TOPA-Notes

General
• It is applicable only inter-vivos; It does not affect any transfer made by the operation
of law and will not apply to transfers
1. By operation of law
2. By a decree or order of a court of competent jurisdiction
3. In execution of such a decree or order

The only exceptions are in section 57 (sale decree) and chapter IV (mortgage of
immovable property)

Muhammadan Law will prevail if act is inconsistent.

• Property- anything which can be owned. Two types- (a) tangible (corporal); (b)
Intangible (incorporeal) like rights out of land
• Immovable property- anything exclusive of standing timber, growing crops or grass
(but right to cut grass is an immovable property (benefit of land)).
1. Includes land
2. Benefits arising out of land
3. Things attached to earth
4. Permanently fastened to anything attached to earth.

Mortgage-debt on an immovable property is also an immovable property

capable of being transferred only by a registered instrument.

• Attached to earth- (a) rooted in the earth; (b) imbedded in the earth; (c) attached to what
is so embedded for the beneficial enjoyment of that to which it is attached.
• All trees are not immovable property; fruit-growing trees can be both movable and
immovable depending on their use i.e. fruit (immovable) or timber (movable)
• The test of immovability is whether or not the thing rests by its own weight on earth and
whether it can or cannot change place and be removed from one place to another.
• Whether a thing is embedded in the earth can be tested on the basis of degree and mode
of annexation as well as object of annexation.
1. Degree and mode: -
If a thing is so annexed to land that it cannot be removed
from its place w/o great damage to the land, it should be regarded as annexed in
perpetuity and should be considered as immovable property.

2. Object: -
 If the intention is the permanent improvement of the premises, the
chattels or movables fixed or annexed become fixtures. (object can be inferred
by a person’s interest in the property i.e. ownership/temporary)

Specific

➢ Section 5: -
• Living person includes company or body or association of individuals.
• Transfer can be made to –
o To one or more other living persons
o To him/herself
o To him/herself and one or more other living persons
• Conveyance is necessary; to a person with no prior title whatsoever, if a person
has rights in a property prior to transfer then there is no conveyance.
• Dedication of property to a deity or court is not transfer.
• Transfer can be made to oneself also but it has to be in a different capacity. Eg-
owner of property to manager of a trust.
• Transfer can be done with immediate effect or from a future date.
• Transfer of future property is not valid in India but a conveyance of such
property may be valid as contract to assign.
• Partition is not a transfer of property but a partition of interests of several co-
owners of a joint property.
• Dissolution of partnership and subsequent distribution of assets among partners
is not considered as a transfer because there is no conveyance as partners do not
have rights to property at time of release.
• Surrender is not a transfer. It is merging of a lesser interest in a greater interest
in such a manner that the greater interest is not enlarged.
• Compromise means an agreement for settlement of doubtful claims between the
parties in respect of some property and it is not a transfer. (To be decided on
facts and circumstances)
• A relinquishment is extinguishment of a right and cannot amount to a transfer.
A relinquishment of a reversioner of his revisionary interests does not amount
to transfer. Where the person is whose favour the release is executed, gets
certain rights by virtue of such release, the transaction may amount to transfer.
• In family arrangement there is neither creation of any new title or interest in
favour of any member not there is any conveyance, therefore, it cannot be a
transfer. (Family settlements regarding property cannot be challenged.)
• The creation of a charge does not involve conveyance of any interest in the
property of another and hence is not a transfer.
• In easement there is no conveyance and hence there is no transfer.
• The contract to transfer future property will be specifically performed only on
coming into existence of that property.
 • TOPA is inapplicable to testamentary successions.

➢ Section 6: -
• “alienation is favoured by the law rather than accumulation.” – better economy
• Any property can be transferred except the following-
1. Spes Successionis- It is a possibility of getting property in future through
succession. It includes –
(a) Chance of an heir apparent succeeding to an estate.
(b) Chance of a relation obtaining a legacy on the death of a kinsman
(c) Any other mere possibility of a like nature (uncertain possibility)

Right to receive the offering being coupled with duties other than those
involving personal qualifications, therefore, transferable and could be
inherited.
2. A mere right of re-entry for breach of a condition subsequent cannot be
transferred to anyone except the owner of the property affected thereby.
This is a right which the lessor keeps with himself after parting with the
whole estate.
3. Easement is an incident of ownership of the dominant heritage and the
land for whose benefit easement right is exercised is known as dominant
heritage. It is a right attached to the property and has no independent
existence. Therefore, it cannot be detached from the property and
transferred separately.
4. An interest in property restricted in its enjoyment to the owner
personally (i.e. solely for him) cannot be transferred by him. Eg- public
offices, emoluments attached to priestly offices.

There is no prohibition in law that ownership in a property cannot be

gifted without its possessions and right of enjoyment.
5. A right to future maintenance, in whatsoever manner arising, secured or
determined, cannot be transferred.
Although the right to maintenance is not transferrable but arrears of
maintenance can be transferred.
6. A mere right to sue cannot be transferred i.e. right to sue for a definite
sum of money is an actionable claim and can be transferred but right to
sue for indefinite sum of money is not transferrable.
Where the right to sue is connected with a business and the whole of
business is transferred, the right to sue is also automatically transferred.
7. Neither a public office nor the salary of a public office (before/ after
becomes payable) are transferrable.
8. The stipends allowed to military, naval, air force and civil pensioners of
the government and political pensions cannot be transferred.
9. No transfer can be made in –
 • In so far as it is opposed to the nature of the interest affected
thereby (res communes/ res nullies i.e. meant to be enjoyed by
everyone)
• For an unlawful object or consideration within the meaning of
section 23 of the ICA
• To a person legally disqualified to be transferee.

10. Any tenant having an untransferable right of occupancy cannot transfer

his interest as such tenant.

➢ Section 7: -
• Competency to contract to transfer property is as per defined by ICA-
1. Age of majority
2. Sound mind
3. Not disqualified by law

A minor can accept a transfer of property in his favour.

➢ Section 8: -
• It deals with effects of transfer and provides that unless a different intention is
present, a transfer of property passes all the interests which the transferor is
then capable of passing in the property and its legal incidents to the transferee.
• The object of this section is to clearly define what are the legal incidents of
each particular class of property which pass along with the property when it is
transferred.
• Incidents of land: -
1. Easements attached to it
2. Its rents and profits accruing after the transfer
3. All things attached to earth
• Incidents of machinery will be its moving parts.
• Incidents of house: -
1. Easements annexed to it
2. Rent accruing
3. Doors, windows (things provided for permanent use)
4. If debt, then the securities
5. If money, then interests accruing from it
• It is the substance and not the form of the document which would determine
its legal character which must depend upon the intention of the parties.
• If the transferor has held the property with certain limitations, the transferee
would get it too those limitations and not without them.
➢ Section 9: -
• Oral transfers are also valid in cases allowed by law and can be done in the
following two ways –
 1. Delivery of possession: - Generally movable properties may be
transferred by delivery of possession.
2. Registration: - Where registration is necessary, the transfer may be
made in writing. The following are to be transferred in writing-
▪ Sale of an immovable property exceeding ₹100
▪ Sale of reversion or other intangible property (any value)
▪ Simple mortgage irrespective of the amount specified (s. 59)
▪ Mortgage of over ₹100
▪ Lease from year to year or exceeding one year
▪ Exchange of immovable property exceeding ₹100
▪ Gift of an immovable property.
▪ Transfer of actionable claims
➢ Section 10: -
• An owner can transfer property with or w/o restrictions and are called
conditional transfers.
• Condition can be two –
1. Condition precedent: Non-adherence results in void transfer
2. Condition subsequent: Non-adherence results in breach of contract
• The owner cannot put a restriction that absolutely restricts the rights of the
transferee and the condition itself is void.
• As per the section, a condition restraining alienation would be void.
• The condition restraining lessee from alienating leasehold property is not
illegal or void.
• Partial restraint is valid and enforceable.
• A restriction for a particular time or to a particular or specified person has
been held as a partial restraint.
• Exceptions: -
1. Lease: - A lessor can impose a condition that the lessee will not assign
his interest or sub-lease the property to any other person.
2. Married Woman: A transferor can impose an absolute restraint of
alienation on a married woman provided she is not a Hindu, Muhammadan
or Buddhist.
• It has been held that if there is an absolute bar on alienation under the
provisions of an Act, it will prevail over sections 10 and 7.
➢ Section 11: -
• It deals with the restrictions on the enjoyment of absolute interest. Where a
person transfers absolute interest in a property but includes a restriction
restraining the enjoyment of property, such a restriction will not be considered
valid and will have no effect.
• Gift, exchange and sale are transfers of absolute interest or ownership.
• This section comes into force upon realisation of two conditions:
1. An absolute interest is created by the transfer in favour of the
transferee.
 2. The terms of the transfer provide that the interest in the property shall
be applied or enjoyed in the manner prescribed by the transferor.

• Exception: Where a restraint is put on enjoyment of one property for the

beneficial enjoyment of another. The two conditions for this to follow are.
1. The direction must be given by the transferor.
2. Such a direction must be made in respect of one piece of immovable
property for the purpose of securing the beneficial enjoyment of
another such property belonging to the transferor. (Eg- right of way)
➢ Section 12: -
• This section indicates a condition where the general rule of conditional
transfer will not apply.
• Two types of conditions are invalidated by this section –
1. Conditions which provide that the interest of the transferee will cease
to exist when the transferee becomes insolvent, and
2. Conditions which limit or restrict any attempted transfer by the
transferee.
• This section does not apply to a condition in a lease for the benefit of the lessor
or those claiming under him.
• Both Hindu and Muslim laws recognise the invalidity of conditions in restraint
of enjoyment of property.
➢ Section 13: -
• For the transfer of property for the benefit of an unborn person two conditions
are required to be followed –
1. Prior life interest must be created in favour of a person in existence at the
date of transfer, and
2. Absolute interest must be transferred in favour of unborn person.
• The unborn person must be in existence when the prior interest comes to an
end or the property would be reverted back to the transferor or his legal heirs.
• It is necessary that the whole of the remaining interest of the transferor in the
property must be given to the unborn person. A life or limited interest cannot
be transferred to an unborn person.
➢ Section 14: -
• A perpetuity in the primary sense of the word is a disposition which makes
property inalienable for an indefinite period.
• The object of rule of perpetuity is to restrain the creation of future conditional
interest in the property as the law prefers movement of property and not its
stagnation for good of the economy.
• The maximum perpetuity period defined by section 14 is the life of the last
preceding interest plus minority of the ultimate beneficiary. (The period of
gestation to be included if child is in womb on death of person with life
interest)
 • Till the ultimate beneficiary attains majority, he only has a contingent interest
in the property which becomes vested in him when he attains majority.
• Even if at the time of transfer of property, there is a slightest possibility that
in future it will be a transfer in perpetuity, the disposition will be void.
• Exceptions: -
1. Provision for payment of debt
2. Charities
3. Creation of charge
4. Personal agreements
5. Agreement of sale
6. Mortgages
7. Right of entry or re-entry (only if a covenant is broken)
8. Covenant for renewal of lease
9. Covenant running with land (pass with the property)
10. Power of appointment
➢ Section 15: -
• It is provided in this section that on the failure of interest in respect of some
persons of the class the interest does not fail in respect of remaining members
of the class.
➢ Section 16: -
• A valid transfer which is subsequent to and dependant upon a void transfer is
itself void.
• This section provides that where an interest created for the benefit of a person
or of a class of persons fails due to the reasons contained in section 13 and 14,
any other interest created in the same transaction which is to take effect after
the prior interest also fails.
• If prior interest fails due to any other reason given in any other section, this
section will not be applicable.
➢ Section 17: -
• The law favours transfer of property and a direction for accumulation of
income is a method of restraining enjoyment of property.
• The limits provided by the section beyond which a direction for accumulation
of income arising out of the property transferred shall be void are as follows:
1. The life of the transferor, or
2. A period of 18 years from the date of the transfer.
• If a limit is provided for that exceeds the two conditions then the limit would
be void to the extent to which it exceeds the longer of the aforesaid period.
• Where a direction for accumulation is made without specifying any of the two
periods, then it will be seen what happens after the transfer.
• If the transferor dies more than 18 years from the date of transfer, the direction
will be void after the death of the transferor. If he dies before the expiry of
 period of 18 years then the next longest period being 18 years, the direction
would be valid till the date the period of 18 years is completed.
• Exceptions:
1. Payment of debts: The debt may be an existing debt or may arise in future.
2. Provision for debts: A provision means a share in the property settled in
favour of children or their issues.
3. Preservation and maintenance of property
➢ Section 18: -
• This section provides an exception to the rule of perpetuity and accumulation
in case of transfer of property for the benefit of the public in the advancement
of religion, knowledge, commerce, health, safety or any other object
beneficial to mankind. These objects are charitable in nature.
• Doctrine of Cy Pres: Acc. To this, when the literal performance of the
antecedent condition is rendered impossible for some reason, substantial
performance in conformity with the original intentions of the transferor will
suffice.
• In cases where property is transferred for a charitable object but by reason of
the objects being uncertain, or incapable of being carried out in execution, or
the persons who have to take benefit are not in existence etc. it cannot be
given effect to, in such a situation the court will apply the doctrine and carry
out the object as near as possible to the original object.
➢ Section 19: -
• Vested interest is an immediate right in the property. When a vested interest
is created the transfer of property is complete.
• A vested interest is created in the property if the transfer is made –
1. Without specifying the time when it is take place, or
2. In terms specifying that it is to take effect –
(a) Forthwith, or
(b) On the happening of an event which must happen, such an interest, is
vested unless a contrary intention appears from the terms of the
contract.
• A vested interest is not defeated by the death of the transferee before he
obtains possession.
• An intention that an interest shall not be vested is not to be inferred merely
from a provision whereby;
1. The enjoyment of the property is postponed, or
2. A prior interest in the same property is given or reserved to some other
person, or
3. Income arising from the property is directed to be accumulated until the
time of enjoyment arrives, or
4. If a particular event shall happen the interest shall pass to another person.
• When an interest is vested, it becomes the property of the transferee and he
can transfer it even before he has obtained possession. A transfer of property
 even without possession is effective. If the transferee dies, his interest vests in
his legal representatives, whether or not he has obtained the possession.
• Characteristics of a vested right are: -
1. Vested interest does not depend upon the fulfilment of a condition. It
creates a present and immediate right.
2. A vested interest is transferable as well as heritable.
3. A vested interest is not defeat by the death of the transferee before
obtaining possession.
➢ Section 20: -
• On a transfer of property to an unborn person, the possession may not be
given to him immediately on his birth, it may be postponed but the interest is
vested in him when he is born alive.
➢ Section 21: -
• An interest the vesting of which takes place after the fulfilment of some
condition precedent, till the condition is fulfilled, remains contingent.
• In a transfer, a person gets contingent interest when: -
1. The specified uncertain event happens, the happening of which was a
condition for vesting of interest, or
2. The specified uncertain event does not happen, the non-happening of
which was a condition for vesting of interest and the event has become
impossible.
• Characteristics of a contingent interest:
1. It is a transferable interest
2. It is not heritable
3. Death is not an uncertain event but survival at the death of another is an
uncertain event.
4. The charge of an heir apparent to succeed to a person as heir or similar
possibilities of a like nature are not ‘contingent interest’ within the
meaning of this section.
• Difference between contingent interest and vested interest:
Vested Interest Contingent Interest
1. Definition 1. Definition
2. It does not depend on 2. It depends upon fulfilment
fulfilment of any condition. of condition.
3. It is not defeated by the 3. It cannot take effect in the
death of the transferee. event of death of the
4. It is both heritable as well as transferee before fulfilment
transferable. of CP.
5. There is present right of 4. It is transferable but not
enjoyment even when its heritable
enjoyment is postponed. 5. There is no present right.
 • The contingent interest and spes-successionis both are future possible
interests. In both, there is a possibility that it may become a perfect title in
future. However, this possibility is lesser in contingent interest.
➢ Section 22: -
• This section provides that only those members of a class will be given interest
who will attain a particular age and not to people who do not.
• Where the class of transferee is certain and known but vesting of interest in
favour of that class is uncertain, this section will not be applicable.
➢ Section 23: -
• The object of this section is to prevent a property from remaining w/o an
owner.
• It contemplates a prior interest and a subsequent contingent interest. In such
transfers, after the termination of prior interest the property is made to vest
subsequently in another person upon the happening of an uncertain event. If
the subsequent contingency does not happen before the termination of prior
interest, the interest would have to remain in abeyance.
➢ Section 24: -
• This section says that where on transfer of property an interest is to be created
in favour of such persons as shall be surviving at some period, the interest
will go to such of them who shall be alive when the intermediate of precedent
interest ceases to exist.
➢ Section 25: -
• Property may be transferred by one person to another absolutely or
conditionally. Conditions may be of three types:
1. Condition precedent
2. Condition subsequent
3. Condition Collateral
• A conditional transfer fails under the following conditions:
1. If fulfilment is impossible.
2. Is forbidden by law
3. Is of such a nature that, if permitted, would defeat the provisions of any
law
4. Is fraudulent
5. Involves or implies injury to the person or property of another
6. Court regards it immoral or opposed to public policy.
➢ Section 26: -
• The general rule regarding condition precedent is that where a transfer is
made on a condition precedent, the transfer fails unless the condition is first
fulfilled.
• The section says that even if the condition if substantially complied with, the
condition will be deemed to have been fulfilled (based on doctrine of Cy
Pres).
 • Where the CP becomes impossible of performance, or is immoral or opposed
to public policy, or fraudulent, the transfer will be void.
➢ Section 27: -
• It provides that where an interest created on a transfer of property is intended
to take effect upon the failure of a prior interest created by the same
transaction, such interest will take effect upon the failure of the prior interest
in any manner, unless it is clearly intended that the subsequent interest is not
to take effect unless the prior interest failed in a particular manner and the
failure occurred in some other manner.
• Exceptions:
1. When the prior interest is void then the ulterior interest dependent upon
it also fails.
2. Where the intention of the transferor is specific that the second transfer
would take effect only when the prior interest will fail in a particular
manner. Only on the failure of the prior interest in that manner the second
transfer takes effect.
➢ Section 28: -
• This section deals with ulterior transfers which are also conditionals transfers.
• Condition Subsequent: A transfer which is absolute in the first instance may
b subjected to a condition that it shall be divested on the happening of a
contingency.
• The difference b/w a CS and an ulterior transfer is that in the case of
happening of a contingency the interest created does not cease but it passes
to another person.
• This section is subjected to rules contained in sections 10, 12, 21, 22, 24, 25
and 27.
• It is not necessary that the interest created should be an absolute interest in
the property.
• A Conditional limitation is a condition of defeasance, which terminates the
interest of one person and invests that in another person.
• If an estate is given to a person in terms which confers an absolute estate, and
then a further interest is given merely after or on termination of that person’s
interest and not in defeasance of it, the further interest will be void for
repugnancy.
➢ Section 29: -
• This section says that an ulterior disposition of the kind contemplated by
section 28 cannot take effect unless the condition is strictly fulfilled.
• The general rule of law is that conditions subsequent which are intended to
defeat vested interests are to be construed strictly.
• If there is any ambiguity in the condition subsequent, it will be read in the
sense most favourable to the vested interest.
➢ Section 30: -
 • This section says that if ulterior disposition is invalid, the prior disposition is
not affected by invalidity of the subsequent disposition.
• In contrast, section 16 provides that if a prior interest fails then the
subsequent interest also fails.
➢ Section 31: -
• This section provides that an interest in a transfer shall cease to exist if a
specified uncertain happens/not happens.
• The condition referred to in this section is a condition subsequent which
terminates an interest and reverts it in the grantor.
• It is not a conditional limitation which creates an interest in a third person.
The CS which operates to terminate the interest must be a valid condition. If
it is a void condition, the interest will not revert in the grantor.
➢ Section 32: -
• This section provides that invalid CS does not divest the interest to which it
is attached. A condition which is void as a CP is also void as a CS.
• The grounds in which CS may be invalid:
1. Where a CS is vague and uncertain, and incapable of giving a
definite meaning, the condition becomes void.
2. Where the CS is incapable of performance.
3. Where a CS is opposed to public policy.
4. Where a CS is immoral.
5. A CS generally restraining marriage is held to be void except in
the following certain cases:
(a) A CS that a person should not remarry.
(b) A CS restraining marriage with a particular person.
(c) A CS causing forfeiture in the event of marriage w/o the
consent of some person named.
(d) If the object of the CS is not to promote celibacy by some
lawful object.
➢ Section 33: -
• This section says then when no time is fixed for performance of a condition
subsequent but the person, who has to perform the condition and who is to
take interest created, does some act by which the condition becomes
impossible to perform or its performance is permanently postponed, the CS
is broken.
➢ Section 34: -
• This section is based on the principle that no person can take advantage of his
own fraud.
• If performance of a condition, whether precedent or subsequent, is prevented
by a person interested in its non-fulfilment, the delay is excused and the
condition is discharged.
• This section deals with two types of situations: -
 1. Where a time is specified for the performance of an act
constituting the condition of a transfer and the fulfilment of the
condition is prevented by the fraud of the person directly
benefitted by the non-fulfilment of the condition.
2. Where no time is specified for the performance of the act and the
fulfilment of the condition is rendered impossible or is indefinitely
postponed by the fraud of the person interested in the non-
fulfilment of the condition.
• Difference b/w CP and CS
Condition Precedent Condition Subsequent
1. Condition comes before 1. Condition follows the
vesting of interest. vesting.
2. Vesting is postponed till 2. Vesting completes before
condition is performed. fulfilment of the condition.
3. Interest which has been 3. Interest even though vested,
vested once can never be is liable to be divested due to
divested by reason of non- non-fulfilment of the
fulfilment of the condition. condition.
4. Affects the acquisition of an 4. Affects the retention of the
estate. estate.
5. If condition is impossible, 5. Transfer becomes absolute
immoral or opposed to and such a condition is
public policy, transfer will ignored.
be void. 6. Invalidity of the condition
6. Condition must be valid in can be ignored.
law. 7. Doctrine of Cy-pres is not
7. Doctrine of Cy-pres is applicable.
applicable.

