Preliminary
When does registration amount to notice?
Registration when amounts to notice—In view of explanation I of section 3 of the Transfer of Property Act, registration of a document operates as a notice of the contents in the document in the following circumstances—
(1) The instrument should be compulsorily registerable. If it is not required by law to be registered, then its registration does not amount to notice.
(2) The instrument should be registered in the manner prescribed by the Registration Act, 1908.
(3) It should be entered into the books kept under the provisions of the Registration Act, 1908.
(4) Its particulars must be correctly entered in the index maintained and kept under the Act.
(5) The person affected with notice should have acquired his interest subsequent to the registration. By registration of document notice cannot be imputed to prior transaction.
What are the kinds of notice within the meaning of the Transfer of Property Act, 1882?
Under section 3 of TPA, notice can be of the following two kinds—
(1) Express or actual notice—An express or actual notice of a fact is a notice whereby a person acquires actual knowledge of the fact. It must be definite information given by a person interested in the thing. A person is not bound to attend to vague rumours or statements by mere strangers. [Ashiq vs Chaturbhuj, AIR 1928 All 159]
“The party imputing notice must show that the other party has knowledge which would operate upon the mind of a rational person, or man of business and make him act with reference to the knowledge he has so acquired.” —Lord Cairn
Constructive Notice—A person is said to have constructive notice of all facts of which he would have acquired actual notice had he made those inquiries which he ought reasonably to have made. It is a notice which treats a person, who ought to have known a fact, as if he actually does know it.
Constructive notice has roughly been defined as knowledge which the court regards to a person upon a presumption as strong that it cannot be allowed to be rebutted that the knowledge must have been obtained. This legal presumption arises as under—
(1) Wilful abstention—The words ‘wilful abstention’ are said to be such abstention from inquiry or search as would show want of bona fides in respect of a particular transaction.
(a) A refuses a registered letter, which contains certain information relating to property which A proposes to purchase. A will be deemed to have notice of the contents of the letter.
(b) A mortgages his house to B who omits to investigate the title deeds relating to the house. C has a charge on the property mortgaged. B will be presumed to have notice of the charge.
(2) Gross negligence—Gross negligence may be stated to be the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs would do or doing something which a prudent and reasonable man would not do. [Blyth vs Bermingham Water Works Co., 11 Ex 10784]
In Ranjita Lal vs Municipal Board Lucknow, (1936) 12 Luck 353 it was held that any person purchasing property within the municipal limits was bound to inquire whether any municipal taxes in respect of that property are in arrears. If he failed to do so, it would amount to gross negligence and it would be deemed that the person had a constructive notice.
(3) Registration—Registration operates as notice in the following cases—
(a) The instrument should be compulsorily registerable. If it is not required by law to be registered, its registration does not amount to notice.
(b) The instrument should be registered in the manner prescribed by the Indian Registration Act, 1908. It should be entered into the books kept under section 51 of the Act and its particulars correctly entered in the indices under section 55.
(c) The person affected with notice should have acquired his interest subsequent to the registration. The registration of a sub-mortgage does not amount to notice to the mortgagor.
(4) Possession—It is the general rule that it should be deemed as constructive notice of the rights of a person in possession. In National bank of Australia vs Paul Hamilton, AIR 1929 PC 274 it was held that possession is in itself notice of the title under which such possession is retained which anyone dealing with the property cannot, without risk, ignore.
(5) Notice to agent—The knowledge of the agent is the knowledge of the principal. But this rule has certain limitations that the notice should have been received by the agent (a) as an agent, (b) during the agency, (c) in the course of agency business, (d) in the matter material to the agency business.
It should be noted that the knowledge of the agent will not be imputed to his principal, if the agent fraudulently conceals the fact.
State how far actual possession is notice to title.
Actual possession to be notice—Formerly, it was not clear how far possession was to be regarded as notice to the title. In some cases, it was held that possession amounts to such notice of title as the person in possession might have. In other cases, the courts felt difficulty in expressing any opinion on the point. By the new amendment, it is laid down that any person acquiring any immovable property or any share or interest in any such property shall be deemed to have notice of the title, if any, of any person who is for the time being in actual possession thereof.
Possession which operates as notice, however, must be actual possession. It does not seem reasonable that a person entering into a transaction regarding immovable property should be in a position to enquire into the nature of the possession or the title of the person who is in actual possession of such property, if he is not the person with whom he is dealing. Accordingly, it is provided that the person dealing with any immovable property is to be deemed to have notice of the title of any person who, for the time being, is in actual possession thereof. It may be noted that notice in this case is not extended to possession which is merely of a constructive nature.
Illustration
A contracts to sell land to B for Rs. 5000. B takes possession of the land. Afterwards A sells it to C for Rs. 6,000. C makes no enquiry of B relating to his interest in the land. B’s possession is sufficient to affect C with notice of his interest, and he may enforce specific performance of the contract against C.
