PROPERTY LAW

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PROPERTY LAW
Unit 1
The transfer of property law can happen in 2 ways-
by the act of parties either by testmentary[after death] and interv vivos [between 2
living person]
by the operation of law, this happens due to succesion,insolvency or execution
transfer of immovable property can be done only in the case of
sale,mortgage,lease,exchange or gift
History
before 1882 transfer of immovable properties in india was governed by english law
and equity and regulations and acts by the governor general in council
the law was very confusing and inconsistent
the law commission in england was appointed to draft a code.
the bill was revised 7 times. it was passed on 17th feb 1882 and came into force on 1st
july 1882
Object of the act
To provide a clear uniform and definte laws for the transfers b/w living persons
Inter vivos transfers (living persons) → Covered by TPA
Testamentary & intestate transfers → Covered by Inheritance Law & Wills
Scope of the act
does not cover all types of transfer
mainly covers immovable property transfer
does not apply to muslim law and certain special rights and incidents
terriottial limitation in this it applies to specfic areas under british rule at the time
Importance of the nature of property
movable property can be transferred by delivery possession no writing/registration
required
Immovable Property requires written and registered document for transfer
Kinds of property
Based on the nature of ownership
real property can be specifically recovered in law
Personal Property includes movable goods where only a personal action is possible
Based on the physical existence
Tangible Property
intangible property
based on mobility
Movable and immovable
SEC 3 TPA [ Immovable property]
Immovable property excludes standing timber growing crops and growing grass
according to general clause act 1897 immovable property includes land, benefits
arising out of the land,thing attached to the earth
according to registration act 1908 it includes land,buliding,rights assoiciated with land
and things attached to the earth
components of immovable property:-
land- includes surface,sub surface and space above land and anything permanently
fixed to land is part of the land
benefits arising out of land- any rights benefits from land for eg:- right to way,lease
right etc.
things attached to the earth- Things embedded in the earth (i.e building), things
attached to embedded objects(door) and things rootes in the earth(trees)
CASE:- SHANTI BAI V. STATE OF BOMBAY
Fruit bearing trees are not standing timber and are considered immovable property
immovable property recongnized by courts
right to way
lease or tenancy rights
rights to extract minerals
rights of fishery and ferry
rights to collect forest produce
mortgage debt
Temple priesthood and its benefits
Movable Property
acc to general clause act “property of every description except immovable property”
sec 2(9) of registration act includes standing timber,growing crops and grass,fruits on
the trees,fruits juice inside fruits
Instrument and attestation
instrument:- a legal document which a property is transferred
Attestation:- certification of the authencity of a document
essentials:-
1. there must be attested by 2 or more
2. witness must see the executant sign or affix mark on the intrument
Each attesting witness must sign in the presence of the executant
legal effect of attestation :- document requiring attestation is valid only when
property attested
who can be attested- sound mind and attained majority, relatives can be witnesses,
Not considered attesting witnesses: Registrar, sub-registrar, officers, typists, or any
party to the contract. no formalities in this act. the signature of the attesting
witnesses is enough if the illitratrte then thumb impression
Registration
offically recorded under the law in force
provides legal validity to the document and ensures authenticiity and enforceablilty
Procedure for registration-
The document is written on stamp paper of prescribed value.
Executant signs, and two attesting witnesses attest the execution.
The document is presented before the sub-registrar with appropriate jurisdiction.
The sub-registrar:
Verifies the executant's identity.
Records the thumb impression of the executant.
Collects prescribed fees.
Enters the document in the official register.
The sub-registrar affixes the official seal and returns the document.
The date of registration is the one recorded by the sub-registrar.
a document requiring registration is ineffective unless duly registered
registration acts as conclusive proof of the transaction
Actionable claim
a claim to any debt other than a secured dept
a beneficial interest in movable property not in possession of the claimant but
recognized by the civil courts as affording grounds for relief
in england it is called as choose in action or thing in action
Characteritics-
there must be a debt
debt should be unsecured
A beneficial interest in movable property
Types-
unsecured money debt - a debt may be existent,accuring and conditional
beneficial interest in movable property- The right of a person to take possession of
movable property from another person, provided they have a legal right to possess
it.
claims that qualify:- arreears of rent,insurance policy claims,return of earnest
money,refund of purchase money when the ssale is set aside etc
non actionable claims- calim for the damage in tort or breach of contract, mesne
profit, copyright or invention rights,judgement debt and future decree claims
Notice
knowledge or info of a fact
a person is said to have noticee when they actually know the fact and they would have
known it buy for willful ignorance
types-
actual notice- express notice
it must me defeinte clear knowlegde, must be recieived by a party involoved in the
transaction, must be related to the transaction, knowledge of staranger is not actual
notice.
Constuctive notice
legal presumption that a person should have known the fact even if they were not
directly informed
based on equity- willful abstention from an inquiry or search and gross negligence [
CASE:- LLOYODS BANK LTD V/S PE GUZDER & CO]
instances of constuctive notice
registration as notice
Actual possession as notice of title
notice to agent = notice to principal
partners notice
Sec 5 transfer of property
an act by which a living person conveys propeety to one or more living person or
himself and one or more other living persons [ humans, companies, associations or
bodies of individuals]
includes both present and future transfers
essentials of a valid tansfer:
act of transfer - a person who wants to transfer property
Parties must be living person - transferor must be a human or juristic persons or legal
capacity
conveys property- the act of transferring property rights to another persons. the
transferor must be have a valid title or interest
present or future transfer- can take immediate effect or happen at a future date
Present transfer: A gifts property to B without any conditions → Immediate transfer
Future transfer: A gifts a watch to B only if B passes the exam → Conditional
transfer.
transfer to one or more living person- transferee does not need to be competent but
the unborn child must be existence at the time of transfer
self transfer - a person cannot transfer property to themselves
A person acting as a trustee, agent, director, or chairman can transfer property to
themselves in a different capacity.
Cases that are not considered TP
family settelement
compromise
partition
surrender
release
relinguishment
charge
Sec 6 what property may be transfered
property of any kind may be transferred unless prohibited by law
Non- transferable propoerties & interest-
spes succession - expection of inheriting property in the future. eg:- A son cannot
transfer his father’s property while the father is alive because he is only an "heir-
apparent.”
mere right of re entry - Right of a landlord to take back possession for breach of lease
condtition. can be only transferred with the affected property
easement apart from domiant heritage - an easement is attached to land and cannot
be transferred separately.
restricted interest- rights meant for personal enjoyment cannot be transferred
right to future maintenance - Maintenance is a personal right and cannot be
transferred or attached for debt recovery.
mere rights to sue - The right to sue for damages cannot be transferred. Example: B is
defamed by A. B cannot transfer his right to sue A to another person, C
public office and salary of public officer - cannot be transfered. salaary of public
officers cannot be transferred before or after it becomes payable
pension and stipend
transfers opposed to the nature of interest - certain properties cannot be transfered
eg air light sea
transfer to a legally disqualified transferee- some persons cannot transfer like
inslovent,trustees,jugdes or adv. invloved in ongoing litigation
tranfers for unlawful objects or considerations - any tranfer that violates sec 23 of the
indian contract act is invalid
a tenant’s occupancy rights may be inalinenable undder tenancy rights
Sec 7 person competent to transfer
a person must be competent to contract [18 yr,sound mind,not disqulified by law]
must have ownership or authority to transfer
a living person including individuals,companise, assoication
neccessary legal formalitites must be fulfilled
Sec 8 Operation of transfer
