What is Transfer of Property?

Definition of Transfer of Property: – Transfer of property is an act by which a living person transfers the
property in present or in future to one or more living persons or to himself. The Transfer of Property Act 1882
is an Indian legislation which regulates the transfer of property in India. Transfer of Property is defined
under section 5 of the act.
According to this section, 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 other living persons. The phrase
“living person” includes a company or association or body of individuals, whether incorporated or not, but nothing
in this section shall affect any law for the time being in force relating to or by companies, associations or bodies of
individuals.

What is the purpose of transfer of property act?

The purpose of transfer of property act is to define and amend the law relating to the transfer of property by the
act of the parties and not by the operation of law. The transfer of property is a contract, so all requirements have to
be met to constitute a valid contract.
Living Person: – In this section ‘ living person’ included “a company or association or body of individuals whether
it is incorporated or not”, but nothing should herein contain shall affect any law for the time being in force related to
companies act.
Property: – Word ‘Property’ has not been defined in the act, but it has a very broad meaning and it also includes
properties of all description. It includes both movable property (books, water bottles, etc.) and immovable property
(ownership, copyrights, etc.)
Transfer: – Word ‘Transfer’ also has a very wide meaning. A transfer can be both of all the rights and interests in
the property or transfer of one or more right in the property.
What are the essentials of transfer of property?
The essentials of transfer of property are as follows: –
1. Transfer must be between Two or More Living Persons (Section 5)
A. The transfer must be inter vivos. Therefore transfer can only be possible between living
persons and there is no transfer of property to a person who is not in existence. The living
person including company or Association or body of individuals whether incorporated or
not.
2. The Property must be Transferable (Section 6)
A. Property of any kind may be transferred, except mentioned in Section 6 (a) to (i) cannot
be transferred. Therefore those properties described in the clauses (a) to (i) of Section 6
cannot be transferred. For Example: – a public office cannot be transferred, pensioners
allowed to government officers and political pension cannot be transferred, etc.
3. The Transfer must not be: –
A. The property cannot be transferred if it is opposed to the nature of interest affected
thereby Section 6 (h);
B. for unlawful object and consideration as per provision of Section 23 of the Indian
Contract Act 1872, which provides a consideration or object is unlawful if: –
 It is Forbidden by law, or
 It is of such a nature that it defeats the provision of any law, or
 is fraudulent, or
 it involves or implies injury to the person or property of another or
 the court regards it as immoral or opposed to public policy.
C. To a person legally disqualified to be a transferee. As per Section 136 of Transfer of
Property Act, a Judge, a legal practitioner or an officer who is connected with Court of
Justice are disqualified from purchasing in actionable claim. This prohibition is only with
respect to actionable claim. It does not apply to any other kind of property.
4. Persons Competent to Transfer (Section 7)
 A. “The person who is allowed to sign the contract is also allowed to transfer a property and
after that he will be allowed to enjoy the property to the fullest and legally permitted and
prescribed for the time being.”
B. Here are some of the individuals who may be enabled to transfer: – The capable, sound
mind of the contract, the transferor should be entitled to the transferable property.
What may be Transferred?
Section 6 of the Transfer of Property Act, 1882 discusses the property which may be transferred. The section states
that property of any kind may be transferred. However, Clauses (a) to (i) of section 6 mention the properties which
cannot be transferred.
1. Clause (a) describes spes successionis cannot be transferred. This clause states that the transfer of a
bare chance of a person to get a property is prohibited under this section. For example, Arun
expecting that Chandini, his aunt, who had no issues, would bequeath her house worth Rs. 50,000
transfers it to Bhushan. The transfer is invalid as it is a mere matter of chance of receiving the
property on the part of Arun. Thus, it is invalid.
2. Clause (b) mentions that the right of re-entry cannot be transferred. The right to re-entry implies a
right to resume possession of the land which has been given to someone else for a certain time. The
section mentions that the right of re-entry cannot be transferred by itself apart from the land. For
example, ‘A’ grants a lease of a plot of land to ‘B’ with the condition that if shall build upon it, he
would re-enter — transfers to ‘C’ his right of re-entering in case of breach of the covenant not to
build. The transfer is invalid.
3. Clause (c) mentions that easement cannot be transferred. An easement is a right to use or restrict the
use of land of another in some way. For example, the right of way or right of light cannot be
transferred.
4. Clause (d) mentions that an interest restricted in its enjoyment of himself cannot be transferred.
For instance, if a house is lent to a man for his personal use, he cannot transfer his right of enjoyment
to another. Clause (dd) restricts the transfer of the right to maintenance. Such a right cannot be
transferred as such right is for the personal benefit of the concerned person.
5. Clause (e) provides that mere right to sue cannot be transferred. The prohibition has been imposed
as the right to sue is a right which is personal and exclusive to the aggrieved party. For example, a
person cannot transfer his right to sue for the damages suffered by him due to breach of contract by
the other party.
6. Clause (f) forbids the transfer of public offices. The philosophy behind the prohibition is that such a
transfer may be opposed to public policy in general. A person is eligible to hold a public office on the
grounds of his personal qualities, and such qualities cannot be transferred. Thus, the transfer of public
offices is prohibited under this section.
7. Clause (g) of section 6 provides that pensions cannot be transferred. Pensions allowed to military and
civil pensioners of government and political pensions cannot be transferred. In simpler terms, a
pension may be understood as any periodical allowance which may be granted in regard to any right
of office but only on account of the past services offered by the pensioner.
8. Clause (h) of this section is titled as nature of nature. This clause prohibits transfer which will oppose
the interest affected thereby. The transfer is also forbidden if the object or consideration of the
transfer is unlawful. Moreover, a transfer by a person who is legally disqualified from being a
transferee is also forbidden.
9. Clause (i) of section 6 was inserted by the Amendment Act of 1885. The clause declares that certain
interests are untransferable and inalienable. For example, a farmer of an estate, in respect of which
default has been made in paying the revenue, cannot assign his interest in the holding.
Thus, section 6 containing clauses (a) to (i) specifically mention that certain things cannot be transferred. Such a
transfer if undertaken would be invalid in the eyes of the law in India.

Person competent to Transfer

Section 7 enumerates the concept of competency of persons who may be allowed to transfer property. According to
this section, a person is allowed to transfer property if he satisfies two conditions. The first condition is that the
person must be competent to enter into contracts with other persons. The second condition is that the person who is
willing to transfer property must have title to the property or authority to transfer it if he is not the real owner of the
property.

An important point to be noted in this regard is the conditions mentioned in section 11 of the Indian Contract Act,
which specifies the category of persons who may be competent to transfer. In the section, it is stated that the person
must have attained majority, he must be of sound mind, and he must not be disqualified to enter into contracts by any
other law applicable in India.
What are the kinds of transfer under Transfer of Property Act?
Kinds of transfer under Transfer of Property Act are as follows: –
1. Sale: – A sale is an out-and-out transfer of property.
2. Mortgage: – In a mortgage, there is a transfer of a limited interest in the property.
3. Lease: – A lease is a transfer of a right to enjoy an immovable property for a specified time or in
perpetuity.
4. Exchange: – Exchange is like a sale but there is a difference in both. As in sale, the consideration is
money, while in exchange consideration can be any other thing other than money. In gift, there is no
consideration.
Case laws under definition of transfer of property
1. Harish Chandra vs. Chandra Sekhar AIR 1977, All 44
In this case, the court held that if the transfer deed states that the transferor was the owner of the property and it
shows the intention to transfer his title and it was adequately conveyed. So, it would amount to transfer.

What is movable and immovable property?

Following are the commonly stated difference between movable and immovable property: –
1. The movable property can easily be transported from one place to another, without changing its shape,
capacity, quantity or quality. Personal property is generally considered to be the movable property.
2. Immovable property commonly refers to real estate (such as your house, factory, manufacturing plant, etc.)
while movable property refers to movable assets (such as your computer, jewellery, vehicles, etc.).
3. In a civil law system, personal property is a movable property. It includes any property which can be moved
from one place to another.

What is movable property?

Meaning of Movable Property: – A movable property can be easily moved from one place to another,
without changing its size, shape, quantity or quality. Movable property is one, which can be transferred from
one place to another place with the human efforts. Example: – Books, utensils, vehicles, etc.
1. Banyan tree; if it is cut or sold for wood, then it will be considered as movable property.
2. A contract done for cutting the bamboo and for the collection of leaves comes under the movable property.
3. There is no need for the movable property to be registered under the Indian Registration Act, 1908. It is
completely voluntary.
4. Movable property is subject to sales tax and central sales tax and it is also subject to certain restrictions and
conditions under tax act and the central sales tax act, 1956.
5. A mere delivery just to transfer that particular movable property completes the transfer.
6. A movable property does not bring an increase to an ancestral impartible estate.
7. Movable property includes: – Right of worship, Royalty, Decree for sale of immovable property, Decree for
areas of rent, maintenance allowance, standing timber, growing crops, grass, government promissory notes,
etc.
What is immovable property?
Meaning of Immovable Property According to the Section 3(26) of General Clauses Act, 1897:
– “Immovable property includes land, benefits arising out of land and things attached to the earth or
permanently fastened or anything attached to the earth.”
Meaning of Immovable Property According to the Indian Regulation Act: – Immovable property includes
land, building, hereditary allowance, rights of way, lights, Ferries, Fisheries or any other benefit to arise out of
land and things attached to the earth or permanently fastened to anything attached to the earth but not standing
Timber, growing crops or grass.
Meaning of Immovable Property: – Section 3 Para 2 of the Transfer of Property Act 1882 defines
immovable property as “immovable property does not include standing Timber, growing crops or grass. It is not
an exhaustive definition, so we have to read the definition by combining the definitions of General Clauses Act
and Transfer of Property Act which is; Immovable property includes land, benefits arise out of land and
things attached to earth except for standing timber, growing crops or grass.

According to Salmond immovable property (i.e., land) has the following elements: –
1.
a determinate portion of the surface of the earth.
2.
The ground beneath the surface down to the centre of the earth
3.
The column of space above the surface ad infinitum.
4.
All objects which are on or under the surface in its natural state for example-minerals natural vegetation, or
stones lying loose upon the surface.
5. An object placed by human agency on or under the surface of the land with the intention of permanent an
annexation, for example, House walls, Doors, Fences, etc.
6. Immovable Property includes: – Right to ferries, Right to fisheries, Right to collect rent, Hereditary office,
Equity of redemption, Interest of mortgage in immovable property, Factory, etc.
Explanation: –
1. Land: – Land includes earth’s surface, column of space above the surface, the ground beneath the surface, all
objects which are on or under the surface in its natural state e.g. minerals, land covered by water e.g. lakes,
river and ponds, object placed by human agency with the intention of permanent annexation e.g. buildings,
walls and fences. Any natural thing which is inside or above the land will be considered as part of the land. For
example, River, lake, pond, any construction on the land, etc.
2. Benefits Arising Out of the land: – It means profits derived from the land without having any adequate land.
For example, rent, right to way, right to collect profit, rights of fisheries, rights of light, etc. The benefits
arising out of land are also known as ‘profit a prendre’. All benefits arising out of immovable property and
every interest in such property are also regarded as immovable property as such benefits cannot be severed
from the land e.g. hereditary allowances, rights of ways, right to collect fish from ponds etc. If Ram sells a
forest to Shyam, the trees, rivers, minerals etc. all forming part of land or ‘profit a prendre’ or benefits arising
out of land will go with it.
3. Things Attached to the Earth: – Section 3 of the Transfer of Property Act defines the expression ‘attached to
earth’ as it includes: –
A. Things rooted in the earth: – include trees and shrubs, except for standing timber, growing crops
and grasses. Now whether the trees are considered as movable or immovable depends on the
circumstances of the case. For instance, if the intention for the plantation of trees is for the
enjoyment of their fruits, then such a tree is an immovable property. But if the intention is to cut
the tree sooner or later to use its wood for building or another industrial purpose, then they will be
treated as movable property. For example, sheesham, babool, neem, etc.
B. Things embedded in the earth: – This includes things like houses, buildings, etc. but it is not
necessary that everything which is embedded to the earth, is immovable. For example, Ship
anchor, it is embedded in the land to hold the ship or shovel as it is not an immovable property
because it is inserted into the mud for a short period but if the anchor is stopping something to
move then it would be considered as immovable property.
C. Things attached to what is so embedded: – For the permanent beneficial enjoyment of that to
which it is attached thus the doors and windows of a house are attached to the house for the
permanent benificial enjoyment of the house but if the attachment is not intended to be permanent
the things attached are not immovable. It must be for the permanent beneficial enjoyment of the
 things to which it is attached. For example, Doors and windows of the house are immovable
property, but electric fans and window blinds, they are movable property.
D. Chattel attached to earth or building: – Movable property, attached to the earth or building it is
immovable property. For example, furniture or clothes hanging in the closet. The main features to
determine whether the chattel is movable or immovable property are degree, manner, extent and
strength of attachment.
But standing timber, growing crops and grass are regarded as
movable property
1. Standing Timber: – It includes babool, shisham, neem, peepal, banyan tree, etc. but trees like mango, mahira,
jack fruit, jamun, etc can be both movable and immovable property depends upon if the intention is to cut
them sooner or later to utilize them as timber and not to use them to enjoy their fruits are movable property.
2. Growing Crops: – Growing crops like creepers including pan, angoor, etc, these crops do not have their
independent existence beyond their final product.
3. Grasses: – It can be only used as fodder and no other use is possible. Therefore it is considered to be as
movable property. But if there is a contract to cut grass will be an interest in chattel, so is immovable property.
There are two main conditions to indicate the intention
1. Degree of Annexation: –
 It means that when the removal of any property annexed or embedded will not cause any harm to the land. It is
the extent to which the item has been attached or annexed to the property.
 If it does cause harm to the land then it will fall under the ambit of immovable property, if it does not cause
any harm to the land then it falls under the ambit of movable property.
 For example: – An anchor which is embedded in the earth to hold the ship and it can be easily detached
without harming the land. So, it will be regarded as movable property.
 Seats in the garden are immovable property, as during their removal it will cause harm to the land.
2. The object of Annexation: –
 If the object of annexing the property is for the usage of a long period. The purpose of annexation is for which
the item was attached to the property.
 For example: – Bolts used to tighten any object in the house; it will be considered being as immovable
property because here the intention is to use it for a long period.
Difference between Movable and Immovable Property
In a leading case Justice Holloway explained the difference between movable and immovable property: –
1. The movable property can easily be transported from one place to another, without changing its shape,
capacity, quantity or quality. The immovable property cannot easily be transported from one place to another.
If transported, It will lose its original shape, capacity, quantity or quality. If however, a thing cannot change its
place without injury to the quality by virtue of which it is immovable.
2. It includes land, benefits to arise out of land, and things attached to the earth (sec. 3 of General Clauses Act). It
includes stocks and shares, growing crops, grass, and things attached to or forming part of the land, and which
are agreed to be severed before sale, or under the contract of sale (section 2 of Sale of Good Act).
3. If the thing is fixed to the land even slightly of it is caused to go deeper in the earth by external agency, then it
is deemed to be immovable property. If the thing is resting on the land merely on its won weight, the
presumption is that it is movable property, unless contrary is proved.
4. If the propose of annexation of a thing is to confer a permanent benefit to the land to which it is attached, then
it is immovable property. If the purpose was only to enjoy the thing itself, then it is movable property even
though it is fixed in the land.
5. Examples: – Benefits to arise out of land such as hereditary allowances, right of way, ferries and fisheries,
right to collect rent and profits of immovable property; a mortgage-debt; right to cut grass of one year, a
factory; etc. Examples Right of worship; royalty; a decree of sale of immovable property; a decree for arrears
of rent; Government promissory notes; standing timber, growing corps and grass.
6. Transfer of immovable property requires registration of the document. No registration is required to transfer a
movable property.
Judicially recognized as immovable property and movable property
 S.NO. MOVABLE PROPERTY IMMOVABLE PROPERTY

1. Right of worship Right to collect the rent of an

immovable property

2. Decree of sale of a mortgaged property Right of ferry

3. Government promissory notes Right of way

4. Standing timber, growing crops and grass Right of fishery

5. Royalty Right to receive future rents and

profits of the land

6. A piece of machinery which is not permanent not attached to the earth and A factory
cannot be shifted from one place to another.

7. A right to recover maintenance allowance even if such allowance is not Right to collect lace from the trees
charged on immovable property.

8. Right of purchase of property to have it registered in his name. Reversion in property leased, etc.

Difference between Movable and Immovable Property

Case laws
1. Baijnath vs. Ramadhan and Anr, AIR 1963
This case was decided by Allahabad High Court. This case has been referred to the larger bench because of
conflict among the decisions on the question arise in this case.

The Question arises: – Whether standing shisham or neem trees are standing timber within the meaning of
section 2(6) of the act?
Judgment: – In this case, the court held that the prime importance is given to the intention. That the tree in
question was meant to be dealt with the parties just to cut off or to use it as standing timber and not merely as a
tree.
2. Shantabai vs. State of Bombay, AIR 1958 SC 532
In this case, the court held that real intention will be considered, as to for what purpose was the tree planted.
Entering into the land and cutting trees will fall under the category of benefits arising out of the land.

3. Kapoor construction vs. Leela Nagaraj & Ors. AIR 2005

In this case, the court held that there are some important factors to determine whether the property is movable or
immovable. The factors are: –
 Intention
 Mode of annexation
 Degree of annexation
What is transferable property?
Meaning of Transferable Property: – Any property which is transferable, it can be passed or moved from
one person or organization to another and used by them. Section 6 to the transfer of property act, 1882 states
that property of any kind may be transferred, except those which are provided by this act or by any other
law for the time being in force. Unless there is some legal restriction preventing the transfer, the owner of the
property may transfer it.
The person insisting non-transferability must prove the existence of some law or custom which restricts the
right of transfer. Unless there is some legal restriction preventing the transfer, the owner of the property may
transfer it. However, in some cases, there may be a transfer of property by an unauthorized person who
subsequently acquires an interest in such property.

