The document discusses various legal concepts related to property law and easements in India. It begins by defining an onerous gift as a gift subject to conditions imposed on the recipient. It then provides definitions for legal terms like charge, notice, ostensible owner, dominant and servient heritage. It also distinguishes between sale and contract of sale. The status of unborn children under property law is discussed, noting that an unborn child can own property and is considered a legal person for certain purposes like inheritance.
1. Probable Questions with answers (Law of Property and Easement)
Very Short Questions
Q.1 Define Onerous Gift.
a. Onerous gift refers to a gift that is subject to conditions. These conditions are imposed on
the recipient of the gift. Sometimes, onerous gift takes the nature of a sale because it
involves the element of consideration. Some features of onerous gift are:
1. The onerous gift is subject to certain charges or obligations imposed on the donee by the
donor ;
2.The donee is at liberty to accept any transfer of gift which is beneficial to him/her and
refuse any gift which are onerous to the donee. (Chattanooga v. Muse)
Q. 2 Define Charge.
a. A charge is one of the methods of taking security recognised by English law. In daily
business life it is common for corporate entities to give security to lenders over their assets
either by way of mortgage, lien or charge.
Q. 3 Define Notice.
a. Notice as defined under Section 3 of TPA-
“A person is said to have notice of a fact when he actually knows that fact, or when, but for
willful abstention from an enquiry or search which he ought to have made, or gross
negligence, he could have known it.”
Two situations under which the subsequent transferee is legally deemed to have notice of
the title of the immovable property –
I) When any transaction relating to immovable property is required to be and has been
effected by a registered instrument, any person acquiring such property or any part thereof,
or share or interest in, such property shall be deemed to have notice of such instrument as
from the date of registration.
II) Any person acquiring any immovable property or interest in any such property shall be
deemed to have notice of the title, if any, of any person who for the time being in actual
possession thereof.
Q. 4 Who is an Ostensible Owner?
a. Section 41 of the Act deals with ostensible owner and it has been defined as:
“Transfer by Ostensible Owner: Where, with the consent, express or implies, of the persons
interested in immovable property, a person is the ostensible owner of such property and
transfer the same for consideration, the transfer shall not be voidable on the grounds that
2. the transferor was not authorized to make it: provided that the transferee, after taking
reasonable care to ascertain that the transferor had power to make the transfer, has acted
in good faith.”
Q. 5 What do you mean by ‘dominant’ and ‘servient’ heritage?
a. The land for the beneficial enjoyment of which the right exists is called the dominant
heritage, and the owner or occupier thereof the dominant owner; the land on which the
liability is imposed is called the servient heritage, and the owner or occupier thereof the
servient owner.
Short Questions
Q. 1 Define ‘Sale’. Distinguish between ‘sale’ and ‘contract of sale’.
Sale of immovable property has been defined as a transfer of ownership in exchange for a
price paid or promised or partly paid and partly promised by the Transfer of Property Act.
Essential Elements of Sale are:
a) Parties: in a sale there has to be a seller and buyer. The seller has to be competent to
transfer the immovable property to the buyer. Both parties i.e. the seller and the buyer
have to be competent to contract under the Indian Contract Act.
b) Subject Matter of Sale: subject matter of a sale should be immovable property
c) Transfer of ownership: there has to be a transfer of ownership by the seller to the buyer.
d) Price: price is the essence of the contract of sale. It may be paid in a lump sum or in
installments as agreed between the parties.
On the other hand ‘Contract to sell’ can be defined as a formal agreement in which a
person, company, etc. agrees to sell something to a buyer at a time in the future, and the
buyer agrees to buy it: A conditional contract is similar to a normal contract to sell, except
that the contract is subject to the fulfilment of certain conditions.
Distinction between ‘sale’ and ‘contract of sale’
BASIS FOR
COMPARISON
SALE AGREEMENT TO SELL
Meaning When in a contract of sale, the
exchange of goods for money
When in a contract of sale the parties
to contract agree to exchange the
3. BASIS FOR
COMPARISON
SALE AGREEMENT TO SELL
consideration takes place
immediately, it is known as Sale.
goods for a price at a future specified
date is known as an Agreement to
Sell.
Nature Absolute Conditional
Type of Contract Executed Contract Executory Contract
Transfer of risk Yes No
Title
In sale, the title of goods
transfers to the buyer with the
transfer of goods.
In an agreement to sell, the title of
goods remains with the seller as
there is no transfer of goods.
Right to sell Buyer Seller
Consequences of
subsequent loss or
damage to the goods
Responsibility of buyer Responsibility of seller
Tax
VAT is charged at the time of
sale.
No tax is levied.
Suit for breach of
contract by the seller
The buyer can claim damages
from the seller and proprietary
remedy from the party to whom
the goods are sold.
Here the buyer has the right to claim
damages only.