“Notice to an agent is notice to the principal.” Comment.
Notice to an agent—In view of explanation III to section 3 of the Transfer of Property Act—A person shall be deemed to have had notice of any fact, if his agent acquires notice thereof whilst acting on his behalf in the course of business to which that fact is material. It should be noted that, if the agent fraudulently conceals the fact, the principal shall not be charged with notice thereof as against any person who was a party to or otherwise cognizant of the fraud.
Notice to an agent is notice to his principal himself—This accords with the principle qui facit per alium facit per se (i.e. he who acts through another is deemed to act in person). Thus, the agent stands in the place of his principal with reference to the business for which he is agent so that his acts and knowledge are the acts and knowledge of his principal. [Mohari Bibi vs Dharmodas Ghose, (1903) 80 Cal 539]
This notice to an agent is properly called “imputed notice”. The Privy Council has said that, it is a rule of law that imputes the knowledge of the agent to the principal for the agency extends to receiving notice on behalf of the principal of whatever is material. [Rampal Singh vs Balbaddar Singh, (1904) 29 IA 212]
The rule is subject to certain limitations. Notice should have been received by the agent—
- during the agency;
- in his capacity as agent;
- in the course of the agency business;
- in a matter material to the agency business; and
- should not have been fraudulently withheld from the principal.
What transfers are governed by the Transfer of Property Act and what not? Discuss.
TRANSFERS GOVERNED BY TPA—The Transfer of Property Act (TPA) deals with the transfers by act of living persons. According to this Act, a property can be transferred by Sale, Mortgage, Charge, Lease, Exchange, Gift and Actionable claims.
Sale—Sections 54 to 57 of the TPA relate to sale of immovable property. Sale of movable property is not governed by this Act, but by Sale of Goods Act.
Mortgage—Sections 58 to 98 relate to mortgage of immovable property. This chapter on mortgage deals with six kinds of mortgages.
Charge—Sections 100 and 101 relate to charge upon immovable property. Charge is a security for the payment of money, not by way of mortgage of immovable property. This Act deals with the charge by act of parties only.
Lease—Lease of immovable property can be made according to the provisions of sections 105 to 117 of the Act.
Exchange—Sections 118 to 121 of the TPA deal with exchanges of immovable as well as of movable property.
Gifts—Sections 122 to 129 of the Act deals with the provisions of gifts of immovable and also of movable property.
Actionable Claims—Transfers of actionable claims of both immovable and movable property are explained by this Act from sections 130 to 137.
TRANSFERS NOT GOVERNED BY TPA
This TPA deals with the transfers by act of parties and transfer inter vivos. Therefore, some other transfers, which are not between living persons or which are not created by act of parties are not governed by the provisions of this Act. These transfers are as follows—
(a) Transfer by a will or a testament;
(b) Transfer on the death of a person;
(c) Transfer in case of a partition between the members of Hindu Undivided Family (HUF);
(d) Transfers by way of trust;
(e) Transfers by operation of law; and
(f) Transfer of goods where Sale of Goods Act applies.
Transfer of Property
“The accessory follows the principal.” How far this maxim is applicable to a transfer of property.
Section 8 of the TPA lays down that—
“Unless a different intention is expressed or implied, a transfer of property passes forthwith to the transferee all the interests which the transferor is then capable of passing in the property, and in the legal incidents thereof.”
Thus, accordint to section 8, there is the general presumption in favour of a transferee of all the interests of the transferor. The court will construe a document strictly; it will not speculate as to the intention of the transferor, unless the intention is expressed or implied in the deed of transfer. The court will presume that a transfer of property passes immediately to the transferee all the interests in the property, unless there is a different intention indicated in the deed.
Illustration
A sells a plot of land to B. There is a grove of mangoes on the plot. The sale-deed makes no mention of the grove. It will be presumed that the grove passed on to B.
Accessory follows the principal—The maxim “accessory follows the principal” means that a thing which is attached to the main thing follows or remains attached with the main thing, is embodied in section 8 of the TPA . Section 8 says that, not only all the interests of the transferor pass to the transferee, but legal incidents of the property also pass along with the property. A legal incident means something which is necessary to the principal thing. It is a thing “necessarily depending upon, appertaining to, or following another—as rent is incident to reversion—something appertaining to or passing with or depending on another, called the principal.
Illustration
A owns land to which a right of way is annexed and sells it to B. The right of way would pass on to B as a legal incident or as a thing appertaining to the principal thing, i. e., the house.
