Transfer of Property Act, 1882 – Economic, Business and Commercial Laws Important Questions

Question 1.
Distinguish between: Vested & Contingent Interest [Dec 2009 (4 Marks)]
Answer:
Following are the main points of distinction between vested and contingent interest:

Points	Vested Interest	Contingent Interest
Section	Vested Interest is provided in Section 19	Contingent Interest is provided in Section 21 of the Transfer of Property Act
Meaning	It is a present right to future possession.	A contingent interest depends upon the fulfillment of some conditions which may or may not happen.
Right of ownership	This right is created as soon as the interest is vested	There is a mere chance to be having the ownership rights
Takes effect	A vested interest takes effect from the date of transfer.	A contingent interest in order to become vested is conditioned by a contingency that may not occur.
Death of transferee	A vested interest cannot be defeated by the death of the transferee before he obtains possession.	A contingent interest may fail in case of the death of the transferee before the fulfillment of the condition.
Example	If the land is given to Kalyani for life with a remainder to Pivusha, Kalyani’s right is vested in possession, Pivusha’s right is vested in interest.	A gift to Aakash on the marriage of Mahesh creates a contingent interest, for Mahesh may never marry at all.

Question 2.
Distinguish between: Vested & Contingent Interest [June 2012 (4 Marks)]
Answer:
Following are the main points of distinction between vested and contingent interest:

Points	Vested Interest	Contingent Interest
Section	Vested Interest is provided in Section 19	Contingent Interest is provided in Section 21 of the Transfer of Property Act
Meaning	It is a present right to future possession.	A contingent interest depends upon the fulfillment of some conditions which may or may not happen.
Right of ownership	This right is created as soon as the interest is vested	There is a mere chance to be having the ownership rights
Takes effect	A vested interest takes effect from the date of transfer.	A contingent interest in order to become vested is conditioned by a contingency that may not occur.
Death of transferee	A vested interest cannot be defeated by the death of the transferee before he obtains possession.	A contingent interest may fail in case of the death of the transferee before the fulfillment of the condition.
Example	If the land is given to Kalyani for life with a remainder to Pivusha, Kalyani’s right is vested in possession, Pivusha’s right is vested in interest.	A gift to Aakash on the marriage of Mahesh creates a contingent interest, for Mahesh may never marry at all.

Question 3.
Differentiate between vested and contingent interest under the Transfer of Property Act, 1882. [June 2017 (3 Marks)]
Answer:
Following are the main points of distinction between vested and contingent interest:

Points	Vested Interest	Contingent Interest
Section	Vested Interest is provided in Section 19	Contingent Interest is provided in Section 21 of the Transfer of Property Act
Meaning	It is a present right to future possession.	A contingent interest depends upon the fulfillment of some conditions which may or may not happen.
Right of ownership	This right is created as soon as the interest is vested	There is a mere chance to be having the ownership rights
Takes effect	A vested interest takes effect from the date of transfer.	A contingent interest in order to become vested is conditioned by a contingency that may not occur.
Death of transferee	A vested interest cannot be defeated by the death of the transferee before he obtains possession.	A contingent interest may fail in case of the death of the transferee before the fulfillment of the condition.
Example	If the land is given to Kalyani for life with a remainder to Pivusha, Kalyani’s right is vested in possession, Pivusha’s right is vested in interest.	A gift to Aakash on the marriage of Mahesh creates a contingent interest, for Mahesh may never marry at all.

Question 4.
Distinguish between: Movable Property & Immovable Property. [Dec 2011 (4 Marks)]
Answer:
Following are the main points of difference between movable & immovable property:

Points	Movable Property	Immovable Property
Definition in General Clauses Act, 1897	“Movable Property” shall mean property of every description, except immovable property. [Section 3(36)]	“Immovable Property” shall include land, benefits to arise out of the land, and things attached to the earth, or permanently fastened to anything attached to the earth. [Section 3(26)]
Definition in TP Act, 1882	The expression ‘movable property’ is not defined by the Transfer of Property Act, 1882.	Section 3 of the Transfer of Property Act, 1882 defines the term ‘immovable property’ negatively; it says that immovable property does not include standing timber, growing crops, or grass.
Contract	It can be oral or written contract	It is generally a written contract
Registration	Generally, registration is optional	Registration is compulsory
Shifted/Movable	It can be shifted or moved without loss /damage	It cannot be shifted or transported without any loss or damage and if transported, it will lose its original shape, capacity, quality, or quantity
Example	Following have been held to be movable property.Government promissory notesRoyaltyRight to recover maintenance allowance immovable property.CopyrightDecree for sale on a mortgage-deedDecree for arrears of rentMachinery which is not permanently attached to earthStanding timber, growing crop, and grass	Following have been held to beRight to collect rents of immovable propertyRight to wayRight to collect dues from fair on a piece of landHereditary officesEquity of redemptionInterest of mortgageeRight to collect lac from treesRight of ferryRight of fisheryRight to receive future rents and profits of landReversion in property leased a factory

Question 5.
State the meaning and characteristics of immovable property as per the Transfer of Property Act, 1882. [June 2013 (4 Marks)]
Answer:
(a) General Clauses Act, 1897: Definition
1. Immovable property shall include land, benefits to arise out of land and things attached to the earth, or permanently fastened to anything attached to the earth.

2. Attached to the earth” means
(a) rooted in the earth, as in the case of trees and shrubs;
(b) embedded in the earth, as in the case of walls or buildings; or
(c) attached to what is so embedded for the permanent beneficial enjoyment of that to which it is attached.

3. Things rooted In the earth: Trees and Shrubs arc immoveable property according to this definition subject to the exception as to standing timber.

4. Things embedded in the earth: A house is embedded in the earth is immovable property and this is so even if it is sold for enjoyment as a house with an option to pull it down. The mode of annexation and object of annexation are the two tests to determine whether it is immovable property or not.

5. Attached to what is so…: The attachment must be as the Section says for the permanent beneficial enjoyment of that to which it is attached e.g.the doors, windows of a house, or movable parts of fixed machinery.
But the attachment must be intended to be permanent.

(b) Transfer of Property Act: [Section 3]:

The immovable property does not include standing timber, growing crops, or grass.
The term “immovable property” is also not defined under the Transfer of Property Act. It just says what cannot be treated as immovable property.

(c) Registration Act, 1908: Immovable property includes the benefits to arise out of the land, hereditary allowances, rights of way, lights, ferries, and fisheries

Question 6.
What do you mean by ‘immovable property’ under the Transfer of Property Act, 1882? \June 2015 (3 Marks)\
Answer:
(a) General Clauses Act, 1897: Definition
1. Immovable property shall include land, benefits to arise out of land and things attached to the earth, or permanently fastened to anything attached to the earth.

3. Things rooted In the earth: Trees and Shrubs arc immoveable property according to this definition subject to the exception as to standing timber.

(b) Transfer of Property Act: [Section 3]:

The immovable property does not include standing timber, growing crops, or grass.
The term “immovable property” is also not defined under the Transfer of Property Act. It just says what cannot be treated as immovable property.

(c) Registration Act, 1908: Immovable property includes the benefits to arise out of the land, hereditary allowances, rights of way, lights, ferries, and fisheries

Question 7.
Distinguish between: Movable Property & Immovable Property. [June 2016 (5 Marks)]
Answer:
Following are the main points of difference between movable & immovable property:

Points	Movable Property	Immovable Property
Definition in General Clauses Act, 1897	“Movable Property” shall mean property of every description, except immovable property. [Section 3(36)]	“Immovable Property” shall include land, benefits to arise out of the land, and things attached to the earth, or permanently fastened to anything attached to the earth. [Section 3(26)]
Definition in TP Act, 1882	The expression ‘movable property’ is not defined by the Transfer of Property Act, 1882.	Section 3 of the Transfer of Property Act, 1882 defines the term ‘immovable property’ negatively; it says that immovable property does not include standing timber, growing crops, or grass.
Contract	It can be oral or written contract	It is generally a written contract
Registration	Generally, registration is optional	Registration is compulsory
Shifted/Movable	It can be shifted or moved without loss /damage	It cannot be shifted or transported without any loss or damage and if transported, it will lose its original shape, capacity, quality, or quantity
Example	Following have been held to be movable property.Government promissory notesRoyaltyRight to recover maintenance allowance immovable property.CopyrightDecree for sale on a mortgage-deedDecree for arrears of rentMachinery which is not permanent attached to the earthStanding timber, growing crop, and grass	Following have been held to beRight to collect rents of immovable propertyRight to wayRight to collect dues from fair on a piece of landHereditary officesEquity of redemptionInterest of mortgageeRight to collect lac from treesRight of ferryRight of fisheryRight to receive future rents and profits of landReversion in property leased a factory

Question 8.
Write a short note on Spes Successionis [Dec 2010 (4 Marks)]
Answer:
(a) Property of any kind may be transferred, except as otherwise provided by the Transfer of Property Act, 1882 or by any other law for the time being in force.

