In this article we shall study Section 91 of IEA, the Indian Evidence Act, 1872 related to the concept of the exclusion of oral by documentary evidence.

Meaning of Evidence:

The term evidence has come from the Latin word “evident” which means “to show clearly” or to prove. Evidence contains everything that is used to reveal the truth or facts. Evidence is the testimony which may be legally received in order to prove or disprove some facts in dispute. Section 3 of the Indian Evidence Act, 1872, defines the term “Evidence” as follows:

 “Evidence” means and includes—

1. all statements which the Court permits or requires to be made before it by witnesses, in relation to matters of fact under inquiry, such statements are called oral evidence;
2. all documents including electronic records produced for the inspection of the Court, such documents are called documentary evidence.

Meaning of Document:

Section 3 of the Indian Evidence Act, 1872, defines the term “Document” as follows:

“Document” means any matter expressed or described upon any substance by means of letters, figures or marks, or by more than one of those means, intended to be used, or which may be used, for the purpose of recording that matter.

Illustrations attached to the Section clear meaning of the term “Document” effectively as follows:

• A writing is a document;
• Words printed, lithographed or photographed are documents;
• A map or plan is a document;
• An inscription on a metal plate or stone is a document;
• A caricature is a document. 

Meaning of Oral Evidence:

When the proof is restricted to spoken words or by gestures or motion, then it is termed   as   ‘oral   evidence’.   Oral   evidence,   when   reliable,   is adequate without narration or written proof to demonstrate a reality or fact. Section 59 of Evidence Act says that it considers all facts as oral evidence   except   electronic evidence   and   documentary evidence. While, Section   60 says   that   oral evidence must be direct.

Meaning of Documentary Evidence:

Any evidence which is present as a document before the court in order to demonstrate or show a reality is called ‘documentary evidence’. Documentary evidence may be primary or secondary. Primary evidence is considered as the   evidence   which   is   given   in several parts like duplicate copies or as counterpart like those which is   signed   by   the   parties   or photocopy   of   the   document whereas,   Secondary   evidence contains   certified   copies,   that have   been   made   by   the   same mechanical   process   and   also contain   counterparts   of   the document against the parties.

Differentiate between oral evidence and documentary evidence.

ChapterVI of the Indian Evidence Act:

In India, the best evidence rule has been regarded as the fundamental principle upon which the law of evidence depends. The best evidence rule does not demand the greatest amount of evidence which can possibly be given of any fact, but its desire is to prevent the   introduction   of   any   evidence   than   the document   itself.   It   is adopted for the prevention of fraud. It is fair to presume that the party has some sinister motive for not producing the best evidence and that if offered his design would be frustrated.

The best evidence rule is the basis of Chapter VI of Evidence Act. (S. 91 to 100 of the Evidence Act). Chapter VI of Evidence Act deals with exclusion of oral evidence by documentary evidence. Section 91 and Section 92 of IEA define the cases in which documents are exclusive evidence of transactions  which they embody and oral evidence cannot be used to supersede, control, contradict, vary add to subtract from the terms of the document. Section 93 to 100 deal with the interpretation of documents by oral evidence. Documents once reduced into writing are considered to be the best evidence. It is on the higher footing than oral evidence. The very object for which writing is used is to perpetuate the memory of what is written down, and so to furnish permanent proof of it. In order to give effect to this, the document   itself   must   be   produced. Section   61   of   Evidence   Act provides that the contents of documents may be proved by primary evidence or its secondary evidence. Section 62 of Evidence Act makes it clear that primary evidence is the document itself.

In Strother v. Barr, (1828) 5 Bing 136 case, the Court observed that the best evidence rule is based on overriding consideration that written words or litera scripta are preferable to spoken words because:

• Written words can prove themselves whereas spoken words cannot;
• Written words convey the intention of the parties in more tangible and verifiable manner than spoken words; and
• Written words are more enduring than spoken words because of “the imperfection of the human memory”.

Section 91 of the Indian Evidence Act:

Evidence of Terms of Contracts, Grants and Other Dispositions of Property Reduced to   Form of Document:

Section 91 of IEA deals with the exclusion of oral evidence by documentary evidence. This Section lays down the best evidence rule, but it does not prohibit any other evidence where writing is capable of being construed differently and which shows how the parties understood the document. Section 91 of IEA contains two exceptions, three explanations and five illustrations. The general rule laid down in this section is also subject to the exceptions laid down in the Sections 95–99 of the Indian Evidence Act.

Provisions of Section 91 of IEA:

Section 91 of IEA runs as follows –

When the terms of a contract, or of a grant, or of any other disposition of property have been reduced to the form of a document, and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence shall be given in proof of the terms of such contract, grant or other disposition of property, or of such matter, except the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions hereinbefore contained.

Exceptions:

• Exception 1: When a public officer is required by law to be appointed in writing, and when it is shown that any particular person had acted as such officer, the writing by which he is appointed need not be proved.
• Exception 2: Wills admitted to probate in India may be proved by the probate.

Explanations:

• Explanation 1: This section applies equally to cases in which the contracts, grants or dispositions of property referred to are contained in one document, and to cases in which they are contained in more documents than one.
• Explanation 2: Where there are more originals than one, one original only need be proved.
• Explanation 3: The statement, in any document whatever of a fact other than the facts referred to in this section, shall not preclude the admission of oral evidence as to the same fact.

Illustrations:

(a) If a contract be contained in several letter, all the letters in which it is contained must be proved.

(b) If a contract is contained in a bill of exchange, the bill of exchange must be proved.

(c) If a bill of exchange is drawn in a set of three, one only need be proved.

(d) A contract, in writing with B, for the delivery of indigo upon certain terms. The contract mentioned the fact that B had paid A the price of other in contracted for verbally on another occasion. Oral evidence is offered that no payment was made for the other indigo. The evidence is admissible.

(e) A gives B a receipt for money paid by B. Oral evidence is offered of the payment. The evidence is admissible.

Intention Behind Section 91 of IEA:

In Roop Kumar v. Mohan Thedani, (2003) 6 SCC 595 case, explaining the rationale of the section observed: “Section 91 relates to evidence of terms of contract, grants and other disposition of properties reduced to form of document. This section merely forbids proving the contents of a writing otherwise than by writing itself; it is covered by the ordinary rule of law of evidence, applicable not merely to solemn writings of the sort named but to others known sometimes as the “best evidence rule”. It is in reality declaring a doctrine of the substantive law, namely, in the case of a written contract, that of all proceedings and contemporaneous oral expressions of the thing are merged in the writing or displaced by it”.

The Court further observed: “This rule is based upon an assumed intention on the part of the contracting parties, evidenced by the existence of the written contract, to place themselves above the uncertainties of oral evidence and on a disinclination of the Courts to defeat this object. When persons express their agreements in writing, it is for the express purpose of getting rid of any indefiniteness and to put their ideas in such shape that there can be no misunderstanding, which so often occurs when reliance is placed upon oral statements. Written contracts presume deliberation on the part of the contracting parties and it is natural they should be treated with careful consideration by the Courts and with a disinclination to disturb the conditions of matters as embodied in them by the act of the parties”.

In Tulsi v. Chandrika Prasad, AIR 2006 SC 3359 case, the Apex Court held that Section 91 of the Evidence Act mainly forbids proving of the contents of a writing otherwise than by writing itself and merely lays down the ‘best evidence rule’. It, however, does not prohibit the parties to adduce evidence, in a case, the deed is capable of being construed differently to show how they understood the same.

In Jayalakshmi Trading Co. v. Krishnamurthy, AIR 2006 SC 179 (188) case, the Court observed: “It is relevant to note that Section 91 of the Indian Evidence Act prohibits oral evidence only regarding the terms of the contract or other evidence relating to the terms of the contract. Section 91 of the Indian Evidence Act does not prohibit the parties to lead oral evidence in respect of the nature of the contract as well as the oral agreement entered into between the parties simultaneously along with the document. It is well settled that if there is ambiguity in the language employed and the recitals there on, the intention of the parties may be ascertained by adducing extrinsic evidence.”

Explanation of Section 91 of IEA:

Under this Section 91 of IEA,

(1) When the terms of (a) a contract, (b) a grant; or (c) any disposition of property, have been reduced to the form of a document; or

(2) Where any matter is required by law to be reduced to the form of a document, then (a) the document itself, or (b) secondary   evidence of its contents, must be put in evidence.

Thus, the   first   part   of   provision   refers   to   transactions voluntarily reduced to writing.  The second part refers to those cases in which any matter is required by law to be reduced to the form of a document, e.g., under the Transfer of Property Act, a sale of immovable property of the value of Rs.100 and upwards, mortgage for an amount exceeding Rs. 100, a lease of immovable   property   for   a   year   at   least,   a   trust   of   immovable property, a gift of immovable property, etc.

The first part of the Section 91 of IEA does not deal with all kinds of documents but only those which are dispositive in nature, i.e., which are (a) bilateral and (b)  involve transfer of rights from one party to another It refers to three kinds of dispositions, namely, a contract, grant or other disposition of property. Illustration (b) attached to Section 91 exemplify the first part of the Section. It says, if a contract is contained in a bill of exchange, the bill of exchange must be proved.

In Pushpalata v. Padma, AIR 2010 Kant 124 case, the Court held that the word “disposition” means giving away or giving up by a person of something which was his own and it is not term of law.

In Taburi Sahai v. Jhunjhunwala, AIR 1967 SC 106 case, the Apex Curt held that a deed of the adoption of child   is   not   a   contract   within   the   meaning   of   Section   91 of IEA  and, therefore, the fact of adoption can be proved by any evidence apart from the deed.

In Bhaskar   Waman   Joshi   v.   Narayan   Rambilas, (1960) 2 SCR 117 case, the Apex Court held  that the question in each case is one of determination of the real character of the transaction to be ascertained from the provisions of the deed, viewed in the light of the surrounding circumstances. If the words   are   plain   and   unambiguous,   they   must,   in   the   light   of   the evidence of surrounding circumstances, be given their true legal effect. If there is ambiguity in the language employed, the intention may be ascertained from the contents of the deed with such extrinsic evidence as may be, by law, be permitted to be adduced to show in what manner the language of the deed was related to existing facts.

In State of Madras v. Ramalingam & Co., AIR 1956 Mad 695 (701) case, the Court held that if the parties intended only to reduce to writing a portion of the terms of the contract, then they are entitled to give a parol evidence of the terms which they did not intend to reduce to writing.