The Punjab and Harayana High Court has held that the intention is to be gathered from a document of transfer itself. Thus, a purported deed of adoption could be given effect to as a will, provided the intention to settle property upon the adopted son after death is also present. [Muhammad Shafi vs Tallai Ram, AIR 1985 P&H 121]
The following are the ordinary legal incidents of different kinds of properties, which in the absence of a clear intention to the contrary, pass on to the transferee.
(1) Transfer of land—As a matter of construction, the grant of land must be taken to be, not only of the land, but also of everything beneath or within the land. A transfer of the right to the surface conveys right to minerals underneath, unless there is an express or implied reservation in the grant. Therefore, a contract to sell or grant of a lease of land will generally include mines, quarries and minerals beneath or within it. [AIR 1967 SC 1081]
Transfer of land includes, unless a different intention is expressed or implied, trees standing in it. [AIR 1968 SC 612]
(2) Easements annexed thereto—Under section19 of the Easements Act, an easement existing at the date of transfer passes with the dominant heritage to the transferee. A purchaser of a house acquires a right of way which the vendor has. [Nubeen Chunder vs Bhoobun, (1871) 15 WR 526]
Illustration
If A owns land to which a right of way is annexed and leases it to B for twenty years, the right of way would vest in B and his legal representatives for so long as the lease continues.
A purchaser of land irrigated by the water of a tank is entitled to use the water of the tank for irrigation. [Venkata vs Secretary of State, (1962) 12 Mad L I 432]
When a common passage was left for the use of the co-sharers in a partition between the members of one family, it was held that such an arrangement did not make the right to share in the passage a legal incident of the shares allotted to co-sharers. [Hamida Khatun vs Barghargeri Paerotaqat, (1947) AP 122]
(3) Rents and profits—Rents and profits accruing after the transfer are “benefits to arise out of the land” and are therefore within the definition of “immovable property”. The rents and profits of property mortgaged by an English mortgage form part of the mortgagee’s security.
If the vendor retains possession after the ownership has passed to the buyer, he may be charged for use and occupation. Rents and profits accruing due before the transfer are not legal incidents of the property transferred. [Bhogilal vs Jethalal, (1928) 30 Bom LR 1588]
(4) Things attached to the earth—What is attached to the earth is part of the land and passes with it on transfer without express mention. In the case of a lease, the right to enjoy the trees and shrubs passes to the lessee. [Badam vs Ganga, (1897) 29 All 484]
(5) Minerals—Minerals are embedded in the earth and pass on sale of the earth. The owner of the surface is entitled ex-jure to everything beneath the land. A transfer of the right to the surface conveys the right to the mineral underneath, unless there is an express or implied reservation in the grant. [Raja Anand vs UP State, (1967) I SCR 373]
(6) Machinery—Machinery is attached to the earth and is therefore fixture, and movable parts of the machine, although they are detachable, pass with the land and the fixed machine.
(7) House—Locks, bars, keys, doors, and windows also pass to the transferee, if the property transferred is a house. [Queen Empress vs Sheikh Ibrahim, (1890) 13 Mad 518]
There may be a presumption that when land is transferred, all things attached to the earth, such as trees and shrubs, are also transferred along with the land. But there can be no presumption vice-versa. Thus, transfer of trees will not by itself justify the inference that the land was also transferred.
What is the doctrine of conditional limitation? Discuss. Or “A conditional limitation is a condition subsequent as regards the prior interest and condition precedent as regards the ulterior interest.” Discuss.
Conditional limitation—Ulterior transfer or ulterior disposition are two terms: former is used in marginal note of section 28 and the latter in sections 27, 28 and 30. Such transfers can only be effected by a conditional limitation which is described in section 28.
Conditional limitation is one containing a condition which divests an estate that has vested and simultaneously by the same stroke vests it in another person. As against this, condition subsequent, as discussed in section 31, divests an estate which is vested, but vests it in the grantor himself. This rule is embodied in section 28 which provides—
Ulterior transfer conditional on happening or not happening of specified event [S 28]—On a transfer of property an interest therein may be created to accrue to any person with the condition super-added that in case a specified uncertain event shall happen such interest shall pass to another person, or that in case a specified uncertain event shall not happen such interest shall pass to another person. In each case the dispositions are subject to the rules contained in sections 10, 12, 21, 22, 23, 24, 25 and 27.
Illustrations
(a) A sum of money is bequeathed to A to be paid to him at the age of 18; if he shall die before he attains that age, to B. A takes a vested interest in the legacy, subject to being divested and to go to B, in case A shall die under 18.
(b) A sum of money is bequeathed to A for life, and after his death to B, but if B shall then be dead leaving a son, such son is to stand in the place of B. B takes a vested interest in legacy subject to being divested if he dies leaving a son during A’s life time.
