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TP Act - transfer of property act

Property law (Karnataka State Law University)

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The transfer of property act 1882

Immovable properties

- The definition of immovable properties it is negative definition, which say what is not an
immoveable property.
- Section 3- of Transfer of property Act 1882-immoveable property does not include
standing timber, growing crops or grass.
- Section 3- of The General Clauses Act 1897- “ Immovable property-
Land Benefits to arise out of land- Profit Appendary (Exp- Rent, fishing rights, right
to ferry, lease)
Things attached to the earth or permanently fastened to anything attached to the
earth.- Exp- building, wall, poll.

Definition of Immovable Properties-

Section 3- immovable property shall include land, benefits to arise out of land, and things
attached to the earth, or permanently fastened to anything attached to the earth, except
standing timber, growing crops or grass, it also include creepers and betel leave.
What is the meaning of Land in TP-

There are four meaning of Land in TP-

1. Plot of land or plain land.

2. Land includes space as well.
3. Things beneath land.
4. Things above surface or thing on surface.

Case law- Narayan Sa v/s Balagure Swami AIR 1924 Madras 187
Vassal used for destilation of liquor not immovable property.

Standing Timber- Case Law- Shanti Bai v/s State of Bombay AIR 1958 SC 532

In this case SC held that , intention of the owner decide whether a standing timber a timber
or crop.

- A fruit bearing tree are immovable property, if the owner treat it as a timber .

Q-
- which one is immovable property?- 2003-SN
- Growing crops? 2003-SN
- Right to ferry? 2003-SN

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- Standing timber? 2003-SN

- Define immovable property. In which cases things which we know as movable are
treated as immovable property? Is there any test to decide it-2007-L

A-

The definition of Immovable property given in the S.3 of Transfer of Property Act 1882, is not
exhaustive, it is the negative definition which exclude the things and says immovable property
does not include standing timber, growing crops or grass. The definition in the General clauses
Act also not exhaustive but it is some what positive definition which includes land, benefits to
arise out of land , and things attached to the earth.

Things attached to earth, or permanently fastened to anything attached to earth?

a. Things rooted in the earth- trees and shrubs.

b. Imbedded in the earth- wall or building.
c. Attached to what is so imbedded for permanent beneficial enjoyment of that which it
is attached-
Perumal v/s Ramaswami – held- oil engine attached to earth and the attachment to
lasts only so long as the engine is used. When it is not used, it can be detached and
shifted to some other place. The attachment in such case immovable property.

Narayan Sa v/s Balagure Swami AIR 1924 Madras 187 Vassal used for destilation of
liquor not immovable property.

The degree, manner, extent and strength of attachment of the chattel to the earth or building, are
main features to be regarded. Further test is whether, such an attachment is for the permanent
beneficial enjoyment of the immovable property to which it is attached.

Land- considers in its legal aspect, land includes the following elements:

1. A determinate portion of the earth’s surface.

2. Possibly the column of space above the surface.
3. The ground beneath the surface.
4. All objects which are on or under the surface in its natural state- minerals, lakes, ponds,
rivers.
5. All objects placed by human agency on or under the surface, with the intention of
permanent annexation. These become part of the land, and lose their identity as separate
movable – building, walls, fences.

Benefits to arise out of land-

Apart from property being immovable from the physical point of view, every benefit arising out of
it and every interest in such property is also regarded as immovable property.- hereditary
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allowances, rights of way, lights, ferries and fisheries. A debt secured by a mortgage of immovable
property is an interest inland. A right to collect lac from jungle, flash from pond, right to take
minerals, rent from hat or market place.

Things attached to earth-

S.3 – defines the expression –attached to the earth- as including-

1. Things rooted in the earth,

2. Things imbedded in the earth,
3. Things attached to what is so imbedded,
4. Chattel attached to earth or building.

Things rooted in the earth-

Includes like trees and shrubs, but when such trees constitute standing timber they are not
immovable property.

Shantabai v/s State of Bombay- if the intention is to use them for enjoying their fruits, they
will be regarded as immovable property. But if the intention is to cut them down sooner or
later for the purpose of utilizing the wood they would be timber and regarded as movable
property.

Similarly, growing crops, and grass are regarded as movable property.

Things imbedded in the earth-

Includes such things as houses and buildings, there are certain thing which are imbedded in the
land but not a immovable property like anchor imbedded in the land to hold a ship.

When the article in question is no further attached to the land by its own weight, it is
generally to be considered as movable property. But when in such a case if the intention is to
make the articles as part of the land

The rule is- if the article stands on the earth up to its own weight, it will not be part of the land
but if it is caused to go deeper in the earth by external agency, then it is part of a land.

Things attached to what is so imbedded-

Includes like door, window of a house are attached to the house for the permanent enjoyment of
the house, when the intention Is not permanent enjoyment then it becomes the movable
property like fans, blinds.

Chattel attached to earth or building-

If a chattel, i.e., movable property is attached to earth or building, it is immovable property.

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Perumal naicker v/s Ramaswami Kone- A property is a movable property and for its beneficial
use of enjoyment it is necessary to imbed it or fix it on earth, through permanently, that is , when it is
in use it should not be regarded as immovable property for that reason.

For example – sugar cane machine or oil engine.

Recognized as Immovable properties-

1. Right to collect rent of immovable property.

2. Right to collect dues from a fair on a piece of land.
3. Right of ferry.
4. Right of way.
5. A right of fishery.
6. A debt secured by mortgage and interest of a mortgage of immovable property.
7. Hereditary offices.
8. Right to receive future rents and profits of land.
9. The equity of redemption.
10. Reversion of property of leased.
11. Right to collect lac from trees.
12. A factory.

Recognized as movable properties-

1. Right to worship.
2. A royalty.
3. A decree for sale of immovable property.
4. A decree for arrears of rent.
5. A right to recover maintenance allowance.
6. A machinery which is not permanently attached to the earth.
7. Government promissory notes.
8. Standing timber, growing crops, and grass.

Section 5, Transfer of Property

Section 5. "Transfer of Property" defined. In the following sections "transfer of property" means
an act by which a living person conveys property, in present or in future, to one or more other
living persons, or to himself and one or more other living persons; and "to transfer property" is to
perform such act.

When we analyze the above definition- there are few things which comes up regarding Transfer of
property-
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 Transfer is an ACT- Giving and Taking of Rights- Active Act, Visible Act.
 Between two or more LIVING PERSON- by which a living person Inter vivos- Living or
Natural person and Artificial Person ( Law existence, company).
 Conveys- transfer.
 Present or future- Future property not allowed.
 Property- Property to another person- To himself ( Trust, minor or guardianship- Rahubar
Singh v/s Jai Jnder Bhadur Singh.

Transfer of Property

Act

Practice

Insolvent

Subject matter

Mode of Transfer

There are modes of transfer of property

1. Sale (Immovable Property). Transfer of Complete Rights. Consideration.

2. Mortgage. ( it is of six kind- 1. Possession,2. Enjoyment,3. Subject to Condition,4.
Equitable,5. Symbolic, 6. Constructive.) Limited Rights Transfer.
3. Gift- ( No consideration)
4. Actionable claim.- Unsecure debt.
5. Lease (Time force, Rent)

Movable Property= Pledge

Immovable Property= Mortgage.
Machinery= Hypotation.

