Concept and meaning of property:-

The word property is used in numerous senses in general. If one looks around in the
surroundings, everything available may be categorized as Property. Every object,
whether tangible or intangible having some value to human beings, may be termed
as Property. The essential characteristic of Property is the value attached to it. In
one way or the other, it is a source of wealth. The value, although may be either
monetary or personal. In a general sense, therefore Property consists of land,
shares, buildings and debts due to another person. However, the term when used in
the legal sense has a definite connotation. It is the right to enjoy and to dispose of
certain things in an absolute manner as one thinks it fit.

The word “property” is derived from the Latin word proprietary and the French
equivalent properties, which means a thing owned. The term property has been
widely interpreted by various jurists such
as Salmond, Bentham and Austin. Eminent jurist Salmond while defining the term
property, observed that the term might be understood in one of the three senses
mentioned below:

(i) The term property includes all the legal rights of a person. That is to say that it
includes complete ownership of a man on material as well as incorporeal things.

(ii) The term includes not a man’s personal rights, but only his proprietary rights.

(iii) The term includes the rights of ownership in material things such as building etc.
According to another jurist, Bentham, the term property includes ownership of
material objects alone. He has, in a way, interpreted the term in a narrow sense.
According to Austin, Property denotes the greatest right of enjoyment known to the
law, including servitudes. The Property includes both proprietaries as well as the
personal rights of a man.

Interpretation of the word Property by the Apex Court of India

The honorable Supreme Court of India in the case of R.C. Cooper vs. Union of India
AIR 1970 SC 564, interpreted the concept of Property in the legal regime. The court,
in this case, observed that the term property includes both corporeal things such as
land, furniture and incorporeal things such as copyrights and patents. The recent
trend of the Apex court, however, has changed. Court has started viewing Property
in the light of Article 21 of the Indian constitution as liberties exist even reference to
the Property owned and possessed.
Kinds of properties
Property is basically of two categories : Corporeal Property and Incorporeal Property.
Corporeal Property is visible and tangible, whereas incorporeal Property is not.
Moreover, corporeal Property is the right of ownership in material things, whereas
incorporeal Property is an incorporeal right in rem. Corporeal Property is further
categorized into Movable and Immovable Property. Incorporeal Property is classified
into two categories : in re propria and rights in re aliena or encumbrances.

These are the two categories of properties that exist.

(i) Corporeal Property has a tangible existence in the world and is related to
material things such as land, house, ornaments, silver, etc.

(ii) Incorporeal Property is intangible because it’s existence is neither visible nor
tangible. Right of easement and copyrights are incorporeal Property.

Right in re-propria means right over one's own property; title, ownership, etc.

Right in re-aliena means the right of a person over the property of another.

Example - tenants rights encumbrance rights etc.

A right in re-aliena is an encumbrance on the property imposing restrictions on the

owner. Example - Mortgage or charge.

In respect of a right in re-aliena, there is an encumbrance, but the ownership and

other rights are vested in the owner. The right of a tenant or a mortgagee in
possession of the property etc. is rights in-aliena. However, the ownership remains
with the owner who has the rights in re-propria. Hence, all encumbrances, are rights
in re-aliena: Leases, servitudes, securities, and trusts. In respect of bailor and bailee,
the right of the bailee is right in re-aliena but the bailor has rights in re-propria.

Movable property:-

"movable property" shall mean property of every description, except immovable

property;

Section 2(6) of the Indian Registration Act, 1908 defines the term immovable
Property as “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.
Immovable Property:-

"immovable property" shall include land, benefits to arise out of land, and things
attached to the earth, or permanently fastened to anything attached to the earth;
The following mentioned are judicially recognized as immovable Property:

1. Right of way
2. Right to collect the rent of immovable Property
3. Right of ferry
4. mortgagor’s right to redeem the mortgage
5. The interest of the mortgagee in immovable Property
6. Right of fishery
7. Right to collect lac from trees

Tangible Property
Tangible property consists of real property and personal property. Real property is
property that does not move, such as land and the things that are attached to or built
on that land.

Intangible Property
Intangible property consists of property that lacks a physical existence. Examples of
intangible property include checking and savings accounts, options to buy or sell
shares of stock, the goodwill of a business, a patent, and spousal love and affection.

Real and Personal Property

This distinction between real and personal Property basically originated from Roman
law, and it still exists in England. The two categories of Property are discussed
below:

(i) Real Property means all rights over land recognized by law.

(ii) Personal Property means all other proprietary rights, whether they are right in rem
or in personam.

Public Property and Private Property With reference to the concept of ownership,
Property may be classified into public and private property. The two kinds are
discussed below:

(i) Public Property is owned by the public as such in some governmental capacity. In
other words, it is owned by the government and used for the beneficial use of the
public in general. A park or a government hospital is a public property.
(ii) Private Property is that Property which is owned by a particular individual or some
other private person. A residential house of a citizen may be his private property.

GENERAL PRINCIPLES OF TRANSFER OF PROPERTY:-

It applies only to transfer by the act of parties and not by operation of law.
This Act deals with a transfer of property inter vivos, that is, a transfer between living
persons.
It contains the transfer of both movable and immovable property but a major portion
of the enactment is applicable to the transfers of immovable properties only.
General Principles of Transfer of Property are as follows :
1.The property must be transferable. (Section 6):
It specifically speaks about, what may be transferred. Property of any kind may be
transferred, except as otherwise provided by this act or even by any other law for
time being in force.
2.Restrains on Alienation of Property. (Section 10):
Section 10 of the Act states that any restriction or limitation that ‘absolutely’ restrains
the buyer or transferee from alienating the property is a void condition. But there
exist two exceptions to this rule which are:
a.In cases of lease where a restraint is for the benefit of the lesser or the estate
leased out.
b.Where the property is transferred for the benefit of a woman who is not a Hindu,
Muslim or a Buddhist, with a condition that she doesn’t. Have the power during her
marriage to transfer or create any encumbrance in the sale of property transferred to
her.Here, it must be taken into consideration that Section 10 only bars an absolute
restraint on alienation whereas a partial restraint is permissible.
3.Transfer to an Unborn Person (Section 13):
Section 13 of the Transfer of Property Act, 1882 says that a transfer cannot be
directly made to an unborn person. The interest in favour of an unborn person must
always be preceded by a prior interest created in favour of a living person. The
transfer to an unborn person must be absolute and there should be no further
transfer from him to any other person.
4.Rule against Perpetuity (Section 14):
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.
5.Vested and Contingent Interest (Section 19 & 21) :
Section 19 of the Transfer of Property Act, 1882 states that it is an interest which is
created in favour of a person where time is not specified or a condition of the
happening of a specified certain event. The person having the vested interest does
not get the possession of that property but has the expectancy to receive it upon
happening of a specified certain event.
Section 21 of the Transfer of Property Act, 1882 states that it is an interest which is
created in favour of a person on a condition of the happening of a specified uncertain
event. The person having the contingent interest does not get the possession of that
property but has the expectancy to receive it upon happening of that event but will
not receive the property if the event does not happen as the condition is not fulfilled.
6.Conditional Transfer (Section 25) :
It means that any transfer that happens on the fulfillment of a condition that is
imposed on the other party for the transfer of property.
7.Doctrine of Priority (Section 48) :
This rule is based on the maxim “Qui prior est tempore potior est jure” which means
that “he who is prior in time is better in law, meaning that the subsequent dealings by
the transferor of the same property cannot prejudice the rights of the transferee of
the same property (prior transferee)”.
When a transferor transfers the same property in favour of several transferees, each
transferee will take the property with the rights of the former transferee. It is also
based upon the principle that no man can transfer the title other than which he is
entitled to.
8.Transfer by Ostensible owner (Section 41):
Transfer by ostensible owner : “Where, with the consent, express or implied, of the
persons interested in immoveable property, a person is the ostensible owner of such
property and transfers the same for consideration, the transfer shall not be voidable
on the ground that the transferor was not authorised to make it: provided that the
transferee, after taking reasonable care to ascertain that the transferor had power to
make the transfer, has acted in good faith.”
Section 41 says that, following are the essential which shall keep into mind
these are:
A.There is a transfer of immoveable property.
B.Transfer is by Ostensible Owner.
C.Consent must be obtained from Real Owner and it may be express or implied.
D.The transfer is for Consideration.
E.The transferee has acted in good faith.
F.The transferee (Third party) has exercised reasonable care in finding out the
power of the transferor to make the transfer.
9.Rule of Estoppel (Section 43):
The doctrine of feeding the grant by estoppel is based on the maxim ‘nemo dat quod
nonhabet’ which implies that ‘no one can give to another, which he himself does not
possess’.
Section 43 of the Transfer of Property Act lays down “where a person fraudulently or
erroneously represents that he is authorized to transfer certain immovable property
and professes to transfer such property for consideration, such transfer shall at the
option of the transferee, operate on any interest which the transferor may acquire in
such property at any time during which the contract of transfer subsists”.
10.Doctrine of lis Pendence (Section 52):
During the pendency in any Court having authority within the limits of India excluding
the State of Jammu and Kashmir or established beyond such limits by the Central
Government, of any suit or proceeding 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.
Essentials of doctrine of Lis Pendence:
A.Pendency of suit or proceeding.
B.Pending in the court of competent jurisdiction.
C.There is a right involved which is of immovable property.
D.Suit or proceeding must not be collusive.
E.Property in dispute must be transferred.
F.Transfer affects the right of other party.
Case Law : Bellany vs. Sabine
In this English case, it was held that, if there is any dispute regarding any property
which is immovable one, in such situation property cannot be transferred when the
litigation on that property is pending in the court of law.
11.Fraudulent Transfer (Section 53)
In order to attract this section, there must be a transfer. The transfer must be of
immovable property. The transfer must be a real one which creates a vested title in
favour of the third party. Fictitious transfers do not attract this section. The fictitious
transfer is where the transferor remains the real owner of the property. Hence, in
order to set aside the transfer under section 53, it has to be proved that the transfer
was a real one and not a sham one.
12.Rule of Part Performance (Section 53A):
Doctrine of Part Performance prevents a transferor from taking any advantage on
account of non registration of documents, the provison this is that the transferee has
performed his part of the contract and in pursuance to that performance; the
transferee has taken possession of some part of the property.

Transfer of property;-

defines the term transfer of property. According to this section, transfer of

property means an act by which a living person conveys property, in present
or in future, to one or more other living persons, or to himself and other
living persons. The phrase “living person” includes a company or association
or body of individuals, whether incorporated or not, but nothing in this
section shall affect any law for the time being in force relating to or by
companies, associations or bodies of individuals.

Requisites of Transfer:-
1.The transfer must be between two or more living persons.