Right of unpaid seller Right to sue for the price. Right to sue for damages.
Q. 2 ‘Immovable property does not include standing timber, growing crops or grass.’
Explain.
a. Definition in Section 3 is not exhaustive. It says only that ‘immovable property’ does not
include standing timber growing crops or grass. Definition of immovable property in Section
3(26) of General Clauses Act, 1897, is also not exhaustive. It defines immovable property as
it shall include land, benefits to arise out of land, and things attached to earth. Thus we find
4. that while Transfer of property excludes certain things. General Clauses Act, includes certain
things under the head ‘immovable property’. By combing both definitions, we may say that,
the term includes land, benefits to arise out of lands, and things attached to the earth,
except standing timber, growing crops and grass.
Standing timber: The word standing timber includes Babool Tree, Shisham, Nimb, Papal
Banyan, Teak, Bamboo, etc. The fruit berating tree like Mango, Mahua, Jackfruit, Jamun,
etc., are not standing timber, and they are immovable properties ( Fatimabibi v. Arrfana
Begum, AIR 1980 All 394). But if intention is to cut them down sooner or later for the
purpose utilising them as timber, and not to use them for the purpose of enjoying their
fruits, they are regarded as movable property. (T.A. Sankunni v. B.J. Philips, AIR 1972 Mad
272). Growing crops: Growing crops includes creepers like pan, angoor, etc., millets (Wheat,
Sugarcane, etc.), Veg like Lauki, Kaddo, etc. These crops don’t have any own independent
existence beyond their final produce.
Grasses: It can only be used as fodder, and no other use is possible. Therefore it is movable.
But a contract to cut grass will be an interest in chattel, so is immovable property. The
following has been judicially recognised as immovable property:
(1) Right to collect rent of immovable property.
(2) Right to dues from a fair on a piece of land.
(3) A right of fisheries.
(4) A right of terry.
(5) A right of way.
(6) Hereditary offices.
(7) The interest of a mortgagee in immovable property.
Minerals: Upon transfer of immovable property, things not only rooted to it, but also
anything found deep down below the property.
Q. 3 Distinguish between an actionable claim and mere a right to sue.
a. A debt or actionable claim must be distinguished from a mere right to sue. A right to sue
for damages in tort is a mere right to sue and therefore not transferable. A right to recover
mesne profits by itself is a mere right to sue, which cannot be transferred.
As defined under section 3 of Transfer of Property Act, 1882, “actionable claim” is a claim on
which action can be initiated in a court of law for relief. It can be interpreted in this way also
that it is a right of a person to initiate action in a court of law to secure his claim over a
property both movable and immovable. However under the same section certain categories
of claims have been excluded such as claims which have already been adjudicated and /or
decreed, claims secured by any charge such as mortgage, pledge or hypothecation of
property.
Strictly speaking this claim relates to only such debts or any beneficial interest in movable
property which is not in actual or constructive possession of the claimant and /or is not
secured by charge (pledge, mortgage, hypothecation) of movable or immovable property. It
can be inherited and transferred by sale, mortgage and gift, just like other property.
Transfer of this claim either by sale, mortgage or gift can be completed by simply execution
of an instrument in writing to this effect. Such instrument does not need to be registered.
Examples of “Actionable Claim:-“The following claims are “actionable claims”:-
5. 1. Claim for arrear rent;
2. Claim for rent to fall due in future.
3. An option offered to repurchase the property once sold.
4. Benefit of a contract giving option to purchase the land.
5. When a contract for purchase of goods is endorsed by the purchaser, by writing on the
back of the contract under his signature, that he has sold all his rights and interest in
the goods purchased under the said contract to a certain person who is named and
properly identified in such endorsement.
However the following claims are not “Actionable claims”:-
1. A claim which is decreed.
2. Relinquishment of interest of a member retiring from joint Hindu Family business in
favor of the members who continue to be co-parceners of the same.
3. “Right to Sue”, though it is a right but not an actionable claim.
4. A claim for main profits.
A mere right to sue, as for instance, in respect of damages for breach of contract, or for tort,
cannot be transferred. The object of the prohibition is to prevent gambling in litigation.
Moreover, a right to sue is personal to the party aggrieved. Example. A contracts to buy
goods from B. On due date A fails to take delivery and B sells the goods in the market at a
loss of Rs.10000. B transfers the right to recover the damages to C. The transfer is invalid.
In Baroda Cement And Chemicals Ltd. vs Commissioner Of Income-Tax, the court held that
the amendment of clause (e) of section 6 by the deletion of the underlined words has
brought into sharp focus the distinction between property and a mere right to sue. Before
the amendment, only the right to sue for damages arising out of a tortious act fell within the
ambit of the said clause. The right to sue arising ex contractu, therefore, did not fall within
the mischief of the clause even if it were a mere right to sue. After the amendment a mere
right to sue, whether arising out of tortious act or ex contractu, is not transferable.