In this section "living person" includes a company or association or body of individuals, whether
incorporated or not, but nothing herein contained shall affect any law for the time being in force
relating to transfer of property to or by companies, associations or bodies of individuals.

xxxxx

What is transfer? The term "transfer" means a process or an act by which something is made
over to another. It does not however, mean that the making over of the thing should always be
absolute. I may transfer my book to you for a day. I may also transfer it to you absolutely either by
sale, gift or in exchange of your book. In either case, what is primarily essential is that I have to
handover the book to you, and that act of handing over the book to you is the transfer of the book.

Analysis of Definition.
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1. Transfer of Property has special technical meaning in Transfer of Property Act. Only 5
conveyances are transfer of property for the Act. Three modes convey absolute title e.g. sale,
gift, exchange. Two convey limited interest e.g. mortgage and lease.

2. Transfer inter vivos alone are included as Transfer in Transfer of Property Act, e.g. transfer from
living person or persons to living person or persons.

3. Transfer can be present or future but transferor and transferee must be living person. The only
exception is Section 13 of Transfer of Property Act.

4. Living person is wider term than natural human beings. It includes juristic persons like
company and other like associations or body of individuals whether registered or not registered.

5. Other laws governing transfer to juristic persons etc. are not affected by Transfer of Property
Act.

Synopsis-

Definition-

 An act by which,
 A living person,
 Conveys,
 In present or future,
 Property,
 To another living person.

Not a Transfer of Property

- Family settlement.
- Compromise
- Partition.
- Surrender.
- Relinquishment.
- Charge.
-
-
Transfer of Property
- Release
- Property situated outside India.

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An Act- it means it is a process or an activity; it is not a digital application or not the

automatic process. Meaning thereby, something should be done by the person who wants
to transfer his or her property. Will or Inheritance is the exception of this rule as property
transfer automatically by operation of law.

Living Person- The Act use the word Inter Vivos i.e. transfer between living person AT THE
DATE OF TRANSFER. Operation of law come into picture in case of Inheritance or wills (
means the death of the transferor) this sort of transfer ( By operation of law) called
TESTAMENTRARY TRANSFER.
Conveys – Doing an act of transfer denote conveys. It means any act the transferor by which
certain new titles or interests are created in favor of the transferee. In simple language it
would be called the ASSURANCE which is being given by Transferor to the Transferee.
Conveys means anything done or any assurance given by the Transferor to the Transferee
by virtue of which the transferee gets the new title or interest is called the conveys.

Emp-

A -------------------- Make (Sale/Gift/Moorgate etc) ------------ B ( Now get the new title)

Conveys

In present or In future- The transfer of property may be take place immediately or in future
date, the expression in present or in future governed by Conveys, it does not govern by the
property.
Means the title of property may vested in the transferee immediately with enjoyment or it enjoyment
can be delayed or postpone for future, which can also comply with certain conditions.

Property- property may be tangible or intangible, property is essentially a bundle of rights or

interest. When a property is transferred it actually the transfer of rights. All rights in a property
denote the ownership or absolute interest.
in Sunil Sidhartbai v/s Commissioner of Income tax, SC held that in general
transfer of property transferred the bundle of right but in some case it may only
be partial of right transfer also happen example – Lease.

In Jugalkishore V/ Ram Cotton Co. Ltd. SC held- the world PRESENT OR IN FUTURE’
qualify the word conveys and not the word property. When a future property is
transferred the transferee does not get that property or interest there in.

To another living person. There should be another person to whom the property can be
transfer, a person can not transfer the property to himself, but in 1929 some amendment has been

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made and a person can transfer a property to himself in case he make any settlement in a trust
and he become the sole trustee.

Other Rules- Not a Transfer of Property

Family Settlement-
Family settlement or Family agreement is not a transfer of property, why because when it take
place the already existing shares of the members of the family are defined and separated in order
to avoid any possible dispute. In Sadu Madho Das V/s Pandit Mukund Ram, SC observed the
same principle.

Transfer of property

Release- It is a transfer of property, because when larger interest falls into smallest interest every
small interest generate a title for some one or new person.

This Act also applicable on MOVABLE AND IMMOVABLE PROPERTYS ( Part A –Chapter II).

S.6- What Can be Transfer-

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Some part
governed by
Prohibited other
Category personal laws
like muslim
outside the TPA or Hindu Law

Hindu Law -
Prohibited Govern -
Like the
Muslim Law
Category of Religious
Transfer offerings
Wakf of
property under TPA - Copasner like
Female
S.6 Legacy

Civil Law
Agricultural
Land

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Transfer

Permited Category-
Prohibited Category
Can be Transfer
Can not be Transfer

Prohibited Under Prohibited Under

S.6 TPA Any other Law

Section .6
Spes Successionis- Mere Chance to Get any thing.
Chance of an Heir apparent.
Chance of getting property under will.
Any othe rpossibility like nature.
Spes-successionis under Muslim Law.
Spes Successionis in Punjab.
English Law.
Mere Right of reentry.
Easement right apart from Dominate Heritage.
Restricted Interest.
Right to Future Maintenance.
Pensions and Stipens.
Transfer opposed to Nature of Interest.
Transfer opposed to nature of interest created thereby.
Transfer where its object or consideration is unlawful.
Transfer made to disqualified transfereee.

Section -6

General Rule- Every thing Can be Transfer

Exception- Prohibited by S.TPA, any other law in force.

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Section .6 – Non Transferable.

• Spes Successionis- Mere Chance to Get any thing.
• Chance of an Heir apparent.
• Chance of getting property under will.
• Any othe rpossibility like nature.
• Spes-successionis under Muslim Law.
• Spes Successionis in Punjab.
• English Law.
• Mere Right of re entry.
• Easement right apart from Dominate Heritage.
• Restricted Interest.
• Right to Future Maintenance.
• Pensions and Stipens.
• Transfer opposed to Nature of Interest.
• Transfer opposed to nature of interest created thereby.
• Transfer where its object or consideration is unlawful.
• Transfer made to disqualified transfereee.
Spes Successionis- Expectation of succession ( of gaining something)
Exp- will or inheritance

It includes- - Base – You can not transfer mere hope.

• Chance of an Heir apparent- succeeding to an estate.

• Chance of getting property under will.
• Any othe rpossibility like nature.
Right of reversioners u/Hindu Law.

Reversioner was a person who used to inherit the properties of a widow held by her for life. After the
death of widow.

Chance of Legacy- because the will executed only after the death of the testator.

Rights of Future offering. Receiving offering of a temple.

Case law-

Punch Tahkur v/s Bindeshwari AIR 1916 Cal 43 Cultauta High Court held-
it is mere possibility so it cannot be transfer.

Balmukund v/s Tularam AIR 1928 All 21

It is not the spes succession , it is not a hope or uncertain and not variable to pass and of conception of
law hence transferable.

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Badrinath v/s Punna AIR 1979 SC 13`14 – Vashno Devi Tample –

It is not a mare possibility it is attached with a duty, and held it is heritable and it is not depending
upon possibility it is coupled with duty and hence transferable.

Spes Succession Condition in English Law

Spes Secceession not transferable but it depend on one conditions,

1. if the transferee has paid the consideration.