➢ Section 35: -
• Election means choosing between two alternative rights or inconsistent
rights. If an instrument confers two rights on a person in such a manner that
one right is in lieu of the other, that person can choose to elect only one of
them.
• The doctrine to election is based on the principle of equity that one cannot
take what is beneficial to him and disapprove that which is against him under
the same instrument.
• The section can be analysed as follows:
1. Where a person professes to transfer property which he has no right
to transfer, and
2. As a part of the same transaction confers any benefit on the owner of
the property,
 3. Such owner must elect either to, confirm such transfer or to dissent
from it.
4. If he dissents from it, he shall relinquish the benefit so conferred,
5. The benefit so relinquished shall revert to the transferor or his
representative as if it has not been disposed of.
• The necessary condition for the application of this doctrine is that there
should be a claim under the instrument and also a claim dehors the
instrument.
• It is also necessary that the benefit and burden both must come from the same
transaction; if they come from independent sources, the transferee need not
elect.
• When the owner dissents and the property reverts back and
1. The transfer is gratuitous and the transferor has before election died or
otherwise became incapable of making a fresh transfer, and,
2. In all cases where the transfer is for consideration,

It shall be the duty of the transferor or his legal representative to

compensate the disappointed transferee. The amount of compensation shall
be the amount or value of the property which was going to be transferred to
him, if the option has been exercised in favour of the transaction.

• Exception – Where a particular benefit is expressed to be conferred on the

owner of the property which the transferor professes to transfer and such
benefit is expressed to be in lieu of that property, if such owner claims the
property, he must relinquish the particular benefit.
• In two circumstances, there is presumption that the owner has knowingly
accepted the benefit –
1. Two years Enjoyment w/o any act of dissent.
2. Impossibility – Where the owner of the property has done some act
which renders it impossible to place parties in the same condition in
which they would have been as if such act had not been done.
• The owner of the property has to signify his decision of election from the
transfer within one year after the date of transfer.

➢ Section 36: -
• Apportionment is a division of a whole into parts proportionate to the rights
of more claimants than one.
• Acc. to TOPA, it is of two kinds-
1. Apportionment by time – it deals with apportionment of periodical
payments as between the transferor and the transferee.
2. Apportionment by estate – Section 37 deals with apportionment of an
obligation in the event of the division of property to which it relates.
• The section says that all rents annuities etc. and other periodical payments in
the nature of income shall upon the transfer of interest of the person entitled
 to receive such payments be deemed as between the transferor and transferee
to accrue due from day-to-day and to apportionable accordingly but to be
payable on the days appointed for the payment thereof.
• This section is applicable to inter vivos transfers between transferor and
transferee only.
• This rule can be excluded by a local usage or a contract to the contrary.

➢ Section 37: -
• Where on a transfer a property is given to several persons by portions, each
transferee is entitled to all the advantages accruing from the property in
proportion to his interest in it.
• It is subjected to three conditions: -
1. Notice of severance
2. Severable Obligation: - The obligation must be such that it can be
severed and can be performed in parts in favour of each of the several
owners. If the obligation cannot be severed, it must be performed for
the benefit of such one of the several owners as they shall jointly
designate for the purpose.
3. No Additional Burden: - It is necessary that the severance does not
increase the burden on the person who has to perform the obligation.
4. This section does not apply to leases for agricultural purposes unless
and until the States government directs so.

➢ Section 38: -
• This section deals with such transfers of property where the transferor has
only limited power of transfer in respect of an immovable property.
• The power of transfer is only available under specified circumstances.
• In simple words, where a person is authorised to transfer a property in certain
specific circumstances which are of variable nature, the actual existence of
such circumstances is not necessary. It is sufficient that the transferee has
used reasonable care to ascertain the existence of such circumstances and has
acted in good faith.
• The essential requirements are as follows: -
1. The transferor should have limited powers of alienation over the
property.
2. The transferor is under certain special circumstances authorised to
transfer the property.
3. The transferor must transfer the property for consideration.
4. The transferor must allege the existence of special circumstances at
the time of transfer.
5. The transferee must have used reasonable care to ascertain the
existence of such circumstances.
 6. The transferee must have acted good faith and must have honestly
believed in the existence of those circumstances.

➢ Section 39: -
• This section lays down that where a third party has a right to receive
maintenance or a provision for advancement or marriage out of the profits
of immovable property, which is subsequently transferred, the right of such
third party can be enforced against the transferee –
1. If the transferee had notice, although the transfer was for value or
consideration, or
2. If the transfer was gratuitous one, irrespective of the fact whether
the transferee had the notice of the right of maintenance.
• Three types of rights are protected under this –
1. A right of maintenance: - It protects the right not only in the first
instance but also the right to receive enhanced amount in the future.
2. A provision for advancement: - it means where a property is
purchased in the name of near relations, there is presumption of gift
of that property in favour of that relation so as to enable them to
anticipate the inheritance.
3. A provision for marriage: - Provision for legitimate expenses for the
marriage of the members of a JHF may be made from the income of
a property. The person protected under this section has no
proprietary interest in the property nor a charge upon it but he has
mere right to be satisfied from the profits of the property.

➢ Section 40: -
• Covenants are written agreements or contracts with respect to a property.
Where the covenants restrict the use or enjoyment of a property, they are
known as restrictive covenants.
• This section deals with negative covenants and their enforceability against
the subsequent transferees. This section says that if a transferor imposes a
negative covenant in a transfer of property then such covenant is binding
and enforceable against the assignee of the transferee provided the following
conditions are fulfilled –
1. The covenant is for the more beneficial enjoyment of the transferor’s
own immovable property.
2. The subsequent transfer is for value and the assignee has notice of
the covenant, or
3. The subsequent transfer if without consideration.
This section enacts the equitable rule that the burden of a covenant runs with
the land.
 • Restrictive covenants and contractual obligations annexed to ownership are
enforceable when the transfers are for value and the transferees have notice
of the restrictive covenants on the property.

➢ Section 41: -
• Essential requirements of the section –
1. The transferor must be an ostensible owner,
2. The transfer of property to the ostensible owner must be with express
or implied consent of the real owner.
3. The transfer by the ostensible owner must be for consideration.
4. The transferee must have acted in good faith, taking reasonable care
in ascertaining that the transferor has the power to make the transfer.
• The transfers related to this section are now controlled under the Benami
Transactions Act, 1988. The person in whose name the property has been
purchased is known as the benamidar. He holds the property for some other
person who is the real owner of the property.
• After the passing of this Act, the person in whose name the property has
been purchased becomes the real owner and the claimant who says that he
is the real owner cannot get back the property by any suit, claim or action.
• This holds true except where the benamidar (now real owner) is a co-
parcener in the HUF or a trustee standing in a fiduciary capacity.
• For the purpose of deciding whether a transaction is of benami nature, the
motive of the person advancing the consideration for the transaction is the
most relevant factor.

➢ Section 42: -
• Where a person,
1. Transfers any immovable property,
2. Reserving power to revoke the transfer to himself, and
3. Subsequently transfers the property to another transferee for
consideration,

Such transfer operates in favour of the subsequent transferee and

amounts to revocation of the first transfer.

• It is immaterial if the first transfer was for consideration or not but the
second transfer must be for consideration.

➢ Section 43: -
• This section is based on the principle of estoppel which is here also known
as feeding the grant by estoppel.
 • A person who has interest in an immovable property can transfer that
property but a person not having any interest or title in the property cannot
transfer the property and would convey no title to the transferee.
• Where a person having no authority to transfer any immovable property, he
is estopped from denying the transfer when he subsequently acquires such
property.
• This is based on two principles –
1. The common law doctrine of estoppel by deed
2. The equitable principle that if a person promises more than he can
perform, then he must fulfil the promise when he gets the ability to
do so.
• In order to get the benefit of this section, two conditions must be fulfilled –
1. The contract of transfer was made by a person who was competent
to contract; and
2. The contrast was subsisting at the time when a claim for recovery of
the property was made.
• This section is not applicable in the following situations –
1. Transfers without consideration
2. Transfers forbidden by law on the ground of public policy.
3. Involuntary transfers.
• Essential requirements of the section –
1. A fraudulent or erroneous representation that the transferor had
authority to transfer the property.
2. The transfer is for consideration.
3. The transferor subsequently acquires the interest which he professed
to transfer.
• If there is a subsequent acquisition, it does not matter if it cannot satisfy the
transfer in toto, the reason being that every acquisition of interest in the
property transferred enures for the benefit of the transferee.
• For satisfying the claim of transfer of property to transferee can happen
through two options –
1. At the transferee’s option
2. At any time during which the contract of transfer subsists.

Section 41
1. In a sale by ostensible owner, the transferee
does not depend upon the representation of
transferor but bona fide takes reasonable care
to inquire.
2. Ostensible owner is the person who is not the
real owner but he holds himself out as the
owner and the transferor takes the property
from him.
Section 43
1. In feeding the grant by estoppel, the
transferee believes the fraudulent or
erroneous statement of the transferor to be
true.
2. The transferee gets the property not
belonging to the transferor and can only
claim if he gets the property by some
chance in the future.
3. The estoppel works against real owner
4. The transferee takes from ostensible owner.
5. The transferee has to make reasonable
inquiry about the authority of the owner.
6. The transferee must not have notice of the
real owner’s title.
7. The transferee must honestly believe that the
ostensible owner has got an authority to
transfer.
3. The estoppel works against the transferor.
4. The transferee takes from the real owner.
5. The transferee has to pay consideration
only.
6. The transferee should have no notice of
the option in favour of the first transferee.
7. The transferee must believe that the
transferor has transferred the property to
him for the first time.