In case the property is transferred subject to the condition which absolutely restrains the transferee from parting
with or disposing of his interest in the property, the condition is void. The only exception is in the case of a
lease where the condition is for the benefit of the lessor or those claiming under him. Generally, only the person
having interest in the property is authorized to transfer his interest in the property and can pass on the proper
title to any other person.

What cannot be transferred?

Exceptions to the transfer of property come under Section 6(a) – 6(i) of the act. So the following are
Non-Transferable Property under the act: –
1. Spes Succession [Section 6(a)]: –
o Clause (a) describes spes successionis cannot be transferred. This clause states that
the transfer of a bare chance of a person to get a property is prohibited under this
section. For example, Arun expecting that Chandini, his aunt, who had no issues,
would bequeath her house worth Rs. 50,000 transfers it to Bhushan. The transfer is
invalid as it is a mere matter of chance of receiving the property on the part of
Arun. Thus, it is invalid.
o The chance of an heir-apparent in succeeding of getting the property, the chance of
inherited relationship upon the death of any relative, or any other mere possibility
of this nature cannot be transferred.
o For example: – ‘A’ dies leaving his widow ‘B’, and his nephew ‘C’, here ‘C’ only
have spes succession as his succession to the estate depends upon the factor, i.e.,
‘B’ leaving the property intact.
2. Right of re-entry [Section 6(b)]: –
o Clause (b) mentions that the right of re-entry cannot be transferred. The right to
re-entry implies a right to resume possession of the land which has been given to
someone else for a certain time. The section mentions that the right of re-entry
cannot be transferred by itself apart from the land.
o A mere right to re-entry cannot be transferred to anyone except the owner of the
property affected thereby.
o For example: – ‘A’ grants his plot to ‘B’ on a lease, for 5 years; with a condition
that ‘B’ cannot dig a tank on the land, if ‘B’ does any such act then ‘A’ has the
right to re-enter. So, here ‘A’ cannot transfer his right to re-entry to ‘C’ for the
breach of the condition. If ‘A’ does any such act of transfer of his right to ‘C’ then
this transfer will be regarded as invalid.
3. Easement [Section 6(c)]: –
 o Clause (c) mentions that easement cannot be transferred. An easement is a right to
use or restrict the use of land of another in some way. For example, the right of
way or right of light cannot be transferred.
o An Easement cannot be transferred except the dominant heritage.
o For example: – Right to way, right to light, right to water, etc. These rights cannot
be transferred without property which has its benefits.
4. Restricted Interest [Section 6(d)]: –
o Clause (d) mentions that an interest restricted in its enjoyment of himself cannot
be transferred. For instance, if a house is lent to a man for his personal use, he
cannot transfer his right of enjoyment to another.
o A person having right to a property can transfer the same either subject to a
restriction or without restriction. Where property is transferred subject to a
restriction the transferee is supposed not to act contrary to the restriction. Thus, if
property is transferred to the transferee with a restriction that it is to be enjoyed
him personally, he shall have no right to transfer such a property and if he transfers
the property in violation of the restriction the transfer shall be void under this
clause. Under this clause, a trustee cannot alienate his office because his office is
based on personal confidence.
5. Right to Future Maintenance [Section 6(dd)]: –
o Clause (dd) restricts the transfer of the right to maintenance. Such a right cannot be
transferred as such right is for the personal benefit of the concerned person.
o The right to future maintenance is only for the personal benefit of the person to
whom it has been granted, thus it cannot be transferred.
o “A right to future maintenance, in whatsoever manner arising secured or
determined, cannot be transferred”. A right to receive maintenance is a personal
right, although any particular property or the income thereof may be charged with
it. The right of maintenance is a personal right and it is not transferable. But this
right can be transfer in case of any arrears of maintenance but as to future
maintenance it is not valid.
6. Mere Right to Sue [Section 6(e)]: –
o Clause (e) provides that mere right to sue cannot be transferred. The prohibition
has been imposed as the right to sue is a right which is personal and exclusive to
the aggrieved party. For example, a person cannot transfer his right to sue for the
damages suffered by him due to breach of contract by the other party.
o A mere right to sue cannot be transferred. The right to sue is personal to the party
aggrieved.
o For example: – Damages for the breach of contract or tort, as it claims for past
means profits for suing an agent for his accounts, for pre-emption, etc.
o These rights cannot be transferred.
7. Public Office [Section 6(f)]: –
o Clause (f) forbids the transfer of public offices. The philosophy behind the
prohibition is that such a transfer may be opposed to public policy in general. A
person is eligible to hold a public office on the grounds of his personal qualities,
and such qualities cannot be transferred. Thus, the transfer of public offices is
prohibited under this section.
o A public office is non-transferable property therefore cannot be transferred, nor
can the salary of the public officer be transferred.
 o Thus, prohibition is based on public policy as a public office is held for personal
qualities.
o If the office is not public, it will be transferable, even if the discharge of its duties
is indirectly beneficial to the public.
8. Pensions [Section 6(g)]: –
o Clause (g) of section 6 provides that pensions cannot be transferred. Pensions
allowed to military and civil pensioners of government and political pensions
cannot be transferred. In simpler terms, a pension may be understood as any
periodical allowance which may be granted in regard to any right of office but only
on account of the past services offered by the pensioner.
o The stipends which are paid to military, naval and air forces and civil pensions of
government and political pensions cannot be transferred.
o Pensions mean personal allowance or stipend not concerning any right of office but
of special merit.
9. Nature of Interests [Section 6(h)]: – In this, no transfer can be made in three conditions: –
o This clause prohibits transfer which will oppose the interest affected thereby. The
transfer is also forbidden if the object or consideration of the transfer is unlawful.
Moreover, a transfer by a person who is legally disqualified from being a
transferee is also forbidden.
o Opposed to the nature of business: – There are things which from their very nature
are not transferable. It includes, res communes (i.e. things of which no one in
particular is the owner) or also known as res nullius (i.e. thing without an owner
such as air, water of rivers etc.). These things from their very nature are not
transferable. Similarly, res extra commericum (i.e. things which cannot be the
subject of commerce) e.g. property dedicated to a idol cannot be transferred.
o Anything with an unlawful object or consideration within the meaning of Section
23 of the Indian contract act, 1872 cannot be transferred. A property otherwise
transferable become non-transferable when the object or the consideration of the
transfer is unlawful. Thus a house given on rent for the purpose of gambling or
prostitution being immoral or opposed the public policy is invalid.
 Is fraudulent
 It is against public policy
 It is prohibited by law.
 Is of such a nature to defeat the provisions of any law.
o A person legally disqualified to be a transferee: – A transfer cannot be made in
favor of a person who is disqualified to be transferee. Under Section 36 of Transfer
of property act, a judge, a legal practitioner or an officer connected with courts of
justice are disqualified fro purchasing any actionable claims.
10. Statutory Prohibitions on the Transfer of Interest [Section 6(i)]: –
o Clause (i) of section 6 was inserted by the Amendment Act of 1885. The clause
declares that certain interests are untransferable and inalienable. For example, a
farmer of an estate, in respect of which default has been made in paying the
revenue, cannot assign his interest in the holding.
o The general rule is that leasehold are transferable but this clause makes an
exception to this rule and declares certain interest untransferable. A tenant having
an untransferable right of occupancy, the farmer of an estate in respect of which
default has been made in paying revenue, or the lessee of an estate cannot assign or
transfer their interest in the holding.
 o This section makes it clear that a tenant cannot have an occupancy of a non-
transferable right in any way to transfer his interest.
Who is competent to transfer under Transfer of Property Act, 1882?
Following persons are competent to transfer of property: –
1. Section 7 of the transfer of property act states about the person who is competent to transfer. Every
person who is competent to contract is competent to transfer property, which can be transferred in
wholly or in part.
2. And another vital point is that the person who is willing to transfer property must have title to the
property or authority to transfer it if he is not the real owner of the Property.
3. He should be entitled to the transferable property or to be disposed of transferable property which is
not his own.
4. Competent to Contract: – According to Section 11 of the Indian Contract Act , 1872 every person
is competent to contract who has attend the age of majority. Under section 3 of the Indian Majority
Act, 1875 a person attains majority at the age of 18 years and if guardian is appointed, he would
attend majority at the age of 21.
5. Transferor must be entitled to transferable property: – Authorised to dispose of transferable
property not his own. One who is real owner of the property and property is free from hindrance is
capable to transfer the same. An owner of the property may authorise his power of attorney holder to
transfer the property for him and on his behalf.
6. Persons who are disqualified to transfer are: – The following are disqualified to transfer- Convicts
, Insolvent Person, Alien, Enemy. A transfer by a defective guardian of minors property is invalid
and will be hit by section 11 of Hindu minority .
Case laws for transferable property and non-transferable property
1. Official Assignee, Madras vs. Sampath Naidu, AIR 1933 Mad. 795
It was observed by the court that a mortgage executed by an heir is void even if he has subsequently acquired
the property as heir. Therefore, it can be concluded from above that the transfer of spes- succession is void ab
initio.

2. Shoilojanund vs. Peary Charon, (1902) ILR29 Cal 470

In this case, the court held that the right to receive voluntary and uncertain offerings in worship is restricted for
personal enjoyment and, therefore, cannot be transferred.

3. Ananthayya vs. Subba Rao, AIR 1960 Mad 188

In this case, the court held that where there is an agreement between two people and according to which a
person agrees to give a certain proportion of his income to his brother in consideration of having being
maintained by the later. Now in such cases, this provision will not apply.

4. Saundariya Bai vs. Union of India, AIR 2008 MP 227

It was believed that the pension is non-transferable property, as long as it is unpaid and in the hands of the
government. Another important aspect that needs to be noted is that pensions are separate from bonuses and
rewards, and on the contrary, these are transferable.

What is Transfer to an Unborn Person?

Meaning of Transfer to an Unborn Person: – The Unborn person is the one, who is not in existence, maybe
born in future but does not have a current legal existence. Section 13 of the Transfer of Property Act, 1882
provides that where, on a transfer of property, an interest therein is created for the benefit of an unborn
person or person not in existence at the date of the transfer, subject to a prior interest created by the same
transfer, the interest created for the benefit of such person shall not take effect, unless it extends to the whole of
the remaining interest of the transferor in the property.
Although a child in the womb is usually not a person in the existence but it has been treated so under both
Indian and English law. Section 13 of the Transfer of Property Act defines a transfer to an unborn person.
Thus, in order to transfer a property for the benefit of an unborn person on the date of the transfer, it is
imperative that the property must first be transferred by the mechanism of trusts in favour of some person living
other than the inborn person on the date of transfer. In simpler terms, it can be said that the immovable property
must vest in some living person between the date of the transfer and the coming into existence of the unborn
person as the property cannot be transferred directly in favour of an unborn person.

According to Section 13 of Transfer of Property Act : – Where, on a transfer of property, an interest therein is
created for the benefit of a person not in existence at the date of the transfer, subject to a prior interest created
by the same transfer, the interest created for the benefit of such person shall not take effect, unless it extends to
the whole of the remaining interest of the transferor in the property.
For Example: – “A” owns a property. He transfers it to “B” in trust for him and his intended wife successively
for their lives. After the death of the survivor, it is to be transferred to the eldest son of the intended marriage for
his life, and after his death, it is to be transferred to A’s second son. The interest so created for the benefit of the
eldest son does not take effect because it does not extend to the whole of A’s remaining interest in the property.

What is the status of an unborn child?

Status of an Unborn Child: – There is no law to prevent a man from owning the property before he is born.
His ownership is necessarily accidental indeed he may never be born at all but it is no less than the current and
real owner. A child in his mother’s womb is considered as already born for many purposes in accordance with a
legal maxim “nasciturus pro jam nato habetur”.
Thus in the property law, there is a fiction that a child “en ventre sa mere”, a person in life choosing to form a
part of the period in the rule against perpetuity.

According to the property law, the unborn child can have certain rights and inherit the property but only when
he is alive, although the unborn child cannot be treated as a person in existence, his/her rights may be vested in
the hands of his/her trustee.

Section 13 of Transfer of Property Act: – Transfer of Property to an

Unborn Child
Section 13 of Transfer of property act states that: –
 If anyone wants to transfer property to an unborn person in that case property cannot be directly
transferred to that unborn person.
 Prior life interest must be created, that Property will be with that person until the child is unborn.
 There must be a transfer of an absolute interest in favour of the unborn person.
What are the essential elements of section 13 of transfer of property
act?
The essential elements of section 13 have been discussed below. They are as follows: –
1. No Direct Transfer
o The Direct transfer of property to an unborn person cannot be done. Such transfer can
only bring into existence by a mechanism of trust.
o It is a cardinal principle of property law that every property will have an owner.
Accordingly, if the property is transferred to an unborn person, it will give rise to the
scenario, in which the property will remain without an owner till the date the unborn
person comes into existence.
2. Prior Interest
 o If the circumstances are such that there is no creation of trust, then in that case the estate
must be in possession of some other person between the date of transfer and the date
when the unborn person comes into existence. In simpler words we can say that the
interest in favour of an unborn person must always be preceded by a prior interest created
in favour of a living person.
o In this, the property is being kept with a person between the date of transfer and the date
when the unborn person comes into existence.
o Or we can say that the interest in favour of an unborn person will always come before the
prior interest created in favour of a living person.
3. Absolute Interest
o The entire property should be transferred to the unborn person. The transfer of
property should be done wholly in the name of an unborn person and no further transfer to
any other person.
o An interest that lasts only for life cannot be given to an unborn person.
Pre-requisites for a valid transfer of property to an unborn person
Section 13 provides a specific mechanism for transferring the property for the benefit of an unborn person. The
procedure as follows: –
 The person intending to transfer the property for the benefit of an unborn person should first create a
life interest in favour of a living person and after it, an absolute interest in favour of the unborn
person.
 Till then the person, in whose name a life interest is created should be alive, he would hold the
possession of the property, enjoy its usufruct i.e. enjoying the property.
 If the unborn person during the period of creation of life interest, comes into existence or born, the
title of the property will immediately get transferred to the person born but he will get the possession
of the property only on the death of the person who is holding life interest in the property.
Case Laws under Transfer of Property to an Unborn Person
1. In the famous case of Girjesh Dutt vs. Datadin, the Apex Court made important observations. In
this case “A” made a gift of her properties to “B”, who was her nephew’s daughter. The gift made by
‘A’ was made for the life of ‘B’ and then to B’s daughter without power of alienation and if there
was no heir of ‘B’, whether male or female, then to A’s nephew. ‘B’ died without having any
children. Thus considering the facts of the case, the court held that the gift in favour of unborn
daughters was invalid under Section 13 as the gift was a limited interest and also subject to the prior
interest in favour of ‘B’.
2. In case related to this concept is of Raja Bajrang Bahadur Singh v. Thakurdin Bhakhtrey Kuer,
the Apex Court had observed that no interest can be created in favour of an unborn person but when
the gift is made to a class or series of persons, some of whom are in existence and some are non
existent, it does not fail completely, it is valid with respect to the persons who exist at the time of
testator’s death and is invalid with respect to the rest.
Conclusion
Thus from the above discussion it is clear that the transfer of property can be executed in respect of unborn
persons. Though, the transfer cannot be operated directly but it can be executed indirectly by the machinery of
trusts. In other words, the interest in favour of the unborn person shall constitute the entire interest in that
particular immovable property. The underlying fundamental principle enshrined under section 13 of the
Transfer of Property Act is that a person disposing off property to another person shall not create hurdles for the
free disposition of that property in the hands of one or more generations.
Thus, for the validity of a transfer in favour of an unborn person, it is important that the whole of the remaining
interest of the person transferring the property should be conveyed to the unborn person. Moreover, as soon as
the transfer of property comes into operation, the vested interest is also transferred to the unborn person. The
transfer of immovable property to unborn persons can, thus take effect only according to the provisions
discussed above. Else, the transfer will be declared as void.
What is rule against perpetuity?
Meaning of Rule Against Perpetuity: – Rule against perpetuity under Transfer of Property Act limits the
maximum time period beyond which the property cannot be transferred. Here ‘Perpetuity’ means forever or
time without any limit. So this rule is against a transfer which makes a property inalienable for an indefinite
period. This period is known as the perpetuity period and the transfer of property cannot be postponed beyond
this limit. Section 14 of the transfer of property act deals with the rule against perpetuity.
1. After the Lifetime: – Here again in order to safeguard the violation of section 5 of Transfer of
Property Act, that the transfer of property must take place during the lifetime or before the death of
the person with the prior-interest and conception of beneficiary otherwise the transfer shall fail.
2. Attains Full Age: – The transfer of property to the unborn person or the transfer of an interest in
favour of beneficiary can be done in the three stages: –
o Interest is created on conception.
o It will become Vested interest on the birth, as per Section 20, of the Transfer of Property
Act.
o And on attaining the age of majority.
Here, absolute interest includes the enjoyment of property, possession, alienation, etc.