(b) One of the exceptions to the general rule that property of any kind may be transferred is Spes Successionis».

(c) The chance of an heir-apparent succeeding to an estate, the chance of a relation obtaining a legacy on the death of a kinsman (a man who is one of a person‘s blood relations), or any other mere possibility of a like nature cannot be transferred.

(d) if a property is neither in existence nor is the person the owner of the property then it cannot be transferred.

(e) Example:
1. Suppose A is the owner of the property and B is his son. B is the heir of A. During the lifetime of his father A, B has oni a hope expectancy that he will inherit the property of his father. This type of property which B hopes to get after the death of the father cannot be transferred, during the lifetime of A.

2. Suppose A, a Hindu who has separate property, dies leaving a widow W and a brother L, L’s succession to the property is dependent upon two factors, vie.,

his surviving the widow, W, and
We leaving the property intact. L has only a bare chance of succession to the property left by A. This is succession, and therefore, cannot be transferred.

Question 9.
A makes a gift of a house to B with whom he had illicit relations in the j past. Is this transfer valid? Will it make any difference if A’s consideration | for this transfer is adulterous relations of B with A? Give reason. [Dec 2014 (8 Marks)]
Answer:
(a) What may be transferred Section 6 of the Transfer of Property Act, 1882 deals with “what may be transferred”. Section 6 provides that, j property of any kind may be transferred, except as otherwise provided | by the Act or by any other law for the time being in force. Clauses (a) to (i) of Section 6 provides which property cannot be transferred.

(b) Indian Contract Act: As per Section 6(h), no transfer can be made for an unlawful object or consideration within the meaning of Section 23 I of the Indian Contract Act, 1872.

(c) Immoral or opposed to Public Policy: Section 23 of the Indian Contract Act, 1872 declares that – the consideration or object of an agreement j is if Court regards it as immoral or opposed to public policy.

(d) In Nagaratnambu v. Ramayya, the Supreme Court held that past co-habitation was the only motive and not a consideration for the gift, and 3 such transfer is not hit by Section 6( h) and the gift of immovable property for past illicit cohabitation is valid.

(e) However, adulterous relations are an offense and hence it is immoral and opposed to public policy. It is unlawful consideration as per Section 23 of the Indian Contract Act, 1872, and hence the transfer of immovable j property is not valid as per Section 6(h) of the Transfer of Property Act, 1882.

Question 10.
Enumerate the properties which cannot be transferred under the provisions of the Transfer of Property Act, 1882. [June 2016 (5 Marks)]
Answer:
What may be transferred [Section 6]: Property of any kind may be transferred, except as otherwise provided by the Act or by another Law for the time being in force.

Exceptions: Some exceptions to the general rule that property of any kind may be transferred. Thus, the following properties cannot be transferred:
1. Spes Succsionis: The chance of an heir-apparent succeeding to an estate, the chance of a relation obtaining a legacy on the death of a kinsman (a man who is one of a person‘s blood relations), or any other mere possibility of a like nature cannot be transferred.

Example: Suppose A is the owner of the property and B is his son. B is the heir of A. During the lifetime of his father A, B has only a hope expectancy that he will inherit the property of his father. This type of property which B hopes to get after the death of the father cannot be transferred, during the lifetime of A.

2. Right of re-entry: A mere right of re-entry for breach of a condition subsequent cannot be transferred to anyone except the owner of the property affected thereby.

Example: A grants his land by way of lease to B, a limited liability company on condition that the land should revert to A from B if the company goes into liquidation. This is a mere right in favor of A and this right of A cannot transfer to anyone as this is a personal right that can be exercised by A only. But if A transfers the whole of his interest in the land including the right of re-entry to C, there the right to re-entry is a legal incident of property and can be validly transferred along with the property.

3. Transfer of easement: An easement cannot be transferred apart from the dominant heritage. (An easement means a right to cross or otherwise use someone else’s land for a specified purpose.)

Example 1: The right of certain villagers to bathe in another’s tank cannot be transferred.
Example 2: If A, the owner of house X, has a right of way over an adjoining plot of land belonging to B, he cannot transfer this right of way to C. But if he transfers the house itself to C, the easement is also transferred to C.

4. Restricted interest or personal interest: An interest in property restricted in its enjoyment to the owner personally cannot be transferred by him. Examples of such restricted interest or property are the following:

The right of preemption given under the Mohammedan Law.
The office of a Shebait of a Temple or mount of a mutt or mutually of a wakf.
Emoluments attached to a priestly office.
Service tenures.

5. Right to future maintenance: A right to future maintenance in a what-soever manner arising, secured, or determined, cannot be transferred.

6. Mere right to sue: A mere right to sue cannot be transferred. Example: A commits an assault on B, B can file a suit to obtain damages; but B cannot assign the right to C and allow him to obtain damages. In contrast, also, the rule is the same. If A breaks a contract which he has entered into with B, B can bring an action for damages, but B cannot transfer this right to C to recover damages.

7. Transfer of public office & salaries, stipends, etc.: A public office cannot be transferred nor can the salary of a public officer, whether before or after it has become payable.

8. Stipends allowed to the military, naval, air force, and civil pensioners of the Government and political pensions cannot be transferred. Since these allowances, pensions, and stipends are given on a personal basis, the law does not allow these types of property to be transferred.

(For 5 marks you can avoid giving example if for more marks write examples as well)

Question 11.
Anil has two properties – Property-X & Property-Y. He sells Property-Y to Sunil and puts a condition that Sunil should not construct on Property-Y more than one story so that Anil’s Property-X which he retains should have good light and free air. Is such a condition valid? Give reasons in support of your answer. [Dec 2009 (5 Marks)]
Answer:
(a) Facts of Case: Anil has two properties – Property-X & Property-Y. He sells Property-Y to Sunil and puts a condition that Sunil should not construct on Property-Y more than one story so that Anil’s Property-X which he retains should have good light and free air.

(b) Provision: As per Section Ii of the Transfer of Property Act, 1882,

When a property is transferred absolutely, the transferee should be free to enjoy the property in any manner he likes. If the transferor imposes any restraint on the enjoyment of the property by the transferee, the restraint is treated as a clog in the enjoyment of the property by the transferee; the restraint is treated as void.
For e.g. A sells his house to B and he adds the condition that only B shall reside in the house. The condition is invalid.
It may be noted that if a person transfers a property to another keeping some other property for himself, he can impose certain conditions which may interfere with the rights of enjoyment of the transferee so that the transferee can enjoy the transferred property in a particular manner only.

(c) Conclusion: Thus, it is clear that the condition which is imposed by Anil is for the benefit of another property that he retains. Such a condition is valid.

Question 12.
Distinguish between: Conditions restraining alienation and condition restraining enjoyment. [Dec 2010 (4 Marks)]
Answer:
Following are the main points of difference between conditions re-straining alienation and condition restraining enjoyment:

Points	Conditions restraining alienation	Condition restraining enjoyment
Meaning	Conditions restraining alienation means transferor restrains transferee from parting with or disposing of the property.	Condition restraining enjoyment means transferor restrains transferee from the enjoyment of property.
Validity of transfer	Where property is transferred subject to a condition absolutely restraining the transferee from parting with or disposing of the property, the transfer is valid but the condition is void. Though absolute restraints are bad in law, partial restraints are valid if conditions imposed are reasonable.	Restraint on the enjoyment of the property is invalid. Where land is transferred by one to another, the transferor should not impose conditions as to how and in what manner the transferee should enjoy the property.
Section	This is dealt with by Section 10 of the Transfer of Property Act, 1882.	This is dealt with by Section 11 of the Transfer of Property Act, 1882.
Example	Ram gives property to Shyam (his heirs) adding a condition that if the property is alienated it should revert to Ram. The transfer is valid and takes effect but the condition not to alienate the property is void. The transferee can ignore such a condition.	Aalia sells her house to Babita and adds a condition that only Babita should reside in that house. Here again, the transfer is valid but the condition is invalid. Aalia cannot put such a condition on Babita regarding the enjoyment of property. Babita can ignore such conditions.