2.The property must be transferable

3.Persons competent to transfer

4.Methods of Transfer

5. Must not have any conditions Restraining Alienation

Kinds of Transfers

1.Sale :-Section 54 of the Transfer of Property Act, 1882, defines “sale”

as the transfer of ownership in exchange for a price. The term “price” is to
be interpreted as a price in terms of money and not otherwise. If the
transfer involves any other kind of consideration, it is not a sale. Further,
the Section also provides that the price need not be paid simultaneously
with the transfer. The price may either be paid in full or partially, or partly
paid and partly promised. The transfer will be deemed complete in all
three cases. Thus, what is relevant is not the immediate payment but the
reference as to when and how the payment is to be made.

2.Mortgage:- A mortgage is a transfer of an interest in immovable property and it is

given as a security for a loan. The ownership of an immovable property remains with
the mortgagor itself but some interest in the property is transferred to the mortgagee
who has given a loan.

Essential conditions of a mortgage:

1. There is a transfer of interest to the mortgagee.

2. The interest created in specific immovable property.
3. The mortgage should be supported by consideration.
3.Lease:- A lease of immoveable 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.
4.Exchange:- An exchange occurs when one item is transferred in exchange for
another. The provisions pertaining to the Exchange in the Transfer of Property Act
(TPA) are found in Section 118.

5.Gifts A gift deed is when one person freely and without compensation gives any
existing movable or immovable property to another person. The Act's (TPA) Section
122 states that in this type of transfer, the donee's acceptance is vital.

What property cannot be transferred :-Section 6(a) : Spes Succession

This section states that:

1.The chance of heir-apparent succeeding to an estate cannot be transferred.

2.The chance of a relation obtaining a legacy on the death of kinsman cannot

be transferred.

3.Any mere possibility of a like nature cannot be transferred.

Example 1:- A is the owner of a property, if he dies his son B will get the
property as he is the legal heir and here it can be said that B is the heir-
apparent. But this same property cannot be transferred to B during the
lifetime of A.

Section 6(b) : Right of re-entry

This clause states that the right to resume the possession of the land which could be
given to some other person for a certain period. For example, lease cases. As per
this, if there is a mere right of re-right for breach of a condition, it later cannot be
transferred to anyone except the owner of the property who is thereby affected.

Example

A grants a lease of land to B for 3 years. At the expiry of 3 years, if he transfers the
right of re-right to C then this transfer shall be invalid.

Section 6(c) : Easement

An easement means a right that the owner or the occupier of certain land has in his
possession for the beneficial enjoyment of the said land. It can be said that the right
to use or restrict the use of the property of some other person. An easement cannot
be transferred except the dominant heritage.
Example

M, the owner of the house has the right of way over their adjoining land with N.
Hence, M cannot transfer his right without transferring the house.

 In the case of Sital v. Delanney, the court held that an easement cannot be
transferred unless the dominant heritage right is attached to it.

Section 6(d) : Restricted interest

A person cannot transfer anything that is interest restricted in the enjoyment to him.
Restricted rights are personal and cannot be transferred and if such transfer
happens then it would be void. The following types of interest are not considered
transferable, such are:

 Service tenure;
 A right of pre-emption;
 Emoluments;
 Religious office.

Example

The right of the priest to receive the offering. This right is his restricted interest and
he cannot transfer this to another person who may be a doctor by profession.

Section 6(dd) : Right to future maintenance

This clause states that the right to future maintenance whatsoever cannot be
transferred in any manner. This is because the right is solely a personal benefit given
to a person and so he cannot transfer his benefit to someone else.

Example

A woman who receives maintenance from her husband under a decree or award or
order.

 In the case of Dhupnath Upadhya v. Ramacharit, it was held that where the
property is given as maintenance, then the person cannot transfer the
property during her lifetime. A right of maintenance is a personal right and
cannot be taken away.
Section 6(e) : Right to sue

According to this clause, a mere right to sue cannot be transferred. A right to sue
cannot be transferred as the transferee acquires no interest in the subject matter of
the suit as much as the owner of the property would.

Example

X published defamatory statements against Y and Y filed a suit against X. But Y

cannot transfer his right to Z to recover damages for him. If Y transfers his right to Z
then this transfer will be held void.

Section 6(f) : Public Office

A public office cannot be transferred and so the salary of the public officer, whether
before or after it becomes payable. A public officer is a person who is appointed to
discharge his duty towards the public and for doing such an Act he is paid in the form
of salary. This salary is a personal benefit to him that cannot be transferred.

Section 6(g) : Pensions

Generally, pensions are the monetary value like a salary, given to a person timely
who ceased to be a government employee. This pension is his benefit which he
cannot transfer just like his salary.

 In Saundariya Bai v. Union of India, it was held by the court that pension is
not transferable and as long as such is in the hands of the government.

Section 6(h) : Nature of interest

According to this section, the Transfer should not affect the nature of the interest of
anyone. For example, the public or religious uses or services cannot be transferred.
If any transfer whose object is unlawful or has unlawful consideration is not
permissible under this section. Also if the property is transferred to someone who is
disqualified legally to be a transferee then such transfer is not valid.

Example

X, Y, and Z entered into an agreement for the division of gains among them which
they acquired by fraud. Hence, this agreement is void as the consideration is
unlawful.

Conditions restraining alienation (Sec10):-

 Section 10 lays down that where the transferee is absolutely

restrained from transferring his interest in his property to
 another person because of a condition which came along when
the property was transferred to the transferee, then this
condition will be made void. The transfer, from the transferor
to the transferee would remain valid.
 For example, A transfers some property to B as a gift but with
the condition that while A is alive, B must not transfer the
property to any other person. This condition will be held void
as it absolutely restrains B from transferring his interest in the
property to another person.
This is commonly known as the ‘rule against alienability’. The
Transfer of Property Act is based on the principle that there can be a
free transfer of property and has been specifically made with regard to
free transfer. If conditions restraining transfer are imposed, then the
free transfer would be restricted and there would be no use for the
Transfer of Property Act.

However, only conditions mandating ‘absolute restriction’ are void.

There are conditions which call for partial restraint to be observed with
regard to the transfer of property. If we are to determine whether a
condition is absolute or partial, then one must look at the substance of
the condition, and not merely the words. Therefore, restraints can be
classified into two categories.

Types of restraints

Absolute Restraints

 An absolute restraint is such a restraint which completely takes away the right
of the transferee to alienate or dispose of the property. The transferee can now no
longer transfer his interest in the property to another person and he has no freedom
to do what he wants with the property in his capacity as the owner of the property.

 Section 10 stipulates that any condition imposed on the transferee which

would amount to an absolute restraint on the right of the transferee to dispose of his
interest in the property shall be void. The property must be transferred to the
transferee subject to the condition.

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

gave a condition that if B decides to sell the house during the lifetime of A’s wife, she
should have the option of purchasing it for Rs 10000, while the market value of the
house was set at Rs 10,00,000. This condition was held to be an absolute restraint
and was declared void.
 In Kannamal v. Rajeshwari, AIR 2004 NOC 8 (Mad), a life estate was to be
created in favour of ‘M’, but the transferor gave an absolute restriction along with the
property transfer to M, whilst divesting himself of all his interests in the property. This
restraint was held to be void as there was an absolute transfer.

 In Mohd Raza v. Abbas BandiBibi,(1932) 59 IA 236, a condition imposing

restriction for a particular time or transfer to a specific person has been held to be
void.

Partial Restraints

 A partial restraint is a condition which partially takes away the right of the
transferee to dispose of his interest in the property. Here, the right is not taken away
substantially. Section 10 does not explicitly talk about partial restraints. A condition
imposing partial restriction is valid.

 In Mata Prasad v. Nageshwar Sahai (1927) 47 All 484, there was a dispute
regarding succession between nephew and widow. A compromise was formed that
the widow had possession of the property while the title for the same was given to
the nephew with the condition that he was restricted from alienating the property
during the widow’s lifetime. It was held that the compromise and the condition were
valid and prudent in the present case.

Exceptions to the restraints

Lease

A lease is a transfer of property wherein the lessee only has the right of enjoyment of
the property, while the ownership right is still with the lessor. Conditions imposing
restrictions are valid in the case of a lease, where the condition is for the benefit of
the lessor or those claiming under him. In Raja JagatRanvir v. Bagriden, AIR 1973
All 1, a condition in the lease that the lessee shall not sublet or assign was held to be
valid.

Married Woman

When the property is to be transferred to a married woman, who is not a Hindu,

Mohammedan or Buddhist, then the condition restricting alienation can be valid.
Repugnant conditions

 Section 11 of the Transfer of Property Act contains conditions which are

inconsistent with the nature of the interest transferred are repugnant conditions.
These conditions come with the transfer when the transfer confers to the transferee,
absolute interests in the property. Any condition with a transfer of absolute interests
in the property will be void.

 When a property is transferred absolutely, it must be transferred along with all

its legal incidents. In Manjusha Devi v. Sunil Chandra, AIR 1972 Cal 310 , the parties
entered into a sale for a piece of land. In the sale deed, it was mentioned that the
buyer could only use the land for setting up a factory for jute textile manufacturing. It
was held that this condition was invalid as the absolute interests in the land had
been transferred to the buyer and he could use it as he pleased.

An exception to Section 11

If the transferor has another piece of immovable property, he may, for the benefit of
that property, impose conditions of restrictions on the transferee’s right of enjoyment.
For example, A has two properties: X and Y. A sells them to B with the condition that
a portion of X, adjoined to Y, shall be kept open for the benefit of Y. This condition
will be valid.

Positive and negative conditions

 Positive conditions: These are those conditions imposed on the transfer

where the transferor imposes a condition on the transferee to do some act. For
example, A transfers land to B, on the condition that he shall maintain and keep
filling up the well on that plot of land. This condition is positive.

 Negative conditions: These are those conditions imposed on the transfer

when the transferor imposes a condition on the transferee to not do some act. For
example, A transfers land to B, on the condition that he shall leave open a four feet
wide space on the land, and would not build anything on it.

Difference between Section 10 and Section 11

 Section 10 specifies that in a transfer with condition that absolutely restrains

the alienation of the property by the transferee, the condition will be deemed to be
void.

 Section 11 specifies that in a transfer where absolute rights in the property

have also been alienated to the transferee, and where a condition is imposed that
the transferee cannot, in spite of having the absolute right in the property, do an act
for his enjoyment of the property, such condition will be deemed to be void.

 Thus, the differences in these sections are that in Section 10 the condition is
deemed void due to absolute restrainment and in Section 11, the condition is
deemed void due to the transfer being of absolute nature.