Section 14 in The Transfer of Property Act, 1882 (Rule against Perpetuity): – No transfer of property can
operate to create an interest which is to take effect after the life-time of one or more persons living at the date of
such transfer, and the minority of some person who shall be in existence at the expiration of that period, and to
whom, if he attains full age, the interest created is to belong.
What is the object of rule against perpetuity?
Object of Rule Against Perpetuity: – As discussed earlier, ensuring the free and active circulation of property
is important for both trade and commerce as well as for the betterment of property which ultimately is good for
society. Thus, the purpose of this section, Rule against Perpetuity, is to make sure that the property is not tied-
up and to prevent this creation of perpetuity. However, a condition restraining alienation is void under section
10 of The Transfer of Property Act, and remote interest is governed by section 14.
Perpetuity may arise under two circumstances: –
1. Transferor of property is deprived of the power of alienation.
2. Remote interest is created in the property but without the right of alienation to the transferee.
What are the essentials of rule against perpetuity under Transfer of
Property Act?
The essentials of rule against perpetuity under transfer of property act are given as follows: –
1. There should be a transfer of property.
2. The transfer must be to generate in favour of an unborn person (i.e. ultimate beneficiary).
3. The Interest created must take into effect during the lifetime of the person living and during the
minority of the unborn person.
4. Birth of unborn person is a condition before the death of the person, who is holding its property
existence at the expiry of the interest of the living person.
5. The vested interest in favour of the ultimate beneficiary may be postponed only to the life of the
living person.
What is the difference in rule against perpetuity between Indian law
and English law?
The difference in rule against perpetuity between Indian law and English law: –
1. The minority period in India is 18 years whereas it is 21 years under English law.
2. The period of gestation should be an actual period under Indian Law but it is a gross period under
English law.
 3. Under Indian law, the property should be given absolutely to the unborn person whereas in English
law, need not be absolutely given.
4. The unborn person must come into existence before the death of the last life estate holder as per
Indian law whereas he must come into existence within 21 years of the death of the last life estate
holder in case of English law.
What are the exceptions to rule against perpetuity?
The exceptions of rule against perpetuity under transfer of property act are given as follows: –
1. Transfer for Public Benefit: – Where property is transferred for the benefit of the people in general,
then it is not void under this rule. For Example: for the advancement of knowledge, religion, health,
commerce or anything beneficial to mankind.
2. Covenants of Redemption: – This rule does not offend the covenants of redemption in the
mortgage.
3. Personal Agreements: – Agreements that do not create any interest in the property are not affected
by this rule. This rule applies only to transfers where there is a transfer of interest.
4. Pre-emption: – In this, there is an option of purchasing land and there’s no question of any kind of
interest in the property, so this rule does not apply.
5. Perpetual Lease: – It is not applicable to the contracts of perpetual renewal of leases.
6. This rule is not applicable to mortgages because there is no creation of future interest.
When will the vested interest get in favour of the ultimate
beneficiary?
1. After the death of the person who has a life interest in the property, or
2. The period of 18 years, whichever is longer, any condition beyond this period will be void and not
operative. This direction is for the whole or part of the income.
3. Example: – ‘X’ transfers his property to ‘Z’ with a condition that property shall accumulate during
X’s life and shall be given to ‘M’. So the direction here given by ‘X’ is valid only during the life of
‘Z’ and not after his death.
Section 13 Transfer of Property Act
“Transfer for benefit of unborn person: – Where, on a transfer of property, an interest is created for the benefit
of a person not in existence at the date of the transfer, subject to prior interest created by the 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 transferor in the property.”
1. Person in Existence: – To begin with, the ultimate beneficiary of the transfer is an unborn person,
who is not yet in existence. Child may not be physically born, but from conception itself, he is
considered as a person in existence. Transfer of interest in property is valid from the day of
conception, though the same shall vest on birth of such child.
2. Prior Interest: – Section 5 of TPA mandates transfer of property inter vivos or between living
persons only. Since, the transferor wishes to pass interest on to a person not in existence, to
overcome this predicament a prior interest is created in favor of living person on the date of transfer.
3. Whole Remaining Interest: – Prior interest transferred to a living person is lifetime interest, which
means he can enjoy the benefits of the property without alienation. In other words, transferor
transferred limited and not absolute interest. The remainder interest in the transferred property is the
right of alienation, which is still held by the transferor. For the transfer to be valid in the hands of
final beneficiary this right of alienation plus prior interests together should reach the beneficiary.
Child in womb
 If the child is in the womb and not in existence and the person holding his property dies. So, this
transfer of property is valid.
 The vested interest in the favor of the child in the womb will get during the minority and not beyond
that.
Conclusion
Therefore Section 14 provides a rule against perpetuity i.e. a rule against remoteness of vesting, in absence of
which the society shall definitely suffer a loss because of the stagnation of the properties. It would cause great
hardship in the easy enforcement of law which shall be detrimental to trade, commerce, intercourse and may
also result into the destruction of the property itself.
So this rule against perpetuity ensures free and active circulation of property both for the betterment of the
property as well as for the betterment of the society at large.
Case laws under Rule against Perpetuity under Transfer of Property
Act
1. Girish Dutt vs. Data Din
Fact of the case: – ‘A’ gifted his property to ‘B’ for her life and then gave it to his son in absolute. The deed
further stated that if ‘B’ has only daughters then the property will go to daughters but only for their life. In case,
if ‘B’ had no child, then the property will absolutely go to ‘X’ after her death. ‘B’ died without any child and
‘X’ claimed that property under a gift.
Judgment of the case: – In this case court held that where the transfer is in favor of a person or his benefit, is
void under section 13 of the act. Any transfer contained in the same deed and intended to be effective or even
on failure of such earlier transfer is void.
2. T.Subramania vs. T. Varadharayas AIR 2003
Fact of the case: – ‘A’ transfers property of which he is the owner to ‘B’ for her life and after the death of ‘B’
to his eldest son and after the death of A’s eldest son to his second son.
Judgment of the case: – In this case court held that the interest so created for the benefit of the eldest son does
not take effect, because the interest created in favor of eldest son was limited only to his lifetime.
The Transfer of Property Act, 1882 deals with two kinds of interest that are vested interest and contingent
interest. The concepts of vested interest and contingent interest are something that is very important to
understand as there are many sections relating to these concepts. The main point to understand about both the
concept is that the transfer of property involving Contingent interest takes effect only after the condition is
fulfilled, if the condition is not fulfilled then the transfer will not take effect.

What is Vested Interest?

Meaning of Vested Interest: – The interest in a property which is created in favor of the person without
specifying, the time or a specific connection is known as Vested Interest in the property. In this, the interest in
the property is vested in favor of the transferee, even though the right to enjoy the property is delayed. The
person having the vested interest does not get the possession of that property but has the expectancy to receive it
upon happening of a specified certain event.
Section 19 of Transfer of Property Act defines Vested Interest: – “Where, on a transfer of property, an interest
therein is created in favour of a person without specifying the time when it is to take effect, or in terms
specifying that it is to take effect forthwith or on the happening of an event which must happen, such interest is
vested, unless a contrary intention appears from the terms of the transfer.”
For Example: – ‘X’ promises to transfer his property to ‘Y’ on him attaining the age of 22. ‘Y’ will have vested
interest in X’s property till the time he does not get the possession of it. If ‘Y’ dies at the age of 21, then the
interest vested in ‘Y’ will pass on to the legal heirs of ‘Y’ and they will be entitled to the property in the
prescribed time period.
Vested Interest can take place in two stages: –
1. First, when the transferee is in immediate possession of the property.
2. Second, when the transferee has acquired an interest in the property but not in the current possession
of the property, where the right of enjoyment is delayed to a future date.
Section 20 of Transfer of Property Act deals with the acquisition of a vested interest in property transferred to
an unborn child. When the transfer of property is done in the favor of the unborn child, so, the interest in such
property vests in favour of an unborn child, at the child’s birth. Such a child may not be able to enjoy the
property but interest in the property is transferred immediately.
What are the characteristics of vested interest?
There are three main characteristics of a Vested Interest as follows: –
1. The vested interest does not depend upon an uncertain event, which may or may not happen. It
creates an immediate or present right, though the right to the enjoyment of property can be delayed.
2. Vested interest does not defeat by death, the property is transferred to the transferee. And on the
death of the transferee the interest is passed to the heir of the transferee.
3. Vested interest is both transferable right and heritable right.
When the vested interest remains vested in the transferee?
The vested interest remains vested in the transferee even in these conditions: –
 When the enjoyment of property is delayed and postponed.
 When a prior interest in the property is created.
 Income arising from the property accumulates till the right to enjoy the property.
 When on the happening of a certain event, the interest in the property passes to another person.
What is Contingent Interest?
Meaning of Contingent Interest: – When interest is created in favour of a person to whom such property is
transferred, and such interest depends upon the happening of a specified uncertain event, it is called Continent
Interest in the property. According to section 21 of Transfer of Property Act, the person having the contingent
interest does not get the possession of that property but has the expectancy to receive it upon happening of that
event but will not receive the property if the event does not happen as the condition is not fulfilled. Contingent
interest is entirely dependent on the condition imposed on the transfer.
For example, ‘A’ agrees to transfer the property to ‘B’ on the condition that he shall secure 90 % in his exams.
This condition is uncertain and the happening of the event or not happening is in doubt and therefore ‘B’ here
acquires a contingent interest in the property. He shall get the property only if he gets 90 % and when the
condition is fulfilled.

However, when a person has a chance of owning a specific property and before the uncertain event occurs,
interest in the property is not a contingent interest if such person receives any income from such property.

Contingent Interest occurs on following conditons: –

1. When interest is created in favour of a person to whom such property is transferred, and such interest
depends upon the happening of a specified uncertain event.
2. Therefore, the transfer of interest depends upon an uncertain event which may or may not happen.
3. The contingent interest in the property can become Vested interest in the happening of that event.
4. The right of enjoyment of ownership or possession in the property depends upon the happening of
that uncertain event that may or may not happen.
Exception to Contingent Interest of Transfer of Property Act
Section 120 of the Indian Successions Act, 1925 lays down the exceptions for contingent interest: –
 Where, under section 21 of transfer of property, a person becomes entitled to an interest therein upon
attaining a particular age, and the transferor also gives to him absolutely the income to arise from
such interest before he reaches that age, or directs the income or so much thereof as may be necessary
to be applied for his benefit, such interest is not contingent.
 Section 22 of Transfer of Property Act states about the transfer to a group or class of members with a
contingent interest. Such interest in the property will only be transferred to those who fulfill that
necessary condition. For example, there is a transfer to a group of 5 people, and the condition is that
the property will be vested in persons who attain the age of 40 years on this particular date. The
persons who have attained this age will get an interest in the property and people who have not, will
not get an interest in that property. Therefore all the people above the age of 18 years will get an
interest in the property and others will not get interest in the property.
  Section 23 of Transfer of Property Act states about a transfer that happens after happening of an
event that was mentioned in the transfer involving contingent interest. This provision simply lays
down one of the two branches of Section 21 that laws down about contingent interest. The two
branches are happening of an event and non-happening of an event. This Section states about what
happens after the happening of the specified uncertain event.
 Section 24 of Transfer of Property Act states about a transfer to a group or class of members who will
get the property on a condition that they shall be living at the specified date. The transfer of an
interest in a property will only be to such persons who are alive at the specified time. This is also a
contingent interest as the event mentioned here is an uncertain event. The transfer will only take
place for those people who satisfy the condition of surviving at a particular date. The legal heirs of
the deceased cannot claim an interest in that property as a transfer involving a contingent interest
solely depends upon the fulfilment of the condition.
What are the characteristics of Contingent Interest?
There are three main characteristics of contingent interest: –
1. This interest is entirely dependent upon the condition. It only happens when the condition is fulfilled.
2. Death of the transferee before getting the possession of the property will result in the failure of
continent interest and the property will remain with the transferor.
3. Contingent interest is a Transferable right, but whether it is heritable or not, it depends upon the
nature of such any transfer and the condition.
What is the difference between vested interest and contingent
interest?
The difference between vested interest and contingent interest is given as follows: –
SERIAL GROUND OF VESTED INTEREST CONTINGENT INTEREST
NUMBER DIFFERENCE

1. Section Vested interest is provided in Section Contingent interest is provided in Section

19 of the Transfer of Property Act, 1882. 21 of the Transfer of Property Act, 1882.

2. Definition It is an interest which is created in favour It is an interest which is created in favour o

of a person where time is not specified or a person on a condition of the happening o
a condition of the happening of a a specified uncertain event. The person
specified certain event. The person having having the contingent interest does not get
the vested interest does not get the the possession of that property but has the
possession of that property but has the expectancy to receive it upon happening of
expectancy to receive it upon happening that event but will not receive the property
of a specified certain event. if the event does not happen as the
condition is not fulfilled.

3. Condition The condition involves a specified The condition involves a specified

certain event. A certain event means an uncertain event. There is a chance of the
event that will eventually happen. happening or non-happening of that
particular event.

4. Fulfilment of Vested Interest does not entirely depend Contingent interest is entirely dependent
conditions on the condition as the condition on the condition imposed on the transfer.
involves a certain event. It creates a Interest is only transferred to the transferee
present right that is in effect immediately, on the fulfilment of the condition imposed.
although the enjoyment is postponed to
the time prescribed in the transfer.

5. Right of This right is created as soon as There is mere chance to be having the
 SERIAL GROUND OF VESTED INTEREST CONTINGENT INTEREST
NUMBER DIFFERENCE

Ownership the interest is vested. ownership rights.

6. Death of Death of the person who is having this Death of the transferee before getting the
transferee interest will not have any effect over that possession of the property will result in th
interest as after the deceased, the interest failure of continent interest and the
will vest in his legal heirs. property will remain with the transferor.

7. Transferable and Vested interest is a Transferable and Contingent interest is a Transferable righ
heritable heritable right. but whether it is heritable or not,
it depends upon the nature of such any
transfer and the condition.

8. The present right There is present, immediate right even There is no present right of enjoyment,
of enjoyment. when its enjoyment is postponed. there is a mere expectancy of having such
right.

9. Examples X professes to transfer the property ‘O’ to X professes to transfer the property ‘O’ to
Y when he attains the age of 20. There is Y on the condition that he shall construct a
a vested interest with Y for the property well in his property. If he constructs, Y
‘O’. shall get contingent interest in the property
until the condition is not fulfilled.

Case laws
1. Lachman vs. Baldeo (1919) 21 OC 312
o In this case, a person transferred a deed of gift in favor of another person but
instructed him not to get possession of that property until the transferor himself
dies. The transferee will have a vested interest even if his right to enjoy is
postponed.
2. Leake vs. Robinson (1817) 2 Mer 363
o In this case, the court stated that whenever a condition involves a legacy, which
was given ‘at a particular age’ or ‘upon attaining a particular age’ or ‘special age’
goes. It can then be derived that the transfer involves a contingent interest.
What is doctrine of election in property law?
Meaning of Doctrine of Election: – Doctrine of election means choosing between two alternative rights or
incompatible rights. Under any instrument, if two rights are conferred on a person in such a way that one right
is in exchange for the other, he is bound to choose only one of them. The applicant cannot use both, the
recipient must choose between two inconsistencies or alternative rights. Basically it means that the
person taking the benefit should also bear the burden.
The doctrine of election is predicated on the principle of equity that one cannot take what’s beneficial to him
and disapprove that which is against him under an equivalent instrument. One cannot approbate and reprobate at
an equivalent time. In simple words, where an individual takes some benefit under a deed or instrument, he
must also bear its burden.
The doctrine of election is stated in transfer of property act 1882 in section 35 and within 180-190 of Indian
succession act. Election means a choice between two alternative or conflicting rights. The doctrine of election is
a general legal rule that requires the recipient to choose whether the heir wants to own someone else’s property
and decide whether to preserve the property or accept his intentions.
If the testator attempts to dispose of the property belonging to someone else and also creates a will for that
person, the beneficiary must choose between keeping the property or accepting the devise.

If a person transfers any property which he has no right to transfer, and the same transaction confers any benefit
on the owner of the property, such owner must elect either to confirm such transfer of property or reject it. If he
rejects the transfer, he will relinquish the benefit given to him and the property will be returned to him or his
representative, as if it were not disposed of.
Understanding the Principle of Doctrine of Election
Doctrine of election consists of the principle of exercising a person’s choice to do an act of his own free will
and is founded on the justifiable principle that one who accepts a profit under an instrument or a transaction of
his choice- Should adopt the gift completely or discard everything. This principle is universal in nature and
applicable to Hindu, Muslim, and Christian.
For example: – ‘A’ promises to give 50 lakh rupees to ‘B’ but only on one condition that he will sell his house
to ‘C’, now ‘B’ here has to make the election on what to do? If he takes A’s offer then he will have to give his
house to ‘C’. On the other hand if he doesn’t, he won’t get 50 lakh also hence he has to make an election on
what to choose.
What are the essential conditions for application of the doctrine of
election?
Following are the essential conditions for the application of doctrine of election: –
1. The transferor must not be owner of the property which he transfers,
2. The transferor must transfer the property of other (owner) to a third person,
3. The transferor must at the same time grant some property, by the same instrument, out of his own, to
the owner of property,
4. The two transfers i.e. transfer of the property of owner to the transferee and conferment of benefit on
the owner of property must be made by the same transaction.
5. Question of election does not arise if the two transfers are made through two separate instruments,
6. The owner must have proprietary interest in the property,
7. The owner taking no benefit under a transaction directly, but diverting a benefit under it directly,
need not to elect.
8. Question of election does not arise when benefit is given to a person in a different capacity.
What are the exceptions to the Doctrine of Election?
The exceptions to the Doctrine of Election are as follows: –
1. When the owner who is considering the election between retaining the property and accepting a
particular benefit, chooses the former, he is not bound to relinquish any extraneous benefit that he
gains through the transaction.
2. “The acceptance of the benefit by the original owner shall be deemed to be as election by him to
validate the transfer, if he is aware of his responsibilities and the circumstances that might influence a
prudent man into making an election”
3. This knowledge of the circumstances can be assumed if the person who gains the benefit enjoys it for
a period of more than two years.
4. If the original owner does not elect his option within a year of the transfer of property, the transferor
would require him to elect his choice. Even after the reasonable time, if he still does not also still
elect, the original owner shall be assumed to have elected the validation of the property transfer as his
choice.
5. In context of a minor, the period of election shall be stalled till the individual attains majority unless
he is represented by a guardian.
When does a person elect to dissent?
According to section 35 If the owner decides not to approve the transfer, he will surrender the transferred
service to him and this service will be returned to the transferor or his representative as if he had not been
released.