2. If everything goes well that contemplated event has been done.

Section 9- Oral Transfer- Mode of Transfer

This section deal with mode of transfer, it says where writing is not necessary the property may be
transferred orally. i.e. without writing any deed.

It means there are two mode of transfer-

1. Delivery of possession- which generally happened in case of movable property.

2. Transfer by registration.

In the following condition Registration are compulsory u/s 9 of TPA-

1. Gift of an immovable property.

2. Sale of an immovable property exceeding Rs 100.
3. Sale of reversion or other intangible property irrespective out of its value.
4. Leases form year to year or for a term exceeding one year or reserving a year rent.
5. Simple mortgage irrespective of its amount.
6. Other kind of mortgage( except mortgage by deposit of title deeds) where the sum secured
exceeds Rs 100.
7. Exchange of immovable property ERs 100.
8. Transfer of actionable claim.

Section 10 Conditional Transfer

Conditional transfer if allowed.

There are two form of Conditions-

1. Use related conditions.

2. Further transfer of property- alienation.

Application of S.10-

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Does not apply on –

1. Mortgage Why it is exception of general rule of S.10, because it is itself

2. Lease a conditional nature

Applicable on following-

1. Sale.
2. Gift.
3. Actionable claim.

Nature of Alienation-

Only the CONDITIONS would be void not the transfer.

General Rule- Right of disposing of property is the essential right of ownership. S.10 put a check on
absolute restraint of alienation, and made the condition void. But there are two exception of this
general rule

1. Lease.
2. Married woman.

In both the cases the absolute restrain of alienation can be made.

S.10 are based on the rule of equity, that property should no be made inalienable permanently. There
for the provision s of this section may be applied also to those transfers which are not govern by this
Act for example Punjab which is out of the purview of this act but the principle of alienation is
applicable all the transfer in Punjab if the transfer against the principle of alienation.

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Section 7- person competent to transfer

Any body can transfer who are

Competent to transfer.

1. Attained the age of majority.

2. Soundness of mind.
3. There should be no other legal bar.

Entitle to Transfer.

1. Entitle.
2. Authorized.
3. Competent.

Competent to inter into a contract.

Entitle to transfer ( must be ownership)

Nemo dept quat non habit- You can transfer only those which you have.

Section 8- Operation of transfer

To understand the section 8 we have to understand what happen in transfer, we transfer the interest
or rights actually.

By transferring property, we also transfer some incident, which may or may not be express in writing.

Example of legal incident are-

Legal incident is easement rights.

Property Legal Incident

Land Easement , rent,and profits and all things attached
to the earth.
House Easement the rent accruing after the transfer,
locks, keys,bars, doors and other things.
Machinery attached to earth Movable parts of machinery
Debt Securities (right to resort to some property for the
satisfaction of the debt
Money or other property yielding income Interest or income accruing after the transfer
takes effect.

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Section-10- Condition restraining alienation- Void the Condition not the Transfer.
Where property is transferred subject to a condition or limitation ABSOLUTELY RESTRAINING the
transferee or any person claiming under him form parting with or disposing of his interest in the
property, the condition or limitation is void, except in the case of lease where the condition is for the
benefit of the lessor or those claiming under him .

Provided that property may be transferred to or for the benefit of a women (not being a Hindu,
Muhammadan or Buddhist), so that she shall not have power during her marriage to transfer or charge
the same or her beneficial interest therein.

 Conditional Transfer
 Absolute restraint
 Partial restraint
 Restaint on alienation in compromises
 Applicability of S.10

Exception

1. Married woman
2. Lease

CRUX OF S.10

-CONDITION TRANSFER- VALID OR NOT

-TYPE OF CONDITIONS
1. USE RELATED
2. FURTHER TRANSFER OF PROPERTY- called Alienation

OBJECT-

 PROPERTY SHOULD BE TRANSFER FROM ONE TO ANOTHER FOR THE HEALTH OF NATIONAL WEALTH
 RIGHT OF DISPOSAL IS ONE OF THE ESSENTIAL FEATURE OF OWNERSHIP , AND IT IS THE RIGHT OF OWNER
 THE TRANSFER WOULD NOT VOID BUT THE Condition would void

Ingredients-
 Conditions which absolutely restraint the alienation
 Partial restraint is valid and enforceable- Muhammad Raza V Abbas Bandi Bibi- condition
restraint the transfer outside the family.

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 S10 applies only when there is absolute transfer of ownership like Sale, Gift,
Actionable Claim
 I t does not applies on Mortgage or Lease.

Compromise- is outside the preview of S5 Transfer of property so S10 does not apply on
Compromise.

Mata Prasad V Nageshar Sahai- Dispute over succeeding the properties of the deceased
between his widow and nephew. It was compromise between them that widow shall hold
the possession of the property for her life while admitting the title of the nephew but
nephew was restrained from transferring the property during the life of the widow.

Same in Laxmama V State of Karnataka- Held – Grant by Govt is not fall within the meaning
of S5 so it can be restraint.

Exception-

Lease- It applies to permanent or temporary lease.

Married woman- to safeguard the right of married women.

Section 11- Restriction repugnant to interest created- Section 11 r/w S17

Crux- Right to use in a particular Manner- is void.

Exception-

1. Necessity of Beneficiary Enjoyment of property adjacent to property. (Which has been

established in Tulk v Moxhay 1848,41 ER 1143- and call the RESTRICTIVE COVENANTS)

2. The condition has been imposed by the transferor himself.

S-10 S11
FURTHER TRANSFER MODE OF USE
LIMITED AND ABSOLUTE ONLY ABSOLUTE

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SECTION 13- TRANSFER FOR BENEFIT OF UNBORN PERSON

Section 13- transfer for benefit of unborn person

Q- Although the TPA deals with the transfer intervolves yet an interest may be created in favour of
persons yet unborn. Examine the above rule and state the exceptions, if any, to this rule the TPA.

Intervolves transfer of property only come within the scope of the TPA. Explain this dictum. Is there
any exception to this dictum? Is so explain it in details.

Do you agree with the view that an interest can be created for the benefit of an unborn person. If so,
subject to what conditions.

To remember-

1. General rule of TPA.

2. Transfer to an unborn person.
3. Transfer for the benefit of an unborn person.
1. No Direct Transfer ( Trust creation)
2. Prior Interest ( Illustration )
3. Absolute Interest ( Illustration) and Case Law Girijesh Dutt v/s Delta Din

General rule of TPA is transfer vivos that is transfer of property between living person at the date of
transfer, but section 13 of this act provide the conditions where a interests can be created for unborn
person or a person who is not exist at the date of transfer subject to certain conditions which is also
authenticated by Indian Trust Act S.5
Transfer to an unborn person-
An unborn person means , a person who is not in existence even in the mother’s womb. Property can
be transfer to a child in mother’s womb (en ventre sa mere). But property can not be transfer to a
person who is not in existence means who is not even his mother womb. Accordingly S.5 of this act
provide that transfer of property between two living person.
Transfer for the benefit of an unborn person
S.13 provide property can be transfer for the benefit of un unborn person subject to following
conditions:
1. No direct transfer:
2. Prior interest
3. Absolute interest

NO DIRECT TRANSFER-

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No transfer can be made directly to an unborn person. Such transfer can be made by the
machinery of trust. Reason behind if a transfer were made directly to an unborn person, there
would be an abeyance of ownership form the date of transfer till the coming into existence of
the unborn person which is void according to English Common Law.

