LLB 3 years Sem 3 Transfer of Property Act and Easement Act Dec 2019 - ToPA Question Paper with Solutions

Section 52 of the Indian Easements Act, 1882: where one person grants to another, or to a definite number of other persons, a right to do, or continue to do, in or upon the immoveable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a licence.

"Mesne profits" is not defined in the Transfer of Property Act. It is defined in section 2(12) of the Code of Civil Procedure, 1908: mesne profits of property mean those profits which the person in wrongful possession of such property actually received or might with ordinary diligence have received therefrom, together with interest on those profits, but not including profits due to improvements made by the person in wrongful possession.

Section 53A: where a person contracts in writing, signed by him, to transfer immoveable property for consideration, and the transferee, in part performance, has taken or continued in possession and done some act in furtherance of the contract, and is willing to perform his part, the transferor is debarred from enforcing against him any right in the property other than a right expressly given by the contract, even though the transfer has not been completed in the manner prescribed by law.

Section 118: when two persons mutually transfer the ownership of one thing for the ownership of another, neither thing or both things being money only, the transaction is called an exchange.

A transfer of property in completion of an exchange can be made only in the manner provided for the transfer of such property by sale.

Section 8 of the Indian Easements Act, 1882: an easement may be imposed by any one in the circumstances, and to the extent, in and to which he may transfer his interest in the heritage on which the liability is to be imposed.

Section 53 deals with two distinct frauds.

Sub-section (1), transfer to defeat creditors. Every transfer of immoveable property made with intent to defeat or delay the creditors of the transferor is voidable at the option of any creditor so defeated or delayed.

Three provisos qualify it:

• Nothing in the sub-section impairs the rights of a transferee in good faith and for consideration.
• Nothing affects any law relating to insolvency for the time being in force.
• A suit by a creditor to avoid a transfer on this ground must be brought on behalf of, or for the benefit of, all the creditors.

Sub-section (2), transfer to defraud a subsequent transferee. Every transfer of immoveable property made without consideration with intent to defraud a subsequent transferee is voidable at the option of that transferee. For this sub-section, no transfer made without consideration shall be deemed to have been made with intent to defraud by reason only that a subsequent transfer for consideration was made.

Section 13 of the Indian Easements Act, 1882 creates easements of necessity on the severance of a tenement.

Where one person transfers or bequeaths immoveable property to another, or where a partition is made of the joint property of several persons, then:

• if an easement in other land of the transferor is necessary for enjoying the subject of the transfer, the transferee is entitled to it (clause (a));
• if such an easement is apparent and continuous and necessary for enjoying the subject of the transfer as it was enjoyed when the transfer took effect, the transferee is entitled to it (clause (b)), which is the quasi easement;
• clauses (c) and (d) give the transferor the corresponding rights over the property transferred; and
• clauses (e) and (f) apply the same rules to a partition.

Purpose. The section prevents an obvious fraud on creditors: a debtor could otherwise give away everything he owns and leave his creditors with a debtor who has no assets and a donee who has no liability. Section 53(1) deals with the same mischief where the intent to defeat creditors can be proved; section 128 imposes liability without proof of intent, simply because the whole estate has passed.

Related sections. Section 127, onerous gifts, is expressly saved: where a gift is a single transfer of several things, one of which is burdened by an obligation, the donee takes nothing unless he takes the whole; where the transfers are separate and independent, he may take one and refuse another. A donee not competent to contract who accepts an onerous gift is not bound by his acceptance, but becomes bound on attaining competence if, with knowledge, he does not then reject it.

3. Right of inspection and production of documents, section 60B. So long as his right to redeem subsists, the mortgagor may, at reasonable times and at his own cost, inspect and take copies of the documents of title in the mortgagee's custody.

4. Right to redeem separately or simultaneously, section 61. Where he has executed two or more mortgages to the same mortgagee, he may redeem any one separately, in the absence of a contract to the contrary.

