Concept of Lease and the

Rights and Liabilities of Lessor

and Lessee
Introduction
Lease is a very common term that is used in dealing with land or property.
So if a person is interested in renting out his flat or his property then that
person will opt for leasing it out. Surprisingly, people miss out on trivial
aspects of a lease deed and it causes a ruckus. It would be wise for a tenant
and a landlord to be wary of their rights and liabilities so that they can avoid
any obstacle and can enjoy a seamless transition where a landlord protects
his interests and a tenant gets to enjoy the property he rented.

Concept of lease

Meaning
Lease basically means when one person through the means of a contract
conveys or rents his property to another person for a specified amount of
time in return for a periodic or a lump-sum payment.

e.g. A leases his house to B for 8 months for periodic payment of Rs. 10000
per month. This is the most basic example of a lease.

Definition
The term “lease” is defined under Section 105 of The Transfer of Property
Act, 1882 and it states that-

“A lease of immovable property is a transfer of a right to enjoy such

property, made for a certain time, express or implied, or in perpetuity, in
consideration of a price paid or promised, or of money, a share of crops,
service or any other thing of value, to be rendered periodically or on specific
occasions to the transferor by the transferee, who accepts the transfer on
such terms”.
There are 4 terms that we will come across this article which are related to
lease of immovable property and they are as follows:

 Lessor- The transferor of the immovable property is called lessor.

 Lessee- The transferee of the immovable property is called lessee.
 Premium- The premium is the price paid for obtaining a lease of
immovable property.
 Rent- The money or service that is rendered is known as rent.

Elements of a valid lease

For a lease to be valid it has certain prerequisites that are needed to be
fulfilled and they are as follows:

1. Competency of Lessor and Lessee- For a lease to be valid both the

lessor and the lessee must be competent enough to constitute a
contract. For a lessor and lessee to be competent they must be:

 The lessee must be a major.

 The lessor must hold the title and authority to make the lease.
 Both the lessor and lessee must be of sane mind.

2. Subject matter- The subject matter of the lease must be immovable

property like a flat, house or loft.
3. Consideration- There must be a form of consideration involved in
the contract. Without a consideration it would not be a valid lease
rather it would be treated as a gift. The consideration is usually in
the form of premium plus rent but sometimes it can be premium
alone or rent alone.
4. Duration- A lease for an immovable property shall be made for 11
months. In case the duration exceeds a year i.e 12 months or more
then a lease agreement can only be made by a registered
instrument as per Section 107 of the Transfer of Property Act, 1882.
5. Delivery and Acceptance- The lessor must deliver the contract and
the lessee must accept the contract without any form of undue
influence, coercion. Once the lessee accepts the contract, the lease
becomes valid.
Nature of lease
In case there is neither an oral confirmation or a registered document of a
lease agreement accompanied by delivery of possession then there is no
formation of a lessor and lessee relationship.

Absence of registration
If there is an absence of a registered deed when the duration of a lease
agreement for immovable property is above 1 year then in that case Section
106 of the Transfer of Property Act applies and it states that:

1. Immovable property for manufacturing or agricultural purpose- If

there is an absence of a registered deed for an immovable property
that is used for manufacturing or agricultural purpose then, in that
case, it is considered to be under a year to year lease and the lease
can be terminable on part of lessor or lessee by six months’ notice.
2. Immovable property used for other purposes- If there is an absence
of a registered deed for an immovable property that is used for
some other purposes, in that case, it is considered to be under a
month to month lease and the lease can be terminable on part of
lessor or lessee by a fifteen day’s notice.
3. Every notice that is delivered must be in writing and signed by the
person delivering it. The notice must be delivered to the lessee
personally or through the mail.

Agreement to lease and lease deed or lease

agreement
There are certain differences between an agreement to lease and a lease
agreement but both of these terms are often confusing for common people
and it makes them vulnerable.

So basically an agreement to lease is the initial part of a lease agreement.

Agreement to lease does not create any legal obligation, agreement to lease
just implies the possibility of any future transfer. Agreement to lease just
denotes the terms and conditions of a prospective lease agreement. It is just
a stepping stone in the process of the lease.

On the other hand, a lease deed or a lease agreement is a final contract. A

lease deed along with the delivery of possession creates a legal obligation
upon a person. A lease deed transfers the rights from a lessor to lessee for a
specific duration.

Lease and License

Lease and License are another two terms that confuse a lot of people.
However, it does make sense because both lease and license share some
common points but by no means, they can be substituted for each other as
both of these terms are quite different.

A lease is generally a grant of property by one person to another in return for

some consideration which is usually in the form of rent. A license is
permission to do some act and without the permission doing such an act will
be illegal.

A lease consists of a transfer of interest in the immovable property but in

case of a license, there is no such transfer of interest in the property.

A lease is transferable and heritable whereas a license is non-transferable

and it is based purely on personal privilege.

A lessee is permitted to uphold a suit in his own name against trespassers

and strangers. A licence does not create an interest in the property in
support of the licensee and so, he is not entitled to uphold suits in his own
name.

Death of either party i.e. lessor and lessee does not affect a lease, whereas a
licence is terminated in such situations.

Rights and Liabilities of a Lessor

We already know who is a lessor, so legally a lessor is granted certain rights
and certain liabilities. Section 108A talks about the rights and liabilities of a
lessor, so let’s further analyse the rights and liabilities of a lessor.

Rights of a lessor
1. Right to accretions- If during the tenancy period or during the
duration of the tenancy any further accretion, accumulation or
addition is made in the property then the lessor is entitled to such
property. Such addition can be natural or by the expense of the
lessee but after the termination of the tenancy period, the lessee
must deliver the title to the lessor.
 2. Right to collect rent- The lessor has the right to collect rent or any
form of consideration as mentioned in the terms and conditions of
the contract from the tenant without any form of interruptions.

Liabilities of a lessor
1. Duty of disclosure- The lessor is bound to disclose any form of a
material defect in the property. There are two kinds of defects:

 Latent defect- Latent defect cannot be discovered rationally or

through inspection by the lessor.
 Apparent defect- Apparent defect can be easily discovered through
some inspection.
So basically a lessor shall disclose any apparent defect to the lessee and it is
vital to disclose such defects as they interfere with the enjoyment of the
property by the lessee.

2. To give possession- The lessor must give possession of the property

to the lessee on lessee’s request. However, this liability only arises
when there is a request on behalf of the lessee.
3. Covenant for quiet enjoyment- The lessee has all the rights to enjoy
the property. It is the duty of the lessor to not cause any form of
interruptions during the tenancy period. The Madhya Pradesh HC
stated that actions such as physical interference or direct
interference in the premises lead to a breach of enjoyment and
interruptions.

Rights and liabilities of a lessee

Just like a lessor, a lessee has also some rights and liabilities which are
granted to him by the Transfer of Property Act. So now we will analyse the
rights and liabilities of a lessee.

Rights of a lessee
1. To charge for repair- If the lessor fails to make any repairs in the
property which the lessor is bound to do in that case the lessee can
make such repairs by his personal expenses. If a lessee makes such
repairs by his personal expenses then, in that case, it is the right of
the lessee to deduct the cost of such repairs from the rent or the
lessee may simply charge the lessor for such repair.
2. Right to remove fixtures- The lessee has the right to remove any
fixture in the property during the time period of the lease, however,
after the termination of the lease deed the lessee must leave the
 property in the condition in which he received it. In case the lessee
fails to do so, the lessor can sue the lessee.
3. Right to assign his interest- The lessee can sub-lease the property
or the lessee can absolutely transfer his interests. However, if the
lease deed restricts a lessee to assign his interest then the lessee is
prohibited to do so and even after the transfer of his rights, the
lessee is still subject to all the liabilities related to the lease deed.
4. Right to have benefits of crops- When the lease is of uncertain
duration then, in that case, the lessee or his/her legal
representative has been given the right to gain benefits from all the
crops grown by them.

Liabilities of a lessee
1. Duty to disclose material facts- The lessee is bound to inform the
lessor of any material fact which the lessee is aware of and the
lessor is not. In case the lessee does not disclose such fact and the
lessor suffers any loss then the lessee is bound to compensate the
lessor.
2. Duty to pay rent- The lessee is bound to pay the rent or the
premium to the lessor or his agent in the proper time and proper
place as decided by the lease deed. In case the lessee fails to pay
his/her rent then, in that case, the lessor can eject the lessee on the
ground of non-payment of rent or file a suit for arrears of rent.
3. Duty to maintain the property- The lessee is bound to maintain the
property in a good condition as it was when he was given the
possession of the property. The lessor or his agent are allowed to
inspect the property at the reasonable ground. Only the changes
caused by irresistible forces can act as an exception for this liability.
4. Duty to give notice- If the lessee becomes aware that any person
has tried or is trying to damage the rights of the lessor or the title of
the lessor is endangered then, in that case, the lessee must give
notice to the lessor.
5. Duty to use the property in a reasonable manner- The lessee must
use the property in a manner as if it was his/her own property.
6. Duty not to erect any permanent structure- A lessee cannot erect
any permanent structures except in the case of agriculture without
the consent of the lessor.
7. Duty to restore possession- After the determination of the lease, the
lessee must restore the possession of the property to the lessor. If
the lessee does not vacate the premises even after the expiry of the
notice, the lessee is then bound to pay the damages. 
Termination of a lease
 A lease is terminated in eight different ways that are discussed below:

1. A lease is terminated after the expiry of the specified time period.

2. If the length of the lease is until the happening of some event and
when that event happens the lease is terminated.
3. If the lessor’s interest in the property is to terminate the lease on
the happening of some event and when the event happens the lease
is terminated.
4. When the lessee surrenders by implying.
5. When both the lessor and lessee mutually agree to end the contract.
6. On the expiry of a notice which expressly conveys the intention to
terminate the vacancy and such notice must be unconditional.
7. Through forfeiture which legally allows a lessor to re-enter and
reclaim his property.
8. If the interest of both the lessor and the lessee in the whole
property becomes vested at the same time in one person in the
same right, then by the operation of law merger takes place.

