitable right, “A bona fide purchaser for valuable consideration who obtains a legal estate at the time of his purchase without notice of a prior equitable right is entitled to priority in equity as well as at law” [Snell’s Equity – Thirtieth Edition – p. 48]. This principle is embodied in Section 19(b) of the Specific Relief Act.
HN Narayanaswamy Naidu v Deveeramma 1981 (SUBSTANTIAL PORTION)
Facts, The lessee ‘A’ was in possession of some part of land. He contended that under an agreement the owner had promised that he would sell the land to him only. The owner however sold the land to B. When ‘A’ came to know about this, he files a suit. A claimed that B should have known/inquired about the position of land. The plaintiff averred that defendant sold the suit properties in her favour in 1966 but plaintiff agreed to reconvey the properties to the vendors in case they pay the entire amount of consideration after six years and within six months thereafter. Subsequently, however, since the vendors were in need of money, plaintiffs further executed an agreement that they would release the agreement of reconveyance. It is for that purpose that the present suit was instituted by the plaintiff calling upon them to execute the registered release deed as assured.
Issue, Whether defendant was a bona fide purchaser for value without notice of the right to get the reconveyance from defendants 1 and 2?
Held, If substantial portion of land is with the owner and most of the lessees are paying the rent, then any encumbrance on any small potion of the land shall not amount to constructive notice. Possession of a Small Portion of the Property out of the substantial one will not amount to constructive notice.
Md Mustafa v Haji Md Isa 1987 Patna (CONSTRUCTIVE NOTICE)
Facts, The case of the plaintiff is that in April 1972 his uncle Haji Md. Isa agreed to sell his house to the plaintiff for a sum of Rs. 20,000. As the plaintiff had not got so much fund with him at that time, Md. Haji Md Isa granted him some time. In June 1972 Md Isa told the plaintiff that he urgently required Rs. 7,000 and so he should advance the amount to him and get a deed of agreement to sell executed by him. The plaintiff agreed advanced Rs. 7,000/-towards the aforesaid consideration money of Rs. 20,000 to Haji Md. Isa, who, in turn, executed an agreement to sell on a stamped paper and delivered the same to the plaintiff. According to this agreement Md Isa agreed to execute a registered sale deed in respect of the said house in favour of the plaintiff on payment of the balance of the consideration money by the last week of January 1973, but he put the plaintiff in possession of the entire building at that very time in part performance of the contract. The case of the plaintiff is that he managed the balance of the consideration money and he asked Md. Isa to execute the sale deed, but he did not do, and hence the plaintiff sent a registered notice through his pleader on 7-10-1972 which was refused. In the meantime, the plaintiff learnt that one Arif Hussain, brought a collusive sale deed dated 20-7-1972 into existence said to have been executed by Md Isa. It is said that this sale deed is a fraudulent document and was brought into existence in spite of the aforesaid agreement executed by Md Isa in favour of the plaintiff. It has also been alleged that this sale deed can have no legal effect, as it was executed without consideration and with full knowledge of the said agreement in favour of the plaintiff.
Held, The plaintiff has stated that Md. Isa had told him in April 1972 that he wanted to sell the disputed house and that the terms of the sale were settled between the two only within two days from the start of the negotiation. Nobody else was present during these talks. Indeed it is not clear from the evidence of the plaintiff as to what was the necessity which compelled Md. Isa to executed the Beyananama in question all on a sudden on 15-6-1972. The Beyananama recites about some necessities but there is no evidence to show that in fact those necessities existed. It is also strange that according to the plaintiff himself the first talk regarding advance of money and execution of Beyananama took place on 14-6-1972, but Md. Isa is said to have purchased the stamp papers for Beyananama on 10-6-1972 i.e. four days before the negotiation and the talk in this regard had started although both the parties are close relations and also close neighbors. Then, there is no evidence worth the name to show that the plaintiff came in actual or even constructive possession of the entire building after the execution of the said Beyananama, as stated therein and as claimed by the plaintiff. It is doubtless well settled that to defeat a suit for specific performance of contract the burden initially lies on the subsequent purchaser to prove want of notice.
Conditions to fulfilled-
Property should be in possession of a person other than the owner/transferor.
Possession must be actual and not constructive.
Actual possessor should be in lawful occupation, and should be in occupation of the whole of the property or substantial portion of the property.
Explanation III: A person shall be deemed to have had notice of any fact if his agent acquires notice thereof whilst acting on his behalf in the course of business to which that fact is material:
PROVIDED that, if the agent fraudulently conceals the fact, the principal shall not be charged with notice thereof as against any person who was a party to or otherwise cognizant of the fraud.
Notice should have been obtained by the agent during the course of agency.
It must have been received by him in his capacity as an agent.
It must have been received by him in material to the agency business.
It should not have been fraudulently concealed by the agent, from the principal.
Rights over the property means-
Right of ownership
Right of Possession and Enjoyment
Right of Alienation
When Buying an immovable property-
Valid written document signed by Parties
Attestation by two competent witnesses
Registration (S.17 of Registration Act requires compulsory registration)
After 1929, Explanation 1 to 53 is same Registration Act of 1908
Pre-emption clause-1st right to reject goes to the family
Registration is not mandatory for Family settlements/arrangements under S.17 of the Registration Act 1908
If not compulsory registration, then constructive notice cannot be imputed.
Property transferred by will, other laws excluded from TPA. See S.5
When a tenant is in possession of the property under a lease agreement, person purchasing part of the estate is bound to enquire the terms of the lease.
Snell’s equity S.19(6) Specific Relief Act
S.25 of the Contract Act-contracts of love and affection such as gift do not require consideration.
There are 4 stages of transfer-
S.7 TPA-Competency of Transferor
Provisions of attestation were added later to the TPA.
Section 3 of the TPA gives the definition of the word “attested” and is in these words-‘Attested’ in relation to an instrument means and shall be deemed to have meant attested by two or more witnesses each of whom has seen the executant sign or affix his mark to the instrument or has seen some other person sign the instrument in the presence and by the direction of the executant, or has received from the executant a personal acknowledgment of his signature or mark, or of the signature of such other person, and each of whom has signed the instrument in the presence of the executant; but it shall not be necessary that more than one of such witnesses shall have been present at the same time and no particular form of attestation shall be necessary. Briefly put, the essential conditions of a valid attestation Under Section 3 are-
Two or more witnesses have seen the executant sign the instrument or have received from him a personal acknowledgment of his signature;
With a view to attest or to bear witness to this fact, each of them has signed the instrument in the presence of the executant.
It is essential that the witnesses should have put their signature animo attestandi, that is, for the purpose of attesting that he has seen the executant sign or has received from him a personal acknowledgment of his signature. If a person puts his signature on the document for some other purpose, e.g., to certify that he is a scribe or an identifier or a registering officer, he is not an attesting witness.
English Law-2 witnesses must be present at the time of the execution of the document
Indian Law-2 witnesses but physical presence is not compulsory. Allahabad and Bombay HC even said that mere personal acknowledgment by the witnesses can also work. But Calcutta and Madras High courts have insisted upon the English Law.
Shame Patter v Abdul Kader 1912
Resulted in Govt. passing an act-Transfer of property validation act 1917 which was amended in 1926 which read as follows-
Attested in relation to an instrument means and shall be always to have meant attested by two or more witnesses each of whom has seen the executant sign or affix his mark to the instrument in the presence and by the direction of the executant or has received from the executant a personal acknowledgement of his signature or mark or of the signature of such other person and each of whom has signed the instrument in the presence of the executant; but it shall not be necessary that more than one of such witnesses shall have been present at the same time and no particular form of attestation shall be necessary.
Competency of Attesting witness-scribe as attesting witness-party interested in the Transaction.
Kumar Harish Chandra Das v Bansidhar Mohanty 1965 SC (TWO FRIEND’S CASE)
Facts, Kumar Harish mortgaged a property in favour of Jagannath Debata (Respondent 2), in April 1945, for a consideration of Rs. 15,000. Harish, however, failed to repay the mortgage amount. Bansidhar (Respondent 1) therefore instituted the suit out of which this appeal arises. According to Bansidhar though the money was advanced by him to the appellant he obtained the deed in the name of the respondent 2, Jagannath Debata because he and the appellant were close friends and he felt it embarrassing to ask the appellant to pay interest on the money advanced by him. There were only two attesting witnesses to the mortgage deed, one of whom was respondent no. 1, that is, the lender himself. Whether mortgage deed was valid?
Held, Section 59 of the TPA, provides that a mortgage deed shall be attested by at least two witnesses does not in terms debar the lender of money from attesting the deed. The object of attestation is to protect the executant from being required to execute a document by the other party thereto by force, fraud or undue influence. No doubt, neither the definition of ‘attested’ nor S. 59 of the TPA debars a party to a mortgage deed from attesting it. It must, however, be borne in mind that the law requires that the testimony of parties to a document cannot dispense with the necessity of examining at least one attesting witness to prove the execution of the deed. Inferentially, therefore, it debars a party from attesting a document which is required by law to be attested. Where, however, a person is not a party to the deed that is no prohibition in law to the proof of the execution of the document by that person. Therefore, the general rule of attestation laid down in English cases and followed in India would not be available against a person who has lent money for securing the payment of which a mortgage deed was executed by the mortgagor but who is not a party to that deed. A distinction was drawn in this case between a person who is a party to a deed and a person who, though not a party to the deed, is a party to the transaction and it was said that the latter was not incompetent to attest the deed. It must follow from this that the beneficial owner of property standing in the name of another must necessarily be entitled to institute a suit with respect to it or with respect to the enforcement of a right concerning the property of a co-sharer. It will follow that a person who takes benefit under the transaction or who provides consideration for a transaction is entitled to maintain a suit concerning the transaction.
ML Abdul Jabbar Sahib v MV Venkata Sastri 1969 (Registrar as attesting witness)
Facts, In February 1953 Abdul Jabbar instituted a suit against Hajee Ahmed Batcha claiming a decree for Rs. 50000 said to be due under two promissory notes executed by Haji Ahmed Batcha. In March 1953, Hajee Ahmed Batcha obtained leave to defend the suit on condition of his furnishing the security for a sum of Rs. 50,000 to the satisfaction of the Registrar of the High Court. He executed a security bond in favour of the Registrar of the Madras High Court charging several Immovable properties for payment of Rs. 50,000. The condition of the bond was that if he paid to the appellant the amount of any decree that might be passed in the aforesaid suit, the bond would be void and of no effect and that otherwise it would remain in full force. The bond was attested by B. Somnath Rao. It was also signed by K. S. Narayana Iyer, Advocate, who explained the document to Hajee Ahmed Batcha and identified him. The document was presented for registration on 29 March 1953 and was registered by D. W. Kittoo, the Sub-Registrar of Madras Chingleput District. Before the Sub-Registrar, Hajee Ahmed Batcha admitted execution of the document and was identified by Senkaranarayan, and Kaki Abdul Aziz. The identifying witnesses and the Sub-Registrar signed the document. Hajee Ahmed Batcha died in February 1954 and his legal representatives were substituted in his place. In March 1954 Ramaswami, J. passed a decree for 50000 with interest and costs and directed payment of the decretal amount on or before April 1954. While passing the decree, he observed: “It is stated that the defendant has executed a security bond in respect of their Immovable properties when they obtained leave to defend and this will stand enured to the benefit of the decree-holder as a charge for the decree amount.” After sometime the sale was confirmed on those security bonds. Respondents-Venkata Shastri who was money creditor of Hajee Ahmed Batcha challenged the sale and applied for that the sale be made for their benefits they also had obtained money decrees from the same court. The respondents also contended that the security bond was invalid as it was not attested by two witnesses.
Held, For attestation as required under S.3 TPA it is essential that the witness should have put his signature animo attestandi, that is, for the purpose of attesting that he has seen the executant sign or has received from him a personal acknowledgment of his signature. If a person puts his signature on the document for some other purpose, e.g., to certify that he is a scribe or an identifier or a registering officer, he is not an attesting witness. The evidence does not show that the registering officer DW Kitto put his signature on the document with the intention of attesting it: Nor is it proved that he signed the document in the presence of the executant. In these circumstances he cannot be regarded as an attesting witness, see Surendra Bahadur Singh v Thakur Behari Singhi (1939) 2 MLJ 762. Likewise the identifying witnesses Senkaranarayan and Kaki Abdul Aziz; put their signatures on the document to authenticate the fact that they had identified the executant. It is not shown that they put their signatures for the purpose of attesting the document. They cannot therefore be regarded as attesting, witnesses. As to the second question, the argument on behalf of the respondents is that Section 100 of the Transfer of Property Act attracts Section 59 and that a charge can be created only by a document signed, registered and attested by two witnesses in accordance with Section 59 where the principal money secured is Rs. 100 or upwards. Those conditions are satisfied in the present case.
Animo Attestandi-with intention to attest
Transferee himself cannot be made a witness. Parties to a contract not to be made witness in their own contract.
Attestation is done after and not prior to execution
Any person competent to contract can put their signature/impression on behalf of leprocy patient/disabled patient.
Padarath Halwai v Pandit Ram Nain Upadhia 1915 (PURDAHNASHIN WOMEN)
Facts, A suit was brought in the Court of the Subordinate Judge of Jaunpur on the 29 November 1904 to enforce, by sale of the village Baragaon and other villages, the payment of Rs. 66,809 odd, due under a mortgage, dated the 25 June 1892. The Subordinate Judge decreed the claim in part, and in part dismissed it. The Appellants contended that the mortgage upon which this suit was brought had not been attested by at least two witnesses, and as the amount secured by it exceeded one hundred rupees the alleged mortgage was ineffective and could not be given in evidence. They contended that the evidence which was given in proof of the attestation was unreliable, and, even if accepted as true, did not prove that the two attesting witnesses who gave evidence on the remand had seen the mortgagors sign their names to the mortgage.
Held, The mortgagors were two purdahnashin ladies who did not appear before the attesting witnesses, and consequently their faces were not seen by the witnesses. These two attesting witnesses were, however, well acquainted with the voices of the ladies, and their Lordships are satisfied that these two attesting witnesses did identify the mortgagors at the time when the deed was executed. The mortgagors were, on the occasion of the execution of the mortgage-deed, brought from the zenana apartments of the house in which they were to an ante-room to execute the deed. In the ante-room the ladies seated themselves on the floor, and between them and these two attesting witnesses there was a chick, which was not lined with cloth, hanging in the doorway. These two attesting witnesses recognised the ladies by their voices, and they say that they saw each lady execute the deed with her own hand, although owing to the chick they were unable to see the face of either of the ladies. On the other side an attempt was made to prove that a tat, through which nothing could be seen, was hanging in the doorway. Their Lordships accept the evidence of these two attesting witnesses as true, and hold it proved that the mortgage-deed of the 25th June 1892 was duly attested by at least two witnesses within the meaning of Section 59 of the Transfer of Property Act, 1882. It is not disputed that the mortgage deed was in fact the deed of the two purdahnashin ladies, Musammat Niamat Bibi and Musammat Kamarunnissa Bibi, the mortgagors.
TRANSFER OF PROPERTY UNDER TPA
Property-Title/ownership, possession/enjoyment and alienation rights. 1882 Act always deals with immovable property.
S.5 TPA-Transfer of property means-
an act (can’t take place automatically)
by which a living person (inter-vivos)
conveys property, (creation of new interest)
in present or in future, (property)
to one or more other living persons, (includes a child in A mother’s womb) or
To himself and one or more other living persons; and “to transfer property” is to perform such act.
Explanation-living person includes a company or association or body of individuals, whether incorporated or not, but nothing herein contained shall affect any law for the time being in force relating to transfer of property to or by companies, associations or bodies of individuals. (Companies Act etc)
Association-2 or more person come together for profit generation
Body of individuals-means a group of individuals (individual only) who join together for common purpose(s) whether or not to earn income. Co-heirs, co-donees, etc joining together for a common purpose or action would be chargeable as BOI. Motive is not necessarily for profit. Charitable trusts, etc.
Properties can be transferred to non-living person but it shall not be the subject matter of TOPA
Governs only the Transfer of property by Hindus.
Not applicable on Muslims and other non-Hindus
Partition of Joint Hindu property, cannot be termed as creation of new interest for the purpose of this Act.
Modes of transfer-
S. 123, 59, 54, 118:-If property value is more than 100 rupees, it has to be registered.
Lease-A lease, as defined by S.105 of the TPA, is a transfer of a right to enjoy Immovable property for a term or in perpetuity in consideration of a price paid or promised or services or other things of Value to be rendered periodically or on specified occasions to the transferor by the transferee. If lease period is more than 12 months, it has to be registered.
Auction-Auction sale by court is not covered by the TPA Act
Will-is a document under which transfer of property takes place after the death of the testator (not subject of S.5 TOPA). Will is not a transfer under TPA.
Trust-Trustee’s right is limited by the trust deed. Property reverts back to the owner after trust’s purpose has been fulfilled.
Kenneth Soloman v Dan Singh Bawa 1986 (IF LEASE CAN BE TRANSFERRED BY WILL?)
Facts-Dr. Suri was lessee of a house in New Delhi under the respondent Dan Singh Bawa. The agreed rent was Rs. 37.82 per month. Dr Suri died in October 1967. In April 1968 the landlord brought an application against the present appellant Kenneth Solomon (Dr. Suri’s nephew) for recovery of possession of the tenancy premises. The eviction was claimed under S.14 of the Delhi Rent Control Act, 1958 (for short the Act) on the allegations that the tenant had left no heir and had in her life time parted with the possession of the premises in dispute in favor of the appellant Kenneth Soloman (nephew of Dr. Suri) without the written consent of the landlord. The appellant contended that tenancy rights devolved on him and another person under a will dated March 31,1957 or inter-alia as an heir being Dr. Suri’s nearest kinsman.
Held, Dr. Suri in her will had stated that she-bequeath, give and devise all her moveable and Immovable properties, whatsoever, howsoever, and where-so-ever situate at the time of her death to her nephew-Kenneth Solomon and Richard Soloman. The agreement of lease confers on the lessee the right to possess the Immovable property subject matter of the lease. It being an interest in the Immovable property would be covered under the expression “all my moveable and Immovable properties” used in the above quoted residuary clause of the will. The tenancy rights, Therefore devolved on she appellant under the will. One characteristic of a will as distinguished from other kinds of instruments disposing of property is its revocable nature. It is ambulatory until the death of the testator. It is dependent upon the testator’s death for its vigour and effect. Till that event it is only an expression of intention to deal with the property in a particular manner. But the moment the testator dies, it has the effect of vesting the property subject matter of the will in the devisee. At that point of time it would have the same effect as a transfer of possession by sale or mortgage. The process of parting with possession thus starts on the execution of the will but matures only on the death of the testator. The tenancy rights disposed under a will would vest in the devisee immediately on the death of the testator. “TRANSFER of property” according to the definition given in S.5 TPA, means an act by which a living person conveys property in present or in future to one or more other living persons or to himself, and one or more other living persons. True, these words exclude transfer by will, for a will operates after the death of the testator. The act of making a will in itself would not attract the provisions contained in proviso (b). No landlord can claim eviction, during the life time of the tenant, on the ground that the tenant had made a will disposing the tenancy rights. It is for the simple reason that it can be revoked at any time. By itself it does not vest the legal possession in the devisee. However, there is no escape from the conclusion that by his voluntary act the tenant parts with the possession of the tenancy premises though from the date of his death in case the will remains unrevoked. Dr. Suri by her act of bequeathing the tenancy rights by means of the will in favor of the petitioner and his brother had parted with possession within the meaning of proviso (b). The landlord was, Therefore, entitled to claim eviction.
N. Ramaiah v Nagraj 2001 (DIFFERENCE BETWEEN WILL AND TRANSFER)
Facts-Anjanamma is widow of Muni Narayanappa. Ramaiah is brother of Anjanamma while Nagraj is nephew of Muni. In 1998 Nagraj filed Probate for grant of letters of administration in regard to a Will dated 11-1-1998 said to have been executed by the Muni Narayanappa. The said Will was contested by Anjanamma, widow of Muni Narayanappa, inter alia on the grounds that the said Will was a got up document, and that she had succeeded to the properties of Muni Narayanappa as his sole legal heir. On 16-3-1998 Nagaraj sought a temporary injunction to restrain Anjanamma from alienating/encumbering the properties on the ground that the said properties were bequeathed to him under the Will dated 11-1-1998 by Muni Narayanappa. The injunction to maintain status quo was granted.
Subsequently, Anjanamma died on 11-12-1998 and the appellant Ramaiah filed an application to get the properties by claiming that Anjanamma had bequeathed her properties to by a Will dated 15-9-1998 to him. He contended that the status quo order only restricted alienations(transfer of property) and the will is different from alienation.
Issue-whether bequest of property under Will is transfer of property?
Held, TPA deals with transfer inter vivos that is the act of a living person. Provisions of Act not applicable to testamentary succession which are governed by Succession Act. Section 2 (h) of Succession Act defines Will as legal declaration of intention of testator in respect of his property which he desires to be carried into effect after his death. A transfer is a conveyance of an existing property by one living person to another (that is transfer inter vivos). On the other hand, a Will does not involve any transfer, nor effect any transfer inter vivos, but is a legal expression of the wishes and intention of a person in regard to his properties which he desires to be carried into effect after his death. In other words, a Will regulates succession and provides for succession as declared by it (testamentary succession) instead of succession as per personal law (non-testamentary succession). The concept of transfer by a living person is wholly alien to a Will. When a person makes a Will, he provides for testamentary succession and does not transfer any property. While a transfer is irrevocable and comes into effect either immediately or on the happening of a specified contingency, a Will is revocable and comes into operation only after the death of the testator. Thus to treat a devise under a Will as a transfer of an existing property in future, is contrary to all known principles relating to transfer of property and testamentary succession.
However, No new interest can be permissible while the case is pending. Lis Pendens is contempt of court. Bequeath under will is not a transfer under S.122 of TPA (S.52 TPA)
Jugal Kishore v Raw Cotton 1955 (Future transfer is not permitted under S.5)
Transfer in present for future property is permissible only when the property will come into being.