Question 13.
Tarun has two properties, Property-X and Property-Y. He sells his Property-Y to Jolly and puts a condition that Jolly should not construct more than one story on Property-Y so that Property-X, which he retains, shall have good light and free air. Whether the condition imposed by Tarun is ‘valid’ under the Transfer of Property Act, 1882? Give reasons. [Dec 2016 (3 Marks)]
Answer:
(a) Facts of Case: Tarun has two properties, Property-X and Property-Y. He sells his Property-Y to Jolly and puts a condition that Jolly should not construct more than one story on Property-Y so that Property-X, which he retains, shall have good light and free air

(b) Provision:

As per Section 11, where land is transferred by one to another, the transferor should not impose conditions as to how and in what manner the transferee should enjoy the property.
If a person transfers a plot of land keeping another plot for himself, he can impose certain conditions which may interfere with the right of enjoyment of the transferee.

(c) Conclusion: Thus, it is clear that the condition imposed by Tarun is for the benefit of another property that he retains. Such a condition is valid.

Question 14.
State the circumstances in which a property may be transferred in favor of an unborn person. [June 2010 (4 Marks)]
Answer:
Transfer for benefit of unborn person [Section 13]: If there is the transfer of property for the benefit of the unborn person, subject to a prior interest created by the same transfer, the interest created for the benefit of an unborn person shall not take effect unless it extends to the whole of the remaining interest of the transferor in the property.

Thus, if a property is given to an unborn person, two conditions should be satisfied:

It should be preceded by a life estate in favor of a living person, and
It should comprise the whole of the remaining interest of the transferor so that there can be no further interest in favor of others.

Example: Ram transfers property of which he is the owner to Shyam in trust for Ram 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 Ram’s second son. The interest so created to the benefit of the eldest son does not take effect because it does not extend to the whole of Ram’s remaining interest in the property, (ie. to say eldest son is getting only a life interest and not an absolute interest)

Effect of a transfer on the failure of prior interest [Section 16]: Further, where by reason of any rules contained in Section 13 interest created for the benefit of a person fails in regard to such person, any interest created in the same transaction and intended to take effect or upon failure of such prior interests also fail.

Question 15.
Describe the essential conditions required for transfer for benefit of the unborn person. [Dec 2016 (5 Marksj]
Answer:
Transfer for benefit of unborn person [Section 13]: If there is the transfer of property for the benefit of the unborn person, subject to a prior interest created by the same transfer, the interest created for the benefit of an unborn person shall not take effect unless it extends to the whole of the remaining interest of the transferor in the property.

Thus, if a property is given to an unborn person, two conditions should be satisfied:

It should be preceded by a life estate in favor of a living person, and
It should comprise the whole of the remaining interest of the transferor so that there can be no further interest in favor of others.

Question 16.
There was a partition of property between a Hindu father and his five sons. The deed provided that if any one of his sons wanted to sell his share, he shall sell it to one of his brothers only and not to any stranger. The consideration for that share shall be ₹ 1,000 only. Are these conditions valid? Give reasons. [June 2011 (5 Marks)]
Answer:
(a) Facts of Case: There was a partition of property between a Hindu father and his five sons. The deed provided that if any one of his sons wanted to sell his share, he shall sell it to one of his brothers only and not to any stranger. The consideration for that share shall be ₹ 1,000 only

(b) Provision: As per Section 10 of the Transfer of Property Act, 1882, where the property is transferred subject to a condition absolutely restraining the transferee from parting with or disposing of the property, the transfer is valid but the condition is void.

Thus, one may give property to another subject to a condition, but the condition should not be one that absolutely prevents the transferee from alienating the property.

(c) Conclusion/Decision: In the given case the deed provided that if any one of the sons wanted to sell his share, he shall sell it to one of his brothers only and not to any stranger. The consideration for that share shall be ₹ 1,000 only. This condition is invalid and the transferee can ignore such condition. The transfer takes effect and is valid, and the condition not to alienate the property is void.

Question 17.
Exceptions to the rule that absolute restraint on the transfer of property is void. Comment. [Dec 2012 (4 Marks)]
Answer:
Condition restraining alienation [Section 10]: Where property is transferred subject to a condition absolutely restraining the transferee from parting with or disposing of the property, the transfer is valid but the condition is void.

Thus, one may give property to another subject to a condition, but the condition should not be one that absolutely prevents the transferee from alienating the property.

The exception to the rule that absolute restraint on the transfer of property Is void:
1. In the case of a lease, the lessor can impose a condition that the lessee shall not sublet the property or sell his leasehold interest. Such conditions are valid. The reason why such an exception is made in the case of a lease is that the lessor may have confidence in the lessee but may not have the same confidence in some other person. So, if the lessor puts a condition restraining the lessee from transferring the property to someone, the condition is valid.

2. The second exception is made in respect of a woman who is not a Hindu, Buddhist, or Muslim. In such a case, a condition to the effect that she shall not have power during her marriage to transfer the property is valid.

Question 18.
Raman makes the transfer of his house in favor of Sohan with the condition that Sohan will get the house only if he marries Shyama with the permission of her three brothers. Before the marriage is solemnized, one of the brothers dies. Sohan marriages Shyama with the permission of the remaining two brothers. Can he claim the house? [Dec 2000 (5 Marks)]
Answer:
(a) Facts of Case: Raman makes the transfer of his house in favor of Sohan with the condition that Sohan will get the house only if he marries Shyama with the permission of her three brothers. Before the marriage is solemnized, one of the brothers dies. Sohan marriages Shyama with the permission of the remaining two brothers

(b) Provision: As per Section 26 of the Transfer of Property Act, 1882, a condition precedent shall be deemed to have been fulfilled if it has been substantially complied with.

A transfer ₹ 5,000 to B on condition that he shall marry with the consent of C, D, and E. E dies. B marries with the consent of C and D. B is deemed to have fulfilled the condition

(c) Decision/Conclusion: In the given case, Sohan marries Shyama with the consent of two brothers ie. the condition precedent is substantially fulfilled, more particularly when one brother has already died before the marriage is solemnized. Thus, Sohan will get the house.

Question 19.
Anurag transfers ₹ 10,000 to his sister-in-law provided she deserts her husband. Is the transfer valid? [June 2003 (5 Marks)]
Answer:
(a) Facts of Case: Anurag transfer ₹ 10,000 to his sister in law provided she deserts her husband

(b) Provision:

As per Section 25 of the Transfer of Property Act, 1882, the condition should not be such as to cause injury to the person or property of another or should not be immoral or opposed to public policy,
If is it causing injury to a person or property or is immoral or opposed to the public policy then the transfer is invalid
E.g.: A lets a farm to B on condition that he shall walk a hundred miles in an hour. The lease is void

(c) Conclusion: By referring to the above facts and provision Anurag has done a conditional transfer to his sister in law which is invalid and hence there is no valid transfer.

Question 20.
What is the ‘doctrine of election’ as enunciated under the Transfer of Property Act, 1882? [June 2015 (3 Marks)]
Answer:
(a) Election when necessary [Section 35]: Where a person

Professes to transfer property which he has no right to transfer, and
As part of the same transaction, confers any benefit on the owner of the property, such owner must elect either to confirm the transferor to dissent horn it.

(b) Dissent: If he dissents from it
(a) He must relinquish the benefit so conferred and
(b) The benefit so relinquished reverts to the transferor or his representative as if it had not been disposed of.
(c) Meaning of Election: Election may be defined as “the choice between two rights where there is a clear intention that both were not intended to be enjoyed”.
(d) Principle: The foundation of the doctrine of election is that a person taking the benefit of an instrument must also bear the burden
(e) Example: Let us suppose that one farm of Sultanpur is the property of C of ₹ 80,000. A professes to transfer that farm of Sultanpur to B and by the same instrument, ₹ 1,00,000 to C. C, the owner of the farm of Sultanpur, is to elect either to confirm the transferor to dissent from it. If C elects to transfer his Farm of Sultanpur of ₹ 80,000 to B then only he can receive ₹ 1,00,000 from A.