5. Right of a usufructuary mortgagor to recover possession, section 62. When the mortgage-money is paid out of the rents and profits, or is otherwise paid or tendered where the term has expired.

6. Right to accession, section 63. Where mortgaged property in the mortgagee's possession receives any accession, the mortgagor is entitled to it on redemption; where the accession was acquired at the mortgagee's expense and is separate, the mortgagor must pay for it if he wants it.

7. Right to improvements, section 63A, and to the renewed lease under section 64.

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

1. to deliver up the mortgage-deed and all documents relating to the property in his possession;
2. where the mortgagee is in possession, to deliver possession; and
3. at the mortgagor's cost, to re-transfer the property or execute an acknowledgement in writing that the right transferred to the mortgagee is extinguished.

This is the right to redeem, and a suit to enforce it is a suit for redemption. It is extinguished only by the act of the parties or by a decree of a Court.

Who may redeem, section 91. Besides the mortgagor:

• (a) any person, other than the mortgagee of the interest sought to be redeemed, having any interest in, or charge upon, the property or upon the right to redeem it, which covers a puisne mortgagee, a co-mortgagor, a lessee, a purchaser of the equity of redemption and a chargeholder;

Section 126 provides the only two routes.

1. Revocation by agreement. The donor and donee may agree that, on the happening of a specified event which does not depend on the will of the donor, the gift shall be suspended or revoked. Three conditions attach:

• there must be an agreement, not a unilateral reservation;
• it must be part of the same transaction as the gift; and
• the event must be outside the donor's will.

A gift which the parties agree shall be revocable wholly or in part at the mere will of the donor is void wholly or in part, as the case may be.

2. Revocation for a defect in consent. A gift may be revoked in any of the cases (save want of consideration) in which, if it were a contract, it might be rescinded, that is for fraud, coercion, undue influence or misrepresentation. Want of consideration is expressly excluded, since a gift is by definition without consideration.

Saving. Nothing in the section affects the rights of transferees for consideration without notice.

Applying it. X has satisfied the first requirement, because prior interests are created in A, B and C. He fails the second. The gift to A's unborn son is expressly "without power of alienation", and the power of alienation is the chief attribute of ownership. An interest stripped of it is less than the whole of the remaining interest of X, so the transfer to the unborn son does not take effect at all.

The Act's own illustration to section 13 is the same idea in another form: a transfer to B in trust for A and his intended wife successively for life, and after the survivor's death to the eldest son of the intended marriage for life, and after his death to A's second son. The interest of the eldest son does not take effect, because a life interest cannot be created in favour of an unborn person.

The rule against perpetuity also bites. Even if the restraint were ignored, section 14 requires the interest to vest not later than the lifetime of persons living at the date of the transfer plus the minority of the ultimate beneficiary. Here vesting is postponed by a fixed block of 20 + 10 + 5 = 35 years, a period measured by terms of years and not by lives in being, which may well outlast every life in being and the following minority. On that ground too the gift to the unborn son fails.

• B takes an interest for 10 years to begin on the expiry of A's term. It is vested in interest now, though enjoyment is postponed. By the Explanation to section 19, an intention that an interest shall not be vested is not to be inferred merely from a provision postponing enjoyment or giving a prior interest to another person.
• C takes an interest for 5 years after B's term, on the same footing.

None of these offends section 14, because they are given to persons living at the date of the transfer and vest at once.

By section 30, where the ulterior disposition is invalid, the prior disposition is not affected. So the invalidity of the gift to the unborn son takes nothing away from A, B or C.

Sale is the remedy of the simple mortgagee (section 58(b)), the mortgagee by deposit of title-deeds (section 96, which applies the simple mortgage rules), and the English mortgagee (section 58(e)), each of whom holds a security over property that remains, in substance, the mortgagor's.

(ii) Does B have a right of foreclosure?

Yes. Foreclosure is precisely 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 such payment being made the sale shall become void or the buyer shall retransfer. The proviso, added by the Amendment Act of 1929, is essential: 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. A condition in a separate document makes it an out and out sale with an agreement to repurchase, and then B has no mortgage rights at all.