Long Questions
Q.1 Define License. How it is distinguished from a lease.
a. 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.
Section 105 of Transfer of Property Act:
Lease-. A lease of immovable property is a transfer of a right to enjoy such property, made
for a certain time, express or implied, or in perpetuity, in consideration of a price paid or
promised, or of money, a share of crops, service or any other thing of value, to be rendered
periodically or on specified occasions to the transferor by the transferee, who accepts the
transfer on such terms.”
Section 52 of the Easements Act, 1882:
License- Where one person grants to another, or to a definite number of other persons, a
right to do, or continue to do, in or upon the immovable property of the grantor, something
which would, in the absence of such right, be unlawful, and such right does not amount to
6. an easement or an interest in the property, the right is called, a license.”
“Lease” is a word which everyone is aware of, and hears it day in and day out while dealing
the transactions related to immovable property. Lease can be defined as the right to enjoy
an immovable property for a certain period of time, in consideration of a price paid by the
person getting possession of the property.
Under Black’s Law dictionary, “Lease” can be defined as a conveyance of lands tenements to
a person for life, for a term of years, or at will, in consideration of rent or some other
recompense. Oxford Dictionary of Law defines it as “a contract under which an owner of
property grants another person exclusive possession of the property for an agreed period, in
return for rent and sometimes for a capital sum known as a premium.
Black’s Law Dictionary defines “Licence” in the context of property law as an authority to do
a particular act or series of acts upon another’s land without possessing any estate therein.
Oxford Dictionary of Law defines it as Permission to enter or occupy a person’s land for an
agreed purpose.
A lease or a licence is a contractual agreement between Council (lessor or licensor) and
another party (lessee or licensee) that binds both parties to the terms of the agreement.
The individual circumstances surrounding the land and buildings and the needs of the users
will assist in guiding whether granting a lease or a licence is appropriate.
The essential differences between a lease and a licence are set out below.
Lease
A Lease is a transfer of right to enjoyment (exclusive possession) of that property by the
lessor the lessee, made for a certain term in consideration of a fee subject to the terms set
out in the lease agreement.
A lease grants exclusive possession for a fixed period (term).
A lease creates an interest in the land which can be transferred to the lessee for the period
of the lease.
A lease can be transferred (assigned) to another party and if registered on the title is binding
on a new owner of the land.
A lease is not revocable (other than subject to any conditions set out in the lease (e.g. a
redevelopment clause).
Licence
7. A Licence is the granting of a permission to use the land in consideration of a fee subject to
the conditions set out in the licence
A licence does not grant exclusive possession.
A licence does not create or transfer an interest in the land.
A licence is not transferable
A licence is revocable
Q. 2 Discuss the law relating to transfer for the benefit of unborn person.
UNBORN CHILD
“A person not in existence has a specific reference to one who may be born in the future but
does not have a current existence”. Even thought a child in womb is literally not a person in
existence, but has been so treated under both Hindu Law and English Law.
STATUS OF UNBORN CHILD
There is nothing in the law to prevent a man from owning property before he is born. His
ownership is necessarily contingent, indeed, for he may never be born at all; but it is none
the less a real and present ownership. A child in its mother’s womb is for many purposes
regarded by a legal fiction as already born, in accordance with the maxim nasciturus pro jam
nato habetur. In words of Coke: ‘The law in many cases hath consideration of him in respect
of the apparent expectation of his birth.’ Thus, in the law of property, there is a fiction that a
child en ventre sa mere is a person in being a life chosen to form part of the period in the
rule against perpetuities. The New York Appel- late Division has recently laid down obiter
the doctrine that a child may recover for prenatal injuries. Nugent v. Brooklyn Heights R. Co.,
i39 N. Y. Supp. 367 (Sup. Ct., App. Div.).’ In determining whether a child en ventre sa mere is
a legal person with capacity for rights, it is helpful to examine the treatment accorded him
in other departments of the law. He takes under a devise to children “living” 2 or “born” I at
a given time. This does not, however, involve the recognition of a child en ventre sa mere as
a separate existent entity, but is purely a rule of construction based on the ground that
“such children come within the motive and reason of the gift.” 4 Similarly he comes within
the Statute of Distribu- tions,5 and is included in the terms of Lord Campbell’s Act allowing
suit by children for the death of their father.6 In a sense it may be said that an unborn child
is treated as living for the purpose of the Rule against Perpetuities I and the revocation of
wills. A more accurate statement of the result of the cases is that the limitation imposed by
the Rule against Perpetuities is twenty-one years and the lives of persons conceived at the
time of the gift plus the period of gestation of the donee; and that a will is revoked by the
8. subsequent marriage of the testator and the conception of a child afterwards born alive. In
like manner it is more nearly correct to say that in the case of children en ventres ses meres
an exception is made to the rule that contingent remainders must vest before the
termination of the preceding estate,’0 than that the law of real property here recognizes the
unborn child as an existent person .