However, if C elects to retain the farm then he will not receive the gift of ₹ 1,00,000.

In the same case, if A dies before the election is made by C. The representatives of A must, out of the ₹ 1,00,000 pay ₹ 80,000 to B to make good to the disappointed transferee the amount or value of the property attempted to be transferred.

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

Example: Let us suppose that X transfers to Y the property P1, in lieu of Y’s property P2 which is given to Z. X also gives to Y the property P3. If Y elects j to retain his own property he must relinquish the claim over P1 but not P3.

Question 21.
An illegitimate son of a deceased owner of a property gets possession j of the property to which he is not legally entitled but his name is entered in the papers as owner. He mortgages the property. On the date of the mortgage, the rightful owner’s suit against him for recovery and possession was j pending and it was decreed subsequently. When the rightful owner sought to avoid the mortgage, the mortgagee resisted the claim by pleading that mortgagor was the ostensible owner of the property when he mortgaged it. Decide. [Dec 2003 (6 Marks)]
Answer:
(a) Facts of Case: An illegitimate son of a deceased owner of a property gets possession of the property to which he is not legally entitled but his name is entered in the papers as owner. He mortgages the property. On the date of the mortgage, the rightful owner’s suit against him for recovery and possession was pending and it was decreed subsequently. When the rightful owner sought to avoid the mortgage, the mortgagee resisted the claim by pleading that mortgagor was the ostensible owner of the property when he mortgaged it.

(b) Provision: General rule regarding the transfer of property is that no one can transfer a better title than what he himself possesses. However, Section 41 of the Transfer of Property Act, 1882 makes an exception to this rule. Thus, a transfer made by the ostensible owner of the property is valid subject to the condition specified in Section 41.

(c) Conclusion/Decision: As per facts mentioned in the case, the illegitimate son of a deceased owner of a property is not the ostensible owner of the property and hence he cannot transfer or mortgage the property to another. Hence, the rightful owner of the property will succeed in avoiding the mortgage.

Question 22.
Sachin made an unconditional gift of property to Amit but continued in possession of the gifted property. Sachin revoked the gift deed transferred it to Naresh. Amit wants to recover possession from Naresh. Discuss it in the light of provisions of Transfer of Property Act, 1882, whether Naresh can withhold the gifted property? [June 2019 (4 Marks)]
Answer:
(a) Facts of Case: Sachin made an unconditional gift of property to Amit but continued in possession of the gifted property. Sachin revoked the gift deed transferred it to Naresh. Amit wants to recover possession from Naresh

(b) Provision:

As per Section 41 of the Transfer of Property Act, 1882, where, with the consent, express or implied, of the persons interested in immovable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorized to make it, provided that the transferee, after taking reasonable care to ascertain that the transferor had the power to make the transfer, has acted in good faith.
In simple words, if the sale is made by the ostensible owner for consideration, then such sale is valid if the transferee has taken reasonable care to see that transferor has the power to make such a sale.
Unconditional gifts cannot be revoked.
Sachin is not an “ostensible owner” as he does not hold the property with the consent of the real owner (Amit). After acceptance of the unconditional gift by Amit from Sachin, Amit is the real owner.

(c) Conclusion: Thus, Naresh cannot seek the protection of Section 41 of the Transfer of Property Act, 1882 and cannot withhold the property gifted to Amit by Sachin.

Question 23.
Arun, a Hindu, who was separated from his father Bharat, sells to Chandan three fields X, Y & Z representing that Arun is authorized to transfer the same. Of these fields, Field-Z does not belong to Arun, as it was retained by Bharat at the time of partition, but after Bharat’s death, Arun being the heir obtained Field-Z. What are the rights of Chandan now? [Dec. 2011 (5 Marks)]
Answer:
(a) Facts of Case: Arun, a Hindu, who was separated from his father Bharat, sells to Chandan three fields X, Y & Z representing that Arun is authorized to transfer the same. Of these fields, Field-Z does not belong to Arun, a§ it was retained by Bharat at the time of partition, but after Bharat’s death, Arun being the heir obtained Field-Z.

(b) Provision:
1. According to Section 43 of the Transfer of Property Act, 1882, if a transfer or transfer the property of others to which he is not entitled, then subsequently when he acquires the property, he will have to transfer the property to the transferee.

2. It is also known as “Doctrine of Feeding the Grant by Estoppel”.

3. Essentials of “Doctrine of Feeding the Grant by Estoppel”.

There was a fraudulent or erroneous presentation of ownership by the transferor.
The transferee must have acted on the fraudulent or erroneous representation of the transferor.
The transferor should not have the transferable title on the property
transferred.
The transfer should be for consideration.
The transferor must subsequently acquire title upon the property transferred on the basis of fraudulent or erroneous representation of ownership.
The transferee has not canceled the contract.
The transferee acted in good faith for consideration and without notice of the rights under the prior transfer

(c) Decision/Conclusion: As per the facts given in the case, Arun has no authority to sell Field-Z, and Chandan has yet not rescinded the contract, I hence by applying provisions of Section 43 Chandan can require Ajay to deliver Field-Z acquired by him on the death of his father.

Question 24.
“Every transfer of immovable property made with intent to defeat or delay the creditors of the transferor shall be voidable at the option of any creditor so defeated or delayed, for which he may move to the court.” Comment. [June 2016 (5 Marks)]
Answer:
Fraudulent Transfer [Section 53]: Every transfer of immovable property made with intent to defeat or delay the creditors of the transferor shall be voidable at the option of any creditor so defeated or delayed.

Thus, where an owner of the property contracts a debt and then transfers his property to someone so that the creditor cannot proceed against the property to realize his debt, such a transfer is voidable at the option of the j creditor. The transfer is valid so long as the creditor does not challenge it in a Court of law and gets a declaration that the transfer is invalid.

Suit by Creditor: A suit instituted by a creditor to avoid a transfer on the ground that it has been made with intent to defeat or delay the creditors of the transferor shall be instituted on behalf of, or for the benefit of all the creditors.

Transfer Invalid: Once the creditor sues the debtor and says that the debtor has the intention to deceive him, the transfer can be declared invalid by the Court.

The burden of Proof: The creditor has to satisfy the Court that there was an intention on the part of the debtor to defeat his rights.

Example: Suppose a man takes a loan from the creditor. He does not pay the loan. The creditor sues him in court to get back his debt. On seeing this, the debtor transfers his property to his friend or some other person who simply holds the property on behalf of the transferor. Again, the debtor may make a gift of his property to his wife or sell it to a friend who will afterward retransfer the same to the transferor. Under these circumstances, we can easily say that the debtor’s intention was to prevent creditor I from taking the property by a suit in the Court and to realize his debt.

Exception: But suppose the debtor has several creditors and he transfers his property to one of his creditors in satisfaction of his whole debt to him. This is not a fraudulent transfer. A mere preference of one creditor over the others is not fraudulent, even if the whole property is so transferred and nothing is left for the other creditors.

Remedy to other Creditors: But the other creditors may file a petition in the Court within three months of the transfer praying that the debtor is declared insolvent. If the debtor is adjudicated insolvent, their interest will be protected and the transfer will be declared as fraudulent preference. The transfer will be set aside and the property will be distributed among all the creditors.

However, the rights of a transferee in good faith and for consideration are protected. It says nothing shall affect or impair the rights of a transferee in good faith and for consideration.

Question 25.
Discuss briefly the doctrine of part performance embodied in section 53A of the Transfer of Property Act, 1882. [Dec. 2009 (4 Marks)]
Answer:
The doctrine of part-performance is embodied in Section 53A of the Transfer of Property Act.

A Contract for the sale of land has been entered into between A and B. The transferee has paid the price entering into possession and is willing to carry out his contractual obligation. As registration has not been effected A, the transferor, seeks to evict B from the land. Can he do so?

No, B will not be allowed to suffer simply because the formality of registration has not been through. The legislature grants some relief to such a transferee under Section 53A, which embodies the doctrine of part-performance.