➢ Section 44: -
• Where a co-owner of an Immovable property legally competent in that behalf
transfers his share in such property, the transferee acquires –
1. Transferor’s right to joint possession, other common or part enjoyment
of the property.
2. Transferor’s right to enforce partition of the property.
• This section is not applicable to the case of a dwelling-house where a part of
it is occupied by strangers after partition. It is of a negative character. It affords
a defence to the members of the family but does not create a positive right in
them.
• This section assures the transferee the right of joint possession or common
enjoyment of the property but does not confer on him any right to exclusive
possession without enforcing partition.

➢ Section 45: -
• This section deals with the quantum of interest and its determination where
there are several joint purchasers of immovable property.
• When a transfer to two or more persons jointly for consideration makes them
co-owners of the property transferred, their interests are in proportion to the
shares of the consideration that they have advanced.
• If the consideration is paid out of a common fund, their shares would be same
as their interest in the common fund.
• In the absence of evidence showing in what shares the consideration was paid
there is a presumption that the co-owner’s interest was equal.
• Even if their name is not on the title, all the persons who have contributed
funds for the purchase of the said property would be co-owners and each of
them would have the right in the said property in proportion to the fund they
have contributed for purchase.
• The principle of this section applies to the property purchased at an
involuntary sale as it embodies a rule of justice, equity, and good conscience.

➢ Section 46: -
 • The principle of this section is that where two or more persons, who are
tenants in-common, sell their shares, they are entitled to share the
consideration in proportion to the value of their interest in the property.
• Where immovable property is transferred for consideration by persons having
different interest in the property,
1. The transferors would be entitled to equal share in consideration when
their interests in the property were equal, and
2. Where interests are unequal, they would be entitled to shares
proportionately to their interests in the property.
• This section is the converse of section 45, as this talks about apportionment
between joint-transferors and that talks about apportionment among the joint-
transferors.

➢ Section 47: -
• Acc. to this section,
1. Where co-owners of an immovable property transfer a share in it,
2. Without specifying the particular share on which the transfer is to take
place,
3. The transfer would take effect on such shares, as among the
transferors-
a) Equally, where the shares are equal
b) Proportionately to extent of shares, where shares are unequal

➢ Section 48: -
• This section says that if there are successive transfers of the same property,
the later transfer is subject to the prior transfer.
• This section is used when transfers of one type are created as there would be
no question of priority when different types of transfers are created.
• However, this general rule applies only in the absence of a special contract or
reservation binding on the earlier transferee.
• If two or more transfers are executed on the same date then evidence may be
taken as to which was first and hence priority would be given accordingly.

➢ Section 49: -
• This section simply lays down that if at the time of transfer the immovable
property had been insured against fire then if any damage by fire occurs then
the transferee can ask the transferor for the money received through insurance
to the reinstate the property.

➢ Section 50: -
 • The principle laid down in this section is that if a person enters into a contract
and w/o any notice of assignment fulfils it to the person with whom he made
the contract, he is discharged from his obligation.
• For getting the protection of this section, the payment must have been made
in good faith. If a tenant knowing that there is a dispute between two persons
claiming to be landlords, and he arbitrarily chooses one and makes payment
to him, he does so at his own risk.
• For protection of this section, it is necessary that the rent should have been
paid when it became due and not in advance.

➢ Section 51: -
• When a person purchases a property from an ostensible owner believing him
to be the real owner and makes improvements in the property believing
himself to be the owner and is subsequently evicted by the real owner, then
the law says that the real owner will have to pay him the cost of
improvements.
• Essential requirements of the section –
a) He must prove he is a transferee of the immovable property.
b) He has made improvements in the property believing in good faith
that he is entitled to the property.
c) He is evicted from the property by a person having better title.
• Two types of relief are given –
a) The transferee may be compensated. (The value of the improvements
is not the cost of the improvements but the extent to which the value
of the property as a marketable subject has been enhanced thereby.)
b) The real owner can sell his interest in the property to the transferee.
• If the transferee has in good faith sown crops during his bona fide possession
of the property then he is entitled to go and collect the crops from the land.

➢ Section 52: -
• Lis Pendens means a suit under consideration of any court in law. The
principle is that where a suit or proceeding is pending between two persons
with respect to an immovable property and one of these parties sells or
otherwise transfers the subject-matter of litigation the then the transferee will
be bound by the result of the suit or proceeding.
• The foundation of the doctrine of Lis pendens does not vest upon notice,
actual or constructive but upon necessity.
• Essential Requirements for applicability of this section –
1. There must be a pending suit or proceeding.
2. The suit or proceeding must be pending in a competent court.
3. The suit or proceeding must not be collusive.
4. A right to immovable property must be directly and specifically in
question in that suit or proceeding.
 5. The disputed property must be transferred or otherwise dealt with by
any party to the suit.
6. The alienation must affect the rights of any other party to the dispute.
• The doctrine cannot be availed of by the transferor, it is meant for the benefit
of the other party to the transaction.
• A compromise decree also falls within the scope of lis pendens provided it is
not result of a fraud.
• This section also applies where alienation has taken place in violation of a
restraint order on alienation. It will also apply between co-defendants if the
relief claimed in the suit involves a decision between them.
• Alienation of the property during pendency of suit without permission of the
court is invalid. Prior permission of the court is necessary.
• “Collusion in judicial proceeding is a secret arrangement between two
persons that one should institute a suit against the other in order to obtain the
decision of judicial tribunal for some sinister purpose”
• For this section’s application, the right to immovable property must be
directly and specifically in issue in the suit or proceeding. A mere right to
sue, not connected with the ownership of property is not property, and
therefore, this section will not be applicable.
• A temporary injunction restraining a transfer pendente lite has been held not
necessary to be granted in each case. The occasion for invoking powers under
Order 39, rules 1 and 2 arises only in rare cases where the plaintiff
demonstrates that the rule of lis pendens is inadequate to protect his interest.
• Exception – when the transfer is made with the permission of the court.
• This section is also applicable to involuntary transfers i.e. transfers by
operation of law.
• The doctrine of lis pendens is applicable to suits for specific performance as
well. A lis pendens transferee is not required to be impleaded as a party to a
suit for specific performance of the contract. Such transferee has no
independent interest in the subject-matter of the suit and the decree in the suit
will be effective against him.
• The doctrine does not apply to co-defendants. Co-defendants have no issue
between them for decision and that is why lis pendens does not apply to them.
• In the matter of transfer of property during pendency of lis, it has been held
that the principle of estoppel contained ins section 41 must yield to the
doctrine of lis pendens. The purchaser was not entitled to the protection under
section 41 as the property was transferred in his favour during pendency of
the litigation.

➢ Section 53: -
• The principle of this section is that every transfer of immovable property made
with intent to defeat or delay the creditors of the transferor shall be variable
at the option of any creditor so defeated or delayed. This means that the
 transfer is valid in law but can be avoided by that creditor whose interest has
been defeated or delayed.
• Essential requirements of this section are –
1. There must be a transfer of an immovable property.
2. Transfer must have been made to with intent to defeat or delay the
creditors of the transferor.
3. The transfer shall be voidable at the option of the creditor whose
interest has been defeated or delayed.
• Exceptions –
1. The rights of a transferee in good faith and for consideration are
unaffected. ( A mere fraudulent intention on the part of the grantor-
transferor will not invalidate the transfer, if it is for valuable
consideration and there is not want of good faith on the part of the
transferee.)
2. Any right created by law of insolvency remains unaffected.
• This section does not cover nominal, sham or simulated transfers of property
because in such case there is no intention to transfer the property and no right
is conveyed in the property. (Surrender by a life-estate holder has been held
to be a transfer under this section.)
• Partition and family settlements are not transfers within the meaning of this
section but where the partition is done only to defeat or defraud creditors,
this section will become applicable.
• The section uses the term ‘creditors’ and not creditor. The intention must be
to defeat or delay the creditors generally and not to prefer one creditor over
another.
• The preference of one creditor to another even though fraudulent in the law
of insolvency, cannot be impeached under general law. The debtor may pay
one creditor and leave others unpaid but he must not retain a benefit for
himself.

➢ Section 53A: -
• The doctrine of part-performance also known as ‘equity of part-
performance’ says that if a person has taken possession of an immovable
property on the basis of a contract of sale and has either performed or is
willing to perform his part of the contract then he would not be ejected from
the property on the ground that the sale was unregistered and the legal tile
has not been transferred to him.
• Essential requirements of the sections –
1. There must be a contract to transfer an immovable property for
consideration.
2. The contract should be in writing and its terms can be ascertained
with reasonable certainty.
 3. The transferee should have taken the possession of the property in
part-performance of the contract or if he is already in possession,
should have continued in possession in part-performance of the
contract, and should have done something in furtherance of the
contract.
4. The transferee is ready and willing to perform his part of the
contract.
• The transferee under an oral agreement cannot take benefit of this section;
the agreement has to be in writing.
• Where transfer is w/o consideration, this doctrine will not be applicable.
• If the transferee has once taken possession but has subsequently lost it, this
fact will not deprive him of his right under section 53A. It is not necessary
to take possession of the whole of the property, even a part of it is enough
to take benefit of the section.
• Where transferee is already in possession of the property, he must do some
act in furtherance of the contract. Anything done prior to the contract or
incidental to the terms of the contract will not be regarded as act in
furtherance of the contract. There must be a direct co-relationship between
the contract and act done in furtherance of the contract.
• A tenant cannot avail this section because the Rent Act will prevail, unless
the relationship changes due to an agreement of sale.
• It is also necessary that the willingness to perform the part must be absolute
and unconditional.
• Exception – The transferee for consideration who has no notice of the
contract or of its performance is not affected by this rule. Any right which
the transferee may have against the transferor under this section would not
be of any avail against a bona fide transferee for value having no notice of
consideration.
• This section comes into effect even if the instrument of transfer has not been
completed in the manner prescribed therefor by the law for the time being
in force, like the Registration Act, which prescribes for registration of
instruments of transfer.
• Section 53A does not confer any title or interest on the transferee in the
property in his possession. It only says that where the conditions of this
section are fulfilled, the right of the transferee in respect of the property in
possession will be protected.

➢ Section 54: -
• Sale is a transfer of ownership for money consideration. It implies an
absolute transfer of all rights in the property sold.
• Essentials of a sale –
1. Parties
2. Subject-matter
 3. Money-consideration
4. Conveyance
• Non-payment of sale consideration does not vitiate a sale if it is promised
to be paid. But if an assertion is made that the consideration has already
been paid and it is found to be incorrect, the transaction does not amount to
a sale.
• The real test is the intention of the parties. In order to constitute a sale, the
parties must intend to transfer the ownership of the property and they must
also intend that the price would be paid either in present or in future.
• The section provides two modes of transfer for immovable property –
1. Delivery of possession.
2. Registration of sale-deed.
• Where the sale is to be completed only by the registered instrument, the
ownership is deemed to pass on execution of the sale-deed not on the
registration of the deed.
• The mere fact that an agreement for sale is described as a re-conveyance
does not by itself mean that it is an option to repurchase nor does it in any
way alter the substance of the deed. It merely records a historical fact that
the property which is to be sold was being purchased by the person who
used to be the owner.
• If there is charge on the property in question either by the buyer or the seller;
where the charged immovable property is converted into another property
or money, the charge will fasten on the property or money into which the
conversion took place.

➢ Section 55: -
• Rights and Liabilities (Duties) of Seller and Buyer –
1. The seller is bound to disclose to the buyer any material defect
which is present either in the property or in the title of the seller of
the property. It is necessary that the defect must be a material defect
about which if the buyer had known he would not have purchased
the property.
2. The seller is bound to produce all the documents relating to the
property for his own protection. If the buyer does not demand any
such document then the seller is under no duty to produce them.
3. If a buyer does not inspect the title-deeds, he would be fixed with
the constructive notice of any defect in the seller’s power of transfer
if it is found later on.
4. The seller is bound to answer to the best of his information all the
relevant questions put to him by the buyer in respect of the property
or its title.
5. The seller is to take as much care of the property and all its
documents of title which are in his possession as an owner of
 ordinary prudence between the period of contract of sale and
delivery of property.
6. The seller is bound to pay all public charges and rent accrued due
in respect of that property upto the date of sale, the interest on all
encumberances on such property due on such date and except where
the property is sold subject to encumberances, to discharge all
encumberances on the property then existing.
• Liabilities (Duties) of seller after completion of sale.
1. The seller is to give possession of the property either to the buyer
or his authorised person whenever the buyer so requires and the
delivery will depend upon the nature of the property.
2. Acc. to sub-section (2) a covenant exists which says that the seller
shall be deemed to contract with the buyer with the buyer that the
interest which the seller professes to transfer to the buyer subsists
and that he has power to transfer the same. The legal effects of such
covenant are –
i. The covenant implies absolute warranty of title.
ii. This liability is limited to which the seller professes to
transfer.
iii. If a defect is found in the seller’s title after completion of
sale, the buyer would become entitled to sue for damages
and to claim return of the purchase-money if he is
dispossessed in consequence of his seller’s defective title.
iv. The covenant runs with the land and it is enforceable by
subsequent purchasers of land.
3. Acc. to sub-section (3) where the whole of the purchaser-money has
been paid to the seller, he is bound to deliver to the buyer all
documents of title relating to the property which are in the seller’s
possession or power.
The proviso says that –
i. Where the seller retains any part of the property comprised
in such documents, he is entitled to retain them all, and
ii. Where the whole of such property is sold to different
buyers, the buyer of the lot of greatest value is entitled to
such documents.

In such cases, the seller and buyer of the highest value

respectively are bound upon reasonable request by the buyer
and at the cost of person making such request to produce the
documents and furnish true copies of it.

• Seller’s Right before sale

1. The seller is entitled to the rents and profits of the property till the
ownership of it passes to the buyer. In case the buyer takes
 possession of the property before completion of sale, the seller has
the right in such a case to realise interest on unpaid-purchase
money.

• Seller’s Right after sale

1. In case of non-payment of purchase-money, the seller entitles to a
charge upon the property from –
i. In the hands of the buyer,
ii. Any transferee w/o consideration or
iii. Any transferee with notice of non-payment
iv. For the amount of the purchase-money or if any part of the
purchase money remaining unpaid, and
v. For interest on such amount of purchase money or any part
unpaid from the date on which the possession has been
delivered.
2. This is known as statutory charge of the seller for the unpaid price.
The seller is not entitled to retain possession; therefore, the charge
is said to be non-possessory lien.
3. Where the buyer is already in possession of the property, the seller
is entitled to claim interest from the date on which such possession
was delivered, not from the date of transfer of ownership.
4. The charge created in favour of the seller is an actionable claim and
is transferable. Therefore, it can be transferred to a third person by
the seller.
5. If the parties want to exclude the charge, they have to contract in
express terms that in case the full price or any part of it remains
unpaid, the seller shall not have any charge on the property.
• Buyer’s Liabilities before completion of sale –
1. The buyer is liable to disclose any fact which materially increases
the value of the property to the seller before completion of sale when
the seller is limited to only those facts which relate to the title or the
interest of the buyer and of which only he has knowledge.
2. The buyer may pay the price to the seller or the person directed by
him. Where the property is sold free from encumberances the buyer
will tender the full price to the seller but where any encumberances
is still a charge on the property sold, the buyer may pay out such
charge-holder and retain that sum from the price to be paid to the
seller.
• Buyer’s Rights before the completion of sale –
1. When the buyer properly declines to accept delivery, he becomes
entitled to refund of earnest (if any) and for the costs (if any) also
awarded to him in a suit to compel specific performance of the
 contract or to obtain a decree for its rescission. The charge would
last until the conveyance is executed by the seller and possession is
also given to the purchaser and ceases only thereafter.
2. Where due to the default of the seller or refusal of the seller to
execute the conveyance, the sale does not take effect, the buyer has
a right to recover all the sums paid together with interest. It is a
statutory charge.
• Buyer’s Liabilities after completion of sale –
1. If any loss occurs to the property either by the way of accidental
destruction or deterioration after the ownership has vested in the
buyer, the buyer will bear the loss.
2. The buyer is bound to pay all rents and public charges which may
become payable after the ownership shifts into his hands, including
the encumberances if there is attached any.
3. The purchase of the properties of a company in liquidation is
entitled to get a clear title free of all charges or encumberances, even
if there was an attachment by a statutory authority. Dues of such
company cannot be recovered from the purchaser.
• Buyer’s Rights after completion of sale –
1. Where the ownership has passed, the buyer is entitled to the benefit
of any improvement in the property or increase in the value of the
property and to the rents and profits thereof.
• The vendor has to pay taxes in respect of the property upto the date of sale.

