Law of Property Study Material PDF
Law of Property Study Material PDF
LAW OF PROPERTY
3 rd SEMESTER
LONG QUESTIONS
1 DEFINE TRANSFER OF PROPERTY. TRANSFER & NON-TRANSFERABLE PROPERTIES 5
2 DOCTRINE OF PART-PERFORMANCE WITH SUITABLE ILLUSTRATIONS (SEC 53A) 3
3 RIGHTS & LIABILITIES OF SELLER & BUYER OF THE PROPERTY, BEFORE & AFTER SALE 4
4 MORTGAGE, RIGHTS & LIABILITIES OF MORTGAGEE & MORTGAGOR 5
5 DEFINE EASEMENT AND EXPLAIN DIFFERENT KINDS OF EASEMENTS & ESSENTIALS 4
CASES
1 TRANSFER TO A PERSON WHO IS IN HIS MOTHER'S WOMB (SECTION 13) 2
2 DOCTRINE OF LISPENDENCE (SEC. 52) 2
3 CONTINGENT INTEREST (SECTION 21) 2
4 PERPETUITY PERIOD (SEC 14) 3
5 OSTENSIBLE OWNER (SEC. 41) 3
6 RIGHT OF MORTGAGOR TO REDEEM (SEC 60) 3
7 GIFT TO SEVERAL PERSONS OF WHOM ONE DOES NOT ACCEPT (SEC 125) 3
8 RIGHTS & LIABILITIES OF LESSEE (SEC 108) 2
GRANT DOES NOT AMOUNT TO EASEMENT (SEC 52 OF INDIAN EASEMENTS ACT,
9 1882) 2
OSMANIA UNIVERSITY
Unit-III: Sale- Essential features — Mode of Sale — Rights and liabilities of parties.
Mortgage - Kinds of Mortgages - Rights and liabilities of mortgagor and mortgagee —
Marshalling and Contribution — Charges.
Unit-IV: Lease — Essential features — Kinds of leases — Rights and liabilities of lesser and
lessee — Termination of lease — forfeiture — Exchange — Gifts — Different types of gifts
— Registration of Gifts — Transfer of Actionable Claims.
SHORT ANSWERS
1. Immovable Property.
Answer:
Definitions: Section 3 of the Transfer of Property Act, 1882, has not defined this term. It
only says that ‘immovable property’ does not include standing timber, growing crops or
grass.
As the definitions given by the Act is neither comprehensive nor exhaustive and only
excludes certain things, it becomes necessary to explore other Acts which have defined
the term ‘Immovable property”
The Registration Act, 1908 defines ‘immovable property’ as follows-
‘Immovable property shall include land, buildings, hereditary allowances, rights to ways,
lights, ferries, fisheries or any other benefit to arise out of land or things attached to the
earth or permanently fastened to anything which is attached to the earth but not standing
timber, growing crops or grass’.
Similarly, Section 3(25) of the General Clauses Act, 1897 defines the term ‘Immovable
Property’ as follows-
‘Immovable property shall include land, benefit to arise out of land and things attached
to the earth or permanently fastened to anything attached to the earth’
This definition is not exhaustive but only illustrative as to what physical objects or
things are included under the term ‘Immovable Property’.
- Land
- Benefits arising out of the land.
- Things attached to the earth.
List of immovable property:
A. Land,
B. Buildings, houses,
C. Actionable claims,
D. Factories,
E. Vested interest,
F. Contingent Interest.
the transfer depends upon a condition precedent. When the condition is fulfilled the
transfer takes effect and that the interest becomes vested.
Definition of Vested Interest
Section 19 of the Transfer of Property Act defines vested interest as follows...
"Where, on a transfer of property, an interest therein is created in favour of a person
without specifying the time when it is to take effect, or in terms specifying that it is to
take effect forthwith or on the happening of an event which must happen, such interest is
vested, unless a contrary intention appears from the terms of the transfer."
A vested interest is not defeated by the death of the transferee before he obtains
possession.
Explanation:
An intention that an interest shall not be vested is not to be inferred merely from a
provision whereby the enjoyment thereof is postponed, or whereby a prior interest in the
same property is given or reserved to some other person, or whereby income arising from
the property is directed to be accumulated until the time of enjoyment arrives, or from a
provision that if a particular event shall happen the interest shall pass to another person.
