Notes - Property Law

Kartheek D. N.
Selected Topic Notes:- Property Law
NOTE:-
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1-side typed sheet = approximately 2-sides in exam booklet

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Condense / Expand answer as required
Unit - 1
Q: THE GENERAL RULE IS THAT PROPERTY OF ANY KIND MAY BE TRANSFERRED. EXPLAIN
THE STATEMENT WITH EXCEPTIONS.
A:
GENERAL RULE OF TRANSFERABILITY OF PROPERTY / WHAT MAY BE TRANSFERRED:
The word property includes properties of all description. It includes movable,
immovable, tangible and intangible properties. A property is a bundle of rights. When a
property is transferred, the rights along with the property are transferred too. However, an
arrangement may be made by which some of the rights may be transferred but not all.
The transferability of property is the general rule and non-transferability is an exception.

Transferability of property is based on the maxim alienatio rei prae fertur juri accrescendi
which means to say that alienation is favoured by the law rather than accumulation. The
general policy of law is to promote free alienation and circulation of property rather than
accumulation of it.
EXCEPTIONS / WHAT PROPERTY CANNOT BE TRANSFERRED:

S. 6 of TP Act, 1882 says that property of any kind may be transferred excepting the
exceptions given in the Act or by any other law for the time being in force.
The section consists of exceptions in clauses (a) to (i). It is a list of cases wherein a
property is not transferable and they are as follows:
Read NOTE:- on Page No.1 Page 1 of 61

Kartheek D. N. Selected Topic Notes:- Property Law
(a) Spes Successionis

(b) Right of re-entry
(c) Easement
(d) Restricted interest
(dd) Right to future maintenance
(e) Right to sue
(f) Public office
(g) Stipends and pensions
(h) Nature of interest, etc
(i) Untransferable interests
(a) Spes Successionis: - s.6(a)

s.6(a) of the Act deals with spes successionis. It says that spes successionis is not
transferable. Spes successionis means expectation of succession, it is a possibility of
getting property in future through succession.
Spes successionis includes chance of an heir apparent succeeding to an estate,
chance of a relation obtaining a legacy on the death of a kinsman or any other mere
possibility of a like nature
Illustration:
A has a wife B and a daughter C. C in consideration of 1000 rupees paid to
her by A executes a release of her right to share in the inheritance to A’s property. A dies
and C claims her one-third share in the inheritance. B resists the claim and sets up the
release signed by C. The release is no defence for it is a transfer of a spes successionis
and C is entitled to her one-third share but is bound to bring into account the 1000 rupees
received from her father.
(b) Right of re-entry: - s.6(b)

s.6(b) of the Act deals with right of re-entry. A “mere right of re-entry” refers to the
right of re-entry which a transferor reserves to himself after having parted with the whole
estate for breach of a condition subsequent. This is the right referred to in S.111(g)
which the lessor has against the lessee for breach of an express condition which provides
that on its breach the lessor may re-enter.
(c) Easement: - s.6(c)

s.6(c) of the Act deals with easement. It says that an easement cannot be transferred
apart from the dominant heritage.
Illustration:
A who is owner of a house has a right of way over the land of B which is adjoining to
his land. A transfers his right of way over the land of B to C.
Here, A cannot do this because easement itself is not a property which can be
transferred.
However, if A transfers his house to C, then the right of easement attached with his
house will go to C.

(d) Restricted interest: - s.6(d)

s.6(d) of the Act deals with restricted interest. An interest restricted in enjoyment to
the owner personally is by its very nature not transferable unless the restriction is void
u/S. 10 of the Act. A transfer of such property would defeat the object of the restriction.
The object of a right of pre-emption is to prevent the introduction to strangers as co-
sharers and the sale of such a right to an outsider would defeat that object.
(dd) Right to future maintenance: - s.6(dd)

s.6(dd) of the Act deals with right to future maintenance. It provides that a right to
future maintenance in whatsoever manner arising, secured or determined cannot be
transferred.
Right of future maintenance is for the personal benefit of the person to whom it is
granted and therefore it cannot be transferred. Although the right of maintenance is not
transferable, the arrears of maintenance can be transferred.
(e) Right to sue: - s.6(e)

s.6(e) of the Act deals with right to sue. It provides that a mere right to sue cannot
be transferred. This means that bare right to sue cannot be transferred.
Illustration:
A publishes libel of B. B has a right to sue A legally because A has published
defamatory statements against him. But B transfers his right to C.
Here, C cannot sue A to recover damages because B has assigned him only the mere
right to sue.
(f) Public office: - s.6(f)

s.6(f) of the Act deals with public office. It provides that a public office cannot be
transferred nor the salary of a public office whether before or after it has become payable.
These interests are made non-transferable to ensure the dignity of the office held by him
and proper performance of his duties.
(g) Stipends and pensions: - s.6(g)

s.6(g) of the Act deals with stipends and pensions and constitutes the eighth
exception to the general rule of transferability. It provides that the stipends allowed to
military, naval, air force and civil pensioners of the government and political pensions
cannot be transferred. Pension means a periodical allowance or stipends granted not in
respect of any right to office but on account of past service or particular merit.
Example:
The family pension of a deceased is not in the nature of an estate and it being not
transferable cannot be bequeathed by a Will.
(h) Nature of interest, etc: - s.6(h)

S.6(h) of the Act deals with nature of interest, unlawful object or unlawful
consideration and a person legally disentitled to be a transferee. The prohibition under
this clause is based on public policy.
This means that the law does not recognise such a transfer as a result of which the
courts will give no assistance either to the transferor to revoke it or to the transferee to
enforce it.
Example:
There are certain things known as res communes which in their natural form belong
to no one or res nulies which are not owned by anyone like air, water, space, sea, light,
etc. These things are given by the nature to be used by each individual on earth. It is not
possible to hold and possess them separately. If any one tries to transfer such a thing, it
would be opposed to its nature.
(i) Untransferable interests: - s.6(i)

s.6(i) deals with untransferable interests. This clause was added in 1885 to remove
doubts regarding the non-transferability of occupancy rights.
Under this clause, any tenant having an untransferable right of occupancy cannot
transfer his interest as such tenant, the farmer of an estate in respect of which default has
been made in paying revenue cannot transfer his interest as such farmer and the lessee of
an estate under the management of the Court of Wards cannot assign his interest as such
lessee to any other person.

Q: DEFINE TRANSFER OF PROPERTY. STATE WHETHER PARTITION, SURRENDER,

COMPROMISE AND GIFT AMOUNTS TO TRANSFER UNDER THE ACT.
A:
INTRODUCTION:
The right of ownership of property whether movable or immovable consists of a
bundle of four rights which are the right to transfer, the right to possess, the right of use &
enjoyment and the right to destroy.
The Transfer of Property Act, 1882 is a codification of the manner in which an owner of
property may exercise his right of ownership of property. All transfers dealt with under the
Act are the transfer of some combination of some or all the rights of ownership of immovable
property.
TRANSFER OF PROPERTY:
s.5 of the Transfer of Property Act,1882 deals with transfer of property. According to
the section, transfer of property means an act by which a living person conveys the property
in present or in future to one or more other living persons or to himself or to himself and one
or more other living persons and the living person includes a company or association or body
of individuals whether incorporated or not.
IS PARTITION, SURRENDER, COMPROMISE AND GIFT TRANSFERS?

Partition, surrender, compromise and gift does not amount to transfer under the Act
for the following reasons:
1) Surrender:
For a transfer, there must be a conveyance i.e., a creation of a right in favour of a
person who has none by a person who has a right in the immovable property. A
relinquishment in favour of coparcener or a Hindu widow having limited interest in property,
surrendering it to the next reversioner in order to accelerate his succession are not transfers
because they are really extinction of rights in property and not transfers of property.
2) Partition:
A family arrangement or a bona fide settlement of a disputed claim is also not a
transfer of property because it is a recognition of pre-existing rights and does not convey any
new or distinct title to the parties to the settlement.
For the same reason, a partition is also not a transfer. Once a partition has been
effected, there is severance of jointness of properties. The portions which came to the share
of two brothers, they exchanged their portions as between them.
3) Compromise:
Every compromise does not involve a transfer of property. A dispute about a property
may be settled by a compromise. If the property already belongs to them, it is divided among
them under their settlement agreement. There would be no conveyance. A deed of
compromise in such a case is not a transfer.

4) Gift:
Gift is the transfer of certain existing movable or immovable property made
voluntarily and without consideration by one person called the donor to another called the
donee and accepted by or on behalf of the donee.
The concept of gift is diametrically opposed to any presence of consideration or

compensation. There may be certain transactions of transfer which may not amount to a gift
within the meaning of s.122 of the Act but would be regarded as gifts for the purpose of
subjecting such transfers to the levy of tax under the Gift Tax Act, 1958 because of the
definition of gift contained sin s.2(xii) r/w s.4 of the Gift Tax Act.
In the Indian context, it has been held that a bequest under a Will i.e., a testamentary
instrument is a gift as the definition of instrument in the Transfer of Property Act,1882
specifically states that an instrument means a non-testamentary instrument and s.5 of the Act
requires a conveyance of property to be by an Act of parties whereas devolution of property
by succession takes place by operation of law and hence such a gift is not a transfer of
property and does not come within the purview of this Act.
Also, a gift made in apprehension of death i.e., donatio mortis cause also does not
come within the scope of this Act.

Q: DISCUSS THE LAW RELATING TO TRANSFER OF PROPERTY MADE FOR THE BENEFIT OF
UNBORN PERSON.
A:
UNBORN PERSON:
A person not in existence i.e., living at the date of the transfer is said to be an unborn
person.
LAW RELATING TO BENEFIT OF UNBORN PERSON:

s.13 and s. 20 of the Act deal with rules provisions which have to be observed when
creating future interests.
s.13:
According to s.13 of the Act, a transfer cannot be made directly to an unborn person
for the definition of transfer in s.5 of the Act is limited to living persons. Such a transfer can
only be made by the machinery of trusts i.e., the transfer is subject to a prior interest created
by the same transfer.
A trust may thus be created in favour of an unborn person even though coming into
existence of such a person is uncertain. The trustees being the transferees hold the property
for the benefit of the unborn person.
This is done so because of the rule that property cannot be held in abeyance as at all
times there must be someone in existence who holds the rights of a particular property. If a
transfer occurs to a person who is not in existence on a particular day, then on that day the
transferor is divested of the rights in that property but there is no one in existence in whom
the rights will vest.
Hence, a restricted interest is created in favour of the prior interest who cannot deal
with the property in anyway except transferring it to the unborn person when he comes into
existence.
It also lays down that an absolute interest must be given to the unborn person as no
restrictions can be placed on the ultimate transfer to the unborn person i.e., life interest cannot
be created in favour of the unborn person.
The maximum period for which the vesting of the property can be postponed is upto
the date of maturity of the ultimate beneficiary i.e., the unborn person.
A child in the mother’s womb is not an unborn person as such a person is deemed to
be in existence as also a child adopted by the mother after her husband’s death.
s. 20:
According to s.20 of the Act, an interest created for the benefit of an unborn person
vests as soon as that person is born unless a contrary intention appears from the terms of the
transfer although such an unborn person is may be not entitled to enjoyment of the property.
A contrary intention that the estate shall not vest at birth may appear as - when the
interest is contingent for example a transfer to A and B for their joint lives and then to the son
of their intended marriage who shall first attain the age of 18 years.
Thus, if A settles property on himself and his intended wife for their joint lives and
then on the eldest son of their marriage, the son takes a vested interest as soon as he is born.
Caselaw: Devaru Ganapathi Bhat vs. Prabhakar Ganapathi Bhat (2004 SC)
In this case, a woman donated property to her brother’s only son with a stipulation
that if the brother had any other children then all of them would hold the property jointly
while retaining one of the properties for her own livelihood till her demise which also would
go to the brother’s only son.
The Hon’ble Court held that the younger brother born subsequently became entitled to
joint ownership of the whole property including the one which was retained by the donor for
her lifetime.