Mortgage
➢ Section 58: -
• A mortgage is the transfer of an in specific immovable property for the
purpose of securing the payment of money advanced or to be advanced by
way of a loan, an existing or future debt, or the performance of an
engagement which may give rise to a pecuniary liability.
• The ownership of the property remains in the debtor but some of his
interests in the property are transferred to the creditor who has given loan.
• In a mortgage, the right in the property created by the transfer is accessory
to the right to recover the debt. The debt subsists in a mortgage, but the
transaction by which the debt is extinguished is not a mortgage but a sale.
• Elements of a mortgage –
1. There must be transfer of an interest.
2. The interest transferred must be in specific immovable property.
3. The transfer must be made to secure a loan of money, debt or
performance of an engagement which may give rise to a pecuniary
liability.
• Mortgage debt is not an actionable claim in this Act but it is only a transfer
of an interest in an immovable property.
• A mere undertaking to create a mortgage is not sufficient in itself to create
an interest in any immovable property.
• In a mortgage-deed the property must be defined specifically and not
generally. Also a life insurance policy cannot be the subject-matter of a
mortgage because it is not property.
• The mortgage must be supported by consideration. A transfer which is
made by way of discharging a debt is not a mortgage. It has been held by
the SC that the mortgage does not become ineffective merely because the
mortgagee could not advance the money on the date of the execution of the
deed.
• There are six kinds of mortgages, namely –
1. Simple mortgage –
a) In case of simple mortgage, the possession of the property
remains with the mortgagor and he personally covenant to
pay the mortgage-money. He agrees that in case of his
default by non-payment, the property may be sold by the
mortgage under court orders.
b) In this case, the mortgagee has two-fold security. Firstly, the
mortgagor takes personal obligation; Secondly, the property
may be sold in case of a default. The proceeds of the sale
will be used to pay off the debt along with the interest and
the balance amount will have to be paid back to the
mortgagor.
2. Mortgage by conditional sale –
a) In this type of mortgage, the mortgagor ostensibly (it is a
sale which apparently looks like a sale but in reality, is a
security for debt) sells the property and it is sold on the
condition that-
I. On default of payment of mortgage-money on a
certain date the sale shall become absolute, or
II. On such payment being made the sale shall become
void, or
III. On such payment being made the buyer shall transfer
property to the seller.
b) However, such a transaction will be deemed to be a
mortgage only when the condition is embodied in the
document which effects or purports to give effect to the sale.
c) A mortgage by conditional sale is an ostensible sale which
ripens only on the breach of condition as to payment into an
absolute sale. The mortgagor here has no personal liability
and therefor the mortgagee cannot look towards other
properties of the mortgagee for debt realisation.
 d) Once the condition of reconveyance is incorporated in the
document of ostensible sale executed by the owner, the
applicability of section 58 (c) i.e. mortgage by conditional
sale is not ruled out merely because ostensible purchaser’s
promise to reconvey property after specified period is
contained in separate document.
e) The remedy open to the mortgage by conditional sale is by
foreclosure only and not by sale.
f) Distinguishing mortgage by way of conditional sale from a
sale with a condition of repurchase, the court said that in the
former, the debt subsists and a right to redeem remains with
the debtor but in the case of latter the transaction does not
evidence an arrangement of lending and borrowing and,
therefore, there is nothing in it in the nature of a right to
redeem.
g) It was further developed by SC that a mortgage by
conditional sale must be evidenced by one document
whereas a sale with a condition of retransfer may be
evidenced by more than one document.
3. Usufructuary Mortgage –
a) Where the mortgagor delivers possession or binds himself
(expressly or impliedly) to deliver possession of the
mortgaged property to the mortgage and authorises him to –
I. Retain such possession until payment of the
mortgage-money, and
II. Receive the rents and profits accruing from the
property, and to appropriate the same in lieu of
interest or in payment or mortgage money or party
in both,

The transaction is called an usufructuary mortgage.

b) The mortgagor himself does not remain personally liable to

pay the mortgage money because either the mortgagee is let
into possession or he is permitted to repay himself out of the
rents and profits of such property.
c) Essential elements of the mortgage –
I. There is delivery of possession to the mortgagee or
an express or implied condition to do the same.
II. Retention of possession by the mortgagee till
payment of mortgage-money or right to appropriate
rents and profits from land to fulfil interest of
principal debt.
III. There is no personal liability of the mortgagor.
 IV. Mortgagee cannot foreclose or sue for sale or
mortgage-property.
V. The mortgagor is entitled to redeem the property
when the amount due is personally paid or the debt
is discharged by rents and profits received by the
mortgagee.
VI. No time limit is fixed for repayment.
VII. When above ₹100 to be registered or when below
then by registered deed or delivery of possession.
d) It is not necessary that the delivery of possession be made at
the time of execution of the deed.
e) The mortgagee cannot alienate the property since there is no
time limit for repayment.
f) The only remedy for the mortgagee is to retain possession
of the property till the mortgage money is paid up and to
appropriate the rents and profits of property till his principal
money and interest due both are paid in accordance with the
mortgage-deed. If the usufructuary mortgagee loses his
possession, he may sue to obtain the possession, mesne
profits as well as for the mortgage money.
g) An usufructuary mortgage can be effected by a lessee. The
rights of such mortgagee are just the same, and no more,
than those of the lessee.
4. English Mortgage –
a) In English mortgage, the property is absolutely transferred
to the mortgagee on the condition that when the debt is paid
off on the given date, the mortgagee will re-transfer the
property to the mortgagor.
b) Essential Elements of the mortgage –
I. There is absolute transfer of property to the
mortgagee i.e. there is delivery of possession.
II. There is a personal covenant to pay the amount. The
mortgagor binds himself to repay the mortgage
money on due date.
III. The property is transferred on the condition that the
transferee-mortgagee will re-transfer it to the
mortgagor on the payment of the mortgage-money.
c) An absolute transfer can never be a mortgage because in the
mortgage there is transfer of a limited interest only for
securing debt. The use of word ‘absolutely’ is only a matter
of form and not of substance.
5. Mortgage by deposit of Title-deeds –
a) This is also known as equitable mortgage and happens
whenever a person –
 I. In the towns of Calcutta, Madras, Bombay, and in
any other town specified by the State Government
concerned in this behalf,
II. Delivers to a creditor or his agent documents of title
to immovable property,
III. With intent to create a security, thereon

Such a transaction is called a mortgage by deposit of

title-deeds.

b) This is a special kind of because here the execution of

mortgage deed is not necessary. Mere deposit of title deeds
of an immovable property by mortgagor to mortgagee is
sufficient.
c) The rule of equity is that the mere deposit of a document of
title w/o writing or w/o word of mouth, will create in equity
a charge upon the property which is referred in deed.
d) In India, it creates a right in rem which cannot be defeated
by any defence of bona fide purchaser w/o notice. Therefore,
it will also operate against as subsequent legal mortgage of
the same estate.
e) No mortgage is created where the documents show no kind
of title. A copy is not a document of title and its deposit
cannot be an equitable mortgage and where the original title-
deed is lost, an equitable mortgage can still be created.
f) It is necessary that the title-deeds are deposited with the
intention of creating security for the debt. Such an intention
cannot be presumed from possession because the mere
possession of the deeds is not enough w/o evidence as to the
manner in which the possession originated.
g) A mortgage by deposit of title-deeds does not require
registration even if there is a writing recording the deposit.
h) The remedy is by a suit for sale and for the mortgage money.
He is not entitled to sue for foreclosure. However, the
mortgagor’s remedy is a suit for redemption and not an
action to recover the title-deeds.
i) The period of limitation for a suit of enforcement of
payment of money secured by mortgage by deposit of title
deeds is twelve years from the date when payment becomes
due.
6. Anomalous mortgage –
a) A mortgage which does not fall under any of the five above
stated categories is known as anomalous mortgage.
 b) Such mortgages take innumerable forms moulded either by
the custom or the caprice of the creditor.
c) In this, the possession may or may not be given.
d) When above ₹100 to be registered or when below then by
registered deed or delivery of possession.
e) The mortgagee’s remedy is by sale and foreclosure, where
the terms of the mortgage permit it. The remedy of a
mortgagor, if he becomes a trustee or legal representative of
the mortgagee is by a suit for sale only.

➢ Section 59: -
• The property may be transferred by way of mortgage in the following three
ways –
1. By a registered instrument
2. By delivery of possession
3. By deposit of title-deeds
• In a mortgage where the principal money secured is ₹100 or more, the
mortgage can be effected only by –
1. A registered instrument
2. Instrument signed by mortgagor
3. Attested by atleast two witnesses
• In a mortgage by deposit of title-deeds, whatever be the amount of
mortgage debt, writing and registration are not necessary.
• Where the mortgage requiring registration is not registered, the mortgage is
not converted into a charge under s. 100 but it may be used to establish a
personal liability.
• In such a case, the mortgagor cannot sue for redemption because the
mortgage is invalid but he can sue for possession on his offering to repay
the loan.
• The mortgagor cannot regain possession on the basis of oral mortgage as it
could not be proved in court for want of registration.

➢ Section 59A: -
• Unless otherwise expressly provided, references in to mortgagors and
mortgagees shall be deemed to include references to persons deriving title
from them respectively.

➢ Section 60: -
• A mortgagor has the following 6 rights –
1. Right of redemption
2. Right to transfer to a third party instead of re-transference to
himself.
3. Right to inspection and production of documents
 4. Right to accession
5. Right to grant a lease
6. Right to reasonable waste
• Right to redemption –
I. At any time after the principal money has become due, the
mortgagor has a right on payment of the mortgagor-money
at a proper place and time, to require the mortgagee-
a) To deliver to the mortgagor-deed and all documents
relating to mortgaged property in possession or
power of the mortgagee,
b) To deliver possession of the property to the
mortgagor where the mortgagee is in possession of
it,
c) To retransfer the property to the mortgagor or any
third person directed by him (at the cost of
mortgagor) or to register an acknowledgement in
writing of the extinction of the mortgagee’s right.

This section does not render invalid any provision to the

effect that –

a) If the time fixed for payment of the principal money has

been allowed to pass, or
b) No such time has been fixed,

the mortgagee shall be entitled to reasonable notice before

payment or tender of such money.

II. The right of redemption as recognised under TOPA is thus

a statutory and legal right which cannot be extinguished by
any agreement made at the time of mortgage as part of the
transaction. Any provision incorporated to do so would be
void and is called a clog on redemption.
III. It can be extinguished as provided in the section and when
it is alleged to be extinguished by a decree, the decree should
run strictly in accordance with the form prescribed for the
purpose.
IV. It is not necessary conclusion that a long-term for
redemption is always a clog on redemption. In fact, it may
suit both parties, relieving the mortgagor of the necessity of
finding another creditor and also enabling the mortgage to
make a long-term investment. So long as the right to
redemption and foreclosure or sale go hand-in-hand, it
would not really matter how long redemption is postponed.
 V. A condition converting a mortgage into a sale is invalid as a
clog on redemption.
VI. When a provision in a mortgage-deed being a clog on the
equity of redemption is void and unenforceable as against
the mortgagor, it cannot bind his assignee also.
VII. Restraint on alienation of property is determined by the
terms of the deed.
VIII. The mortgagee shall not reserve to himself any collateral
advantage outside the mortgage contract.
IX. A subsequent agreement having the effect of postponing
redemption may either be an agreement which creates a
personal obligation or a charge on a mortgage creating a
right in rem.
a) When only a personal obligation is created by an
agreement, it is a clog on redemption because the
mortgagor is entitled to get back his land on payment
of the debt secured on it.
b) Where the mortgaged property is made security for
the repayment of the further advances, then the
agreement not to redeem the first mortgage until the
second debt is paid off is valid.
X. Where a condition sale in part of the mortgage transaction it
is considered as a clog on redemption. Where the mortgagee
stipulates for the purchase of the property from the
mortgagor subsequent to the mortgage, it is a valid clause.
XI. Where the terms in the mortgage-deed provided that the
mortgage could demolish the existing structure and
construct a new one, the expenses for which were to be
reimbursed by the mortgagor at the time of redemption, the
terms were held to be unreasonable and unconscionable and
a clog on redemption.
XII. The mortgage deed has to be returned to the mortgagor for
completing the process of redemption. If the process of
redemption has been given the shape of an endorsement of
redemption, the signature of the mortgagee should be there.
XIII. In case of multiple mortgagors, the redemption of property
by just one of them frees the property from mortgage.
XIV. The effects of redemption of mortgage –
(i) Return of documents and return of possession of the
mortgaged property.
(ii) The mortgagor may require that instead of re-
transferring the mortgaged property to the
mortgagor, the mortgagee shall assign the mortgage-
debt to a third person named by him.
 (iii) The mortgagor becomes entitled to –
(a) Accessions to the mortgaged property
(b) Improvements made thereon
(c) The renewed mortgage leases
XV. The general rule is that the mortgage-debt being indivisible
and the mortgaged property being held in its entirety as
security for the whole debt, the property can be redeemed in
its entirety on payment of the whole debt. Therefore, the
purchaser from the mortgagor or from a sharer, who is
having some interest in the mortgaged property is not
entitled to redeem his share only.
XVI. Exception to the above rule –
(a) Where the terms of a mortgage provide for partial
redemption.
(b) Where the co-mortgagors have distinct and separate
interests.
(c) Where the mortgagee recognises a partition of the
mortgaged property amongst the co-mortgagors.
(d) When the mortgagee himself acquires a portion of the
mortgaged property and not the whole of the mortgaged
property.
XVII. The following can redeem the property –
(a) Any person (other than the mortgagee) who has any
interest in the mortgaged property or any charge upon
the mortgaged property or the right to redeem the same;
(b) Any surety for the payment of the mortgage-debt or any
of its part; or
(c) Any creditor of the mortgagor who has in a suit for the
administration of his estate obtained a decree for sale of
the mortgaged property.
XVIII. Where the mortgagor died and there were more than one
legal representatives who succeeded to the property, any one
of them could seek redemption.
XIX. An anomalous mortgage enabling a mortgagee after a lapse
of time and in the absence of redemption to enter and take
rents in satisfaction of the interest would be perfectly valid
if it did not also hinder an existing right to redeem.
XX. The section is unqualified in its terms and contains no saving
provision as other sections do in favour of contracts to the
contrary.
XXI. The period of limitation for redemption is 30 years.

➢ Section 60A: -
 • The mortgagor may require the mortgagee to assign the mortgage-debt and
transfer the mortgaged property to a third person directed by him, instead
of re-transferring the property to him but this happens only when the debt
has become payable and the mortgagor has paid the mortgage-money.
• The section was intended to enable the mortgagor to pay off the debt of the
mortgage by taking loan from another person on security of the same
property.
• The right under this section may also be exercised by pusine mortgagee.
The requisition of pusine mortgagee will prevail over that of a mortgagor.

➢ Section 60B: -
• The mortgagor who has handed over the title-deeds or other documents
relating to the mortgaged property to the mortgagee, is entitled to inspect
them.

➢ Section 61: -
• A mortgagor who has executed two or more mortgages in favour of the
same mortgagee shall be entitled to redeem any one such mortgage
separately or any two or more of such mortgages together.
• This is subject to contrary contract.
• Doctrine of consolidation enabled the mortgagee of different properties
mortgaged by the same mortgagor to consolidate those mortgages and force
him to redeem them all or prevent him from redeeming one of them before
redeeming the other. Thus, in order to protect the interest of the mortgagee,
equity provided that the mortgagee could require the mortgagor to redeem
both together.