Conclusion
In this article, we analysed the concept of lease and how a lease is different
from a license. We also discussed the rights and liabilities of both lessor and
lessee who are integral and indispensable part of a lease deed.

Through the rights and liabilities, it is clear that a lessor must disclose facts
and shall avoid interruptions while the lessee is leased the property. A
lessee, on the other hand, is bound to take reasonable care of the property
and at the same time pay his/her rent. A lease of a property is certainly
different from a sale of a property and this article clarifies that aspect of
property law.
what is Exchange? What are the rights and liabilities of parties to an exchange?

CONCEPT OF EXCHANGE UNDER

PROPERTY LAW
INTRODUCTION
Exchange is defined under section 118 of the Transfer of Property Act, 1882 –
when two people mutually transfer the ownership of one thing for the ownership of
another, the transaction is called an ‘exchange’ when neither thing or both things
are money only. A transfer of property at the completion of an exchange can take
place only in the manner provided for the transfer of such property by sale.

The transaction is called an exchange when the ownership of one thing for the
ownership of another is mutually exchanged by two parties, neither thing or both
things being money only. It is a transaction in which each party acquires property
in which it previously had no interest. There must be a physical delivery of the
property to the parties for a valid exchange, and each party to the exchange has the
rights and is subject to the seller’s liability as to what he gives, and also has the
rights and liabilities of the buyer as to what he takes.

ESSENTIALS OF AN EXCHANGE
1. There must be a minimum of two parties and two properties, one each
belonging to each of them;
2. A mutual transfer of these properties has to take place, i.e. A to transfer his
property to B and B to transfer his property to A;
3. Property can be exchanged for property that is either movable or
immovable.
4. Besides these properties, no other consideration should be involved.
An exchange involves a mutual transfer of their respective properties between two
parties. The primary factor which distinguishes an exchange from a sale is that no
monetary consideration is involved in an exchange. A sale is the exchange of one
property for money, and a barter is an exchange of movable property with another
movable property. An exchange of one stamp for another, or as a consideration
shares in a limited company, is an exchange. The consideration must be specified
in an exchange, since, if it is not mentioned, the transaction is not an exchange. If
one of the transferred items is coupled with money, the transaction is not an
exchange, but a sale.

Mutual Exchange     
The term ‘mutually’ indicates that the parties need to be the same and two things
need to be exchanged. A transfers his property to B, for instance, and B transfers
his own property in return for A. It is not an exchange if the transfer is just from
the hand of one of the parties. In the discharge of her maintenance claim, a transfer
by a husband to a wife is not an exchange, as the wife does not transfer the
possession of something. Similarly, a document in which one decree is set off
against another and the balance made up by the transfer of land is not an exchange,
since two items are not mutually transferred.

The object of exchange must be lawful

The object of exchange must not be unlawful. Exchange is primarily a contract,
and if the object is unlawful or aims at defeating the provisions of law, it will be
invalid. A deed of exchange to compromise criminal proceedings between the
parties was executed in Srihari Jena v. Khetramohun Jaina. The agreement
between them specified that the deed of exchange could not be taken from the
Registrar’s Office until the proceedings had been compromised. The court held that
the exchange was not valid in light of section 23 of the Indian Contract Act, 1872.
Oral exchange is not permissible in view of the amendment of Section 49 of the
Registration Act, 1908 brought about by Act No. 21 of 1929, which by inserting in
Section 49 of the Registration Act, 1908 the words” or by any provision of the
Transfer of Property Act, 1882”, has made it clear that the documents of which
registration is necessary under the Transfer of Property Act, 1882 but not under the
Registration Act, 1908 fall within scope of Section 49 of the Registration Act,
1949. And if not registered they are not admissible as an evidence of any
transaction affecting any immovable property comprised therein and do not affect
any such immovable property.

SALE AND EXCHANGE

In respect of the liabilities of both parties, the TP Act has kept both sales and
exchanges on the same footing. Often similar are the procedures and formalities for
conducting a sale and an exchange. Yet in two basic ways, the two are distinct. The
following are the two main distinctions between an exchange and a sale:

i) In a sale, only one property is usually exchanged for money, but in an exchange,
one property is exchanged for another property.
(ii) In a sale, money is a consideration, but money should not be a consideration in
an exchange.

In John Thomas v Joseph Thomas, whether the written agreement for the mutual
exchange of properties amounted to a sale or an exchange was the question before
the court. The parties had known each other for a long time. One of the parties, A,
owned property X, while the other party, B, owned property Y. Since X was more
valuable than Y, B paid an additional amount of one lakh rupees towards
equalization money when A exchanged X for Y. The court held that it amounted to
a sale and not an exchange, because money had been paid from one party to
another.
RIGHT OF A PARTY DEPRIVED OF THING
RECEIVED IN EXCHANGE; [Section 119 of
the Transfer of Property Act, 1882]
If any party to an exchange or any person claiming through or under such party is
by reason of any defect in the title of the other party deprived of the thing or part of
the thing received by him in exchange , then, unless a contrary intention appears
from the terms of the exchange , such other party is liable to him or any person
claiming through or under him for loss caused thereby, or at the option of the
person so deprived for the return of thing transferred , if still in the possession of
such other party or his legal representative or a transferee from him without
consideration.
An exchange, like a sale, is primarily an agreement between two parties; and
unless the object of exchange is illegal, all parties will be subject to the terms of
the contract. A contract to the contrary is also subject to the law enunciated in
section 119. According to this section, each party is entitled to the property to
which it was entitled under the contract and provides the aggrieved party with a
remedy in the case that it does not receive what it was supposed to obtain under
that contract. A and B, for example, enter into a contract to mutually exchange
their X and Y properties, respectively. A supplies X to B, but B fails to supply Y to
A. In accordance with the rules laid down in this section, A’s rights will be
determined. It provides the party so dispossessed in the alternative with two
remedies:

i) He can seek compensation for the loss of such dispossession caused to him.

(ii) He is entitled to take back the property he has transferred. This right may be
exercised as against:
(a) The other party to the exchange in whose hands there is possession;
(b) Where the possession is kept by the transferee’s legal representative;

(c) Where the possession is with the other party’s gratuitous transferee.

An exchange of land took place between A and the predecessor of B in 1941

in Ramsayivan v Lalji Ram, but B sold the same illegally to a third party in 1988.
It was decided that the purchaser of the land would not have any locus standi to say
anything about the exchange nor that of A’s title. The principle of getting the
property in return in the case of deprivation of the exchanged property also extends
to cases where there is no transfer at all instead of subsequent deprivation of the
transferred property. If a party to an exchange fails to acquire possession of the
property it is entitled to obtain in exchange, it shall also be entitled, at his option, to
the return of the assets which it has exchanged.
Jattu Ram V. Hakama Singh, where, due to false entries made by patwari, there
was a defect in the title of land obtained by one party for exchange and the party
was deprived of some portion of the land as per Deed of Exchange. It was held by
the Supreme Court that entries made in the official records by patwari do not
generate title, so to the extent that the opposite party was liable to return land
(property).

1. The provisions of Section 119 shall apply only in situations where one of the
parties to the Transaction has been deprived of the things/property
transferred because of a defect in the title of another person transferring the
things/property.
2. It is not necessary to invoke the provisions of Section 119 of the Transfer of
Property Act, 1882 in a situation where another person has forcefully
disposed of the property / things obtained by him by exchange.

Example: Assume that Mr. A and Mr. B were transferred ownership of their
residential property and Mr. C’s brother, Mr. A, was forcibly disposed of Mr. B’s
possession of residential property, the ownership of which was transferred in
exchange to Mr. B.

RIGHTS AND LIABILITIES OF PARTIES TO

THE EXCHANGE (Section 120)
The rights and liabilities of the parties to the exchange are not expressly stated in
section 120. It just provides that each party has the rights and is subject to a seller’s
liabilities as to what he gives and has rights and is subject to a buyer’s liabilities as
to what he takes. The rights and liabilities of the parties in the event of an exchange
are therefore the same as in the case of a sale. One thing is given in return and
another thing has been taken, so parties play the role of both seller and buyer. The
rules of the Sale of Goods Act 1930 are also applicable in exchange for movable
property.
In exchange, all parties have equal rights over one another. He is considered to be
in the role of a seller when the person transfers the property to the other and he
holds all the rights that a seller has when selling property. The person who receives
the property is called a buyer and, because of being a buyer, he has all the
privileges that a buyer possesses.

EXCHANGE OF MONEY (Section 121)

On an exchange of money, each party thereby warrants the genuineness of the
money given by him. Money can be exchanged with money, of the same or
different denominations or even different currencies. The term money here
includes not only coins, but also currency notes.

What is an easement? Explain the essentials of an easement and

different types of easement.

Meaning and nature of Easements

The concept of easement has been defined under Section 4 of The Indian
Easements Act, 1882. According to the provisions of Section 4, an
easementary right  is a right possessed by the owner or occupier of the land
on some other land, not his own, the purpose of which is to provide the
beneficial enjoyment of the land. This right is granted because without the
existence of this right an occupier or owner cannot fully enjoy his own
property.

It includes the right to do or continue to do something or to

prevent or to continue to prevent something in connection with or in
respect of some other land, which is not his own, for the enjoyment of his
own land.

The word ‘land’ refers to everything permanently  attached to the earth and
the words ‘beneficial enjoyment’ denotes convenience, advantage or any
amenity or any necessity. The owner or occupier referred to in the
provision is known as the Dominant Owner and the land for the benefit of
which the easementary right exists is called Dominant Heritage. Whereas
the owner upon whose land the liability is imposed is known as the Serviant
Owner and the land on which such a liability is imposed to do or prevent
something, is known as the Servient Heritage.
Illustrations-
1. ‘P’ being the owner of certain land or house has a right of way over
Q’s house, adjacent to his house, to move  out of the street. This is
known as right of easement.
2. A voluntary dedication of right by ‘X’ to the public for passing or re-
passing over a surface of certain land is not a right of easement.
3. X’s right to go on his neighbour Y’s household for fetching water
from the well for the purpose of his own household  is a right of
easement. Here, the way to the well is through Y’s land only. Hence,
X has an easementary right to pass through Y’s household.
In the words of great jurist Salmond, easement is that legal servient
which can be exercised on some other piece of land specifically for
the beneficial enjoyment of one’s own land. Right of easement is
basically a form of privilege, the integral part of which is to do an act or
prevent certain acts on some other land for enjoyment of one’s own land.