Second part of Section 91 of IEA refers to those cases in which any matter is required by law to be reduced to the form of a document. Second part has wider scope. According to this part the documents may or may not be dispositive or bilateral in nature. Those documents which are required by the law to be in writing are:

• Under Sections 54 and 118 of the Transfer of Property Act, 1882, sales and exchanges where the value of property is more than Rs. 100 or more can be made only by registered instrument.
• Under Section 59 of the Transfer of Property Act, 1882, mortgages can be affected only by registered instrument signed by the mortgagor and attested by at least two witnesses.
• Under Section 107 of the Transfer of Property Act, 1882 and Section 17(1)(d) of the Registration act, 1908, lease of immovable property from year to year, or any term exceeding one year, or reserving a yearly rent can be made only by registered instrument.
• Under Section 123 of the Transfer of Property Act, 1882 and Section 17(1)(a) of the Registration act, 1908, gifts of immovable property must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses.
• Under Section 130 of the Transfer of Property Act, 1882, actionable claims with or without consideration shall be affected only by execution of an instrument in writing signed by the transferor or his duly authorized agent.
• Wills made under Section 64 of the Indian Succession act, 1925 are required to be attested by at least two witnesses.
• According to Order XX of the Code of Civil Procedure, 1908, all judgments and decrees in Civil.
• Judgments in criminal cases under Section 354 of the Code of Criminal Procedure, 1973.
• Under Section 25(1) of the Indian Contract Act, 1872, agreement without consideration made on account of natural love and affection between parties standing in near relation to each other is valid provided it is expressed in writing and registered under the law.
• Confession made by an accused or dying declaration are not required by law in writing if they are made to person other than Magistrate. But Confession made by an accused or dying declaration to Magistrate must be recorded under Section 164  of the Code of Criminal Procedure, 1973.

Exceptions to Section 91 of IEA:

These two exceptions to this provision are as under:

Exception 1:

When a public officer is required by law to be appointed in writing, and when it is shown that any particular person had acted as such officer, the writing by which he is appointed need not be proved.

This   exception   is   partly   based   on   the   maxim ‘omnia praesumuntur rite esse acta’. It is a general principle, that a person’s acting in a public capacity is prima facie evidence of his having been duly authorised so to do; and even though the office be one the appointment to which must have been in writing, it is not, at least in the first instance, necessary to produce the document, or account for non­production. The fact that a person is working in the due capacity of his office is also evidence of that person’s appointment in the office.

The term “Public Officer” is defined in Section 2(1) of the Code of Civil Procedure, 1908, and it includes all Government Officers, judges, police officers, military officers.

The ingredients of this exceptions are:

• The person must be a public officer;
• He must have been appointed in writing; and
• He must have acted in his official capacity.

Let us understand it with illustration: a question arises whether ‘A’ is a Police Officer   of the Police Station, then the order of appointment is not required to be proved. The fact that he is working as a Police Officer of the Police Station is sufficient.

Exception 1 virtually requires that the Court shall presume that, if the conditions of eceptions are fulfilled, the public official was duly appointed, and shifts the burden of proof on the party who avers that public officer was not duly appointed or that he is impostor.

In Ram Sahai v. Gajja, ILR (1959) 9 Raj 389 case, the Court held that under exception (1) of Section 91 of the Evidence Act it is enough for petitioner to prove that the successful candidate in an election acted as a patel, an office of profit under the Government and therefore was disqualified for standing as a candidate for election. It is not necessary to produce the order of appointment.

Exception 2:

Wills admitted to probate in India may be proved by the probate.

A Will is neither a contract, nor a grant, nor a disposition of property. The death of the testator makes it operative. Hence, this Section does not apply to Wills.

When on the basis of will probate has been obtained and if later, the question arises on the existence of that will, the original will is not required to be produced before the court.  This exception requires to prove the contents of the will by which the probate is granted. According to section 2(f) of the Indian succession Act, 1925, the term “probate” stands for the copy of a certificate with the seal of the court granting administration to the estate of the testator. The probate copy of the will is secondary evidence of the contents of the original will in a strict sense, but it is ranked as primary evidence.

Attached Explanations of Section of IEA:

Explanation 1:

This section applies equally to cases in which the contracts, grants or dispositions of property referred to are contained in one document, and to cases in which they are contained in more documents than one.

For example, a contract may be entered into through a series of letters exchanged between the parties and correspondence put together might constitute a single contract. Illustration (a) exemplifies the meaning of this explanation. It says if a contract is contained in several letters, all the letters in which it is contained must be proved.

Explanation 2:

Where there are more originals than one, one original only need be proved. Illustration (c) exemplifies the meaning of this explanation. It says, if a bill of exchange is drawn in a set of three, one only need be proved.

Explanation 3:

The statement, in any document whatever of a fact other than the facts referred to in this section, shall not preclude the admission of oral evidence as to the same fact. Illustrations (d) and (e) exemplify this explanation. Illustration (d) says, A contract, in writing with B, for the delivery of indigo upon certain terms. The contract mentioned the fact that B had paid A the price of other in contracted for verbally on another occasion. Oral evidence is offered that no payment was made for the other indigo. The evidence is admissible. Illustration (e) says, A give B a receipt for money paid by B. Oral evidence is offered of the payment. The evidence is admissible.

Conclusion:

The best evidence rule does not demand the greatest amount of evidence which can possibly be given of any fact, but its desire is to prevent the   introduction   of   any   evidence   than   the document   itself.   It   is adopted for the prevention of fraud. Documents once reduced into writing are considered to be the best evidence. It is on the higher footing than oral evidence. The very object for which writing is used is to perpetuate the memory of what is written down, and so to furnish permanent proof of it. In order to give effect to this, the document   itself   must   be   produced. The best evidence rule is the basis of Chapter XVII of Evidence Act. (S. 91 to 100 of the Evidence Act).

Section 91 and Section 92 of IEA define the cases in which documents are exclusive evidence of transactions which they embody and oral evidence cannot be used to supersede, control, contradict, vary add to subtract from the terms of the document. Section 91 deals with the exclusion of oral evidence by documentary evidence. This Section lays down the best evidence rule, but it does not prohibit any other evidence where writing is capable of being construed differently and which shows how the parties understood the document. The first   part   of   provision   refers   to   transactions voluntarily reduced to writing.  The second part refers to those cases in which any matter is required by law to be reduced to the form of a document.

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Article 21 of the Constitution of India:

Protection of life and personal liberty: No person shall be deprived of his life or personal liberty except according to procedure established by law.

Article 14 of the Constitution of India:

Equality before law: The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India Prohibition of discrimination on grounds of religion, race, caste, sex or place of birth

Section 11 of the Indian Penal Code, 1866:

Person: The word “person” includes any Company or Associa­tion or body of persons, whether incorporated or not.

General Clauses Act, 1897, defines the term “person” exactly same way as it is done in the Indian Penal Code.

In all above provisions, the word “person” is used. It means it is applicable to all persons i.e. citizens and foreigners. But it is not including the word “unborn child” in its definition. Hence there is some discrepancies in the status of unborn child.

The definition, as is clear from the language of this section, is not exhaustive but inclusive. The word ‘person’ includes a juridical person and as such an idol being a juridical person capable of owning property is a ‘person’ within the meaning of this section. An unborn child may be called a person if its body is sufficiently developed in its mother’s womb to call it a child.

From the general term “person” we can come to conclusion that the right to life has been guaranteed as a fundamental right to everyone under this article, which may be deemed to include an unborn child. Therefore, the State is under an obligation under Article 21 not only to protect the life of an unborn child from arbitrary and unjust destruction but also not to deny it equal protection under Article 14

In Elliot v. Lord Joicey, 1935 AC 209 case, the Court held that an unborn child is taken care of just as much as if it were in existence, in any case in which the child’s own advantage comes in question; though no one else can derive any benefit through the child before birth.

In Roe v. Wade, 410 US 113 (1973) case, the Court held that State’s interest in potential human life becomes compelling at a point of viability.

In Webster v. Reproduction Health Services, 1061 Ed 2d 410 (1989) case, the Supreme Court of America upheld a Missouri Statute which declared that the life of each human being begins at conception and that unborn children have a protectable interest in life, health, and well-being.

In Davis v. Davis, (1989) 15 FLR 2097 case, the Court held that as a matter of law, human life begins at conception.

In Walker v. Great Northern Railway Company of Ireland, (1890) 28 L.R. Ir. 69 case, where the plaintiff’s pregnant mother travelled on the defendant’s railway. There was an accident of the railway. Plaintiff’s claim was he had been born crippled and deformed because the injury was caused to it by the accident due to the railway’s negligence and hence he should be compensated by the defendant. The Court held that the defendants are not liable to pay damages due to the following two reasons:

1. The defendants did not owe any duty or care to the plaintiff as they did not know about his existence; and
2. The medical evidence to prove the plaintiff’s claim was very uncertain.

In Tagore v. Tagore, (1872) I 1A Suppl. 47 case, the Supreme Court observed that an infant in the womb is a person in existence for the purpose of making a gift to an unborn person. It is to be noted that this judgment is applicable to an unborn child for the purpose of a gift only.

In Jabbar v State AIR 1966 All 590 case, the Court observed that the term ‘person’ would include an unborn child in the mother’s womb after seven months of pregnancy, that means it is capable of being spoken of as a person if its body is developed sufficiently. It is to be noted that this decision is applicable to a foetus who has completed its seven months. Thus the exact definition of “unborn child” is not given in any Act or by Indian Court.

Meaning of Transfer of Property:

Section 5 of Transfer of Property Act, 1882:

Transfer of property defined – In the following sections “transfer of property” means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself, or to himself and one or more other living persons; and “to transfer property” is to perform such act. In this section “living person” includes a company or association or body of individuals, whether incorporated or not, but nothing herein contained shall affect any law for the time being in force relating to transfer of property to or by companies, associations or bodies of individuals.

According to the definition of transfer of property (Section 5 of the Transfer of Property Act, 1882) , we can write the following characteristics of a Transfer of a Property.