Unit - 2
Q: DISCUSS THE PROVISION OF TP ACT RELATING TO TRANSFER BY OSTENSIBLE OWNER.
A:
OSTENSIBLE OWNER:
An ostensible owner is one who on inquiry by a prospective purchaser, which a
prudent and careful man would make, appears to have all the characteristics of a real owner
and the real owner himself does not dispel the impression.
However, an entry in the municipal registers of the name of a person as the real owner
of the property without the knowledge of the real owner will not estop the real owner.
TRANSFER BY AN OSTENSIBLE OWNER:

s.41 of the Act deals with transfer by ostensible owner. This section deals with what
is known as the Doctrine of Holding Out. It forms an exception to the general principle of
contracts nemo dat quod non habet which means that a person cannot convey a better title
than he himself has and resolves the dispute which arises when the rights of 2 innocent
persons come into conflict.
The requisites/essentials for taking benefit of the section are:

1) the transfer must be by an ostensible owner
2) the transferor must have become the ostensible owner with the express or implied consent
of the real owner
3) the transfer must be for some consideration
4) the transferee must have acted in good faith with reasonable care in ascertaining that the
transferor has the power to make a transfer.
This section is based on the Principle of Estoppel enunciated in s.115, Evidence Act.
Therefore, to imply consent of the real owner, it is not sufficient to prove that he was silent
until it is also shown that he had a duty to speak.
The section cannot be invoked against minors because they are incapable in law of
giving the necessary consent either expressly or by implication.
Caselaw:
BENAMI TRANSACTION:
In this country where the benami system prevails and is legally recognised, the
benamidar is the ostensible owner.
Caselaw: Binapani Paul vs. Pratima Ghosh (2007 SC)

In this case, a wife purchased property in her name acting through her power of
attorney. The husband was the attesting witness to the power of attorney. He therefore knew
that the transaction was that of his wife. An insurance policy was also taken out in her name.
The property was also mutated in the name of the wife immediately. The Hindu Women’s
Right to Property Act, 1935 had not yet come into force. The couple had a son and seven
minor daughters.
The Hon’ble Court by observing that the intention of the husband to provide for
security of wife and children could be inferred and held that the transaction was not a benami
transaction.
COURT SALE:
The section applies only to voluntary transfers and does not apply to Court sales.
MORTGAGE BY CONDITIONAL SALE:

s.58(c) of the Act deals with mortgage by conditional sale. The ingredients of a
mortgage by conditional sale are:
1. There is an ostensible sale by the mortgagor to the mortgaged property
2. There is a condition that the sale shall be void if the loan/mortgage-money is repaid on a
particular date. The property is then re-transferred to the mortgagor. If however the
payment is not made on the stipulated date, the sale becomes absolute in favour of the
mortgagee
3. The remedy of the mortgagee is by a suit for foreclosure
4. Registration is compulsory only if the consideration exceeds 200 rupees
5. There should be only one document
A mortgagee cannot transfer the mortgaged property. He takes the property as a

security. He has to return it to the mortgagor on payment. He is not competent to transfer the
property. Any such transfer conveys no right or title.
Caselaw: Narayan vs. Prushottam

In this case, it has been held that a mortgagor is the owner of a limited interest and not
an ostensible owner and therefore the purchaser of an equity of redemption is not entitled to
the protection of this section against the mortgagee.
EXCEPTION:
However, the transferee may in an appropriate case claim the benefit of the principle
behind the section if he has been led by the conduct of the mortgagee to believe that the
property was unencumbered.

Q: EXPLAIN DOCTRINE OF LIS PENDENS AS PROVIDED UNDER TP ACT.
A:
PENDENCY OF SUIT:
The meaning of pendency of suit is provided in the Explanation to s.52 of the Act. It
lays down that for the purposes of the section pendency of a suit or proceeding shall be be
deemed to commence from the date of presentation of the plaint or the institution of the
proceeding in a Court of competent jurisdiction and continues until the suit or proceeding has
been disposed of by a final decree or order and complete satisfaction or discharge of such
decree or order has been obtained or has become unobtainable by reason of the expiration of
any period of limitation prescribed for the execution thereof by any law for the time being in
force.
DOCTRINE OF LIS PENDENS:

Lis Pendens means a suit under consideration of any Court of law. It is an action
which is pending in any Court.
s.52 of the Act deals with this aspect. It lays down that during the pendency in any
Court of a suit or proceeding which is not collusive and in which any right to immoveable
property is directly and specifically in question, the property cannot be transferred or
otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any
other party thereto under any decree or order which may be made therein except under the
authority of the Court and on such terms as it may impose.
This section is based on the maxim ut lite pendente nihil innovetur which means that
nothing new should be introduced into a pending litigation. It is done to maintain the status
quo unaffected by the act of any party to the litigation pending its determination.
Where a suit or proceeding is pending between two persons with respect to an

immovable property and one of these parties sells or otherwise transfers the subject-matter of
litigation, the the transferee will be bound by the result of the suit or proceeding whether he
had notice of the suit of proceeding or not. This is known as the rule of lis pendens. This
rule affects the purchaser’s /transferee pendente lite’s title.
Caselaw: Narendrabhai Chhaganbhai Bharatia vs. Gandevi Peoples Co-op Bank Ltd.
In this case, the Hon’ble Court has observed that the principles contained in s.52 of
the Act are in accordance with the principle of equity, good conscience or justice because it
will be impossible to bring an action or suit to a successful termination if alienations are
permitted to avail (profit of land).

Caselaw: T.G. Ashok Kumar vs. Govindammal & Anr.

In this case, the Hon’ble SC has held that -
i) if ultimately the title of the pendente lite transferor is upheld in regard to the transferred
property, the transferee’s title will not be affected.
On the other hand, if the title of the pendente lite transferor is recognized or accepted
only in regard to a part of the transferred property, then the transferee’s title will be saved
only in regard to that extent and the transfer in regard to the remaining portion of the
transferred property to which the transferor is found not entitled will be invalid and the
transferee will not get any right, title or interest in that portion.
ii) if the property transferred pendente lite is allotted in entirety to some other party or parties
or if the transferor is held to have no right or title in that property, the transferee will not
have any title to the property.
Caselaw: KN Aswathnarayana Setty (D) Tr. LRs & Ors vs. S. of Karnataka & Ors
In this case, the Hon'ble SC has held that a transferee pendente lite is bound by the
decree just as much as he was a party to the suit and that the transferee cannot deprive the
successful plaintiff of the fruits of the decree if he purchased the property pendente lite.
Caselaw: T. Ravi & Anr vs. B. Chinna Narasimha & Ors

In this case, the Hon'ble SC has held that the provisions of s.52 is to prevent
multiplicity of proceedings and that it is not at all necessary to file a suit for cancellation of
the sale deed as the vendor had no authority to sell.

Q: EXPLAIN THE CIRCUMSTANCES UNDER WHICH CREDITORS CAN SET ASIDE A TRANSFER AS
FRAUDULENT.
A:
FRAUDULENT TRANSFER:
S.53 of the Act deals with this aspect. The transfers referred to in the section are
transfers in fraud of creditors which are valid until they are avoided and which are voidable at
the option of any creditor defrauded, defeated or delayed.
The section uses the term creditors instead of creditor. It includes all those who are
creditors at the date of the transfer as well as those who become creditors subsequent to the
date of fraudulent transfer. The term creditor is correlative to debtor and signifies a person to
whom a debt i.e., a liquidated or specific sum of money is due. For example, a Muslim wife
is a creditor in respect of her dower debt.
If the creditor sues to avoid the transfer, he must file a representative suit on behalf of
all the creditors. Alternatively, he may take recourse to for example attachment of the
property transferred.
ESSENTIAL REQUIREMENTS OF S.53(1):

The essential requirements of this section are as follows:
1) there must be a transfer of an immovable property
2) transfer must have been made to with intent to defeat or delay the creditors of the
transferor
3) the transfer shall be voidable at the option of the creditor whose interest has been defeated
or delayed.
Exceptions:
1) The rights of a transferee in good faith and for consideration are unaffected:
Where a transferee acquires property from the debtor in good faith and for value, he is
not affected by the rule laid down in s.53(1). If the creditors establish that the transfer was
made with the object of defeating them, the burden shifts on the transferee to prove that he
had paid a fair price for the property and that he was not a party to the fraud.
Caselaw: Samittri Devi vs. Sampran Singh

In this case, as soon as the landowner came to know that his property was being sold
in a clandestine manner, he sent a notice under a certificate of posting. A copy of the notice
and of the certificate of posting was produced in evidence. The agreement of purchase was
signed 5 days after despatch of the notice.

The Hon'ble SC came to the conclusion that it could be presumed that the notice was
duly served before the agreement of purchase was signed. Hence, there was not a bona fide
purchase for value without notice.
The real owner obtained the decree in his favour.
2) Any right created by the law of insolvency remains unaffected:

The law of insolvency aims at providing for equal distribution of the assets of the
insolvent among his creditors and therefore its provisions are more stringent. It says that a
transfer made voluntarily at the time within 2 years prior to adjudication and a transfer for
consideration made within 3 months prior to adjudication are voidable as against the Official
Receiver u/ss. 53 and 54 of the Provincial Insolvency Act, 1920.
CIRCUMSTANCES UNDER WHICH CREDITORS CAN SET IT ASIDE:

1. When the transfer is done with an intent to defeat the creditor
2. When the transfer is done with an intent to delay the creditor
If the following conditions are present, it may lead to an inference of defeating or

delaying creditors:
1) where the debtor sells all the property keeping nothing to himself
2) the consideration is not adequate
3) the transfer is made secretly
4) the transferor tries to take off his property out of the reach of those person who might
become his creditor.
Caselaw: Mattar vs. Dhumbajii

In this case, a creditor obtained a decree against a widow who had a life interest in the
property gifted to her by her husband. The widow in order to render the property out of reach
of the creditor surrendered her interest to her son.
The Hon’ble Court held that the surrender was voidable at the option of the creditor
u/s.53 of the Act.
Caselaw: Palamalai vs. South Indian Export

In this case, A who was in embarrassed conditions wished to convert his property into
cash so as to conceal it from his creditors. B, who was aware of his condition assisted him by
purchasing the property.
The Hon’ble Court held the sale to be voidable u/s.53 of the Act.
Where transfers do not defeat the creditors but only delays them i.e., payment to them
is delayed, s.53 will be applicable.
Caselaw: C. Abdul Shukoor Saheb vs. Arji Papa Rao

In this case, the Hon'ble SC held that in a case where the whole of debtor’s property
was not sold could not by itself negative the applicability of s.53(1) unless there is cogent
proof that there is another property left sufficient in value and of easy availability and that
rendered alienation in question immaterial for the creditor.

s.53(2) provides for subsequent transferees and comes into play where a prior transfer
is made without consideration and a subsequent transfer of the same property is made for
consideration. The prior transfer without consideration should have been made with intention
to defraud creditors. In such a case, where the same property is transferred again to a
subsequent transferee, the prior transfer shall be voidable at the option of the subsequent
transferee.
Illustration:
A makes a settlement of his property to his children and subsequently he sells the
same property to B.
Here, if B can prove that the sale was made with the intention to defraud him, the
settlement is liable to be set aside.

Q: EXPLAIN THE DOCTRINE OF PART PERFORMANCE AND ESSENTIALS OF IT.
A:
DOCTRINE OF PART PERFORMANCE:

The Doctrine of Part Performance is also known as Equity of Part Performance. It
says that if a person has taken possession of an immovable property on the basis of a contract
of sale and has either performed or is willing to perform his part of the contract, then he
would not be ejected from the property on the ground that the sale was unregistered and the
legal title has not been transferred to him.
The Doctrine of Part Performance was incorporated in s.53A of the Act by the
Amending Act of 1929. It creates a statutory right but the right is only of a defence as the
transferor remains the full owner.
ESSENTIAL REQUIREMENTS OF DOCTRINE OF PART PERFORMANCE:

Caselaw: Nathulal vs. Phoolchand
In this case, the requirements were stated by the Hon'ble SC as follows:
1) There must be a contract to transfer an immovable property for consideration
2) The contract should be in writing and its terms can be ascertained with reasonable
certainty
3) The transferee should have taken the possession of the property in part performance of the
contract or if he is already in possession should have continued in possession in part
performance of the contract and should have done something in furtherance of the contract
4) The transferee is ready and willing to perform his part of the contract.
1) Contract to transfer an immovable property for consideration:

The first requirement of this section is that there must be a contract to transfer an
immovable property and the contract must be in writing. It must be signed by the person or
his agent on his behalf. A transferee under an oral agreement cannot take benefit of this
section. However, all the terms of previous oral agreement reduced in writing can be used for
the purpose of s.53A.
The protection given under s.53A is available only in those cases where the transfer of
property is for a consideration. Where transfer is without consideration, this doctrine will not
be applicable.
2) Contract in writing and ascertainable with reasonable certainty:

The second requirement is that the contract must be in writing and such that the terms
of the contract can be ascertained with reasonable certainty. The contract must have also
been signed by the person claiming to recover possession or on his behalf.

A letter written by the owner of the property admitting that he had agreed to sell his
half share of the property was not taken by the SC as a deemed agreement to sell so as to
meet the requirement of the section. However, an incomplete deed of transfer though not
registered or even attested is regarded as a contract in writing but such a deed must have been
signed by the transferor or the agent. An unregistered document affecting immovable
property required to be registered may be received in evidence of a part performance of a
contract for the purpose of s.53A.
3) Part performance of contract by transferee, transfer of possession or continuance of

possession:
The third requirement of this section is that the transferee either must have taken the
possession of the property after the contract is made or if he is already in possession of the
property he must have continued in possession.
However, for this section, it is necessary that the transferee must have obtained
possession by lawful means.
Caselaw: KK Adaltha vs Amrish Sehgal

In this case, the transferee was put in possession of the suit property and he had
already paid a substantial part of the sale consideration.
The Hon’ble Court said that the agreement had been partly performed by the parties
and the transferor was not permitted to fall back upon the frivolous plea that the amount of
registration charges was not paid to him.
Taking possession is not the only method of part performance of the contract. Where
the transferee is already in possession of the property, the must do some act in furtherance of
the contract. For example, he must pay increased rent if there is such a term in the contract or
he must pay half the price of the property which is to be transferred to him under the contract,
etc.
4) Readiness or willingess of transferee:

The principle of equity is that he who seeks equity must do equity. Therefore, the
transferee who wants to take benefit of this must also do his part of the contract. He must be
willing and ready to perform his part under the contract which is the fourth requirement of
this section.
However, a purchaser/vendee who has already taken possession of the property

cannot protect his possession under this section if he is not willing to pay the price of the
property.
Caselaw: Nathulal vs. Phoolchand

In this case, the Hon'ble SC has observed that it is not necessary that the transferee
must plead his willingness in each and every case. It can also be inferred from his conduct.
For example, where a purchaser of land has to pay the price after inspecting the
revenue records but he could not do so because the records were incorrect he could not be
said to be unwilling to pay the balance price.
The existence of right to claim protection u/s.53A would not be available if the
transferee just kept quiet and remained passive without taking effective steps.

