(I) TRANSFER IN GENERAL

● Shantabai v State of Bombay – unregistered lease document for 26k and 12 years for
cutting bamboo, fuel wood and teak – Madhya Pradesh Abolition of Proprietary
Rights Act – what was nature of right? – if immovable, she can realise right
irrespective of change in ownership; however, if movable, only eligible for
compensation – held to be immovable (profits a prendre) since spread over 12 years
and no immediate intention to cut. However, no remedy because unregistered doc.
● Chhotabhai Jethabai Patel v State of MP – Petitioners entered into contract with
owners of certain proprietary estates to pluck tendu leaves, cultivate lac, and cut and
carry timber, hardwood and bamboo. Held, this created no interest in lands, trees or
plants.
● State of Orissa v. Titaghur Paper Mills – Contract with Orissa for felling and
converting bamboo into pulp for manufacturing paper. Company could use all lands
and streams as well as free ingress and egress from the areas. It could be renewed for
several more years in different contract areas and covered bamboos that were to come
into existence later. Held contract related to immovable property as a benefit to arise
from land; integral and indivisible contract – not to be severed.

“Standing timber” – 1. A timber tree, 2. Reached a stage in which ready to be used as timber,
3. Intended to be cut reasonably early.

Test: Whether intention to leave it for further growth or use the Earth as a warehouse.

WHEN DOES A CHATTEL BECOME A FIXTURE?

● Holland v Hodgson – whether looms attached to earth/floor of a worsted mill fixture?
Question: what decided sufficient annexation? Test: Blackburn J – 1. look at degree of
annexation, and 2. object of annexation. Here, purpose was use as factory as mill and
therefore fixture.

Quicquid plantatur solo, solo credit (whatever affixed to soil belongs to soil)

Quidquid inaedifactur solo, solo credit (whatever embedded in soil belongs to soil)

Exceptions: contract to the contrary, and trade fixture (by a tenant).

India follows English cases, but the test is different. We look at sufficient degree of
attachment for a chattel to become fixture. Test: 1. Mode of attachment and consequences
of detachment, 2. Object or intention of attachment (temporary or permanent; for
beneficial enjoyment of land – per Bamdev), 3. By whom is it attached. Case-to-case
manner.

● Duncan Industries v State of UP – Company agreed to transfer fertilizer business

including plant and machinery – Court had to determine character. It did so by
looking at intention of parties, and whether it was to be temporary or permanent.
Machineries were permanently embedded in the earth for permanent use, by the
nature of it. Though it was held to be immovable property, since no written, attested
and registered doc, no title was conveyed.
● Bamdev Panigrahi v Manorama Raj – A obtained land as possessory mortgage from
Raja for business. Equipment embedded and installed in earth by construction of
foundation. B colluded with Raja and obtained the mortgage in their name. A filed for
returning of equipment (projector and diesel oil engine). A died, and his widow filed
for it. Court had to decide the nature of property to check limitation and go into
merits. It found the nature to be movable as it is was to be temporary, and hence
dismissed the suit as time-barred.

ATTESTATION
Object is to verify voluntary execution, and avoid force, fraud or undue influence.

● Shamu Patter v Abdul Kader – List all characteristics per the section. Ratio: For a
valid attestation, the competent witnesses must have seen the executant put their
signature/mark.
● Subrahmanian v Karuppayee Ammal – It is not necessary that witness must actually
be present when the executant signs it. Acknowledgment by the executant is
sufficient. The essential part is that witness should have put his signature animeus
attestandie (intention to attest; physical act should coincide with mental act; therefore
mere consent would not suffice, nor would signature for any other purpose).

English law mandates that both attesting witnesses see the executant execute the doc, and be
present together. No personal acknowledgement. Indian law much more chill that way. The
witness however must be competent to contract.
NOTICE
It is used to determine the rights and claims of parties in an unconscionable transaction. Can
be actual or constructive (reasonable person test to check if knowledge was imputed).

Due diligence under constructive notice includes access to public records. Constructive
knowledge is presumed if a person had the means to know, but failed to use it (Lloyd Bank).
However, if no means/opportunity of enquiry, notice cannot be imputed (Haji Abdulgafar).
Gross negligence is also an exception, however it should be more than mere carelessness.