a transfers includes for land,machinery,house,debts,money
transfer passes all interests and legal incident associated with the property
Sec 9 oral transfer
can be oral unless law requires writing. Delivery of possession for Movable property
and registration for immovable property above 1000
Sec 10 condition restraining alienation
any condition absolutely restraining transfer is void
Exceptions-
lease
married women - property may be transferred with restriction during marriage
Idol or religious endownments- certain properties held for religious purposese may
have restrictions
Types:
Absolute Restraint- Completely prohibits transfers - void
Partial Restraint - Limits transfer to same extent - valid
Conditional transfers
condition precedent- must be fulfilled before transfer takes effect
Condition subsequent - must be fulfilled after the transfer otherwise property reverts
CASE:- MUHAMMAD RAZA V/S ABBAS BANDA BIBI
partial restraint restricting transfer outside family was held valid
Sec 11 Restriction repugnant to interest created
if absolute ownership is transfered restriction on enjoyment are void
Eg:- a sells agricultural land to B with a condition that only wheat can be culitvated.
the condition will be void
exception:- Restrictions for the benefit of adjoining property are valid (e.g.,
restriction on obstructing light and air to the transferor’s house). CASE :- TULK V/S
MAXHAY- est.the concept of restrictive convenants
Sec 13 transfer for benefit of unborn person
property cannot be transfered directly to an unborn person
conditions-
must be preceded by a life interest in favor of an existing person
only absolute interest can be transferred not a life or limited interest
eg:- A transfers property to X (living person) for life and after X’s death to UB valid
transfer
CASE:- GIRIJESH DUTT V/S DATA DIN
Transfer to living person B for life was valid and transfer to B’s daughter (limited
interest) was void
Sec 14 Rule Against Perpetuity
perpertuity means an indefinite period
the rule prevents making property inalienable for an indefinite period
if property is transfered in such way that it cannot be transferred further indefinitely,it
becomes a transfer in perpetuity
ways in which perpetuity may arise
by taking away the transferee’s power of alienation
by creating a future remote interest
object of the rule
ensures free circulation of property in society
prevents property from being locked up indefinitelty within family
helps in better utilization of property for trade and commerce
based on public policy to prevent undue restrictions on transfer
essentials-
There must be a transfer of property.
The transfer is for the ultimate benefit of an unborn person.
The vesting of interest is preceded by a life or limited interest in favor of a living
person.
The ultimate beneficiary must come into existence before the death of the last
preceding living person.
The vesting of interest may be postponed only up to:
The lifetime of living persons plus
The minority of the ultimate beneficiary but not beyond that.
The maximum permissible postponement is :- Life of last preceding interest +
minority of the ultimate beneficiary
if the ultimate beneficiary is unborn at the time of transfer but is in the mother’s
womb, then:- the period of gesation is included in the postponement
Maximum remoteness of vesting = life of preceding interest+period of gestation+
minority of the ultimate beneficiary
The ultimate beneficiary does not get ownership until they reach majority. if the UB
dies before attaining majority the interest reverts back to the transferor or their heirs
exception
transfer for the benefit of the public
the rule applies only to property transfered not personal agreement
Section 17 rule against accumulation
accumulation refers to profits or income from a property being set aside instead of
being enjoyed immediately
can be partial or full accumulation of imcome
cannot direct income accumulation beyond:- the life of the transferor or 18 years from
the date of transfer. if the direction for accumulation exceeeds this period it is void
Exceptions-
payment of debts- if the income is directed to be accumulated for debt payment, it is
valid even beyond 18 years
Raising portions for children- accumalation is allowed to provide for the maintenance,
education or marriage of children
preservation of property- if accumulation is necessary for property maintenanace or
preservation it is valid.
Sec 19 vested interest
interest is vested when - no time is specified for when it takes effect,it is specified to
take effect immediately ,it takes efffect upon the happeneing of an even that must
happen.
the transferee gets an immediate interst once the transfer is complete
even if the transferee dies before obtaining possession, the interest passes to their
legal heir.
even if enjoyment is delayed, the interest remoains vested
it is transfereable and heritable A gifts ₹10,000 to B on the death of C → B has a
vested interest even before C dies, but he will receive the money only upon C’s
death. If B dies before C, the money will go to B’s legal heirs.
delay in taking the possession does not afftec vested interest
if another person has a prior interest in the property,it does not change the vested
nature of the transfer
if come from the property is to be accumulated before enjoyment,it remoains vested
if interest shifts to another person upon an even happening,the original interest
remains vested
Sec 21 contingent interest
it takes effect only on the happening of an uncertain future event or only if a specified
unceratin even does not happen
does not have an immediate title,as condition is not fullfilled
does not pass to the leagl heirs if the transferee dies before the condition is met
cannot be attached or sols in execution of a decree
if the transferee is given absolute rights over the income from the property before
fulfilling the contingency,the interest is not contingent but vested
Sec 25 conditional tansfer
property is transferred subject to a condition
tranfer will be void if the condition is impossible to perform,unlawful ,oppsed to public
policy A gifts ₹500 to B on condition that B marries A’s daughter C, but C is
already dead → Transfer is void.
Sec 26 fullfillment of condition precedent
If the transfer depends on fulfilling a condittion before interest is acquired then
substantial compliance is enough.
A transfers ₹5000 to B on the condition that he marries with the consent of C, D, and
E. E dies before marriage, but B marries with the consent of C and D → Condition is
deemed fulfilled
Sec 27 conditioonal transfer with ulterior disposition
if the 1st transfer fails the property passes to another person as per the transfer terms
A transfers ₹500 to B if he executes a lease within 3 months of A’s death,
otherwise, it goes to C. B dies before A → Transfer to C takes effect
Sec 28 Ulterior transfer conditonal on a future event
a property interest is transferred to a person but will pass to another person if an
uncertain even happens or does not happen
subject to restriction under sec 10,12,21-25 and 27
Sec 29 fulfillment of conditon subsequent
if a property is transferred with an ulterior condition the condition must be strictly
fullfilled
A transfers ₹500 to B, to be paid upon attaining majority or marriage, but if B
marries as a minor without consent, then it goes to D. B marries at 17 years
without consent → Transfer to D takes effect.
Doctrine of Election
founded on equity,applies irrespective of personal laws.
the doctrine means choosing btween 2 inconsistent rights under an instrument
CASE:- BEEPATHUMMA V. KADAMBOLITHAYA
-a person cannot take under and against the same intrument
no one can approabte and reprobate at the same time
if a person accepts benefit,they must also accpet obligation
Sec 35 if a person professes to transfer a property not his own but also confers a
benfit on the true owner
the owner must elect to confirm the transfer and dissent from the transfer and forfeit
the benefit
if the transferor dies beofre elcetion the benefit reverts to the transferor’s
representatives
election arise only when the transferee takes a direct benefit under the transaction.
CASE:- VALLIAMMAI V. NAGAPPA
-No election required for indirect benefit
elements:-
professing to transfer property not owned - the transfer property belonging to
someone else
benefit conferred on ture owner - the true owner must recieve some benfit under the
same instrument. ownership includes vested,contingent,reversionary or remote
interests.
Benefit & transfer must be part of the same transaction - the transfer and benefit
must be interdependent
CASE:- muhammad Afsal v. Ghulam Kasim
- benefits must come from the same source Duties of the owner
the owner must elect to accept or reject the transfer
if he accepts: he emust transfer his property and will receive the benefit
if he reject: he retain his property but forfeits the benefit.
Mode
express:- verbal or written
implied :- if the owner enjoys the benefit for 2 yr without dissenting or if the owner
consumes or exhausts the benefit.
if no election is made within one year, the transferor can demand an election if the
owner fails to elect within a reasonable time,they are deemed to have confirmed the
transfer.
if the owner has a legal disability election is postponed until the disability ceases, the
competent authority
if the owner rejects the transfer, he forfeits the benefit.