Condition of insolvency

 Section 12 provides that when the transferee becomes insolvent, and if he

has some interest in the property that was transferred to him by the transferor, the
transferee still would not lose his interest in the property. Hence, any condition
stating that transferee shall lose the interest in the transferred property on insolvency
and this interest shall be reverted back to the transferor shall be void.

 However, this section does not apply to a condition on a lease for the benefit
of the lessor or those claiming benefit under him. However, in Smith v. Gronow
(1891) 2 QB 394, if lessee assigns the lease and then is rendered insolvent, then
this condition will not apply.

Vested Interest:-

Section 19 of the Transfer of Property Act, 1882 states about Vested Interest. It is
an interest which is created in favour of a person where time is not specified or a
condition of the happening of a specified certain event. The person having the
vested interest does not get the possession of that property but has the expectancy
to receive it upon happening of a specified certain event.

 For example, A promises to transfer his property to B on him attaining the age
of 22. B will have vested interest in A’s property till the time he does not get the
possession of it.

Death of the person who is having this interest will not have any effect over that
interest as after the deceased, the interest will vest in his legal heirs.

For example, in the above example, if B dies at the age of 21, then the interest
vested in B will pass on to the legal heirs of B and they will be entitled to the property
in the prescribed time period.

There are the important aspects of a vested interest as stated above, all these are
discussed in detail below:
1. Interest should be vested: This is the basic meaning of the provision that lays
down that interest should be created in favour of a person where time is not specified
or a condition of the happening of a specified certain event. A person should profess
to transfer a particular property in order for this interest to be created.
2. Right to enjoy property is postponed: When interest is vested in a person, he
does not immediately get the possession of that property and hence cannot enjoy
that property.
But any person who is not a major and has a guardian is only entitled to the vested
interest after he attains majority.

For example, X agrees to transfer the property ‘O’ to Y and directs his guardian Z to
give him the property when he attains the age of 22. Y gets vested interest once he
attains the age of 18.

1. Time of vesting: The interest is vested right after the transfer is initiated. Nothing
can stop the interest from vesting in the person in favour of whom the transfer is to
be made.
2. Contrary Intention: The transferor can specify a particular time as to when the
interest will be vested in the person who will receive the property.
3. Death of the transferee: If the transferee dies before getting the property in his
possession, the interest vested in him will now vest in his legal heirs and they will get
the possession of that property once the condition is fulfilled.
In the case of Lachman v. Baldeo (1), a person transferred a deed of gift in favour
of another person but directed him that he will not get the possession of that property
until the transferor himself dies. The transferee will have a vested interest even
though his right of enjoyment is postponed.

Characteristics of Vested Interest

1) Vested interest creates a present right that is in effect immediately, although the
enjoyment is postponed to the time prescribed in the transfer. It does not entirely
depend on the condition as the condition involves a certain event.

2) Death of transferee will not render the transfer invalid as the interest will pass on
to his legal heirs.

3) Vested interest is a Transferable and heritable right.

Section 20 of the Transfer of Property Act, 1882 states about vested interest to an
unborn child. The interest in the property will be vested in him once he is born. The
unborn child may not get the right of enjoyment of the property immediately after
having vested interest.

Concept of Contingent Interest

Section 21 of the Transfer of Property Act, 1882 states about Contingent Interest. It
is an interest which is created in favour of a person on a condition of the happening
of a specified uncertain event. The person having the contingent interest does not
get the possession of that property but has the expectancy to receive it upon
happening of that event but will not receive the property if the event does not happen
as the condition is not fulfilled. Contingent interest is entirely dependent on the
condition imposed on the transfer.

For example, A agrees to transfer the property ‘X’ to B on the condition that he shall
secure 90 % in his exams. This condition is uncertain and the happening of the event
or not happening is in doubt and therefore B here acquires a contingent interest in
the property ‘X’. He shall get the property only if he gets 90 % and when the
condition is fulfilled.

In the case of Leake v. Robinson (2), the court held that whenever a condition
involves a bequest that is to be given ‘at’ a particular age or ‘upon attaining’ a
particular age or ‘after’ attaining this particular age, then it can be derived that the
transfer involves a contingent interest.

Characteristics of Vested Interest

1) Vested interest creates a present right that is in effect immediately, although the
enjoyment is postponed to the time prescribed in the transfer. It does not entirely
depend on the condition as the condition involves a certain event.

2) Death of transferee will not render the transfer invalid as the interest will pass on
to his legal heirs.

3) Vested interest is a Transferable and heritable right.

Section 20 of the Transfer of Property Act, 1882 states about vested interest to an
unborn child. The interest in the property will be vested in him once he is born. The
unborn child may not get the right of enjoyment of the property immediately after
having vested interest.
 Concept of Contingent Interest
Section 21 of the Transfer of Property Act, 1882 states about Contingent Interest. It
is an interest which is created in favour of a person on a condition of the happening
of a specified uncertain event. The person having the contingent interest does not
get the possession of that property but has the expectancy to receive it upon
happening of that event but will not receive the property if the event does not happen
as the condition is not fulfilled. Contingent interest is entirely dependent on the
condition imposed on the transfer.

For example, A agrees to transfer the property ‘X’ to B on the condition that he shall
secure 90 % in his exams. This condition is uncertain and the happening of the event
or not happening is in doubt and therefore B here acquires a contingent interest in
the property ‘X’. He shall get the property only if he gets 90 % and when the
condition is fulfilled.

In the case of Leake v. Robinson (2), the court held that whenever a condition
involves a bequest that is to be given ‘at’ a particular age or ‘upon attaining’ a
particular age or ‘after’ attaining this particular age, then it can be derived that the
transfer involves a contingent interest.

Condition Precedent: As per Section 26 of the Transfer of Property Act 1882, the
conditions that must be fulfilled before the property transfer is called a condition
precedent.

 It is not mandatory or strictly followed by the parties when the actual transfer occurs
as per the conditional transfer in property law. It can also be done with substantial
compliance with the Transfer.
 Any party can ask for a condition with substantial compliance before the land
documents are transferred to the other party’s name.

Example case:

Wilkinson vs. Wilkinson

 The party asked the other party to end the marriage and divorce the husband for the
transfer to be completed.
 This is an immoral act that violates the other party’s interests. Hence, it was termed
void, and the court held it invalid to go through with an act against public policy.

2. Condition subsequent: As per Section 29 of the Transfer of Property Act 1882,

the conditions that must be fulfilled after the property transfer is called a condition
subsequent.

 It is a mandatory condition that is to be strictly followed and completed. The transfer

can be completed only after the subsequent has been done.
 An essential factor and requirement are that the conditional transfer in property law
should be lawful and must not have fraudulent actions involved. If found to be
unlawful, it will be void and cancelled by the court.
 For example, X offers to transfer the property to you on the condition that Y causes
injury to Z. This is immoral and void. The transfer cannot go through with such types
of conditions.

Transfer of unborn person(sec13)

Sec 13 “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.”

Section 13 of the Transfer of Property Act, 1882 provides that

when for the transfer of property, an interest therein is created for the
benefit of an unborn person at the date of the transfer, a prior interest
is to be created in respect of the same transfer and 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 person
transferring the property in the property to be transferred.

Thus, in order to transfer a property for the benefit of an unborn

person on the date of the transfer, it is imperative that the property
must first be transferred by the mechanism of trusts in favour of some
person living other than the inborn person on the date of transfer. In
simpler terms, it can be said that the immovable property must vest in
some living person between the date of the transfer and the coming
into existence of the unborn person as the property cannot be
transferred directly in favour of an unborn person.

In other words it can be said that the interest of the unborn person
must in all cases be preceded by a prior interest. Moreover,when an
interest is created in favour of an unborn person, such interest shall
take effect only if it extends to the whole of the remaining interest of
the person transferring the property in the property, thereby making it
impossible to confer an estate for life on an unborn person. The
interest in favour of the unborn person shall constitute all of the entire
remaining interest in the estate. The underlying principle in section 13
is that a person disposing of property to another person shall not cause
obstruction in the free disposition of that property in the hands of more
than one generation. Section 13 does not apply restrictions on the
successive interest being created in favour of several persons living at
the time of operation of the transfer. What is provided as a restriction
under section 13 of the Transfer of Property Act, 1882, is the grant of
interest, limited by time or otherwise, to an unborn person.

Thus, it can be said that if the persons for whose benefit the transfer is
to take effect are living, any number of successive life interests can be
created in their favour. However, an important point to note here is
that if the interest is to be created in favour of persons who have yet
not taken birth, then in that case absolute interest must be granted to
such unborn persons.

Essential Elements of Section 13

The essential elements of section 13 have been discussed below. They are as
follows:

1. No Direct Transfer

A transfer cannot be directly made to an unborn person. Such a transfer can

only be brought into existence by the mechanism of trusts. It is a cardinal
principle of property law that every property will have an owner. Accordingly,
if a transfer of property is made to an unborn person, it will lead to a
scenario wherein the property will remain without an owner from the date of
transfer of property till the date the unborn person comes into existence.

2. Prior Interest

If the circumstances are such that there is no creation of trust, then in

that case the estate must in some other person between the date of
transfer and the date when the unborn person comes into existence.In
simpler words we can say that the interest in favour of an unborn
person must always be preceded by a prior interest created in favour
of a living person.

3. Absolute Interest

The entire property must be transferred to the unborn person. The

transfer to an unborn person must be absolute and there should be no
further transfer from him to any other person.An interest which
remains only for the lifetime cannot be conferred on an unborn person.
Under the English law, an unborn person can be conferred an estate
only for his lifetime. This concept of English law, however, is subject to
a restriction known as the rule of double possibilities. This rule was
recognised in the case of Whitby Mitchell. The rule states that life
interest to an unborn person should not be transferred as doing so will
give rise to existence of two possibilities. The first possibility will be the
birth of the unborn person to whom the life estate was to be
transferred and the second possibility will be the coming into existence
of issues of that unborn persons. Thus, the transfer of property to an
unborn person can be permitted only if the absolute interest is
transferred and not just the life estate.

Illustration

“A” owns a property. He transfers it to “B” in trust for him and his
intended wife successively for their lives. After the death of the
survivor, it is to be transferred to the eldest son of the intended
marriage for his life, and after his death, it is to be transferred to 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.

When an Unborn Person Acquires Vested Interest

The provisions of section 20 of the Transfer of Property Act, 1882
mention the concept that in what circumstances unborn person
acquires vested interest. Unborn person may not be able to enjoy the
possession of property as soon as he is born but he may, however,
acquire a vested interest in the property since his birth. Where, on a
transfer of immovable property interest is created for the benefit of an
unborn person, he acquires upon his birth, a vested interest, although
he may not be entitled to the enjoyment thereof immediately on his
birth.The mentioned provision however may be waived off if the terms
of the agreement mention a contrary clause.