THE LAW OF PROPERTY
There is a fiction that a child en ventre sa mere is a person in being for the purpose of (1)
acquisition of property by the child itself, or (2) being a life chosen to form part of the period
in the rule against perpetuities.2 The principle is well settled now, although the older
authorities show some disagreement.3 In (1), the basis of the rule is not that in a gift to
“children” the natural or ordinary meaning of “children” is such as to include a posthumous
child, but that an artificial sense must be given to the word, because “the potential
existence of such a child places it plainly within the reason and motive of the gift”;4 this is,
of course, assuming that the donor has not expressed or implied in the document an
intention to confine the gift to children living at the date at which the gift takes effect.
To[8]put the matter in another way, if the donor had thought about it at all,[9] he would
almost certainly have said that he wished to include his posthumous children among the
beneficiaries. There[10] is no fiction as to his intention, but the law can give effect to that
intention [11]only by the fiction that the child en ventre sa mere is actually born, provided it
is in fact subsequently born alive. The [12]fiction is applicable in (1) only if it is for the
benefit of the child, not where it may be detrimental to him.5 But in (2), i.e., in connexion
with the perpetuity rule, the fiction holds whether it be for the advantage of the unborn
child or not.6 Even with respect to the[13] benefit in (1), it must be for the child’s direct
benefit; e.g., if there be a gift to X for life, with a limitation over to X absolutely if X leave
issue, but, if he leave none, then to Y, and if X die leaving a child en ventre sa mere, the
property will go to Y; for the gift conferred no direct benefit on X’s child unborn at X’s death.
Such [14]was the decision of the house of lords in Elliot v. Joicey,7 and it evoked a
considerable amount of adverse criticism.
TRANSFER OF PROPERTY TO AN – UNBORN CHILD
Section 13 of Transfer of property Act read as follows:
“Where, on a transfer of property, an interest therein is created for the benefit of a person
not in existence at the date of 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 the whole of the remaining interest of the transfer in the property. Section[15]
13 gives effect to the general rule that a transfer can be effected only between living
persons. There cannot be a direct transfer to a person who is not in existence or is unborn.
This is the reason why section 13 uses the expression transfer ‘for the benefit of’ and not
transfer ‘to’ unborn person. A child in the mother’s womb is considered to be competent
transferee. Therefore, the property can be transferred to a child in mother’s womb because
the child exists at that time but not to an unborn person who does not even exist in
mother’s womb. Every[16] transfer of property involves transfer of interest. As [17]soon as
the property is transferred, the transferor is divested of that interest and the interest is
vested in the transferee. For vesting of interest, therefore, it is necessary that the transferee
must be in existence. Otherwise [18]the interest will remain in abeyance till the transferee
comes into existence. This[19] is against the very concept of an interest. Section 13 provides
9. that the property cannot transfer directly to an unborn person but it can be transferred for
the benefit of an unborn person. For transfer of property for the benefit of unborn person
two conditions are required to be fulfilled:
1) Prior life interest must be created in favor of a person in existence at the date of
transfer, and
2) Absolute interest must be transferred in favor of unborn person.
PRE-REOUISITES FOR A VALID TRANSFER OF PROPERTY TO AN UNBORN PERSON
Section 13 provides a mechanism for a specific mechanism for transferring property validly
for the benefit of unborn persons. The procedure as follows:
1) The person intending to transfer the property for the benefit of an unborn person
should first create a life estate in favor of a living person and after it, an absolute estate in
favor of the unborn person.
2) Till the person, in whose favor a life interest is created is alive, he would hold the
possession of the property, enjoy its usufruct i.e. enjoyment the property.
3) During his lifetime if the person, (who on the day of creation of the life estate was
unborn) is born, the title of the property would immediately vest in him, but he will get the
possession of the property only on the death of the life holder.
Creation of a Prior Life Interest
As far as the creation of a prior interest is concerned, first, the property is given for life to a
living person. It is not necessary that life interest should be created in favor of only one
living person. The transfer is competent to create successive life interests in favor of several
living persons at the same time.
For instance, A transfer property to B for life, and after him, to C, and
then to D again for their lives and then absolutely to B’s unborn child UB.
A ———————————B (life interest)
———————————-C (life interest)
———————————-D (life interest)
———————————-UB (Absolute interest) [fig (i)]
On B’s death, the possession would be taken by C and on C’s death, by D. On D’s death, the
possession would go to B’s child, who should have come in existence by this time. If he not
there, the property would revert back to A, if he is alive, else to his hiers.