➢ Section 62: -
• In two conditions a usufructuary mortgagor can recover possession of
property along with the mortgage-deed and all other documents from the
mortgagee-
1. Where the mortgagee is authorised to pay himself the mortgage-
money from the rents and profits of the property, when such money
is paid.
2. Where the mortgagee is authorised to pay himself from such rents
and profits when the term prescribed for the payment of mortgage-
money has expired and the mortgagor pays or tenders the mortgage
money to the mortgagee or deposits it in the court.
• Where a usufructuary mortgagor could not recover possession on the basis
of an oral mortgage, he can still recover possession on the strength of his
title.
• The mortgagor may file a suit for redemption or may take recourse to the
summary process of deposit and notice under s. 83.
➢ Section 63: -
• Where mortgaged property in possession of the mortgagee has
1. During the continuance of the mortgage,
2. Received any accession,
3. The mortgagor shall upon redemption, be entitled to such accession as
against mortgagee,
4. This is so in the absence of a contract to contrary.
• The section deals with following kinds of accessions –
1. Natural accession –
a) Accessions which are not made by the parties to the mortgage but
arise as assertions by the course of nature are known as natural
accessions.
b) The section provides that as a general rule, natural accessions
which arise during the continuance of mortgage can be redeemed
by the mortgagor together with the mortgaged property. The
mortgagee has no right to retain or claim such accessions when
mortgagor redeems the mortgage.
2. Acquired accessions-
These are of 2 types –
a) Separable acquired accession-
Where such accession has been acquired at the expense of the
mortgagee and is capable of separate possession or enjoyment w/o
detriment to the principal property, the mortgagor desiring to take
the accession must pay to the mortgagee the expense of acquiring
it.
b) When the accessions are inseparable, the mortgagor has no option
but to take them on redemption. Therefore, he is liable to pay the
cost only –
1. If the acquisition was necessary to preserve the property from
the destruction, forfeiture, or sale; or
2. If the acquisition was made with his consent.
• Where the mortgage is usufructuary, and the accession has been acquired
at the expense of the mortgagee then the profits arising from the accession
shall be set off against interest payable on the money so expended.
However, this is in the absence of the contract to the contrary.

➢ Section 63A: -
• This section in general provides that in the absence of a contract to the
contrary, if the mortgaged property has improved during the continuance
of the mortgage, the mortgagor shall be entitled to such improvement w/o
paying its cost.
• The essential elements are –
 1. The mortgaged property should be in possession of the mortgage.
2. The improvements to the property should have been affected during
the continuance of the mortgage.
3. The improvements must have been affected at the cost of the
mortgagee.
• The exception cases where the mortgagor is liable to pay are –
1. Where improvements were necessary to preserve the property from
destruction or deterioration, or
2. Where improvement was necessary to prevent the security from
becoming insufficient in comparison to debt, or
3. Where improvement was made in compliance with the lawful order of
any public servant or public authority.
• A mortgagee who was the owner of the structure at the time of redemption
was allowed, if he so desired to remove and take away the material of the
structure.

➢ Section 64: -
• Where the mortgaged property is a lease and the mortgagor obtain a
renewal of the lease, the mortgagor upon redemption shall have the benefit
of the new lease in the absence of the contract to contrary.

➢ Section 65: -
• There are 5 types of contracts which a mortgagor is deemed to have entered
into with the mortgagee in the absence of a contract to contrary, namely –
1. Covenant of title-
The mortgagor is deemed to contract with the mortgagee that the
interest which the mortgagor professes to transfer to the mortgagee
subsists and that the mortgagor has the power to transfer the same.
There is an implied warranty of title by mortgagor.
This covenant is two-fold –
a) As to the quantum of interest:
If the title of the mortgagor turns out to be defective, the
mortgagee can sue for the principal money as well as damages
even before the stipulated time.
b) As to the interest being transferable:
Where at the time of the mortgage, the mortgagor had no interest
in the property but afterwards he acquires the interest in the
property, the mortgagee becomes entitled to subsequently
acquired interests for the purposes of his security.
2. Covenant for defence of title –
The mortgagee has a right to protect the title of the mortgagor because
he is entitled to the full benefit of the security. Therefore, the mortgagor
is under an implied covenant to defend the title if he himself is in
 possession or to assist the mortgagee in defending the title if he is in
possession.
3. Covenant for payment of public charges –
The mortgagor will, so long as the mortgagee is not in possession of
the mortgaged property, pay all the public charges accruing due in
respect of the property. In case of his death, the legal heir would be
responsible to do so. The same duty goes to the mortgagee on acquiring
possession.
If the property passes possession with arrears of revenue, then the
mortgagor is liable to pay as he cannot profit from his wrongs.
4. Covenant for payment of rents –
Where the mortgaged property is leasehold, the mortgagor covenants
that he has paid the rent and performed the conditions of the lease for
the period prior to the mortgage. He covenants for the future that as
long as the mortgagee is not in possession, he will pay the rent and
perform the conditions of the lease.
5. Covenant for discharge of prior mortgage –
This is an implied covenant that the mortgagor will discharge prior
mortgages, for otherwise, the mortgagee may be deprived of his
security. It does not affect the right to redeem prior encumberances and
in the event of breach, mortgagee can sue for mortgage-money under
section 68.
• The benefits of these implied covenants run with the land therefore, all the
assignees of the mortgagee will be entitled to the same.
• But the burden of these covenants is confined of the mortgagor alone and
does not pass to a purchaser of the equity of redemption.

➢ Section 65A: -
• A mortgagor, who is in lawful possession of the mortgaged property, shall
have the power to make the lease of the property which shall be binding
on the mortgagee. This right is subject to 5 provisions (read from act)
• When the mortgage is made without fulfilling any of the conditions, the
mortgagee is not bound by the deed. They may also contract to exclude
altogether any power of the mortgagor to execute any lease under the
mortgage-deed.
• An unregistered lease deed was held to be not protected from seizure as a
secured asset by a security holder.

➢ Section 66: -
• The mortgagor is liable for any deliberate waste but not where the property
is itself deteriorating. The mortgagor is not liable for waste by omission,
he is liable only for active waste done by him deliberately because due to
 injury, which is permanent in nature and destruction the market value of
the property is reduced and this results in loss of the mortgagee.

➢ Section 67: -
• This section gives the mortgagee a right of foreclosure or sale in default of
redemption by the mortgagor. Where the money is paid, no question or
foreclosure arises. Similarly, where a decree of redemption has been
passed a suit for foreclosure or sale would be barred because the decree
itself provides for it.
• In absence of any stipulation (express or implied) to the contrary, the right
to foreclosure and right to redeem are co-extensive. Where there is a
stipulation of time for payment of mortgage-money, the mortgagor cannot
redeem before that time period.
• The difference b/w the two rights is that right of redemption is an absolute
right while the other is subject to the contract.
• The section provides two remedies i.e. foreclosure and sale depending on
the type of mortgage –
1. Simple mortgage –
It cannot foreclose. The remedy is to bring a suit for sale.
2. Usufructuary mortgage –
He has to recover his principal and interest from the property itself
because he has possession.
3. By conditional sale –
The condition itself provides for the mortgage to become a sale in
favour of mortgagee on default.
4. English mortgage-
The remedy is to file a suit for sale of property.
5. By Deposit of Title-deeds –
The remedy is to file a suit for sale of property.
6. Anomalous mortgage –
The right of the mortgage depends upon the terms contained in the
mortgage deed since it’s a combination of mortgages and he can
have any of the two rights i.e. sale or foreclosure.
• A mortgagor who is a trustee of the mortgagee is prohibited from filing a
suit for foreclosure because if the mortgagor is allowed to foreclose, he
would acquire the property for his own benefit and thus become a trustee
of his own property.
• The mortgagees of public works are prohibited from filing a suit of
foreclosure or sale. The remedy is to appoint a receiver to realise the
earnings of such undertakings and recover the debt.
• Partial sale or foreclosure is prohibited for the purpose of providing
protection to the mortgagor from multiplicity of suits being filed by
 several mortgagees separately. Therefore, all the co-mortgagees must join
together and file one suit in respect of the whole mortgage-property.

➢ Section 67A: -
• This section provides that if a mortgagee holds two or more mortgages of
the same property or of different properties from the same mortgagor, he
must enforce all or more, in the absence of a contrary contract. It provides
that –
1. A mortgagee who holds 2 more mortgages executed by the same
mortgagor, and
2. In respect of each mortgage he has a right to obtain the same kind of
decree under s. 67, and
3. He sues to obtain such decree on anyone of the mortgages,
4. He shall be bound to sue on all the mortgages in respect of which the
mortgage money has become due.

This is subject to a contract to contrary.

• This section is opposite to s. 61 which contains a rule against the

consolidation of mortgages when the mortgagor redeems them jointly.

➢ Section 68: -
• In the following cases, the mortgagee has the right to sue for the mortgage-
money –
1. Where the mortgagor binds himself to repay the same
Personal Covenant – The personal covenant does not run with the
land and hence no decree can be passes against a purchaser of the
right of redemption. However, there is an implied covenant by such
purchaser to indemnify the mortgagor.

In the mortgage by conditional sale and usufructuary mortgage,

liability can only be created by an express or implied covenant.

The personal liability is not affected by want of registration or of

attestation of mortgage.
2. Where the mortgaged property is destroyed, wholly or partially
without the fault of any party.
Destruction of security – Essential elements of this section are
a) The mortgaged property is destroyed (wholly or partially) or the
security is rendered insufficient.
b) The wrongful act or default of the mortgagor or mortgagee is
not involved in the destruction or insufficiency of security.
 c) The mortgagee must have given the mortgagor a reasonable
opportunity of providing further security so that the whole
security become sufficient against the mortgage-debt.
d) But the mortgagor fails to provide the security.
3. Where the mortgagee is deprived of the whole or part of his security
by wrongful act or default of the mortgagor.
Wrongful act or default of mortgagor – This clause contemplates a
situation where the mortgaged-property is lost, destroyed or is
devolved due to any deliberate act or negligent omission of the
mortgagor. However, where the mortgaged-property is lost due to
the mortgagee himself, he cannot sue for the mortgage-money.

Where the mortgaged-property is sold for arrears of revenue owing

to the default of the mortgage in possession, he cannot bring a suit
for the mortgage-money.
4. Where the mortgage being entitled to possession, the mortgagor fails
to deliver the same.
Failure to deliver possession – This clause refers to usufructuary or
anomalous mortgages. When possession is not delivered to a
usufructuary or anomalous mortgagee entitled to possession, he may
sue for mortgage-money.
• For the application of s. 68, it is necessary that there should be a suit for
recovery of the mortgage-money.

➢ Section 69: -
• This section gives the mortgagee a right to sell without the intervention of
the court. When the mortgage-money is not repaid by the mortgagor, he
becomes entitled to sell the property to recover debt.
It can be done in the following cases –
1. Where the mortgage is an English mortgage and neither the
mortgagor or the mortgagee is a – Hindu, Muhammadan, Buddhist
or a member of any other race, sect, tribe or class from time to time
specified in this behalf by State govt. in official gazette.
2. Where a power of sale w/o intervention of court is expressly
conferred on the mortgagee by the mortgage deed and the
mortgagee is the government.
3. Where a power of sale w/o court intervention is expressly conferred
on the mortgagee and the mortgaged property is situated within
specified towns.
• A power of sale w/o court intervention does not affect the ordinary right
of realisation by suit of the mortgagee.
 • A power of sale given to two joint mortgagees may be exercised by the
survivor of them. Where the mortgagees are partners, the power of sale
may either be exercised by all or in the way expressed in mortgage-deed.
• Conditions for exercise of power –
a) Notice must have been served in writing and three months must
have passed after service of notice.
b) This power can be exercised when the sum interest under the
mortgage amounting at least to ₹500 is in arrear and unpaid for
three months after becoming due.
• The mortgagor should offer to redeem before he can bring the mortgagee
before court. The mortgagor may obtain an injunction to restrain a sale if
the mortgagee is acting in a fraudulent and improper manner, or contrary
to the terms of the mortgage-deed.
• When a sale has been made in professed exercise of power, the title of the
purchaser shall not be impeachable on the grounds that –
a) No case had arisen to authorise sale
b) Due notice was not given, or
c) The power was otherwise improperly or irregularly exercised
• The title is not affected by any irregularity in exercise of power but is
affected by irregularity of notice.
• The money from the sale is to be used in the following manner –
a) For discharge of prior encumberances
b) For payment of costs, charges and expenses property incurred for the
sale.
c) For the discharge of mortgage-money.
d) The surplus money, if any, will be paid to the person entitled to the
mortgaged property. The mortgagee shall act as a trustee for the
surplus money
• The mortgagor’s only remedy, is damages against the mortgagee, in the
absence of fraud. In which case, the sale be set aside.

➢ Section 69A: -
• This section deals with the right of the mortgagee to appoint a receiver of
the income of the mortgaged property. This section covers such cases
where it is alleged by the mortgagor that there is no debt outstanding or
that the mortgage has become time-barred and thus, there should be no
receiver.
• Any person who has been named in the mortgage-deed and is willing and
is able to act as a receiver may be appointed by the mortgagee. In case no
one is named then for appointing, the consent of the mortgagor is required
and if he doesn’t agree then mortgagee is entitled to apply to court for
appointment of receiver.
 • A remover may be moved on due cause shown, by the court on application
by either mortgagor or mortgagee.
• A receiver appointed by the mortgagee shall be deemed to be agent of the
mortgagor and will be solely responsible for receiver’s acts or defaults
except in cases of –
a) Where the mortgage-deed provides otherwise i.e. someone else has
been made responsible.
b) Acts or defaults of the receiver are due to the improper intervention
of the mortgagee.
• The receiver is entitled to retain out of any money received by him for his
remuneration a commission at a rate not exceeding 5% on the gross amount
received.
• The receiver is bound to insure the mortgaged property against loss or
damage by fire where the mortgagee directs him to do so in writing.
• The money received has to be applied in the following manner –
a) In discharge of all rents, taxes, land revenue, rates and outgoings
whatever affecting the mortgaged property.
b) In keeping down all annual sums, other payments and interest on all
principal sums having priority to the mortgage.
c) In payment of his commission, premiums on insurance policies and
the cost of executing necessary or proper repairs.
d) In payment of interest following due or under the mortgage.
e) In discharge of principal money when directed by mortgagee in
writing.

The residue, if any, to be paid to the person entitled to mortgaged-

property.

➢ Section 70: -
• Accessions are additions to property.
• This section says that if after the date of the mortgage, any accession is
made to the mortgaged-property, the mortgagee shall be entitled to such
accession for the purposes of security of his mortgage-debt.
• This section is converse of s. 63 which provides for mortgagor’s right to
accession.
• This section is not limited to physical accretions only as an increase of
interest or enlargement of estate is also an accession.
• The mortgagee is entitled to treat the acquired accession as part of his
security and to enforce his lien upon them. A mortgagee is entitled to
benefit of accession for the purpose of security only.
• However, this right is only available in the absence of contract to
contrary.
➢ Section 71: -
• This section is based upon the principle that a renewal of lease is a graft
upon the old stock and is, therefore, subject to the same equities as the
old lease.
• This section says that when the mortgaged-property is a lease and the
mortgagor obtains a renewal of lease, the mortgagee shall be entitled to
the new lease for the purposes of security in the absence of the contract
to contrary.
• This section is corollary of section 64, just as the mortgagor gets the
benefit of renewed lease, the mortgage also gets the benefit of renewed
lease under s. 71.