Facts, A firm named Habib & Sons used to carry on business of cotton at Bombay. In 1948 they firm instituted a suit against the present appellant Jugal Kishore Saraf for the recovery of Rs. 7113 said to be due in respect of certain transactions. In 1949, they transferred all their business including book and other debts due to Messers Raw Cotton. The respondent company did not take steps to get themselves substituted as plaintiffs in the place of Habib & Sons, the plaintiffs on record, but allowed the suit to be continued in the name of the original plaintiffs. Evidently, the two partners migrated from India to Pakistan and their properties vested in the Custodian of Evacuee Property. In December 1949 decree was passed in their favour.
S.5 read with S.13,14, 18, 19, 20-Property can be transferred to unborn child.
Raghubar Singh v Jai Indira Bahadur Singh 1919 (CONSTRUCTIVE NOTICE)
Facts, Thakur Ballabhdaar Singh, Talukdar of Mahewa, died issueless and intestate in 1898 leaving the taluka and other property, and leaving a widow, Raghubans Kunwar and a brother, Sheo Singh. On his death his brother Sheo Singh took possession of all his property; but his widow, Raghubans Kunwar brought a suit against Sheo Singh to recover the property in the Court of the Subordinate Judge of Sitapur, and, on the 6 August 1902, obtained a decree for possession of the same. After she had obtained this decree the widow applied to be put into possession of the property in dispute, and she was given possession by an Order or the Subordinate Judge; upon her providing security to restore the mesne profits, to the extent of one lac of rupees. The persons who gave that security are or are now represented by the present appellants. But on an appeal the decree was varied, and it was declared that the taluka with its accretions had passed to the brother, though the other property left by the deceased would pass according to Hindu law to the widow. Possession of them was forthwith given to the respondent Jai Indira Bahadur Singh, the son of the original defendant, who had by this time died. Thereupon, the respondent made an application, for fixation of mesne profits and damages. The parties against whom the application was made were the widow and the present appellants, the sureties; and the relief prayed was that they might be declared liable for mesne profits of the 117 villages, the liability of the sureties being limited to one lac only.
Held, For a proceeding under the TPA there should be a mortgagor and a mortgagee. Their Lordships have to examine whether in this case there is any mortgagee, any person to whom the security was given. Now no person is mentioned in the instrument. It recites the decree that the widow has been ordered to furnish security, and then the declarants furnish security by hypothecating their property. The mortgagee in any way should have known that the widow had no right to alienate the property.
Mohar Singh v Devi Charan (1988) (PARTITION) Held, that a partition is not a transfer of property but only signifies the surrender of a portion of a joint right in exchange for a similar right from the other co-sharer or co-sharers.
VN Sarin v Ajit Kumar Poplai (PARTITION is not a transfer)
Facts-AKP received his family coparcenary property through Partition. At that time a person VNS was already living there as a tenant. So AKP filed for his eviction. VNS challenged that AKP was not his landlord and he cannot evict him. Also, that AKP acquired the property by transfer and under S.14 of Delhi Rent Control Act required waiting period of 5 years before asking for eviction in case a property is acquired by Transfer. Under S.14(e), such eviction can be made even earlier if a bona-fide need is proved by the landlord. These provisions were there for the benefit of the tenants.
Issue-Whether a property acquired under partition can be covered under S.5 of DRCA as well as S.53 of TOPA?
Judgement-Object of Section 14 (6) was to prevent transfers by landlords as a device to enable purchasers to evict tenants from the premises let out to them-object sought to be achieved by Section 14 (6) cannot take within its sweep those who acquired property by partition-properties got by partition did not tantamount to ‘transfer’ within meaning of Section 14 (6) therefore suit was maintainable and TF High Court’s Order upheld which affirmed the eviction
CIT v Keshavlal 1965 (WHETHER PARTITION IS TRANSFER?)
Facts-respondent converted self acquired property to joint property and then effected partition and claimed before taxation authorities that assessment should be done after taking into consideration the conversion. CIT disallowed the claim and hence this appeal.
Issue, But, is a partition of JHF property a transfer in the strict sense?
Held, that partition is really a process in and by which a joint enjoyment of JHF property is transformed into an enjoyment in severalty. Each one of the sharers had an antecedent title and therefore no conveyance is involved in the process as a conferment of a new title is not necessary. No question of transfer of assets can arise when all that happens is separation in status, though the result of such severance in status is that the property hitherto held by the coparcenary is held thereafter by the separated members as tenants-in-common. Subsequent partition between the divided members of the family does not amount either to a transfer of assets from that body of the tenants-in-common to each of such tenants-in-common. Agreeing with these authorities, we hold that when the joint Hindu family property was partitioned, there was no transfer of assets within S.16(3)(a)(iii) and (iv) of Income Tax Act to the wife or the minor son. S.16(3)(a)(iii) and (iv) of Income Tax Act say that in computing the total income of any individual for the purpose of assessment, there shall be included from assets transferred directly or indirectly to the wife by the husband otherwise than for adequate consideration or in connection with an agreement to live apart; or from the assets transferred directly or indirectly to the minor child.
Narayanbhai v Sulemaan 1976 (TRANSFER OF PROPERTY TO HIMSELF VIA TRUST)
Facts, Lands in dispute were previously of sole ownership of Respondent No. 1. On creation of trust property vested in trust of “Dadabhai Trust” and since Respondent No. 1 became sole trustee of that trust, vesting resulted in transfer by Respondent No. 1 to himself in his capacity as sole trustee of trust. Assistant Judge held that creation of trust which was represented by donor himself in different capacity did not amount to transfer and therefore Section 63 Bombay Tenancy and Agricultural Lands Act had no application to case. Hence, this Appeal-
Held, Section 5 of the 1882 Act showed that transfer of property was act of conveyance of that property by person to one or some other living persons or to himself. Identity of both transferor and transferee should therefore be distinct. Person could not transfer his property to himself and it was for that reason that Section 5 of the Act contemplated conveyance of property from one person to one or other living persons. Insertion of those words were meant to cover those cases wherein property was required to be transferred by person standing in one capacity to himself standing in altogether another capacity. Thus, requirement of S.5 TPA 1882 Act were fully satisfied. It was evident that if requirements of “transfer of property” as contemplated by Section 5 of 1882 Act were satisfied then there remained no difficulty in holding that Respondent No. 1 in his personal capacity was donor, further, in his capacity as trustee of Dadabhai Trust he was donee who accepted gift of property without any consideration on behalf of beneficiaries. Therefore, transaction in question did amount to “gift” as defined by Section 122 of 1882 Act.
Bhupati Nath v Ramlal 1910 (TRANSFERING PROPERTY TO DIETY)
Facts, The plaintiff commenced the present action for construction of the will and for a declaration that the trust for the establishment and consecration of the image of the goddess Kali and her worship was void inasmuch as the deity had not been established in the life-time of the testators.
Does the principle of Hindu Law which invalidates a gift other than to a sentient being capable of accepting it, apply to a bequest to trustees for the establishment of an image and the worship of a Hindu deity after the testator’s death and make such a bequest void?
Whether gift to a Hindu deity whose image is to be established and consecrated in future is void?
Held, On, and, consequently with, this basis of general principles, modern law has arrived at certain conclusions. Of these the most important for present purposes is that an idol after it has been duly constituted is a juridical person in an ideal sense (SAID ONE JUDGE). The practical meaning of this somewhat elusive expression is that the ministers of an idol have over the property dedicated to the idol, which is the same thing as the deity inspiring the idol, the same rights that they would have if they were trustees for his benefit, or if he was an infant and they, managers on his behalf, being at the same time liable to corresponding duties legally enforceable. This seems to me to show that such a dedication as the present is a devise for a religious purpose such as on the authorities referred to by my learned brothers would be recognised as valid by English law, and not considered as bad for uncertainty. Deity is not a juristic person under Hindu Mythology to take property (SAID THE OTHER JUDGE). So a trust has to be created which will take the property on diety’s behalf. We start with the position that in the case of deities there cannot be any acceptance and; therefore, necessarily, any gift. If, therefore, a dedication is made in favour of the deity, what is the position? The owner is divested of his rights. The deity cannot accept. In whom does the property vest? The answer is that the king is the custodian of all such property.
Khunilal, 1911 ILR 33 Allahabad 356 (COMPROMISE IS NOT A TRANSFER)
AIR 2001 All 334
Release-S.118-exchange in ownership
Krishna Mohan v BK Chaturvedi AIR 2001 All 334 (AUCTION SALE BY COURT is not a transfer)
Facts, Whether S.5 and S.8 applicable to Auction sale? Whether court decree is an act of parties?
Held, No. it’s not a transfer under S.5 TPA. Court decree is mere an operation of law. Court is not a living person. S.8 of the TPA 1882, does not apply to a transfer which takes place by operation of law or by a Court sale.
Oral Transfers-S.9 TPA read with S.54 TPA
Oral transfer allowed only where the statute is silent
Unregistered lease of less than 12 months. Holding over renewed yearly
Property of less than 100 rupees
After transfer takes place, see effects under S.5.
What kind of interest?
What may be transferred?
S.6 TOPA-Property of any kind may be transferred, except as otherwise provided by this Act or by any other law for the time being in force.
Essentials of a valid transfer
Property must be transferable
Lawful object or consideration
Made in the prescribed manner
Exceptions to general rule-
Hindu Law-coparcenary property, property dedicated to God
Muslim Law-Waqf properties and office of Mutawalli 1954(permanent dedication of property for religious purposes)
Code of Civil Procedure (S.60)-prohibits the attachment of cooking vessels and tools of artisans, etc.
Various Local Acts and customs-restricts transfer of agriculture tenancies. Eg Grazing lands, Watan, Karnam, Ghatwal, etc.
COMPETENCY TO TRANSFER PROPERTY
S.7 TPA-competency of transferee not of much relevance
S.13-even a lunatic can transfer property
TRANSFER INTERVIVOS; LIVING AND JURISTIC PERSON
TRANSFER OF SPEC SUCCESSIONIS, TRANSFER BY HEIR APPARENT; CHANCE OF A RELATION
S.6A TOPA-Property of any kind may be transferred, except as otherwise provided by this Act or by any other law for the time being in force.
Spec Successionis-Mere chance of interest cannot be transferred as it is against public policy.
Shamsuddin Golamhusein v Abdul Husain Kalimuddin (1906) ILR Bom 165 (Expectancy of Muslim Heir) The chance of a Muslim heir succeeding is a mere spes successionis, and cannot be the subject of a transfer or a release.
Annada Mohan v Gour Mohan Mallik 1921 [Reversioner (person holding the property on behalf of a widow) sells the property] Also see the case of Raghubar v Jai Indira Bahadur Singh
Facts-Gopal Lal Seal died intestate in 1902, survived by his two widows and five nephews A, B, C, D and Gour. The nephews claimed the property citing some ‘will’ made by Gopal which was pending in Court. During the pendency of the suit, the defendant Gour Mohan, entered into an agreement with the plaintiff in 1908 and agreed to convey to the plaintiff, for a consideration, his interest in the estate of his uncle, if such interest was ultimately established on the basis of the Will or on the basis of his position as a reversionary Heir. It is to be observed that the extent of the share and the time of its accrual would be materially different in the two events contemplated. If the Will was established, the defendant would take one-sixteenth of the estate with effect from the date of the death of the testator; if the Will failed, the defendant would take a share the extent whereof would be ascertained, only upon the death of both the widows; if the defendant died before that date, nothing would vest in him; if he survives both of his maternal aunts, his share would be 1/5, 2/5, 3/5, 4/5 or the whole, according as four, three, two, one or none of his cousins survived him; such was in essence the nature of the agreement now under consideration. Eventually, the defendant obtained one-fifth of a half share of the estate of Gopal Lal Seal by virtue of a compromise decree. The defendant now resisted the claim for specific performance of the contract on the ground, amongst others, that it was void, illegal and unenforceable as the subject matter was an expectancy.
Held-under the Hindu Law, though the death of the female owner opens the inheritance to the reversioners and the one most nearly related at the time to the last full owner becomes entitled to possession, in her lifetime the reversionary right is a mere possibility or spes successionis. But a reversionary heir, although having only those contingent interests which are differentiated from a spes successionis is as having a right to demand that the estate be kept free from waste and free from danger during its enjoyment by the widow or other owner for life, in other words, to appeal to the Court in a representative capacity, truly for the conservation and just administration of the property, so that the corpus of the estate may pass unimpaired to those entitled to the reversion. Mr. Ameer Ali observed that a Hindu reversioner has no right or interest 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 relinquish, or even to transmit to his heirs; his right becomes concrete only on her demise until then, it is mere spes successionis. The interest of a Hindu reversioner is an interest expectant on the death of a qualified owner; it is not a vested interest, it is a spes successionis or a mere chance of succession; it cannot be sold, mortgaged, assigned or relinquished, for a transfer of a spes successionis is a nullity and has no effect in law. But though a transfer of his interest by a reversioner is void, he may, by becoming a party to a compromise and by taking the benefit of the compromise, be estopped from claiming as a reversioner.
Amrit Narayan v Gaya Singh 1918 (chance of legacy/expectancy of getting property under a will)
Facts-On Jhamman’s death, his widow Radha Koer, applied for the registration of her name in place of her deceased husband in the Collector’s records. Her application was opposed by some of Jhamman’s agnatic male relations, whom the respondents now represent; they claimed the property both under the general Hindu law as also under some undefined family custom. Their objections were overruled by the revenue Courts, and Radha Koer’s name was duly entered in the Collector’s register. Radha died shortly after in 1861, and was succeeded by her daughter, Kar Koer, the mother of the appellant. The agnates raised a fresh contest as to her right to hold the property. In the disputes that followed, and which were eventually referred to the arbitration of a number of caste-men, she seems to have been represented by her husband, Rajander Singh. There is nothing, however, on the record to show if he had any authority to act for her as her agent. Before the arbitrators had taken any action in the matter a compromise was arrived at, in which also Rajander purported to act both for her and her infant son, the appellant. Under this compromise Kar Koer abandoned in favour of the agnates all right to the immovable property of her father, receiving on her part, besides some movable property, two small fractional shares in certain lands which stood in the names of herself and her mother. The effect of the arrangement was to extinguish completely the reversionary interest of the appellant in his grandfather’s estate. The compromise was placed before the arbitrators and they were invited to make an award in accordance therewith, which they did. It is to be noted that there is nothing on the record to show that the proceedings before the arbitrators ever came to the knowledge of Kar Koer or that she knew of the compromise and its effect. In fact it appears that Kar Koer did not acquiesce in the award, and the opposite party had to apply to the civil Court under the provisions of S.327 of Act VIII of 1859 (the law that regulated at the time the procedure of the civil Courts in India) for a decree on the award. The Court of first instance held that all the proceedings in connection with the compromise and the award had been without Kar Koer’s knowledge. He accordingly dismissed the application of the agnates under S.327. In this action the plaintiff charged that the arbitration proceedings, together with the compromise and award, were fraudulent and taken and entered into without the knowledge or authority of Kar Koer; that in any event he was not bound by them.
Held-With respect, in proceeding to consider whether Rajander Singh, the plaintiff’s father, had power to refer the matter on behalf of his minor son to arbitration, they seem to have misconceived the legal position of the infant under the Hindu law. Evidently they thought he had a right which could form the subject of bargain. This is an obvious mistake; a Hindu reversioner has no right or interest in praesenti 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 relinquish, or even to transmit to his heirs. His right becomes concrete only on her demise; until then it is mere spes successionis. His guardian, if he happens to be a minor, cannot bargain with it on his behalf or bind him by any contractual engagement in respect thereto. Rajander’s action, therefore, in referring to arbitration any matter connected with his son’s reversionary interest was null and void.
Badri Nath v Ms. Punna AIR 1979 SC 1314 (Whether offering from pilgrim can be mortgaged?)
Facts-The plaintiff is the daughter of one Bagu who died in or about the year 1959. During his life time Bagu and the three defendants were entitled to receive the offerings made at the shrine of Shri Vaishno Devi Ji on certain days falling within every seventh Bikrami year so that Bagu would have 6/16 share therein and the defendants collectively a similar share. After the death of the plaintiff’s father the parties were entitled to receive the offerings in the shares above mentioned on every eighth day in the Bikrami year 2019, the plaintiff having succeeded to the share of her father both under the law of inheritance and by virtue of a will executed by him in her favour. The plaintiff had to resort to the suit as the defendants had started interfering with her right to collect her share of the offerings. The defendants contested the suit. They challenged the will set up by the plaintiff as a forged one and further pleaded that only members of four sub-castes namely, Khas Thakars, Darora Thakars, Manotra Thakars and Samnotra Brahmins were entitled to receive the offerings and that while Bagu was entitled to a share in the same, the plaintiff was not as she had lost her original sub-caste by marriage outside the four sub-castes mentioned above.
Held-the trial court noted the contents of paragraph 422 of “Principles of Hindu Law” by Mulla which states, inter alia, that where offerings, though made to idols, are received by persons independently of any obligation to render services, they are alienable and attachable. There is thus no doubt that the right to receive a share in the offerings is subject to the performance of onerous duties. But then it is apparent that none of those duties is in nature priestly or requiring a personal qualification. On the other hand all duties here are of a non-religious or secular character and may be performed not necessarily by the baridar personally but by his agents or servants so that their performance boils down to mere incurring of expense. If the baridar chooses to perform those duties personally he is at liberty to do so. But then the obligation extends merely to the making of necessary arrangements which may be secured on payment of money to others, the actual physical or mental effort involve being undertaken by those others. The right is, therefore, a transferable right as envisaged in the passage above extracted from Balmukand and Ors v Tula Ram and Ors. The right to share the offerings being a right coupled with duties other than those involving personal qualifications and, therefore, being heritable property, it will descend in accordance with the dictates of the HSA and in supersession of all customs to the contrary in view of the provisions of S.4 of that Act.
UP State Electricity Board v Ram Barai Prasad AIR 1985 All 265 (Future interest in the property is transferable)
Facts-The State Electricity Board has a power station in Azamgarh. Certain amount of coal ash is produced by the power station in the course of producing thermal power. This coal ash is disposed of periodically by sale to intending purchasers. The plaintiffs entered into an agreement with the U. P. State Electricity Board to lift coal ash of 600000 cubic feet between 23-3-1980 and 22-3-1981. It was further stipulated that the plaintiffs would lift the entire quantity of 6 lakhs cubic feet of coal ash within the above period but not beyond the stipulated period. It appears that during this period they lifted 373910 cubic feet of coal ash. They had still to lift the balance amount of 226090 cubic feet of coal ash when the period expired. The plaintiffs obviously wanted to lift the remaining amount of coal ash but they were not allowed to do so. The plaintiffs alleged that they were prevented from lifting or taking away coal ash during the period of one year by the defendants and their officers who created impediments in doing so. This resulted in lesser amount being lifted by the plaintiff. The plaintiffs’ prayer to the defendant to extend the time for lifting the remaining amount of coal ash was not acceded to by the defendant on the ground that the time limit had expired and according to the contract no lifting was permissible after the expiry of the time. The plaintiffs thereupon filed the present suit with the reliefs mentioned above. The defendant State Electricity Board took a plea that the contract stipulated the lifting of coal ash within a period of one year and the date had also been clearly fixed under the agreement. The agreement further stipulated that they could not lift any amount of coal ash beyond the stipulated period. Their plea was that the contract had come to an end and the plaintiffs were not entitled to any of the reliefs claimed for. It was further pleaded that they did not have any right under the agreement to lift the remaining amount of coal ash. They denied that any obstacle had been created by the defendants or their officers. It was further pleaded that the suit filed by the plaintiffs was not maintainable. A question arises whether the defendant held the coal ash in his capacity as a trustee on behalf of the plaintiffs.
Held-The contract shows that as and when coal ash becomes available for removal, it was to be removed by the plaintiffs and the time limit fixed for the purpose was one year. If it was all ready and available when the contract was entered into there was no question of granting a year’s time to remove the same. What happens in the normal course in a Thermal Power Station is that coal ash gets accumulated daily as the power station consumes coal for firing its boiler. That coal ash can only be removed after it has cooled down. It is then removed to the dumps from where the contractor is supposed to take them away on payment. In such a contract the entire goods may not be in existence or available at the time of the contract but would materialise from time to time within the stipulated period of the contract. Nevertheless it was a contract for the sale of 6 lakhs cubic feet of coal ash, which is more or less specific goods and a natural produce. It was, therefore, a contract for, what is termed as a ‘POTENTIAL PROPERTY’-A property which is not in existence on the day of the contract but would be available in due course of time becomes potential property and a sale in respect of such a property is established by contract. The title in such property passes unto the purchaser although it is held by the seller in the capacity of a trustee. The coal ash in the present case was in the nature of potential goods and that it would be fully covered under Clause (ii) (b) of the Explanation to Section 10 of the Act. The plaintiffs had asked for two reliefs. First, for extension of time to lift the coal ash and secondly, for a prohibitory injunction restraining the Board from interfering with their lifting the remaining coal ash, and they are entitled to both the reliefs in the circumstances of the case.
Possibility of Alike nature
Devi Prasad v Lewis-1909 31 All 304 (future property)
Fisherman-Anand Behara case-fishes in the pond.
DOCTRINE OF FEEDING THE GRANT BY ESTOPPEL
113 of Evidence Act-Once a statement or promise has been made, parties have to stick with it. They cannot go back on it.
Jumma Masjid Mercara v Kodimaniandra Deviah 1962 (IMP) Do it again
The Purchaser Ganpati claimed that in 1920 reversioners sold the properties on a representation that they acquired it as reversioner of widows and therefore is estopped from claiming otherwise under S.43. Mosque claimed widow gifted the properties to them in 1932 and reversioners only had Spes successionis (mere chance of succession) in those properties and TF, the transfer by them was void as per S.6A.
S.6(a) TPA prohibits transfer of the chance of an heir apparent succeeding an estate etc Future interests can be transferred as per S.5 but chance of future interests cannot under 6A.
Issue, conflict between 6A and 43 TPA
The Court ruled that the transferee was entitled to the benefit of Section 43 of the Act, if he had taken the transfer for consideration on the faith of representation. If the language of the section clearly excluded from its purview transfers in which the transferor had only such interest as is specified in s. 6(a), then it would undoubtedly not be legitimate to use the illustration to enlarge it. When a person transfers property representing that he has a present interest therein, whereas he has, in fact, only a spes successionis, the transferee is entitled to the benefit of S.43, if he has taken the transfer on the faith of that representation and for consideration. In the present case, the Masjid failed to prove a valid gift.