● Lloyd Bank v PF Guzdar – Title deeds of a house given to Bank A to secure overdraft.
G demanded title deed of the house to find purchasers, could not find the deeds and
mortgaged property to Bank B. As A did not pay, B wanted to sell it, but A claimed
priority over it. Held B 3qw vigilant as the title deeds were in order, and loan was
granted after securitization. Mortgage is a valid guarantee that it won’t be mortgaged
elsewhere. Bank A was grossly negligent in giving title deed to G without any care or
caution.
● Ahemdabad Municipal Corporation v Haji Abdulgafar Haji Hussenbhai – Owner of a
property was declared insolvent with tax arrears, however did not take action to pay.
A bonafide purchased bought the property at an auction. Filed suit that taxes were not
recoverable from sale to him. Held, s 100 of TPA states that no charge shall be
transferred without notice. No notice was given here, and it cannot be reasonably
expected of a buyer to look into it. Charge of tax not constructive notice.
● Ram Nivas v Bano – A took a shop on rent from B, and then entered into a contract to
buy it. Paid part of the consideration; remaining to be paid on the date of execution.
B, however, sold it to C. C contends they were bonafide purchasers without any notice
of A’s claim; thought A was tenant. Court held that though there was no actual
knowledge, notice may exist. C could have made enquiries from A about their title
over property. Cannot escape consequences after abstaining from enquiry.

(II) FUNDAMENTALS OF TRANSFER

Act of living person conveying existing property to one or more living persons (transfer inter
vivos).

CONVEYANCE
Creating new title/interest in favour of transferee through an instrument.
PROPERTY
Anything that is capable of being owned (including an interest in property). When all rights
transferred, absolute transfer. When some rights, an interest is transferred.

Note: ‘present or future’ to apply to the word convey, and not property. Only existing
property can be transferred, but might happen at a later point of time.

Self-transfer can occur in trusts. No transfer in partition of joint family property, as no new
rights are created; they are merely divided (collective right to possess & alienate to individual
split-right; held jointly to held severally).

● VN Sarin v Ajit Kumar Poplai – Joint family property portioned into three. Each
coparcener got 1/3rd, however a tenant was already occupying son A’s property. As
this did not fall under ‘transfer’ per TPA, and that all collective rights they had were
now individual or specific rights.

Informal family arrangements through mutual agreements are legally binding. However not a
transfer if it is mere acknowledgement/definition of titles (Tek Bahadur Singh v Debi Singh).

Will is to be governed by Indian Succession Act.

● N Ramaiah v Nagaraj S – A will gave all property to husband’s nephew. Wife alleged
fraud. Court told to maintain status quo until probate (will is proved). She then
executed the will in favour of her own brother when she died. Locus standi of brother
challenged as he had no original interest. SC held that Will is not the same as
transfer – not inter vivos or irrevocable and is governed by Indian Succession
Act. Held that until veracity of probate is maintained, property was in control of
wife’s relative.
● Kenneth Solomon v Dan Singh Bawa – Tenant had bequeathed tenancy rights in
favour of heirs. On death, beneficiaries took possession of tenanted premises.
Landlord filed for eviction alleging that tenant has parted with possession. Held, will
is different from transfer and vests property on death – same effect as transfer by sale
or mortgage then. Held, a violation of lease agreement had taken place by
bequeathing tenancy rights under will – told to vacate.

Spec Succesionis – heir apparent and a chance at legacy. Transfer of this mere possibility is
void ab initio. Moreover, cannot be renounced.
If renounced, not bound by it.

● Gulam Abbas v Haji Kayyam Ali – Dad died leaving behind property to five sons,
daughters and widow as heirs. Three sons paid off debt and obtained deed from other
two; other two to get case, but no future rights in property. The, field for partition.
Held bare renunciation of expectation cannot bind expectant heir’s future conduct.
However, if to mislead an owner + receives consideration, can be debarred from
setting up a right unquestionably vested in him. Principle of estoppel.
● Hameeda v Jameela – Daughter renounced share in father’s property for
consideration and assignment of some property. Brought another property with the
proceeds. However, filed for inheritance after father’s death. Again, held was nor bare
renunciation, got compensation. Cannot claim not bound by relinquishment after
having enjoyed the result. Estopped.

Oral transfer of property possible when value is less than 100 for mortgage, and lease of
immovable property for less than a year.

(III) VESTED AND CONTINGENT INTEREST

Vested interests – certain event; transfer is complete even if possession not delivered.
Ownership with transferee. Contingent – dependent on a condition precedent; becomes vested
once specified condition happens.

● Usha Subba Rai v BN Visveswariah – Vested interest exists when there is a present
right of enjoyment or present right of future enjoyment. Contingent when right of
enjoyment is made dependant on something which may/may not happen. This is to be
determined from the substance of the document read as a whole. However,
construction would be biased in favour of vested interest unless there is a definite and
clear intention for contingent interest.