The section lays down that an interest created for the benefit of an
unborn person vests in that unborn person as soon as he is born. Such
interest remains vested interest even though he may not be entitled to
the enjoyment thereof immediately on his birth.

For example, if “A” transfers an estate to trustees for the benefit of A’s
unborn son with a direction to accumulate the income of such estate
for a period of ten years from the date of the birth of A’s son and then
to hand over the funds to him. A’s unborn son acquires a vested
interest upon his birth, although he is not entitled to take and enjoy
the income of the property for a period of ten years.

Rule against perpectuality

The dictionary meaning of the word ‘perpetuity’ is ‘continuing forever’. Here under
Sec. 14 the term “perpetuity” refers to tying up of property for an indefinite period or
for ever. According to Jarman, perpetuity, in the primary sense of the word, is a
disposition which makes property inalienable for an indefinite period. If properties are
blocked for ever from being alienated, the commerce would be obstructed, capital
investment of the country would be withdrawn from trade and every branch of
industry would be diminished. Certainly, it would obstruct the national prosperity.
There are some persons who wish to retain their properties in their own family from
generations to generations perpetually. But, it is the policy of the law to prevent
creation of perpetuities.

To protect this situation Sec. 14 of the Transfer of Property Act has embodied the
rule against perpetuity. The rule is founded on the general principle that the transfer
shall be void which tend to create in perpetuity or place property for ever out of the
reach of exercise of the power of alienation. Section 14 lays down that “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, the
interest created is to belong if he attains the age of majority.”

Let us suppose, that A transfers a piece of land to his friend B for life, and
afterwards to his friend C for life, then to his friend D for life, and then to the son that
may be born to B, for his son’s life, then to the son that may be born to C for his life,
and then ultimately to the son that may be born to D for ever. In case of such
disposition of the land, B can not alienate the property, because he has only a life
interest therein.

For the same reason, neither C nor D, nor the sons of B and C can alienate the
property. When the property finally vests in D’s son, only he will be entitled to
alienate the property. This would be certainly a restraint on the free alienation of the
piece of land for a considerable long period. Section 14 prevents this and lays down
that one can tie up property and stop it’s free alienation only for one generation,
because all friends of A, now living must die within that time, as they are all candles
lighted together. Again, as for instance, if a transfer is made by A in favour of B for
his life, afterwards in favour of C, D and E, successively for their lives, who are all
living persons, the transfer is valid because all the persons benefited are in existence
at the date of transfer.

According to the English law, the vesting of property can be postponed for any
number of lives in being and an additional term of 21 years afterwards, & for as
many months in addition as are equal to the ordinary period of gestation, should
gestation exist. The additional term of 21 years is irrespective of the fact whether
such person is a minor or not. But according to the Indian law, the vesting can be
delayed beyond the lifetime of persons in being for the period only of the minority of
some person born in their lifetime, & the addition of an absolute period of 21 years
has not been adopted by Sec. 14.

The following are the exceptions to the rule against perpetuity

1. The rule has no application where land is purchased or property is held by a

corporation.

2. This rule is does not apply when the transfer creates only a personal obligation
and does not affect the interest in the property.

3. Gifts to charities such as transfer for the benefit of public, for the advancement of
religion, knowledge, health, commerce, safety, or any other object beneficial to the
mankind do not fall within this rule.

4. A covenant of redemption in a mortgage is not affected by this rule.

5. A covenant for pre-emption in respect of land unrestricted in point of time is not

affected by this rule.

6. Where only a charge is created on any property and such a charge does not
amount to transfer of any interest, that charge does not fall within this rule.

7. The contract for perpetual renewal of a lease does not come within the purview of
this rule. 8. Provision for the payment of the debts of the transferor.

Doctrine of election”

The principle of the doctrine of election was explained in the leading case of Cooper
v. Cooper. Sec. 35 of the TP Act embodied the doctrine of election. The doctrine of
election is based on the principle of equity.
According to the section 35 where a persona) professes to transfer property which
he has no right to transfer, and b) as part of the same transaction, confers any
benefit on the owner of the property, c) such owner must elect either to confirm the
transfer or to dissent from it.

If he dissents from it-

(a) he must relinquish the benefit so conferred; and

(b) the benefit so relinquished reverts to the transferor or his representative as if it

had not been disposed of.

However, when such benefit reverts back to the transferor, it is subject to the charge
of making good to the disappointed transferee the amount or value of the property
attempted to be transferred in two cases, namely

i) where the transfer is gratuitous, and the transferor has, before election, died or
otherwise become incapable of making a fresh transfer; and

ii) where the transfer is for consideration. The doctrine of election may be illustrated
by the following example. Let us suppose that one farm of Sultanpur is the property
of C and worth 800/- . A, professes to transfer that farm of Sultanpur upon which he
has no right to transfer. And by an instrument of gift, professes to transfer it to B,
giving by the same instrument 1000/- to C. C, the owner of the farm of Sultanpur, is to elect
either to confirm the transfer or to dissent from it. Here, C elects to retain the farm or dissents
from the transfer. C, then forfeits the gift of 1000/- . In the same case, A dies before the
election. The representatives of A must, out of the 1000/- pay 800/- to B to make good to the
disappointed transferee the amount or value of the property attempted to be transferred.

The conditions necessary for application of this doctrine are as follows

a) The transferor must not be owner of the property which he transfers.

b) The transferor must transfer the property of other owner to a third person.

c) The transferor must at the same time grant some property, in the same instrument, out of
his own, to the owner of property.
d) The two transfers i.e. transfer of the property of owner to the transferee and conferment of
benefit on the owner of property must be made in the same transaction. Question of election
does not arise if the two transfers are made by virtue of two separate instruments.

e) The owner must have proprietary interest in the property; a creditor is not put to election as
he has only a personal right to be paid by the debtor.

f) The owner taking no benefit under a transaction directly, but diverting a benefit under it
indirectly, is not put to election.

g) Question of election does not arise when benefit is given to a person in a different
capacity.

There is difference between English and Indian law regarding the doctrine of election.

1. English law applies the principle of compensation while the Indian law adopts the rule of
forfeiture.

2. English law does not specify any time within which election is to be made .Indian law
specified one year time within which owner of the property is to elect whether he confirms
the transfer or dissents from it .If the owner does not comply with such requisition , he is to
be deemed to have elected to confirm the transfer.

There is one exception to the doctrine of election.

Where a particular benefit is expressed to be conferred on the owner of the property which
the transferor professes to transfer, and such benefit is expressed to be in lieu of that property,
if such owner claims the property, he must relinquish the particular benefit, but he is not
bound to relinquish any other benefit conferred upon him by the same transaction. This
exception may be explained by an example. Let us suppose that X transfers to Y the property
A, in lieu of Y’s property B which is given to Z. X also gives to Y the property C. If Y elects
to retain his own property he must relinquish claim over A but not C.

Doctrine of feeding grant by estoppel:-

English law of estoppel is that where a grantor has purported to grant an interest in land
which he did not at the time possess but subsequently acquires, the benefit of his subsequent
acquisition goes automatically to the earlier grantee or, as it is usually expressed, feeds the
estoppel. Section 43 of the Transfer of Property Act embodied this doctrine of feeding the
grant by estoppel.
Section 43 says that where a person fraudulently or erroneously represents that he is
authorized to transfer certain immovable property and professes to transfer such property for
consideration, such transfer shall, at the option of the transferee, operate on any interest
which the transferor may acquire in such property, at any time during which the contract of
transfer subsists. Section 43 further provides that nothing in this section shall impair the right
of transferees in good faith for consideration without notice of the existence of the said
option.

The following are the conditions for application of the doctrine of feeding the grant by
estoppels

1. There must have a fraudulent or erroneous representation of ownership by the transferor.

2. The transferee must have acted on the fraudulent or erroneous representation of the
transferor.

3. The transferor should not have transferable title on the property transferred.

4. The transfer should be for consideration.

5. The transferor must subsequently acquire title upon the property transferred on the basis of
fraudulent or erroneous representation of ownership.

6. The contract of transfer must be subsisting when the transferee exercises his right to
recourse the doctrine of feeding the grant be estoppel.

If these conditions are fulfilled the transferee can exercise his option only during continuance
of the contract and only in respect of the interest which the fraudulent or erroneous transferor
acquires in such property. But there are some circumstances where the doctrine of feeding the
grant by estoppel has no application. These circumstances are as follows

1. This section is not applicable if the transfer is not for consideration.

2. This section does not apply if the transfer is invalid for being forbidden by law or contrary
to public policy

3. This section is not applicable if the contract comes to an end before acquisition of the
property by the transferor.
4. This section has no application to Court sales.

5. The right is not available against the bonafide purchasers for value without notice.

Doctrine of lis pendenens

The doctrine of Lis pendens emerged out of the maxim “ut lite pendent nihil innoveteur”
which means that nothing new should be introduced in a pending litigation.

This doctrine of Lis pendens is embodied in section 52 of the Transfer of Property Act. The
principle of finality of litigation or the doctrine of Lis pendens will be found in the judgment
of Lord Justice Turner in the leading case of Bellamy v. Sabine, where the Learned Judge
said so,”…. It is, as I think, a doctrine common to the Courts of both law and equity, and
rests, as I apprehend upon this foundation----that it would plainly be impossible that any
action should or could be brought to a successful termination, if alienation pendent lite were
to prevail.

The plaintiff would be liable in every case to be defeated by the defendant’s alienating before
the judgment or decree, and would be driven to commence his proceedings de novo, subject
again to be defeated by the same course of proceeding………”

According to Sec. 52 of TP Act, during the pendency in any Court having authority within
the limits of India excluding the State of Jammu and Kashmir or established beyond such
limits of the Central Government, of any suit or proceeding which is not collusive and in
which any right to any immovable property is directly and separately in question, the
property can not 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. It
has been explained further by the Sec. 52 that for the purpose 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.

In order to constitute Lis pendens, following conditions must be satisfied- There should be a
pending suit or proceeding

. The suit or proceeding must not be collusive one.

 The suit or proceeding must be pending in a Court of competent Jurisdiction.

 The suit or proceeding must be one in which a right to immovable property is directly
andspecifically in question.

The property directly and specifically in question must be transferred during such pendency

. The transfer must affect the right of other party.

The doctrine of lis pendens may be explained by an example. Let us suppose that A
mortgaged his property to B. B filed a suit on the mortgage and obtained a decree for sale.
While this decree was being executed, A leased the property to X for ten years. During sale
of the property B purchased the property himself. As the lease to X was affected by the rule
of Lis pendens B was entitled to evict X. There is one exception to the rule of lis pendens. It
is quite open to the Court to permit any party to the suit to transfer the property on such terms
which it may think fit and proper to impose.

