SALE SECS 54-57 Section 54 of the Transfer of Property Act defines the transaction of sale and lays down the formalities required for effecting a sale Definition, ‘Sale’ 1sa transfer of ownershup 1n exchange fora price paid or promised or part-paid and part-promised” In other words the transaction of sale involves a transfer of ownership mn consideration ofa price Mode of effecting a sale. There are two modes of transfer by sale- (a) Regystered instrument (>) Dehvery of property Registered instrument Under Section 54, the following transfers can be made only by registered instrument viz , 1) Tangible immovable property of value more than Rs 100/- nn) Intangible thing in) Reversion Delivery of property. Sales of immovable property of small value are exempted from the requirement of registration In the case of tangible immovable property ofa value less than one hundred rupees, a sale may be either by a registered instrument or by delivery of property Delivery of the tangible mmovable property takes place when the seller places the buyer or such other person as the directions the possession of the property Contract for Sale: A contract for sale of immovable property 1s a contract that a sale of such property shall take place on terms settle between the parties It does not create any interest in or charge n such property by itself In case of contract of sale, the ownership of property transfers to the buyer immediately when the sale takes effect Bum contract for sale, the ownership will be tiansferred only when the terms entered into by the parties are satisfied Illustration If‘A’ agreed with ‘B’ to sell hus land and entered into a ‘Contract for sale” and later on has sold the property to C'B' can challenge the sale through court of law and specfically enforce A to sell the property, provided, “Chas purchased the property from'‘A’ for consideration and wathout che notice for as earlier contract for sale with B Lord Hatherley observes in Shaw-vs-Foster (1872) ‘The moment that contract for sale and purchase 1s entered into and the relation of vendor (seller) and vendee (Buyer) 1s constituted, the vendor becomes the equitable owner from the date of contract 1tselfEffect of stupulati ° The transfer of ownership m a sale of mmovable property 1s regulated by the contract between partes If there 1s contract between the parties that ownership shall pass only on payment of price and not earher, the contracts valid But when ownership has been transferred, the seller is only enuitled voa charge for unpaid purchase money and the ownership cannot be made to revert to the seller when pricean unpaid Illustration: If X has entered into a ‘contract for sale’ with ‘Y’ of his property with a condition that ‘X' transfers ownership to Y.on payment of half of che purchase money and the remaining amount of Rs 2 Lakhs shall be payable after a period of two months In this case, f'Y’ cannot be able to pay the balance amount the ownership cannot be made to revert to the seller The seller X’1s only enutled to a charge for unpaid purchase RIGHTS AND LIABILITIES OF SELLER AND BUYER: Inthe absence of contract to the contrary, the sellerand buyer of the immovable property are subject tothe following nght and habities SELLER: Rights The seller is entitled to the rents and profits of the property all the ownership thereof passes to the buyer ‘Where the ownershup of the property has passed to the buyer before payment of the whole of the purchase money, toa charge upon the property in the hand of the buyer Dunes. Seller is bound to 1) Disclose any macenial defect mn the property which the buyer 1s not aware of and which the buyer could not discover with ordinary care 2) TO produce all the documents of title relating to the property on the request of the buyer for examination Whuch aren the seller's possession or power 3) To pay all public charges and rent accrued due in respect of the property upto the date of the sale 4) Between the date of the contract of sale and delivery of sale and delivery of the property, to take much care of the property andall documents of utle relating thereto BUYER. Rights: The buyers enutled () — Tothe benefit ofany umprovement in or increase m value of the property and to the rents and profits D Buyersis bound to (@) Disclose to the seller any fact as to the nature and extent of the seller's interestn the property (u)_ Where the ownership has passed to hum, to pay all public charges and rent become payable n respect of the property 30Doctrine of Caveat emptor ‘The maxim ‘caveat emptor’ means “let the buyer beware” ‘This sapplicable to sale of goods The meaning of the maxims that “Its not the duty ofthe seller to pomt our the defects m the goods but he is able only when the buyer totally zelies upon the seller ‘When we discuss about the apphcabihty of the maxim for immovable property. 1¢ 18 applicable only to patent defects and not to latent material defects “Parent defect” isa defect, whichis visible to the eye ‘Latent matenal defects, 1s mternal defect or defects mn the property which interferes with the enjoyment the property But the maxim has no application to the defects in ttle Unpaid vendor's Lien - Under Sec 55 (4) (b) the vendor acquires a charge over the property 1 respect of che unpaid purchase money A——> sells his property worth Rs 10 lakhs > B(paid only 8 lakhs to A) Now charge will creaced in favour of A, on the property for the unpaid 2 lakh rupees Refer Webb -v- Macpherson Vendee’s en on pre-paid purchase money.- See 55 (6) (b) provides sumular protection to the vendee for the pre-paid purchase money Refer Chiranpt—vs- Har Swarup MORTGAGES OF PROPERT’ ‘The provisions relating to Mortgage and Charges are contained in Sec 58 to Sec 1040f the TP Act Itis dealt within Chapter IV Mortgage 1s a transaction which can be simply understood as “transfer ofan interest sn immovable property as security for a loan” Nature & Object, When a person lends money to another without any secunty er under a contract and ifthe borrower fatls to pay the same, the lender will have a nght rosue for the money But the borrower becomes msolvent, he may lose part or all of his money However, when some secunty of value is given for the loan, the ender wil be protected and he can realize money from the property given by way of secunty Mortgage & Pledge Pledge 1s transfer of mterest in movable property as security Mortgage 1s related to mmovable property 31Ds f Mortgage Sec 58 “A mortgage 1s @ transfer of an interest in specafic immovable property for the purpose of securing the payment of morieyadvanced or to be advanced by way ofloan, an extsting or future debt or performance of an engagement which may give rise to pecumary liabality” ~ an Element of Mortgage. ‘The essential chaiactenstics ofa mortgage are 1 There must be a transfer of an interest 2 There must be specific umovable property intended to be mortgaged 3 The transfer must be made tosecure the payment of a loan or to secure the performance of a contract, “Mortgagor”1sthe person who transfers property, ‘Mortgagee’ 1s the person to whom property 1s transferred “The principal money and interest of which payment 1s secured ate called ‘mortgage money’ The imstrument by which the transfer is effected is called “Mortgage deed” Essentials ‘Transfer of an interest ‘The term ‘Transfer of an interest’ signufies that the interest that passes o the mortgagee 1s not ownership or dominion Ifownership 1s transferred 1t comes under sale and not mortgage Mortgage 1s simply a transfer of interest in the mmovable property while the ownership sull remains with the mortgagor A mortgage creates a ‘night in rem’, in the sense such right 1s available against all subsequent transferees of the mortgaged property srrespective of the notice Specafic um rr The second requinte of a mortgage 1s that “immovable property” must be distinctly specified The word “specific’ 1s to be distinguished from the term ‘general’. For instance, the term “my house er my land” 1s, general which includes all the properties owned by a person On the other hand, the words * a house sttuated in Chennai at Adyar owned by me” specific Consideration of Mortgage ‘The third essential of a mortgage 1s that it must be supported by consideration Itmay be either () money advanced or to be advanced by way of loan (a) an existing or future debt or (1) the performance of an engagement giving rise to pecumary hability ‘A mortgage 1s created for the purpose of securing a debt or other obligation It should be noted that a transfer, which 1s made by way of discharging a debt, 1s not a mortgage "A mortgage may be given not only for an existing debt or money advanced by also as a security against advances to be made in furure ‘The words “money advanced” includes existing debt and as well as a debt which has become barred by Imitation ‘Furure debt’ means debt, which may be incurred at any time after the mortgage ‘The followsng illustration may be helpful to understand the term pecuniary hability BeLlystration ‘A’ borrows paddy from another cultuvator ‘B’ and mortgages his field to secure repayment of the paddy and the payment of further add by way of mcerest ‘The engagement to return paddy 1s one that may give nse to a pecuniary hablity and the transaction 1s also a mortgage Effect of failure of mortgagee to advance amount undertaken Mortgages nota mere contract Therefore sooner a valid mortgage deed 1s registered, and interest n the property mortgaged vests in the mortgagee, 1n the absence of contiact tothe contrary, though the mortgagee has not paid the mortgage money to the mortgagor Once a document transferring immovable property has been registered, the transaction passes out of the domam of a mere contract and falls into one of a conveyance Therefore, transaction of mortgage formally executed does not become vord or ineffective merely because the