lOMoARcPSD|26102095

Module 4 Drafting-converted

DRAFTING, PLEADING & CONVEYANCE (CLINICAL PAPER I) (Amity University)

Scan to open on Studocu

Studocu is not sponsored or endorsed by any college or university

Downloaded by Lokpal ([email protected])
 lOMoARcPSD|26102095

➢ FUNDAMENTALS OF CONVEYANCING

Definition of Conveyancing

The art of ‘conveyancing’ is of English origin. The word ‘to convey’ means to transfer or to make
over. The word conveyancing means an instrument or deed through which one or more living
person transfer his or their interest in present or in future in or upon an immovable property to one
or more living persons. In other words conveyance means an act by which property is conveyed or
voluntarily transferred from one person to another by means of a written instrument and other
formalities. Section 2(10) of the Indian Stamp Act, 1899 defines the term ‘conveyance’ as:
“Conveyance includes a conveyance on sale and every instrument by which property, whether
movable or immovable, is transferred inter vivos and which is not otherwise specifically provided
for by Schedule I.”

History of Conveyancing

In ancient times, in England the deed writing was optional and it continued to remain optional until
the time of King Charles II, particularly the case in which the deed was required not to be under
seal. Writing was required only in the matter of importance. It was only during the reign of King
Charles II that the British Parliament enacted in 1677 a legislation requiring writing for creation
and transfer of the interest in landed property with an exception in case of lease for less than three
year. The Real Property Act of 1845 required all grants of landed interest to be made in writing
which came to be known as ‘conveyancing’. The present form of conveyancing is based on the
Conveyance of Land Act of 1845 and the Law of Property Act of 1925. However, no legislation in
India has ever been passed explicitly on the law of conveyancing.

Object and Function of Conveyancing

• Movable property may be physically given and taken by actual delivery, while this is not
possible in case of immovable property. Thus, conveyancing is that branch of the law of
transfer of property which deals with the mode and form of transfer to which both- the
transferor and the transferee have agreed upon. Its main object is to enable the owners of
real property to make voluntary transfers of their right, title and interest therein for some
specific purpose and for a specified period. Such transfers are not otherwise possible than
by conveyancing.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

• It expresses the intention of the parties to the deed of conveyance so that accordingly it
shall take effect. In case of any doubt, dispute, ambiguity and susceptibility, the real
intention of the parties may be discovered from the words, phrases and the expression used
in the deed. A transferor may have passed the property intending to pass; but if he has not
expressed himself in suitable words of the language, the deed may be defective or
susceptible of two or more constructions; and so the benefits of the transfer may be lost to
the transferee. Where any adverse claimant interposes before the transferee, may get actual
legal possession of the transferred property, it may be quite possible that the transferor with
all his willingness may not be able to help the transferee.
• It helps the court and judicial tribunals to determine any dispute if subsequently arises
between the parties to the deed. It serves the purpose of both- the transferor and the
transferee in protecting their interests. It protects the interest of the transferee from any
precedent and /or subsequent acts or omissions of the transferor or any other person
claiming through or under him against the expressed intention of the grant and the covenant
of the deed; and likewise, the interest of the transferor is also protected from any subsequent
acts or omissions of the transferee. It is a document of title to the property and forms the
basis of a record of rights maintained by the Government. It is, also, a documentary piece
of evidence.

Deed

In a broad sense the ‘deed’ means something done or performed which is synonymous with ‘act’.
In legal sense, deed means a solemn act denoting document, and it may be defined as an instrument
written on parchment or on a paper executed, signed, sealed and delivered by the executant. A
document or an instrument through which a present or future interest in an immovable property is
transferred by one or more living persons to another living person or persons is called deed. It is
called a deed because it is considered the most solemn and authentic act that a person can possibly
perform in relation to his property. Statements made in deeds may amount to admission and may
operate as estoppel in certain circumstances.

In Halsbury's Law of England, a deed has been defined as an instrument written on parchment or
paper expressing the intention of some persons named therein who make assurance of some interest
in property, or of some legal or equitable right, title or claim, or undertake or enter into

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

some obligation, duty or agreement enforceable at law or in equity, or to do some other act
affecting the legal relation or position of a party to the instrument.

Historically, in England, deeds were classified into (a) Deed Poll, and (b) indenture deed.

Deed Poll

As the old practice in England was to indent or cut a document which indicated towards executant
of the deed; and when deed was polled or cut at the top or at the bottom it was known as ‘Deed
Poll’. It was called Deed Poll or single deed because it was executed by one party only. A bond, a
power of attorney, and a will are the best examples of Deed Poll. It is an executed contract of
conveyance made by the grantor alone.

Document

Documents means any matter expressed or described upon any substance by means of letters,
figures, or marks, or by more than one of those means intended to be used, or which may be used,
for the purpose of recording that matter ( sec. 3, Indian Evidence Act 1872). Documentary evidence
is an important piece of evidence of which the Court, Jury and Tribunal take judicial cognizance.

Construction or interpretation of documents

Some of the main rules of constructing documents are:

a. The meaning of the document or of a particular part of it is to be sought for in the document
itself. The intention of the parties must be discovered, if possible, from the expressions they have
used. The question is not what the parties intended to say, but what they have said.

b. Clear and unambiguous words prevail over an intention, but if the words used are not clear or
unambiguous the intention will prevail.

c. The plain, ordinary meaning of the words used is to be adopted in constructing a document.
Words are to be taken in their literal meaning.

d. The literal meaning which the parties were in the habit of affixing to the expression employed.

e. Technical legal terms will have their legal meaning.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

f. Extrinsic evidence may be admitted, not for finding out the writer's intention, but only to interpret
the language used.

g. The document must be construed as a whole.

Deed, Conveyance and Deed of Conveyance

The term ‘Deed’, ‘Conveyance’ and ‘Deed of Conveyance’ or ‘Conveyancing’ are frequently used
interchangeably to denote one and the same legal concept, and each is being commonly understood
to mean an instrument in writing whereby the grantor conveys to the grantee some right, title or
interest in or upon some real property . Thus, by the aforesaid expressions, we mean each of them
as document, indenture or instrument in writing. So , the terms, ‘conveyance’, ‘conveyancing’,
‘deed of conveyance’ or ‘conveyancing’, ‘deed’, ‘document’, ‘indenture’ and ‘instrument’ are
interchangeable for the purpose of drafting of documents.

Components of deeds

Drafting of a deed involves the law by which parties are governed, effect of the transaction and
certainty and clarity by using appropriate words and expressions. An ordinary deed of transfer may
conveniently be divided into the following parts: Description of the deed; Date; Parties; Recitals;
Testatum; Consideration; Receipt; Operative words; Parcels; Exception and Reservations (if any);
Habendum; Covenants (if any); Testimonium. The part of the deed which precedes the habendum
is termed as “the premises”.

A) DESCRIPTION/NAME/TITLE OF THE DEED

All deeds should be described by the name of the transaction such as “THIS DEED OF
MORTGAGE”, THIS DEED OF SALE”, THIS LEASE”, THIS DEED OF GIFT”, etc. When the
deed is of a complex character and evidences different transactions known by different legal
names, or the conveyancer is not sure what name should properly be given to it, it would be best
to describe it simply as “THIS DEED”. The description is usually written in capitals.

B) DATE AND PLACE

After the description of the deed is stated, the date on which it is executed shall be stated: “THIS
LEASE made on the first day of February one thousand nine hundred and ninety nine.”

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

The date of a deed is the date on which it is singed by the party or parties executing it. When there
is only one party to a deed, as in the case of Deed Poll, or when all the parties sign it on one and
the same date, or when, though there are several parties to a deed, all do not sign and those who
sign do so on one date, there is no difficulty. But if several parties to a deed sign it on different
dates, the question is which date should be entered as the date of deed. The practice is to regard
the last of such dates as the date of the deed.

The date should, in order to avoid mistake and risk of forgery, be written in words and not in figures.
Figures may be added within parenthesis. In every case in which a deed is executed by more than
one person, the date on which each signs the deed must be shown in the deed, preferably against his
signature.

The place where the deed is executed must be specified very clearly and generally at the start of
the document.

C) PARTIES TO THE DEED

1. Transferee

After the date, the names and description of the parties to the deed are mentioned. Who are the
necessary and proper parties to a deed depends on the circumstances of each case. Although a
transferee is not a necessary party, and a deed will not be invalid or ineffective if he is not
mentioned as such, except in the case of a Lease, he is certainly a proper party. It is always
advisable to make him a party.

2. Third person

Sometimes it is necessary or expedient, in order to validate a transfer or to give a complete title to

the transferee, or to avoid possible disputes or doubts in that regard, to obtain the consent or
concurrence of a third person. In such cases, such third person may also be joined as parties.

3. Description

Full description of the parties so as to prevent difficulty of identification should follow the name.
In India, parentage, occupation and residence including Municipal or survey number, street and
city and in the case of resident of a rural area the village, sub-division, tehsil and/or development
block are generally regarded as sufficient to identify a man, but if there is any other description

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

which is sufficient, the same may be normally adopted. Where the transferor is as member of a
scheduled caste or scheduled tribe for whose protection the statute places restrictions on his right
to transfer it may be necessary to mention such caste or tribe while reciting the fact of permission
for the transfer having been obtained from the competent authority.

4. Juridical Person

A party to a transfer need not be a living individual but may be a company, or association or body
of individuals or an idol or a corporation sole or aggregate, or in fact, any juridical person capable
of holding property and entering into contracts.

5. Reference Labels of Parties

In order to avoid the repetition of the full name and description at every place, the parties are
generally referred to in the body of the deed by some easy and convenient names which generally
have reference to the character in which they join the deed, such as ‘the vendor’, ‘the purchaser’,
‘the lessor’, ‘the lessee’, In order to avoid mistakes in writing words resembling each other for
opposite parties, e.g., a combination of ‘mortgagor’ and ‘mortgagee’ or ‘vendor’ and ‘vendee’,
they prefer to use a combination of ‘borrower’ and ‘mortgagee’, or ‘vendor’ and ‘purchaser’. If no
such name is adopted, the parties can be referred to as ‘the party of the first part’ (or ‘the first
party’), ‘the party of the second part’ (or ‘the second party’), ‘the said AB’, ‘the said CD’, but is
is always preferable to give each party some short name for reference. Whatever short name is
adopted the party should be referred to throughout by the same name. The form, in which the
parties will be described in the beginning of the deed, would thus be as follows:
“This SALE DEED is made on the day of BETWEEN AB (hereinafter called ‘the
Vendor’) of the one part and CD (hereinafter called ‘the Purchaser’), of the other part.” If the
transferor along is made a party, this clause will run as follows:
“The SALE DEED is made on the day of by AB (hereinafter called ‘the
Vendor’)”. If there are more than two parties, instead of the works “of the one part” and “of the
other part” the works “ of the first part”, “of the second part”, “of the third part”, etc., should be
used.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

D) RECITALS

Recitals are of two kinds: (1) Narrative Recitals, relates to the past history of the property
transferred and set out facts and instruments necessary to show the title and the relation of the
parties to the subject-matter of the deed; and (2) Introductory Recitals, which explain the motive
for the preparation and execution of the deed.

Form of Recitals
Recitals generally begin with the word ‘WHEREAS’, but, when there are several recitals, one can
either repeat the word before every one of them, by beginning the second and subsequent ones
with the words ‘AND WHEREAS’, or divide the recitals into numbered paragraphs with the word
‘WHEREAS’ at the top.

E) TESTATUM

The next part of a deed consists of the operative part. It commences with a witnessing clause
termed the ‘testatum’, which refers to the introductory recitals of the agreement (if any) and also
states the consideration (if any) and recites acknowledgement of its receipt. The witnessing clause
usually begins with the words ‘NOW THIS DEED WITNESSES’. These words of testatum are of
no importance as affecting the operation of the deed and their sole use is to direct attention to the
object which the deed is intended to serve several objects, use the words ‘as follows’ after the
testatum, thus: ‘NOW THIS DEED WITNESSES AS FOLLOWS:’

F) CONSIDERATION

As contracts are necessarily for consideration (Sec. 10 of the Contract Act), it is advisable to
express the consideration. This is necessary in many cases of transfer for ascertaining the stamp
duty payable on the deed as Sec. 27 of the Indian Stamp Act requires that the consideration should
be fully and truly set forth in the deed. The penalty for omission to comply with this requirements
is a fine which may extend to RS. 5,000 (vide Sec. 64).

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

G) RECEIPT

Acknowledgment of receipt of consideration may be embodied in the deed itself instead of passing
a separate receipt. Thus: “NOW THIS DEED WITNESSES THAT in pursuance of the aforesaid
agreement and in consideration of Rs. paid by the purchases to the vendor before the
execution hereof, the receipt of which the vendor hereby acknowledges”.

H) OPERATIVE WORDS

Then follow the real operative words which vary according to the nature of the estate and of the
transaction.