Fraudulent transfer

Every transfer of immovable property by way of sale made with an intention to defeat or
delay the creditor of the transferor is voidable at the option of the creditor so defeated or
delayed. This is what is stated in Section 53 of TP Act. If the transferee purchased the
property after proper enquiries and in good faith and belief, the transfer is valid and he will
not be liable. However, the creditor can institute a suit against the transferor. If the transfer
was made without sufficient consideration or with the intention to defeat or defraud the
creditors, the transfer is voidable at the option of the transferee also.

The following are some of the essential elements of Fraudulent Transfer: A transfer must be
made by a debtor to a third person for consideration.

 The intention behind the transfer was to defeat or defraud the creditors.

 The transfer is voidable at the option of the creditor.

 The creditor can file suit on behalf of himself and all other creditors.

 If the property was purchased by the transferee in good faith, he will not be liable.

Doctrine of part performance

The historical background regarding the application of the doctrine of part performance
reveals that in the case of Kurri Veerareddi v. Kurri Bapireddi, the full Bench of Madras High
Court ruled in 1906 that the English doctrine of Part Performance was not applicable in India.
Thereafter, in the case of Md. Musa v. Aghore Kumar Ganguli, the Privy Council held in
1914, that the English doctrine of Part Performance was applicable in India on the principles
of Justice, equity and good conscience. Again, in 1928, in the case of Arif v. Jadunath, the
Privy Council held, going back to the view of Madras High Court, that the English doctrine
of Part Performance was not applicable in India. Thereafter, in 1929, Sec. 53-A was
introduced, to incorporate the doctrine of Part Performance, by amending the TP Act.

Object of the doctrine of Part Performance is to prevent fraud.

Section 53-A of the TP Act lays down that where any person contracts to transfer-

(a) for consideration,

(b) any immovable property,

(c) 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-

(a) has, in part performance of the contract, taken possession of the property or any part
thereof, or

(b) 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

(c) the transferee has performed or willing to perform his part of the contract,

then notwithstanding that where there is an instrument of transfer, that the transfer has not
been completed in the manner prescribed therefore by the law for the time being in force,

a) 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

b) of which the transferee has taken or continued in possession, other than a right expressly
provided by the terms of the contract.
It has also been provided by Sec. 53-A, as an exception to this rule, that nothing in this
section shall affect the rights of a transferee for consideration-

(a) who has no notice of the contract or

(b) of the part performance thereof.

Basis of the doctrine of part performance are the following three maxims of equity-

He who seeks equity must do equity.

 Equity treats that as done which ought to have been done.

 Equity looks to the intent rather than to the form.

The doctrine of part performance requires the following conditions to come into play-

There should be a contract, to transfer any immovable property, for consideration, duly
written and signed by the transferor or on his behalf, from which the terms necessary to
constitute the transfer can be ascertained with reasonable certainty. The transferee must have
taken possession of the property or any part thereof or if already in possession should have
continued in possession in part performance of the contract and should have done some act in
furtherance of the contract. The transferee must have performed or is ready and willing to
perform his part of the contract. The rights of any other subsequent transferee for value
without notice will not be affected by this doctrine.

Sale:-

The relevant sections in the Act are Sections 54 to 57 of The TP Act, 1882.

Sale is defined by Sec. 54 of the Transfer of Property Act. According to the Sec. 54, sale is a
transfer of ownership in exchange for a price paid or promised, or partly paid and partly
promised to pay. The essentials of a valid sale are as follows- According to section 7, the
seller must be a competent person to transfer. According to section 6, the transferee must
be a competent person and must not be a person disqualified to be a transferee. According
to section 6, the subject matter should be transferable immovable property.

 The ownership must be transferred.

 The transfer of ownership must be in exchange for price.

 The price must be paid or promised to pay or partly paid and partly promised to pay.

 The deed of conveyance must be registered in case of transfer of a tangible immovable

property of the value of Rs. 100/- and upwards.

In case of tangible immovable property of a value less than Rs. 100/- , there must be either a
registered deed of conveyance, or delivery of property.

A contract for sale is also defined by Sec. 54 of the Act. According to Sec. 54 a contract for
sale of immovable property is a contract that a sale of such property shall take place on terms
settled between the parties. It does not, of itself, create any interest in, or charge on, such
property. In English law, the purchaser, by virtue of the contract for sale, becomes owner of
the property, from the date of the contract, according to equity. But in India, vendor's
ownership in the property is not affected by the contract for sale until the deed of conveyance
is not registered. The difference between sale and contract for sale may be shown in the
following tabular form.

Rights and liabilities of buyer and seller

Every property transaction create certain rights and liabilities for the
contracting parties. In the case of a sale, the contracting parties, a buyer and
a seller, are also vested with some rights and liabilities. Generally, the
parties themselves expressly agree as to which rights and liabilities they will
subject themselves to. These are mostly mentioned in a sale deed. However,
the Act does not leave it entirely up to the parties. Section 55 lays down a
detailed description of every right and liability in the absence of a contract to
the contrary. For convenience, the rights and liabilities of the buyer and
seller can be categorised into the rights and liabilities before and after the
completion of the sale.

Liabilities and rights of the seller and the buyer before completion of sale

Liabilities of a seller

 Disclosure of material defects (Section 55(1)(a)): A seller is

bound to disclose any latent material defect in the property or his
title in his knowledge. A material defect is of such a nature that if it
was known to the buyer, his intention to enter into a sale might
deviate [Flight v Booth (1834)]. It is a latent defect because it
 cannot be discovered by the buyer even after ordinary care and
inquiry.
 Production of title deeds for inspection (Section 55(1)(b)): A
seller is bound to produce all the title documents relating to the
property at the request of the buyer for his inspection.
 Answer relevant questions regarding his title or the
property (Section 55(1)(c)): The seller must answer every relevant
question put to him by the buyer relating to his title or the property.
The answer must be to the best of his information.
 Execute a proper conveyance of the property (Section 55(1)
(d)): Conveyance means an act of transferring a property. It can be
done by signing or affixing a thumb impression on the sale deed by
the seller. A seller is bound to execute a proper conveyance only on
the payment of the consideration by the buyer. This clause imposes
reciprocal duties on both the buyer and the seller. The clause also
provides that the execution must be at a proper time and place.
 Take reasonable care of the property and title deed (Section
55(1)(e)): The seller is bound to take care of the property and title
deed in the same manner as an owner of ordinary prudence would
do. This duty is to be exercised till the delivery of the property to
the buyer.
 Pay all the charges (Section 55(1)(g)): A seller is bound to pay all
the rent and public charges of the property, with interest if any, due
till the completion of the sale except if the buyer purchased the
property with all the encumbrances.

Rights of a seller
 Right to take rents and profits (Section 55(4)(a)): A seller is
entitled to collect rents and profits from the property until the
ownership is transferred to the buyer.

Liabilities of a buyer
 Disclosure of all the facts known to the buyer that materially
increase the value of the property (Section 55(5)(a)): The buyer
is under obligation to confide to the seller any fact to which he has
reason to believe is not known to the seller relating to the increase
in the property’s value. If he fails to do so, it will be considered
fraud, and the seller can avoid the sale if it is proven.
In the English case of Summers v. Griffiths (1866), an old lady contracted to
sell a property at a much lower price, believing that her rights in the property
were not absolute. The buyer was aware that the lady’s interest in the
property was perfect and absolute, but he did not disclose it to the lady. He
was held liable for fraud, and the sale was set aside.
  Pay the price in accordance with the contract (Section 55(5)
(b)): The buyer must pay the purchase money at the time of
completion of the sale to the seller or any person as directed by the
seller. If there are any encumbrances existing on the property at the
time of sale, the buyer is free to deduce such amount from the
consideration he has to pay. It is in correspondence with the duty of
the seller to execute a proper conveyance.

Right of a buyer
 Refund of money paid on proper denial to accept
delivery (Section 55(6)(b)): The buyer is entitled to receive the
amount of any purchase money with interest properly paid by him
to the seller in anticipation of delivery. The buyer is also entitled to
get a refund of any earnest money paid by him or the cost awarded
to him in a suit to compel the specific performance of a contract or
to obtain a decree for its rescission.

Liabilities and rights of the seller and the buyer

after completion of the sale

Liabilities of a seller
 To give possession (Section 55(1)(f)): The seller is bound to put
the buyer or person as directed by the buyer in possession of the
property on being so required. This clause uses the words- “…such
possession of the property as its nature admits.” It refers to the
nature of possession. For instance, in the case of tangible
immoveable property, physical control is to be given over property.
In the case of intangible immoveable property, the possession is
symbolic.
 Implied liability (Section 55(2)) – The seller must undertake
impliedly that he holds the perfect title to the property and is
transferring the same free from any encumbrance. The rights or
interest created by the sale shall vest with the transferee and may
be enforced by every person in whom that right or interest is for the
whole or any part thereof from time to time is vested.
 To deliver title deeds on receipt of price (Section 55(3)): The
seller is bound to hand over all the documents relating to the title of
the property to the buyer on payment of the whole of the purchase
money. Proviso (a) to Section 55(3) states that if a seller retains
any part of the property comprised in the documents, he is entitled
to keep the documents as well. Proviso (b) also imposes the same
 duty on the buyer of the greatest value when the property is sold to
different buyers. However, in both cases, such a person must
furnish such documents and their true copies to other buyers at
their request. They are also under an obligation to keep the
documents safe unless prevented from doing so by fire or other
inevitable accidents.

Right of a seller
 Charges upon the property for the unpaid price (Section 55(4)
(b)): Where the ownership has been transferred to the buyer before
payment of the whole consideration amount, the seller becomes
entitled to a charge upon the property which is in the hands of the
buyer or any transferee without consideration or any transferee with
notice of non-payment. The charge will be for the amount of the
purchase money or the part remaining unpaid or for the interest on
such amount or part from the date on which possession has been
delivered.

Liabilities of a buyer
 To bear loss to the property (Section 55(5)(c)): After the
completion of the sale, the ownership is completely transferred to
the buyer. From that date, if any damage, destruction or decrease
in value occurs in the property, the buyer will be bound to bear such
losses.
 To pay the outgoings. (Section 55(5)(d)): The buyer is liable to
pay all the public charges or rent accruing after the completion of
the sale or as agreed by the terms settled in the sale deed.

Rights of a buyer
 Benefit of the increment. (Section 55(6)(a)): Any benefit arising
from improvement or increase in value of the property or the rents
and profits after completion of the sale shall vest with the buyer.

