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

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 3: "attested" means attested by two or more witnesses, each of whom has

• seen the executant sign or affix his mark, or seen some other 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 128: where a gift consists of the donor's whole property, the donee is called 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 7: every person who is (i) competent to contract, and (ii) 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.

Subrogation, under section 92, is the rule that a person who redeems a mortgage steps into the shoes of the mortgagee he has paid off, and gets, so far as regards redemption, foreclosure or sale, the same rights that the mortgagee had against the mortgagor or any other mortgagee.

Section 10: where property is transferred subject to a condition or limitation absolutely restraining the transferee from parting with or disposing of his interest in the property, the condition or limitation is void, except in the case of a lease where the condition is for the benefit of the lessor or those claiming under him.

The reason is that the power of alienation is an incident of ownership. A transferor cannot give ownership with one hand and take away its chief attribute with the other.

Two exceptions are preserved by the section itself:

• a lease, where a covenant against assignment or subletting is valid because it protects the lessor's reversion;
• a transfer to or for the benefit of a married woman who is not a Hindu, Muhammadan or Buddhist, where the property may be secured against her anticipating or alienating it.

Absolute and partial restraints

Section 35 states the doctrine: where a person professes to transfer property which he has no right to transfer, and as part of the same transaction confers a benefit on the owner of that property, the owner must elect either to confirm the transfer or to dissent from it. If he dissents, he must relinquish the benefit, and the benefit so relinquished reverts to the transferor or his representative.

The principle is that he who takes under an instrument must take under the whole of it, or, more simply, one cannot approbate and reprobate.

The charge on dissent

Where the transfer was for consideration, or was gratuitous but the transferor has died or become incapable of making a fresh transfer before the election, the relinquished benefit is charged with making good to the disappointed transferee the value of the property attempted to be transferred.

How election is made

The second illustration is implied election: A transfers to B an estate to which C is entitled and gives C a coal-mine; C takes possession of the mine and exhausts it, and has thereby confirmed the transfer.

That last row is the point of the whole topic. Section 26 illustrates substantial compliance: a transfer conditional on B marrying with the consent of C, D and E; E dies and B marries with the consent of C and D; the condition is fulfilled.

Related provisions

Section 27 deals with an ulterior transfer on failure of the prior disposition; section 28 with an ulterior transfer conditional on a specified event; section 30 provides that an invalid ulterior disposition does not affect the prior one; section 31 allows a transfer to cease to have effect on a specified uncertain event, and section 32 requires that condition to be valid; sections 33 and 34 deal with performance of an act where no time, and where a time, is specified.

Pendency, by the Explanation, begins on the date of presentation of the plaint and continues until the suit is disposed of by a final decree or order and complete satisfaction of it has been obtained or has become unobtainable by limitation.

Effect

The transfer is not void. It is valid between transferor and transferee, but it is not binding on the other party to the suit, who takes the property under the decree free of it. The transferee is bound by the result of the litigation, which is why the doctrine is said to rest not on notice but on public policy: otherwise no litigation could ever be brought to a conclusion.

Bellamy v. Sabine (1857) is the source; the Supreme Court applied the section in Rajender Singh v. Santa Singh (1973), holding its purpose is to maintain the status quo unaffected by the act of any party pending the litigation.

Chapter V of the Indian Easements Act, 1882 (sections 37 to 51) sets out how an easement comes to an end.

Points that carry marks

Under section 47 the twenty years are counted backwards from the suit or proceeding in which the easement is questioned, and for a continuous easement the non-enjoyment must be total. Under section 48, when an easement is extinguished the accessory rights go with it. Suspension under section 49 is not extinction: the easement revives under section 51 when the cause of suspension ends.

The rule. Section 6(a) provides that the chance of an heir apparent succeeding to an estate (spes successionis), 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. A transfer of a bare chance is void ab initio, not merely voidable, and no consideration can validate it.

Applying it. During A's lifetime C was only an heir apparent. She had no right, title or interest in A's property, only a hope of succeeding if she survived A and A died intestate leaving the property. What she "released" in favour of B was therefore nothing, and a release of nothing transfers nothing. Section 6(a) makes the transaction void even though B paid consideration for it. On A's death C's right vests in her for the first time, by inheritance and not through the release.

Conclusion. B cannot resist C's claim on the strength of the release. C is entitled to her share in A's property.

The kind of mortgage. Under section 58(c) a mortgage by conditional sale is one where 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 being made the sale shall become void or the buyer shall retransfer the property. The proviso added in 1929 is decisive: the transaction is not a mortgage by conditional sale unless the condition is embodied in the document which effects or purports to effect the sale. If the condition is in a separate document, it is an out and out sale with an agreement to repurchase.