No Life Interest for an Unborn Person
As far as the unborn is concerned, no life interest can be created for the benefit of an
unborn person. Section 13, specifically prohibits that, by the use of the expression, ‘the
interest created for the benefit of such person’ shall not take effect, unless it extends to the
whole of the remaining interest of the transferor in the property. It means that the transfer
must convey to the unborn person, whatever interest he had in the property, without
retaining anything with him. Thus, no limited estate can be conferred for the benefit of the
unborn person. If limited interest in the property is settled for him, the same would be void.
For instance, A creates a life estate in favor of his friends B, and a life estate for the benefit
of B’s unborn first child UB1 and then absolutely to B’s second child UB2.
A ———————– B (Life interest)
———————– UB1 (Life interest)
———————– UB2 (Absolute interest) [fig (ii)]
10. The second figure is of limited interest in the property for the benefit of an unborn person
and would therefore be void and incapable of taking effect in law. After the death of B,
here, the property would revert back to A or his hiers as the case may be, as even though
the transfer for the benefit of UB2 appears to be proper, as it is dependent on a void
transfer that cannot take effect in law; a transfer subsequent to, or dependent on a void
transfer can also not take effect.
Thus, where a father gave a life interest in his properties to his son and then
to his unborn child absolutely, it was held that the settlement was valid. But where the
interest in favor of the unborn child was a life interest the settlement would be void, and a
subsequent interest would also fail. Similarly, where there is possibility of the interest in
favor of the unborn child being defeated either by a contingency or by a clause of
defeasance, it would not be a bequest of the whole interest, and would be therefore be void.
In the example cited above, in figure (ii), suppose UB1 dies before B and UB2 is alive when
the life estate in favor of B comes to an end. Even then, the transfer of the benefit of UB2
will not take effect as the validity of the transfer has to be assessed from the language of
the document and not with respect to probable or actual events that may take place in
future. It is the substance of the transfer that will determine whether it is permissible under
the law or not and not how the situation may emerge in future.
In[20] Girish Dutt V Data Din, A made a gift of her property to B for her life and then to her
sons absolute. B had no child on the date of execution of the gift. The deed further provided
that in case B had only daughters, then the property would go to such daughters but only
for their life. In case B had no child then after the death of B, the property was to go
absolutely to X.
The deed on paper provided a life estate in favor of B’s unborn daughters: which is
contrary to the rule of sec.13. However, B died without any child, and X claimed the
property under the gift deed. The court held that where a transfer in favor of a person or his
benefit is void under sec.13, any transfer contained in the same deed and intended to take
effect or upon failure of such prior transfer is also void. In determining whether the transfer
is in violation of sec.13, regard has to be made with respect to the contents of the deed and
not what happened actually. Here as the transfer stipulated in the contract that was void,
the transfer in favor of X also became void. Hence, X’s claim was defeated.
Case Laws
Sopher’s case
In the case of [21]Sopher v Administrator General of Bengal a testator directed that his
property was to be divided after the death of his wife into as many parts as there shall be
children of his, living at his death or who shall have pre-deceased leaving issue living at his
death. The income of each share was to be paid to each child for life and thereafter to the
grand-children until they attained the age of 18, when alone the grand-children were to be
absolutely entitled to the property. The bequest to the grand-children was held to be void
by Privy Council as it was hit by sec.113 of the Indian Succession Act which corresponds to
sec.13 of Transfer of property Act. Their Lordships of the Privy Council observed that: “ If
under a bequest in the circumstances mentioned in sec.113, there was a possibility of the
interest given to the beneficiary being defeated either by a contingency or by a clause of a
defeasance, the beneficiary under the later bequest did not receive the interest bequeathed
in the same unfettered form as that in which the testator held it and that the bequest to
11. him did not therefore, comprise the whole of the remaining interest of testator in the thing
bequeathed.
Ardeshir’s Case
In Ardeshir V Duda Bhoy’s case D was a settler who made a settlement. According to the
terms of settlement, D was to get during life, one-third each was to go to his sons A and R.
After D’s death, the trust property was to be divided into two equal parts. The net income of
each property was to be given to A and R for life and after their death to the son’s of each
absolutely. If A and R were each to pre-deceased D without male issue, the trust were to
determine and the trust property were to the settler absolutely. The settler then took
power to revoke or vary the settlement in whole or in part of his own benefit. It was held
that R’s son who was not born either at the date of settlement or his death did not take any
vested interest and the gift to him was invalid. A’s son who was alive at these dates did not
also take a vested interest.
Q. 3 Explain the doctrine of lis pendens and narrate the essential conditions of the
application of the doctrine.
a. The doctrine of lis pendens provides that no fixed property can be transferred while an
action relating to it is pending before a court of law.(3) Under Section 47, a registered sale
deed of a fixed property, on registration, is deemed to operate from the date of execution.
Section 52 of the Transfer of Property Act,1882 provides the doctrine of lis pendens, i.e.,
‘pending litigation.’