PRIOR INTEREST

In case the trust is not created , the estate must vest in some person between the date of the
transfer and the coming into existence of the unborn person. In other words, the interest in
favour of an unborn person must always be preceded by a prior interest in favour of a living
person.

Illustrations
I. A transfer his house to X for life and thereafter to UB (unborn) who is an unborn son of A.
The transfer of house in favour of UB is valid, here since UB is not in existence at the date
of the transfer, A could not transfer the houser directly to him. So, A had to make a direct
transfer of life interest in favour of X who is a living person at the date of the transfer.
After the death of X the interest of the house shall pass on to UB who is the ultimate
beneficiary.

ABSOLUTE INTEREST
The entire property must be transferred to the unborn person. It is not permissible to confer a
life-interest on an unborn person. in English Law it is possible to give an estate to an unborn
person for life. But this aspect of Enlish Law was subject ot a restriction called the rule against
double possibilities.

Illustration
I. A transfer his property to X for his life and thereafter to UB for life X is a living person at
the date of the transfer.
UB is not into existence at the date of transfer so the transfer of life interest of X is valid.
But the transfer of life interest of UB is void because although the transfer in favour of UB
is preceded by a life interest to X but UB himself has not been given an absolute interest.
The result is, therefore that X shall hold the property during his life but after his death it
shall not pass on the UB but shall revert back to A or ( if A is dead that time) to A’s legal
heirs.

Reason- giving life interest or creating life estate in favour of a person means giving
him only the RIGHT OF ENJOYMENT AND POSSESSION. HE HAS TO PRESERVE THE
PROPERTY LIKE A TURSTEE DURING HIS LIFE TIME ON BEHALF OF UNBORN.

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GIRIJESH DUTT V/S DELTA DIN

Held that the gift in favour of unborn daughter was invalid u/s 13 because the gift was of
limited interest and subject to prior interest in favour of B.

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RULE AGAINST PERPETUITY- SECTION 14

Q- what do you know about the rule against perpetuity? What are the exceptions to this rule?
Explain the difference between Indian and English Law on this point.

To remember-

1. Object of Law.
2. Transfer in Perpetuity ( condition void restrain of alienation).
3. By creating future remote interest ( incorporates the rule against perpetuity)
4. Ingredients of Rule against perpetuity
5. Maximum remoteness of vesting ( 18 years or 21 when court appoint)
6. Ultimate beneficiary in the mother’s womb.
7. Scope and object of rule against perpetuity-
8. Rule Against Perpetuity under English and India Law.
9. Exceptions to the rule Against Perpetuity
10. Transfer for the benefit of public-
11. Personal Agreement

Object of Law- The object of law is no property should not be tied up or inalienable for an indefinite
period or forever. Frequent disposition of property is in the interest of the society and also necessary
for its more beneficial enjoyment. The rule against perpetuity protects the object of Law that property
should be in motion.

Transfer in Perpetuity

In any disposition, perpetuity may arise in two ways:

1. Taking away transferee’s power of alienation

2. By creating future remote interest

Section 10 provides the protection against the first rule that a condition restraining the transferee’s
power of alienation is void.

Section 14 – A disposition that tends to create future remote interest has been prohibited, which
incorporates the rule against perpetuity.

Ingredients of Rule Against Perpetuity 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
3. The vesting of interest in favour of ultimate beneficiary is preceded by life or limited interest of
living person/s
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4. The ultimate beneficiary must come into existence before the death of the last preceding living
person
5. Vesting of interest in favour of ultimate beneficiary may be postponed only up to the life or
lives of living persons pus minority of ultimate beneficiary, but not beyond that.

The extent of perpetuity period

u/s 14 the maximum permissible remoteness of vesting is
Life of the last preceding interest + Minority of the ultimate beneficiary
Minority in India terminate at the age of 18 years, when the minor is under supervision of Court then
at the age of 21 years.

Ultimate beneficiary in mother’s womb

Life of the preceding interest + period of gestation of ultimate beneficiary + minority of the ultimate
beneficiary.

Where the ultimate beneficiary in the mothers whom when the last person dies (preceding
beneficiary) the property vests immediately in him while he is still in the mothers whom. Therefore the
exact period from which the minority runs is the date when the ultimate beneficiary conceived. The
gestation period is in which the ultimate beneficiary remains in mothers womb after date of conceived
and before he is born alive.

Scope and object of rule against perpetuity-

The rule against perpetuity is not concern with the following-
a) Contracts as such or
b) Contractual rights and obligation as such
In Walsh v/s Secretary of State for India- held-

A contract to pay money to a person, his heirs or legal representative upon a future contingency which may
happen beyond the period prescribed would be perfectly valid.

In English Law a contract for purchase of real property is regarded as creating an equitable interest,
and if, in the absence of a time , it is possible that the option for repurchase might be exercised
beyond the prescribed period fixed by the perpetuity rule, the covenant is regarded as altogether
void.

Rule Against Perpetuity under English and India Law.

English law allow 21 years in gross after life or lives in being while Indian Law allow only the period of
minority after a life or lives in being but in case court appoint the guardian the minority age postpone
to 21 years.

Exceptions to the rule Against Perpetuity

There is two exception of this rule

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a) Transfer for the benefit of public- A/c to S18 of TPA, if the property is transferred for the
benefit of pubic in the advancement or religion, knowledge, commerce, health, or safety or any
other ob
b) ject the transfer is not void under the rule against perpetuity.
c)
d) - In Ram baran v/s Ram mohit SC held- that a mere contract for sale of an immovable
property does not create any interest in immobile property and therefore the rule cannot
apply to such contract.
Similarly in Shebaits of a temple under an agreement, appointed pujaris out of a particular
family to perform religious services in the temple, the agreement is valid because the Court
held that being a personal agreement, it was not hit by rule against perpetuity it was held in
Jafar Chandra v/s Kailash
Similarly Mortgage and Lease not fall under the rule of perpetuity.

Situation Under Hindu and Muslim Law

Section 14 or this rule against perpetuity is made apply cable on Hindu after 1929, but this provision is
not applicable to Muslim Law but a gift to remote and unborn generations was held void although
exception has been made in case of wakfs.

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RULE AGAINST ACCUMULATION SECTION 17- IT IS EXCEPTION OF S11

ACCUMMULATION= PROFITS OR INCOME ARISING OUT OF THE PROPERTY, it can be whole or in part

Section 11 says conditions which restrains the enjoyment of property which is absolutely transferred is
void, Section 17 is the exception of this rule , the application of S11 applies only absolute transferred,
but section 17 applies all kinds of transferred.

it means S17 postpone the beneficial enjoyment of a property, such postponement is discouraged by
law just as postponement of vesting of interest has been that discouraged under the rule against
perpetuities .

Under section 17 direction for the accumulation of income is allowed but not beyond a certain period.
The maximum permissible lime /period upto which income of the property may be accumulated is:

a) Life of the transferee or,

b) A period of 18 years, whichever is a longer period

So a direction of postponement of beneficiary enjoyment or in other word which makes accumulation

of income beyond this period of maximum permissible limit is void.