mortgage fails to advance the amount of money which he undertook to be advance by hun ‘A mortgage must be distinguished from certain other transactions which resemble it ‘They are pledge. charge, hen and lease Mortgage and Pledge: A ‘pledge’ consists ofa loan of money in return for the delivery of possession of chattels (movables) to the lender In pledge, although the lender has certain powers of sale, the general property im goods remains in the borrower The lender has immednate possession of the property pledged Ina mortgage, the whole legal titles an the property passes conditionally to the mortgagee and if the property 1s not redeemed (get back) at the time stipulated, the title becomes absolute ‘In mortgage usually the possession 1s still vested with the mortgagor except mm case of certam kinds Mortgage & Charges: For practical purpose, charge is regarded as a species of mortgage ‘A mortgage is a conveyance of property subject to a nght of redemption ‘A charge conveys nothing but only gives certain rights o the charge holder, over the property concerned as secunty forthe loan Dustinetio: 1 Charge only gives a ngh¢ to payment out of a particular immovable property without transfering any interest nat But a mortgage conveys an interest in specific movable property 2 Imacharge no night in remus created _In mortgage,tt ss created 3. Morcgage can be enforced against a bonafide purchaser for value with or without notice whereas charge cannot be enforced Mortgage and lv Allien is the night to retain the possession of another's property until a debts paid Lien 1s a mere passive nght of retention, giving no right to sell or otherwise deal with the property In simply, afany person “X”1n possession of Y's property, he exercise the right of hen as if ¥ had been in debred to him Possessory right is essential to exercise right of en 38‘A mortgage confers an interest of legal character in the mortgagee and 1t 1s not always necessary that the mortgagee should have possession of the property, Mori Lease- Chapter V of the TP Act deals wath the provisions of lease of movable property, under section 10510 Sec 107 Sec 105 defines “Lease of immovable property 1s a transfer of a nght to enyoy such property, made for certain me, express or implied, or mn property, m consideration of 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 transfer by the transferee, who accepts the transfer on such terms Itis clear from the defimition that lease isatransfer of right to enjoy the property. It has nothing to deal about the utle of the property The transferor 1s the ‘lessor’ and the transferee 1s the ‘lessee’ In lease property is not transferred by way of secunty for the payment of money borrowed ‘The distinction or test to determine whether a document ssa lease or mortgage 1s that whether the purpose of transaction 1s enjoyment of the property by the transferee or whether it sintended cosecure the repayment of debt by the transferor_In the former case 18 ‘lease’ and in the latter 11s a ‘mortgage’ KINDS OF MORTGAGE. Sec 58, Enumerates six forms of mortgage They are (2) Simple mortgage [Sec 58(b)] (1) Mortgage by conditional sale(Sec 58(c)] (an) Usufructuary mortgage (Sec 58(4)} (av) English Mortgage/Sec 58 (e)] () Mortgage by deposit of utle deeds [Sec 58 (6) | (v1) Anomalous mortgage [Sec 58(g)] Sumple Mortgage Sec. 58 (b) “Where without dehvering possession of the mortgaged property. the mortgagor binds bumself personally to pay the mortgage money and expressly or mphedly, that in the event of his fasling to pay according to Inns contract, the mortgagee shall have a night to cause the mortgaged property to be sold and the proceeds of'sale to be apphed, so far as may be necessary, in payment of the mortgagee — money, the transaction 1s called a simple mortgage and the mortgagee 1s @ simple mortgagee” Elements of Simple Mortgage (1) The mortgagor does not deliver possession of the mortgaged property to the mortgagee (x) Expressly or imphedly the mortgagor agrees that m case of hus fatlure to pay the mortgage money, the mortgagee shall have a nght to sell the mortgaged property (1) And the money so obtained shall be applied an payment of the mortgage money so far as may be necessary and if ny amounc is let unused, 1 wall be returned to the mortgagor 3aIn sumple a) ay) Gu) No debvery of possession Personal undertalang Right to have the mortgaged property Itis to be noced that ma simple mortgage the power of sale cannot be exercised suit for recover of money must be filed within the lumtation period of 12 years from the date when the money sued for becomes due Mortgage By conditional Sale_ [Sec 58 (c)] Where the mortgagor ostensibly sells the mortgaged property- ‘On condition that in default of payment of the mortgage-money on a certain date the sale shall become absolute or ‘On condition that on such payment beng made the sale shall become void or ‘On condition thet on such payment being made the buyer shall transfer the property to the seller, the transaction. called mortgage by conditional sale and the mortgagee 1 called as a mortgagee by condinonal sale Provided that no such transaction shall be deemed to be a mortgage unless the condition is embodied in the document which effects or purports to effect a sale Essentials of a mortgage by conditional sale: Ina mortgage by condiaonal sale, there must be a ostensible sale of mmovable property, (it hasan appearance of'sale but 1t1s really not a sale) with the condition that on the repayment of money on a certain date, the sale shall become vod or the buyer shall. retransfer the property to the seller or on the default of payment con that date the sale shall become absolute and that the condition should be embodied in the document Ifasale and an agreement to repurchase are embodied in separate documents, the transaction cannot be a mortgage, even though the two documents may be contemporaneously executed Lake a simple mortgage, in this case the mortgagor does not take a personal habilty to pay loan ‘The remedy of mortgagee by condiuonal sale isto sue for foreclosure only ‘Whether adeed isa mortgage by conditional sale or sa sale with condition or repurchase will be determuned by the intention of the partes Distinction: $.No| Mortgage by Conditional sale Sale with a condition or repurchase 1 | Debtsubsists and the nghto redeemie To pay| No debt subsists and there ino nght co redeem off mortgage (Right to get buck the property on| payment of debt) remams with the debtor But simply a personal right of repurchase 15 reserved for the seller 2 | A farlure to fulfill the strict terms of the| The power must be excised strictly in agreement 15 not immediately followed by a| accordance with the terms ofthe agreement forfeiture of the mortgaged property 3_| Thesale1s only ostensible Tras a real sale 35USUFRUCTUARY MORTGAGE [SEC 58(d) Where the mortgagor delivers possession expressly or by imphcation binds himself to deliver possession of the mortgaged property to the mortgagee and authonzes him to retann possession untl payment of the mortgage money, and to recerve the renés and profits accruing from the property or amy part af suck, rents and profits and to appropnate the same in leu of interest. or m payment of the mortgage- money, or partly in heu of interest (or) partly im payment of the mortgage-money the transaction 1s called an usufructuary mortgage and che mortgagee 1s called as a usufructuary mortgagee The charactenstics of the usufructuary mortgage are - () The possession of the property 1s dehvered to the mortgagee (x) The Mortgage 1s to get rents and profits tn Jiew of mterest or principal o1 both (11) No personal habilty 1s incurred by the mortgagor and. (iv) The mortgagee cannot foreclose or sue for sale ‘Thus, in a usufructuary mortgage, the mortgagor hands over physical possession of the property to the mortgagee and does not take any kand of personal responsibility regarding the payment of mortgage money and interest The mortgagee himself has to utuhze rents and profits accruing from the property for the satisfaction of his morigage entitled to remain in possession of property In usufructuary mortgage, no time mut 1s fixed during which the mortgage 1s to subsist, because 1¢ 1s difficult to predict within what time the debt will be satisfied “The mortgagee 1s supposed to maintain an account of rents and profits obtained by him. ‘Where the mortgagor fails to dehver possession of property. the mortgagee, can sue for possession or for recovery of money advanced But of he has got possession, his remedy 1s to retain property till his debts are satisfied and he does not have remedy of foreclosure ZURIPESHGI LEASE Zunpeshg1 Lease bears a close resemblance to usufructuary mortgage ‘A Zurspeshg: lease means a lease fora lump sum of money paid m advance ‘The pornts distinction becween the two areas fellows = (1) Inausufructuary mortgage the relanonshnp of debtor and creditor subsists where in Zunpeshgt lease tds relanionshyp does not exist (2) Inusufructuary mortgage. the mortgage 1s entitled to retam possession of the mortgaged property until the mortgage money is satisfied While in Zunpesshgs lease, the lessee remains in possession fora fixed ame 3) The delivery of possession essential in both the case but in usufructuary mortgage, the mortgagee sometumes executes a lease in favour of the mortgagor who retains possession and agrees to pay rents generally equivalent to the interest of the amount advanced Thusis not so in Zunpeshgi lease English Mortgage [Sec 58 (c) “Where the mortgagor binds himself to repay the mortgage-money on a certam date and transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso that he wall re-transfer cro the ‘mortgagor upon payment of the mortgage-money as agreed, the transaction is called English Mortgage” 36Elements of English Mortgage are - 1 The mortgagor takes