PROBLEM:-
Somanna purchases a land from Radhika at Hubli. Somanna believes that he had
acquired absolute title and constructs a house on that land. Subsequently, Shashi Kumar who
holds a better title on the land proceeds for eviction of Somanna from the property. Discuss
the relief available to Somanna.
SOLUTION:-
Facts:
1) Somanna purchases a land from Radhika at Hubli.
2) Somanna believes he has acquired absolute title to it.
3) Subsequently, Shashi Kumar who holds better on land proceeds for eviction of Somanna.
Issue:
1) What is the relief available to Somanna?
Provisions:
1) Section 51 of Transfer of Property Act, 1882.
Discussion:
The section provides that where a transferee makes any improvements on the property
under a defective title believing in good faith that he is absolutely entitled to and is
subsequently evicted from the property by any person having a better title, then the transferee
has a right to have the value of the improvement estimated at the time of eviction and paid or
secured to the transferee or require the person to sell his interest in the property at the then
prevailing market rate irrespective of the value of the improvement.
In the given problem, Somanna having purchased the property from Radhika was
proceed on for eviction and according to Section 51 of Transfer of Property Act, 1882 he is
entitled from Shashi Kumar to the estimated value of improvement at the time of eviction or
in the alternate buy the interest of Shashi Kumar at the then prevailing market value.
Conclusion:
In view of the above discussion, the relief available to Somanna is - he is entitled to the
estimated value of improvement at the time of eviction or in the alternate buy the interest of
Shashi Kumar at the then prevailing market value.

Unit - 3
Q: DEFINE MORTGAGE AND STATE ITS KINDS.
A:
MORTGAGE:
S.58(a) of the Transfer of Property Act, 1882 defines mortgage as - a mortgage is the
transfer of an interest in specific immoveable property for the purpose of securing the
payment of money advanced or to be advanced by way of loan, an existing or future debt, or
the performance of an engagement which may give rise to a pecuniary liability.
The transferor is called a mortgagor, the transferee a mortgagee; the principal money and
interest of which payment is secured for the time being arc called the mortgage-money, and
the instrument (if any) by which the transfer is effected is called a mortgage-deed.
DIFFERENT KINDS OF MORTGAGE:

S. 58 of the Act contemplates 6 kinds of mortgage and they are as follows -
(1) Simple Mortgage
(2) Mortgage by Conditional Sale
(3) Usufructuary Mortgage
(4) English Mortgage
(5) Mortgage by Deposit of Title Deeds
(6) Anomalous Mortgage
(1) Simple Mortgage: - s.58(b)

s.58(b) of the Act deals with simple mortgage. In a simple mortgage, possession and
enjoyment of the property remains with the mortgagor and he personally covenants to
pay the mortgage-money. He agrees that in case of his default by non-payment the
property may be sold by the mortgagee under the order of the court. It must be effected
by a registered instrument.
Remedy of the mortgagee:

The mortgagee has 2 remedies and they are one, on the personal undertaking to
obtain a money decree against the mortgagor and second, to sue on the mortgage and
obtain a decree for the sale of the property.
(2) Mortgage by Conditional Sale: - s.58(c)

s.58(c) of the Act deals with mortgage by conditional sale. In a mortgage by
conditional sale, there is an ostensible sale by the mortgagor to the mortgagee of the
mortgaged property with a condition that the sale shall be void if the loan is repaid on a
particular date and then the property is transferred back to the mortgagor. It must be
effected by a registered instrument if the consideration exceeds Rs.100.00
Caselaw: Raj Kishore vs. Prem Singh

In this case, the Hon'ble Supreme Court has held that every sale accompanied by an
agreement for re-conveyance of property does not constitute a mortgage by conditional
sale.

The remedy open to the mortgagee by conditional sale is by foreclosure only and not
by a suit for sale. Foreclosure is a legal proceeding by mortgagee to either gain title or
to force a sale in order to satisfy the unpaid debt secured by the property.
(3) Usufructuary Mortgage: - s.58(d)

s.58(d) of the Act deals with usufructuary mortgage. Usufructuary means a person
has the right to the benefits of another’s property.
In a usufructuary mortgage, possession of the property is given to the mortgagee.

The mortgagee is given the right to the usufruct of the property i.e., rent, produce or
profits of the property. The mortgagor himself does not remain personally liable to pay
the mortgage money because either the mortgagee is let into the possession or he is
permitted to repay himself out of the rents and profits of such property.
It must be effected by a registered instrument if the consideration is Rs. 100.00 or
more but if it is less than Rs. 100 it may be made by a registered instrument or by
delivery of property.

Since the mortgagee is entitled to possession of the property till his principal money
and interest due both are paid in accordance with the mortgage deed, the right of
foreclosure or a suit for sale is not available to him.
Rights of Usufructuary Mortgagor:

Under s.62 of the Act, a usufructuary mortgagor has been given a right to recover
possession of the mortgaged property from the mortgagee when the mortgagee has repaid
himself out of the rents and profits of such property or mortgagor pays the mortgage
money or balance of it to the mortgagee or deposits it in the court.
(4) English Mortgage: - s.58(e)

s.58(e) of the Act deals with English mortgage. In a English mortgage, the property
is absolutely transferred to the mortgagee with a condition that when the debt is paid off
on the given date, mortgagee will re-transfer the property to the mortgagor.

The remedy open to the mortgagee is by a suit for sale and not by foreclosure.
(5) Mortgage by Deposit of Title Deeds; - s.58(f), equitable mortgage

s.58(f) of the Act deals with mortgage by deposit of title deeds. This type of
mortgage is also known as equitable mortgage. This is a special kind of mortgage
because here the execution of mortgage deed is not necessary. Mere deposit of title
deeds of an immovable property by mortgagor to mortgagee is sufficient.
The rule of equity is that mere deposit of a document of title without writing or
without word of mouth will create in equity a charge upon the property which is referred
in the deed. It also creates a right in rem which cannot be defeated by any defence of
bona fide purchaser without notice and therefore will also operate against a subsequent
legal mortgage of the same property.
It is restricted to persons in certain towns, but the property can be anywhere. On the
other hand, if property is situate in one of the towns mentioned but the title deeds are
handed over in a town which is not included the transaction would not be a mortgage by
deposit of title deeds.
It need not be effected by a registered instrument.

The remedy open to the mortgagee is by a suit for sale and for mortgage money and
not by foreclosure. However, the mortgagor’s remedy is a suit for redemption and not
an action to recover the title deeds.
(6) Anomalous Mortgage: - s.58(g)

s.58(g) of the Act deals with anomalous mortgage. A mortgage which does not fall
under any of the five above stated categories is known as anomalous mortgage. Such
mortgages take innumerable forms moulded either by custom or the caprice of the
creditor. In this kind of mortgage, the possession may or may not be given. If the
mortgage money is Rs. 100 or more, it must be registered but if less than Rs. 100 it may
be by a registered instrument or by delivery of possession.
Example:
Suppose in the case of a usufructuary mortgage, the mortgagor also personally
covenants to repay the mortgage amount, it ceases to be a usufructuary mortgage and
becomes both a simple and a usufructuary mortgage.
Caselaw: Kidar Nath vs. Mangat Rai

In this case, properties were mortgaged with possession and under the covenants in
the mortgage deed there was a stipulated rate of interest payable by the mortgagor on the
mortgage money and the amount recovered from the income of the property was to be
first applied towards the interest and the balance towards the principal. The mortgagee
was also entitled to recover by suit the interest accruing due.
The Hon'ble Supreme Court held that the mortgage is clearly anomalous mortgage.

The remedy open to the mortgagee is by a suit for sale and by foreclosure where the
terms of the mortgage permit it according to s.67(a) and according to s.67(b) it is by a
suit for sale only if he becomes a trustee or legal representative of the mortgagee.

Q: EXPLAIN THE RIGHTS AND LIABILITIES OF THE MORTGAGEE IN POSSESSION.
A:
MORTGAGE:
S.58(a) of the Transfer of Property Act, 1882 defines mortgage as - a mortgage is the
transfer of an interest in specific immoveable property for the purpose of securing the
payment of money advanced or to be advanced by way of loan, an existing or future debt, or
the performance of an engagement which may give rise to a pecuniary liability.
The transferor is called a mortgagor, the transferee a mortgagee; the principal money and
interest of which payment is secured for the time being arc called the mortgage-money, and
the instrument (if any) by which the transfer is effected is called a mortgage-deed.
RIGHTS & LIABILITIES OF MORTGAGEE IN POSSESSION:

s.72 of the Act deals with rights of a mortgagee in possession and s.76 of the Act
deals with liabilities of a mortgagee in possession and they are as follows:
1. RIGHTS:
A mortgagee is allowed to spend money only where it is necessary to keep the
property intact. The reason behind this right is that the mortgagee gives loan to the
mortgagor on security of the mortgaged property and in case of mortgagor’s default to repay
the debt he recovers the money from the mortgaged property only. If the mortgaged property
is destroyed or devalued, the mortgagee would not be able to recover the money.
Thus, it becomes necessary to protect the property from destruction. However, this
right is not an absolute right. The mortgagee is entitled to spend money only when it is
necessary to do so. He cannot spend more than what is required or without any necessity for
the same.
CIRCUMSTANCES IN WHICH EXPENDITURES IS ALLOWED:

A mortgagee may spend such money as is necessary in the absence of the contract to
the contrary in the following circumstances:-
1) Preservation:
It is the duty of the mortgagor to keep the property protected. If the mortgagor
neglects to do so, this section gives the right to the mortgagee to protect that property and
spend money for the purpose. The expenditures incurred by the mortgagee in the
preservation of property is included in the mortgage-money.
The interest of the mortgagee in the protection of the mortgaged property lies in the
fact that the property is given to him for securing the repayment of his debt.
Caselaw: Canara Bank, Mannarkkad vs. Bhavani Oil Co.

In this case, the Hon’ble Court held the Bank liable for loss of goods in its
possession by observing that the goods hypothecated and stored in the bank’s godown at
risk and responsibility of the borrower would not apply as it means only ordinary care
which bailee has to take u/s.151 of the Contract Act, 1872.
2) Mortgagor’s title:

Title to property means ownership of property. The mortgagor is under duty to

defend his title. But, if he fails to defend his title and the mortgagee defends the mortgagor’s
title and incurs expenses in doing so, he is entitled to add such money to the principal amount.
3) Mortgagee’s title:
Where the mortgagor brings any suit to challenge the title of the mortgagee in the
mortgaged property and the mortgagee defends his title, he becomes entitled to add the
expenses of the suit incurred by him to the principal amount.
However, he is not entitled to costs incurred by him in defending his title against a
stranger or to incur costs in regard to criminal proceedings taking place between the parties in
regard to the mortgaged land.
4) Renewal of the lease:

The mortgagee is entitled to spend money for renewal of the lease when the
mortgaged property is a renewable leasehold. Although he is under no liability to renew the
lease he may do so in order to maintain his security and if he pays fine for the renewal he can
add the amount to the principal sum.
5) Insurance:
Where the property is by its nature insurable, the mortgagee may in the absence of a
contract to the contrary insure and keep insured against loss or damage by fire the mortgaged
property and the premiums paid for any such insurance shall be added to the principal money.
The amount of such insurance should not exceed the amount specified in the deed for
the purpose. If no such mount has been mentioned in the deed, the amount of insurance
should not exceed 2/3rds of the amount which would be required to reinstate the property in
case of total destruction.
2. LIABILITIES:
Where the mortgagee is in possession of the mortgaged property he becomes bound
by certain obligations towards the property because the property belongs to the mortgagor.
s.76 of the Act lays down that when during the continuance of the mortgage, the
mortgagee takes possession of the mortgaged property he is bound by the following
duties/liabilities:
1) Manage the property:
The mortgagee has the liability to manage the property as a person of ordinary
prudence. Although the mortgagee is not the trustee of the mortgaged property for the
mortgagor, yet his duties towards the mortgaged property are similar to the duties of a trustee
u/s.15 of the Indian Trust Act
A mortgagee may grant lease of the mortgaged property in the course of management
of property but not beyond the period of the mortgage.
2) Rents and profits:

The mortgagee has the liability to collect rents and profits to his best endeavour. The
mortgagee has to account not only for the rents and profits which he has actually received but
also for those which he could not collect due to his negligence or mismanagement.
3) Government duties, etc:

The mortgagee has the liability to pay the public charges, rent and Government
revenue as they paramount charges on immovable property of which he is in possession and

failure to pay them renders the property liable to be sold. However, this duty is subject to a
contract to the contrary.
4) Repairs:
The mortgagee has the liability to may make repairs to the mortgaged property when
any money is left out of rents and profits with him after paying the Government revenue and
charges of public nature, etc. In case no money is left with him, he is not bound to undertake
repairs. He cannot increase the mortgage debt by undertaking repairs. However, this duty is
also subject to a contract to the contrary.
5) Permanent destruction injury:

The mortgagee has the liability to use the mortgaged property with the care of a
prudent owner. However, he is not liable for accidental losses.
6) Insurance:
The mortgagee has the liability to in case of loss or damage by fire to apply the
money received by him under the insurance policy in reinstating the property or in reduction
or discharge of the mortgage-money where the mortgagor directs so.
7) Proper accounts:
The mortgagee has the liability to keep clear, full and accurate accounts of all the
sums received and spent by him as a mortgagee. He is bound to supply the mortgagor on his
request and cost true copies of such accounts and of vouchers by which they are supported.
He cannot contract himself out of this duty.
8) Mode of Accounting:
The mortgagee has the liability to apply the income in the following order -
(i) expenses properly incurred in the management of the property and the collection of rents
and profits and other expenses
(ii) interest on the amount
(iii) the surplus is to be applied towards the interest on the principal money and
(iv) towards the principal money
As soon as there is a surplus of net receipts over interest, the balance should be
applied in reduction of principal and then interest runs on the reduced amount.
9) Gross receipts:
The mortgagee has the liability to account for all the rents and profits received by him
from the date of tender or deposit of money in the Court till he actually receives the money.
The rents and profits received by the mortgagee during this period cannot be included in the
mortgage money.