Following could take place: –

 The transfer is voluntary and the Transferor had died or had become incapable of doing a fresh
transfer.
 In all cases where the transfer must be checked, it is the responsibility of the transferor or his
representative to compensate disappointed buyers. The compensation amount is the amount or value
of the property that will be transferred if the option.
What are the modes of doctrine of election?
There are two types of elections, such as: –
1. Direct Election: – There is no prescribed form. A letter, telegram, oral words of the transferor or any
other indication by the person that states the transferor’s intention is sufficient.
2. Indirect Election: – There are three types of indirect elections: –
o Acceptance of benefits without knowledge of duty for election
o Enjoy for two years and
o The status quo cannot be restored.
 Acceptance of benefits without knowledge of duty for election: –If he accepts the benefit
conferred by the transfer, such acceptance on his behalf constitutes an election by him. But there
should be acceptance with full knowledge of his duty for elections and all matters regarding such
benefits.
 Enjoyment for two years [Section 188 (1) of the Indian Succession Act]: – If any person who has
to make an election knows that he is under duty to make the choice, he should express his dissent, if
he has held the property for some time and is unwilling to contest the election in favor of the transfer.
If he holds the property for two years, without expressing that he is not in favor of the election, it is
presumed that the person possessing the property is doing so with the knowledge and acceptance of
the document.
Status quo cannot be restWhat does transfer by ostensible owner mean?
Meaning of ostensible owner: – Ostensible means what appears to be true but is not so. Ostensible owner means a
person who appears to be the owner of a particular property but is not. He is not a trespasser or any person who is
having unlawful possession of property. He acts like a property owner with the consent or conduct of the real owner.

Section 41 of the transfer of property act deals with the transfer of Ostensible Owner.
For Example: – ‘X’ owns property in Delhi, but he lives in the USA. He allows ‘Y’, his brother who lives in Delhi
to take care of the property, including payment of taxes, major repairs etc. Here ‘X’ is the real owner of the property,
while ‘Y’ is the ostensible owner. Benamidars or Benami transactions are also an example of ostensible owners.
What is doctrine of lis pendens?
Meaning of Doctrine of Lis Pendens: – The Doctrine of Lis Pendens states that no fixed property may be
transferred when a lawsuit relating to it is pending. Under Section 47, from the date of execution, a recorded
sale deed of a fixed property is considered to exist upon registration. ‘Lis’ means ‘litigation’ and ’pendens’
means ‘pending’. So, here the Doctrine of Lis Pendens means that nothing new should be introduced in
property whose litigation is pending.
The doctrine of Lis Pendens is strictly based on the theory of necessity rather than on the theory of notice
governed by the principles enshrined in common law, namely Justice, Equity and Good Conscience. It is,
therefore, pivotal in ensuring that justice is provided without injuring the rights of either party.
  The doctrine of lis pendens is expressed in a very popular maxim; ‘Pendente lite nihil innovetur’,
which means ‘during the pendency of litigation, nothing new should be introduced’.
 This doctrine means that during the pendency of any suit regarding the title of a property, no new
interest should be created in relation to that property. Therefore, in essence, the doctrine of lis
pendens prohibits the transfer of property whose litigation is pending.
 This is a very old doctrine and has been operating in the English Common Law.
Doctrine of Lis Pendens
 Section 52 in The Transfer of Property Act, 1882 include the doctrine of lis pendens (pending litigation) as
expressed in the maxim Pendente lite nihil innovetur which means nothing new should be introduced in property
whose litigation is pending. Therefore, evolving the principles of common law and Section 52 of The Transfer of
Property Act, 1882, was born and is as follows: –
“When there is an ongoing lawsuit in any Court having authority within the limits of India, a suit or proceeding
in which any right to immovable property is precisely in question, the property cannot be conveyed by any party
to the lawsuit which can influence the rights of any other party thereto under any order which may be rendered
therein, unless under the jurisdiction of the Court and on such conditions as it may enforce.“
Doctrine of Lis Pendens states that the transfer of property shall be restricted when there is a litigation pending
on the title or any rights that arise directly thereof involving an immovable property.
Illustrations: –
 ‘A’ sues ‘B’ in respect of a house in B’s possession. During the pendency of the suit, ‘B’ sells the
house to ‘C’. A’s suit is dismissed. The transfer to ‘C’ holds good position. Thus, here, the purchaser
‘C’ is bound by the result of the litigation.
 ‘A’ sues ‘B’ in respect of a house in B’s possession. During the pendency of the suit, ‘B’ sells it to
‘C’. A’s suit is decreed. The transfer to ‘C’ is voidable and A’s right to take the house is not affected.
What are the essentials of doctrine of lis pendens?
The following are the essentials of the doctrine of lis pendens as given in Section 52: –
1. There should be pendency of proceedings of a case;
2. The case or proceeding should be pending in the competent court;
3. Right to the title of immovable property is directly and specifically involved in the suit;
4. The suit or proceedings should not collusive;
5. The suit should directly affect the rights of the other part;
6. Transfer should affect the litigation rights of the other party.
7. The property in question is being transferred by either party.
Non-applicability of doctrine of lis pendens
Doctrine of Lis pendens is not applicable in every case. There are some examples in which this principle does
not apply: –
 Sale by mortgage in the exercise of the power conferred by the mortgage deed.
 In cases of review;
 In cases where the transferor is the sole party affected;
 In cases of favorable suits;
 In cases where proceedings are collusive;
 The suit’s case involves a pending transfer by a person who is not a party to the suit;
 In cases where the property is not properly described in the plaint;
 Cases where the subject matter of the rights concerned in the suit and which are alienated by transfer
are different.
The purpose of the doctrine of Lis Pendens
Doctrine of Lis Pendens is essential as it prevents Transfer of the title of any disputed property without the
Court’s consent, there can be endless litigation, and it will become impossible to bring a lawsuit to a successful
termination if alienations are permitted to prevail, and covenants are not imposed.
The ‘Transferee pendente lite’ is bound by the verdict just as if he were a party to the suit and the transfer shall
be subservient to the result of the pending lawsuit.

Applicability of Section 52 of Transfer of Property Act: – Conditions

to be Satisfied
In a three-judge bench the Supreme Court in “Dev Raj Dogra vs. Gyan Chand Jain and others” established the
meaning of Section 52 of the Transfer of Property Act and laid down the following conditions: –
 A suit or a proceeding in which any right to immovable property is directly and clearly in question
must be pending;
 The suit or the proceeding should be pending in a court of competent jurisdiction;
 The suit or the proceeding need not be a collusive one;
 Litigation should be one in which the right to immovable property is directly and clearly in question.
Case laws under Doctrine of Lis Pendens
1. Ramjidas vs. Laxmi Kumar and Ors. AIR 1987 MP 78
The Court of Madhya Pradesh observed that the purpose of section 52 is not to defeat any just and
equitable claim, but only to subject them to the authority of the court dealing with the property for
which the claims are put forward.
2. Lov Raj Kumar vs. Dr.Major Daya Shanker and Ors.
In this case, Delhi High Court observed that the principles contained in section 52 of the Transfer of
Property Act are in accordance with the principle of equity, good conscience or justice, as they rest on a
just and equitable basis, that it would be impossible to bring an action or suit to a successful
termination if alienation is permitted to prevail. Allowing alienation’s made during the pendency of a
suit or an action to defeat the plaintiff’s right will pay a premium to the cleverness of a Defendant and
thus defeat the ends of justice and throw away all principles of equity’.
3. Har Narain vs. Mam Chand on 8 October, 2010
The Supreme Court discussed and amended the law concerning the Doctrine of lis pendens in Har
Narain vs. Mam Chand, in compliance with Section 47(2) of The Registration Act, 1908. The lis
pendens doctrine states that no fixed property may be transferred when a lawsuit relating to it is
pending. Under Section 47, from the date of execution, a recorded sale deed of a fixed property is
considered to exist upon registration. The Court made it clear that the fiction produced pursuant to
Section 47 does not prohibit lis pendens from functioning. Thus, if the civil action starts and is
registered later, the Court held that land sales are still subject to the principle of lis pendens.

What are the essentials of ostensible owner?

 Transfer of immovable property by an ostensible owner
 Transfer is done for consideration
 A person interested in that property has consented to the transfer of property. The consent of the person
can be express or implied.
 The transferee should have to take proper care and acted in good faith. “Such transfer is a valid transfer.”
Explanation: –
1. Transfer of immovable property by an ostensible owner: –
o This section also applies to partial transfers. Therefore, a transfer does not need to be done by
sale or exchange. A transfer involves the transfer of an interest in a property, For example: – a
mortgage.
o Transfer must be voluntary. Therefore, the transfer made by order of the court will not come
under this section.
 o The section will be applicable only in cases of transfer of immovable property. Also, an actual
owner must exist with an ostensible owner; otherwise, the principle has no application under
this section.
2. The transfer should be for some consideration: –
o This section also does not apply to transfers made without consideration, For example: – gifts.
Therefore, a gift made by the ostensible owner of a property will not come under the purview
of this section.
3. Consent of the person interested in the property: –
o The term person has not been defined in the statute but includes the central and state
governments. A person interested in property means the real owner here. To transfer under
this section, the bona fide transferee must prove that the transfer is done by an Ostensible
Owner and the transfer is done with the consent of the real owner.
o The real owner must be able to give consent and the consent given must be independent. If
the consent is derived from fraud or misrepresentation, then it would mean that the purchase
is not bona fide and therefore, the petition under this section will not be entertained.
o The consent of the real owner can be expressed or implied. Where the conduct of one person
to permit another to act in a particular way, it amounts to implied consent. Mere silence will
not amount to implied consent unless there is a duty to speak, but negligence on behalf of a
real owner may amount to implied consent.
4. The transferee should’ve taken reasonable care and acted in good faith : –
o Section 41 states that the transferee must have taken reasonable care before entering into the
transaction and must have assumed that the transferor had the right to transfer. The test of
proper care is the amount of care a prudent man usually takes.
o For Example: – ‘A’, the transferee knew that the land belonged to ‘X’. ‘Y’ told ‘A’ that ‘X’
has given him the authority to sell that particular land. Without making any inquiries and
knowing that ‘Y’ does not have the authority to sell the land, ‘A’ entered into the transaction.
Here, ‘A’ is not entitled to protection under Section 41 of Transfer of Property Act.
What is benami transaction?
Benami transactions are an example of ostensible ownership. A Benami transaction implies that the property is held
by one person whereas, consideration for the same is provided by another. Therefore, the real owner is the person
who provides the consideration and the person in whose name the property is considered as the ostensible owner.

Benami transactions are now dealt under the Benami Transactions Act, 1988. The Act prohibits Benami transactions
and makes it equally punishable. The act declared that whoever is the ostensible owner of the property, will become
the actual owner of that property.

There are 2 exceptions to the ban on benami transactions (Section 3, Benami Transactions Act, 1988): –
 If someone buys property in his wife’s name, or
 If someone buys property in the name of an unmarried daughter.
The Transfer is valid: – If the requirement of Section 41 is met, the transfer by the Ostensible Owner is valid and is
not null or void.
Burden of proof: ostensible owner
The burden of proof under section 41 lies on the transferee, to prove that: –
 A transferor is an ostensible owner, and
 He took reasonable precautions, like a reasonably prudent person, to protect his interest.
Section 41: Rule of estoppel over the real owner of the property
Estoppel refers to a situation where a person makes other people believe in something which is not true and also the
other person acts on the same, then the person who made the representation can’t refuse to act on the same. Here,
  The real owner of the property assures the other person (transferee) that the person dealing with the
property (ostensible owner) has the right to deal with it as the owner of the property and includes the right
to alienate the property, regardless be it implicit or explicit;
 The person who is alienating doesn’t have the authority to alienate the property but he alienates property
as the ostensible owner;
 It should for a consideration ;
 Even after due care, the transferee believes that the transferor has the right to transfer;
 Now the real owner is prevented from questioning the transfer because the transferor was not competent
to do so.
It is based on the principle that a person’s conduct led to a transfer. Even though two parties were cheated by the
transferor, one enabled the fraud to take place (the real owner due to consent). The other innocent party should not
bear the brunt of this.

Case Laws of transfer by ostensible owner

1. Padam Chand vs. Lakshmi Devi
A gift deed was executed by the father, who was the ostensible owner of the property in favor of his daughter and the
idea for transfer was contented to be the love and affection in favor of his daughter. It was held that a gift is “part of
the property by the owner without benefit” and Section 41 of the Transfer of Property Act had no application in
the present case.
Therefore, it can be concluded that monetary consideration is needed to draw this section.

2. Ramcoomar Koondoo and others vs. Macqueen and another

Boono Baby was the mistress of Alexander Macdonald. Alexander bought the property in the name of Boono Baby.
In June 1843, he sold the property to Ramdoni Kundu (Ramkomore Kundu’s father). After his death, his successor
enjoyed unquestioned ownership for 24 years. Alexander made a will and stated that after Alexander’s death, the
property would go to McCain, who was the daughter of Alexander and Boono Baby.

In this case, the court held that the sale was bona fide in nature and was properly investigated by the appellants as a
prudent person.

 ored: – In the case of property which is exhaustible by consumption or used, if the person once starts
consuming the property, the election in his favor is presumed. No period for consumption is
necessary for this presumption.
Case laws
1. Mohd. Kader Ali fakir vs. lukman hakim
The basis of the doctrine of choice is that the person who uses the instrument must also bear the burden
imposed in this way and that he cannot carry under and against the same instrument. This is a violation
of general rules that cannot be accepted or rejected by anyone. This doctrine is based on the fictional
intent of this ether that the law implies that the author of the instrument intends to manifest any part of
it. There is an obligation for anyone using a will or other instrument to make that instrument fully
effective, which donors or settlers cannot have. However, what effect can be obtained from his
agreement that has received compensation based on the same instrument? The law will apply to the
applicant’s obligation to use the instrument in full force and effect. If the tool is partially invalid, the
rest is enough to place someone to vote if they say so.

2. Dhanpati vs. Devi Prasad and others (1970) (3) SCC 776
In this case, the court held that it was determined that the following conditions must be followed before
the election: –
 A person having no right to transfer the property.
 He has to transfer some profit to the owner of the property as part of the same transaction.
  The owner must either elect to confirm the transfer or dissent from it.
What is Fraudulent Transfer under Transfer of Property Act?
Meaning of Fraudulent Transfer: – Fraudulent Transfer means the illegal transfer of property to defraud
creditors. Every transfer of immovable property made with intent to defeat or delay the creditors of the
transferor shall be voidable at the option of any creditor so defeated or delayed. To constitute a fraudulent
transfer there should be an intention to hinder the creditor from his equitable and legitimate rights. Where the
transfer is made with a fraudulent intention, it means intending to defeat the interest of the creditor or interest of
any subsequent transferee. Where the transfer is made with a fraudulent intention, the object of the transfer
would be bad in the eyes of equity and justice, though it is valid in law.
Section 53 of the Transfer of Property Act, 1882 talks about fraudulent transfers. Fraudulent Transfer in
general parlance, therefore, refer to transfers which are made with an intention to defraud. Thus a
fraudulent transfer arises in a creditor-debtor relationship. In the fraudulent transfer, the property is put out of
reach of the creditor so that the creditor is delayed from satisfying his debt.
For example: – When ‘A’ transfers his property to ‘B’ without giving him his ownership of the property with
the intention to keep his assets out of reach of his creditor, such a transfer is called a fraudulent transfer.
A fraudulent transfer of property gives rise to a civil cause of action. The court may set aside a fraudulent
transfer at the request of the defrauded creditor.

The Transfer of Property Act deals with fraudulent transfers under Section 53; “Fraudulent Transfers: – Every
transfer of immovable property made with intent to defeat or delay the creditors of the transferor shall be
voidable at the option of any creditor so defeated or delayed. Nothing in this sub-section shall impair the rights
of a transferee in good faith and for consideration.
The law stipulates that all cases of such fraudulent transfers, are voidable at the option of the party so defrauded
(the creditors or the subsequent transferee). The Section incorporates the common law principle of equity,
justice and good conscience as it attempts to prevent defeat of legitimate claims of creditors or transferees.

Since the Act makes all such cases voidable at the option of creditors/transferees, the burden to prove such
fraudulent conduct or intent initially lies on the creditors. Once, facts are proved sufficiently to show prima
facie the intention of the debtor to defeat or delay the creditors, the debtor is required to make his case and
explain the facts.
Objective behind the Doctrine of Fraudulent Transfers
Section 53 is attracted in cases wherein any transfer of property, which is immovable in accordance with the
relevant sections of The Transfer of Property Act, 1882, is done with the design or scheme to fulfil the objective
of defrauding his creditors in a manner that they are defeated or delayed.

It was such practice that compelled the legislature to enact this section. Their objective was to lend protection
to creditors who are those to whom the transferor owes some sort of liability which is financial in nature. The
basic objective is to lend a blanket to such people who suffer in the nature of delay or defeat of their interest.
Such people whose mere fault was to lend money to the ill-intentioned transferor must be provided some kind
of security- one which only the legislature through legal policy can provide.
What are the essentials of Fraudulent Transfer under Transfer of
Property Act?
The essentials of Fraudulent Transfer under Transfer of Property Act are as follows: –
1. Transfer of the property done by the transferor
2. It should be immovable property
3. The transfer is done without consideration
4. The transfer is done with the intention to defraud a subsequent transferee and with intention to defeat
or delay his creditors
 5. Such transfer is voidable at the option of the subsequent transferee.
Exceptions of Fraudulent Transfer under Transfer of Property Act are: –
1. Acted in good faith, and
2. The transfer was for consideration.
Framing of suit under fraudulent transfer
Privity of contract is followed which means that only the parties to the contract can sue. Hence, no third
party can sue on the creditor’s behalf who is not a party to the suit. The suit is instituted by the creditor on the
ground that the transfer is made to defeat or delay the creditors of the transferor.
The suit is instituted in the representative category or for the benefit of all creditors. This is to avoid a
multiplicity of suits against the same opposite party/parties on the same subject. Dismissing a creditor’s lawsuit
would be binding on all creditors.