Marshalling by subsequent purchaser

Section 56 of the Act deals with marshalling. The situation of marshalling
arises when a debt has to be satisfied and two or more properties are
available. The rule of marshalling suggests that where the owner of two or
more properties mortgages them to one person and sells one or more of the
properties to another person, the buyer of the property is entitled to make
an arrangement with the mortgagee to satisfy his debt out of those
properties that are not sold to him.
This Section is based on the principles of equity. It insists that when a buyer
purchases some property, its absolute interest must be protected. In Brahm
Parkash v. Manbir Singh (1963), the Supreme Court held that under Section
56, a subsequent purchaser has a right to claim marshalling. This Section
also provides that such marshalling shall not affect the rights of the
mortgagee, persons claiming under him, or any other person who has
acquired any interest in the property for consideration.

Mortgage
A mortgage is a transfer of an interest in immovable property and it is given
as a security for a loan. The ownership of an immovable property remains
with the mortgagor itself but some interest in the property is transferred to
the mortgagee who has given a loan.

Essential conditions of a mortgage:

1. There is a transfer of interest to the mortgagee.

2. The interest created in specific immovable property.
3. The mortgage should be supported by consideration.

Kinds of Mortgage
As per Section 58 of Transfer of Property, there are six kinds of mortgages

Simple Mortgage
 Simple Mortgage is defined under Section 58(b) of Transfer of
Property Act, 1882.
 In a simple mortgage, the mortgagor does not transfer immovable
property to the mortgagee but agrees to pay the mortgage money.
 The mortgagee agrees on a condition that in the event of not paying
the mortgage money the mortgagee has every right to sell the
property and can use the proceeds of the sale and such a
transaction is called a simple mortgage.

Conditional Mortgage
 Mortgage by conditional sale is defined under Section 58(c) of
Transfer of Property Act, 1882.
  In this mortgagee places three conditions to the mortgagor, and the
mortgagee shall have the right to sell the property if:

1. mortgagor defaults in payment of mortgage money on a certain

date.
2. as soon as the payment is made by the mortgagor the sale shall
become void.
3. on the payment of money by the mortgagor, the property is
transferred and such a transaction is called a mortgage by
conditional sale.

Usufructuary Mortgage
 Usufructuary Mortgage is defined under Section 58(d) of Transfer of
Property Act, 1882.
 In this mortgage, the mortgagor delivers the possession of the
property to the mortgagee and authorises the mortgagee to retain
such property until the payment is made by the mortgagor and
further authorise him to receive the rent or profit arising from such
mortgaged property and to appropriate the same instead of
payment of interest. Such a transaction is called a Usufructuary
transaction.

English Mortgage
 English Mortgage is defined under Section 58(e) of Transfer of
Property Act, 1882.
 In this mortgage, the mortgagor transfers the property absolutely to
the mortgagee and binds himself that he will repay the mortgage
money on the specified date and lays down a condition that on
repayment of money mortgagee shall re-transfer the property. Such
a transaction is called an English mortgage transaction.

Deposit of title-deeds
 Deposit of title -deeds are defined under Section 58(f) of Transfer of
Property Act, 1882.
 In this mortgage where a person is in Calcutta, Madras, Bombay
and in any other towns as specified by the state government and
the mortgagor delivers to a creditor or his agent the documents of
title of immovable property with an intent to create security and
then such a transaction is called Deposits of title-deeds.
Anomalous Mortgage
 An Anomalous Mortgage is defined under Section 58(f) of Transfer
of Property Act, 1882.
 A mortgage which is not any one of the mortgages mentioned above
is called an anomalous mortgage.

Rights and Liabilities of Mortgagor and

Mortgagee

Rights of Mortgagor

Right of Redemption
As per Section 60 of the Transfer of the Property Act, 1882 one of the
important rights of the mortgagor is the right to redeem the mortgage.

 Once the money has become due on the specified date the
mortgagor has the right to get back the mortgaged property on
paying the money to the mortgagee.
 Right to redemption is a statutory and legal right which cannot be
extinguished on the entering into any agreement.

Right to transfer to a third party

 As per Section 60A of the Transfer of Property Act, 1882 the
mortgagor may direct the mortgagee to assign the mortgage debt
and authorise him to transfer the property to a third party instead of
transferring him the same.
 The object of this section is to enable the mortgagor to pay off the
debt of the mortgagee by taking a loan from another person on the
security of the same property.

Right to inspection and production of documents

 As per Section 60B of the Transfer of Property Act, 1882 the
mortgagor may inspect anytime the document of title relating to the
mortgaged property which is in the custody of the mortgagee.
  The costs and expenses incurred while inspecting the documents
may be borne by the mortgagee.

Right to accession
 As per Section 63 of the Transfer of Property Act, 1882 during the
subsistence of the mortgage if any accession is made to the
mortgaged property where the property is in possession of the
mortgagor itself and then the mortgagor has a right to take in
accession after the redemption of the mortgage.
 Accession can be of two types:

1. Natural accession.
2. Acquired accession.

Right to improvement
 As per Section 63A of the Transfer of Property Act, 1882 during the
subsistence of the mortgage if any improvement is made to the
property where the property is in possession of the mortgagee and
then the mortgagor has a right to take the improvements made to
the property upon the redemption.
 But where the improvements were at cost of the mortgage by
preserving the property from destruction then the mortgagor is
liable to pay the cost which is incurred by the mortgagee in
preserving the property.

Right to a renewed lease

 As per Section 64 of the Transfer of Property Act, 1882 where the
property which the mortgagor has given for mortgage is a leasehold
property if the mortgagee renews the leases during the subsistence
of mortgage the mortgagor shall obtain the benefit of the lease
upon the redemption of the mortgage.

Right to grant a lease

 As per Section 65A of the Transfer of Property Act, 1882 a
mortgagor shall have the right to grant a lease of which is lawfully
in possession with the mortgagee and such lease shall be binding on
the mortgagee subject to the following conditions:

1. lease shall be according to the local laws, custom or usages.

 2. no rent or premium shall be paid in advance.
3. the lease shall not contain a covenant for renewal.
4. the lease shall come into effect within six months from the date on
which it is made.
5. in case lease of buildings, the duration of the lease shall not exceed
not more than three years.

Liabilities of Mortgagor
Section 65 and 66 of the Transfer of the Property Act, 1882 deals with the
liabilities of the mortgagor.

Section 65 is the implied liabilities which are laid upon the mortgagor.
Subject to the contrary, every mortgagor is deemed to have made the
following covenant.

a. Covenant for title

 As per Section 65(a) of the Transfer of the Property Act, 1882 there
is an implied covenant that the mortgagor transferring the interest
in the property to the mortgagee belongs to the mortgagor only.
 And it is necessary that the mortgagor possess the transferable
interest in the property.
 In case mortgagor makes a breach in the covenant the mortgagor is
liable to compensate.

b. Covenant for the defence of the title

 As per Section 65(b) of the Transfer of the Property Act, 1882 the
mortgagor has a duty impliedly to either defend the title if anyone
tries to take away the title from the mortgagee or help the
mortgagee in defending the title.
 By doing so, the mortgagor bears all the expenses incurred while
defending the title.
c. Covenant for payment of public charge
 As per Section 65(c) of the Transfer of the Property Act, 1882 there
is an implied duty to the mortgagor that upon the execution of the
mortgage the mortgagor shall pay all the necessary changes.
 If the mortgagor fails to meet the required charges the property
would be sold by the public authorities and realise the charges.

d. Covenant for payment of rent

 As per Section 65(d) of the Transfer of the Property Act, 1882
where the property mortgaged by the mortgagor is a leasehold
property there is an implied duty of the mortgagor to pay the rent of
the mortgaged property.

e. Covenant for the discharge of prior mortgage

 As per Section 65(e) of the Transfer of the Property Act, 1882 there
is implied duty of the mortgagor to discharge the prior mortgage if
any.
 There is always a presumption that the mortgagor has a covenant
with the subsequent mortgages to pay off the mortgage on
becoming due.
 In such subsequent mortgage if the mortgagor makes a breach the
subsequent mortgagee would have the right to sue for his
mortgaged money.

Mortgagors liability for waste

 Section 66 of the Transfer of the Property Act, 1882 states there is
an implied duty on mortgagor that he shall not do any act which is
injurious or destructive to the mortgaged property.
 Mortgagee should also see that he also does not commit any act
which results in reducing the value of the mortgaged property.
 Following activities are considered as waste by the mortgagor:

1. Removing valuable fixtures from the mortgaged property.

2. Pulling down the mortgaged house and taking the price of the
materials.
3. Cutting down the timber from the mortgaged property.
 4. Mining under the mortgaged building which as a result may lead to
placing the building in the danger.
5. Working new mines on the mortgaged property.

 Whether any particular activity is considered as waste or not

depends on the degree of the loss of the mortgaged property.
 The mortgagor is liable only for the active waste and not the
permissible waste.

Rights and Liabilities of Mortgagee

The rights and liabilities of a mortgagee are given from Section 67 to 77 of
Transfer of Property Act, 1882.

Rights of Mortgagee in Possession

Right to foreclosure or sale

 As per Section 67 of the Transfer of Property Act, 1882 the
mortgagee has a right to foreclosure or sale.
 When the mortgagor does not pay the mortgage money after the
specified date is over and the mortgagor’s right to redeem the
mortgaged money has become complete but he has failed to avail
that right then mortgagee gets a right to institute suit for a decree
that the mortgagor is absolutely debarred of his right to redeem the
property.
 The difference between the right to redemption and right to
foreclosure is that the former is an absolute right whereas the right
to foreclose is not.
 The mortgagor cannot limit the right of redemption but the right to
foreclose can be made subject to a contract between the parties.

Right to sue
 As per Section 68 of the Transfer of Property Act, 1882 the
mortgagee has every right to sue for the mortgaged money.
 The mortgagee can sue for mortgaged money in the following
circumstances:

1. where mortgagor binds himself to repay the money to the

mortgagee.
 2. where the property mortgaged by the mortgagee has been
destroyed either wholly or partially without the fault of the
mortgagee.
3. where the property mortgaged, the mortgagee is deprived of the
security due to some wrongful act done by the mortgagor.
4. where the mortgagors fail to deliver the possession to the
mortgagee.

Right to sell
 As per Section 69 of the Transfer of Property Act, 1882 the
mortgagee has every right to sell the mortgaged property if the
mortgaged money has not been received
 This right can be exercised by the mortgagee when the mortgagor
makes a default in payment of the mortgaged money after the
specified date is over.
 This right can be exercised without the intervention of the court but
only in the following cases:

1. if the mortgage is an English mortgage both the mortgagor and

mortgage should not be Hindu, Muslim, Buddhist, or a member of
any other race as specified by the state government;
2. when there is a contract between the mortgagor and mortgagee the
sale would take place without the intervention of the court in case of
default in payment of mortgaged money;
3. to exercise the above right the mortgaged property should be
situated either in Calcutta, Madras, Bombay, Ahmedabad, Kanpur,
Allahabad, Lucknow, Coimbatore, Cochin and Delhi.