I) PARCELS

This is a technical expression meaning description of the property transferred and it follows the
operative words. Care must be taken, on the one hand, to include in the particular description or in
general words, all the lands, etc., which are intended to pass so that no doubt may arise as to the
extent and operation of the deed; and on the other hand not insert words which will pass more than
what is intended.
Sometimes it is necessary to have a map or a plan of the property in order to avoid mistake about
its identity and to indicate the actual property conveyed with greater definiteness and precision. A
map referred to in a transfer deed is treated as incorporated in the deed, and if it is drawn to scale
and demarcates the boundaries clearly it is not permissible to attempt to correct them with reference
to revenue records.
Great care should be taken in describing the property, as a slight mistake or omission may cause
immense loss to a party and if the property is described both in the body and the schedule, a conflict
between the two should be carefully avoided.

J) EXCEPTIONS AND RESERVATIONS

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

All exceptions and reservations out of the property transferred should follow the parcels. An
exception is something in existence at the date of transfer which, if not expressly excepted, would
pass with the property as described in the parcels, such as trees.
A reservations is something not in existence at the date of the transfer but is newly created by the
grant, e.g. when the vendor reserves a right of way over the property. But since both ‘excepting
and reserving’ are used in practice it is immaterial whether what follows is an exception or a
reservation.

K) CONVENANTS AND UNDERTAKINGS

While drafting covenants, regard should be had to the statutorily implied covenants which operate
subject to any contract to the contrary. Where several covenants follow each other, they may run
on as one sentence, each being introduced with the words ‘and also’ or by the words ‘First’,
‘Secondly’, etc. or they may be set out in paragraph form with the heading. ‘THE VENDOR
HEREBY COVENANTS WITH THE PURCHASER AS FOLLOWS:’
It is better to put in the transferor’s and the transferee’s covenants separately, and any covenants
mutually entered into by the parties with each other may be inserted separately. If the transferer’s
and transferee’s covenants are separately mentioned in the deed, care should be taken that no
covenant which should really by the covenant of one party is entered in the covenants of the other.
For example, if a lessee is given the right to cut trees of a certain kind and not to cut tree of a
different kind, the latter covenant is a covenant by the lessee and the owner is a covenant by the
lessor and both should not be inserted in one covenant by either. When it is found inconvenient or
awkward to split up, what really is one covenant into two parts, it is better to insert such a covenant
as a mutual covenant by the parties. Sometimes the terms and conditions of a transfer cannot be
conveniently separated into transferor’s covenants and transferee’s covenants. In such cases, it
would be better to include all the covenants under one head as parties’ covenants thus: ‘THE
PARTIES HEREBY MUTUALLY AGREE WITH EACH OTHER AS FOLLOWS:’

L) TESTIMONIUM
The last part of a deed is the testimonium which sets forth the fact of the parties having signed the
deed. This is not an essential part of the deed, but as it marks the close of the deed there is no harm
in continuing the established practice. The usual English form of testimonum is as follows: ‘In

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

witness whereof the parties hereto have hereunto set their respective hands and seals the day and
year first above written.’ The use of seals is not common in India except in cases of companies
and corporations, and the proper form in simple language would be somewhat as follows: ‘In
witness whereof the parties hereto have signed this deed on the date first above written.’

M) SIGNATURES AND ATTESTATION

After testimonium should follow the signatures of the executants and those of attesting witnesses.
If executant is not competent to contract or is a juristic person, the deed must be signed by the
person competent to contract on his or its behalf.

Enforceability of a document (including stamping and registration requirements)

Stamping
The Indian Stamp Act, 1899 deals with stamping of agreements/documents in India. Stamping of
agreements and documents is desirable as it ensures legality and validity, enforceability and
admissibility in court since such agreements can be registered under the Indian Registration Act,
1908, which in turn ensures its enforceability.
Sec. 3 of the Indian stamp Act, 1899, provides that every instrument shall be chargeable with duty
of the amount indicated in Schedule I Amendments have been made to the stamp act by almost
every state. On account of this the duty chargeable on an instrument values from state to state.
Duty on an instrument is payable as prescribed in the state in which the instrument is executed. If
the instrument is sought to be used in another state, where the duty prescribed for that instrument
is higher, then the difference between the two has to be paid in addition to the duty already paid
before the instrument can be so used. A draftsman must be conversant with the requirements of the
stamp Act; He must familiarize himself with the duty chargeable on the instrument in the state
where the instrument is executed. An efficient draftsman has not only to Sec. that the proper duty
is paid on an instrument but also to be seen that no extra or avoidable burden is placed in the
executants. A clever and able draftsman will easily be able to word his instrument in such a manner
as to be chargeable with the minimum duty
Sec. 10 and the rules made there under prescribed how stamp duties are to be paid most instruments
have to be written on non-judicial stamp-paper of the requisite value. Sec. 11 enumerates the
instruments which maybe stamped with adhesive stamps.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

An instrument not duly stamped is not invalid, but it is incapable of being used in evidence until it
is stamped properly. Sec. 35 of the stamp Act lays down the disabilities with which an instrument
not duly stamped suffers. Sec. 62 provides that every person executing, making or using an
instrument without the some being duly stamped shall be punishable with fine which may extend
to five hundred rupees.
Registration
The Indian Registration Act provides for registration of documents thereby recording the contents
of the document. Registration is required to conserve evidence and title. There are certain
agreements mentioned under section 17 of the Indian Registration Act, which are to be
compulsorily registered and thus, cannot be made without stamp paper. Some of these are,
• Instruments pertaining to immovable property i.e. sale deed, agreement to sell, gift deed,
lease, and others.
• Instruments pertaining to movable property valued at or above INR 100.
• Lease deed of an immovable property, where the lease exceeds a year.
• Instruments that transfer or assign a decree or order of Court for a value exceeding INR
100 and immovable property.
• Document to adopt a son executed other than through a will.
(i) Compulsorily and optionally registrable documents.- Sec. 17 of the Registration act,
1908 enactsthat where a document is executed to effectuate any of the transactions
spe~ified in Sec. 17,' such document must be registered not withstanding that the
transaction is one which the law does not require to be in writing. The registration of
these documents is compulsory. Sec. 18 specifies the documents of which registration
is optional. In fact every document can be registered some state amendments provide
that the registering officer shall refuse to register any document presented to him for
registration unless it is accompanied by a time copy thereof.

(ii) Time of Presenting: A document must be presented for registration within four months
of its execution (Sec. 23). Where a document is executed by different persons at
different times it may be presented for execution within four months form the date of
each execution. The sub-registrar has no power to extend the time or to condone the
delay in presenting a document for registration. But where a document could not be

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

presented within time owing to urgent necessity or unavoidable accident" the Registrar,
when the delay in presentation does not exceed four months may condone the delay on
payment of a fine not exceeding ten times the amount of the proper registration fee.
There does not appear to be any power to condone delay beyond four months. However,
a will may be presented for registration at any time.

(iii) Place of Presenting: A document relating to property has to be presented for registration
in the office of the sub-registrar within whose sub-district the whole or some portion of
the property to which the documents relates is situate. Other documents maybe
presented for registration either in the office of the sub-Registrar in whose sub-district
the document was executed or in the office of any other sub Registrar under the state
Government at which all the person executing and claiming under the document desire
it to be registered. The Registrar may in his discretion receive and register any document
which might be registered by ay sub- registrar subordinate to him.

➢ POWER OF ATTORNEY (GENERAL & SPECIAL)

Power of Attorney is a document of agency or a formal arrangement by which one person
(Principal) gives another person (Attorney or Agent) authority to act on his behalf and in his name.
As per the Power of Attorney Act, 1882:
“Power-of-Attorney includes any instruments empowering a specified person to act for and in the
name of the person executing it.”
A Power of Attorney may be a general or special power. A General Power of Attorney covers more
than one subject matter while a Special Power of Attorney relates to a specific subject matter, though
it may contain several powers relating to the same subject matter. Power of
Attorney is required to be stamped but need not be mandatorily registered.

Draft of a general power of attorney

KNOW ALL MEN BY THESE PRESENTS THAT THIS GENERAL POWER OF ATTORNEY
is executed at New Delhi on this 1st day of January 2004 by M/s. TINRIN, a company incorporated
under the Companies Act having its registered office at E-1 WESTEND, New Delhi through its
Managing Director Mr. X……(details) (hereinafter referred to as the EXECUTANT), DO

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

HEREBY APPOINT, NOMINATE, CONSTITUTE AND AUTHORISE Sh. Y….(details),

Executive Director of M/s TINRIN (hereinafter referred to as the ATTORNEY) AS MY TRUE
AND LAWFUL ATTORNEY TO MANAGE, CONTROL, LOOKAFTER / SUPERVISE,
PERFORM ALL LEGAL ACTS MENTIONED HEREUNDER.
WHEREAS…..
AND WHEREAS…..(Mention few recitals like the purpose of making this GPA).
NOW THIS GENERAL POWER OF ATTORNEY WITNESSESTH AS UNDER:-
(i) To institute, commence and conduct any action, suit or other legal proceedings before any
Court, Arbitrator, Quasi-judicial or authorities, Offices, Tribunals, Labour Courts, Conciliation
Officers, Land Acquisition Officers, etc. on behalf of the company for claiming any right, relief,
recovery, title, interest, property or in respect of any matter connected with or arising out of the
Company’s business and subject to aforesaid, to settle, adjust, compromise or submit to Arbitration
any such actions, suits or proceedings.
(ii) To defend all actions, suits, proceedings, applications, petitions, appeals, revisions, reviews,
arbitrations, conciliations, taxation and labour matters and other disputes that are now pending or
may hereafter be brought or made or instituted in any Court or office or Tribunal, Arbitrator,
Conciliation Officer, or any other Judicial or Quasi-judicial authorities in the name of the company.
(iii) To appear and represent the Company in any Court of Justice or Tribunal whatsoever and for
the purpose aforesaid or any of them to sign and verify plaints, written statements, applications
and swear affidavits and to sign petitions and other necessary documents including Valalatnama
and to appoint any Solicitor, Advocate, Pleader or other Legal Advisor with the necessary power
and such again at pleasure, to revoke and appoint others in their place.
(iv) To continue and conduct or defend any appeal, review, revision, arbitration in any Court or
Tribunal or office against any order, judgment or decree made in suits, actions, proceedings,
application etc.
(v) Generally for and in the name and as the act and deed of the Company to make, execute and do
all and every such further and other acts. Deeds, matters and things as shall be fit, requisite and
necessary in and about the premises and for all or any of the purposes aforesaid and as the
Company could do if acting in the premises.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

And I, the said Managing Director of the Company and also for the said Company hereby agree to
ratify and confirm whatsoever the said Attorney shall lawfully do or cause to be done in or about
the premises by virtue of these presents.
IN WITNESS WHEREOF I have hereunto signed this document on the date and place first
above written in the presence of following witnesses.

EXECUTANT
WITNESSES: (1)
(2)

Draft of a special POA

KNOW ALL MEN BY THESE PRESENTS THAT THIS SPECIAL POWER OF ATTORNEY
is executed at New Delhi on this 1st day of January 2004 by I, AB, ……(details) (hereinafter
referred to as the EXECUTANT), DO HEREBY APPOINT, NOMINATE, CONSTITUTE AND
AUTHORISE Sh. Y….(details), (hereinafter referred to as the ATTORNEY) AS MY TRUE AND
LAWFUL ATTORNEY TO PERFORM ALL LEGAL ACTS MENTIONED HEREUNDER.
WHEREAS…..
AND WHEREAS…..(Mention few recitals like the purpose of making this SPA).
NOW THIS SPECIAL POWER OF ATTORNEY WITNESSESTH AS UNDER:-
1. To receive from the purchaser or his heirs or assigns the sum of Rs ....................being the price
agreed to be paid to me by XY for the purchase of (description of property) under an agreement
dated the ....................... and to give an effectual receipt and discharge for the same;
2. To execute a proper sale deed of the said property or any other deed or assurance necessary for
the completion of the sale of such property and to get the same duly registered; And I hereby agree
to ratify and confirm whatsoever the said Attorney shall lawfully do or cause to be done in or about
the premises by virtue of these presents.
IN WITNESS WHEREOF I have hereunto signed this document on the date and place first above
written in the presence of following witnesses.
EXECUTANT
WITNESSES: (1)
(2)

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

➢ SALE DEED
A sale deed is a legal document that showcases the transfer of title, rights, and ownership of a
property from a seller to a buyer.
It is the most important document that legally reports the proof for the buyer and seller. It is an
essential document for both the buyer or the transferee and the seller or the transferor. The purchase
or sale of the property is not legally complete until a sale deed is signed between the buyer and the
seller. Normally, a sale deed is signed only after both the parties are satisfied and comply with the
terms and conditions.
Advantages of a sale deed:
• It is a legal document that is enforceable by law.
• It allows Sale transactions to be carried out in a stable and comfortable manner.
• It protects the rights of both parties involved in the contract.
• It mentions clearly the rights and duties of the Purchaser and Vendor.
• It clearly defines and describes the property.
• A well-drafted deed can avoid ambiguity and minimize risks.
• The whole process of the sale is now stamped and registered.
Registration of a Sale Deed
The property papers are to be kept with the Sub-Registrar to confirm the deal is being closed. The
registration includes the following: –
• Value of the property
• Stamp duty assessed as per the market rate and actual price are to be considered
• Value of non-judicial stamp paper
• Deed to be executed on stamp paper
• Both the parties should execute the document in the presence of two witnesses
• Finally, it should be registered with the Sub-Registrar
What should a sale deed include?
In general, a sale deed should include the below-mentioned details-
• Descriptions of the parties involved- the full name, complete address, contact details, age
& occupation for each of the buyers and sellers.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

• Description of the property being transferred- id number, correct address, dimensions of

the property, construction details of the building, if there is any.
• Indemnity & encumbrance clause- This includes a declaration from the seller that the
property being transferred is free from every encumbrance, litigation, and charge. Also, the
seller indemnifies the buyer from any pending charges in this regard.
• The seller should settle a pending loan taken with the concerned property as a mortgage,
before proceeding with the sale. The buyer has every right to examine the related
documents before registration.
• The sale consideration- It’s the price at which the transfer deal is closed. This section should
also mention the advance amount paid if there is any. The parties should explicitly agree
on the dates of payment, the mode of payment, etc. The price and the details of the
transactions made should be mentioned in both figures and numbers. The sale deed should
also mention the receipts of the sale transaction.
• Delivery & possession of the property- the deed should specifically mention the date of
handover to and possession by the buyer.