A transfer which is absolute in the first instance may be made subject to a condition that it shall be cut down or divested on the happening of a contingency. Such a condition is called a condition subsequent. A transfer may also be made subject to a condition that on the happening of a contingency, the interest created shall not only cease, but that it shall pass to another person. Such a condition is so far as the prior interest is concerned, a condition subsequent, but is, so far as the ulterior transfer is concerned, a condition precedent. Such a case is known as conditional limitation.
Sections 28 and 31—Section 28 deals with a case in which on the happening of a specified uncertain event, the property transferred is to pass to second donee whereas section 31 refers to a mere cesser of the first donee’s interest on the happening of a specified uncertain event in which case the property will in ordinary case revert to the donor. [AIR 1966 Pat 40]
The terms of a compromise provided that L should not have an estate for life and after her death, R should be full owner, if he survived L and if he did not, the estate would pass to R’s lineal male descendant according to the rule of primogeniture. The court held that condition affected the retention of the estate and not its acquisition and construed the compromise as conferring on R a vested interest liable to be divested, if he did not survive L. [AIR (1925) 47 All 496]
Repugnancy—A conditional limitation is a condition of defeasance which terminates the interest of one person and invests another person with it. But, if an estate is given to a named donee in terms which confer an absolute estate, and then a further interest is given merely after or on termination of that donee’s interest and not in defeasance of it, the further interest would be void for repugnancy. Condition subsequent in defeasance of vested interest must be strictly construed. [AIR 1969 Ker 207]
With the condition super-added—Where an absolute estate is conferred with a clause super-added that in case the transferee dies without children, the estate would revert to his sister and sister’s children, then what is conferred is an absolute estate with a defeasance clause and not an absolute estate with repugnant clause. [AIR 1973 Ker 96]
No recognition in Mohammadan Law—Conditional limitations are not recognised in Mohammadan Law.
“If the ulterior disposition is not valid, the prior disposition is not affected by it.” Explain.
Section 30 of the Transfer of Property Act deals with the effect of the ulterior disposition on the prior one. It states that the prior disposition is not affected by such invalidity. An ulterior disposition may be invalid, either because such disposition is not one recognised by law, or the condition on which it is to take effect is invalid. Thus, a gift to A for life and to an unborn person was under Hindu Law invalid so far as the ulterior disposition was concerned. [Tagore vs Tagore, 9 Beng LR 377; 1928 PC 156] So also a transfer to A for life with a subsequent disposition which amounted to altering the legal course of inheritance would be invalid so far as the subsequent disposition is concerned. [1931 PC 179; ILR (1964) 2 All 534]
When a prior interest is invalid, either as offending the rule against perpetuity, or as being illegal or impossible under section 25, the subsequent interest also fails [Section 16]. But if the subsequent interest is invalid, the prior interest is not affected. B makes a gift to B for life and on his death to his heirs. In this case, the gift to heirs is invalid, but its invalidity will not affect the gift made to B for life. [Tagore vs Tagore, 9 Beng LR, 377 (PC)]
What is the effect of disability and illegality on the doctrine of election?
Disability—Where the donee suffers from some disability, i. e., minority, the election shall be postponed until the disability ceases or until the election is made by some competent authority e.g. a guardian of a minor. A transfer by a person under a legal disability cannot give rise to a case of election. [AIR 1967 SC 1153]
Illegality—Doctrine of election cannot be restored to in order to cure an illegality. Therefore, a gift which infringes the rule against perpetuities cannot be used to raise a case for election. It was held by the Madras High Court that a testatrix under her marriage settlement had power to set a fund for the children. She appointed a part of the fund to her son C for life, with remainder to such persons as she might by Will appoint. C was not in existence at the time when the power was created. Therefore, the remainder after C’s life estate was void as contravening the rule against perpetuity. By the same Will, she made a general residuary appointment of the settled fund to her daughters to whom she bequeathed another benefit. As the gift of the remainder to C’s testamentary appointees was void, the daughters were not put to their election. Not only the doctrine of election will cure an illegality, but also an election is a doctrine of equity, it will not be applied so as to lead to inequitable results.
Impossibility of election—The doctrine does not apply when election is impossible as when a married woman is restrained from alienating, for it is impossible for her to give up property which she is restrained from alienating [Hamilton vs Hamilton (1892) 1 Ch 396]
“The English doctrine of election is based upon the principle of compensation while the Indian doctrine is based upon the principle of forfeiture.” Discuss.
The English Law—The English Doctrine of Election rests on the principle of compensation. If the transferee elects against the instrument, he can keep his own property and also the benefit under the instrument, subject to compensating the disappointed donee out of the benefit conferred to the extent of the value of property of which he had been disappointed.