Illustration
A Hindu widow adopted son but there is an agreement which postpones the son’s
estate during the lifetime of widow. Here an interest created in favour of adopted son is
vested right, which does not depend upon condition precedent, for example…
Performance of any act, it has to take effect on happening of the event which is certain i.e.
the death of widow.
The adopted son has Present proprietary right in the estate. The right of possession and
enjoyment being deferred and therefore he can transfer the property even during the
widow’s lifetime. Similarly, a Transfer of Property in favour of a person simply creates
vested interest with an immediate right to the possession and enjoyment of the property.
Such vested interest is not defeated by the death of the transferee even before getting
possession of the property.
Illustration
A transfers property to B in trust for C and direct B to give possession of the property to C
when C attains the age of 25 years. In this problem, the enjoyment in the property is
postponed but this does not prevent the interest vesting immediately.
Therefore C has vested interest and entitled to possession of the property at the age of
18.
When an unborn person acquires vested interest on transfer for his benefit - Section 20
Where, on a transfer of property, an interest therein is created for the benefit of a person
not then living, he acquires upon his birth, unless a contrary intention appears from the
terms of the transfer, a vested interest, although he may not be entitled to the enjoyment
thereof immediately on his birth.
Characteristics of vested interest
1) Vested interest does not depend upon the fulfilment of a condition. It creates present
and immediate right though the enjoyment may be postponed to future date.
2) A vested interest is not defeated by the death of transferee before obtaining
possession; it will pass on to His heirs.
The Supreme Court held that the interest taken by the two brothers under the trust deed
was vested and not contingent because it was certain event
Vested interest does not depend upon fulfilment of a condition and takes effect from the
date of the transfer. In vested interest there is present, immediate right even if the
enjoyment is postponed. A vested interest is heritable and transferable. A contingent
interest depends solely upon the fulfilment of the condition. In contingent interest there
is no present right, there is a promise to give right upon the fulfilment of a condition.
A contingent Interest is inalienable and not transferable and not heritable.
of the suit has no independent right to property to resist, obstruct or object execution of a
decree.
APPLICATION OF SECTION 52 OF TRANSFER OF PROPERTY ACT – CONDITIONS TO BE
SATISFIED: the following conditions must be fulfilled for applicability of this section -
1. There must be a pending suit or proceeding,
2. The suit or proceeding must be pending in a court of competent jurisdiction;
3. The suit or proceeding must not be a collusive one;
4. A right to immovable property must be directly and specifically in question in that
suit or proceeding,
5. The disputed property must be transferred or otherwise dealt with by any party to
the suit.
6. The alienation must affect the rights of any other party to the dispute.
7. Any transfer of such immovable property or any dealing with such property during
the pendency of the suit is prohibited except under the authority of court,
8. if such transfer or otherwise dealing with the property by any party to the suit or
proceeding affects the right of any other party to the suit or proceeding under any
order or decree which may be passed in the said suit or proceeding.
Non – Applicability of Doctrine of Lis Pendens
Lis Pendens is not applicable in every case. There are certain instances wherein this
doctrine does not apply:
1. When transfer is made with the permission of the court, the principle of lis
pendens is not applicable. The court may permit such a transfer subject to such
terms as it may impose.
2. Sale by agreement-holder: the agreement holder transferred the property to a
third party. A suit for specific performance was filed against him. During this suit,
the third party made a further sale. The court said that it was not invalid.
3. A sale made by the mortgagee in the exercise of the power as conferred by the
mortgage deed.
4. In matters of review;
5. In cases where the transferor is the only party affected;
6. In cases of friendly suits;
7. In cases where the proceedings are collusive;
8. In case of suits involving pending transfers by a person who is not a party to the
suit;
9. In cases where the property has not been properly described in the plaint;
10. In cases where the subject matter of rights concerned in the suit and that which
are alienated by transfer are different.
The Transfer of Property Act deals with two kinds of interest vested interest and
contingent interest. Vested interest is to be distinguished from contingent interest. When
an interest is vested, the transfer is complete but when the interest is contingent,
the transfer depends upon a condition precedent. When the condition is fulfilled the
transfer takes effect and that the interest becomes vested.
Definition of Contingent Interest - Section. 21 defines Contingent interest as follows -
D) It is not heritable,
E) Death is not an uncertain events but survival at the death of another is an uncertain
event.
CASE LAW -
1) Sundar Bibi vs. Rajendra Narayan AIR1925 All.389.