Doctrine of Apportionment
apportionment means division or distribution of property,income or obligations
sec 36 Apportionment by Time
applies to periodical payments
income is deemed to accrue daily and must be divided accordingly between
transferor and transferee
if no contract or local custom specifies otherwise, the rule applies automatically.
A's house is on rent for Rs.300 per month. A sells the house to B on April 15. Rent must
be divided as: A gets Rs.140 (for April 1–14). B gets Rs.160 (for April 15–30).
Sec 37 Apportionment by estate
applies when property is divided into several shares
the obligation to pay benefits must be divided proportionately among the new
owners
Conditions
the obligation must be capable of division
the division should not increase the burden of obligation
the person under obligation must have reasonable notice of the division.
A sells a house to B and C in a 1:2 ratio. The house generates Rs.300 in monthly rent. B
receives Rs.100. C receives Rs.200.
Exception-
Transfer by operation of law [heirs jointly enforce claims]
Agricultural tenancies [Division may cause inconvenience to farmers]
Improvement made by bonafide holders under
defective titles
Sec 51
protects bonafide transferees who make improvements in good faith but later face
eviction due to a better title holder
prevents unjust enrichment of the real owner at the transferee’s expense.
if evicted the bonfide transferee has 2 option, reeive compensation for improvement
made or purchase the property at market value.
the compensation amiunt is calculated based on the improvement’s value at the time
of eviction
essential: -
the transferee must be bonafide - gf belief that they had an absolute title to the
property. BOP lies on the transferee to show their honest belief in ownership. if the
bad faith or fraud is proven,protection under this sec is not available
transferee must have made improvements [permanenet enhancement of property
value] eg:- constructing a building on land or planting permanent trees/crop.
the eviction party must have a better title - a person with a superior legal claim can
evict the transferee. however,they must compensate the transferee for improvement
made in gf.