Q: EXPLAIN THE PRINCIPLES OF MARSHALLING AND CONTRIBUTION.
A:
1. MARSHALLING:
Rule of Marshalling Assets is an Equitable Doctrine that requires a senior creditor having
two or more assets to satisfy his debt to first dispose of the asset not available to a junior
creditor i.e., it prevents the inequity that would result if the senior creditor could choose to
satisfy his debt out of the only asset available to the junior creditor and thereby exclude the
junior creditor from any satisfaction.
It is also known as Marshalling Doctrine, Rule of Marshaling Securities, Rule of

Marshalling Remedies.
MARSHALLING BY SUBSEQUENT PURCHASER:

S. 56 of the Transfer of Property Act, 1882 deals with Marshalling by subsequent
purchaser.
This section deals with the statutory right of a vendee to claim marshalling where the
owner who has mortgaged two or more properties has sold one or more of those properties to
him in the absence of a contract to the contrary to have the debt satisfied out of the
property/properties not sold to him so far as the same will extend provided that it does not
prejudice the rights of the mortgagee or persons claiming under him or of any other person
who has for consideration acquired an interest in any of the properties.
The Doctrine of Marshalling has been held to be not applicable to execution sales, but it
may be invoked in cases of involuntary sales.
Illustration:
Properties X, Y and Z are subject to a mortgage. The mortgagor sells X to A free
from encumbrances.
Here, marshalling enables A to require that the mortgagee shall satisfy his mortgage
as far as possible out of the properties Y and Z.
Caselaw: Muhammad Rafeeq vs. Bank of Baroda

In this case, A borrowed money from the Bank, B by securing some items of the
property. C was a stranger to this loan transaction between A and B. He later purchased
one item of property from A over which security interest was created.
The Hon’ble Court held that C would not be eligible to have the property spared u/s.
56 of the Act as provisions of SARFESI Act would override the provisions of the
Transfer of Property Act.
MARSHALLING SECURITIES:
S. 81 of the Transfer of Property Act, 1882 deals with Marshalling Securities.

This section deals with the statutory right of a mortgagee to claim marshalling where the
owner who has already mortgaged two or more properties subsequently mortgages one or
more of those properties to him in the absence of a contract to the contrary to have the prior
mortgage-debt satisfied out of the property/properties not mortgaged to him so far as the
same will extend provided that it does not prejudice the rights of the prior mortgagee or of
any other person who has for consideration acquired an interest in any of the properties.
A prerequisite to claim marshalling is that there must be a common debtor. It is available

only if there are two properties involved and not if portions of a property are dealt with.
This section applies to mortgage of immovable property and not to hypothecation of

movables.
Illustration:
Properties X, Y and Z are mortgaged by A to B. A subsequently mortgages X to C.
Here, B is prior mortgagee and C is subsequent mortgagee.
Now, marshalling enables C to require that the prior mortgagee shall satisfy his
mortgage as far as possible out of the properties Y and Z.
2. CONTRIBUTION TO MORTGAGE DEBT:

s.82 of the Act deals with this aspect. This section deals with the rules relating to
contribution of money towards mortgage-debt. The Doctrine of Contribution provides that
several properties mortgaged to secure 1 debt are liable to contribute to that debt rateably in
proportion to their values at the date of the mortgage, the amount of the previous mortgage or
charge being deducted.
This rule applies not only where several properties are mortgaged and their owner is
compelled to satisfy the whole mortgage-debt but also where only 1 property held by several
co-owners is mortgaged and the portion of 1 co-owner is made to satisfy the mortgage.
It is based on the principles of equity, justice and good conscience. Equity does not
allow that 1 person bear the whole burden of a common debt.
Rules of Contribution:
The rules of contribution are given below:
1) when mortgaged property belongs to 2 or more persons
2) when 1 property is mortgaged first and then again mortgaged with another property
3) marshalling supersedes contribution.
1) When mortgaged property belongs to 2 or more persons:

Where the mortgaged property belongs to 2 or more persons who take a common loan,
then according to the rule of contribution all the co-mortgagors are liable to contribute
rateably.
Hence, the mortgagor from whose property alone the debt is recovered has a right to
compel other co-mortgagors to contribute to the debt. However, the co-mortgagors are liable
to contribute only up to the extent of their respective shares in the property and not personally.

This rule is also applicable where at the time of mortgage, the property is 1 but later
on it is partitioned and co-shares become owner of their respective shares.
Illustration:
A, B and C jointly mortgage their properties to D to secure a debt of 10,000 rupees
and A has half-a-share whereas B and C have one-fourth-share each in the mortgage property
and mortgagee, D recovers his full debt from the property belonging to A.
Here, as A is only liable only for 5,000 rupees in debt amount as his is half-a-share, he
can ask B and C to contribute 2,500 rupees each towards the loan amount.
2) When 1 property is mortgaged first and then again mortgaged with another property:
Where the mortgagor has 2 properties and he mortgages 1 property to secure 1 debt
and then mortgages both to secure another debt and if the former debt is paid out of the
former property therein the absence of a contract to the contrary each property is liable to
contribute rateably to the latter debt after deducting the amount of the former debt from the
value of the property from which it has been paid.
3) Marshalling supersedes contribution:

In case of any conflict between the right of marshalling and contribution, the right of
marshalling prevails over that of contribution i.e., it supersedes contribution. Therefore,
contribution is subject to marshalling.

Unit - 4
Q: DEFINE SALE AND STATE THE RIGHTS AND LIABILITIES OF SELLER AND BUYER.
A:
SALE:
s.54 of the Act deals with this aspect. It defines sale as - sale is a transfer of
ownership in exchange for a price paid or promised or part-paid and part-promised.
RIGHTS & LIABILITIES/DUTIES OF SELLER AND BUYER:

s.55 of the Act deals with this aspect. The obligations imposed by this section are
covenants and are in the nature of statutory obligations and is applicable subject to a contract
to the contrary or such of them as are applicable to the property sold:
Rights and liabilities of the buyer and seller can be categorised as follows:
1) BEFORE COMPLETION OF SALE:

(1) Sellers Liabilities:
(i) to disclose material defects
(ii) to produce title-deeds for inspection
(iii) to answer questions as to title
(iv) to execute a proper conveyance
(v) to take care of property and title deed
(vi) to pay public charges and rent accrued
(2) Sellers Rights:

(i) To take rents and profits
(3) Buyer’s Liabilities:

(i) To disclose facts materially increasing value of property
(ii) To pay the price
(4) Buyer’s Rights:

(i) to charge for price prepaid
2) AFTER COMPLETION OF SALE:

(1) Seller’s Liabilities:
(i) to give possession
(ii) implied covenant for title
(iii) to deliver title deeds on receipt of price
(2) Seller’s Rights:

(i) charges for price unpaid

(i) to bear loss to the property
(ii) to pay outgoings - public charges and rents

(i) Benefit of increment
1) BEFORE COMPLETION OF SALE:

(1) Sellers Liabilities:
(i) to disclose material defects:
The seller is bound to disclose to any material defect which is present either in the
property or in the title which the buyer would not discover with ordinary care. It is
necessary that the defect must be a material defect about which if the buyer had
known he would not have purchased the property.
Example:
Encumbrance, charge, easement, restrictive covenants, etc.
(ii) to produce title-deeds for inspection:

The seller is bound to produce title deeds in his possession or power for inspection of
the buyer. The buyer should examine all the documents for his own protection either
at the seller’s place or buyer’s place.
If the buyer does not demand any such document, the seller is under no duty to
produce them.
(iii) to answer questions as to title:

If there are some doubts, the buyer must ask them and the seller must answer them to
the satisfaction of the buyer.
(iv) to execute a proper conveyance:

Conveyance means transfer of ownership. This is done by signing of the sale deed or
putting thumb impression on the sale deed by the seller. When the buyer makes the
payment, the seller has to execute the conveyance, it must be on proper place and
proper time which is decided by the parties. However, the conveyance must be within
reasonable time after tender of price.
(v) to take care of property and title deed:

Between date of contract of sale and delivery of property, the seller is bound to take
as much care of the property and all documents of title as an owner of ordinary
prudence would do.

(vi) to pay outgoings:

Before the completion of sale, the seller has to pay all outgoings i.e., all the public
charges like rent, revenue, taxes, etc unless there is a contract to the contrary. If the
seller fails to pay the outgoings and the buyer subsequently pays them, the buyer
becomes entitled to be reimbursed by the seller.
(2) Sellers Rights:

(i) To take rents and profits:
The seller is entitled to rents and profits of the property till the ownership passes to
the buyer as he continues to be the owner of the property.

(i) To disclose facts materially increasing value of property:
The buyer is liable to disclose any fact which materially increases the value of the
property to the seller before completion of sale when the seller is not aware about that.
Caselaw: Summers vs. Griffiths

In this case, an old lady contracted to sell a property at much less price
believing that her rights in the property were not absolute, but the buyer had
knowledge that her interest was perfect and absolute and did not disclose it.
The Hon’ble Court held the buyer was liable for fraud and set aside the sale.
(ii) To pay the price:

The buyer is not bound to pay or tender the full amount before transfer of ownership.
He may either pay the price or promise to pay it at the time of completion of sale to
the seller or to the person directed by him.

(i) to charge for price prepaid:
When the buyer properly declines to accept delivery of the property, he becomes
entitled to refund of earnest money if any and for the costs if any also awarded to him
in a suit to compel specific performance of the contract or to obtain a decree for its
rescission.
2) AFTER COMPLETION OF SALE:

(1) Seller’s Liabilities
(i) to give possession:
Possession is to be given to the seller/his agent after ownership is transferred to the
buyer unless there is a contract to the contrary. In the case of tangible immovable
property, physical control is to be given over the property and in case of intangible
immovable property possession is symbolic.
(ii) implied covenant for title:

Such a covenant is implied in every sale of immovable property and it is not required
to be expressly mentioned in a sale deed. It means that the seller’s interest in the
property subsists and that he has the power to transfer the same.
(iii) to deliver title deeds on receipt of price:

When the whole of the money has been paid to the seller, the seller is bound to deliver
all documents of title which are in his possession or power.
(2) Seller’s Rights

(i) charges for price unpaid:
This is known as statutory charge of the seller for the unpaid price. This right has
been given for the protection of the seller who has given possession of his property to
the buyer but has not received full price. The seller has the right to recover the
unpaid purchase money from the property alongwith interest on such amount from the
date on which such possession was delivered. Under this right, the seller is not
entitled to retain possession and the charge is said to be non-possessory lien.
(3) Buyer’s Liabilities

(i) to bear loss to the property:
Where ownership of the property has passed to the buyer, the buyer is bound to bear
any loss arising from the destruction, injury or decrease in value of the property not
caused by the seller.
(ii) to pay outgoings:

After the completion of sale, buyer becomes the owner of the property and he
becomes liable to pay the outgoings like for example Government dues, taxes, rents,
revenue, etc.
(4) Buyer’s Rights

(i) Benefit of increment:
The buyer is is entitled to rents and profits of the property and also the increase in the
value of the property and any improvement in the property.