In this case the Allahabad High Court held that in a vested interest the title passes
absolutely from the transferor to the transferee at the date of the transfer, though the
enjoyment may be postponed.
2) Rajesh Kanta Roy vs. Shrimati Sunita Debi AIR1957, S.C.255 -
One Ramani Kanta Roy executed a registered trust deed in respect of his properties. The
eldest son Rajesh was appointed the sole Trustee to hold the properties under the trust
subject to certain power and obligation. After his death his two sons Rajesh and
Ramendra got interest in the property. There was a clause in the trust deed that both of
them was to get interest in the properties allotted to each other happening of the two
events -
1) Discharge of all the debts specified in the schedule and death of the settler himself.
2) The trust was to come to an end on the death of the settler and the sons were to get
properties allotted to them thereafter.
Issue before the court was whether the interest created by the trust was vested or
contingent?
A Supreme Court held that the interest taken by the two brothers under the trust deed
was vested and not contingent because it was certain event.
A contingent interest depends solely upon the fulfilment of the condition. In contingent
interest there is no present right, there is a promise to give right upon the fulfilment of a
condition. A contingent Interest is inalienable and not transferable.
3) Usufractuary mortgage
4) English mortgage
6) Anomalous mortgage.
mortgage-money, the transaction is called a simple mortgage and the mortgagee a simple
mortgagee.
B) Mortgage by conditional sale Section 58(c): Where, the mortgagor ostensibly sells the
mortgaged property-
on condition that on default of payment of the mortgage-money on a certain date the
sale shall become absolute, or on condition that on such payment being made the sale
shall become void, or on condition that on such payment being made the buyer shall
transfer the property to the seller, the transaction is called a mortgage by conditional sale.
Provided that no such transaction shall be deemed to be a mortgage, unless the condition
is embodied in the document this effects or purports to affect the sale.
C) Usufructuary Mortgage Section 58(d)
Where the mortgagor delivers possession or expressly or by implication binds himself to
deliver possession of the mortgaged property to the mortgagee, and authorises him to
retain such possession until payment of the mortgage-money, and to receive the rents
and profits accruing from the property or any part of such rents and profits and to
appropriate the same in lieu of interest or in payment of the mortgage-money, or partly in
lieu of interest or partly in payment of the mortgage-money, the transaction is called a
usufructuary mortgage and the mortgagee a usufructuary mortgagee.
D) English Mortgage Section 58(e)
Where the mortgagor binds himself to repay the mortgage-money on a certain date, and
transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso
that he will re-transfer it to the mortgagor upon payment of the mortgage-money as
agreed, the transaction is called an English mortgage.
E) Mortgage by deposit of title-deeds Section 58(f) -
Where a person in any of the following towns, namely, the towns of Calcutta, Madras, and
Bombay, and in any other town which the State Government concerned may, by
notification in the Official Gazette, specify in this behalf, delivers to a creditor or his agent
documents of title to immovable property, with intent to create a security thereon, the
transaction is called a mortgage by deposit of title-deeds.
F) Anomalous mortgage Section 58(g) -
A mortgage which is not a simple mortgage, a mortgage by conditional sale, a
usufructuary mortgage, an English mortgage or a mortgage by deposit of title-deeds
within the meaning of this section is called an anomalous mortgage.
It does not fit in above five mortgages, but is a combination of two or more of above
mentioned types of mortgages.
2. Operating Lease
In an operating lease, the lessee uses the asset for a specific period. The lessor bears the
risk of obsolescence and incidental risks. There is an option to either party to terminate
the lease after giving notice. In this type of leasing lessor bears all expenses lessor will not
be able to realize the full cost of the asset specialized services are provided by the lessor.
This kind of lease is preferred where the equipment is likely to suffer obsolescence.
becomes the lessee. The asset remains with the seller who is a lessee but the ownership is
with the lessor who is the buyer. This arrangement is done so that the selling company
obtains finance for running the business along with the asset.
such permission from the grantor would be considered unlawful. Interpreting section 52,
it can be said that when a person is given the right to use a particular property for certain
use, while the possession and control of the property are with the owner, the person will
be considered as the licensee. A license can be granted to only a definite number of
people, as a license is a personal right given to the licensee. Section 56 of the Easement
Act also states that a license cannot be transferred by a licensee or the right under the
license be exercised by his servants or agents. In the judicial pronouncement of Associated
Hotels of India Ltd. v RN Kapoor, the Apex Court gave a definition of a license. The Court
stated that when a document only gives the right to use a certain property in a certain
way, it’ll be considered as a license. The licensee is entitled to use the premises only in a
specific manner. Without the permission, his activities would be considered unlawful. The
essential features of a license can be thus summarized as-
1. A license does not create an interest in the property. It acts only as permission
which created a personal right with regards to the property.
