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Law of Property - NOTES
LLB (Chaudhary Charan Singh University)
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Law of Property - NOTES
LLB (Chaudhary Charan Singh University)
Scan to open on Studocu
Studocu is not sponsored or endorsed by any college or university
Downloaded by Priyanshu Goel (priyanshugoel05@gmail.com)
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KRISHNA INSTITUTE OF LAW
(Approved by BCI affiliated to CCSU, Meerut)
NH-24, Jindal Nagar, Ghaziabad-201002
Phone no- +9643031960, 9643028427
LL.B. IIISem
Law of property and Easement
M eaning of Fraudulent Transfers
Although every owner of property has right to transfer his
property but it must be made with a bona fide intention. Where
the transfer is made with a fraudulent intention i.e. with the
intention of defeating the interest of creditor or interest of any
subsequent transferee then the transfer would be bad in the eyes of
equity and justice though is valid in law.
Since fraudulent transfers are otherwise valid in law, they are not
void. But, because they are made with mala fide intention equity
would render it voidable by the person who was so defrauded.
Essentialsof Fraudulent Transfers:-
1.)Transfer of immovable property – There must be a transfer of
property and such transfer must be valid and enforceable so that
property vests in the transferee. S.53 (1) does not apply where the
transfer is in itself void.
2.)Fraudulent Transfer to defeat or Delay Creditor – The transfer
which can be avoided by the creditor under this section must be
with intention to defeat or delay the interest of the creditors of the
transferor. A transfer made with intent of either defeating or
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delaying the interest of creditor is a fraudulent transfer.
Example-
Where the debtor sells all his properties after the decree to a
purchaser who is in the knowledge of his debts, it may be
presumed that the transferor (debtor) has a fraudulent
intention to defeat or delay his creditor. S
uch presumption may
be stronger if there is evidence that no price has actually been
paid by the purchaser. Where the transferees hares the
fraudulent intention and actively aids and assists the transferor
in fulfilling his intention of defrauding the creditor, there is no
doubt that the transfer was made to defeat the interest of the
creditor.
Transfer is Voidable by Creditors- When a transfer is proved to
have been made with intent to defeat or delay creditors it is
voidable by creditors. S.53 does not as such make a fraudulent
transfer void. It remains a perfectly valid transfer until the
creditors exercise their right to avoid the transfer.
GratuitousTransfer to defraud Subsequent Transferee
S
. 53 (2) says that a gratuitous transfer of an immovable
property with intent to defraud a subsequent transferee
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shall be voidable at the option of subsequent transferee.
Under, this sub- section, the subsequent transferee may avoid the
first transfer if he could prove that the former gratuitous transfer
was fictitious or sham (Benami) tr ansfer and was made it view
to defraud him (Subsequent Transfer.
Example, A makes a gift his house to B in Jan, 2018. In Feb, 2018
sells the same house to C. Here B and C are two claimants of the
same property. The general rule is that first transferee has
preference over the second and C should not get the house. But
under this sub- sec, it is provided that if first transfer is proved to
be fraudulent, the subsequent transfer shall prevail ·
and the first
would be voidable by the subsequent transferee.
Exceptions- The rule that a fraudulent transfer can be avoided by
creators is not applicable in the following two cases:
1. Transferee in Good- faith for consideration- A transferee who
takes property in good- faith for consideration is protected.
Where a transferee has purchased the property in good- faith
from a debtor, the creditors cannot avoid the sale U. /S. 53
(1).
2. Rights created under Insolvency laws- Rights of a transferee
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created under any provision of insolvency laws are not
affected even if the transferor’s intention was to defeat or
delay the interest of creditors.
Doctrine of part- performance
It may be noted that Doctrine of part- performance is an equitable
Doctrine. It is also known as 'equity of part- performance. 'According
to this doctrine, if a person has taken possession of an immovable
property on the basis of a contract of sale and has either performed
or, is willing to perform his part of contract then, he would not be
ejected from the property on the ground that the sale was
unregistered and legal title had not been transferred to him.
Example-
There is a contract of sale of a plot between A and B. The contract
is in writing, stamped, attested and duly executed but not
registered by a who is the seller. B who is the purchaser, has
performed or is willing to perform his part of contract i.e. has paid
the price or is willing to pay the same. On the basis of such
contract B takes possession of land. Now, A sold the land to C
through a registered deed. C having legal title of the land, attempts
to eject B.
At this stage, since B has no legal title, law may not protect his
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possession but equity shall help him from being dispossessed.
Es
s
entialsof the Doctrine of Part- Performance
1) There must be a Contract to Transfer Immovable Property for
Consideration - S.53- A applies only in those transfers that are
with consideration. Gift is a transfer of movable property without
consideration is beyond the purview.
2) The Contract must be in W riting in clear Terms- The contract must
be in writing signed by or on behalf of persons ought to be
charged. It should be in such form from which the term may be
ascertained. An oral agreement will not be sufficient.
Example-
In this case the pleading of part- performance was based on oral
contract which is not maintainable. Court held that since the
defendant has denied completely the existence of contract,
therefore, the relief claimed under S.53- A is completely
unsustainable.
3) The Transferee in Part- Performance of Contract Takes Possession
- Possession is a semi- juristic concept and much of it is a question
of fact. Possession is useful in two ways:
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(i) Position after taking Possession- if the transferee takes
the corpus of the property in his possession after the
contract to transfer that property is signed, the
requirement of the section is complete.
(ii) W hen Possession is Retained- If the transferee takes the
corpus of the property in his possession after the new
contract to transfer it. It is enough if the transferor and
transferee agrees to that proposal to hold the possession
under new contract.
Example –
A lets out a house to B for five years. After the expiry of the lease A
agrees to sell the same house to B, B pays1,000, and continues in
possession.
4) The Transferee has Done some Act in Furtherance of Contract-
Taking or retaining the possession must be corroborated by some
positive action on the part of the transferee in order to show that
he has not taken or retained the possession casually or accidentally
but has taken it purposely.
5) The Transferee is W illing and ready to Perform his Part of the
Contract :- S.53- A will protect the interests of the transferee only
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when his own hands are clean and nothing remains in balance so
far he and his part in the transaction is concerned :
Example –
If some money is to be paid, the transferee must have tendered to
the money to the transferor at right time and place .What is needed
is that transferee should be ready and willing.
Extent and Scope of Defense
This section protects the transferee against two type of claim.
i. No Registry- The transferee’s interest cannot be assailed on
the ground that the deed of transfer is not registered.
ii. Instrument of transfer not in proper form- It provide that
transferee cannot be turned out from the possession of the
immovable prope
rtyconcerned only due to the document is
deficient in form.
Nature and Scope of Transferee’s Rights U/.53- A
a) No Title or Interest in property- S
.53 – A does not confer any
title or interest to the transferee in respect of the property in his
possession .This section provides that when the conditions laid
down in it are fulfilled, the transferor or any other person
cannot evict the transferee.
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b) Pas
s
ive Equity; no right of Action – S
.53 – A
does not give to the transferee any right of action. It
provides merely a right of defense. That is to say where a
transferee takes possession of an immovable property .He can raise
the defense of part- performance in case he is evicted by
transferring the property to any other person.
c) Transferee as Plaintiff or defendant: It is settled that this section
confers on the transferee only the right to defend his possession
when he is being evicted by a person having better title. But how
he may defend his possession is not dear. But now it is held that
he may be defendant or can also be plaintiff if needed for
defending his possession.
d) Rights of Subsequent Transferee for Value – The provision
toS.53- A protects the interests of a subsequent transferee for
value without Notice of previous transferee’s rights of part-
performance.
Example-
A who is owner of a land contract to sell it to B.? The contract
is unregistered and in part- performance of this contract B takes
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of the said land. Under this section the transferor or any other
person cannot disposes B from the land. But if A sell the land to
C through a duly executed and registered sale- deed and C has
not the least knowledge of B"s rights of part- performance then.
S
. 53- A shall not apply. And B (Previous transferee) cannot
resist c from evicting B and taking possession of the land.
M arshalling
If the owner of two or more properties mortgages them to one person
and then mortgages one or more of the properties to another person ,
the subsequent mortgagees is, in the absence of the contract to the
contrary , entitled to have the prior mortgage- debt satisfied out of the
property or properties not mortgaged to him .
Marshalling means arranging things. Rights of the marshalling
securities is a right of puisne ( subsequent) mortgagee S.81
incorporates the right of a subsequent mortgagee to make such an
arrangement (marshalling) that as far as possible the prior mortgage-
debt is satisfied out of the properties not mortgaged to him.