Burden of proof under fraudulent transfer

There is no presumption in law that the transfer was affected with the intent to defeat or delay creditors. The
existence of fraud will not be presumed by the court, it has to be proved. Therefore, when the transfer of
property is challenged on grounds of fraud, the primary onus will be on the petitioner to show how he was
connected to the property and how the fraud has taken place.
Therefore, the primary onus here is on the creditors to prove that the transfer was affected to defeat or delay the
debtors. But once this is proven then the burden shifts on the transferee to prove that he has purchased the
property with good faith and consideration.
Burden of proof with respect to showcasing whether the transfer was made possessed with the intention aimed
to delay or defeat the creditors [ or the people to whom the transferor owes some kind of liability which is
financial in nature lies on such people to whom the transferor owes some kind of liability which is financial in
nature i.e., the creditors. This is so since they are the ones who can actually prove whatever delay, defraud or
defeat they suffered at the hands of the ill intentioned transferor.

Proviso: –
A bona fide transferee who paid the consideration for the transfer has been protected under this section. Bona
fide transferee will mean that the transferee is unaware of or has no knowledge of the fake intentions of the
transferor. Knowledge includes real and constructive notices. If Transferee has constructive notice of fraud, it
will be presumed that he knew about the fraud.

Also, the consideration must be the essence of the transfer. The transferee of an unjustified transfer would not
be protected.

Case laws
1. Kanchanbai vs. Moti Chand, AIR 1967 MP 145
In this case, the court observed that the phrase creditors would also include a single creditor. The clause
would be attracted even if a single creditor was defrauded or intended to defraud only a single creditor.
Here the transfer was made to fail and delay the creditor’s claim. Therefore, section 53 would be
applicable.
2. Dr Vimla vs. Delhi Administration AIR 1963 SC 1572: – 1963 Supp (1) CR
585
In this case, the Supreme Court observed that the term defraud involves 2 elements i.e., Deceit and
Injury to the defrauded person. The injury does not only mean economic loss. It also includes
deprivation of property or money and includes harm caused to body, mind, and reputation to a person.
What is rule of art performance?
Meaning of rule of art performance: – The rule of art performance is based on the principle of equity, was
developed in England and was later added to the Transfer of Property Act, 1882, through the Amendment
Act of 1929.

In the law of contract (for example, a contract for sale), no right is passed until the sale is completed but if a
person does his part after entering into the contract or does any act in furtherance of the contract, then he is
entitled to reimbursement or compensation in case of the other party steps back.

Section 53A of the act states both the parties involved have their respective art performances to be played in a
contract, the transferor is required to get the documents made and registeration done whereas the tranferee is
required to pay the requisite amount and hence posses the property. But if there comes up a case where the
transferor has missed out the registeration part or if there is any other fault in the completion of the contract as
prescribed, in such a case, the transferor would not have enough powers or rights to file against the transferee
and involved faulty parties. But since the transferor here went wrong, the right and ownership of transferee
remain unaffected.
Illustration
‘A’ contracts with ‘B’ to sell his plot for ‘x’ amount of money. ‘A’ accepts the advance from ‘B’ towards the
sale of the plot and hands over the possession of the said plot to ‘B’. After some time, ‘B’ is ready to pay the
remaining sale amount but ‘A’ refuses to accept the same. Further, ‘A’ asks ‘B’ to hand over the plot back to
him.

Here ‘B’ is ready to perform his part of the contract but ‘A’ is not. In such a case, ‘B’ can bring a case requiring
specific performance from ‘A’. It does not matter that the sale was not registered.

What are the essentials of rule of art performance?

The essentials of rule of art performance are as follows: –
1. There should be a written contract for the transfer of immovable property by or on behalf of the
transferor. The principle cannot be applied if there is a void agreement or no agreement.
2. There should be a consideration.
3. Contracts should have out the terms of the transfer with reasonable certainty;
4. The Transferee must have taken possession as a result of this contract or continued possession if he
was already in possession of the property;
5. The Transferee may have done some act in advance to the contract. Acts made before the agreement
or its independence cannot be considered part of the contract to be performed; And
6. The Transferee should have performed its part of the deal or agreed to do it.
What are the objectives behind the doctrine/rule of art performance?
1. This Section is based upon the maxim ‘which ought to have been done’.
2. In the execution of the transfer of property, the law imposes a duty on both, the transferor and the
transferee. Generally, the transferee has to pay the consideration according to the terms of the
contract and the transferor has to execute the transfer deed in a manner prescribed by the law.
3. Clause 53A focuses on protecting the transferee’s right to retain possession of the property, where
there is no fault on his part, as the transferee should not suffer because of the fault of the transferor to
complete the instrument of transfer in the prescribed manner.
Transfer of the Property
The transfer can be of immovable property in the form of a sale, and may also be a right of way in the
immovable property. Therefore, the rule of art performance applies to leases, mortgages etc.
Written Contract
The situation in Indian law is different from the common law: –
1. In India, the contract must be in writing to attract the rule of art performance. Since no special format
has been provided for the contract, it does not have to be formal. The rule does not attract oral
contract cases where there is a complete absence of any written agreement.
2. Simply the contract in writing is not enough, but it must also be signed by the transferor or someone
else on behalf of the transferor. If the contract is not signed, it will not be considered a valid contract
under this section.
3. To attract this section, the contract of sale must be registered (after amendment). Even if the contract
of sale is not registered, the section has no application.
4. The nature of the transaction should be clear from the reading of the deed and also what rights are
being transferred to the transferee.
Possession by the transferee under rule of art performance
One of the main essentials of this section is that the transferee at the time of moving into the contract should
have possession of the property. Possession by transferee may be taken after entering into a contract or
possession may be a continuous one.

But for attracting this section, the possession of the property should’ve been taken place in part performance of
the contract and not for any other purpose.

In case of continuous possession, it must be shown by the transferee that he has done something in advance the
contract. A mere continuation of possession by the person who was already in possession before the contract is
not sufficient.

For example: – ‘X’ agrees to sell his property to ‘Y’ after a period of two months. But at the moment of the
agreement, ‘Y’ had no other place to live, so ‘X’ allows ‘Y’ to live in his property. If the contract fails to takes
place, ‘Y’ cannot ask for the retention of possession based on the principle of art performance. As the
possession was taken by ‘Y’, here is not done in furtherance of the contract, but it was permission granted by
‘X’ to ‘Y’ for a specific purpose.
Act done in furtherance of the contract
When the property was already in possession of the transferee before the contract, it must be shown by the
transferee that he has done something in furtherance of the contract. The act is done and there must be some
reasonable real nexus in the contract.

Bonafide transferee rights not affected

Where a subsequent transfer occurs and the transfer is for consideration, the transfer would be valid if there was
no notice of the contract already existing. This notice will include an actual as well as constructive notice.

The transferee must have taken reasonable care before entering into the transaction. In a case where the
transferee is unaware of the contract, but if he would have become aware of it by taking reasonable care, it will
be presumed that the transferee had constructive notice.

Difference between the rule of art performance followed in English

and Indian law
English law of art performance Indian law of art performance

The contract must not be written or signed Section 53(A) deals with the Doctrine and states that the contract must be in
 by the transferor. writing as well as signed by the transferor.

Right under this doctrine is an equitable The right under the doctrine is a statutory right.
right.

Right under principle is an equitable right. It can only be used to defend the possession of transferee.

It creates a title in the Transferee. It does not create a title in the transferee.

Case laws of rule of art performance

1. Kukaji vs. Basantilal AIR 1955 MB 93
The fact of the case: – ‘A’ mortgaged his house to ‘B’ and gave possession of it. Later, ‘A’ sold the house to
‘B’, but it is not registered. The consideration for the sale was a mortgage loan. After some time, the property
was sold to ‘C’ and got the transfer deed registered. ‘C’ sued ‘B’ to release the mortgage. ‘B’ moved
under Section 53(A) of the Transfer of Property Act, claiming retention of possession under rule of art
performance.
The Judgment of the case: – In this case court held that ‘B’ was already in possession of the property as a
mortgage. The continuity of possession is not a part performance ‘B’ would have to show that they had done
something else to advance the contract.
2. Sardar Govindrao Mahadik vs. Devi Sahai
Facts of the case: – ‘A’ mortgaged his property to ‘B’ and gave possession of the same. Subsequently, an
agreement was reached between ‘A’ and ‘B’ to sell the mortgaged property. For the same, the mortgagee
advanced Rs. 1000 for purchase of stamp to be affixed on a deed. The sale deed was never registered.
Later, ‘A’ sold the property to ‘C’ and ‘A’ and ‘C’ then filed a lawsuit against ‘B’ for the redemption of the
property. ‘B’ claimed that the benefit of the principle of partial performance on the ground i.e., a sale deed was
executed in his favor; he retained possession and Rs. 1000 for purchase of stamp which should be considered in
the advancement of proceeding of the contract.

The Judgement of the case: – In this case court held that the money provided for the purchase of the stamp is
owed to the contract and no further work is done. ‘B’ was not entitled to benefit of the principle of part
performance.
What is Actionable Claim?
Meaning of Actionable Claim: – Actionable claim in general term signifies a claim or a debt for which you
can take an action. It means there’s a claim and you can approach court for enforcement of the same. The debt
here is unsecured. According to section 3 of the transfer of property Act, “actionable claim means a claim to
any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge
of movable property, or to any beneficial interest in movable property not in the possession, either actual or
constructive, of the claimant, which the civil courts recognize as affording grounds for relief, whether such debt
or beneficial interest be existent, accruing confidential or contingent”.

In general terms, an actionable claim refers to a claim or a debt for which you can take an action, which means
there is a claim and you can approach the court for enforcement of the same. Here it denotes a debt and the
actionable claim holder can go to court to recover that debt. An actionable claim is transferable. Transfer of
actionable claim is defined under Chapter VIII of the Transfer of Property Act, 1882. Chapter VIII is the last
chapter of Transfer of Property Act and covers sections 130 to section 137.
For example: –
 ‘X’ owes 500 rupees to ‘Y’. This is an actionable claim.
 ‘A’ agrees to sell to ‘B’ a product ‘P’ in future. Here ‘B’ acquires a beneficial interest and is
therefore an actionable claim.
 Rent is an actionable claim due to the tenants’ share.
  ‘A’ gives Rs. 10,000 to ‘B’ as an earnest money for B’s house. Later, ‘B’ refuses to sell the house to
‘A’. 10,000 rupees given as earnest money is an action claim.
Examples of Actionable Claim are as follows: –
 Claim for arrears of rent.
 Claim for money due under insurance policy.
 Claim for return of earnest money.
 Right to get back the purchase money when the sale is set aside.
 Right of a partner to sue for an account of the dissolved partnership firm.
 Right to claim benefit under a contract for the purchase of goods.
 Right to get the proceeds of a business.
Exceptions to Actionable Claim are as follows: –
 Debts secured by mortgage of immovable property;
 Damages for breach of contract;
 Damages in tort;
 A claim to mesne profits;
 Share in company;
 Claim to copyright.
Actionable Claim under Transfer of Property Act
In brief, it can be said that an actionable claim means a claim to an unsecured debt or any interest in
movable property that is not in the possession of the claimant. The term actionable claim only covers the
below mentioned two types of claims.
According to Section 3 of Transfer of Property Act 1882, an actionable claim means: –
1. Claim to an unsecured debt or any debt that is not secured by: –
o Mortgage of immovable property, or
o Pledge of movable property, or hypothecation
OR

2. Any beneficial interest in movable property that is not in the possession of the claimant. The
possession can be constructive or actual.
Unsecured Debt: – Unsecured debt refers to all monetary obligations of a certain amount, and that is not
covered by any security in the form of mortgage, pledge or hypothecation. This is not just limited to the concept
of loans forwarded by a creditor to a principal debtor. It extends to all kinds of monetary obligations, such as
rent or payment on sale of property etc. So, the three types of unsecured debt are:: –
 Existing: – It is the kind of debt that has already become due, and is currently payable and
enforceable. For example, if Mr. A currently sells a house to Mr. B, and the monetary consideration
has to be paid at the same time, the consideration becomes payable at the same time, and is an
existing loan.
 Accruing: – If a monetary obligation is currently due but becomes payable at a future date, it is
accruing debt. For example, if Mr. A is an employee of Mr. B and he receives his salary on the last
day of every month, his salary is in debt during that month, as it is due for the whole month, but it
becomes payable only on the last day of the month. Therefore, if Mr. B fails to pay the salary, Mr. A
can approach the Court to claim it only after the last date of the month, when it becomes due.
 Conditional or Contingent: – A loan is conditional or contingent if it becomes payable on the
fulfillment of a condition or contingency. It is called a conditional loan when the condition is under
the control of the parties. For example, an agreement between ‘A’ and ‘B’ that ‘A’ will pay Rs. 1000
if ‘B’ buys C’s house, it is a conditional loan. Here, Rs. 1000 becomes payable and ‘B’ can claim it
only after fulfilling the condition. On the other hand, when the condition is beyond human control, it
is called a contingency loan. For example, if ‘A’ promises to pay ‘B’ a specific amount if C’s ship
sinks, then since the sinking of the ship is beyond the control of the parties, it is a contingent debt.
Beneficial Interest in Movable Property: – If a person has the right to possess a movable property, then it is
said that he has beneficial interest in that movable property. But if that property is not in his possession, then he
has an actionable claim. So, the requirements to constitute this type of actionable claim are: –
 Movable property;
 The movable property is not in the possession of the claimant;
 The claimant has the right to possess that movable property.
 For example, if ‘A’ sells his car to ‘B’ and ‘B’ has completed his obligation, that is, ‘B’ has
forwarded the consideration from his side, then ‘B’ has the right to possess the car; but if ‘B’ is
unable to acquire possession, then ‘B’ can approach the Court to claim this possession.
 But if the movable property is already in the possession of the claimant, either actual or constructive,
then he cannot claim possession. So, if in the previous example, ‘A’ had given the car keys to ‘B’,
then it can be said that ‘B’ has constructive possession, and hence, B cannot approach the Court to
claim possession.
What are the modes of transfer of Actionable Claim?
Section 130 of the Transfer of Property Act lays down how such actionable claims can be transferred as: –
“Transfer of actionable claim: – The transfer of an actionable claim shall be effected only by the execution of
an instrument in writing signed by the transferor or his duly authorised agent, shall be complete and effectual
upon the execution of such instrument, and thereupon all the rights and remedies of the transferor, whether by
way of damages or otherwise, shall vest in the transferee, whether such notice of the transfer as is hereinafter
provided be given or not: Provided that every dealing with the debt or other actionable claim by the debtor or
other person from or against whom the transferor would, but for such instrument of transfer as aforesaid, have
been entitled to recover or enforce such debt or other actionable claim, shall (save where the debtor or other
person is a party to the transfer or has received express notice thereof as hereinafter provided) be valid as
against such transfer.”
The modes of transfer of Actionable Claim is described under section 130 of the transfer of property act, such
as: –
 The instrument of transfer must be in writing;
 The transferor or a duly appointed agent must have signed such an instrument;
 Transfer can be done with or without consideration;
 Consideration may or may not be extended;
 Such a transfer will be complete and deemed effective only when it has been executed;
 Transferor will get all the rights and remedies in the property at the time of transfer.
Exceptions to Section 130 of the Transfer of Property Act: –
 Negotiable Instruments, Stocks, Shares, Debentures
 Marine policy of insurance
 Fire insurance policy
 Cases falling under section 38 of the Insurance Act, 1938.
Which claims are not covered under Actionable Claim?
Claims are not covered under Actionable Claim are as follows: –
 Right to Claim Damages: – Such right to claim damages whether arising from tortuous liability or
contractual liability are not considered actionable claims. This is so mainly because of the uncertainty
of the amount of money which may be deemed to be payable. Furthermore, given that this right is
based out of a personal infringement or injury, the redressal of such injury cannot be transferred.
 Mesne Profits: – These money for possession of immovable property which is received by a tenant,
who themselves do not have the permission to allow for possession of such property. In the case
of Jai Narayan v. Kishun Dutta, it was held that a claim for mesne profits is not an actionable claim
as they are essentially unliquidated damages; they are not considered as any claim to beneficial
interest in property or in possession of such a claimant. It is simply a right to sue.
 Decree or Judgement of Debt: – Any decree or judgement of debt cannot be transferred under
actionable claim. This is so because once such a judgement has been pronounced, no action subsists
which can be transferred.
  Intellectual Property: – Intellectual properties such as patents, copyrights etc. do not operate as
claims but are special rights which already vest in a person. They have exclusive governing
legislations and cannot be transferred as actionable claims.
Notice of transfer to debtors
Notice of transfer to debtors is not required. This means that the transfer of an actionable claim will be valid
irrespective of the fact whether the debtor had knowledge of it or not. But if the debtor is not given notice, he is
not bound by the transfer. Therefore, the payment made by him to the principle creditor will be valid.

Therefore, to bind the debtor with the transfer, notice must be provided to him. Section 131 of the Transfer of
Property Act provides that it is not sufficient to provide the debtor with a notice; the notice must be expressed
one.
The notice should be: –
 In writing,
 Signed by
 The transferor or an agent duly authorized on his behalf,
OR

 Where the transfer refuses to sign, the transferor or its agent

 Specify the name and address of the transfer.
Case laws under Actionable Claim
1. H. Anraj vs. Govt. Of Tamil Nadu, A.I.R. 1986 S.C. 63
In this case Supreme Court held that the right to participate in a draw is a beneficial interest in movable
property. The objective of participation will be to win the award. Transfer of rights is thus a beneficial
interest in movable property and not possession. Therefore, the lottery is an actionable claim.

What is Mortgage?
Meaning of Mortgage: – A mortgage is a loan that the borrower uses to purchase or maintain a home or other
form of real estate and agrees to pay back over time, typically in a series of regular payments. The property
serves as collateral to secure the loan. A mortgage is the transfer of an interest in specific immovable
property to secure the payment of funds or to be advanced through a loan, an existing or future loan, or the
performance of an engagement that may give rise to a pecuniary liability.
According to Section 58(a) of The Transfer of Property Act, 1882 mortgage is the transfer of an interest in
specific immovable property for the purpose of securing the payment of money advanced or to be advanced
by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a
pecuniary liability. The transferor is called a mortgagor, the transferee a mortgagee; the principal money
and interest of which payment is secured for the time being are called the mortgage-money, and the instrument
(if any) by which the transfer is effected is called a mortgage-deed.

What are the characteristics of mortgage?

Following are the characteristics of mortgage: –
1. A mortgage can only be affected on immovable property;
o immovable property includes land and profits that arise from things attached to the earth
such as trees, buildings and machinery.
o But a machine that is not permanently fixed to the earth and is able to shift from one place
to another is not considered immovable property.
2. A mortgage is the transfer of interest in a specific immovable property which is different from sale.
As in sale the ownership right of the property is transferred but in mortgage certain right of
ownership get transferred and the other ownership right will be with the owner only.
 3. The purpose of the transfer of an interest in property would be to secure a loan, resulting in a
monetary obligation. Transfer of property for the purpose other than the above will not amount to
mortgage. For example: – property transferred to liquidate prior debts will not become mortgage.
4. The mortgaged property must be a specific one, i.e., that can be identified by its size, location,
boundaries, etc.
5. The actual possession of the mortgaged property should not always be transferred to the mortgagee.
6. The owner of the property will get the interest back in the mortgaged property after the repayment of
the debt.
7. If the mortgagor fails to repay the loan, the mortgagee receives the right to recover the debt from the
sale proceeds of the mortgaged property.
Who is a Mortgagor?
Meaning of Mortgagor: – A mortgagor is the person who borrows money from a lender in order to
purchase a home or other piece of real estate. The person who has transferred interest to a specific immovable
property is known as a mortgagor. A mortgagor is the person or other entity that receives a mortgage loan in
order to buy property.
Mortgagors can obtain varying mortgage loan terms based on underwriting factors associated with
a mortgage loan. Mortgage loans are a type of secured loan therefore one commonality among all mortgage
loans is the pledging of real estate collateral.

Once the loan has been funded, the mortgagor is responsible for making timely payments of interest and
principal. If they do not, they may ultimately be subject to foreclosure on the home.

For example: – ‘A’ wants a loan from ‘B’. Now ‘B’ wants his money to be secured which he is giving in loan
to ‘A’. ‘A’ will transfer interest in the specific immovable property to ‘B’ and give him the right to sell the
property in case ‘A’ is not able to repay the amount. ‘A’ is the mortgagor here.
Who is a Mortgagee?
Meaning of Mortgagor: – A mortgagee is a lender, specifically, an entity that lends money to a
borrower for the purpose of purchasing real estate. In a mortgage transaction, the lender serves as
the mortgagee and the borrower is known as the mortgagor. The transferee or the person in whose favor the
interest is being transferred is known as a mortgagee. In the example given above, the person who is lending
money i.e. B is a mortgagee.
In order to limit its risk, a mortgagee creates a priority legal interest in the value of the mortgaged property,
allowing it to seize it if the mortgagor defaults on the loan.

How a Mortgagee Works?

Most people take out a mortgage to finance the purchase of a residence or commercial building. In order to limit
its risk in the investment, the lender in the transaction creates a priority legal interest in the value of
the property, substantially lowering the probability, the mortgagee, will not be repaid in full if the borrower
defaults on the loan. This is done through a perfected lien and title ownership.

A mortgagee represents the interests of the lending financial institution in a mortgage deal. Lending institutions
can offer a variety of products to borrowers, representing a significant portion of loan assets for both individual
lenders and the credit market overall.

What is Mortgage money?

Meaning of mortgage money: – The principal amount which is given as loan and the interest amount that the
mortgagor will pay. The sum of both, the principal amount and interest is known as mortgage-money.
In a mortgage loan the mortgagor is the party receiving the loan and the mortgagee is the party offering the
loan. The mortgagor must submit a credit application and agree to the mortgage loan terms if approved for a
loan. The mortgagee has the authority to determine the terms of the mortgage loan, oversee the servicing of the
loan and manage the title rights to the real estate collateral.
Mortgage Loan Contract Obligations
Mortgagors approved for a mortgage loan must agree to the terms offered by the mortgagee in order to complete
the deal. A mortgage loan contract will include the mortgagor’s interest rate and duration. The mortgagor is
required to make monthly payments of principal and interest in order to keep the loan in good standing with the
mortgagee. Mortgage loan contracts also include provisions for title ownership and a lien on the real estate
property as collateral. Provisions pertaining to the collateral outline the requirements for maintaining monthly
payments and the specifications regarding any missed payments. Terms can vary regarding the number of
delinquent payments allowed and when the lender can take action with the lien to seize the property in default.
What is a Mortgage Deed?
Meaning of Mortgage Deed: – This is the means by which the transfer of interest in a specific immovable
property is affected. It is a type of agreement that legally binds both the mortgagor and the mortgagee. A
mortgage deed is a document that contains all details concerning the loan given including the parties
involved, details of the property kept as collateral, loan amount, interest rate, and more. The deed gives a
thorough run-through with regards to the interest and title over the property.
There are 6 types of mortgages in India

1. Simple Mortgage [Section 58(b)]: – In simple mortgage the borrower personally mortgages the
immovable property to avail the debt. The lender has the right to sell the mortgaged property in case
of repayment failure. In such type of mortgage, the borrower needs to sign an agreement stating that
if he/she is unable to pay back the borrowed amount in specified time duration, then the lender can
sell the property to anyone to get his money back.
o The fundamental element of a simple mortgage is the personal obligation to pay on the
part of the mortgagor.
o Possession remains with the mortgagor in the case of a simple mortgage. The security
which is obtained by the mortgagee is of the mortgaged property, not of the rents and
profits accruing from it.
o The mortgagee is empowered to sell the property in the case of non-payment of the
mortgaged money.
2. Mortgage by Conditional Sale [Section 58(c)]: – In mortgage by conditional sale, there is a
condition that on the failure of the repayment of the mortagage money the mortagagee has the right to
sell the mortagaged property, but if mortagagor repays his debt then this condition will become void.
Under such mortgage, the lender can put a certain number of conditions which the borrower must
follow in terms of repayment. These conditions may include the sale of the property if there is a delay
in the monthly instalments, an increase in the rate of interest due to delay in repayment, etc.
3. Usufructuary Mortgage [Section 58(d)]: – In Usufructuary Mortgage, the property is transferred
to the mortagagee, who can get rent or profit from it without creating any personal liability on the
mortagagor in case of repayment failure. This kind of mortgage gives a benefit to the lender. The
lender has the right over the property for the due course of the loan period, he can put the property on
rent or use it for other purposes until the repayment of the amount. But the main rights lie with the
owner himself.
o The possession of the mortgaged property is delivered to the mortgagee by the mortgagor
as a security for the payment of mortgage money. The mortgagee is entitled to retain the
ownership of the property till the debt remains unsatisfied.
o The mortgagee is entitled to receive rent and profits accruing from the mortgaged
property till the money is repaid.
o The mortgagor does not take any personal responsibility for the payment of mortgage
money in the case of a usufructuary mortgage.
 4. English Mortgage [Section 58(e)]: – In English Mortgage, the mortagagor binds himself as he
specifies a certain date for the repayment of money, and after the repayment of the debt to the
mortagagee, the mortagagor will get his property back. In this type of mortgage, the borrower has to
transfer the property in the name of the lender at the time of taking money, at a condition that the
property would be transferred back to the borrower once the complete amount is paid back.
o In an English mortgage, there is a personal liability of the mortgagor to repay the amount
of mortgage debt on a certain date as agreed. An agreement to pay is an important part of
such a mortgage.
o In case of default by the mortgagor, the remedy available with the mortgagee is to sell off
the mortgaged property and recover himself.
o The mortgagee in this form of mortgage gets the right of possession whether the right of
entry is expressed or not, and can retain the same till the said amount is not paid to him.
5. Mortgage by Deposit of Title Deed [Section 58(f)]: – The mortgagor deposits the title deed of the
property to the mortagagee with the mortagaged property against the debt to avail. Where a person in
any of the following towns, namely, the towns of Calcutta, Madras, and Bombay, 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 thereon, the transaction is called a mortgage by deposit of title-deeds. In this type
of mortgage, the title deeds of the property are given to the lender. This is a common phenomenon in
the banking mortgage loans. It is done to secure the property.
o In English Law, this type of mortgage is called an ‘equitable mortgage’ as opposed to a
‘legal mortgage’ because there is just a deposit of a document of the title without writing
or without any other additional formalities.
o It is not necessary to make physical delivery of documents, a constructive delivery of
documents is sufficient. A valid equitable mortgage does not require all the documents of
title to be deposited or the documents deposited to show a complete title.
6. Anomalous Mortgage [Section 58(g)]: – A mortgage that does not fall under any of the above types
of mortgage is a divisional mortgage. A mortgage that 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 section is called an anomalous mortgage. Such agreement which is
made between the mortgagor and the mortgagee according to their terms and conditions is called an
anomalous mortgage. Where it is not a simple, usufructuary, mortgage by conditional sale, etc. is
termed as an anomalous mortgage.
o In the case of an anomalous mortgage the rights and liabilities of the parties shall be
determined by their contract as evidenced in the mortgage deed, and, so far as such
contract does not extend, by local usage.
o Such agreement which is made between the mortgagor and the mortgagee according to
their terms and conditions is called an anomalous mortgage.
When do mortgagor’s rights and liabilities arise?
The rights and liabilities of a mortgagor arise during a mortgage. A loan can be secured or unsecured. Where
the debt is paid on the basis of the debtor’s promise to pay (for example- note the promise), such loans are
called unsecured loans. But, where the creditor seeks security from the debtor for repayment of his money, the
loan is known as secured loan. One such way to secure debt is mortgage.
Section 58 (A) of the Transfer of Property Act, 1882, defined mortgage as the transfer of interest in a specific
immovable property for securing: –
 The money given to him should be paid or given through loan, or
 A current or future debt, or
 Performing an engagement that can lead to an pecuniary liability.
What are the rights of mortgagor?
Every mortgage-deed leaves a right to the mortgagor and has an equal liability for mortgagee and vice versa.
The following are the rights given to a mortgagor granted by the Transfer of Property Act, 1882: –
 Right to Redemption
 Right to Transfer Mortgaged Property to a Third Party instead of Returning Back to
Mortgagor
 Right of Inspection and Production of Documents
 Right to Accession
 Right to Improvements
 Right to a Renewed Lease
 Right to Grant a Lease
Explanation:
1. Right to Redemption (Section 60): – It is one of the most important rights of a mortgagor granted
under the section of the Act. This right ends when the mortagagor get his mortagaged property back.
The right to redeem further grants three more rights to the mortgagor: –
o Right to terminate the mortgage deal
o Right to transfer mortgaged property in their name
o To withdraw possession of property in case of delivery of possession
There are three exceptions to the right to redeem. It can be extinguished under the following matters: –
 By acts of parties
 By operation of law
 By decree passed by court
2. Obligation to transfer it to third party instead of pledging [Section 60 (A)]: – This right was
added to the Act by the Amendment Act of 1929. This right provides the mortgagor with the right to
assign the mortgage loan to the mortgagee and to transfer the property to a third person as directed by
him. The purpose of this right is to help the mortgagor to pay off the mortgagee by taking debt from a
third person on the same security.
3. Right to inspection and production of documents [Section 60 (B)]: – This section is also inserted
by the Amendment Act of 1929. It is the right of the mortgagor to ask the mortgagee to produce
copies of the documents of the mortgaged property in his possession for inspection on notice at a
reasonable time. Expenses incurred on the production of a mortgage or copies of documents or travel
expenses are to be paid by the mortgagor. This right is available to the mortgagor only as long as the
right of redemption exists.
4. Right to Accession (Section-63): – Basically, accession means any addition to the property.
According to this right, mortgagor is entitled to such accession of his property which is in the custody
of the mortgagee. There are two types of accession: –
o Artificial accession: – This is when the mortgagor made some efforts and this increased
the value of land.
o Natural accession: – The name itself defines i.e. without any man-made efforts.
5. Right to Improvements [Section 63 (A)]: – According to this right, if the property mortgaged is
improved while it is in the possession of the mortgagee, then mortagagee is entitled to such
correction on redemption and in the absence of any contract to the contrary. The mortgagor is not
liable to pay unless the mortgagee is: –
o The improvements made by the mortgagee were to protect the property or with the prior
permission of Mortgagor.
o Improvements can be made by the mortgagee with the permission of the public
authority.
6. Right to Renewed Lease (Section 64): – Where the mortgaged property is a lease, and the
mortgagee obtains a renewal of the lease, the mortgagor, upon redemption, shall, in the absence of a
contract by him to the contrary, have the benefit of the new lease.
7. Right to Grant a Lease [Section 65 (A)]: – This right was introduced by the Amendment Act of
1929. Prior to this right, the Transfer of Property Act did not permit a mortgagor to lease property
mortgaged on his own, but only with the permission of the mortgagee. Now, a mortgagor has the
 right to lease the mortgaged property while in lawful possession of the property subject to the
following conditions: –
o All conditions in the lease must be in accordance with local laws and customs to prevent
any fraudulent transactions.
o No rent or premium shall be paid by the mortgagor in advance or promised by him.
o There will be no provision for renewal of the lease in the contract.
o Every such lease shall come into force within a period of six months from the date of its
execution.
o Where the mortgaged property is a building, the lease period should not exceed three
years in total.
What are the liabilities of a mortgagor?
With the rights granted to a mortgagor, the Transfer of Property Act has also conferred certain duties on him.

The duties of a mortgagor are as follows: –

 Duty to Avoid Waste
 Duty to Indemnify for Defective Title
 Duty to Compensate Mortgagee
 Duty to Direct a Rent of a Lease to Mortgagee
Explanation:
1. Duty to Avoid Waste (Section 66): – This section imposes a duty on the mortgagor for not
committing any act which leads to the wastage of property or reduces the value of the mortgaged
property. Waste is divided into two categories: –
o Permissive waste: – A mortgagor who is in possession of the property mortgaged is not
liable to the mortgagee for any minor waste.
o Active Waste: – When an act is done that causes major waste of property or leads to a
decrease in the value of the mortgaged property, the mortgagor will be liable to the
mortgagee.
2. Duty to Indemnify for Defective Title: – It is the duty of a mortgagor to compensate the mortgagee
for defective title in the mortgaged property. A defective title refers to the situation when a third one
starts making claims or interferes in the mortgaged property. It is the liability of the mortgagor to
compensate for the expenses incurred by the mortgagee to protect the title of the property.
3. Duty to Compensate Mortgagee: – If the mortgaged property is in the possession of the mortgagee
who is paying all taxes and other public charges, it is the duty of the mortgagor to compensate the
mortgagee for such expenses. Similarly, when no delivery of possession is there i.e. the property
mortgaged is still in possession of the mortgagor, it is his duty to pay all public charges and taxes
levied thereon.
4. Duty to Direct Rent of a Lease to Mortgagee: – Where the mortgaged property is leased by the
mortgagor, it is his duty to direct the lessee to pay the rent to the mortgagee.
What are the rights of mortgagee?
Important rights of Mortgagee as follows: –
1. Selling Rights: – Mortgagee has the right to sell the mortagaged property, if mortagagor fails to
return the loan in time.
2. Shortage of Money Case: – After selling the property, if the amount which is received from the sold
property is less than the loan. The remaining balance can be recovered from the person by getting the
decree from the court.
3. Usufructuary Case: – In this case the mortgagee has no right to sell the property and to obtain a
decree from the court. The banker may retain possession of the property until the recovery of the
loan.
4. Refusal of Debt: – If a mortagagor refuses to repay the loan or is unable to repay the loan, the
mortagagee can obtain a foreclosure decree from the court.
 5. Adjustment of Payment: – The banker has the right to distribute the received payment after the sale
of the property as principal amount, interest and other charges.
6. Joint Suit: – If the mortgagor is more than one person, a lawsuit will be filed against all of them if
the loan is not refunded.
7. Sale of Private Property: – In case of personal property, before selling the property the mortgagee
shall issue at least 3 months notice to the mortgagor.
What are the liabilities of the mortgagee?
When the property is in the possession of the mortgagee, he has the following duties or obligations: –
 He cannot cause any damage to the property.
 No changes can be done in the property.
 Property should be insured.
 Property should be protected.
 Rent of the property should be collected.
 Government revenue will have to be paid.
 Property should be kept clear of all dues.
Case laws
1. Noakes & Co. vs. Rice (1902) AC 24
Facts of the Case: – Rice was a dealer who mortgaged his property, premise and goodwill to N subject to the
provision that if R returned the entire amount, the property would be transferred back to his name or another
person. A covenant was attached stating that whether the amount was due, R would only sell malt liquor by N in
his premises. Because of this covenant, R had difficulty in redemption and did not give him full authority over
his property.
Judgment of the Case: – In this case court held that anything that clogs this right is bad and they have come
up with the concept that ‘once a mortgage is always a mortgage’ and that the mortgage can never be
irrevocable.
2. Stanley vs. Wilde, (1899) 2 Ch 474
Judgment of the Case: – In this case court held that any provision mentioned in the mortgage deed which has
the effect of preventing or obstructing the right to redeem is void as a restriction on redemption
What is a Charge under transfer of property act?
Meaning of Charge under Transfer of Property Act: – Charge under Transfer of Property Act is an interest
created over an immovable property for securing payment of the amount which is due to the party. Charge is
where the immovable property of one person, is by an act of parties or operation of law, made security for the
payment of money to another person and the transaction does not amount to a mortgage, the latter person is said to
have a charge on the property.
Hence, every mortgage is a charge but not every charge is a mortgage. A charge under Transfer of Property Act is
an interest created over an immovable property for securing payment of the amount which is due to the party. The
property is not transferred to the lender and only interest is created. It is neither a lien nor a mortgage but some
properties of both are present in a charge.