2. A license authorizes certain acts on the property which would be otherwise
unlawful.
3. A license cannot be assigned or transferred to some third party
4. A license is not heritable.
5. A license is revocable.
6. A licensee cannot sue outsiders in his own name.
7. Licence is purely permissive right arising only by permission, express or implied,
and not by adverse exercise or in any other way.
A license is deemed to be revoked under the following circumstances:
1. When, from a cause preceding the grant of it, the grantor ceases to have any interest in
the property affected by the license;
2. when the licensee releases it, expressly or impliedly, to the grantor or his
representative;
3. where it has been granted for a limited period, or acquired on condition that it shall
become void on the performance or non-performance of a specified act, and the period
expires, or the condition is fulfilled;
4. where the property affected by the license is destroyed or by superior force so
permanently altered that the licensee can no longer exercise his right;
5. where the licensee becomes entitled to the absolute ownership of the property
affected by the license;
6. where the license is granted for a specified purpose and the purpose is attained, or
abandoned, or becomes impracticable;
7. where the license is granted to the licensee as holding a particular office, employment
or character, and such office, employment or character ceases to exist;
8. where the license totally ceases to be used as such for an unbroken period of twenty
years, and such cessation is not in pursuance of a contract between the grantor and the
licensee;
9. In the case of an accessory license, when the interest or right to which it is accessory
ceases to exist.
f. Actionable claims,
g. Vested interest (Section 19),
What may not be transferrable?
a. The chance of an heir-apparent succeeding to an estate, the chance of a relation
obtaining a legacy on the death of a kinsman, or any other mere possibility of a
like nature, cannot be transferred,
b. 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,
c. An easement cannot be transferred apart from the dominant heritage,
d. All interest in property restricted in its enjoyment to the owner personally cannot
be transferred by him.
e. A mere right to sue cannot be transferred,
f. A public office cannot be transferred,
g. Stipends allowed to defence personnel is not transferable.
h. No transfer can be made (1). Is so far as it is opposed to the nature of the interest
affected thereby, or (2). For an unlawful object or consideration, (3). A person
legally disqualified to be transferee.
5. In this case even without execution of sale deed, the transferee acquires the right in the
property and the transferor cannot claim any right in respect of property under
consideration other than the rights expressly provided in the terms of contract.
Illustration: A contracts with B to sell his plot for X amount of money. A accepts the advance from
B towards the sale of the plot and hands over the possession of the said plot to B. After some
time, B is ready to pay the remaining sale amount but A refuses to accept the same. Further A asks
B to hand over the plot back to him.
Here B is ready to perform his part of the contract but A is not. In such a case, B can bring a case
requiring specific performance from A. It does not matter that the sale was not registered.
3. RIGHTS & LIABILITIES OF SELLER & BUYER OF THE PROPERTY, BEFORE & AFTER SALE
(SECTION 55).
Answer: In the absence of a contract to the contrary, the buyer and the seller of
immovable property respectively are subject to the liabilities, and have the rights,
mentioned in the rules next following, or such or them as are applicable to the property
sold:-
The seller is bound –
1. To disclose to the buyer any material defect in the property or in the seller’s title,
2. Producing all documents on the request of buyer,
3. Answering all the question pertaining to the sale by buyer,
4. After the payment by the buyer he has to execute a proper conveyance of the
property.
5. Between the date of the contract of sale and the delivery of the property, to take
as much care of the property and all documents of title relating thereto which are
in his possession,
6. To give, on being so required, the buyer, or such person as he directs, such
possession of the property as its nature admits,
7. To pay all public charges and rent accrued due in respect of the property up to the
date of the sale, the interest on all encumbrances on such property due on such
date.
8. He must have the right to transfer the property,
9. Where the whole of the purchase money has been paid to the seller, he is also
bound to deliver to the buyer all documents.
Rights of the seller:
1. The seller is entitled to the rents and profits of the property till the ownership
thereof passes to the buyer,
2. To take the entire consideration amount before transfer of the property,
3. If the seller transfers the property before entire payment is paid, then he is
entitled to the charge upon the property for payment due and interest upon that
due.
