CHAPTER IV

Of mortgages of immovable property and charges

Section 58
58. “Mortgage”, “mortgagor”, “mortgagee”, “mortgage-money” and “mortgage-deed”
defined.—(a) A mortgage is the transfer of an interest in specific immoveable property for
the purpose of securing the payment of money advanced or to be advanced by way of loan, an
existing or future debt, or the performance of an engagement which may give rise to a
pecuniary liability. The transferor is called a mortgagor, the transferee a mortgagee; the
principal money and interest of which payment is secured for the time being arc called the
mortgage-money, and the instrument (if any) by which the transfer is effected is called a
mortgage -deed.
(b) Simple mortgage.—Where, without delivering possession of the mortgaged property, the
mortgagor binds himself personally to pay the mortgage-money, and agrees, expressly or
impliedly, that, in the event of his failing to pay according to his contract, the mortgagee shall
have a right to cause the mortgaged property to be sold and the proceeds of sale to be applied,
so far as may be necessary, in payment of the mortgage-money, the transaction is called a
simple mortgage and the mortgagee a simple mortgagee.
(c) Mortgage by conditional sale.—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 and the
mortgagee a mortgagee by conditional sale: 1 [Provided that no such transaction shall be
deemed to be a mortgage, unless the condition is embodied in the document which effects or
purports to effect the sale.]
(d) Usufructuary mortgage.—Where the mortgagor delivers possession 1 [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 2 [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 3 [or] partly in payment of the mortgage-money, the transaction is
called an usufructuary mortgage and the mortgagee an usufructuary mortgagee.
(e) English mortgage.—Where the mortgagor binds himself to re-pay 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. 1
(f) Mortgage by deposit of title-deeds.—Where a person in any of the following towns,
namely, the towns of Calcutta, Madras, 2 [and Bombay], 3*** and in any other town which
the 4 [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 immoveable property, with
intent to create a security thereon, the transaction is called a mortgage by deposit of title-
deeds.
(g) Anomalous mortgage.—A mortgage which is not a simple mortgage, a mortgage by
conditional sale, an usufructuary mortgage, an English mortgage or a mortgage by deposit of
title-deeds within the meaning of this section is called an anomalous mortgage.]
 If there is a loan for immovable property, as a collateral – u give specified IP to secure
payment of any debt – as far as consideration is monetary – then property becomes
mortgaged
 A right in the property is getting transferred – but short of ownership – it is a bundle
of rights – absolute right are not going – right of enjoyment, possession, profits, right
of selling can be given but not the ownership – even if conditional sale, the rights
revert back – right of redemption of the mortgagor
 Mortgage = transfer of an interest for a specific IP – secured loans and unsecured
loans – without any security or surety – unsecured debt (no collateral or security) u
are just taking the money – if there is security involved, then it is mortgage – secured
debts (For TPA – immovable)
 Immovable property – mortgage
 Movable property – pledge
 Nature of both is the same
 Mortgage money – the amount taken as loan – principal amount + interest
 Mortgage deed – instrument used to convey the property – the document
 Parties – Transferor – mortgagor, Transferee – mortgagee
3 basic essentials –
1. Transfer must be of some interest – ownership is not transferred – only the interest to
recover the mortgage money from the mortgaged property.
 ". Therefore, the interest is given by the mortgagor to the mortgagee. What type of
interest is transferred to the mortgagee decides the kind of mortgage.
 A mortgage is a transfer of an interest and it creates a right in rem, but mere agreement
to create a mortgage does not create any interest in the property mortgaged.
 Value of the property ke according u can take multiple mortgages – hence 2
different banks can be the mortgagee but mostly depends on the terms
 Because transfer of interest is considered transfer of property – essentials of valid
transfer all apply here –
 Case – Mathai Mathai v. Joseph Mary (2015 5SCC 622) –
o A mortgage executed in favour of a minor who has advanced the whole of the
mortgage money is enforceable by him or anyone on his behalf. But otherwise
minority of the mortgagee renders it void ab initio
o both the mortgagor and mortagee must be persons competent to contract
and capable to transfer and hold the property
 MINORS cannot enter into a transaction of mortgage –
 some interest depending on the nature of the mortgage – how can we tranfer
certain rights
 simple mortgage – transfer of the right to sell as well – power of sale gets
transferred
 Usufructuary mortgage - right of possession, right of enjoyment
  Conditional mortgage – right of ownership can be transferred – if the condition is
fulfilled the property reverts back
2. Some specified immovable property – everything has to be specified not vague –
which property is being transferred – no scope of confusion – so general description
must be avoided.
3. 3rd essential – purpose of transfer – perfomrace of an engagement – there is a debt or
engagement to pecuniary liability – then mortgage
Consideration for mortgage – securing payment for a debt or pecuniary liability p this
becomes the consideration – can take in present or future – money can be advanced any time
–
State of Kerala v Cochin temple Refinries – AIR 1956 SC 67 – transaction of a mortgage
doesn’t become ineffective merely because money couldn’t be advanced on the day of
mortgage
s. 58(b) Simple Mortgage
 Where, without delivering possession of the mortgaged property, the mortgagor binds
himself personally to pay the mortgage-money, and agrees, expressly or impliedly, that, in
the event of his failing to pay according to his contract, the mortgagee shall have a right to
cause the mortgaged property to be sold and the proceeds of sale to be applied, so far as
may be necessary, in payment of the mortgage-money, the transaction is called a simple
mortgage and the mortgagee a simple mortgagee.
 Remedies of the mortgagee
o When the mortgagor fails to pay back the money, the mortgagee would move the
court for a decree to sell the property, and as soon as the decree is awarded he may
proceed to sell the property