Conditions to exercise of Power

Before the sale proceeding can take place the mortgagee has to fulfil the
following conditions:

 The notice has to be served on the mortgagor in writing and three

months have to be elapsed from sending the notice.
 When the money is unpaid for three money and mortgaged money
is at least INR 500 in arrear.
Right to appoint a receiver
 A receiver is appointed only if there happens to be a sale under
Section 69 of the Transfer of Property Act, 1882.
 The appointment of the receiver is made according to the
mortgaged deed.
 The person appointing as a receiver should be willing to act as a
receiver if he is unable to act as a receiver then the mortgagee can
appoint the receiver if the mortgagor agrees. In case the mortgagor
does not agree to the appointment made by the mortgagee then the
mortgagee can apply to the court for the appointment.
 The money received by the receiver shall distribute for the following
to below case

1. he may discharge all the rents, taxes, land revenues, and any other
charge which is affecting the property.
2. he can claim back the payment along with the interest.
3. he can keep a sum of money as commission and he may pay
premiums on the various insurances insured.

Right to accession to mortgaged property

 As per Section 70 of the Transfer of Property Act, 1882 if there is a
contract between the mortgagor and mortgagee that after the date
of mortgage that the mortgagee shall have the right to the
accession made to the mortgaged property then the mortgagee
shall have right to all the accessions made.

Right of Mortgage to spend the money

 As per Section 72 of the Transfer of Property Act, 1882 the
mortgagee has a right to spend the money when it is necessary.
There are few circumstances in which the mortgagee has a right to spend
the money:

1. the mortgagee can spend the money on preserving the mortgaged

property from destruction, forfeiture and sale.
2. the mortgagee can spend the money if circumstances arise to
protect the mortgagor’s title to the property.
3. when the mortgaged property happens to be a renewable leasehold
property.
 4. the mortgagee can spend the money on insuring the mortgagor’s
property.

Right to proceed of revenue sale or compensation on

acquisition
 As per Section 73(1) of the Transfer of Property Act, 1882 if the
mortgaged property is sold due to the non-payment of government
dues then the mortgagee shall have every right to claim back his
mortgaged money from such sale.
 As per Section 73(2) of the Transfer of Property Act, 1882 if the
mortgaged property is acquired under the land acquisition act or
any other act and the compensation is paid the mortgagee can claim
his debt from such compensation.

Liabilities of Mortgagee in Possession

As per Section 76 of the Transfer of Property Act, 1882 list down the duties
of the mortgagee who is in possession of the property which belongs to the
mortgagor.

The duties mentioned under are the statutory duties except for the duties
which are mentioned under clauses (c) and (d) the duties under these
clauses are mentioned in the contract by the parties.

Duty to manage the property

 The mortgagee has a duty to take reasonable care in the property of
the mortgagor.
 Though he has a liability to take reasonable care in the property the
mortgagee is not bound by the directions given by the mortgagor
and the mortgagee has acquired absolute rights in managing the
property.
 The only condition which is put forward by the mortgagor is that he
cannot lease the property beyond the termination of his interest in
the mortgaged property.

Duty to collect rents and profits

 The mortgagee who is in possession of the mortgagor’s property can
collect the rent and profits arising from the property.
  One outstanding feature of usufructuary mortgagee is the rent and
profits collected from the property are appropriated by the
mortgagee instead of payment of interest.
 Mortgagee becomes liable for the collection of rent and profit only to
the property which he is liable to acquire the rent and profits and
not liable for the whole rental property.

Duty to pay rent, revenue and public charges

 If there is an agreement between the mortgagor and mortgagee
that the mortgagee has to pay the rents, revenue, taxes and
outgoings then the mortgagee is liable to pay all of them which have
been agreed by him.
 The mortgagee is not allowed to take the benefits without paying
the taxes etc.
 In case the money which has been obtained from the property is
insufficient for paying the charges, he may pay out of his own
pocket and later add the amount which has been paid by him to the
debit account.

Duty to make necessary repairs

 If there is an agreement between the mortgagor and mortgagee
that the mortgagee is bound to carry out all the necessary repairs in
the property then the mortgagee is liable to take care of the
necessary repairs.
 The necessary repairs in the property are to be made only when
there is a surplus amount from the rents and profits.

Duty not to commit any destructive act

 While the property is in the mortgagee’s possession he is prevented
from committing any act which is either in destructive nature or is
injurious to the mortgaged property.
 He is prohibited from carrying out any acts which may result in
reducing the value of the property.
 If the property is destroyed because of acts of god then the
mortgagee is not liable for the property.
Duty towards the proper use of insurance money
 Where the mortgaged property has been insured against loss by fire
it is the duty of the mortgagee to apply for the insurance money in
restoring the property.
 The mortgagee is also bound to apply the money received under the
insurance policy in reinstating the property.
 The property which is to be insured only for the two-third of its
value.

Duty to keep the accounts

 The mortgagee has a statutory duty under this provision in keeping
the correct accounts of all incomes arose and expenses incurred by
the mortgagee.
 The only exception is when the mortgagee is entitled to adjust the
income against the interest he is not allowed to give full accounts
because something there may be no money left to use for other
expenses.

Duty to apply rents and profit

 This clause provides the manner in which the mortgagee who is in
possession of the property has to apply for rents and profits during
the mortgage.

Essential doctrines under mortgage

Doctrine of Priority
 The doctrine of Priority is provided under Section 78 and 79 of the
Transfer of Property Act, 1882.
 This doctrine is based on the principle “quite prior est tempore
potior est jure”.
 It means that first in time prevails over the other.
 Where the immovable property is transferred by the mortgagor to
different mortgagees the successive mortgagee is paid only after the
prior mortgagee is satisfied.
 Section 48 of the Transfer of Property Act, 1882 is an exception to
this section.
  As per Section 78 of the Transfer of Property Act, 1882 in case a
prior mortgage suffers from fraud, misrepresentation or gross
neglect then the subsequent mortgage shall have priority over the
prior mortgage.

Doctrine of Marshalling
 Marshalling is defined under Section 81 of the Transfer of the
Property Act, 1882.
 In simple terms, marshalling means arranging things.
 The doctrine of marshalling means when there are two or more
properties which belong to the mortgagor and the mortgages those
properties to one mortgagee and then subsequently mortgage those
properties which have been mortgaged to another mortgagee.

Concept of lease: an introduction

 Lease of an immovable property is defined under Chapter V of the
Transfer of Property Act, 1882.
 Section 105. Lease defined. – 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.

Rights and liabilities of lessor and lessee

The rights and liabilities of lessor and lessee are governed by any contract
between the parties and the local custom or usage and by the provisions of
Section 108 of this Act. These rights and liabilities are subject to a contrary-
contract, i.e., where the lessor and lessee make an agreement to be
governed by their terms and conditions during the subsistence of lease, their
respective rights and liabilities are determined by their own
agreement. Section 108 does not apply in such a case. In the absence of any
contract to the contrary, the mutual rights and liabilities of lessor and lessee
arise. These mutual rights and liabilities are explained below.

Rights and Liabilities of Lessor

Rights of Lessor
The section does not provide for any specific right of the lessor. However,
there are few rights of the lessor that can be inferred from this section.
 1. Right of the lessor to recover the rent from the lease as mentioned
in the lease agreement.
2. In case of any breach of condition by the lessee the lessor has the
right to take back the possession. This right arises from the
exception to Section 10 of this Act.
3. In case of any damage done to the property the lessor is entitled to
recover the amount of damages from the lessee.
4. On the termination of the lease term as prescribed in the
agreement, the lessor has the right to take back the possession of
his property from the lessee.
Illustrations

 A has leased his land to B for a period of three years with a

condition that B shall not cause damage to the property. B breaches
this condition. A is entitled to recover damages from B for the
damage done to his land.
 A has leased his house to B for one year through an agreement. On
the termination of the lease term (one year), A has a right to take
back the possession of his property.

Liabilities of Lessor
Clause (a), (b) and (c) of Section 108 of the Act, lays down the liabilities of
the lessor.

1. It is the duty of the lessor to disclose any material defect in the property
which the lessee under ordinary supervision cannot find out or does not
know. This defect should of such nature that the if the lessee would have
known about it, he would have not accepted it at all and if accepted, he
would have imposed certain terms and conditions.

There are two kinds of defects:

a. Latent defect- Latent defect cannot be discovered rationally or

through inspection by the lessor.
b. Apparent defect- Apparent defect can be easily discovered through
some inspection.
So basically a lessor shall disclose any apparent defect to the lessee and it is
vital to disclose such defects as they interfere with the enjoyment of the
property by the lessee.

In the case, Radha Krishna v. O Faherty, the lessor was held liable for not
disclosing the fact that the furniture of the tenant was destroyed by the fire
caused by the defect in the chimney, which was not disclosed to the tenant.
2. The lessor is bound by the duty to transfer the right of possession over his
property as without having the possession the lessee cannot have the
enjoyment of the property.

Rights and Liabilities of the Lessee

Rights of the Lessee

The clauses (d) to (j) of Section 108 of the Act provide for the rights of the
lessee in the absence of any contract or local usage to the contrary.

(d) If any alteration is made during the duration when the lease is in effect
then that change will come under that same lease.

(e) The lease is voidable at the option of the lessee if the property that has
been leased is destroyed wholly or partly by fire, by war, by flood, violence,
mob or by any other means thus, making it impossible for the lessee to
enjoy the property.

If the property so destroyed can be made fit to use then the lessee cannot
avoid the lease. Also, if the lessee himself causes some damage to the
property then the remedy to avoid the lease will not be available for him.

(f) Lessee has the right to deduct expenses from the rent that he made for
any repairs done in the property if the lessor, bound under some local law or
customs, fails to repair the tenanted property.

(g) The lessor has the right to recover any payment which a lessor is bound
to make either by making a deduction in the interest of the rent or directly
from the lessor, which a lessor is bound to make.

(h) After the termination of the lease, the lessor has the right o
remove/detach all the things that he may have attached to the land during
the time period of the lease. Although, he has an obligation to leave the
property in the same condition as he has received it.

(i) When the duration of the lease is not specified in the lease agreement, all
the benefits or profits arising from the crops sown by the lessee at that
property will belong to the lessee or his legal representative.