Difference between 6A and 43-S.6(a) deals with certain kinds of interests in property mentioned therein, and prohibits a transfer simpliciter of those interests. S.43 deals with representations as to title made by a transferor who had no title at the time of transfer, and provides that the transfer shall fasten itself on the title which the transferor subsequently acquires. S.6(a) enacts a rule of substantive law, while S.43 enacts a rule of estoppel which is one of evidence. The two provisions operate on different fields, and under different conditions, and we see no ground for reading a conflict between them or for cutting down the ambit of the one by reference to the other. In out opinion, both of them can be given full effect on their own terms, in their respective spheres. To hold that transfers by persons who have only a spes successionis at the date of transfer are not within the protection afforded by S.43 would destroy its utility to a large extent.
Transfer by unauthorised person (S.43)-The criteria is that the person should be unauthorised but competent to transfer and the transfer is not prohibited by law.
Rajapakshi v Fernando (1920) AC 892 (897)
Where a grantor has purported to grant an interest in land, which he did not at that time possess but subsequently acquires, the benefit of the subsequent acquisition goes automatically to the earlier grantee, or as it is usually expressed, feeds the estoppel.
Based on partly common law doctrine of estoppel
Mahadeo v Har Bush AIR 1928 Oudh 13-presumption of death(Indian Evidence Act)-A person is presumed to be dead after 7 years. A’s Wife transferred the mortgage of A’s property to B after 5 years of unknown whereabouts of A. A then appears. B waits for 2 more years and then files a suit for the title. No, because such transfer was prohibited by law.
Mohori Bibi v Dharmodas Ghose (1903) 30 IA 114 (S.7) Public policy case
Rustam Ali v Abdul Jabbar 1923-Husband promised sister’s property as Meher to wife. Subsequently Sister sold it to ‘A’ and was purchased by transferor. Whether Wife can claim the possession under S.43?
Held, Yes. S.43 encompasses all such subsequent acquisitions by the person who had erroneously represented the property to be his, except acquisitions made by auction sale.
Alamanaya Kunigari Nabi Sen v Murukuti Papiah AIR 1915 Mad 972
- Subsequent Acquisition of Interest-Inter-vivos or operation of law
At the transferee’s Option
At anytime during which the contract of transfer subsists
Kartar Singh v Harbans Kaur. AIR 1993 P&H 186 (Notice)
S.43 does not applies in case of void contract.
Jote Singh v Ram Das Mahato, 1996 (Auction sale)
Auction sale not covered by 43. (S.54)
- Transferee in Good faith
- Invalid Transfer
Difference between S.6A and S.43
ABSOLUTE AND PARTIAL RESTRAINTS ON TRANSFER
RESTRICTIONS REPUGNANT TO INTERESTS CREATED
RESTRICTIONS FOR BENEFICIAL ENJOYMENT OF ONE’S OWN LAND
POSITIVE AND NEGATIVE COVENANTS
RULE AGAINST PERPETUITY
VESTED AND CONTINGENT INTEREST
S.10-Conditions restraining alienation-Where property is transferred subject to a condition or limitation absolutely restraining the transferee or any person claiming under him from parting with or disposing of his interest in the property, the condition or limitation is void, except in the case of a lease where the condition is for the benefit of the lessor or those claiming under him:
PROVIDED that property may be transferred to or for the benefit of a women (not being a Hindu, Muslim or Buddhist), so that she shall not have power during her marriage to transfer or charge the same or her beneficial interest therein.
Types of conditions-
Types of restraints-
In regard to person-A transfers property to B with condition that B can only transfer it to C. Its void. What if C was not in position to buy it/dead etc-void. What if in place of C ‘any place in his village’? Then it’s not void.
In regard to money-
In regard to time-A transfers property to B with condition that he cannot transfer it for 5 years. B alienates before 5 years. It’s Valid. What if condition was that in case alienation before 5 years, it can only be to ‘A’ at market value? It’s Valid.
In regard to specific purpose-A transfer his trust property to B as a charity with a condition that B can only alienate it only for charitable purpose. It’s Valid.
Whether condition is partially restricting transferee’s right or substantially?
Types of restrictions-
To be determined from the objective and purpose of the transfer.
Examples of S.10-
A transfers his property to B with condition that B shall only transfer it to C-Invalid
A transfer his property worth 1 crore to B with condition that B shall transfer it to other only at the cost of 1000/-Invalid
A transfers his property to B with condition that B shall not sell it before 20 years-Invalid
Whether conditional transfer is permissible under TPA?
Condition Precedent-S.19 and 21.
Condition Subsequent-A will transfer property to B only if B marries.
But reasonable pre-emption is valid
Rosher v Rosher 1884
Father writes in his will that son will get property. If son wishes to sell, the mom would get an option to buy it at 20% rate as long as she is alive when such sale is wished upon. Son says this creates an absolute restraint. Judge agrees saying sale at 20% price is stupid and nobody would throw away 4/5th of the property and hence, practically an absolute restraint is created. Section 10 prohibits absolute restraints not only in writing, but also in fact.
Zoroastrian Coop Housing Society v District Registrar 2005
Facts-Zoroastrian Cooperative Housing Society, is a society registered under Bombay Cooperative Societies Act, 1925 formed with object of providing housing to members of Parsi Community only. Respondent 2 became member of the society on death of his father and applied to society for permission to demolish bungalow and to construct a commercial building in its place. The application was rejected by the Society stating that bye laws of society did not permit commercial use of land. Respondent 2 subsequently applied to society for permission to demolish bungalow and for construction of residential flats to be sold only to Parsis. Application was allowed by society. Respondent 2 entered into negotiations with Respondent 3, a builder’s association in violation of restriction on sale of shares or property to a Non Parsi. It was challenged by Society by filing a case before Board of Nominees. The Board held that society could not restrict its membership only to Parsi Community. A Tribunal held that bye law restricting membership to Parsis was a restriction on right to property and was violative of Article 300 A.
Held-Allowing appeal SC held that when a person accepts membership in a cooperative society by submitting himself to its bye laws and places on himself a qualified restriction on his right to transfer property by stipulating that same would be transferred with prior consent of society to a person qualified to be a member of society, it could not be held to be an absolute restraint on alienation offending S.10 of TPA. Hence finding of High Court that restriction placed on rights of members of a society to deal with property allotted to him was invalid as an absolute restraint on alienation, held unsustainable and set aside.
S.11 Restriction repugnant to absolute interest created
Where, on a transfer of property, an interest therein is created absolutely in favour of any person, but the terms of the transfer direct that such interest shall be applied or enjoyed by him in a particular manner, he shall be entitled to receive and dispose of such interest as if there were no such direction.
Where any such direction has been made in respect of one piece of immovable property for the purpose of securing the beneficial enjoyment of another piece of such property, nothing in this section shall be deemed to affect any right which the transferor may have to enforce such direction or any remedy which he may have in respect of a breach thereof. (NEGATIVE COVENANT)
Types of covenant
Positive-where any financial burden are incurred on the property born by the transferee
Negative-always runs with the land
Tull v Moksey 1808 page 116 of Manual
There was a square house in the midst of which there is a garden having some ornamental piece. ‘A’ transferred the house to many persons one after other but garden therein was transferred only to ‘B’ with a condition that garden shall be kept as it is and that B can charge reasonable amount from visitors. Later on B transferred it to C and then C to D and so on until it came to X. X intended to destroy the garden. S.11 para 2 will be applicable. This case is of Negative covenant. If Mr X had knowledge of the covenant, he will not alter the property.
S.12-Condition making interest determinable on insolvency or attempted alienation
Where property is transferred subject to a condition or limitation making any interest therein, reserved or given to or for the benefit of any person, to cease on his becoming insolvent or endeavouring to transfer or dispose of the same, such condition or limitation is void.
Nothing in this section applies to a condition in a lease for the benefit of the lessor or those claiming under him.
VESTED AND CONTINGENT INTEREST S.19,20,21 TPA
S.19-Vested Interest-Where, on a transfer of property, an interest therein is created in favour of a person without specifying the time when it is to take effect, or in terms specifying that it is to take effect forthwith or on the happening of an event which must happen, such interest is vested, unless a contrary intention appears from the terms of the transfer.
A vested interest is not defeated by the death of the transferee before he obtains possession.
Explanation : An intention that an interest shall not be vested is not to be inferred merely from a provision whereby the enjoyment thereof is postponed, or whereby a prior interest in the same property is given or reserved to some other person, or whereby income arising from the property is directed to be accumulated until the time of enjoyment arrives, or from a provision that if a particular event shall happen the interest shall pass to other person.
If transfer is dependent on the happening of an event that is bound to happen the transferee takes a vested interest in the property.
When the transfer is completed?
Transfer is completed without the transfer or delivery of the possession of the property. All three rights, ownership, possession/enjoyment and alienation.
S.20 When unborn person acquires vested interest on transfer for his benefit-Where, on a transfer of property, an interest therein is created for the benefit of a person not then living, he acquires upon his birth, unless a contrary intention appears from the terms of the transfer, a vested interest, although he may not be entitled to the enjoyment thereof immediately on his birth.
Prior Interest/Limited Interest(S.13)-When the property is transferred to an unborn person, it does not mean there is no interest.
S.17-Period of accumulation shall not be longer than the period of interest.
S.119 of the Indian Succession Act 1925
S.10 and 11 TPA
S.19-Nature of Vested Interest
Present Fixed right
Transferrable and heritable
S.21 Contingent Interest-Where, on a transfer of property, an interest therein is created in favour of a person to take effect only on the happening of a specified uncertain event, or if a specified uncertain event shall not happen, such person thereby acquires a contingent interest in the property. Such interest becomes a vested interest, in the former case, on the happening of the event, in the latter, when the happening of the event becomes impossible.
Exception : Where, under a transfer of property, a person becomes entitled to an interest therein upon attaining a particular age, and the transferor also gives to him absolutely the income to arise from such interest before he reaches that age, or directs the income or so much thereof as may be necessary to be applied for his benefit, such interest is not contingent.
The transfer is not complete and dependent on a condition precedent the happening and fulfilment of the condition.
Illustration-‘A’ made a gift to B on condition of death of A’s father. This creates a vested interest in B because death of a human being is a certain event but a gift to B on birth of A’s son is a contingent gift as whether a son will be born to ‘A’ or not is uncertain.
Usha Subbarao v BN Vishveswaraiah AIR 1996 SC 2260
An interest is said to be vested when there is immediate right of present enjoyment or present right for future enjoyment.
Distinction between contingent and Vested interest-
Rajes Kanta Roy v Shanti Debi AIR 1957 SC 255.
Facts, One Ramani Kanta Roy was possessed of considerable properties. He had three sons, Rajes Kanta Roy, Rabindra Kanta Roy and Ramendra Kanta Roy. Rabindra died childless in the year 1938 leaving a widow, Santi Debi. In 1934 Ramani created an endowment in respect of some of his properties in favour of his family deity and appointed his three sons as shebait. After the death of Rabindra his widow Santi Debi, instituted a suit against the other members of the family in 1941 for a declaration that she, as the heir of her deceased husband, was entitled to function as a shebait in the place of her husband. The suit terminated in a compromise recognising the right of Santi Debi as a co-shebait. Shortly thereafter, however, i.e., in the year 1944, Ramani and his two sons, Rajes and Ramendra, filed a suit against Santi Debi, for a declaration that the above mentioned compromise decree was null and void. One of the grounds on which the suit was based was that the marriage of Santi Debi with Rabindra was a nullity inasmuch is the said marriage was one between persons within prohibited degrees. During the pendency of that suit Ramani, the father, executed a registered trust deed in respect of his entire properties on July 26, 1945. As per the terms of that trust-deed, the eldest of the sons, Rajes, was appointed thereunder as the sole trustee to hold the properties under trust subject to certain powers and obligations. After the execution of this trust deed the father died. Some time thereafter the suit was compromised on December 3, 1946. By the said compromise Santi Debi gave up her rights under the previous compromise decree of 1941 and agreed to receive for her natural life a monthly allowance of Rs. 475 payable from the month of November, 1946. It was one of terms of the compromise that on default of payment Santi Debi will be entitled to realise the same by means of attachment of properties in execution of the decree. It appears that the monthly allowance as aforesaid was regularly paid up to the end of February, 1948, and that thereafter payment was defaulted. Consequently Santi Debi filed an application for execution on July 8, 1949, to realise the arrears of her monthly allowance from March, 1948, to July, 1949, amounting to Rs. 8,075 against both the brothers, Rajes and Ramendra. Execution was asked for by way of attachment and sale of immovable properties. It was contended that in the properties covered by the trust deed, and sought to be attached, is only a contingent one and hence not attachable. That a mere contingent interest though transferable inter vivos is not attachable.
Held, Indeed, if under the trust deed the judgment-debtor has a beneficial interest, it is not disputed that such beneficial interest would be attachable provided it is a vested interest and not a contingent interest. The determination of the question as to whether an interest created by such a deed is vested or contingent has to be guided generally by the principles recognised under Sections 19 and 21 of the Transfer of Property Act, 1882, and Sections 119 and 120 of the Indian Succession Act, 1925. Now, there can be no doubt about the rule that where the enjoyment of the property is postponed but the present income thereof is to be applied for the benefit of the donee the gift is vested and not contingent.
Ranganath Mudaliar v
Before the property reaches the hands of the donee is a vested interest. If a
Syllabus for Mid-Term-TILL MODULE 2.4
5 ways in which property gets conveyed-
In each case, there will be a conveyance deed.
Subject matter of Suraj Lamp-whether by power of attorney (agency-when someone is authorized to act for other) accompanied by sale deed will result into transfer of property? In and around Delhi, there was a practice that in place of valid sale deed, people would have this arrangement and question was whether such arrangement would be valid?
S.5, 9 and 54 TPA
1st requisite in buying anything-
Having Money/Income-which is regulated by government in many ways.
Circle rate-per square fit rate of any area-Property cannot be sold below that rate.
S.13-Transfer for the benefit of unborn person-Where, on a transfer of property, an interest therein is created for the benefit of a person not in existence at the date of the transfer, subject to a prior interest created by the same transfer, the interest created for the benefit of such person shall not take effect, unless it extends to the whole of the remaining interest of the transferor in the property.
Illustration A transfers property of which he is the owner to B in trust for ‘A’ and his intended wife successively for their lives, and, after the death of the survivor, for the eldest son of the intended marriage for life, and after his death for A’s second son. The interest so created for the benefit of the eldest son does not take effect, because it does not extend to the whole of A’s remaining interest in the property.
Illustration-A on 1 January executes a deed by which he creates a life interest in his property in favour of his brother B and further provides after his death it shall pass to B’s eldest child. B was unmarried at that time so as soon as a child is born she will have a vested interest in the property though possession will continue to remain with B till his lifetime.
It means only an absolute interest can be created in favor of unborn person. If it is limited interested then the transfer is void.
Even an unborn person can own a property. As per S.5 transfer can only take place inter-vivos ie living persons. Child in a mother’s womb has been recognised as a living person. And a prior interest can be created in such a person having the womb. Prior interest can be limited or life interest. When the child is born he becomes an absolute owner. He will have both ownership and alienation rights but the mother will have only limited right ie possession and enjoyment right till the child is born.
S.5, S.13 and S.20 has to be read together.
A transferred property to B’s daughter and B is only 5-6 years old now. Is this transfer possible and permissible? Yes, under S.13 TPA he will have to first create a life interest in B and followed by absolute interest in B’s daughter.
Transfer in an unborn person can be done two ways-
Creating a trust
Creating a life Interest in the mother
Important-But the absolute interest in the child will not take place as long as mother is alive. For example if A transfers the property to B’s unborn child C in year 2001 The child was born in 2005 but mother continue to live till 2050. It is only after the death of B that C will become the absolute owner.
A child is ‘en ventre sa mere’ ie a living person under Hindu Law
Child includes both-
Conceived but not yet born and
Not yet conceived
Pre-Requisites for a valid transfer of property to an unborn person-
S.13 provides a mechanism for a specific mechanism for transferring property validly for the benefit of unborn persons. The procedure as follows:
The person intending to transfer the property for the benefit of an unborn person should first create a life estate in favor of a living person and after it, an absolute estate in favor of the unborn person. It is not necessary that life interest should be created in favor of only one living person. The transfer is competent to create successive life interests in favor of several living persons at the same time. For instance, A transfer property to B for life, and after him, to C, and then to D again for their lives and then absolutely to B’s unborn child UB.
Till the person, in whose favor a life interest is created is alive, he would hold the possession of the property, enjoy its usufruct i.e. enjoyment of the property.
During his lifetime if the person, (who on the day of creation of the life estate was unborn) is born, the title of the property would immediately vest in him, but he will get the possession of the property only on the death of the life holder.
S.20-When unborn person acquires vested interest on transfer for his benefit. Where, on a transfer of property, an interest therein is created for the benefit of a person not then living, he acquires upon his birth, unless a contrary intention appears from the terms of the transfer, a vested interest, although he may not be entitled to the enjoyment thereof immediately on his birth.
S.19-Vested Interest-Where, on a transfer of property, an interest therein is created in favour of a person without specifying the time when it is to take effect, or in terms specifying that it is to take effect forthwith or on the happening of an event which must happen, such interest is vested, unless a contrary intention appears from the terms of the transfer. A vested interest is not defeated by the death of the transferee before he obtains possession.
Explanation : An intention that an interest shall not be vested is not to be inferred merely from a provision whereby the enjoyment thereof is postponed, or whereby a prior interest in the same property is given or reserved to some other person, or whereby income arising from the property is directed to be accumulated until the time of enjoyment arrives, or from a provision that if a particular event shall happen the interest shall pass to another person.
Note-Vested interests are absolute interest and are inheritable, attachable and transferrable
IMPORTANT Question-In a case where ‘A’ creates prior interest in B and then absolute interest in B’s son and what if B dies before birth of BS or never gets married? What will happen with the property?
Answer-prior interest remains for life time of the person in favour of whom it was created and if B dies without leaving any heir then it reverts back to ‘A’ or in his absence A’s legal heirs. But if BS is born and dies then it will not revert back to A but BS’s heirs as vested interest in attachable, inheritable and transferable.
JV Satyanarayana v Pyboyina Manikyan 1983 (Subsequent transfer by person having the prior Interest shall not affect vested Interest ie Limited interest can be transferred but it will not affect the vested interest)
Facts-One P. Muthaiah had a son Ganga Raju and executed a settlement deed in respect of the suit property conferring life estate on his son and after his death to the sons of Ganga Raju to be borne absolutely. Ganga Raju executed a relinquishment deed relinquishing his life estate to back to original donee (his own father P. Muthaiah) before the birth of his son. Ganga Raju died in 1971 leaving behind three sons viz., Ramarao, Lakshmanarao and Muthaiah. The first son Ramarao was born in the year 1942 the plaintiff happened to be the auction purchaser of the one-third share of P. Muthaiah in a Court auction in execution of some decree. The plaintiff also purchased the share of lakshmanarao from his wife Raghavamma under a registered sale deed dated 24-2-1972 as per Ex. A-2 and he filed the present suit for the recovery of this two-thirds share. The 1st defendant Pyboyina is the son of Muthaiah who resisted the suit. The courts below held that Ganga Raju executed a relinquishment deed before the birth of his sons and Consequently the entire estate has gone out of the original donee and hence the gift in favour of his unborn children has failed and the present suit is not maintainable and liable to be dismissed.
Issue-whether S.16 is attracted in the present case?
Held-A reading of the S.16 TPA discloses that three conditions must be present before the said section is attracted.
There should be an interest created for the benefit of a person or class of persons which must fail by reason of the rules contained in S.13 and S.14.
There should be another interest created in the same transaction.
The other interest must intend to take effect after or upon failure of the prior interest.
So a gift made to an unborn person should not offend S.13 or S.14. S.13 requires two conditions to be fulfilled.
The transfer intervivos cannot be made directly to an unborn person but must be preceded by a prior disposition in favour of a living person.
The interest given to the unborn person is the whole of the interest remaining in the transferor. S.14 embodies the rule against perpetuity.
So. S.16 embodies the rule that if any gift made in favour of unborn persons fails by reason of the rule contained in those two sections, the subsequent interest created in the same transaction also fails. So in order to attract S.16 we must see whether the three conditions mentioned above are fulfilled or not before the principle that the gift is void for remoteness as embodied in the said section can be invoked. Firstly the gift of the unborn children has not failed either because of the rules contained in S.13 or S.14. Secondly the prior interest created in favour of Ganga Raju is also not invalid. Thirdly a valid estate created in favour of Ganga Raju was voluntarily transferred in favour of muthaiah and lastly when there is no failure of prior interest and no question of failure of the subsequent interest arises as contemplated under section 16. Further this is not a conditional transfer as contemplated under S.27 TPA and consequently all the children of Ganga Raju on their birth acquire vested interest as contemplated under S.20 of the TPA. So validity of gift in favour of unborn children to be judged with reference to original settlement deed and not the relinquishment deed. Relinquishment deed made by father before birth of sons did not alter legal position contemplated by original settlement deed.
S.13 prohibits creation of life interest in any unborn person. No limited interest can be created in favour of unborn person.
Girish Dutt v Datta Din 1934 Oudh
Facts-A gifted his property to B for her life along with absolute ownership to B’s unborn son once B is dead. B had no child on the date of execution of the gift. The deed further provided that in case B had only daughters, then the property would go to such daughters but only for their life. In case B had no child then after the death of B, the property was to go absolutely to X. When, B died without any child, and X claimed the property under the gift deed.
Held-The deed on paper provided a life estate in favor of B’s unborn daughters: which is contrary to the rule of S.13 TPA. The court held that where a transfer in favor of a person or his benefit is void under S.13, any transfer contained in the same deed and intended to take effect or upon failure of such prior transfer is also void. In determining whether the transfer is in violation of S.13, regard has to be made with respect to the contents of the deed and not what happened actually. Here as the transfer stipulated in the contract that was void, the transfer in favor of X also became void. Hence, X’s claim was defeated.
Question-What will happen if there are 3-4 conditions and only one of them is valid and others are void? If A transfers his property to B (prior interest) with condition that if daughter is born to B she will have limited interest while the subsequent male child will have absolute interest. But if no child is born to B then to X? This transfer is void as the first transfer is void. See S.16 TPA
Prior to TPA 1882, under Muslim and Hindu Law, a gift to person who was not in existence, was void.
Muslim law is still the same but Hindu law has changed.