Example,
1. A mortgages properties X, Y and Z to B for securing another loan of
Rs. 10,000.
2. A then mortgages property Z to C securing another loan of Rs. 5,000
taken from C.
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In the above example B is the first mortgagee on properties X, Y and Z
which are the securities for a debt of Rs. 10,000. Out of these three
properties which already constitute security for an earlier debt,
property Z is mortgaged to C as a security for another debt of Rs. 5000.
B is prior mortgaged and C is subsequent mortgagee. The right given to
C (Subsequent mortgagee) entitles him to say that the debt of Rs.
10,000should be satisfied out of the sale- proceeds of properties X and
Y only and not from Z which has been mortgaged to him, However
incase X and Y could be sold for less than Rs., 10,000 property Z may
be sold to complete the amount. In this manner, although C is a
subsequent mortgagee and his claim is not prior to that of B but, he (C)
has right of marshalling or arranging the securities (properties) in his
favour as far as possible. Accordingly, the right given to the subsequent
mortgagee under the section is called right of marshalling securities.
Essentialsof doctrine of M arshalling:
i. Same M ortgagor: - It is necessary that mortgager is the same
person who mortgages his different properties to different
person (mortgagees).
ii. No prejudice to prior M ortgagee- Therefore where two
properties X and Y are mortgaged to B and thereafter property
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Y is mortgaged to C, the subsequent mortgagee C cannot say
that property Y should not be affected even B’s debt could not
be satisfied out of the sale of X only, he cannot prevented by C
from selling Y and compelling the balance of his debt.
iii. No Prejudice to Third Parties– The right of marshalling cannot
be exercised also against any third party or a transferee for
value.
Example-
1. A mortgage X and Y to B.
2. A mortgages X to C.
3. A mortgages Y to D.
In this case C is a subsequent mortgagee who may enforce marshalling
against B who is the prior mortgagee. This would mean that he (C)
would ask B to get his debt only out of property Y as far as possible. But
since property Y has also been mortgaged to a third person D, the
exercise of marshalling would be against the interest of D. He is not
allowed to enforce marshalling.
M eaning of the Doctrine of contribution
Contribution means providing money for a common fund. If
mortgaged property belongs to two or more persons having different
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shares then each of such sharers is liable to contribute to the debt
according to his respective share.
Nature and scope
The rule of contribution is based on the principles of equity, and justice
and good conscience. Equity does not permit that in the case of
common debt, any one of the debtor should be compelled to bear the
burden of whole debt. Each debtor must be liable to contribute to such
common debt rateably i.e. in proportion of his respective share in the
property.
Rule of Contribution
S. 82 incorporate following rules of contribution:-
Rule 1: W hen M ortgaged Property Belong to two or M ore Persons- The
first of S. 82 provides the general rule that if several mortgagors take a
common loan by mortgaging their properties then they shall
contribute rateably to its discharge. The co- mortgagors may be
compelled to contribute only upto the extent of their respective shares
in the property.
Example-
A, B and C mortgage their properties jointly to D to secure a debt of
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Rs.10,000. In the mortgaged property A has half share and B and C
have one- fourth each. The mortgagee D recovers the debt by causing
the sale of only that property which belongs to A. U./S.82, A has a right
to compel B and C to contribute Rs.2,500 each towards the fund. That
is to say, out of Rs.10,000 A’s share for debt would be Rs.5,000 and that
of B and C Rs.2,500 each. This quantum of share in discharge of debt is
in proportion of the shares to each mortgagor in the mortgaged
property.
Rule2: W hen one Property is M ortgaged First and then Again
M ortgaged with another Property- It deals with a situation where out
of two properties one is mortgaged to secure a debt and later on
both properties are mortgaged to secure another debt. In such cases,
when former debt is paid out of the former property then first of all,
the amount of this former debt is deducted from the value of that
former property. Thereafter, both the properties contribute rateably
to the later debt. Thus, the contribution of the later debt too is made
rateably but the ratio is calculated after deducting the former debt
from the properly out of which it was paid.
Example-
Properties X and Y each are worth Rs.1,000 and are owned by one
person. Property X is mortgaged first to A to secure a debt of Rs.400.
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Then X and Y both are mortgaged to B to secure a debt of Rs.800.
Now property X is sold to C and property Y is sold to D. According
to the rule of contribution given in the second paragraph, C and D
shall contribute to the later mortgage of Rs.800 in the ratio of
(1000- 400) to 1,000 i.e. in the ratio of 600:1000 or 3:5.
Accordingly, C is liable to pay Rs. 300 and D is liable to pay Rs.500.
Contract to the Contrary- The parties to mortgage are at liberty to
modify the rule of contribution as given in this section. Where
the parties agree otherwise the contribution is to be made
according to that agreement.
Rule: M arshalling Supersedes Contribution- If there is any conflict
between the right of marshalling and contribution; the right of
marshalling prevails over, that of contribution.
Example
1. Properties X and Y are owned by one person.
2. Property X is mortgaged to A
3. Property X and Y both are mortgaged to B.
4. Property Y is mortgaged to C.
Exercising the right of marshalling C can insist that B should recover
his debt first from Property X. U/S. 82, properties X and Y are liable
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to contribute to B's mortgage in proportion of the their values after
deducting from X the amount of A’s mortgage. But, C's right of
marshalling will prevail over contribution. Accordingly, C can
require B to first recover as much of debt from X as he could from this
property.
M eaning of IM M OVABLE PROPERTY
The property has been classified into a number of categories i.e,
tangible & intangible, real & personal, corporeal & incorporeal,
movable & immovable property.
Under Indian law the division of property is considered as movable &
immovable.
The term immovable property comprehends all that would be real
property according to English law and possibly more.
UNDERTPA,” Immovable property” does not include standing timber,
growing crops, grass.
UNDERGENERAL CLAUSEACT SEC. 3(26),” Immovable property’ shall
includes land, benefits to arise out of land and thing attached to earth.
Under Indian registration act 1908 section 2(6) “ Immovable
property includes land, building, hereditary allowances, right to way,
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lights & ferries, fisheries or any other benefit arise out of land or things
attached to the earth but not standing timber, growing crops or grass.
TPA makesit clear that immovable property includes:
(1) LAND:
In legal meaning land include the following elements:
(I) a portion of the earth s surface
(II) any ground, soil or earth
(III) the ground beneath the surface
(IV) the space above the surface
(V) anything fixed to the soil
(2) Benefitsto arise out of land :
Besides land, every benefit arising out of land and every interest in
such property is also regarded as immovable property because
benefits’ arising out of land is an incident of it and can’t be severed
from it.
Anand Behera v. orissa:-
SC held that a right to enter the Chilka Lake and catch fish for a period
of five years is equivalent to profits or the benefit to arise out of land.
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Santa bai v. Bombay:-
SC held that right to enter land, cut and carry away wood over a period
of 12 years is profit and hence it is a immovable property. Thus a right
to collect lac from trees is an immovable property
(3) Thing that are attached to earth:-
It has been defined by section 3 of TPA, It means:-
(i) Things rooted in the earth
(ii) Things embedded in the earth
(iii) Things attached to what so embedded
THINGSROOTED IN THE EARTH:-
Things that are rooted in earth are said to be attached to earth, this
includes cases of trees and shrubs
A general rule in respect of all the trees, plants, herbs, and shrubs is
that they are immovable property. There is an exception to this rule, i.e.
standing timber, growing crops & grass.
One must be careful that trees and shrubs standing on the land may be
sold as a part from the land with an intention to be cut and removed as
wood, such trees and shrubs are regarded as movable property.
M athura dasv. jadubir
Trees and shrubs are immovable property but as soon as a tree or plant
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is cut down it is detached from land and is no more a part of the land
and becomes a movable property.
THINGSEM BEDDED IN EARTH:
Things which are fixed firmly in the earth and whose foundation is laid
well below the normal surface of the earth are things embedded in the
earth.
Where the things are just placed on the surface of the earth without
any intention to make them part of the land, the things may not be
immovable property.
The question whether a thing embedded in the earth is immovable
property or not depends on the fact of each case i.e, degree of
annexation and object of the annexation.
(i) Degree and mode of annexation:
If a thing is so annexed to land that it can’t be removed from its
place without great damage to the land then it should be considered
as immovable property.
