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http://studypoints.blogspot.in/2012/09/rights-and-liabilities-of-mortgagee-and.html
Karnataka State Law (KSLU) University Important Solved Q & Answers for LLB
Second Semester – Property Law
Essay Questions
Q.1: - Define ‘Movable Property’ and Immovable property’ as defined under the Transfer
of Property Act. Q.3. – Define “Transfer of Property”. What are the properties that
cannot be transferred under Transfer of Property Act? or
Meaning of Property: -
The word property has taken its origin from the latin word “Proprietos”.
According to social science encyclopedia, the word property means, anything of any value to
a man or anything possessed by man or anything which can be used and enjoyed by man.
KINDS OF PROPERTY:
The properties, which can be transported from one place to another place for theuse or
happiness of man. For Ex: Jewel, Watches, Currency, All kinds of shoes, sleepers, Mobile
Phones, Books, all kinds of Vehicles, domestic animals – (Goats, Cow, Sheep, Horse, Donkey
etc)
2) Immovable Property: -
The natural earth, anything permanently attached to earth or affixed to earth for the use
and enjoyment of man is called as immovable property.
Attachments to the buildings – windows, doors, ceiling fan, Electrical lights, Ornamental
handles, fixed to the doors of the building.
All kinds of water system, water pipes, sprinklers, motors attached to the water sources
for irrigation purposes shall be called as immovable properties.
1) Right of Way: -
Man has the right to walk on the public roads at reasonable times or permitted times.
Every person has the right of movement. Such a right is called as immovable properties.
2) Right to Water: -
Every person has the right to enter the river, stream, and pond and to use and enjoy the
water for personal happiness. This right is called right to water; this is also an immovable
property.
3) Right to Fishery: -
Government gives the permission for certain people to enter the rivers or pond to collect
the fishes. Such persons have to pay the tax or fees to the government. Such persons have
the right to catch fishes. Such a right is called an immovable property.
4) Right to Ferry: -
Government gives the permission for certain people to run the boats for the transportation
of the people and the goods. The boat owner must pay the taxes to the government. Such a
right to transport the people on the water on the river is called the right to ferry. Such a right
is also an immovable property.
5) Fruit bearing trees: -
The fruit bearing trees like Apple tree, Mango tree, Guava tree, Orange tree, etc are
always useful to man as long as it is rooted in the earth man consumes the fruits.
EXCEPTIONS: -
The following things have been excluded from the definition of immovable properties.
1) Standing Timber: - There are trees which are useful to man in the preparation of
windows, doors, furniture, Boats, Ships etc. For ex: Rose wood, teak wood, ebony
tree, elm tree, Sandal wood tree etc. These trees grow and attain maturity and
afterwards it shall be served from earth. All such trees shall not be included in the
definition of immovable property.
2) Standing Crops: - Paddy, Ragi, Jowar, Wheat, Sugar Cane etc are plants useful to the
man. These plants grow for few months and attain the maturity and such a plants
shall be removed or separated from the earth. Such plants are called standing crops.
Such plants are not included in the definition of immovable property.
3) Standing Grass: - Grass grows for certain period. It is useful after its separation from
earth as fodder to the domestic animals & also useful in the manufacture of perfumes.
The grass attached to earth is not included in the definition of immovable property.
2(1)- Tangible Property (Corporal Property): - Every man has five physical senses. Those
properties which can be experienced by the physical senses are called tangible property or
corporeal property. Ex: Pen, Book, Furniture, All types of Jewels, vehicles, Clothes etc.
For Ex: - Intellectual properties, copy right of a novel or a story or a book, formulas,
scientific calculations, good will of a shop or a business establishment.
CONCLUSION
Q.2. - Define the term Notice. Explain the different types of Notice. or
Sec. 3: -
INTRODUCTION:
A person is deemed to have notice of a fact, when he actually knows that fact or when
but (except) for wilful abstention from an enquiry or search which he ought to have made, or
gross negligence, he would have known it.
The Court held that the terms ‘he ought to have made’ imposes a duty to himself as a
reasonable and prudent man and it does not refer to any duty which a man owes to a third
person.
It is an act to bring some information about some property or defects in the property
to the knowledge of another person.
KINDS OF NOTICE:
When one person gives information about a subject matter to the knowledge of another
person directly i.e. one person stands in front of another & gives the information by words.
Illustration: - Mr. ‘A’ is the owner of a land. The land appears to be fertile. But the land
is a useless, burdensome, barren land. Mr. ‘B’ came forward to purchase the land. Mr. ‘A’ &
Mr. ‘B’ sat together. Mr. ‘A’ sincerely told the defect in the land to Mr. ‘B’ words. This is
called direct notice by Mr. ‘A’ to Mr. ‘B’
In the following circumstances there is no direct notice but law will presume that the
other party has secured the information about the defect in the property. Let us analyse the
circumstances.
Father transferred his property absolutely to the first wife’s son. In the same document he
allotted Rs. 30,000/- to be paid to the Second wife’s son from that property. Subsequently the
First wife’s son took the original document and approached bank of Bombay and deposited
the original deed & secured a loan of Rs. 52,000/-.
The first wife’s son failed to repay the loan to the bank. Bank authority decided to sell
the property. The Second Wife’s son objects & demands Rs. 30,000/- before selling the
property. The bank authorities defends, that they did not had the knowledge about the
liability of Rs. 30,000/-. But the court says that the bank authority failed to read the original
document. They wilfully abstained from understanding & enquiring the property. Hence the
court presumes that the bank had constructive notice about the liability of Rs. 30,000/-.
Hence Bank must pay Rs. 30,000/- to the second wife’s son and only afterwards they can sell
the properties & get back their amount of loan.
In this case the Court held that the bank authorities the constructive notice about the
liability of 30,000/- Rs.
2. Gross Negligence: -
In this case there is two banks. Mr. ‘A’ very clever, talkative, owner of the immovable
property in Calcutta. Mr. ‘A’ took the original title deeds and deposited in the First Bank and
raised a loan amount. Within few days he took back the original title deed and deposited it in
the Banks. The dispute aroused between the banks in selling away the property and to
recover the loan amount.
In this case the First bank had the priority in selling away the property to recover the
loan amount. The First bank authorities have lost the priority rights, because of carelessness
in returning the original document. The First Bank authorities should not have returned the
original title deed or the First Bank should have sent the original title deed along with one of
the Bank officers or should have affixed the seal of the bank on the original title deed. But
they did not. So law presumes that the First Bank had the constructive notice about the rising
of the 2nd Loan in 2nd Bank. Hence, the First Bank losses its right and the 2 nd Bank secured
the right to sell away the property and to recover the loan amount.
1. REGISTRATION: -
In every office of the sub-registrar there shall be the details about the immovable
properties. A person must give an application along with the fees to the sub-registrar for
securing true copies about the details of the immovable properties. The person will
understand all the details. He will know the real owner, the value of the property, the
presence of any liability or charges.
If any person fails to approach the office of the sub-registrar and suffers by the cheating
then the law will presume that the transferee had the constructive notice about the defects.
Illustration: - Mr. ‘C’ is the absolute owner of a house. Mr. ‘B’ wants to buy the house.
Mr. ‘A’ represents that he is the absolute owner of the house. Mr. ‘B’ without approaching
the office of the sub-registrar gave an advance of Rs. Five Lakhs to Mr. ‘A’ to conclude the
sale transactions. Later, ‘A’ cheats Mr. ‘B’. ‘B’ files the case. Court says that Mr. ‘B’ is
having the indirect notice about the real ownership of the property. I.e. Mr. B is presumed to
have the knowledge that ‘A’ is a bogus person & ‘C’ as the real owner of the property.
A person interested in the property, must find out the persons having the physical control
of the property, enquiry must be made with those persons and only afterwards the transaction
and be entered, otherwise the person fails.
Illustration: - Mr. A, is the absolute owner of a house. He is living with his family in the
house. Mr. ‘B’ is a fraudulent person. He misrepresented to Mr. ‘C’ as that he himself is the
absolute owner of the house. Mr. ‘C’ believed in the words and paid an advance of Rs. Five
Lakhs. Later, no sale took place Mr. C wants the house property. He files the case against
Mr. B & A.
Court held that there is a failure on the part of Mr. ‘C’ in visiting the house property and
in finding out the possession of the property by ‘A’ and family. So we presume that ‘C’ had
the indirect notice about the real ownership of the property. He must suffer.
Mr. ‘A’ is the owner of 10 acres of land. Unfortunately, a small portion of the land is used
for burial purposes. Later Mr. ‘B’ purchased the land without inspecting the land.
Subsequently Mr. ‘B’ files the case against Mr. ‘A’ for cheating.
The Court says that there is no cheating. Mr. ‘B’ has failed to study the nature of the
property. He could have been known the burial land. Hence, he shall suffer for his wrong of
not inspecting
In a transfer of property the transferor may give information about the presence of defects
to the agent or the servant of the transferee. The agent or the servant acting in the course
employment may pass the information to the transferee or may not pass the information to the
transferor. Then law will presume that the transferee has received the constructed notice.