CASE- SAYED ALI MOOSA RAZA V. RAZIA BEGUM

- the defendant made construction in gf,believing they had valid ownership. the court
held that the defendant was entitled to either compensation for the improvements or
option to purchase the property.
nature- transferee cannot force the owner to sell the choice lies with the evictor. if the
real owner is too poor to compensate ,they may prefer selling the property.
Value - market value of improcement is detemined by the court. transferee must
provide proof of money spent on improvment. compensatioon is assessed on the sate
of eviction not wheb the claim is made.
Lis Pendens
Sec 52
“lis”- litigation “pendens”- pending
during pendency of litigation nothing new should be introduced. prevents transfer of
property that is under litigation.
restricts transfer of immovable property during pending litigation. any transfer made
during pendency is subject to the final court decision.
exception- transfer allowed with court’s permission.
object:- prevent endless litigation,protect parties from unfair transfers and prevent
abuse of legal process.
based on necessity,not actual or constructive notice[pending litigation signals
disputed ownership] prvents parties from bypassing the court’s decison through
transfers.
CASE:- BELLAMY V. SABINE
- pevents defeating litigation throught alienation. the transfereee is bound by the
court’s final decison.
CASE :- NAGUBAI AMMAL V. B SHAR,A RAO
-suit pendency starts when a properly stamped plaint is filled.
CASE:- SUPREME GENERAL FILMS EXCHANGE LTD V. SRI NATH SINGHJI DEO
- lease executed during attachment was invalid under lis pendens.
essestials:
pendency of a suit
suit must be before a competent court - the court must have jurisdiction
right to immovable property involved - not applicable to movable properties
suit should not be collusive - if suit is fraudelent lis pendes does not apply
property transferred by a party to the suit
transfer must affect rights of another party - the transfer must impact litigation
outcomes.
the transferee is bound by the court’s decision. transfer is valid but subject to
litigation outcome. no defence of lack of knowledge of pending litigation
A landlord sues B for unpaid rent but sells the property to C. Since rent is not related
to ownership, lis pendens does not apply.
Exceptions:
transfer with court permission is valid.
transfer by a non-party to litigation is not afffected
Doctrine of fraudulent transfer
Section 53
a transfer made with the intent to defeat or delay creditors.
can be voidable at the option of the defrauded party.
though valid in law equity can render it voidable
sec 53(1) fraudulent transfer to defeat or delay creditors
conditions: -
transfer of immovable property
made with intent to defeat or delay creditors
voidable at the option of the creditor.
Exceptions: -
rights of a transferee in gf and for consideration are protected
does not affect insolvency laws
must be a valid transfer under TP act
does not apply to relinquishment, parttiton, family settlement or dissolution of
partnership
indicators :- secret and hurried transfer, transfer made soon after a decree was
passed,transferor disposes of all or most of his property,consideration is significantly
lower than market value and no actual payment of consideration.
A debtor can prefer one creditor over others.not necessarily fraudulent unless the
intent is to defeat other creditors.
only creditors can challenge the transfer not the transferor or transferee.
CASE:- MINA KUMARI V. BIJOY SINGH
- transfer to one creditor does not imply intent to defraud other creditors
exceptions
transferee in gf for consideration - protected if the transferee had no knowledge of
the fraud. consideration must be monetary gifts are not protected.
CASE:- DAYA RAM V. NADIR CHAND
- if a transferee lacks knowledge of fraud,creditors cannot void the transfer.
does not override insolvency laws
Sec 53(2) gratuitous transfer to defraud subsequent transferee
conditions
1st transfer is made without consideration
intent to defraud a subsequent transferee
voidable at the option of the subsequent transferee.
protects bona fide purchasers from fraudulent transactions.
A gifts his house to B in January 1990.A sells the same house to C in February 1990.C
can challenge the gift if it was made fraudulently.
Doctrine of part performance
Sec 53A
based on the principle of equity developed in england
if a party performs their part of the contract they can seek protection even if the
other party fails to execute the legal formalities.
written contract for transfer of immovable property for consideration. the transferee
has taken possession in futherance of the contract. the transferee has performed or is
willing to perform his part of the contract.
The transferor is debarred from enforcing any right over the property against the
transferee except as per the terms of the contract. However, this does not affect the
rights of a bona fide transferee for consideration without notice.
Equity treats the contract as fully executed even if legal formalities (e.g., registration)
are incomplete.
CASE:- MOHAMMAD MUSA V. AGHORE KUMAR GANGULI
- applied english equity of part-performance in india and compromise deed was
upheld as valid since parties took possession based on it
Essentials: -
contract for transfer of immovable property- written and signed of the transferor
CASE:- KALAWATI TRIPATHI V. DAMAYANTI DEVI
- oral agreement are not protected
possession in furtherance of the contract
CASE:- SULTAN V. SEYDU ZOHRA BEEVI
-if possession is not proven the doctrine wont be applicable
CASE:- DURGA PRASAD V. KANHAIYA LAL
-Taking possession of even a part of the property is enough for protection.
some act in furtherance of the contract - if already in possession,transferee must
perform some additional act in furtherance of the contract
transferee must be willing to perform his part of the contract
Ostensible owner
a person who appears to be owner but is not the real owner.
CASE:- UOI V. MOKESH BUILDERS & FINANCE
CASE:- JAYADAYAL PODDAR V. BIBI HAZARA
Source of purchase money – Who paid for the property?
Nature of possession – Who actually possesses and controls the property?
Motive behind benami transaction – Why was the property purchased in another’s
name?
Relationship between parties – Close relatives or strangers?
Conduct of parties – How do they deal with the property?
Custody of title deed – Who holds the ownership documents?
Benami Transactions [ prohibition] Act - sec sec 2(a) benami transaction = property
brought in one person’s name paid for by another.
benamidar is legally treated as the real owner. benami property cannot be claimed by
the actual payer.
sec 4(1) no claim or suit to enforce right in benami property is allowed
sec 4(2) no defence in court based on benami ownership is allowed
Exceptions sec 4(3)
property is held by a coparcener
property is held by a trustee
property is purchased in the name of wife or unmarried daughter.
punishment - imprisonment upto 3 yr or fine or both
nature :- not retrospective, not declaratory but prohibitory,creating a new offence
and no protection under sec 41 of TPA
Section 43
if an ostensible owner transfers property the transfer is valid if real owner gives
express or implied consent,transfer is for consideration,transferee acts in gf and
transferee exercises reasonable care to check the sellers ownership
essentials: -
transfer by an ostensible owner with real owner’s consent
for consideration
good faith by transferee
reasonable care by transferee
buyer must genuinely believe seller has ownership.if buyer knows the seller is just an
apparent owner, the transaction is not in good faith
inquiry must be diligent not casual,buyer should check properly document,revenue
records and ownership history.
CASE:- ANODA MOHANT V. NILPHAMARI
-implied consent by allowing the ostensible owner to deal with property
CASE:- RAMCOOMAR KOONDOO V. MACQUEEN
- valid transfer when real owner’s mistress sold the property.