Holland V. Hodgson
Held that, the articles that are not otherwise attached to land then by
their own weight are not be considered as part of the land unless it is
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shown that is intended to be part of the land
THINGSATTACHED TO W HAT SO EM BEDDED:
Two tests for the purpose are
(i) Things must be attached permanently
(ii) Must also be attached for the beneficial enjoyment of property
Things includes doors, window, shutters, which are attached to the
house for the permanent enjoyment of that to which they are attached
Things attached without any intention of making them a part of the
house would not be immovable properties.
Things such as festivities, electrical appliance, fittings, etc are not
considered immovable because
 These are not permanent but only transitory
 These are not in any sense necessary for the permanent beneficial
enjoyment.
 These are attached not for the permanent beneficial enjoyment of
the house but only for the use and enjoyment of the things itself.
Doctrine of fixtures
Under the English law, a thing becomes a part of the land and property
of the owner of the soil this doctrine can be explained with the help of
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two maxims:-
(1) Quic quid plantator solo solo credit i.e whatever is in the earth
become part of the earth
(2)Quic quid inoedificature solo solo credit i.e whatever is built into or
embedded into or attached to soil becomes part of the earth
In India, there are two rules that determine fixture.
(1) A person is entitled to remove the attachment if he vacant the
premises having the land in the same state as it was before the
attachment
(2) If he leaves the attachment on the land and the owner derives a
benefit from it, he is entitled to compensation for the value of
attachment
M eaning of M OVABLE PROPERTY
The TPA doesn’t defines ‘ movable property’ it simply says that ‘
immovable propriety doesn’t include standing timber, growing crops
and grass, this simply means that standing timber, growing crops or
grass are movable property because what is not immovable may be
movable.
Registration act:
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Movable property to include property of every description excluding
immovable property, but including standing timber, growing crop and
grass, fruit upon & juice in trees.
Section 2(7) sale of good act- Defines goods as every kind of movable
property other than actionable claims and money, includes stock and
shares, growing crops, grass and things attached to or forming part of
the land
(A) Standing timber
It is used to refer trees which are included to be used in the building
and repairing of houses, bridges, etc. provided they have attained
certain age and size.
Trees can be divided into two categories.
(i) Fruit bearing trees (ii) Standing timber
Fruit bearing trees stand on different footing as they are grown for
enjoying their fruit and thus, they are considered as immovable
property.
But sometime they are treated as standing timber depending upon the
intention
(a) If the intention is to enjoy only their fruits then they will come
under immovable property.
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(b) If the intention is to cut sooner or later. They will fall under
movable property
M ovable property Immovable property
1. Acc to sect2 of sale of goods act, it
include stock & shares growing
crop, grass, and things attached to
land
1. Act to sect 3 of general clause act, it
include land, benefit arising out of
land and things attached to the earth.
2. If a thing is resting on its own
weight, the presumption is that it
is movable property
2. If a thing is fixed to the land even
slightly in the earth by external
agency, then it is deemed to be
immovable property.
3. No registration is required to
transfer movable property
3. Transfer of immovable property
requires registration of documents.
4. If the purpose is only to enjoy the
thing ,than it is movable even
though it is fixed to land
4.If the purpose of attachment is to
confer a permanent benefit to the
land then it is immovable property
Ex: Right to worship: royalty:
standing timber: growing crops, and
grass
Ex: Right to collect rent, ferries,
mortgage debt: right to cut grass for
one year etc.
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DOCTRINE OF NOTICE
M eaning of notice: Notice means intimation. Legally notice means
knowledge or information of a fact. When a person has knowledge of
any fact or it could be proved that under the circumstances he must
have knowledge of that fact,
he is said to have a notice of that fact.
Object of notice:-
The object is to control unconscionable transactions. Under TPA it
is used to determine the rights and claims of two or more persons in
relation to each other.
The knowledge of fact is binding on the person and such knowledge of
fact can’t be denied if it goes against him.
KIND OF NOTICE:-
(1)Actual notice:-
Actual notice means direct or express knowledge or information
about something. It is a notice whereby a person acquires actual
knowledge of a fact. It must be definite information given by a person
interested in the thing in respect of which notice is issued. Actual
notice is binding on a person only following conditions
(i) Knowledge must be definite
(II)Only knowledge of the parties interested in the transaction is actual
notice regarding the transaction
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(iii)Knowledge must be about the transaction in question
(2)Construction notice:-
Doctrine of constructive notice is based on equity. Where a person
actually does not know anything about a fact but the court treats that
under the circumstance he must have knowledge of that fact, the notice
is constructive.
The legal presumption of constructive notice is taken by the court
under the following circumstances.
(a) Notice implied to a person by reason of willful abstention from
enquiry,
Ex- if a person refuse to accept a registered envelop addressed to him,
it is his willful abstention from taking notice of the contents of that
envelop. In such a situation the law presumes that he must have
knowledge that the contents of the letter are against his interest.
(b)Notice implied to person by reason of gross negligence
Ex- If A purchase the property of B, he is expected to inspect the title
deeds of that property. In normal course, since A purchase property, he
has a duty to know whether B has the ownership or not. If he omits to
do so, it shall be presumed that he has knowledge that contents of the
deed might be against his interests.
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(2)Notice by compulsory registration of an instrument
In order that registration may be treated as constructive notice of its
contents, following conditions are necessary:-
i. Registration is notice only of those documents which are
compulsory registerable.
ii. Registration amounts to notice only when all the formalities
under the registration Act are duly completed.
(3)Notice by actual possession of an immovable property
(4)Notice to an agent
(5)State of property sometime amounts to notice.
The principle of constructive notice is that when a person is duty
bound to make an enquiry and fails to do so shall be deemed to have
notice of an facts which would have come to his knowledge had he
made the enquiry
And where a person is not bound to make an enquiry he can’t be
charged with constructive notice of the fact which might have been
ascertained on such enquiry.
W illful abstraction from an enquiry asconstructive notice:-
Willful abstention are said to be such abstention from inquiry as would
show want of bonafied in respect of a particular transaction and not
mere omission to make enquiry. It means deliberately avoiding taking
notice of a fact which a reasonable man would have taken notice of a
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fact which a reasonable man would have taken normal course of life.
Agra bank v. Barry:-
It was held that this doctrine prescribes the course which a man
dealing bonafied in the proper and usual manner for his own interest
fallow with a view to his own title and his own society if he doesn’t
follow the course the omission of it be thing required to be accounted
for,
Illustration:-
(i)Where a purchaser omits to inspect title deeds he may be affected
with notice of all facts which he would have discovered upon a proper
investigation of title
(ii) Where a charge was registered but the agent of a subsequent
mortgagee omitted to look into the register of registrar, the mortgagee
was deemed to have had constructive notice of the charge
(iii)A contracts to sell his property to be, who at the same time knows
that rent due in respect of property are paid by the tenants to a third
person x. B will be fixed with the notice of right x.
(iii) A purchased two properties x4y from B. A doesn’t pay the full
price to B. in the mean time he sell property x to c and informs him
of B’s charge for unpaid price. Has instructive notice of B’s charge.
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Grossnegligence asconstructive notice
Mere negligence is not penalized and it does not deprive a man of his
property. Negligence means carelessness. It is the omission to do
something which a reasonable man guided by those considerations
which ordinarily regulate the conduct of human affairs, would do and
doing something which prudent and reasonable man would not do.
Registration as constructive notice (Explanation I section 3)
Explanation 1 was added by amending act, 1929 before that whether
registration amounted to constructive notice or not was not settled.
In the case of Tilakdhari v. khedan lal It was held that the question was
not one of law but of fact to be determined according to the
circumstances of each case, and the mere fact that a document was
registered was not constructive notice of its contents it would depend
upon the facts and circumstances of each case.
*Explanation 1 lays down that where any transaction relating to
immovable property is required by law to be, and has been effected by
a registered instrument, any person acquiring such property shall be
deemed to have notice of such instrument from date of registration.
Condition which should be applicable:-
(I)The instrument must be compulsorily registered
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(II)The registration of the document must be completed in the manner
prescribed
(iii)The instrument and the particulars regarding the transaction to
which it is related must be correctly entered in the registers and indices
kept under section 55 of the registration act.
Actual possession as constructive notice (Explanation II section 3)
Explanation II lay that actual possession is notice of the title of the
person in actual possession. It raises a statutory presumption of notice
against a person who acquires any interest in any immovable property
of the title of the person who is for the time being in actual possession
thereof.