• It is an act of conveyance
• Conveyance is inter vivos means between living persons.
• Property may be conveyed to one or more other living persons, or to himself, or to himself and one or more other living persons.
• Property may be transferred in the future or in present.
• The term ‘person’ includes company or association or body of individuals, whether incorporated or not

Under T. P. Act, 1882, there are 6 modes of transfer of property which are Sale, Mortgage, Lease, Exchange, Gift, and Actionable claim. Under T. P. Act, 1882, Partition, Relinquishment, Surrender, Easement, Will, Compromise, Family Settlements, are not considered as a transfer of property.

According to Section 5 of the Transfer of Property Act, 1882, transfer under this section, is limited to living persons only. Hence a transfer of property cannot be made directly to an unborn person under this Section.

Section 13 of the Transfer of Property Act, 1882:

Transfer for benefit of unborn person: Where, on a transfer of property, an interest therein is created for the benefit of a person not in existence at the date of the transfer, subject to a prior interest created by the same transfer, the interest created for the benefit of such person shall not take effect, unless it extends to the whole of the remaining interest of the transferor in the property.

The transfer of property to unborn chid can be done using provisions of Section 13 of the Act. The interest created in favour of an unborn under this Section is contingent on the occurrence of birth.

Essentials of Transfer for Benefit of Unborn Person:

There cannot be a direct transfer of property to Unborn Person:

According to the provisions of Section 5 of the Transfer of Property Act, 1882, property may be conveyed to one or more other living persons, or to himself, or to himself and one or more other living persons. Thus under Section 5 of the Transfer of Property Act, 1882, cannot be transferred directly. If such a transfer of property is made to an unborn person, it will lead to a scenario wherein the property will remain without an owner from the date of transfer of property till the date the unborn person comes into existence.

Transfer of a property to unborn child can be effected by creating prior interest:

Such transfer can be effected using the provisions of Section 13 of the Transfer of Property Act, 1882. As per the provisions, in order to transfer a property for the benefit of an unborn person on the date of the transfer, it is imperative that the property must first be transferred by the mechanism of trusts in favour of some person living other than the inborn person on the date of transfer. Thus to create the interest of unborn child, first prior interest should be created. The prior interest persists from the date of transfer and the date when the unborn child comes into existence. As soon as the unborn child takes birth, the property rights immediately get transferred in his/her name. Post which he or she will be the sole owner of the property.

The transfer of property to unborn child under Section 13 of the Transfer of Property Act, 1882 must be absolute:

When an interest is created in favour of an unborn child, such interest shall take effect only if it extends to the whole of the remaining interest of the person transferring the property in the property, thereby making it impossible to confer an estate for life on an unborn child. Thus absolute transfer of interest means The entire property must be transferred to the unborn person. The transfer to an unborn person must be absolute and there should be no further transfer from him to any other person. The principle behind such a provision is that a person disposing of property to another person shall not cause obstruction in the free disposition of that property in the hands of more than one generation. This concept can be understood by reading, the illustration attached to the Section 13.

Illustration: A transfers property of which he is the owner to B in trust for A and his intended wife successively for their lives, and, after the death of the survivor, for the eldest son of the intended marriage for life, and after his death for A’s second son. The interest so created for the benefit of the eldest son does not take effect, because it does not extend to the whole of A’s remaining interest in the property.

Section 20 of the Transfer of Property Act, 1882:

When unborn person acquires vested interest on transfer for his benefit.—

Where, on a transfer of property, an interest therein is created for the benefit of a person not then living, he acquires upon his birth, unless a contrary intention appears from the terms of the transfer, a vested interest, although he may not be entitled to the enjoyment thereof immediately on his birth.

According to this provision, unborn person may not be able to enjoy the possession of property as soon as he is born but he may, however, acquire a vested interest in the property since his birth.  The mentioned provision however may be waived off if the terms of the agreement mention a contrary clause.

For example, if “A” transfers an estate to trustees for the benefit of A’s unborn son with a direction to accumulate the income of such estate for a period of ten years from the date of the birth of A’s son and then to hand over the funds to him. A’s unborn son acquires a vested interest upon his birth, although he is not entitled to take and enjoy the income of the property for a period of ten years.

Interest created in favour of unborn person such as referred in Section 13 is dissimilar to the interest envisaged by Section 20. Section 20 refers to the creation of a limited interest by the transferor in favour of someone in the first instance and creation of successive interest in someone else thereafter.

In K. Vasanthappa v. Channabasappa, AIR 1962 Mys 98 (100) case, where A donor transferred his property by a gift in favour of H a living son of his daughter (donor’s daughter). In the gift deed, it was also provided that the property gifted shall also be enjoyed by other sons who might be born to the donor’s daughter before H attained the majority. T was born to the donor’s daughter before H attained the majority. H transferred the entire gifted property. It was held that T, on birth acquired ½ share in the gifted property in view of Section 20, and T was entitled to petition and recover possession of his ½ share in the property. Court also held that Section 20 is not controlled by the provisions of Section 13.

In F. M. Devaru Ganapathi Bhat v. Prabhakar Ganapathi Bhat, AIR 2004 SC 2665 (2668) case, where a donor by gift deed gave the property to her brother’s son then living and also stated in the gift deed that other male children born to her brother would also be joint holders with the donee. The Court held that the gift deed was valid in view of the provisions of Section 20 and was not hit by the provisions of Section 13 of the T.P. Act.

Transfer of Property to Unborn Child under Personal laws:

Under Hindu Law and Mahomedan Law, a gift or bequest to a person unborn is void.

Conclusion:

The transfer of property to unborn child cannot be executed in respect of unborn persons directly but it can be executed indirectly by the machinery of trusts (i.e. by creating a prior interest). The prior interest persists from the date of transfer and the date when the unborn child comes into existence. As soon as the unborn child takes birth, the property rights immediately get transferred in his/her name. Post which he or she will be the sole owner of the property. The underlying fundamental principle enshrined under section 13 of the Transfer of Property Act is that a person disposing off property to another person shall not create hurdles for the free disposition of that property in the hands of one or more generations.

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The classification of mortgage has been made on the basis of the nature of the interest which is transferred for securing the loan. Accordingly, there is a difference in the rights and liabilities in each kind of mortgage. These six types of mortgages also differ regarding the formalities that are necessary for effecting them.

As per Section 58, six types of mortgages are Simple mortgage, Mortgage by Conditional Sale, Usufructuary mortgage, English mortgage, Mortgage by deposit of title-deeds, and Anomalous mortgage.

Simple Mortgage:

Section 58(b): Simple mortgage.

Where, without delivering possession of the mortgaged property, the mortgagor binds himself personally to pay the mortgage-money, and agrees, expressly or impliedly, that, in the event of his failing to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property to be sold and the proceeds of sale to be applied, so far as may be necessary, in payment of the mortgage-money, the transaction is called a simple mortgage and the mortgagee a simple mortgagee.

As per Section 58 (b). Where the mortgagor promises to pay the mortgage-money (loan) without delivering possession of the mortgagor-property and agrees expressly or impliedly that in case of non-payment of the loan, the mortgagee shall have the right to cause the mortgaged property to be sold through a decree or order from the Court, the mortgage is a simple mortgage. Thus in a simple mortgage, the mortgagee is not put into possession of the property pledged to him. The mortgagor merely parts with the right of sale and nothing more.

The mortgagee cannot foreclose i.e. keep the property in lieu of the mortgage-money but acquires right of sale the property by the intervention of the Court.

Characteristics of a simple Mortgage:

• In such a mortgage, the mortgagor takes a personal undertaking to pay the loan.
• In such a mortgage, the possession of the mortgagee-property is not given to the mortgage.
• In such mortgage in the case of non-payment of the loan, the mortgagee has the right to have the mortgage-property sold through the intervention of Court.
• A simple mortgage can be made only through a registered document irrespective of the sum of money secured. (Section 59 of the Act)
• A simple mortgagee is entitled to a decree for sale as a matter of course. He cannot acquire absolute ownership by foreclosure.
• In a simple mortgage, the security for the debt is two-fold: (i) the personal obligation; and (ii) The property.

Case Laws:

In Ram Narayan Singh v. Adhindra Nath, AIR (1916) PC 119 the Court held that the fact that some immovable property has been mentioned as security for its repayment does not displace the personal liability of mortgagor to repay the loan with interest.

In Kishan Lai v Ganga Ram (1891) 13 Allahabad 28 case, the Court held that the very words “right to cause the property to be sold” in section 58 (b) of the Transfer of Property Act, 1882 indicates that the power of sale is not to be exercised by the mortgagee without the intervention of the court.

Mortgage by Conditional Sale:

Section 58 (c): Mortgage by conditional sale:

Where, the mortgagor ostensibly sells the mortgaged property— on condition that on default of payment of the mortgage-money on a certain date the sale shall become absolute, or on condition that on such payment being made the sale shall become void, or on condition that on such payment being made the buyer shall transfer the property to the seller, the transaction is called mortgage by conditional sale and the mortgagee a mortgagee by conditional sale: Provided that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale.

As per section 58(c) of the Transfer of Property Act, the sale with a condition that upon repayment of the consideration amount, the purchaser shall retransfer the property to the seller is known as Mortgage by conditional sale. Although, the whole transaction looks like a conditional sale, yet, in the intention of the parties is to secure the money (an essential ingredient of the mortgage) which the seller takes as a loan from the purchaser.

Characteristics of Mortgage by Conditional Sale:

• There is an ostensible (appearing to be true but not necessarily so) sale of immovable property.
• It is a conditional sale. The sale is subject to any of the following conditions: (i) On non-payment of mortgage-money (price) the sale would become absolute or, (ii) On payment of mortgage money the sale shall become void or the buyer shall retransfer the said property to the seller.
• The condition must be embodied in the same document.

Case Laws:

In Rama v Samiyappa ILR (1881) 4 Mad 179 183 184 case, the Court held that the essential of this form of mortgage is that with the default of payment the transaction is closed and the mortgage security becomes the absolute property of the mortgagee. There is no personal liability on the part of the mortgagor to repay the debt. The mortgagor’s right of redemption will be lost only by a decree for foreclosure.

In Natesa Pathar v Pakkirisamy Pathar, AIR 1997 Mad 105 case, the condition of sale and resale was engrafted in the same document. The purchaser was specifically prohibited from encumbering the property within the period of five years stipulated for repurchase. There was a substantial difference between the actual value of the property and consideration as stipulated in the deed. The transaction was held to be a mortgage by conditional sale.

In Chunchun Jha v. Ibadat Ali, AIR 1954 SC 345 case, the Court held that if the sale and repurchase are embodied in separate documents then the transaction cannot be a mortgage whether the documents are contemporaneously executed or not.