Draft of a sale deed:

THIS DEED OF SALE is made at on this the day of 2022.

BY AND BETWEEN , (hereinafter called “the seller”) which expression shall unless repugnant
to the context shall include its successors, legal representatives, assigns of the ONE PART

AND , (hereinafter called “the buyer”) which expression shall unless repugnant to the
context shall include its successors, legal representatives, assigns of the OTHER PART.

Now Therefore It Is Hereby Agreed by and Between the Parties Here To as Follows:

1. In consideration of the sum of Rs paid by the buyer to the seller on

the day of (the receipt of which the seller hereby
acknowledges) the seller as

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

owner hereby transfers to the buyer by way of sale ALL that pucca house standing on the land
measuring meters by meters fully described in the schedule hereto annexed and thereon shown
with its boundaries coloured red (hereinafter referred to as “Premises”) TO HOLD the same to the
buyer as absolute owner.
2. The seller hereby covenants with the buyer as follows: –
(a) The said Premises shall be quietly entered into and upon and held and enjoyed and the
rents and profits received therefrom by the buyer without any interruption or disturbance by
the seller or any person claiming through or under him and without any lawful disturbance
or interruption by any other person whomsoever;
(b) The seller will at the cost of the person requiring the same, execute and do every such
assurance or thing necessary for further more perfectly assuring the said premises to the
buyer, as may reasonably be required;
(c) The interest hereby transferred subsists and the seller has the power to sell the same;
(d) The property hereby sold is free from all encumbrances, charges, mortgages, liens, prior
agreement to sell, court proceedings, gifts, of any nature whatsoever.
(e) That the construction existing on the said Premises is in accordance with the sanctioned
plan.
3. If any of the foregoing including the representations and warranties are found to be false in any
manner and/or if the buyer is deprived of the said Premises at any time, in future after the execution
of this Sale Deed in full or in part thereof, owing to the above reason or reasons whatsoever in
respect of the said Premises, the Seller hereby undertakes that he will entirely remain liable and
responsible to indemnify the buyer for the same in all manners, including but not limited by all his
moveable and immoveable properties and all other assets.
4. That the Seller has delivered the peaceful physical vacant possession of the said Premises under
sale along with all its rights of ownership and also delivered all the previous original documents
of the said Premises to the buyer at the time of execution and registration of this Sale Deed.
5. That the buyer can get the said Premises under sale mutated in its own name and/or any other
concerned authority by presenting this Sale Deed or its true copy.
6. That from the date of execution of this Sale Deed the buyer becomes the sole and absolute owner
of the said Premises under sale and shall be at full liberty to use, enjoy and utilize the said Premises

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

under sale and also have right, power, absolute authority and be fully competent to sell or dispose
of the same to anyone in any manner as he may like.
7. That after the execution of this Sale Deed neither the buyer nor his legal heirs, may raise any
objection or create any charge or demand any share in the said Premises under sale here-after.
In Witness Where of the parties hereto have signed this Deed of Sale on the date mentioned against
their respective signatures.

Witness Vendor:

Witness Purchaser:

THE SCHEDULE
(DESCRIPTION OF THE PROPERTY)

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

➢ PARTNERSHIP DEED
Partnership deed is a partnership agreement between the partners of the firm which outlines the
terms and conditions of the partnership between the partners. The purpose of a partnership deed is
to provide clear understanding of the roles of each partner, which ensures smooth running of the
operations of the firm.
Importance of partnership deed
A few important advantages of a well-drafted deed are listed:
• It controls and monitors the rights, responsibilities and liabilities of all the partners
• Avoids dispute between the partners.
• Avoids confusion on profit and loss distribution ratio among the partners.
• Individual partner’s responsibilities are mentioned clearly.
• Partnership deed also defines a remuneration or salary of the partners and working partners.
However, interest is paid to each partner who has invested capital in the business.
Partnership Deed Contents
While making a partnership deed, all the provisions and the legal points of the partnership deed
are included. This deed also includes basic guidelines for future projects and can be used as
evidence at times of conflict or legal procedures. For a general partnership deed, the below
mentioned information should be included.
• Name of the firm as determined by all partners.
• Name and details of all the partners of the firm.
• The date on which business commenced.
• Firm’s existence duration.
• Amount of capital contributed by each partner.
• Profit sharing ratio between the partners.
• Duties, obligations and power of each partner of the firm.
• The salary and commission if applicable that is payable to partners.
• The process of admission or retirement of a partner.
• The method used for calculating goodwill.
• The procedure that must be followed in cases of dispute arising between partners.
• Procedure for cases where a partner becomes insolvent.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

• Procedure for settlement of accounts in the event of dissolution of a firm.

Draft of a partnership deed

This Deed of Partnership is made at.................... on this .................... day of ............... by and
between: Shri ............................... aged about .............. years, son of Shri ..................................
resident of .................................................................(Hereinafter to be called the First Party);
Shri ............................... aged about ............... years, son of Shri ................................... resident of
………………………………………(Hereinafter to be called the Second Party);
Shri ............................. aged about ................ years, son of Shri .................................. resident of
(Hereinafter to be called the Third Party);
Shri .......................... aged about ................. years, son of Shri .................................. resident of
(Hereinafter to be called the Fourth Party);

WHEREAS, the parties to this deed have been carrying on the business of .......................................
under the name and style of M/s. ......................... with its principal place of business at .............
on the terms and conditions incorporated in the Partnership Deed executed
on.........................................

AND WHEREAS, vital amendments have been made by the Finance Act, 1992 in the procedure
for assessment of firm. Consequent to the said amendment, the parties to this deed had a meeting
and have orally and mutually agreed to amend and alter some of the terms and conditions contained
in the aforesaid partnership deed with effect from .

AND FURTHER WHEREAS the parties to this deed have been carrying on the above said
business in partnership on the terms and conditions orally and mutually agreed amongst themselves
as aforesaid;

AND NOW WHEREAS, the parties to this deed desire that the terms and conditions on which
they have been carrying on the above said business in partnership since ....................... and propose
to continue in future be reduced to writing to avoid future difficulties or misunderstanding.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

NOW, THEREFORE THIS DEED WITNESSETH as under, incorporating the aforesaid

amendment/ alteration in the terms and conditions of the partnership:

1. That the partnership business has been and shall continue to be carried on under the name and
style of M/s. ....................................

2. That the partnership business has been and shall continue to be that of ................ with its
principal place of business at .............. The parties by mutual consent may carry on business at
such other place or places, in such other name or names and of such other nature or natures, as
they may deem fit and proper from time to time.

3. That the amount lying to the credit of the partners as on shall be deemed as their
capital investment. Further capital, loans or deposits looking to the needs/requirements of the
partnership firm shall be arranged, invested or contributed by the partners.

4. That interest at the rate of per annum or as may be prescribed under section 40(b)(iv) of the
Income-tax Act, 1961 or any other applicable provisions as may be in force in the income-tax
assessment of the partnership firm for the relevant accounting period or at a lower rate as may be
agreed to by and between the parties from time to time shall be paid to the partners or credited to
the partners on the amount standing to the credit of the account of the partners.Such interest shall
be considered as an expenditure of the firm and shall be debited to the Profit & Loss Account of
the firm before arriving at the divisible profit or loss. The interest to persons other than partners
shall be paid or credited to their accounts at the rate or rates as may be agreed to by and between
the partners and such persons from time to time.

5. That Shri ................................ Shri ..................... and Shri ............................. the parties of the
....................... parts have agreed to keep themselves actively engaged in conducting the affairs of
the business of the partnership firm. The said partners shall be working partners. It is hereby agreed
to that in consideration of the said parties keeping themselves actively engaged in the business of
the partnership firm and working as working partners, shall be entitled to remuneration.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

The remuneration payable to the said working partners shall be computed in the manner laid down
or deduction under section 40(b)(v), read with Explanation 3 of the Income-tax Act, 1961 or any
other applicable provision as may be in force in the income-tax assessment of the partnership firm
for the relevant accounting year. Such amount of remuneration shall be distributed between the
said working partners in the following proportion:

A. Shri ......................................... per cent of such amount

B. Shri ......................................... per cent of such amount

C. Shri ......................................... per cent of such amount

The partners shall be entitled to increase or reduce the above remuneration and may agree to pay
remuneration to other working partner or partners as the case may be. The partners may also agree
to revise the mode of calculating the above said remuneration as may be agreed to by and between
the partners from time to time.

6. That the parties hereto shall be true and faithful to each other and shall not do or cause to be
done anything which may be detrimental to the interest of the firm.

7. That the parties shall keep or cause to be kept proper books of account and documents and
shall make entries therein of all receipts, payments and other matters as is usually done and entered
in the books of account kept by persons engaged in business similar to that of the firm. Each partner
shall have a right to have access to and to inspect and take copy of the same.

8. That the partnership has been and shall be a partnership at will.

9. That the net profit of the partnership firm after deduction of all expenses including rent,
salaries, other establishment expenses, interest and remuneration payable to the partners in
accordance with this deed of partnership or any supplementary deed as may be executed by the

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

partners from time, to time, shall be divided and distributed amongst the partners in the following
proportion:

Sr. No. Name of Party Share in profits

1.

2.

3.

4.

The losses, if any, including loss of capital suffered in any year shall also be apportioned in the
above said proportion.

10. That the bank account or accounts have been and shall be maintained in the name of the firm
and shall be operated singly or jointly by the partners.

11. That the books of account shall be closed on 31st day of March each year. The net profit or
loss after deducting all expenses, interest, remuneration, outgoings shall be divided between the
parties in proportion to the sharing ratio referred to hereinabove.

12. That notwithstanding anything contained in the Indian Partnership Act it is hereby mutually
agreed to by and between the parties that in case of death of any one or more partners, the firm
shall not be dissolved but shall continue to be carried on by and between the surviving partners
and legal heirs and/or representatives of the deceased partner, as a continuing concern, on the same
terms and conditions as incorporated in this Deed or on such terms and conditions as may be agreed
to by and between them from time to time. It is hereby further clarified that it shall be deemed as
change in constitution and not succession.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

13. That with respect to any matter connected with the affairs of the firm, which is not specifically
provided for herein, the partners may make such agreements therefor and may set in such manner
with regard thereto as may be agreed upon by and between themselves.

14. That if the partners deem proper and in their interest, they may admit any other person or
persons as partners on the terms and conditions as may be mutually agreed amongst themselves.

15. That the partners to this deed are partners in their individual capacity/representing HUF styled
as M/s ....................................... The parties do not represent any other person.

16. All bonds, bills, notes, bills of exchange, hundies or promissory notes or other securities given
on behalf of the partnership (except cheques) shall be signed, endorsed, accepted or executed
jointly by all the partners and any bond, bill, note, bill of exchange, etc. to which any partner may
be a party contrary to this provision shall be deemed to have been on the personal account of such
partner and he shall pay and discharge the same out of his own moneys and indemnify other
partners and the firm against payment thereof and against all actions, proceedings, costs, charges,
expenses, claims and demands in respect thereof.

17. That the parties of ....................... part are not working partners but are only financing, dormant
and sleeping partners. The parties of ....................... part need not be in charge of, responsible to
the firm for the conduct of the business of the firm and need not take interest in day-to-day working
and business of the partnership firm.

That the parties of the ............................ part shall not be liable to any criminal action for the
business or working of the partnership firm or for the acts of the other partners or its employees or
its representatives for and on behalf of or on account of the partnership firm or for the purposes of
the partnership firm. The said partners shall not be liable for any liability, civil or criminal, against
the partnership firm or other partners.

That the said partners shall not become and shall not be liable for any criminal action for any
default or offence committed by other partners or employees or authorised representatives of the

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

firm under the Income-tax Act, Customs Act, Foreign Exchange Regulation Act, Sales tax Laws
or other Central or State Acts, laws, Rules or Regulations.

18. That the partners shall be entitled to modify the above terms relating to remuneration, interest,
etc. payable to partners by executing a supplementary deed and such deed when executed shall
have effect unless otherwise provided from the first day of accounting period in which such
supplementary deed is executed and the same shall form part of this deed of partnership.