S.113 of Hindu Succession Act
S.14-Rule against Perpetuity-No transfer of property can operate to create an interest which is to take effect after the life time of one or more persons living at the date of such transfer, and the minority of some person who shall be in existence at the expiration of that period, and to whom, if he attains full age, the interest created is to belong.
Illustration 1-If A transfer his property to unborn son of B by creating a life interest in B. B should be in existence when C takes birth. What if the condition is that property shall not vest in C until he attains majority (18 years)? Valid
Illustration 2-In 2000, ‘A’ transfers property to B’s unborn child. B was 30 years old at the time of the execution of the gift deed. The condition was that property shall not vest in BS until he attains the age of 20. In 2020 BS is born. From 2000 to 2020 property remains in the hands of B with limited interest. BS will become 20 years old in 2040. Its void w.r.t BS because condition is for more than majority age. In such cases the prior/limited interest is valid but not the absolute/vested interest in unborn child because condition is repugnant to S.14 which is rule against perpetuity.
Ram Newaz v Nankoo AIR 1926 (Condition that lineal decedents shall have no right to alienate)
Facts-In 1884 one Ram Charan sold his properties to Nankoo. According to the sale deed, 2 bighas was to remain in Ram Charan’s possession and after his death, it was to go to his ‘Aulad Khas’. It was also written that his lineal dependents will have no right to alienate those property temporarily or permanently. In case there are no lineal dependents, the property will absolutely vest in the Vendees ie Nankoo and with heirs of Nankoo or his own heirs will have no claim to it. Now if that be so, what is the position when a contest arises between the nearest reversioners and the successors of the venders?
Held-What you have to see is whether the event can be postponed to beyond the period of a life or lives in being and 21 years after and not what in fact happened. Now applying that test it is perfectly evident that these 2 bighas of nankar land might have remained with the lineal descendants of Ram Charan for 100 or 200 years, and that being so, we are of opinion that this was a condition repugnant to the law (S.14.Rule against perpetuity), and being so repugnant to the law the defendants could not set up this document on which they rely as entitling them to possession of the property.
Ram Baran Prasad v Ram Mohit Hazara 1967 (Pre-Emption Clause And S.14-Rule Against Perpetuity)
Facts-Two brothers, Tulsidas and Kishorilal owned certain properties (land and building) in the suburbs of Calcutta. In the year 1938 Kishorilal sued for partition of the properties and eventually the matter was referred to arbitration. On December 16, 1940, the arbitrators filed their award under which blocks ‘A’ and ‘C’ were allotted to Tulsidas and the remaining two blocks, B and D were allotted to Kishorilal. Two common passages marked as X and Y and a common drain Z were kept joint between the parties for their use. In the award there was a clause to the following effect:
“We further find and report with the consent of and approval of the parties that any party in case of disposing or transferring any portion of his share, shall offer preference to the other party, that is each party shall have the right of pre-emption between each other.”
In 1941 Tulsidas sold his ‘A’ block to one Nagendra Nath after Kishorilal’s refusal to pre-empt the same. In 1942, Kishorilal sold, his two blocks, B and D to Rati Raman Mukherjee and others. In 1946, the Mukherjees in their turn sold the two blocks B & D to the plaintiff Ram Baran. In 1952 Nagendra Nath Ghosh sold block ‘A’ to defendant No. 1 Ram Mohit and on December 2, 1952, the present suit was filed by the plaintiffs against the said purchaser. The plaintiffs prayed for a decree for pre-emption against defendants Nos. 1 & 2 and calling upon them to execute a conveyance in favour of the plaintiffs on payment of the actual consideration paid for the property in suit.
Issue-whether the covenant of pre-emption offends the rule against perpetuities and is therefore void and not enforceable even against the original contracting parties?
Held-It is obvious that in these clauses the expression “parties” cannot be restricted to the original parties to the contract but must include the legal representatives and assignees of the original parties. Reading S.14 along with S.54 of the TPA its manifest that a mere contract for sale of immovable property (agreement to sell) does not create any interest in the immovable property (it will be actual delivery of possession which will create interest) and it therefore follows that the rule of perpetuity cannot be applied to a covenant of pre-emption even though there is no time limit within which the option has to be exercised. It is true that the second paragraph of S.40 of the TPA make a substantial departure from the English law, for an obligation under a contract which creates no interest in land but which concerns land is made enforceable against an assignee of the land who takes from the promisor either gratuitously or takes for value but with notice. A contract of this nature does not stand on the same footing as a mere personal contract, for it can be enforced against an assignee with notice. There is a superficial kind of resemblance between the personal obligation created by the contract of sale described under s. 40 of the Act which arises out of the contract, and annexed to the ownership of immovable property, but not amounting to an interest therein or easement thereon and the equitable interest of the person purchasing under the English Law, in that both these rights are liable to be defeated by a purchaser for value without notice. But the analogy cannot be carried further and the rule against perpetuity which applies to equitable estates in English law cannot be applied to a covenant of pre-emption because S.40 of the statute does not make the covenant enforceable against the assignee on the footing that it creates an interest in the land. We are accordingly of the opinion that the covenant for pre-emption in this case does not offend the rule against perpetuities and cannot be considered to be void in law. Pre-emption does not create any interest in the property but it creates right in favour of persons which can be enforced.
R. Kempraj v Burton Sons and Co. 1970 (Lease In Perpetuity)
Facts-The respondent Burtons entered into a deed of lease in 1951 with the appellant Kempraj in respect of premises Nos. 8 & 9. It was stipulated that the lease would be for a period of 10 years in the first instance with effect from 1 November 1961 with an option to the lessee to renew the same as long as desired as provided. It appears that before the expiry of the period of ten years from the date of the commencement of the lease, the lessee wrote to the lessor informing him of the intention to exercise the option given to the lessee under the deed of lease to get the same renewed on the same terms and conditions as before for a period of ten years from November 1, 1961. The lessor did not comply with the request. After serving a notice the lessee filed a suit for specific performance of the covenant in the lease for renewal. The lessor pleaded, inter alia, that the condition relating to renewal was hit by the rule against perpetuity.
Issue-whether an option given to a lessee to get the lease, which is initially for a period of 10 years, renewed after every 10 years is hit by the rule of perpetuity and is void?
Held-The rule against perpetuity is embodied in S.14 of the TPA 1882. According to this section, no transfer of property can operate to create an interest which is to take effect after the lifetime of one or more persons living at the date of such transfer and the minority of some person who shall be in existence at the expiration of that period and to whom, if he attains full age, the interest created is to belong. It is well known that the rule against perpetuity is founded on the principle that the liberty of alienation “shall not be exercised to its own destruction and that all contrivances shall be void which tend to create a perpetuity or place property for ever out of the reach of the exercise of the power of alienation”. S.105 of the Act defines “lease”. A lease of immovable property is only a transfer of a right (and not property) to enjoy such property made for a certain time express or implied or in perpetuity in consideration of a price paid or promised or of money, a share of crops, service or any other thing of value. A lease is not a mere contract but it is a transfer of an interest in land and creates a right in rem. Owing to the provisions of S.105 a lease in perpetuity can be created but even then an interest still remains in the lessor which is called a reversion. It is not disputed on behalf of the appellant that a lease in perpetuity could have been created but the lease in the present case was not of that kind and was for a period of ten years only in the first instance. It is said that the mischief is created by the clauses relating to renewal which are covenants that run with the land. It is pointed out that on a correct construction of the renewal clauses the rule of perpetuity contained in S.14 would be immediately attracted. We are unable to agree. S.14 is applicable only where there is transfer of property. Even if creation of a lease-hold interest is a transfer of a right in property and would fall within the expression “transfer of property” the transfer was for a period of ten years only by means of the indenture Exhibit P-l. The stipulation relating to the renewal could not be regarded as transferring property or any rights therein.
These were personal contracts and therefore S.14 is not applicable because personal contract does not transfer any interest in the property.
S.15 Transfer to a class, some of whom come under sections 13 and 14-If, on a transfer of property, an interest therein is created for the benefit of a class of persons with regard to some of whom such interest fails by reason of any of the rules contained in sections 13 and 14, such interest fails in regard to those persons only and not in regard to the whole class.
Illustration-If ‘A’ creates life interest in ‘B’ for absolute interest in unborn son and daughter of B. But the condition is that property will vest in BS only when he attains majority and in case BD when she attains the age of 25. Is it valid? It will be valid in case of son but not in case of daughter.
S.16-Transfer to take effect on failure of prior interest-Where, by reason of any of the rules contained in sections 13 and 14, an interest created for the benefit of a person or of a class of persons fails in regard to such person or the whole of such class, any interest created in the same transaction and intended to take effect after or upon failure of such prior interest also fails.
Javerbai v Kablibai (1891) 16 Bom 492
Held-upheld the power of appointment subject to the same restrictions as the Hindu testamentary law imposes on the testator himself against that the appointment shall be made during the life of the tenant for life so that the appointed might be ascertained when the event arose on which he was to take and that he should be a person alive at the death of the testator.
S.17-Direction for Accumulation (Exception for the rule against perpetuity S.14)
Where the terms of a transfer of property direct that the income arising from the property shall be accumulated either wholly or in part during a period longer than-
The life of the transferor, or
A period of 18 years from the date of transfer, such direction shall, save as hereinafter provided, be void to the extent to which the period during which the accumulation is directed exceeds the longer of the aforesaid periods, and at the end of such last-mentioned period the property and the income thereof shall be disposed of as if the period during which the accumulation has been directed to be made had elapsed.
This section shall not affect any direction for accumulation for the purpose of-
The payment of the debts of the transferor or any other person taking any interest under the transferor; or
The provision of portions for children or remoter issue of the transferor or of any other person taking any interest under the transfer; or
The preservation or maintenance of the property transferred, and such direction may be made accordingly.
Illustration-A transfers property to B in 1900 when B was 10 years. The nature of transfer was limited interest created on order to vest absolute interest in B’s son when BS is born and becomes major. In 1930 B gets married and in 1945 BS is born. BS takes vested interest immediately after he is born. B’s accumulation of benefit from the property can only extend till BS attains 18 years of age and not more than that. (Why? But he is to enjoy the property for lifetime) Please note that accumulation of benefit is different from possession and enjoyment.
S.18-Transfer in perpetuity for benefit of public-(Exception for rule against perpetuity S.14)
The restrictions in sections 14, 16 and 17 shall not apply in the case of a transfer of property for the benefit of the public in the advancement of religion, knowledge, commerce, health, safety or any other object beneficial to mankind.
S. 25-Contract Act-Love and affection, gratuitous Act
S. 122-129 of Chapter 7 of TPA 1882
The donor (Transferor)
The Donee (Transferee)
The absence of consideration
S.122-Definition of Gift-Gift is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the donor, and accepted by or on behalf of the donee.
Acceptance when to be made-Such acceptance must be made during the lifetime of the donor and while he is still capable of giving.
If the donee dies before acceptance, the gift is void.
Is a person who gives
A person who is Sui-juris
A person who is competent to contract
A gift by minor is void and onus is on the donor to prove his minority at the time of gift.
Who accepts the gift
A minor may be a donee but if the gift is onerous, the obligations cannot be enforced against him
But when he attains the majority he must either accept the burden or return the gift
Donee cannot be public, must be ascertainable. He should be a person who is identifiable.
Pallayya v Ramavadhanulu (1903) (Gift made directly to Idol)
Facts-the plaintiff dedicated the land to the idol, so that a temple may be built on it, and adding that in case a permanent temple is built thereon for the idol, neither he nor his heirs will raise any dispute.
Held-There should be a person who should accept it on behalf of God. We are clearly of opinion that the dedication of the idol and land to the public is not a gift within the definition of that term in S.122 TPA 1882, In our opinion the word “donee” is not applicable to the public. It must denote an ascertained or ascertainable person or persons by whom or on whose behalf the gift can be accepted or refused. Further under Exhibit 1 there is really no transfer of property (of S.122) the plaintiff declaring and constituting himself under Exhibit I the Dharmakarta or trustee of the temple. Exhibit I amounts only to a declaration of trust in relation to Immovable property for a public religious purpose, the plaintiff, the author of the trust, declaring himself to be the trustee without transferring his ownership in the trust properly to another.
Gifts may be absolute or conditional.
Certain existing Property/Subject Matter
Movable or immovable
It may be land, good or actionable claims
Gift made by coparcener? Is void
Munnilal Mehto v Chandreshwar Mehto 2007 Patna (See Below)
Voluntary and without consideration-
Blackstone, Gifts are always gratuitous, grants are upon some consideration or equivalent.
Free will ie Free consent
Onus of proof of free consent on the donee
Munnilal Mehto v Chandreshwar Mehto 2007 (Gift made by coparcener is void)
Gift of coparcener of his coparcenary interest in joint family property without consent of other coparceners is void. So long as coparcenary continues, coparcenary interest is an indeterminate. It may increase or decrease by reason of death or birth in family. It becomes determinate only when status of jointness is broken. In a continuing joint family, coparceners have an indeterminate interest which cannot be gifted.
Partition-Once a preliminary decree in a partition suit is passed, it amounts to severance of status of joint family-Coparcenary comes to an end. They are tenants in common in joint possession. No sooner coparcenary comes to an end, parties are then free to gift their physically undivided share, their shares being definite. To effectuate partition, it is not necessary that all Joint family properties must be divided by metes and bound and till that is not done, joint family would continue. The moment preliminary decree is passed, joint family status stands disrupted and parties become tenants in common.
Voluntarily and without consideration-
Blackstone-gifts are always gratuitous grants are upon some consideration or equivalent
Free will ie Free consent
Onus of proof of free consent on the donee
S.123-Transfer how effected? For the purpose of making a gift of immovable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses. For the purpose of making a gift of movable property, the transfer may be effected either by a registered instrument signed as aforesaid or by delivery. Such delivery may be made in the same way as goods sold may be delivered.
Does not necessarily have to be done during the lifetime of the donor
Registration only is not an exclusive proof for all purposes
Registration is requirement of law and not for the validity of a gift
Signed by or on behalf of the Donor-
Deed signed by the donee will not affect the transfer
On behalf of donee mere surplusage
Deo Narayan v Kukar Bind 1902 All
Omprakash v Shanti Devi 2015
Kalyanasundaram Pillai v Kaaruppa Maooppanar 1927 (Registration is only a formality)
Facts-On 9 September 1891 Vaithilingam Pillai executed a trust deed by which he appointed trustees to administer a trust for charity, including the maintenance of religious services at certain temples. In order to provide funds for the maintenance of these services, he set apart certain immovable properties belonging to him. This constituted a gift of immovable property within the meaning of S.123 of the TPA, 1882. However he adopted a son on 10 September 1891. On 15 September, the gift deed was registered. On this basis, it was contended for the appellant that the deed of gift was not complete until registration, and that, as the grantor had before registration adopted the appellant as his son, the latter a rights in the family property had intervened so as to revoke or invalidate the gift.
Issue-Whether adoption of son by Hindu made after execution and delivery of deed of gift, but before registration renders deed void as against adopted son?
Held-Where the donor of immovable property has handed over to the donee an instrument of gift duly executed and attested, and the gift has been accepted by the donee, the donor has no power to revoke the gift prior to the registration of the instrument.
When the instrument of gift has been handed over by the donor to the donee and accepted by him, the former has done everything in his power to complete the donation and to make it effective. Registration does not depend upon his consent but is the act of an officer appointed by law for the purpose who, if the deed is executed by or on behalf of the donor and is attested by at least two witnesses, must register it if it is presented by a person having the necessary interest within the prescribed period. Neither death, nor the express revocation by the donor, is a ground for refusing registration, if the other conditions are complied with. Registration can happen even after the death of the donor if all other conditions have been fulfilled and the gift deed have been validly attested by competent witnesses and executed.
Signed in the presence of the executant
Attestation in acknowledgement of execution is sufficient
Purpose of attestation is only to ensure the free consent of the donor.
Gift of Movable Properties
Registered deed signed by or on behalf of the donor
Delivery of possession
Handing over of possession if not there, then there is no completion of gift
Where the gift is capable of physical possession (only immovable property), non-delivery renders it invalid
Mukhtiar Kaur v Gulab Kaur 1977 (Delivery of possession is necessary in case of immovable property)
Facts-On 6-10-1956, a lady named Gurdial Kaur gifted all her property in favour of her two daughters namely Gulab Kaur and Mukhtiar Kaur. Gurdial Kaur filed a suit against her daughters Mukhtiar Kaur and Gulab Kaur, for declaration that the gift-deed dated 6-10-1956, executed by her in favour of her daughters, was null and void on the ground that she was a simpleton woman and fraud had been practiced upon her, for getting gift-deed executed. She also pleaded that the facts mentioned in the gift-deed, that the defendants had lived with her after, their marriage and rendered services to her, were wrong and that she had not parted with the possession of the land in favour of the donee (her daughters). That application was still pending when Gurdial Kaur died. Her daughter Gulab Kaur was substituted as her legal representative. Mukhtiar Kaur urged that Gurdial Kaur had executed the gift-deed dated 6-10-1956 in favour of Gulab Kaur and Mukhtiar Kaur, that both Mukhtiar Kaur and Gulab Kaur were present at the time of execution of the gift-deed, that in the gift-deed it is specifically stated that Gulab Kaur and Mukhtiar Kaur were rendering service to her, that both of them (the daughters) and their husbands were living with Gurdial Kaur and that all these circumstances indicated that the possession of the land had also been given to them (the donees).
Held-The gift-deed, Ext. D-A, dated 6-10-1950 is a registered document executed by Gurdial Kaur in favour of her daughters Mukhtiar Kaur and Gulab Kaur, It is stated in the gift-deed by Gurdial Kaur that she had gifted all her lands in favour of her daughters and possession had also been delivered to them. Under these circumstances it has to be seen whether the gift-deed executed by Gurdial Kaur had been acted upon and possession of the land had been given to the donees in pursuance of the same or not. It is not disputed that both the donees were present when the gift-deed was got registered by Gurdial Kaur and that they signed the deed. In case the gifted property is capable of physical possession, the non-delivery of the same makes the gift invalid. A valid gift, therefore, must ordinarily be followed by delivery of possession. In the case in hand, it is in evidence that after the gift-deed was executed, Gurdial Kaur remained in possession of the land for 4 or 5 years and got it cultivated with the help of siris (sharecroppers) and thereafter she gifted the land to Gulab Kaur and that she (Gulab Kaur) and her husband Ujagar Singh are in possession of the land since then. Even by the evidence produced by the defendant-appellant, it is apparent that Gurdial Kaur had not delivered the possession of the land to her daughters.
Pardanashin and illiterate Lady-The deed has explained to and understood by the party thus under a disability either before execution or after it under circumstances which established adoption of it with full knowledge and comprehension.
Ajmer Singh v Atma Singh 1985 (Old man with feeble health)
Facts-Atma Singh was an old man with feeble health. He alleged that Charan Singh who is the father of Ajmer Singh took advantage of this and fraudulently too over his properties in the guise of a gift deed which he had mistakenly signed under a fraud. Ajmer Singh alleged that it was a valid gift made for love and affection.
Held-The father of the defendants misrepresented the factum of the gift deeds and told the plaintiff that the papers related to the special power of attorney in his favour about the property of the plaintiff. Thus, the plaintiff signed the documents under the impression that he was signing the papers in regard to the special power of attorney in favour of Charan Singh, the father of the defendants, about his property. By doing so, the father of the defendants committed a fraud upon the plaintiff and played a ruse on his innocence taking advantage of his weakness and simplicity. From a perusal of the above provisions, it is quite clear that the gift, in order to be valid, must have been made voluntarily. In the present case, the evidence in this behalf is missing. It was for the defendants to prove that the plaintiff executed the gift deeds voluntarily after understanding the nature of the documents. This, the defendants have failed to prove by any cogent evidence as found by the lower appellate Court.
S.122-Acceptance when made-Such acceptance must be made during the lifetime of the donor and while he is still capable of giving. If the donee dies before acceptance, the gift is void.
Can one transfer a gift deed to unborn child but only for his/her life time? No. it is contrary to S.13 of TPA 1882
Essential requirements for ACCEPTANCE-
No particular mode is required for acceptance but must be accepted during the lifetime of the donor.
The gifted property should be accepted by the donee during his lifetime
Acceptance may be inferred and it may be proved by the donees’s possession of the property
By the donee’s possession of the deed of Gift
Delivery of possession of gifted property is not absolute requirement as it is in Muslim Law. Then what about the case of Mukhtiar Kaur v Gulab Kaur? Actually it depends upon the terms and conditions. In conditional gift, delivery of possession may be deferred.
As per S.123 TPA, registration of Gift of immovable property is necessary.
In case of movable property, only handing over of possession or delivery is sufficient. Nature of delivery is like goods sold delivered.
Kamkshi Ammal v Rajalakshmi 1995 (Free consent of donor is necessary)
Facts-A lady under allegedly bequeathed all her property to her father, even though she had six minor children. Children filed a suit for recovery. While the suit was pending, the father to whom all property was bequeathed died and his heirs filed a suit for partition.
Issue-whether suit for partition maintainable?
Held-Evidence on record to show will executed in favour of seventh defendant was fabricated. Signature of testator on will not genuine. There is no reason for testator having six minor children to bequeath all property in favour of her father-seventh defendant. Nothing to hold that suit for partition not maintainable.
S.124-Gift of existing and future property-A gift comprising both existing and future property is void as to the latter.
S.125-Gift to several of whom one does not accept-A gift of a thing to two or more donees, of whom one does not accept it, is void as to the interest which he would have taken had he accepted.
Gift to several of whom one does not accept-
Illustration-‘A’ is the owner of three pieces of land X, Y and Z. He gifts them by one gift deed to B, C and D. B does not accept the gift but C, and D do give their acceptance. This gift deed is valid to the extent of the shares of C and D and is void with to X that was given to B.
S.126-When gift may be suspended or revoked-The donor and donee may agree that on the happening of any specified event which does not depend on the will of the donor a gift shall be suspended or revoked; but a gift which the parties agree shall be revocable wholly or in part, at the mere will of the donor, is void wholly or in part, as the case may be.
A gift may also be revoked in any of the cases (save want or failure of consideration) in which, if it were a contract, it might be rescinded.
Save as aforesaid, a gift cannot be revoked.
Nothing contained in this section shall be deemed to affect the rights of transferees for consideration without notice.