Essential Conditions:

There must be a contract to transfer immovable property.
It must be for consideration.
The contract should be in writing and signed by the transferor.
The terms must be ascertainable with reasonable certainty.
The transferee should have taken possession of the property. In case he is already in possession, he must have continued in possession.
The transferee must have fulfilled or ready to fulfill his part of the obligation.

If all the abovementioned conditions are satisfied, then, the transferor and the persons claiming under him are debarred from exercising any right in relation to the property other than the right expressly provided by the terms of the contract notwithstanding the fact that the instrument of transfer has not been registered or complete in the manner prescribed therefore by the law for time being in force.

Question 26.
Discuss briefly the ‘doctrine of part performance, which is embodied in section 53A of the Transfer of Property Act, 1882. [June 2018 (5 Marks)]
Answer:
The doctrine of part-performance is embodied in Section 53A of the Transfer of Property Act.

Essential Conditions:

There must be a contract to transfer immovable property.
It must be for consideration.
The contract should be in writing and signed by the transferor.
The terms must be ascertainable with reasonable certainty.
The transferee should have taken possession of the property. In case he is already in possession, he must have continued in possession.
The transferee must have fulfilled or ready to fulfill his part of the obligation.

Question 27.
A contract for the sale of land has been entered into between A and B. The transferee has paid the price entering into possession and is willing to carry out his contractual obligations. As registration has not been effected, A the transferor seeks to evict B from the land. Can he do so? Explain. [Dec 2018 (4 Marks)]
Answer:
The doctrine of part-performance is embodied in Section 53A of the Transfer of Property Act.

Essential Conditions:

There must be a contract to transfer immovable property.
It must be for consideration.
The contract should be in writing and signed by the transferor.
The terms must be ascertainable with reasonable certainty.
The transferee should have taken possession of the property. In case he is already in possession, he must have continued in possession.
The transferee must have fulfilled or ready to fulfill his part of the obligation.

Question 28.
Write a short note on the Accumulation of income
Answer:
Direction for accumulation [Section 17]: Accumulation of income from the land for an unlimited period without the income being enjoyed by the owner of the property is not allowed. The law allows the accumulation of income for a certain period only. The period for which such accumulation is valid is:

Life of the transferor, or
18 years from the date of transfer.

Any direction to accumulate the income beyond the period mentioned above is void.

Exceptions: In the following cases, any direction for accumulation of income beyond the period prescribed above is allowed:

For the payment of the debts of the transferor or any other person. taking any interest under the transferor.
For the provision of portions for children or any other person taking any interest in the property under the transfer, and
For the preservation and maintenance of the property transferred. The doctrine of lis pendens

Question 29.
Explain the rule of lis pendens as provided in the Transfer of Property Act, 1882. [June 2010 (4 Marks}]
Answer:
(a) Meaning: Lis means depot, upends means pending, Lis pendens means a pending suit, action, petition, or the like.

(b) Provision: Transfer of property pending suit relating thereto [Section 52]: During the pendency of a suit in a court of law, property that is subject to litigation cannot be transferred i.e. property may be transferred but this transfer is subject to the rights that are created by a court’s decree.

(c) Maxim: The provision is based on maxim- 4l us lite pendant nihil innovator”- During litigation, nothing new should be introduced

(d) Essential of Rule of Lis Pendens:

The suit is filed in the Indian Court
The suit is not filed in a foreign court
The suit is in relation to immovable property in question
It should not be vexatious suit

(e) Movable Property: The doctrine of lis pendens does not apply to Moyabies.

(h) The doctrine is not applicable in favor of a third party.

Example: Specific office building is under litigation. Balwant and Chetan are parties to the litigation. Balwant during the pendency of suit transfer property to Aman. The suit ended in favor of Chetan. Aman is bound by order of court and Chetan can recover property from Aman

Question 30.
What do you mean by the rule of lis pendens? Write down the essentials of the rule of lis pendens as provided in the Transfer of Property Act, 1882. [June 2013 (4 Marks)]
Answer:
(a) Meaning: Lis means d&pzte, upends means pending, Lis pendens means a pending suit, action, petition, or the like.

(c) Maxim: The provision is based on maxim- 4l us lite pendant nihil innovator”- During litigation, nothing new should be introduced

(d) Essential of Rule of Lis Pendens:

The suit is filed in the Indian Court
The suit is not filed in a foreign court
The suit is in relation to the immovable property in question
It should not be vexatious suit

(e) Movable Property: The doctrine of lis pendens does not apply to Moyabies.

(h) The doctrine is not applicable in favor of a third party.

Question 31.
What is meant by the doctrine of “Lis-Pendens “under the Transfer of Property Act, 1882? Discuss its essential elements. [Dec. 2017 (7 Marks)]
Answer:
(a) Meaning: Lis means d&pzte, upends means pending, Lis pendens means a pending suit, action, petition, or the like.

(c) Maxim: The provision is based on maxim- 4l us lite pendant nihil innovator”- During litigation, nothing new should be introduced

(d) Essential of Rule of Lis Pendens:

The suit is filed in the Indian Court
The suit is not filed in a foreign court
The suit is in relation to the immovable property in question
It should not be vexatious suit

(e) Movable Property: The doctrine of lis pendens does not apply to Moyabies.

(h) The doctrine is not applicable in favor of a third party.

Question 32.
“Nothing new should be introduced in a pending litigation”, is a well-known concept of property law. Critically evaluate this concept. [June 2018 (3 Marks)]
Answer:
(a) Meaning: Lis means d&pzte, upends means pending, Lis pendens means a pending suit, action, petition, or the like.

(c) Maxim: The provision is based on maxim- 4l us lite pendant nihil innovator”- During litigation, nothing new should be introduced

(d) Essential of Rule of Lis Pendens:

The suit is filed in the Indian Court
The suit is not filed in a foreign court
The suit is in relation to the immovable property in question
It should not be vexatious suit

(e) Movable Property: The doctrine of lis pendens does not apply to Moyabies.

(h) The doctrine is not applicable in favor of a third party.

Question 33.
A and B are litigating in a court of law over property X and during the pendency of the suit, A transfers property X to C. The suit ends in B’s favor. Decide, who shall be entitled to property X under the provisions of the Transfer of Property Act, 1882? [Dec. 2019 (4 Marks)] P
Answer:
(a) Facts of Case: A and B are litigating in a court of law over property X and during the pendency of the suit, A transfers property X to C. The suit ends in B’s favor.

(b) Provision: As per Section 52 Transfer of Property Act, 1882, during the pendency of a suit in a court of law, property which is subject to litigation cannot be transferred, Le. property may be transferred but this transfer is subject to the rights that are created by a court’s decree.

The provision is based on the maxim “ us lite Pendente nihil innovator”- During litigation, nothing new should be introduced.

When we say that property cannot be transferred what we mean in this context is that property may be transferred but this transfer is subject to the rights that are created by a Court’s decree. For example, A and B are litigating in a Court of law over property X, and during the pendency of the suit, A transfers property X to C. The suit ends in B’s favor

(c) Conclusion: Here C who obtained the property during the time of litigation cannot claim the property. He is bound by the decree of the Court wherein B has been given the property

Question 33.
Distinguish between: Lease & License [Dec. 2009 (4 Marks)]
Answer:
Following are the main points of difference between lease and license:

Points	Lease	License
Meaning	A lease of immovable property is a transfer of a right to enjoy the property.	A license is a right to do or continue to do in or upon the immovable property of the grantor, something which would, in the absence of such a right, be unlawful.
Possession	A lease involves a transfer of interest followed by possession of the property for a specified period.	In the case of a license, the legal possession continues to be with the owner of the property, but the licensee is permitted to make use of the premises for a particular purpose.
Enjoyment of property	In the ease of a lease, there is a transfer of a right to enjoy the property.	In the case of a license, there is something less than a right to enjoy the property in the licensee.
Transfer of property	A lease would amount to the transfer of property.	A mere license does not create interest in the property to which it relates.
Transfer	The lease is both transferable and heritable.	The license is personal to the grantee. It is neither transferable nor heritable.
Termination	The lease comes to an end only in accordance with the terms and conditions stipulated in the contract.	The license can be withdrawn at any time at the pleasure of the grantor.