UNIT 2
Mortgage
Before granting a loan the creditor may take security from the debtor. security can be
pledge (movable property) and mortgage (immovable property).
it is the transfer of an interest in a specific immovable property to secure loan,future
debt and any other pecuniary liability.
the mortgage gives security for repayment of the loan
parties:-
mortgagor - who takes the loan
Mortgagee- grants the loan in whose favor the property is mortgaged
Mortgage money - the amt of money taken as loan under the mortgage
Mortgage deed - the legal instrument by which the mortgage is executed
Essentials of Mortgage:-
Transfer of interest - only an interest in the property is transferred not full ownership.
The mortgagor retains ownership but gives the mortgagee the right to recover
his money from the property in case of default.
Specific immovable Property - the mortgaged property must be clearly identified.
Purpose of mortgage- must be secure a debt or pecuniary Liability. Consideration for
mortgage: money advanced,existing or future debt,Performance of an engagement
that creates a pecuniary liability.
Kinds of Mortgage
Simple mortgage [sec 58 (b)]
the mortgagor personally undertakes to pay the loan. possession of property remains
with mortgagor.
essential :-
personal Obligation - personally liable for repayment
no possession transfer - does not get possession of the property
right to sell property - mortgagee can seek court’s order for sale
Remedies :-
file a personal suit for money recovery
file a suit for sale of property to recover the debt
suit must be filled within 12yr from the due date
must be registered regardless of the loan amount
Mortgage by conditional sale [sec 58(c)]
sells the property with the condition if loan is not repaid then absolute, if loan is
repaid the void and the property is transferred. there is not personal liablity
Essentials:-
Ostenisble sale - looks like a sale but is actually a mortgage
sale is conditional
conditional must be in the same document
CASE:- BALU GOUNDER V. PATTAYA GOUNDER
- SC said that conditional sale must be in the same document ,loan amt is much lower
that actual property value and mortgagee continues paying land tax.
Remedy:-
must be obtain a decree of foreclosure from the court. mortgagor can redeem the
property before foreclosure.
if the loan is 100 or more then registration is mandatory.
Usufructuary Mortgage [SEC 58(d)]
delivers possession of the property,enjoys the benefits in place of interest. the
mortgagee cannot sell or foreclose the property.
Essential :-
possession transferred to mortgagee
mortgagee enjoys benefit instead of charging interest
no personal liability on the mortgagor to repay the loan
mortgagee cannot sue for sale or foreclosure
more than 100 registration is mandatory
English Mortgage [sec 58(e)]
property is transferred absolutely, the mortgagor agrees to repay the loan on a fixed
date. if the repayment is made, the mortgagee must retransfer the property.
Essential :-
personal obligation
absolute transfer
condition for retransfer
more than 100 mandatory.
Mortgage by deposit of title deeds [sec 58(f)]
deposits title deeds with the mortgagee as security for a loan. no formal mortgage
deed. also known as Equitable mortgage.
registration is not required