‘A’ gives a field to B, reserving to himself, with B’s assent, the right to take back the field in case B and his descendants die before A. B dies without descendants in A’s lifetime. ‘A’ may take back the field.
‘A’ gives a lakh of rupees to B, reserving to himself, with B’s assent, the right to take back at pleasure Rs. 10,000 out of the lakh. The gift holds goods as to Rs. 90,000, but is void as to Rs. 10,000, which continue to belong to A.
Conditions subsequent and condition precedent-
Those conditions are valid which are not under the control of donor and donee
Tila Bewa v Mana Bewa 1962 (Gratuitous expectations from Donee such as maintenance after a Gift)
Facts-In 1951, Mana Bewa gifted her properties to Tila Bewa by a registered gift deed with the condition that she marries his son Natwar and serves him for life. The properties remained in the possession of Tile Bewa until 1953 when her husband Natwar died and she came to live with her own mother. In 1954, aggrieved mother-in-law executed a cancellation deed for the said gift contending inter alia that she executed the deed of gift, in order to induce Tila to come and live with her son and serve him and her mother in law and that it was a conditional gift to the plaintiff on condition that the plaintiff will maintain her.
Held-The well settled legal position, based on authorities, is that a gift, subject to the condition that the donee should maintain the donor, cannot be revoked under S.126 TPA for failure of the donee to maintain the donor, firstly for the reason that there is no agreement between the parties that the gift could either be suspended or revoked; and secondly, this should not depend on the will of the donor; again, the failure of the donee to maintain the donor as undertaken by her in the document is not a contingency which should defeat the gift; all that could be said is that the default of the donee in that behalf amounts to want of consideration; S.126 thus provides against the revocation of a document of gift for failure of consideration; if the donee does not maintain the donor as agreed to by the donee, the latter (donor) could take proper steps to recover maintenance; it is not open to a settler to revoke a settlement at his will and pleasure and he has got to get it set aside in a court of law by putting forward such pleas as bear on the invalidity of a deed of gift. Under S.122 the TPA, a gift is complete when it is accepted by or on behalf of the donee; where there is evidence that the gift of property by a person to his wife and children was accepted by the donees, the fact,–that the donor, who had no other property,–stayed on the property, even after the gift,–does not show that the gift had not taken effect; where no right in the property is reserved in the donor, the fact that there is a clause in the deed (as in the present case) that the donee should maintain the donor, does not show that the donor continued to be the beneficial owner; a direction in a gift deed that the donee should maintain the donor till his death will not make the gift a conditional one; if the terms of the gift deed were, that there had been an absolute transfer of the property in favour of the donee, such a direction for maintenance shall be regarded only as an expression of pious wish on the part of the donor.
Ashokan v Lakshmikutti 20
Facts-A deed of gift was executed by Lakshmikutti in favour of her son Ashokan on 04-01-1984. He was said to have been put in possession of the properties covered by the deed of gift. It was a registered document. Defendant, however, on the premise that the said gift was an onerous one and the appellant did not fulfil the conditions therefor, viz., failure to contribute a sum of Rs. 10000 at the time of marriage of his sister, cancelled the said deeds of gift by two documents executed on 15-06-1985 contending that-
Appellant had not been rendering any financial help to the family although he was employed in Sultanate of Oman;
Appellant had not accepted the said gifts.
Issue-Whether express acceptance necessary?
Held-The definition of ‘gift’ contained in S.122 TPA, 1882 provides that the essential elements thereof are:
the absence of consideration;
the subject matter
the transfer; and
Gifts do not contemplate payment of any consideration or compensation. It is, however, beyond any doubt or dispute that in order to constitute a valid gift, acceptance thereof is essential. We must, however, notice that the TPA does not prescribe any particular mode of acceptance. It is the circumstances attending to the transaction which may be relevant for determining the question. There may be various means to prove acceptance of a gift. The document may be handed over to a donee, which in a given situation may also amount to a valid acceptance. The fact that possession had been given to the donee also raises a presumption of acceptance. While determining the question as to whether delivery of possession would constitute acceptance of a gift or not, the relationship between the parties plays an important role. It is not a case that the appellant was not aware of the recitals contained in deeds of gift. The very fact that the defendants contend that the donee was to perform certain obligations, is itself indicative of the fact that the parties were aware thereabout. Even a silence may sometime indicate acceptance. It is not necessary to prove any overt act in respect thereof as an express acceptance is not necessary for completing the transaction of gift. Once a gift is complete, the same cannot be rescinded. For any reason whatsoever, the subsequent conduct of a donee cannot be a ground for rescission of a valid gift. Non-acceptance of gift is generally not a ground for revocation of Gift.
When Gift may be suspended or revoked? S.126
The Donor and donee may agree on the happening of any specified event which does not depend on the will of the donor, a gift shall be suspended or revoked
The gift can be revoked in case if it was a contract it could have been rescinded (except for want of consideration)
S.127-Onerous gifts-Where a gift in the form of a single transfer to the same person of several things of which one is, and the others are not burdened by an obligation, the donee can take nothing by the gift unless he accepts it fully. Where a gift is in the form of two or more separate and independent transfers to the same person of several things, the donee is at liberty to accept one of them and refuse the others, although the former may be beneficial and the latter onerous. Onerous gift to disqualified person: A donee not competent to contract and accepting property burdened by any obligation is not bound by his acceptance. But if, after becoming competent to contract and being aware of the obligation, he retains the property given, he becomes so bound.
Moffett v Bates 1857-‘A’ had shares in X, a prosperous joint stock company, and also shares in Y-a joint stock company in difficulties. Heavy calls are expected in respect of the shares in Y. ‘A’ gives B all his shares in joint stock companies. B refuses to accept the shares in Y. He cannot take the shares in X.
Warenn v Rudall 1860-‘A’ having a lease for a term of years of a house at a rent which he and his representatives are bound to pay during the term, and which is 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 refuses to accept the lease. He does not by this refusal forfeit the money.
S.128 Universal Donee-Subject to the provisions of S.127, where a gift consists of the donor’s whole property, the donee is personally liable for all the debts due by and liabilities of the donor at the time of the gift to the extent of the property comprised therein.
S.129-Saving of donations mortis-causa and Muslim Law-Nothing in this Chapter relates to gifts of moveable property made in contemplation of death, or shall be deemed to affect any rule of Muslim law.
5 Essential Conditions For a MORTIS CAUSA Gift-
Gift shall be made in contemplation of death
Donor is suffering from illness
Property is transferred to the Donee and accepted by him
If the Donor survives, the property will revert back to him
LIS-PENDENS (MATTERS PENDING IN COURT)
S.52-Transfer of property pending Suit relating thereto
During the pendency in any court having authority, of any suit or proceedings which is not collusive and in which any right to immovable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any other party thereto under any decree or order which may be made therein, except under the authority of the court and on such terms as it may impose.
Explanation : For the purposes of this section, the pendency of a suit or proceeding shall be deemed to commence from the date of the presentation of the plaint or the institution of the proceeding in a court of competent jurisdiction, and to continue until the suit or proceeding has been disposed of by a final decree or order and complete satisfaction or discharge of such decree or order has been obtained, or has become unobtainable by reason of the expiration of any period of limitation prescribed for the execution thereof by any law for the time being in force.
Illustration-‘A’ an owner of certain property rented them to his friend ‘B’. After some ‘B’ sold the property to ‘C’. ‘A’ will sue whom? B and C both
Illustration-‘A’ had permitted residence of B but after sometime B declared himself the owner. A files a suit against B. When suit was pending in court, B transferred the property to C. Transfer will be invalid.
When a suit regarding any immovable is pending in court, that suit property cannot be alienated. No new interest can be created when the suit property is subject matter of court.
Bellamy v Sabine 1857
It would be plainly 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 defendant’s alienating before the judgement or decree and would be driven to commence his proceedings de-memo…
Kinds of Jurisdiction-
Area Maps in Police Stations-
Jurisdiction maps in court premises-
Appeal (Dalip Kumar v Jeevan Ram AIR 1996 P&H 158)
Dalip Kumar v Jeevan Ram 1996
Facts-‘A’ had a pre-emption agreement with B. ‘A’ sold the land to ‘C’ without asking B. B filed a suit for possession by way of pre-emption which was decided in his favour on August 22, 1983. In pursuance to this decree, B took possession of the suit land on October 6,1983. ‘C’ filed an appeal which was dismissed by the District Judge on March 18, 1985. B now sold the land to ‘D’. Thereafter, ‘C’ filed a special leave petition under Article 136 of the Constitution of India which was granted and was accepted vide order, dated October 5, 1989. Accordingly, the suit filed by B was dismissed and ‘C’ filed an application for restitution of possession. ‘D’ filed objections alleging that he is a bonafide purchaser.
Issue-Are the proceedings in a civil appeal before the Supreme Court in pursuance to the grant of special leave under Article 136 of the Constitution of India not a continuation of the proceedings in the original suit and is the principle of Lis pendens not applicable to such proceedings?
Held-In the present case, the decree which had been passed by the trial court and affirmed by the lower appellate Court as well as this Court in Second Appeal, was reversed by their Lordships. The decree having been reversed, the parties were clearly entitled to restitution of possession. The mere fact that the present appellants (D) were not a party before the Supreme Court, is of no consequence as their interests were duly represented by their vendor(Lakshman) who was admittedly a party. Still further, there appears to be no warrant for the view that the proceedings are not a continuation of the original suit. The mere fact that leave to appeal has to be obtained under Constitution does not mean that doctrine of Lis-pendens would not apply or that decree holder shall not be entitled to restoration of possession- No merits hence appeal is dismissed.
Unless and until the decree has not been executed or loan amount has not been paid, decree has not ended.
Collusive Suit-a suit filed with conspiracy
Gauri Dutt v Sheikh Sukur Mohammad 1948 (Collusive Suit)
‘A’ agreed to transfer certain property to ‘C’ within 20 days after ‘C’ paid an earnest amount with a condition that if ‘A’ fails to transfer his property within 20 days to C, he will pay the double earnest money. ‘A’ ask his wife ‘B’ to file a maintenance suit against him with an intention to make the property Lis-pendens in order to make it immune from ‘C’. When the suit was pending, ‘A’ transferred the property to ‘C’. And a decree was passed in favour of ‘B’. C’s interest in the property shall not be subject matter of S.52 TPA.
Specific Right in Immovable Property-If any specific property is subject matter of suit pending in a competent court, Lis-pendens will be considered only to that specific property and not other property in the possession of the person.
Supreme General Films Exchange v Brij Nath Singh Deo 1975
Facts-Bhatias, had borrowed a Plaza Theatre from Maharaja Brij Nath Singh for Rs. 2,50,000 in 1940. Subsequently they leased it to Supreme General Films Exchange. When plaza owners failed to repay the loan, Maharaja filed a suit. The Plaza theatre, was attached in 1955 in the course of execution of that decree. In the meanwhile Bhatias renewed the lease of theatre to appellant company in 1956. Maharaja claimed that the renewal of lease in 1956 was void as it was struck by Lis-pendens, namely, S.52 of the TPA.
Issue-Whether the property was subject matter of Lis-pendens?
Held-We find that the terms of the compromise decree in that suit and lease-deed of 1956 purported to confer upon the defendant-appellant new rights. Indeed, there are good grounds for suspecting that the compromise in the suit for specific performance was adopted as a device to get round the legal difficulties in the execution of the lease of 1956 in favour of the defendant-company.
Jayaram Mudaliar v Ayyaswami Mudaliar 1973
Facts-Munisami Mudaliar and Ayyaswami Mudaliar were members of a HJF. As a Karta of HJF, Munisami had mortgaged JHF properties many times and in relation to which many suits were pending in court. In 1956, his brother Ayyaswami filed a partition suit. In 1958, government auctioned the JHF properties to one Jayaram Mudaliar in order to realize various loans taken by Munisami. In 1958 Ayyaswami challenged the validity of these auction sales on the ground of Lis pendens embodied in S.52 TPA. Ayyaswami contended that although the properties were joint, the liabilities sought to be created and alienations made by Munisami were fraudulent and not for any legal necessity, and, therefore, not binding on the family.
Issue-Whether, sales of joint property in suit, were struck by doctrine of Lis pendens embodied in Section 52 of TP Act?
Held-The appellant Jayaram claims that both kinds of sales were outside the purview of the doctrine of Lis pendens inasmuch as both the sales were for the discharge of preexisting liabilities of the HJF of which Munisami was the karta. The court agreed with this and held that the liability of the land to be sold was a pre-existing charge and that subsisted as from the date of the loan. This was not affected by the institution of the suit for partition. This charge could be enforced by the State notwithstanding the pendency of the partition suit. No decree in the Partition suit could have effaced the charge. Therefore, if the State has sold only the property in respect of which loan was taken, the purchaser-defendant No. 12-is not prejudiced by the principle of Lis pendens.
Amit Kumar Shaw v Farida Khatoon 2005
Facts-The property in question originally belonged to Khetra Mohan Das and subsequently by way of lease and transfer; the said property ultimately came in the hands of Birendra Nath Dey and Kalyani Dey. There were troubles in between the original owner and the said Birendra Nath Dey and Smt. Kalyani Dey and as a result of that, the suit was filed. One Fakir Mohammad claimed his right, title and interest in respect of the property in question by way of adverse possession. While the suit was still pending, in 1995, by a deed of assignment Birendra Nath Dey assigned his leasehold interest in respect of the suit property in favour of the present appellants. Therefore, the appellants filed applications for recording their names in the Municipal records. At that time, the appellants, for the first time, came to know about the pendency of the above two appeals.
Issue-Whether the property was Lis-pendens?
Held-Section 52 of the TPA, provides that pendente lite, neither party to the litigation, in which any right to immovable property is in question, can alienate or otherwise deal with such property so as to affect his appointment. This Section is based on equity and good conscience and is intended to protect the parties to litigation against alienations by their opponent during the pendency of the suit. In order to constitute a Lis pendens, the following elements must be present:
There should be a suit/proceeding pending in a Court of competent jurisdiction.
The suit or proceeding must not be collusive.
The litigation must be one in which right to immovable property is directly and specifically in question.
There should be a transfer of or otherwise dealing with the property in dispute by any party to the litigation, and
Such transfer must affect the rights of the other party that may ultimately accrue under the terms of the decree or order.
The doctrine of Lis pendens applies only where the Lis is pending before a Court. Further pending the suit, the transferee is not entitled as of right to be made a party to the suit, though the Court has a discretion to make him a party. But the transferee pendente lite can be added as a proper party if his interest in the subject matter of the suit is substantial and not just peripheral. A transferee pendente lite to the extent he has acquired interest from the defendant is vitally interested in the litigation, whether the transfer is of the entire interest of the defendant; the latter having no more interest in the property may not properly defend the suit. He may collude with the plaintiff. Hence, though the plaintiff is under no obligation to make a Lis pendens transferee a party; under Order XXII Rule 10 an alienee pendente lite may be joined as party. As already noticed, the Court has discretion in the matter which must be judicially exercised and an alienee would ordinarily be joined as a party to enable him to protect his interests. The Court has held that a transferee pendente lite of an interest in immovable property is a representative-in-interest of the party from whom he has acquired that interest. He is entitled to be impleaded in the suit or other proceedings where the transferee pendente lite is made a party to the litigation; he is entitled to be heard in the matter on the merits of the case. In this case the appellants have properly, sufficiently and satisfactorily explained the delay in approaching the Court. We see bona fide in their explanation in not coming to the Court at the earliest point of time. Therefore, the appellants who are transferees pendente lite should be made as parties to the pending second appeals as prayed for by them.
Bengal Ambuja Housing Development v Pramila Sanfui 2015 (Opposite party whose interest may be affected by the transfer pendente lite)
Facts-One Gangadas Pal was owner of the suit land. A suit for partition was instituted in the land by Gangadas and the co-owners namely, Sanfui, Naskar, Mondal and Sardar family in the year 1956. Gangadas Pal died in June 1958. At the same time, the suit property was acquired by the State Government under the West Bengal Estates Acquisition Act 1953, which was challenged by the heirs of Gangadas Pal, by way of a Writ Petition which was allowed. Aggrieved of the order passed in the above Writ Petition, the State Government preferred Writ Appeal. While the suit was pending, heirs of Gangadas sold the land to Appellant Ambuja Housing Board. This conveyance was challenged by Govt. on the ground of Lis-pendens. The High Court held that the third party (Appellant Housing Board) had purchased the suit property Lis pendens, and that no permission was taken from the court for the same. Thus, the provisions of Section 52 of the TPA 1882 would govern the transaction.
Held by SC-The Appellant Housing Board purchased the land in question from the heirs of late Gangadas Pal in 2008. The Appellant Housing Board was not a party to the Title Suit at any point of time. It has purchased the land in question from its owners. The original suit instituted by the Plaintiff-Respondents against late Gangadas Pal had abated vide order of the learned subordinate judge, Alipore dated 30/11/1973. The said order has attained finality as no appeal has been filed questioning the correctness of the same.
S.53A-PART PERFORMANCE-Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty,
and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract,
and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that the contract, though required to be registered, has not been registered, or, where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract:
PROVIDED that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof.
Illustration-A allowed B to use his house till B arrange his own accommodation. After sometime B requested A to sell the house to him. When A refused, then B sought to leave the house as he found embarrassing to live there without rent. So ‘A’ leased the house to him for one month. After a month, B again asked ‘A’ if he wanted to sell the house to him. ‘A’ agreed this time but with a condition that B will live there for 6 more months as a lessee. But A sold the land to ‘C’ and B filed a suit for specific performance. B will not succeed as there was no contact between them and there was no consideration as well. What if B had made changes to the existing structure of the house? Even thin, B would fail for want of consideration and contract.
Transfer for consideration
Contract in writing
Signed by the Transferee
Reasonable Certainty of nature of transaction
Taking of possession by the transferee
Continuation or retention of possession
Act done in furtherance of the contract
Kalawati Tripathi v Damyanti Devi 1993 (Contract in writing-S.53 not applicable in case of oral contracts)
Facts-The plaintiff acquired the suit premises by a registered sale deed dated 23/4/1991 from aforesaid Ramesh Prasad. Since she was living outside and as such they authorised their vendor Ramesh Prasad to collect rent from the original defendant as their agent. When they came back sometime in the year 1982 the defendant refused to pay rent to them. Hence, they requested the defendant to vacate the suit premises but the defendant did not pay any heed, hence the suit. The defendant contested the suit on the ground that Ramesh Prasad had agreed to sell the disputed land and house to him for a sum of Rs. 75,000. He was in urgent need of money he took an advance of Rs. 10,501 from him on 10-12-1979 in presence of several persons. Since there was good relationship between the two families the defendant did not insist for a written document in proof of contract for sale. Ramesh Prasad assured the defendant for executing the sale deed immediately after the disposal of the proceeding under Urban Ceiling Act, but he postponed the matter on one pretext or the other. Thereafter, the defendant filed a suit for specific performance of contract against said Ramesh Prasad who sold the same to the plaintiffs with a view to defeat the rightful claim of the defendant in the aforesaid title suit.
Held-In the present case the case of the defendants is that in pursuance of an agreement for sale the defendants paid part of the consideration money to Ramesh Prasad, the owner of the property, and he was allowed to continue in possession as a transferee and not as a tenant from the date of the agreement for sale. Even according to the defendants the aforesaid contract is not in writing signed by the owner Ramesh Prasad or any person on his behalf. The contract in writing is a sine qua non for applicability of the doctrine of part performance. In absence of the same a party cannot be allowed to raise a plea of part performance and the trial court rightly rejected the claim of the defendants-petitioners on this ground. There is another reason also to reject the aforesaid submission made on behalf of the petitioners. In a suit for eviction when the tenant raises a question of title or even a plea of part performance, the jurisdiction of the court to decide the suit for eviction is not ousted. It is well settled that when such a plea is raised by the tenant the court can go into the question incidentally for the purpose of deciding the main question in the suit, i.e., as to whether there is relationship of landlord and tenant between the parties or not. If the court wants to decide the question of title in a full-fledged manner in that case only the court will direct the plaintiffs to pay ad valorem court-fee and then it will decide the question of title. In the present case the court below in paragraphs 17 and 18 of its judgment has considered the plea of part performance as raised by the defendants incidentally and has rejected the same on two grounds, namely, (1) there was no written contract between the parties and (2) that plea was not tenable on merit.
Bhabhi Dutt v Ramlalbyamal AIR 1934 Rang 203 (Reasonable certainty of Nature of Transaction)
It should be clear by a reading of the deed as to what is the nature of the transaction, whether it seeks to convey all the rights in favour of the transferee or only some of the rights in the property.
Kukaji v Basantilal 1955 (repairs and improvements effected under a mortgage is not acts done in furtherance of the contract) But the section say that registration not necessary?
Facts-On 3/4/1931 one Bherulal mortgaged his house to Kukaji for Rs. 200. One of the terms of the mortgage was that if the mortgagor failed to redeem the property within 8 years of the date of the mortgage, it shall be, deemed to have been sold to the mortgagee. Bherulal did not, however, redeem the mortgage within the stipulated period and On 8/4/1939 executed a sale deed in favour of Kukaji transferring the house to him, the consideration being the mortgage debt and the amount spent by Bherulal on the repairs and improvements to the property. This sale deed was not registered. On 12/4/1939 Bherulal sold the equity of redemption on this mortgage to Basantilal by a registered deed. Thereafter Basantilal instituted on 9/10/1939 the suit giving rise to this petition against the mortgagee for the, redemption of the property. The main plea on which Kukaji resisted the suit was that Bherulal having sold the mortgaged house to him on 8/4/1939, the mortgage was thereafter no longer subsisting and that, therefore, Bherulal had no right to sell any equity of redemption to Basantilal. Kukaji also raised the plea that the plaintiff was not entitled to redeem the property without paying in addition to the mortgage-debt the amount that he had spent on the repairs and improvements of the property.
Held-for availing the benefit of this doctrine of part performance, it is essential to show that the transferee has done some act in furtherance of the contract. It is not necessary to speculate as to what act done in furtherance of the contract the applicant could have been proved when no money was to be paid by him under the contract to Bherulal. The fact remains that the Kukaji has not proved any such act. He cannot, therefore, claim the benefit of the doctrine of part performance. It was said that after the execution of the deed dated 8-4-1939 the applicant filed a suit for specific performance of that contract and that this was an act done in furtherance of the contract. To my mind the filing of a suit for specific performance is an act for enforcing the contract and not one done in furtherance of the contract. Another difficulty in giving to the applicant the benefit of the doctrine of part performance is that the applicant has not established the fact that the transfer to Basantilal was not for consideration or that he had notice of the contract of sale in favour of Kukaji or of the part performance thereof.