Nature of possession
*For constructive notice, it is necessary that the possession must be
actual possession. Constructive possession is not notice. Further notice
is only of the title of the person is actual possession and not of any
other person.
Illustration:-
A contract to sell his land to B and B asks his tenant c to take possession
of the land. C take possession and brings land into his use there after a
sells that very land to D. D makes demand for possession of land to
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which B objects. Here possession of C shall not operate to affect D with
notice of B’s interest in land.
*This principle shall not apply where transfer finds his transferor in
possession of property. In such a situation transferee would not be
affected with notice that the transferor is in possession as a tenant of a
third person
Illustration:-
A sells his land to B, but continues in possession as tenant of B. the sale
deed remains unregistered. A sells land to C by registered deed. C will
be entitled to land. He will not be affected by the doctrine of notice for
he has no reason to believe that A’s possession of land was otherwise
than as an owner.
(3)Imputed notice (explanation III to section 3):-
The general principle of the law of agency is than an agent stands in
the place of the principle for the purchase of the business in hand, his
acts and knowledge being considered as the act and knowledge of the
principle.
Rampal singh v. BAL bhaddar sungh:-
It was observed that it is not a mere question of constructive notice of
inference of fact, but a rule of law which imputes the knowledge of the
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agent to the principal, in other word, the agency extends to receiving
notice of behalf of his principle of whatever is material to be stated in
the course of the proceeding.
This principle is based on the maxim ‘quit facit’ per alium facit perse’
i.e he who dies by another does by himself.
According to explanation III is applicable to legal proceedings which
one usually conducted through agents.
The doctrine of imputed notice that notice to an agent is notice to the
principle, is subject to certain limitations.
This rule shall come into operation only if notice been received by the
agent:-
(1)During the agency:-
Notice must be acquired by an agent during the course of agency.
Knowledge acquired by a person his appointment as agent or after the
termination of agency is no knowledge and is not imputed notice for
principle.
(2)In hiscapacity asagent:-
Notice must be acquired by a person as an agent, not in any other
capacity. If the information is not obtained as an agent, it would be
difficult to say that he was acting for his principle when he got the
information.
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(3)In the course of agency business:-
Notice to an agent is imputed notice to principle only with regard to
the particular business or transaction for which the agent has been
appointed.
(4)In a matter material to the agency business:-
The knowledge must be material to the business for which the agent is
employed it is not the business of the agent to acquire knowledge of a
fact which is not material to the business of the agency.
(5)Should not have been fraudulently concealed from the principle:-
Fraud on the part of the agent exempt the principle from the rule of
imputed notice it protect the principle from the consequences of notice
which his agent fraudulently with held from him as against persons
accessory to the fraud.
(C)Definition of transfer of property:-
According to section5 ‘transfer of property means an act by which a
living person conveys property in present or future to one or more
other living being or to himself and one or more other living person.’
Living person includes: - Company, body of individuals, whether
incorporated or not, but nothing herein contained shall affect any law
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for the time being in force relating to transfer of property to or by
company, association or body of individual.
This section ispeculiar in two respects:-
(A) Under it a transfer of property can effectively take place not merely
where a living person conveys property in present but also where he
conveys property in future.
(B)A transferor can convey the property to himself.
Analysisof definition 5/essentialsof section 5
(1)Property:-
The word’ property’ has not been defined in the act. But the term
‘property’ is of widest import and subject to any limitation which the
context might require, it signifies every possible interest which a
person can acquire hold and enjoy.
The term property can be used in the following senses:-
(i)Tangible material thing
(ii)Rights which are exercised over material things
(iii)Rights which are not exercised over material things
The definition of “transfer of property: in section5 is also applicable to
properties situated outside INDIA.
(2)Transfer of property isan act of conveyance:-
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Transfer of property is an act by which something is done by the
person who wants to transfer his property. The property is not
transferred automatically under TPA without transfer’s act as in the
case of wills or inheritance.
The expression ‘transfer of property’ in this section is wide enough to
cover any transaction which has the effect of conveying property from
on living person to another.
(3)Conveyance is effected B/W living people:-
The conveyance of property must be from one living person to another
living person. The person giving the property and the person acquiring
it both must be living because this act deals with what is known as
inter vivas transfers.
(4)Property isconveyed to (A) to one or more other living person (b) To
himself:-
(i) To one or more other living person:-
There must also be one or more other living persons to whom the
property may be transferred. Such other person is called transferee.
The transferee need not to be a major person. Transferee may be a
minor, even may be (Child in mother’s womb) but the transferee must
be in existence when the transfer is being made
(ii) To himself:-
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A transfer of property under section5 of the act requires two living
persons, the transferor and the transferee. One can’t transfer a property
to himself. But one can transfer a property to himself in some other
capacity, where a person makes any settlement of his property in a
trust and appoint himself as the sole trustee. It is a valid transfer.
(iii) Transfer may be in present or in future:-
It implies that although a transfer of property may be affected either in
present or in future, but the property must be in existence at the date of
the transfer. There can be no transfer of future property.
A transfer of property that is not in existence operates as a contract to
be performed in the future which may be specifically enforced if the
transferor fails to transfer the property to the transferee as soon as the
property comes into existence.
Transactionsamounting to transfer of property:-
(1)Sale (sect. 54 to 57)
This is a transfer of ownership of property in exchange for a price. In a
sale, there is an absolute transfer of all the rights of the seller in the
property sold, and no rights are left in the transferor
(2)M ortgage (sec.58- 104)
It is a transfer of limited interest in property. A mortgage is nothing
more than a transfer of an interest in immovable property assecurity
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for the repayment of a debt.
(3) Lease (sect. 105- 107)
This is the transfer of a right to enjoy certain immovable property for a
determinate term less than that which the lessor himself has in the
immovable property.
(4)Exchange (sec.118- 121)
When two persons mutually transfer the ownership of one thing for
the ownership of another, neither thing being money only, the
transaction is called ‘exchange;
It is a voluntary transfer of property from one person to another
without consideration.
(5) Release Deed:-
If the person executing release deed holds some rights, title or interest
in the property, release of that interest would amount to conveyance. If
the deed is in favor of a person having no interest in the property it
can’t take effect as an enlargement of an existing estate.
Transaction not amounting to “transfer of property “
(1)Charge:-
By a charge on a property, the only right created under it is a right to
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payment out of the property subjected to the charge. The creation of a
charge does not involve conveyance of any interest in property to
another.
(2)Easement:-
It is merely an incident of property and attached to the dominant
heritage. No conveyance is done of an easement.
In other word” easement is a right which the owner of certain land
possesses as such for the beneficial enjoyment of that land, to do and
continue to do something or to prevent and continue to prevent
something being done in respect of certain other land not his own.
(3) Conveyance for renewal of lease:-
An agreement for renewal of a lease after a specified time is not a
conveyance of property. This is merely an agreement to renew the lease
after that time and is not a “transfer of property’
(4)W ill
A transfer is a conveyance of an existing property by one living person
to another. The concept of transfer by a living person is wholly alien to
will. When a person makes a will, he doesn’t transfer any property.
While a transfer is irrevocable and comes into effect either immediately
or on the happening of a specified event, whereas will is revocable and
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come into operation only after the death of the testator.
(5)Relinquishment:-
It means giving up ones right or interest, it effects is extinction of one’s
right in property; there is no intention that the person relinquishing his
interest is conveying that interest in favor of another person.
(6)Surrender:-
It means merging or falling of lesser smaller interest with a greater
interest in such a manner that the greater interest is not enlarged.
Example:-
A is landlord and B is his tenant. A as landlord has ownership of the
house. Ownership is a larger interest. But a tenant also has a interest in
his house but B’s interest is lesser interest because it is limited only to
right of enjoyment.
(7)M erger:-
Merger is not a transfer of property within the meaning of this section.
It means merging or falling of greater interest with a smaller interest.
(8)Compromise
It means an agreement for settlement of doubtful claims between the
parties in respect of same property. A compromise of a doubtful claim
doesn’t amount to transfer of property as it is based on the assumption
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that there was one antecedent title of same kind in the parties which
the agreement acknowledged and defined.
(9) Partition of Hindu joint family:-
In a HUF, after partition the share of each coparcener is specified and
instead of collective rights, they acquire individual rights over the
property.
(10)Family arrangement
It is based on the assumption that there is an antecedent title of some
sort in the parties and the agreement acknowledgesand defines what
that title is. Each party relinquishing all claims to property other than
that falling to his share and recognizing the right of the others, as they
had previously asserted it, to the partition allotted to them.