Illustration: - Mr. ‘A’ is the seller of an agricultural land. Mr. ‘B’ is the servant of the
buyer. The servant interacted with Mr. ‘A’. Mr. ‘A’ sincerely told the barren character of the
land to the servant. Bu the servant forgot to pass the message to his master. Mr. ‘C’ the sale
deed took place, registered and the property passed from the seller to the buyer.
Subsequently the buyer came to know about the defects. He files the case against the seller
for cheating.
Here the court presumes that the information has constructively brought to the knowledge
of the buyer through the servant. Notice to the servant is considered as notice to the buyer.
Hence there is constructive notice. So no liability for cheating.
CONCLUSION
INTRODUCTION :
Sec. 10,11,12,17 & 18 give the instances of illegal restrictions on certain transfers.
Such restrictions are deemed to be absolute restraints, totally depriving the owner of the
property of its free enjoyment.
The object of this Section is to prevent any person from keeping a property to its total
destruction. In other words, the done or transferee of the property should have the freedom to
deal with the property in the same way as his ex-owners, i.e. donors or transferors?
For e.g.: A transfers his property to b with a condition that B shall never sell it. This
condition is void and B may or may not sell as he pleases.
Types of Restrictions:
E.g.: A transfers property to B with a condition that B should not sell it. The condition
gives the transferor a substantial right to transfer, then it is partial restriction/restraint and
valid.
Four brothers were enjoying the ancestral property. They have agreed for the partition of
the ancestral property. A partition deed was prepared with the following condition.
“All the four brothers shall have equal rights on the property. Every brother must marry,
every brother must become father. If any brother fails to marry then, he loses the right of
alienation permanently.
According to the partition deed all the four brothers became the absolute owners of the
shares. One of the brother not interested in the marriage sold his share to an outsider. The
purchaser paid the market price through specified stamp papers & registered it. The
purchaser took the possession of the property.
The seller never married, but he died very soon. On his death the remaining three
brothers challenges the sale & wants to recover the property.
In this case the Court condemned the condition imposed in the partition deed. Such a
condition is void. The purchaser shall be the owner absolutely. One of the brothers sold his
share of property. He may marry or he may not marry his right of alienation should not be
destroyed.
A family of father, mother, son, Father, transferred the estate absolutely to the son, with a
condition – “My dear son, you shall not have right to sell the property, you must sell it for
3000 pounds to your mother only”.
The actual value of the estate was 15,000/- pounds. After sometimes, son decides to sell
the estate to an outsider for a good market price. Mother makes the objection resulting in this
case.
In this case, condition imposed by the father will destroy the right of alienation of the
estate of the son. The condition is void. The son is having the right to sell it to any person
for any price.
The transferor can impose partial restriction on the right of the transferee. For eg., A
condition not to sell a property outside the family members is a partial restraint and hence
valid. However, such restriction should not interfere materially with the free enjoyment of
the property.
Illustrations:
1. A sells a land to B. The condition is that, if B sells the land, he should give first
choice only to A. This is the right of pre-emption and therefore, it is valid. This is
only a partial restraint.
2. A sells a land to B on condition that B should not sell the land to C, the vendor’s
enemy. This is partial restraint and hence valid.
A property was conveyed with a condition that the donee should not transfer the
property by way of gift except for religious purposes. Held it was only a partial restraint and
hence valid.
In this case, a property was give to two sisters subject to the condition that if they had
no issue, they have no power of alienation except to their sisters or their children. It was held
that the condition was only partial and hence valid.
CONCLUSION
Q.4: - Discuss the rules relating to transfer of property in favour of unborn persons.
Introduction:
Unborn person means who are going to take birth on a future date. A person may take
birth tomorrow or in the next year or after 5 years or 10 years.
Sec. 13 explains the transfer of property today in favour of an unborn person. The
transfer of property to an unborn person is made under the 2 conditions –
1) The transferor must create a private trust of his property. The transferor appoints a
trustee. The trustee shall guard the property until the arrival of the unborn person.
2) The transferor must confirm absolute rights on the unborn person that means, the
unborn person shall become the absolute owner of the property of the transferor.
3) The unborn person must take birth before the death of the trustee.
Illustration:
Mr. ‘A’ is 70 years of age. Mr. ‘A’ is the owner of large properties. Mr. ‘A’ is having
a son Mr. ‘B’ is a useless person, he wastes all the money. Mr. ‘A’ is worried about his
properties. So Mr. ‘A’ created a private trust deed on the specified stamp paper & appointed
an young advocate of 26 years as the trustee of the property. Mr. ‘A’ delivered all the
property, all the documents to the custody of the trustee. Now Mr. ‘A’ is called the author of
the trust & the trust is for the benefit of the future grandchild. Such an unborn person is
called the beneficiary.
Mr. ‘A’ is a living person and trustee is also a living person. So according to section 5
it is valid transfer none of the trustee has the custody of the property. He is going to wait for
the arrival of the future grandchild. Let us consider a granddaughter takes birth after 3 years.
Such a person is a living person. Trustee is also a living person. Trustee is also a living
person. Hence trustee transfers the property to the born person. This is also a valid transfer
of property. The future person becomes the absolute owner. So in this illustration
granddaughter became the absolute owner.
CONCLUSION
Q.5: - Explain the ‘Rule against Perpetuity’ with illustrations and exceptions. or
June 2010: Discuss ‘Rule against perpetuity’. State exceptions if any to the rule.
Section 14- defines, Properties must be easily transferable for the happiness of the people &
also for the national economy.
Perpetuity: - ‘Perpetuity’ means permanency or infinity (indefinite period). The old law as
to transfer of property was that the property could be detained for a permanent period from
free enjoyment and absolute ownership.
Rule against Perpetuity: - The transfer can impose the condition restraining the alienation for
a maximum of 18 years of the unborn persons. The unborn person shall not have the right to
sell or the right to gift within the period of minority. Any conditions or restrictions beyond 18
years shall be void. This is called the rule against Perpetuity.
Case Law – 1:
Mr. ‘A’ is a big land owner. He was married. He had children. He had grand children.
One day he created the transfer of his property to the WAKF with a condition, “I am the
absolute owner of all properties. I shall not have any right of alienation after the death of my
sons & daughter, my grandsons & daughter shall enjoy the property without the power of
alienation. Like this my future lineal decedents shall have the right to use & enjoy the
property. But without any right of alienation if by chance all my lineal descendants die
completely then all my property shall go to the benefit of the poor people”.
The Court condemned the transfer of property made to the poor people the transferor
wants to control his property within his family for an indefinite period. The future unborn
persons can enjoy without alienation this condition is void & the condition is shame and
fictitious transfer.
Mr. ‘A’ made a gift of her property to ‘B’ She is the nephew’s daughter for life and after the
death of ‘B’, the property should go to the male descendents of ‘B’, if she should have any
absolutely but if she should have no male descendants then to the daughter of ‘B’ without
power of alienation but, if there were no descendents of ‘B’ then to the nephew ‘B’ dies
without marriage decide.
In this illustration, the transferor is ‘A’ & transferee is ‘B’. There is partial transfer. It
is valid transfer. But the next condition is the absolute transfer to the future sons of ‘B’ is
also valid. The next condition, in the absence of male birth the property should go partially
to the female of ‘B’. This is a void condition.
Finally the transfer to the nephew is also a failure, i.e. any transfer after the rule against
perpetuity shall also be invalid.
Exceptions: - Transfer of property in Perpetuity having a good mind, good feelings towards
the society, towards the public benefit can transfer the property in perpetuity such a transfer is
valid.
For Ex:
CONCLUSION
Q.6: - State the exceptions to the rule. ‘No one can convey a better title than what he
has’. (Ostensible owner)
Sec. 41
The general rule that a person cannot confer a better title than what he himself has.
This is known by the Latin Maxim ‘Nemo Dat quot non habet’.
The term ‘Nemo Dat quot non habet’ refers to No one can transfer a better title in
property than he himself has. It means a sale without title is not possible. Sale of goods act
describes rules regarding transfer of property and ownership. Sometimes goods are
transferred by none owner. The general rule is no one can pass better title than himself.
Where goods are sold by a person who is not the owner thereof and who does not sell
them under the authority or with the consent of the owner, the buyer does not acquire better
title than the seller had (Sec. 27). As a general rule no one can sell the goods and give a good
title thereof unless he is the real owner thereof. This general rule expressed the maxim
‘Namo Dat quot non habet’ which means “no one can give that which he possesses not’.
The seller cannot give to the better title to the goods than himself he has.