Question 34.
Distinguish between: Sale and Contract for sale. [Dec. 2010 (4 Marks)]
Answer:
(a) Sale:
1. “Sa1e has been defined as a transfer of ownership in exchange for a price paid or promised or part paid and part-promised.

2. Essential of Valid sale:

The owner must be competent to contract
Subject matter must be immovable property
There is the transfer of ownership
It is for consideration which is in price
It is between two or more persons

(b) Contract of Sale

“Contract for sale” includes both a present sale and a contract to sell at a future time.
A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the j parties.
A contract for the sale of immovable property differs from a contract for the sale of goods in that the Court will grant specific performance of it unless special reasons to the contrary are shown.

Question 35.
Enjoy voluntarily makes a gift of his immovable property to Bijoy. Bijoy accepts the gift. The possession of the property was given to Bijoy but the gift deed which required registration under section 123 of the Transfer of Property Act, 1882 was not registered. Whether Ajoy, the donor can revoke the gift? Decide. [Dec. 2010 (6 Marks)]
Answer:
(a) Facts of the case: Ajoy voluntarily makes a gift of his immovable property to Bijoy. Bijoy accepts the gift. The possession of the property was ‘ given to Bijoy but the gift deed which required registration under section 123 of the Transfer of Property Act, 1882 was not registered

(b) Provision: It was held by the privy council in Kalyan Sundaram Pillai v. Karuppa Mopanar when the instrument of gift has been handed over by the donor to the donee and accepted by him, the former has done everything in his power to complete the donation and to make it effective and if it is presented by a person having a necessary interest within the prescribed period the Registrar must register it.

Neither death nor the express revocation by the donor is a ground for refusing registration, provided other conditions are complied with. It should be presented within a reasonable time, it can be duly registered

(c) Conclusion/Decision: Thus, as per the facts given, the gift is complete as it was accepted by the donee and once the gift is complete donor cannot revoke it. Thus, Ajoy, the donor cannot revoke the gift.

Question 36.
Distinguish between: Sale and Exchange [Dec. 2011 (4 Marks)]
Answer:
Following are the main points of difference between sale and exchange:

Points	Sale	Exchange
Meaning	“Sale” has been defined as a transfer of ownership in exchange for a price paid or promised or partly paid and partly promised.	When two persons mutually transfer the ownership of one thing for the ownership of another, neither thing nor both things being money only, the transaction is called an “exchange”.
Money consideration	In sale whole or part consideration should be money.	Money consideration is not involved in the exchange.
Section	Section 54 of the Transfer of Property Act, 1882 deals with the ‘sale’.	Sections 118 to 121 of the Transfer of Property Act, 1882 deals with the ‘exchange’.

Question 37.
Amrit (lessor) grants his immovable property (premises) on lease for 4 years to Sukant (lessee) commencing from 1st June 2001. The lessor gives notice to the lessee on 1st February 2008 for vacating the premises on 1st March 2008:
(i) Is this notice a valid notice?
(ii) If the lease is continued after 4 years, will the tenancy be on a monthly basis or yearly basis? Decide. [Dec. 2012 (6 Marks)]
Answer:
(a) Facts of Case: Amrit (lessor) grants his immovable property (premises) on lease for 4 years to Sukant (lessee) commencing from 1st June 2001. The lessor gives notice to the lessee on 1st February 2008 for vacating the premises on 1st March 2008:

(b) Provision:
1. Section 106 of the Transfer of Property Act, 1882 In the absence of a contract or local law or usage to the contrary

2. Lease for Agricultural or manufacturing Purpose a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year.

3. Lease other than agricultural or manufacturing purpose: Lease of immovable property for any purpose other than agricultural or manufacturing purposes shall be deemed to be a lease from month to month.

4. Mutual Consent: However, landlord and tenant can mutually agree and make the lease of immovable property for agricultural or manufacturing purposes on a month-to-month basis.

5. Notice:

In case of a tenancy for a period of more than a year the landlord wants to terminate or end the lease, he has to give 6 months notice to the lessee to quit,
In case of a tenancy from month to month, 15 days’ notice to quit is necessary.

6. The monthly tenancy may be created either by contract or may be presumed from the nature of the tenancy to be one, from month to month.

7. Effect of holding over [Section 116]: If a lessee of the property remains in possession after the determination of the lease granted to the lessee, and the lessor or his legal representative accepts rent from the lessee or otherwise assents to his continuing in possession, the lease is, in the absence of an agreement to the contrary, renewed from year to year, or from month to month, according to the purpose for which the property is leased, as specified in Section 106.

8. Conclusion: As per facts given in the case, Amrit has granted his immovable property on lease for 4 years to Sukant. The problem does not specifically specify that the lease of immovable property is for agricultural or manufacturing purposes; hence it is deemed to be a lease for a month-to-month basis. The lease is granted for 4 years on 1st June 2001 which ends on 31st May 2005. Sukant remains in possession after the determination of the lease; hence applying the effect of holding out it will be a lease of the month to month after 31st May 2005.

Since it is a lease of the month to month notice of 15 days will be necessary. Amrit has given notice to Sukant on 1st February 2008 for vacating the premises on 1st March 2008. The notice period is of 1 month which is more than the statutory period of 15 days. Thus, the notice given by Amrit is valid.

Question 38.
How is ‘lease’ different from ‘license’? [Dec. 2014 (5 Marks)]
Answer:
Following are the main points of difference between lease and license:

Points	Lease	License
Meaning	A lease of immovable property is a transfer of a right to enjoy the property.	A license is a right to do or continue to do in or upon the immovable property of the grantor, something which would, in the absence of such a right, be unlawful.
Possession	A lease involves a transfer of interest followed by possession of the property for a specified period.	In the case of a license, the legal possession continues to be with the owner of the property, but the licensee is permitted to make use of the premises for a particular purpose.
Enjoyment of property	In the ease of a lease, there is a transfer of a right to enjoy the property.	In the case of a license, there is something less than a right to enjoy the property in the licensee.
Transfer of property	The lease would amount to the transfer of property.	A mere license does not create interest in the property to which it relates.
Transfer	The lease is both transferable and heritable.	The license is personal to the grantee. It is neither transferable nor heritable.
Termination	The lease comes to an end only in accordance with the terms and conditions stipulated in the contract.	The license can be withdrawn at any time at the pleasure of the grantor.

Question 39.
What is meant by ‘onerous gift’? [June 2016 (4 Marks)]
Answer:
Onerous gifts [Section 127]: Sometimes several things are transferred as a gift by a single transaction. In such cases, some of them are really beneficial while the other conveys burdensome obligations. Such gift is known as an onerous gift and the donee takes nothing by the gift unless he accepts it fully.

Where the gift is in the form of two or more independent transfers to the same person of several things, the donee is at liberty to accept one of them and refuse the other.

Examples:
(a) A-shares in X, a prosperous joint-stock company, and also shares in Y, a joint-stock company in difficulties. Heavy calls are expected in respect of the shares in Y. A gives B all his shares in joint-stock companies. B refuses to accept the shares in Y. He cannot take the shares in X.

(b) A, having a lease for a term of years of a house at a rent which he and his representatives are bound to pay during the term, and which is more than the house can be let for, gives to B the lease, and also, as a separate and independent transaction, a sum of money. B refuses to accept the lease. He does not by this refusal forfeit the money.

Question 40.
If the gift of immovable property is accepted but not registered, does it amount to a valid gift? Give reasons. [June 2016 (3 Marks)]
Answer:
According to Section 123, a gift of immovable property must be made by a registered instrument signed by or on behalf of the donor and attested by at least two witnesses. A gift of movable property may be made by a registered instrument or by delivery of property.

Revocation of gift: A revocable gift is one that may be revoked by the donor at any time. It is to be noted that, a gift cannot be revoked at the will and pleasure of the grantor. If the revocation of the gift depends upon the mere will or pleasure of the donor, then such a gift is void. But on the other hand, if the condition is one that does not depend on the will or pleasure of the donor, the gift can be revoked on the happening of such condition.

Illustrations:
(a) A gives a field to B, reserving to himself, with B’s assent, the rights to take back the field in case B and his descendants die before A, B dies I without Descendents during A’s lifetime. A may take back the field.