The remedy. Section 67 gives the mortgagee, in the absence of a contract to the contrary, the right at any time after the mortgage-money has become due, and before redemption, to obtain a decree that the mortgagor be absolutely debarred of his right to redeem (foreclosure) or that the property be sold. But the section then divides the remedies by the kind of mortgage, and clause (a) provides that a mortgagee by conditional sale has the right to foreclosure, and not a right of sale.

Is the mortgage valid? On these facts, no, and the reason is section 7. Only a person entitled to transferable property, or authorised to dispose of transferable property not his own, is competent to transfer it. The flat belongs to A. B is his wife, not the owner, and a spouse has no implied authority to mortgage the other spouse's separate property. Absent a power of attorney or a Court's authority, the mortgage does not bind A's interest.

Why the five years do not help B. Section 108 of the Indian Evidence Act, 1872 (now section 111 of the Bharatiya Sakshya Adhiniyam, 2023) provides only that when a person has not been heard of for seven years by those who would naturally have heard of him, the burden of proving that he is alive shifts to the person asserting it. Two things follow, and both are commonly got wrong:

• At the date of the mortgage only five years had passed, so even the presumption was not available.

2. Against the property, if B inherits. This is the important point. Once the seven years are out and A is presumed dead intestate, B takes a share in the flat as his heir. Section 43 then applies: a person who erroneously represents that he is authorised to transfer immoveable property, and transfers it for consideration, is compelled, at the option of the transferee and while the contract subsists, to make the transfer good out of the interest he afterwards acquires. This is feeding the grant by estoppel. C may therefore enforce the mortgage against the share B inherits, provided he took in good faith and without notice of the defect, which the proviso to section 43 requires.
3. Not against the children's shares. Section 43 feeds only the interest B acquires. The shares of A's other heirs are untouched, and C's security is limited to B's share.
4. If the mortgage was for legal necessity. Where B, as manager of the family in the absence of its head, borrowed for the necessary maintenance of the family, that necessity may bind the estate to that extent. It has to be pleaded and proved, item by item, not assumed.

For full marks, cover: the definition in section 118, that it is not confined to immoveable property, the mode of transfer, that each party is at once a seller and a buyer, section 119 on eviction, section 120 on rights and liabilities, section 121 on exchange of money, and the difference between exchange and sale and partition.

Definition, 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.

Two features follow at once. There must be a mutual transfer of ownership, so a mere agreement to exchange is not an exchange; and at least one side must not be money, because if both are money it is a sale of one currency for another and if one side alone is money it is a sale.

Section 120, rights and liabilities. Save as otherwise provided, 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 one sentence imports the whole of section 55 into every exchange, and it is the answer the examiner wants.

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

What section 55 therefore gives each party

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;
• produce title deeds for examination on request;
• answer questions as to the title to the best of his information;
• execute a proper conveyance on tender of the counter-transfer;
• take reasonable care of the property and the title deeds between contract and transfer;

2. Immoveable property, and a transfer of a right to enjoy it, not of ownership.
3. Duration: a certain time, express or implied, or in perpetuity. A lease for an indefinite term with no means of ascertaining it fails for uncertainty.
4. Consideration: premium or rent, or both.
5. Transfer of possession: the lessee gets an interest in the land, which is what separates a lease from a licence.
6. Acceptance by the lessee.
7. Reversion remains with the lessor.

Section 107, how made. A lease from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument. All other leases may be made either by a registered instrument or by oral agreement accompanied by delivery of possession. Where a registered instrument is used, it must be executed by both lessor and lessee.

• (b) To give possession on the lessee's request.
• (c) Covenant for quiet enjoyment: the lessee, paying the rent and performing the contract, may hold the property without interruption during the term. The covenant runs with the land and binds every person who derives title from the lessor.

Rights:

• To receive rent as reserved.
• To recover possession on determination of the lease.
• To claim compensation for waste, and for the value of any part of the property wrongly used or damaged.
• To re-enter and forfeit where the lessee breaks an express condition providing for re-entry, denies the lessor's title, or is adjudicated insolvent where the lease so provides (section 111(g)).

Rights and liabilities of the LESSEE (section 108, clauses (d) to (q))

Rights:

• (d) Accretions to the property during the tenancy are deemed to be comprised in the lease.

• (i) On a lease of uncertain duration determined by any means other than the lessee's own fault, he or his legal representative is entitled to the crops planted or sown by him and growing on the property, and to free ingress and egress to gather them.
• (j) He may transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest, and any transferee may again transfer it; but the lessee is not thereby relieved of any of his own liabilities.

Liabilities:

• (k) To disclose facts materially increasing the value of the lessor's interest, of which he is aware and the lessor is not.
• (l) To pay the premium or rent at the proper time and place.
• (m) To keep the property in as good condition as when he took it, allowing for reasonable wear and tear and irresistible force, and to allow the lessor to enter and inspect.
• (n) To give notice to the lessor of any encroachment on the property or interference with the lessor's rights.

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

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 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.

Proviso: nothing in the section affects the rights of a transferee for consideration who has no notice of the contract or of the part performance of it.