Anomalous Mortgage [sec 58(g)]

Any mortgage that does not fall under the 5 categories above. usually a combination
of 2 or more types.
eg:- A mortgage with both usufructuary and simple mortgage elements
registration depends on the terms of the mortgage.
Rights of the mortgagor
right of redemption sec 60
right to reclaim his property after repaying the mortgage loan.
essential:-
the principle amt must be due
payment or tender of the mortgage money must be made
the mortgage must return the mortgage deed possession and re transfer the
property
exception - the right is lost if extinguished by an act of parties or court decree.
Equity of redemption :- originated in english under chancery courts to prevent unfair
loss of property due to strict common law rules. if the mortgagor defaults the
mortgagee becomes the absolute owner. allowed the mortgagor to redem even after
default preventing absolute transfer to the mortgage.
Once a mortgage,always a mortgage
- A clog on redemption is any condition in a mortgage agreement that unfairly
prevents or restricts the mortgagor (borrower) from reclaiming their property after
repaying the loan. The principle "once a mortgage, always a mortgage" means that a
mortgage is only a loan security and cannot become a permanent transfer of
ownership. Courts of equity developed this rule to protect borrowers from unfair
agreements where lenders (mortgagees) tried to take permanent control of the
mortgaged property. Examples of clogs include forcing the borrower to sell the
property to the lender, excessive delays in redemption, or unreasonable conditions
that make repayment difficult. In India, Section 60 of the Transfer of Property Act,
1882, guarantees that any such restriction is invalid, ensuring that the borrower can
reclaim their property once the debt is paid.
Clog on redemption - any stipulation restricting or preventing the mortgagor from
redeeming the property is void.
must be imposed by the mortgagee
must be in the mortgagee deed
must be unreasonable,against public policy or male fide
must not put an absolute or unreasonably long restriction on redemption.
Modes -
direct payment to mortgagee - the mortgagor can directly repay the loan to the
mortgagee or an authorized agent.
deposit in court - If the mortgagee refuses to accept payment, the mortgagor can
deposit the mortgage money in court.
suit for redemption- If the mortgagee refuses to release the property despite
payment, the mortgagor can file a suit for redemption in court. The suit must be filed
before the right of redemption is lost
effect of redemption:-
mortgagor can compel mortgagee to return all docu related to the mortgage.
in usufructuary mortgage can compel mortgagee to return possession of property.
in english mortgagoe can compel mortgagee to re-transfer property to himself or a
third party
extinguishment of right of redemption:- by act of the parties [voluntary agreement
b/w mortgagor and mortgagee. by decree of court [ court orders termination of
redemption rights.
obligation to transfer to third party sec 60A
Mortgagor can direct mortgagee to transfer the mortgage debt to a third party
instead of re-transferring it to himself.
Mortgagee is bound to comply. If an encumbrancer requests transfer, their request
prevails over mortgagor’s request.
Right to inspection of documents sec 60B
can inspect,copy, or extract mortgage document at his own cost. mortgagee can
charge for this service.
right to redeem separately or simultanesously sec 61
If a mortgagor has multiple mortgages with the same mortgagee, he can redeem
them separately or together unless there is a contract to the contrary. Principal
amount of any mortgage must have become due.
Right to recover possession in usufructuary mortgage sec 62
If mortgagee was to recover mortgage-money from rents and profits, mortgagor
gets possession once debt is paid.
If mortgagee was to recover only a part of the debt from rents and profits,
mortgagor can recover possession after prescribed period expires and he pays the
balance.
Accession to mortgaged property sec 63
if mortgagee adds value to the property,mortgagor is entitled to it upon redemption
unless stated otherwise in a contract
Natural accession- Arises naturally (e.g., land extension due to river deposits).
Mortgagor automatically entitled to it.
Acquired accession- Improvements made by mortgagee. Mortgagee can remove
them, unless mortgagor pays for them.[ separate accession] Becomes part of
property; mortgagor must pay the mortgagee for the cost if It was necessary to
prevent destruction or sale. or It was done with mortgagor’s consent.[inseparable
accession]
Improvement to mortgaged property sec 63A
Mortgagor is entitled to improvements without paying the cost.If the improvement
generates profits, they are credited to the mortgagor.
Exceptions: Necessary to prevent destruction, Necessary to maintain mortgage
security, Required by lawful public authority.
Renewal of mortgaged lease sec 64
If mortgagee renews a lease on mortgaged property, mortgagor gets the benefit of
the renewed lease upon redemption.
Exception: A contract can exclude this right.
Duties & Liablities of Mortgagor
sec 65 implied contracts by mortgagor
Sec 65A mortgagor’s power to lease.
Mortgagor, while in lawful possession, can lease the mortgaged property, and such
lease will be binding on the mortgagee.
limitation in leasing power:-
ordinary course of management
reserve the best rent no premium or advance rent should be paid
must not contain renewal clauses
should commence within 6 mon of excution
cannot exceed 3 yr and must include a rent payment covenant and a re-entry clause if
rent is unpaid within the specificed time.
If any of these conditions are not met, the mortgagee is not bound by the lease.
Sec 66 Waste by mortgagor in possession
Mortgagor in possession is not liable for general property deterioration but must
not commit destructive or injurious acts.
security is insufficient if property value is less then 1/3rd of the mortgage amt for land