The buyer’s duties:
1. To disclose to the seller any fact as to the nature or extent of the seller’s interest in
the property of which the buyer is aware, but of which he has reason to believe
that the seller is not aware, and which materially increases the value of such
interest.
Rights of Mortgagor
Every mortgage-deed leaves a right to the mortgagor and a corresponding liability for
mortgagee and vice versa. Following are the rights given to a mortgagor given by the
Transfer of Property Act, 1882:
1. Right of redemption (Section 60),
2. Right of transfer of mortgaged property to a third party instead of retransferring it
to himself,
3. Right of inspection and production of documents
4. Right to accession
5. Right to improvements
6. Right to a renewed lease
The word ‘land’ refers to everything permanently attached to the earth and
the words ‘beneficial enjoyment’ denotes convenience, advantage or any
Illustrations-
1. ‘P’ being the owner of certain land or house has a right of way over
Q’s house, adjacent to his house, to move out of the street. This is
known as right of easement.
2. A voluntary dedication of right by ‘X’ to the public for passing or re-
passing over a surface of certain land is not a right of easement.
3. X’s right to go on his neighbour Y’s household for fetching water
from the well for the purpose of his own household is a right of
easement. Here, the way to the well is through Y’s land only. Hence,
X has an easementary right to pass through Y’s household.
• Right of way
• Right to discharge rainwater
• Right to sunlight etc
Essentials of Easements
2. Separate owners
For exercising the right of easements, owners of the two properties shall be
different and not a single person.
3. Beneficial Enjoyment
The object of easements is that the dominant owner enjoys it in a way which
includes express and implied benefits.
4. Positive or Negative
Easements can be either positive or negative. Former refers to a right
through which the dominant owner does some act to exercise the right over
the land of the servient owner. Whereas, the latter denotes an act of
prevention. In a negative easement the dominant owner prevents or restricts
the servient owner from doing certain act or acts.
The easementary right exists only when two heritages are adjacent to each
other. It is a right in rem, which means a right available against the whole
world. Easement as a right is always annexed to the dominant
tenement. It is a right of re-aliena which means a right over a servient
tenement and not on one’s own land.
Illustration -A right of way annexed to A’s house over B’s land. This is a
discontinuous easement.
Illustration- Rights annexed to A's land to lead water thither across B's land
by an aqueduct and to draw off water thence by a drain. The drain would be
discovered upon careful inspection by a person conversant with such
matters. These are apparent easements.
1. A transferred his property to an unborn person who is in mother’s womb. Decide the
rights of the unborn person. (Jan-2017, Dec-2015).
Answer:
Issue: Can ‘A’ transfer to a person who is in his mother’s womb?
Rule: As per Section 13 of the Transfer of Property Act, 1882, property can be transferred to a
person who is in his mother’s womb at the time of transfer.
Application: The Transfer of Property Act, 1882 deals only with the transfers of property between
living persons (inter vivos). An unborn person means a person not in existence even in the
mother’s womb. A child in the mother’s womb is considered to be a competent transferee.
Therefore, the property can be transferred to a child in mother’s womb because the child exists at
that time but not to an unborn person who does not even exist in mother’s womb.
Every transfer of property involves transfer of interest. As soon as the property is transferred,
the transferor is divested of that interest and the interest is vested in the transferee. For vesting
of interest, therefore, it is necessary that the transferee must be in existence.
Conclusion: In the given case ‘A’ the transferor can transfer the immovable property to a person
who is in his mother’s womb and he is a valid transferee and transfer is valid.
2. A party to a suit transfers the disputed property to a third party. Is such transfer valid?
Explain with reasons. (Jan-2014).
A property in dispute, and in respect of which a civil suit is pending, was sold by one of the
partners to the suit. Is such sale valid? Discuss the legal position. (Aug-2013)
Issue: Can a property, during the pendency in any court, transferable?
Rule: Lis pendens Section 52 of Transfer of Property Act, 1882.
Application: Lis pendens” means a suit under consideration of any court of law. It is an action
which is pending in any court. This section is based on the maxim “ut lite pendent nihil innovetur”
which means that nothing new should be introduced into a pending litigation. Therefore, the
property which is in dispute should not either be sold or otherwise dealt in by any party to the
dispute during the pendency of the suit or proceeding. Where a suit or proceeding is pending
between two persons with respect to an immovable property and one of these parties sells or
otherwise transfers the subject-matter of litigation, then the transferee will be bound by the
result of the suit or proceeding whether he had the notice of the suit of proceeding or not. This is
known as the rule of lis pendens. This rule affects the purchaser because the law does not allow
litigants pending litigation to give to others any right to the property in dispute so as to prejudice
the other party.