Transferable and non transferable property:-
Transferability
For a valid transfer of property, the property must be transferable
property. It is based on the maxim
“Alienation rei praefertue juri accrescendi”
I.e. law favor alienation other than accumulation.
* Transferability of property is a general rule and non- transferability is
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a exception.
*where prohibitions is imposed in such cases, burden of proof lies on
the person who alleges that property is not assignable
Essentialsof a valid transfer
(1)The property must be transferable (S.6)
(2)The transferor must be competent to transfer (S.7)
(3)The transferee must be competent to take transfer (S.6 (h) (3))
(4)The consideration and object of the transfer must be lawful [S.6 (h)
(2)]
(5)The transfer must not be opposed to nature of the interest affected
thereby. [S.6 (h) (1)]
(6)It must be made in the manner and in the form required by the act
(S.9)
Exception to the general rule:-
(a)The properties which can’t be transferred otherwise as given in TPA,
these are those properties which have been mentioned specifically
under clause (a) – (i) of section 6, TPA
(b the properties which can’t be transferred by any law for the time
being, in force in INDIA
Exceptionsunder clause (a) to (i), section6, TPA”
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Various kind of property are not transferable, and if transferred their
transfer would be a nullity but these properties otherwise may be
transferred under any other law like succession act, solvency act,
Bankrupcy act, etc.
However the principle laid down in section 6 shall not apply to future
property, because transfer of future property can only operate as a
contract which may be specifically performed when property come
into existence.
1. Spec- Successions:-
It means expectations of succession i.e. a possibility of getting property
in future through succession.
In this clause following three kinds of possibilities cannot be
transferred.
(i)Chance of an heir apparent:-
The term ‘heir apparent’ is based on the maxim ‘Nemo est heres
viventis’ i.e. no one is the heir of a living person. He is that person who
would be the heir if he survived the ancestor and if the ancestor dies
intestate.
Heir apparent is not a legal heir but apparently an heir and all that he
could say is that he might became the heir on the death of his ancestor
if the latter has not in the mean time disposed of the estate by a will or
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otherwise.
(ii)Chance of obtaining a legacy:-
The chance of a relation obtaining a legacy is also a mere possibility
and therefore can’t be transferred. This is so even if the testator has
agreed with the relation that he would give him a legacy. The branch
of such as agreement may give the legatee a right to sue for damages
but will not give him any right in the property itself.
*The chance of a legacy means Expectancy of getting certain property
under a will I.e. to get something from somebody on his grace.
(iii)Any other mere possibility of a like nature:-
1. Any other mere possibility of a like nature is also not capable for
the transfer.
Ex- The possibility of winning a lottery or prize in certain competition
cannot be transferred.
2. M ere right to re entry- According to S. 6 (b) a mere rights of re-
entry for breach of a condition subsequent cannot be transferred
to anyone.
3. easement apart from dominant heritage
4. Restricted interest- A person cannot transfer such property which
is restricted for his enjoyment only.
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5. Right to future maintenance- A right of future maintenance is
solely for the personal benefit of the person to whom it is granted
and therefore it cannot be transferred.
6. M ere right to sue- A mere right to sue, being a personal rights of
the party aggrieved cannot be transferred.
7. Public office & salary of public officer- A public office cannot be
transferred nor can the salary of a public officer, whether before
or after it has become payable.
8. Pension & stipends cannot be transferred.
9. Transfer opposed to nature of interest cannot be transferred.
10. Untransferable right of occupancy cannot be transferred.
Law for the benefit of an Unborn P
erson –S.13 and 14 of the Act
deal with the laws relating to the transfer of property in favour of
an unborn person.·
Example- The property is given to a living person for life and then to
is unborn child and then to the child of unborn child. Here, there are
two possibilities, which are for bidden by this section. Firstly, there
may not be
·any son tall, this is the first possibility; and secondly, the child of
unborn child n1ay not be born at all; this is second possibility, which
are for bidden by this section. In order to defeat this double
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contingency, it is enacted that the first unborn child (Provided he
comes in to existence before the finishing of the prior interest) will
take whole of the remaining interest of the transfer so that no
subsequent transfer of the above nature can be create.
As these section provides that an interest can be created in favor
of an unborn person with the condition that transfer should be made
to him through trust.
Example- A transfers his property for life to 'B' a living person, and
then to 'C' the unborn child of 'B' for life and then to D, the unborn
child of unborn child C. Here the transfer in favour of 'D' is void,
because there are two possibilities. The transfer in favour of 'C' is also
not valid, because the whole remaining interest is not transferred to
'C'.
Unborn Child must Come in existence on or before the termination of
prior interest –The unborn child should be horn on or before the
prior interest finishes ,as in the over example the unborn person 'C'
must be born before the death of 'B'
1.The Entire Remainder must be Given to Unborn Person- Even if all
the conditions are satisfied, the interest in favour of an unborn child
shall· not take effect if he has not been given the whole of the
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remaining interest by the transferor.
2. According to S.14, the unborn child takes the interest in the
property immediately on birth, provided all the conditions
mentioned above have been fulfilled. But, according to the same
section, the transfer can restrict vesting of the property in such
person till his (unborn person) minority.
M eaning of Rule against Perpetuity
Explaining the rule S
.14 says, “No transfer of property can operate to
create an interest which is to take. Effect after the life time of one or
more persons living at the date of such transfer, and the minority of
some person who shall be in existence at the expiration of that period,
and to whom, if he attains full age, the interest created is to belong.
Rule against perpetuity is the rule which is against a transfer making
the property inalienable for an indefinite period or forever. Where a
property is transferred in such a way that it becomes non- transferable
in future for an indefinite period, the property is tied up forever. This
disposition would be a, transfer in perpetuity.
Object of Rule against Perpetuity- The object of the rule against
perpetuity is to ensure free and active circulation of property, both
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for purpose of trade and commerce as well as for the betterment of
the property itself.
A transfer which renders property in alienable for an indefinite
period is detrimental to the interests of its owners who are unable to
dispose it of even in urgent needs or for any higher value. It is also a
loss to society because when property ·
is tied up from one generation
to another in one family.
Rule against perpetuity is therefore, based also on broad principles of
public policy.
M aximum Remoteness of Vesting- Under S.14, the maximum
permissible remoteness of vesting is the life of the last preceding interest
plus minority of the ultimate beneficiary. Accordingly property may be
transferred to A for life and then to B for life and then to the U.B. when
he attains the age of majority. A and B hold property successively for their
lives, therefore, the property is tied 'up for their lives one after the
other. After the death of B (the last preceding interest) although it
should vest in the ultimate beneficiary U.B .immediately but ,under this
section the property may be allowed to vest in the U.B. when he attains
the age of majority (18yrs.).
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Ultimate Beneficiary in M other'sWomb- Where the ultimate
beneficiary isin the mother'swomb, the latest period up to which
vesting may be postponed, (after the preceding interest) is the
minority plusthe period during which the child remainsin mother's
womb .It may be noted that minority is counted form the date of
worldly birth where asfor purposesof being a transferee, a child in
mother's womb is a competent person. Where the ultimate
beneficiary isin mother's womb when the last person dies, the
property vests immediately in him while he is still in mother'swomb.
Therefore, the exact period from which the minority beginsto run is
the date when ultimate beneficiary isconceived.
Example-
A transfers certain properties to X for life and then to Y life and then to
U.B., when he attains the age of majority, X and Y are persons living at
the date of the transfer and U.B. is the ultimate beneficiary not in
existence even in mother's womb. Here, the last preceding life interest
is with Y. When Y dies the U.B. must be already in existence either (i) in
mother's womb as a child says S
ix months, or (ii) a born child of say of
six years. In case (i) the maximum period up to which of property in
U.B. can be postponed would be: life of Y + three months period of
gestation) + 18years. In case (ii) the maximum period up to which
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vesting m.ay is postponed will be: life of Y + 12 years.
Exceptionsto the Rule against Perpetuity:-
1. Transfer for the Benefit of Public- Where a property is transferred for
the benefit of public in the advancement of religion, knowledge.
The transfer is not void under the rule against perpetuity.
2. Personal Agreement- Personal agreements which do not create
any interest in property are exempted from the rule against
perpetuity.