(i) Can B resist C's claim to her share in A's property? Why?

On the plain application of the Act, no.

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, but only a hope of succeeding, called spes successionis, which depended on her surviving A, on A dying intestate, and on the property still being his at his death. A release of that hope transfers nothing, and section 6(a) makes the transaction void ab initio, not merely voidable. Consideration does not cure it: a void transfer cannot be validated by payment.

Property law deals in existing rights. An heir apparent has no right at all, only a possibility, and the owner may defeat it at any moment by selling the property, giving it away or making a will. To allow such an expectancy to be bought and sold would be to let people trade in the deaths of others, and would encourage exactly the kind of speculation the section forbids.

What section 6(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 words are read ejusdem generis, so they cover only naked possibilities of the same character.

What it does not cover, and this is the examinable distinction:

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, for the beneficial enjoyment of the dominant heritage, of any part of the soil of the servient heritage or anything growing or subsisting thereon.

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 the personal benefit of its owner.
4. The heritages must be different and in different hands.
5. The right must be capable of forming the subject matter of a grant.

Classification under section 5

• Continuous: enjoyment is, or may be, continual without the act of man, such as a right to light and air, or to receive water through a fixed channel.

Section 16 is the reversioner's protection: where the servient heritage was under a lease or a life interest, the period of that interest may be excluded in computing prescription against the reversioner. Section 17 lists rights that cannot be acquired by prescription, including an easement that would tend to the total destruction of the servient heritage, a right to the free passage of light or air to an open space, a right to surface water not flowing in a stream and not permanently collected, and a right to underground water not passing in a defined channel.

Other classifications

• Positive and negative, according to whether the dominant owner does something on the servient land or merely prevents something.
• Permanent or limited: by section 6 an easement may be created for a limited period or subject to a condition.
• Appurtenant and in gross. An easement in gross, one that belongs to a person and not to a dominant heritage, is not recognised in India, because section 4 requires a dominant heritage.

Origin. The doctrine was settled in England in Maddison v. Alderson (1883) 8 App Cas 467, where acts of part performance were held to take an oral contract out of the Statute of Frauds. It was brought into the Act as section 53A by the Amendment Act of 1929, on the recommendation of the Special Committee, which found Indian purchasers being defeated on precisely these facts.

Section 53A. Where any 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 of the contract, taken possession of the property or any part of it, or, being already in possession, continues in possession in part performance and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that where there is an instrument of transfer the transfer has not been completed in the manner prescribed by law, the transferor and any person claiming under him are debarred from enforcing against the transferee, and persons claiming under him, 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 terms of the contract.

5. Willingness to perform: the transferee must have performed, or be willing to perform, his part. Willingness must be continuous and absolute, from the contract to the suit. A transferee who has refused to pay, or who comes forward only when prices rise, fails here.
6. Registration, for contracts made on or after 24 September 2001. The Registration and Other Related Laws (Amendment) Act, 2001 deleted from section 53A the words "the contract, though required to be registered, has not been registered", and inserted section 17(1A) into the Registration Act, 1908, which makes documents containing contracts to transfer for consideration for the purposes of section 53A compulsorily registrable, and provides that if they are not registered they "shall have no effect for the purposes of the said section 53A".

That sixth condition is the one that dates an answer. Every book written before 2001 says registration is unnecessary, and for a contract made on or after that date it is now wrong.

A shield, not a sword

2. where the mortgagee is in possession, to deliver possession of the property to the mortgagor; and
3. at the mortgagor's cost, either to re-transfer the property to him or to such third person as he may direct, or to execute and register an acknowledgement in writing that any right derived from the mortgage has been extinguished.

This right is called the right to redeem, and a suit to enforce it is a suit for redemption.

The proviso, which is the heart of the section: the right conferred by it has not been extinguished by the act of the parties or by a decree of a Court. Those are the only two ways it can end.