and 1/2 of the mortgage amt for buildings
If the mortgagor’s actions reduce property value and make security insufficient,
mortgagee can take legal action.
Rights of Mortgagee
Right to foreclosure or sale [ sec 67]
If the mortgagor fails to repay the loan, the mortgagee can file a suit for foreclosure
(in mortgages by conditional sale) or sue for sale of the property (in simple and
English mortgages).
Exception:-
usufructuary mortgagee cannot sue for sale or foreclosure
Railway or canal mortgages cannot be foreclosed
a partial mortgagee cannot sue unless all mortgagee agree
Right to bring one suit on several mortgages [sec 67A]
If a mortgagee holds multiple mortgages from the same mortgagor, they must
combine all claims into one suit instead of filing separate lawsuits.
Right to sue for mortgage money [sec 68]
can directly sue the mortgagor for recovery of the loan instead of selling the property
if:-
1. Mortgagor has personally agreed to repay.
The property is destroyed without fault of either party.
Mortgagee loses the security due to the wrongful act of the mortgagor.
Mortgagee was entitled to possession but mortgagor refuses to hand it over.
Right to sell the property without court intervention [sec 69]
can sell the property directly if its is english mortgage and neither party is
hindu,muslim or buddist.
the mortgage deed explicitly grants this power
the mortgage was excuted in notified towns. a 3 mon default notice has been served.
Right to have a receiver appointed [sec 69 A]
if a power of sale is available, can appoint a receiver to manage the propety and
recover income from it. if mortgagor and mortgagee disagree on the appointment
then the court will appoint one
Right to accession to mortgaged property [sec 70]
if the mortgaged property inc in value, the mortgagee’s security extends to the
accession.
Right to benefit of renewed lease [sec 71]
If the mortgaged property is leasehold and the mortgagee renwes the lease they have
the right to continue benefitting from it.
Right to spend money on property for preservation [sec 72]
if the mortgagee has possession of the property,they can spend money on
maintanance,taxes or necessary repair and add the amt to the mortgage debt
Right to compensation in case of govt acquisition [sec 73]
If the govt acquires the property for public use the mortgagee has the 1st right over
the compensation money received
Liabilities of mortgagee
Liability to manage property properly [ implied duty] If the mortgagee is in
possession of the property, they must manage it prudently to prevent damage or loss.
Liability to account for rents and profit
if the mortgagee earns money from the property (rent, lease income), they must
adjust it towards the mortgagor’s debt.
Liability to return possession [sec 60]
Once the mortgagor repays the loan, the mortgagee must return the property and
related documents.
liability not to commit waste [sec66]
The mortgagee cannot damage or destroy the property in any way that reduces its
market value.
Liability to apply insurance money properly [implied duty]
the money must be used to either to repair the property or repay the mortgage debt
liability to surrender additional security [sec 74]
If the mortgagee holds multiple securities for the loan, they must release extra
securities after the loan is repaid.
liability to distribute sale proceeds [sec 76]
If the mortgagee sells the property they must use the sale proceeds in the following
order:
Pay sale-related expenses.
Repay mortgage loan + interest.
Give remaining amount to mortgagor.
Liability to maintain proper accounts [sec 77]
Mortgagee must keep records of all transactions related to the mortgaged property
and share details with the mortgagor upon request.
Doctrine of marshalling & Contribution Sec 81
marshalling means arranging things in order. right of a subsequent mortgagee does
not unfairly lose their security due to the actions of the prior mortgagee
If a mortgagor mortgages two or more properties to one mortgagee and later
mortgages one or more of those properties to another mortgagee, the subsequent
mortgagee has the right to demand that:
The prior mortgagee first satisfies their debt from properties that are not mortgaged
to the subsequent mortgagee.
Only if that is not sufficient, the property mortgaged to the subsequent mortgagee
can be used.
example:-
First Mortgage: A mortgages Properties X, Y, and Z to B for a loan of ₹10,000.
Subsequent Mortgage: A later mortgages Property Z to C for another loan of ₹5,000.
Right of C:
C can demand that B should recover his ₹10,000 first from Properties X and Y.
Property Z should only be used if X and Y are not sufficient to repay B’s loan.
Conditions:-
the same person must have mortgaged all the property to both mortgagees
the prior mortgagee cannot be forced to suffer a loss or change their rights and if the
prior mortgagee prefers to sell a specific property they can do so
the right cannot be exercised if it affects the rights of other people who may have an
interest in the property
right of marshalling can be excluded by an agreement b/w the parties[ express or
implied
Sec 82
contribution- sharing a common liablity when a property belongs to two or more
persons and is mortgaged for a loan, each co-owner is liable to contribute to the
repayment of the mortgage debt based on their ownership share.
Scope :- ensures fairness among co-owners by dividing liability in proportion to their
property share. protects a single owner from bearing the entire burden and the
mortgagee can recover from any property but affected owner can claim
compensation from co-owners
Rules of contribution:-
1. When Mortgaged Property Belongs to Two or More Persons:
If two or more persons mortgage their properties together for a loan, all of them must
contribute rateably (proportionally) to repay the debt.
The mortgagee can recover the debt from any of the properties, but the affected
owner can claim reimbursement from co-mortgagors.
No personal liability: Each co-mortgagor is only responsible for their share in the
property.