Q: EXPLAIN THE VARIOUS MODES OF TERMINATION OF LEASES.
A:
LEASE:
s.105 of the Transfer of Property Act, 1882 deals with this aspect. It defines lease as -
a lease of immoveable 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 promise or
of money, a share of crops, service or any other thing of value to be rendered periodically or
on specified occasions to the transferor by the transferee who accepts the transfer on such
terms.
The transferor is called the lessor, the transferee is called the lessee, the price is called
the premium and the money share, service or other thing to be so rendered is called the rent.
MODES OF TERMINATION OF LEASES:

s.111 of the Act deals with this aspect. It lays down the modes in which a lease can
be terminated as in a lease only right of enjoyment is transferred in favour of the lessee who
thereafter is bound to deliver possession of the property to the lessor.
The modes of termination of a lease are:

1) By efflux of time
2) By happening of some event
3) By termination of lessor’s interest in property
4) By merger
5) By express surrender
6) By implied surrender
7) By forfeiture
8) On expiration of notice to quit
1) By efflux of time:
Where the term of lease if fixed, the lease determines on the last day of the time
period of lease automatically. No notice to quit is required. However, unregistered lease
deed cannot be determined by efflux of time.
Where the lessee continues to remain in possession of the leased property even after
the determination of lease, he is known as lessee at sufferance/holding over and has to pay
compensation to the lessor the use and enjoyment of the property and a 15 days notice is
sufficient to terminate the tenancy
Caselaw: UoI vs Jagdish Kaur

In this case, the lease was for a fixed term of 5 years with a stipulation for extension
by mutual agreement which stipulation was not availed of. It also contained an arbitration
clause in case of any disputes to be referred to.
The Hon’ble Court held that the arbitration clause came to an end with the expiry of
the lease deed and was no longer applicable and that the suit for eviction was maintainable.

2) By happening of some event:

Where the lease contains a condition that the lease will terminate on the happening of
some event, it will terminate on the happening of that event. So long as such event does not
happen, the lessee will be entitled to the possession of the leased property.
On the determination of the lease, the lessor may either re-enter the property or
maintain a suit for ejectment.
3) By termination of lessor’s interest in property:

Where a lessor has only a limited interest or power to grant a lease, the lease is determined
with the loss of that interest.
Example:
i) Lease by a Hindu widow who is entitled only to a life estate determines on her death
ii) Lease granted by a mortgagee in possession and extending beyond the term of the
mortgage determines on redemption
4) By merger:
Lease of an immovable property determines in case the interests of the lessee and the
lessor in the whole of the property become vested at the same time in one person in the same
right.
Example:
i) When the tenant himself becomes the absolute owner of the tenanted premises
ii) When one of the joint tenants purchases the premises leased to them and the other joint
tenant neither claims tenancy rights nor pays rents after the purchase
5) By express surrender:
Surrender consists in the yielding up of the term of the lease accompanied by delivery
of possession. Delivery of possession is important unless there is an agreement to surrender
at some future time.
In case of an express surrender, no formality is required, only the lessee must express
his intention to surrender, the lessor must agree to the surrender and there must be delivery of
possession. Express surrender may be made either orally or in writing. Also, surrender can
be inferred from the conduct of the parties.
6) By implied surrender:
An implied surrender takes place either by creation of a new relationship between the
lessor and the lessee or by relinquishment of possession by the lessee and taking over by the
lessor.
Example:
i) Surrender by lessee takes place when the lessor grants a new lease to a 3rd person with the
assent of the lessee who delivers possession to such person
ii) Surrender by lessee takes place when he directs his sub-tenant to pay rent directly to the
lessor

7) By forfeiture:
Lease terminates by forfeiture in the following circumstances:
i) Breach of express condition by lessee
ii) Denial of title of lessor
iii) Insolvency of lessee
In any of these cases, the lessor or his transferee has to serve a notice in writing to the
lessee of his intention to determine the lease
8) On expiration of notice to quit:

A lease terminates when the notice to quit or to determine expires. u/s.106 of the Act,
periodic leases like leases from month to month or from year to year are terminated by notice
to quit. No notice is necessary in case of leases for fixed terms.
Caselaw: Vijay Kumar vs. Harbhajan Kaur

In this case, a 1 year lease carried a condition that the lessee would vacate the shop
when required by the landlord for her use.
The Hon’ble Court held that the notice u/s.111(h) was proper, that she became
entitled to a decree of eviction and that she was not required to prove that the shop was
required by her for her personal use.

Q: EXPLAIN THE CIRCUMSTANCES UNDER WHICH A LEASE CAN BE DETERMINED.
A:
LEASE:
s.105 of the Transfer of Property Act, 1882 deals with this aspect. It defines lease as -
a lease of immoveable 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 promise or
of money, a share of crops, service or any other thing of value to be rendered periodically or
on specified occasions to the transferor by the transferee who accepts the transfer on such
terms.
The transferor is called the lessor, the transferee is called the lessee, the price is called
the premium and the money share, service or other thing to be so rendered is called the rent.
CIRCUMSTANCES UNDER WHICH LEASE CAN BE DETERMINED:

s.111 of the Act deals with this aspect. It lays down the modes in which a lease can
be terminated as in a lease only right of enjoyment is transferred in favour of the lessee who
thereafter is bound to deliver possession of the property to the lessor.
s.111(g) lays down the circumstances under which a lease can be determined on
forfeiture and they are as follows:
1) Breach of express condition by lessee
2) Denial of title of lessor
3) Insolvency of lessee
In any of these cases, the lessor or his transferee has to serve a notice in writing to the
lessee of his intention to determine the lease
1) Breach of express condition by lessee:

Under this circumstance of forfeiture, the lease terminates when the express condition
is broken by the lessee which had provided that in case of breach of the condition by the
lessee the lessor will re-enter the leased property.
Caselaw: Nil Madhab vs. Narottam

In this case, the lease deed contained an express condition that the lessee shall not
alienate his leasehold, but he alienated the property in violation of the condition.
The Hon’ble Court held that the lessor cannot forfeit property because the lease deed
did not contain provision for re-entry.
Caselaw: Bharathi Shetty vs. B. Hanumanthappa

In this case, the lessee committed breach of an express condition of lease by default in
payment of rent, but there was no provision for forfeiture in the agreement in such default.
The Hon’ble Court held that in the absence of forfeiture clause, the lessor had no right
to re-enter the premises, the lessee was not liable to be evicted and was only liable to pay
arrears of rent along with costs and interest.

2) Denial of title of lessor:

Under this circumstance of forfeiture, the lease terminates when the lessee denies
lessor’s right and sets up a title in himself or in a 3rd person. The lessor in such a case
becomes entitled to forfeit the tenancy.
Caselaw: Institute of Education, Saraswatipuram, Mysore vs. Sowcar A. Siddanna

Endowment and KH Ramaiah Memorial Endowment Trust, Mysore
In this case, the title of the plaintiff was denied by the defendant-tenant on the ground
that he himself had purchased the property in a public auction.
The Hon’ble Court decreed the suit by setting aside the sale in favour of defendant
and held that he would not be restored to his original position as tenant.
3) Insolvency of lessee:
Under this circumstance of forfeiture, the lease terminates when the lease deed
contains a condition that in case the lessee is adjudicated insolvent the lessor will re-enter the
property.
The 3 conditions in which the lessor has been given the right to re-enter the leased
property and take possession can be waived by the lessor at this discretion.

Q: WHAT IS AN ACTIONABLE CLAIM? HOW CAN AN ACTIONABLE CLAIM BE TRANSFERRED?
A:
ACTIONABLE CLAIM:
s.3(c) of the Transfer of Property Act, 1882 deals with this aspect.
Actionable claim means a claim to -

1) any debt other than a debt secured -
a) by a mortgage of immovable property or
b) by hypothecation or pledge of movable property or
2) any beneficial interest in movable property -
not in the possession either actual or constructive of the claimant
Which claim the Civil Courts recognise as affording grounds for relief whether such debt
or beneficial interest be existent, accruing, conditional or contingent.
Example:
Claims for arrears of rent, money due under any insurance policy, return of earnest
money, unpaid dower of a Muslim woman, right to get back the purchase money when sale is
set aside, a share in partnership
TRANSFER OF AN ACTIONABLE CLAIM:

s.130 of the Transfer of Property Act, 1882 deals with this aspect. According to this
section, transfer of both the types of actionable claims i.e., with or without consideration are
effected by the execution of an instrument in writing. The instrument must be signed by the
transferor or his duly authorised agent.
Illustration:
(i) A owes money to B, who transfers the debt to C. B then demands the debt from A who
not having received notice of the transfer as prescribed in s.131 pays B. The payment
is valid and C cannot sue A for the debt.
(ii) A effects a policy on his own life with an Insurance Company and assigns it to a Bank for
securing the payment of an existing or future debt. If A dies, the Bank is entitled to
receive the amount of the policy and to sue on it without the concurrence of A's
executor, subject to the proviso of s.130(1) and to the provisions of s.132.
INCAPACITY:
s.136 of the Act provides that certain persons cannot be assignees of actionable claims
i.e., the transferee must be a competent person. The following persons are legally
disqualified to be transferees: judge, legal practitioner or officer connected with any Court of
Justice. However, they can sell their own actionable claims.
MODE OF ASSIGNMENT:
s.131 of the Act deals with this aspect. It lays down that every notice of transfer of
actionable claim must be in writing and signed by the transferor or his duly authorised agent

in this behalf. Where the transferor refuses to sign, then the notice must be signed by the
transferee or his agent. The notice must be an express notice in writing and it must state the
name and address of the transferee. It has been held that a notice which did not give the
address of the transferee was held to be invalid.
There is no time limit within which the notice must be given. Notice given within 1
year was held to be reasonable.
It is not necessary that the assignment should be made by a separate document. Only
an endorsement on the back of a document containing the actionable claim is sufficient for
the purpose.
EFFECT OF ASSIGNMENT:
After execution, all the rights and remedies of the transferor vest in the assignee.
Then, the assignee/transferee becomes entitled to recover the claims and sue in his own name.
The assignee also becomes liable for all the liabilities and equities to which the transferor was
subject to at the time of the transfer.
NOTICE OF ASSIGNMENT:
Although a notice of assignment to the debtor is not compulsory to perfect the title of
the assignee/transferee, but until the debtor receives notice of assignment to a 3rd person his
dealings with the original creditor shall be protected. Therefore, the assignee must give
notice to the debtor in his own interest as early as possible.
ASSIGNMENT OF INSURANCE POLICIES:

Where an insured assigns his policies to a bank and makes a claim as a complaint
under the consumer Protection Act, as soon as a decree is passed or an order is made in
favour of the complainant, the bank will be entitled to the amount directly from the insurer
and the bank need not obtain the decree or order in its favour.
ASSIGNMENT OF PROMISSORY NOTE:

A document whereby the owner of a government promissory note authorises a person
to recover the note or its value from the person with whom it is deposited operates as an
assignment.
ASSIGNMENT OF A BOND:
Delivery of a bond to A with a letter requesting the debtor to pay A constitutes an
assignment of the bond to A.
ASSIGNMENT OF A FIXED DEBT:

A fixed deposit is not a negotiable instrument. It represents a debt and can be
assigned u/s.130.
ASSIGNMENT BY OPERATION OF LAW:

On the death of the person entitled, his actionable claims pass as a rule onto his LRs.
Exception: The provisions of s.130 does not apply to transfer of a marine or fire policy of insurance or
affect the provisions of s.38 of Insurance Act, 1938.

Q: WHAT IS GIFT? WHEN A GIFT MAY BE REVOKED?
A:
GIFT:
s.122 of the Transfer of Property Act, 1882 deals with this aspect. It defines gift as -
gift is the transfer of certain existing moveable or immoveable property made voluntarily and
without consideration by one person called the donor to another called the donee and
accepted by or on behalf of the donee.
Such acceptance must be made during the lifetime of the donor and while he is till
capable of giving, If the donee dies before acceptance, the gift is void.
INTRODUCTION:
A deed of gift once executed and registered cannot be revoked unless it can be shown
that the mandatory requirements of the section were not complied with.
A gift can be made subject to certain conditions. It is necessary that these conditions
must be valid conditions according to the provisions of this Act.
WHEN A GIFT MAY BE REVOKED:

s.126 of the Act deals with this aspect. It lays down the following 2 cases under
which the gift may be revoked:
1) A gift is revocable if the donor and the donee have agreed that on the happening of a
specified event not depending upon the will of the donor the gift should be suspended or
revoked. This is called suspension or revocation by agreement.
Illustration:
A gives 1,00,000 rupees to B reserving to himself with B’s assent the right to take back at
pleasure 10,000 rupees out of the 1,00,000 rupees. The gift holds good as to 90,000 rupees
but is void as to 10,000 rupees which continue to belong to A.
It is necessary that agreement to suspend or revoke the gift must be made at the time
of making of gift otherwise the gift will become absolute. However, it is necessary that the
condition must be a valid condition.
Caselaw: Tokha vs. Biru

In this case, an immovable property was gifted by the donor in lieu of services and
maintenance to be provided to her by the donee and possession of immovable property was
given to the donee and the gift was complete.
The Hon’ble Court held that in the absence of any condition of revocation in the gift
deed the fact that the donee stopped rendering services could not render the conditional gift
revocable.
2) A gift may also be revoked in any of the cases in which if it were a contract it might be
rescinded.

According to s.19 of the Act, a contract may be rescinded in the following

circumstances:
(1) Coercion
(2) Undue influence
(3) Fraud
(4) Misrepresentation
If the donor does not exercise his option of revocation on any of the above grounds,
the gift will not stand revoked and will become absolute. Revocation may made within 3
years from the date on which the donor becomes aware of such grounds. However, the right
to revoke is lost where the donor ratifies the gift expressly or impliedly by his conduct.
The donor cannot assign his right of revocation to anyone else. However, after the
death of the donor, his LRs may sue for revocation of gift on any of these grounds.
Caselaw: Manirajan Pillai vs. KK Karunakaran Nair

In this case, the executant alleged fraud and though she was aged and had to be
hospitalized for periods the doctor certified that she was capable to taking care of herself at
the time of execution.
The Hon’ble Court did not allow the cancellation of gift deed.