Other examples of right of easement includes-

 Right of way
 Right to discharge rainwater
 Right to sunlight etc

Essentials of Easements

1. Dominant and Servient Heritage

For the enjoyment of right of easement, necessary existence of two
properties i.e dominant and servient heritage is a  must. This is because
as per the definition, it is the right exercised by the owner or occupier of one
land for enjoying the benefit of his/her land, over the land of some other
person. Dominant and servient heritage cannot be one. Thus, the existence
of two properties and that to be separate from each other is essential.

2. Separate owners
For exercising the right of easements, owners of the two properties shall be
different and not a single person.
3. Beneficial Enjoyment
The object of easements is that the dominant owner enjoys it in a way which
includes express and implied benefits.

4. Positive or Negative
Easements can be both positive or negative. Former refers to a right through
which the dominant owner does some act to exercise the right over the land
of the servient owner. Whereas, the latter denotes an act of prevention. In a
negative easement the dominant owner prevents or restricts the servient
owner from doing certain act or acts. 

In a right of easement an owner of dominant heritage can do an act or

prevent the servient owner from doing something but he cannot bind the
servient owner to do something for him.

The easementary right exists only when two heritages are adjacent to each
other. It is a right in rem, which means a right available against the whole
world. Easement as a right is always annexed to the dominant
tenement. It is a right of re-aliena which means a right over a servient
tenement and no on one’s own land.

Classification of Easements
Section 5 of the The Indian Easements Act, 1882 classifies the
easements as follows–

Continuous or Discontinuous
Continuous easements are the one whose enjoyment may be continued
without the intervention of any human conduct or act of a man. There is no
interference by a man and it adds special quality to the property. While, on
the other hand, right of easement for the enjoyment which an  interference
of a man is required is known as discontinuous. In this kind of easement, it is
necessary that a human act is done on the servient heritage.

Apparent or Non- Apparent

An apparent  easement is one the existence of which can be seen through a
permanent sign. It can be visible by a careful examination and on reasonable
foresightedness. It is also known as express easement. An inspection is
required to check the existence of a right. For example- There is a drain from
A’s land to B’s land and from there it led to an open yard. This can be visible
through a clear inspection and is an apparent easement.

Whereas, a non-apparent easement is just opposite of what apparent

easement is. This kind of easement is not visible through an inspection.
There is no permanent sign as such. The right is in use but is not visible and
thus, is known as an invisible easement. For example,  A’s right annexed
to A’s land to prevent B from building on his own house.

Another example to explain non-apparent easement is that the right to stop

construction over a certain height.

Limitations or Conditions of Easements

An easementary right may be permanent or for a period of years or for a
limited term. It can    also be subjected to periodical interruption or may be
exercisable at a particular place, between certain hours and for a certain or
particular purpose. This right can also be granted on a condition that such a
right shall become void or voidable on happening of some event or non
performing of some act. These limitations or conditions which regard to the
right of easement has been specified under Section 6 of the Act.

Restrictive Easements
Section 7 specifies that the easements are restrictive of certain rights which
are as follows-

 Exclusive right to enjoy

 Right to advantages arising out of the situation

Profit a Prendre
According to The Indian Easements Act, 1882, profit a prendre is a part
of the definition of easements. An instance to explain the concept is, a right
to take earth from the land of the other person for making an earthenware is
a profit a prendre. This is basically a profit made out of the land of the other
person. Other examples of profit a prendre-

 Right of fishery
 Right to take fruits of trees in the season
This is the right which is exercised on the land appurtenant to the dominant
heritage. Hence, there shall be the existence of two heritages i.e. dominant
and servient. The owner of the dominant heritage exercises this right on the
property of the servient owner. Profit a prendre is a right to do something on
the land of servient tenement for more beneficial enjoyment of the dominant
heritage.

Modes of Acquisition of Easements

Express Grant
The easement can be  acquired through express grant made by inserting the
clause of granting such a right in the deed of sale, mortgage or through any
other form of transfer. This involves expressing by the grantor of his clear
intention. If the value of the immovable property is Rs.100 or above then it
compulsory for it to be in writing and duly registered.

Implied Circumstances
Easementary right can be acquired in implied circumstances in the  following
ways-

 Easement of Necessity
Section 13 of the act deals with this. This consists of the circumstances
where the owner or occupier  cannot use his property without exercising the
right of easement over the servient heritage. Thus, absolute necessity is the
test and the convenience.

For example– X sells his land  to Y for agricultural purpose. Here, Y cannot
access his land without passing through Z’s land (his neighbour). Thus, this
is an easement of necessity.

When a joint property is partitioned amongst various coparceners and if right

of easement over one share of the property is essential for the enjoyment of
the share of the other coparcener then latter shall be entitled to easement.

 Quasi Easements
In the case of a person transferring his property to another person then-

 If an easement is continuous, apparent and necessary to enjoy,

then in such a case the transferee shall be entitled to it,
  If such an easement is continuous, apparent and necessary to enjoy
the said property, the transferor has a right to such  easement over
property transferred by him
 In case of partition of the property of the joint family, if an
easement is continuous, apparent and necessary to enjoy the share
of one coparcener over the other coparcener, then he is entitled to
such a right of easement.
Easements are quasi as those are arising out of circumstances,i.e. When
common properties are converted into tenements by way of sale, mortgage,
partition or through any other form of transfer. In such a case, there is an
implied grant of right of easement.

For example– P’s right attached to Q’s house to receive air and light
through a window without any obstruction  by his neighbour. This is a
continuous.

 Prescriptive Easements
Section 15 provides for this type. Following are the requisites-

 Right must be definite and certain,

 Right must have been independently enjoyed without any
agreement with the servient owner,
 Must be enjoyed openly, peacefully and as of a right without any
interruption for a continuous period of 20 years and in respect of
any government land the period of non-interruption shall be 30
years.

 Customary Easements
An easement right can be acquired by virtue of a local custom. This is known
as customary easements. Section 18 of the Act provides for it. For example-
people living in a particular city or town having a right to bury the dead in a
particular area or riparian right to use water.

Extinction of Easements
Section 37 to 47 of the The Indian Easements Act, 1882,  provides for the
mode of extinction of easements.

 Dissolution of Servient Owner’s right

In the situation where the grantor ceases to have any right in the servient
tenement because of some reason, then the right of easements ceases to
exist as well. This has been specified under Section 37 of the Act. For eg- X
grants a piece of land to Y for a period of 20 years in the year 1970. In the
year 1971, Y imposed an easement in favour of Z. In 1990 Y’s interest came
to an end. Thus, easementary right granted to Z ceases to end as well.

 Expiry of time or happening of an event

When an easement is acquired on certain conditions or for certain purpose or
for certain period of time. On the fulfilment of such condition or purpose or
expiry of the time, the right of easement extinguishes as well as in
accordance with Section 6 of the Act.

 Extinction by release
Where in a situation the owner of the dominant heritage releases the right of
easement to the servient owner, the right ceases to exist. Such a release can
be both expressly or impliedly made. For eg- P has a right to discharge water
through the eaves to Q’s yard. P  authorized Q to construct a building to such
a height as not be able to discharge water. Q builds it and P’s right comes to
an end.

 Termination of necessity
When necessity terminates the easement of necessity terminates as well. For
example- A grants a piece of land to B on which easement of necessity for B
is the right of his way over A’s land. Later on, B purchases  a part of the A’s
land over which he may pass to reach his own land. Here, the necessity has
ended and so does the easement.

 Useless Easements
When easement is of such a nature that is not useful or becomes incapable
of being beneficial at any time or under any circumstances, then the right of
easement ends.

 Permanent  change in the Dominant

Heritage
When the nature of the dominant heritage changes permanently with
increase in burden on tenement, then the right of easement ceases to exist
as the purpose of it was the beneficial enjoyment of the dominant heritage.
For example- A’s house is located such that he has a right of way by passing
through B’s house. Later, due to earthquake, B’s house got cut off and thus,
right of easement ends.

 Extinction by destruction of either of

heritages
When either of heritages gets destroyed, the easement ends as it is essential
for two properties to exist for exercising the right.

 Unity by ownership
By unity of ownership it is indicated that when one person becomes the
owner of both the dominant and servient heritage then the right of easement
terminates. For instance, A has right of easement over B’s property. Later
on, A purchases B’s property and becomes the owner of B’s property. In such
a case, easement extinguishes.

Another example which can be stated her to explain the concept  is that A
has a right of easement over B’s land. In future A takes B’s land on rent,
here A becomes the occupier of B’s land. Thus, easement terminates.

Suspension of Easements
Section 49 of the Act provides that easement can be suspended under the
following circumstances-

1. An easement is or can be suspended when the dominant owner

becomes entitled to the possession of servient heritage for a limited
interest. An example which can be stated here to explain the
concept  is that A has a right of easement over B’s land. In future A
takes B’s land on rent, here A becomes the occupier of B’s land.
Thus, easement suspends.
2. When the servient owner becomes entitled to the possession of
dominant heritage for a limited interest, the easement is suspended.
Thus, where both the dominant and servient owner becomes one, easement
is suspended.
Revival of Easements
Section 51 of the Act provides for the situations wherein easement
suspended or extinguished can be revived, which are as follows-

1. When an easement is extinguished by destruction of either of the

heritages then it can be revived-

 If the heritage is restored in 20 years.

 If the heritage is rebuilt in 20 years
2. In case of unity of ownership, if the unity breaks due to some reason, then
easementary right can be revived and also through an order of a competent
court.

Licenses
Section 52 of the Act deals with the concept of licenses. Where one person
grants to another person a right to do or continue to do something in or upon
the immovable property of the grantor, something which if he does will be
unlawful without the prior permission or the availability of the grant. Such a
right shall not amount to an easmentary right or creation of interest in the
property.