Illustration

A transfer his properties to B for life with a direction that the income of the said properties shall
accumulated during A’s life and shall be given also to C. The direction for the accumulation of income is
valid , upto life of B

A transfers a property to B for life and thereafter to B’s such son who first attains the age of 25 years
with a direction for accumulation of income till B’s first son attains 25 years . The direction of the
accumulation of such income is void, reason it is beyond the permissible limit ( life or 18 years).

A transfers property to B in 1960 with a direction for the accumulation of its benefits upto 1990. A dies
in 1985 thus the transferor lives for 25 years which is more than 18 years . The direction for
accumulation is valid upto 1985 ( for 25 years) because it is the longer period.

Exception

1. Payment of Debts- the period of accumulation can be exceed in case of payment of bebts. For
example – A makes a gift of his house to B with a direction that form the rents of the house B
shall pay Rs 500 per months towards the satisfaction of a debt of Rs on Lac incurred by A. The
direction of the accumulation of income is valid even it continues after the life of A or expiry of
period of 18 years.
2. Raising portions- Portion ordinarily means a part or share which points to the arising of
something our of something less for the benefit of some children or class of children.

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3. Preservation of Property- for the maintenance of property/ preservation of property, it is

allowed.

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VESTED INTEREST- S19 ( it is advisable S.19 r/w s.28) and 21

There is two point of view of transfer

1. Quantum of right
2. Time of transfer

Rights of Property - Point of

Views

Quantum Time of
of Right Right

Absolute Contingent Immediate Postponment

or Delayed
rights
Contingent Rights -
Vested Rights This is non certain event
which may or may not
Section 19 happen
Secton 21

Sometime with conditon Some time

with
depends on certain events condition
Certain future events or which bound to
happen. for eamble any future date or deaths
etc.
It is naturally vested or absolute in nat in
nature

Symptoms of Vested Rights / Test of Vested Rights

1. When no time specified as to when it will take effects ( Test- Silence of documents or
absence of date of vesting the rights)

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2. If transferor specifically mentioned the date of vesting of interests/ rights take

effects.
3. It is to take effect upon happening of an event which must happen or bound to
happen or certain nature of future event. For example – any future date, any person
death, any age, or things are bound to happen.

Following condition which appears not vested but actually it is vested the rights.
1. Postponement of enjoyment of rights ( vesting happen immediately but the enjoyment of rights
postpone)
2. Prior interests- Creation of prior interest. Like interested created for unborn person.
3. Direction for accumulation.
4. Conditional limitation. It is the English Law concept, which authenticated in India under S28 of TPA
For example-
A gifts his house to B with a condition B takes possession of house within 6 months if he fail to take
possession A transfer the possession of house to H.
Here B ‘s vested right is within 6 months

POSTPONMENT OF ENJOYMENT

Postponement of enjoyment of property does not mean that the interest of the transferee is not vested. In a
transfer of property, the primary thing is the transfer of interest of title. Possession of property is secondary.

For Example-

A transfers his property to B to be given to B on B’s attaining the age of 20 years, the interest of property is
vested although the enjoyment of property has been postpone.

However, if B Dies before attaing the age of 20 years the possession and enjoyment of the property shall go to
B’s representatives or legal heirs together with title which B already had and died having it.

The postponement of property may be postponed till any future date or future event which is of MUST nature
and is bound to happen.

PRIOR INTEREST

Where a prior interest is created in the same transfer there is postponement of the enjoyment of property. The
vesting interest is not postponed.

A transfers property to B for life and then to C the interest of C is vested interest.

Here C has a vested interest immediately with the transfer was made but his right of enjoyment is postponed till
the life of B, because the death is the future event and must in nature.

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DIRECTION FOR ACCUMULATION OF INCOME (U/S 17)

Direction for accumulation of income is valid provided its within the period prescribed in S17 .Where the
property is transferred with such direction the interest of the transferee is nevertheless vested. In this case also
the right of enjoyment has been postponed not the vesting.

In KOKILAMBAL V/S RAMAN KOLILAMBAL -

There was a deed of family settlement in which the settler created a limited interest (right to received the
income form rents). The property of the settler was to vest in the settlee only on death of settler.

SC Held-

The family settlement does not create a vested interest in favour of the settlee and settle cannot be absolute
owner during the life of settlor. Therefore the settlee cannot succeed the property on the settlor’s death.

CONDITIONAL LIMITATION

It is the concept of English Law, means upon happen of a particular event the interest vested in a person shall
pass on to another person, S28 of TPA authenticated in India.

A condition limitation does not prevent the vesting of the interest. Rather it is implied that the interest which
had already been vested may be divested and my vest somewhere else.

A transfer his house to B with a condition that if B doest not take possession of this house within 6 months form
the date of the transfer, the house shall belong to C.

The interest of B is a vested interest although it is vested only for these 6 moth and if he possess the house
within 6 month the vesting would be permanent.

NATURE OF VESTED INTEREST

 Present fixed right- when a interest is vested, it becomes the property of the transferee and is u/s 6
transferable by him even before he has obtained possession. If the transferee dies, his interest vested in
hi legal representatives whether or not he has obtained possession.
Basis Vested Contingent
Right of Enjoyment Immediate rights Merely a future possible rights
accrues
Nature of Event No such condition (happening or non Condition ( on happening or non
happening of future event) happening of future event )
Heritability It is heritable right Not a heritable right
Nature of Title Perfect immediately Imperfect, Perfect on happening of or
non happening of event
Effect of Interest Immediately form the date of Condition precedent, which must in
Transfer nature
Transferability Transferable Transferable, may be defeated by reason
of non fulfillment of the condition

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precedent.
Attachment & Sale Capable of being attached or sold in Not Capable.
in Execution of Execution of Decreed
Decreed

 Transferable and heritable - vested interest is transferable and heritable, as it is present and fixed
right. And it is heritable in a sense when transferee dies having vested interest in a property his
interest vests in his legal heirs, whether or not he has obtained possession.

DIFFERENCE BETWEEN CONTINGENT AND SPES SUCCESSIONIS

The thin line between Spes Successions and Contingent is DEGREE OF POSSIBILITIES.

Spes Succession >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Degree ( Remote)

Contingent >>>>>>>>>Degree (Proxy)

In Spes succession is naked or mere future possibility interest, therefore S6 recognized it as a non transferable
interest.

While Contingent is less probability, and it is recognized u/ 6 as a transferable interest.

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Section 25 Conditional Transfer

The legal effect of transfer is very according to the nature of condition attached.

Conditions are of three kinds

Kinds of conditions

Condition Collateral
Condition Precedent Condition Susequent
Simulteneous or Side
Pre Conditon After Condition
by Site contidions

A gift his house to B

Exp- A gift his hosue A gift his house to be
with a condition B
to B with a Condition he will not visit
has to leave in the
if he marries to C within 5 years to USA
hosue

Object of S25- To eliminate the following conditions- if following are the condition then the transferred would
be void.

 Impossible conditions
 Unlawful / forbidden by law
 Impossible performance.
 Opposed to public policy
 Fraudulent conditions

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S28- conditional limitation

It is a English Law concept, interest may be created in favour of a person with a condition that if an
uncertain event doe4s not happen the interest shall pass on to another person. thus a condition
limitation is a condition of defeasance which terminates the interest of one person and invest another
person with it. Means conditional limitation is one containing a condition DIVESTS an estate that has
vested an vested in ANOTHER PERSON.