(e) Transfer to an unborn person and rule against perpetuity
General Rule for Tran
*Transfer for the benefit of an unborn person (Section13)
Section 13 lays down, where an a transfer of property an interest
therein is created for the benefit of a person not in existence at the date
of the transfer, subject to a prior interest created by the same transfer,
the interest created for the benefit of such person shall not take effect,
unless it extends to whole of the remaining interest of the transferor in
the property.
Illustration:-
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‘A’ transfers property of which he is the owner to B in trust for A and
his intended wife successively for their lives, and after the death of the
survivor, for the eldest son by the intended marriage for life, and after
his death for A’s second son. The interest so created for the benefit of
the eldest son doesn’t take effect.
Principle:-
The principle of this section is that the liberty of alienation shall not be
exercised to its own destruction.
Scheme and scope of section 13:-
(i)It is an exception to the general scheme of TPA which deals with
transfer inter vivos only
(ii)There can be no direct transfer in favor of a person not in existence.
(iii)The interest of unborn person must be preceded by the creation of a
prior interest in favor of living person
(iv) There is no limit to no. successive interest in favor of living person
(v)Whole remainder interest of the transferor in the property must be
conveyed to unborn person.
(i)Exception to the General rule:-
Providing
*A person may be either in existence or not in existence but difficulty
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arises in case of a child in the womb within the natural meaning of the
words, a child in womb can’t be said to be a person in existence. A
child in womb is regarded to be potentially in existences.
Condition for giving interest to unborn child
(ii)No direct transfer in favor of person not in existence
The act provides that property can be transferred under this act in
favor of a living person only. Therefore an unborn person can’t be a
party to a transfer. There can be no direct transfer in favor of a person
not in existence.
(iii)A prior interest must be created in favor of a living person:
The estate must vest in some person between the date of the transfer,
and the coming into existence of the unborn person therefore it is
necessary for a valid transfer of property to an unborn person that
before the transfer actually takes place, a prior interest must be created
in favor of a living person on the date of transfer.
Illustration:-
X transfers his properties to Y for life and then to the eldest child of Y
absolutely. This transfer in favor of Y’s eldest child is valid because both
the requirements as prior interest and transfer of absolute interest are
filled.
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Girijesh dutt v/sdutta din
A makes a gift of her properties to B who was her nephew’s daughter.
This gift by A was for a life of B and then to B’s male descendents
absolutely if she should have any. But if B had no male descendents,
then B’s daughter without power of alienation and if there was no
descendents of B, male or female then to her (A’s) nephew. B died
without any issue.
It was held that, the gift in favor of unborn daughter was invalid under
section 13 because gift was of limited interest and subject to prior
interest I favor of b
Legal consequence of prior interest and absolute interest:-
(1)The intermediary person living at the date of the transfer is to be
given only life interest or creating life estate in favor of a person means
giving him only the right of enjoyment and possession. He has to
preseve the property like a trustee during his life- time on behalf of the
unborn.
(2)The unborn must come in to existence before the death of the person
holding property for life. If the unborn person comes into existence say,
after one month after the death of the last living person the property is
to revert back to the transferor or hisheir
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Rule against perpetuity (Section 14)
According to section 14
No transfer of property can operate to create an interest which is take
effect after the life time of one or more person living at the date of such
transfer and the minority of same person who shall be in existence at
the expiration of that period and to whom, if he attains full age, the
interest created is to belong.
Illustration
A find is bequeathed to for his life, and after his death to b for his life
after B’s death to such of the son of B as shall first attain the age of 25 a
and b survive the testator. Here the son of b who shall first attain the
age of 25 may be a son born after the death of the testator, such son
may not attain 25 until more than 18 yrs have elapsed from the death
of the longer lives of a and b and the vesting of the fund my thus be
delayed beyond the life time of a & b and the minority of the sons of b.
the bequest after B’s death is void.
Essential requirement of section 14
(1)There is a transfer of property
(2)The transfer is for the ultimate benefit of an unborn person who is
given absolute interest
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(3)The vesting of interest in favor of ultimate beneficiary is preceded by
life or limited by living person
(4)The ultimate beneficiary must be in existence at the expiration of the
interest of the living person
(5)Vesting of interest in favor of ultimate beneficiary may be postponed
only upon the life of living persons at the date of such transfer plus
minority of ultimate beneficiary
(6)Vesting of interest in favor of unborn person can’t be postponed
beyond the perpetuity limit
Extent of perpetuity period:-
The perpetuity period as laid down in section 14, TPA is a life in being
plus the minority of the unborn done. An unborn transferee can take
under a transfer if he comes into existence when the prior interest
comes to an end and the property is vested in him at the lattes, when he
attains majority
The perpetuity period, the maximum period being which the property
may be rendered in alienable, to the life of any person who’s alive at
moment when the deed which creates the interest beings to operate,
plus a period of 15 yrs from the time such designated person dies.
The rule requires that a limitation whether of an absolute or period
interest, shall necessarily vest within prescribed period. However the
problem arises when an unborn person doesn’t come into existence at
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Phone no- +9643031960, 9643028427
or before the expiry of the last prior interest but he is merely in womb.
In such a case, the period of gestation has to be included as a period of
grace with the perpetuity period.
The total period of perpetuity i.e. the period for which the vesting of
property can be postponed isgiven below
(i)Where the unborn person has come into existence either at or before
the expiry of the last prior interests his minority period
(ii)Where the unborn person is in womb at the expiry of the last prior
interest, the period of gestation plushis minority
(D)Vested and contingent interest (Section 19 & 21)
Vested interest (Section 14)
There are three stages which may be marked in regard to interests. An
interest may be vested in possession it may be vested and yet not in
possession or it may be contingent thus a vested in possession
*It will be Vested in interest where there is a present fixed right to
future enjoyment; but where the right is of present enjoyment it will be
‘vested in possession;
According to S. 19, “Where on a transfer of property, an interest
therein is created in favour of a person without specifying the time
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Phone no- +9643031960, 9643028427
when it is to take effect forthwith or in terms specifying that it is to take
effect forthwith or in terms specifying that it is to take effect forthwith
or on the happening of an event which must happen , such interest is
vested.
On the analysis of this section, we come to the conclusion that in the
following cases , a vested interest is presumed.
Example – A makes a gift to B of Rs 100/- to be paid to him on the
death of C. B. gets a vested interest in it because here the death of ‘C’ is
a certain event which must happen.
A transfer to B Rs.100/- to be paid to him upon his attaining the age of
18 years. ‘B’ has a vested interest in it because the property is
transferred to him and merely an enjoyment of the property is
postponed to 18 yrs of age .
Salient featuresof vested interest:
(1)W here no time mentioned:-
A person gets vested interest in a transfer of property where the terms
do not specify the time when it is to take effect.
(2)W here it is to take effect forth with:-
The interest created in favor of the transferee is vested where it is
specified that it is to take effect forth with I.e. immediately
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(3)On the happening of a certain event:-
The interest is a vested interest where the operation of the transfer is
made to depend upon some specified, explained and it must be certain
to happen.
(4)Postponement of enjoyment:-
It is not to be inferred that an interest shall not be a vested interest
merely from a provision whereby the enjoyment of the property is
postponed. Simply because the transferee is not authorized to an
immediate enjoyment the interest doesn’t cease to be a vested one.
(5)Prior interest:-
A prior interest doesn’t post pone the vesting of subsequent interest. It
is not to be inferred that an interest shall not be vested by a provision
whereby a prior interest is the same property is given for some other
person
(6)Direction for accumulation of income:
Where along with transfer there is a direction to accumulate the
income arising out of the property transferred till the period of
payment is arrived, it should not be inferred that the interest is not a
vested interest.
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(7)Conditional limitation:-
A provision that if a particular event shall happen the interest shall
pass to another person’s what is called In English law a conditional
limitation. A conditional limitation divests an estate which has
conditional limitation divests an estate which has vested and vests it in
another person. A condition subsequent divests an estate which has
vested and vests it in the grantor
(8)No condition precedent:-
If an interest is limited to take effect on the fulfillment of a condition,
the condition is known as a condition precedent. If the condition refers
to an event which is certain to occur the interest is a vested interest
Contingent interest (section 21)
Section 21 defines what a contingent interest is and when such interest
becomes vested. Contingency means uncertain future event, in a
transfer of property where the vesting of an interest depends on any
contingency that may or may not happen, the interest is contingent,
Exception:-
Under a transfer of property , a person becomes entitled to an interest
therein upon attaining a particular age; and the transferor also gives to
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him absolutely the income to arise from such interest before he reached
that age, or directs the income as may be necessary to be applied for his
benefits, such interest is not contingent.