The Indian Law—The Indian Law, however, is based on forfeiture. By electing against the instrument, the refractory donee incurs a forfeiture of the benefit conferred on him and such benefit reverts to the transferor or his representative. The transferor or his representative is liable to make good to the disappointed transferee the amount or value of the property attempted to be transferred to him in two specific cases—
(a) where the transfer is gratuitous, and the transferor has before the election, died, or otherwise became incapable of making a fresh transfer; and
(b) in all cases where the transfer is for consideration.
The Indian Rule is thus based on forfeiture by the refractory donee while the English Rule is based upon compensation.
Sale of Immovable Property
What remedies are available after the completion of sale?
Remedies after completion of sale are as following—
(1) Rescission—Any person interested in the contract in writing may sue to have it rescinded, and such rescission may be adjudged by the court in any of the following case, namely—
(a) Where the contract is voidable or terminable by the plaintiff.
(b) Where the contract is unlawful for causes not apparent on its face, and the defendant is more to blame that the plaintiff.
(c) Where a decree for specific performance of a contract of sale, or of a contract to take a lease, has been made, and the purchaser or lessee makes default in payment of the purchase money or other sums which the Court has ordered him to pay. [Section 38 Specific Relief Act].
Rescission may be granted on the ground of fraud, misrepresentation, coercion, undue influence, common mistake or incapacity, e.g., minority or lunacy.
(2) Rectification—When, through fraud or a mutual mistake of the parties, a contract or other instrument in writing does not truly express their intention, either party, or his representative-in-interest may institute a suit to have the instrument rectified. If the court finds it clearly proved that there has been fraud or mistake in framing the instrument and ascertaining the real intention of the parties in executing the same, the court may, in its discretion, rectify the instrument so as to express that intention, so far as this can be done without prejudice to rights acquired by third persons in good faith and for value.
Mortgage of Immovable Property
State the law of accession to mortagaged property. Discuss the respective rights of mortgagor and the mortgagee as regards such accession.
Accession—An accession really means an accretion to the mortgaged property. Acquisition which would increase the value of property either in point of area or title or any other manner would fall under the term “accession”. The expression “accession” is not confined to physical acquisition or additions to the mortgaged property, but will include also the acquisition of an interest in property. The rule is that “increase follows the principal”. Accordingly, any addition or increase becomes part of the mortgaged property. Section 63 refers to the mortgagee’s rights to accession. Section 63 deals with—
(1) Natural accessions.
(2) Acquired (by the mortgagee) accessions which are separable.
(3) Acquired (by the mortgagee) accessions which are inseparable.
(1) Natural accessions—These are additions to the mortgaged property by natural causes. For example, A mortgages to B a certain field bordering on a river. The field is increased by alluvion. A is entitled to this increase on redemption.
(2) Acquired accessions which are separable—These are accessions made by the mortgagee in possession, but they are capable of severance from the property. If the mortgagor wishes to take them, he must pay the expenses of acquiring them.
Illustration
A mortgagee erected a stable on the mortgaged land and the materials of the stable could be removed without injury to the property. It was held that it was an accession which could be separated and the mortgagee had the right to remove the material.
(3) Inseparable accessions—When the accessions made by the mortgagee are inseparable, the mortgagor has no option, but to take them on redemption. He is liable to pay cost only—
(1) if the accession was necessary to preserve the property from destruction, forfeiture or sale; or
(2) if the accession was made with the mortgagor’s consent.
A brought a suit for redemption against B, the mortgagee. The mortgagee claimed the expenses of constructing a well in place of an old one which had been destroyed. The mortgaged property was an agricultural land and as the existence of a well was necessary for the purpose of preserving the agricultural character of the land, it was held that the mortgagee was entitled to expenses.
Mortgagee’s rights as regards accession—Under section 70, the mortgagee is entitled to treat natural accessions and acquired accessions as part of his security. Thus, if the mortgagor builds on the property mortgaged, the building forms part of the mortgaged property. In the event of default in payment, the mortgaged property along with the building is liable to be sold.
Explain the maxim “he who is prior in time is stronger in law.” Does the Transfer of Property Act introduce any exception to this rule?
He who is prior in time is stronger in Law—This maxim means that where two successive transfers of the same property by way of mortgage have been effected, the latter in date must give way to the earlier. The first mortgagee is entitled to be satisfied out of the property, if necessary to the exclusion of the second.
A property worth Rs. 5,000 is mortgaged first to A for Rs. 2,000 then to B for Rs. 1,500 and then to C for Rs. 500. The mortgagor makes a default in payment and the property is sold. A, the first mortgagee, will be paid first; then out of the balance, B the puisne (subsequent) will be paid before C, the third mortgagee. A’s mortgage being prior to B and C will have priority over B and C and similarly B’s mortgage will be prior to C’s.
Exceptions—(1) Postponement of a prior mortgagee [Section 78]—Where, through the fraud, misrepresentation or gross neglect of a prior mortgagee, another person has been induced to advance money on the security of the mortgaged property, the prior mortgagee shall be postponed to the subsequent mortgagee.