Q: DISCUSS THE RIGHTS AND LIABILITIES OF BENEFICIARY u/a Will or Indian Succession Act.
A:
WILL:
According to s.2(h) of the Indian Succession Act, 1925, Will means the legal declaration
of the intention of a testator with respect to his property which he desires to be carried into
effect after his death.
According to s.2(b) of the Indian Succession Act, 1925, Codicil means an instrument
made in relation to a Will and explaining, altering or adding to its dispositions and shall be
deemed to form part of the Will.
TESTATOR AND LEGATEE/BENEFICIARY:

The one who makes the Will is called a testator and the one who is the beneficiary is
called a legatee.
RIGHTS AND LIABILITIES OF BENEFICIARY/LEGATEE:

1. RIGHTS:
1) s.213(1) of Indian Succession Act provides that no right as legatee can be established in
any Court unless a Court of competent jurisdiction in India has granted probate of the
Will under which the right is claimed or has granted letters of administration with the
Will or with a copy of the Will annexed.
2) s.119 of Indian Succession Act provides that a legacy vests in interest in the legatee at
the date of the testator’s and the mere fact that the possession or enjoyment is deferred
will not prevent the vesting unless a contrary intention appears by the Will.
3) s.123 of Indian Succession Act provides that where a testator makes 2 distinct bequests
in the same Will to the same person one of which happens to be onerous and the other
beneficial, prima facie the legatee is entitled to disclaim the onerous and to take the other.
4) s.138 of Indian Succession Act provides that where the testator has devised an absolute
estate to the legatee but has specifically added a clause which has the effect of reducing
his power to deal with that property as an absolute estate, in such a case the restriction
placed on the right of the legatee needs to be rejected on account of it being repugnant to
the absolute bequest.
5) s.139 of Indian Succession Act provides that where the testator leaves a legacy
absolutely as regards his estate but restricts the mode of the legatee’s enjoyment of it to
secure certain objects for the benefit of the legatee, upon failure of such objects the
absolute gift prevails.
6) s.171 of Indian Succession Act provides that where there is a bequest of something
described in general terms the executor must purchase for the legatee what may
reasonably be considered to answer the description.
7) s.172 of Indian Succession Act provides that where the interest of produce of a fund is
bequeathed without any indication as to the disposal of the corpus, both the corpus as
well as the interest will belong to the legatee.
8) s.173 of Indian Succession Act provides that where an annuity is created by a Will the
legatee is entitled to receive it for his life only unless a contrary intention appears by the
Will.

LIABILITIES::
1) s.122 of Indian Succession Act provides that where onerous and beneficial property is
included in the same bequest, the legatee cannot disclaim the onerous and accept the
beneficial unless the Will manifests sufficient intention of the testator to the contrary.
2) s.137 of Indian Succession Act provides that where the Will requires an act to be
performed by the legatee within a specified time, the act must be performed within the time
specified unless the performance of it is prevented by fraud in which case further time shall
be allowed as is required to make up for the delay caused by the fraud.
3) s.141 of Indian Succession Act provides that where a legacy is given to a person in the
character of an executor and not as a mark of personal regard only the bequest is
conditional on him accepting the office and the legatee is not entitled to the legacy unless
he proves the Will or otherwise manifests his intention to act as executor.
4) s.170 of Indian Succession Act provides that where any payments are necessary at the
testator’s death to constitute him a complete shareholder they must be borne by his estate,
but if he is a complete shareholder all calls made after his death must be borne by the
specific legatee if he accepts the bequest unless there is a contrary intention in the Will.
5) s.179 of Indian Succession Act provides that no bequest shall be wholly or partially
adeemed by a subsequent provision made by settlement or otherwise for the legatee.
6) s.181 of Indian Succession Act provides that a bequest for a person’s benefit is for the
purpose of election the same thing as a bequest made to himself.

Q: A PERSON WHO ACCEPTS THE BENEFIT FROM THE INSTRUMENT SHALL ALSO TAKE THE
BURDEN OF IT. DISCUSS.
A:
GIFT:
s.122 of the Transfer of Property Act, 1882 deals with this aspect. It defines gift as -
gift is the transfer of certain existing moveable or immoveable property made voluntarily and
without consideration by one person called the donor to another called the donee and
accepted by or on behalf of the donee.
Such acceptance must be made during the lifetime of the donor and while he is till
capable of giving, If the donee dies before acceptance, the gift is void.
DISCUSSION - ONEROUS GIFT:

s.127 of the Act deals with this aspect. A gift is said to be onerous when it is
accompanied with a burden or obligation. The section is based on the maxim qui sentit
commodum sentire debetet onus which means that he who receives advantage must also bear
the burden.
1st paragraph of s.127 of the Act provides that where a gift is in the form of a single
transfer to the same person of several things of which one is and the others are not burdened
by an obligation, the donee can take nothing by the gift unless he accepts it fully.
Here, the following elements are essential -

1) the gift must be in the form of a single transfer
2) to the same person
3) of several things (properties)
4) of such thing only one is burdened with obligation and others are not
When such conditions are present, the donee will have to accept the gift fully. He
cannot accept the benefits of gift only and reject the burdens/obligation. In other words, the
donee may either accept the full gift or reject the whole gift, partial acceptance is not
allowed..
Illustration:
(a) A has shares in X, a prosperous joint stock company and also shares in Y, a joint stock
company, in difficulties. Heavy calls are expected in respect of the shares in Y. A gives B
all his shares in joint stock companies. B refuses to accept the shares in Y. He cannot take
the shares in X.
(b) A, having a lease for a term of years of a house at a rent which he and his representatives
are bound to pay during the term and which is more than the house can be let for, gives to
B the lease and also as a separate and independent transaction a sum of money. B refuses
to accept the lease. He does not by his refusal forfeit the money.
DISQUALIFIED DONEE:
s.127 of the Act also deals with this aspect. It lays down that when a donee is not
competent to enter into a contract and accepts property burdened by an obligation he is not

bound by his acceptance. But, if after becoming competent to contract and being aware of
the obligation he retains the property given, he becomes so bound.
Example:
A minor is an incompetent or disqualified donee. He has the right to reject/repudiate the gift
on attaining majority i.e., competency.

SN:- Donatio Mortis Causa
A:-
DONATIO MORTIS CAUSA:
Gift made by a person in contemplation of his death is known as donatio mortis causa.
TRANSFER OF PROPERTY ACT, 1882:

S.129 of the Act speaks about saving of donations mortis causa and Muhammadan law
and lays down that - Nothing is this Chapter related to gifts of moveable property made in
contemplation of death, or shall be deemed to affect any rule of Muhammadan law.
THE INDIAN SUCCESSION ACT, 1925:

S 191 of the Act deals with property transferable by gift made in contemplation of death.
ESSENTIALS OF SECTION 191:

Following are the essentials for a valid donatio mortis causa:
i) the gift must be of movable property which the donor may dispose of by will
ii) it must be made in contemplation of death
iii) the donor must be ill and he expects to die shortly of the illness
iv) possession of the property should be delivered to the donee and
v) the gift does not take effect if the donor recovers from the illness or the donee
predeceases the donor
A gift in pursuance of this section partakes the nature of a Will and is essentially
different from a gift contemplated u/s.122 of the Transfer of Property Act, 1882.
Under the Indian Succession Act, there is no provision for a donatio mortis causa of
immovable property.
WHEN NOT VALID:

A gift made in contemplation of suicide is not a valid donatio mortis causa as that would
be against public policy.
UNDER MUHAMMADAN LAW:

Gift made by a Muhammadan during Marz-ul-Maut or death-illness cannot take effect
beyond a third of the surplus of his estate after payment of funeral expenses and debts unless
the heirs give their consent after the death of the donor to the excess taking effect.
Marz-ul-Maut is a malady which induces an apprehension of death in the person
suffering from it which eventually results in his death.
UNDER HINDU LAW:

Although this section dose not apply to Hindus, donatio mortis causa is recognised in
Hindu Law. Hindu law makes no distinction between an ordinary gift and a gift in
contemplation of death.
The requisites are:
i) giving either orally or in writing with the intention of passing the property
accompanied by actual delivery and
ii) the acceptance by the donee in the lifetime of the donor.

PROBLEM:-
A makes gift to B, C & D. B & C accept the gift, but D refuses. Decide validity of gift.
SOLUTION:-
Facts:
1) A makes gift to B, C and D
2) B and C accept the gift, but D refuses the gift
Issue:
1) Validity of Gift
Provisions:
1) Section 125 of Transfer of Property Act, 1882.
Discussion:
The validity of the gift depends upon the acceptance of the donee. But, according to
Section 125 of the Transfer of Property Act, 1882, when a gift is made to two or more donees
and one of them does not accept it the whole gift does not fail and is void to the extent of
interest to which it is not accepted.
In the given problem, A makes a gift to B, C and D. So, B, C and D each get 1/3rd share
of the gift. As B and C accept the gift they may claim their share of 1/3rd each. And, as D
refuses his share, that 1/3rd share alone shall fail according to Section 125 of the Transfer of
Property Act and it continues to remain with the donor, A.
Conclusion:
In view of the above discussion, the gift is valid as regards donees, B and C to the extent
of 1/3rd share each and only 1/3rd share of gift to donee, D fails which reverts to the donor, A.

Unit - 5
Q: DEFINE TRUST. EXPLAIN DIFFERENT KINDS OF TRUST.
A:
INTRODUCTION:
The essence of the concept of trust is the separation of legal and beneficial ownership
with the property being legally vested in one or more trustees but in equity held for and
belonging to others.
DEFINITIONS:
s.3 of the Indian Trust Act, 1882 defines trust as - a trust is an obligation annexed to
the ownership of property and arising out of a confidence reposed in and accepted by the
owner or declared and accepted by him for the benefit of another or of another and the owner.
According to Story -
a trust is an equitable right, title or interest in property, real or personal, distinct from
the legal ownership thereof.
TRUSTEE:
A person having nominal title to some right or property which he holds not for his
own sole beneficial interest but for the interest of another or others is called a trustee.
CESTUI QUE TRUST/BENEFICIARY:

They are synonymous terms and is the person for whose benefit the trustee holds the
property in trust. Snell calls the trustee the nominal owner of the property and the cestui que
trust the beneficial owner of the property.
KINDS OF TRUST:
Trusts are classified based on points of view as follows:
1) Classification based upon nature of duties of the trustees:
Based on nature of duty, this kind of trust is further classified into -
(i) Simple Trust:
A trust in which the trustee is a mere depository of the trust property with no active
duties is called a simple trust.
Example:
A holds simply in trust for B.
Here, A is simply the servant of B and it is his duty to carry out B’s orders with regard to the
trust property unless B is a lunatic or infant.
(ii) Special Trust:

A trust in which the trustee has to exercise his discretion in carrying out the trust is
called a special trust.
2) Classification according to the purpose of trust:

Based on object/end use, this is further classified into -
(i) Public Trust:
A trust whose object is to carry out for the benefit of a society at large or members of
an uncertain and fluctuating body is called a public/charitable trust.
Example:
A trust for advancement of education irrespective of caste or creed.
(ii) Private Trust:

A trust whose object is carry out for the benefit of either one person or of certain
definite persons is called a private trust .
Every private trust consists of 4 distinct elements: an intention of the settlor to create
the trust, a subject matter, a trustee and a beneficiary.
Example:
A trust for the benefit of “X” and his children.
3) Classification according to mode of creation of trust:

ss.86 to 94 of the Indian Trusts Act illustrate the creation of constructive trusts.
Based on the mode of creation of trust, this is further classified into -
i) Express/declared trust:
A trust is said to be express/declared trust when it is created by the settlor by words or
by deed or Will.
Example:
A conveys property to B with the direction to hold it for the benefit of C for life and thereafter
for C’s children.
An express trust may be sub-divided into -

(i) Executed Trust:
A trust is said to be executed when no further instrument is necessary.
Example:
Money is vested in trustees on trust for A for life and after his death for B absolutely.
(ii) Executory Trust:

A trust is said to be executory when a further instrument is necessary to carry into
effect the general intention expressed in the first instrument.
Example:
A promises in writing to settle certain property upon trust for the benefit of B.
ii) Implied/presumed trust:

A trust is said to be implied/presumed/presumptive when it arises from the presumed
intention of the parties i.e., it is inferred.
Example:

A purchases land and gets it conveyed not to himself but to B.