Example:
Mr X sells goods to Mr. Y acquired by theft, where Mr. Z is the real owner of the goods. He
latter finds goods in possession of Mr. Y. Now Mr. Y has no title to the goods as Mr. X was
not the owner and had not title to sell the goods. Therefore, Mr. Y will have to return the
goods to Mr. Z who is the real owner.
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EXCEPTINS TO THE RULE, ‘NO ONE CAN TRANSFER A BETTER TITLE THAN
WHAT HE HAS’ (Nemo Dat quot non habet)
This rule protects the owner. However this rule has certain exception.
iii) SALE BY ONE OF THE JOINT OWNER: - In case of joint ownership if the
goods which cannot be separated, may be transferred by one of the joint owner.
CONCLUSION
11
Q.7: - State the law relating to improvements made by a bonafide purchaser under
defective title.
INTRODUCTION:
This is based on the maxim ‘no one can enrich himself at the cost of another
person’.
Sec. 51 reads –
When the transferee of immovable property makes any improvement on the property,
believing in good that he is absolutely entitled to do so and if he is subsequently evicted from
the property by any person having a better title, then the transferee has a right against the
other person either to have the value of the improvement paid or to sell the property to him
(transferee) at the market-value.
The amount to be paid for of the improvement made is the estimated value at the time
of eviction of the transferee.
Now, the owner of the property has an option either to sell his interest in the property
or to pay compensation for the improvements made to the person under defective title.
The improvements made by the transferee under defective title must increase the
value of property permanently and hence the ordinary repairs etc., in the property are not
considered as am improvements.
For eg., White washing of a small portion of a house, levelling a ground, periodical
cleaning of a house or land etc., are not considered as improvements.
KINDS OF COMPENSATION:
12
The above options are available only to the person causing eviction.
CONCLUSION
Lis Pendence generally means pendency of a suit in a court. Lis Pendence is a Latin
word. Legally it embodies this principle that subject matter of suit should not be transferred
to third party during the pendency of suit in a competent court. Transferee is bound by result
of suit in a case when such subject matter is transferred during pendency of suit. During the
pendency of suit nothing new should be introduced.
The word Lis Pendence is a Latin word. And there are two part of this word. Lis
means cause of action and litigant and the Pendence means pending before the court. So Lis
Pendence means a pending suit before a court. In simple words a judicial proceeding brought
by one party against another; one party prosecutes another for a wrong done or for protection
of a right or for prevention of a wrong.
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CONCLUSION:
To conclude it can be stated that basic principle, which works behind doctrine of Lis
Pendence is that nothing new should be introduced during litigation. It reveals that primary
object of this doctrine is to maintain status quo and protect parties to some litigation against
their opponents alienation of property during pendency of litigation particularly when some
right to immoveable property is in question in such litigation.
Q. 09: - What is a Fraudulent Transfer? Mention the remedies available to the creditors
against the fraudulent Transfer. Or
“Every transfer made with the intention to delay or defeat the creditors is voidable at
the option of such creditors” Comment.
Every transfer of immovable property made with intent to defeat or to delay the
creditors of the transferor shall be voidable at the option of any creditor so defeated or
delayed.
However, if the transferee has purchased the property in good faith and for
consideration, then the transfer is valid. This provision 53 of Transfer of Property act does
not affect the insolvency laws.
Creditor:
i) The term ‘Creditor’ means a person to whom a debt (a specific or liquidated sum
of money) is due, a person who has obtained a decree for his debt, and also
includes all creditors at the date of transfer as well as those who become creditors
subsequent to the date of fraudulent transfer.
14
Thus, a landlord is a creditor of the tenant for rent and a Mohammedan wife is a
creditor in respect of her dower and a deserted Hindu wife is a creditor in respect
of her claim for maintenance.
ii) It also includes the creditors who have obtained decrees and creditors whose
claims are yet to be proved in a Court.
However, a person who claims unliquidated damages for tort or breach of contract is
not a creditor. Similarly, a person who claims a time – barred debt is not a creditor.
ESSENTIALS:
Mr. ‘A’ was a married person; he is the owner of number of properties. He had a wife
& two children. He had number of friends. He had all royal habits. His friends were giving
him the money to meet the expenses.
The elders in the family were worried about it. Suddenly one day by the grace of god
he stopped all the habits. He became very calm. He started spending time with his wife and
children and elders. Elders advices him to transfer the properties to the name of wife &
children through registration. He obeyed the orders of the elders. Time has passed off. One
day he once again became the slave of royal habits. His friends were very happy. They
started spending money on him. Suddenly the friends came to know about the transfer of all
his properties in the name of his wife and children. So the creditors file the case for the
cancellation of the transfer of property to the wife & children.
In this case the court held the settlement of property in the name wife and children for
their future life is valid. There is no question to cheat the creditors.
CONCLUSION
Doctrine of Elecction:
The doctrine of election is stated in Sec. 35 of the Transfer of Property Act alongside
Section 180 to 190 of the Indian Succession Act.
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To select or choose from available choices of properties, people when a person is having
an opportunity to choose on thing from two or more things, such a selection, choosing is
called Election.
The Doctrine of election under Sec. 35 is not practiced in the present time. It was
practiced in olden days of India, in the time there was cardiality, brotherlihood, affection,
humanity and love. So this topic can be understood if we go the year 1882.
ESSETNIALS: -
A owns a property that is worth Rs 800. B professes to transfer the same to C through the
Rs1000 instrument to A. But the A, the owner opts/elects to retain his property and thus,
forfeits the gift of Rs 1000.
The ‘Doctrine of election’ in Sec. 35 of Transfer of Property Act is based on the rule in
Cooper Vs. Cooper.
‘X’ gave certain properties to some trustee to sell it after his widow’s death. The sale
proceeds in trust must be used for the benefit of his children.
The Widow executed a deed and gave the property to her three sons A, B & C. She
gave the self acquired property to her sons B and C and the deceased husband’s property to A.
After the widow’s death A brought an action against B and C to elect between the
deed of appointment and the inheritance.
The Court held that the doctrine of election could apply and as such B and C had
either to accept the wido’s deed and waive their inheritance or to reject the both.
India is a land of trust, faith, and belief. From the past many years the transfers of
property was made on the basis of faith, belief, trust. Gradually new laws came into
16
ESSENTIALS: -
There was a land owner Mr. ‘A’. He wanted to Mortgage the land to Mr. B for 99
years for a Market price. Both the parties developed a dispute. The litigation came to the
Court. After sometimes both of them entered into a compromise deed. Submitted the
compromise deed to the court. The Judge put his signature & seal to the compromise and
closed the case.
40 years have passed the successors of Mr. ‘A’ discovered the non-registration and
filed the petition for eviction of the successors of Mr. ‘B’ Decide.
In this case the Court supported the successors of Mr. B. There is a written document
for the transfer of the property. It has received the approval of the Court. Mr. ‘B’ has paid
the Market price to Mr. ‘A’ Mr. ‘B’ took the possession of the land and used it for 40 years.
Mr. ‘B’ and his successor are not liable for the non-registration of the document. So the
Court protected Mr. B and his successors.
Two friends one is a Land lord in the year 1913 both of them entered into an oral
agreement for the permanent lease of the land at a monthly rent of Rs. 80/-. The tenant took
the possession of the land and made big investment and made number of construction.
Landlord gave a written notice to the tenant on 14th Dec 1918 to vacate the land. The
tenant refuses on 12th April 1923. Landlord filed the case for eviction.
The tenant requested the benefit of the judgement of Mohammed Musa Vs. Aghar
Kumar Ganguli. The court dismissed the case and failed to protect the tenant because there
was no writing of the transfer of property..
c) Doctrine of Fraudulent: -
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The principle of section 53 is based on the rule of justice, equity and good conscience. The section
enumerates fraudulent transfer. A transfer made with intention to defeat any right of the transferee
or of any other person interested therein is called fraudulent transfer of property. Such transfer is not
void but voidable at the option of person named.
2. Relevant Provisions
3. Meaning of Fraud
A false representation of a matter of fact, whether by words or by conduct, by false or
misleading allegations, or by concealment of that which shall have been disclosed, which
deceives and is intended to deceive another so that he shall act upon it to his legal injury.
4. Meaning of Transfer
Transfer means an act of the parties, or of law, by which the title to property is conveyed
from one person to another.
Essentials
18
Mr. ‘A’ was a married person he is the owner of number of properties. He had a wife
and two children. He had number of friends. He had all royal habits. His friends were
giving him the money to meet the expenses.
The elders in the family were worried about it. Suddenly one day by the grace of god
he stopped all the habits. He became very calm. He started spending time with his wife and
children and elders. Elders advised him to transfer the properties to the name of wife and
children through registration. He obeyed the orders of the elders. Time has passed off. One
day he once again became the slave of royal habits. His friends were very happy. They
started spending money on him. Suddenly the friends came to know about the transfer of all
his properties in the name of his wife and children. So the creditors file the case for the
cancellation of transfer of property to the wife and children.