● Kokilamban v N Raman – A settled properties inherited from husband in favour of

sister’s son B. To be jointly enjoyed by them, and B to pay taxes and collect rent. B
relinquished individual right to alienate, but deed provided for joint right of
alienation. B died, and A revoked the settlement and created one in favour of
brother’s daughter D and her husband DH. B’s brother (legal hair) filed a suit
claiming vested interest. Plus since A only had a life interest, no right to revoke or
create a new one. Court said, if vested B get it; if contingent A valid. SC held that
 since A retained some parts of the property and did not completely relinquish, no
absolute ownership was created in favour of B. Thus, not inheritable and B’s brother’s
claim dismissed.

(IV) Conditions restraining Alienation

LAW PREFERS ALIENATION TO ACCUMULATION

Basic rights and cannot be encroached upon. A condition subsequent restricting alienation
would be void, and can be ignored (even if mutually agreed upon) as repugnant to nature of
interest created by transfer.

Partial restraint however is possible and binding – via media (balance between competing
interests). Should not run counter to ownership. Substance and effect to be gauged to
determine whether partial/absolute.

Alienation is prerogative of owner and includes power sell at any point of time, for any
consideration, to any person, for any purpose. Restraint on alienation can be restraint over
transfer for particular time, control over consideration, on transferee, or particular use of
property.

Once property is transferred absolutely, no agreement from previous owner which dictates
present owner can be enforced, as all rights are divested absolutely. Buyer can ignore any
such conditions without it being breach of contract. Won’t apply if specific transfer of right.
Exception: when direction is given for the purpose of securing beneficial enjoyment of
another property of the transferor.

● K Muniswamy v K Venkataswamy – Partition; half went to M and F; one-fourth each

to two sons. After M&F’s death, property to be partitioned equally between sons.
Parents only had life interest and no power to alienate. However, post-partition, this
was sold through a sale deed to S1 alone. Looking at intention + full document, Court
held that absolute restraint on transfer was invalid.

● Manohar Shivaram Swami v Mahadeo Guruling Sami – B sells property of mutual

cousin A to C. Condition that can only be sold to people within caste, which C
ignored and sold to D. B sued to restore. Court held this to be absolute restraint, not
partial.
 ● STMVR Muthuraman Chettiar v Ponnusami – Partition deed among members of joint
hindu family. Clause provided that on event of death of any of the heirs without a
male child, their residuary share will be divided among surviving brothers. Held that
they have full powers of disposition and liberty to provide what becomes of their
shares after death. Not restraint upon alienation, mere restriction made on will.

● Zoroastrian Cooperative Housing Scoiety v Dist. Registrar – A co-operative society

for building houses restricted membership only to Parsis. Bye law that no member
could alienate the house to non-Parsis. Held to be void, but not offending s 10 of TP
as only a partial restraint.

● Manjusha Debi v Sunil Chandra – Hindu father made a gift of 30k to widowed
daughter D. She purchased property X on the condition that she has life interest that
cannot be alienated by her heirs. She alienated the whole property to gods in her will.
Held that she cannot limit her own interest in a conveyance. Transferor divested
himself of interest in favour of transferee, and has no right to create life interest in
favour of transferee.

Restriction Repugnant to Interest Created

● Umashankar Aggarwal v Daulatram Sahu – Plaintiff sold suit shop to defendant

through registered sale deed. It was mentioned that purchaser only entitled to
ground-floor, and not area above. Also could exercise Nistari in front door; however,
no pakka construction should be made anywhere. Held, it was contrary to s 11. Would
have been okay if the case was for securing beneficial enjoyment of another property.

(V) TRANSFER TO UNBORN CHILD

For this, first an inter vivos transfer of life-interest (usufructary) should go towards a person
living on the date of transfer as an intermediary. An absolute interest can then be vested on
the unborn. This interest is a heritable one. Possession however can only take place after
death, though title and alienation is available. Alternatively, an interest can be transferred
through a trust.

● Girjish Dutt v Data Din – Gift from A to B, and then to her unborn child. If sons,
absolutely; if daughters, then only for their life; if no child, after death, would go to X.
 B died childless and X claimed property. Court said that as it is void under s 13, any
transfer contained in the same deed is also void.

● JV Satyanarayana v P Manikayan – Life estate in favour of S, with absolute interest

in favour of S’s unborn sons. S executed a relinquishment deed. Court held that
transfer in favour of unborn sons was still valid, as per the original deed.
Relinquishment cannot prevent vesting.

● Devaru Ganapathi Bhat v Prabhakar Ganapathi Bhat – Brother transferred property

to M, who gifted all of it to B’s son. Deed had condition that nobody shall have right
or title over it. Also stated that if G had other male children, A would hold joint
property with them. R was born after gift deed was executed. On M’s death, R filed
suit resisted by A. Court held that read as a whole, document created absolute interest
in A’s favour and s 13 would not apply.