The doctrine of lis pendens is expressed in the well-known maxim; ‘pendente lite nihil
innovature’ which means ‘during pendency of any suit regarding title of a property, any new
interest in respect of that property should not be created. The effect of the applicability of
the doctrine is that it does not annul the conveyance, but only renders it subservient to the
rights of the parties to the litigation. The transferee will be bound by the result of the suit or
proceeding, whether or not he had notice of the suit or proceeding.
The principle is explained in Bellamy v. Sabine, (1857) 1 Dec. & 566, where Turner, L.S said,
it that doctrine rests upon this foundation that, it would plainly be impossible that any
action or suit could be brought to a successful termination if alienations pendente lite were
to allowed prevail. The plaintiff would be liable in every case to be defeated by the
defendants, alienating before the judgment or decree and would be driven to commence his
proceeding de novo subject again to the same course of proceeding.”
The doctrine is based upon expediency and it is immaterial whether the transferee pendente
lite had or had not notice of the suit. This doctrine had been fully expounded by the Privy
Council in Faiyaz Hussain Khan v. Prag Narain, (1907) 29 All 339 PC where their lordship
quote with approval the observations of Lord Justice Turner is Bellamy’s case.
The rule of Lis pendens is based on the necessity for final adjudication. It aims at the
prevention of multiplicity of suits or proceedings.
For applicability of the- doctrine, folios° conditions must be fulfilled:
• There must be pendency of a suit or proceeding.
• The suit or proceeding must be pending in a competent court.
• The suit or proceeding must not be collusive.
12. • A right to immovable property must be directly and specifically in question in that suit or
proceeding.
• The property in dispute must be transferred or otherwise dealt with by any party to the
litigation.
• The alienation must effect the right of the other party.
Explanation to Section 52 provided that the pendency of a suit or proceeding beings from
the date of the presentation of the plaint or institution of the proceeding in court of
competent jurisdiction. In case the plaint is presented in a wrong court, and a transfer takes
place during such pendency, the doctrine of lis pendens would not be applicable.
In Mahendra Nath v. Parineswar, (1921) 60 IC 439, it was held that if the plaint is
insufficiently stamped and is rejected and then represented after making good the
deficiency, a transfer between the two dates of presentation would not subject to lis
pendens.
Q. 4 Explain the nature and meaning of mortgage. What is the mode of effecting it.
a. Meaning: A mortgage is a loan in which property or real estate is used as collateral. The
borrower enters into an agreement with the lender (usually a bank) wherein the borrower
receives cash upfront then makes payments over a set time span until he pays back the
lender in full.
Mortgage is, in English Law, a disposition of property to another in
security of a debt, in supplement of a personal contract for payment of the
debt. Mortgage (Mortuum Vadium, dead pledge) is so - called because, in
many cases, the mortgagor does not perform the condition in the provision
for redemption and the pledge is forfeited.
Nature:The classic description of a mortgage is given by Lindley, M.R. in
Santley v Wilde5. "A mortgage is a conveyance of land or an assignment
of chattels as a security for the payment of a debt or the discharge of someother obligation
for which it is given". These words exactly express the
nature of a mortgage.
And it therefore follows that a mortgage presents two essential features :
i) the object of the transaction is to provide security for the
performance of an obligation
ii) this object is attained by transferring to the obligee rights of
property.
The entire law relating to mortgage of immovable property is
contained in the Transfer of Property Act, 1882 (Sections 58 to 98).
The Transfer of Property Act, 1882 was modelled on the English Law
of mortgage. The latter has been changed by the Law of Property Act, 1925. Section 58 (a) of
the Transfer of Property Act,1882 defines mortgage
as 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.
Types and mode of effecting them
13. Section 58 of the Transfer of Property Act, 1882 enumerates six
classes of mortgage:
1. Simple mortgage- without delivering possession of the mortgaged property, the
mortgagor binds himself personally to pay the mortgage money, and agrees
expressly or impliedly, that, in the event of failing to pay according to his
contract, the mortgagee shall have a right to cause the mortgaged property
to be sold and the proceeds of the sale to be applied, so far as may be
necessary, in payment of the mortgage – money.
2. Mortgage by conditional sale-Where the mortgagor ostensibly sells the mortgaged
property _
On a condition that on default of payment of the mortgage money on
a certain date the sale shall become absolute, or
On condition that on such payment being made the sale shall become
void, orOn condition that on such payment being made the buyer shall
transfer the property to the seller
3. Usufructuary mortgage-Where the mortgagor delivers possession or expressly or by
implication binds himself to deliver possession of the mortgaged property
to the mortgagee, and authorises him 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 profits and to
appropriate the same in lieu of interest, or in payment of the mortgage -
money, or partly in lieu of interest or partly in payment of the mortgage -
money
4. English mortgage- Where the mortgagor binds himself to repay the mortgage - money
on a certain date, and transfers the mortgaged property absolutely to the
mortgagee, but subject to a proviso that he will retransfer it to the
mortgagor upon payment of the mortgage - money as agreed,
5. Mortgage by deposit of title – deeds-Where a person in any of the following towns,
and in any other town which the State
Government concerned may, by notification in the Official Gazette, specify
in this behalf, delivers to a creditor or his agent documents of title to
immovable property, with intent to create a security there
6. Anomalous mortgage- is not a simple mortgage, a mortgage by
conditional sale, a usufructuary mortgage, an English mortgage or a
mortgage by deposit of title - deeds within the meaning of this.
Mortgage How Effected
Section 59 of the Transfer of Property Act, 1882 provides as follows:
Where the principal money secured is one hundred rupees or
upwards, a mortgage other than a mortgage by deposit of title deeds can be
effected only by a registered instrument signed by the mortgagor and
attested by at least two witnesses.
Where the principal money secured is less than one hundred rupees,
a mortgage may be effected either by a registered instrument signed and
attested as aforesaid or (except in the case of a simple mortgage) by delivery
of the property".
The words "other than a mortgage by deposit of title deeds" were
inserted by the Amending Act 20 of 1929. In either case, a simple mortgage
14. can only be effected by a registered instrument. Mortgage by deposit of title
deeds has been specifically excluded from the purview of this section and no
registered instrument is necessaiy to effect such a mortgage. The words
"principal money secured" in the section show that interest is not to be
taken into account in estimating the amount secured. A mortgage does not
become complete and enforceable until it is registered.
Mode of creating a mortgage
No particular form of words is necessary for the creation of a
mortgage. It is sufficient that the transfer should be originally intended to
secure the debt. The intention of the parties will be ascertained by looking
at the substance and essence of the transaction and not mere the form of
words. Even if the deed calls itself a mortgage, its nature will be
determined not by the name the parties give it, but by the jural relationship
constituted by it.
In Kottayya v Annapumamma, a debtor who was not able to
repay the amount of the debt granted to the creditor a right to occupy and
enjoy certain land for a period of 20 years. It was held that the transaction
was not a mortgage but a lease. In Natesa Pathar v Pakkirisamy Pathar, before the Madras
High Court, the condition of sale and resale was engrafted in the same
document, wherein the purchaser was specifically prohibited from
encumbering the property within a period of five years stipulated for
repurchase. There were also substantial differences between the actual
value of the property and consideration as stipulated in the deed. It was
held that it was a mortgage by conditional sale and not a sale with a
condition for re - transfer. ‘
Q. 5 Who are persons entitled to redeem the mortgage? Discuss the mortgagee’s right to
sue for mortgage money.
a. Where a mortgage is created in respect of any property, undoubtedly,
an interest in the property is carved out in favour of the mortgagee. The
mortgagor is entitled to redeem the property on payment of the mortgage
dues. This does not, however, mean that the property ceases to be the
property of the mortgagor. The title to the property remains with the
mortgagor. Therefore, a statutory first charge is created on the property of
the mortgagor; the property subjected to the first charge is the entire
property of the mortgagor.
The mortgagor’s right to redeem
The most important right of a mortgagor (the borrower) is the right to redeem the mortgage
on repayment of the loan, together with payment of any interest on the mortgage.
Right to redeem at law
At law, the right to redeem is a matter of contract: the mortgagor can redeem the mortgage
on the date/s and in the manner required under the mortgage agreement. If the agreement
provides that the mortgage must be redeemed on a particular date, the mortgagor must
15. legally redeem the mortgage on that day. The mortgagor cannot insist on redeeming the
mortgage either before or after the contractual date.
At common law, if the mortgagor did not pay on the contractual date, the mortgagor would
traditionally forfeit the land to the mortgagee (the lender) and be sued in contract for
repayment of the debt. Therefore, the legal right to redeem is limited.
Right to redeem in equity
Fortunately, equity (fairness) stepped in: as the purpose of a mortgage agreement is simply
to provide the mortgagee with security for the loan, equity took the view that so long as the
advance and any interest was repaid, the mortgagee should not be able to object to
redemption.
Right of redemption is the right which every mortgagor possess, which is created by virtue
of the mortgage deed. This right is considered to be inalienable, and cannot be taken away
from a mortgagor by means of any contract to the contrary. According to Black’s Law
Dictionary, term “redemption” can be defined as the act of the vendor of property in buying
it back again from the purchaser at the same or an enhanced price. “Right of Redemption”
can be defined under the same dictionary as an agreement or paction, by which the vendor
reserves to himself the power of taking back the thing sold by returning the price paid for it.