Essentials of licenses
1. It is a permission granted, i.e a right arising out of permission.
2. Legalises an act.
3. Is revocable on the act of the grantor.
4. It is always in respect of immovable property.
5. It is a right in personam.

Revocation of licenses
License can be revoked in following ways-

1. If from the cause of preceding the grant, the grantor himself ceases
to have any interest in the property, the license gets revoked.
Grantor’s interest comes to an end.
2. By express and implied release of the license by licensee.
3. There are certain cases wherein a license is issued under certain
conditions or limitations. This includes a license issued on a
 condition that if a certain act is doe or is not performed then the
license may become void. In such a situation wherein these acts are
performed then license can be revoked. Also, licenses are granted
for the fulfillment of certain acts and once it is fulfilled license can
be revoked.
4. Where a property in relation to which a license was granted gets
destroyed due to any reason, then a license can be revoked.
5. Where, a licensee himself becomes the owner of the property for
which license was granted, then the purpose for which license was
granted ceases to exist and thus, the license also ceases to exist
and gets terminated.
6. When licensee does not use it for a period of 20 years then the
license gets revoked.

Transferable Licenses
According to Section 56 of the Act, a license can be transferable under the
following conditions-

1. A license to attend a place of public entertainment may be

transferred by the licensee. This may be gathered from the grant or
contract, or from surrounding circumstances or local usage. For
instance, P grants Q, a right to walk over P’s field whenever he
pleases. The right is not annexed to any immovable property of Q.
The right cannot be transferred.
2. Transfer by licensee- The general rule is that the licensee cannot
transfer his license. If he transfers then the transferee becomes a
trespasser and can be or may be ejected.

Irrevocable Licenses
Section 60 provides that license can also be irrevocable. If the license is
coupled with a transfer of property and the transfer is in force, it cannot be
revoked. This is subject to the agreement. Hence, the power can be
reserved. The rule is that a bare license may be revoked but if coupled with a
transfer of the property, then it is irrevocable.

A license coupled with an interest in a land is binding. A license coupled with

profit a prendre is irrevocable, for example, Right to excavate earth and
carry it to make earthen wares, right to cut and carry timber on payment of
royalty.  

If the licensee, has executed some work which is permanent in nature and
has incurred expenses, the licence cannot be revoked and hence, is
irrevocable. For example,  there are two companies, namely X and Y having
lands adjoining to each other. The agents were common who managed to put
up the building and tank on X’s land for use by Y. License is irrevocable as
the rule applied as was held in Ramson V dyson.

Tabular difference between Licenses and

Easements
License Easements

1. License is a form of personal 1. Right of easement is a right

right attached to an immovable appurtenant to immovable
property. property.

     2. It is a right in personam.      2. It is a right in rem.

    3. It is a right which can be annexed to

    3. This right cannot be attached.
the property to which it is attached.

    4. License is revocable.     4. Easements are not revocable at all.

    5. It is a permission given by the

     5. It is acquired as of a right.
licensor i.e the grantor.

Conclusion
The Indian Easements Act, provides for the whole concept of right of
easements and its regulation in India. Easement as defined under Section 4
of the Act is a right enjoyed by the owner of the dominant heritage over the
heritage of servient owner for the beneficial enjoyment of his own land. It
not only defines what actually easements consist of but also provides with its
classification. Easements can be prescriptive, customary, quasi and of
necessity.

Thereafter, modes of acquiring easements has been provided under Section

7 of the said Act according to which it can acquired through an express
grant or is in certain circumstances considered to be an implied right. If
easement is to be acquired through the express grant then such a clause has
to be specifically mentioned in the deed of sale, mortgage or any other deed
in accordance with the mode of transfer. Easements is a right in rem, that is,
it is available against the whole world. It can be subject to limitations as well
and can be restrictive too. Easements can be
both positive and negative. Whereas, on the other hand licenses can only
be positive in nature.

Further, the Act talks about the provisions regulating the suspension,
extinction and revival of the easements. Also, how easements is different
from licenses has been discussed. The article also explains the concept of
licenses along with its essentials. License can be revocable as mentioned in
the Act  and irrevocable as mentioned under Section 60 of the Act. They can
also be transferred according to Section 56 of the Act. It is a right in
personam which is not available against the whole world but is granted
personally.

Discuss the rights and liabilities of a

mortgagor?
Introduction
Nowadays mortgage is a very commonly used word. Every single person has
the knowledge that if he wants a loan to be sanctioned, he has to pay some
collateral and for that, he has to mortgage his property with a bank.
Mortgagor and mortgagee are the parties who have an important role to play
during mortgage of a property. Various statutes available in India deals with
a mortgage. Following legislation deal with mortgage:

1. The Transfer of Property Act, 1882– Sections 58-104, which are

mentioned in Chapter IV deals with the significant part of mortgage.
2. The Civil Procedure Code, 1908– The procedural part of
mortgage of immovable property is dealt in Chapter XXXIV of CPC.
3. Indian Contract Act, 1872– Any contract related to mortgage and
its general principles are mentioned in the Indian Contract Act of
1872.

When do rights & liabilities of a mortgagor

arise?
The rights and liabilities of a mortgagor arise during a mortgage. A loan may
be secured or unsecured. Where a loan is given simply on the basis of
debtor’s promise to pay (e.g. on promissory-note), such loans are called as
unsecured loans. But, where the creditor takes security from the debtor for
the repayment of his money, the loan is known as secured loans. One such
way to secure loans is mortgage. Section-58(a) of the Transfer of Property
Act, 1882 has defined mortgage as the transfer of an interest in a specific
immovable property for securing:
  The payment of money given to him or to be given through loan, or
 An existing or future debt, or
 The performance of an engagement which may give rise to a
pecuniary liability. 

Who is a mortgagor?
The person who has transferred the interest in a specific immovable property
is known as mortgagor. For instance, A wants a loan from B. Now B wants
his amount to be secured which he is going to loan A. A will transfer the
interest in a specific immovable property to B and will give him the authority
of selling it in case A is not able to repay B’s amount. Here A is the
mortgagor.

Who is a mortgagee?
The transferee or person in whose favour the interest is being transferred is
known as mortgagee. In the above-given example, the person who is lending
money i.e. B is the mortgagee. 

What is mortgage-money?
The principal amount which is given as loan and the interest amount which
mortgagor will pay to mortgagee along with the principal amount. Sum of
both the principal amount and interest is known as mortgage-money. 

What is a mortgage deed?

It is an instrument by which the transfer of interest in a specific immovable
property is affected. It is a kind of agreement which legally binds both the
mortgagor and mortgagee. 

Different kinds of mortgage

There are six kinds of mortgage which are recognized under the Transfer of
Property Act, 1882. They are discussed in the act from section 58(b)-
58(g). Following are the different kinds of mortgage:

1. Simple Mortgage [section-58(b)]

 2. Mortgage by conditional sale [section-58(c)]
3. Usufructuary Mortgage [section-58(d)]
4. English Mortgage [section-58(e)]
5. Mortgage by deposit of title deeds [section-58(f)]
6. Anomalous Mortgage [section-58(g)]

Rights of Mortgagor
Every mortgage-deed leaves a right to the mortgagor and a corresponding
liability for mortgagee and vice versa. Following are the rights given to a
mortgagor given by the Transfer of Property Act, 1882:

1. Right to redemption
2. Right to transfer mortgaged property to a third party instead of
retransferring
3. Right of inspection and production of documents
4. Right to accession
5. Right to improvements
6. Right to a renewed lease
7. Right to grant a lease

Right to Redemption (section-60)

It is one of the most important rights of a mortgagor given under section of
the Act. This right puts an end to mortgage by returning the property of
mortgagor. The right to redeem further grants three rights to the
mortgagor:

1. Right to end mortgage deal

2. Right to transfer mortgaged property to his name
3. To take back possession of property in case of delivery of possession
In the case of Noakes & Co. vs. Rice (1902) AC 24, Rice was a dealer who
mortgaged his property, premise and goodwill to N subject to the provision
that if R paid back the whole amount, the property would be transferred back
to his name or any other person’s. A covenant was attached that stated
whether or not the amount is due, R would only sell Malt liquor by N in his
premises. Because of this covenant, R had difficulty in redemption and it
didn’t give him absolute right over his property. House of Lords held that
anything which clogs this right is bad and they came up with the concept
that ‘once a mortgage always a mortgage’ and said that mortgage could
never be irreducible. 

This principle was added to protect the interest of a mortgagor. Any condition
or provision which prevents a mortgagor from redeeming his mortgaged
property is a clog on the right of redemption. The right to redemption
continues even though the mortgagor fails to repay the loan amount to
mortgagee. In the case of Stanley v. Wilde, (1899) 2 Ch 474, it was held
that any provision mentioned in the mortgage-deed which has an effect of
preventing or impeding the right to redemption is void as a clog on
redemption.  

 Exceptions to the right- The right to redeem has three

exceptions. It can be extinguished under the following cases:

 By the act of parties

 By operation of law

 By decree passed by the court

Obligation to transfer to the third party

instead of transferring it to mortgagor
(section-60A)
This right was added in the Act by Amendment Act of 1929. This right
provides the mortgagor with authority to ask the mortgagee to assign the
mortgage debt and transfer the property to a third person directed by him.
The purpose of this right is to help the mortgagor to pay off the mortgagee
by taking a loan from a third person on the same security.  

Right to inspection and production of

documents (section-60B)
This section is also inserted by the Amendment Act of 1929. It is the right of
mortgagor to ask mortgagee for the production of copies of documents of the
mortgaged property in his possession for inspection on notice of reasonable
time. The expenses incurred on production or copies of documents or travel
expenses of a mortgagee are to be paid by the mortgagor. This right is
available to the mortgagor only as long as his right to redeem exists. 
Right to Accession (section-63)
Basically, accession means any addition to property. According to this right
mortgagor is entitled to such accession to his property which is in the
custody of mortgagee. There are two types of accession:

 Artificial accession- It is when mortgagor made some efforts and it

increased the value of land. 
 Natural accession- The name itself defines i.e. without any man-
made efforts.
In case an accession is made to the property due to the efforts of mortgagee
or at his expense and such accession is inseparable, mortgagor, in order to
be entitled to such succession, needs to pay the mortgagee the expense of
acquiring such accession. 