The conditions the transferee must fulfil

1. There is a contract to transfer immoveable property, for consideration.

5. The transferee has performed or is willing to perform his part. Willingness must be continuous and absolute from the date of the contract to the date of the suit; a person who has repudiated or refused to pay cannot claim the protection.
6. Since 24 September 2001, the contract must be registered. 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 simultaneously inserted section 17(1A) of the Registration Act, 1908, which makes documents containing contracts to transfer for consideration for the purposes of section 53A compulsorily registrable, failing which they "shall have no effect for the purposes of the said section 53A".

That sixth condition is the single most important dating point in this topic. Every textbook printed before 2001 says the contract need not be registered, and for a contract made on or after 24 September 2001 that is wrong.

A shield, not a sword

For full marks, cover: section 4 with the dominant and servient heritage, the essentials, the Explanation that brings in profits a prendre, the classification under section 5 and by mode of acquisition under sections 13, 15 and 18, and the four ways an easement is acquired.

Definition, section 4. An easement is a right which the owner or occupier of certain land possesses, as such, for the beneficial enjoyment of that land, to do and continue to do something, or to prevent and continue to prevent something being done, in or upon, or in respect of, certain other land not his own.

The land for the beneficial enjoyment of which the right exists is the dominant heritage and its owner the dominant owner; the land on which the liability is imposed is the servient heritage and its owner the servient owner.

• Continuous: enjoyment of which is, or may be, continual without the act of man, for example a right to light or air, or a right to receive the flow of water through a drain.
• Discontinuous: one that needs the act of man for its enjoyment, for example a right of way.
• Apparent (or express): the existence of which is shown by some permanent sign which, on careful inspection by a competent person, would be visible, such as a door, a window or a drain.
• Non-apparent: one that has no such sign, for example a right of way in the open, or a right to prevent building above a certain height.

The two pairs cross, giving four combinations: continuous and apparent (light through a window), continuous and non-apparent (a right to stop a neighbour building higher), discontinuous and apparent (a made-up path), discontinuous and non-apparent (an unmarked track).

Types by mode of acquisition

Other classifications

For full marks, cover: section 60 and the equity of redemption, the three rights it gives, the doctrine of clog, the persons in section 91, subrogation under section 92, and when the right is extinguished.

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 to the mortgagor; and
3. at the mortgagor's cost, either to re-transfer the property to him, or to execute an acknowledgement in writing that any right transferred to the mortgagee has been extinguished.

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

Related rights. Section 60A entitles the mortgagor to require the mortgagee to assign the mortgage-debt to a third person he nominates instead of re-conveying, which lets him refinance. Section 60B gives him a right, so long as his right to redeem subsists, to inspect and take copies of the documents of title in the mortgagee's custody, at his own cost. Section 61 gives him the right to redeem separately or simultaneously where he has executed two or more mortgages to the same mortgagee. Section 62 gives a usufructuary mortgagor the right to recover possession when the mortgage-money is paid out of the rents and profits, or when the term expires.

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, who has any interest in, or charge upon, the property mortgaged or in or upon the right to redeem it. This is the wide clause and it covers a puisne (later) mortgagee, a lessee, a co-mortgagor, a purchaser of the equity of redemption, and a person having a charge;

For full marks, cover: the policy behind the rule, section 14 with the perpetuity period worked out, section 13 and its two conditions, the way the two sections work together, the exceptions in sections 18 and 20, sections 15 and 16, and the difference from the English rule.

The policy. Property must remain in commerce. If a transferor could tie up land indefinitely by creating one interest after another for generations unborn, the land would be taken out of circulation and improvement, and the rule of law is that a person may dispose of his property but may not govern it for ever. The rule against perpetuity fixes the outer limit of that power.

Section 14, rule against perpetuity. 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 in India is therefore:

The Act's illustration: A transfers property to B in trust for A and his intended wife successively for their lives, 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 it is only a life interest.

How sections 13 and 14 work together

Take the standard example. A transfers property to B for life, then to B's unborn son C absolutely. This is good if C comes into existence during B's lifetime: section 20 provides that where an interest is created for the benefit of an unborn person, he acquires a vested interest on his birth, though he is not entitled to enjoyment until he attains possession.

Section 30 is the counterpart: where an ulterior disposition is invalid, the prior disposition is not thereby affected.

Exceptions to the rule against perpetuity

The rule does not apply to:

• Section 18: transfers for the benefit of the public in the advancement of religion, knowledge, commerce, health, safety or any other object beneficial to mankind. Sections 14, 16 and 17 are expressly excluded.
• Personal agreements that create no interest in property, such as a mere contract of pre-emption or an option to repurchase, since the rule strikes only at interests in property.
• A charge, which creates no interest in the property.
• A covenant of redemption in a mortgage.
• Leases with a covenant for renewal.
• Transfers in favour of a corporation, which never dies.

India and England compared