19. That all disputes and questions in ........................ connection with the partnership or this deed
arising between the partners or between any one of them or their legal representatives and whether
during or after the partnership, shall be referred to the arbitrator in accordance with the provisions
of the Arbitration and Conciliation Act, 1996 then in force.

IN WITNESS WHEREOF the parties to this deed have set their hands on the day and year first
above written and in the presence of:

WITNESSES;

First party: 1.
2.
Second party: 1.
2.
Third party: 1.
2.
Fourth party: 1.
2.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

➢ NOTICE AND ITS REPLY

Legal notice
All legal action can only be taken once notice has been served upon the entity or individual you
wish to take to court. It is only this process that legalises bringing a matter to court. The intimation
sent is known as a legal notice.
A legal notice is, therefore, a formal communication to a person or an entity, informing the other
party of your intention to undertake legal proceedings against them.
This notice, when sent, conveys your intention before the legal proceedings and thus, makes the
party aware of your grievance. Many times, a legal notice served will bring the other party on
heels, and the problem can get resolved out of court too, with fruitful discussions on both sides.
And, if the other party is still not heeding to the grievance, one can always start the court
proceedings after a particular interval, as stated by the law.
Essential Information
A legal notice is filed as per Section 80 of Code of Civil Procedure, 1908 and is only filed in civil
cases. A legal notice is an intimation and thus carries the following information:
• Precise statement and facts relating to the grievance for which the action is to be taken.
• Alternatives/relief sought by the grieving party.
• How are the relief/problem in hand be solved, a summary of facts and the way it can be
solved.
• A complete brief of the problems that the aggrieved party is facing, combined with what
can be done to resolve the issue need to be clearly mentioned. The last past of the Legal
notice should contain a detailed account of how relief can be obtained/problem solved if
mutually agreed upon the grievance.
A perfectly crafted legal notice, can act as a mediator between the two parties and help solve the
issue out of the court if both of them are willing to compromise on the issue.
A legal notice format must contain the following points:
• Name and required information
• Description
• Place of residence of the notice sender
• Aspects of the effect
• The monetary relief claimed by the sender of the notice

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

• The gist of the legal basis for the relief claimed

Draft of a legal notice

Ref. No……………. Dated ,

ADVOCATE NAME
OFFICE ADDRESS:

CONTACT NO.

REGISTERED A.D.

To,

1- (Name and Address of the Recipient.)

2-

SUBJECT: LEGAL NOTICE UNDER SECTION OF ACT, . (Legal Basis)

Dear Sir,

Under the instructions and on behalf of my client Mr./Ms. S/o , resident of

, I do hereby serve you with the following notice under section of the Act.

1- That my client . (Statement of Facts)

2- That since .

3- That on .

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

4- That my client wants you to .(Relief Demanded by the Plaintiff.)

I therefore call upon you through this notice .

A copy of this legal notice is retained in my office for further necessary action.

ADVOCATE NAME

Reply to a legal notice

The legal notice should be replied within the stipulated time, if not replied within the stipulated
time it can prove to be beneficial to the addressee.
After receiving the notice the following points must be kept in mind:
• Carefully reading the legal notice– It is important to properly read the notice to understand
the issue and concerns that are raised by the other party. If the receiver of the legal notice
feels that the concerns raised in the legal notice could be resolved amicably then
immediately a conversation should be initiated.
• Contacting the Lawyer– If the contents of the legal notice are not clear, then a profound
lawyer must be contacted who can further legal action in the matter. Also, the receiver
should keep a record of the time of receiving the legal notice which will be advantageous
even if the matter is taken to the Court by the opposite party.
• Briefing the lawyer– This step must be done carefully, the entire matter must be escalated
to the appointed lawyer. The lawyer must be provided with all the necessary information
about the facts, time, place, events etc that are related to the issue, this helps the lawyer to
draft a proper reply that represents the receiver’s side of an argument.
• Sending the reply– The reply notice is sent either through a registered notice or courier,
once the lawyer drafts the reply notice on your behalf. The lawyer keeps the copy of the
reply notice for future reference.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

What happens if the person doesn’t respond to a Legal Notice?

If the person to whom the notice is sent, doesn’t respond to it in a stipulated time, then the
aggrieved party files a suit in the appropriate Court of Law. Once the suit is filed in the court, the
order will be sent to the respondent by the Court to appear before the court and to answer the
charges pressed against them by the opposite party.

Draft of a reply to a legal notice

Particulars of addressee

Ref:

Dated:

Reply to Legal Notice

To:

Sir,

Kindly refer to Notice dated issued by you on behalf of your client . I have
instructions from my client, Sh. , to reply to your above notice in the following terms:-

1. That your client has not given you a correct picture of facts and circumstances of the case
and on the basis of which the averments made by you against my client are absolutely
baseless. We deny the averments and bring to you the correct facts and circumstances.

The facts are

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

2. In the light of the facts, it is clear that my client has not done anything wrong as alleged by
your client. Now under the circumstances, my client any liability averred by you and on
the contrary makes a demand that your client offers him a written unconditional apology
for maligning his reputation.
3. Also, kindly advise your client to refrain from such like activities and in case he continues
with the same, my client has imparted me further instructions to initiate appropriate legal
actions against your client which shall be at the cost and risk of your client. Kindly note
that cc is retained.

Yours sincerely,

Name of Advocate

____________

Signature

_________

Contact details

_____________

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

➢ LEASE DEED

What is a ‘lease’?
As per Section 105 of the Transfer of Property Act, the definition of ‘Lease’ can be understood
as a transfer of a right to enjoy property for a certain time or in perpetuity; in consideration of
a price paid or promised or of money, a share of crop, service or any other thing of value to be
rendered periodically or on specific occasion to the Lessor by the Lessee who accepts the
transfer on such terms.
In this context,
• Lessor is the absolute owner of the property which is the subject matter of the
lease;

• Lessee is the person acquiring the rights to use and enjoy the property on lease
from the Lessor;

• Duration is the term for or period for which the rights to use and enjoy the
property is granted. The duration of the lease can be for a certain time, express or
implied or can also be in perpetuity;

• Premium or Rent is the consideration for granting the rights to use and enjoy the
property can be in the form of a one-time price paid or promised i.e. Premium or
on payment of money or any other thing of value, periodically or on specific
occasions or intervals, known as Rent.
Therefore, by executing a Lease Deed, what is transferred by the Lessor to the Lessee is only
his right to enjoy the property, subject to the terms agreed upon, and not the whole or any part
of the absolute ownership rights, this type of transfer in conveyancing parlance is known as a
‘demise’.

Lease Deed:

A lease deed is a written contract between a landlord (lessor) and tenant (lessee), which states
that the landlord would receive a periodic payment in exchange of allowing the tenant to use
and occupy the property. The lease deed also defines the terms and conditions that govern the
relationship between a landlord and a tenant during the period of lease.
A lease deed is generally required when the property is leased for a long period of time, ranging
between 1-5 years or even longer. In such cases, a lease deed plays an important role to govern
the relationship between the landlord and tenant and lays down the provisions legally binding
over them.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

In other words, Lease deed is a legal document/ agreement which lays out the prescribed terms
and conditions of lease between the landlord and the tenant.
Section 107 of the Transfer of Property Act, 1882 provides that A lease of immovable property
from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made
only by a registered instrument. All other leases of immovable property may be made either by
a registered instrument or by oral agreement accompanied by delivery of possession. Where a
lease of immovable property is made by a registered instrument, such instrument or, where there
are more instruments than one, each such instrument shall be executed by both the lessor and
the lessee.
Section 108 and 109 of the Transfer of Property Act, 1882 provides for rights and liabilities of
lessor and lessee.
Essentials terms while drafting lease deed of lease deed: Description of Property, Duration of
lease, Amount of Rent, Maintenance, and Security, Termination of Lease, Consequences of
Subletting, Dispute Resolution.

DRAFT OF LEASE DEED

THE LEASE DEED is executed at Delhi on (date of execution) between Sh. XYZ aged
years S/o sh. R/o

(Hereinafter called/ referred to as lessor) which expression shall mean and include his heirs,
successors, Legal Representatives and assignees etc. on the One Part

AND

Sh. ABC aged 40 years S/o sh. XYZ R/o

(Hereinafter called/ referred to as lessee) which expression shall mean and include his heirs,
successors, Legal Representatives and assignees etc. on the Other Part.

WHEREAS the lessor is the landlord and owner of house bearing no. 16, Colony,
Shahdara, Delhi-110032 comprising of 3 bedrooms, 1 drawing room, 2 bathrooms, a kitchen
and a balcony and is desirous to let out the same for her bonafide needs to the lessee for a period
of 6 years w.e.f. 15.11.2020 at monthly rent of Rs. 12,000/- (Rupees twelve thousand only) on
following terms and conditions

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

NOW THIS LEASE AGREEMENT IS WITNESSED AS UNDER:-

1. The monthly consideration payable by the lessee to the lessor towards the rent for the
said house shall be Rs. 12,000/- (Rupees twelve thousand only) excluding the electricity
charges w.e.f. 15.11.2020 for a period of 6 years.
2. The monthly rent of Rs. 12,000/- shall be payable in advance by the lessee to the lessor
by the 7th day of each month.
3. The payment of Rent shall be made by cheque or NEFT to the account no.
of the account holder name XYZ from Bank of DEF, Shahdara
Branch.
4. The in case the lessee does not pay the rent for one month then in the subsequent month
his position would be that of a trespasser he will be liable to pay damages at the rate of
Rs. 1000/- per day or delay in handing over peaceful and vacant possession.
5. The rent shall increase and revised by 10% in every 2 years.
6. The lessee shall use the leased premises solely for residential purposes of himself and
his family and shall not be use or allow to use the premises for any other purposes.
7. The lessee shall not sublet, assign or part with the possession of whole or part of the
demised premises in any case.
8. The lessee shall pay the electricity and water bills as per the bills of the local authorities.
9. The lessee shall comply with all rules and regulations of the local authorities
whatsoever with regard to the demised premises.
10. The lessee shall not carry out any illegal or unlawful activities in the demised premises.
11. The lessee shall not carry out any structural additions and alterations to the building
layout, fittings and fixtures without the consent of the lessor in writing. The lessee shall
be responsible to restore them in same conditions at the time of surrender of the
possession.
12. The lessee shall be liable to carry out all minor repairs in the demised premises at his
own cost. However any major repair, if required shall be carried out by the lessor.
13. The lessee is required to deposit an interest free security with the lessor of Rs. 24,000/-
(Rupees twenty four thousand only) for due performance of terms and conditions. The
amount of security shall be refundable at the time of vacation of tenanted premises /
property.
14. The lessee shall permit the lessor and his agents to enter upon the demised premises
whenever necessary to inspect the premises.
15. The lessee shall not be responsible to pay the property tax in respect of the demised
premises which shall be the sole liability of the lessor.
16. In case of the death of the lessor, the rent shall be collected by the Mr. PQR who is the
brother of the lessor whereas the legal heirs of the lessee shall have no right in case of
the demise of lessee during the continuation of the lease.
17. That notwithstanding anything contained hereinbefore, it is expressly agreed by and
between the parties hereto that in the event of default of any conditions hereinbefore
referred to the lessor shall be entitled to and shall always have the power to terminate
the lease hereunder granted at his absolute discretion and/or keep the said premises
without subjecting himself to any liability on account and in such event, the lessee shall
surrender the premises and deliver the possession of the same to the lessor.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

18. The charges of drafting and registration of the lease deed shall be borne solely by the
lessee.
19. The original lease deed is executed on the stamp paper of Rs. which shall be
retained by the lessor while a copy thereof shall be retained by the lessee.

IN WITNESSES WHEREOF the parties hereto have said their respective hands on the day,
month and year mentioned hereinabove in the presence of following witnesses.

WITNESSESS:

1.

2.