a personal ability to repay the mortgage —money 2 He promises to pay the mortgage money on a certain date 3. Hetransfers the mortgage property absolutely to the mortgagee and 4 When the mortgagor pays back the mortgaged — money to the mortgagee, he (mortgagee) re —transfers the property to him (mortgagor). Ilustration. °X borrowed certain amount on the basis of an undertaking that he will repay the mortgage money ona stipulated time and transfers his property situated in Chennai to Y He entered into an agreement to the effect that the transfer 1s absolute and on his default n payment the mortgagee ¥ has to reconvey the property upon payment made by X on the appointed day ‘Distunction between English Mortgage and Mortgage by conditional sal ‘An Enghsh Mortgage resembles a mortgage by conditional sale in so far as in both cases the ownership of the property mortgaged 1s liable to be transferred from the mortgagor to the mortgagee on default of ‘payment No] English Mortgage Mortgage by conditional sale 1 | Mortgagors personally able to pay the debt | No personal liability ‘The mortgagee has his remedy against the mortgaged property alone 2 | The ownership in the mortgaged property 1s] The mortgagee acquired only a qualified absolutely transferred to the mortgagee ownership 3. | Decree for foreclosure under section 67 1s not| Foreclosure is the only remedy possible MORTGAGE BY DEPOSIT OF TITLE DEEDS: [SEC.58 (f) ‘Equitable Mortgage) “Where a person in any ofthe following towns, namely, the towns of Calcutta, Madras and Bombay and any other town which the State Government concerned may, by nonfication in the official Gazette, specify inthis behalf, debvers to a creditor or ins agent, document of title of immovable property, with incenc ro create a security thereon, the transaction 18 called a mortgage by depostt of title deeds” ‘In English law, this form of mortgage is known as ‘Equitable Mortgage’ Because in this type of mortgage, there 1s sumply a deposit of document of ttle wathout anything more 1e without writing and other formalities This form of mortgage 1s vogue in big commercial cities ‘The object is to provide a special and easy mode to facihitate mercantile transactions in cases ‘where it becomes necessary all of a sudden to raise money and there1s no enough me to observe required formalities for other kind of mortgages A deposit of ttle deeds outside the towns specified wall create neither a mortgage nor a charge 37Under the defination of a mortgage by deposit of ttle deeds by Sec 58 ({), the essential requisites of this type are Q)- Adebe oe (x) Deposit oftutie deeds (1m) Am intention that the deeds shall be secunty for the debt (v}_ Physical debvery of documents by the debtor to the creditor snot the only mode of deposit There may be a construcuve deposit also Essential Elements Lake any other mortgage, the debt, sn 2 mortgage by deposit by deposit of utle deeds may be an exstinga future one Deposit of ttle deeds: ‘The next element s that the debtor should deliver documents of tile to mmoyable property on which the secunity 1 intended to be created to the creditor or his agent A question may anise in this type ie, whether its necessary that the property to which the mortgage relates should be situate within one of the towns mentioned :n the Section? The answer isthat the property may be situated outside the town mentioned an the clause but ts enough if he hands over the title-deeds to the creditor in the town eg Mortgage of property outside Madras can be deposited in Madras to avail loan Intenuon to create securit ‘The very smportant element is that the deposit of title deeds must be made with distinct intention of creating a secunty for the debt If the intention 1s otherwise, at shall not operate as security and the transaction will not be a mortgage Registration; Asa mortgage by deposit of atle deeds 1s created by the deposit of utle deeds xt 8 not necessary that the ‘transaction should be recctded But 1t 1s usual for the depostt of tidle-deeds to be accompamied by @ memorandum of wnting If this wating must be the contract of mortgage creating the "mortgage’, it must be registered ANOMALOUS MORTGAGE. [SEC 58(g)| DEFINITION. “A mortgage which 1s not a simple mortgage, a mortgage by condinonal sale, an usufructuary mortgage, an English mortgage or a moregage by deposit of title deeds within the meaning of this section called an anomalous mortgage” The classification of mortgages contained in Sec 5818 not exhaustrve It only describes certain forms of ‘mortgages which are m common usein India. However several other kands of mortgages are also in use. various partsof India Suck mortgages, which does not fall within any of the categories mentioned under Sec 581s anomalous mortgageAn anomalous mortgage includes- 0) Asimple mortgage & usufructuary Mortgage combined and (un) Ausufructuary & mortgage by conditional sale combined Asimple mortgage & usufructuary isa combinauon ofa sample mortgage and usufructuary mortgage and consequently an “anomalous mortgage’ In this case, the mortgagee obtains possession of the mortgaged property and recovers money advanced by him out of the rents and profits of property and there is also personal undertaking as well asa night to cause the property to be sold on the expiry of the date Fixed for payment 1 A mortgage usufructuary & by conditional sale ss another instance of an anomalous mortgage In this case the mortgagee is in possession asin a usufructuary mortgage for a fixed period and if the debt 15 not paid (discharged) at the expiry of chat period, he gets all the rights of a mortgagee by conditional sale 1 e , the mortgagee gets the night for foreclosure, depriving the mortgagor's night of redemption 2 Where the mortgage in question was neither purely simple nor usufruct excluswvely but a mixture of the two, 1t wasan anomalous mortgage within the meaning of Section 58. An anomalous mortgage deed requires attestation Customary Mortgages. ‘There are mortgages co which special incidents are attached by local usage Forexample ‘Orn’ and'Kanom’ mortgages prevalent in Malabar area cannot be redeemed before the expiry of 12 years in the absence of a special agreement in the contrary The “Kanom’ acquired the character of a mortgage anda lease The ‘Ott holder hasa nght of pre-empuon A ‘peruarthan’ mortgage is redeemable for the market value of the Jand at the ume of redempuon Mortgagor: The transferor of a property under mortgage 1s known as ‘Mortgagor’_ It mcludes hens, executors and admumuscrators who derive their title from the mortgagor Mortgagee payment of the debc This includes a person denwving title under onginal mortgagee A security bond given to a court cannot be enforced as a mortgage because the courtis not ayudicial person Mortgage Money" Itsncludes principal money and the interest, the payment of which 1s secured for the time being Sub - Mortgage: ‘The Mortgage executes a sub mortgage In other words, it 1s a mortgage of a mortgage Mlustranon: ‘A’ mortgaged his property for a certain amount of loan to B.‘B' transfers that property to one ‘C’undera mortgage, then the mortgage executed by 'B"1s sub-mortgage 39A B c Puisne Mortgage ‘A pursne mortgage isa second or later mortgage executed by the same mortgagor ‘Suppose for first time’A’ mortgaged hus property *X’ of worth Rs 10 lakhs with ‘B’ for Rs Lakhs and for the 2! time mortgaged the same 'X’, with ‘C’ for Rs 2 lakhs mortgage between ‘A’ and ‘C’ 1s called as Puisne mortgage Onginal mortgagor's nght to redeem mortgage when there 1 a sub-mortgag: Unless and unul nouce of the sub mortgage is given to the original mortgagor, the mortgagor has every night to redeem his mortgage by paying his mortgagee 1 ¢ , the sub-mortgagor If notice 1s given to the original mortgagor, he is bound to pay the debe of the sub-mortgagee and the later can hold the property ullitis redeemed ‘A sub-mortgagee 1s enutled to relief by way of sale of the property comprised in the original mortgage Iilustration If*A’ mortgaged lus specific immovable property “X' of value 10 Jakhs to B for a loan of amount 3 lakhs and again he mortgaged the same property ‘X' to ‘C’ then the 2” mortgage wath ‘C’1s known as puisne ‘Companson of Hypothecation and Pledge of Movables Ina pledge of movables the goods are in the possession of the creditor In hypothecatton they are left n the possession of the debtor humself Ilustratio! (2) If‘A" pledge his ‘Jewel’ to get a loan from ‘BY, the possession of Property will be transferred to the creditor ‘B (by When‘A’ borrows some amount from ‘B’ by hypothecating hus Motorcycle, the possession 1s sll vested wath ‘A’ only and not with ‘B’ MODE OF EFFECTING A MORTGAGE [SEC.59) “Where the principal money secured 1s one undzed rupees or upwards, a mortgage other than a mortgage by deposit of tutle-deeds can be effected only by a registered instrument signed by the mortgagor and attested by atleast two witness Where the principal money secured is less than one hundred rupees,a mortgage may be effected exther by a registered instrument signed and attested, as aforesaid, or (except in the case of a simple mortgage) by dehvery of the property ‘There are three ways m which property may be transferred by way of mortgage @) — Byregistered instrument (u) By dehver of possession (mn) By deposit of utle deeds 40Registered Instrument, Where the principal money secured 1s one hundred rupees or mote, a mortgage can be effected only by a registered mstrument The instrument of transfer must signed by che Mortgagor and be attested at least by two witness A combined reading of Sec 59 of TP Act and Sec 17(1)(b) of the Indian Registrauon Act, make it absolutely clear that the value of Rs 100 contemplated must be reference only to the principal amount secured under the mortgage and not to the interest that may accrue By Dehvery of Possession Ifthe