In the case the court held the settlement of property in the name of wife and children
for their future life is valid. There is no question to cheat the creditors.
The friends after sometime came to know about the secret mortgage of the properties.
The friends filed the case for the cancellation of the Mortgage deed to make available the
property for the satisfaction of their loan amount.
In this case the Court questioned the secrecy in executing the Mortgage deed in a far
place without the knowledge of any of his close friends. The Court cancelled the Mortgage
deed and made it available to all his lawful creditors i..e the kind hearted friends.
CONCLUSION
Q.11: What is a “Contract of Sale? How is it different from a “Contract for Sale? or
Relevant Provisions
Section 54, 55 of transfer of property act 1882.
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Meaning of Sale
Sale is a contract between two parties called respectively the seller and buyer by
which the former in consideration of the payment or promise to pay a certain price in money
transfers to the latter the title possession of the property.
Definition of Sale
Sale is a transfer of ownership in exchange for a price paid or promised or part paid
and part promised.
1) Parties: - There must be two parties. The transferor and transferee. Transferor is
the absolute owns of immovable property. He is a sound minded, major personality.
He is called as the seller of the vendor. The transferee is a sound minder, major
personality. He is called as buyer or vendor.
2) Property: - This definition is related only to immovable properties. It does not apply
to the movable property, because there is a separate law for the sale of movable
properties that is the Sale of Goods Act.
Sec. 3 defines and explains the word immovable properties. Any kind of land, any
kind of buildings. Any object or any material attached or affixed to the land for the
use and enjoyment of man.
3) Consideration: - There must be a valid consideration for the sale. The consideration
must be only in the form of money. The money should be fixed by both the parties.
The amount of money may be equivalent to the market price or sometimes it may be
very low or sometimes it may be very high. The money should be certain.
The sale price must be fixed and the complete amount of money must be
paid on the date of registration or the complete amount of money is promised to be
paid on a future date. or Partial money may be delivered at the time of registration
and partial amount of money may be promised to be paid on the future date.
5) Possession: - When the money has been paid and registration was made on a
particular date, then on that date the seller must give the possession of the property
to the buyer. The symbolic delivery of possession is valid. For e.g.: In case of a
house, the seller can give the Lock and Key of the house to the purchaser or in case
20
of agricultural land, the seller may take the buyer to the land and take few steps on
the land and must wish good luck to the purchaser and should walk away from the
place. This is a valid delivery of the possession.
Sl. No. Sale or Absolute Sale or Sale deed Agreement to sell or Contract for sale
01 This is a present document This is a future document.
02 This is an executed document This is to be executed document.
03 There is an absolute transfer of There is no transfer of ownership
ownership
04 Possession has been delivered to the Possession remains with the seller.
purchaser
05 Duty to pay government taxes Duty to pay the tax shall remain with
transferred to the purchaser. the transferor.
06 Right to receive the income shall be Right to receive income shall be with
transferred to the purchaser. the transferee.
07 The sale shall be made on a higher The agreement shall be made on a
amount stamp per or lower denomination.
CONCLUSION
Q.12: Discuss the liabities and rights oftheseller and buyer before and after the
completion of sale. Or
State the rights and liabilities of a seller and buyer of immovable property?
a) Duties: -
A latent defect means hidden defect or defects which cannot be presumed by the other
person. The objects are known only to the seller. Then if any person comes to purchase
such properties, thus it is the duty of the seller to disclose the defect to the purchaser.
21
heavy losses. So Mr. ‘B’ files the case against Mr. ‘A’ for not disclosing the acquisition
notice. Mr. ‘A’ shall be liable for all the losses of Mr. B.
The purchaser has the right to request the seller to produce the documents related to the
property. The purchaser makes the request, and then it is the duty of the seller to delivered
copies of all the documents. For E.g: The documents of ancestral properties or documents of
sale deed or documents of grants made by the government Tax paid receipt, Khatas, etc.,
The documents must relate to the origin of property. It may be a few year old documents
or it may be 16 or 17 years old documents. It depends on how the seller secured ownership
on the properties. When the request is made the seller is having the duty to submit all the
documents for the inspection of the purchaser.
The purchaser has the right to know about the property. He has the right to ask questions
relating to the property. Then it is the duty of the seller to speak the truth and answer all the
questions to the purchaser.
Seller has the duty to make payments towards the governmental revenue or taxes or
charges. They must sincerely make the payment without any defaults. In case of any
defaults the government is having the right to sell of the property and secured its money.
v) Duty to care: -
Generally the seller will take care of properties until the date of registration. In case of
agreement to sell, the seller made psychologically becomes negligent towards the property.
The seller must guard and delivered the property in good condition to the buyer.
When the sale transaction completes on registration and payment of complete sale price,
it is the duty of seller to give clear vacant possession of the property.
The seller has right to receive all properties incomes arising periodically up the date of
registration.
The seller of a land is an illiterate person. He does not know the minerals present in his
land. But the purchaser has the knowledge about the presence of valuable minerals in the
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lands. There is a duty imposed on the purchaser to disclose the advantages of the land to the
seller. So, that he can get more benefits.
The purchaser has the duty to pay the complete sale price to the seller at the time of
registration in front of Sub-registrar.
The Purchaser has the duty to make payments towards the governmental revenues or taxer or
charges. He must make the payments sincerely.
The purchaser has the right to receive all rents, profits, incomes which will arise
periodically up to date of registration.
5. Duty to care: -
Generally the purchaser with take care of their properties until the date of registration. In
case of agreement to purchase made psychologically becomes negligence towards the
property.
CONCLUSION
A Mortgage is the transfer of an interest in specific immovable property for the purpose
of securing the payment of money advanced – comment.
INTRODUCTION:
Essentials: -
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1) Parties: - The transferor is called the Mortgagor. The transferee is called the
Mortgagee. The Mortgagor is the absolute owner of immovable property, who is in
need of loan. The Mortgagee is the financier who is giving the loan to the mortgagor.
Both the parties must be major, must be sound minded.
3) Consideration: - There must be a fixed loan amount. The loan is a present loan or a
future loan. There should be money only and nothing else.
Types of Mortgages –
1. Simple Mortgage
2. Mortgage by Conditional Sale
3. Usufructuary Mortgage
4. English Mortgage
6. Anomalous mortgage
1. Simple Mortgage –
In a Simple mortgage, the possession of the mortgaged property is not transferred from
mortgagor to the mortgagee.
If the mortgagor fails to repay the loan, the mortgagee has the right to sell the property and
recover the loan from the sale amount.
Under such Mortgage, the mortgagor apparently sells the property to the mortgagee on
certain conditions –
1.On failure to repay the mortgage money before a certain date the sale shall become absolute,
or
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2.On condition that on such repayment of mortgage money the sale shall become invalid, or
3.On condition that on such repayment the mortgagee shall retransfer the property.
3. Usufructuary Mortgage –
4. English Mortgage –
In an English Mortgage –
1. The mortgagor binds himself to repay the borrowed money on a certain date.
3. But such transfer is subject to the condition that the mortgagee will retransfer the property on
repayment before the agreed date.
In such mortgage, the mortgagor delivers the title document of the property to the
mortgagee with an intention to create a security thereon. Such mortgage is valid in towns of
Kolkatta, Mumbai and any other town as the State Government may notify by publication in
Official Gazatte
5. Anomalous mortgage –
CONCLUSION
Q-15: What is Usufructuary Mortgage? When can a Usufructurary Mortgagee sue for
mortgage money?
Usufructuary mortgage :
(a) the mortgagor delivers possession expressly, or by implication and binds himself to
deliver possession of the mortgaged property to the mortgagee, and
(b) authorizes the mortgagee, to retain such possession until payment of the mortgage money
and to receive the rents and profits accruing from the property or any part of such rents and
25
profits and to appropriate the same in lieu of interest, or in payment of the mortgage money,
or partly in lieu of interest and partly in payment of the mortgage money.
(i) The mortgagee is put in possession of the mortgaged property. Here, by possession it is
meant, the legal possession and not the physical possession. For example, the mortgagor may
continue to enjoy the physical possession as the lessee of the mortgagee or the mortgagor
may be the caretaker of the property directing the tenants to pay rent to the mortgagee.
However, the deed must contain a clause providing for the delivery of the property to the
mortgagee and authorizing him to retain such possession.
(ii) The mortgagee has the right to receive the rents and profits accruing from the property.
Such rents and profits or part thereof, may be appropriated in lieu, of interest or in payment
of the mortgage money or partly for both.
(iii) Unless there is a personal covenant for the repayment of the mortgage money, there is no
personal liability for the mortgagor. Therefore, the mortgagee cannot sue the mortgagor for
repayment of the mortgage debt; nor can he sue mortgagor for the sale or foreclosure of the
mortgaged property.