LESSOR

LESSEE

Checklist:

Here is a checklist of key elements to consider and include when drafting a lease deed for
commercial purposes:

1. Property Description: A detailed description of the property should be provided

along with the area, the exact location, respective Survey No.(s) etc. It is also
advisable to include a description of all the structures standing on the property along
with the list of all the fittings and fixtures thereon.
2. Term: The exact duration of the lease should be mentioned along with the
commencement date and expiry date.
3. Title Search: Proper Title Search should be conducted and public notices issued to
ensure that the Lessor is entitled to give the property on lease and that there is no
legal impediment in the property being demised in favour of the Lessee.
4. Lock-In Period to be mentioned if any.
5. Termination: The grounds for termination of lease like breach, non-payment of
rent, force majeure, failure to pay rent etc., to be included along with the agreed
process for termination by the parties and the notice period.
6. Rent Payment: The quantum of rent, the mode of payment, due dates, the procedure
for delay, rent escalation etc., to be discussed and reduced to writing.
7. Security Deposit, if any.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

8. Maintenance Charges and Land Taxes: Who is responsible for payment of

maintenance charges, society charges, land taxes and other government charges?
Effect of non-payment and the process for dealing with that.
9. Utility Charges: It should be clearly defined whose obligation it is to pay for the
utilities such as water, electricity, telephone, internet etc and in whose name the
receipts are to be generated.
10. What are the permitted uses of the demised property?
11. Whose obligation is it to ensure the maintenance and upkeep of the demised property
and the procedure with repairs.
12. Restriction of material alteration of the property without the express consent of the
Lessor.
13. Sub Letting: Whether sub-letting of the demised property is permitted and if so then
under what terms and only with the express approval of the Lessor.
14. Inspection of the demised property should be permitted by the Lessee at
reasonable hours and with prior notice.
15. Study the applicable law pertaining to the payment of Stamp Duty and Registration
of the Lease Deed and ensure that adequate payments are made and the correct forum
followed.
16. Legal Charges: Whose obligation is it to pay the Stamp Duty, Registration Fee and
other governmental and incidental charges in the transaction?
17. Procedure for the handover of possession at the end of the lease and the execution
of a Deed of Surrender of Lease, if applicable should preferably be mentioned in the
Lease Deed itself.
18. It is recommended that either of the parties get their own insurance cover on the
demised property to protect against any unexpected event.
19. Clearly identify the jurisdiction of the relevant Court and the dispute redressal
mechanism in the event of a dispute arising between the Lessor and Lessee.
20. Respective Indemnities: Ensure that there are adequate Indemnity clauses in the
Lease Deed to cover foreseeable incidents like defaults in payment of rent, damage
to property, breach of terms, wrongful representations and warranties, defect in title
etc.
The aforementioned is a basic outline of the process of drafting a legally competent and
balanced Lease Deed concerning commercial lease deed with a corporate purpose in mind.

A corporate lease deed needs to be drafted and scrutinized more thoroughly than a lease of
residential premises or tenancy as there are various aspects of commercial transactions of
commercial use of a property which are not present or do not have a very large role to play in
non-commercial transactions.

➢ MORTGAGE DEED
What is a Mortgage?
In India, Mortgage is governed under Section 58 to 104 of the Transfer of Property Act, 1882.
A Mortgage can be defined as the transfer of interests in a specific property to secure the loan
advanced or to be advanced in the future. In other words, we can say that when any person takes
a loan from anyone, some security is required to be kept with the lender to have the
Downloaded by Lokpal ([email protected])
 lOMoARcPSD|26102095

assurance that in case of default in the repayment of the loan, the lender can recover his money
from that security. The person who mortgages his property against the loan is called
“Mortgagor.” Whereas the person to whom the property is mortgaged is called Mortgagee” and
the terms and conditions related to mortgages are contained in the “Mortgage Deed”.

What is a Mortgage Deed?

Section 55(2) of the Act, talks about some relevant covenants or agreements which the parties
are required to enter into for the conveyance of immovable property such as lease, sale,
Mortgage, gifts etc. The mortgage deed is an instrument or a legal document containing terms
and conditions relating to the Mortgage. The deed provides the lender with the interest and
legal rights over the property. All the rights and interests over the property that the borrower
has pledged as collateral are legalized in the Mortgage Deed. In case of any default or failure
to pay the loan amount, the lender can claim his legal rights over the property.

Registration of Mortgage Deed

Registration of mortgage deed is essential to give legal validity to the document. In case of
Mortgage by Delivery of Title Deed, registration is not required. Following are the conditions
which need to be fulfilled for a valid registration:
• The deed must be signed by the Mortgage.

• At least two witnesses must attest to the deed.

• Stamp duty must be paid accordingly; otherwise, the document is not enforceable.

When is the Mortgage Deed required?

• It is generally required when you are loaning money from another person or business
and want to transfer the interest of the property to another person.

• When you want to borrow money and are required to mortgage your property as a
collateral. The deed helps you secure your rights and interest over the property.

Why is the Mortgage Deed required?

• The first and foremost requirement of the mortgage deed is to determine the parties
to the deed, i.e. the Borrower/Mortgagor and the lender/Mortgagee.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

• The deed enforces the rights of the lender in the Court. It ensures that in case of the
default or delay in repayment of the loan, the lender will get paid by selling the
property.

• The mortgagee has the right to foreclose on the property in case the mortgagor stops
paying or breaches the terms of the Contract.

• The deed gives a thorough investigation as to the interest and title over the property.
It helps to determine the rightful owner of the mortgaged property.

• The mortgage deed helps to determine the loan amount and the rate of interest.

• The mortgage deed also gives the right to the mortgagee to take possession of the
property, if specified in the Contract.

• The mortgage deed acts as evidence that the property is transferred to the lender.

Draft of a Mortgage Deed

This Deed of Mortgage made at ...................... this ................ day of ................... Between X, son
of ............................... resident of hereinafter called as a mortgagor of the ONE PART and Y,
son of resident of.................. hereinafter called as a mortgagee of the OTHER PART.

WHEREAS, the mortgagor is absolutely seized and possessed of or otherwise well and
sufficiently entitled to the house bearing municipal no ..................................... situated
on........................ Road, ..................................................................................... more
particularly described in the Schedule hereunder written;

AND WHEREAS, the mortgagor has requested the mortgagee to lend him a sum of Rs.
.............................................which the mortgagee has agreed on the mortgagor mortgaging
his property.

NOW, This Deed Witnesseth That in pursuance to the said agreement and in
consideration of the sum of Rs. ................................. at or before the execution of these
presents paid by the mortgagee to the mortgagor (the receipt whereof, the mortgagor doth
hereby admit and acknowledge and of and from the same hereby release and discharge
the mortgagee), the mortgagor hereby covenants with the mortgagee that he will pay on
the ..................... day of.............................................. (hereinafter called "the said date"),
the said sum of Rs. ................. with interest @ ........................ % per annum from the date of
these presents till the repayment of the said sum in full, every quarter the first instalment of
interest to be paid on the ................... day of ................................................ 20 and each
subsequent instalment on the ................................. day of July, October, January and April of
each succeeding year until the said sum is repaid in full.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

AND this deed further WITNESSETH that

In consideration aforesaid, the mortgagor doth hereby transfer by way of mortgage his house
bearing municipal no ................. situated on .............. Road . ......................
and more particularly described in the Schedule hereunder written as a security for repayment
of the said sum with interest @.................................................. per annum with the condition
that the mortgagor, his heirs, executors, administrators or assigns shall on the said the pay to
the mortgagee, his heirs, executors, administrators or assigns the said sum of Rs together
with interest thereon at the rate mentioned above, the
said mortgagee, his heirs, executors, administrators, or assigns shall at any time thereafter upon
the request and at the cost of the mortgagor, his heirs, executors, administrators or assigns
reconvey the said house, hereinbefore expressed to be mortgaged unto or to the use of the
mortgagor, his heirs, executors, administrators or assigns or as he or they shall direct.

And It Is Hereby Agreed And Declared that if the mortgagor does not pay the said mortgage
amount with interest when shall become due and payable under these presents, the mortgagee
shall be entitled to sell the said house through any competent court and to realise and receive
the said mortgage amount and interest, out of the sale proceeds of the house.

And It Is Further Agreed And Declared by the mortgagor that during the period, the mortgage
amount is not paid and the said house remains as a security for the mortgage amount, the
mortgagor shall insure the said house and take out an insurance policy in the joint names of the
mortgagor and mortgagee and continue the said policy in full force and effect by paying
premium and in case of default by the mortgagor to insure or to keep the insurance policy in full
force and effect, the mortgagee can insure the said house and the premium paid by the mortgagee
will be added to the mortgage amount, if not paid by the mortgagor on demand.

And It Is Further Agreed That the mortgagor can grant lease of the said house with the consent
of the mortgagee in writing.

And It Is Further Agreed by the Mortgagor that he shall bear stamp duty, registration charges
and other out of pocket expenses for the execution and registration of this deed and
reconveyance deed but however each party will bear cost and professional charges of his
Solicitor/Advocate.

IN WITNESS WHEREOF the parties have put their hands the day and year first hereunder written.

The Schedule above referred to

Signed and delivered by X the within named mortgagor Signed

and delivered by Y the within named mortgagee WITNESSES;

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

1.

2.

➢ GIFT DEED
What is a Gift Deed?
A gift deed is a legal instrument for transferring moveable and immoveable property. The
transfer of property by a gift deed is voluntary and without any consideration. A gift is
generally made based on love and affection, for example, the gift of ancestral property by a
grandfather to grandchildren. Section 122 of the Transfer of Property Act, 1822 governs a
gift deed. Under Section 117 of the Registration Act, it is compulsory to register the same if
you gift an immovable property.
A gift deed is an agreement that is used, when a person wishes to gift his property or money
to someone else. A moveable or immovable property can be gifted voluntarily using gift deed,
from the donor to the donee. A gift deed allows the property owner to gift the property to
anyone and avoids any future dispute arising out of succession or inheritance claims. A
registered gift deed is also evidence in itself and unlike in the case of a will, the transfer of
property is instant and you will not be required to go to the court of law for execution of gift
deed and hence, deed of gift also saves time.

Gift deed: What gifts have to be in a gift deed format?

A movable property, or immovable property, or an existing property that is transferable, can
be gifted and require a gift deed. Having a registered gift deed, will help you avoid any
litigation that comes up thereafter.

Gift deed: How to draft it?

Draft of a gift deed must include the following details:
• Place and date on which the gift deed is to be executed.
• Relevant information on gift deed regarding the donor and the donee, such as their
names, address, relationship, date of birth and signatures.
• Complete details about the property for which you draft a gift deed.
• Two witnesses to bear testimony of the gift deed and their signatures.

Thereafter, depending on the value determined by the state government, the gift deed must be
printed on stamp paper after paying the required amount and the gift deed should be registered
at the registrar or sub-registrar’s office.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

Gift deed: Important clauses to mention

Here are some important things that should be mentioned in the gift deed format.
• There’s no money or force involved
Make sure that you add this consideration clause to the gift deed. It must be indicated
that there is no exchange of money and that the gift deed is made solely out of love and
affection and not due to money or coercion.
• You are the owner of your property when you gift
Only the owner can gift a property. If you are not the owner (title holder) of the property,
you cannot give a property as gift deed it to someone else, even in anticipation.
• Describe the property
All information pertaining to the property, such as the structure, type of property,
address, area, location, etc., must be mentioned in the property gift deed format.
• Relationship between the donor and the donee
If the donor and donee are blood relatives, some state governments may offer a
concession on stamp duty. Even otherwise, it is important to establish the relationship
between the donor and done in the property gift deed format.
• Mention liabilities
If there are rights or liabilities attached to the gift, such as whether the donee can sell or
lease the property, etc., such clauses should be mentioned in the gift deed.
• Delivery clause
This on the gift deed mentions the expressed or implied action of delivery of
possession of the property.
• Revocation of the gift
The donor can also mention clearly if he/she wants a revocation clause to be adhered
to the gift deed by the donee. Both, the donor and donee, must agree on this gift deed
clause.

Sample format for a Gift Deed:

Gift Deed for an Immovable Property

THIS DEED OF GIFT IS MADE BETWEEN :-

Sh. s/o Sh. r/o _ (hereinafter referred to as "the donor")

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

AND

Sh. _ s/o Sh. _ d/o __ (hereinafter referred to as "the

donee")

WHERE AS

• The donor is the absolute owner and is in possession of the house situated at
having boundary description as under:
East: West: North: South
• The donor and donee are related to each other as father and daughter.
• That out of natural love and affection of the donor for the donee, the donor is desirous
of conveying the said property as gift to the donee.
• That the donor is also living with the donee's family. That the donor has no other male

child and has two daughters only.

• That the donee has been taking care of the donor in his old age.
• That the donor is of sound mind and is not under any intoxication, undue influence, or
coercion while making this gift deed.

NOW THIS GIFT DEED WITNESSES AS FOLLOWS:

1. In consideration of the natural love and affection of the donor for the donee, the donor
hereby transfers to the donee the said property, the estimated value of which is Rs.
(Rupees only) to the donee to hold the same to the donee absolutely forever.
2. The donee has accepted this Gift and has taken the physical possession of the said
property.

IN WITNESS WHERE OF, the donor gets and subscribes his signature and deliver in presence
of the witness.

Date: (Signature of Donor)

Place:

(Signature of Witness)
WITNESS 1:
Name and Address

(Signature of Witness)
WITNESS 2:
Name and Address

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

ACCEPTANCE

Accepted by the said Donee.

(Signature of Donee)
DONEE
Name and Address

How to Draft a Gift Deed of Immovable Property?

A Gift Deed is mandatory for a gift of immovable property to be effective. It would help if you
keep the following in mind while drafting a gift deed of immovable property:

1. It should be in writing.
2. The donor must sign it.
3. A proper description of the property (including its size and boundaries) and its location.
4. Two independent witnesses should attest it. Hence, the witnesses must not be the
donor, or the beneficiary, of the gift.
5. Stamp duty is payable on gifts of immovable property. The Gift Deed must be executed
on stamp paper of the same value as the stamp duty payable.
6. Finally, the duly executed and stamped Gift Deed must be registered with the local
Sub-Registrar of Assurances.
7. A statement of the nature of the donor's title over the property as to how the donor
acquired title over the property must be mentioned.
8. The fair-market value of the property should be explicitly mentioned. This is necessary
to calculate the stamp duty payable on the gift.
9. An explicit statement that the transfer of the property has been made, for no
consideration and freely and voluntarily.
10. A statement of acceptance by the beneficiary of the gift. This is essential because a gift
doesn't take effect unless the beneficiary accepts it.

How to Draft a Gift Deed of Movable Property?

A Gift Deed is not mandatory for a gift of movable property. However, you can draft a Gift Deed
for gifts of movable property too. If a Gift Deed is executed, it must be executed in exactly the
same way as, the process for executing a Gift Deed of Immovable Property as explained above.

➢ ADOPTION DEED
Downloaded by Lokpal ([email protected])
 lOMoARcPSD|26102095

What is Deed of Adoption?

Adoption involves the creation of the parent-child relationship between individuals who are
not naturally so related. The adopted child is given the rights, privileges, and duties of a child
and heir by the adoptive family. It is a Legal document wherein all rights and responsibilities,
along with filiation, from the biological parent or parents is transferred to adopted parents.

Why is Deed of Adoption required?

A Deed of Adoption is required in order to declare that the adoption is taking place. Adoption
can be concluded through a registered Adoption deed subject to compliance with the
provisions of the Hindu Adoption and Maintenance Act. However, if Adoption is being taken
place under the Juvenile Justice Act 2015, an Adoption Order finalizes adoption and a deed
may not be required.

What should a Deed of Adoption cover?

An Adoption Deed should cover the personal details of the adoptive parent(s) and the natural
parents (as the case may be). The gender of the child being adopted, along with the age
should also be mentioned. Apart from this, the will of the adoptive parents to adopt the child
should be stated in clear words. The consent of the natural parents to give their child for
adoption to the adoptive parents must also be stated. The fact of transfer of legal rights and
liabilities of the adopted child to the adoptive parents is also to be stated, along with the duty
of maintenance of the child by the adoptive parents. The Adoption Deed must also mention
the date of adoption and bear signatures of adoptive parents and natural parents.
Format for Deed of Adoption
THIS DEED OF ADOPTION is made and entered into at this day of

,20 BETWEEN MR.A N, Adult, Indian Inhabitant of , residing at ,

hereinafter referred to as the 'ADOPTIVE FATHER' (which term and expression shall unless it
be repugnant to the context or meaning thereof shall mean and include his heirs, executors,
administrators and assigns) of the ONE PART and MRS. B N, Adult, Indian Inhabitant of
, residing at ,-, hereinafter referred
to as the 'NATURAL MOTHER' (which term and expression shall unless it be repugnant to the
context or meaning thereof shall mean and include her heirs. executors, administrators and
assigns) of the SECOND PART and MASTER AD, a Minor, through her Natural Mother and
Guardian, Mrs. B N, the Party of the Second Part herein, hereinafter referred to as the 'Adopted
Son' of the THIRD PART.
WHEREAS the Party of the Second Part herein had married S R on at and after marrying Mr.
S R, her name was Mrs. B R, hereinafter for the sake of brevity referred to as the 'Said
Marriage'.
Downloaded by Lokpal ([email protected])
 lOMoARcPSD|26102095

AND WHEREAS out of the Said Marriage, there has been a issue i.e. a Male Boy namely,
"AD", born on , hereinafter for the sake of brevity referred to as the
Said Boy.

AND WHEREAS due to their difference of opinion the Party of the Second Part and her the then
husband i.e. Shri S. R preferred a Petition No. AA / for Divorce by Mutual Consent in the
Family Court at and the Honorable Court was pleased the dissolve the Said Marriage vide
their order passed below Exh. 6 on ___ besides awarding the permanent custody of the Said
Boy to the Party of the Second Part herein, hereinafter for the sake of brevity referred to as the
'Said Order'

AND WHEREAS Mr. S R the Ex-Husband of the Party of the Second Part herein did not
prefer any Appeal and/or revision against the Said Order and Judgment.

AND WHEREAS the Party of the First Part herein has married the Party of the Second
Part herein and have registered their marriage at the office of the Sub- Registrar of
Assurances (Marriage Officer), vide Their Receipt No. / dated , hereinafter
for the sake of brevity referred to as the 'Said Second Marriage'.

AND WHEREAS the Party of the First Part has married the Party of the Second Part herein, has
decided to Adopt the Party of the Third Part herein as he is issueless and has married the natural
mother of the Said Boy.

AND WHEREAS the natural mother (the Party of the Second Part herein) consented for the
said adoption and on the physical act of giving and taking of the
boy in adoption was performed, namely the natural mother gave the third party in adoption and
the adaptor took the boy as adopted son accompanied by performance of Datta Homam.

AND WHEREAS the parties considered it necessary and expedient that a Deed of Adoption
be executed so as to be authentic record of the Adoption having already taken place.

NOW THEREFORE THIS INDENTURE WITNESSETH AS FOLLOWS;

1. It is hereby declared that on the party of the Second Part i.e. the Natural Mother of the
Third Party gave in adoption her son "AD" to the Adopter who took the boy in Adoption.
The Adopter took the boy in Adoption, the physical act of giving and taking was also
Downloaded by Lokpal ([email protected])
 lOMoARcPSD|26102095

accompanied by Datta Homam ceremony and in the presence of assembled brotherhood

of the parties.

2. As a result of the aforesaid adoption the Third Party was transferred legally from the
Natural Mother to the Parties of the First and Second Part herein and Adopter became
entitled to all the rights and obligations of his Adopted Son.
3. The Adopted Boy by virtue of the Said Adoption has become member of the Coparcenary
with his Adopted father and shall be entitled to inherit his self acquired property if
indisposed of and shall be entitled to succeed to his Joint Ancestor's property by
Survivorship except that if a legitimate son is born subsequent to his adoption, the right
of inheritance of succession of the adopted son shall be regulated by Rule of the Hindu
Law.

4. The Adopter, first party, shall be responsible for the maintenance and education of the
adopted son and agrees to bring him up according to his status in life.

5. The Natural Father of the Said Boy having relinquished all his right, title, interest and
claim over the said boy and Natural Mother having married the Party of the first part
herein after her marriage having been dissolved by the Family Court, and being
continue to remain as Natural Mother of the Said Boy, question of taking any consent
from anybody does not arise at all.
6. The Adopter shall not lay any claim hereinafter against the natural father for expenses
incurred by him for the education and maintenance of the Said Boy/Adopted Son.

IN WITNESS WHEREOF the parties hereto have hereunto set and subscribed their
respective hands to this on the day and year first hereinabove written

WITNESS:

1.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

2. _

ADOPTIVE FATHER

NATURAL FATHER _

Procedure for Deed of Adoption

No set procedure is applicable in the making of an Adoption Deed. However, all the facts
regarding the Adoption Deed should be discussed with the lawyer. Once the Adoption Deed
is drafted, it should be examined by the parties. Once finalised, it should be signed by both the
parties (i.e. adoptive parents and natural parents- as the case may be) and the witnesses. It is
also to be printed on stamp paper of the correct value, depending upon the local laws of each
state. A lawyer will be able to guide you whether registration is required to be carried out.

Legal Considerations for Deed of Adoption

The ceremony of giving and taking of a child is necessary for making an adoption essentially
valid. Child adoption can take place under Hindu Adoption and Maintenance Act, Juvenile
Justice Act, Guardians and Wards Act. The Central Adoption Resource Agency is the
main/central authority that facilitates adoption of children in India.

➢ PROMISSORY NOTE:
Promissory Note is a financial instrument or legal instrument that is also called ‘Debt
instrument’. Promissory note is not a new thing, it is a very old concept related to financial
transaction and if we look at its emergence then we find that Promissory Note for the first time
found in China during the Han Dynasty in 118 BC which was made of leather material. After
that Romans also used it as a financial instrument at their time and a proof of the same is found
in London. If we look at the Concept of the Promissory Note, then it is said that a Promissory
Note is a type of financial instrument or legal instrument and also a type of money market
instrument which is a written promise by a entity to another entity to pay a specific amount of
money within the stipulated time.
Promissory Note is issued when a Person gives another person a certain amount of money for
a fixed period of time with a written promise that the person whom certain amount of money
is being provided will return the money as per the written guidelines in the promissory note. In
case if that person does not repay the amount in the stipulated period of time then, a legal action
will be brought against that person.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

Certain conditions required for issuing of Promissory Note

A promissory note contains all types of guidelines and all types of terms and conditions
required for fulfilling the criteria of Promissory note. The Promissory note should include
certain details which is required in every circumstances like:

• The name and Address of both the lender and the borrower.
• Total amount which is being borrowed and if any collateral is being put down it
should also be mentioned down.
• Time limit and how often payments will be made.
• Signature of both the parties must be there in order to Promissory note enforceable
by law.

Different forms of Promissory Note

Some forms of the Promissory note are:

o Simple Promissory Note: This Promissory note is for a lump sum

repayment on a particular date as per the terms and condition mentioned.
In this Interest rate may or may not be charged on the loan amount,
depending on the agreed terms and condition.
o Demand Promissory Note: As the name suggests Demand, it is clearly
explicit that it is totally based on demand and made on demand. This
Promissory note is one in which payment is due when the lender asks for
the money back after the finish of the stipulated time period.
o Secured Promissory Note: A Secured Promissory Note is a type in
which there is an obligation to pay the amount which is taken as a loan
which is secured or we can say that for which collateral has been put
down and if the person who takes loan fails to pay within the stipulated
period of time then that collateral is being seized. The collateral is
anything of the same value of loan taken like- real estate or personal
property. Secured Promissory notes are most often used in loans of fairly
large sums borrowed from commercial lenders and mostly prevalent in
the money market. So, it is also called a Money market instrument.
o Unsecured Promissory Note: An Unsecured Promissory note is an
obligation on the person who has taken loan for payment but there is no
requirement of Collateral or seizure of property earlier as a security. In
this type, if the Payer fails to pay the required sum of money within the
stipulated period of time, the Payee has a full right to go for legal action
and file lawsuit against him but if it is found that the property available to
the person who has taken loan is not sufficient to make repayment then
its totally Bad luck of person who have given loan to that person. This
type of promissory note is uncertain and nothing can be done else.
o Convertible Promissory Note: Convertible Promissory Note is not like
an ordinary one. This type of Promissory Note is issued against the loans
Downloaded by Lokpal ([email protected])
 lOMoARcPSD|26102095

made to businesses and the Corporate Sector. This Promissory Note is

with an additional provision that allows the debt to be converted as the
name itself suggests in the business, in lieu of being repaid. And this
Convertible Promissory Note can be either of them i.e. Secured Promissory
Note or Unsecured Promissory Note.

Certain Key Pointers related to Promissory Note

• A Promissory note is only issued under the Section 4 of the Negotiable Instrument
Act, 1881 and all the terms and conditions are mentioned in this act for the
successful transaction and delivery of a Promissory note.
• Suppose a Promissory note is being issued in one state but now it has to be presented
in another state then there will be no problem in dealing in another state with the
same Promissory note and with the same stamp as the note bears valid stamp.
• A Promissory note should not be typed or printed, it should be totally hand written
and it should contain all the required elements for the valid transfer of Promissory
Note.
• Most essential things is that a Promissory note is valid up to the extent of 3 years
starting from when the Promissory note is executed and at the end of 3 years that
Promissory note becomes invalid and a fresh Promissory note is being executed in
favour of that same person.
• And in case of Promissory note execution there is no maximum limit of amount
which can be lent or borrowed.
• In many cases, a witness is being taken for the proof but is totally optional and it is
not mandatory. It is advisable to have a note signed by a witness who is independent
from the transaction.
After analyzing and explaining different elements of Promissory note, what it is, how execution
of Promissory notes take place now the different parties involved in the execution of Promissory
note will be defined and explained. The Parties involved in Execution of Promissory Note are:
(1) Drawer (2) Drawee (3) Payee.
Drawee is the Person in whose favour the Promissory note is prepared and this person is the
creditor who provides goods or services on credit or lends capital. It also depends on two things
that the drawee is willing to provide and able to provide. After this comes Drawer, it is the
person or we can say borrower or debtor who promises to pay the debt to the moneylender
within the given time period and as per the terms and condition. Now comes Payee, who
takes the money or to whom the money or payment is made. And it is not necessarily required
that payee and drawee should be two separate people or entities, both can be the same also.
Many people get confused between Bills of Exchange and Promissory Note and use them in
exchange for each other. Due to this a lot of problems are taking place in the financial
transaction. So, it’s very necessary to clear the difference between these both instruments. And
this confusion is because there is not a major difference between these two negotiable
instruments. A Bill of Exchange is a negotiable instrument which is issued in order to ask the
debtor to pay the debt to the creditor the fixed amount of money that has been owed by him for
a stipulated period of time. Whereas, Promissory Note is also a negotiable instrument but it is
issued by the debtor with a written promise to pay the creditor a certain amount within a specific
Downloaded by Lokpal ([email protected])
 lOMoARcPSD|26102095

date or on demand. Bills of exchange is mentioned in the Section 5 of Negotiable Instrument

Act, 1881 and Promissory note is also mentioned in Negotiable Instrument Act, 1881 but it is
included in Section 4 of this Act. Bills of Exchange is issued by Creditor and the Promissory
Note is issued by Debtor and this clearly demarcated the difference between these two
instruments. In Bills of Exchange, Liability of drawer is secondary and conditional and total
liability is on Drawer and in Promissory Note, liability is on the drawer as same as in the case
of Bills of Exchange but the liability of drawer is primary and absolute.

Draft of a promissory note

➢ WILL

A will or testament is a legal declaration which authorizes the testator to name the people who
would inherit his estate after his death. He can specify his intentions which he wishes to be
fulfilled after his death and clarify all confusion regarding the distribution of his property. A
will once made can be revoked by the testator only during his lifetime. It cannot be changed
or disregarded after the event of his demise and thus it is the best way to dispose off one’s
property. However one thing has to be kept in mind. A testator can only make declarations
regarding his self acquired property by way of a will. He cannot give away the joint family
property or any other property not solely belonging to him.

Will is a legal document through which a person decides how his/her property would be
distributed, allocated and spent after his death. A person who dies without creating a will is
called dying intestate. Dying intestate forces the relatives of the deceased to spend additional
Downloaded by Lokpal ([email protected])
 lOMoARcPSD|26102095

time and money for acquiring the estate of the deceased, which could have been easily done
by creating a will. Dying intestate does not distribute the assets of the deceased according to
his wish and will rather its done according to the law. As it is only logical to distribute your
hard earned money according to your wish and the way you want it and this can be easily done
by creating a will.

Conditions for a Valid Will (Section 63 of the Indian Succession Act, 1925)
• The testator should sign or affix his mark (e.g., thumb mark)
• The Will must be attested by 2 or more witnesses
• The witnesses must have seen the testator sign or affix his mark to the Will
• Each witness shall sign the Will in the presence of the testator.
• The witness should not be a beneficiary under the Will.

STATUTORY BACKDROP OF A WILL:

The Indian Succession Act applies to all religious communities across the board. This act
however does not apply to Muslims who are governed by their personal laws. The Indian
Succession Act, 1925 (S. 5) deals with both intestate and testamentary succession. When
a person dies by leaving behind a will it is known as testamentary succession. S. 2(h) of
the act defines the term ‘will’ as a legal declaration of the intention of a testator with
respect to his property which he desires to be carried into effect after his death.

WHO CAN MAKE A WILL?

Any individual who has attained majority and is of sound mind can make a will. In India, a person
attains majority at the age of 18 years. This is governed by the Indian Majority Act, 1875. A
person of unsound mind can also make a valid will if it is made during his lucid interval. A will
made by a minor is void even though a testamentary guardian can dispose off his property. One
must be wondering as to whom one can make the beneficiaries of a will.
The answer to this question is very simple. S. 112-117 of the Indian Succession Act states
that any person who can hold property can be a beneficiary of a will. Thus a minor, a person
of unsound mind, a juristic person, a corporation, etc can be a legatee.

Important contents of WILL:

• Personal Details – You have to state your name, father’s name, residential address,
Date of Birth etc.,
• Declaration of Date – It is very important to clearly mention the date of preparing
WILL.
• Validate Free Will – You can mention that you are not under any influence and you
are not forced to prepare this Will by any person.
• Provide Executor’s Details – Executor is the person who will implement/execute your
Will. Hence, clearly mention his/her name, address, your relationship with him/her, age
etc.,
• Details of Assets & Beneficiaries – This is a very important section. List all immovable
properties with clear addresses. Mention the movable assets like bank deposits,
insurance, units of mutual funds etc., Mention the name of beneficiary(ies) for each
asset. (For Mutual Funds – mention the Folio no’s)
• Signature – Sign the Will after mentioning the above details
• Signature of Witnesses – You have to get the Will attested by minimum two witnesses.
Downloaded by Lokpal ([email protected])
 lOMoARcPSD|26102095

Make sure that they mention their father’s names and addresses.

SAMPLE WILL FORMAT:

I, Shri/Smt ………………….. son/daughter/wife of Shri ……………..,resident of

…………………., by religion………….., do hereby revoke all my previous Wills (or) Codicils
and declare that this is my last Will, which I make on this
…….(Date)………………… My Date of Birth is ………….

I declare that I am in good health and possess a sound mind. This Will is made by me without
any persuasion or coercion and out of my own independent decision only.

I appoint Shri………………….. Son/daughter of ……………, resident of ..........................to

be the executor of this Will. In the event Shri…………… were to predecease me, then Shri
..................................... , will be the executor of this Will.

I bequeath the following assets to my Wife Smt……………..

1. My house located at………(address)………

2. Bank balance of my savings account no…………………..with ............................. (bank

name & bank address)………

3. My Bank fixed deposits in …….(bank name)…..bearing ……..(FD receipt nos)……..

4. The proceeds of my Term insurance policy ….(Policy no)……,

from…….(insurance company name)………

5. The contents of bank locker no………, with bank…………, bank

address……………

I bequeath the following assets to my son Shri……………

1. Residential Plot no…….., located at…………….

2. My car with registration no……….

3. My mutual fund investments with folio numbers…………………..

4. Any other asset not mentioned in this Will but of which I am the owner.

All the above assets are owned by me. No one else has rights on these properties.

Signature of Testator

Witnesses

We hereby attest that this Will has been signed by Shri………….as his last Will at
Downloaded by Lokpal ([email protected])
 lOMoARcPSD|26102095

………(Place) ............. in the joint presence of himself and us. The testator is in sound
mind and made this Will without any coercion.

Signature of Witness (1) Signature of Witness (2)

➢ AFFIDAVIT

An affidavit is a statement made by a person before the court or an appropriate adjudicating

authority, wherein the deponent (the person who makes the statement) states the facts and
information related to the matter in dispute, in his knowledge and swears it to be true. There
are various provisions in Indian law, which explain what an affidavit is and the proper
procedure that must be followed while submitting it before the court.

An affidavit is a sworn statement of facts by a person who knows that such facts and
circumstances have taken place. The person who makes such statement and signs it is known
as a deponent. An affidavit is a written document signed by the deponent, confirming that
the contents of the affidavit are true and correct to his knowledge and he has concealed nothing
material therefrom. It is duly attested/ affirmed by the Notary or Oath Commissioner. Such
Notary/ Oath Commissioners are appointed by the Court of Law. The duty of the Notary/ Oath
Commissioners is to ensure that the signature of the deponent are not forged.
Hence, the deponent himself needs to be present before the Notary/ Oath Commissioner during
the attestation of the affidavit.

The affidavit must be paragraphed and numbered. The person making the affidavit (the
deponent) must sign the bottom of each page in the presence of an authorized person, such as
a lawyer. Further, the affidavit must contain the full name, address, occupation and signature
of the person (deponent) making such affidavit and the date & place where such affidavit is
made. The affidavit must contain facts and circumstances known to a person and must not set
out the opinions and beliefs of the deponent. Further, one should avoid referring to facts that
are based on information received from others (known as hearsay evidence). However, if the
person is giving evidence as an expert; for instance, a psychologist or licensed valuer, then his
opinion might be stated in the affidavit.

Essential elements of an affidavit

Certain aspects of an affidavit are of vital importance to be included, so as to validity to the
said affidavit:
1. The declaration should be made by a legal person,
2. Contents of the affidavit should relate and connect with the said facts of the case,
3. The declaration must be in writing,
4. The language of the said declaration must be in the first person,

5. The affidavit must be signed or affirmed, before a Magistrate or other authorised

and appropriate officer.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

Sample format of AFFIDAVIT

IN THE_ _ COURT, NEW DELHI

CIVIL SUIT NO. _ OF 2021

IN THE MATTER OF:

Xyz …..Plaintiff

VERSUS

Abc ……Defendants

AFFIDAVIT
I, _S/O_ _, aged _ _ years, R/O
_ , do hereby solemnly affirm and declare as
under:-

1. That I am the plaintiff in the above-noted suit and fully conversant with facts of the
case and able to depose about the same.
2. That the accompanying suit/plaint has been drafted by my counsel on my
instructions and contents of the plaint have been read over and explained to me in
vernacular language and I have understood the meaning and implications thereof
and the facts stated therein are correct.
3. That the contents of the suit are not being repeated here for the sake of brevity and
same shall be considered as part of this affidavit also (Optional but you can also add
the details of submissions to be made before the court, to which deponent is
testifying to be true to his knowledge).
DEPONENT

VERIFICATION:

Verified at New Delhi on this _ _day of __ _May 2021, that contents of the above affidavit
are true and correct to my knowledge and nothing material has been concealed therefrom.

DEPONENT

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

➢ MEMORANDUM OF UNDERSTANDING:

A Memorandum of Understanding (MoU) is a consensus between two or more parties or it can

be between two or more nations to enter into a contract. It is an agreement that is entered much
before the parties enter into any future business agreement or arrangement. It is more of an
understanding between the two parties wherein they have some mutual understanding points
and they do not disclose or violate any of the terms mentioned in an MoU. It is a situation where
nations arrive at a common parameter. When the parties arrive at a common consensus then
they further indulge in negotiations and discussions and when these negotiations and
discussions become successful then they finally enter into an agreement. An MoU is mostly
found in international relations, but it is commonly used in business agreements.

Essentials of a valid Memorandum of Understanding

MoU is not legally enforceable in the court of law until the agreement is signed or ratified
between the parties or two nations. In most scenarios, MoUs are legally not valid but in a situation
where it fulfills all the three essentials of Section 10 of the Indian Contract Act, 1872, it is then
said to be legally valid. As to determine the validity of a contract, we look at Section 10 of the
Indian Contract Act, which determines the essentials of a valid contract, the same goes with an
MoU. There are further some essentials that need to be complied with to make an MoU valid:

• First and foremost, it is important to determine the intent of parties who need to
enter into an agreement and there should be at least two parties to enter into an
MoU.
• In an MoU, a specific date and time should be mentioned on which it is started and
ended.
• There should be a clear understanding between the parties regarding the duties and
responsibilities. All information regarding payment and finance should be defined
clearly.
• It should be specified in the MoU about the clauses concerning the allocation of
risks and dispute resolution as whenever a conflict of interest arises between parties
or any legal injury happens to any one of the parties, it should be cleared in the MoU
who will be liable for the loss.
• MoU should contain a clause which talks about the termination of an agreement
wherein under certain circumstances, any of the parties’ courts terminate their
agreement at a given point of time.

MoUs in Indian Law

As per Indian law, MoU is only enforceable in a court of law when it fulfills the provisions of
the Indian Contract Act, 1872. To make it a valid agreement, the parties in an MoU should
have a legally binding relationship to enter into an agreement. If all the conditions are fulfilled
under Indian Contract Act then the parties have a right to make the other party specifically
perform the contract under the Specific Relief Act, 1963, if the compensation is not
quantifiable.

What to include in an MOU format i.e. Memorandum of

Downloaded by Lokpal ([email protected])
 lOMoARcPSD|26102095

Understanding Format

Following are the content of MOU:

1. Objective or Purpose of entering into MOU,

2. Responsibilities of each party,
3. Meetings and manner of Reporting,
4. Technical and Financial Support, if any,
5. Financial Consideration, if any, involved in the transaction,
6. Person responsible for the Management,

7. Duration of MOU,
8. Confidentiality Clause,
9. Conditions driving towards Termination of MOU,
10. Possibility of Extension,
11. Ways of Communication,
12. Severability Clause,
13. Arbitration Clause,
14. Indemnity Clause, etc.

Depending upon the nature of transaction covered under MOU, the clauses can be
added or removed and agreed upon with mutual consent.

DRAFT OF MEMORANDUM OF UNDERSTANDING

ABC and XYZ.

Re: Pvt. Ltd.

THIS MEMORANDUM OF UNDERSTANDING made on this day of

between ABC having his office at , India
hereinafter referred to as "ABC" (which expression and the expression "ABC Group" shall
unless it be repugnant to the context or meaning thereof mean and include himself and the
present other shareholders of Pvt. Ltd. and their
respective heirs, executors, administrators and assigns) of the One Part and MR. XYZ having
his office at . (Hereinafter referred to as "XYZ" which expression and the expression
"XYZ Group" shall unless it be repugnant to the context or meaning thereof be deemed to mean

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

and include himself and his nominees to the extent specified herein and their respective heirs,
executors, administrators and assigns) of the SECOND PART;

WHEREAS, ABC is one of the founding shareholders and is Chairman and Director of a
company incorporated in India known as Pvt. Ltd. hereinafter

referred to as "the Company" which is in the process of setting up an internet portal, relating
to , known as " ";

AND WHEREAS, ABC and certain other persons have advanced sums of money to the
Company in respect of which shares have been/are to be issued to them and this group is for the
sake of brevity referred to as the "XYZ Group";

AND WHEREAS, XYZ has agreed that he and his nominees (for the sake of brevity referred
to as the "ABC Group") will invest an amount of Rs. /- (Rupees
Only) to acquire of the Capital of the Company on
certain terms and conditions and equity shares of the Company will be issued to the members
of XYZ Group accordingly;

AND WHEREAS, the parties hereto are desirous of recording the terms and conditions of their
agreement in writing

NOW THIS MEMORANDUM OF UNDERSTANDING WITNESSETH AS UNDER:-

1. ABC Group has caused to be incorporated a Company known as

Pvt. Ltd. hereinafter referred to as "the Company" and has, since several months been
working on establishing an internet portal relating to .