(j) By subleasing or mortgaging the leased property, the lessee has a right to
transfer absolutely the property or his interest in that property.
Illustrations

 A leases his property to B. After sometimes A adds some land to the

leased property and dies B to enjoy that property. B has the right to
sue A and enjoy the increased property along with the main
property.
 A, the lessor, will be held responsible for the death of the person
visiting the leased property due to the defect in the electric wiring of
the house.

Liabilities of the Lessee

The clauses (k) to (q) of Section 108 of the Act provide for the liabilities of
the lessee.

(k) It is the duty of the lessee to disclose all the related material facts known
to him which are likely to increase the value of the leased property. The
breach of this duty does not mean that the lease agreement will be
terminated. However, the lessor can sue him for the damages.

(l) The lessee is under an obligation to pay the rent or premium to the lessor
or his agent within the prescribed time as stipulated in the agreement. When
there are more than one lessee, then the rent paid by any one of them is
sufficient. Likewise, if there are more than one lessor then rent paid to any
one of them is sufficient. If the lessee breaches his duty, then the lessor may
sue the lessee for the rent with the interest.

(m) It is the duty of the lessee to maintain and return the property as he got
it initially from the lessor on the commencement of the lease.

(n) It is the duty of the lessee to give notice to the lessor about any
proceedings related to the property or any encroachment or any
interference.

(o) Lessee is under an obligation to prevent any stranger from using all the
assets and goods which are on the property different from the purpose as
described in the lease agreement. He must use the property reasonably.

(p) The lessee is under an obligation to not erect any permanent structure,
except for agricultural purposes, without the consent of the lessor. And if
these permanent structures constructed by the lessee are not removed, then
on the expiry of the term it will belong to the lessor.

In the case of Purushottam Das Bangur v. Dayanand Gupta, the tenant was
held liable for replacing the tin roof of the house with a concrete slab and for
 the construction of the passage, as these changes could not be removed
without damage to the other structure.

(q) It is the duty of the lessee to give back the possession of the property
back to the lessor after the duration of the lease agreement expires. And if
the lessee does not return the property after the expiry of the term he will be
held liable to pay damages and mesne profits to the lessor.

Illustrations

 If the lessee, B discovers any gold mine in the property leased to

him by A. He is under an obligation to inform A about it as it is likely
that the gold mine will increase the value of the property.
 The lessee B must not cut the trees on the land leased to him by the
lessor,A, and sell the timber.
 GIFTs
 Section 122 to Section 129 contained in Chapter VII of Transfer of Property Act,
1882 deals with gifts.
 A gift is considered a gratuitous transfer as an existing property is transferred in
favour of another person without consideration.
o A gift between living persons is intervivos (between the living) gift and it is a
transfer of property within the meaning of Section 5 of this Act.
 The following gifts do not come within the purview of this Act:
o Testamentary gift that is a gift by operation of law.
o A gift made in apprehension of death.

Section 122 of the Transfer of Property Act, 1882

A gift is defined in Section 122 of the Act, which reads as follows:

 Gift is the transfer of certain existing moveable or immoveable property made

voluntarily and without consideration, by one person, called the donor, to another,
called the donee, and accepted by or on behalf of the donee.
 Acceptance when to be made – Such acceptance must be made during the lifetime
of the donor and while he is still capable of giving. If the donee dies before
acceptance, the gift is void.
 Kinds of Gifts
Void gifts may be divided into two types:

 Void Gifts
 Onerous Gifts
Void Gift
The following gifts are included in the category of void gifts:
 Gifts depending on unlawful purposes.
 Gifts made upon a condition, the fulfillment of which is impossible or forbidden by
law.
 Gifts by a person incompetent to contract.
 Where the donee of the gift dies before acceptance.
 A gift comprising of both the existing and future property is void as to the future
property.
Onerous Gifts
 A gift is said to be onerous when it is accompanied by a burden or obligation.
o This section is based on the maxim ‘qui sentit commodum sentire debetet
onus’ which means that he who receives advantage must also bear the burden.
 Section 127 of this Act deals with the concept of Onerous Gifts. It states that:
o Where a gift is in the form of a single transfer to the same person of several things
of which one is, and the others are not burdened by an obligation, the donee can
take nothing by the gift unless he accepts it fully.
o 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
accept a property which, 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.
Universal Donee
 Section 128 deals with the concept of universal donee. It states that:
 Subject to the provisions of section 127, where a gift consists of the donor's whole
property, the donee is personally liable for all the debts and liabilities of the donor at
the time of the gift to the extent of the property comprised therein.
 Universal Donee is the person who gets the whole property (both movable and
immovable) of the donor under a gift.
Mortis Causa
 Section 129 deals with the Gifts which are made in contemplation of death and
known as donatis mortis causa. Such gifts are exempted from the operation of
chapter VII by virtue of Section 129.
 Another exemption is made in favour of gifts which are governed by Muslim personal
law.
Exchange
is defined in section 118 of the Transfer of Property Act, 1882. The exchange of
property in this act relates to immovable property** only. The exchange of moveable
property is governed by the Sale of Goods Act. The literal meaning of exchange
is giving and taking of something.

 In the early decades, the concept of exchange was known as barter

system. The people used to exchange their things and commodities with
others who are in need of them. And in return, they used to get something
which is useful for themselves.

 Essentials of Exchange

 1. There must be two persons for the purpose of exchange.

 Their intention to transfer the things must be with mutual consent. If either of
them has not given consent, then it is not exchange.
 3. There must be a transfer of ownership of a thing from one person to
another and vice-versa.
 4. Any of the thing which is getting exchanged can be any immoveable
property but not money. Money can’t be a property in exchange. (If money is
involved, it becomes sale and not exchange.) (But money can be exchanged
if both parties exchange money. Like A gives 71 rupees to B, and receives 1
dollar from A. See next to next heading.)
 5. The exchange takes place between the parties like the process of sale.
One person transfers his ownership to the other person, and likewise, other
person does.

 Rights and Liabilities of Parties in Exchange

 Both the parties in exchange have equal rights over one another. When the
person is transferring the ownership to the other, he is considered to be at the
position of a seller, and he holds all the rights which a seller has while selling
property. The person who receives the property is considered a buyer, and
he has all the rights which a buyer possesses by virtue of being a buyer.
 The rights are gained after considering the position a person is holding. If a
person is at the receiving side, then he has the rights of a buyer like getting
property in a fit condition and, if not in a fit state, may claim for damages. He
has the right to possess all rights over that property after getting transferred.

 Can There Be Exchange of Money

 It is a written rule that money can’t be a thing in exchange. But section 121 of
the Transfer of Property Act says that if money is exchanged between the
parties, then the parties must assure the other party regarding the
genuineness of money he has given to the other. The proving of the
genuineness of money is essential, if exchanged.
 There are many events where money can get exchanged. For example, a
person visiting the U.K requires the currency of that country only. So when he
exchanges his money in rupee to get money in pounds, it is an exchange of
money.

 Valuation of Things in Exchange

 The definition of exchange nowhere provides any provision or statement

relating to the valuation of things transferred in exchange. The parties
exchanging things may transfer any value of a thing with the other person. It is
immaterial that both the things do not have equal valuation. So the parties
exchanging things must transfer it voluntarily and mutually.
 Finally:
If any person receives anything damaged or destroyed, then he may claim for
damages or may seek permission from the court to return it to the transferor.
 ** Note: The Transfer of Property Act specifically deals with the transfer of
immovable property except for a few provisions like where a thing’s price is
less than Rs 100; it can be made by delivery of goods. Here no registration is
required.
 Likewise, it is not expressly provided in Section 118 of TPA (‘Exchange’
defined) as to what property it includes and excludes.
 The matter of transfer of property under the act has always been debatable.
Some researchers say it includes, and some say it does not include.
Therefore we interpret it with the help of interpretation clause.
 Specifically, the Transfer of Property Act deals with immovable property, and
where the subject matter of transfer is movable property, it is dealt under
the Sale of Goods Act.

ACTIONABLE CLAIM
What is Actionable Claim?
Actionable claim is defined in Section 3 of the Transfer of Property Act, which was
included in the Act by the Amending Act II of 1990. Actionable claim is an intangible
movable property, and its transfer is dealt with in Chapter VIII of the Act.

According to Section 3 of the Act, actionable claim means:

1. Claim to an unsecured debt

2. Beneficial interest in a movable property
These are both claims that are recognized in the Courts of law as affording relief.
There are other types of claims also that afford relief and are actionable in the Courts
of law, such as secured debts and tortuous suits like defamation or nuisance. But
those are not categorized under the meaning of actionable claim. The term
actionable claim only covers the above mentioned two types of claims.

Unsecured Debt

Unsecured debt refers to all monetary obligations of a certain amount, and that is not
covered by any security in the form of mortgage, pledge or hypothecation. This is not
just limited to the concept of loans forwarded by a creditor to a principal debtor. It
extends to all kinds of monetary obligations, such as rent or payment on sale of
property etc.

The three requirements for a transaction to qualify as unsecured debt are:

1. Monetary obligation
2. No security
3. Certainty of amount of money obligated
According to Sunrise Associates v. Govt. of NCT of Delhi [2], an actionable claim
may be existent in praesenti, accruing, conditional or contingent. So, the three types
of unsecured debt are:

Meaning and nature of Easements

The concept of easement has been defined under Section 4 of The Indian
Easements Act, 1882. According to the provisions of Section 4, an
easementary right is a right possessed by the owner or occupier of the land
on some other land, not his own, the purpose of which is to provide the
beneficial enjoyment of the land. This right is granted because without the
existence of this right an occupier or owner cannot fully enjoy his own
property.
It includes the right to do or continue to do something or to
prevent or to continue to prevent something in connection with or in
respect of some other land, which is not his own, for the enjoyment of his
own land.

The word ‘land’ refers to everything permanently attached to the earth and
the words ‘beneficial enjoyment’ denotes convenience, advantage or any
amenity or any necessity. The owner or occupier referred to in the
provision is known as the Dominant Owner and the land for the benefit of
which the easementary right exists is called Dominant Heritage. Whereas
the owner upon whose land the liability is imposed is known as the Serviant
Owner and the land on which such a liability is imposed to do or prevent
something, is known as the Servient Heritage.

Essentials of Easements

1. Dominant and Servient Heritage

For the enjoyment of right of easement, necessary existence of two

properties i.e dominant and servient heritage is a must. This is
because as per the definition, it is the right exercised by the owner or
occupier of one land for enjoying the benefit of his/her land, over the land
of some other person. Dominant and servient heritage cannot be one.
Thus, the existence of two properties and that to be separate from each
other is essential.

2. Separate owners

For exercising the right of easements, owners of the two properties shall
be different and not a single person.

3. Beneficial Enjoyment

The object of easements is that the dominant owner enjoys it in a way

which includes express and implied benefits.