Illustration
A, before advancing money to B by way of mortgage enquires of C, if the property was free of encumbrances. C does not mention his own mortgage already existing and makes a representation to A that the property is free from any mortgage. In this case, C’s mortgage although first in order, will be postponed to A’s mortgage.
(2) Mortgage to secure uncertain amount when maximum is expressed [Section 79]—This section 79 provides that a prior mortgagee making a further advance is entitled to get priority in respect of that advance over subsequent mortgagees provided the conditions laid down in the said section are fulfilled. The conditions are—
(a) The mortgagee must express the maximum to be secured.
(b) The subsequent mortgagee must have notice of the prior mortgage.
Illustration
A mortgages Sultanpur to his bankers, B & Co., to secure the balance of his account with them to the extent of Rs. 10,000. A then mortgages Sultanpur to C, to secure Rs. 10,000, C having notice of the mortgage to B & Co., and C gives notice to B & Co. of the second mortgage. At the date of the second mortgage, the balance due to B & Co. does not exceed Rs. 5,000. B & Co. subsequently advance to A sums making the balance of the account against him exceed the sum of Rs. 10,000. B & Co. are entitled, to the extent of Rs. 10,000, to priority over C.
What are the provisions in the Transfer of Property Act regarding the appointment of receiver?
Appointment of Receiver [S 69A]—The provisions regarding the appointment of a receiver are contained in section 69A of the Transfer of Property Act as below—
(1) A mortgagee having the right to exercise a power of sale under section 69 shall subject to the provisions of sub-section (2) be entitled to appoint, by writing signed by him or on his behalf, a receiver of the income of the mortgaged property or any part thereof.
(2) Any person who has been named in the mortgage deed and is willing and able to act as receiver may be appointed by the mortgagee.
If the person has been so named, or if all persons named are unable or unwilling to act, or are dead, the mortgagee may appoint any person to whose appointment the mortgagor agrees; failing such agreement, the mortgagee shall be entitled to apply to the court for the appointment of a receiver, and any person appointed by the court shall be deemed to have been duly appointed by the mortgagee.
A receiver may, at any time, be removed by writing signed by or on behalf of the mortgagee and the mortgagor, or by the court on application made by either party and on due cause shown.
A vacancy in the office of receiver may be filled in accordance with the provisions of this sub-section.
(3) A receiver appointed under the powers conferred by this section, shall be deemed to be the agent of the mortgagor; and the mortgagor shall be solely responsible for the receiver’s acts, or defaults, unless the mortgage-deed otherwise provides or unless such acts or defaults are due to the improper intervention of the mortgagee.
(4) The receiver shall have power to demand and recover all the income of which he was appointed receiver, by suit, execution or otherwise in the name either of the mortgagor or of the mortgagee to the full extent of the interest which the mortgagor could dispose of, and to give valid receipts accordingly for the same, and to exercise any powers which may have been delegated to him by the mortgagee, in accordance with the provisions of this section.
(5) A person paying money to the receiver shall not be concerned to inquire if the appointment of the receiver was valid or not.
(6) The receiver shall be entitled to retain out of any money, received by him, for his remuneration, and in satisfaction of all costs charges and expenses incurred by him as receiver, a commission at such rate not exceeding five per cent on the gross amount of all money received as is specified in his appointment, and if no rate is so specified, then at the rate of five percent, on that gross amount, or at such other rate as the court thinks fit to allow, on application made by him for that purpose.
(7) The receiver shall, if so directed in writing by the mortgagee, insure to the extent, if any, to which the mortgagee might have insured, and keep insured against loss or damage by fire, out of the money received by him, the mortgaged property or any part thereof being of an insurable nature.
(8) Subject to the provisions of this Act as to the application of insurance money, the receiver shall apply all money received by him as follows, namely—
(i) in discharge of all rents, taxes, land revenue, rates and outgoings whatever affecting the mortgaged property;
(ii) in keeping down all annual sums, or other payments, and the interest on all principal sums, having priority to the mortgage in right whereof he is receiver;
(iii) in payment of his commission and of the premiums of fire, life or other insurances, if any, properly payable under the mortgage-deed or under this Act, and the cost of executing necessary or proper repairs directed in writing by mortgagee;
(iv) in payment of the interest falling due under the mortgage;
(v) in or towards discharge of the principal money, if so directed in writing by the mortgagee,
and shall pay the residue, if any, of the money received by him to the person, who but for the possession of the receiver, would have been entitled to receive the income of which he is appointed receiver, or who is otherwise entitled to the mortgaged property.