Here, B would prima facie hold the land as a trustee for A.
iii) Constructive trust:

A trust is said to be a constructive trust when it arises by construction of equity
independently of the intention of the owner of the property,.
Whenever any executor, guardian or agent takes advantage of his position to make
profit he will in equity be a trustee for such profits or gain and will be held responsible for it.
A constructive trust may arise in either of the following ways -

(i) Vendor’s lien for unpaid purchase money
(ii) Purchaser’s lien
(iii) Persons in fiduciary position gaining personal advantage
(iv) Receipt of trust property by a stranger even for value
(v) Other cases like mortgagee exercising his power of sale
iv) Resulting trust:

A trust is said to be a resulting trust where it is implied in favour of the person
creating it or his LR. It is a species of implied trust.
It is settled law that if there is a total or partial failure of the object of a trust it results
in a resulting trust to the extent in favour of the settlor or his representatives.
Example:
A trust is created for the education of a certain person who subsequently gives up his
studies without exhausting the trust fund,
Here, the remnant of the fund will be held in a resulting trust.
v) Precatory trust:
A trust is said to be a precatory trust where it arises with the use of words such as
wish, hope, desire, fully confident , beseech etc. The word precatory relates to prayer,
entreaty , etc. Here, the donee will apply the property for the benefit of a definite
person/subject.
Such cases mainly raise under Will and it becomes a difficult question to decide in
such a case whether it is a Will or a trust.
vi) Secret trust:

A trust is said to be a secret trust where on the face of the Will it does not disclose the
trust. In such a case, the testator may have communicated his intention to the legatee before
making the Will or sometime after making it before his death or by way of a letter left for the
legatee after his death.
4) Classification according to consideration for the creation of trust:

Based on the consideration for the creation of trust, this is further classified into -
(i) Trust of Value:

A trust is said to be a trust of value/consideration when the consideration moves from

the beneficiary.
Example:
A trust created in favour of X if he marries Y.
(ii) Voluntary Trust:

A trust is said to be a voluntary trust when no consideration proceeds from the
beneficiary.
5) Other kinds of trusts:

Under this kind falls all other trusts which does not fall under any of the above 4
heads and they are -
(i) Completely and incompletely constituted trusts:
A trust is said to be completely constituted when the trust property has been vested in
trustees for the benefit of the beneficiaries. Until then, the trust is incompletely constituted
or in fieri as it is sometimes called.
(ii) Trusts of imperfect obligation:

A trust is said to be a trust of imperfect obligation when the obligations are incapable
of being enforced by the sestue que trust.
Example:
A trust for fox hunting.
(iii) Illusory trust:

A trust is said to be an illusory trust when from its tenor it appears that the
beneficiaries are apparent beneficiaries.
Example:
A trust created for the benefit of creditors as it can be revoked by the debtor.
(iv) Discretionary trusts:

A trust is said to be a discretionary trust when it does not afford the beneficiary a right
to any part of the income of the trust property and gives the trustee a discretionary power to
pay the beneficiary such a part of the income as he thinks fit. In such a trust, the beneficiary
only has a hope that the discretion will be exercised in his favour.

VESTED AND CONTINGENT INTEREST - Unit - 1, Part Syllabus
Vested Interest
Introduction - Transfer of Property Act, 1882
The right of ownership of property whether movable or immovable consists of a bundle
of four rights which are the right to transfer, the right to possess, the right of use and
enjoyment and the right to destroy.
Before the Act came into existence, the transfer of immovable properties in India were
governed by the principles of English law and equity. In the absence of any statutory
provisions, the courts used to fall back upon English law on real properties sometimes forcing
the courts to decide the disputes according to their own notions of justice and fair play
resulting in confused and conflicting case laws. To remedy these confusions and conflicts, a
code of substantive law of transfer of properties was enacted in the form of Transfer of
Property Act, 1882 which came into force with effect from 17 February 1882 .
The Transfer of Property Act, 1882 is a codification of the manner in which an owner of
property may exercise his right of ownership of property. All transfers dealt with under the
Act are the transfer of some combination of some or all the rights of ownership of immovable
property.
Meaning of Transfer of Property:

The legislature has not attempted to define the word property, but it is used in TP Act in
its widest and most generic legal sense. In Joydev Sen vs. State of W.B., the Hon’ble Court
has held that the word property means the right and interest in lands and chattels to the
exclusion of others.
The word transfer has also not been defined in the Act, but it also a very wide meaning.
It may be either transfer of all the right and interests in the property or transfer of one or more
of subordinate right in the property.
S.5 of the Act deals with transfer of property. According to the section, transfer of
property means an act by which a living person conveys the property in present or in future to
one or more other living persons or to himself or to himself and one or more other living
persons and the living person includes a company or association or body of individuals
whether incorporated or not.
What is Immovable Property:

The Transfer of Property Act, 1882 has not defined the term immovable property. It only
says that immovable property does not include standing timber, growing crops or grass under
S.3.
As the definition given is neither comprehensive nor exhaustive and only excludes
certain things, it is necessary to see what other Acts which have defined the term immovable
property says.
The Registration Act, 1908 defines u/s. 2(6) immovable property as -
“immovable Property” includes land, buildings, hereditary allowances, rights to ways, lights,
ferries, fisheries or any other benefit to arise out of land, and things attached to the earth, or
permanently fastened to anything which is attached to the earth, but not standing timber,
growing crops nor grass;
The General Clauses Act, 1897 defines u/s. 3(26) immovable property as -
“immovable property” shall include land, benefits to arise out of land and things attached to
the earth, or permanently fastened to anything attached to the earth;
Introduction - Vested Interest:

Vested interest is an immediate right to a property. When an vested interest is created,
the transfer of property is complete. The immediate right may be either a right of present
enjoyment or a right of future enjoyment. If a condition is specified which is certain to occur,
then the interest dependent upon it is vested.
Thus, a gift to A on the death of B creates a vested interest in A even during B’s lifetime
for there is nothing more certain than death.
Section 19, Transfer of Property Act, 1882:

S.19 of TP, Act, 1882 deals with vested interest. According to the section, where on
transfer of a property an interest is created in the property in favour of a person-
(i) Without specifying the time when it is to take effect, or
(ii) In terms specifying that it is to take effect-
(a) Forthwith, or
(b) On the happening of an event which must happen, such an interest, is vested
unless a contrary intention appears from the terms of the transfer.
(i) Where no time mentioned:

A person gets a vested interest in a transfer of property where the terms do no
specify the time when it is to take effect.
Example:
A person sells his house to another person. The purchaser gets the vested interest
from the day of sale though the possession may not be given to him immediately.
(ii) Where it is to take effect forthwith:

The interest created in favour of the transferee is vested where it is specified that it is
to take effect forthwith, i.e., immediately, without delay. Where a deed contains such a
declaration clearly, the deed conveys vested interest alone.
(iii) On the happening of an event:

The interest is a vested interest where the operation of the transfer is made dependant
upon some specified certain event. The event must be clearly specified, explained and it
must be certain to happen.
Example: of Events Certain to Happen:

Death, sunrise, sunset, etc.
(a) Enjoyment Postponed:

The Explanation to the section provides that an interest shall not be a vested
interest is not to be inferred merely from a provision whereby the enjoyment of the
property is postponed.
In Sewdayal vs. Official Trustee, the Hon’ble Court has held that a condition
postponing enjoyment does not prevent the interest vesting immediately, but it is
itself void for repugnancy after the transferee has attained majority.
(b) Prior Interest:

Similarly, it is not to be inferred that an interest shall not be vested merely by a
provision whereby a prior interest in the same property is given or reserved for some
other person. Where a prior interest is created, there is only postponement of
enjoyment and not the vesting of subsequent interest.
Example:
A transfers property to B for life and then to C. Here, the interest of C is vested
interest, but only due to the prior interest created in favour of B his right of
enjoyment is postponed till the life of B.
(c) Accumulation of Income:

Where income arising from the property is directed to be accumulated until the
time of enjoyment arrives, only the right of enjoyment is postponed but not the
vesting. But, direction for accumulation of income must be within the limits
stipulated under S.17 of the Act. If it is for a period in excess of the limits stipulated
under S. 17 of the Act, it will be invalid for the period in excess of it.
(d) Conditional Limitation:

A provision that if a particular event shall happen the interest shall pass to
another person is what is called in English law a conditional limitation. A
conditional limitation divests an estate which has become vested and vests it in
another person. S.28 of TP Act deals with conditional limitations.
Few Illustrations under Indian Succession Act, 1925:

The corresponding section of the Indian Succession Act, 1925 is Section 119. few of the
illustrations appended to it are:
(i) A fund is bequeathed to A for life, and after his death to B. On the testator’s
death, the legacy to B becomes vested in interest in B.
In the above illustration, a prior interest intervenes, but the legacy is vested as
the determination of that prior interest is a certain event.

(ii) A bequeaths the whole of his property to B upon trust to pay certain debts
out of the income and then to make over the fund to C. At A’s death the gift to C
becomes vested in interest in him.
In the above illustration, there is divestment after the payment of debts. Jarman
says that such a devise confers an immediately vested interest, the payment of debt
constituting only a charge.
Time of Vesting:
In Harris vs. Brown, the Privy Council has observed that as soon as the transfer is
complete, the interest vests. Words are to be construed according to their ordinary meaning
and no particular form of words is necessary to effect a vesting.
Power of Appointment:
A power of appointment confers upon the donee of the power a right of disposition of the
property of the creator of the power i.e., the appointer. The power may be either general to
appoint to any one the donee pleases or special to appoint anyone of a specified class of
persons. The appointee or person in whose favour the donee exercises the power derives title
from the creator of the power and not from the donee. However, the property vests when the
power is exercised and not when it is created.
Contrary Intention:
S. 5 of TP Act, 1882 provides that a transfer may not be only in the present but also in
the future. So, a grantor may specify the time of vesting, but the time of vesting cannot be
beyond the period allowed by the rule against perpetuity.
Death of Transferee:
An interest which is vested becomes the property of the transferee and is transferable
under Section 6 of the Act even before the transferee gets possession of it as it is also an
effective transfer. In a case where a transferee dies, the vested interest vests in his
representatives whether he had possession of it or not at the time of his death.

S. 20 of TP Act, 1882 deals with provisions relating to vesting of interest in case of
unborn person and vests in that person as soon as he is born. But, when an unborn person
dies within the womb of his mother and is not born alive, the section has no application.
In FM Devaru Ganapathi Bhat vs. Prabhakar Ganapathi Bhat, a woman donated property
to her brother’s only one while retaining one of the properties for her own livelihood and
after he death was also to go to the brother’s son and no one else was to have any right or title
over it. There was a further stipulation that if the brother had any other children, all of them
would be holding the property jointly.
The Hon'ble Supreme Court held that the younger brother born subsequently became
entitled to joint ownership of the whole property including the one which was retained by the
donor for her life-time.
Conclusion:
The main characteristics of vested interest may be summarized as follows:-

(1) Vested interest does not depend upon the fulfillment of a condition. It creates a
present and immediate right. The enjoyment may be postponed to a future date.
(2) A vested interest is transferable as well as heritable.
(3) A vested interest is not defeated by the death of the transferee before obtaining
possession. The interest passes on to the heirs of the transferee.
CONTINGENT INTEREST
If an interest is limited to take effect on the fulfillment of a condition, the condition is
known as condition precedent i.e., when that condition is fulfilled the transfer takes effect and
the interest is vested. Also, in the case of an uncertain event, it is contingent because the
condition may never be fulfilled and the transfer may never take effect.
Example:
(i) A transfers his farm of Sultanpur Khurd to B if B shall convey his own farm of
Sultanpur Buzurg to C. Interest of B in the farm of Sultanpur Khurd is contingent. It
may become vested if B conveys his farm of Sultanpur Buzurg to C.
(ii) A gift to A on the marriage of B creates only a contingent interest for B may never
marry, but that contingent interest becomes vested if and when B marries.

S. 21 of TP, Act, 1882 deals with contingent. According to the section, in a transfer of
property, a person gets a contingent interest in the property when -
(i) The specified uncertain event happens, the happening of which was a
condition for vesting of interest, or
(ii) The specified uncertain event does not happen, the non-happening of which
was a condition for vesting of interest and the event has become impossible
to happen.
The specified uncertain event may be of two kinds. In the first kind, the happening or
non-happening of the event depends upon the will and desire of the parties like marriage or
payment of a sum of money. In the second kind, the specified event does not depend upon
the will of the parties like death of a person on reaching a certain age. So, the contingent
interest becomes vested only when either of the condition is fulfilled.
For example, where A makes a gift to B provided X survives the age of 25 years, the
interest of B is contingent. Where A makes a gift to B provided X does not survive the age of
25 years, the interest of B again is contingent.
In Soorjeemoney vs. Denobandhu, A made a gift in favour his sons with a condition that
if any of them dies leaving no male issue, his share will be taken by the others and not by the
widow or daughter of the deceased son.
The Hon’ble Court held that the gift created a contingent interest.
Few Illustrations under Indian Succession Act, 1925:

The corresponding section of the Indian Succession Act, 1925 is Section 120. Few of the
illustrations appended to it are:
(i) A legacy is bequeathed to D in case A, B and C shall all die under the age of
18; D has a contingent interest in the legacy until A, B and C die under 18, or one of
them attains that age.
(ii) An estate is bequeathed to A until he shall marry and after that event to B.
B’s interest in the bequest is contingent until the condition is fulfilled by A’s
marrying.
Condition Precedent Construed as a Condition Subsequent:

A condition precedent when followed by a gift over is sometimes construed as a
condition subsequent so that the interest dependent on it is not contingent, but vested. Thus,
a devise to A if or when he attains the age of majority, with a gift over in the event of his
dying under that age, has been held to be a condition subsequent so that A takes a vested
interest liable to be divested by his death under the age specified. Similarly, a devise to A if
or when he shall attain a given age, with a limitation over on his death under that age without
issue, confers a vested estate on A defeasible only in the event of his death without issue
under the specified age.
Spes Successionis:
Contingent interest and spes successionis are both future possible interests. In both, there
ia a possibility that it may become a perfect title in future. However, this degree of
possibility is lesser in contingent interest.
In the case of contingent interest, the property is transferred subject to certain
contingencies which may or may not happen. But, in the case of spes successions i.e., mere
chance of heir-apparent depends upon several possibilities like the heir-apparent surviving
the deceased person, etc.
In Sumsuddin vs. Abdul Husein, the Hon’ble Court has held that a mere spes
successionis is neither a contingent interest nor a vested interest.
Exception:
Illustrations of the exceptions are given in S. 120 of the Indian Succession Act, 1925.
Under the exception, there must be either a gift of the interest/income or a direction to apply
it. If there is no gift of income, for a case to fall within the exception it is necessary that the
direction relates to the whole of the income.