2. The paid up capital of the Company shall be Rs. /

(Rupees only) comprising ( ) equity shares of
Rs. /- (Rupees ) each.

3. It has been agreed that XYZ group shall hold ................. of the paid-up capital of the
Company.

4. It is further agreed that. ............. shall be allotted by ABC Group as and by way of stock
Downloaded by Lokpal ([email protected])
 lOMoARcPSD|26102095

options at their discretion to employees, associates, content writers and Technology

partners and other supporters on such terms as decided by the Group. It has however been
agreed that...... out of this .......... shall be allotted to Mr. XYZ and........ to Mr. PQR leaving
thereby....................................... to be allotted by ABC Group as described above.

5. XYZ has agreed that for the ..............to be allotted to the XYZ Group, the XYZ Group shall
pay to the Company a total amount of Rs. /- (Rupees
...........................................................Only) to comprise share capital and premium of the
total amount of Rs. ........................... /- (Rupees Only) an
amount of approximately Rs. ........... /- (Rupees Only) being the equivalent of
U.S. $ .............................................../- has already been received by the Company by way
of Foreign Inward Remittance received from XYZ. These amounts already received have
been treated by the Company as advances against share capital and premium. The balance
amount of Rs .................................... /- (Rupees Lakh
Only) approximately is to be paid in the following manner:

a. Rs. /- (Rs Only) by (date)

b. Rs. /- (Rupees Only) by --/--/---

c. Rs. /- (Rupees Only) by --/--/---.

d. Rs. /- (Rupees Only) by --/--/---

e. Rs. /- (Rupees _ Only) by --/--/---

f. Rs. /- (Rupees Only) by --/--/---

g. The balance to make up Rs /- (Rupees only) by (date)

6. It has been mutually agreed that the Company shall not further dilute its equity or avail of
finance from any other person nor shall it agree to allot any shares to any other person without
the consent of XYZ. It has been further agreed that ABC Group shall not sell all or any of the
shares allotted to them without the consent of XYZ Group until such time as there is an IPO or
a second round of financing by mutual agreement. In the event of a second round of financing
Downloaded by Lokpal ([email protected])
 lOMoARcPSD|26102095

becoming necessary, it shall be done by mutual Agreement between the parties hereto and it is
expected that an Initial Public Offering (IPO) will also be made and that shares will be issued
to the public. The parties have agreed that for any future rounds of financing as mutually
decided there will be a proportionate dilution of shares.

7. XYZ shall have the right to be a Director of the Company and ABC shall cause XYZ to be
appointed to the Board of Directors whenever XYZ desires.

8. ABC shall cause this Memorandum of Understanding to be taken on the records of the
Company and the Company will also agree to abide by all the terms and conditions hereof.

9. The parties hereto record that this Memorandum of Understanding reflects the broad terms of
their Agreement and they agree to execute and sign a detailed Shareholders Agreement and
such further Agreements in writing as may be required from time to time to give effect to the
development promotion and financing of the portal in the best possible way.

IN WITNESS WHEREOF the parties hereto have hereunto set and subscribed their
respective hands the day and year first hereinabove written.

SIGNED AND DELIVERED by the Within named

MR. ABC

In the presence of

SIGNED AND DELIVERED by the Within named

MR. XYZ

In the presence of _______

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

➢ LETTER OF GUARANTEE
A letter of guarantee is a type of contract issued by a bank on behalf of a customer who has entered
a contract to purchase goods from a supplier. The letter of guarantee lets the supplier know that
they will be paid, even if the customer of the bank defaults. To get a letter of guarantee, the
customer will need to apply for it, similar to a loan. If the bank is comfortable with the risk, they
will back the customer with the letter, for an annual fee.
A letter of guarantee may also be issued by a bank on behalf of a call writer guaranteeing that the
writer owns the underlying asset and that the bank will deliver the underlying securities should
the call be exercised. Call writers will often use a letter of guarantee when the underlying asset of
a call option is not held in their brokerage account.
Letters of guarantee are often used when one party in a transaction is uncertain that the other party
involved can meet their financial obligation. This is especially common with purchases of costly
equipment or other property. However, a letter of guarantee may not cover the whole amount of
the debt. For example, a letter of guarantee in a bond issue may promise either interest or principal
repayment, but not both.

When is a Letter of Guarantee Required?

1. New supplier
A customer will often provide a new supplier with a letter of guarantee because the new supplier
does not have a history of transactions with the customer and, therefore, there exists a lot of
uncertainty between the two parties. The practice is most common when the customer wants to
purchase costly machinery and equipment, and the supplier does not want to provide trade credit.

2. Start-up company
Early-stage companies may not have enough liquidity to finance the purchase of goods at the start,
and they may ask the bank to provide a letter of guarantee when purchasing such goods. Also,
since they do not have a credit history with the supplier, it would be impossible for the supplier to
judge the company’s ability to pay.

3. Dealing with a supplier outside the usual trading area

Companies that do business overseas may be required to provide a letter of guarantee by suppliers
to show their commitment to pay for the products. This is because suppliers may incur

additional costs in supplying goods outside the country and they want a guarantee from a bank
that they will receive the payments if the customer fails to pay.

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

Draft of a letter of guarantee

➢ AGREEMENT OF HYPOTHECATION
Hypothecation deed is a legal document that establishes contractual relations between the lender

Downloaded by Lokpal ([email protected])

 lOMoARcPSD|26102095

and the borrower wherein the lender agrees to grant a loan amount to the borrower in return for
movable asset provided as security as well as the lenders right to seize the possession of such
security if the borrower defaults in repayment of the loan as per terms of the agreement.
Hypothecation deed builds terms and conditions upon which the borrower and lender agree to
hypothecate movable assets against a loan amount. The deed defines every right and liability of
the parties which can be enforced in an appropriate court of law.

Key elements of hypothecation agreement

Before entering into a hypothecation agreement, having a clear understanding of important clauses
in an agreement is vital. Although the procedure clearing a loan may seem cluster free, the
agreement at times may turn out to be complex, as the agreement is usually drafted by a bank and
therefore, it can be inferred that the bank would keep their interest at the top.
Therefore, it is advisable for the borrower/customer to read through the entire agreement giving
equal emphasis to each clause, and not consider this stage as mere signing formality and discard
it completely.
Here are some of the important clauses of the hypothecation agreement that require a clear
understanding.
• Obligations of the parties
Here, the clause shall discuss all the rights and liabilities of both the borrower and lender with
respect to the loan amount advanced and security provided as collateral against the loan subject
to terms and conditions of the agreement.
For instances, the clause shall cover disbursement of the loan amount, manner and number of
installments shall it be done, mode of disbursement, confirmation of loan amount received by the
borrower, fulfillment of certain conditions prior to disbursement of the loan, clear title, and
ownership of the property and other related obligations.
• Security
This clause shall define in detail what type of security is offered as collateral against the loan
amount advanced. The property/properties upon which charge is created shall be defined as
hypothecated properties or secured properties. The clause shall further include insurance charges,
repairs, and maintenance costs, no disposing of that shall be borne and adhered to by the borrower.
• Title and ownership

Having this clause is essential and it is equally important to define this clause well wherein, the
clause shall state that the borrower retains the title and ownership of hypothecated property as
well as income generated from it while the lender enjoys the possession of such property. Further,
Downloaded by Lokpal ([email protected])
 lOMoARcPSD|26102095

the clause shall state that the lender shall have the right to seize such property in the event of
default to repay the loan amount plus interest amount or under any other condition agreed by the
parties under the agreement to recover the loan amount advanced to the borrower.
• Repayment of loan
This clause is similar to every other repayment clause in a loan agreement. The parties under the
agreement, agree on the time period within which the loan shall be repaid along with interest with
agreed trenches.
The clause shall further include the mode and manner in which the repayment shall be done by
the borrower specifying details of it as well as an extension to the time period of repayment beyond
the agreed time which shall be contingent upon parties to the agreement and circumstances of the
situation.
• Interest and default interest rate
Again this clause is identical to every interest clause in a loan agreement. This clause shall state
that the applicable interest rate shall be paid upon the loan amount at regular intervals till the loan
is actually repaid by the borrower.
This clause further encapsulates the default interest rate which shall be higher than the normal
interest rate payable by the borrower upon default in repayment of loan amount by agreed
repayment date under the agreement. The borrower is liable to repay such default interest rate
from the date of default of repayment till the loan amount is actually repaid.
• Insolvency
This clause shall state the position of the lender as well as the manner in which the lender shall
recover the loan amount advanced to the borrower in the event if the borrower is declared insolvent
by a competent court or if any insolvency proceeding initiated against the borrower. The clause
may further state the right of the lender to seize the possession of the hypothecated property to
recover the loan amount under such circumstances being raised.
Representations and warranties
This clause defines in detail all the assertions and assurances provided by the borrower and lender
under the agreement. In addition to this, the clause shall further encapsulate, the parties under the
agreement agree to provide all the required and necessary assistance to each other in order to
perform their respective obligations and duties with due diligence.

• Amendment
This clause gives the right to the lender to amend the agreement in the event of default of
repayment of the loan amount or under any other event by giving prior notice to the borrower
Downloaded by Lokpal ([email protected])
 lOMoARcPSD|26102095

regarding the same or without intimating the borrower which shall be contingent upon the situation
and parties to the agreement.

Draft of a hypothecation agreement

AGREEMENT OF HYPOTHECATION FOR MACHINERY

THIS DEED OF HYPOTHECATION executed at ________ on this the ___________ day of

_________ between

Mr.________________, son of_____________, aged about ___________ years, residing at

_____________________, hereinafter called the CREDITOR (which expression shall, unless it is
repugnant to the context mean and include his legal representatives, executors, administrators, and
assigns)

And

Mr.________________, son of_____________, aged about ___________ years, residing at

_____________________, hereinafter called the BORROWER (which expression shall, unless it
is repugnant to the context mean and include his legal representatives, executors, administrators
and assigns);

WHEREAS

The BORROWER has placed an order for the purchase of, a ___________,
namely________________, {valued at Rs.____________ (Rupees ____________), (Details of
the same are set out in the schedule 'A' hereunder) (hereinafter referred to as the asset), with the
________________, namely ________________, having its office at __________, and has
remitted an amount of Rs.______________(Rupees _____________only}, with the said
_________________ as advance towards the sale consideration.

The BORROWER has approached the CREDITOR for a loan of Rs.______________, (Rupees
_____________only), for the payment of the balance price of the schedule 'A' mentioned asset.
The CREDITOR and BORROWER have agreed that the CREDITOR shall finance the purchase
of the schedule 'A' mentioned asset, on the condition that the BORROWER hypothecates the
schedule mentioned asset with the CREDITOR as security for the due repayment of the said loan.
The parties have agreed to reduce their agreement to writing
Downloaded by Lokpal ([email protected])
 lOMoARcPSD|26102095

NOW THEREFORE IN CONSIDERATION OF THE MUTUAL OBLIGATIONS AND

UNDERTAKINGS CONTAINED HEREIN THIS AGREEMENT WITNESSETH AS
FOLLOWS:

Payment by the CREDITOR

The CREDITOR shall pay to the said manufacturer, on behalf of the BORROWER, a sum of Rs.
____________/-, (Rupees _______), towards the balance price of the said asset and shall retain
possession of the original invoice of the said asset till the debt is fully discharged by the
BORROWER.

Hypothecation

The BORROWER hereby hypothecates and creates a charge on the asset more fully described in
the schedule 'A' hereunder to and in favour of the CREDITOR as security for the repayment of
the loan with interest.

Obligations of the BORROWER

The BORROWER hereby undertakes to repay the loan amount within a period of ______ months
commencing from________ along with interest. The BORROWER shall pay interest at the rate
of ______________ on the principal per month, at Rs._____________/-, (Rupees
____________only). The Interest and principal are payable in monthly installments as per
schedule-B hereto.

Rights of the CREDITOR

If the BORROWER defaults in payment of the amount as per schedule-B hereto then such
defaulted installment will carry interest as if the defaulted installment is the principal, until it is
paid. If the BORROWER fails to pay any ______ installments then the CREDITOR shall be
entitled to claim the principal and interest amount due, and the same shall become payable
forthwith, on the CREDITOR calling upon the BORROWER to make payment of such defaulted
principal amount.

The BORROWER shall not remove or take the said asset, outside the State without prior
Downloaded by Lokpal ([email protected])
 lOMoARcPSD|26102095

intimation to the CREDITOR.

The BORROWER agrees and undertakes to insure the asset against all hazards, and shall produce
the relevant receipts, and other documents, whenever called upon by the CREDITOR so to do.

Any dispute arising under this Deed or any matter incidental thereto, shall be submitted to
arbitration as per the provisions of the Arbitration and Conciliation Act 1996 and the venue of the
arbitration shall be at Chennai

IN WITNESS WHEREOF the parties hereto affixed their signatures on the day month and year
mentioned hereinabove

SCHEDULE 'A'

(Describe the Asset)

SCHEDULE-B

(Describe the payment schedule)

CREDITOR

BORROWER

WITNESSES

1.

2.

Downloaded by Lokpal ([email protected])