Nathulal v Phulchand 1969 3 SCC 120
Facts-Nathulal was, the owner of a Ginning Factory constructed on a plot of agricultural land which stood in revenue records in the name of his brother Chittarmal. In 1951 Nathulal agreed to sell to Phoolchand the land and the Ginning factory for Rs. 43011. He received in part payment Rs. 22011 and put Phoolchand in possession of the property. Phoolchand agreed to pay the balance on or before 7 May 1951 on condition that he get the land mutated in his name in place of his brother Chittarmal. The terms of the agreement were reduced to writing in counter-part and were duly signed by the parties. On the plea that Phoolchand had failed to pay on the due date the balance of price, Nathulal rescinded the contract on 8 October 1951 and commenced an action in May 1954 for a decree for possession of the land and the factory and for mesne profits from the date of delivery till possession was restored to him. Phoolchand contended that Nathulal had failed to get the name of his brother Chittarmal “deleted” from the revenue record according to the terms of the agreement, and that he, was ready and willing to pay the balance of Rs. 21,000 and that he had sent a telegram on May 7, 1951, offering to pay the balance against execution of the sale deed, that the agreement had been unlawfully altered by Nathulal after execution by adding a clause by which the possession of Phoolchand in default of payment of money on or before May 7, 1951, was declared unlawful.
Held-Under the terms of the agreement Nathulal had undertaken to get the name of his brother Chittarmal removed from the revenue records and to get his own name entered, but the lands continued to stand recorded in the name of Chittarmal till October 6, 1952, and before that date Nathulal rescinded the contract. Phoolchand could be called upon to pay the balance of the price only after Nathulal performed his part of the contract. Phoolchand had an outstanding arrangement with his Banker to enable him to draw the amount needed by him for payment to Nathulal. The conditions necessary for making out the defence of part performance to an action in ejectment by the owner are-
That the transferor has contracted to transfer for consideration any Immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty;
That the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession continues in possession in part performance of the contract;
That the transferee has done some act in furtherance of the contract; and
That the transferee has performed or is willing to perform his part of the contract.
Nathulal had expressly undertaken to have the revenue records rectified by securing the deletion of Chittarmal’s name. 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. The argument raised that Nathulal was bound to perform the two conditions only after the amount of Rs. 21,000 was paid is plainly contrary to the terms of the agreement. Phoolchand on the other hand, had managed the remaining amount and was willing to give it to Nathulal provided Nathulal had done his part of mutating his name in the revenue record.
Sardar Govindrao Balwantrao v Devisahai 1981 (Purchasing stamp-papers etc does not amount to acts done in furtherance of contract)
Facts-In 1929, Appellant Sardar Govindrao mortgaged the suit property in favour of the respondent for a consideration of Rs. 10000. According to the respondent, some times later, the mortgagor had agreed to sell the mortgaged properly to him for a consideration of Rs. 50000 and in pursuance of the same, a sale deed was actually executed and duly signed in 1950. But before presentation of the sale deed for registration, the mortgagor changed his mind; and by using the other stamp papers the mortgagor altered it into a deed of sale, dated 14-10-1950 in favour of second appellant Gyarsilal, for a consideration of Rs. 50000. At the time of the sale deed in favour of the respondent, an account of the mortgage transaction was made and a round sum of Rs. 25,000 was settled to be adjusted. The respondent was to pay the balance of Rs. 25,000 in cash. As there was a completed contract in favour of the respondent, he claimed the benefit of part performance under S.53A TPA to resist the mortgagor’s claim for redemption, and also contended that the second appellant, Gyarsilal did not get any valid title by virtue of the subsequent sale deed, dated 14-10-1950 executed by the mortgagor. In order to attract Section 53A, he contended that Rs. 1,000 advanced to mortgagor for purchase of stamps etc was in furtherance of the contract.
Issue-Whether the appellant is entitled to invoke the doctrine of part performance as per S.53A of the TPA? Whether purchasing of document for writing contract is act done in furtherance of contract? Whether the transferee had performed or was willing to perform his part of the contract?
Held by SC-In order to qualify for the protection conferred by the equitable doctrine of part performance as enacted in Section 53A, the following facts will have to be established:
That the transferor has contracted to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty;
That the transferee has in part-performance of the contract taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract;
That the transferee has done some act in furtherance of the contract; and
That the transferee has already or is willing to perform his part of the contract.
And it must be shown that the act has been done in furtherance of the contract, ie subsequent to the contract or at best simultaneously with the contract but unequivocally attributable or referable to the contract. It must also follow that acts done anterior to and done previous to the agreement cannot be presumed to be done in pursuance of it and cannot, therefore, be considered as acts of part performance.
Achayya v Venkata Subba Rao 1957 (Part performance doctrine can be used as a shield and not as a sword-This applies in cases where, if instead of fulfilling his part, a person files a suit of ownership)
Facts-In 1939 Achayya executed a sale deed in favour of the Venkata Subba Rao for a valid consideration and put them in possession thereof. As Achayya’s husband Apparao suddenly died, the document could not be registered within the time prescribed. She demanded the remaining amount to get the registration done. When transferee refused to pay the remaining amount, he was forcefully dispossessed from the land by family members of Achayya. Transferee then filed a suit claiming ownership and possession of the suit property under S.53A TPA.
Held-The necessary conditions for the application of the section are
there is a contract to transfer immovable property for consideration,
the contract is signed by or on behalf of the transferor,
the terms can be ascertained with reasonable certainty from the document,
the transferee is put in possession or if he has been already in possession continues in possession,
he has done some act in furtherance of the contract and
the transferee has performed or is willing to perform his part of the contract.
The essential condition for invoking the doctrine is that he should have taken possession of the property in part performance of the contract and has done some act in furtherance of the contract. The Plaintiffs were admittedly put in possession and the fact that subsequently they lost possession could not deprive them of their rights which they are entitled to under the section. The transferor could recover the money now in Court deposit only by enforcing her right against the property and the Plaintiffs could prevent her from doing so and that is what they are now seeking to do in the suit. If the transferor could not enforce her right against the property and, therefore against the money in Court representing that property, the money would automatically be paid to her as the property was sold by Court as her property.
Kulwant Singh v Prasad Ram 2006 P&H (6000 in lieu of a loan-possession-Transfer to C)
DS Parvathamma v A Srinivasan (2003) 4 SCC 705
A leased his property to B. After a few years B proposed to purchase the property. There was an agreement to sell after B paid some amount to A. B was already in possession of the property. But after 13 years later, when B showed no interest in completing the remaining formalities, A transferred the property to C and B filed a suit for specific performance under the doctrine of part of performance. Court held that nature of possession was only like tenants-in-possession. C was a bonafide transferee who thought that B was living only as tenant-in-possession and therefore C has right over the property and his interest shall be protected. B in this case cannot file for specific performance because imitation period is over.
Transactions not permitted by Law
Required permission from the government office.
Difference between Indian and English Law
As Defence, to protect his possession and not to invoke any right-protect possession-invoke right to continue possession.
S.54 Sale defined-Sale is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.
Sale how made: Such transfer, in the case of tangible immovable property of the value of one 100 rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument.
In the case of tangible immovable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property.
Delivery of tangible immovable property takes place when the seller places the buyer, or such person as he directs, in possession of the property.
Contract for sale: A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties.
Procedure of a Sale-Deed-
Buyer shall bear all expenses including the stamp-paper, scribe, notary, registration and attestation, etc
Patta means lease
Registration depends completely on the value of the property (S.17 Registration Act and S.54 TPA)
Circle rate is determined by the Government.
Intangible properties are the rights and charges attached to the land-easementary rights such as right to ferry, right to way, right to air, equitable right to redeem mortgage property (S.60 TPA)
Power of attorney-cannot transfer a property.
Ingredients of Sale-
Competency (except in case of lease) as described in S.7 TPA
Transferee need not be a competent person but the transferor has to be a competent person.
As to who can be a buyer, the statute is silent on this. But judicial authorities and lawyers are exempted. (S.136) Also when he is explicitly debarred by law.
Ulfat Rai v Gauri Shankar 1911-Minor can be a purchaser
Seller can also be a minor if permission from court has been taken. But in such cases Minor has to rectify the sale after becoming adult.
Tangible immovable property
Intangible immovable property
Only present and existing properties are transferable. Future property is not transferable.
Profit of Prendre is also included in immovable property
Transfer of redemption rights to buyer in case of usufructuary mortgage
Reversionary right (after 2005 amendment) excluding the case of S.6 (Spec successionis). Reversionary right is intangible immovable property. It is also a vested interest. Title vests in Reversioner and possession and enjoyment is with the widow.
Conveyance-S.5 of TPA-a new interest will be created in the vendee/transferee.
Price or consideration-Price may be less or more but the transfer depends upon the value of the property (For registration purpose)
Commissioner of IT v Motor and General Stores Private Ltd. 1967
A compromise, a decretal amount, an advance made by one person to another or an arrangement to protect and defend the property at the purchaser’s cost is a good consideration for the purpose of sale
Price Paid or promised-Price is the essence of the contract of sale but the time for payment is not the essence of the sale unless the contract stipulates to. For example, even after registration, if the clause of contract say that transfer will not be complete unless price is paid fully, then seller will have right to retain the amount.
A promise to pay the price within one year is valid. The term paid or promised to be paid suggests that this promise to pay must be genuine.
Fry on specific performance-Price is an essential ingredient and where it is neither ascertained nor rendered ascertainable, the contract is void for incompleteness and incapable of enforcement. Price may be determined later as well. (Fair Price)
Mode of Executing a sale-
By Registered Instrument
By Delivery of Possession
S.54(para 4)-Delivery of tangible immovable property takes place when the seller places the buyer, or such person as he directs, in possession of the property.
Registration and Transfer of Ownership
Transfer of ownership cannot take place without registration and it concludes on registration unless there is contrary intention expressed in the contract.
Date of execution
Intention of Parties
No Registartion-No Transfer
G. Ram v DDA 2003 (Consequences of non-registration)
Suraj Lamp v State of Haryana
Delivery of Tangible immovable property
Delivery of Keys
Any overt act signifying change in the possession
Contract of Sale
Agreement for sale and contract of sale
An agreement to sell or contract of sale does not create an interest in the proposed vendee in the suit property, but only creates an enforceable right in the property. The Parties can file a suit of specific performance against each other. A contract for sale is merely a document creating a right to obtain another document, and does not require registration.
Two important Points-
Date of Payment of Price
Date of delivery of Possession
Rights and liabilities of the Buyer and Seller-
Seller’s Duty of Disclosure, S.55(1)(a)-to disclose to the buyer any material defect in the property or in the seller’s title thereto of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover;
Horsfall v Thomas (1882) 1 H&C 90
Patent Defects-If there is a defect known to the manufacturer, and which cannot be discovered on inspection, he is bound to point it out.
Latent Defects-There is no duty to disclose defects of which the seller is unaware of, the maxim of caveat emptor applies.
Defect in title
Right of way of public on the property
Illustration-A sells to B an enclosed field. Before accepting the conveyance, B discovers that the public have a right of way across the filed of which there is no visible indication on the land. This is a defect both on the property and in the seller’s title. A not having disclosed this defect, B may refuse to complete and claim damages. He can also resist the suit for specific performance.
DUTIES OF VENDOR-
To Produce Title Deeds S.55(1)(b)-to produce to the buyer on his request for examination all documents of title relating to the property which are in the seller’s possession or power;
No obligation on the seller to produce
Production for inspection, not for delivery
Produce those documents which are in seller’s possession of power
To answer all relevant questions relating to the property S.55(1)(c)-to answer to the best of his information all relevant questions put to him by the buyer in respect to the property or the title thereto;
Matter relation to the conveyance
Where the vendor has failed to answer to the questions, the vendee is entitled to rescind the contract
To execute the Conveyance S.55(1)(d)-on payment or tender of the amount due in respect 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;
Payment of price and execution of conveyance are reciprocal duties to be performed simultaneously
It is the duty of the buyer to tender a conveyance, and to pay the price at the time of execution, are of course subject to a contract to the contrary
In India, in absence of any clause stating otherwise, buyer has to bear the expense of Stamp paper.
To take care of the Property till delivery of possession S.55(1)(e)-between the date of the contract of sale and the delivery of the property, seller has to take as much care of the property and all documents of title relating thereto which are in his possession as an owner of ordinary prudence would take of such property and documents;
Lord Seaborne said in the case of Phillips v Sylvester 1872 8 Ch App 173 The vender is pro-tanto a trustee in possession for the purchaser, although he holds the purchaser at arms length and a trustee, therefore who is bound to do those things which he would be bound to do if he were a trustee for any other person.
To give possession S.55(1)(f)-to give, on being so required, the buyer, or such person as he directs, such possession of the property as its nature admits;
It is the duty of the seller to give possession and not to leave the buyer to get possession for himself
Where the vendor is not in a position to give the possession of the property agreed to be sold by him to the purchaser, the purchaser will be entitled to rescind the contract and claim the advanced money
Possession is a flexible term
To pay outgoings S.55(1)(g)-to pay all public charges and rent accrued due in respect of the property up to 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 then existing.
By agreement, the parties may agree that the vendor shall pay all public charges due at the date of the delivery of possession instead of the at the date of sale-Govind Ram v State of Gondal AIR 1950 PC 99
Proof of Discharge of Encumbrances-
If the sale is not subject to encumbrances, the vendor does not make out a marketable title, unless he gives satisfactory evidence of the discharge of encumbrances
If he produce a release mortgage, he must show that the release is signed by a person duly authorised.
Nathu Khan v. Burtonath AIR 1922-the purchase deed contained the express declaration that the property was sold free from encumbrances and consequently by S. 55(1)(g), sub-sec. (2) of TPA the vendor must have been deemed to contract with the buyers that he had power to transfer so sold, and consequently, that the property was free from burdens. It is immaterial that the buyer was aware of the encumbrances when he contracted to buy.
Covenant for Title S.55(2)-The seller shall be 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:
Provided that, where the sale is made by a person in a fiduciary character, he shall be deemed to contract with the buyer that the seller has done no act whereby the property is encumbered or whereby he is hindered from transferring it.
The benefit of the contract mentioned in this rule shall be annexed to, and shall go with, the interest of the transferee 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.
Prior to completion and in absence of any express stipulation in the contract, the buyer’s right is to a title free from reasonable doubt.
The seller implies absolute warranty of title
This liability is limited to which the seller professes to transfer
If a defect is found in the seller’s title after completion of sale, buyer can sue-for damages and claim purchase money
The covenant runs with the land and it is enforceable by subsequent purchasers of the land.
He can also ask for specific performance of the contract.
Delivery of title deeds on receipt of Price S.55(3)-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.
The seller has to deliver to the buyer all deeds relating to the property conveyed. This includes documents in his power, but not in his possession and the cost of abating them is borne by the seller.
Two exceptions of S.55(3)-
Where the seller retains any part of the property comprised in such documents, he is entitled to retain them all, and,
Where the whole of such property is sold to different buyers, the buyers of the lot of greatest value is entitled to such documents.
In case of more than 1 buyers, then seller can give the documents (title deeds) to one having substantial portion. But the one having documents is duty bound to produce it when demanded by other sellers.
When ownership passes to the buyer?
When price consideration fully paid and intention of the parties.
S.55(4)(a) of TPA-The seller is entitled-
To the rents and profits of the property till the ownership thereof passes to the buyer;
Where the ownership of the property has passed to the buyer before payment of the whole of the purchase-money, to a charge upon the property in the hands of the buyer, any transferee without consideration or any transferee with notice of the non-payment, for the amount of the purchase-money, or any part thereof remaining unpaid, and for interest on such amount or part from the date on which possession has been delivered.
The contract for sale transfers no right-in-rem
If the buyer takes the possession before completion, he would, as he takes the rents and profits any interest on unpaid purchase money
If the seller refused to execute a conveyance or to give possession, the buyer will be entitled to specific performance by execution which would be mesne profits.
Seller’s charge for unpaid Price-S.55(4)(b)
If the sale is completed by conveyance and the price or any part of the price is unpaid, the seller become entitled to a charge upon the property-
In the hands of the buyer
Any transferee without consideration
Any transferee with Notice of non-payment
For the amount of the purchase money or or if any part of the purchase money remaining unpaid,
For interest on such amount of purchase money or any part unpaid from the date on which the possession has been delivered.
Umedmal Motiram v Davu 1878
Summers v Griffiths 1866
Buyer’s Duty of Disclosure S.55(5)(a)
Coakes v Boswell (1886) 11 App Cas 232
Lord Seaborne-every such purchaser is bound to observe in good faith in all that he says or does with a view to the contract, and of course to abstain from all deceit, whether suppression of truth or by suggestion of falsehood. But inasmuch as a purchaser is (generally speaking) under no antecedent obligation to communicate to his vendor facts which may influence his own conduct or judgement when bargaining for his own interest, no deceit can be implied from his silence to facts, unless he undertakes or profess to communicate them. This however, he may be held to do, if he makes some other communication which, without the addition of those facts, would be unnecessarily and probably misleading.
Payment of Price S.55(5)(b)
Execution of the conveyance by the seller and payment of price by the buyer are reciprocal duties to be performed simultaneously.
If the property is sold free from encumbrances and they are not discharged at the time of conveyance, the buyer is not bound to pay.
After Completion Buyer bears Losses S.55(5)(c)
Outgoings after completion S.55(5)(d)-After the sale to pay all public charges and rents which have accrued, buyer will pay/bear it.
Illustration-A mortgaged his property to B for 2000 and later A sold his property to C for 5000 and C had to pay 3000 after deducting the mortgage amount. Later it was found that montage was invalid. C will be the beneficiary in this case. [S.55(1)(g)]
Benefits after completion S.55(6)(a)
Buyer’s charge for Price pre-paid S.55(6)(b)
All persons claiming under him(seller)
Remedies after completion
S.56 Marshalling by subsequent purchaser-If the owner of two or more properties mortgages them to one person and then sells one or more of the properties to another person, the buyer is, in the absence of a contract to the contrary, entitled to have the mortgage-debt satisfied out of the property or properties not sold to him, so far as the same will extend, but not so as to prejudice the rights of the mortgagee or persons claiming under him or of any other person who has for consideration acquired an interest in any of the properties.
8th Edition of Fisher and Lightwood’s Law of Mortgages
The doctrine of marshaling rests upon the equitable principle that a creditor who has the means of satisfying his debt out of several funds shall not by the exercise of his right, prejudice another creditor whose security comprises only one of the funds.
The owner of two or more properties mortgages them to one person;
He then sells one or more of the properties to another person;
The buyer is, in the absence of a contract to the contrary entitled to have the mortgaged debt satisfied out of the property or properties not sold to him so far as the same will extend;
But not so as to prejudice the rights of the mortgagee or persons claiming under him;
Or of any other person who has for consideration acquired an interest in any, of the property
Properties X, Y and Z are subject to a mortgage. The mortgagor sells X to A free from encumbrances but not Y and Z. Marshalling enables A to require that the mortgagee shall satisfy his mortgage as far as possible out of properties Y and Z.
Properties X, Y and Z are subject to a mortgage. The mortgagor sells the equity of redemption of X to A, of Y to B, and Z to C. If the mortgagee satisfies his mortgage out of X, then A may require B and C to contribute pro-rata to the discharge of the mortgage debt.
If you need money what you will do?
Bail-regarding movable property
Pledge-creditor has right to sell the property
Hypothecation-ownership and possession remains with the lender but creditor has right to dispose the hypothecated property in case of default.
Mortgage-transfer of land to the creditor in Liu of money advanced. Mortgage is a submitting of security to creditor in consideration of a sum of money advanced by the creditor.
In ancient system of law, mortgage was really a pledge-the property being a gage which was forfeited on default of payment.
Stanley v Wilde 1999
Lindley J-A mortgage is a transfer of interest in a land or an assignment of chattels as a security for the payment of a debt or discharge of some other obligation which it is given.
A mortgage is transfer of an interest in the specific immovable property as a security for the repayment of a debt. But such interest itself is immovable property.
The characteristic feature of mortgage is that the right in the property created by the transfer is accessory to the right to recover the debt.
The debt subsists in a mortgage, while a transaction by which a debt is extinguished is not a mortgage but a sale.
Elements of Mortgage-
There must be transfer of an interest.
The interest transferred must be in specific immovable property.
The transfer must be made to secure a loan of money, debt or performance of an engagement which may give rise to a pecuniary liability
What transactions amount to Mortgage?
Depends on the substance of the document.
Jural relationship created by the document.
The document may be described as a mortgage but may not be mortgage if the effect of it is otherwise.
Ram Nath v Baij Nath 2005
A borrowed money from B by executing a sale deed with respect to his property. The conditions incorporated in the deed were that if A repaid the money within a period of two years the property would be reconveyed to him. Possession of the property was given to B. It is a Mortgage deed despite the document mentioning it to be a slaw deed.
S.58 Mortgage, mortgagor, mortgagee, mortgage-money and mortgaged defined.
A mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured for the time being are called the mortgage-money, and the instrument (if any) by which the transfer is effected is called a mortgage-deed.
SIMPLE MORTGAGE-Where, without delivering possession of the mortgaged property, the mortgagor binds himself personally to pay the mortgage-money, and agrees, expressly or impliedly, that, in the event of his failing to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property to be sold and the proceeds of sale to be applied, so far as may be necessary, in payment of the mortgage-money, the transaction is called a simple mortgage and the mortgagee a simple mortgagee.
MORTGAGE BY CONDITIONAL SALE-Where, the mortgagor ostensibly sells the mortgaged property-on condition that on default of payment of the mortgage-money on a certain date the sale shall become absolute, or on condition that on such payment being made the sale shall become void, or on condition that on such payment being made the buyer shall transfer the property to the seller, the transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale: PROVIDED that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale.
USUFRUCTUARY MORTGAGE-Where the mortgagor delivers possession or expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee, and authorises him to retain such possession until payment of the mortgage-money, and to receive the rents and profits accruing from the property or any part of such rents and profits and to appropriate the same in lieu of interest or in payment of the mortgage-money, or partly in lieu of interest or partly in payment of the mortgage-money, the transaction is called a usufructuary mortgage and the mortgagee a usufructuary mortgagee.