prmeypal money secured 1 less than one hundred rupees, the transaction can be effected even without a registered and attested mstrament But there s an exception to the rule relating to simple mortgage Since in the case of a simple mortgage, possession of property 1s not delivered to the mortgagee and the mortgagor himself retams possession a valid transaction 1m this case be effected only by a registered strument although the principal money secured 1s less than one hundred upees, By deposit of title-deeds Ina mortgage by Deposit of Title Deed no writing and registration is essential Whatever, be the amount of principal sum secured, 1t can be effected simply by deposit of utle deed But this type of mortgage effecced only m certam towns specified in Sec 58 (1) No validity of unregistered mortgage deed If a mortgage deed 1s not registered it cannot be used 1n evidence and the transaction itself cannot be proved by oral evidence RIGHTS AND LIABILITIES OF, :AGOR Sec 60 to 66 of TP Act deals with the nghts and habibues of mortgagor Mortgagor’s Right of Redemption (s-60) The most important night possessed by the Mortgagor is the ght to redeem the morcgaged property Redemption= night to get back Sec 60: at any ume after the principal money has become due, the Mortgago1 has a night, on payment or tender, ata proper time and place, of the mortgage-money, to require the Mortgagee (a) to dehver, to the Mortgagor the mortgage ~deed and all documents relating to the mortgaged property which are in the possession or power of the Mortgagee, (b) where the Mortgagee is sn possession of the mortgaged property, to deliver possession there for to the Mortgagor and (c) at the cost of the Mortgagor either to transfer the mortgaged property to him orto such third person as he may direct, or to execute and where the mortgage has been effected by a registered mstrument to have registered an acknowledgement in writing that any right in derogation of his interest transferred to the mortgage has been extinguished Provided that the nght conferred by this Section has not been extinguished by act of the parties or by Decree of a court The nght conferred by this section 1s called ‘a night to redeem’ and a sunt to enforce 1s called a surt for redemption Nothing in this Section shall be deemed to render invalid any provision to the effect that, if che ume fixed fot payment of the principal money has been allowed to pass or no such tume has been fixed, the Mortgagee shall be entitled to reasonable notice before payment or tender of such money 41Redemption of Portion of Mortgaged Property.( Partial Redemption} ‘Nothing in this section shall enutle a person interested in a share only of the mortgaged property to redeem his own share Only, a payment of a proportionate part of the amount remaining due on the mortgage except (only) where a Moregege or ifthere are more Mortgagees than one, all such Mortgagees, has or have acquired, in whole or in part the share of the mortgagor ‘The Doctrine of Equuty of redemption is expressed in the maxim “once a mortgage always a mortgage and nothmg but a mortgage” ‘The nght of redemption means the nght of Mortgagor to get back his property or documents of ttle relatang to property from the Mortgage on payment of debt on or before a specified date. In Enghish law, this nght.s known Equity of Redemption In India the nght of redemption isa legal nghtas tas incorporated inthe statute 1 , the Transfer of Property Act Principle of Redemption. Under Sec 60 of the TP Act, at any ume after pnnaapal money has become due, the Mortgagor has a nght on the payment of mortgage money with interest to require the mortgagee to deliver at proper time and place, the morigagee-deed and all documents relating co the mortgaged property, which are in possession or power ta the Mortgagee However this remedy 1s available to the Mortgagor only before the Mortgagee has filed a su for enforcement ofthe mortgage Subsequent co the filling of the suit, chis remedy 1s not available Clog on Redemption. The night of redemption s a statutory right and it cannot be fettered by any condition which impedes oz prevents redemphon Any stipulation or condition forming part of the mortgage transaction and inconsistent. ‘with its position 1sa clog on redemption andis void The Doctrine of Clog on Redemption is expressed in the maxim “Once a mortgage 1s always a mortgagee and nothing but a mortgage” A ht of Re on Since the object of a mortgage 1s to secure repayment of a debt, 11s desirable that the nght to repay debt and obtam back property must remain alive Where the Mortgagor deprived of his right to redeem his property either by contract or otherwise, 1t1s said that a clog or fetter has been 1mposed on the right of the mortgagor to redeem The doctrine that there should be no clog on the equity of redemption 15 rule of justice, equuty and good conscience ‘The mortgagor ss entutled to redeem the property even before the supulated period mentioned in the deed Ilustration If clause in a mortgage making rt wrredeemable after a period 1s clearly repugnant to the Mortgagor’s equity of redemption and such as covenant is ignored as 1018 a clog *A’ executes usufructuary mortgage 1n favour of B with a condition that if ‘A’ does not redeem within 10 years, the mortgage shall become sale Inthe above case, the condition 1sa clog as seeks to make a mortgage 1rredeemable by converting 1€ m1to asale Iris void‘Termination of Right of Redempuion: ‘The nght of redemption is extinguished enther by an act of the parties or by operation of law1e ,adecree ofthe court The followingare the methods by which the nght of redemption is extinguished - 1 Byforeclosure 2 Bysaleor 3 By lapse of ume or 4 Byrelease in favour of the mortgagee 5 Byredempuon Partial Redemption. A Morgage 1s an indivisible secunty for the debt and, therefore 1t cannot be divided into pieces. A mortgage cannot be redeemed into pieces or fragments ‘The person who wants to redeem must redeem the whole or not at all Ifone out of several mortgagors has redeemed the whole, he has nght of contribution against the rest So far as the property 1s concerned the steps into the shoes of the mortgagees and the other mortgagors can redeem, from him The rule 1s that all interested person must be made party tothe redemption But hus rule does not apply in the following situanons () Where the co-mortgagors have disunct and separate interests (=) Where the moregagee recognizes a portion of the mortgaged property among the co-mortgagors (m1) Where the mortgagee himself acquires a portion of mortgaged property (w} Where however only a partition wsaffected with the consent of the mortgagee, partial redempnion 1s, possible Right of Mortgagor. ‘The following are the nghts of mortgagor 1 Rightofredempuoa Right to inspection and production of document, which are in the custody, or power of the mortgagee Right to redeem separately or simultaneously re 1fa mortgagor has executed two or more mortgages an favour of the same mortgagee then unless a contract to the contrary 1s shown, he can zedeem any such mortgage separately or two more mortgages together Right of usufructuary mortgagor to recover possession Accession to mortgaged property)\(Increase sn value) Ennitled to improvements to mortgaged property Renewal of mortgaged lease eyaue Waste by mortgagor in possession of mortgaged properry However he must not commit any act thac s destructive or permanently myunes thereto and render the secunty insuffictent 48Liabilues of Mortgagee In Chaptet-IV, Rights and habihues of Mortgagee are dealt under Sec 67 to 77, Secs 67 to 73 deals with Mortgagee's Rights and Secs 67, 76 & 77 refer to his Liabilities Right to Foreclosure or Sale (See 67. ~ ied Foreclosure is the process whereby mortgagor's ught to redeem 1s extinguished and the Mortgagee becomes the owner of the mortgaged property. In the absence of contract to the contrary, at time after the mortgage money has become due and before a decree has been made for the redemption of the mortgaged property or the mortgage money has been pand or deposited, the morrgagee can obtaina decree from the court. absolutely barring the Mortgagos’s ight to redeem the property ora decree to sell the property Remedies available to the Mortgage: 1 Rightof foreclosure 2 Right of sale ‘Foreclose’ - oxford dictionary meaning ~ “take possession of a mortgaged property asa result of defaults In mortgage payments” Analysis of Remedies under different forms of the Mortgage Asimple mortgagee cannot foreclose as the real right transferred 1s a right of sale the night of sale can be exercised only with the prior permission of the court A surt for sale must be filed within 12 years from the date on which the mortgage money becomes due Ifthe income from sale 1s not sufficient to satisfy the ‘mortgage money, a personal decree wil be passed against the Mortgagor for the balance the mortgagor 4s personally lable and if the personal claim is not barred by hmitation. ‘Usufructuary Mortgage. ‘An usufructuary mortgagee 1s a transferee of a night of possession only and he retains possession until the debris discharged Therefore, he can neither sue for foreclosure nor for sale Mortgage by Gonditsonal sale: Inthis kind, the mortgagee hasa right ufforeclosure only He cannot get a decree for sale In other words, the conditional sale becomes absolute the amounts are not returned on the fixed date Ifthe mortgagee ‘was not already 1n possession of the same when he obtams a decree for foreclosure and af the mortgagor falls to deliver the possession the mortgagee can sue for it within 12 years from the date on which the ‘decomes entitled to possession English Mortgage Inan English mortgage, the mortgagee’s remedy 1s by way of sale of the mortgaged property and foreclosure 1s not possible Mortgage by deposit of ule deeds: The remedy under this kind 1. sutt for sale of the mortgaged property Anomalous Mortgage In an anomalous mortgage, the right of the mortgagee depends upon the terms of the deed A suit for foreclosure can be instituted by him only the deed specially empowers hun If not so empowered, he can ansuture a sunt for sale 44Where Mortgagor 1s trustee for the Mortgagee- If the Mortgagor 1s a trustee or legal representative of the mortgage, he cannot foreclose He can only nstitute a sutt for sale Public Property” A mortgagee of a public property lnke mortgage of a railway, canal or other work cannot institute a suit eather for foreclosure or sale The remedy in such case 1s the appointment of a Receiver Partial foreclosure The principle laid down mm section 67 1s based on the maxim “Mortgage debt 1s single and indivisible” Parnal foreclosure 1s not allowed except by a person interested only 1m part of the mortgaged property However a mortgagee has several mnterests Under the mortgage he can use with the consent of other mortgages. If he fails to obtain the consent of other mortgagees to the suit, he has to jomn them as co- defendants and can sure to realize the whole mortgage debt Rights of the Mortgage: 1 Right to foreclosure or sale(S-67) 2 Rightto sue for mortgage money (S-68) 3. Rightto Accession to the mortgaged property ($-69) 4 Right to have received appointed exc Liabil; 1. When amortgagee who holds two are more mortgages executed by the same mortgagor he 1s bound to bring one surt on several mortgages ($-67A) 2 Sec 76 Liabilines of mortgagee in possession. (2) Hemusc manage the property asa man of ordmary prudence (01) He must ry hus best endeavours to collect the rents and profits (m1) Hers bound to pay thereof the Government revenue and all other charges of a public nature, in the absence of a contract to the contrary (av) He must make such necessary repairs of the property as he can pay out of the rents & profits (v) He must nor commit any act which 1s destructive or permanently injunows to the property (vi) He must to keep proper accounts ete MARSHA! NG AND CONTRIBUTION ShhEG 81- Marshalling Securitues — Defininon “afthe owner of two or more properties mortgages them to one person and then mortgages one or more of the properties to another person, the subsequent mortgagee 1s, 1n the absence of contract to the contrary, entitled to have the prior mortgage deed sansfied out of the property or properties noc mortgaged to him, so far as the sake will extend, but not so as to prejudice the nghts of the prior mortgagee or of any other person who has for consideration acquired an interest in any of the properties” 45“Marshalling’ means arranging or settling the clams of two persons in respect of certain common property For example, suppose‘A’ mortgages propernes'X’ and 'Y' to Band then property Y alone toC If Bseeksto realize his mortgage out of Y, C can compel B to proceed first against X and realize the debt from t. And in case Bs unable to realize the whole amount duéto him from X, he 1s enutled to recover the balance fram Y_ Under Sec 81, the subsequent mortgagee 1s empowered to regulate or Marshall the order in which and from which property the prior mortgagee will reahize his clarm Limutanon of the Rule The claim to marshalling must not be allowed to preyudice the rights of the first mortgagee or of other who have acquired an interest for consideration Illustration. Iftwo estates X and belonging to’ are first mortgaged to B, then X1s zmortgaged to C and Y 1s mortgaged +10 D.C would not be permitted to compel B to marshal in his favour, which of would preyudice the interest ofD Similarly, D could not compel Bro resort in the first instance o the estate X. The nght of Marshalling may be excluded by a contract between the parties Doctrine of Contribution (Sec 82) Principle “As between persons liable in respect of the same debt, their habihity 1s to bem propornion tothe quancum oftheir interest n the property” While the mortgagor’s nght of redemption 1s a nght exercisable against the mortgagee, the night of contribution is one that anses between mortgagors Inter Se: ‘The doctrme of contribution rests upon the principle that “a fund which is equally Lable wath another to pay a debt shall not escape because the creditor has been paid out of that other fund alone Ilustration; A.Band C three brothers mortgaged their ount property to D for Rs10,000/- Thereafter they parnnoned the property into three shares For realizing his mortgaged money if D nstituted a suit for sale of the property and realized his money by the sale of A's share then ‘A’ 1s entitled for contribution against the shares of B and C each 3,333 Rs Marshailiny Ts ntribution ‘Where marshallingand contribution might conflict with each other, marshallings to prevatl pon: 92 The term ‘Subrogation’ simply means “Substitution”, this term originates from Roman law “When one person takes the place of another person he is said to have substtuced or taken the place of the former one” In Roman Law, a creditor who lent money to che debtor for the purpose of payment of a mortgage on condition that he was to be substituted 1 the place of the mortgagee, was entitled to claim the benefit of the secuntty discharged with his money This rule of Roman Law has not been recognized by many legal systems of the world 46Kinds of Subrogation (1) Legal Subrogation 1 e, by operation of law (2) Conventional subrogation 1¢ , by agreement Legal Subrogation. ‘When the mortgage debts paid off by a person who has some interest to protect, legal subrogation comes imtoexistence Eg Where a subsequent mortgagee pays off a prior mortgagee, he shall acquire the nght of the prior mortgagee and thus subrogate to him ‘A legal subrogation takes place when. () A puisne (subsequent) mortgagee comes into existence (x) Aco-mortgagor exasts (mm) Aperson standing asa surety and (iv) Aperson purchases the nght of redemption Redemption by Puisne Mortgage: A puisne mortgagee who redeems a por mortgage, has a ight to be subrogated to the position of the prior mortgagee, if “A’ mortgages his property X co B for Rs 10,000/- “A mortgages hs property X to C for Rs 9,000/- ‘A’ mortgages hus property X to D for Rs 8,000/- Andaf‘D' pay‘B’ Rs 10,000 he will rake the place of B_ He wall acquire all the rights, which ‘B'has against “A’ and ‘D' will stand in better position against C Redemption by Co-Mortgagor. A.co-mortgagor by redeeming a mortgage steps into the shoes of the mortgagee Llustration Aand B, mortgaged their joint property X to C for Rs 10,000/-, 1f B pays off C’ entare amount, he stands n the mortgagees' shoes to the extent of the amount paid in excess ¢ to the amount of Rs 5000/- Redemption by Surely: Redeeming the mortgaged property subrogates a surety of the mortgagor by redeeming the mortgaged property tothe nghts of the creditor Redemption by Purchaser of Right of Redemption Where a purchaser of right of redemption pays off a mortgage. he acquires the right of the mortgagee Mlustratron: ‘A’ mortgages his property X to Band then B mortgages X to C ‘A’ selis his night of redempnon in respect of Xto DD pays off B and takes the place of BD shall be subrogated to the nghts of B as agamnst C 47EC 100 “Where mmmovable property of one person by act of parues or operation of law made security for the payment of money to another and the transaction does not amount to mortgage, the latter person is said to have a charge on the property, and all the provisions hereinbefore contacted which apply to simple mortgage shall, so far as may be apply to such charge" For practical purpose a charge is regarded asa species of Mortgage The essential difference between two 18, mortgage 1s a conveyance of 2 property subject toa night of redemption Whereas a charge conveys nothing more except by giving the person having the charge 1 e charges rights over the property concerned as secunity for the loan Kinds of Charges () Charges created by acts of parties (x) Charges ansing by operation of law Charges created by act of parnes An agreement, which gives immovable property as secunty for sausfacuon of a debt without transfering any mnterest in the property, constitutes charge by act of parties Illustration (@) ‘A’ merited an estate from his maternal grand — mother and executed an agreement to pay his sister “Ba fixed annual sum out of rentsof the estate Bhas charge on the estate (b) ‘A’sued Bona promissory note The compromse Decree directed the payment of the money and further directed that Bshall not dispose of his share in a factory until satisfaction of the decreetal amount Itwasheld that‘A’ hada charge on the property specified Charges by operation of law: ‘A charge by operauon of laws one, which arises irrespective of the agreement of the parties Such charges are known as equitable hens m English Law They areas follows (0) Atrustee ss enntled u/s32 of the Trust Act toa check on the income as well as the corpus of the trust, estate for all moneys properly expended in performing the obligavons of the trust (1) Vendor's charge for unpaid purchase money ws55(4) (am) Vendee's charge for prepaid purchase moneyws6(6) (iv) Charge in favour of a person entitled to contnbution w/s 82 48LEASE See 105 to 117 of TP Act, 1882 deals with provisions relating to lease Sec 105 defines lease as“ transfer of right co use or enjoyment of an immovable property. made for a specific or indefinite period sn consideration for some benefit in cash, kind or im service paid or promised to be paid m lump sum or periodically or on specific occasions as per terms and the same 1s accepted” The transferor 1s called the lessor and the transferee 1s called the lessee According to Mulla “a lease isa contract between the lessor and the lessee for the possession and profits of land, etc ,on one side and the recompense by rent or other consideration on the other” Mosley defines lease as “demuse or lecingof lands or tenements, nghtof common, rent or any hereditament, into another for a terms of years or life, or at will, usually fora rent reserved The anterest created by the lease must be less than the lessor hath in the promises, or lessee itis noca lease, but an assignment” Salmond in observed lease as“ A lease, in genenc sense, 1s that form of encumbrance which consist, ma night to the possession and use of property owned by some other person Its the outcome of the rightful separation of ownership and possession Kands of lease - See 105 recognises three kands of leases viz. , (1) Lease for fixed period or certain period (it) Periodic leases (leases from year to year and from month to month) (an) — Leasean perpetuity Section 106-- Duration of certain leases in absence of written contract of local usage ~ Unless contract ot local usage to the contrary () Lease for agncultural or manufacturing purpose shall be deemed to be from yearto year, termmnable on the part of exther the lessor or the lessee by giving six months notice expirmg with the end of a year ofthe tenancy agnculture’ mcludes farming, horuiculture, fishenes, forestry, reanng and management of hve-stock husbandry, tillage together with such subjects as butter and cheese malang and sugar malang etc “Manufacturing” includes mechamcal industry or commerce and production of goods or making of amicles of trade and commerce by means of machinery] (1) Lease for any other purpose shall be deemed to be from month to month termunable on the part of eather of the party by giving 15 days notice expiring with the end ofa month of the tenancy Lease for manufacturing purpose - In Allenbury Engineers Pvt Ltd —vs- Shr Ram Krishna Dalma and others | ATR 1973 SC 425], 1t has been stated that the expression "manufacturing purposes’ for malang or fabricating articles or materials by physical labour, or skill, or by mechanical power, vendible and useful as such. Such making or fabricatung does not mean merely a change man aheady exusting arncle or matenal, but transforming 1tintoa different anucle or material having a distmenive name, chaiacter or use of fabricating a previous known aricle by a novel process 49Inorder to determune whether a particular purpose 1s manufaccunng, the following tests were laid down, by the Supreme Court in Idandas—vs- Anant Ramachandra AIR (1982) G 42716 , (a) _Itmustbe proved that a certain commodity was produced (6) The process of production must involve either labour or machinery (©) Theend-product should be complete and have a different name and should be put toa different use Inthe above case, the raw materials wheat while the end product is flour All the tests were satisfied So the purposes manufictunng purpose Sec 107.- Leases how made - A lease of immovable property from year to year, or for any cerm exceeding one year, orreservinga yearly rent can be made only by a registered mstrument, All other leases of ummovable property may be made either by a registered instrument or by oral agreement. accompamed by delivery of possession Where a lease 1s made by a registered instrument shall be executed by both che lessor and the lessee In Ram Sewak—vs- Abdul Majeed, AIR 1980, SC 78, it has been held that a rent note which has been executed by atenant alone is nota lease within the meaning of section 107 of the TP Act Note:- a lease 1s void if unregistered in cases where the registration 1 compulsory However, a document containing an unregistered lease can be used for the purpose of finding out the nature of agreement executed between the parties And the lessee, who 1s n possession of the land underan unregistered lease, 1s not a trespasser but merely a tenancy at will The lessor 1s entucled to claun compensation from such lessee for the use and occupation of the land Further, both the lessor and the lessee can sue for specific performance on the basis of unregistered under Section 27-A of the Specific Rehef Act Under Section 53-A ofthe TP Act, the lessee in possession under an unregistered instrument is protected from ejectment provided the conditions laid down sn the sechon are fulfilled Section 110:- exclusion of day on which term commences - Section 110 lays down rule for reckoning of the duration of leases And the sectton 1s not applicable toa tenancy at holding over and it applies to periodic lease with specific date of commencement, Where the tume lamited by a lease of ammovable property 1s expressed as commencing from a particular day, 1n computing that tame such day shall be excluded Where no day of commencement is named, me so limited begins from the making of the lease Mustration - suppose a lease 1s made for 10 years and 1s expressed" to commence from 10.02 2005 10* February 1s exchided from computation and so the lease ends at mudmght of 10 02 2015 Rights and habilties of lessor and the lessee:~ Section 108 and 109 ‘The nghts and habilines of the lessor and the lessee are settled by (1) contract, (1) local usage and by Section 108 of the TP Act Under sec 108, the term ‘local usage’ means local establishment practices, customary mode of action on the part of a number of persons, an establishment or recognized mode or procedure, acon or conduct The local usage may not be untversal orimmemonaal It need not be ancient, uniform or have the notoriety of custom It may stll be in the cause of growth, butt1s sufficient ft appears to be well-known and settled 50Rights of the lessor - ‘There is no express provision in section 108 of the TP Act or in any part of the chapter dealing with lease asto nghts of the lessor However, the habihties of the lessee would imply identical nights of the lessor ‘The only night of the lessor appeared by the terms of clause (¢) of section 108s to recerve rents. Laabilites of the lessor - (1) Dury to disclose defects ~ sec 108 (a) Sec 108 (a) provides about the duty of the lessor to disclose to the lessee matenal defects in the property with reference to its intended use and of which he ts aware and the lessee could not aware with ordinary care discover But the use of words “of which he is aware” clearly indicates chat this duty isnot absolute It extends only to those a defect of which lessor s aware Patent defects are not within the ambit of sec 108 (a) Unlike section 55, section 108 does not declare that the omussion to disclose material defects must be fraudulent But it still seems the omission may be good ground for avoiding the lease on the basis of “constructive fraud’ The lessee may also sue for damages sustained by him asa result of the omission, (2) Duty to give possession sec 108 (b) Sec 108 (b) imposes a statutory duty on the lessor to deliver possession to the lessee, on his request What amounts to delivery of possession in any particular case depends upon the nature of the property leased In ‘Narayanaswami~vs- Yerramulhh, 33Mad 499, xt was held that if the lessee fails to xequest the lessor to put hum m possession or fails co take possession of the property, he cannot resist a suit for rent, In England, faslure to put the lessee m possession of a part of the land demised entails a suspension of the entre rent But this doctrine does not apply to India In Katyayam Debi —vs- Udoy Kumar 52 Cal 417 (P ©), the Privy Council observed that “the doctrine of suspension of payment of rent when the tenant has ‘not been putin possession of part ofthe subject leased, has no application toa case where stipulated rents so much peracre” (3) Implied covenant for quiet enjoyment- Sec 108 (c) Section 108 (c ) provides that the lessor shall be deemed to contract with the lessee that, 1fthe latter pays the rent and performs the contract, he may hold the property during the tume lumuted by the lease without interruption Thisis known as covenant for quiet enjoyment’ This clause protects the lessee against the disturbance caused by the lessor or by persons claiming under lessor but not against disturbances caused by trespassers or against unlawful or tortious eviction by third partes. The reason being that against such acts, the lessee has ins proper remedy agamst the wrong-doers In Katyayam Debt -vs- Udoy Kumar, the Privy Council held that st was the duty of the tenant to protect ‘um against illegal encroachments by another Title paramount. Eviction by atle paramount means an eviction due to the fact that the lessor has no ttle to grant the term and the paramount tle isthe ttle paramount to the lessor's which destroys the effect of the grant and with acthe corresponding lability for payment of rent In Gajadhar—vs- Romphaee, (1938) Nag 439, the sub-lessee of'a theatre was prevented by the proprietor, the ongunal lessor, from using the theatre on the ground that notice has been served on the lessee determuning the lease, Therefore, the sub- lessee had to take lease from the propnetor on payment of an additional sum 51Ic was held that there was a breach of the covenant and that sub-lessee could sue ts lessor (the original lessee) for damages No protection against acts done under compulsion of law ‘The Indian covenant affords no protection against act done under compulsion ofTaw 1a Merwary ve Alikhan, 52 Cal 417 P C the lessee was evicted under the Epidemic Diseases Actand Minto —vs- Kalicharan, 23 Bom510, the eviction wasunder Land Acquisition Act It was held chat there was no cause of action m. either case against the lessor RIGHTS OF THE LESSEE (1) Right Te Accession ‘As per see 108 (d) any accession made to the property duning lease 1s deemed tothe comphed in the lease ‘Accessions include additions artificially made as well as accretions by alluvial or natural process A lessee +has a right to retain possession over accretions and on the termination of the lease he must surrender the accession to the lessor in the same way as he 1s bound to surrender the property onginally leased to him However adjoining waste land