Simple mortgage – as a personal promise, the transfer of an immovable property is promised

against securing of a loan. The possession of the property will not be delivered. There is a
promise to repay the amount.
Ram Narayan Singh vs. Adhindra Nath AIR 1916 PC 119
The very acceptance of a loan, then there is a promise to repay irrespective of it being an
express term in the contract. The very acceptance of loan involves the personal liability of the
borrower. The fact that some immovable property has been mentioned as security for its
repayment does not displace the personal liability of the mortgagor to repay the loan with
interest.
Since the mortgagee is not the owner of the property. He can approach the court and to then
sell the property. If the mortgagor is simply sued for money, a decree is passed against him
and he will be bound by it. He can dispose off the property etc. As a mortgagee, the sale of
the property can also be prayed for.
The primary proceeds of the sale go to the mortgagee, and the remainder amount goes to the
mortgagor.
Registration of simple mortgage is mandatory. For a property below the value of 100 is not
compulsorily registrable. In the case of a simple mortgage, the amount is not material.
Registration is important because there is no delivery of possession. Mandatory under s. 59.
Umesh Prasad Sharma and Anr. v. Allahabad Bank AIR 2022 SIK 5
A person secures a loan, using C as a guarantor and his immovable property. A defaults. Bank
proceeds to attach and sell off C’s property.
From the date of default, the limitation is 12 years.
Mortgage by Conditional Sale
In villages, this mortgage is more relevant. This mortgage is an expression of the willingness
of the mortgagor to procure money and make back the payment in time. In conditional sale, it
is also called an ostensible sale.
3 elements:
1. There is an ostensible sale of an immovable property
Case – Prakasam v. Rajambal AIR 1975 MAD.282
 Nature of condition
 Intention of the parties must be inferred by the nature of the condition
 Sale deed – transferor had paid the stamp duty
 Consideration far lower than the actual value of the property
 The transferee or the mortgage will reconvene the property to the transferor if the same
value is repaid – the buyer gives property back to the seller
 Not a sale of absolute nature but a mortgage
Case – Kamal Shivaji Rao Katkar v. Gajrabai Sopan Rao Algude AIR 2001 Bom.369
 The condition to repurchase the property
 Condition subsequent – not fulfilled – property reverts back
 Sale with condition to repurchase? – is it a mortgage by conditional sale?
 Distinguish:
1. Conditions can be like construction not completed, or maintenance not done,
not going to fall under MBCS because there is an existence of a debt and the
repayment or non-repayment decided the mortgage by CS.
2. Time/interest for payment not stipulated – then not MBCS – mortgage cases
mostly there is an interest stipulated
3. The intention of the parties to secure a debt through the transfer of property –
only then a condition is MBCS – but if it is a condition subsequent then it is
simple
 Present case – no intention to secure a debt – essential feature not met – not mortgage
WHICH IS SALE AND WHICH IS MBCS?
 Any set standard = no
 Intention of the parties
 Case – Tulsi v Chandrika Prasad AIR 2006 SC 3355
  Case – Vasant Rao v Kishan Rao AIR 2008 BOM.42
Intention of the parties like sale or mortgage - if securing a debt – mostly a mortgage.
Whatever the condition if There is no intention
Condition to repurchase v MBCS
1. In a MBCS, the existence of a debt between buyer and seller is necessary
MBCS is a transfer of only some interest in the property, partial interest – the time
stipulated like 1 year – mortgagee under an obligation not to sell my property –
restrain basis in the sale deed itself – then we can say partial interest transferred
Sale with a condition of repurchase is a transfer of all interest in the property except
the personal right to repurchase.