A gift his house to B with a condition that he will marry to C if he will not then the house is to go to C.

Here C is the Ulterior transfer and it takes effect in case the prior transfer viz form A to B fails.

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DOCTRINE OF,ELECTION WHEN

NECESSARY S-35
Q- Critically examine the doctrine of Election, difference between English and Indian Law.

The foundation of Election is that a person taking the benefit of an instrument must also bear the
burden.

Election means choosing between two inconsistent or alternative rights . Under any instrument if two
rights are conferred on a person in such a manner that one right is lieu of the other, he is bound to
elect only one of them.

In Beepathumma v/s Kadambolithaya SC held that – A person cannot take under and against the same
instrument.

A offer Rs 100 to B in lieu of transfer his house, B can elect only one, either he can retain the money
and transfer his house or deny the money, he can not enjoy the both.

This doctrine is based on equitable principle under which a person may not be allowed to approve that
of an instrument which is beneficial to him and disapprove its that part which goes against him. Means
no one can approbate and reprobate at the same time. In other words where a person takes some
benefit under a deed or instrument he must also bear it s burden.

In Cooper v/s Cooper, Held that the Doctrine of Election, applies on every instrument and every type
of property movable or immovable.

Application of Election

 When a person professes to transfer a property not his own

 In lieu of the property the transferor confers certain benefits to the owner of the property
 Transfer of benefit and confer of benefit to be part of the same property

When a person professes to transfer a property not his own

Professes means to purports or make contract, for a property which is not his own but he can make
contract for the same.
A may profess to transfer a property B, which is owned by C, and also confers a benefit Rs 1000 to C.
Here A is not transferring the C’s Property to B but simply profess or contract a property which he does
not own.
Knowledge of the fact that transferor has no authority to transfer the property is immaterial for
applicability of the rule of election.

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Benefit confer on the owner of the property

Doctrine says owner must condensate or confers the benefit for his ownership on the property.
The word Ownership is a wide connotation, it include a person having vested interest, or contingent
interest and also a person who has ever reversionary or remote interest in the property.

Part of the same transition

This Doctrine only applicable when transfer and benefit a part form the same transition. Means the
benefit and transition are interdependent and inseparable they form part of the same transition.
OWNER’S DUTY
Owner are duty bound to either accept or reject the offer benefits
He has two act in a same capacity means he may accept the benefit in one capacity and reject the
other part of instrument in the same capacity not vise versa.
Mode of Election
it can be express or implied
owner can express his intention in clear and specific word, once the election has done it is final and
conclusive.
Election is implied when the owner of property having aware of his duty to elect and accept the
benefits. When owner has enjoyed the benefit for two years without doing any act of refusal or dissent
of the transation. When the owner of the property exhausts or consume the benefits.
Requisition to Elect
This is the special procedure for expediting election, after the expiry of one year, if the owner of
property does not elect, neither confirm his dissents the transation, it deem to elect in favour of
transferee.
Suspension of Election- The election may suspend till the time there are any legal disability.
Election against transfer- if there is dissent form the professed transferred, the transferor forfeits his
benefit confer to owner.

Difference between English & Indian Law

The thin line between English and India law is the residues (balance).
A professed to gift a House worth Rs 800 to B which belongs to C, and he offers benefits to C Rs 1000,
before election C dies. According to Indian law the residue (Rs 200) would go to A (transferor), while in
English law goes to C, as a compensation.

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S41- Transfer by Ostensible owner-Doctrine

of Holding Out
Q- who is ostensible owner? What is the effect of the transfer made by him? Explain the law realting
to transfer by ostensible owner.
Explain the doctrine of holding out as given u/s 41 .
Explain the circumstances in which a transferee from an ostensible owner should prove to sustain his
claim against the real owner.
Does the transfer of property Act make any exception to the general rule that a person cannot
confer a better title to the property than he has in it? Is so, how do you justify the exception?

Ostensible Owner- a person is not the real owner of the property, while he appeared to be the real
one it may be found that although his name appears in the record and he also possesses the property
but he never intended to own it. It is difficult to ascertain who is the real owner and who is ostensible
owner as the ostensible owner possess all the characteristic of real owner, the main difference is the
INTENTION TO HOLD THE PROPERTY OR PURCHASE THE PROPERTY IS NOTE THERE.

Test of Ostensible Owner

In UOI v/s Mokesh Builders & Finance SC explain the Ostensible owner – the real test is as to what is
the source of the purchase money, the motive behind giving the benami color , possession of the
property and as to who is enjoying the benefits of the property.

Thus a person who hold the property act as a Agent, guardian of the property, it does not mean he is
the owner of the property. In simple language he called the Benamidar
In Jaya dayal Poddar v/s Bibi Hazara – SC laid down the parameters to ascertain the Ostensible
owner.
 Source of purchase money, who paid the price.
 Nature of possession after purchase.
 Motive of giving benami colour to the transation. Why the property purchased in the name of
another person.
 Relationship between the parties, they are related to each other or they are stranger.
 Conduct of parties in dealing with the property
 Custody of the title deed.

.
Effect of Transation made by Ostensible owner

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The general rule of TPA is one who is not the real owner cannot transfer, but this section is the
exception of this rule subject to fulfillments of conditions laid down in the section.

If a person purchases form a Benamidar / Ostensible owner, the real owner cannont recover, provided
other conditions are fulfilled

A purchased a property on her B, and B acted as his agent or care taker of the property, B Mortgage
the property to C. It was held that Silence of A on mortgage created by B made B as ostensible owner
and hence A cannot deny the mortgage.

Ingredients of S41

Consent of true Owner.

It is one of the important condition, that apparent ownership must have been created or permitted by
the real owner of the property, either by express or implied consent.

Reasonable Care
it is also important that the transferee before taking effect of any transition he made reasonable care
which a ordinary man do and enquiries to ascertain the transferor had the power to transfer.
Good Faith
The last condition is the transfer must be in a good faith there should not be any malafied intentions.

Protection of Bona fide purchaser when disputed land.

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Section 52- transfer of property pending

suit relating thereto- Doctrine of Les
Pendens
Q explain the doctrine of les pendens, and its essentials. What is the effect of this doctrine?
Explain its exception, if any. Can the doctrine of lis pendens afact the property sold in an
auction ordered by the court.

Les= Litigation

Pendens= Pending

It applies only on immovable properties

Thus it means pending litigation, it express in the maxim- pendente tie nihil innovature. Means
during pendency of litigation nothing new should be introduced.

This doctrine prohibit any creation of new title or transfer of property during pendency of
litigation, which means this doctrine is prohibited in nature.

Basis of Doctrine-

The basis of doctrine is necessary rather than actual or constructive notice, because constructive
notice is the presumption of law that under such circumstances the transferee knowledge of such
les pendency.

It is the duty of the transferee he must enquire about the les pendency of the property.

Having being the actual or constructive notice the transferee r made any transation related to les
pendent property it treated the abuse of court of law. And it is in the interest of public policy, there
for it is necessity

Essentials of les Pendens.