Section 100 of the Transfer of Property Act, 1883 defines charge as, Where a person’s immovable property is, by
an act of parties or operation of law, made a security for the payment of money to another, and this transaction does
not amount to a mortgage, the latter person is said to have a charge on the property; and all the provisions therein
contained which apply to a simple mortgage shall, so far will also apply to charge.
Nothing in this section applies to a trustee’s charge on trust-property for the expenses in the execution of his trust,
and, to save until the time expressly enforced by any law, any charge will not be enforced against any property in
the hands of the person to whom such property has been transferred for consideration and without notice of charge.

What are the requisites of a charge under transfer of property act?

The requisites of a Charge under Transfer of Property Act are as follows: –
  A charge does not regard any transfer of an interest in the immovable property;
 The property should be specified and it should be made security for the payment of money. A clear
and accurate specification of the property is mandatory for the creation of charge.
 In order to constitute a charge, the form of words is immaterial; it is not necessary to use any
technical terms;
 A charge must be created in favour of a particular person specifically named;
 A charge may be created orally, although if it is created by an instrument in writing, it must be
registered unless made by a will or unless the amount secured is less than one hundred rupees;
 A charge cannot be created on a future contingency. A charge created by a person on the unknown
and uncertain share which one of his heirs may succeed to is invalid as a charge;
 A charge on the future property is valid and operates on such property when it comes into existence;
 A charge could be assigned;
 A charge cannot ordinarily be split up by apportioning liability amongst various persons.
What are the essentials of a valid charge under transfer of property
act?
There are some essentials which need to be fulfilled to create a valid Charge under Transfer of Property Act: –
1. Immovable Property: –
o The charge must be made against an immovable property which may be a present
or future property belonging to the borrower.
o It is nothing but a tool to create security that may be enforceable in court.
o To create charges against immovable property, it is necessary that it must be in
writing.
o Most important thing to keep in mind is that there should be a clear intention to
use the property as a security for the payment of money.
o If the immovable property is not owned by the person to whom the payment is due,
the charge cannot be created.
o For example: – A wife sought in a maintenance suit to construct a charge on the
property of the house. The court considered that since the property was neither
constructed nor owned by the husband, no charges can be made against such
property.
2. Does not amount to a Mortgage: –
o A charge is not a mortgage because there is no transfer of property nor is any right
transferred, but a personal obligation is created or the right to pay out of a specified
property is generated.
o It is specifically noted in section 100 that a charge is not amount to mortgage,
although all provisions that apply to a simple mortgage will also be applicable to
charge. In simple mortgagee, the mortgagor is not required to give possession of
his property to the mortgagee. Under a mutual agreement, it is decided that if the
mortgagee fails to pay the money within the stipulated time period, the property
can be sold in accordance with the law. In a simple mortgage there is a transfer of
an interest in the property, but there is no such transfer in charge.
o A charge is a wider term because it also includes a mortgage i.e. each mortgage is
a charge but each charge is not a mortgage.
3. The Charge created by an Act of Parties: –
o Here, parties themselves create a charge by entering into an agreement. No special
form of words or language is required to create a charge.
 This would be sufficient to create a charge if it can be seen from the document that
o
there is a clear intention to use that property as a security for the payment of the
money, without transferring any right or interest in the property.
o The Charge Holder’s remedy is only against the charged property.
o For example: – ‘A’ inherited a property from his grandmother. He receives a
certain amount of rent from the property. Now on his own volition (choice), he
made an agreement to pay a certain portion of the rent to ‘B’. Here, ‘B’ will have a
charge over the said property.
4. Charges arising by Operation of Law: –
o A charge can also be made by operation of law. This means that the charge is made
without the will or intention of the parties, but the law enforcers them to perform
certain obligations.
o For example: – ‘B’ made the full payment of the purchase money in advance to
‘A’. But ‘A’ neither transferred the property nor registered it in the name of ‘B’.
Here, ‘A’ charge will be created by the operation of law over the said property in
favor of ‘B’.
Exceptions: –
Section 100 provides two exceptions under which no charge can be made. They are as follows: –
 The charge which is made on an immovable property which is also a trust property in favor of a
trustee for incurring expenses in the execution of his trust i.e. maintaining the trust property.
 If a property, on which a charge was made, is brought into consideration by a person without any
notice of the said charge, such charge cannot be enforced against him.
What is the difference between Charge and Lien?
The difference between Charge and Lien are as follows: –
 A charge may be created both by an act of parties or by operation of law. A lien arises by operation
of law
 A charge can exist on an immovable property only. A lien can exist on both movable and immovable
property
 A charge is not possessory in its nature. A lien is possessory in nature
 A charge holder can satisfy his claim by selling the property subject to his charge. A lien holder
satisfies himself by private sale or retaining possession of the property.
What are the types of charge under transfer of property act?
The types of Charge under Transfer of Property Act are as follows: –
1. Fixed Charge: – It is created on properties such as Land and Building, Plant & Machinery,
whose identity does not change during the period of loan. The charge is created over
discoverable assets i.e. land, building, machinery, goodwill, copyright etc. At the time of the
creation of the fixed charge, there is a clearly specified and defined property, the identity of
which doesn’t change during the period of the loan.
o In such an arrangement, the borrower is left only with the possession of the
property and the lender has complete control over the asset.
o The borrower does not have the right to sell, transfer or dispose off the property
and requires prior permission.
o There is an obligation to pay the due amount first.
2. Floating Charge: – It is created on assets which undergone change (stock). In floating
charge, the security is allowed to be used in the ordinary course of business till the charge
crystallizes. The charge is made on unascertainable assets i.e. assets, vehicles, debtors, etc. It
is dynamic in nature i.e. price and quantity fluctuate time to time.
 oThe borrower has the right to sell, transfer or dispose of the property and no prior
permission is required.
o No obligation to pay the due amount first.
3. Crystallization: – Crystallization is a process in which the floating charge is converted into a
fixed charge. This usually happens when the borrower defaults on the payment and the lender
takes action to recover the loan. It means the charge becomes fixed when the company/firm
ceases to be a going concern or upon the commencement of winding up or on the
appointment of receiver.
o It happens at the time of the closing of the company.
o 1st Charge: – Where assets are charged to a creditor on first basis, that creditor has
the 1st charge. The company exists or the business has to move forward.
o 2nd Charge: – Where assets are already charged to a creditor on 1st basis and
subsequently the charge is created in favour of another creditor.
o Appointment of a receiver by the court.
What is Registration of Charges?
Meaning of Registration of Charges: – It is the obligation of every corporation to register with the Registrar of
Companies specific charges made by the corporation on its assets. The reason for registration of charge is to offer
public notice towards those who contemplate giving credit to the corporation on how far the property of the
corporation is encumbered.
 Under Section 77 of the Companies Act, 2013, every company making a charge shall register the
particulars of the charge signed by the company its charge-holder together with the instruments
created.
 Therefore all types of charges are required to be registered according to the Act, whether they are
made within or outside India.
 A company must file with the Registrar the detailed information of the charge, along with the
Instrument of the charge or its certified copy, in respect of certain charges, within the 30 days of the
creation of a charge.
 If it is not filed, it will be void against the liquidator and any other creditor of the company. However,
this does not mean that the charge is completely void and the debt is not recoverable.
 So until the company goes into liquidation, the charge is good and probably to be implemented.
Condonation of Delay
 If the Registrar is satisfied that the company has sufficient reason for not filing the details and
instruments of charge within 30 days of the formation of such charge, it may allow such registration
after 30 days, But within 300 days after forming the charges.
 The request for extension shall be submitted in Form CHG-10 and shall be accompanied by a
statement from the corporation signed by the Secretary or Director claiming that admitting to such
late filing, the rights of the intervening creditors of the company does not have adverse impact.
 If the corporation fails to file a charge even during this three-hundred-day period, it may ask the
Central Government to prolong the period in compliance with Section 87.
Difference between Charge and Mortgage under Transfer of Property
Act
Difference between charge and mortgage under transfer of property act is given as follows: –

S.No. Charge Mortgage

1. Defined under section 100 of transfer of property act. Define in section 58 of transfer of property act .

2. Interest is made in the property to pay off the loan and there is It involves the transfer of an ownership interest in
 no transfer of any interest. an immovable property.

3. It is created either by an act of the parties or by the operation It can be created by an act of the parties.
of law.

4. Registration is mandatory only when it is made by the act of Registration should be under the transfer of proper
the parties. Act. It is mandatory.

5. Time is infinite and can continue forever. The time is fixed in a mortgage.

6. Right in personam i.e. enforceable against a person. Right in rem i.e. enforceable against the world.

7. It can be in oral and written form. It must be in writing.

Case laws of Charge under transfer of property act

1. JK (Bombay) Private Ltd vs. New Kaiser-I-Hind Spinning and Weaving Co
Ltd 1970 AIR 1041, 1970 SCR (3) 866
In this case court held that however in the case of a charge, there is no transfer of interest or any of its interest, but
only the creation of the right of payment out of the specified property, a mortgage accomplishes the transfer of
property or an interest. No particular form of wording is required to create a charge and it is necessary that there
should be a clear intention to create security of property for payment of money in the praesenti (at present time).

2. Raychand Jivaji vs. Basappa Virappa Bellary (1940) 42 BOMLR 1113

In this case court held that it would be sufficient to create a charge if it can be seen from the document that there is a
clear intention to use that property as security for the payment of money, without transferring any right or interest in
the property.

3. Debi Singh and Ors. vs. Jagdish Saran Singh AIR 1952 All 716
A mortgage is a legal process under which a person borrows money from another person and secures the repayment
of the borrowed money and also pays the interest at the agreed rate, by creating any right or charge in favor of the
lender on his movable and/or immovable property.

4. Hasan vs. Mt Kalawati 147 IC 302, AIR 1933 All 934.

In this case the Calcutta high court held that if an instrument is expressly called a mortgage and the mortgagee gives
the power of realization of the mortgaged money from the sale of the premises, it should be considered a mortgage.
The fact is that the necessary formalities of due were not intended to convert the mortgage into the charge. If, on the
other hand, the instrument is not on the face of a mortgage, but simply creates a lien, or instructs the realization of
money from a particular property, without reference to the sale, it creates a charge.

What is sale under transfer of property act?

Meaning of Sale under Transfer of Property Act: – Sale is defined as the transfer of ownership of
a property in exchange for a price paid or promised or partly paid or part promised. Sale simply means the
purchase and sale of goods and services, the sale of immovable property is provided under Section
54 of Transfer of Property Act 1882.

Section 3 of the Act is the interpretation clause, which provides the meaning: –
1. Immovable Property: – Immovable property exclude standing timber, growing crops or grass,
2. Instrument: – It means a non-testamentary instrument. The instrument should be in writing, a formal
or legal document in writing, such as a contract, deed, bond or lease or anything reduced to writing.
 3. Registered: – A register is a book contains records of the facts as they are kept by the public
authority. If the registration is done in violation of the provisions of the Registration Act, that
document cannot be said to be duly registered.
4. Attached: – It is a term that describes the physical union of two independent structures or objects,
which refers to the relationship between two parts of the structure each having its function.
Section 54 of the Transfer of Property Act
Section 54 of the Act defines the meaning of the ‘sale’ and also specifies how the sale of immovable
property can be done. Here, sale refers to the sale of immovable property whether tangible or intangible (For
example: – easement rights)
A sale under transfer of property act is a transfer of ownership for a money consideration. It refers to the
complete transfer of all rights in the property sold. No rights in the property sold, are left to the transferor.
Section 54: – Sale ownership is transferred in exchange for a price paid or promised or part-paid and part-
promised.
What is contract for sale?
Meaning of Contract for Sale: – A contract for the sale of immovable property is a contract which takes
place on the settled terms between the parties. In this, the seller agrees to sell or deliver something to the
buyer for a fixed price that the buyer has agreed to pay. A contract of sale of goods is a contract whereby the
seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract
of sale between one part-owner and another.
What are the elements of Sale?
The elements of Sale are given as follows: –
1. Transfer of Ownership: – Ownership is the aggregation of all rights and liabilities in a property.
When transfer of ownership occurs, all rights and liabilities in the property is transferred from
transferor to transferee.
2. Money Consideration: – Where the ownership of the property is transferred for money, it amounts
to sale, but if it is transferred for something else, it amounts to exchange.
3. The seller must be a person competent to transfer. The seller should be either the owner of the
property or should have the authority to dispose of it.
4. The buyer must be a person competent to the transferee.
5. The subject matter must be a transferable immovable property which can be tangible or intangible.
6. There must be a transfer of ownership
7. The transfer must be in exchange for a price. ‘Price’ in the ordinary sense connotes money
consideration for the sale of the property. The price must be paid or promised or partly paid.
What are the essentials of a Sale under Transfer of Property Act?
The essentials of a sale under transfer of property act are given as follows: –
 Parties i.e., Seller, Buyer
 Competency
 Money consideration
 Conveyance
 Registration
Explanation: –
1. Parties: – In a sale, there must be at least two parties. The person who transfers his property is
known as the transferor/seller/vendor and the person to whom the property is transferred is known as
the transferee/buyer/vendee.
2. Seller: –
o The seller must own the property which he is going to sell.
o The seller should have legal title to it only then he can sell the property.
o The seller should be competent to contract.
o He must not be a minor person.
 o He should not be of unsound mind.
o He must not be statutorily incompetent.
o The seller may be a natural person / judicial person, for example, a corporation or any
other legal person.
3. Buyer: –
o The buyer must be competent to get the ownership of the property.
o The buyer should not be disqualified from purchasing the immovable property under any
law at the time of sale, for example: under section 136 of the Act, a judge, a legal
practitioner or an officer of the court is incompetent for purchase of actionable claim.
o The seller may be a natural person / judicial person, for example: a corporation or other
legal person.
4. Subject Matter: – The sale under Transfer of Property Act, 1882 specifically deals with the sale
of immovable property. Immovable property includes the benefits from the land and the things
attached to the earth and it does not include standing timber, growing crops and grass.
5. Competency: – A valid sale requires both the parties i.e., the buyer and seller to be competent on the
date of sale.
6. Money Consideration: – The consideration must only be in money to constitute a sale. If it is for
exchange or some other items then it is not sale. The consideration for the sale must be paid, partly
paid, promised or partly promised. Therefore price is money but not necessarily money immediately
paid in notes and coins, it includes money which might be already due or payable at a future date.
7. Conveyance: – Section 54 provides for two ways for transfer of property: –
o Where the property transferred is tangible immovable property of value of one hundred
rupees and upward transfer can only be made by a registered instrument. Where the
property is immovable property of less than one hundred rupees, it can be transferred
either by registered instrument or delivery of property. The delivery of tangible
immovable property occurs when the seller puts the buyer or such person as the buyer
directs in possession of the property.
o Registration of sale deed: – Where the value of tangible immovable property is Rs. 100 or
more, the sale of such property requires registration of the deed. Where the property is
intangible immovable property of any valuation, it will require registration to complete
the sale.
8. Registration: – Both section 8 and 54 of the Transfer of property act, 1882 suggests that through
execution and registration of a sale deed, the ownership and all interests in the property passes to the
transferee, yet this will be on the terms and conditions embodied in the deed indicating the intention
of the parties. The intention of the parties can be gathered from the averments (formal statement) in
the sale deed itself or under other attending circumstances. Where the sale is to be completed only by
the registered instrument, the ownership is presumed to pass on the execution of the sale deed, not on
the deed’s registration. The sale deed transferring immovable property of the value of 100 or more it
will require registration under Indian Registration Act 1908.
Rights and liabilities of Buyer and Seller
The buyer and the seller of the immovable property respectively are subject to the liabilities, and have the
rights, mentioned in the rules following: –
1. The seller is bound: –
o To disclose to the buyer any material defect in the property or in the seller’s title
thereto of which the seller is, and the buyer is not, aware, and which the buyer
could not with ordinary care discover;
o To produce to the buyer on his request for examination all documents of title
relating to the property which are in the seller’s possession or power;
o To answer to the best of his information all relevant questions put to him by the
buyer with respect to the property or the title thereto;
 o On payment or tender of the amount due in respect of the price, to execute a proper
conveyance of the property when the buyer tenders it to him for execution at a
proper time and place;
o Between the date of the contract of sale and the delivery of the property, to take as
much care of the property and all documents of title relating thereto which are in
his possession as an owner of ordinary prudence would take of such property and
documents;
o To give, on being so required, the buyer, or such person as he directs, such
possession of the property as its nature admits;
o To pay all public charges and rent accrued due in respect of the property up to the
date of the sale, the interest on all encumbrances on such property due on such
date, and,except where the property is sold subject to encumbrances, to discharge
all encumbrances on the property then existing.
2. The seller is entitled: –
o To the rents and profits of the property till the ownership thereof passes to the
buyer;
o Where the ownership of the property has passed to the buyer before payment of the
whole of the purchase-money, to a charge upon the property in the hands of the
buyer, any transferee without consideration or any transferee with notice of the
non-payment, for the amount of the purchase money, or any part thereof remaining
unpaid, and for interest on such amount or part from the date on which possession
has been delivered.
3. The buyer is bound: –
o To disclose to the seller any fact as to nature or extent of the seller’s interest in the
property of which the buyer is aware, but of which he has reason to believe that the
seller is not aware, and which materially increases the value of such interest;
o To pay or tender, at the time and place of completing the sale, the purchase-money
to the seller or such person as he directs. Provided that, where the property is sold
free from encumbrances, the buyer may retain out of the purchase money the
amount of any encumbrances on the property existing at the date of the sale, and
shall pay the amount so retained to the persons entitled thereto;
o Where the ownership of the property has passed to the buyer, to bear any loss
arising from the destruction, injury or decrease in value of the property not caused
by the seller;
o Where the ownership of the property has passed to the buyer, as between himself
and the seller, to pay all public charges and rent which may become payable in
respect of the property, the principal money due on any encumbrances subject to
which the property is sold, and the interest thereon afterwards accruing due.
4. The buyer is entitled: –
o Where the ownership of the property has passed to him, to the benefit of any
improvement in, or increase in the value of, the property, and to the rents and
profits thereof;
o Unless he has improperly declined to accept delivery of the property, to a charge
on the property, as against the seller and all persons claiming under him, to the
extent of the seller’s interest in the property, for the amount of any purchase-
money properly paid by the buyer in anticipation of the delivery and for interest on
such amount; and, when he properly declines to accept the delivery, also for the
 earnest (if any) and for the costs (if any) awarded to him of a suit to compel
specific performance of the contractor to obtain a decree for its rescission.
Difference between Sale under Transfer of Property Act and Contract
for Sale
S.NO. SALE CONTRACT FOR SALE

1. There is a transfer of ownership of the property. There is an agreement between the parties for the sale
of the property with consent.