(b) A gives ₹ 1,00,000 to B, reserving to himself with B’s assent the right to take back at leisure ₹ 10,000 out of ₹ 1,00,000. The gift holds goods as to ₹ 90,000 but is void as to ₹ 10,000 which continue to belong to A.

It was held by the Privy Council, that while registration is a necessary soil solemnity for the enforcement of a gift of immovable property, it does not suspend the gift until registration actually takes place when the instrument y of gift has been handed over by the donor to the donee and accepted by him, the former has done everything in his power to complete the donation and to make it effective and if it is presented by a person having a necessary interest within the prescribed period the Registrar must register it. Neither death nor the express revocation by the donor is a ground for refusing registration, provided other conditions are complied with. [Kalyan Sund- aram Pillai v. Karuppa Mopanar]

Question 41.
Distinguish between: Actionable Claim and mere right to sue [June 2012 (4 Marks)]
Answer:
Following are the main points of difference between an actionable claim and the mere right to sue:

Points	Actionable Claim	Mere right to sue
Section	Referred in Section 3 of the Transfer of Property Act, 1882	Referred in Section 6 of the Transfer of Property Act, 1882
Meaning	The actionable claim is a claim to an unsecured debt, which the civil court recognizes as affording grounds for relief of the person who claims it.	The right to sue’ is a personal right available to the party to contract in case of breach of contract by another party.
Transfer	An actionable claim which can be validly transferred.	A mere right to sue cannot be transferred.
Example	Aman agrees on 1.2.2019 to deliver 1,000 gunny bags to Balu on 1.3.2019. On 1.22019 Balu assigns interest in the contract to Chirag. Aman fails to deliver the bags on 1.3.2019. Chirag can sue Aman because a beneficial interest in a subsisting contract that relates to movable property is an actionable claim which can be validly transferred.	1. Ram commits an assault on Balu, Balu can file a suit to obtain damages; but Balu cannot assign the right to Chandan and allow him to obtain damages.2. If A breaks a contract which he has entered into with B, B can bring an action for damages, but B cannot transfer this right to C to recover damages.

Question 42.
Distinguish between: Mortgage & Charge [Dec. 2009 (4 Marks)]
Answer:
Following arc main points of distinction between Mortgage & Charge:

Points	Mortgage	Charge
Meaning	A mortgage is the transfer of an interest in specific immovable property for the purpose of securing payment of money advanced.	Although in a charge, the property is made secure for the payment of the loan, yet the transaction does not amount to a mortgage.
Transfer of interest	In a mortgage, there is the transfer of an interest in the property.	In charge, there is no transfer of any interest in the property.
Created	A mortgage can only be created by an act of parties.	A charge may be created by an act of parties or by the operation of law.
Registration	A mortgage deed must be registered and attested by two witnesses.	A charge need not be made in writing, and if reduced to writing, it need not be attested or registered.
Foreclosure	In certain types of mortgages, the mortgagee can foreclose the mortgaged property.	The charge-holder cannot foreclose though he can get the property sold as in a simple mortgage.

Question 43.
Explain the doctrine of marshaling [Dec. 2009 (4 Marks)]
Answer:
Marshalling [Section 81]: If the owner of two or more properties mortgages them to one person and then mortgages one or more of those 1 properties to another person, the subsequent mortgagee is, in the absence of 1 a contract to the contrary – entitled to have the prior mortgage debt satisfied out of the properties not mortgaged to him, so far as the same will extend, but not so as to prejudice the rights of the prior mortgagee or any person who has for considering action acquired an interest in any of the properties, Example: Ram has three properties P1 P2 & P3. He mortgages all three properties to Shyam. He again mortgages property P1 & P2 to Mohan. Since properties P; & P2 are common to both Shyam and Mohan, Mohan can invoke the doctrine of marshaling can compel Shyam to have the prior mortgage debt satisfied out of the property P3 which was not mortgaged to Mohan.

Question 44.
Distinguish between: Mortgage & Charge [Dec. 2010 (4 Marks)]
Answer:
Following arc main points of distinction between Mortgage & Charge:

Points	Mortgage	Charge
Meaning	A mortgage is the transfer of an interest in specific immovable property for the purpose of securing payment of money advanced.	Although in a charge, the property is made secure for the payment of the loan, yet the transaction does not amount to a mortgage.
Transfer of interest	In a mortgage, there is the transfer of an interest in the property.	In charge, there is no transfer of any interest in the property.
Created	A mortgage can only be created by the act of parties.	A charge may be created by the act of parties or by the operation of law.
Registration	A mortgage deed must be registered and attested by two witnesses.	A charge need not be made in writing, and if reduced to writing, it need not be attested or registered.
Foreclosure	In certain types of mortgages, the mortgagee can foreclose the mortgaged property.	The charge-holder cannot foreclose though he can get the property sold as in a simple mortgage.

Question 45.
Discuss briefly the right of redemption. [Dec. 2011 (4 Marks)]
Answer:
A mortgager has a right of redemption. Any clause or provision inserted in the mortgage deed to prevent, evade, or hamper redemption is void. “Once a mortgage always a mortgage” rule is based on the principle of equity. The court will not allow or permit any condition which will impede the redemption of the mortgage or the repayment of the loan for v/hich the security of property was given.

A mortgage deed, providing that if the amount is not paid within a stipulated time, the mortgages would become the absolute owner of the property, was held to be a clog on the equity of redemption. [Murari Lai v. Dev Karani]
However, when conditions are reasonable and do not prevent the mortgagor to redeem the property, they will be recognized as valid and binding. Conditions like “no redemption during the cultivating season of a land, for a certain period”, were held valid and enforceable. But where “no redemption on a particular day”, barred the mortgagor from redeeming for a further long period, it was held to be a clog on redemption, hence not valid.

Question 46.
Distinguish between: English mortgage and mortgage by conditional sale [June 2012 (4 Marks)]
Answer:
Following are the main points of difference between English mortgage and mortgage by conditional sale:

Points	English Mortgage	Mortgage by Conditional Sale
Meaning	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 retransfer it to the mortgagor upon payment of the money as agreed, the transaction is called an “English Mortgage”.	In this type of mortgage, the property is mortgaged with a condition superadded that in the event of failure by the debtor to repay the debt at the stipulated time, the transaction should be regarded as a sale. In case the loan is repaid within the stipulated time, the sale shall be invalid, or on condition that on such payment being made, the buyer shall transfer the property to the seller.
Sale of property	In an English mortgage, the property is absolutely sold to the mortgagee.	In a mortgage by conditional sale, the mortgaged property is conditionally sold.
Personal liability	The mortgagor has the personal liability to pay the debt.	The mortgagor has no personal liability to pay the debt.
Right of fore-closure	The mortgagee has no right to foreclosure.	The mortgagee has the right to foreclosure.
Mesne profits	The ownership is transferred to the mortgagee and the mortgagee enjoys the mesne profits.	If the mortgagor commits defaults title of the property can be transferred to the mortgagee.
Possession	The mortgagor has the right to possession.	The mortgagor has no such right.

Question 47.
Distinguish between: Mortgage & Charge [Dec. 2012 (4 Marks)]
Answer:
Following arc main points of distinction between Mortgage & Charge:

Points	Mortgage	Charge
Meaning	A mortgage is the transfer of an interest in specific immovable property for the purpose of securing payment of money advanced.	Although in a charge, the property is made secure for the payment of the loan, yet the transaction does not amount to a mortgage.
Transfer of interest	In a mortgage, there is the transfer of an interest in the property.	In charge, there is no transfer of any interest in the property.
Created	A mortgage can only be created by an act of parties.	A charge may be created by an act of parties or by the operation of law.
Registration	A mortgage deed must be registered and attested by two witnesses.	A charge need not be made in writing, and if reduced to writing, it need not be attested or registered.
Foreclosure	In certain types of mortgages, the mortgagee can foreclose the mortgaged property.	The charge-holder cannot foreclose though he can get the property sold as in a simple mortgage.

Question 48.
Write a short note on Usufructuary Mortgage [Dec. 2013 (5 Marks)]
Answer:
(a) Possession of Property: In this type of mortgage, the mortgagor has to deliver possession of the property to the mortgagee.