If such separate possession or enjoyment is not possible, the accession must

be delivered with the property; it is the liability of mortgagor, in the case of
an acquisition which is necessary to preserve the property from destruction,
forfeiture or sale, or made with his assent, to pay the proper cost thereof, as
an addition to the principal money, with interest at the same rate as is
payable on the principal amount, or, where no such rate is fixed, at the rate
of nine percent per annum. 

Right to Improvements (section-63A)

According to this right if the mortgaged property has been improved while it
was in possession of mortgagee, then on redemption and in the absence of
any contract to the contrary mortgagor is entitled to such improvement. The
mortgagor is not liable to pay mortgagee unless:

 Improvements made by the mortgagee were to protect the property

or with the prior permission of mortgagor.
 Improvements were made by the mortgagee with the permission of
the public authority.   

Right to Renewed Lease (section-64)

If the mortgagor is entitled the mortgaged property is a leasehold property
and during the duration of mortgage the lease gets renewed then, on
redemption the mortgagor is entitled to have the benefit of the new lease.
This right is available to the mortgagor unless he enters into any contract to
the contrary with mortgagee.
Right to grant a Lease (section-65A)
This right was introduced by the Amendment Act of 1929. Prior to this right,
the Transfer of Property Act did not allow a mortgagor to lease out the
mortgaged property on his own but only with the permission of mortgagee.
Now, a mortgagor has the right to lease out the mortgaged property while he
is in lawful possession of that property, subject to the following conditions:

 All conditions in the lease should be according to the local laws and
customs to prevent any fraudulent transaction.
 No rent or premium shall be paid in advance or promised by
mortgagee.
 The contract shall not contain any provision for the renewal of the
lease.
 Every such lease shall come into effect within a period of six months
from the date of its execution. 
 Where the mortgaged property is a building, the term of the lease
should not exceed three years in total.

Duties/liabilities of a mortgagor
Along with the rights given to a mortgagor, the Transfer of Property Act has
also conferred some duties on him. Following are the duties of a mortgagor:

1. Duty to avoid waste

2. Duty to indemnify for defective title
3. Duty to compensate mortgagee
4. Duty to direct rent of a lease to mortgagee

Duty to avoid waste (section-66)

This section imposes a duty on the mortgagor to not to commit any act which
leads to the waste of property or any act which reduces the value of the
mortgaged property. Waste is divided into two categories:

 Permissive waste– A mortgagor who is in possession of the

mortgaged property is not liable to the mortgagee for any minor
waste.
 Active waste– When an act is done which causes major waste of
the property or leads to the reduction in the value of mortgaged
property, then the mortgagor will be liable to the mortgagee.
Duty to indemnify for defective title
It is the duty of a mortgagor to compensate the mortgagee for a defective
title in the mortgaged property. A defective title refers to a situation when a
third party starts claiming or interferes with mortgaged property. It is a
liability for the mortgagor to compensate for the expenses incurred by
mortgagee for protecting the title of that property.

Duty to compensate mortgagee

If the mortgaged property is in possession of mortgagee who is paying all the
taxes and other public charges, then it is the duty of mortgagor to
compensate mortgagee for incurring such expenses. Similarly, when there is
no delivery of possession i.e. the mortgaged property is still in possession of
mortgagor, then it is his duty to pay all public charges and taxes levied on
it. 

Duty to direct rent of a lease to mortgagee

Where the mortgaged property is leased by mortgagor then it is his duty to
direct lessee to pay the rent, etc. to the mortgagee.  

Conclusion
A mortgage-deed comes up with many rights and liabilities for both the
parties involved i..e. mortgagor and mortgagee. These rights and liabilities
were created and included in the Transfer of Property Act in 1882 which is
quite old and therefore is outdated. Though amendments were made in the
Amendment Act of 1929, but no recent amendments have been made in the
chapter of rights and liabilities of mortgagor. This has lead to various
fraudulent transactions as both the mortgagor and mortgagee has found
various new methods of deceiving each other. Therefore, the need of the
hour is to amend the laws and make it more stringent so that no party
attempts to enter in fraudulent transactions. 

What are the essential elements of a gift? When a gift can

be revoked?

Introduction
A Gift is generally regarded as a transfer of ownership of a property where
the sender willingly brings into effect such transfer without any compensation
or consideration in monetary value. It may be in the form of moveable or
immoveable property and the parties may be two living persons or the
transfer may take place only after the death of the transferor. When the
transfer takes place between two living people it is called inter vivos, and
when it takes place after the death of the transferor it is known as
testamentary. Testamentary transfers do not fall under the scope of Section
5 of the Transfer of Property Act, and thus, only inter vivos transfers are
referred to as gifts under this Act.

If the essential elements of the gift are not implemented properly it may
become revoked or void by law. There are many provisions pertaining to the
gifts. All such provisions, for example, types of property which may be gifted,
modes of making such gift, competent transferor, suspension and revocation
of gift, etc. are discussed in this article.

What may be referred to as a gift

Gift
Section 122 of Transfer of Property Act defines a gift as the transfer of an
existing moveable or immovable property. Such transfers must be made
voluntarily and without consideration. The transferor is known as the donor
and the transferee is called the donee. The gift must be accepted by the
donee. This Section defines a gift as a gratuitous transfer of ownership in
some property that is already existing. The definition includes the transfer of
both immovable and moveable property.

Mt. Brij Devi v. Shiva Nanda Prasad & Ors (1939) : an

analysis
One of the few essentials of a Gift is, that in event of a transfer, there must
be a transference of all the rights in the property by the donor to the donee;
however, it is also permissible to make conditional gifts. Such a clause is
governed by Section 126 of the Act.

To delve into the issue, we must refer to the first important pre-
independence judgment of the Allahabad High Court, where the subject
matter of dispute is the same as our concern. In the case of Mt. Brij Devi v.
Shiva Nanda Prasad & Ors (1939) Brij Devi had claimed possession of a land
which had formed the focus of a gift deed executed by her ancestors on
11th December 1914, in favor of one Jain Bulaqi Shankar. The gift deed was
executed with some conditions attached to it which read as, “The material
terms of the gift-deed are as follows: I have made a gift to Pt. Jain Bulaqi
Shankar for construction of the temple of Bhaironji, and residence, and
removing my possession from the property gifted, I have put the donee in
proprietary possession and he will have the right to construct a temple and a
quarter… The donee or his successors will have no right to transfer or
mortgage it; if he does, the transfer will be invalid, and I and my successors
will have a right to get the gift revoked.” As per the gift deed, Jain Bulaqi did
not succeed in building the temple or a residential quarter for his own
occupation, but subsequently he made a waqf of the property in favour of
one Shiva Nanda Prasad in 1927, which means, he transferred the property
which had been gifted to him by the plaintiffs’ ancestor. This action of the
done was alleged to be in contravention of the conditions of the gift deed
itself. They alleged that in circumstances of property being alienated, by
virtue of the revocation clause mentioned in the gift deed, they were entitled
to declare the transfer done to the defendant as invalid and further have the
right to take back the possession of the land as per the gift deed. 

The defendants argued that the transfer made by way of gift deed, was an
absolute transfer of the land to Jain Bulaqi, and that that transfer in the gift
deed had been subject to a condition absolutely restraining the transferee
and his successors from parting with or disposing of his interest in the
property which is repugnant to the Transfer of Property Act itself. Section 10
of the Transfer of Property act states that, absolute restraint on the
transferee by the transferor is void, that is, the condition restraining the
alienation is void while the transfer of the property itself is valid. The
defendants’ argument was essentially based on the foundation of Section 10
of TPA, they argued that such a restraint on the land was void and the
contract must be allowed as if an unequivocal transfer of the land was made
to the donee. 

Moreover, because the condition was void, the transfers in favor of Shiva
Nanda Prasad were valid and could not be set aside, nor were the plaintiffs
entitled to revoke the gift deed. The plaintiffs then took the defense of
Section 126 of the Transfer of Property Act and contested that the transfer
was not void as per the mentioned section. The section essentially means
that the donor and donee can agree upon happening of certain conditions,
when the condition is not fulfilled, the gift can be revoked. The plaintiffs
argued that the right to revoke the gift was contingent upon the alienation by
the donee of the land gifted and not upon the will of the donor.

The plaintiffs supported this claim by citing the case of Makund Prasad v.
Rajrup Singh (1907), in which the court held that a gift of property made on
the condition that the land would be liable to be taken back in the event of
its Alienation, was valid and the power of revocation was not repugnant to
the original transfer under Section 10.

The court in this case rightfully upheld the defendants claim and ruled that
the gift deed cannot be revoked by the successors of the ancestor who had
made the gift deed in favour of Jain Bulaqi as the transfer was uncosniable in
the first place as it restricted the donee completely to alienate such property.
This was the first major judgment which rightfully upheld the donee’s claim
and rightfully interpreted the law relating to sections 10 and 126, however
the thing to note in this judgment was the lower appellant court had ruled in
favour of the plaintiffs and the high court had overturned the decision which
is a usual trend which we see in cases relating to the issue of our paper.
Even after such a judgment, we see cases relating to the same issue where
the lower and high court’s decision is overturned in the Supreme Court. In
the case of Sridhar vs N. Revanna (2000), which is a case of February, 2020,
out of the many issues in the suit, the same issue, that is, whether a gift
deed can be revoked by virtue of Section 126 if such property is alienated
had been raised in the Supreme Court once again for which the court had to
adjudicate the matter. In this case one Shri Muniswamappa, great
grandfather of the plaintiffs and grandfather of defendant No.1, was the
absolute owner of the suit schedule property who executed gift deeds in
favour of the defendants with the same condition that the property should
not be alienated and if such property was to be alienated, then the gift deed
stands invalid. The defendants on the other hand had sold the property which
they had received as a gift to which the plaintiffs’ alleged that such a transfer
was invalid as the gift deed specifically stated that the mentioned property is
not to be alienated and the plaintiffs demanded the property to be
transferred to them back.