brought under cultivation 1s not an accession When some land ts added to the leased property by change of the course of the river, the lessee hasa nght, tosue and enjoy the increased area of land together with the main property and he has to leave 1t when the lease 1s terminated Refer Secretary of State —vs- Raya of vizanagaram 45 Mad 207 (2) Raght to repudiate the leases- section 108 (e) Sec 108 (e) provides that the lessee 1s entitled to avoud the lease ifthe subject matter 1s destroyed wholly or 1n part, by fire, tempest, floor, violence of army or mob, or other irresistible force However, in a lease of a land with buildings upon it, the destruction of even the enuurety of buildings does not affect the continuance ofthe lease or of the lessee’s ability under it, unless so provided by express contract, In Vannattankandy Ibray1-vs- Kunhabdulla Haye AIR 2003 SC 4453 1t has been held that the tenanted shop has been completely destroyed by fire, the tenancy right stands extinguished as the demise must have a subject matter and ifthe same 1s no longer n existence, there isan end of tenancy The landlord is under ro legal obhigation to restore the destroyed buslding to sts original form to the tenant (3) Right to deduct cost of repairs- sec 108 (f) Clause ( of'section 108 does not speak of any imphed covenant by the lessor to make repairs, but when he has expressly covenanted to carry out the repatrs and fails to do so, he commuts a breach of covenant and this enable the lessee, after gremg reasonable notice to the lessor to do the repairs Where under the terms of the lease the tenants humself bound to make the repairs at hs own expense he ‘cannot claim anything from the lessor on that account or deduct the value of the repanr from the rent due The lessee 1s not enutled to recover any compensation for loss suffered by hum due to lessor’s failure to reparr (4) Rught to deduct payment of tax etc ~ Sec 108 (g) Ifthe lessor neglects to make any payment which hes bound to make and 1s recoverable from the lessee or against the property, the lessee may make such payment himself and deduct 1c with interest from the rent Bz‘This principle is based on the provisions of Sec 69 of the Contract Act, 1872 which says “a person whois anterested in the payment of money which another 1s bound by law to pay, and who therefore pays.it,1s, entitled to be reimbursed by the other” (5) Right to remove fixtures- sec 108 (h) “The general rule 1s that fixtures cannot be removed by the holder of a lamited interest ‘Tenant's fixture constituted an exception to that rule The lessee has the nght to remove the ‘fixtures’ made by hum during continuance of the lease But, while removing the fixtures, he must see that the property 1s left m the same condition in which he has received 1c Once the possession is handed over to the lessor, lessee cannot enter nto the premises to remove the fixtures, (6) Rught to remove crops (right to usufructs)- sec 108 (1) ‘Where the lease 1s of an uncertain duration and the lessee’s interest 1s determuned by any means other than the fault of the lessee, he or his legal representatives is entitled to the benefit of all ree or crops growing. on the land planted or sown by hum for which he is given night to ingress and egress to gather and carry away the growing crops The nght is not available to the lessee m case the termination of the tenancy 18 brought about by the lessee’s negligence or misconduct (7) Rught to alienate his interest - sec 108 )) Sec 108 () provides that the lessee may transfer absolutely or by way of mortgage or sublease the whole or any part of his interest in the property and any transfer of such interest or part may again transfer it There 1sno prohibition of sub-letung But there 1s no privity of estate between the lessor and the sub-lessee, and assuch the lessor cannot sue the sub-lessee for rent, and hus remedy 1s only against the lessee with whom he entered into the contract LIABILITIES OR DUTIES OF LESSEE - Section 108 clause (k) to clause (q) deal with habiliues of lessee 1. Duty to disclose- Sec 108 (k) ‘The lessee 1s bound to disclose to the lessor any fact as to the nature or extent of the interest which the Tessee is about to take of which the lessee 1s, and the lessor snot aware, and which materially increases the value of such interest Under sec 108 (k) non-disclosure does not amount to fraud and hence the lessor cannot sue to set aside the lease The only remedy 1s clam for damages ‘The lessee’s duty to disclose 1s, different from the duty of the lessor, while the lessor 1s bound to disclose all material defects which affect, the tended use of the property whereas the lessee 1s bound to disclose facts regards the lessor's interest which may increase the value of the lease and of which the lessor 1s not aware 2 Duty to pay rent ~ 108 (1) ‘The lessee 1s bound to pay or tender the premium or rent to the lessor or his agent in this behalf at proper time and place as directed by the lessor 3. Duty to maintam the property (not to commit waste)- 108 (m) Sec 108 (m) provides that the lessees bound to maintain in asa good cond:tion as he found it, and restore the property 1n the condition in which it was let to hum The lessee 1s hable for permssive waste 1 ¢ ‘omission or default sn carrying our necessary repairs 53However, the lessee 1s not hable for any loss occasioned to the property by irresistible force like storm, flood, earthquake, cyclone, accidental fire ete The hability of the lessee to maintain the property in good condition continues even after creation of sub-tenancy 4 Duty to inform about encrozchment—sec 108 (1) — —_— If the lessee becomes aware of any proceedings to recover the property or any part thereof, or of any encroachment made upon or any interference with the lessor’s night concerning such property, he ss bound to give notice to the lessor with reasonable diligence 5 Duty to use the property reasonably- sec 108 (0) Section 108 (0) of the TP Act provides that the lessee 1s to use the property and its product (if any) as a person of ordinary prudence would use them if they were his own As per the section he should not do the following while using che property viz (1) Use or permtt another co use the property for a purpose ather than that for which 1t was leased or (2) fell or sell timber or (3) pull down or damage buildings belonging to the lessor or (4) work mines or quarmies not open when the lease was granted or (5) commut any other act which is destructive or permanently injurious thereto 6. Duty not to erect permanent structure - Sec 108 (p) The lessee shall not erect permanent structure on the property except for agricultural purposes But sfhe erect, hes entitled to remove them provided he leaves the property in the state m which he received 1 In deciding whether a construction 1s permanent or temporary, two factors are prmary viz nature of the structure and the mtention with which it1s made of In judging whether the structures were permanent or not the following factors would be taken 1n to considerauion a Intenuon ofthe party who put up the structure bb Thisntention sto be gathered from the mode and degree of annexation ¢ _ Ifthestructure cannot be removed without dog irreparable damage to the demused premises then that would be certainly one of the circumstances to be considered while deciding the question of tention, 4 ‘The durabihty of structure Ifthe lessee has raised an unauthorized structure, he 1s hable for eviction 7 Duty to restore possession - sec 108 (q) on expiration of the lease, the lessee 1s bound to put the lessor unto possession of the property Section 109 - Rights of lessor’s transferee - Ifthe lessor transfer the property leased or any party thereof, the transferee shall possess all the nghts as the lessor unless the contract to the contrary The liabilities of the lessee contmue towards the transferee However, the transferee 1s not entitled to the arrears or rent due before the transfer Sec 110 Exclusion of day on which the term commences - ‘Where the time hited by a lease of mmovable property 1s expressed as commencing from a particular day such day shall be excluded in computing the time Where no day of commencement is named, time so lumited begins from the making of the lease b4‘TERMINATION OF LEASE OF IMMOVABLE PROPERTY ~ SEC 111 SEC 111- determination of lease A lease of ummovable property determines (@ Byeffluxofume (b) Where such tame1s limited conditionally on the happening of some event- by the happening of such event (©) Where the interest of the lessor i the property termunates on or his power to chspose of the same extends only to the happening of any event, by the happening of such event (@) _ Incasethe interest of the lessee and the lessorin the whole of the property become vested at the same tume mone person in the same right (©) By express surrender 1e the lessee yields up his interest under the lessee to the lessor by mutual agreement between them () By mphed surrender @ By forfexure (h) Onexpiration of nonce to determine the lease or to quit given by one party to the other 1, By efflux of ume ~ sec 111 (a) ‘A lease of unmovable property determines by lapse of the tme hited thereby On exprry of the period, the lessor has nght toask ejectment by simple demand for possession Thus condition need not be sncorporated in the lease deed In Tezchand-~vs- Srikanth Ghose it was held that a lease created fora certain time does not termunate if any of the parnes dies during the term The reason beng that the interest transferred in a lease 1s hentable interest In K M Mohan ~vs- Dist Collector, Nellore Dist {AIR 2006 Mad 63) has been held thar the lessee has no statutory right to insist upon the renewal of lease in his favour nor the lessor has got statutory duty to doso 2 By happeming of certain event- Sec 111 (b) Where the expiry of the te 1s hmited