(b) Receive rent and profits: The mortgagor expressly, or by implication binds himself to deliver possession of the mortgaged property to the mortgagee: and authorizes him to retain such position until payment of the mortgage money, and to receive the rents and profits accruing from the property or any part of those and to appropriate the same in lieu of interest or partly in payment of mortgage money. This is also known as a mortgage with possession.

(c) Example: Mr. A has mortgaged his building to Mr. B and allowed Mr. B to collect rent and adjust against the outstanding loan and interest.

Question 49.
Distinguish between: Mortgage & Charge [Dec. 2013 (5 Marks)]
Answer:
Following arc main points of distinction between Mortgage & Charge:

Points	Mortgage	Charge
Meaning	A mortgage is the transfer of an interest in specific immovable property for the purpose of securing payment of money advanced.	Although in a charge, the property is made secure for the payment of the loan, yet the transaction does not amount to a mortgage.
Transfer of interest	In a mortgage, there is the transfer of an interest in the property.	In charge, there is no transfer of any interest in the property.
Created	A mortgage can only be created by an act of parties.	A charge may be created by an act of parties or by the operation of law.
Registration	A mortgage deed must be registered and attested by two witnesses.	A charge need not be made in writing, and if reduced to writing, it need not be attested or registered.
Foreclosure	In certain types of mortgages, the mortgagee can foreclose the mortgaged property.	The charge-holder cannot foreclose though he can get the property sold as in a simple mortgage.

Question 50.
Explain the doctrine of ‘clog on the equity of redemption under the Transfer of Property Act, 1882. [Dec. 2014 (5 Marks)]
Answer:
A mortgager has a right of redemption. Any clause or provision inserted in the mortgage deed to prevent, evade, or hamper redemption is void. “Once a mortgage always a mortgage” rule is based on the principle of equity. The court will not allow or permit any condition which will impede the redemption of the mortgage or the repayment of the loan for v/hich the security of property was given.

A mortgage deed, providing that if the amount is not paid within a stipulated time, the mortgages would become the absolute owner of the property, was held to be a clog on the equity of redemption. [Murari Lai v. Dev Karani]
However, when conditions are reasonable and do not prevent the mortgagor to redeem the property, they will be recognized as valid and binding. Conditions like “no redemption during a cultivating season of a land, for a certain period”, were held valid and enforceable. But where “no redemption on a particular day”, barred the mortgagor from redeeming for a further long period, it was held to be a clog on redemption, hence not valid.

Question 51.
What do you understand by ‘crystallization of floating charge’ under the Transfer of Property Act, 1882? [June 2016 (5 Marks)]
Answer:
(a) Meaning of Floating Charge: A floating charge attaches to the company’s property generally and remains dormant till it crystallizes or becomes fixed. The company has a right to carry on its business with the help of assets having a floating charge till the happening of some event which determines this right.

(b) Example: RIL Ltd created a charge on raw material worth? 100 crore in favor of HDFC Bank

Crystallization is the process by which a floating charge becomes a fixed charge
In certain cases like default, liquidation, etc. the lender can take physical possession of the assets and realize his dues by selling the current assets, without the intervention of the Court. This is termed as ‘crystallization of charge’.

(d) Example: ABC Ltd created a floating charge of t 100 crore on finished goods kept in Delhi Godown in favor of Debenture holder. ABC Ltd is now in the process of liquidation. Then all the finished goods will not under the control and direction of the Debenture trustee (crystallization of charge)

(e) Situation when floating charge becomes fixed charge: A floating charge crystallizes and the security becomes fixed in the following cases:

When the company goes into liquidation
When the company ceases to carry on the business
When the creditors or the debenture holders take steps to enforce their security e.g. by appointing a receiver to take possession of the property charged
On the happening of the event specified in the deed.

(f) Effect of crystallization of a floating charge: On crystallization, the floating charge converts itself into a fixed charge on the property of the company. It has priority over any subsequent equitable charge and other unsecured creditors. But preferential creditors who have priority for payment over secured creditors in the winding-up get priority over the claims of the debenture holders having floating charge.

Question 52.
Distinguish between ‘English mortgage’ and ‘mortgage by conditional sale’. [Dec. 2016 (5 Marks)]
Answer:
Following are the main points of difference between English mortgage and mortgage by conditional sale:

Points	English Mortgage	Mortgage by Conditional Sale
Meaning	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 retransfer it to the mortgagor upon payment of the money as agreed, the transaction is called an “English Mortgage”.	In this type of mortgage, the property is mortgaged with a condition superadded that in the event of failure by the debtor to repay the debt at the stipulated time, the transaction should be regarded as a sale. In case the loan is repaid within the stipulated time, the sale shall be invalid, or on condition that on such payment being made, the buyer shall transfer the property to the seller.
Sale of property	In an English mortgage, the property is absolutely sold to the mortgagee.	In a mortgage by conditional sale, the mortgaged property is conditionally sold.
Personal liability	The mortgagor has a personal liability to pay the debt.	The mortgagor has no personal liability to pay the debt.
Right of fore-closure	The mortgagee has no right to foreclosure.	The mortgagee has the right to foreclosure.
Mesne profits	The ownership is transferred to the mortgagee and the mortgagee enjoys the mesne profits.	If the mortgagor commits defaults title of the property can be transferred to the mortgagee.
Possession	The mortgagor has the right to possession.	The mortgagor has no such right.

Question 53.
Explain the meaning of ‘Usufructuary Mortgage’ as given under the Transfer of Property Act, 1882. [Dec. 2017 (3 Marks)]
Answer:
In Usufructuary Mortgage, the mortgagor has to deliver possession of the property to the mortgagee. The mortgagor expressly, or by implication binds himself to deliver possession of the mortgaged property to the mortgagee and authorizes him to retain such position until payment of the mortgage money, and to receive the rents and profits accruing from f the property or any part of those and to appropriate the same in lieu of interest or partly in payment of mortgage money. This is also known as a mortgage with possession.

Question 54.
Define the term ‘Puisne Mortgage’. [June 2018 (3 Marks)]
Answer:
Puisne Mortgage: Where the mortgagor, having mortgaged his property, mortgages it to another person to secure another loan, the second | mortgage is called a puisne mortgage.
Example: Where A mortgages his house worth ₹ 1,00,000 to B for ₹ 40,000 and mortgages the same house to C for a further sum of ₹ 30,000, the mortgage to B is first mortgage and that to C the second or puisne mortgage C is the puisne mortgagee and can recover the debt subject to the right of B, the first mortgagee, to recover his debt of ₹ 40,000 plus interest.

Question 55.
Distinguish between: Mortgage and Charge [Dec. 2018 (3 Marks)]
Answer:
Following arc main points of distinction between Mortgage & Charge:

Points	Mortgage	Charge
Meaning	A mortgage is the transfer of an interest in specific immovable property for the purpose of securing payment of money advanced.	Although in a charge, the property is made secure for the payment of the loan, yet the transaction does not amount to a mortgage.
Transfer of interest	In a mortgage, there is the transfer of an interest in the property.	In charge, there is no transfer of any interest in the property.
Created	A mortgage can only be created by the act of parties.	A charge may be created by the act of parties or by the operation of law.
Registration	A mortgage deed must be registered and attested by two witnesses.	A charge need not be made in writing, and if reduced to writing, it need not be attested or registered.
Foreclosure	In certain types of mortgages, the mortgagee can foreclose the mortgaged property.	The charge-holder cannot foreclose though he can get the property sold as in a simple mortgage.

Question 56.
Distinguish between: Mortgage and Charge [June 2019 (3 Marks)]
Answer:
Following arc main points of distinction between Mortgage & Charge:

Points	Mortgage	Charge
Meaning	A mortgage is the transfer of an interest in specific immovable property for the purpose of securing payment of money advanced.	Although in a charge, the property is made secure for the payment of the loan, yet the transaction does not amount to a mortgage.
Transfer of interest	In a mortgage, there is the transfer of an interest in the property.	In charge, there is no transfer of any interest in the property.
Created	A mortgage can only be created by an act of parties.	A charge may be created by an act of parties or by the operation of law.
Registration	A mortgage deed must be registered and attested by two witnesses.	A charge need not be made in writing, and if reduced to writing, it need not be attested or registered.
Foreclosure	In certain types of mortgages, the mortgagee can foreclose the mortgaged property.	The charge-holder cannot foreclose though he can get the property sold as in a simple mortgage.

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