The High Court in this case too decided that the condition of the gift deed
was not fulfilled and thus ruled that the sale made by the donee was invalid
and the property is to be returned, but the Supreme court in this too cited
the ruling held in the case of Mt. Brij Devi v. Shiva Nanda Prasad & Ors
(1939)  and overturned the High court’s decision and ruled that the gift deed
cannot be revoked as at the very inception of the gift deed, the donee was
completely restricted to alienate such property which is prohibited by
Transfer of Property Act by virtue of section 10. 

For an issue that has been a settled law as per the 1939 judgment of the
Allahabad High Court, it is important to analyze what is making the courts
interpret such laws in different manners and why are the higher courts being
time and again invoked to settle such disputes. Firstly we would look at the
way Section 126 is drafted in the Transfer of Property Act and also the
placement of such a section would be beneficial for an in-depth analysis.
Section 126 reads as: “donor and donee may agree that on the happening of
any specified event which does not depend on the will of the donor, a gift
shall be suspended or revoked; but a gift which the parties agree shall be
revocable wholly or in part, at the mere will of the donor, is void wholly or in
part, as the case may be.” 

The section as it appears has a highly generic wording and allows the donor
to make some condition while gifting it to the donee and if such condition is
not fulfilled or abided by, the donor can revoke the gift deed not on the basis
of his will but subject to the condition that remained unfulfilled or which has
not been abided by. This section is type of a conditional clause as the gifts
chapter starts from Section 122 of the Transfer of Property Act. Chapter 2 of
the Act is a general chapter which puts some restrictions on the property
while the gifts form a part of separate chapter, that is, ‘of Gifts’ in the Act.
Moreover if we look at the illustrations present in the section, it appears that
the law is silent upon such matters, that is, what if there is a complete
restriction on the alienation of the property. The courts while adjudicating the
matter look at the placement of these conditional clauses, where the
presence of section 126, that is, the conditional clause is already present in
the chapter, the courts tend to think that the gifts are to be governed only by
the set conditions that have been made in the gift deed. Moreover, the courts
also interpret that if such conditional clause is present in the chapter ‘of gifts’
hwere parties can make own conditions in the gift deed, there must be a
legislative intent behind this structuring and the chapter ‘of gifts’ must be
looked at aloof of other chapters, specifically Section 10 (to which our
analysis is limited). The illustrations (Section 126), being silent on such
conditions, also add to this mis-interpretation of the court. The first
illustration provided in the section is contingent upon the death of B and his
descendants but in the first place, the donee is not restricted from alienation
of the property. 

The second illustration provided also does not talk about the alienation issue
rather it clarifies that if an amount of 100 is gifted to someone by the donor
and with both the donor and donee’s assent, they agree that Rs 10 can be
asked back at any time, this shows that the actual gift was of Rs 90 only as
the donee has to return back the Rs 10 to the donor back, that is, that
amount of Rs 10 is inalienable. The second illustration is somewhat related to
the issue at hand but because it is talking about a movable gift, that is, in
cash, the courts tend to think that this may be applicable to only movable
gifts as we cannot gift land in such a way. Thus, due to the absence of such
clarity in the issue, the court thinks that the act is silent in the issue at hand
and they tend to give different rationale and rule that the property which
forms center of a gift deed can be revoked if the condition of alienation is not
abided by the donee. 

This interpretation or perception of the courts is wrong as section 10 of the

act is part of the chapter 2, that is, ‘of transfers of property by act of Parties’
which is a general section and must apply to all the chapters of the Act as it
defines the ‘action’ of the parties per se which is void in the eyes of law.
Needless to mention, Parties of any transaction are an essential element for
a transaction to take place, thus a specific chapter has been created by the
Act which gives some clarity of what all actions of the parties entering into
the transaction are good or bad in law. If there was a legislative intent for a
gift to be governed only by the conditions of the gift deed, that is, section
126 of the Transfer of Property Act and section 10 would not apple to such
conditions, then such an exception would be specifically mentioned in the
section 10 of the Act just like mortgage, which has been specifically excluded
in the section 10 of the Act. Thus, reading into the issues where the act
appears to be silent as section 126 and section 10 are a part of different
chapters is the wrong approach that is often followed by the court which
leads to wrong judgments time and again. The same logic of free market that
is used to defend the creation of section 10 of the Act can also be extended
to this issue as well. The main reason for which such a section, that is,
section 10 was created was to not allow accumulation of the property. People
in India hold a lot of sentimental value towers the land and property they
own and subsequently the ancestors do not want their future generations to
alienate such property.

To counter such problem, that is, a property does not start limiting to one
family lineage; such a section was created and is still needed as exclusion of
such a section would pull us back to the zamindari system as was prevalent
in India as few years back. Moreover when a gift deed is revoked the
government too is not benefitted from this transfer in terms of taxes. A gift
deed in the first place when is executed, it does not attract any tax but there
is a change in ownership as there is a change in title of the property and
when such a gift deed will be revoked, there will be again a change in the
title and ownership which would not attract any tax as the property which
was owned by the donor at some time is being handed back to him by way of
revocation, thus two transfers of title are made and the taxable amount is
none on the property which is something not beneficial for a new democracy
to progress. Moreover the legal maxim, “alienation rei praefertur juri
accrescendi” meaning that Law favours Alienation instead of
Accumulation can be extended to the issue at hand and by way of alienation
of the gifted property, even the government could benefit from the amount
of taxes that would be charged by way of transfer of such property to a third
person. 

Parties to a gift transfer

Donor
The donor must be a competent person, i.e., he must have the capacity as
well as the right to make the gift. If the donor has the capacity to contract
then he is deemed to have the capacity to make the gift. This implies that at
the time of making a gift, the donor must be of the age of majority and must
have a sound mind. Registered societies, firms, and institutions are referred
to as juristic persons, and they are also competent to make gifts. Gift by a
minor or insane person is void. Besides capacity, the donor must also have
the right to make a gift. The right of the donor is determined by his
ownership rights in the property at the time of the transfer because gift
means the transfer of the ownership.
Donee
Donee does not need to be competent to contract. He may be any person in
existence at the date of making the gift. A gift made to an insane person, or
a minor, or even to a child existing in the mother’s womb is valid subject to
its lawful acceptance by a competent person on his/her behalf. Juristic
persons such as firms, institutions, or companies are deemed as competent
donee and gift made to them is valid. However, the donee must be an
ascertainable person. The gift made to the general public is void. If
ascertainable, the donee may be two or more persons.

Essential elements
There are the following five essentials of a valid gift:

1. Transfer of ownership
2. Existing property
3. Transfer without consideration
4. Voluntary transfer with free consent
5. Acceptance of the gift

Transfer of ownership
The transferor, i.e., the donor must divest himself of absolute interest in the
property and vest it in the transferee, i.e., the donee. Transfer of absolute
interests implies the transfer of all the rights and liabilities in respect of the
property. To be able to effect such a transfer, the donor must have the right
to ownership of the said property. Nothing less than ownership may be
transferred by way of gift. However, like other transfers, the gift may also be
made subject to certain conditions.

Existing property
The property, which is the subject matter of the gift may be of any kind,
movable, immovable, tangible, or intangible, but it must be in existence at
the time of making a gift, and it must be transferable within the meaning
of Section 5 of the Transfer of Property Act.

Gift of any kind of future property is deemed void. And the gift of spes
successionis (expectation of succession) or mere chance of inheriting
property or mere right to sue, is also void.
Transfer without consideration
A gift must be gratuitous, i.e., the ownership in the property must be
transferred without any consideration. Even a negligible property or a very
small sum of money given by the transferee in consideration for the transfer
of a very big property would make the transaction either a sale or an
exchange. Consideration, for the purpose of this section, shall have the same
meaning as given in Section 2(d) of the Indian Contract Act. The
consideration is pecuniary in nature, i.e., in monetary terms. Mutual love and
affection is not pecuniary consideration and thus, property transferred in
consideration of love and affection is a transfer without consideration and
hence a gift. A transfer of property made in consideration for the ‘services’
rendered by the donee is a gift. But, a property transferred in consideration
of donee undertaking the liability of the donor is not gratuitous, therefore, it
is not a gift because liabilities evolve pecuniary obligations.

Voluntary transfer with free consent

The donor must make the gift voluntarily, i.e., in the exercise of his own free
will and his consent as is a free consent. Free consent is when the donor has
the complete freedom to make the gift without any force, fraud coercion, and
undue influence. Donor’s will in executing the deed of the gift must be free
and independent. Voluntary act on a donor’s part also means that he/she has
executed the gift deed in full knowledge of the circumstances and nature of
the transaction. The burden of proving that the gift was made voluntarily
with the free consent of the donor lies on the donee.

Acceptance of gift
The donee must accept the gift. Property cannot be given to a person, even
in gift, against his/her consent. The donee may refuse the gift as in cases of
non-beneficial property or onerous gift. Onerous gifts are such where the
burden or liability exceeds the actual market value of the subject matter.
Thus, acceptance of the gift is necessary. Such acceptance may be either
express or implied. Implied acceptance may be inferred from the conduct of
the donee and the surrounding circumstances. When the donee takes
possession of the property or of the title deeds, there is acceptance of the
gift. Where the property is on lease, acceptance may be inferred upon the
acceptance of the right to collect rents. However, when the property is jointly
enjoyed by the donor and donee, mere possession cannot be treated as
evidence of acceptance. When the gift is not onerous, even minimal 
evidence is sufficient to prove that the gift has been accepted by donee.
Mere silence of the donee is indicative of the acceptance provided it can be
established that the donee had knowledge of the gift being made in his
favour.
Where the deed of gift categorically stated that the property had been
handed over to the donee and he had accepted the same and the document
is registered, a presumption arises that the executants are aware of what
was stated in the deed and also of its correctness. When such presumption is
coupled with the recital in the deed that the donee had been put in
possession of the property, the onus of disproving the presumption would be
on the donor and not the donee.