➢ Section 72: -
• This section deals with the right of mortgagee in possession provides for
the circumstances under which the mortgagee may spend money. In
addition, it gives him the right to add the amount spent to mortgage-
money.
• The mortgagee is allowed to spend money only where it is necessary to
keep the property intact and protect it from damage since the mortgagee
recovers his debt from that in case of default.
• This right is not absolute and depends on necessity.
• Circumstances in which to spend –
1. For the preservation of the mortgaged property from destruction,
forfeiture or sale.
2. For supporting the mortgagor’s title to the property. (money spent in
this will be added to principal amount.)
3. For making his own title thereto good against the mortgagor i.e. for
defending his own title against the mortgagor. (money spent in this
will be added to principal amount (only if against mortgagor and not
a stranger))
4. When the mortgaged property is a renewable lease-hold, for the
renewal of the lease. (no obligation to renew but if paid fine for
renewal then it is added to principal amount)
5. Insuring the property where it is of insurable nature.
• If any premiums are paid for the insurance then they are added to the
principal amount. The rate of interest on that will be same as principal
amount and in absence of any guideline it would be 9% per annum.
• The amount of insurance should not exceed what is stipulated in the deed
and if there is no guideline then it should not be more than two-thirds of
the amount which would be required to reinstate the property in case of
total destruction.

➢ Section 73: -
 • Acc. to this section, where the mortgaged property or any interest in it is
sold, owing to failure to pay –
1. Arrears or revenue, or
2. Other charges of a public nature
3. Rent due in respect of such property

Such a failure did not arise from any default of the mortgagee, the
mortgagee shall be entitled to claim payment of the mortgage money, out
of any surplus of sale-proceeds remaining after the payment of –

a) Arrears, and
b) All charges and deductions directed by law
• This section enunciates the doctrine of substituted security. The rights and
interests of the mortgage in the mortgaged property get attached to the
property or to the compensation which may replace the mortgaged
property.
• The mortgagee’s claim under this section prevails against all other claims
except prior encumberances. He is also entitled to enforce his claim even
though the principal money has not become due.
➢ Section 74 & 75 –
Repealed
➢ Section 76: -
• The section provides for liabilities of the mortgagee in possession.
Although only the usufructuary mortgagee retains the possession of the
property but this section is applicable to all the mortgagees who may have
obtained possession of the mortgaged property for any reason. The duties
are as follows: -
1. Duty to manage the property as a person of ordinary prudence.
a) Although the mortgagee is not the trustee of the mortgaged
property yet his duties towards the property are similar to a
trustee.
b) A mortgagee may grant a lease of the mortgaged property in the
course of mortgage but only in the period of the mortgage.
2. Duty to collect rents and profits of the property to his best
endeavour.
a) The mortgagee has to account not only for the rents and profits
which he has actually received but also for those which he
could not collect due to his negligence and mismanagement.
3. Duty to pay Government dues unless there is a contract to the
contrary.
a) The public charges, rent and government revenue are
paramount charges on immovable property and the failure to
pay them renders the property liable to be sold.
 4. Duty to make necessary repairs of the mortgaged property unless
there is a contract to the contrary.
a) He can make repairs from the surplus money left from rents and
in case there is none present then he is not obligated to make
repairs.
b) He cannot increase the mortgage debt by undertaking repairs.
5. Duty not to commit any act which may destroy or injure the
property permanently.
a) He is bound to use the property with care of a prudent owner.
However, he is not liable for accidental losses.
6. Duty to apply insurance money in reinstating the property or in
reduction of the mortgaged-money if he receives such money in
respect of the mortgaged-property.
7. Duty to keep proper accounts of all sums received and spent by him
as a mortgagee.
a) During and continuance of mortgage he is bound to supply
mortgagor on his request and cost, true copies of such accounts
and of vouchers by which they are supported.
b) He cannot contract himself out of this duty.
8. Duty to apply rents and profits in discharge of interest after making
certain deductions.
a) As soon as there is surplus of net receipts over interest, the
balance should be applied in reduction of principal and then
interest runs on the reduced amount.
9. Duty to account for gross receipts.
a) The mortgagee has to account for all the rents and profits
received by him from the date of tender or deposit of money in
the court till he actually receives the money. The rents and
profits received by the mortgagee in this period cannot be
included in the mortgage-money.
• The mortgagee will be liable for any loss that culminates from his failure
to perform any duty and the mortgagor can ask the court to debit such
amount from the mortgage-debt.

➢ Section 77: -
• This section provides that if it is agreed b/w the parties that rents and
profits received by the mortgagee are to be taken by him in lieu of interest
on the mortgage-money the mortgagee is under no liability to give
accounts of the income.
• This is an exception to s. 76

➢ Section 78: -
 • This section says that where a subsequent mortgagee is induced to give
money to the mortgagor due to fraud, misrepresentation or gross neglect
of the mortgagee prior to him, the prior mortgagee shall be postponed to
the subsequent mortgagee.
• The mortgagee later in time will be repaid earlier in time.
• This section is an exception to the general rule of priority.

➢ Section 79: -
• As a general rule, if A mortgages property to B for a loan and then
mortgages the same property to take a loan from C and still again obtains
a further loan from B after C. Then the first loan of B would come before
C but the second loan will come after repayment of C.
• This section encompasses the exception to this general rule and is the
second exception to the rule of priority.
• Acc. to the section, if B had advanced money in present as well as secured
future advances up to a maximum limit, then any further advance made
by B within that maximum limit even after notice of a second mortgage,
will be treated as first mortgage to B. But it is necessary that C must have
notice of the first mortgage to B.
• Essential elements are –
a) A maximum amount must have been secured under the first mortgage.
b) The second mortgage must have had notice of the first mortgage.
c) The prior mortgagee must have advanced more money within the
maximum limit after the second mortgage.

➢ Section 80: -
Repealed
➢ Section 81: -
• Marshalling means arranging things.
• This right arises when a person who has two or more properties,
mortgages them and then mortgages one or more of them (already
mortgaged) to another person. The subsequent mortgagee is entitled,
unless there is a contract to the contrary to have the prior mortgage-debt
satisfied out of properties not mortgaged to him.
• Essential elements are –
1. The mortgagees may be two or more persons but the mortgagor
must be common i.e. there must be a common debtor.
2. The right cannot be exercised to the prejudice of the prior
mortgagee.
3. The right cannot be exercised to the prejudice of any other person
having claim over the property who has for consideration acquired
an interest in them.
 • This right may be excluded by the parties to the mortgage by mutual
agreement.
• It is necessary that the prior mortgagee must have equal rights over the
two properties mortgaged to him. Where the rights are not similar,
marshalling cannot happen.
• Different portions of the same property are not considered different
properties. Where one portion of the property already mortgaged is
subsequently mortgaged to another person, they will not be considered as
different properties.

➢ Section 82: -
• This section deals with the rules relating to contribution of money towards
mortgage-debt. The doctrine of contribution provides that several
properties mortgaged to secure one debt are liable to contribute to that debt
rateably in proportion to their values at the date of the mortgage, the
amount of the previous mortgage or charge being deducted.
• This section also applies when a single property owned by several co-
owners is mortgaged and the portion of one co-owner is made to satisfy
the mortgage.
• If one person fulfils the whole debt then he can ask for indemnification
from the other.
• The rules of contribution are as follows –
1. When mortgaged property belongs to two or more persons
a) All the co-mortgagors are liable to contribute rateably.
b) If one person fulfils the whole debt then he can ask for
indemnification from the other. However, the co-mortgagors are
not personally liable to contribute but only upto extent of share
in the property.
c) This rule is applicable where at the time of mortgage, the
property is one but later on it is partitioned and co-sharers
become owner of their respective shares.
2. When one property mortgaged first and then again mortgaged with
another
a) In this case if the prior debt is fulfilled by the first mortgaged
property therein, the absence of a contract to contrary, each
property is liable to contribute rateably to the latter debt after
deducting the amount of the former debt from the value of the
property from which it has been paid.
3. Marshalling supersedes contribution
a) In case of any conflict b/w the right of marshalling and
contribution, the right of marshalling prevails over that of
contribution.
 • When a mortgagor purchases a share in the equity of redemption he may
become liable to contribution for he splits his security and a co-mortgagor
can redeem for a proportionate part.
• When a mortgagee releases any part of the mortgaged property he
diminished his own security only because the rest of the property remains
subject to the mortgage for the full amount of mortgage.

➢ Section 83: -
• This section provides for the power and manner in which a mortgagor can
deposit money due on mortgage in court.
• A mortgagor can redeem the mortgaged-property by paying the debt
amount. There are 3 ways in which a mortgagor can pay off the debt –
1. By tendering or making payment of the mortgage-money directly to
the mortgagee.
2. By filing a suit for redemption, and
3. By depositing the amount in the court
• After valid deposit of money, the court sends a written notice to the
mortgagee informing him of the amount deposited and for ascertaining
his willingness to accept the money so deposited in full discharge of the
debt.
• The mortgage-deed and all other documents are then delivered to the
mortgagor or the person entitled.
• This procedure is a summary procedure and the function of the court
under the section is of a procedural nature. Adjudication of the rights of
the parties about their rival claims cannot be undertaken in this section.
➢ Section 84: -
• When the mortgagor tenders or deposits the money remaining on the
mortgage in the court under s. 83, the interest on the principal money
ceases from the date of tender of money or as soon as in the case of a
deposit the mortgagor has fulfilled all the requirements to enable him to
take such amount out of court and notice has been served upon him.
• It is necessary that the deposit must be a valid deposit under s. 83 and
complete notice has been served on the mortgagee.

➢ Section 85 to 90: -
Repealed
➢ Section 91: -
• This section provides that besides the mortgagor, there are certain other
persons who may redeem or institute a suit for redemption for the
mortgaged property. They are –
 1. Any person (other than the mortgagee) who has any interest in, or
charge upon, the property mortgaged or in or upon the right to
redeem the same;
a) The rights of a pusine mortgagee are not affected even if the
property is sold in the execution of a decree.
b) It has also been held that where a property has been mortgaged
to secure subsequent or successive debts and sold in execution
of a decree passed in an auction by a mesne mortgagee against
the mortgagor without impleading the pusine mortgagor, then
the pusine mortgagee is not bound to redeem the mortgage of
the mesne mortgagee.
c) An auction-purchaser is entitled to bring a suit for redemption
because he is a successor-in-interest in the property.
2. Any surety for the payment of the mortgage-debt or any part
thereof,
3. Any creditor of the mortgagor who has in a suit for the
administration of his estate obtained a decree for sale of the
mortgaged property.

➢ Section 92: -
• Subrogation is a Roman word for substitution. It is the right of a person
to stand in the place of the creditor after paying off his liabilities. In a
mortgage, subrogation takes place only by redemption.
• In order to be entitled to subrogation, a person must pay off the entire
amount of a prior mortgage. A partial-payment will not give rise to the
right.
• The section provides that –
1. Amy person other than the mortgagor referred to in section 91, and
any
2. On redeeming the mortgaged property,
3. Shall have the same rights as the mortgagee whose mortgage he
redeems may have against the mortgagor or any other mortgagee,
4. The rights are regarding redemption, foreclosure or sale of such
mortgaged property.
5. This right is known as the right of subrogation and a person
acquiring the same is said to be subrogated to the rights of the
mortgagee whose mortgage he redeems.
• When the mortgagor himself redeems the property, this doctrine cannot
be invoked. The mortgagor who discharges a prior debt is not entitled to
be subrogated to the rights and remedies of his creditor. This is because
by discharging a prior encumbrance created by himself, he is discharging
his own obligation to his creditor.
• There are 2 types of subrogation, namely –
 1. Legal subrogation –
It takes place by operation of law and is based on the principle of re-
imbursement. Where a person interested in making some payment
which another person is legally bound to make, then such a person
must be re-imbursed when he makes the payment.
These can be claimed by people of 4 types –
a) Pusine mortgagee – A pusine mortgagee, who redeems a prior
mortgage, has a right to be subrogated to the position of the prior
mortgage.
b) Co-mortgagor – He is liable only to the extent of his share of the
debt. When besides redeeming his own share, he pays off the
share of the other mortgagor also, he becomes entitled to be
subrogated in place of such other mortgagor.
c) Surety – When the surety of the mortgagor redeems the property
he is subrogated to the position and rights of the creditor.
d) Purchase of Equity of Redemption
2. Conventional subrogation –
This takes place where the person paying off the mortgage-debt is a
stranger and has no interest to protect, but he advances the money
under an agreement (express or implied) that he would be subrogated
to the rights and remedies of the mortgagee who is paid off.
The right of subrogation can be claimed only if the mortgagor has
agreed by registered instrument that he shall be so subrogated.

➢ Section 93: -
• Tacking means uniting securities given at different times.
• Tacking was abolished in India in 1929.
• This section says that no mortgagee shall, by paying off a prior mortgage
(with or w/o notice) thereby acquire any priority in respect of his original
security.
• No mortgagee making a subsequent advance to the mortgagor (with or
w/o notice) can thereby acquire any priority in respect of his security for
such subsequent advance, except in the case of section 79.
• Exception –
When a mortgage is made to secure –
a) Future advances
b) The performance of an engagement
c) The balance of a running account
Expresses the maximum to be secured thereby, a subsequent
mortgage of the same property if made with notice of prior
mortgage, is to be postponed to the prior mortgage in respect of all
advances or debits not exceeding the maximum though made or
allowed with notice of the subsequent mortgage.
➢ Section 94: -
• The section says that a mesne mortgagee can redeem all the mortgagees
before him and can foreclose all the mortgagees after him. Redemption
by a mesne mortgagee is upwards (prior to him) and foreclosure is
downwards (subsequent to him).
• A mortgagor mortgages his property to A, B and C respectively for debts.
Here C can redeem B or A and B can redeem A. A can foreclose the
mortgagor and B and C in whose hands the equity of redemption is
assigned.
• Where the prior mortgagee forecloses his mortgages and also makes the
pusine mortgagees parties to the suit, the pusine mortgagees are given the
liberty to redeem the prior mortgagee and foreclose or bring to sale the
mortgaged property.
• But if the prior mortgagee enforcing his mortgage does not make the
pusine mortgagee a party to the suit and brings the property to sale, the
auction purchaser acquires the rights of both mortgagor or mortgagee.
• The omission to implead a pusine mortgagee does not affect his rights
though the first mortgagee may obtain a decree on his mortgage and the
property may be sold in execution of such decree.
• In India, the third mortgagee is entitled to redeem the first mortgagee w/o
redeeming the second mortgagee who is just above him. He can redeem
the second mortgagee w/o foreclosing the mortgagor. It is necessary to
make the intermediate mortgagee party to the suit of redemption in India.

➢ Section 95: -
• This section provides that where one of the several mortgagors redeems
the property he shall be entitled to add to the mortgage-money
recoverable from them that proportion of the expenses incurred in
redemption as is attributable to this share in the property.
• This right is available when the co-mortgagor redeeming the property
enforces the right of subrogation under s. 92 against his co-mortgagors.
• The expenses incurred in redeeming the mortgage are added to the
mortgage-money.