In Prakasam v. Rajambal, AIR 1975 Mad. 282 case, the document was described as a sale deed but the stamp paper was provided by the transferor and the consideration (price) was much less than the actual value of the property. There was a specific condition that on payment of ‘principal’ amount the property should be reconvened. It was held by the Madras High Court that the transaction was a mortgage by conditional sale and not an outright sale.

In Kamal Shivajirao Katkar v. Gajrabai Sopanrao Algude, AIR 2001 Bom. 369 case, where A, the owner of the land, gave possession of his land of B on receipt of money from him, and under the agreement B was to execute reconveyance on payment of the amount by A otherwise the sale was to be confirmed. In this case, payment of interest was not stipulated in the agreement. Accordingly, the court found that there was no intention of parties to treat the transfer of land as ‘security for debt’ which is an essential feature of a mortgage. The Bombay High Court held that the transaction was sale with the condition to repurchase and not a mortgage by conditional sale.

Usufructuary Mortgage:

Section 58 (d): Usufructuary mortgage:

Where the mortgagor delivers possession 1[or expressly or by implication binds himself to deliver possession] of the mortgaged property to the mortgagee, and authorises him to retain such possession until payment of the mortgage-money, and to receive the rents and profits accruing from the property 2[or any part of such rents and profits and to appropriate the same] in lieu of interest, or in payment of the mortgage-money, or partly in lieu of interest 3[or] partly in payment of the mortgage-money, the transaction is called an usufructuary mortgage and the mortgagee an usufructuary mortgagee.

As per section 58(d) of the Transfer of Property Act, when the mortgagor gives possession of the property to the mortgagee, then the mortgage is called usufructuary mortgage. Since possession is with the mortgagee, he enjoys the fruits of the property i.e. produce, benefits, rents or profits of the mortgage-property in lieu of interest on the principal money (debt) advanced by him. Therefore, on payment of a debt (principal money). The mortgagee has no right of possession.

Characteristics of Usufructuary Mortgage:

• Delivery of possession of the mortgage-property or, an express or implied undertaking by the mortgagor to deliver such possession.
• Enjoyment or use of the property by mortgagee until his dues are paid off.
• There is a transfer to the mortgagee of one of the incidents of ownership, namely, the right of possession and enjoyment of the usufruct.
• No personal liability of the mortgagor.
• The mortgagee cannot foreclose or sue for sale of mortgage-property.
• In this form of mortgage, no time-limit is fixed for the payment.

Case Laws:

In Chathu v Kunjan (1889) 12 Madras 109 case, the Court held that since there is no personal liability on the part of the mortgagor to repay the mortgage – money the mortgagor cannot be sued personally for the debt.

In Butto Kkristo v. Govindram, AIR (1939) Pat 540 case, where the mortgage-property is a tenanted house the only way in which possession can be given to mortgagee is to give him the right to collect the rents and appropriate them towards the debt.

In Hikmatulla v. Imam Ali, (1890) 12 All 203 case, the Court held that mortgagee is entitled to retain possession until the money due is paid. In a usufructuary mortgage, the time up to which money may be paid by mortgagor is uncertain. If any time is fixed the mortgage would not be a
usufructuary mortgage.

English Mortgage:

Section 58 (e): English mortgage:

Where the mortgagor binds himself to repay the mortgage-money on a certain date, and transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso that he will re-transfer it to the mortgagor upon payment of the mortgage-money as agreed, the transaction is called an English mortgage.

As per section 58(e) of the Transfer of Property Act, in English mortgage, there is an absolute transfer of property to mortgagee with a condition that when the debt is paid off on a certain date, he (mortgagee) shall re-transfer the property to the mortgagor. According to section 58 (e) of this Act, where mortgagor binds himself to repay the money (debt) on a certain date and transfers the mortgage-property absolutely subject to the proviso that mortgagee will re-transfer it to mortgagor on payment of debt as agreed, the mortgage is English mortgage. In an English Mortgage, the ownership of the property is transferred with a promise to repay the debt on a certain date. And the mortgagee is entitled to the possession of the property and to the enjoyment of the profits arising therefrom.

Characteristics of English Mortgage:

• The mortgagor binds himself to repay the mortgage money (debt) on a certain date.
• The mortgage-property is transferred absolutely to the mortgagee.
• The absolute transfer is subject to a proviso that mortgagee will re-transfer the property to mortgagor on payment of mortgage-money on the said date.
• It is known to mortgagee with certainty when the mortgagor is to redeem or he to proceed to foreclose or sell.

Case Laws:

In Narayana v Venkataramana, ILR (1902) 25 Madras 220 (235) (FB) case the court opined that the English Mortgage has three essential ingredients. First, the mortgagor has to bind himself to repay the mortgage money on a certain day. Secondly, the property mortgaged is transferred “absolutely” to the mortgagee. Thirdly, this transfer is subject to a proviso that the mortgagee will reconvey the property to the mortgagor upon payment of the mortgage – money on the date fixed for repayment.

The statutory power of sale by an English mortgagee arises when the mortgagor and the mortgagee are not Hindus, Muhammadans or Buddhists or members of any other race, sect, tribe or class from time to time specified in this behalf by the State Government in the Official Gazette. This means that majority of people in India, though entitled to go in for English mortgage, cannot have the statutory power of sale due to confinement of this power only to certain communities such as Christians, people of English origin only.

Mortgage by Deposit of Title deeds:

Section 58 (f): Mortgage by deposit of title-deeds:

Where a person in any of the following towns, namely, the towns of Calcutta, Madras, and Bombay, and in any other town which the State Government concerned may, by notification in the Official Gazette, specify in this behalf, delivers to a creditor or his agent documents of title to immovable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title-deeds

Section 58(f) provides for the mortgage by way of deposit of Title deeds. Mortgage by deposit of title-deeds is a peculiar kind of mortgage. It is peculiar in the sense that in this mortgage, execution of mortgage-deed by mortgagor is not necessary. Mere deposit of title-deeds of immovable property by a mortgagor to mortgagee is sufficient. Title-deeds
are those documents which are legal proof that a person owns a particular property. The object of this kind of mortgage is to provide easy
mode of taking loans in urgent need particularly by a trading community of the commercial towns. This is called in English law an equitable mortgage. The towns specified in the section are called notified towns. Many other places have been notified by the State Governments for depositing title – deeds for creation of mortgages. There are territorial Restrictions for application of this form of a mortgage. In accordance with the provisions of Section 96 of the Transfer of Property Act, 1882, mortgage by deposit of title deeds, though without writing or by any deed, is equivalent to a simple mortgage. Bankers, in most of the cases, adopt the mortgage by deposit of title deeds since it is simple, inexpensive and non-time-consuming. The remedy of this mortgagee lies in filing a suit for sale of the mortgaged property. Title-deeds may also be deposited with banks to secure an overdraft account. This is a common practice among the trading community or persons involved in the business.

Characteristics of Mortgage by Deposit of Title deeds:

• Existence of a debt. The debt may be an existing or future debt.
• Deposit of title-deeds in notified town,
• Intention to create security, and

Case laws:

In K.J. Nathan, S. Maruthi, AIR (1965) SC 430 case the physical delivery of the title-deeds had taken place outside the towns specified. But the intention to create equitable mortgage by these deeds was formed after delivery of the deeds and in a town which was within the notified area. The Supreme Court held that an equitable mortgage was created under section 58 (f) of the Transfer of Property Act. The Court opined that there must be a bona fide intention that possession of title-deeds with the creditor is by way of security for the money advanced by him. However, the intention to create security by the deposit of title-deeds is a question of fact and not of law.

In Jethibai v. Putlibai, (1961) 14 Bom. L.R. 1020 case, the Court held that there is no equitable mortgage unless there is a connecting link between the debt and the possession of title-deeds suggesting a definite intention on the part of the debtor that deeds are in possession of creditor as security for the debt.

Anomalous Mortgage:

Section 58(g): Anomalous mortgage:

A mortgage which is not a simple mortgage, a mortgage by conditional sale, an usufructuary mortgage, an English mortgage or a mortgage by deposit of title-deeds within the meaning of this section is called an anomalous mortgage.

According to section 58 (g), a mortgage is an anomalous mortgage if it is not a simple mortgage, a mortgage by conditional sale, a usufructuary mortgage, an English mortgage or, a mortgage by deposit of title-deeds.

When a transaction is a mortgage in all respects i.e. there is the existence of debt and security of immovable property for re-payment of that debt but the agreement between the debtor and creditor is of such nature that it cannot be included in any specific category of mortgage, the transaction is an anomalous mortgage. It may also be combination of any two or more forms of specific categories of mortgage.

In Madho Rao v Gulam Mohiuddin AIR 1919 PC 121 case, the Court held that while considering an anomalous mortgage, the intention of the parties must be gathered from the terms of the instrument as controlled by the provisions of the Act.

Some of the forms of anomalous mortgages are given below :

• A mortgage with possession containing a covenant to pay the principal and interest (Ramanarayanimgar v Maharaja of Venkatagiri AIR 1927 PC 32 (36)).
• A mortgage with possession having a stipulation that the transferee should appropriate the rents and profits for a specified term of years and then give back the land (Tukaram v Ramchand ILR (1902) 26 Bom 252 (258)).
• A mortgage with the mortgagee to remain in possession and the mortgagor to repay in installments with interest or to redeem at any time.
• A mortgage without possession with the mortgagor not to redeem before five years and the mortgagee has given a right of foreclosure (Ujagar Lai v Lokendra Singh AIR 1941 Allahabad 169 (171)).
• A mortgage having a covenant to pay interest, but without any covenant to repay the principal and the mortgagor subsequently depositing certain title – deeds not mentioned in the mortgage as additional security.