 There is a pendency of a suit or proceeding

 The suit or proceeding must be pending in a court of competent jurisdiction
 A right to immovable property is directly and specifically involved in the suit
 The suit or proceeding must not be collusive
 The property in dispute must be transferred or otherwise dealt with by any party to suit
 The transfer must affect the rights of the other party to litigation

Right to immovable property is directly and specifically Involved- mere representation of

immovable property in the plaint is not enough right in respect of immovable property must in
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questioned. For ex- A suit is pending before the court of law between a landlord and tenant
regarding rent, and if the during the proceeding the landlord transfer the property it would not
violate the Doctrine of Les Pendens as the right on immovable property is not questioned.

Following are the suit regard in this section

1. A suit for partition

2. A suit on mortgage
3. A suit for pre-emption
4. Easement suit

Suit most not be collusive In nature- means there should not be mala fide intention, means
there is no dispute just for the mala fide intention it evolve.

Exception-

A transfer during the pendency of a suit may be sanctioned by the court in which the suit is
pending, provided the order must not obtain fraudulently.

Effect Transfer by Court Order / Involuntary / by Operation of Law Transfer-

in Samarendra Nath Sinha V/s Krishna Kumar Nag- SC Held

the doctrine of les pendens applies where the sale is made by the order of the court.

Effect of Doctrine-

The transferee is bound by the order of court

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S53- fraudulent transfer

Q-Explain doctrine of fraudulent transfer. What are the exceptions?

Every owner of property has right to transfer his property as he likes, but the transfer must be
made with bona fide intention. When any transfer made with the intention to defeating the
interest of creditor or interest of any subsequent transferee.

Nature

When the transfer is made with fraudulent intention, the object of transfer is mala fide in the eye
of equity and justice though it is valid in law. It is not void but voidable.

But S53(1) does not apply where the transfer is in itself void. This section makes a valid transfer
void at the option of creditor after the property had already vested in transferee.

The suit under this section must accept the validity of the transfer first and then proceed to get it
invalidated. If its proves to be fraudulent.

Essential Conditions of Fraudulent Transfers.

1. There is a transfer of immovable property

2. The transfer if fraudulent

There is a transfer of immovable property - The doctrine applies only when there is a transfer
of property within the meaning of S5. Relinquishment is not transfer of property. Dissolution of
partnership is also not regarded as a transfer under this section.

A deed of wakf executed with the object of making the property inalienable and beyond the reach
of creditor was held a transfer within the meaning of this section.

Partition- Partition also not cover under transfer so this section does not apply on it.

Sham, Benami transation are also out of the purview of this section as the sham transfer means
fictitious transfer, which is not real a fake transfer.

The transfer is fraudulent- this section applies only when there is fraudulent transfer.

Intent to defeat or delay- the transfer made with the intention to defeating or delaying the
interest of creditor, the only interest of creditor in the debtor ‘s property is that he can recover his
money form that property in case the debtor fails to repay it personally.

Preference to one creditor-

if there are several creditor, and transfer in favour of one creditor does not amout to an intention
to defeat or delay in other creaditor.

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Exp- A , who has taken load from B, C and D, and transfers certain property in favour of B, it does
not mean he is with intent to delay with other creditor.

Transfer is voidable by creditors-

The option remain with creditor to make the transation void, if he deem fit to continue the
transfer the transfer remain valid till.

Burden of proof- the burden of proof lies with creditors.

Transferee in good faith- This section also protect the right of transferee if he acted in a good
faith.

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S53-A Part Performance

Q- Explain, what are the essentials, explain the scope of defense and protection available to
the transferee. Nature and scope.

What are the rights of a subsequent transferee for value are protected by S 53 A, as against
the right of former transferee who has taken possession in furtherance of the contract.

Doctrine of part performance is an equitable doctrine, it based on the Maxim equity looks on
that as done which ought to have been done.

Means equity treats the subject matter of a contract as to its effects in the same manner as if the
act contemplated in the contract had been fully executed, form the movement the agreement has
been made , though all the legal formalities for example registration of contract have not been yet
completed.

This doctrine protect the transferee who has done his part or willing to perform his part, he can
not be distitle on the basis of the legal formalities has not been done.

For example –

A sale his house to B, and get the consideration against the house and B also takes the possession
of the house a sale deed has been made but it not being registered. A again Sale his house to C, and
C get it registered, and now C try to eject B. Here law would not help to B, but equity would help
him.

Part performance before 1929

Before 1929, English equity of part performance was neither certain nor uniform, In Mohamman
Musa v/s Aghore kumar Gangualy, Privy Council applied this doctrine in the matter of
Razinama of Land distribution.

But in Arrif v/s Jadunath, PC, change his opinion and held the equity of part performance
can not be overruled of Indian Registration Act.

Scope in India

It is an enacted law in India, but it is not an application of English Equity, it is almost same as PC
laid down in Mohammad Musa case, with certain restrictions, in two aspects

1. English equity also protect the interest of such defendant who has taken possession on the
basis of oral agreement, while in S53 A, the Agreement must be in writing.
2. EQ, also gives a right of action against the evictor but S53A, gives no such rights.

Essentials

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1. Written contract for the transfer of immovable property ( Transfer for

consideration, for Movable property, and must be valid contract)
2. Transferee takes possession of the property under the contract ( the possession
must be in furtherance of contract, some act in furtherance of contract, taking
possession is not only the method of part performance of contract. If the transferee is
already in possession of the property then, after the contract of transfer, he has to do
some further act in part performance of that contract. In order to attached S53A)
3. The transferee either performed his part or willing to perform.

Nature of transferee rights

No title or interest in property

 The section doe not confer any interest or title, just protect the right of transferee form
ejection if the property in his possession.
 It is a statutory bar on the transferor that he cannot dispossess the transferee if he possess
the property

Passive equity no right of action

 section does not give to the transferee any rights of action. It provides merely a right of
defense. It is shield not a sword

Right of subsequent transferee for value

Section protect the interest of subsequent transferee for value without notice of previous
transferee’s right of part performance.

A own a land and contract to sale to B, the contract is unregistered and in part performance B
possessed the land, the transferor and or any other person cannot dispossess B form that land.

But when A sale this land to C, and C dully registered the sale deed, C has a right to dispossess to B
form such land, if C has not knowledge of B’s part performance.

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Sale of immovable properties- S 54,55,56

Q- define sale. Essentials of valid sale? how it is made? Are the hire purchase agreement
amount to sale?

Distinguish between-

 Sale and gift

 Sale and exchange

Sale
S-54-Sale is the transfer of ownership, in exchange of price paid, or promises to paid or part paid
or part promise.
When sale made Prior owner distitle and new owner gets the title of the property
Constituent-
 Transfer of ownership- In sale there must be transfer of absolute ownership, means
ownership with liability.
 Money consideration- when ownership is transfer in money consideration its call sale, the
adequacy of consideration is immaterialize. The price may be paid full, part, immediately or
in future.

Essential of Valid Sale

 Two parties seller and purchaser

 Competent parties
 Subject matter i.e. property in existence.
 Money consideration, price of the property
 The conveyance/ contract made in accordace with existing law

Mode of Sale

Registration of Sale Deed

How sale made- Sale relating only with tangible immovable property, if the value of property
above Rs 100, it must be registered, in case of value of tangible immovable property less then Rs
100 such transfer may be made either by registered instrument or transfer of property.
Delivery of property
Deliver of tangible immovable property takes place when buyers takes the possession of the
property.