(iv) There is no time limit specified and the mortgagee remains in possession of the property
until the debt is repaid. The only remedy for the mortgagee is to remain in possession of the
mortgaged property and pay themselves out of the rents and or profits of the mortgaged
property. If the mortgagor fails to sue for redemption within thirty years, the mortgagee
becomes the absolute owner of the property.
Bankers do not prefer this form of mortgage for the following reasons:
(ii) As the mortgaged money can be recovered only by the appropriation of rents and/or
profits, it will take a very long time to recover money through this process.
CONCLUSION
Q- 16: - ‘Mortgagor’s right of redemption is a statutory right and the same cannot be
contracted out’ – Discuss.
Sec: 60: -
The Mortgagor is having the right to take back the possession of the property or the
right to take back the possession of the original title deeds from the possession of the
mortgagee. It is called right of redemption.
The mortgagor has the duty to arrange the complete mortgage money and
immediately after the expiry of the mortgage period, the mortgagor has to deliver the amount
to the mortgagee at the right time. And if the document is registered then it should be
26
terminated from the sub-register office. Then the mortgagee has to deliver the possession of
the property and the documents to the mortgagor. Then the mortgage transaction will comes
to an end.
The Court held that once the mortgage money has been paid, the mortgage comes to
an end and the mortgagor has the statutory right to recover possession and if the mortgagee is
in possession of the mortgaged property, then he has to deliver possession of the property to
the mortgagor.
Rules of redemption:
CONCLUSION
Q.17- Define Mortgage. Set our the rights and liabilities of a mortgagor and mortgagee.
RIGHTS OF MORTGAGEE:-
1. Selling Right :-
If borrower fails to return the loan in time then the mortgagee has the right to sell the property
of the mortgagor. But it will be sold and getting decree from the court. Property will be sold by
auction.
After selling the property if amount is less then the loan, the balance can be recovered from the
person by getting the decree from the court.
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2. Usufructuary Case :-
In this case mortgagee has no right to sell the property and to obtain the decree from the court.
The banker can retain the possession till the recovery of the loan.
3. Refusal Of Debt :-
If a borrower refuses to return the loan or he is unable to pay the debt then the lender can
get a foreclosure decree from the court.
4. Adjustment Of Payment :-
The banker has a right to distribute the payment received after the sale of property
according the principal amount, interest and other charges.
5. Joint Suit :-
If the mortgagor are more than one person then suit will be filed against all of them if the
loan is not returned
In case of private property the mortgagee will issue at least 3 months notice to the
mortgagor before selling the property.
LIABILITIES OF MORTGAGEE:-
When property is in the possession of the mortgagee then it has the following duties or
liabilities:
1. Redeem Of Property :-
As the loan is returned then a mortgagor has a right to redeem the property. All documents
and the mortgage deed should be returned to the borrower.
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If the property is damaged during the possession of the mortgagee then the mortgagor has a
right to claim the damages from the mortgagee.
3. Partial Redemption :-
4. Right Of Lease :-
If the possession of the property is in the hands of mortgagor then he can make lease of this
property for the ordinary period.
The mortgagor will observe all the conditions contained in the agreement deed. He will also
defend the title of property if the property is in his possession.
6. Recovery Of Possession :-
When the mortgagor returns the loan then he has a right to recover the possession of the
property from the mortgagee.
7. Liability Of Taxes :-
If property is in the possession of the mortgagor then the liability of all types of taxes will be
on the mortgagor over of Modarba certificates is not impressive. Now the ratio of equity is
very high in relation to debt financing.
There are many checks on the Modarba companies to regulate the modarba. The state bank,
religious board, corporate law authority and registrar of modarba are responsible to regulate
the modarba company.
9. Appointment Of Auditor :-
It is very necessary that modarba company should appoint the auditor. Auditor should be
qualified charted accountant approved by the registrar. The auditor should certify the
objectives and accounts of the modarba.
Auditor verified balance sheet and profit and loss report about the company must be given
to the modarba certificate holders with in six month of the closing accounts period.
CONCLUSION
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Sec. 81
Illustrations: Mr. ‘A’ is the owners of four different houses. They are H1, H2, H3 and H4 . Mr. ‘A’
mortgaged all the four houses to Mr. ‘B’ in the year 2001 for Rs. 50 lakh. For 6 years. Later
in the year 2004, Mr. ‘A’ mortgaged H4 ti Nr, ‘C’ for 5 years for 5 lakh rupees.
The first Mortgage period expired. Mr. ‘A’ failed to pay 50 lakhs of Rs. To Mr. ‘B’. Now Mr. ‘B’
has the right to foreclosure. He decides to sell of all the 4 houses. This matter came to the
knowledge of Mr. ‘C’ then Mr. ‘C’ has the right o compel Mr. ‘B’ to sell off. Then Mr. ‘C’ has
the right to compel Mr. ‘B’to sell of H1, H2, H3 and not to sell H4, because it is the security for
the 2nd Mortgage. This right of Mr. ‘C’ is called Marshalling.
EXCEPTIONS:
Illustration:
In the above illustration Mr. ‘A’ has given the information of the 1 st Mortgage to the
subsequent mortgagee Mr. ‘C’. Mr. ‘C’ has agreed in writing that he is not going to excercise
the right of Marshalling against Mr. ‘B’ then Mr. ‘C’ loses the right of Marshalling.
After the expiry of the 1st mortgage period the mortgagor fails to pay the mortgage
money. Then Mr. ‘B’ the prior mortgagee has the right to sell of H 1, H2, H3. Therefore he
could not collect complete mortgage money. Let us presume that Mr. ‘B’ has collected
only 40 lakhs, then he still needs 10 more lakh. In such a situation the prior mortgagee
has the right of priority to sell of H 4 mortgaged to Mr. C. Then Mr. ‘C’ cannot exercise the
right of Marshalling.
It is an act of giving something for lawful purpose. It is a duty to give share of money
in clearing the loan. Let us consider an immovable property. It is the security for more than
one mortgage. It means there are two or more loans on property. Such a property has been
partitioned between two or more persons. Then all such owners have the duty to contribute
30
towards the clearance of all mortgage debts proportionately. Such an act is called
contribution.
Illustration: A family of father and 4 sons. They are enjoying 20 acres of ancestral land.
Father has mortgaged land in 2001 for 5 years, for 5 lakh. In 2003 father raised 2 nd mortgage
of 5 lakhs for 5 years.
Father died in the year 2004. All the four brothers divided property equally and
became independent owners. The 1 st Mortgage period expires. Then all the 4 sons have the
duty to make contribution to clear the loan. They have to contribute equally 1.25 lakhs
each.
The 2nd mortgage period expires, then also all the 4 brothers have the duty
contribute equally i.e. 1.25 lakh each. Since they have secured equal ownership of the
property.
EXCEPTION:
If a contract is entered among the mortgagors in clearing the mortgage money then such
a contract shall be valid and it may exempt the contributions.
Illustration: - Let us consider the above illustration. There are four sons and two
different mortgages. The first mortgage is 5 Lakh and 2 nd mortgage is also 5 lakhs rupees.
The property has been partitioned among 4 brothers. All the brothers have duty to
contribute equally to the mortgage loan . Eldest brother is the kind hearted person. He has
agreed to repay entire mortgage money personally. He exempted three brothers from any
contribution. Then such an agreement is valid and there is not necessity for the
contribution.
Case: Kashi Ram Vs. Het singh, 1915: - Father has raised two different mortgages on
ancestral property. Father died and subsequently the property divided equally among 3
brothers, A,B and C. The time has passed the 1st mortgage period expires. The 1st
mortgagee demands money from all the three brothers. The first brother ‘A’ agreed and
paid completely the 1st mortgage money because 2 other brothers refuses to contribute. M.
‘A’ sold his share of property and cleared the 1st Mortgage.
After some time 2nd mortgage period expired. The second mortgagee demands the money
from two brothers. Mr. B & C demands the contribution from ‘A’ Now Mr. ‘A’ is not having
the duty to contribute to the 2nd Mortgage, because other two brothers fails to contribute in
1st mortgage. Hence there is not necessary of ‘A’ contribution to the 2nd mortgage.
CONCLUSION
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Definition of Mortgage
Definition of Charge
By the term ‘charge’ we mean, a right created by the borrower on the property to
secure the repayment of debt (principal and interest thereon), in favor of the lender i.e.
bank or financial institution, which has advanced funds to the company. In a charge, there
are two parties, i.e. creator of the charge (borrower) and the charge-holder (lender). It can
take place in two ways, i.e. by the act of the parties concerned or by the operation of law.
When a charge is created over securities, the title is transferred from the borrower to
the lender, who has the right to take possession of the asset and realize the debt through
legal course. The charge on various assets is created according to their nature, such as:
On Deposits: Lien
1. Fixed Charge: The charge which is created on ascertainable assets, i.e. the assets
which do not change their form like land and building, plant and machinery, etc. is
known as fixed charge.
2. Floating Charge: When the charge is created over unascertainable assets, i.e. the
assets which change its form like debtors, stock, etc. is called floating charge.