ENGLISH MORTGAGE-Where the mortgagor binds himself to repay the mortgage-money on a certain date, and transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso that he will re-transfer it to the mortgagor upon payment of the mortgage-money as agreed, the transaction is called an English mortgage. (Good and simple mortgage)
MORTGAGE BY DEPOSIT OF TITLE-DEEDS-Where a person in any of the following towns, namely, the towns of Calcutta, Madras, and Bombay, and in any other town which the State Government concerned may, by notification in the Official Gazette, specify in this behalf, delivers to a creditor or his agent documents of title to immovable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title-deeds.
ANOMALOUS MORTGAGE-A mortgage which is not a simple mortgage, a mortgage by conditional sale, a usufructuary mortgage, an English mortgage or a mortgage by deposit of title-deeds within the meaning of this section is called an anomalous mortgage.
EQUITABLE MORTGAGE-Mortgage by deposit of title deeds S.58(f)
S.59 Mortgage when to be by assurance-
Where the principal money secured is one 100 rupees or upwards, a mortgage other than a mortgage by deposit of title deeds can be effected only by a registered instrument signed by the mortgagor and attested by at least two witnesses.
Where the principal money secured is less than one 100 rupees, a mortgage may be effected either by a registered instrument signed and attested as aforesaid or (except in the case of a simple mortgage) by delivery of the property.
Immovable property fixtures etc-
Mortgage deed-the instrument (if any) by which transfer is effected in a mortgage. No particular form is necessary. The court will ascertain the intention of the parties.
Mortgage Money-the principal money and interest of which the payment is secured for the time being are called the mortgage money.
Transactions amounting to mortgage-
Depends on the substance of document
Jural relationship created by the document
The document may be described as a mortgage but may not be mortgage if the effect of it is otherwise.
Basic rule of mortgage-Once a mortgage is always mortgage. The creditor cannot change the nature of transaction. This is equitable principle because mortgager is generally not in a position to bargain because he is dire need of money.
Simple Mortgage S.58(b)
Without delivering the possession of the mortgaged property, the Mortgager
Binds himself personally to pay the mortgage money; and
Agrees that in the event of his failing to pay according to his contract, the mortgage shall have a right to cause the mortgaged property to be sold and the proceeds of sale to be applied, so far as may be necessary in payment of the mortgage-money, the transaction is called a simple mortgage and the mortgagee a simple mortgagee.
Binds himself personally
Express or implied
The personal liability is excluded when the borrower bind himself to pay out of a particular fund
Raja Ram Narayan Singh v Adhindra Nath AIR 1916 PC 119
Right to case the property to be sold
Right in rem but it only be enforced by the intervention of the court
Nazar Gahan, Taran Gahan or Rehan words enough to constitute mortgage
In Gokuldas v Kirparam 1874 PC-if I fail to pay the money as stipulated and my heirs shall without objection cause the settlement of the said village to be made with you.
Raja Ram Narayan Singh v Adhindra Nath AIR 1916 PC 119
Facts-In 1896 by Maharaja Ram Narayan Singh mortgaged his zamindari to Rai Babu Jadunath Mukherji for a consideration of 130,000. The principal amount was to be repaid, as provided by the deed, by and out of the rents and cesses of certain mokurari villages of Maharaja Nam Narayan Singh, which were mortgaged with possession to Jadu Nath Mukherji. The mortgage was in their Lordships’ opinion an usufructuary mortgage within the meaning of S.67(a) of the TPA 1882, but as it was not attested by at least two witnesses, as required by S.59 of that Act, it was not enforceable as a mortgage. However, possession of the respective mokurari villages was given to Jadu Nath Mukherji. Except in the events mentioned in the extracts which have been set out above, Maharaja Nam Narayan Singh did not bind himself personally to repay the mortgage-money or any of it. The clear intention of the parties, to be inferred from the deed, was that the mortgage-money should be repayable from the usufruct and not personally by the Maharaja. On the termination of the mortgage period possession of the mokurari villages which had been mortgaged, was given to the Maharaja or his representatives. Jadu Nath Mukhurji died in 1902.
Held-It can be inferred that document that the Maharaja Nam Narayan Singh did not intend that he should be personally liable for the repayment of any portion of the money advanced, except to the extent and in one or other of the events mentioned in the extracts which have been already given, and that Jadu Nath Mukhurji was, in advancing the Rs. 130,000, content to rely upon the security of a usufructuary mortgage of the mokurari villages. Although the document of the 14t April 1896 was, by reason of its not having been attested as required by the Transfer of Property Act, 1882, not enforceable as a mortgage, Jadu Nath Mukhurji got possession under it of the mokurari villages, and held possession for the agreed period.
Mortgage by conditional sale S.58(c)
Mortgagor ostensibly sells the mortgaged property
The property sold on the condition that-
On default of payment of the mortgaged money on a certain date the sale shall become absolute or
On such payment being made the sale shall become void or
On such payment being made the buyer shall transfer the property to the buyer,
Such transaction is called a mortgage by conditional sale and the mortgagee by conditional sale.
Chennamamal v Munimalaiyan AIR 2005 SC 4397
By conditional sale and option of repurchase-
Debtor creditor-No such relation
Single Document-Two independent documents.
Debts Subsists-consideration for sale
Consideration always below the real value-equal or near to.
Redemption right-must repurchase within the time.
Chennamamal v Munimalaiyan AIR 2005 SC 4397
Facts-M executed a simple mortgage in favour of the C for 3000. As M was unable to discharge his liabilities, properties given by him as security were sold to the C. Right to repurchase the properties within a period of 3 years were however kept reserved by the M. M sought redemption of the property. C contended that the deed in question was a deed of sale and not a mortgage by conditional sale. M therefore instituted a suit against the C and prayed for a decree for redemption.
Issue-Whether the document in question is a mortgage by conditional sale or a sale with a condition of re-purchase?
Held, recitals clearly shows that the deed in question was not a deed of sale but a mortgage by conditional sale. That the intention must be gathered from the document itself and if the words are express and clear, effect must be given to them and any extraneous enquiry into what was thought or intended is ruled out. The real question in such a case is not what the parties intended or meant but what is the legal effect of the words which they used and if there is ambiguity in the language employed, then it is permissible to look to the surrounding circumstances to determine what was intended. The above judgment, in our opinion, squarely applies to the facts and circumstances of the case on hand. They are:
the transaction in question is a mortgage by conditional sale;
the condition for re-purchase of 3 years was embodied in the same document;
the consideration for the transaction was Rs. 3000 while the real value of the property was of 12500
Patta (Lease) was not transferred to the defendant after the execution of the document;
as per the evidence available on record, the kist for the land was continued to be paid by the plaintiff-Munimalaiyan;
the consideration for re-conveyance was only for Rs. 3000
the appellant was given liberty to have the patta transferred and also to enjoy the property absolutely after the period of 3 years expired;
Trial Court granted a preliminary decree which was reversed by the lower Appellate court and again interfered with by the High Court.
Pomal Kanji Govindji v Karsandas Purohit 1988 (Clogs on equity of redemption)
Facts-The plaintiff’s father had mortgaged the suit property to Kansara Soni for 30000 by a registered mortgage deed dated 20 April 1943. The mortgage property consisted of two delis in which there were residential houses, shops, etc. The mortgagees had inducted tenants in the suit property When the mortgage transaction took place, the economic condition of the father of the plaintiffs was weak, he was heavily indebted to other persons. It was alleged and it was so held by the learned Judge and upheld by the Appellate Judge that the mortgagees took advantage of that situation and took mortgage deed from him on harsh and oppressive conditions. They got incorporated long term of 99 years for redemption of mortgage. It is further stated that though possession was to be handed over to the mortgagees, they took condition for interest on the part of principal amount in the mortgage deed. Moreover, the mortgagees were given liberty to spend any amount they liked for the improvement of the suit property. They were also permitted to rebuild the entire property. Thus the terms and conditions, according to the Appellate Judge, were incorporated in the mortgage deed to ensure that the mortgagors are prevented for ever from redeeming the mortgage. The terms and conditions, according to the first Appellate Court were unreasonable, oppressive and harsh and amounted to clog on equity of redemption and, as such, bad and the plaintiffs were entitled to redeem the mortgage even before the expiry of the term of mortgage. Defendants contended that the term of mortgage was for 99 years, so the suit filed before the expiry of that period was premature. They also resisted the suit on the grounds that the plaintiffs were not entitled to redeem the mortgage and even if they were so entitled, they could not get actual physical possession from the tenants who were protected by the provisions of the relevant Bombay Rent Act. It was their case that the plaintiffs were not entitled to get actual possession of the premises in which they were inducted by the mortgagees. Moreover, as per the terms and conditions of the mortgage deed dated 20 April 1943, there was usufructuary mortgage for 20000 and the remaining 10000 were advanced to the mortgagor at monthly interest at the rate of 0.5 per cent. There was a condition in the mortgage deed that the mortgagor should pay principal amount as well as the interest at the time of redemption.
Issue-Whether long term mortgages in the present inflationary market in fast moving conditions are clogs on equity of redemption and as such the mortgages are redeemable at the mortgagors’ instance before the stipulated period and whether the tenants who have been inducted by the mortgagees can be evicted on the termination of the mortgage?
Held-The principle is this that a mortgage is a conveyance of land or an assignment of chattels as a security for the payment of a debt or the discharge of some other obligation for which it is given. This is the idea of a mortgage and the security is redeemable on the payment or discharge of such debt or obligation, any provision to the contrary notwithstanding. That, in my opinion, is the law. Any provision inserted to prevent redemption on payment or performance of the debt or obligation for which the security was given is what is meant by a clog or fetter on the equity of redemption and is therefore void. It follows from this, that once a mortgage is always a mortgage. The right of redemption, therefore, cannot be taken away. The Courts will ignore any contract the effect of which is to deprive the mortgagor of his right to redeem the mortgage. The doctrine-clog on the equity of redemption is a rule of justice, equity and good conscience. It must be adopted in each case to the reality of the situation and the individuality of the transaction. We must take note of the time, the condition, the price spiral, the term bargain and the other obligations in the background of the financial conditions of the parties. Therefore, in our opinion, in view of the evidence it is not possible to hold that there was no clog on the equity of redemption in these cases. It was a right of mortgagor on redemption to get back subject of mortgage and to hold and enjoy as he was entitled to do. If he was prevented from doing so then that would be bad in law. Further, there was no condition in mortgage deed, which entitled mortgagees to create tenancy beyond period of mortgage. There were decisive factors showing that tenants did not get their rights enlarged on coming into force of subsequent Rent Legislation. Moreover, period of mortgage had been expired long back. Thus, tenancy created in favour of tenants by mortgagor did not have concurrence of mortgagor so as to claim tenancy rights even after redemption of mortgage. Whether in the facts and the circumstances of these cases, the mortgage transaction amounted to clog on the equity of redemption, is a mixed question of law and fact. Courts do not look with favour any clause or stipulation which clogs equity of redemption. A clog on the equity of redemption is unjust and inequitable. The principles of English law, as we have noticed from the decisions referred to hereinbefore which have been accepted by this Court in this country, looks with disfavour at clogs on the equity of redemption. S.60 of the TPA, in India, also recognises the same position. It is a right of the mortgagor on redemption, by reason of the very nature of the mortgage, to get back the subject of the mortgage and to hold and enjoy as he was entitled to hold and enjoy it before the mortgage. If he is prevented from doing so or is prevented from redeeming the mortgage, such prevention is bad in law. If he is so prevented, the equity of redemption is affected by that whether aptly or not, and it has always been termed as a clog. Such a clog is inequitable. The law does not countenance it. Bearing the aforesaid background in mind, each case has to be judged and decided in its own perspective. As has been observed by this Court that long-term for redemption by itself, is not a clog on equity of redemption. Whether or not in a particular transaction there is a clog on the equity of redemption, depends primarily upon the period of redemption, the circumstances under which the mortgage was created, the economic and financial position of the mortgagor, and his relationship vis-a-vis him and the mortgagee, the economic and social conditions in a particular country at a particular point of time, custom, if any, prevalent in the community or the society in which the transaction takes place, and the totality of the circumstances under which a mortgage is created, namely, circumstances of the parties, the time, the situation, the clauses for redemption either for payment of interest or any other sum, the obligations of the mortgage to construct or repair or maintain the mortgaged property in cases of usufructuary mortgage to manage as a matter of prudent management, these factors must be co-related to each other and viewed in a comprehensive conspectus in the background of the facts and the circumstances of each case, to determine whether these are clogs on equity of redemption. This is the Indian law based on justice, equity and good conscience.. Though, long-term by itself as the period for redemption, is not necessarily a clog on equity but in the changing circumstances of inflation and phenomenal increase in the prices of real estates, in this age of population-explosion and consciousness and need for habitat, long-term, very long-term, taken with other relevant factors, would create a presumption that it is a clog on equity of redemption. If that is the position then keeping in view the financial and economic conditions of the mortgagor, the clause obliging the payment of interest even in case of usufructuary mortgage not periodically but at a time of ultimate reduction imposing a burden on the mortgagor to redeem, the clauses permitting construction and reconstruction of the building in this inflationary age and debiting the mortgagor with an obligation to pay for the same as a ground for redemption, would amount to clog on equity. Appeal dismissed.
Vidhyadhar v Manikrao 1999 (Mortgage and subsequent sale by mortgagor)
Facts-Defendant No. 2 was the owner of the suit property. In March 1971, he executed a document styled as Kararkharedi (کرارکھریدی) in favour of defendant No. 1 for a sum of Rs. 1500 and delivered possession thereof to the latter. There was a stipulation in the document that if the entire amount of Rs. 1500 was returned to defendant No. 1 before 15 March 1973, the property would be given back to defendant No. 2. This land was subsequently transferred by defendant No. 2 in favour of the plaintiff for a sum of Rs. 5000 by a registered sale deed dated 19/06/1973. After having obtained the sale deed, the plaintiff filed the aforesaid suit in which it was given out that defendant No. 2 had offered the entire amount to defendant No. 1 but the latter did not accept the amount and, therefore, defendant No. 2 had to send it by money order on 7/6/1973 which was refused by defendant No. 1. A notice, dated 5/6/1973, had also been sent by defendant No. 2 to defendant No. 1. It was pleaded that since the document, executed by defendant No. 2 in favour of defendant No. 1, was a mortgage by conditional sale, the property was liable to be redeemed. It was also pleaded in the alternative that if it was held by the Court that the document did not create a mortgage but was an out and out sale, the plaintiff as transferee of defendant No.2, was entitled to a decree for reconveyance of the property as defendant No. 2 had already offered the entire amount of sale consideration to defendant No. 1 which, the latter, had refused and which amount the plaintiff was still prepared to offer to defendant No. 1 and was also otherwise ready and willing to perform his part of the contract. Defendant No. 1 contested the suit and pleaded that the document in his favour was not a mortgage by conditional sale but was an out and out sale and since the amount of consideration had not been tendered within the time stipulated therein, the plaintiff could not claim reconveyance of the property in question.
Issue-Is the plaintiff entitled to redeem the mortgage executed by the defendant No.2 in favour of defendant No.1? Was the defendant No.2 ready and willing to repurchase the suit field prior to 15/3/71? Is the plaintiff entitled to claim retransfer of the suit field from the defendant No.1?
Held-The real test is intention of parties for transfer of ownership. In order to constitute ‘sale’ parties must intend to transfer ownership of property. Parties also must intend that price would be paid either in present or in future. Intention is to be gathered from recital in sale deed, conduct of parties and evidence on record. Defendant no. 2 executed sale deed in favour of plaintiff and sale deed was presented for registration and execution before Sub-registrar. Part of sale consideration was paid and then finally document got registered. Additional circumstances also lead that defendant no. 2 executed sale deed in favour of plaintiff and received full amount of consideration. Clearly sale deed executed in favour of plaintiff and title in property passed to plaintiff. Defendant No. 1 himself was not a party to the transaction of sale between defendant No. 2 and the plaintiff. He himself had no personal knowledge of the terms settled between defendant No. 2 and the plaintiff. Could, in this situation, defendant No. 1 have raised a plea as to the validity of the sale deed on the ground of inadequacy of consideration or part-payment thereof? Defendant No. 2 alone, who was the executant of the sale deed, could have raised an objection as to the validity of the sale deed on the ground that it was without consideration or that the consideration paid to him was highly inadequate. But he, as pointed out earlier, admitted the claim of the plaintiff whose claim in the suit was based on the sale deed, executed by defendant No. 2 in his favour. The property having been transferred to him, the plaintiff became entitled to all the reliefs which could have been claimed by defendant No. 2 against defendant No. 1 including redemption of the mortgaged property.
Shivdev Singh v Sucha Singh 2000
Facts-Prakash Singh mortgaged his property in favour of Basant Kaur for a sum of Rs. 7000 in 1968. Basant Kaur died whereafter the Shivdev Singh herein stepped into her shoes. Prakash Singh, sold some portions of the mortgaged property in favour of the respondents Socha Singh vide registered sale deed in 1987 for a valid consideration by which the mortgage money of Rs. 7000 was kept with the respondent-plaintiff as security (Amanat) to be paid to the appellants. It was further pleaded by the Sucha Singh that at the time of the original mortgage deed Prakash Singh was financially tight and allegedly taking undue advantage of his poor financial condition and helplessness the appellants got incorporated a term in the mortgage deed, to the effect that the mortgage was for a period of 99 years which constituted a clog on the equity of redemption and that the appellants had been enjoying the usufructs of the mortgage for more than 20 years before the date of the filing of the suit. Despite the fact that Sucha Singh had purchased only 19 kanals 2 marlas out of the mortgaged land, he offered the whole of the mortgage money to the appellants-defendant realizing that partial redemption was not permissible. The appellants were stated to have refused to deliver possession which necessitated the filing of the suit. Prakash Singh who was impleaded as defendant No. 3 was proceeded exأparte. The appellants, though admitted that the disputed land under mortgage was in their possession on the basis of a mortgage for a sum of Rs. 7000 since the year 1968, yet contended that the plaintiffs had no right to get the suit land redeemed before the expiry of mortgage period of 99 years.
Issue-Whether the mortgage deed amounted to clog on equity of redemption?
Held-Courts below held that mortgage deed being for period of 99 years was clog on equity of redemption as appellants were found to be in advantageous position qua mortgagor. They were also found to be deriving usufructs of mortgaged land for period of over 26 years at time of filling of suit on payment of meager sum of particular amount only to mortgagor. Findings of facts returned by Courts below do not require any interference particularly when counsel appearing for appellants has not contented that such findings were perverse or uncalled for or against evidence. Appeal dismissed.
Usufructuary Mortgage S.58(d)
There is delivery of possession or expressly or by impliedly to the mortgage
Retention of possession by mortgagee until payment of the mortgage-money and to receive the rents and profits accruing from the property or any part of such rents and profits and to appropriate the same in lieu of interest or in payment of the mortgage-money or partly in lieu of interest or partly in payment of the mortgage-money.
There is no personal liability of the mortgagor
Mortgagee can not foreclose or sue for sale of property
No time limit is fixed for payment
Value of property
This transaction is called a usufructuary mortgage and the mortgagee is called a usufructuary mortgagee.
Right of Usufructuary Mortgagor S.62
Accession to Mortgaged Property S.63 and S.63A, S.70 and S.71
Mortgagee can’t foreclose or sell S.67(a)
Only to retain the possession of the property till the mortgage money is paid-up to appropriate the rents and profits of property.
S.68(1)(d)-get possession and mesne profits
Zurupeshagi lease-This is a kind of lease which looks like a usufructuary mortgage but there is no relationship of creditor and debtor but lessor and lessee. Lessee advances the money to secure tenancy. There is also no right of redemption.
English Mortgage S.58(e) to be read with S.69 and 58(a)
Essentials of English Mortgage are-
The mortgagor should bind himself to repay the mortgage money on certain date
That the mortgaged property should be transferred absolutely to the mortgagee
That such absolute transfer should be made subject to a proviso that the mortgagee will reconvey the property to the mortgagor upon payment by him of the mortgage money as agreed on the day which the mortgagor bound himself to repay the same.
Mortgage by deposit of title deeds S.58(f)
Where a person-
In case of the following towns, namely, the towns of Calcutta, Madras and Bombay and in any other town which the state government may by notification in the official gazette specify in this behalf,
Delivers to a creditor or his agent documents of title to immovable property
With an intent to create a security thereon
Such truncation is called a mortgage by deposit of title-deeds or equitable mortgage
Requisites of mortgage by deposited of title deeds-
Deposit of title deeds
An intention that the deed shall be security for the debt
Registration-A mortgage by deposit of title deeds does not require writing. When it is an oral transaction it is not affected by law of registration. S.59 says that a mortgage by deposit of title deeds does not require registration even if there is a writing recording the deposit.
Remedies-S.96-Suit for sale and for mortgage money
Anomalous Mortgage S.58(g)
A mortgage which is not-
A simple mortgage, usufructuary mortgage, English mortgage, etc but mixture of two or more mortgages
Simple Mortgage Usufructuary
Mortgage Usufructuary by conditional sale
OTTI and KANOM (Madras)-cannot be redeemed before expiry of 12 years
OTTI Holder-has a right of pre-emption
Hathika v Padmanathan AIR 1994 Kerala 141
A mortgagor borrowed a sum of Rs.1000 from the mortgagee and the possession of property was handed over to him. The mortgage debt was to be repaid within a period of six months and in case of default the mortgage had right to bring the property to sale and realise the amount.
Mortgagee-S.67(a)-sale and foreclosure
Mortgagor-S.67(b)-if he becomes a trustee or legal representative of the mortgagee is by a suit for sale only
Rights of Mortgagor
Right of redemption (S.60)
Right of transfer to a third party instead of re-transference to himself (S.60A)
Right to inspection and production of documents (S.60B)
Right to accession and improvements (S.63 S.63A S.70)
Right to grant a lease (S.65A)
Right to reasonable waste (S.66)
Illustration-A mortgaged his property to B and sometimes later B filed a suit of foreclosure against ‘A’ and ‘A’ filed suit of redemption against B. Court gave 3 months to A to pay the mortgaged amount and take back the property. He comes 3 years later depositing the money and asking the possession. Limitation period in case of mortgage is 30 years.