(VI) CONDITIONAL TRANSFER

Transfer of property that vests an interest contingent upon fulfilment or non-fulfilment of a
condition. Could be precedent or subsequent. Compliance should be substantial, as complete
compliance is impossible. Transfer should not be defeated because facts and circumstances
have changed since transfer making compliance difficult/impossible – however cannot
deviate without change of circumstances.

If condition fails, transfer fails. However s 27 gives option to create alternate transfer if prior
condition fails. When two interests are created in same transaction and prior interest/transfer
fails for unforeseeable reasons, subsequent interest/transfer shall take effect (doctrine of
acceleration). Exceptions: prior transfer void, or intention clear from transferor that it should
take place in a particular manner and not be accelerated.

● Debi Shankar v Nand Kishore – Interest was created for a successive period of 21
years to A, B, C, A’s eldest son and then B’s eldest son. B and C died in second period
of 21 years. Court held that would accelerate in favour of A’s eldest son as prior
interest of B and C have failed.
A condition subsequent is expected to be followed by transferee, else transfer fails. Ignorance
not excuse. However, if transferee is prevented from fulfilling condition, valid ground. Prior
transfer is valid even when subsequent transfer is invalid, though part of same conveyance.

● Venkatarama v Aiyasami Ayar – Prisoner sentenced for life transferred property to B

with the condition that interest ceases to exist once he returns from prison. Condition
valid, and subsequent condition invalidates the ulterior.

(VII) ELECTION AND APPORTIONMENT

Who takes benefits must also take obligations. A person having no right to transfer, when
transferring, must transfer some benefit on owner of property as part of the same transaction.
Benefit and transfer must be inseparable and independent; benefit must be given in lieu of
transfer. Owner must elect whether to confirm or dissent from the transfer. Must be accepted
or rejected as a whole. Principles of estoppel and equity work here. If not within stipulated
time, considered to not want to confirm the transfer.

Can be revoked if incomplete knowledge. Constructive notice can work here.

● Dhanpati v Devi Prasad – before election, there must be (1) a transfer of a property
by a person with no right to transfer, (2) as part of the same transaction, he must
confer some benefit on owner, and (3) owner must elect to confirm or dissent from it.

Apportionment is the division of a common fund between several claimants. Can be done by
time of income accrual, and by estate when bought by co-sharers. Rent should be paid across
them on a shared basis. Can be excluded by contract to the contrary, specified dates by parties
and local usage.

Contributor can be made liable only when they have notice or knowledge or respective
contribution of transferees.

(VIII) LIS PENDENS

Pendete lite nihil innovature – nothing new must be introduced while a litigation or suit is
pending. Literal meaning is pending suit. For lis pendens to apply, there should be a suit with
respect to right in a specific property. Simply put, do not convey property until proceedings
are done with, and the Court enforces a decree.
 ● Bellamy v Sabine – X sold an immovable property to A. X’s son (heir) sues A to
declare the sale void. However, in the middle of the suit, A sold the property to B.
Court noted that if alienation in pending litigation were to be allowed, no suit would
be resolved successfully. Therefore, both parties must be obliged to initiate the
proceedings de novo.

(IX) SALE
It is a transfer of ownership for a price paid/promised/partly both. All three: title, possession
and enjoyment and alienation transferred (absolute transfer); would not amount to sale even if
only absent.

● Ramlal v Phagua – P executed a 'sale deed' in favour of B in exchange for a loan of

400. P said that in case she is able to return 400 back to B in3 years, the property can
be reconveyed to her. Re-conveyance deed was executed simultaneously. B never got
any right, title or interest in the property, there was only mutation in B's favour. Thus
held – no sale deed, but mere surety.
● DR Rathna Murthy v Ramappa – A purchased land through sale deed from B at 10k.
B sold to C on the very next day at 10k and delivered position. B then sued A for
reconveyance, citing it was a conditional deed and he had right to repurchase at
consideration of 10k within 10 years. Contended some parts including condition was
added after execution of the deed, which the witness also confirmed. Noting this, the
Court held that there was no intention, consent and knowledge from A’s side to accept
the condition, and therefore cannot be held to be a conditional sale.

ESSENTIALS
1. Transferor – competent to contract + authority to dispose (ownership). Transferee –
competent to receive (no legal bar, can include minor).
2. Subject matter – immovable property which is sufficiently identified.
● Rail Vihar KS A Samiti v State of UP – Sale of superstructure with
co-operative society and individual members as lessee and NOIDA as lessor.
If the owners did not execute the deeds, NOIDA threatened them with penalty
as unauthorised occupants. Court ruled in favour of owners stating that
consideration for lease was paid by contribution from members. Since there
was no actual sale of superstructure/land, the transfer was deemed invalid.
 3. Presence of money is essential. Even other valuable consideration would not
constitute sale.
● State of Madras v Gannon Durkerley – Sale is transfer of ownership for a
money price. When other goods/valuables, it is exchange or barter. However,
in certain circumstances, may be deemed sale.
● Kanigolla L Rao v Gudimetla R Manikyamba – A settlement deed can be
considered consideration for sale deed. It need not always be money.

If price is promised is not paid, remedy is to sue the buyer not to set or get back possession.
(Lakshmi Narain Barnwal v Jagdish Singh). Normally, title of vendor passes to vendee or
registration irrespective of if money has been paid in whole or part. However if contrary
intention arises that title shall pass only on full and final payment, transfer does not take place
(Kaliaperumal v Rajagopal). If parties wish, they can push for a later date as well. Price is of
essence, time of payment is not (can be lower or higher than market value, as long as fair).

If value of property is less than 100, written sale deed which is attested and registered is
optional. Else, mandatory.

Contract of sale is a promise of future transfer of ownership; agreement of sale pre-deed.

There should be a concluded agreement of sale to enable suit for specific performance.
Agreement of sale however does not create a title in property. But if possession is transferred
as part performance, transferee can protect possession.

● Ramesh Chandra v Anil Panjwani – A & B have a contract for sale – agree for part
performance. B pays A earnest money on which possession is transferred. Squatters
sent by A sit in on the property; refuse to be evicted citing that A has a better title.
Court held that this was a suit based on possessory and not proprietary title,
distinguishing between ownership and possession. Given that there was consideration
+ part possession Defendant permanently barred from interfering with possession.
● Ameer Minhaj v Dierde Elizabeth (Wright) Issar – SC held that an unregistered
agreement to sell can be used as evidence of a contract in a suit for specific
performance later on.
RIGHTS AND LIABILITIES OF SELLER AND BUYER
Duties of Seller
Includes duty of disclosure, especially when it could fall within the category of
fraud/deliberate omission.

● Haryana Financial Corporation v Rajesh Gupta –

Production of documents of title, but at the same time buyer beware. Duty is to produce
documents within seller’s power and possession within reasonable time for buyer’s
inspection.

● Jitendra Nath v Mahwswari Bose – Property was sold via auction from A to B for
earnest money. Clear correspondence that A must provide independent approach road.
The passage was too direct and narrow, despite clear instructions – so, B did not pay
rest of earnest money and A called for fresh bids. Court held that there was a clear
duty on seller’s part to disclose material defect (lack of independent passage), and
therefore should not be allowed to take advantage of their own wrong by forfeiting
earnest money.

Duty to obtain permission for sale from authority.

Nathulal v Phool Chand – A was the owner of factor situated on land of his brother B. A sold
to C giving them possession, indicating that C would have to pay consideration when A gets
the property in his name. C doesn’t pay. A had obligation to get permission from collector as
C was a non-agriculturalist. As he failed in that, C not paying consideration was valid.

MARSHALLING
When owner of two/more properties mortgages them to one person, and sells one/more of
these to another, the buyer can get the mortgage satisfied out of the unsold property. Provided
it can extinguish debt + there is no contract to the contrary. Moreover, should not prejudice
rights of mortgagee/or any claimant under them/any other person who has acquired an
interest in these properties under consideration.

(X) MORTGAGE
Principles of equity:

● Mortgage in essence is a borrowing transaction.

 ● In such a transaction, borrower is in need of protection; condition penalizing them
should be void.
● Condition of forfeiture in default of payment is a penalty.

Simple mortgage is occurs without delivery of possession. Failure entails personal

(money decree) or property-based suit (sale through foreclosure, with the intervention of
the court).

In mortgage by conditional sale, there exists ostensible sale of property. In the event of failure
to pay, sale becomes absolute; successfully payment, sale = void. Different from a sole with
condition to repurchase; essentially a form of redemption. Test is intention of the parties to
mortgage.

● Chennamal v Munimalaiyan – M executed simple mortgage to C to the tune of 3k. As

security, three items were given for due repayment. As M was unable to discharge the
mortgage, a deed was executed by M in favour of C at the behest of Panchayatdars,
with a right to repurchase within a period for 3 years on repayment of 3k. A filed a
suit for redemption after 3 years, but M contended it was a contract of sale now. Court
differentiated b/w mortgage with conditional sale and sale with option of repurchase:
(i) debtor-credit v equal footing; (ii) single document v two documents; (iii) debt
subsists as borrowing arrangement v no debt, money is consideration; (iv)
transacted amount below market value v consideration near/equal to market
value; (v) right to redemption persist till expiry of time & foreclosure v
re-purchase has to happen with stipulated period.
Held conditional sale as consideration as intention clear, and no debtor-creditor
relationship.

Usufructuary mortgage is another kind. Delivery of possession (mandatory; could be

constructive possession also) + retain till repayment. Rent and profits accrue to mortgagee;
used to appropriate for debt. NO RIGHT OF SALE or personal liability. Entitled to
possession until debt with interest is paid back.

It resembles Zuripeshgi lease, where a non-returnable lump is paid in advance in exchange

for possession of property for a fixed time. Unlike mortgage, it is a lease + no right of
redemption + lease to work/occupy land for money advanced + actual possession (cannot be
constructive).
 ● Nidha Sah v Murli Dhar – A executed a deed in favour of B for certain villages for 14
years. B was to retain possession for 14 years, post which A’s financial obligation
would come to an end. However, at the end of the term, B refused to part stating that
quantum of property delivered was insufficient. Held, that it was zuripeshgi and
therefore no liability on A as property was not security for repayment.

In English mortgage, there is absolute transfer in favour of mortgagee until debt is repaid;
mortgagor bound to repay on a certain date fixed in advance. Transfer subject to
mortgagee returning the property, and mortgagor repaying loan on the date. Failure ousts
right to redeem (though in India, sale not automatic).

Mortgage by depositing title deeds is also an option. Title deeds are delivered at time of
mortgage as security (need not be in writing). A transfer of interest occurs here.
Constructive delivery is sufficient.

● KJ Nathan v SV Maruthi – Court needs to check the ‘substance’ case-by-case to

discern if there has been a delivery of title-deeds from creditor to debtor. What is
necessary us to see whether the parties agreed to treat the documents in possession of
creditor (or their agent) as delivery for the purpose of the transaction. The requisites
are: (i) debt, (ii) deposit of title-deeds, and (iii) intention that these deeds would
be used as security for debt.
Mere possession of deed + existence of debt does not raise a presumption, but it is a
significant fact.

Anomalous mortgage does not fall into any of these categories, but is any combination of
these. For instance, mix of usufructuary and simple mortgage.

REDEMPTION
Cannot be taken away by contract to contrary. Can be exercised before foreclosure or sale.

● LK Trust v EDC Ltd – Trust mortgaged as property to EDC. Before right to

redemption used, EDC auctioned property. Held, right to redeem persists till
completion of sale by registration. Right not extinguished because of mere auction or
proposed sale.
Since equitable right to redemption, reasonable notice of intention to redeem & fully
fulfilling obligations as mortgagor. Till foreclosure is raised and sale confirmed, right to
redemption continues.

● New Kenliworth Hotels v Ashoka Industries – Unless conditional or anomalous

mortgage, debtor has right to deposit entire sale money and the court has a statutory
duty to accept and direct redemption.

CLOG
Immovable property is a merely a security for debt, and the debt-bearer should be allowed to
redeem. Any provision to bypass this right would be void (cannot be made
irredeemable/illusory). When mortgage terms unconscionable, the Courts can relieve
mortgagor from effects of bargain (were the circumstances taking advantage? Oppressed?
Imposed upon?). If so, entitled for relief.

● Seth Gangadhar v Shankar Lal – Mortgage deed providing that redemption could
happen only within 6 months after expiry of 85 years. Held that right to redemption
cannot be taken away, even if included in contract. 6 months restriction was invalid,
though 85 years thing was fine.

Clog is an attempt to obstruct redemption; preventing redeeming security even when ready to
repay. Courts view based on ‘situational peculiarities’. Condition penalizing mortgagor would
be treated as clog, and void. Such condition can be ignored and would not be enforced by the
Court.

● U Nilan v Kannayyan – Appeal filed by mortgagor to set aside sale. They had paid the
mortgage while sale is pending, during tough times. Held that adversity of one should
not be a boon for others. Court seeks to protect the person affected by adverse
circumstances from being a victim of exploitation.
● Stanley v Wilde – Laid down what clog is. Once a mortgage, always a mortgage.
Mortgage cannot be converted into a sale through a unilateral act.
● SB Narain Dass v Surta – A executed property in favour of B, and delivered
possession also. B stipulated beyond legislatively-allowed rates of interest, and
enjoyed benefits + appropriated interests for 60 years. Then, instead of filing a suit for
foreclosure enabling mortgagor to pay him back, filed for a suit for declaration of title
in his favour. Suit dismissed as B did not follow procedure for closure, appropriated
 benefits and imposed difficult terms on mortgagor. Hence, clog. Since A had paid
mortgage debt for 60 years, had a right to redeem.