Salient featuresof contingent interest
(1)An interest is said to be contingent when its vesting is depending on
the happening or non happening of a specified uncertain future event.
The transfer is not complete and is dependent on a condition precedent
the happening and fulfillment of which is not certain
(2)The test to see whether an interest created is vested or contingent to
see whether there is an immediate right of present or future enjoyment
or whether the right itself is to accrue on the happening of an
uncertain event.
(3)It is not always easy to determine whether the interest created is a
vested or contingent it is really a question of intention to be gathered
from a comprehensive view of all the terms of a document creating the
interest
(4)Contingent event may be of two kinds:-
(a)Where happening or non happening of the event depends upon the
will and desire of the parties
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Phone no- +9643031960, 9643028427
(b)Where happening or non happening of the specified event doesn’t
depend upon the will of the parties like death of a person, on reaching
a certain age, etc
(5)The death of a person is not an uncertain event. But when the
property is transferred with a condition precedent of the death of any
person, the interest of the transferee is vested. But when and at what
age does a person die, is an uncertain future event.
(6)Contingent interest is a transferable interest. However since, a
contingent interest is itself an uncertain interest in the property and
transferor’s own title is not perfect, the transferee too gets an imperfect
title. Although a contingent interest is transferable, the transferee’s title
is subject to me same contingency as it was before the transfer was
made
(7) A contingent interest is not a heritable interest I.e. where a person
having contingent interest dies before vesting, his legal heir don’t get
anything, not even the contingent interest,
Illustration:-
*A property Is transferred to d in case A,B, and C shall all die under the
age of 18 d has contingent interest in the property until A,B, and C all
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die under 18
Difference between vested & contingent interest:-
(1)Fulfillment of condition:-
A vested interest take effect immediately and if its enjoyment is
dependent on the fulfillment of a condition precedent the condition
must be one which is born happen.
Whereas contingent interest is solely dependent upon the fulfillment of
the condition precedent, so that if the condition is not fulfilled, the
interest would fail
(2)Time of Accruing:-
A vested interest takes effect from the date of transfer through its
enjoyment may postponed for some time.
On other hand contingent interest doesn’t accrue to the transferee until
the specified uncertain event happens or doesn’t happens, and doesn’t
take effect from the date of transfer
(3)Nature of title
In a vested interest, the transferee has present fixed right in properly
even if the enjoyment is postponed. Whereas, in contingent interest, the
title is dependent on an uncertain future event which may or may not
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occur and the title is incomplete.
(4)Transferability and heritability:-
Both the interests are transferable but contingent interest is not
heritable. A vested interest is the property of the transferee; therefore it
may be inherited by his heir.
(5)Effect of transferee: death:-
Since the vested interest the title of the transferee is complete, it isnot
defeated by the death of the transferee.
But in case of contingent interest, there is no present fixed right and it
can’t take effect in the event of the transferee’s death before the
fulfillment of the condition precedent.
(6)Attachment and sale in execution of a decree:-
A vested interest can be sold or attached in execution of a degree
whereas, a contingent interest can’t be sold attached in execution of
any decree because of the uncertainly involved in it.
(g)Rule of election (Section35):-
According Section 35, Where a person professes to transfer property
which he has no right to transfer and as part of the same transaction
confers any benefit on the owner of the property, then such owner
must elect either to confirm such transfer or to dissent from it.
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Phone no- +9643031960, 9643028427
And in the latter case he shall relinquish the benefit so conferred, and
the benefit so relinquished shall be reverted to the transferor or his
representative
*Where, the transfer is gratuitous, and the transferor has died before
the election and all cases where the transfer is for consideration, to the
charge of making good to the disappointed transferee the amount or
value of property attempted to be transferred to him.
Illustration:-
The form of sultanpur in the property of C and worth RS800, A wants
to by an instrument of gift transfer it to B, giving C RS1000 for the
same. C elects to retain the form. He for feats the gift or Rs 1000, But if
a dies before the election, then his representative must out of the RS
1000 Pay RS8000 to B.
Exception to the rule of election:-
Where a particular benefit is expressed to be conferred on the owner of
the property which the transferor professes to transfer, and such
benefit is expressed to be in lieu of that property, is such owner claims
the property he must relinquish the particular benefit, but he is not
bound to relinquish any other benefit conferred upon him by the same
transaction.
Acceptance of the benefit by the person on whom it is conferred
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constitutes an election by him to confirm the transfer, if he is aware of
this duty to elect and of those circumstances which would influence
the judgment of a reasonable man in making an election or if he waives
inquiry into the circumstances.
*It is presumed that knowledge or waiver in absence of evidence to the
contrary, if the person on whom the benefit has been conferred has
enjoyed it for two years without doing the act to express dissent.
*Such knowledge or waiver may be inferred for any act of his which
renders it impossible to place the person interested in the property
professed to be transferred in the same condition as if such act has not
been done.
Illustration:-
A transfer to B an estate to which C isentitled and as part of the same
transaction gives C a coat mine. C takes possession of the mine and
exhausts it. He has thereby confirmed the transfer of the estate to
transfer.
*If he doesn’t within one year after the date of the transfer signify to the
transferor his intention to confirm or to dissent to the transferor his
intention to confirm or to dissent from the transfer, upon the
expiration of that period, transferor is required to make his election
and if he doesn’t comply with such requisition within a reasonable
time after he has received it, he shall be deemed to have elected to
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confirm the transfer.
Principle of doctrine of election:-
The principle of doctrine of election is that a person taking a benefit of
an instrument must bear the burden.
Analysisof the section:-
(i)Transfer of a property by the transferor not hisown:-
Election under this section arise when the property transferred by the
transferor is not his own, which he has no right transfer,
This section will apply whether or not the transferor had the
knowledge that the property he is transferring is not his own.
(ii)Benefit conferred as a part of same transaction:-
This doctrine only applies when the unauthorized ‘transfer’ and
‘benefit’ firm part of the same transaction. It means that the transfer
and benefit both must arise in a single act.
Under the section it is not required that for the purpose of the same
transaction one single instrument should always be there. Even if two
separate instruments should always be there even if two separate
instruments are there one for benefit and the other for ‘transfer’ but
both are independent and made in live of each other as a complete the
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Phone no- +9643031960, 9643028427
doctrine will apply.
(iii)Benefit in lien of such transfer:-
The benefit transferred to the owner of the property must be in live of
transfer made by the transferor of the property
Exception:-
The above principle are subject to an exception given in the section
which say that where the benefit is expressed to be conferred on the
owner of the property which the transferor professes to transfer to
another person and such benefit is expresses to be inline of that
property, if such owner claims the property, then he must relinquish
the particular benefit but he is not to relinquish any other benefit
conferred upon him by the same transaction.
Right of disappointed transferee:-
Where due to the refusal of the owner of property the transferee to
whom the property was transferred by the transferor is disappointed
because of not getting the property, this section protects the interest of
such transferee:
Transferee shall have the following rights:-
(a)If the transfer was gratuitous and the transferor has, before the
election died, or otherwise become incapable of making a fresh transfer
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Phone no- +9643031960, 9643028427
(b)In all cases where the transfer wasfor consideration it shall be the
duty of the transferor to compensate the disappointed transferee.
The amount of compensation shall be the amount or value of the
property attempted to be transferred to him
Doctrine of part- performance
It may be noted that Doctrine of part- performance is an equitable
Doctrine. It is also known as 'equity of part- performance. 'According
to this doctrine, if a person has taken possession of an immovable
property on the basis of a contract of sale and has either performed
or, is willing to perform his part of contract then, he would not be
ejected from the property on the ground that the sale was
unregistered and legal title had not been transferred to him.
Example-
There is a contract of sale of a plot between A and B. The contract
is in writing, stamped, attested and duly executed but not
registered by a who is the seller. B who is the purchaser, has
performed or is willing to perform his part of contract i.e. has paid
the price or is willing to pay the same. On the basis of such
contract B takes possession of land. Now, A sold the land to C
through a registered deed. C having legal title of the land, attempts
to eject B.
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Phone no- +9643031960, 9643028427
At this stage, since B has no legal title, law may not protect his
possession but equity shall help him from being dispossessed.
Es
s
entialsof the Doctrine of Part- Performance
4) There must be a Contract to Transfer Immovable Property for
Consideration - S.53- A applies only in those transfers that are
with consideration. Gift is a transfer of movable property without
consideration is beyond the purview.