Where the donee is incompetent to contract, e.g., minor or insane, the gift
must be accepted on his behalf by a competent person. The gift may be
accepted by a guardian on behalf of his ward or by a parent on behalf of their
child. In such a case, the minor, on attaining majority, may reject the gift.

Where the donee is a juristic person, the gift must be accepted by a

competent authority representing such legal person. Where the gift is made
to a deity, it may be accepted by its agent, i.e., the priest or manager of the
temple.

Section 122 provides that the acceptance must be made during the lifetime
of the donor and while he is still capable of giving. The acceptance that
comes after the death or incompetence of the donor is no acceptance. If the
gift is accepted during the life of the donor but the donor dies before the
registration and other formalities, the gift is deemed to have been accepted
and the gift is valid.

Modes of making a gift

Section 123 of the Transfer of Property Act deals with the formalities
necessary for the completion of a gift. The gift is enforceable by law only
when these formalities are observed. This Section lays down two modes for
effecting a gift depending upon the nature of the property. For the gift of
immovable property, registration is necessary. In case the property is
movable, it may be transferred by the delivery of possession. Mode of
transfer of various types of properties are discussed below:

Immovable properties
In the case of immovable property, registration of the transfer is necessary
irrespective of the value of the property. Registration of a document
including gift-deed implies that the transaction is in writing, signed by the
executant (donor), attested by two competent persons and duly stamped
before the registration formalities are officially completed. In the case
of Gomtibai v. Mattulal, it was held by the Supreme Court that in the absence
of written instrument executed by the donor, attestation by two witnesses,
registration of the instrument and acceptance thereof by the donee, the gift
of immovable property is incomplete.

The doctrine of part performance is not applicable to gifts, therefore all the
conditions must be complied with. A donee who takes possession of the land
under unregistered gift-deed cannot defend his possession on being evicted.
The following must be kept in mind regarding the requirement of
registration:

 Registration of the gift of immovable property is must, however, the

gift is not suspended till registration. A gift may be registered and
made enforceable by law even after the death of the donor,
provided that the essential elements of the gift are all present.
 In case the essential elements of a valid gift are not present, the
registration shall not validate the gift.
It has been observed by the courts that under the provisions of the Transfer
of Property Act, Section 123, there is no requirement for delivery of
possession in case of an immovable gift. The same has been held in the case
of Renikuntla Rajamma v. K. Sarwanamma that the mere fact that the donor
retained the right to use the property during her lifetime did not affect the
transfer of ownership of the property from herself to the donee as the gift
was registered and accepted by the donee.

Movable properties
In the case of movable properties, it may be completed by the delivery of
possession. Registration in such cases is optional. The gift of a movable
property effected by delivery of possession is valid, irrespective of the
valuation of the property. The mode of delivering the property depends upon
the nature of the property. The only things necessary are the transfer of the
title and possession in favour of the donee. Anything which the parties agree
to consider as delivery may be done to deliver the goods or which has the
effect of putting the property in the possession of the transferee may be
considered as a delivery.

Actionable claims
Actionable claims are defined under Section 3 of the Transfer of Property Act.
It may be unsecured money debts or right to claim movables not in
possession of the claimant. Actionable claims are beneficial interests in
movable. They are thus intangible movable properties. Transfer of actionable
claims comes under the purview of Section 130 of the Act. Actionable claims
may be transferred as gift by an instrument in writing signed by the
transferor or his duly authorised agent. Registration and delivery of
possession are not necessary.
A gift of future property
Gift of future property is merely a promise which is unenforceable by law.
Thus, Section 124 of the Transfer of Property Act renders the gift of future
property void. If a gift is made which consists of both present as well as
future property, i.e., one of the properties is in existence at the time of
making the gift and the other is not, the whole gift is not considered void.
Only the part relating to the future property is considered void. Gift of future
income of a property before it had accrued would also be void under Section
124.

A gift made to more than one donee

Section 125 of the Act says that in case a property is gifted to more than one
donee, one of whom does not accept it, the gift, to the extent of the interest
which he would have taken becomes void. Such interest reverts to the
transferor and does not go to the other donee.

A gift made to two donees jointly with the right of survivorship is valid, and
upon the death of one, the surviving donee takes the whole.

Provisions relating to onerous gifts

Onerous gifts refer to the gifts which are a liability rather than an asset. The
word ‘onerous’ means burdened. Thus, where the liabilities on a property
exceed the benefits of such property it is known as an onerous property.
When the gift of such a property is made it is known as an onerous gift, i.e.,
a non-beneficial gift. The donee has the right to reject such gifts.

Section 127 provides that if a single gift consisting several properties, one of

which is an onerous property, is made to a person then that person does not
have the liberty to reject the onerous part and accept the other property.
This rule is based upon the principle of “qui sentit commodum sentire debet
et onus” which implies that the one who accepts the benefit of a transaction
must also accept the burden of it. Thus, when two properties, one onerous
and other prosperous, are given in gift to a donee in the same transaction,
the donee is put under the duty to elect. He may accept the gift together
with the onerous property or reject it totally. If he elects to accept the
beneficial part of the gift, he is bound to accept the other which is
burdensome. However, an essential element of this Section is a single
transfer. Both the onerous and prosperous properties must be transferred in
one single transaction only then they require the obligation to be accepted or
rejected in a joint manner.
In case the onerous gift is made to a minor and such donee accepts the gift,
he retains the right to repudiate the gift on attaining the age of majority. He
may accept or reject the gift on attaining majority and the donor cannot
reclaim the gift unless the donee rejects it on becoming a major.

Universal donee
The concept of universal donee is not recognised under English law, although
universal succession, according to English law is  possible in the event of the
death or bankruptcy of a person. Hindu law recognises this concept in the
form of ‘sanyasi’, a way of life where people renounce all their worldly
possessions and take up spiritual life. A universal donee is a person who gets
all the properties of the donor under a gift. Such properties include movables
as well as immovables. Section 128 lays down in this regard that the donee
is liable for all the debts and liabilities of the donor due at the time of the
gift. This section incorporates an equitable principle that one who gets
certain benefits under a transaction must also bear the burden therein.
However, the donee’s liabilities are limited to the extent of the property
received by him as a gift. If the liabilities and debts exceed the market value
of the whole property, the universal donee is not liable for the excess part of
it. This provision protects the interests of the creditor and makes sure that
they are able to chase the property of the donor if he owes them.

Suspension or revocation of gifts

Section 126 of the Act provides the legal provisions which must be followed
in case of a conditional gift. The donor may make a gift subject to certain
conditions of it being suspended or revoked and these conditions must
adhere to the provisions of Section 126. This Section lays down two modes of
revocation of gifts and a gift may only be revoked on these grounds.

Revocation by mutual agreement

Where the donor and the donee mutually agree that the gift shall be
suspended or revoked upon the happening of an event not dependent on the
will of the donor, it is called a gift subject to a condition laid down by mutual
agreement. It must consist of the following essentials:

 The condition must be expressly laid down

 The condition must be a part of the same transaction, it may be laid
down either in the gift-deed itself or in a separate document being a
part of the same transaction.
 The condition upon which a gift is to be revoked must not depend
solely on the will of the donor.
  Such condition must be valid under the provisions of law given for
conditional transfers. For eg. a condition totally prohibiting the
alienation of a property is void under Section 10 of the Transfer of
Property Act.
 The condition must be mutually agreed upon by the donor and the
donee.
 Gift revocable at the will of the donor is void even if such condition
is mutually agreed upon.

Revocation by the rescission of the contract

Gift is a transfer, it is thus preceded by a contract for such transfer. This
contract may either be express or implied. If the preceding contract is
rescinded then there is no question of the subsequent transfer to take place.
Thus, under Section 126, a gift can be revoked  on any grounds on which its
contract may be rescinded. For example, Section 19 of the Indian Contract
Act makes a contract voidable at the option of the party whose consent has
been obtained forcefully, by coercion, undue influence, misrepresentation, or
fraud. Thus, if a gift is not made voluntarily, i.e., the consent of the donor is
obtained by fraud, misrepresentation, undue influence, or force, the gift may
be rescinded by the donor.

The option of such revocation lies with the donor and cannot be transferred,
but the legal heirs of the donor may sue for revocation of such contract after
the death of the donor.

The limitation for revoking a gift on the grounds of fraud, misrepresentation,

etc, is three years from the date on which such facts come to the knowledge
of the plaintiff (donor).

The right to revoke the gift on the abovementioned grounds is lost when the
donor ratifies the gift either expressly or by his conduct.

Bonafide purchaser
The last paragraph of Section 126 of the Act protects the right of a bonafide
purchaser. A bonafide purchaser is a person who has purchased the gifted
property in good faith and with consideration. When such a purchaser is
unfamiliar with the condition attached to the property which was a subject of
a conditional gift then no provision of revocation or suspension of such gift
shall apply.
Exceptions
Section 129 of the Act provides the gifts which are treated as exceptions to
the whole chapter of gifts under the Act. These are:

 Donations mortis causa
These are gifts made in contemplation of death.

 Muslim-gifts (Hiba)
These are governed by the rules of Muslim Personal Law. The only essential
requirements are declaration, acceptance and delivery of possession.
Registration is not necessary irrespective of the value of the gift. In case of a
gift of immovable property worth more than Rupees 100, Registration
under Section 17 of the Indian Registration Act is must, as it is applicable to
Muslims as well. For a gift to be Hiba only the donor is required to be Muslim,
the religion of the donee is irrelevant.

Conclusion
To constitute a transfer as a gift it must follow the provisions of the Transfer
of Property Act. This Act extensively defines the gift itself and the
circumstances of the transfer of such a gift. The gift, being a transfer of the
ownership rights, must be in possession and ownership of the transferee and
must be existing at the time of making the transfer. The transferor must be
competent to make such transfer but the transferee may be any person. In
case the transferee is incompetent to contract, the acceptance of gift must
be ratified by a competent person on his/her behalf. Gift of future property is
void. Partial acceptance of prosperous gifts and rejection of onerous gifts is
not valid either. The acceptance of a gift entails the acceptance of the
benefits as well as the liabilities coupled with such a gift. A gift may be
revoked only by a mutual agreement on a condition by the donor and the
donee, or by rescinding the contract pertaining to such gift. The
Donations mortis causa and Hiba are the only two kinds of gifts which do not
follow the provisions of the Transfer of Property Act.
What is subrogation'? State properties which cannot be
transferred?