(9) The provisions of sub-section (1) apply only if and as far as contrary intention is not expressed in the mortgage deed, and the provisions of sub-sections (3) to (8) inclusive may be varied or extended by the mortgage-deed and as so varied or extended, shall, as far as may be, operate in like manner and with all the like incidents, effects and consequences, as if such variations or extensions were contained in the said sub-sections.
(10) Application may be made, without the institution of a suit to the court for its opinion, advice or direction or any present question respecting the management or administration of the mortgaged property other than questions of difficulty or importance not proper in the opinion of the court for summary disposal. A copy of such application shall be served upon and the hearing thereof may be attended by, such of the persons interested in the application as the court may think fit.
The cost of every application under this sub-section shall be in the discretion of the court.
Lease of Immovable Property
What are the consequences of non-registration of lease?
Consequences of non-registration—A lease is void, if unregistered in cases where the registration is compulsory. However, a lessee, who is in possession of the land under an unregistered lease, is not a trespasser, but merely a tenant-at-will. The lessor is entitled to claim compensation from such lessee for the use and occupation of the land. Further both the lessor and the lessee can sue for specific performance on the basis of unregistered lease under section 27A of the Specific Relief Act. Under section 53A, the lessee in possession under an unregistered instrument is protected from ejectment provided the conditions laid down in the section are fulfilled.
Can a lessee assign his rights under a lease to a third person? Discuss the rights of a lessor as against assignee of the whole interest in— (a) Lease; (b) A sub-lease; (c) A mortgage from the lessee.
Transfer of interest by the lessee—Section 108 (j) of the Transfer of Property Act entitles the lessee to transfer his interest in leased property. The lessee may transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest in the property, and any transferee of such interest or part may again transfer it. The lessee shall not, by reason only of such transfer, cease to be subject to any of the liabilities attaching to the lease;
Nothing in this clause shall be deemed to authorize a tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the lessee of an estate under the management of a Court of Wards, to assign his interest as such tenant, farmer or lessee.
The right of a lessor against the assignee of the whole interest in the lease—An absolute assignment of the whole interest of the lessee creates privity of estate between the lessor and the assignee. The assignee becomes liable to the lessor for all terms running with the land, including the terms to pay rent and the lessor has got a right to enforce these against him.
(b) Sub-lessee—There is no privity of estate between the lessor and the sub-lessee, and as such the lessor cannot sue the sub-lessee for rent. His remedy is only against the lessee with whom he entered into the contract.
(c) A mortgage from the lessee—A mortgage of the lessee’s right is not an absolute assignment. It does not create privity of estate between the lessor and the mortgagee. Hence, the lessor cannot sue the mortgagee for rent, nor can the mortgagee be liable to the lessor for the whole of the rent and covenants and cannot be liable for any part of it without apportionment, even if he takes possession
Gift
What are conditional gifts? Are conditional gifts valid?
Conditional gifts—A gift is a transfer of property and, is therefore, subject to the rules enacted in Chapter II of this Act which deals with conditional transfers. Section 25 of the Act provides that an interest created on a transfer of property and dependent upon a condition fails, if the fulfilment of that condition—
- is impossible; or
- is forbidden by law; or
- defeats the provisions of any law; or
- is fraudulent or involves or implies injury to the person or property of another; or
- the court regards it as immoral or opposed to public policy.
If the condition is not of above nature, then it is considered as a valid and proper condition and the gift can be made with or subject to that condition.
Where the donor in his old age executed the gift deed of his house to Nagar Maha Palika subject to the condition that the donee would set up a school in his name and permit him to live in one of small rooms. The condition as well as gift have been held valid in Subhash Chandra vs NMP Kanpur.
If an absolute gift is made subject to condition restricting alienation, the condition would be void. But the condition reserving the profit to the donor for life is not repugnant. A gift may be subject to a condition precedent under section 21 of the Act and there is no transfer or no gift until and unless the condition is fulfilled.
If the condition precedent is illegal, impossible or immoral, the gift fails. So a gift by a father of an annuity to his daughter, if she lives apart from her husband is void. But a gift to two daughters on condition of their living apart is valid. A gift to a husband and wife on condition of the donor having physical possession of the wife is invalid. Gifts on conditions inciting crime or corruption are invalid.
A condition subsequent is intended to put an end to a gift. So if the condition subsequent is impossible or illegal or immoral, the condition is void under section 32 and the gift stands. So a gift to a mistress on condition of her continuing to live with the donor is a valid gift, though the condition is void.
INDIAN EASEMENTS ACT, 1882
Explain—“No easement consists in faciendo.”
No easement consists in faciendo—No right of easement can consist in faciendo, i.e., consist in a right to an act or acts to be performed by the servient owner. The right of easement imposes upon the servient owner an obligation to suffer something to be done by the dominant owner, or not to do something in, upon or in respect of the servient tenement. Thus, an easement right has two aspects, one positive or affirmative and the other negative. But there can be no easement by which the dominant owner can compel the servient owner to perform any act.