Law > Civil Laws > Transfer of Property Act > Types of Mortgages

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Section 108 of the Act deals with the liabilities and rights of the lessor and lessee of immovable property. In this article, we shall discuss the liabilities of lessee. Section 108 clauses (k) to (q) deals with the liabilities of lessee

Section 108: Rights and liabilities of lessor and lessee:

In the absence of a contract or local usage to the contrary, the lessor and the lessee of immoveable property, as against one another, respectively, possess the rights and are subject to the liabilities mentioned in the rules next following, or such of them as are applicable to the property leased:

(A) ………………

(B) Rights and Liabilities of the Lessee

(a) ………… (j)

(k) the lessee is bound to disclose to the lessor any fact as to the nature or extent of the interest which the lessee is about to take, of which the lessee is, and the lessor is not, aware, and which materially increases the value of such interest;

(l) the lessee is bound to pay or tender, at the proper time and place, the premium or rent to the lessor or his agent in this behalf;

(m) the lessee is bound to keep, and on the termination of the lease to restore, the property in as good condition as it was in at the time when he was put in possession, subject only to the changes caused by reasonable wear and tear or irresistible force, and to allow the lessor and his agents, at all reasonable times during the term, to enter upon the property and inspect the condition thereof and give or leave notice of any defect in such condition; and, when such defect has been caused by any act or default on the part of the lessee, his servants or agents, he is bound to make it good within three months after such notice has been given or left;

(n) if the lessee becomes aware of any proceeding to recover the property or any part thereof, or of any encroachment made upon, or any interference with, the lessor’s rights concerning such property, he is bound to give, with reasonable diligence, notice thereof to the lessor;

(o) the lessee may use the property and its products (if any) as a person of ordinary prudence would use them if they were his own; but he must not use, or permit another to use, the property for a purpose other than that for which it was leased, or fell 3[or sell] timber, pull down or damage buildings 3[belonging to the lessor, or] work mines or quarries not open when the lease was granted, or commit any other act which is destructive or permanently injurious thereto;

(p) he must not, without the lessor’s consent, erect on the property any permanent structure, except for agricultural purposes;

(q) on the determination of the lease, the lessee is bound to put the lessor into possession of the property.

• Section 108 (k) lays down that the lessee is under an obligation to disclose all related material facts which are likely to increase the value of the property for which the lessee has an interest in and the lessor is not aware of. There is no such duty when there is a contract or local usage to the contrary. This clause is not applicable to agricultural leases. In the event of non-disclosure by the lessee of an advantage taken by him, the lessor’s remedy would be not the avoidance of leases but compensation or damages.

• Section 108 (l) lays down that the lessee is under an obligation to pay the rent or premium which is settled upon in the agreement to the lessor or his agent within the prescribed time. This clause is not applicable when there is a contract or local usage to the contrary. This clause is not applicable to agricultural leases.

In Rameshwar Dayal v. Mani Lal. AIR 1977 All 534 (535) case, the Court held that once remittance of rent is proved, the presumption would arise under S. 114 of the Indian Evidence Act that ordinary course of events was followed and the amount must have been tendered to the addressee and received by him.

• Section 108 (m) lays down that the lessee is under an obligation to maintain the property in the condition that he initially got the property on commencement of the lease and he has to return it in the same condition. The changes caused by reasonable wear and tear or irresistible force are acceptable. This Section allows lessor and his agent during the term of the lease and at a reasonable time to enter upon the property and inspect its condition. The lessor is powered to give notice of any defect found and is entitled to make good, within three months after notice.

In Paritosh Ghosh v. Ashim Kumar Gupta, 2003 AIHC 291 (297,  298) (Cal) case, where the tenant made holes in walls for fixing air coolers, replaced brass water caps by plastic caps, in violation of leases agreement, the eviction of the tenant was held proper.

• Section 108 (n) lays down that if lessee gets to know about any proceedings relating to the property or any encroachment or any interference, then lessee is under an obligation to give notice to the lessor. This clause is for protection of the lessor’s interest in the property. This clause is not applicable when there is a contract or local usage to the contrary. This clause is not applicable to agricultural leases.

• Section 108 (o) lays down that the lessee has a right to use all the assets and goods which are on the property as an owner would use which is preserving it to the best of its nature. He is although under obligation to prevent any other person from using that asset or good for any other purpose from what was prescribed in the lease agreement.

• Section 108 (p) lays down that the lessee cannot attach any permanent structure without the consent of the lessor except for the purpose of agriculture.

In Rameshwar Roy v. Baidendra Kinkar Patra, AIR 1998 Cal 292 (298) case, the Court held that the clauses (m), (o) and (p) would apply only to premises demised, and none of this clause would apply in respect of other property, as property mentioned in these clauses would mean only the premises demised and not any other property or premises.

• Section 108 (q) lays down that the lessee is under an obligation to give the possession of the property back to the lessor after the expiry of the prescribed term of the lease.

In Sky Land International Pvt. Ltd. v. Kavita P. Lalwani, 2012 (191) DLT 594 (Del) case, the Court held that upon expiry of the term of the lease or termination of monthly leases by notice to quit, the lessee must vacate the property on his own and not wait for lessor to bring a suit where he can raise all kinds of contests in order to profit from Court delays.

In Santsaran v. Bankeylal Ramlal, AIR 1955 NUC 52 (MP) case, the Court held that even where the tenant has constructed a building on the land, the lessee’s obligation to restore possession to the lessor on the expiry of the leases is absolute.

In Hirabai v. Jivanlal, AIR 1955 Nag 134 (DB) case, the Court held that where the lessee wrongfully refuses to deliver possession, the lessee must pay damages to the lessor to the extent of the loss of rent suffered by latter during the period he remained out of possession.

Law > Civil Laws > Transfer of Property Act > Liabilities of Lessee

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Section 108 of the Act deals with the liabilities and rights of the lessor and lessee of immovable property. In this article, we shall discuss the rights of lessee.

Section 108: Rights and liabilities of lessor and lessee:

In the absence of a contract or local usage to the contrary, the lessor and the lessee of immoveable property, as against one another, respectively, possess the rights and are subject to the liabilities mentioned in the rules next following, or such of them as are applicable to the property leased:

(A) ………………

(B) Rights and Liabilities of the Lessee

(d) If during the continuance of the lease any accession is made to the property, such accession (subject to the law relating to alluvion for the time being in force) shall be deemed to be comprised in the lease;

(e) if by fire, tempest or flood, or violence of an army or of a mob, or other irresistible force, any material part of the property be wholly destroyed or rendered substantially and permanently unfit for the purposes for which it was let, the lease shall, at the option of the lessee, be void: Provided that, if the injury be occasioned by the wrongful act or default of the lessee, he shall not be entitled to avail himself of the benefit of this provision;

(f) if the lessor neglects to make, within a reasonable time after notice, any repairs which he is bound to make to the property, the lessee may make the same himself, and deduct the expense of such repairs with interest from the rent, or otherwise recover it from the lessor;

(g) if the lessor neglects to make any payment which he is bound to make, and which, if not made by him, is recoverable from the lessee or against the property, the lessee may make such payment himself, and deduct it with interest from the rent, or otherwise recover it from the lessor;

(h) the lessee may 1[even after the determination of the lease] remove, at any time 2[whilst he is in possession of the property leased but not afterwards] all things which he has attached to the earth; provided he leaves the property in the state in which he received it;

(i) when a lease of uncertain duration determines by any means except the fault of the lessee, he or his legal representative is entitled to all the crops planted or sown by the lessee and growing upon the property when the lease determines, and to free ingress and egress to gather and carry them;

(j) 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 authorise 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;

(k) …………. (q)

Rights of Lessee:

• Section 108 (d) lays down that during the period lease is in effect if any alteration is made (alluvion for the time being in force) then that alteration will come under that same lease. This rule would not apply where the parties are governed by their contract or local usage. This clause is also not applicable to agricultural leases (S. 117 of the Act).

In Tabor v. Godfrey, (1895) 64 LJQB 245 case, the Court held that the clause deals with increament when during the currency of the lease the original land is increased by addition to it. According to the clause, in the absence of express stipulation or local usage to the contrary, such additions are deemed to be included in the land originally leased and subject to the same terms of tenancy as the parent land. This rule would not apply where the parties are governed by their contract or local usage.

• Section 108 (e) lays down that if a significant part of the property that has been leased is destroyed wholly or partly by fire, by flood, by war, by the violent acts of the mob or by any other means resulting in its inefficiency of being a benefit for the lessee. If this happens, the lease is voidable at lessee’s option. There is a provision to this section that if the damage is done due to any act of the lessee himself, this remedy will not be available for him.

In Dada Siba Estate v. Raja Dharmdev Chand, AIR 1961 Punj 143 (DB) case, the Court held that under the clause 108(e) the option of continuance of leases remains with the lessee.

In George J. Ovungal v. Peter, AIR 1991 Ker 55 case, the Court held that ton the destruction of leased property, landlord tenant relationship would not automatically terminate and come to an end.

• Section 108 (f) lays down that lessee has the right to deduct any expenses he has made for repairs in the property from the rent if the lessor has failed to in reasonable time after sending notice. This clause would not apply where the parties are governed by their contract or local usage. This clause is also not applicable to agricultural leases (S. 117 of the Act).

In Home School NO. 16, 17, & 18 v. M. Shafi Ul Huq, 2002 AIHC 753 (754) case, the Court held that to effe4ct repairs, the tenant is expected to give notice to the landlord.

In Pritam Prakash Davar & Sons HUF v. Krisan Kumar Bhasin, 2009 (158) DLT 662 case the Court held that where landlord neglects to effect repairs in a reasonable time, the tenant has right to effect the repairs and recover costs from the landlord.

In V. G. K. Design & Development Engineering Pvt. Ltd. v. H. N. Narayana Reddy, AIR 2008 (NOC) 739 (Kar) case, the Court held that where the tenant has not given notice to the lessor and obtained his implied or express consent he would not be entitled to recover the expenses incurred by him in carrying out the repairs in tenanted premises.

• Section 108 (g) lays down that lessee has a right to recover any such payment which a lessor is bound to make by can deducting it from the interest of the rent or directly from the lessor. He has this right when the lessor has neglected to make that required payment. This clause would not apply where the parties are governed by their contract or local usage. This clause is also not applicable to agricultural leases (S. 117 of the Act).

In Shakuntala Devi Darak v. Transport Corporatiuon of India Ltd., 2011 (6) ALT 47 (A.P.) case, the Court held that Section 108(g) is only subject to any agreement between the landlady/landlord and tenant.

• Section 108 (h) lays down that lessee has a right to detach all things that he may have attached in the property or earth. His only obligation is that he has to leave the property in the same condition as he received it. He can remove the things attached to the earth at any time whilst he is in possession but not afterwards. This clause would not apply where the parties are governed by their contract or local usage. This clause is applicable to agricultural leases (S. 117 of the Act).

In Narayan Das v. Jatindranath, AIR 1927 PC 135 case, the Court held that there may be separation of the ownership of the buildings from the ownership of the land, and there is no rule of law that whatever affixed or built on the soil becomes part of it and is subjected to the same rights of property as the soil itself.

In Kakalpudi Rangaraju v. Happavaluri Sitaramaya, AIR 1955 AP 62 case, the Court held that the trees of spontaneous growth on the land belong to the owner; the lessee cannot remove or cut such trees. The lessee can remove only such trees as have been planted by him after the leases.

• Section 108 (i) lays down that when a lease is of unspecified duration in the lease agreement, lessee or his legal representative have a right to collect all the profits or benefits from the crops which were sown by the lessee at that property. They also have a right of free ingress and egress from such property even if the lease ends. The provisions of this clause do not apply when such a lease determines by fault of the lessee. This clause is not applicable to agricultural leases (S. 117 of the Act).

• Meaning of ingress and egress: The tenant and his servants are given right to enter upon the leases after the termination of the leases to gather and carry the crops. The tenant cannot claim to retain possession until the crops are cut. Thus by this clause pass and repass for the carts carrying crops is allowed.

• Section 108 (j) lays down that lessee has a right to transfer absolutely the property or any part of his interest in that property by sub-leasing or through mortgaging. Lessee is not independent of the terms and conditions mentioned in the lease agreement.

In Maa Durga Enterprises v. State of Bihar, 2009 (74) AIC 432 (345) (Pat) case, the Court held that under Section 108 (j), a lessee has been given right to sublease whole or any part of his interest in his property with further right to transferring it upon the sub-lease.

Veeran Devi v. Lt. Governor, Delhi AIR 1982 Del 470 (473) (FB) case, the Court held that where lessee assigns the rights adjuncted to lease, to a third person, the provisions of Section 18 (j) may apply subject to a contract to contrary.

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Law > Civil Laws > Transfer of Property Act > Rights of Lessee

The post Rights of Lessee appeared first on The Fact Factor.

Section 108 of the Act deals with the liabilities and rights of the lessor and lessee of immovable property. In this article, we shall discuss the liabilities and rights of lessor.

Section 108: Rights and liabilities of lessor and lessee.

In the absence of a contract or local usage to the contrary, the lessor and the lessee of immoveable property, as against one another, respectively, possess the rights and are subject to the liabilities mentioned in the rules next following, or such of them as are applicable to the property leased:

(A) Rights and Liabilities of the Lessor

(a) The lessor is bound to disclose to the lessee any material defect in the property, with reference to its intended use, of which the former is and the latter is not aware, and which the latter could not with ordinary care discover;

(b) the lessor is bound on the lessee’s request to put him in possession of the property;

(c) the lessor shall be deemed to contract with the lessee that, if the latter pays the rent reserved by the lease and performs the contracts binding on the lessee, he may hold the property during the time limited by the lease without interruption. The benefit of such contract shall be annexed to and go with the lessee’s interest as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested.

In Megh Lal v. Raj Kumar (1907) 34 Cal 358 case, the Court held that If the contract between the parties is silent in reference to matters dealt within the Section 108 of the Act, the law implies covenant to that effect. The covenants dealt with in the section need not be enumerated in the contracts. They are what are known as implied covenants as oppose to express covenants. When the parties regulate their contract in express terms, the latter would exclude the application of the provisions of the Section.

Liabilities of the Lessor

Liabilities of the lessor are laid down in Section 108(a) to Section 108(c)

• Section 108(a) lays down that the lessor has to disclose any material defect relating to the property which the lessee does not know and cannot with ordinary supervision find out. Thus lessor is under an obligation to reveal to the lessee all defects in the demised premises as are materials that is, such as would affect the use to which they are to be subjected by the lessee. There is no duty to disclose defects which are either known to the lessee or which the lessee would with ordinary care discover.

In Radha Krishna v. W. C. O. Flaherty (1869) 3 Beng LR 277 case, A lessor impliedly contracts with the lessee that premises are fit for the intended user. So where the plaintiff hired a dwelling house of the defendant, and in lighting a fire in the fireplace in one of the rooms, the chimney took fire, there was no vent, and the plaintiff’s furniture was destroyed, it was held that the defendant was liable for the loss.

In Keates v. Cadogan, (1851) 10 CP 591 case, the Court held that when the house is in a ruinous condition, there is no implied duty to inform the proposed tenant that it is unfit for human habitation and no action lies against the landlord.

In Syed Mukhtar v. rani Sunder Koer 17 C.W.N. 960 case, the Court held that a defect in the lessor’s title cannot be said to be a material defect in a property within the meaning of Section 108(a).

• Section 108 (b) lays down that the lessor is bound by the request of the lessee to give him the right of possession over his property.

In Harish Chander v. Mohinee Mohun case (1868) 9 WR 582 case, the Court held that a suit of rent will not lie when the lessee has not obtained possession.

In Munne Dutt v. William Cumpbell, (1869) 11 WR 278 case, the Court held that for in every case there is an implied contract that lessor will give peaceful possession of the land leased to the lessee.

In Pemmarazu v. The secretary of State of India, (1911) 34 Mad 108 case, the Court held that when the lessor is unable to put lessee in possession of area stipulated in the leases, he is liable to compensate the lessee by the way of damages.

• Section 108 (c) lays down that the lessor can enter into a contract with the lessee if he agrees to abide by all terms and conditions prescribed in the agreement, he can enjoy the property for the rest of the time period without any interference with an obligation to pay the rent later on.

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

Rights of the Lessor:

Liabilities of Lessee are laid down in Sections 108(k) to Section 108(q), which can be considered as rights of lessor.

• Section 108 (l) lays down that the lessor has a right to recover the rent from the lease which was mentioned in the lease agreement.

• Section 108 (c) the lessor has a right to take back the possession of his property from the lessee if the lessee commits any breach of condition.

In Paritosh Ghosh v. Ashim Kumar Gupta, 2003 AIHC 291 (297,  298) (Cal) case, where the tenant made holes in walls for fixing air coolers, replaced brass water caps by plastic caps, in violation of leases agreement, the eviction of the tenant was held proper.

• Section 108 (m) lays down that the lessor has a right to recover the amount for damages from the lessee if there is any damage done to the property. This Section allows lessor and his agent during the term of the lease and at a reasonable time to enter upon the property and inspect its condition. The lessor is powered to give notice of any defect found and is entitled to make good, within three months after notice.

• Section 108 (q) lays down that the lessor has a right to take back the possession of his property from the lessee on the termination of the lease term prescribed in the agreement.

In Yashpal Lala Shiv Narain v. Allatala Tala Malik Waqf Ajakhan Mus, AIR 2006 All 115 (134) case, The provision in Section 108(q) of the Act in absence of any contract or local usage to contrary, overrates, is a statutory condition and is implied in every case.

In Sky Land International Pvt. Ltd. v. Kavita P. Lalwani, 2012 (191) DLT 594 (Del) case, the Court held that upon expiry of the term of the lease or termination of monthly leases by notice to quit, the lessee must vacate the property on his own and not wait for lessor to bring a suit where he can raise all kinds of contests in order to profit from Court delays.

In Santsaran v. Bankeylal Ramlal, AIR 1955 NUC 52 (MP) case, the Court held that even where the tenant has constructed a building on the land, the lessee’s obligation to restore possession to the lessor on the expiry of the leases is absolute.

In Hirabai v. Jivanlal, AIR 1955 Nag 134 (DB) case, the Court held that where the lessee wrongfully refuses to deliver possession, the lessee must pay damages to the lessor to the extent of the loss of rent suffered by latter during the period he remained out of possession.

Previous Topic: Introduction to Lease

Next Topic: Rights of Lessee

Law > Civil Laws > Transfer of Property Act > Liabilities and Rights of Lessor

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The primary aim of laying down the rights and duties of the seller and the buyer in the case of sale is to ensure fair dealings, and as far as possible, to minimize fraud and waste of the property. In this article, we shall discuss the liabilities of seller.

Liabilities of Seller Before Completion of Sale:

Liability to Reveal Fault or Material Defects:

Section 55 Clause (1) Subclause (a) lays down that the seller is bound to disclose to the buyer any material defect in the property or in the seller’s title thereto of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover.

An omission to make such disclosure amounts to fraud. The defects in the title include encumbrance or charge on the property, the existence of an easement, and restrictive covenants, etc. The defects in property may include a right of way and existence of nuisance in the neighbourhood.

In Flight v. Booth (1834) 1 Bing NC 370 the Court opined that it is necessary that the defect should be a material defect about which a buyer had known he would have not purchased that property.

In Ganpat Ranglal v. Mangilal Hiralal, AIR 1962 MP 144 case, the Court held that the seller is not bound to disclose such faults which are really known by the buyer or otherwise he is in the know of the information. Court further opined that to attract the provisions of Section 55(1)(a) two conditions are necessary: firstly, that the buyer should not be aware of the existence of the defect in the title; and, secondly, that he could not with ordinary care discover the defect. So far as the first condition is concerned, although the applicant vendor in his written statement pleaded that the buyer was aware of the existence of the mortgage, there is no proof of this fact and it must be assumed that the buyer was not aware of the defect. However, the second condition is not satisfied inasmuch as the buyer could have known about the encumbrance by making inquiries in the office of the Registrar. Section 55(1)(a) of the Transfer of Property Act has, therefore, no application to the present case.

In RL Pinto v FF Menezes AIR 2001 Kant 141 case, the Court held that the primary duty of the seller is to convey a good title to the buyer and therefore, he is bound to disclose a defect in the title if any.

In Ratanlal v Nanabhai AIR 1926 Bom 175 case, the Court held that the onus of showing a failure to disclose a defect in the title is on the buyer.

To Produce Title-Deeds for Inspection::

Section 55 Clause (1) Subclause (b) lays down that the seller is bound to produce to the buyer on his request for examination all documents of title relating to the property which are in the seller’s possession or power.

The seller is bound to produce all the documents demanded by the buyer for his examination. Buyer can ask for documents for his protection. The documents can be examined at the seller’s place or at the buyer’s place. If the buyer does not demand such documents for examination, the seller is in no obligation to show it to the buyer. If the documents are not examined by the buyer, then the Court presumes that the buyer is satisfied with the title of the property. If the buyer does not inspect title deeds, he would be fixed with the constructive notice of any defect in the seller’s power of transfer if it is found later on.

In Mathuri Bawa v. Prafulla Routray, AIR 2003 Ori 136 case, the Court held that It is no longer res integra that existence of a joint family does not raise a presumption that it owned properties jointly. Once there has been an admission with regard to the division of property no presumption of jointness shall thereafter arise.  Mere entry in the record of right showing names of predecessors-in-intent of vendor and vendee will not be conclusive to draw a conclusion that suit property was joint family property, the vendee will derive indefeasible right by virtue of sale-deed from the vendor.

To Answer Questions as to Title:

Section 55 Clause (1) Subclause (c) lays down that the seller is bound to answer to the best of his information all relevant questions put to him by the buyer in respect to the property or the title thereto.

As the buyer is acquiring the ownership from the seller, the buyer in his interest must get completely satisfied about ownership rights of the seller and his capacity to transfer the property. In such case only examining the documentation by the buyer is not sufficient. He may have some doubts, he is supposed to ask them to the seller and the seller is bound to answer all these questions related to the property.

In the case of Laxmidas & Company v. D.J. Tata case it has been held by the Mumbai high court that if the seller does not answer for such questions then the contract may be rescinded by the buyer.

To Execute Proper Conveyance:

Section 55 Clause (1) Subclause (d) lays down that it is duty of seller that on payment or tender of the amount due in respect of the price, to execute a proper conveyance of the property when the buyer tenders it to him for execution at a proper time and place.

This is done by the signing of the sale deed or putting a thumb impression on the sale deed by the seller. The subclause shows that the duties of the seller and buyer are reciprocal. The buyer should make payment and the seller should execute the conveyance. The Subclause says it should be done at proper place and at the proper time. The Subclause does not clarify what is meant by proper place and at the proper time. It is presumed that it can be decided by mutual agreement between the buyer and the seller.

In Jamshed v. Burjorji, AIR 1934 Bom 1 case, the Court held that the conveyance must be within a reasonable time after tender of price. In case there is no stipulation of fixing the type of execution of the conveyance and seller makes unreasonable delay in executing conveyance, the proper course is to give the notice to make time as the essence of the contract.

To Take Care of Property and Title Deeds:

Section 55 Clause (1) Subclause (e) says that it is duty of seller that between the date of the contract of sale and the delivery of the property, to take as much care of the property and all documents of title relating thereto which are in his possession as an owner of ordinary prudence would take of such property and documents.

Between the date of the contract of sale and date of actual delivery of property, the property remains with the seller. Since the seller has already executed a conveyance in the name of the buyer, the seller holds the property as the trustee of the buyer. During this period the seller has to take care of the property and all the relevant documents related to property. If the seller fails to protect them, he will have to compensate the buyer for the loss.

To Pay Outgoings (Public Charges and Rent Accrued):

Section 55 Clause (1) Subclause (g) says that the seller is bound to pay all public charges and rent accrued due in respect of the property up to the date of the sale, the interest on all encumbrances on such property due on such date, and, except where the property is sold subject to encumbrances, to discharge all encumbrances on the property then existing.

This clause clarifies that before the completion of the sale, the seller has to pay all outgoings on the property like rent, revenue, taxes, etc. up to the date of the sale. Unless there is the contrary intention, the seller must discharge all the encumbrances, if there are any on the property. The buyer has a right to require the seller to produce evidence that the property is free from all encumbrances. This liability of seller continues before the completion of the sale and even after completion of the sale.

In Nathu Khan v. Buxto Nath, AIR 1922 PC 176 case, the Court held that where the seller does not pay the outgoings and the buyer subsequently pays them, then the buyer becomes entitled to reimbursement by the seller.

Liabilities of Seller After Completion of Sale:

To Give Possession of Property:

Section 55 Clause (f) Subclause (f) lays down that the seller is bound to give, on being so required, the buyer, or such person as he directs, such possession of the property as its nature admits.

The seller is supposed to give the possession of the property to the buyer or to his authorized agent whenever the buyer requires. The actual delivery of property depends on the nature of the property. In the case of tangible immovable property, physical control is to be given to the buyer. While in case of intangible movable properties the delivery of possession is symbolic. Actual possession is not possible in the case of incorporeal rights such as a right to a fishery, a right of way, etc. The possession should be given after transfer of ownership to the buyer at the date of execution of the sale deed if there is no contract to the contrary.

Implied Covenant for Title:

Section 55Clause (2) lays down that the seller shall be deemed to contract with the buyer that the interest which the seller professes to transfer to the buyer subsists and that he has power to transfer the same: Provided that, where the sale is made by a person in a fiduciary character, he shall be deemed to contract with the buyer that the seller has done no act whereby the property is encumbered or whereby he is hindered from transferring it. The benefit of the contract mentioned in this rule shall be annexed to, and shall go with, the interest of the transferee as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested.

A covenant is a legal agreement between two or more parties. It is normal practice for the seller to provide covenants for title, in standard form, by selling with “full” or “limited” title guarantee, in accordance with the Law of Property (Miscellaneous Provisions) Act 1994. The effect of this wording is that, following completion, the buyer can sue the seller for breach of the title guarantee. The seller will normally sell the property with full title guarantee unless the seller is a trustee, personal representative or mortgagee, in which case he will normally sell the property with limited title guarantee.

In Raghunathan v. Chellammal,  94 LW 755 and B. Kutpuddin vs Zuleika Bibi (1997) IMLJ 15 cases, the Courts held that Section 55(2) of the Act makes it clear that the benefit of covenant for the title runs with the land and is enforceable by the subsequent purchasers of the land and if the buyer resells to several purchasers, each of the purchasers is entitled to sue on the covenant in respect of his part.

In N.Narasingarayadu v. N. Ankineedu, AIR 1962 A.P. 192 case the Court held that under Section 55(2), every sale for consideration carries with it a covenant for the title.

In Tavvala Veerabhadra Rao v. Bonam Venugopala Rao, 1997 (4) ALT 713 case, there was a warranty of title Under Section 55(2) of the Transfer of Property Act.

Previous Topic: Sale of Immovable Property (S. 54)

Law > Civil Laws > Transfer of Property Act > Liabilities of Seller

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Section 54 of Transfer of Property Act, 1882 defines the sale of immovable property.

Section 54 in The Transfer of Property Act, 1882

“Sale” defined.—‘‘Sale” is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.

Sale how made.— Such transfer, in the case of tangible immoveable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument.

In the case of tangible immoveable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property.

Delivery of tangible immoveable property takes place when the seller places the buyer, or such person as he directs, in possession of the property.

Contract for sale.—A contract for the sale of immoveable property is a contract that a sale of such property shall take place on terms settled between the parties.

It does not, of itself, create any interest in or charge on such property.

Property can be transferred by different modes or ways viz. Sale, mortgage, lease, gift, exchange, etc. Transfer of immovable property by each of the aforesaid modes has its own significance, advantages, and disadvantages. In these articles, we should study the meaning of the word “SALE” and its essentials.

For a sale of immovable property, for example, a building, there will be a contract between the parties requiring the seller to transfer the ownership in the building for a price in cash. The contract will provide the terms of the sale, including the time of passing of the ownership, delivery of the property and payment by the buyer. In the performance of the contract, when the seller transfers the ownership in the property, the sale is done. At some point of time, the seller will give possession of the property to the buyer. A sale of immovable property is done through a registered instrument.

The Essential Elements of a Sale of Immovable Property:

According to Section 54, the following are the essentials of a valid sale

• Parties to a sale;
• The subject matter of sale;
• Price or consideration;
• Registration;
• Conveyance.

Parties to Sale:

The parties to a sale are the transferor who is called a seller or vendor, and the transferee known as the buyer or vendee. A contract of sale must be based on a mutual agreement between the seller and the buyer. Thus there are two parties to a sale.

Competency of Transferor or Vendor:

• The transferor or the seller must be a person who is competent to enter into a contract on the date of sale (Section 7 of the Act) i.e., he must be a major (completed 18 years of age) and of sound mind and should not be legally disqualified to transfer the property.
• A minor or a person of unsound mind is incompetent to transfer his own property despite being its owner, but a transfer by a mentally challenged person during lucid intervals is considered valid.
• Incompetency imposed under law or a statute is called statutory incompetency. When a person is declared as an insolvent, his property vests in the official receiver and he is incompetent to transfer the same. Similarly, a judgment debtor is not capable sell his property that is to be sold in execution under the order of the court. The property cannot be sold when it is under the management of the Court of Wards.
• The transferor must be the owner of the property and he must have a legal title to it.
• The transferor or seller may be a real person or a legal person.

Case Laws:

• In Shakeela Bano v. Mohd Bismil Siraj, AIR 2006 MP 192 case, a sale deed was executed by father on behalf of the respondent (minor) held void ab initio.
• In Biswanath Sahu v. Tribeni Mohan, AIR 2003 Ori 189 case, the Court held that the transferor should either be the owner of the property or should have an authority to dispose of it. For example, the Karta of joint family property is authorized to transfer the property under certain specified circumstances.
• In Sarup Chand v. Surjit Kaur, AIR 2002 P & H 54 case, the court held that the guardian of the property of a minor is empowered to sell it with the permission of the court, and without such permission, the sale would be invalid.
• In Lakhwinder Singh v. Paramjit Kaur, AIR 2004 P & H 6 case, the Court held that an agent having a power of attorney to sell the property can also sell it without being the owner of the property. Where the sale is executed after getting a general power of attorney; without obtaining the requisite permission of the court, the sale deed is invalid and would not confer any title on the transferee.
• In A Bhagyamma v. Bangalore Development Authority, Bangalore, AIR 2010 Kar. 63  case, the Court held that if the Power of Attorney executed in favour of the holder expressly authorizes him to transfer the property and he would be a competent seller.
• In Misahul Enterprises v. Vijaya Srivastava, AIR 2003 Del 15 case, the Court opined that a contract of sale like other contracts must be based on a mutual agreement (mutuality) between the seller and the buyer.

Competency of Transferee or Vendee:

• The transferee must be a person competent to receive a transfer in his favour.
• He should not be disqualified by any law for time being in force for purchasing a property. For example, Under Section 136 of this Act, an actionable claim cannot be purchased by a judge, legal practitioner or an officer connected with the court. Similarly, an officer performing an official duty in connection with the sale of the property cannot purchase the same.
• The transferee or buyer may be a real person or a legal person.

Case Law:

In Ram Jiwan Rai v. Deoki Nandan Rai, AIR 2005 Pat 23 case, the Court held that a minor is a competent transferee in a transaction of a sale. Similarly, a mortgage or a lease can be executed in favour of a minor, but a minor cannot take a lease in his favour, as a lease has to be executed by both the parties. A lease in favour of a minor is, therefore, void.

Subject Matter of a Sale:

Section 54 only governs the sale of immovable property which is transferable (Section 6 of the Act). The Sale of Goods Act, 1930 deals with the sale of movable properties.

Characteristic of Transferable Immovable Property:

• Immovable property can be tangible or intangible. Tangible property is one that can be touched, such as a land, a house, a tree, things attached to earth, etc., while intangible property refers to property that cannot be touched such as a right of ferry, a right to mortgage, a right of fishery, a right of way, etc.
• The property must be properly and sufficiently identified.

Case Law:

In Ram Jiwan Rai v. Deoki Nandan Rai, AIR 2005 Pat 23 case, a suit for declaration of title of the property, the controversy was with respect to the identity of the property. There was a mistake in the plot number. The court held that as both boundaries and plot number was given in the sale certificate a mistake in the plot number must be treated as a misdescription which did not affect the identity of the property sold. Rather, it is intrinsic evidence in proving that the seller wanted to convey the right and title in the suit property to the buyer.

Price or Consideration:

The price is an essential element of a sale. At the time of the contract of a sale, a price must be ascertained at which the property is going to be transferred. The definition of “Sale” in Section 54 specifies that there is an exchange of ownership for a price paid or promised or part-paid and part-promised. Thus price can be paid at the time of sale or before the sale in advance or after the sale. At the same time, it can be paid in a lump sum or in part. If the price is not ascertained then the contract of sale is incomplete and void because it is not enforceable. Thus the payment of the price is not necessary for the completion of the transfer but its reference is necessary. It may be paid at the time of execution or promised to pay or the same part of it may be paid at the time of execution and rest may be promised to be paid in future. Thus payment of the price is not a sine qua non for completion of the sale.

In Ramlal v. Phagua (2006)1 SCC 168 case, the Court held that the term price has not been defined in the Transfer of Property Act, 1882, but is used is the same sense as in the Indian Contract Act, 1872, S. 77;

In Commissioner of Income Tax v. Motor and General Stores, AIR 1967 SC 200 case, the Court opined that the price, in the ordinary sense connotes money consideration for the sale of the property. In the same case the Court further observed that where, instead of price, some other valuable consideration is kept, the transaction is not a sale but can be an exchange or barter.

In Unnao Commercial Bank v. Kailash Nath, AIR 1955 All 393, case, court held that where the consideration is money but is not specific, the transaction would still be a sale. Thus, if the transaction on the face of it is complete, it cannot be regarded as a mere agreement only on the ground that the price is unascertained at that time.

In Hakim Singh v. Ram Sanehi AIR 2001 All 231 case, the Court held that for the validity of the sale, the inadequacy of consideration is not any relevant factor. Even when the price or the consideration is found by the Court to be less than the market value of the property, the sale is valid.

The consideration should be reasonable, otherwise, the Court may presume to be fraudulent, having mistake, or made under coercion and can declare it void.

A compromise (Krishan Tanjabi v. Aba, (1910) ILR 34 Bom 139), a decretal amount (Sura Reddy v. Ram Sarasa, AIR 1937 Mad 714), an advance made by one person to another (Ashok Chandra v. Chota Nagpur Banking Corpn., AIR 1948 Rang 294), or an agreement to protect and defend the property at the purchaser‘s cost,( Berni Madho v. Joh., AIR 1947 All 110) is a good consideration for sale.

In K. Lakshaman Rao v. G. Ratna Manikyamba, AIR 2003 AP 241  case, a son-in-law executed an agreement for sale in favour of his mother-in-law in consideration of a family settlement, it was held that family settlement amounted to a valid consideration for the sale of immovable property.

An agreement to maintain the transferor (Rati Ram v. Mam Chand, AIR 1959 Punj 117) or not to contest a suit, (Mahima v. Dinabondhi, AIR 1960 Ori 16) or to file a suit for redemption and bear all its costs, (Sabadeo Singh v. Kubernath, AIR 1950 All 632) cannot be called price as is understood under this section and therefore, if these are the considerations, the transaction would not be a sale.

In Ghulam Mohamad v. Tek Chand, AIR 1921 Lah 82  case, the Court held that a transfer effected where the consideration is the work done in clearing and sinking a well is not a sale.

In Madan Pillai v. Badrakali, AIR 1922 Mad 311, case, the Court held that the transfer of a life interest in land in the discharge of a claim for maintenance is neither a sale not an exchange nor a gift.

In Malik Mohamad Shujaagt v. Salim Jahan, AIR 1949 All 204 case, the Court held that transfer effected in lieu of kharcha-e-Pandan is not a sale, while in Saburannesa v. Mohiuddin, AIR 1934 Cal 693  case, the Court held that a transfer of immovable property in lieu of dower of a Muslim woman can be a sale of immovable property .

In Chandra Shankar v. Abhia AIR 1952 Bom 56 case, the Court opined that the ordinary rule governing sale is that payment of consideration is simultaneous with the time when the conveyance is executed by the seller. This rule can be deviated from in case of an agreement to the contrary by the parties.

In Nalamathu Venkaiya v. B.S. Neelkanta, AIR 2005 Andh Pra 535 case, the Court held that a price is the essence of the contract of sale but the time for payment of it is not the essence of the sale unless the contract stipulates so.

In Hara Bewa v. Banchandilal, AIR 1957 Ori 243 case, the Court held that if the recitals are indecisive, surrounding circumstances or conduct of parties are the relevant factors to decide the validity of the sale.

In Shiva Narain Sab v. Baidya Nath Tewari, AIR 1973 Pat 386 case, the Court held that the payment of the price is not a sine qua non to the completion of the sale.

In Sahadeo Singh v. Kubernath, AIR 1950 All 632  case the Court held that a promise that price will be paid within a year is valid, but if it is no paid the seller cannot set aside the sale or sue for getting the possession back. His only remedy would be to sue the buyer for the price.

In Kaliperunal v. Rajagopal, AIR 2009 SC 2122  case, the Court held that where the intention of the parties was clear that the title in the property would pass in favour of the transferee only after the payment of complete consideration, then notwithstanding the fact that the sale deed has been registered, the transfer of ownership would not take place till the payment of the total price.

In Inder Kaur v. Tara Singh, (1978) 80 Punj LR 41 the Court held that if the buyer pays money through a cheque which is dishonoured, the sale would not take effect.

Registration:

According to S.54 of the Act, writing, attestation, and registration are the essential requirements for the completion of a valid sale of the property, whose value is more than Rs. 100 (see phrases ‘only by’ in the S. 54). For sale of property whose value is less than Rs. 100 the registration is optional (see the phrase ‘may be’ in S. 54).

In Munnalal v. Armaram, AIR 2008 (NOC) 843 (MP)  case, the Court opined that generally speaking, in a sale, the three requirements of law are that transfer of property by sale must take place with the help of a validly executed sale deed, by the transferor in writing, is properly attested, and registered. Unless all the three conditions are complied with, no right passes from the seller to the buyer i.e. there is no sale of immovable property.

in case of property of nominal value, the sale of the property can be completed by simple delivery of possession of such property. In such cases, due to the small value of the property, For immovable property whose value is less than Rs. 100 can be transferred without registration.

In Arjuna Reddy v. Arjuna C Thanga, (2006) 7 SCC 756 case, the Court held that the property of a value less than Rs. 100 can be transferred. It is only that writing, attestation, and registration in such cases are optional. The test is the value of the property and nor the amount of consideration or the price.

In Lakshmi Narain Bamwal v. Jagdish Singh, AIR 1991 Pat 99; case, the Court held that Transfer of ownership of property whose value is more than Rs. 100 cannot take place without registration and it concludes on registration unless there is a clause contrary in the contract.

Conveyance of Property:

In Ram Saran Lall v. Domini Kuer, AIR 1961 SC 1747 case, the Court held that a suit for preemption that can be filed only after the conclusion of the sale, if filed before registration, will be premature.

In Tapan Krishna Das v. Hazi Ali Khan, AIR 2005 Cal 60  case, the sale deed was executed on 28 July 1989 but was registered on 22 June 1992, a preemption suit filed on 18 June 1992, was held by the Calcutta High Court as premature.

In Kameshwar Choudhary v. State of Bihar, AIR 1998 Pat 141 case, the Court held that once registration takes place, the-ownership passes with effect from the date of the execution of the sale deed unless there is an intention of the parties to the contrary.

In Venkataramana v. Rangiab, AIR 1922 Mad 249 case, the Court held that the ownership under a deed for sale executed before but registered after a suit was filed with respect to this property, will not be lis pendens.

In Chander Singh v. Jamuna Prasad, AIR 1958 Pat 193 case, a subsequently registered deed will not affect a former executed sale deed, though registered later.

The general rule of the passing of ownership on registration is subject to the intention of the parties (i.e. buyer and seller) explicitly expressed in the contract.

In Prem Singh v. Distt Board of Rawalpindi, AIR 1934 Lah 917 case, the Court held that if the intention of parties to pass the ownership can not be gathered from the document, then extraneous evidence is admissible for clarity.

In Bishnudeo Narain Rai v. Anmol Devi, AIR 1998 SC 3006 case, the Court held that if the intention of parties to pass the ownership is ambiguous in the document, then extraneous evidence is admissible for clarity.

In Ponayya Goundan v. Muttu, (1894) ILR 17 Mad 146 case, the Court held that if the intention was that transfer of ownership is to take place on the registration, the ownership in the property passes on such registration even though the possession has not been delivered.

In Shib Lal v. Bhagwan, (1888) 11 All 244 case, the Court held that if the intention was that transfer of ownership is to take place on the registration, the ownership in the property passes on such registration even though the price has not been paid.

In Mathura Mohan v. Ram Kumar, (1916) ILR 43 Cal 790 case, the title to the land does not pass by mere admission when the Act requires a conveyance.

In Abdul Alim v. Abdul Sattar, AIR 1936 Cal 130 case, the Court held that an unregistered sale deed can be used as evidence as to the character of possession of the property.

Next Topic: Liabilities of Seller S. 55 (1) and S. 55(2)

Law > Civil Laws > Transfer of Property Act > Sale of Immovable Property

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