➢ Section 96: -
• A mortgage by deposit of title-deeds stands on the same footing as a
simple mortgage. Such a mortgagee can sue for sale but not foreclosure.
The provisions in respect of simple mortgage shall apply, so far as may
be, to a mortgage by deposit of title-deeds.
• Acc. to this section, the provisions in respect of simple mortgage shall
apply, so far as may be, to a mortgage by deposit of title-deeds. A
mortgagor can bind himself personally to pay the mortgage-money.
➢ Section 97: -
Repealed
➢ Section 98: -
• This section provides that in the case of anomalous mortgage, the rights
and liabilities of mortgagor and mortgagee are fixed by the parties
themselves and these are included in the mortgage-deed.
• And in cases of lacuna of contract, it would be directed by the local usage

➢ Section 99: -
Repealed
➢ Section 100: -
• Charge on an immovable property is created to secure payment of money.
• The section says that where immovable property of a person is made
security for the payment of money to another and the transaction is not a
mortgage, it is said that a charge has been created.
• In a charge, there is no transfer of any interest in favour of the charge-
holder but he is only entitled to recover his money from the property.
• In a charge, there is the creation of a personal obligation i.e. a right to
payment out of the specified property.
• It is necessary under the section, that there must be a clear intention to
make a particular property security for the repayment of a debt. Where
the property is not intended to serve as a security there can be neither a
mortgage nor a charge.
• Property can be made security either by the act of parties or by operation
of law.
• When a charge is created by the act of parties, no particular form of words
is required to create it. There must be intention, that’s all. A charge on the
property can be created by an instrument inter-vivos or by will.
• A charge must be created in favour of a specific person and he must be
specifically named.
• A charge on future property is valid and operated on such property when
it comes into existence.
• Any transaction which is intended to be a mortgage, but is neither written
nor registered, it cannot operate as a mortgage or as a charge.
• If the instrument is not on the face of it a mortgage, but simply a lien, or
directs the realization of money from a particular property, w/o reference
to sale, it creates a charge.
• A charge can be enforced by a suit even when created by a decree.
• A charge can be extinguished in the following manner –
1. By act of parties by release of debt or security,
2. By novation, or
3. By merger
 • Difference b/w mortgage and charge
Mortgage
1. It is a security for a payment of
debt.
2. It maybe security for the
performance of an engagement
giving rise to a pecuniary liability.
3. It involves transfer of an interest in
some specific immovable
property.
4. It can be created only by act of
parties.
5. There may be a covenant to pay.
6. Gives rise to a right in rem
7. A mortgagee can follow his
security in whatsoever hands it
may go, even a bona fide purchase
for value.
8. Can be enforced by foreclosure
suit for money and sale.
9. Every mortgage is a charge.
10. A simple mortgage can be
enforced within 12 years whereas
other types can be done in 30
years.
• Difference between a charge and lien
Lien
1. A charge may be created both by
the act of parties and by operation
on law.
2. A charge exists on immovable
property only.
3. A charge is not possessory in
nature.
4. A charge-holder may satisfy his
claim by selling the property
subject to charge.
Charge
1. It is a security for the payment of
money, may/may not be a debt.
2. In a case of charge, it is not so
while it is in mortgage.
3. No transfer of interest to charge-
holder. Can satisfy claim w/o such
transfer of property.
4. It can be created either by the act
of the parties or by the operation of
law.
5. There can be no covenant to pay.
6. Gives rise to a right in personem
7. A Charge-holder cannot follow his
security.
8. A charge can be enforced by sale
of property through court.
9. A charge is a much wider term.
10. A charge can be enforced within
12 years.
Charge
1. A lien arises by operation of law
only.
2. A lien may be created both on
immovable property and movable
property.
3. A lien is possessory in nature.
4. A lien-holder can satisfy his claim
by private sale or by retaining
possession of the property.

➢ Section 101: -
• When two estates held in the same legal right become united in the same
person, it is said that a merger has taken place. It happens by the union of
a greater and lesser estate and by union of a higher and lower security.
• Merger may extinguish a mortgage or a charge.
 • A merger of mortgages happens in the following ways –
(i) By the mortgagee acquiring the equity of redemption.
(ii) By the mortgagor redeeming the mortgage.
(iii) By the purchaser of the equity of redemption redeeming the
mortgage.
• The section provides that no merger takes place in case of subsequent
encumbrance. The section says that
(a) Any mortgagee of in immovable property, or
(b) Any person having a charge upon immovable property, or
(c) Any transferee from such mortgage or security-holder

May purchase or otherwise acquire the rights in the property of the

mortgagor or owner, without thereby causing the mortgage or charge to
be merged as between –

(a) Himself and any subsequent mortgagee of the same property, or

(b) Himself and person having charge upon the same property;

No such subsequent mortgagee or charge-holder shall be entitled to

foreclose or sell such property w/o redeeming the prior mortgage or
charge, or otherwise than subject thereto.

• Where a mortgagor pays off the mortgage debt, there is a merger and the
mortgage stand extinguished.
• When the purchaser of equity of redemption redeems the mortgage,
mergers occur.
• Novation differs from merger because the securities are of equal strength
and one security is accepted for the other. When a second mortgage bond
is created to different obligations the security is extinguished.
• In renewal, a new security is taken without extinguishing the old.

➢ Section 102: -
• This section provides that if the person on whom the notice is to be served
or tender is to be made does not reside in the district in which the property
is situated, then, notice may be served to his agent or his duly authorised
person on whom the notice is required to be served.
• Where such an agent or authorised person could not be found the court
may give direction as to how such notice may be served on the concerned
person.

➢ Section 103: -
• This section provides that where the person on whom the notice is to be
served is not a person competent to contract, the notice may be served on
 the lawful guardian of such incompetent person. Such a lawful guardian
ad litem who is to be appointed by the court on a formal application to it.
➢ Section 104: -
• This section provides that the High Court may make rules and that such
rules prevail over the general terms of the Code of Civil Procedure.

Lease
➢ Section 105: -
• Lease is a partial transfer of certain rights in the property. It is a transfer
of ‘right to enjoyment’ of an immovable property made for a certain
period in consideration of –
(i) Price paid or promised, or
(ii) Money,
(iii) A share of crops,
(iv) Service, or
(v) Any other thing of value
• Essential elements of a transaction of lease –
(i) The parties to lease – lessor and lessee
(ii) The subject-matter of lease- immovable property
(iii) There must be a transfer of right
(iv) Duration of lease
(v) Consideration of lease- premium
(vi) Acceptance of transfer by the lessee.
(vii) Lease must be made in the mode under section 107
• Only an absolute owner of property can grant a lease for any period he
likes. A limited owner can grant a lease only to the extent permitted by
law.
• Where a lease is granted by joint tenants and on of them dies, the lessee
holds under the survivors.
• Leased premises is not only a building or part of building but also the land
and other things appertaining to it and also furniture and other fixtures
provided by the landlord.
• A lease creates a right in rem and is not merely a contract. The estate
transferred to the lessee is called the leasehold whereas the estate
remaining in the lessor is called the reversion.
• The interests of the lessor and the lessee in the leasehold property are
heritable and vests in their heirs on their death.
• If the purported lessor does not have any right in the property sought to
be leased, the lease would be void.
• Three types of leases are recognised by this section –
(i) Leases for a certain time
(ii) Periodic leases
 (iii) Leases in perpetuity
• A lease for life is a lease for a certain time, for it terminates with the death
of the lessee.
• The consideration which is paid periodically is called rent. It must be
certain and where it is varying in nature it must be reasonably
ascertainable and it need not necessarily be in form of money.
• Difference b/w lease and agreement to lease
Lease Agreement to lease
1. It creates a right in rem 1. It does not create a right in rem
2. It operates as a transfer 2. It does not transfer right of enjoyment
3. It establishes the relationship of with immediate effect.
landlord and tenant b/w parties. 3. It does not create any relationship
• Difference b/w Lease and License
A license is governed by the Indian Easements Act and it is a permission
to some act which w/o such permission would be unlawful.
Lease License
1. There is transfer of interest in an 1. There is no transfer but the licensee
immovable property. acquires a right to occupy property.
2. If during the lease-period, any 2. A licensee acquires no right in the
accretion is made in the property, property.
it is deemed to be included in it. 3. It is neither transferable not heritable
3. It is transferable and heritable. because it is a personal privilege.
4. The lessee gets a proprietary right 4. Licensee gets only a personal right of
in respect of the land, this right is using land of another person.
called demise. 5. It can be revoked at pleasure unless it is
5. It cannot be revoked before the coupled with a transfer of property and
expiry of the term or w/o breach of such transfer is in force or the licensee,
any express condition by the acting upon the license has executed a
lessee. A lessee is entitled to a work of permanent character and
notice to quit before eviction. incurred expenses.
6. A lessee is entitled to maintain a 6. The licensee is not entitled to maintain
suit in his own name against the such a suit.
trespassers and strangers. 7. A licensee is determined when the
7. The lessee’s interest is not liable to grantor makes an assignment of the
be defeated by a subsequent subject-matter of the license.
transfer of the leased property. 8. Death of either party terminates the
8. Death of either party does not license.
affect the lease.
• Whether a transaction is a lease or license, the dominant test is the
intention of the parties.
• In the matter of occupation of the premises, the relationship b/w the
employer and employee was that of licensor and licensee and not of lessor
and lessee.
 • Periodic leases are tenancies from period to period.
• In case of composite tenancy, the premises are let out for defined purposes
more than one, leaving the option open to the tenant to use the entire
tenancy premises as one unit for either or both purposes.
• In case of integrated tenancy for dual purposes, the contract of tenancy is
no doubt an integrated one but the premises are demarcated or divided by
reference to the purpose for which they will be separately used.
• A lease requires registration.

➢ Section 106: -
• A lease of immovable property for agricultural purposes or
manufacturing purposes shall be deemed to be –
(i) A lease from year to year
(ii) Terminable on the part of either lessor or lessee
(iii) By six months’ notice expiring with the end of a year of tenancy.

A lease of immovable property for any other purposes shall be deemed to

be –

(i) A lease from month to month

(ii) Terminable on the part of either lessor or lessee
(iii) By 15 days, notice expiring with the end of a month of tenancy.

These are subject to a contrary contract or local law or usage.

• Where the lease has come to an end by efflux of time, no notice is required
under s. 106.
• Where raw products were taken and eatables were sold, it would amount
to manufacturing process within the meaning of s. 106
• Where the lease deed contained the covenant about renewal but terms and
conditions of renewal were not mentioned anywhere in the deed, it was
held that the right of renewal was vague and the lessee had no enforceable
right of renewal.
• Where the contract provided for termination by serving three months’
notice it was held that a suit for eviction in the absence of any such notice
is not maintainable.
• When there is no agreement b/w the parties or local usage to the contrary,
the duration of the lease will be as under: -
(1) A monthly lease or tenancy can be determined by the lessor or lessee
by –
(i) A notice in writing
(ii) Notice must be of 15 days
(iii) The 15 days’ notice must expire with the end of a month of
tenancy, and
 (iv) The notice must be served in the manner provided in the
section.
(2) A lease from year to year can be determined by the lessor or lessee
by-
(i) A notice in writing,
(ii) Notice should be of six months
(iii) The notice must expire with the end of a year of the tenancy,
and
(iv) The notice must be served in the manner provided in the
section itself.
• No notice to quit is necessary where the tenant is holding over or lease is
of permanent nature or is determined by forfeiture or if the tenant denies
the title of the landlord.
• Where there are several co-owners, notice to quit can be given to any one
of them and the suit for eviction can also be similarly filed.
• Withdrawal of rent deposited by the tenant in court subsequent to the
termination of the tenancy did not amount to waiver of notice. This was
particularly so because the rent withdrawn belonged to the notice period.
• Acc. to the amendment, that to terminate a monthly tenancy a simple
notice of 15 days is sufficient. It is not necessary that the notice to quit
must expire with the monthly end of the tenancy. The period of 15 days
start from the date of receipt of notice.
• Every notice under this section must be in writing and signed by or on
behalf of the person giving it. The notice must be either –
(i) Sent by post to the party who is intended to be bound by it, or
(ii) Tendered or delivered personally to such party, or to one of his
family or servants at his residence, or
(iii) Affixed to a conspicuous part of the property where such tender
or delivery is not practicable.
• Where notice was sent to tenant through registered cover which was
received back by sender with postal endorsement, “unclaimed”, there was
presumption of service.
• The notice under s. 106 can be affixing when the tender or delivery of
notice either by post or by personal delivery to the addressee is found to
be impracticable.
• A tenancy from year to year or month to month basis does not come to an
end with the efflux of time even if its duration is fixed. Notice to quit
remains mandatory and in its absence, a suit for eviction cannot be
decreed.
• Where the interest of the lessee devolved upon several persons as tenants
in common or joint tenants, notice to quit may be given to all of them. If
it is given only to some of them, the notice is sufficient to put an end to
the tenancy.
 • Where the agreement between the parties is to the effect that the tenancy
should be determinable by either party at any time, there is a contract to
the contrary and the provisions of s. 106 will not be applicable.

➢ Section 107: -
• This section provides 2 modes of creation of leases –
I. Leases which can be made by registered deed –
(i) Lease from year to year
(ii) Lease for a term exceeding one year
(iii) Lease reserving a yearly rent
(iv) Permanent lease
II. Lease in which registration is optional –
(i) Lease from month to month
(ii) Lease for a term of one year
(iii) Lease for a term of less than one year
• Where the rent is reserved for the whole year, there is a presumption that
it is a year to year lease and it is registerable.
• Permanent lease is compulsorily registerable. When no term is fixed in
the lease or instrument of lease contains a provision for certain rights by
legal heirs of lesser and lessee after their death, there is a presumption of
a permanent lease.
• When a covenant for renewal exists in a lease, its exercise is a unilateral
act of the lessee and consent of the lessor is not necessary.
• Renewal requires execution of a document evidencing renewal. By mere
exercise of option claiming renewal, the lease is not to stand renewed
automatically.
• In case of extension of lease, the extension for the term agreed upon shall
be a necessary consequence of the clause for extension, therefore, there
is no need for a fresh deed. However, in the case of renewal, a fresh deed
will have to be executed between the parties.
• Where the lease is made by registered instrument, it is necessary that the
instrument should be executed both by the lessor and the lessee.
• Where the compulsorily registerable lease is not registered, the lease is
considered to be invalid.
• It has been held that an oral agreement accompanied by delivery of
possession is good enough for purpose of creation of jural relationship
between the parties.
• It has been held that the execution of a fresh lease during the currency of
an earlier lease leads to implied surrender of an earlier lease.