The equity of redemption and the clog upon it

What remains with the mortgagor after the mortgage is called the equity of redemption, and it is itself property: it can be sold, mortgaged again, inherited and attached.

Because the borrower is in a weak position when he borrows, equity will not allow the lender to bargain away the right to redeem. Any term of the mortgage that impedes or defeats redemption is void as a clog:

The mortgagor's related rights. Section 60A, to require the mortgagee to assign the debt and transfer the property to a nominee instead of re-conveying, which enables refinancing. Section 60B, to inspect and take copies of the title documents while the right to redeem subsists. Section 61, to redeem separately or simultaneously where several mortgages have been made to the same mortgagee. Section 62, the usufructuary mortgagor's right to recover possession when the money has been paid out of the rents and profits or the term has expired.

Who may redeem besides the mortgagor: section 91

Besides the mortgagor, the following may sue for redemption:

• (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 in or upon the right to redeem it. This clause is wide and covers:
• a puisne or subsequent mortgagee, who redeems the prior mortgage to protect his own security;
• a co-mortgagor, who may redeem the whole;
• a lessee of the mortgaged property;
• a purchaser of the equity of redemption;
• a person having a charge on the property under section 100;

• Conventional subrogation arises where a stranger advances the money under an agreement that he shall be subrogated. The second proviso to section 92 requires that agreement to be in writing and registered.
• A person who redeems part only of the mortgaged property is not subrogated unless he has redeemed the whole.

The mortgagor cannot be subrogated: he cannot hold a mortgage on his own property, and on his redemption the mortgage is discharged.

Limitation. A suit for redemption lies within thirty years from the date the right to redeem accrues, under Article 61 of the Limitation Act, 1963. A suit for foreclosure or sale by the mortgagee lies within twelve years.

Subject nevertheless to this: where the transfer is gratuitous and the transferor has, before the election, died or otherwise become incapable of making a fresh transfer, and in all cases where the transfer is for consideration, the reverting benefit is charged with making good to the disappointed transferee the amount or value of the property attempted to be transferred to him.

Three conditions, all of which must be present

1. The transferor professed to transfer property which he had no right to transfer. The section adds that the rule applies whether or not the transferor believed the property to be his own, so an honest mistake makes no difference.
2. He conferred a benefit on the owner of that property, and on him as owner. A person taking no direct benefit, but deriving one only indirectly, need not elect.
3. Both formed part of one and the same transaction. Two separate instruments raise no question of election, however close in time or intention.

The section also provides that a person who takes a benefit in one capacity may dissent in another.

The two courses open to the owner

• Presumption from an irreversible act. Knowledge or waiver may be inferred from any act of his which renders it impossible to place the persons interested in the property in the same condition as if that act had not been done. The Act's illustration is a person who takes possession of a coal-mine given to him and exhausts it; he has thereby confirmed the transfer.
• Requisition to elect. If the owner does not, within one year of the transfer, signify to the transferor or his representatives his intention to confirm or dissent, they may require him to make his election; if he does not comply within a reasonable time, he is deemed to have elected to confirm.
• Disability. Where the owner is under a disability, the election is postponed until the disability ceases, or until an election is made on his behalf by some competent authority.

The exception. Where a particular benefit is expressed to be conferred on the owner in lieu of the property which the transferor professes to transfer, and the owner claims the property, he must relinquish that particular benefit, but he is not bound to relinquish any other benefit conferred on him by the same transaction.

The illustrations

For full marks, cover: section 105 and the four defined terms, the essentials as a numbered list, sections 106 and 107, then section 108 as two labelled lists with clause letters, section 111 on determination, 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 to be rendered the rent.

Essentials of a valid lease

1. Competent parties. A lessor entitled to the property and competent to transfer under section 7, and a lessee competent to receive it.