The following is an example of a case law referring to in faciendo—
By saying that servitude cannot consist in faciendo, it means that the owner of a serving estate can do only that which may be required for the maintenance of the servitude. [Louisiana & AR Co. vs Winn Parish Lumber Co., 131 La 288, 306 (La 1911)]
Can there be an easement on easement?
An easement is unique to the agreement between the two parties involved. As such, easement agreements are structured so that the specific use of the property is explicitly outlined and there is a termination of easement given to the property owner. Such agreements are sometimes transferred in a property sale, so it is important for potential buyers to know if there are any easements on the property being evaluated.
No easement on easement—The right of easement is for the benefit of the dominant tenement also and the servient tenement acquired no right to insist on their continuance. It can not create a reciprocal right in favour of servient owner. Thus, in Khurshed vs Tek Narain, CLR 141, it was held that the flow of liquid manure from the dominant owner’s drain, however long continued and, however useful it may be to the servient tenement could not reverse the relative positions of the dominant owners so as to allow the servient owner to maintain a suit to enjoy the manner indefeasibly.
Servient owner not entitled to require continuance [Section 50]—Section 50 of the Easements Act provides that the servient owner has no right to require that an easement be continued. He is not entitled to compensation for damage caused to the servient heritage in consequence of the extinguishment or suspension of the easement, if the dominant owner has given to the servient owner such notice as will enable him, without unreasonable expense, to protect the servient heritage from such damage.
Comment on the statement “Easement rights are restrictions on ownership rights.”
Easement restrictive of certain rights [Section 7]—Easements are restrictions of one or other of the following rights (namely)—
(a) Exclusive rights to enjoy—The exclusive right of every owner of immovable property (subject to any law for the time being in force) to enjoy and dispose of the same and all products thereof and accession thereto.
(b) Rights to advantages arising from situation—The right of every owner of immovable property (subject to any law for the time being in force) to enjoy without disturbance by another, the natural advantages arising from its situation.
Illustrations
(a) The exclusive right of every owner of land in a town to build on such land, subject to any municipal law for the time being force.
(b) The right of every owner of land that the air passing thereto shall not be polluted unreasonably by other persons.
(c) The right of every owner of a house that his physical comfort shall not be interfered with, materially and unreasonably by noise or vibration caused by any other person.
(d) The right of every owner of land to so much light and air as pass vertically thereto.
(e) The right of every owner of land, that such land, in its natural condition, shall have the support naturally rendered by the subjacent and adjacent soil of another person.
Land is in its natural condition when it is not excavated and not subjected to artificial pressure; and the subjacent and adjacent soil mentioned in this illustration means such soil only as in its natural condition would support the dominant heritage in its natural condition.
(f) The right of every owner of land that, within his own limits, the water which naturally passes or percolates by, over or through his land shall not, before so passing or percolating, be polluted by other persons.
(g) The right of every owner of land to collect and dispose within his own limits of all water under the land which does not pass in a defined channel, and all water on its surface, which does not pass in a defined channel.
(h) The right of every owner of land that the water of every natural stream which passes by, through or over his land in a defined natural channel shall be allowed by other persons to flow within such owner’s limits, without temperature; the right of every owner of land abutting on a natural lake or pond into or out of which a natural stream flows, that the water of such lake or pond allowed by other persons to remain within such owner’s limits without material alteration in quantity, quality or temperature.
(i) The right of every owner of upper land that water naturally arising in, or falling on, such land and not passing in defined channals, shall be allowed by the owner of adjacent lower land to run naturally thereto.
(j) The right of every owner of land abutting on a natural stream, lake or pond to use and consume its water for drinking, household purpose and watering his cattle and sheep, and the right of every such owner to use and consume the water for irrigating such land, and for the purposes of any manufactory situate thereon: Provided that he does not thereby cause material injury to another like owners.
A natural stream is a stream, whether permanent or intermittent, tidal or tideless, on the surface of land or underground, which flows by the operation of nature only and in a natural and known course.
Right of ownership consists of a bundle of minor or fragmentary rights each capable of separate enjoyment. The owner’s absoluteness in his property consists in his power to dispose of as pleases any of these fragmentary rights. They may consist of the right of possession or of the mere right of use or enjoyment. These rights are carved out of the right of ownership by a restrictive process and are restrictions on the power of full use and enjoyment of the owner. Though they restrict the use and enjoyment of the owner, yet they do not exclude him totally from it and vest no exclusive right of use and enjoyment in the holder thereof.
Easements, briefly speaking, are restrictions on the property or a legalised interference with them. Its effect is not to extinguish or to exclude the ordinary use of property.