conditionally on the happening of some event, by happening of such event the leases determined Ilustratton - xf the lessor imposes a condition that the lease comes to an end when husson, whos working in a foreign country comes down to the place On the happemng of arnval of hus son, the lease comes to an end 3. By termination of lessor’s interest- Sec 111 ( c) Section 111(c) provides thata lease of movable property determmes where the interest of the lessor in the property terminates on or his power to dispose of the same extends only to the happening of any event, >y the happening ofsuch event Iluscration 1 - ifthe lessor is the usufructuary mortgagee, the lease comes to an end when the mortgagor redeems hus property since the night of the mortgagee over the property comes toan end on redempuon Ilustration 2-- x the lessee let the property under sub-lease The subsequent lease comes to an end on the expiration of the original lease 554 By merger- Sec 111 (d) ‘A lease 1s determined sf the interest of the lessor and the lessee become vested at the same time in one person This happens if the lessee purchases the property and thereby the nght vested with the same person Nonght of lease exists __ 5. By express surrender- Sec 111 (e) Surrender isthe counterpart of merger The giving up of tenancy 1s known as surrender Express surrender consists n the lessee yielding up his interest in the lease to the lessor by mutual agreement between chem Thus a sub-lessee cannot surrender to the orginal lessor 6. By imphed surrender- Sec 111 (f) Surrender may also be imphed For example, a lessee accepts from hus lessor a new lease of the property leased to take effect during the continuance of the existing lease ‘This san implied surrender of the former lease and such lease determines there upon. But such implied surrender must not be due to some fraud or concealment of some material fact or formation by the lessor An imphed surrender can be inferred from an unequivocal conduct of both parties 7 By forferture- sec 111 (g) A llease ofimmovable property determines by forfeiture under the following circumstances Incase the lessee breaches an express condition or b Thelessee renounces his characters such by setting up a utlen a third person or by claming title 1n jumselfor ¢ The lessees adjudicated insolvent and the lease provides that the lessor may re-enter on the happening ofsuch event 8 On the expiration of Notice to quit- Sec 111 (h) ‘The periodic leases like leases from year to year or from month to month are termmated by notice to quit under section 106 ofthe TP Act The notice must specify the date on which the tenancy should expire It must be unconditional and must be in wrung and signed by or on behalf of the party giving st and must be served effectively Ifats monthly lease 15 days notice must be given, which should expire on the expiration of the month And for lease from year to year, 6 months notice must be given which should expire on the expiration of year SECTION 116- EFFECT OF HOLDING OVER ‘The essenuals to consider the tenant asa tenant of holding over are as follows (a) _ lessee orunder-lessee of property must remains m possession (b) after the determination of lease ()_lessoror the legal representatives accepts the rent (@__ orassents tobis continuing possession {e) an the absence of contract to the contrary [Ram Prasad Kurm —vs- Suraj Nath] 56In *Sundetshan Trading Co Ltd -v-s LD D'Souza Ir washeld chat the tenancy by holding overs creature ofa bilateral, consensual act between the erstwhile landlord and the erstwhile tenant, and does not come into exastence by a mere unilateral ntendment or declaration of one of the parties Atenant continues mn possession after the determination of lease, without the landlord's consentisa tenant at sufferance and his possession 1s also juridical, and he can get an mjunction against eviction by the landlord otherwise than in due course of law A person in llegal occupation of the premises without the consent of the landlord 1sa trespasser and cannot avail the benefits of this provision, SEC 117 EXEMPTION OF LEASES FOR AGRICULTURAL PURPOSES - ‘The provisions of lease under thus chapter shall not apply to leases for agricultural purposes, except its notified by the State Government in the Officral Gazette GIFT (SEC 122 TO SEC 129) Gift — definituon ~ Sec 122 - “Grft is the transfer of certarn existing movable or ammovable property made voluntarily and without consideration, by one person called “donor, to another. called the ‘donee’, and accepted b or on behalf of the Parties are ‘donor’ & ‘donee’ Voluntary transfer Without consideration “Acceptance by donee or any other person on his behalf 1 2 3 4 5 Gaftasa transfer of ownershup ina property 6 — Theproperty must ben existence 7 The property may be movable or immovable 8 —‘Thetransfer must be made voluntanly and without consideranon 9 The property must be accepted by the donee or by any person on behalf of him. 10 The eransfer must be effected na manner prescribed by law ‘Transfer of ownership: ‘A giftisa transfer of ownership n a property _It ordinarily involves renuncration of whole of the anterest ofthe transferor called ‘donor’, n favour of the transferee called the ‘donee’ Gift of immovable property.- U/s 128 of the TP Act, a gift of an immovable property irrespective of 1ts value must be made through a registered deed Thus, the gifts of immovable, whether corporeal or incorporeal and valuing more than Rs 100 or less, must be signed by on behalf of the Donor, attested by at least two competent watnesses and must also be registered Any oral gift of mmovable property cannot be made in view of the provisionsof$ 123. Mere delivery of possession without wntten instrument cannot conferany utle 57Gift of movable property Ina giftofa movable property. the registration is opnional Tecan made eather by a registered instrument signed as aforesaid or by delivery of possession. Mohammedan Gift Se Provisions of the Transfer of Property Act pertaining to gxft do not apply to Muslims The procedure of Hiba (guft)s adopted and governed under Mushm law ‘Under Muslim law, a val gift requires three stages viz () Declaration of the gift by the donor (1) Acceptance bythe done (Gn) Delivery of possession According to Mushim Law, no writing or registration is necessary for gift The provistons of Indian stamps Act and Registration Act do not apply to the gifts of Muslim Suspension or Revocation of Gift (S-126) A gift may be suspended or revoked in certain cases by agreement and in certain circumstances without any previous agreement By agreement: ‘The general rule is that there 1s no valid gift at all when the person purports to give retams the iberty of revoking the guft at his pleasure But the principles quahfied by the rule that a power of revocation would be valid ifthe event on the happening of which a guft can be revoked does not depend upon the wall of the donor ‘The suspension or revocation may take place on the happening of an event and not on the will of he donor Ifthe happening ofthe event is dependent on the will of the donor, suspension or revocation of gift wall be void But st 1s necessary that the condition imposed must be a valid condition and must not be allegal or umpossible or opposed to public policy ONEROUS GIFTS _SEC.127 “Where a gift sin the form of a smgle transfer to the same person of several things of which one 1s, and the other are not, burdened by an obligation, the donee can take nothing by the gift unless he accepts. fully” ‘The principle of thus kind of Gift 1s that “he who receives advantage must also bear the burden” A gufts sard to be a onerous gift fit 1s accompamed wath the burden or obligation Elements necessary fc yr the Rulk (a) Gift must be m the form of a single transfer (b) Tothesame person (c) Ofseveral properties: ¢ more than one property should be conveyed (@ Out of several properties one should be subject toa burden or obligation 58INIVERSAL DONEE SEC 128 Where the gift consists of the donor's whole property, the donee 1s personally liable for all the debts and liabilities of the donor at the trme of che gift to the extent of the property comprised there A universal donee is a person who getsall the properties of the donor by gift matio — mortis cause - (Death b Gifts of movable property made in contemplation of death are known as donatio - mortis causa and they are regulated by Sec 191 of the Indian Succession Act 1925 REVOCATION OF GIFT Asa general rule, the vahd gift once made cannot be revoked However there 1s a controversy of opmions inthe different schools of Muslim law Axevocation of gift may be done by owo ways namely (1) Before debvery of possession or (2) After delivery of possesston In fact the delivery of possession 1s the essentual charactenstic feature of a valid gift The donor may revoke the gift before the delivery of possession of the property to the donee Even though the donor might have declared that he intends to gift he can revoke before the delivery of possession No court order 1s necessary for such a revocation lever also nor can rev ‘0 circumstances (Q) With the conszatof the donee (2) With the decree of the cout But under the following circumstances, the gift becomes irrevocable (1) When thedonorisdead Since the gifts given by the donor, the night of revocanon 1s confined with only and not on his heirs 2) When thedoneessdead 3) When the property 1s extinguished, lost, destroyed etc (4) When the property has been alienated by the donee by means of sale, gift, exchange etc Death bed gifts (Marz -UI-Maut! A gift iscalled death — bed ~ gift when the donor 1s suffermg with death ilIness ‘The crucial test of Marz~ ‘Ul-Mautis the subjective apprehension of death mn the mind of the donor It has all essential elements of the gift Such gift may be revoked :f the donor recovers from ill-health 59