A condition not depriving right of mortgagor, but adding a collateral benefit to the mortgagee
(affecting right of the former) is also void. For instance, mortgagee remaining a permanent
tenant, or perennial partner of a firm.

● Maina Devi v Thakur Mansingh – A mortgaged property to tenant B who had

possession. The contract said A could not redeem for 15 months from execution, but
could within the 15-30 month. In case failure to pay, property would be deemed to be
sold. If successful payment, continued possession as tenant. Held by Court to be clog.
Though not express clog, B had a clear intention to become owner and have an undue
right to retain possession forever.

Mere length of time does not by itself amount to clog, provided it is not undue advantage or
fraud. However, if length unreasonable/oppressive/makes redemption impossible, clog.

● Shivdev v Sucha Singh – A mortgages property to B for 99 years for 7k, during
financially hard times. B took possession and enjoyed the usufruct. A sold portion of
this to C. C sued for redemption around 26 years, but B pleased that it was premature.
Held condition postponing redemption for 99 years for a meagre sum amounts to clog.

FORECLOSURE
Mortgagee forfeiting property on default is an old norm, and no longer is law; can only cause
property to be sold (cannot sell to self). In the event of non-payment, can approach Court
with a prayer of sale (suit for foreclosure).

SUBROGATION
Means substitution, and cannot be partial. Right to step into the shoes of the creditor – if
person pays debt, gets rights of mortgagee.

MISC
● Ram Nath v Baij Nath – A borrowed money from B by executing a sale deed.
Condition was that if A repaid money within a period of two years, property
would be reconveyed. Court held this to be a mortgage and not sale, because
substance indicates that it is a usufructuary mortgage which A had a right of
redemption to, and B was transferred possessory interest for.
 (XI) LEASE
Involves the right to transfer the right to possess and enjoy property for a term or perpetuity,
for a consideration (monetary, service or otherwise). It is a transferrable (and even heritable;
though a lease for life terminates with death) interest, enabling sub-lease and sub-tenant.
Relationship is with the property, and not the owner. Lease necessarily should involve
transfer of interest.

Absolute lease (also known as primary lease) is granted by the absolute owner for any
number of years. Derivative lease is a sub-lease by the lessee, and cannot extend beyond the
primary lease period. Lease could be fixed (specific duration), periodic (year-to-year) or in
perpetuity (without any time limit – permanent lease).

A contract with a condition that tenant can continue in possession as long as rent is paid is
indicator of lifetime lease (though not permanent). However, when origin is unknown, and
long possession + uniform rent, there arises a presumption of permanency. Burden of proof of
proving tenancy on tenant. Btw existence of forfeiture clause does not change its permanent
nature (as long as other aspects remain intact).

Tenancy at sufferance arises due to implication of law. Person in lawful possession of

property continues to be in possession, even after lawful possession ends [tenant by holding
over]. Same with sub-tenants when holding over tenant is called tenant at sufferance;
whoever if this sub-lessor is introduced against lessor’s wishes, they will be a trespasser.

Tenancy at will at will arises by implication of law. Occupant by express agreement let to stay
for indefinite period of time; day-by-day compensation as long as parties please. Terminable
by either of the parties (especially by demand of landlord). If a decree is sought, notice to quit
becomes necessary.

LEASE V LIECENE
Transfer of interest in specified immovable property v bare permission to use w/o interest
transfer. Interest created in favour of lessee v no interest in licensee. Transferrable and
heritable v neither. Does not end with death of grantor v ends. Can terminate with breach of
T&C of contract v potentially withdrawn at pleasure of grantor. Unaffected by property
transfer v ends with sale. Lessee has tight to protect her possession (suit in own name) v
cannot defend possession as no proprietary rights. Lessee entitled to any
improvements/accession v no such rights.
Question of fact in determining whether lease/licence, Substance of document > form. Note:
If legal possession or control with owner, license, If interest created, lease.

1. Sohanlal Naraindas v Laxmidas Raghunath – the SC here noted that intention of

parties must be examined in light of surrounding circumstances. This should not be
gauged by words used to describe/create the lease/license alone (though it can be
indicative). The test is whether the instrument intended to create an interest in
property or not. If it does, lease. If it doesn’t, licence. The test of exclusive
possession is also indicative in whether licence or lease, though not determinative.