APPLICATION OF SECTION 52 OF TRANSFER OF PROPERTY ACT – CONDITIONS TO BE
SATISFIED: the following conditions must be fulfilled for applicability of this section -
1. There must be a pending suit or proceeding,
2. The suit or proceeding must be pending in a court of competent jurisdiction;
Conclusion: In the given case transferring a property, on which a suit is pending in the court, the
transfer is valid but the transferee will be affected by the judgment of the suit, irrespective of
whether he is having actual or constructive notice of the suit.
Fayaz Husain Khan v. Prag Narain.
3. Some property transferred to D in case of A, B and C shall all dies under the age of 18
years. Examine what type of interest is vested in D? (Jan-19, Jan-17).
Issue: Is the case pertains to contingent interest? Yes.
Is transfer of contingent interest valid? Yes.
Rule: Contingent Interest (Section 21 of Property Act, 1882):
An interest the vesting of which takes place after the fulfilment of some conditions precedent,
till the condition is fulfilled remains contingent.
In a transfer of property a person get a contingent interest in the property when:
(i) The specified uncertain event happens, the happening of which was a condition for
vesting of interest, or
(ii) The specified uncertain event does not happen, the non-happening of which was a
condition for vesting of interest and the event has become impossible to happen.
Application: In the case of a contingent interest, the interest becomes vested only when either of
the condition is fulfilled. For example, where A makes a gift to B provided X survives the age of 25
years, the interest of B is contingent. Where A makes a gift to B provided X does not survive the
age of 25 years, the interest of B again is contingent.
The main characteristics of a contingent transfers are:
(i) The contingent interest is a transferable interest,
(ii) It is not heritable. On the death of a person having contingent interest, his interest
does not pass to his legal heirs. The legal heirs of such a transferee do not get any
interest.
(iii) Death is not an uncertain events but survival at the death of another is an uncertain
event.
Conclusion: The transfer is valid under Sec 21 and D will be vested of transferred property if A, B
and C die under the age of 18 years till that time its contingent interest.
4. Property is transferred to ‘A’ for life and the remainder to his eldest son on attaining 25
years of age. ‘A’ has no son on the date of transfer. Is the transfer valid? Decide (Mar-18)
Property is transferred to Rama for life and the remainder to his elder son on attaining 21
years of age. Rama has no son on the date of transfer. Is the transfer valid? (May-17) &
(June-14).
5. ‘A’ purchases property in the name of ‘B’. ‘B’ sells the property to ‘C’ without A’s
authority. ‘A’ sues to recover the property from C. Decide (Jan-19), (Mar-18) & (Dec-15).
Issue: Is the transfer by ‘B’ valid? Yes, provided that the transferee, after taking reasonable care
to ascertain that the transferor had power to make the transfer, had acted in good faith.
Rule: Transfer by ostensible owner 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 authorised to make it:
Provided that the transferee, after taking reasonable care to ascertain that the transferor had
power to make the transfer, has acted in good faith.
Application: The general principle of law of transfer of property is that no person can transfer to
another a right or title greater than what he himself possesses. The maxim on which this principle
is based is nemo dat quod non-habet, i.e., no one can transfer better title that he himself has. This
general rule has certain exceptions too. One exception is that if the true owner of property
permits another to hold himself out as the real owner, a third person who deals in good faith with
that other person may acquire a good title to the property as against the true owner.
Benami transactions: The law relating to transfer of property by an ostensible owner under this
section are now subject to the provisions of Benami Transactions (prohibition of the Right to
Recover Property) Act, 1988, “Benami transaction” means any transaction in which property is
transferred to one person for a consideration paid or provided by another person. In simple
words, the person who purchases the property and pays the price for it, does not purchase the
property in his own name but in the name of any other person. The other person whose name is
used as the owner of the property is known as benamidar (ostensible owner). In truth, he holds
the property on behalf of the real owner because he is not the real owner. The Benami
Transactions act of 1988 provides that where a property is transferred benami (i.e., in the name of
another person), the person, in whose name the property is held, shall become the real owner.