Seth Ganga Dhar vs Shankar Lal 1958
Facts-In 1899, Purshottamdas mortgaged his property to Dhanrupmal for 6000. The terms of the mortgage were
That Purshottamdas or his heirs would not be entitled to redeem the property for a period of 85 years.
After the expiry of 85 years they shall redeem it within a period of six months failing which they shall have no claim over the mortgaged property, and in such a case this very deed will be deemed to be a sale deed.
After death of Purshottamdas in 1947, his heirs contested the mortgage as unfair claiming that the provision postponing redemption for eighty-five years was invalid as it amounted to a clog on the equity of redemption.
Issue-Whether the condition was a clog on the equity of redemption?
Held-the case is governed by the S.60 of TPA 1882 which provides that any time after the principal money has become due, the mortgagor has a right on payment or tender of the mortgage money to require the mortgagee to reconvey the mortgage property to him. The right conferred by this section has been called the right to redeem and the appellant sought to enforce this right by his suit.
The rule against clogs on the equity of redemption is that, a mortgage shall always be redeemable and a mortgagor’s right to redeem shall neither be taken away nor be limited by any contract between the parties. The principle is this: a mortgage is a conveyance of land or an assignment of chattels as a security for the payment of a debt or the discharge of some other obligation for which it is given. This is the idea of a mortgage: and the security is redeemable on the payment or discharge of such debt or obligation, any provision to the contrary notwithstanding. That, in my opinion, is the law. Any provision inserted to prevent redemption on payment or performance of the debt or obligation for which the security was given is what is meant by a clog or fetter on the equity of redemption and is therefore void. It follows from this, that once a mortgage always a mortgage. The right of redemption, therefore, cannot be taken away. The Courts will ignore any contract the effect of which is to deprive the mortgagor of his right to redeem the mortgage. One thing, therefore, is clear, namely, that the term in the mortgage contract, that on the failure of the mortgagor to redeem the mortgage within the specified period of six months the mortgagor will have no claim over the mortgaged property, and the mortgage deed will be deemed to be a deed of sale in favour of the mortgagee, cannot be sustained. Under the section, once the right to redeem has arisen it cannot be taken away. The mortgagor’s right to redeem must be deemed to continue even after the period of six months has expired and the attempt to confine that right to that period must fail. Consequently, in a suit, for redemption where the mortgage deed, by two distinct and independent terms provided that (1) the mortgage shall not be redeemed for eighty-five years and (2) that it could be redeemed only after that period and within six months thereafter, failing which the mortgagor would cease to have any claim on the mortgaged property and the mortgage deed would be deemed to be a deed of sale in favour of the mortgagee, and it was clearly evident from the facts and circumstances of the case that the bargain was quite fair and one as between parties dealing with each other on an equal footing. The term providing for a period of 85 years was not a clog on the equity of redemption, and the mere length of the period could not by itself lead to an inference that the bargain was in any way oppressive or unreasonable. The term was enforceable in law and the suit for redemption, filed before the expiry of the period was premature. Held, further, that the term that on the failure of the mortgagor to redeem within the specified period of six months, he would lose his right to do so and the mortgage deed was to be deemed to be a deed of sale in favour of the mortgagee, was clearly a clog on the equity of redemption and as such invalid but its invalidity could not in any way affect the validity of the other term as to the period of the mortgage, that stood clearly apart.
Chhedilal v Babunandan AIR 1944 All 204 (Benaras case)
Facts-On 15 January 1906 a deed of usufructuary mortgage was executed by two brothers, Sahdeo Singh and Bahadur Singh, in. favour of one Miss Subhagi and it was stated in the deed that the amount advanced by the mortgagee to the mortgagors was Rs. 1200. On 30 November 1936, Sahdeo Singh and the sons of Bahadur Singh sold the mortgaged property to the present plaintiff-appellant, Chhedi Lal. The mortgagee, Mt. Subhagi, is dead and her successors-in-interest are defendants. Without the knowledge, information and consent of the mortgagors, the husband of Mt. Subhagi, mortgagee, got the following conditions incorporated in the-mortgage deed, that if the mortgagee constructs any building on the mortgaged property by demolition of the mortgaged property, or otherwise, mortgagors or their heirs shall pay the entire mortgage money with costs of construction, according to the account produced by the-mortgagee, at the time of redemption of the mortgaged property and then the mortgaged property shall be redeemed. The plaintiff’s case was that the mortgagee did not advance to the mortgagors Rs. 400 out of the mortgage money mentioned in the deed and that thus the principal mortgage money was only Rs. 800 and not Rs. 1200. He alleged in para. 10 of the plaint that the mortgagee, Mt. Subhagi, had appropriated the timber of a nib tree and the materials of the house that had been mortgaged to her and that the value of the timber and the materials was Rs. 500. He stated that the mortgage was redeemable on the payment of the sum of Rs. 800 and prayed that a decree for redemption be passed in his favour subject to the payment by him of that sum.
Held-Any provision inserted to prevent redemption on payment or performance of the debt or obligation for which the security was given is what is meant by a clog or fetter on the equity of redemption and is, therefore, void. It follows from this, that once a mortgage always a mortgage. A ‘clog’ or ‘fetter’ is something which is inconsistent with the idea of ‘security’ : a clog or fetter is in the nature of a repugnant condition. If I mortgage my land subject to a condition forbidding me to alienate it, that is a repugnant condition. If I give a mortgage on a condition that I shall not redeem, that is a repugnant condition. The Courts of equity have fought for years to maintain the doctrine that a security is redeemable. Having carefully considered the arguments that have been addressed to us, we have come to the conclusion that, in view of the facts of this case, the stipulation in question does not amount to a clog. There appears to be no doubt that the building which stood at the time of the mortgage was not in a sound condition and that one of the objects probably the main object that the mortgagors had in view when they made this mortgage was that a better and more substantial building might be constructed by the mortgagee. That the improvement, in the language used in the cases, is a lasting one, is obvious. It cannot also be denied, and has not been denied, that it has substantially enhanced the selling value of the property. It has been stated, and has not been denied, that the building in question is situated in a busy part of the city of Benares. We recognize that a mortgagee ought not to be allowed to improve the mortgagor out of his estate, but, on the facts of this case, can it be said that by spending Rs. 8125 on the construction of the new house, which was obviously contemplated by the parties at the time of the execution of this mortgage deed, the mortgagee did something which amounted to improving the mortgagor out of his estate? Can it be said that the expenditure of the sum of Rs. 8125 in all the circumstances, was an unreasonable expenditure? In our judgment the answer to both these questions must be in the negative. That being so, the contract entered into by the mortgagors must be enforced.
Right of redemption S.60
The mortgagor in Indian law is the owner who had parted with some rights of ownership and the right of redemption is a right which he exercises by virtue of his residuary ownership to resume what he has parted with,
Right of redemption cannot be extinguished by any agreement made in the time of mortgage as part of the mortgage transaction. (Exception-usufructuary Mortgage)
Basis principle is once a mortgage is always a mortgage
Long time period by itself is not a clog on equity of redemption but surrounding circumstances has to be taken in to account to look into any injustice.
S.60 Right of mortgagor to redeem
At any time after the principal money has become due, the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage-money, to require the mortgagee,
To deliver to the mortgagor the mortgage-deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee,
Where the mortgagee is in possession of the mortgaged property, to deliver possession thereof to the mortgagor, and
At the cost of the mortgagor either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and (where the mortgage has been effected by a registered instrument) to have registered an acknowledgement in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished:
PROVIDED that the right conferred by this section has not been extinguished by the act of the parties or by decree of a court.
The right conferred by this section is called a right to redeem and a suit to enforce it is called a suit for redemption.
Nothing in this section shall be deemed to render invalid any provision to the effect that, if the time fixed for payment of the principal money has been allowed to pass or no such time has been fixed, the mortgagee shall be entitled to reasonable notice before payment or tender of such money.
Redemption of portion of mortgaged property-Nothing in this section shall entitle a person interested in a share only of the mortgaged property to redeem his own share only, on payment of a proportionate part of the amount remaining due on the mortgage, except only where a mortgagee, or, if there are more mortgagees than one, all such mortgagees, has or have acquired, in whole or in part, the share of a Mortgagor
Bakhtawar Begum v Husseini Khanum AIR 1914 PC 36
Ordinarily, and in the absence of a special condition entitling the mortgagor to redeem during the term for which the mortgage is created, the right of redemption can only arise on the expiration of the specified period.
Where immovable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property and all the provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such charge.
Nothing in this section applies to the charge of a trustee on the trust-property for expenses properly incurred in the execution of his trust, and, save as otherwise expressly provided by any law for the time being in force, no charge shall be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of the charge.
S.101 No merger in case of subsequent encumbrance
Any mortgagee of or 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 of the mortgagor or owner, as the case may be, without thereby causing the mortgage or charge to be merged as between himself and any subsequent mortgagee of, or person having a subsequent charge upon, the same property; and no such subsequent mortgagee or charge- holder shall be entitled to foreclose or sell such property without redeeming the prior mortgage or charge, or otherwise than subject thereto.
LEASE AND LICENSE
CHAPTER 5 TPA 1882
A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.
Lessor, lessee, premium and rent defined: The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.
S.106. Duration of certain leases in absence of written contract or local usage
In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by 6 months’ notice expiring with the end of a year of the tenancy; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by 15 days’ notice expiring with the end of a month of the tenancy.
Every notice under this section must be in writing, signed by or on behalf of the person giving it, and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the property.
S.107. Leases how made
A lease of immovable property from year to year, or for any term exceeding one year or reserving a yearly rent, can be made only by a registered instrument.
All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.
Where a lease of immovable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee:
PROVIDED that the State Government from time to time, by notification in the Official Gazette, direct that leases of immovable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession.
S.108. Rights and liabilities of lessor and lessee
In the absence of a contract or local usage to the contrary, the lessor and the lessee of immovable property, as against one another, respectively, possess the rights and are subject to the liabilities mentioned in the rules next following, or such of them as are applicable to the property leased:-
Rights and Liabilities of a Lessor-
The lessor is bound to disclose to the lessee any material defect in the property, with reference to its intended use, of which the former is and the latter is not aware, and which the latter could not with ordinary care discover;
The lessor is bound on the lessee’s request to put him in possession of the property;
The lessor shall be deemed to contract with the lessee that, if the latter pays the rent reserved by the lease and performs the contracts binding on the lessee, he may hold the property during the time limited by the lease without interruption.
The benefit of such contract shall be annexed to and go with the lessee’s interest as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested.
Rights and Liabilities of a Lessee-
If during the continuance of the lease any accession is made to the property, such accession (subject to the law relating to alluvion for the time being in force) shall be deemed to be comprised in the lease;
If by fire, tempest or flood, or violence of an army or of a mob, or other irresistible force, any material part of the property be wholly destroyed or rendered substantially and permanently unfit for the purposes for which it was let, the lease shall, at the option of the lessee, be void: PROVIDED that, if the inquiry be occasioned by the wrongful act or default of the lessee, he shall be entitled to avail himself of the benefit of this provision;
If the lessor neglects to make, within a reasonable time after notice, any repairs which he is bound to make to the property, the lessee may make the same himself, and deduct the expense of such repairs with interest from the rent, or otherwise recover it from the lessor;
If the lessor neglects to make any payment which he is bound to make, and which, if not made by him, is recoverable from the lessee or against the property, the lessee may make such payment himself, and deduct it with interest from the rent, or otherwise recover it from the lessor;
The lessee may even after the determination of the lease remove, at any time whilst he is in possession of the property leased but not afterwards all things which he has attached to the earth; provided he leaves the property in the state in which he received it;
When a lease of uncertain duration determines by any means except the fault of the lessee, he or his legal representative is entitled to all the crops planted or sown by the lessee and growing upon the property when the lease determines, and to free ingress and egress to gather and carry them;
The lessee may transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest in the property, and any transferee of such interest or part may again transfer it. The lessee shall not, by reason only of such transfer, cease to be subject to any of the liabilities attaching to the lease;
Nothing in this clause shall be deemed to authorise a tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the lessee of an estate under the management of a Court of Wards, to assign his interest as such tenant, farmer or lessee;
The lessee is bound to disclose to the lessor any fact as to the nature or extent of the interest which the lessee is about to take of which the lessee is, and the lessor is not aware, and which materially increases the value of such interest;
The lessee is bound to pay or tender, at the proper time and place, the premium or rent to the lessor or his agent in this behalf;
The lessee is bound to keep, and on the termination of the lease to restore, the property in as good condition as it was in at the time when he was put in possession, subject only to the changes caused by reasonable wear and tear or irresistible force, and to allow the lessor and his agents, at all reasonable times during the term, to enter upon the property and inspect the condition thereof and give or leave notice of any defect in such condition; and, when such defect has been caused by any act or default on the part of the lessee, his servants or agents, he is bound to make it good within three months after such notice has been given or left;
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 diligence, notice thereof to the lessor;
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 injurious thereto;
He must not, without the lessor’s consent, erect on the property any permanent structure, except for agricultural purposes;
On the determination of the lease, the lessee is bound to put the lessor into possession of the property.
S.109-Rights of lessor’s transferee
If the lessor transfers the property leased, or any part thereof, or any part of his interest therein, the transferee, in the absence of a contract to the contrary, shall possess all the rights, and, if the lessee so elects, be subject to all the liabilities of the lessor as to the property or part transferred so long as he is the owner of it; but the lessor shall not, by reason only of such transfer cease to be subject to any of the liabilities imposed upon him by the lease, unless the lessee elects to treat the transferee as the person liable to him:
PROVIDED that the transferee is not entitled to arrears of rent due before the transfer, and that, if the lessee, not having reason to believe that such transfer has been made, pays rent to the lessor, the lessee shall not be liable to pay such rent over again to the transferee.
The lessor, the transferee and the lessee may determine what proportion of the premium or rent reserved by the lease is payable in respect of the part so transferred, and, in case they disagree, such determination may be made by any court having jurisdiction to entertain a suit for the possession of the property leased.
Derivative lease-Where the lessee sub-lets the lease property to another person, the another person is called derivative. The right of lessee to do so depends upon the terms and conditions of original lease between lessor and lessee.
Lease at sufferance-In the above case if original lease was for 5 years. In the fourth year lessee B executed a sub lease with C for two years. If C continues to be in possession after 5 years, it is called lease in sufferance.
Lease at will-In the above case, after the expiry of original lease, if B is still in possession of the leased property. Then is said to be holding over the property. And if he is ready to pay the rent and he is paying it and A is accepting it. Then this position between A and B is called lease at will. Though rights and duties of original lease will no longer be applicable.
Associated Hotel of India Ltd. v RN Kapoor 1955
Facts-Two rooms at the Hotel Imperial were put in possession of the respondent for the purpose of carrying on his business as hair-dresser from May 1, 1949. The term of the document was, in the first instance, for one year, but it might be renewed. The amount payable for the use and occupation was fixed in a sum of Rs. 9,600 per annum, payable in four instalments. The respondent was to keep the premises in good condition. Sometimes later, the respondent filed a suit for fixing the rent of the room used by him for providing these services. The appellant contended that the spaces are not premises within the Act as they are rooms in a hotel and so no standard rent could be fixed in respect of them.
Issue-What is the meaning of room in the Hotel?
Held-Rooms in Hotel, Lounge and Dharamshala are excluded from fixation of rent under Rent control Act and fixation of rent is possible only in case of lease (creation of interest) and not licence. There is a marked distinction between a lease and a licence. S.105 of the TPA defines a lease of immovable property as a transfer of a right to enjoy such property made for a certain time in consideration for a price paid or promised. Under S.108 of the said Act, the lessee is entitled to be put in possession of the property. A lease is therefore a transfer of an interest in land. But if a document gives only a right to use the property in a particular way or under certain terms while it remains in possession and control of the owner thereof, it will be a licence. The legal possession, therefore, continues to be with the owner of the property, but the licensee is permitted to make use of the premises for a particular purpose. But for the permission, his occupation would be unlawful. It does not create in his favour any estate or interest in the property. The following propositions may, therefore, be taken as well-established-
To ascertain whether a document creates a licence or lease, the substance of the document must be preferred to the form;
The real test is the intention of the parties, whether they intended to create a lease or a licence;
If the document creates an interest in the property, it is a lease; but, if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a licence; and
If under the document a party gets exclusive possession of the property, prima facie, he is considered to be a tenant; but circumstances may be established which negative the intention to create a lease.
A room in an hotel within the definition is any room in a building in the whole of which the business of an hotel is run. So understood, the definition would include the spaces in the cloak rooms of the Imperial Hotel with which we are concerned. These spaces are, in my view, rooms in an hotel and excluded from the operation of the Act. The Rent Controller had no power to fix any standard rent in respect of them.
Quality Cuts Pieces v M Laxmi and Company AIR 1986 Bom 359
The case questioned whether the stalls operating in a departmental store were on lease or license under S.105 of the TPA 1882? On the basis of facts and circumstances, it was held that the possession of the stall-holders was that of the licensees.
The case questioned whether two stalls in a departmental store facing the road that had been given exclusive possession and a separate entrance were licensees under S.105 of the TPA 1882? It was held that the exclusive possession showed that the two stall holders were not mere licensees.
BV D’Souza v Antonio Fausto Fernandes 1989
Facts-The building belongs to the respondent, and the appellant claims to be in its occupation as a month to month tenant. The respondent instituted a suit for a decree for eviction of the appellant, alleging that he has been in occupation of the building as a licensee and has illegally refused to vacate in spite of service of notice. The appellant’s defence is that he is a tenant protected by the provisions of the Goa Lease and Rent Control Act 1968, and in view of S.56 thereof the suit in the civil court is not maintainable.
Held-Though, the agreement in the present case has been described as an agreement of leave and licence and the parties as the “Licensor” and the “Licensee”, its provisions unmistakably, indicate that the appellant was being let in as a tenant on the monthly rental of Rs. 350/-(besides water and electricity charges) to be paid regularly on or before the 5th day of each consecutive month. By clause 5, it was agreed that the appellant shall not sub-let, under-let or part possession of the premises to any stranger nor shall he keep the premises vacant for more than 3 months without the consent of the Licensor. The question of executing a sublease or sub-letting can arise only by a tenant. If a licensee inducts any person in the property as his tenant, it cannot be described as subletting. In clause 15 it is stated that on the expiry of the period, the deed shall be renewable thereafter at the will of the licensee; and in the event of the licensee not desiring to renew, shall give one month’s notice in writing.
The real lest is the intention of the parties as to whether they intended to create a lease or licence. If an interest in the property is created by the deed it is a lease but if the document only permits another person to make use of the property of which the legal possession continues with the owner, it is a licence. If the party in whose favour a document is executed gets exclusive possession of the property, prima facie he must be considered to be a tenant; although this factor by itself will not be decisive. Judged in this light, there does not appear to be any scope for interpreting Ext. 20 as an agreement of leave and licence.
Delta International v Shyam Sunder Ganeriwalla 1999
Facts-Abraham Mallick was owner of the premises created a tenancy in favour of MICPL. DGIPL was inducted into the premises as the monthly tenant under MICPL. DGIPL was maintaining and running a petrol service station for sale of motor spares and components at the tenanted premises. DGIPL had erected and built certain structures on the said premises. DGIPL was subsequently amalgamated into Delta International and by an agreement dated 18th July, 1970, they executed a ‘leave and license’ agreement in favour of ESSO. The ESSO in turn permitted Shyam Sunder Ganeriwalla, to run a petrol service station. Further, the business undertakings and the estates of ESSO had been taken over by the Act of Parliament and has been transferred and assigned in favour of Hindustan Petroleum Corporation Limited. In 1985, Delta International Limited filed a Suit for a perpetual injunction restraining the Defendants from using any of the fixtures, fittings and accessories lying at suit premises from 1st May, 1985, that is, the date of termination of leave and license.
Issue-Whether document in question was a lease agreement or ‘leave and license’ agreement?
Held-Construction of document depends upon its pith and substance and not merely upon the label put upon it by the parties. If the document is a camouflage, real intention of parties is the test to determine true nature of document. There is a clear distinction between lease and license: the dividing line is clear, though sometimes it becomes very thin or even blurred and observed that for such determination following propositions may be taken as well established:
To ascertain whether a document creates a licence or lease, the substance of the document must be preferred to the form;
The real test is the intention of the parties–Whether they intended to create a lease or a licence;
If the document creates an interest in the property, it is a lease; but if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a licence; and
If under the document a party gets exclusive possession of the property, prima facie, he is considered to be a tenant; but circumstances may be established which negatived the intention to create a lease.
Hence, for the reasons discussed above, we hold that the agreement dated 18th July, 1970 is a deed of ‘leave and licence’ and not a ‘lease’.
Shambhunath Mitra v Khaitan Consultant Ltd. AIR 2005 Cal 281
Facts-Prabhat Chandra De predecessor-in-interest of the plaintiffs and defendant was the recorded tenant under one Emerald Company Limited in respect of suit premises. In 1950, Shambhunath De, the third son of Prabhat Chandra De occupied the said space as a licensee of his father. In the year 1963, Prasanta Kumar De, the fourth son of Prabhat Chandra De was qualified as an Attorney-at-law and started his practice with his father in the same space. Sambhunath De died intestate in 1976 but prior to his death, he granted his brother-in-law Sambhunath Mitra leave and license to occupy the said portion. Sometime in 1979, Khaitan Consultant Limited took the said premises on lease from the Emerald Company Limited and continued to issue rent receipt in the name of Prabhat Chandra De. The plaintiffs recently came to know that the rent receipt has been changed in the name of Prasanta Kumar De in place of Prabhat Chandra De without obtaining any surrender from the other heirs of Prabhat Chandra De and without their knowledge and consent. In May, 1995, Prasanta Kumar De became seriously ill and during his illness his daughter started looking after the law firm. Prasanta Kumar De died on 21st June, 1996. On 23rd September, 1996 Sambhunath Mitra came to know that Prasanta Kumar De had got the tenancy of the suit room transferred in his name and had purported to surrender his tenancy and possession to Khaitan Consultant Limited. Sambhunath Mitra, on behalf of the plaintiffs protested against such illegal acts.
Issue-Whether, by virtue of lease deed, Emerald Company Limited, admitted owner of property, could create any interest in property to enable Plaintiff to file a suit for eviction of trespasser.
Disclaimer– Pending review