Introduction
The Transfer of Property Act of 1882 is a significant law from the
nineteenth century. The primary goal of this Act is to make the transfer of
immovable property a public transfer system. Registration is necessary to
complete the transfer. Property is a wide phrase that encompasses a
thing’s value as well as the ownership exercised by the owner. It
encompasses a person’s property rights. In different legal systems, the
term subrogation has varied meanings. The doctrine of subrogation is
derived from Roman law.
Subrogation is defined as the substitution of one person or thing for
another, and as a result of this change, the same rights and obligations that
applied to the original person or thing apply to the substitute person or
thing. As a result, it merely entails putting oneself in another’s shoes.
The doctrine of subrogation gives the insurer the right to benefit from the
assured’s rights and remedies against third parties in accordance with the
loss, to the degree that the insurer has indemnified and made good the
damage. As a result, the insurer has the right to utilise whatever rights the
assured has in order to recover compensation for the loss to that degree,
but it should be done in the name of the assured.[1]
 Section 92 in The Transfer of Property Act, 1882 states the Doctrine of
Subrogation.
The doctrine applies to the following persons:

1. A person has an interest in the mortgaged property or has any right

of redemption.
2. Any creditor of the mortgage.
3. A co-mortgagor.
4. It includes a  mortgagor’s surety redeeming the mortgage.[2]

The following are the essential aspects for a legitimate subrogation

claim:

i. The person claiming the right must have an interest in or charge on

the mortgaged property that entitles him to redeem the mortgage.
ii. He has till the end of the month to pay off the mortgage.
iii. A person must have given money to a mortgagor in order to redeem
a mortgage, with an agreement in writing that he will be subrogated
to the rights of the mortgagee whose mortgage is discharged.

The essence and scope of the doctrine of subrogation were defined by the
Calcutta High Court in Bisseswar Prasad v. Lala Sarnam Singh (1910) 6
Cal. LJ 134 : “The doctrine of subrogation is a doctrine of equity
jurisprudence. It does not depend upon the privity of contract, express or
implied, except in so far as equity may be supposed to be imported into a
transaction and thus raise a contract by implication. It is founded on the
facts and circumstances of each particular case and on the principles of
natural justice.” [3]
According to Broomfield, J., in the case of Isap Bapuji Amiji’ v. Umarji
Abhram Adam, the retrospective effect should be used as a guide for
determining what equitable rules are not inconsistent with the Act should be
adopted as valid in India in cases where there is a conflict of authority.
Whereas according to N.J. Wadia, J., Section 92 of the Transfer of
Property Act, as amended in 1929, has a retrospective effect.[4]

Historical Perspective
Stringer V. The English and Scotch Marine Insurance Co. was the first
English case to use the term “subrogation.” The plaintiffs in this case
insured a ship cargo with the defendants for the ‘taking at sea, arrests,
restraints, and detention of all Kings, princes, and people.’ The ship was
eventually captured by a US cruiser and transferred to New Orleans, where
a lawsuit for its condemnation was filed. The plaintiffs successfully
challenged the action, and the captors appealed. The plaintiffs were
compelled to provide security for fees, which they could not pay. As an
outcome, the ship was condemned, and the plaintiffs filed a formal notice of
cargo abandonment, requesting that the insurance compensate them for
their whole loss. The court stated that the plaintiff, as the assured, had the
option of contesting the appeal in an American court or claiming a loss
under the policy. The insurers were forced to pay because the assured
picked the latter. The insurers were entitled to be subrogated to them after
they had paid. They’d take whatever they could from the Americans for
their own profit.’
Subrogated rights do not arise from an indemnity contract, according to
both Canadian and English law. It arises as a result of the common law’s
application to the relationship. Subrogated rights do not emerge under
common law until the insured is completely compensated for its loss. Once
full indemnity has been paid, the insurer has the right to file suit in the
insured’s name against the offender and make all legal judgments. In
situations like giving evidence at trial, the insured has a duty to cooperate
in the action.
The ideas of subrogation established by equity were accepted and welded
into common law in the case of London Assurance Co. V. Sainsbury. The
common law played a significant role in shaping the future of this equitable
theory.[5] In the case of Deering v. Winchelsea, the Court of Exchequer
concluded that ‘bottom of contribution’ is a permanent principle of justice
that is not established in contract: His contribution is regarded to be based
on equity, with no mention of a contract. In a Court of Equity, the principle
is more obvious than in a Court of Law. At law, the party is dragged before
an Audita Querela or Seire Facias in order to stop the execution and
compel execution against everyone.
The court explained the basis on which courts of law could justify the
adoption of equitable norms in the sphere of contribution in Craythorn V.
Swinburn. If there are co-sureties under the same instrument, and the
creditor requires one of them to settle the principal obligation, or any part of
it, that surety has the right to call on his co-surety for contribution, either on
the basis of equity or contract.

The Doctrine of Subrogation in India

Subrogation is a doctrine founded on ideals of equity, justice, and morality.
The basic tenet of the doctrine is that the individual who pays off a
mortgage inherits all of the mortgagee’s rights. Even in parts of India where
the Act itself did not apply, this notion was rendered applicable. [6] Section
92 of the Transfer of Property Act, 1882, recognises and describes the
Right of Subrogation.
In the case of Gokuldas V. Puranmal, the Privy Council applied the
principle of subrogation to a purchaser of the equity of redemption, holding
that Gokuldas was subrogated to the rights of the prior mortgagee whom
he had paid off, and that this claim could not be disposed of unless it was
redeemed.Gokuldas, the mortgagor’s creditor, bought the equity of
redemption at a sale in execution of a money decree and took possession,
according to the facts of the case. He paid off a previous mortgagee, but a
puisne mortgagee sued him for possession. A mortgagor who pays off a
prior debt is not entitled to be subrogated to his creditor’s rights and
remedies. This is because, by releasing a former encumbrance he
established, he is releasing his own debt to his creditor.[7]
In the matter of Narain V. Narain, it was established that where the
mortgagor redeems the property himself, the doctrine could not be applied.
A mortgagor who pays off a former debt is not eligible to be subrogated to
his creditor’s rights and remedies. This is because he is discharging his
own duty to his creditor by eliminating a prior encumbrance he imposed.
The Madras High Court ruled that when a subsequent mortgagee redeems
a prior mortgage, there is no doubt about whether the payment is for the
advantage of the mortgagor or the mortgagee. To determine whether
section 92 applies, all that is required is to determine whether the individual
claiming the benefit of this section was a mortgagee during the time he
made the payment.[8]

Kinds of Subrogation
Section 92 of the Transfer of Property Act, 1882, mentions two kinds of
subrogation : (1) Legal Subrogation and (2) Conventional Subrogation.

Legal Subrogation
Paragraph 1 of Section 92 deals with legal subrogation. A legal subrogation
occurs as a result of the law’s operation. A legal subrogation occurs when a
mortgage loan is paid off by someone who has an interest or charge on the
debt, or who is a surety, creditor, or co-mortgagor to safeguard the interest.
When a subsequent mortgagee redeems the former mortgagee, a co-
mortgagor redeems the mortgage, a surety redeems the mortgagee, or a
purchaser of equity of redemption redeems the mortgage, legal subrogation
occurs.
The following people can claim Legal Subrogation:

i. Puisne mortgagee: This person is a subsequent mortgagee who

redeems a prior mortgage and is entitled to subrogation to the
preceding mortgage’s position.
ii. Surety: Under section 91, a person who acts as a surety in a
mortgage for the repayment of the loan if the mortgagor fails to do so
is also entitled to redeem the mortgaged property. When the
mortgagor’s surety redeems the property, he becomes subrogated to
the creditor’s status and rights.[9]
iii. Co-mortgagor: The co-mortgagor is liable only to the extent of his
portion of the debt. He becomes entitled to be subrogated in lieu of
the other mortgagor when, in addition to redeeming his own part, he
also pays off the other mortgagor’s portion.
iv. Purchaser of equity of redemption: There is some ambiguity about
whether or not the purchaser of redemption equity could be
subrogated. The mortgagor’s equity of redemption is considered his
property, which he can sell or transfer. The buyer of such equity
becomes the property’s owner.
Conventional Subrogation
Paragraph 3 of Section 92 deals with conventional subrogation. When the
individual paying off the mortgaged obligation is a stranger, a traditional
subrogation occurs since the stranger has no interest in protecting the
mortgaged property. This person repays the loan under the arrangement
that he will be subrogated to the rights of the paid-off mortgagee. It’s a
subrogation based on a contract. This subrogation agreement can be
written and registered, and it can be expressed or inferred.

Conclusion
Overall, when evaluating the applicability of equitable subrogation
principles, it is necessary to examine the method in which the insured party
is compensated for the loss they have sustained. The existence or absence
of subrogation rights can have a considerable impact on the risk profile of a
given exposure, especially in the case of large and complicated risks
involving several insureds. After a loss, the party gaining charge of the
proceedings must use caution in any settlement and ensure that it
conforms with its duty of good faith. In terms of the entire claim’s merits, the
settlement must be consistent with legal advice.
When a subrogated claim involves damages that are not covered by the
policy, there is considerable confusion about who has control of the
proceedings and how the proceeds of any recovery should be split between
them. The law provides that all securities be given to the surety in order for
them to get their claim in full.[10]
The Supreme Court of India ruled that subrogation rights are only granted
by operation of law, not by deliberate agreement. Subrogation, according to
the Supreme Court of India, is the assignment of rights by the insured, and
so the insurer is not a “consumer” within the definition of the Consumer
Protection Act, 1986, and hence is not allowed to file a complaint.