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Difference between contract OF SALE, & contract FOR SALE

Basis Contract –OF SALE Contract FOR SALE

Rule Contract + Transfer + Contract for future sale
consideration
Time Immediate / Present Future
contract shall take palace if Some time parties are not in a
terms settled between the position to execute the Sale
parties, it may be noted that in Deed at present but they
every sale there is a preceding intend that sale would take
contract for sale, upon the place between them in future.
execution of this , preceding In order to have the evidence
contract the sale happened of their intention that the
between the parties. Thus sale property would sold the
complete in furtherance of his contracting party only and not
very contract. anybody else.

Part performance Immediate/ simultaneous Postponed / future/ delay

activity

Type Sale deed Agreement for Agreement

Position in India Establish law Not establish law, it is the
concept of English law
Remedy Protected by Law ( In India) Not protect by Law ( only
Doctrine of Equity u/s 54
applicable to transferee)

Right of Purchaser Establish Right Not establish right

It can restrain or set aside the It cannot be apply to restrain
execution of a sale deed of the or set aside the execution of a
same land to another person. sale deed of the same land to
another person.
Equity protect the interest of
purchaser- following is the
right of purchaser:
 He may file a suit u/
Specific Performance
Act 1963 against
vendor.
 He may compel the
vendor to execute the
sale deed in his favour
 If the purchaser paid
some money to the
vendor he may acquire
the charge upon the
property for the money

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which he had paid, and

he is entitle to get it pay
back

Nature Expressed and implied Nothing
It is merely a document
creating a right to obtain
another documents namely ,
dully a executed sale deed.
Effect It provides the established S54 clearly says that a contract
interest / ownership on the for sale does not itself , create
property, he there is dully any interest or charge on the
executed sale deed. property. No title or interest in
respect of the property is
therefore created in favour of
purchaser on the basis of such
contract.
Under English Law-
Creates an equitable
ownership in favour of the
purchaser and the vendor
holds property for him as a
trustee.
Under India Law
Doctrine of equitable interest
is not recognized in India, so
neither Legal Estate nor the
Equitable Este in favour of the
transferee.
In Laclman Nepak v/s Nadam
Kayalu Syama held –
It is well settled law in India
that existence of any
agreement for sale does not of
itself create any interest in or
charge upon such property.
Even if the purchaser paid the
consideration and had taken
the possession of the property
on the basis of such contract,
he cannot get ownership
unless a sale deed is dully
executed in his favour.

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HIRE PURCHASE AGREEMENT- AMOUNT TO

SALE OR NOT?
Hire purchase agreement is not amount to Sale, because the ownership of the property is not
transferred to the transferee on the basis of such agreements.

Normally parties are under an agreement, in which purchaser take the possession of the property
and agreed to pay the price against the property in future installment.

Here there is contract, possession and price but on the following reason its not amount to sale:

 The installments are not the price paid in future.

 In the same time the purchaser has the option to refuse the sale
 The seller has also right to terminate the sale.
 There is no absolute transfer of ownership

Basis Sale Exchange Gift

Consideration Ownership is transfer Ownership is transfer Ownership is transfer
for price of ownership of some without consideration
other property
Transfer of
ownership of money
in return is also the
exchange not the Sale
Interest Absolute Absolute Absolute
Mode Registration of Sale Deed No registration require Registration Required

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S55- Rights and Obligation of Buyers and

Seller
Before the Sale
Seller Rights Sellers Duty Buyers Rights Buyers Duty

1. To get the rent 1. Disclosure of 1.Buyers charges- In case 1.Duty of disclosure, if

and profits of material defect in the sale does not take the seller is ignorant
the property the property if place due to any reason, about his own right in
till he possess any. buyers has a right to take property. It is the duty of
the ownership. 2. Produce of title back his payment made in the buyer to disclose the
deed of the advance with interest. seller that some material
property. fact can increase the cost
3. Answer relevant of the property in future.
questions, asked
by buyer. 2.Payment of price. To pay the
4. Care of property agreed payment/ price for the
and title deed as property in the contract of
its own, like a sale.
normal prudence
person care.
5. Payments of
outgoing till date
of sale.

After Sale
Seller Rights Sellers Duty Buyers Rights Buyers Duty

1.Saller’s Lien or 1. Giving possession of 1. Enjoy all the rights 1.Bear the loss to
charge- the property arising out of the property.
2. Convent for title. property 2.To pay the out goings
3. Delivery of the title on property.
deed.

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Seller’s Lien or Charge S55(4)(b)

if after completion of sale, if the price or any part of it remains unpaid, the seller acquires a lien or
charge on the property.

Means when the ownership is transfer to the buyer after completion of sale, and the seller remain
unpaid; the seller can nighters neither refuse the delivery of possession nor can claim back the
possession of the property.

Therefore u/s 55(4) (b) the seller has given a right to recover the unpaid purchase money form
out of the property. This is called the statutory charge of the seller for unpaid seller.

In other, word this is the only remedy left with the seller to recover of the balance purchase
money.

There is creation of a right of payment out of the property; it may be created by the act of the
parties or by operation of law.

Since under this right the seller is not entitled to retain the possession of the property this charge
is said to be the non-possession lie.

For the recovery of unpaid purchase money the seller shall enforce his charge u/s 100 by a suit
against buyer for sale of the property. But such a charge can not be enforced against any
subsequent buyer, and not after the expiry of 12 years of the date of sale.

In Bhag mal v/s Shriromani Gurdwara held, where the property has been sold to several
purchaser, the seller has a charge on the whole property for unpaid price without having
any regard as to the proportion of money to be paid by each purchaser.

Interest on Unpaid Price. The seller is also entitle to claim not only the unpaid part of the
purchase money but also interest on such amount but not from the date of transfer of ownership
but form the date on which the possession was delivered.

Transfer of Seller charge- a charge created in favour of the vendor is an unsecured debt,
therefore it is a Actionable Claim, and transferable.

Exclusion of the Charge- can be possible by contract between the parties.

Seller Unpaid Price / Lie under English Law

Under English law the seller acquire lie on property under the principle of equity. When the
contract of sale is constituted the seller gives to the buyer an equitable estate even before the
completion of sale, in return he also acquire the lie on the property from the date of contract,
subject to price unpaid. In India contract of sale does not given any interest in the property, the
charge is created only after the conveyance. In India the charge is created by Law not by equity.
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Marshalling- S56

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S58- Mortgages
S58(a) Transferring LIMITED INTEREST of property for taking Loans.

Where a loan is secured against any immovable property is called Mortgage, and when it secured
against any movable property its called pledge.

It is a security against loan on the basis of any immovable property

Mortgagee= Who gives loan against property.

Mortgagor= Who Takes Loans against property.

Loan under mortgage= Mortgage money.

Instrument/ Deed of Transfer of Interest= mortgage Deed

Essential of Mortgage

1. There must be transfer of Limited Interest

2. Interest transferred against any specific immovable property.
3. Purpose of transfer must be to secure payment of any debt, or performance of an
engagement which may give rise to a pecuniary liability.

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