2. Gives legal title to buyer. Does not generate any interest in the property.

3. Creates a right in rem. Creates a right in personam

4. Registration is mandatory where the sale is of immovable Registration is not required.

property of Rs. 100 or more.

Case laws of Sale under Transfer of Property Act

1. Nahar Lal vs. Brijnath 1928 AC 385
Judgments of the case: – In this case, the court held that if the registration is done in violation of the
provisions of the Registration Act, a document cannot be said to be duly registered.
2. Umakanta Das vs. Pradip Kumar Ray, AIR 1983 Ori 196
Judgments of the case: – In this case, the court held that if the sale deed contains a condition that the
price will be paid within one year, provided that possession is obtained within that time, and if
possession is not obtained, the payment of the price will be postponed, or in the event of the vendee not
getting the property, the price will not be paid. In all the above cases, the deed within the meaning of
the section is the sale deed.
3. Raheja Universal Ltd. vs. NAC Ltd., 2012 4 SCC 148
Judgments of the case: – In this case, the court states that a contract for sale of immovable property or
an agreement to sell is a contract that a sale of such property shall be on the terms settled between the
parties. This in itself does not create any interest or charge on such property.
4. Misabul Enterprises vs. Vijaya Srivastava, AIR 2003 Del. 15.
Judgments of the case: – In this case, the court held that a contract of sale should be based on a mutual
agreement between seller and buyer.
What is gift under transfer of property act?
Meaning of Gift under Transfer of Property Act: – Gift under transfer of property act is defined as
the transfer of certain existing moveable and immovable property made voluntarily and without
consideration, by one person called the ‘donor’, to another, called the ‘donee‘, and accepted by or on behalf of
the donee. The person who is transferring the property refers to as “donor” and to whom the property is
transferred referred to as “donee”.

What are the essentials of gift under transfer of property act?

The essentials of gift under transfer of property act are as follows: –
1. There should be Two Persons: – To make a gift there must be two persons i.e. the donor and the
donee. The donor should be of sound mind, must be competent to make a gift, must attain the age of
majority, and should not be disqualified by law.
2. The Gift must be made Voluntarily: – The gift should be made out of free wish and will and should
not be under any undue influence, coercion, etc.
 3. Transfer of Ownership: – When a gift is to be given, the property is transferred along with the
transfer of ownership with all rights and liabilities.
4. Gifts must be Existing and Transferable: – Gifts cannot be made from uncertain assets or future
assets. Assets must exist and be transferable.
5. Donor and Donee must be living: – A gift is an inter vivos i.e. between two living persons. It is
necessary that the donor and donee should be living at the time of transfer and acceptance. If Donne
dies before acceptance, the gift is void.
Drafting a gift deed
As the gifting is a voluntary action, it must be mentioned in the gift deed that the deed is made voluntarily and
without any force or coercion taken out of the donor’s own choice. The deed must also declare that the donor is
solvent (not insolvent) and the gift is being made without consideration.

Acceptance of gift under transfer of property act

The next step is the acceptance of the gift under transfer of property act by the donee. And the acceptance of the
donee will be recorded in the gift deed by the donee’s signature and is also substantiated by acceptance of
possession of the gift. Another key element of this step is that the acceptance of gift must take place during the
life of the donor. The gift may be rendered invalid otherwise
Void gifts under Transfer of Property act, 1882
Meaning of void gifts: – Void gifts are the gifts which are not enforceable by the law due to the incompetence
of a person or both the persons i.e. donor or donee.
Void gifts can be: –
 Donee died before acceptance of a gift.
 When a gift is made for an illegal purpose.
 When a condition that is imposed is forbidden by law or unlawful.
 When a person is unable to make a gift i.e. minor or lunatic.
What are Universal donee?
The Universal Donee is defined under section 128 of the Transfer of Property Act, 1832, which means that when
the transfer is made, the entire donor’s property along with all the debts and all of the debtor’s liabilities at the time
of transfer will be transferred when the gift is made and the donee will be personally liable.
What is Onerous gift?
Meaning of Onerous Gift: – The onerous gift is defined under Section 127 of Transfer of Property Act which
states a gift is in the form of one transfer, which are done to the same person with several things then in this
situation the donee has the liberty to accept one of them or reject the others.
Principle on which onerous gift is based upon: – The maxim “Qui Sentit Commodum Sentire Debet Et Onus”
defines onerous gift. It means that one who receives the benefit must bear the burden.
The onerous gift to the disqualified person: – When a donee is not competent to contract and accepted the
property which is a burden on him and that time he is not bound by his obligation. But, as soon as he becomes
competent to make a contract and being aware about his obligation, he can retain back his property and
becomes bound of it.
Mode of creating a gift to make it effective
According to Section 123, the transfer of immovable property by way of gift shall be effective only by a
registered instrument or signed on behalf of the donor, and must be verified by at least two witnesses. However,
if the instrument is not registered, then the title of the immovable property may not pass.
However, the transfer of movable property will be effective either by the registered instrument or signed on
behalf of the donor and attested by at least two of the witnesses or only delivery of possession will be sufficient.
Such delivery will be in the same way as the goods sold can be delivered.

What are the grounds of revocation or suspension of gift?

Section 126 of Transfer of Property Act states that grounds on which a gift can be revoked or suspended: –
1. A gift can be revoked or canceled if the consent of the donor has been obtained forcefully by
coercion or undue influence.
2. If the validity of the gift is dependent on a specified event, and such specified event is not dependent
on the will of the donor, the gift may be suspended or revoked
Case laws of Gift under Transfer of Property Act
1. Padma Chand vs. Laxmi Devi, 2010 (173) DLT 604
In this case, the court held that a gift is a voluntary transfer of property without any consideration and
division by the owner of the property (related to money) without any pecuniary benefit.

2. Vimala vs. Narayanaswamy, 1996 ALHC 4170 KAR

In this case, the court stated that where the deed is to be taken with immediate effect, the property to be
transferred during the life of the executor, it will be a gift deed, not a will.

3. D.N.Dawar vs. Ganga ram Saran Dhama, AIR 1993 Del.P 19

In this case, the court held that in the case of a gift of an immovable property if the document is not
registered then mere delivery of possession will not pass the title to the donee.

4. Shahdev vs. Sheikh Papa (1905) 29 Bom.

In this case, the court held that the gifts of immovable property are compulsory registerable and it
amounts to notice for a subsequent transfer and not for transaction before registration.

What is lease in Transfer of Property Act?

Meaning of Lease under Transfer of Property Act: – 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
price or promised, or of money, a share of crops, service or any other thing, of value, to be rendered periodically
or on specified occasion to the transferor by the transferee who accepts the transfer on such terms. Lease under
Transfer of Property Act, 1882 deals with sSection 105 to section 117. A lease can be done only of immovable
property.
A lease under transfer of property act, is a contract by which one party transfer the right to enjoy the land,
property, services, etc. to another for a specified time, usually in return for a periodic payment.

Section 105 of Transfer of Property Act says out the definition of a lease stating that it is a transfer of
immovable property for a particular time period for consideration of which the transferee has accepted the terms
and conditions mentioned in the agreement. The lease is governed by the Transfer of Property Act, 1882 and it
is given from Sections 105 to 117.
Lessor: – In a lease, the right of possession is transferred rather than the right of ownership. Here the
transferor is called the lessor.
Lessee: – The transferee i.e. the one who enjoys the property for a period is called the lessee.
What are the essentials of lease under Transfer of Property Act?
The essentials of lease under transfer of property act are as follows: –
1. Parties must be Competent: – A lease agreement must enable parties to enter into a
contract. A lessor should be entitled to a property and have full rights over that property. He
must be of sound mind and should not be disqualified by the contracting law. Also he must be
the true and absolute owner of the property which is grant in a lease.
 2. Right of Possession: – In the lease ownership rights are not transferred, only the possession
of the property is transferred. Lease is different from a sale. In lease there is only a transfer of
possession to the lessee whereas the ownership is still remained to the lessor.
3. Consideration: – A lease must be made of consideration which may be in the form of
premium or rent. In a lease, consideration can be taken in the form of a rent or premium. The
consideration for lease is either premium or rent, which is the price paid or promised in
consideration of the demise. The premium is the consideration paid of being let in possession,
such as Salami, even if it is to be paid in installments. It can be rent with premium or rent
alone or premium alone.
4. Acceptance: – The lessee, who is to receive interest in the property after the lease, must
accept the lease agreement with the time period and the terms and conditions imposed on the
transfer between the parties.
5. Time Period: – The lease is always for a specific time period that is to be specified in the
lease agreement. This can be relaxed at the option of the lessor. In a lease the right to enjoy
the property is given for a certain period or in perpetuity. However, generally the time period
is mentioned in the agreement.
6. Right to Enjoy the Property: – In a lease, right to enjoy the property is transferred. A lessee
having a right to enjoy the property for certain period of time but he does have right to further
transfer that property because in lease merely possession is transferred not the ownership.
When there is no time period prescribed in the lease agreement
Section 106 provides for the duration of the lease in the absence of a lease agreement. It is given below that in
the absence of a contract; the lease under transfer of property act can be terminated by both parties by issuing a
notice of termination of the lease. The stipulated time period always starts from the date of receiving the notice
to quit.
There is a distinction of two purposes in regard to Section 106 i.e. Agricultural or manufacturing and other
purposes. Hence, two things can be derived from this: –
 In the absence of a contract or local law or usage to the contrary, a lease of immovable property for
agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable,
on the part of either lessor or lessee, by six months’ notice
 When a lease of immovable property for any other purpose shall be deemed to be a lease from month
to month, terminable, on the part of either lessor or lessee, by fifteen days’ notice.
Proviso: – There is proviso to this section which states that the notice to quit in this section must be in written
and communicated to the party who is required to abide by it. If this is not possible then it should be attached to
a conspicuous place in that property.
How is a lease under transfer of property act executed?
Section 107 states about lease how made. This section covers three aspects: –

 When there is a lease of immovable property for a period of 1 year or more – it can only be made by
a registered deed.
 All other leases of immovable property – either by registered deed or by transfer of possession of that
property may be made by an oral agreement or settlement.
 When the lease is of multiple properties, requiring multiple deeds, it will be made by both parties of
the lease.
What are the rights and liabilities of lessor and lessee?
1. Rights of the Lessor: –
o A lessor has the right to recover rent from the lessee which was mentioned in the
lease agreement.
 o If the lessee commits any breach of condition then the lessor has the right to take
back possession of his property from the lessee.
o If there is any damage to the property, the lessor has the right to recover the
amount of the loss from the lessee.
o The lessor has the right to take possession of his property at the end of the lease
term prescribed in the agreement.
2. Liabilities of the Lessor: –
o The lessor has to disclose any material defects related to the property that the
lessee does not know and cannot detect with ordinary supervision.
o The Lessor is bound by the lessee’s request to give him the right to possession over
his property.
o The Lessor may enter into a contract with the lessee if he agrees to abide by all the
terms and conditions prescribed in the agreement, and can enjoy the property for
the rest of the time without interference with the obligation to pay the rent later.
3. Rights of the Lessee: –
o During the period, the lease is in effect if any change is done (alluvion for the time
being in force) then that change will come under that same lease.
o If a significant part of the property that has been leased is completely or partially
destroyed by fire, by flood, by war, by violent acts of mob or by any other means
resulting in its inefficiency of being a benefit for the lessee. If this happens, the
lease is voidable at its option.
o This section contains a proviso stating that if the damage is caused by any act of
the lessee, the remedy will not be available for him.
o The lessee has the right to deduct any expenses incurred for repairing the property
from the rent if lessor fails in a reasonable time.
o The lessee has the right to recover any payment which a lessor bound to make by
deducting it from the interest of the rent or take it directly from the lessor. He has
this right when the lessor has neglected to make that required payment.
o The lessee has the right to detach all things that he may have attached to the
property or the earth. His only obligation is to leave the property in the same
condition he received it.
o When a lease is of unspecified duration in the lease agreement, the lessee or his
legal representative has the right to collect all profits or gains from the crops that
was sown by the lessee on that property. They have the right of free entry and exit
of such property even after the lease ends.
o Lessee has a right to tranfer the property absolutely or any part of his interest in
that property through sub-leasing or through mortgaging. Lessee is not independent
of the terms and conditions mentioned in the lease agreement.
4. Liabilities of the Lessee: –
o The lessee is under an obligation to disclose all related material facts that are likely
to increase the value of the property for which the lessee has an interest and the
lessor is not aware of it.
o The lessee is under an obligation to pay the rent or premium which is settled upon
the agreement to the lessor or his agent within the stipulated time.
o The lessee is under an obligation to maintain the property in the condition that he
initially received the property at the commencement of the lease and must return it
in the same condition.
 o If lessee gets to know about any proceedings related to the property or any
encroachment or any interference, then lessee is obliged to give notice to the
lessor.
o The lessee has the right to use all the assets and goods that are on the property as
an owner, who will use it which is preserving it for the best of its nature. However
he is obliged to prevent any other person from using that asset or good for any
other purpose as stipulated in the lease agreement.
o And the lessee cannot attach any permanent structure without the lessor’s consent
except for the purpose of agriculture.
o The lessee is under an obligation to return the possession of the property to the
lessor after the expiry of the prescribed term of the lease.
How does a lease gets terminated?
Section 111 deals with the termination of the lease, which explains the methods for terminating the lease: –
1. Lapse of Time: – When the time of the lease is expired. When the stipulated time of the lease
expires, the lease is terminated.
2. Specified Event: – When a condition occurs at the time of the lease based on the happening of an
event. Where such time is limited which is based on the happening of some event.
3. Interest: – When the interest of the lessor gets terminated or his power disposed of towards the
property. The interest off lessor to lease the property may cease, hence resulting in the termination of
the lease.
4. Same Owner: – It gets terminated when the interest of the lessee and lessor gets vested on the one
person at the same time. When the interests of both the lessor and the lessee are transferred or vested
in the same person.
5. Express Surrender: – This is when the lessee stops having interest in the property and comes to a
mutual agreement with the lessor.
6. Implied Surrender: – When the lessee enters into a contract with another to lease the property, it is
an implied surrender of the existing lease.
7. Forfeiture: – Gets terminated by the way of forfeiture like if there is a breach of any condition on the
part of the lessee or like lessee given or setting the title in the name of third person or by
himself. There are three ways by which a lease can be terminated: –
o When an express condition is breached by the lessee. The lessor may get possession of the
property back.
o When the lessee gives the title of property or renounces his character to a third person.
o When the lessee is declared bankrupt by banks, and if conditions are provided for it, the
lease will stand terminated.
8. Expiry of Notice to Quit: – When the notice to quit expires given by the lessor to the lessee, then the
lease will also expire.
What is notice to quit and what happens after it?
Meaning of Notice to Quit: – The notice to quit is a formal written statement issued to the lessee if the
lessee wishes to terminate the lease agreement, whether on the expiry of the duration as stated under section
106 or on the grounds specified in section 111. Any lease can be forfeited as mentioned in the sub-clause (g) of
Section 111, by accepting the notice to quit.
But Section 112, states that if the lessor accepts any rent from the lessee after initiating the process of
termination of the lease on the grounds of forfeiture, it will be understood that the lease still exist and the notice
to quit and termination has been waived.

Section 113 provides two ways in which a notice can be waived, that is, expressly or implicitly: –
 Express waiver of notice to leave: – When a lessor accepts rent from the lessee after the notice has
been served it is called express waiver of notice to quit.
  Implied waiver of notice to quit: – When a lessor gives a notice to quit to the lessee, and at the
expiration of that notice, lessor issues another notice to quit to the lessee, and the first notice to quit is
impliedly waived.
The waiver of the notice also shows the intention to continue the existing lease.

Effect of Holding over

Section 116 states the effect of holding overlay that if a waiver of notice to quit is granted, it will not be called a
new lease, rather than a lease on sufferance or tolerance without objecting to it. The term ‘holding over’ stands
for retained possession on a property that has been leased. Thereafter, the lease is as renewable as any ordinary
lease and is in the manner prescribed in section 106.
This section states that if the lessor agrees to the holding over of the property by the lessee, it will be renewed.
But if the lessor does not entertain the retained possession by the lessee, he may initiate the proceedings against
the trespasser or tenant at sufficient.

Case laws of Lease under Transfer of Property Act

1. State Bank of Hyderabad vs. Nehru Palace Hotels, AIR 1991 SC 2130
In this case, the Court held that a lease entails transfer of right to enjoy such property in respect of
which a lease is made out for a defined time which is express or implied or even in perpetuity in
consideration of price paid or promised to be paid in cash or anything of value which is to be rendered
periodically or on specified occasions.

2. Bengal A &I Corporation vs. Corporation of Calcutta, AIR 1960 Cal 123
(133)
In this case, the Court held that the subject matter of lease must be ascertained, and clearly defined. If
the land is yet to be ascertained and carved out of a larger parcel of land, there cannot be a demise.
(Demise refers to premises that have been transferred by lease, as opposed to the ‘retained parts’ which
are not transferred but are retained by the landlord.)

3. Jaswant Singh Mathura Singh vs. Ahmedabad Municipal Corporation, AIR

1991 SC 2130
In this case, the Court held that a lease creates a right or an interest in enjoyment of demised property
and a tenant or a subtenant is entitled to remain in possession of the demised property until the leases
are dully terminated and eviction takes place in accordance with the law.