Section 106, duration where the contract is silent. In the absence of a contract, local law or usage, a lease for agricultural or manufacturing purposes is deemed to be from year to year, terminable by six months' notice; a lease for any other purpose is deemed to be from month to month, terminable by fifteen days' notice. Since the 2002 amendment the notice period commences from the date of receipt, a notice falling short of the period is not invalid where the suit is filed after the period expires, and every 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) To disclose to the lessee any material defect in the property, with reference to its intended use, of which the lessor is and the lessee is not aware, and which the lessee could not with ordinary care discover.

• (d) Accretions: anything added to the property during the tenancy is deemed comprised in the lease.
• (e) Destruction: where by fire, tempest, flood, violence of an army or of a mob, or other irresistible force, any material part is wholly destroyed or rendered substantially and permanently unfit for the purpose let, the lease is, at the lessee's option, void; the benefit is lost where the injury was caused by his own wrong.
• (f) Repairs: if the lessor neglects a repair he is bound to make within a reasonable time after notice, the lessee may make it himself and deduct the cost with interest from the rent.
• (g) Payments: if the lessor neglects a payment he is bound to make which is recoverable from the lessee or the property, the lessee may make it and deduct it with interest from the rent.
• (h) Removal of fixtures: the lessee may remove, at any time while in possession and not afterwards, all things he has attached to the earth, leaving the property in the state in which he received it.

• (o) To use the property as a person of ordinary prudence would use his own; not to fell trees, pull down or damage buildings, work mines or quarries not open when the lease was granted, nor commit any act destructive or permanently injurious to the property.
• (p) To erect no permanent structure, except for agricultural purposes, without the lessor's consent.
• (q) On determination, to put the lessor into possession.

Section 111, determination of a lease. By efflux of time; on the happening of a specified event; on the termination of the lessor's interest; by merger; by express surrender; by implied surrender; by forfeiture; and on the expiry of a notice to quit. Sections 112 and 113 deal with waiver of forfeiture and of notice, section 114 with relief against forfeiture for non-payment of rent, and section 116 with the effect of holding over.

Lease and licence

For full marks, cover: who an ostensible owner is, the tests from Jayadayal Poddar, section 41 in full, the five requirements expanded one by one, the equity in Ramcoomar Koondoo, what "reasonable care" and "good faith" mean in practice, the exceptions to nemo dat of which this is one, and the effect of the Benami Act.

Who is an ostensible owner. An ostensible owner is a person who, by the express or implied consent of the real owner, is held out to the world as the owner of property, and who has all the indicia of ownership, though the beneficial ownership is in another.

He is more than an agent, a manager or a servant in charge of property. The real owner must have clothed him with the appearance of ownership: the property stands in his name, he deals with it as owner, and third parties dealing with him have no reason to look further.

Tests, Jayadayal Poddar v. Bibi Hazra (1974) 1 SCC 3. Whether a person is an ostensible owner is a question of fact, and the Supreme Court listed the relevant considerations:

1. the source of the purchase money, that is who paid;

2. He must be so with the consent, express or implied, of the real owner. Consent must be free and given with knowledge of the facts. Mere silence may amount to implied consent where the real owner knew of the holding out and did nothing; it does not where he was himself ignorant, or a minor, or under a disability.
3. The transfer must be for consideration. A gift is outside the section entirely, because the section protects a person who has parted with value on the faith of the appearance, not a volunteer.
4. The transferee must have taken reasonable care to ascertain that the transferor had power to transfer. This is an active duty of enquiry, not a formality. He must examine the title deeds, trace the title, and enquire into possession, since Explanation II to section 3 deems him to have notice of the title of anyone in actual possession. Asking the seller and taking his word is not care.
5. The transferee must have acted in good faith, that is honestly and without notice of the real owner's title. Good faith and reasonable care are cumulative: a person who took great care but had actual notice is not in good faith, and a person who was honest but made no enquiry has not taken care.

Effect of the transfer. Where the section applies, the transfer is not voidable at the instance of the real owner. He is left to his personal remedies against the ostensible owner, for the price received or for damages, and the purchaser keeps the property.