32
The difference between charge and mortgage can be drawn clearly on the following
grounds:
1. The term mortgage alludes to a form of charge, in which the ownership interest in a
particular immovable property is transferred. On the other hand, Charge is used to
mean the creation of right over the assets in favor of the lender, for securing the
repayment of the of the loan.
2. The mortgage is created out of the act of the parties concerned, whereas charge is
created either by the operation of law or by the act of the charger holder and charge
creator.
4. The mortgage is for a specified term. Unlike charge, which continues forever.
Conclusion
By and large, the creation of charge provides security to the lender that the amount lent to
the borrower will be repaid. On the other hand, in mortgage, the borrower is bound to pay
the mortgage money or else the amount will be realized by selling the asset, so mortgaged,
but only by order of the Court, in a suit.
Q.20- Define lease. What are essential elements of lease? Distinguish lease from Licence.
33
The rent may be either money or share of crops, service or anything of value to be
rendered periodically by the transferee to the transferor. The consideration may be a price
or a rent.
ESSENTIALS OF LEASE:
1) PARTIES: - In lease transaction there must be two parties. The transferor and the
transferee. The transferor is called the lessor and he is absolute owner of the immovable
property. He is a major and he is a man of sound mind. The transferee is called the lessee.
He is a sound minded and person of the age of majority.
2) SUBJECT MATTER: - Leases is only for immovable properties. Sec. 3 of the transfer of
property Act. 1882 defines immovable property. It means and includes Land, agricultural,
residential or buildings for any purposes or anything attached to earth for the use and
enjoyment of man.
3) PARTIAL TRANSFER: - In the lease transaction the absolute owner can transfer the
possession of the property to the lessee. The Lessee and his family will start using and
enjoying the property. So it is partial transfer or rights only.
4) PERIOD: - The lessor and lessee can agree the period of lease. It may be for 1 day or 1
month or for 11 months or for year or for number of years or for perpeituity.
In the olden days the lessee was delivering specified quantity of food grains grown on
the land of lease. The food grains must be delivered once in a year or twice in a year.
Illustration: -
A poor village student was given a small shelter by its owner for 5 years for the
consideration of manual service daily in the shop of the lessor. It is a valid consideration.
The service must be done every day.
34
In the modern world the money is an important element in lease. The lessor and
lessee agree for the payment of specified amount of currency to be rendered or delivered to
the lessor by the lessee on a specified date. It is called as monthly rent or yearly rent.
Licence
Thus, the primary distinction between a lease and a licence is that the lease is a transfer
of a right in a specific immovable property, whereas, licence is a bare permission and a
licencee is not entitled to notice to quit before evidence.
2. A lease creates an interest in favour of the lessee with respect of the property, but a licence
does not create such an interest.
3. A lease is both transferable and heritable, a sub tenancy can be created by the tenant and on
the death of the tenant, the tenancy can be inherited by his/her legal heir, whereas, licence is
neither transferable nor heritable.
4. A licence comes to an end with the death of either the grantor or the garantee, since it is a
personal contract, but a lease does not comes to an end on either the death of the grantor or
grantee.
5. A licence can be withdrawn at any time at the pleasure of the grantor but the lease can
come to an end only in accordance with the terms and condition stipulated in the contract of
tenancy agreement.
6. A lease is unaffected by the transfer of the property by sale in favour of a third party. It
continues and the purchaser has to wait till the time period for which the tenancy was created
is over before he can get the possession, whereas, in case of a licence, if the property is sold
to a third party, it comes to an end immediately.
7. A lessee has a right to protect the possession in his own right. Whereas, a licencee cannot
defend his possession in his own name as he does not have any proprietary right in the
property.
35
CONCLUSION
Hence the term ‘lease’ and ‘license’ are defined under Section 105 of the Transfer of Property Act
and Section 52 of the Indian Easements Act respectively.
Thus, the primary distinction between a lease and a licence is that the lease is a transfer of a right in
a specific immovable property, whereas, licence is a bare permission and a licencee is not entitled to
notice to quit before evidence.
If the lease deed prescribes a time lime, then after expiry of such period the lease
comes to an end. At any time after this period, the lessee can demand the return of from
the lessor. If there is a covenant of renewal, the lessee may claim enforcement of such
covenant.
Since a lease is for a definite period and since it expires efflux of time, service of a
notice under Sec. 106 is not necessary for determination (termination) of lease.
The lease can be terminated by giving valid notice by the lessor to the lessee.
36
1. The notice should prescribe a proper length of time. If the lease is tenancy at will
(tenancy from month to month) then the landlord must give 15 days notice, it the tenancy is
from year to year, then land lord must give 6 months notice.
2. The lease should be terminate at the end of the month, or end of the year of the tenancy,
for e.g.: the lease created for 4 years, i.e. commencing form 01/04/2004. It should be end
after 4 years i.e., on 31/05/2008.
Now the lessor can give notice only 17/05/2008. And as per the notice the lease will end
only on 01/06/2008. The notice is valid since it has given only 14 days time.
c) TENANCY AT WILL: -
“Tenancy at Will” means that the tenant holds the land in possession and the lease
terminate at any time at the will and pleasure of either the land lord and tenant. Such
tenancy arises by agreement or implication of law.
In leases, where the tenancy or lease can be terminated at the will of the lessor only,
death of the landlord terminates the lease. It can also terminate when the tenant assigns
his interest to somebody.
d) CONDITIONAL LEASE: -
For E.g.: If three harvests is a condition, then on the completion of third harvest, the
lease is terminated.
e) FORFEITURE: -
When the lessee or tenant breaches the express condition of lease, the lessor gets right to
re-entry in the property. Such re-entry terminates the lease.
CONCLUSION
Q.22: Define Gift. How is gift of an immovable property affected? What are the essentials
of valid gift? When gift is considered void under the Transfer of Property Act?
37
Gift Inter vivos is a gift between living persons which dealt under Sec. 122 of the
Transfer of the property Act.
Testamentary gift, otherwise called ‘wills’ is a gift operating after the death of the
testator and outside the scope of the Transfer of property Act.
1. It must be made voluntarily, with the free consent, without undue influence.
2. It should be without consideration.
ESSENTIALS OF GIFT:
1. PARTIES: - There should be two persons one transferor and a transferee. The
transferor of the gift is called donor, and the person who accept the gift is called
transferee or done.
2. PROPETY: - The property may be movable or immovable property. The donor must
be absolute owner of the property. It should be self acquired property. The property
must be in existence, must be present. The property should be in futuristic.
4. ACCEPTANCE: - In Hindu law there are two schools i.e. Mithakshara and Dayabhaga.
According to Mithakshara acceptance is must for a validity of the gift. But in
Dayabhaga acceptance is not must for a validity of the gift.
5. REGISTRATION: - The gift of the immovable property of value of Rs. 100/- and more
shall be registered on the stamp paper according to the Indian Registration Act.
A gift was made which was to be revoked if the done married a person who is not of a
Jewish parentage and Jewish birth. Since the condition was uncertain, the gift was invalid.
38
The condition was that the gift was to cease, if the donor does not live in the house intended
to be built by the donor. As the donor died without building the house, the condition was
impossible of performance.
The gift was to cease if the donee did not continue her immoral relations with the donor.
The gift was valid and the conditions was invalid, because it was for an immoral purpose.
5. Any condition which is opposed to public policy. The condition may be condition
precedent or condition subsequent but must be valid.
If there is a condition precedent, then it should be fulfilled for the git to take effect. For a
valid condition subsequent, the gift ceases when the condition is fulfilled.
CONCLUSION;
Hence to consider the valid gift there should be proper characteristics and conditions are
essential to be fulfilled.
Q.23: Define ‘Trust’. Explain the different kinds of Trusts. Distinguish it with debt and
Bailment
INTRODUCTION:
It was felt necessary to define and amend the law relating to private trusts and
trustees. Hence, the Indian Trust Act 1882 was enacted to define and emend the law
relating to Private Trusts and Trustees.
The Act comes into force on the first day of March 1882.
Definitons: (Sec. 3)
Thus trustee holds the trust property for the benefit of the beneficiary. He has to use
the trust property only for the benefit of trust and as pre the terms and objects of the trust.
KINDS OF TRUST:
39
There are many kinds of trusts. Some of the important trusts are s follows:
TRUST
1. The purpose of trust is that the trustee must administer the trust property for the
welfare of the beneficiaries. Even when the purpose is over, the trustee need not
return the properties to the author of the trust. In other words, the trust property
continues to remain with trust, even after the purpose of the trust is over.
2. In a trust, a trustee is appointed to administer the trust property.
3. The trustee cannot destroy the property, but he can administer the property.
4. The interest or benefit arising from the trust is enjoyed or used by some other
persons called beneficiaries.