➢ Section 108: -
• This section provides for rights and liabilities for both lessor and lessee.
These rights and liabilities are subject to contrary-contract.
• If there is a contract-contrary then this section will not apply.
• Similarly, where there is any local custom or usage governing their rights
and liabilities then that custom or usage will apply and not this section.
• The first three clauses provide for the liabilities of the lessor. In this
section, no specific rights of the lessor ae given but the liabilities of the
lessee given in the section are considered as identical rights of the lessor.
• The liabilities of the lessor are –
(i) Duty of disclosure
(a) Bound to disclose material defects which the lessee could
not discover with ordinary care.
(b) Defects are of two types – apparent and latent
(c) The lessor is only bound to disclose latent defects
(d) This section contains no provision as to title but only for
quiet enjoyment of property. Therefore, the lessor has no
duty to disclose defect in title.
(ii) Duty to give possession
(a) This duty of lessor only arises when there is a request by the
lessee in this respect.
(b) Where the lessee gets possession of only a part of the lease
property he may repudiate the lease. But where he wants to
retain that part he must pay rent for that occupied part.
(iii) Covenant for quiet enjoyment
(a) It is the duty of the lessor to ensure that the lessee ought not
to be interfered with during the period of lease either by him
or anyone else.
(b) The covenant for quiet enjoyment under this clause is
regarded as a covenant running with the land so as to be
enforceable by any assignee of the lessee against the lessor
and his assignee.
(c) Where the quiet enjoyment of the lessee has been
interrupted, he is entitled to recover damages equivalent to
the present value of the prospective profit of which he is
deprived.
• The rights of the lessee are as follows –
(i) Right to enjoy accretions –
(a) The lessee is entitled to accretions during the continuance of
the lease but not afterwards.
(b) He cannot acquire title to accessions adversely to his lessee or
landlord.
(c) On termination of the lease, the lessee is bound to surrender
the accession in the same way as he surrenders the leased
property.
(ii) Right to avoid lease in case of any destruction by fire, tempest etc.
 (a) The lease shall be void at the option of the lessee in case any
material part is either wholly or substantially and permanently
unfit for purposes for which it was given, by fire, tempest etc.
(b) However, where the injury is occasioned to the wrongful act
or default of the lessee, he shall not be entitled to the benefit
of this clause.
(c) It is necessary that the destruction must be substantial and of
permanent character.
(d) Destruction of a house or building constructed on a leasehold
property does not by itself destroy tenancy right of the
occupant.
(iii) Right to repair the property when lessor neglects to make and to
deduct the expenses of repairs from rent.
(a) The lessor is not bound to make repairs to the leased property.
But where he agrees at the time of the lease with the lessee
that he will make the necessary repairs then he becomes bound
to make the repairs.
(b) If within reasonable time after notice, the lessor does not make
the repairs then the lessee can do it himself and recover
compensation for it.
(iv) Right to make payments that are obligatory on the lessor and to
deduct the amount from rent.
(a) If the lessee makes certain payments like taxes, revenue which
were bound to be made by the lessor and which are not
recoverable from the land then the lessee might make the
payment and recover from the lessor.
(b) The payment must not be voluntary and it must be compulsory
and the lessee must have made the payment under protest.
(v) Right to remove fixtures made by him during tenancy.
(a) This clause provides the lessee to remove anything which he
attached to the property. This clause provides an exception to
the general rule that things attached to the earth becomes part
of it.
(b) However, while removing such fixtures he must see that the
property is left in the same condition in which he had received
it.
(vi) Right to have the benefits of crops growing on the land planted by
him.
(a) Where a lease of uncertain duration is determined not due to
the default of the lessee, the latter is entitled to all the benefit
of the crops growing, planted or sown by him.
(b) He and his legal representatives are given free right to ingress
and egress to gather and carry the grown crops.
(vii) Right to assign his interest in the leased property.
 (a) This clause, in absence of a contract to the contrary, empowers
the lessee to transfer whole of his interest or any part of his
interest.
(b) The interest may be transferred absolutely or by way of
mortgage or sub-lease.
(c) His transferee or his assignee has also been empowered to
transfer his interest again.
(d) On the termination of the lease, the obligation of handing over
the possession of the property is of the lessee and not of the
sub-lessee because only the original lessee is privy to the
contract.
(e) A lessee or a licensee cannot claim to have acquired
customary rights to get lease or license.
• The liabilities of the lessee are as follows –
(i) Duty to disclose facts materially increasing the value of the
property.
(a) It is necessary that the lessor must be unaware of the fact of
such increase in value.
(b) Omission or failure of the lessee to inform the lessor about
such facts is not a fraudulent act and lessor cannot terminate
lease due to such omission.
(c) However, the lessor can sue for damages.
(ii) Duty to pay rent or consideration of lease.
(a) This clause has made the lessee liable to pay the rent or
premium at the proper time and place to the lessor. However,
the proper time comes only after the lessee takes possession
of the property and not from the date of signing the lease-deed.
(b) Where the lessee could not get possession of the whole leased
properly, he will have the right to claim reduction in the rent
accordingly.
(c) Where the property is leased jointly to more than one person,
rent paid by anyone of them will be sufficient. Similarly, when
a joint property is leased to a person, then rent paid to anyone
of the lessors will be sufficient.
(iii) Duty to maintain the property.
(a) Where the defect has been caused by any act or default on the
part of the lessor or his servants or agents, he is bound to make
it good within three months of such notice.
(b) The lessee is bound to maintain and restore the property in the
condition in which it was let to him. Only the changes caused
by the reasonable wear and tear of irresistible force are
allowed under the duty of this clause.
(iv) Duty to give notice of any encroachment on the property of the
lessor
 (a) Where the lessee comes to know of any right in respect of
property in his possession, he has to inform the lessor about
this fact so that he may timely take an action to protect his
interest.
(v) Duty to use the property in a reasonable manner.
(a) The lessee must not use or allow others to use the property for
a purpose other than that for which it was leased.
(vi) Duty not to erect permanent structure on the property.
(a) Where the lessee is entitled to erect any permanent structure
w/o the permission of the lessor, he is bound to remove them
w/o causing damage to the tenanted property.
(b) In case, the permanent structures are not removed after the
expiry of the lease then they belong to the lessor.
(c) Material impairment of the value and utility of tenancy due to
construction is not a ground for passing a decree of eviction.
It should be a case of waste of or damage to the premises.
(vii) Duty to re-transfer the possession on determination of lease.
(a) If the lessee continues in possession even after the term his
possession becomes unauthorised possession.
(b) Where the tenant does not vacate the tenanted premises even
after the expiry of the notice he becomes liable to pay damages
as well as mesne profits to the lessor.
(c) Where the tenant made additional fixtures and fittings in the
premises for making the premises useful for business but no
objection was taken by the landlord, it was held that the
landlord could not insist that the tenant should restore the
premises to original position because it could not be said that
tenant did any damage to the premises.

➢ Section 109: -
• This section deals with the rights of the lessors’ transferee. After the lease
of the property, the lessor may transfer the remaining interest to another
person.
• In such a transfer the transferee too becomes entitled to all the rights and
liabilities of the lessor which he had at that time.
• However, such entitlement is subject to a contract to the contrary.
• The lessor is not by reason of the transfer to cease to be the subject to any
of the liabilities imposed upon him by the lease, unless the lessee elects
to treat the transferee as the person liable to him.
• The transferee is not entitled to arrears of rent due before the transfer but
if the lessee not having knowledge of such a transfer, pays the rents to the
lessor, he shall not be liable to pay such rent over again to the transferee.
 • The lessor, the transferee and the lessee may determine about the
apportionment of rent between them in the case when only a part of the
revision has been transferred.
• In apportionment of rent, regard must be had to the value and quality of
the property.
• When the owner sells the property, the purchaser can recover arrears of
rent only if there is assignment in his favour, otherwise not.
• The substantive part of section 109 read with the proviso necessarily
indicates that the arrears of rent due is one the lessor’s right as to the
property transferred.

➢ Section 110: -
• The section lays down the rule for computation of period of lease. Where
the time limited by a lease of immovable property is expressed as
commencing from a particular day, in computing the period of lease, such
day shall be excluded.
• This section does not apply to tenancy from month to month by holding
over, it applies only to periodical tenancy with definite date of
commencement.
• Where the lease is made to terminate before expiry of the term but it is
not specified at whose option it is to terminate, then in such a case, the
lessee shall have the option to terminate it, not the lessor.

➢ Section 111: -
• This section lays down the modes in which lease can be terminated –
1. By efflux of time –
(i) Where the term of the lease is fixed, the lease determines after
the expiry of the time-period automatically.
(ii) In case of lease of fixed period no notice to quit is necessary.
(iii) Where the lessee is in a settled position in the premises, he can
be dispossessed only in accordance with the procedure
prescribed by the law.
(iv) No tenant or lessee has any statutory right to demand renewal
nor is the lessor under any statutory duty to grant renewal.
(v) Where the lessee committed violation of the terms of lease by
sub-letting the premises, it was held that the lease
automatically came to an end by efflux of the period specified.
2. By Happening of some event –
(i) Where the lease contains a condition that the lease will
terminate on the happening of some event, it will terminate on
the happening of that event.
(ii) On the determination of the lease the lessor may either re-enter
the property or maintain a suit for ejectment.
3. By Termination of lessor’s interest in property –
(i) Where a lessor has only a limited interest or power to grant a
lease, the lease is determined with the loss of that interest.
(ii) A lease granted by a mortgage in possession and extending
beyond the term of the mortgage, determines on redemption.
4. By merger –
(i) A lease of immovable property determines in case the interests
of the lessee and the lessor in the whole of the property
become vested at the same time in one person in the same
right.
(ii) A person could not be sub-tenant and owner at the same time.
The effect of merger is that a limited interest becomes
crystallised into absolute ownership.
5. By Express Surrender –
(i) A lease of immovable property terminates by express
surrender; that is to say, in case the lessee yields up his interest
under the lease to the lessor by material agreement between
them.
(ii) The surrender consists in the yielding up of the term of the
lease accompanied by delivery of possession. Delivery of
possession is necessary unless there is an agreement to
surrender at some future time.
(iii) In case of express surrender, no formality is required, only the
lessee must express his intention to surrender. It can be done
orally by delivery of possession.
(iv) Registered deed is not necessary to evidence surrender. But
where a surrender of a part of the premises results in
modification of the terms of lease deed, it would require a
registered document.
6. By Implied Surrender
(i) An implied surrender takes place either by the creation of new
relationship between the lessor and the lessee or by the
relinquishment of possession by the lessee and taking over the
lessor.
(ii) It is also necessary that the surrender must be to the immediate
landlord because the transfer
(iii) There can be implied surrender, if the lessor grants a new lease
to a third person with the assent of the lessee under the existing
lease who delivers the possession to such person or where the
lessee directs his sub-tenant to pay the rent directly to the
lessor.
 7. By forfeiture –
(i) A lease terminates by forfeiture in the following cases-
(a) In the case lessee breaks on express condition which provides
that on the breach of it, the lessor may re-enter the property,
or
(b) In case the lessee renounces his character as such by setting
up a title in a third person or by claiming title in himself, or
(c) The lease is adjudicated an insolvent and the lease provides
that the lessor may re-enter on the happening of such event.
(ii) The three conditions in which the lessor has been given the
right to re-enter the leased property and take possession, can
be waived by the lessor at his discretion.
(iii) Waiver has to be a deliberate and conscious act on the part of
the landlord to treat the contractual tenancy as subsisting.
(iv) The lessor or his transferee has to give notice in writing to the
lessee of his intention to determine the lease.
8. On expiration of Notice to Quit –
(i) A lease terminates when the notice to quit or to determine
expires.
(ii) Where the lessee continues in possession even after the notice,
he cannot claim title to the property on the basis of adverse
possession even after a considerable number of years.
(iii) A landlord who accepts rent after notice and also files and
prosecutes the suit for eviction cannot be said to have waived
the notice.

➢ Section 112: -
• This section applies to those situations where the right of forfeiture has
accrued to the lessor but he elects not to forfeit the sale. A waiver takes
place in the following conditions-
(i) When the lessor accepts the rent which has been incurred, or
(ii) By distress for such rent i.e. lawful extrajudicial seizure of the
chattels to enforce the payment of rent, or
(iii) By any other act on the part of the lessor showing an intention
to treat the lease as subsisting.
• However, a waiver of forfeiture is no bar to an action for damages.

➢ Section 113: -
• Waiver of notice to quit has to be established by two ingredients, namely
(i) The express or implied consent of the person to whom the notice
was given, is necessary to say that the notice is waived.
(ii) In so far as the person who gives notice, there must be an act
showing the intention to treat the lease as subsisting.
➢ Section 110: -
• The sections say that if at the hearing of the suit the lessee pays or tenders
to pay the arrears of rent together with compensation, the court may,
instead of passing a decree for ejectment, pass an order relieving the
lessee from forfeiture.
• This section affords protection to the tenant against forfeiture. While the
tenant enjoys the immunity from eviction for default in payment of rent,
the landlord-lessor gives the corresponding benefit of recovery even of
such arrears of rent which are not legally recoverable.
• The tenant cannot be permitted to deposit the arrears of rent in the court,
they have to be made or tendered to the lessor. But where the money
having been deposited in the court and also withdrawn by the landlord,
the tenant was held as not liable to be evicted.
➢ Section 114A: -
• This section is applicable where the forfeiture occurs due to breach of an
express condition with the right of re-entry only. This section does not
apply to the breach of conditions against –
(i) Assignment,
(ii) Sub-letting
(iii) Parting with possession, and
(iv) Disposing of the property leased.

Where a breach which results in the forfeiture of a lease is remediable, an

opportunity should be first given to the parties before ordering forfeiture.

➢ Section 115: -
• Where the lessor does not prohibit the lease by express terms, he may
sublet the property leased to him, this is called under-lease.
• This section provides that the surrender of a lease by a lessee does not
affect the under-lease of that property or any part of it which has been
granted to sub-lessee on the terms and conditions substantially the same
as the original lease. Therefore, the provision safeguards the interests of
the sub-lessee.
• If the lease is surrendered for the purpose of obtaining a new lease, the
interest of the sub-lessee shall cease.
• The forfeiture of a lease extinguishes all the under-leases except where
such forfeiture has been produced by the lessor in fraud of the under-
lessees or relief against forfeiture has been granted under s. 114. The right
or interest of the under-lessee also comes to an end when the lessor
forfeits the lease.
• Where the terms of the lease authorise the lessee to mortgage his interest,
the lease should not be forfeited w/o giving the mortgagee an opportunity
to prevent it.
 • Difference b/w Surrender and forfeiture
Surrender
1. It is undertaken by the lessee
whereby he surrenders his right
of enjoyment of leased property.
2. It implies mutual consent of the
lessor and the lessee.
3. It does not prejudice a sub-lease
granted by the lessee previously
on substantially the same terms
and conditions of the original
lease.
Forfeiture
1. It is undertaken by the lessor
whereby he extinguishes the rights
of the lessee over the leased
property.
2. It does not imply any consent on
the part of the lessee.
3. It annuls all under-leases or sub-
leases except where (i) such
forfeiture has been procured by the
lessor in fraud of the sub-lease, or
(ii) relief against forfeiture has
been granted under s. 114.

➢ Section 116: -
• The expression “holding-over” is used in the sense of retaining
possession.
• For the application of this section, two conditions are necessary –
(i) The tenant (lessee) must be in the possession of the property after
the determination of the lease.
(ii) The lessor or his representative must accept the rent or otherwise
give his consent to lessee’s continued possession.
• This section is available for leases fixed originally from month to month
or year to year. Where the original lease is given for the life of the lessee,
this section will not be applicable.
• The whole basis of this section is that a landlord is entitled to file a suit
for ejectment and obtain a decree for possession and therefore, his
acceptance of rent after expiry of lease is an unequivocal act referable to
his desire to assent to the tenant continuing possession.
• However, such assent would be absent where there are restrictions on
eviction of tenants as provided by rent control laws.
• To gain benefit of this section, the tenant must establish that the landlord
accepted the rent from him as a legal tenant not as a statutory tenant.
• After the termination of the lease, the lessee remains in possession of the
leased property with the consent of the lessor, he is known as tenant by
holding over.
• Tenancy by holding over after expiry of the term of lease does not have
the effect of changing the purpose for which the property had been
originally leased.
• After the termination of the lease, the lessee remains in possession of the
leased property without the consent of the lessor, he is known as tenant-
 at-sufferance. It is merely a fiction to prevent the possession from being
a trespass.
• When the original or head lease expires, sub-lease, if any, also expires.
The sub-lessee is accountable to his lessor. Both of them are liable to be
evicted.
• Difference b/w tenant by holding over and tenant-at-sufferance
Tenant by holding over Tenant-at-sufferance
1. With the consent of the lessor. 1. Without the consent of the lessor.
2. Privity of state b/w tenant and lessor. 2. No privity of state b/w tenant and lessor
3. Can transfer his interest to another. 3. Cannot transfer his interest to another.
4. Cannot be ejected w/o notice to quit. 4. Not entitled to a notice to quit.

➢ Section 117: -
• Leases for agricultural purposes have been exempted from the provisions
of this chapter.
• The object of the exemption is not to disturb the settled usages which have
come into existence.
• It is not necessary that the agricultural lease must be in writing. It may be
made orally. However, if it is made in writing, it must be registered.

Exchange
➢ Section 118: -
• An exchange is defined as –
(i) When two persons mutually transfer the ownership of one thing
for the ownership of another,
(ii) Neither thing or both things being money only, the transaction is
called an exchange.
• Oral exchange is not permissible.
• It is necessary that the deed of exchange must be a valid contract. Where
the deed was executed to compromise criminal proceedings between the
parties, it was held that since the object of the contract of exchange was
unlawful, the contract, and therefore, the exchange was void.
• When in an exchange, one party did not get possession of the property he
was entitled to receive in the exchange, he was entitled to return of
property transferred to him.

➢ Section 116: -
• This section provides for a contingency in which one of the parties to the
exchange is deprived of the property received by him due to some defect
in the title of the other party.
 • The remedy –
(i) He can recover for compensation the loss suffered by him.
(ii) He can take back the thing transferred by him.

However, the second remedy is available only in three situations –

(i) Where the property is still in the possession of the other party, or
(ii) In the possession of his legal representative; or
(iii) A transferee from him w/o consideration.

➢ Section 120: -
• This section provides only that each party has the rights and is subject to
liabilities of a seller as to that what he gives and has the rights and subject
to liabilities of a buyer as to that which he takes.
➢ Section 121: -
• This section provides that on exchange of money, each party thereby
warrants the genuineness of the money given by him.
• The party who does not get genuine money in return would be entitled to
recover genuine money paid by him.