5) The Contract must be in W riting in clear Terms- The contract must
be in writing signed by or on behalf of persons ought to be
charged. It should be in such form from which the term may be
ascertained. An oral agreement will not be sufficient.
Example-
In this case the pleading of part- performance was based on oral
contract which is not maintainable. Court held that since the
defendant has denied completely the existence of contract,
therefore, the relief claimed under S.53- A is completely
unsustainable.
6) The Transferee in Part- Performance of Contract Takes Possession
- Possession is a semi- juristic concept and much of it is a question
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Phone no- +9643031960, 9643028427
of fact. Possession is useful in two ways:
(iii) Position after
taking Possession- if the transferee takes the corpus of
the property in his possession after the contract to
transfer that property is signed, the requirement of the
section is complete.
(iv) W hen Possession is Retained- If the transferee takes
the corpus of the property in his possession after the new
contract to transfer it. It is enough if the transferor and
transferee agrees to that proposal to hold the possession
under new contract.
Example –
A lets out a house to B for five years. After the expiry of the lease A
agrees to sell the same house to B, B pays1,000, and continues in
possession.
6) The Transferee has Done some Act in Furtherance of Contract-
Taking or retaining the possession must be corroborated by some
positive action on the part of the transferee in order to show that
he has not taken or retained the possession casually or accidentally
but has taken it purposely.
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Phone no- +9643031960, 9643028427
7) The Transferee is W illing and ready to Perform his Part of the
Contract :- S.53- A will protect the interests of the transferee only
when his own hands are clean and nothing remains in balance so
far he and his part in the transaction is concerned :
Example –
If some money is to be paid, the transferee must have tendered to
the money to the transferor at right time and place .What is needed
is that transferee should be ready and willing.
Extent and Scope of Defense
This section protects the transferee against two type of claim.
iii. No Registry- The transferee’s interest cannot be assailed on
the ground that the deed of transfer is not registered.
iv. Instrument of transfer not in proper form- It provide that
transferee cannot be turned out from the possession of the
immovable prope
rtyconcerned only due to the document is
deficient in form.
Nature and Scope of Transferee’s Rights U/.53- A
e) No Title or Interest in property- S
.53 – A does not confer any
title or interest to the transferee in respect of the property in his
possession .This section provides that when the conditions laid
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Phone no- +9643031960, 9643028427
down in it are fulfilled, the transferor or any other person
cannot evict the transferee.
f) Pas
s
ive Equity; no right of Action – S
.53 – A
does not give to the transferee any right of action. It
provides merely a right of defense. That is to say where a
transferee takes possession of an immovable property .He can raise
the defense of part- performance in case he is evicted by
transferring the property to any other person.
g) Transferee as Plaintiff or defendant: It is settled that this section
confers on the transferee only the right to defend his possession
when he is being evicted by a person having better title. But how
he may defend his possession is not dear. But now it is held that
he may be defendant or can also be plaintiff if needed for
defending his possession.
h) Rights of Subsequent Transferee for Value – The provision
toS.53- A protects the interests of a subsequent transferee for
value without Notice of previous transferee’s rights of part-
performance.
Example-
A who is owner of a land contract to sell it to B.? The contract
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Phone no- +9643031960, 9643028427
is unregistered and in part- performance of this contract B takes
of the said land. Under this section the transferor or any other
person cannot disposes B from the land. But if A sell the land to
C through a duly executed and registered sale- deed and C has
not the least knowledge of B"s rights of part- performance then.
S
. 53- A shall not apply. And B (Previous transferee) cannot
resist c from evicting B and taking possession of the land.
(a)Transfer by ostensible owner: - (section41)
Where, with the consent whether expressed or implied, of the person
interested in immovable property a person is the ostensible owner of
such property and transfer the same for consideration and such
transfer shall not be voidable on the ground that the transferor was not
authorized to make it.
Provided that the transferee after taking reasonable care to ascertain
that the transferor has power to make the transfer, has acted in good
faith.
Illustration:-
A (Real owner)
B (ostensible owner)
B the ostensible owner transfers the property to V with express or
implied consent of A.
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Essential condition of section41
(i)Transfer ismade by an ostensible owner of an immovable property:-
The term ostensible owner means a person who has all the character of
ownership without being the real owner. It doesn’t include such person
within its scope, who possesses or holds possession of property.
The question whether a person is a real owner or ostensible owner
depends upon the intention of the party holding the property and it is
for the court to decide whether the transferor was an ostensible owner.
In jayadayal poddar vsbibl hazara, The SC observed that whether the
person is ostensible owner is a subjective question which is to be
decided on the basis of the facts and circumstances.
(ii)Consent of the real owner expressor implied:-
Ostensible owners activities with regards to property must be guided
with express or implied permission of the real owner.
Irrespective of the intention of the real owner, if he conducts himself,
so that a reasonable man would believe that he was assenting to the
terms proposed by other party and upon that belief enters into the
contract with him, the man so conducting himself would be equally
bound as if he had intended to agree to the other party’s term.
[Smith vs. Hughes]
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Phone no- +9643031960, 9643028427
But a real owner can’t be hold responsible where he is under certain
disqualification to give a valid consent either express or implied
(iii)Property is transferred by the ostensible owner:*
The section will apply only when. The immovable property is
transferred. Where the ostensible owner’s act deals with the transfer of
a property which is not transferable under the act, this section will not
be applicable.
(iv) The transfer ismade for consideration:
This section is applicable only in those transferees by section owner’s
where the property was transferred for consideration, it doesn’t apply
in case of gratuities transfer.
(v)the transferee must have taken all reasonable care to ascertain that
the transferor haspower to transfer the same and he acted in good
faith:-
This condition of the section imposes a responsibility on the transferee
to take all reasonable care before purchase of the property as to
whether the transferor has the authority either express or implied from
the real owner to transfer the same or not.
The transferee can take the benefit only when he can prove that he
acquired the property in good faith and taken all reasonable care as to
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authority of the transferee
Burden of proof:-
The burden that the person transferring the property is an ostensible
owner is on the transferee and that transferee acted in good faith with
reasonable care.
This section is not confined to first transferee only, value but is also
available to any subsequent transferee for value and good faith
Test for determining benami transaction:-
The real test determining whether the transaction is a benami, the
following consideration will be taken into accounts:-
(1)Source from which the purchase money come
(2)Nature of possession after the purchase
(3)Motive if any
(4)Relationship B/W the parties
(5)Custody of the title deed after sale
(6)Conduct of the parties after sale
Effect of Benami transaction:-
*No suit claim or action to enforce any right in respect of any property
held benami against the person in whose name the property is held
*No defense based on any right in respect of any property held benami
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whether against the person in whose name the property is held, shall
be allowed in any suit, on behalf of a person claiming to be the real
owner of such property.
Exceptions:-
(1)Where the property is held in the name of person who is a
coparcener in JHFand the property is held for the benefit of the
coparceners
(2)Where the property is held in the name of trustee or any other
person standing in a judiciary capacity, and the property is held for the
benefit of other person.
After the enactment of Benami transaction (Prohibition) Act, 1988, no
person shall be allowed to take plea U/S41 of TPact, and the property
stands in the name of Benamidar and that he is the real owner.
Section58: M ortgage
M eaning- A mortgage is the transfer of an interest in specific
immovable property for the purpose of securing the payment of money
advanced or to be advanced by way of loan, an existing or future debt,
or the performance of an engagement which may give rise to a
pecuniary liability.
The transferor is called a mortgagor, the transferee, a mortgagee the
principal money and interest of which payment is secured for the time
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Phone no- +9643031960, 9643028427
being are called the mortgage money and the instrument by which the
transfer is effected is called a mortgage deed.
Essential elementsof mortgage
(i)Transfer of interest
(ii)Specific immovable property
(iii)Consideration in mortgage
FORM of mortgage
(i)Simple mortgage
(a)Personal undertaking by the mortgage to repay loan
(b)Possession and enjoyment of the mortgage property remain with the
mortgage
(c)In case of non- payment of loan mortgage can exercise the right to
sale property with intervention of court
(d)Mortgage must be affected by a registered instrument irrespective of
the amount of consideration
(ii)M ortgage by conditional sale:-
(a)Ostensible sale by mortgage to the mortgagee
(b)Condition of re transfer of mortgage property
(c)Condition for repurchase must be in same document
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