5. The trustee and the beneficiaries are the duplicate owners of the trust property.
BAILMENT
1. The contract of bailment is special class of contract. Indian contract Act deals
with bailment.
2. Bailment is the delivery of goods by one person to another for some purpose.
The purpose is specified in the contract of bailment. When the purpose is over
the goods should be returned to the person who delivered it or it is disposed of
according to the directions of the person who delivered the goods.
3. The delivery may be actual or constructive. If the bailor puts the goods in the
custody of the bailee, it is actual delivery.
4. The person who deliver the goods is called bailor, and the person to whom the
goods are delivered is called bailee. The transaction is called bailment.
Conclusion: -
Hence the Definition and types denotes the nature and different activities of Trust.
40
Q.24; what are the essentials of a valid trust? How trust is different from agency and
contract?
1. Both the agent and trustee have fiduciary relationships with the beneficiary and
the principal respectively.
2. Both cannot act against the interests of the beneficiary/principal respectively.
4. The trustee is the owner of the trust property. Whereas an agent is not a legal
Owner of the goods entrusted to him.
5. An agent represents the principal, whereas the trustee does not represent the
beneficiary.
Conclusion:
The essentials of the trust denotes the qualities required for valid trust and difference
between Trust and agency shows the activities of trust and agency differently.
Immediately after the appointment of a person as a trustee has the duty to visit all
the property of the trust and must be find out details of the property. Such as nature of the
property, address, incomes etc.,
2) To Execute Trust: - Trustee is to fulfil an object. So he has the duty to fulfil that object
within the specified time or within the reasonable time.
Illustration: - Mr ‘A’ is the owner of agricultural land. He had number of loans and so had
number of creditors. They started demanding the repayment of loan.
Mr. ‘A’ appointed Mr. ‘B’ who is an expert in selling the properties. So Mr. ‘A’ created
a private trust of his property and appointed ‘B’ as the trustee and he has ordered the
trustee to sell the property by public auction and to distribute to the money to the creditors.
They are the beneficiaries.
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Mr. ‘B’ the trustee received all the properties and made proper arrangements and
conducted the public auction and collected very good amount of money and systematically
apportioned the money among all the creditors and received acknowledgement for the
same. So Mr. ‘B’ the trustee has executed the trust and fulfilled the object of the trust.
3)Conversion of perishables: - Trust property may produce, vegetables, fruits, food grains
periodically, then trustee has the duty to collect such produces and must sell them in the
market and collect the money thereby and keep the money in the trust account.
4) Investment of Trust Money: - Trustee is the protection of the properties. Some of the
trust may contain lot of money. Then the trustee may invest such money in the
governmental shares, bonds, and debentures. For ex- He can invest the money in the
central government established Indian Railway Corporation.
5) Trustee to be impartial: - If there is more than one beneficiary, the trustee must treat
them equally in the eyes of law. He should not discriminate. For ex: If there are three
creditors, then the trustee has the duty to sell the property and collect the money and
equally distribute the money among the three creditors. He should never discriminate or
favour to one creditor to that of another.
6) Duty to maintain accounts: - Trustee must maintain proof of lawful income &
expenditure. He may appoint an accountant or Chartered Accountant to maintaining all the
accounts. A copy of the accounts shall be kept in his office. The government authorities, or
the beneficiaries or the court may come and inspect the accounts.
7) Trustee to prevent waste: - Trustee is the care taker of the property. He must use the
property as a man of ordinary reasonable prudence. He should prevent others from
committing waste of the property.
Short Notes
Sec. 130-137) defines actionable claim means, the right to make a claim in the court of law.
The word actionable claim includes two elements.
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Illustration: - Mr. ‘A’ has given Rs. 10,000/- as a loan to Mr. ‘B’ for three months. After the
expiry of 3 months. Mr. ‘A’ can receive back the money or he can demand the payment from
Mr. ‘B’. Mr. ‘A’ can go to the court of law or Mr. ‘A’ can transfer his right to his son through a
written papers.
Right to receive insurance money: - A policy holders, has the right to receive
Insurance money after its maturity. It is an actionable claim.
Right to receive the money for the goods: - Mr. ‘A’ the owner of an Iron shop sold
100 tons of iron to Mr. ‘B’. Mr ‘B’ paid half of the money and promises to pay the
other half after 6 months. Mr. ‘A’ is having right to receive unpaid money for the Iron
rods sold.
3) Right to take back Movable properties: - Lady ‘A’ was the owner of the Jewel. ‘B’ is a
friend, and requested ‘A’ the jewel to be used for a marriage ceremony with a
promise to return immediately afterwards. ‘A’ out of friendship gave the jewel to
Mrs. ‘B’ for 15 days. Later ‘A’ fails to deliver back the jewel. ‘A’ is having the
actionable claim against ‘B’. ‘A’ has the right to receive the jewel.
“Attestation” means the signing of a document to signify that the “Attestor” is a witness
to the execution of the document.
The witness must have signed the instrument in the presence of the executants but they
need not necessarily be present at the same time.
A mere signature is sufficient for attestation and particular form is not required. It may
be made at any place in the deed, but must be done only after execution of the deed.
In order to constitute the signature of a person as valid attestation, the following are the
essentials.
1. The attester must have signed either at the time of or after seeing.
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b) Any other person signed the instrument in the presence or direction of the executants
or personal acknowledgement from the executants.
2. The attester must have signed in the presence of the executants. He must not have
signed the instrument for any other purpose except as a witness.
The Doctrine of Consolidation is an English Doctrine. Consolidation means that the right
of the mortgagor who holds several mortgages executed by the same mortgagor to require
the simultaneous redemption of all mortgages.
1. Consolidation can now be claimed, only if there is an express contract stipulating for
such right.
2. The right of the consolidation can be enforced, only when the mortgagee for the
several mortgages is the same person.
3. Only if the mortgages have been originally made by the same mortgagor, the right of
consolidation exists.
E.g: ‘A’ borrows Rs. 5,00,000/- from ‘B’ in 2000 on a usufructuray mortgage for 10 years. In
2005, A borrows further sum of Rs. 3,00,000/- from B and executes a separate document
promising to repay within 5 years. The deed provides that without repaying the second
unsecured debt, A cannot redeem the Usufructuary mortgage. Now this contract between
Mortgagor and mortgagee is for the consolidation of an unsecured debt witha mortgage
debt. This is not permissible.
Such gifts are death bed gifts and are governed by section 191 of the Indian Succession Act.
It is a gift made in contemplation of death. Donatio Mortis causa is void, if the donor
recovers from his illness or survives the done.
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1. Regarding the gift of movable property made in contemplation of death, the gift
must be given either orally or in writing with the intention of passing the property
accompanied by its actual deliver and acceptance by the done during the life time of
the donor.
2. The donor must be a person who is ill and expects to die shortly due to his illness.
The giver may resume gifts.
E.g: ‘A’ is ill and expects to die. He delivers to b to be retained by him in case of A’s death of
gold ring, a promissory note endorsed in blank, and a mortgage deed. A consequently dies
of his illness. B is entitled to all these articles.
‘A’, in expectation of death puts aside articles in separate parcels marked as ‘B’ and ‘C’.
However he does not deliver parcels to them during his life time. A dies on his illness.
In this case, ‘B’ not is entitled to the contents of the parcels because the actual
possession was not delivered to them by the deceased.
5. Forfeiture of Lease.
When the lessee or tenant breaches the express condition of lease, the lesser gets the right
of re-entry in the property. Such re-entry terminates the lease.
When the lessee or tenant refuses to pay the rent, the Courts have the power to declare the
forfeiture of the leased property.
If the lessee has breached an essential condition of contract of lease, then the lease is
forfeited. For e.g. If the lessee has subleased the property, then the lease is forfeited.
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If there are other conditions in the lease deed that the property will be maintained
properly and it will not be misused for other purposes, then breach of such conditions
makes the lease forfeited.
If the lessee claims title of the property, then the lessor can bring about the forfeiture of
lease.
If the lessee or tenant becomes insolvent, then the leased property is forfeited by the lessor.
INTRODUCTION:
In English law, the mortgage by deposit of title deeds is known as Equitable Mortgage. It
is called Equitable Mortgage, because in this mortgage, there is simply a deposit of
document of title without anything in writing and without any other formalities. This is with
a view to help the business community to raise money without the lengthy procedure of
preparation of formal mortgage deed and its registration. The main advantage of this
mortgage is that there need not be any registration of the mortgage deed.
This mortgage is applicable only to the towns of Culcutta, Bombay and Madras and other
towns as notified by the Government in the official gazette.
Sec. 58(f) speaks about mortgage by deposit of title deeds. It reads – ‘ If a person in the
towns of Calcutta, Madras and Bombay and in any other Government notified town, delivers
to a creditor/his agent the documents of title to immovable property with the intention to
create a security thereon, then the transaction is called a mortgage by deposit of title-deeds.