S. 22 of TP, Act, 1882 deals with transfer to members of a class who attain a particular
age or to a contingent class.
The case dealt with in this section is a gift to a contingent class. This is not the same
thing as a gift to a class on a contingency. However, a gift to such of the children of A who
shall attain the age of 18 is a gift to a contingent class. No child of A has vested interest until
he has attained that age and until then he does not completely answer the description of a
transferee. Until then, his interest is contingent even though there may be a gift over.

S. 23 of TP, Act, 1882 deals with transfer contingent on happening of specified uncertain
event.
The case put in this section is that of a prior interest followed by a subsequent contingent
interest. The contingent interest cannot vest until the event on which it is contingent happens.
If that happens sometime after the prior interest has determined, there is a gap or interval
during which the estate would be in suspense and would be a res nullius. The section,
therefore, enacts that the contingent interest will fail or cannot vest, unless the event happens
before or at the same time as the prior interest ceases.
Example:
If there is a gift for life to A, and then to B in case B gets called to the Bar, the gift to B
fails unless he is called to the Bar in the lifetime of A or at the same time as A dies.

S. 24 of TP, Act, 1882 deals with transfer to such of certain persons surviving at some
period.
This section is based on the general rule that if an estate is limited to two persons jointly,
one capable of taking and the other is not, he who is capable shall take the whole. The
interest created in such a case is only a contingent interest which would become vested only
when they survive the owner of precedent interest.
Illustration:
A transfers property to B for life and after his life to C and D, to be divided equally
between them, or to the survivor of them. C dies during the life of B. D survives B. At B’s
death, the property passes to D.
In the illustration, if both C and D survive B and thereafter C dies, C’s legal
representatives and D share the property equally. If both C and D predecease B, the property
will be shared equally by the representatives of C and those of D. This is due to a peculiar
rule laid down in Penny vs. Commissioner of Railway to the effect that the survirorship
clause is in the nature of a divesting clause and if none of the donees survive, the clause will
be inoperative so that the donees are deemed to have vested interests.
Conclusion:
The main characteristics of contingent interest may be summarized as follows:-
(1) The contingent interest is a transferable interest
(2) It is not heritable. On the death of a person having contingent interest, his
interest does not pass to his legal heirs.
(3) Death is not an uncertain event, but survival at the death of another is an
uncertain event.
(4) The charge of an heir-apparent to succeed to a person as heir or similar
possibilities of a like nature is not “contingent interest” within the meaning
of this section.

Q: DISCUSS THE RIGHTS AND LIABILITIES OF BENEFICIARY u/Indian Trusts Act, 1882.
A:
INTRODUCTION:
The essence of the concept of trust is the separation of legal and beneficial ownership
with the property being legally vested in one or more trustees but in equity held for and
belonging to others.
DEFINITIONS:
s.3 of the Indian Trust Act, 1882 defines trust as - a trust is an obligation annexed to
the ownership of property and arising out of a confidence reposed in and accepted by the
owner or declared and accepted by him for the benefit of another or of another and the owner.
According to Story -
a trust is an equitable right, title or interest in property, real or personal, distinct from
the legal ownership thereof.
TRUSTEE:
A person having nominal title to some right or property which he holds not for his
own sole beneficial interest but for the interest of another or others is called a trustee.
CESTUI QUE TRUST/BENEFICIARY:

They are synonymous terms and is the person for whose benefit the trustee holds the
property in trust. Snell calls the trustee the nominal owner of the property and the cestui que
trust the beneficial owner of the property.
RIGHTS & LIABILITY OF A BENEFICIARY:
1. RIGHTS OF A BENEFICIARY:
A cestui que trust/beneficiary has no estate or interest in the subject-matter u/the
Indian Trusts Act but has certain rights set out in Chapter VI of the Act which are as under:
1) Right to rents and profits
2) Right to specific execution
3) Right to transfer of possession
4) Right to inspect and take copies of instrument of trust and accounts
5) Right to transfer beneficial interest
6) Right to sue for execution of trust
7) Right to property trustees
8) Right to compel the trustee to any Act of duty
9) Wrongful purchase by trustee
10) Following trust property into the hand of third persons, into that into which it has been
converted
11) Right in case of blended property
1) Right to rents and profits:

s.55 of the Act deals with this aspect and lays down that subject to the provisions
of the instrument of trust, the beneficiary has a right to the rents and profits of the trust
property.
2) Right to specific execution:

s.56 of the Act deals with this aspect and lays down that the beneficiary is entitled
to have the intention of the author of the trust specifically executed to the extent of his
interest.
3) Right to transfer of possession:

s.56 of the Act also deals with this aspect and lays down that where there is only
one competent beneficiary or where there are several competent beneficiaries who are
all of one mind, he/they are entitled to have the trust property transferred by the trustee
to him/them or to such other person as he/they direct the trustee.
Example:
Where the trustee is to hold the property till the beneficiary attains a particular age,
the beneficiary is entitled to have the property handed over to him even though the trust
provides that the beneficiary has to attain some age over the age of majority.
Illustration:
A transfers certain property to B and directs him to sell or invest it for the benefit of C
who is competent to contract.
Here, C may elect to take the property in its original character.
However, s.56 also lays down that where the trust’s provisions are such that a
married woman is not to deprive herself of the beneficial interest of the trust property
the right of transfer of possession does not apply.
4) Right to inspect and take copies of instrument of trust and accounts:

s.57 of the Act deals with this aspect and lays down that the beneficiary has a right
to inspect and take copies of the instrument of trust, documents of title, accounts,
vouchers if any, cases and opinions obtained by the trustee for his guidance and the right
extends to even persons claiming under the trustee with notice of trust.
5) Right to transfer beneficial interest:

s.58 of the Act deals with this aspect and lays down that a competent beneficiary
subject to the law for the time being in force as to the circumstances and extent in and to
which he may dispose of such interest is entitled to transfer his beneficial interest.
However, s.58 also lays down that where the trust’s provisions are such that a
married woman is not to deprive herself of the beneficial interest of the trust property
the right to transfer beneficial interest does not apply.
6) Right to sue for execution of trust:

to sue for execution of the trust where no trustees are appointed or all of them die,
disclaim or are discharged or where the execution of the trust becomes impracticable.
7) Right to proper trustees:

s.60 of the Act deals with this aspect and lays down that subject to the provisions
of the instrument of trust the beneficiary is entitled to proper protection of trust property,
it is held & administered by a proper person or such number of proper persons.
Illustration:

A conveys certain property to 4 trustees in trust for B. 3 of the trustees die.

Here, B may institute a suit to have 3 new trustees appointed in the place of the
deceased trustees.
8) Right to compel the trustee to any Act of duty:

to compel the trustee to perform any particular act of his duty and restrain him from
committing any contemplated or probable breach of trust.
Illustration:
A is trustee of certain land with a power to sell the same and pay the proceeds to B and C
equally. A is about to make an improvident sale of the land.
Here, B may sue on behalf of himself and C for an injunction to restrain A from
making the sale.
9) Wrongful purchase by trustee:

s.62 of the Act deals with this aspect and lays down that where a trustee has
wrongfully bought trust property the beneficiary has a right to have the property
declared subject to the trust or re-transferred by the trustee if it remains in his hands
unsold or if it has been bought from him by any person with notice of the trust by such
person.
On re-conveyance of the property, the beneficiary is bound to repay the purchase
money with interest and other expenses properly incurred in the preservation of the
property.
10) Following trust property into the hand of third persons, into that into which it has been
converted:
ss.63, 64 of the Act deals with this aspect and lays down that where a trustee has
made a wrongful alienation or conversion of trust property in breach of trust the
beneficiary is entitled to recover the proceeds of the disposition of trust property so long
as it is traceable and identifiable unless such money or property has come into the hands
of a transferee in good faith for valuable consideration without notice of the trust. Also,
where the trust property has been conveyed to a volunteer i.e., without consideration, the
trust estate may be followed into his hands whether he had notice of the trust or not.
Illustration:
A, a trustee wrongfully purchases land in his own name partly with his own money
and partly with money subject to a trust for B.
Here, B is entitled to a charge on the land for the amount of the trust money so
misemployed.
11) Right in case of blended property:

s.66 of the Act deals with this aspect and lays down that where the trustee
wrongfully mingles trust property with his own property, the beneficiary is entitled to a
charge on the whole fund for the amount due to him.

2. LIABILITY OF BENEFICIARY JOINING IN BREACH OF TRUST:

s.68 of the Act deals with this aspect and lays down that where one of several
beneficiaries
1) joins in committing a breach of trust or
2) knowingly obtains any advantage therefrom without the consent of other beneficiaries or
3) becomes aware of a breach of trust committed or intended to be committed and either
actually conceals it or does not within a reasonable time take proper steps to protect the
interest of other beneficiaries or
4) has deceived the trustee and thereby induced him to commit a breach of trust,
his liability is as follows:

(i) the other beneficiaries are entitled to have all his beneficial interest impounded as
against him and all who claim under him otherwise than as transferees for
consideration without notice of the breach until the loss caused by the breach has
been compensated.

Notes - Property Law

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Kartheek D. N.

Selected Topic Notes:- Property Law

All the best for exams.

1-side typed sheet = approximately 2-sides in exam booklet

The transferability of property is the general rule and non-transferability is an exception.

EXCEPTIONS / WHAT PROPERTY CANNOT BE TRANSFERRED:

Read NOTE:- on Page No.1 Page 1 of 61

(a) Spes Successionis

(a) Spes Successionis: - s.6(a)

(b) Right of re-entry: - s.6(b)

(c) Easement: - s.6(c)

Read NOTE:- on Page No.1 Page 2 of 61

(d) Restricted interest: - s.6(d)

(dd) Right to future maintenance: - s.6(dd)

(e) Right to sue: - s.6(e)

(f) Public office: - s.6(f)

(g) Stipends and pensions: - s.6(g)

(h) Nature of interest, etc: - s.6(h)

Read NOTE:- on Page No.1 Page 3 of 61

(i) Untransferable interests: - s.6(i)

Read NOTE:- on Page No.1 Page 4 of 61

Q: DEFINE TRANSFER OF PROPERTY. STATE WHETHER PARTITION, SURRENDER,

IS PARTITION, SURRENDER, COMPROMISE AND GIFT TRANSFERS?

Read NOTE:- on Page No.1 Page 5 of 61

The concept of gift is diametrically opposed to any presence of consideration or

Read NOTE:- on Page No.1 Page 6 of 61

LAW RELATING TO BENEFIT OF UNBORN PERSON:

Read NOTE:- on Page No.1 Page 8 of 61

Q: DISCUSS THE PROVISION OF TP ACT RELATING TO TRANSFER BY OSTENSIBLE OWNER.

TRANSFER BY AN OSTENSIBLE OWNER:

The requisites/essentials for taking benefit of the section are:

Caselaw: Binapani Paul vs. Pratima Ghosh (2007 SC)

Read NOTE:- on Page No.1 Page 9 of 61

MORTGAGE BY CONDITIONAL SALE:

A mortgagee cannot transfer the mortgaged property. He takes the property as a

Caselaw: Narayan vs. Prushottam

Read NOTE:- on Page No.1 Page 10 of 61

Q: EXPLAIN DOCTRINE OF LIS PENDENS AS PROVIDED UNDER TP ACT.

DOCTRINE OF LIS PENDENS:

Where a suit or proceeding is pending between two persons with respect to an

Read NOTE:- on Page No.1 Page 11 of 61

Caselaw: T.G. Ashok Kumar vs. Govindammal & Anr.

Caselaw: T. Ravi & Anr vs. B. Chinna Narasimha & Ors

Read NOTE:- on Page No.1 Page 12 of 61

ESSENTIAL REQUIREMENTS OF S.53(1):

Caselaw: Samittri Devi vs. Sampran Singh

Read NOTE:- on Page No.1 Page 13 of 61

2) Any right created by the law of insolvency remains unaffected:

CIRCUMSTANCES UNDER WHICH CREDITORS CAN SET IT ASIDE:

If the following conditions are present, it may lead to an inference of defeating or

Caselaw: Mattar vs. Dhumbajii

Caselaw: Palamalai vs. South Indian Export

Caselaw: C. Abdul Shukoor Saheb vs. Arji Papa Rao

Read NOTE:- on Page No.1 Page 14 of 61

Read NOTE:- on Page No.1 Page 15 of 61

Q: EXPLAIN THE DOCTRINE OF PART PERFORMANCE AND ESSENTIALS OF IT.

DOCTRINE OF PART PERFORMANCE:

ESSENTIAL REQUIREMENTS OF DOCTRINE OF PART PERFORMANCE: