BLS LLB 5 Years Sem 7 Transfer of Property Act and Easement Act 2023-24 - ATKT 60/40 Question Paper with Solutions

Section 3 provides that a person has notice of a fact when he actually knows it, or when, but for wilful abstention from an enquiry or search which he ought to have made, or gross negligence, he would have known it. The second limb is constructive notice: knowledge the law imputes to a person who ought to have known.

Section 3: "attested" means attested by two or more witnesses, each of whom has seen the executant sign or affix his mark, or seen another person sign in the presence and by the direction of the executant, or received from the executant a personal acknowledgement of his signature or mark; and each of whom has signed the instrument in the presence of the executant.

It is not necessary that more than one witness was present at the same time, and no particular form of attestation is necessary.

Section 7: every person competent to contract and entitled to transferable property, or authorised to dispose of transferable property not his own, is competent to transfer that property, wholly or in part, absolutely or conditionally, in the circumstances, to the extent and in the manner allowed and prescribed by any law for the time being in force.

Section 58(a): a mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.

The transferor is the mortgagor, the transferee the mortgagee, the principal money and interest the mortgage-money, and the instrument the mortgage-deed.

Section 128: where a gift consists of the donor's whole property, the donee is a universal donee and is personally liable for all the debts due by, and liabilities of, the donor at the time of the gift, to the extent of the property comprised in the gift.

Section 14. No transfer of property can operate to create an interest which is to take effect after the lifetime of one or more persons living at the date of the transfer, and the minority of some person who shall be in existence at the expiration of that period, and to whom, if he attains full age, the interest created is to belong.

The perpetuity period: lives in being at the date of the transfer + the period of gestation, if any + the minority of the ultimate beneficiary (18 years).

Why the rule exists. Property must remain in commerce. A transferor may dispose of his property; he may not govern it for ever through generations of unborn descendants, because land tied up in that way is neither improved nor productive.

How it works with section 13. An interest cannot be created directly for a person not in existence, since a transferee must be a living person (section 5). Section 13 allows it only subject to a prior interest, and only if the unborn person takes the whole of the transferor's remaining interest; so a life interest cannot be created in favour of an unborn person. Section 14 then fixes the outer limit for vesting.

Origin. An equitable doctrine taken from English law (Maddison v. Alderson, 1883), enacted as section 53A by the Amendment Act of 1929. Its purpose is to stop a transferor using the absence of a completed transfer as an instrument of fraud against a transferee who has taken possession and acted on the contract.

Section 53A. Where a person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf, from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has in part performance taken possession, or being already in possession continues in possession and has done some act in furtherance of the contract, and has performed or is willing to perform his part, then, notwithstanding that the transfer has not been completed in the manner prescribed by law, the transferor and anyone claiming under him are debarred from enforcing against the transferee any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the contract.

A shield, not a sword. The section confers no title and no interest. It cannot found a suit for possession, for a declaration, or for the transfer; those must be pursued by a suit for specific performance. In Shrimant Shamrao Suryavanshi v. Pralhad Bhairoba Suryavanshi (2002) 3 SCC 676 the Supreme Court held that section 53A may still be pleaded in defence even where specific performance would be barred by limitation.

4. The transferee took reasonable care to ascertain the transferor's power: examining the title deeds, tracing the title, and enquiring into possession, since Explanation II to section 3 fixes him with notice of the title of anyone in actual possession.
5. He acted in good faith.

The equity. The general rule is nemo dat quod non habet. Section 41 is an exception resting on Ramcoomar Koondoo v. McQueen (1872): where one of two innocent persons must suffer by the fraud of a third, the loss falls on the one whose own conduct enabled the fraud.

Tests of ostensible ownership, from Jayadayal Poddar v. Bibi Hazra (1974): the source of the purchase money, possession and enjoyment, the motive for the arrangement, the relationship of the parties, their conduct, and the custody of the title deeds.

Section 48: on extinction, the accessory rights go with the easement.

• If A and B die together and the wife survives, the divesting condition has not happened. Her interest becomes indefeasible and she takes absolutely. B's contingent interest can never take effect, because the event on which it depended has failed. It also lapses for a second reason: B is dead, and a transferee must be in existence when his interest is to take effect.
• If the wife had died in A's lifetime and B was already dead, the ulterior transfer would fail for want of a transferee. By section 30, the failure of an ulterior disposition does not affect the prior one; but here the prior interest has itself determined, so the property would revert to A or his estate.
• Where the order of deaths cannot be proved, the burden lies on the party asserting survivorship, and if it cannot be discharged the claim fails. There is no general presumption of simultaneous death that decides title. Section 21 of the Hindu Succession Act, 1956 presumes, where two persons have died in circumstances rendering it uncertain which survived, that the younger survived the elder, but it operates only for succession under that Act and not on the operation of a condition in a deed.

Conclusion on the facts. The wife takes the property absolutely; B's interest lapses.

On the validity of conditions about marriage, which is the family context this problem sits in: a condition in general restraint of marriage is void as opposed to public policy, while a condition against a particular marriage, or one defining the duration of a widow's interest by reference to her remarriage, has been upheld, because it fixes the extent of the gift rather than restraining her freedom.

The reason is structural. In this mortgage the property has already been ostensibly sold to the mortgagee, defeasible on payment. His remedy is to make that sale absolute; once it is, the property is his and there is nothing left to sell. Sale belongs to the simple mortgagee, the mortgagee by deposit of title-deeds and the English mortgagee, each of whom holds security over property that remains the mortgagor's in substance.

(ii) Does B have a right of foreclosure?

Yes. Foreclosure is exactly his remedy.

Section 58(c) defines the transaction: the mortgagor ostensibly sells the property on condition that on default of payment on a certain date the sale shall become absolute, or that on payment the sale shall become void or the buyer shall retransfer. The proviso added in 1929 is essential: no such transaction is a mortgage unless the condition is embodied in the document which effects or purports to effect the sale. A condition in a separate document makes it an outright sale with an agreement to repurchase, and B would then have no mortgagee's remedies at all.

(i) Can D resist C's claim? Why?

No, on the plain application of the Act, and the position of D as an outsider makes the answer firmer here than in the versions of this problem where the release is in favour of a family member.

Section 6(a) provides that the chance of an heir apparent succeeding to an estate, the chance of a relation obtaining a legacy on the death of a kinsman, or any other mere possibility of a like nature, cannot be transferred.

During A's lifetime C was only an heir apparent. She had no right, title or interest in A's property; she had a spes successionis, a hope of succeeding which depended on her surviving A, on A dying intestate and on the property still being his. A release of that hope transfers nothing, and section 6(a) makes the transaction void ab initio. Consideration does not cure a void transfer.

(ii) Explain the principle involved

The principle is that a mere expectancy is not property and cannot be transferred.

Property law deals in existing rights. An heir apparent has none: the owner may sell, gift or bequeath the property at any moment and the hope disappears. Allowing such expectancies to be bought and sold would create a market in the anticipated deaths of others and would encourage exactly the speculation the section forbids.

What clause (a) covers. Three things: the chance of an heir apparent, the chance of a relation obtaining a legacy, and any other mere possibility of a like nature, the last read ejusdem generis and so confined to naked possibilities of the same character.

The distinction that earns the marks:

(i) Is the mortgage valid?

No, not as against A, and the reason is section 7.

Only a person competent to contract and entitled to transferable property, or authorised to dispose of transferable property not his own, may transfer it. The flat is A's. The wife is not the owner, and a spouse has no implied authority to mortgage the other spouse's separate property. Without a power of attorney or an authority from a Court, the mortgage does not bind A's interest.

2. Against the property, once she inherits: section 43. This is the answer the examiner wants. A person who fraudulently or erroneously represents that he is authorised to transfer immoveable property, and transfers it for consideration, must, at the option of the transferee and while the contract of transfer subsists, make the transfer good out of the interest he afterwards acquires. This is feeding the grant by estoppel. Once the seven years are out and A is presumed dead intestate, the wife takes a share in the flat as his heir, and C may enforce the mortgage against that share, provided he took in good faith and without notice of the defect, as the proviso to section 43 requires.
3. Not against the child's share. Section 43 feeds only the interest the wife acquires. The shares of A's other heirs are untouched, and C's security is confined to hers.

2. The subject matter may be moveable or immoveable, or one of each. The section is not confined to land.
3. At least one side must not be money. If one side alone is money it is a sale; if both sides are money it is still an exchange, and section 121 deals with it. Land for land plus cash to equalise remains an exchange.

Mode. Following the rules for sale: an exchange of tangible immoveable property of Rs. 100 or more, or of a reversion or other intangible thing, requires a registered instrument (section 54); below that, delivery of possession suffices; moveables pass by delivery.

Section 120, the hinge. Save as otherwise provided in the chapter, each party has the rights and is subject to the liabilities of a seller as to that which he gives, and the rights and liabilities of a buyer as to that which he takes. This imports the whole of section 55 into every exchange, twice over.

As SELLER of what he gives, each party must:

• disclose material defects in the property or in his title of which he is aware and the other is not, and which the other could not with ordinary care discover, 55(1)(a);
• produce the title deeds for examination on request, 55(1)(b);

• bear any loss by destruction, injury or decrease in value not caused by the other, from the date the ownership passes, 55(5)(c);
• pay public charges and rent accruing due after that date, 55(5)(d);

and he is entitled to the benefit of any improvement or increase in value from that date, and to a charge for consideration prepaid and properly returnable, 55(6).

Section 119, the chapter's own remedy. If a party to an exchange, or a person claiming through him, is by reason of any defect in the title of the other party deprived of the thing or any part of it, then, unless a contrary intention appears from the terms of the exchange, he is at his option entitled either to compensation for the loss, or to the return of the thing he transferred, if it is still in the possession of the other party, his legal representative, or a transferee from him without consideration.

Section 121. On an exchange of money, each party thereby warrants the genuineness of the money given by him.

Exchange and sale

For full marks, cover: section 105 with the four defined terms, the characteristics as a numbered list, sections 106 and 107, section 108 as two labelled lists with clause letters, section 111, and lease against licence.

Definition, section 105. A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on those terms.

The transferor is the lessor, the transferee the lessee, the price the premium, and the money, share, service or other thing so rendered the rent.

Characteristics

1. Competent parties: a lessor entitled to the property under section 7, and a lessee competent to receive.
2. Immoveable property.

Section 106, duration where the contract is silent. A lease for agricultural or manufacturing purposes is deemed year to year, terminable by six months' notice; any other lease is month to month, terminable by fifteen days' notice. Since the 2002 amendment the period runs from the date of receipt of the notice, a short notice is not invalid where the suit is filed after the proper period expires, and the notice must be in writing, signed and served as sub-section (4) directs.

RIGHTS AND LIABILITIES OF THE LESSOR

Liabilities, section 108(a) to (c):

• (a) Disclose material defects in the property with reference to its intended use, of which he is aware and the lessee is not, and which the lessee could not with ordinary care discover.
• (b) Put the lessee in possession on request.
• (c) Covenant for quiet enjoyment: the lessee, paying rent and performing his contracts, may hold the property without interruption during the term. The covenant runs with the land and binds those deriving title from the lessor.

Rights:

• To receive the rent at the agreed time and place.

• (g) Payments: on the lessor's neglect of a payment recoverable from the lessee or the property, the lessee may pay and deduct it with interest.
• (h) Fixtures: he may remove things he has attached to the earth while in possession, leaving the property as he found it.
• (i) Crops: on a lease of uncertain duration ending otherwise than by his own fault, he takes the crops he planted, with ingress and egress to gather them.
• (j) Transfer: he may transfer, mortgage or sub-let the whole or any part of his interest, and the transferee may transfer again; but he is not relieved of his own liabilities.

Liabilities, section 108(k) to (q):

• (k) Disclose facts materially increasing the value of the lessor's interest.
• (l) Pay the premium or rent at the proper time and place.
• (m) Keep the property in as good condition as when he took it, wear and tear and irresistible force excepted, and permit entry and inspection.
• (n) Give notice of encroachments and of proceedings to recover the property.

The test is exclusive possession and the parties' intention, not the label: Associated Hotels of India v. R. N. Kapoor (AIR 1959 SC 1262).

Explanation. "Land" includes things permanently attached to the earth; "beneficial enjoyment" includes possible convenience, remote advantage and even a mere amenity; and "to do something" includes the removal and appropriation by the dominant owner of any part of the soil of the servient heritage or anything growing or subsisting thereon, which is how a profit a prendre counts as an easement in India.

Essentials

1. A dominant heritage and a dominant owner.
2. A servient heritage and a servient owner.
3. The right must exist for the beneficial enjoyment of the dominant heritage, not for its owner personally.
4. The heritages must be different and in different hands.
5. The right must be capable of forming the subject matter of a grant.

Types under section 5

• Continuous: enjoyment is or may be continual without the act of man, such as light, air, or water through a fixed drain.
• Discontinuous: needs the act of man, such as a right of way.

Section 16 allows the period of a lease or life interest to be excluded against the reversioner. Section 17 lists rights that cannot be prescribed for: an easement tending to the total destruction of the servient heritage; light or air to an open space; surface water not flowing in a stream and not permanently collected; and underground water not passing in a defined channel.

Other classifications

For full marks, cover: section 60 with its three limbs and the proviso, the equity of redemption and the clog doctrine with cases, sections 60A, 60B, 61 and 62, section 91's three clauses expanded, subrogation under section 92 in both forms, and limitation.

What redemption is. Redemption is the mortgagor's right to get his property back on paying what he owes. It is the counterpart of the mortgagee's right of foreclosure or sale, and it exists because a mortgage transfers only an interest by way of security and leaves the ownership where it was.

Section 60. At any time after the principal money has become due, on payment or tender of the mortgage-money at a proper time and place, the mortgagor may require the mortgagee:

1. to deliver up the mortgage-deed and all documents relating to the property in his possession or power;

Two qualifications. A subsequent, independent sale of the equity of redemption for fresh consideration is valid, the pressure of the loan being over. And a long term is not by itself a clog; it becomes one when it makes redemption illusory.

Related rights. Section 60A, to require an assignment of the mortgage-debt to a nominee instead of a re-conveyance, which permits refinancing. Section 60B, to inspect and take copies of the title documents while the right subsists. Section 61, to redeem separately or simultaneously where several mortgages were made to the same mortgagee. Section 62, the usufructuary mortgagor's right to recover possession when the money is paid out of the rents and profits or the term has expired.

Who may redeem besides the mortgagor: section 91

• (a) Any person, other than the mortgagee of the interest sought to be redeemed, having any interest in, or charge upon, the property mortgaged or upon the right to redeem it. This covers a puisne mortgagee, a co-mortgagor, a lessee, a purchaser of the equity of redemption, a chargeholder, and a judgment creditor who has attached the equity of redemption.

Limitation. A suit for redemption lies within thirty years from the date the right accrues (Article 61, Limitation Act, 1963); a suit for foreclosure or sale within twelve years.