2. Associated Hotels v R N Kapoor – Occupancy of hotel rooms for a barber shop

licence or lease. Barber applied for fixation of standard rent – this could be
entertained if lease, but not if licence. The deed for possession was titled ‘licence
deed, and empowered to carry business on premises for a year, through quarterly
instalments. Grantee could renew terms, and had to make payments for electricity and
water. They further could not make alterations w/o grantor’s consent. Court laid down
4 propositions: 1. Substance of document must be preferred to form, 2. Real test is
intention of parties (Sohanlal), 3. If document creates interest in property – lease,
however if only permits use, while owner retains possession – licence, 4. If
exclusive possession of property for party prima facie – tenant under lease
[however circumstances may be established to show negative intention to create
lease.

Held here that lease because of exclusive possession and untrammelled control free of
grantor’s directions.

3. Delta International Ltd. v Shyam Sunder Ganeriwalla – A created lease in favour of

B; B created agreement with C styled as both lease and licence for running a petrol
pump and a service center. The agreement did not empower B to create sub-tenanncy
without landlord’s consent. Deed specifically said licence was granted to use, occupy,
enjoy, run and work the station – and that licence could be revoked on breach of any
condition. SC held noting this that it was a licence, and not lease. Also approved the
following tests: 1. Pith and substance of the document to be preferred over
party-put labels, 2. Paramount test (Sohanlal and Associated Hotels) – intention
of parties, 3. Exclusive possession, though an important factor does not preclude
from holding it a licence, 4. Even in exclusive possession, only licence will be
 created if grantor did not have power to grant lease, 5. When dominant intention
is to use premises for fittings and fixtures for business purposes, same does not
tantamount to lease of immovable property.

MODE OF EXECUTION OF LEASE

Registered doc if term is year-to-year, more, or reserving yearly rent. Everything else, either
by registered deed or by oral accompanied by delivery of possession. Agricultural lease need
not be in writing, but should be registered if so. If lease in favour of government, mandatorily
by registered deed.

DETERMINATION OF LEASE (LESSEE ACCEPTS NEW LEASE FROM THE LESSOR TO TAKE EFFECT DURING

THE CONTINUANCE OF EXISTING LEASE)

Expiry of time (no notice reqd), future event, termination of interest/power of lessor (death of
a life-interest holder), Merger (lessee purchase leasehold; lessor and lessee one), express
surrender, implied surrender (when lessee becomes mortgagee), forfeiture (express breach of
condition, renouncement, adjudicated insolvent and provision in lease for re-entry).

(XII) GIFTS
Gift is a transfer of property, without monetary compensation (no consideration). However,
governed by Muslim law and not TPA if both parties are Muslims. Consists of donor (should
be competent to contract) and donee (should be ascertainable person; can’t be an idol, but can
be a religious institution). Donor must divest of absolute interest (all rights and liabilities) and
vest it on donee. Donee must have right of ownership.

Property may be of any nature, but must qualify as ‘transfer’ under s 5. Spec successionis is
not a gift. As it is to be of mutual love and affection, even the mildest element of pecuniary
obligation would make it a sale/exchange. This obligation could include undertaking the
liability of the donor as consideration.

Also free consent – no undue influence, fraud, force or coercion. Full knowledge and
independence of Donor’s will in executing the deed – Burden of Proof to prove voluntariness
of donor lies on donee.

Acceptance (express or implied) is a necessity; gift cannot be given without consent. Onerous
gifts are those in which the burden of liability exceeds the value of the subject matter itself. If
the donee is not competent to contract, the gift can be accepted on their behest by a
competent person. While a guardian can accept a gift on behalf of a minor, they have the
option of rejecting it once they attain majority. If the acceptance comes after the death of a
donor, the gift will be valid as deemed to be accepted.

Gift may be movable or immovable, but transfer cannot happen orally in the latter.

CONDITIONAL GIFT
Condition precedent or subsequent attached to the gift, but it cannot purely be as per the
wishes of the donor. If so, void.

● Tila Bewa v Mana Bewa – A executed gift deed in favour of W in the hope that W
will marry her son and look after them through old age. W did marry, however felt
neglected, and left A’s son. W applied for mutation of name, while A executed deed of
cancellation citing that it was a conditional contract. The Court held that since there
was no condition for revocation in the document, the gift cannot now be revoked.

Onerous gifts are gifts with a burden attached. Benefit and burden through a single
instrument – so acceptance or rejection must be in full (unless several properties are
transferred through different documents). Minor can accept or reject onerous gift, once they
attain majority.
DONATION MORTI CAUSA
Gift made in contemplation of impending death (in death bed, basically). This is for movable
property, and kicks into effect once the giver dies. Possession must be delivered. Giver may
choose to resume the gift, but generally it does take effect if the person recovers.