The Benami Transactions Act, 1988 provides that no suits, action or claim to enforce any right in
respect of any property held benami against the person in whose name the property is held or any
other person shall lie by the person claiming to be the real owner of the property. In other words,
the real owner now after the enforcement of this Act cannot claim the property from the
benamidar by any suit, claim or action. The defence of being the real owner shall also not be
allowed.
Conclusion: The Transfer of Property Act says that the transferee should act in good faith while
dealing but after the passing of the Benami Transactions Act, 1988 the transferee will become the
real owner and the ostensible owner cannot claim the property. In the given case the sale is valid.
6. ‘A’ makes a gift to X, Y and Z. X and Y accept while Z refuses. What happens to the gift?
(Jan-19, Mar-18 and Jun-14).
Issue: Is a Gift made to two or more persons jointly valid? Yes valid.
If one or more donees do not accept, still is it a valid gift? Yes to the extent of gift which was
accepted.
Rule: Gift to several persons of whom one does not accept Section 125 of The Transfer of Property
Act, 1882.
Application: Gift may be made to two or more persons jointly. For the validity of the gift it is
necessary that it must be accepted by all the donees. Section 125 provides that a gift of a thing to
two or more donees, of whom one does not accept it, is void as to the interest which he would
have taken had he accepted. This means that where one of the several donees does not accept
the gift, the gift is void only for his part of interest which he would have taken, had he accepted
the gift. Where the donee is unable to accept due to his incompetency, his guardian must accept
the gift on his behalf. For example, a gift is made to four persons jointly A, B, C and D by a person
named X, without specifying their shares in the gift. Each will be entitled to ¼ (one-fourth) share
in the gifted property. Suppose D does not accept his share of gift, then his share will revert back
to donor X. It will not be added to the shares of other donees.
Conclusion: In the given case Z has refused the gift of A, and X and y have accepted the gift, Z’s
part will be reverted to the donor A. Now the property is owned by X, Y and A each have 1/3 of
right.
7. A takes a lease of a building for being used as a dyeing factory. He stores chemicals there,
needed for his business. The building is burnt down and must damage is caused because
of storage of those chemicals. Discuss the liability of A. (May-2017), (Jun-2014).
Issue: Is ‘A’ responsible for the damage and should restore the property? Yes.
Rule: According to Section 108 {Clause (k) to (q)}, the lessee is under the following liabilities:
a. duty to disclose facts materially increasing the value of property,
b. duty to pay rent or consideration of lease,
c. duty to maintain the property,
d. duty to give notice of any encroachment on the property to the lessor,
e. duty to use the property in a reasonable manner,
8. Mr. Siva allowed his friend Mr. Rama to park his car in his house. After some time Mr. Siva
refused to park the car in his house. Mr Rama claimed that it is easement right. (May-17).
A allowed his neighbour B to park his car in A’s house. After some time A refused to park
B’s car in his house. B claimed it is easement right. (Dec-15).
Issue: Is it easement? No
Is A’s refusal of B’s car parking is valid? Yes.
Rule: Section 52 in the Indian Easements Act, 1882
"License" defined. -Where one person grants to another, or to a definite number of other
persons, a right to do, or continue to do, in or upon the immovable property of the grantor,
something which would, in the absence of such right, be unlawful, and such right does not amount
to an easement or an interest in the property, the right is called a license.
Application: License is a permission to do something, which without the license would not be
allowable.
Conclusion: In the given case Mr. Rama is allowed to park his car its license not easement and Mr.
Rama’s claim is non-maintainable.
9. Property X, Y and Z are subjected to a Mortgage. The mortgagor sells the equity of
redemption of X to A of Y to B and of Z to C. if the mortgagee satisfied his mortgage out of
X what remedy is available to A. (May-17).
Here the mortgager has mortgaged his three properties to a single person and later he sells the
properties to different persons (here the meaning of equity of redemption is sale only) and after
that the mortgagee, to recover his dues wants to sell the property X which now owned by A.
Under Section 67A of the Transfer of Property Act, 1882, Mortgagee when bound to bring one
suit on several mortgages. - A mortgagee who holds two or more mortgages executed by the
same mortgagor in respect of each of which he has a right to obtain the same kind of decree under
Section 67, and who sues to obtain such decree on any one of the mortgages, shall, in the absence
of a contract to the contrary, be bound to sue on all the mortgages in respect of which the
mortgage-money has become due.