Example:
A and B jointly mortgage their respective properties to C for ₹50,000.
A owns 60% and B owns 40% of the total property value.
If C recovers the full amount from A, then A can demand 40% from B as contribution.
2. When One Property is Mortgaged First and Then Both Properties are
Mortgaged Again:
If a single property is first mortgaged for a loan and later both properties are
mortgaged for another loan, the second debt is shared after deducting the first debt
from the first property.

Example:
Property X is first mortgaged for ₹20,000 to A.
Later, Properties X and Y are mortgaged for another loan of ₹50,000 to B.
If X is sold to pay A’s loan, the remaining debt (₹50,000) must be shared rateably
between X and Y after deducting ₹20,000 from X.
3. Contract to the Contrary:
The rule of contribution can be modified by an agreement.
If the co-owners agree on a different liability-sharing arrangement, the agreement will
override Section 82.

Example:
A and B own separate parts of a property. They agree that A will pay the entire loan in
exchange for a later reimbursement.
B cannot claim a right to automatic contribution, as the contract overrides Section 82
If there is a conflict between Marshalling (Section 81) and Contribution (Section 82),
the right of Marshalling prevails.Marshalling protects the subsequent mortgagee,
while Contribution protects co-mortgagors

Sec 92 Subrogation
means substitution
when a person other than the mortgagor redeems a mortgage,he acquires the same
rights as the mortgagee.This means he steps into the shoes of the mortgagee and
can enforce rights against the mortgagor or any other mortgagee.
scope:- applies to any person with an interest in the mortgaged property. ensures fair
reimbursement for someone who pays off a mortgage on behalf of the mortgagor.
types:- 1. legal subrogation
Occurs automatically by law when someone having an interest in the property
redeems a prior mortgage.
No need for an agreement between the parties.
Based on the principle of reimbursement: If someone pays a legally owed debt for
another, they should be compensated.

Persons Entitled to Legal Subrogation:

Person Situation
Puisne Mortgagee If a later mortgagee pays off an earlier mortgage, he gets the same rights
(Subsequent Mortgagee) as the prior mortgagee.
Co-mortgagor If one co-mortgagor (who owns only a share of the property) pays off the
full debt, he is subrogated to the rights of the mortgagee.
Surety If a surety pays the mortgage debt, he can claim the same rights as the
mortgagee against the mortgagor.
Purchaser of Equity of A person who buys the mortgagor’s right to redeem can be subrogated
Redemption unless there is a contract stating otherwise.

Example:
A mortgages his property to B.
Later, A again mortgages the same property to C.
If C pays off B's mortgage, then C takes B’s place and can claim repayment from A.
2. Conventional Subrogation:
Based on an agreement between the person paying the mortgage and the mortgagor.
The person paying must not be legally bound to do so (i.e., must be a stranger).
Conditions for Conventional Subrogation:
The person paying must advance money specifically for redemption of the mortgage.
There must be a written and registered agreement that grants subrogation rights.
Only applies when the entire mortgage is paid off, not partial redemption.

Example:
A friend of the mortgagor pays off a mortgage loan on the condition that he will take
the mortgagee’s place.
If this agreement is registered, the friend gets subrogation rights and can recover
money from the mortgagor.
Limits :-
subrogation is only possible if the entire mortgage is paid off
partial redemption does not allow subrogation
a person legally bound to discharge a mortgage cannot claim subrogation
Sec 100 Charges
A charge is created when immovable property is made security for payment of
money, but without transferring any interest in the property. The person entitled to
receive payment holds a charge over the property, meaning he can recover the debt
from that property if the borrower fails to pay.
Exceptions: Trustees' charge for expenses cannot be enforced against buyers who
purchased the property for value without notice.
Example:
Mortgage: A takes a loan from a bank and mortgages his house. If A fails to pay, the
bank can take ownership and sell the house.
Charge: A court orders A to pay a debt from his property. The creditor cannot take
ownership but can recover money from it.

Kinds of charges
charges created by act of parties
Example: A person pledges his land to secure payment of maintenance but does not
transfer ownership.
charges created by operation of law

How a Charge is Enforced:

Enforced like a simple mortgage.
The charge-holder can file a suit and force the sale of the property.

How a Charge is Extinguished:

Act of Parties → The charge-holder releases the charge voluntarily.
Novation → A new agreement cancels the charge.
Merger → If the charge-holder acquires a greater security, the earlier charge ends
automatically.

Example:
A bank charges a property for a ₹10 lakh loan. If the borrower takes another loan and
gives the property as full security, the earlier charge is merged into the new loan
agreement.