ESSENTIALS:
There must be a debt. It may be an existing or future debt. The deposit of title deeds
may also be to cover a running account of many debts (loans and advances)
The debtor delivers to the creditor all the documents of title in respect of an immovable
property.
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The documents are intended to create security for the loans advanced by the creditor.
Thus, the deposit of title deeds must be made with a distinct intention of creating a security
for the debt due by the mortgagor to the mortgagee.
4. No Registration:
In a mortgage by deposit of title deeds, it is not necessary that the transaction should be
recorded. In such a case, registration is not necessary, because the mortgage is complete
without writing.
5. Territorial Restrictions:
It is not necessary that the mortgaged immovable property should be situating within
one of the towns mentioned in the section 58If). It is enough if the title deeds are handed
over to the creditor residing in any one of the towns mentioned above.
6. Remidies:
The mortgage by deposit of title deeds, like a simple mortgage, can be enforced by a suit
for sale of the mortgaged property.
7. Priority of rights
If a person creates a rights in the same immovable property by transfer at different times
and if such rights cannot at all exist or cannot be exercised to the full extent together, then
each later created right is subject to the previously created rights.
This is based on the maxim ‘Qui prior est tempore potio est jure’ which means who is
prior in time is better in law.
Illustration:
‘A’ Mortgages his house to ‘B’ for Rs. 50,000/- and then subsequently mortgages to ‘C’
for Rs. 20,000/-. Now B’S mortgage is first and C’s mortgage is subsequent. If the house is
sold, then B’s mortgage deed must be first satisfied and if any surplus amount is there, C can
take it.
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During the life time of a person, the chance of his heir succeeding his property or the
chance of a relation obtaining a legacy under his will is called ‘Spes Successionis’ and the
heir who has such chance of succession is called ‘Spes Successioner’. Such expectancy
cannot be made the subject matter of a transfer. It is a nullity and no effect in law.
In Hindu Law, the example of ‘Spes Successionis’ is the interest of the reversionary heir
expectant on the death of a Hindu female holding a limited estate (woman’s estate). On her
death, the property devolves next to her heirs but to the heirs of the last male holder. The
heirs of the last holder who thus take the property are called reversioners.
Only on the death of the widow, the right of the reversioner become concrete and
operative. Untill then it is mere ‘Spes Successionis’. Similarly the mere chance of a person
to get a property from others cannot also be transferred.
E.g. A, a Hindu, dies leaving a widow b and a brother C. Here, C has only a chance of
succession and this chance of succeeding cannot be transferred. His chance of succession
depends on two factors – (1) he has to survive B, the widow, (2) the widow B should leave
the property intact.
If a gift consists of donor’s whole property, the done is personally liable to pay off all the
debts and liabilities of the donor existing as the time of making the gift.
But the liability cannot exceed the value of property received under the gift. The
properties of donor include both movable and immovable.
The donee of the entire property of another person (except an insignificant part kept for
maintenance by the donor) is called a universal done.
The universal donee is personally liable for all the debts and liabilities of the donor at the
time of the gift to the extent of property which is received.
If the donor retains the equity of redemption in certain properties and makes a gift of
the other properties, then the done is not a Universal done.
The Court held that when a Hindu woman relinquished (left, sacrifice) all her interest in
favour of the reversioner, the reversioner (done) was liable for the debts also.
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As per Sec. 2(11) of the C.P.C, a universal done who by reason of a gift enters upon
possession of the state of a deceased cannot be regarded as his ‘legal representative’.
When the purchaser has not paid the purchase money to the seller or vendor even after
sale, the seller gets right to keep the sold property with himself, provided the seller has not
delivered the property to the purchaser.
if the above two conditions are fulfilled, then the vendor can keep the sold property with
him till the purchase money is fully paid to him.
This right of the vendor is known as the unpaid vendor’s lien (charge).
If a gift is made to a person and it consists of several things i.e. some burdened with
obligation the rest without obligation, the donee must accept the whole gift.
The onerous gift is based on the maxim ‘qui sentit commondum sentire debet et onus’
(he who receives advantage must bear the burden also.)
For e.g.: A makes gift of a house and a land to B. The house under mortgage of Rs.
5,000/- However B must accept the full gift, and he cannot accept the land alone.
But if the gift contains two or more separate independent transfers made on different
occasions, then the donee can accept the beneficial gift alone and reject the onerous gift.
Illustration:
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If an Onerous gift and a beneficial gift are made to a minor or lunatic, the donee can
accept the beneficial gift alone and reject the burdensome gift.
Sec. 100: Charge defines the creation of security for the payment of money on
immovable property. It is a burden on the immovable property. The creation of charges
takes place in two methods.
a) By act of parties,
b) By operation of law;
1) By act of parties: -
Without transferring any interest in the property, if an movable property is given under the
an agreement as security for satisfaction of a debt, then it called ‘charge by act of parties’
Illustration: - Mr. ‘A’ wanted to marry a lady Ms. ‘B’. Mr. ‘A’ is the owner of the shopping
complex. Mr. ‘A’ has created the Mohar of Rs. 10 Lakh rupees from the shopping complex
property. Mr. ‘A’ has executed the stamp paper and registered it authorising lady ‘B’ to
collect 10 lakhs of rupees. This is the creation of charge of 10 lakhs on the property of the
husband. The charge is created by agreement between Husband and the wife. This kind of
creation of charge is called charge by the Act of parties.
INTRODUCTION:
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According to Sec. 92, “Any person who has any interest in, or charge upon, the
property mortgaged or any surety for the payment of the mortgage debt or any creditor of
the mortgagor, on redemption of the mortgaged property, have the same rights as of the
original mortgagee in redemption, foreclosure or sale of the property against the mortgagor
or any other mortgagee.
This right is called is the right of subrogation and the person redeeming the property
is subrogated to all the rights of the mortgagee.
CONDITIONS:
c) By payment of the mortgage money the person redeeming the property occupies the
place of original mortgagee.
The properties which yield income periodically, when transferred, the question of
apportionment (sharing) of such periodical income between the transferor and the
transferee arises.
In the absence of any specific agreement between the transferor and transferee – up
to the date of transfer, the transferor and from the date of transfer, the transferee would be
entitled to get the income from the property respectively.
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a) APPORTIONMENT BY TIME: -
Illustration: - Mr. ‘A’ is the owner of a house property. Mr. ‘B’ Is paying regularly the Rent
of Rs. 5000/- on the 1st date of every month to Mr. ‘A’ Later Mr. ‘A’ sold the house to Mr. ‘C’
for Rs. 5 lakhs on 16th June, 2015. Now the question is how much rent amount Mr.’ ‘A’ will
get and how much rent and Mr. ‘C’ will get. The tenant MR. ‘B’ has to make the
apportionment.
The First 15days of rent should go the Mr. ‘A’ and next 15 days of rent should go to Mr.
‘C’. That means the tenant has to deliver Rs. 2500/- to Mr. ‘C’. This is the apportionment by
time.
b) APPORTIONEMENT BY ESTATE: -
Consider an immovable property is earning periodical income & the property belongs to
one individual. Such a property is alienated to a group of new owners. Then the question is
about the sharing of the periodical income among the new owners. The income shall be
divided and shared according to their respective share of ownership. Such a division of
periodical income is called apportionment by estate.
Illustration: - Mr. ‘A’ is the absolute owner of a house. Mr. ‘B’ is the tenant, he pays Rs.
1,20,000/- per year to Mr. ‘A’. After some time four brothers C, D, E & F purchases the house
property. All the four brothers contributed equally to the sale price.
Next year the time has come for the payment of rent to the new owners.
In this illustration there are four new owners. They have contributed equally to the sale
price. So the tenant has the duty to divide the rent of Rs. 1, 20,000/- into four equal
divisions. So, they will get Rs. 30,000/- each. This is called apportionment by estate.
15. June 2010: Define and distinguish ‘Vested Interest’ and ‘Contingent Interest’
The word interest means an act of creation of a right in immovable property to other
person. It is divided into 2 kinds.
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1) Vested Interest
2) Contingent Interest.
1) Vested Interest: -
Sec. (19&20) creation of interest in the following circumstances is called vested interest.
E.g.: ‘A’ agrees to transfer property to ‘B’ if ‘A’ dies at sunset or sunrise. Thus, the
event should be specified and certain.
In the case of vested interest, it is not affected by the death of the transferee
before he obtains possession.
2) Contingent Interest: -
For e.g.: A property is transferred to ‘X’ only if ‘X’ attained the age of 18. Here the
interest created in favour of X is only contingent interest i.e., ‘X’ must survive till the age of
18.
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event or forthwith.
03 The right created is transferable The right created is non transferable
04 The right created is heritable The right created is non heritable.
05 It creates an absolute right It does not create an absolute right.
06 In the vested interest, the owner’s title In a contingent interest, the title is yet
is already perfect. imperfect, but is capable of becoming
perfect on the fulfilment of some
condition.
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