This right finds place under Section 60 of the Transfer of Property Act, 1882 which makes
mortgagor the owner of the property mortgaged, and makes him able get his property back
from the mortgagee on paying the amount borrowed from him. Clog on a right means the
insertion of any clause or any provision under the mortgaged deed which would alienate
mortgagor of his property under certain circumstances. Under Indian legal system, such
provisions would not be able to alienate a mortgagor of his “Right of Redemption”, and such
provisions would be void ab initio. The reason for such clauses under the mortgage deed
being void is quite interesting and reasonable. It would not be difficult to understand that a
person mortgages his property when he is in need of money, and would not be in the same
position as that of the mortgagee. Also, it would not be difficult to understand that
mortgagee would try to misuse his position to exploit the mortgagor, and it is for this reason
that such clause becomes obvious which would alienate a mortgagor of his property. It is
highly possible that a person agrees to enter in a mortgage having clauses which extinguish
his right of redemption, but it would not be necessary that the provisions have been
accepted by him willingly. In need of money, a person would agree to the terms and
conditions of the mortgagee even if he doesn’t want to do so. But, law doesn’t sit silent and
in such cases it steps in the picture, and save the basic rights of a mortgagor. Law doesn’t
allow any person to alienate a mortgagor of his “Right of redemption”. Such right would
remain effective unless the property has been sold off or under any statutory provision.
Even if mortgage has went to the court for the foreclosure of the property mortgaged,
mortgagor can redeem his property by paying off the full amount in the court.
Time period is not the essence in case of right of redemption. One such case was decided by
the court in Achaldas Durgaji Oswal v Gangabisan Heda (2003) 3 SCC 614 , where a suit was
filed by the mortgagee for the foreclosure of the property, and another suit was filed by the
mortgagor. Lower court asked mortgagor to pay off the amount within 3 months, but he
was not able to do so. Instead, he paid off the amount after a period of 3 years and at that
point of time his suit was rejected by the lower court on ground of exceeding the limitation
16. period as decided by the court. Lower court’s decree was reversed by the High Court, which
was upheld by the Supreme Court. It was held by the Supreme Court that “the right of
redemption of mortgagor being a statutory right, the same can be taken away only in terms
of the proviso appended to Section 60 of the Act which is extinguished either by a decree or
by act of parties. Admittedly, in the instant case, no decree has been passed extinguishing
the right of the mortgagor nor such right has come to an end by act of the parties.” Another
view was taken by the Supreme Court in K.Vilasini and Ors v Edwin Periera CIVIL APPEAL NO.
5476 OF 2008,where a suit was filed by the mortgagor for the foreclosure but it was prayed
by the mortgagor that he would pay the amount and required some time. The time was
granted by the court with the consent of the mortgagee, but mortgagor was not able to pay
the amount in the stipulated time. He later deposited the amount claimed to redeem his
property. The same was decreed by the court and confirmed by the High Court. Supreme
Court also decreed in favour of the mortgagor stating that mortgagee had himself allowed
mortgagor to pay off the amount and also took part in the proceedings therein. In Hasthimal
and Sons v. Tej Raj Sharama 2007 AIR SCW 6135 ,where a pre-emption clause was
introduced by the mortgagee stating that he would have a right to purchase the property if
the same was intended by the mortgagor. In this case, Supreme Court relied on a judgment
of House of Lords in Lewis v. Frank Love, Ltd, 1961 All. E.R. 446, where it was held by the
court that “where one of the terms arranged between the mortgagor and the mortgagee
was that the mortgagee should have a right to pre-emption in case the mortgagor wishes to
transfer the property to a third party, such a condition operates as a clog on the right of
redemption of the vendee from the mortgagor.
Right to sue for mortgage-money
Section 68 of the Transfer of Property Act, 1882 deals with the mortgagee’s right to sue for
the mortgage money. It says that the mortgagee has a right to sue for the mortgage-money
only in the following cases, namely,-
(a) where the mortgagor binds himself to repay the same;
(b) where, by any cause other than the wrongful act or default of the mortgagor or
mortgagee, the mortgaged property is wholly or partially destroyed or the security is
rendered insufficient within the meaning of section 66, and the mortgagee has given
the mortgagor a reasonable opportunity of providing further security enough to
render the whole security sufficient, and the mortgagor has failed to do so;
(c) where the mortgagee is deprived of the whole or part of his security by or in
consequence of the wrongful act or default of the mortgagor;
(d) where, the mortgagee being entitled to possession of the mortgaged property,
the mortgagor fails to deliver the same to him, or to secure the possession thereof to
him without disturbance by the mortgagor or any person claiming under a title
superior to that of the mortgagor:
However, in the case referred to in clause (a), a transferee from the mortgagor or from his
legal representative shall not be liable to be sued for the mortgage-money. Further, Where
17. a suit is brought under clause (a) or clause (b) of sub-section (1), the court may, at its
discretion, stay the suit and all proceedings therein, notwithstanding any contract to the
contrary, until the mortgagee has exhausted all his available remedies against the
mortgaged property or what remains of it, unless the mortgagee abandons his security and,
if necessary, re-transfers the mortgaged property.