2. The sale is subject to any of the following conditions:

 If any repayment of mortgage money – the sale becomes void and if not then sale
becomes absolute
 On non-repayment of mortgage money – sales becomes absolute
 On payment of mortgage money the buyer shall re-transfer the said property to the
seller.
 Hence there is an existence of a debt – even if the transaction has an appearance of a
sale, the legal relationship between buyer and seller seems like debtor and a creditor.
 If mortgagee doesn’t return the property or sell it to someone else before or after the
repayment – such a transaction will be invalid – the mortgagee doesn’t hv such power
Case: Ram Lal v Phagua AIR 2006 SC 623
Case: Jay Ram Bhai Rama Bhai Rabari v Nitin Chandra Naran Bhai Baroa AIR 2013
GUJ. 27
3. The conditions must be embodied in the same document/ instrument of transfer
 If this is not done – like if the condition we tell after some time or put it in a Different
document, then such transaction will be invalid?
 The transaction loses the nature of the mortgage – there were no talks of repayment
 Sale will be a valid transaction not in thre narture of mortgage
Case: Panit Chunchun Jha v Shekh Ibadat Ali AIR 1954 SC 345
 if the sale and agreement to repurchase are embodied in separate documents, then the
transaction cannot be a mortgage, whether the documents are contemporaneously executed
or not. But the converse does not hold good. That is to say, the mere fact that there is only
one document does not necessarily mean that it must be a mortgage and cannot be a sale."
 If condition of repurchase not embodied in document of mortgage, then the said
transaction cannot be a mortgage
Case: Soban v Sayed Nabi 2019
 Sale with mere condition of re-transfer is not a mortgage if sale and agreement to
repurchase are embodied in separate documents, then transaction cannot be MBCS
irrespective of whether the documents are simultaneously executed or not (invalid)
 4. Mode of making mortgage is simply registration is compulsory where the value of
property is above Rs. 100.
Section 58(d) –
No ownership or possession – u want money and there is a property which is generating
income – rent or produce – take the entire rent against satisfaction of mortgage money – or
take a part or the whole income till mortgage money is satisfied – right of possession and
enjoyment both can be transferred.
Can be used against the interest on the mortgage money and whether this should be utilized
only for interest or principal amount or both. Delivery of possession happening or not?
3 essentials –
1. Delivery of possession – either expressly or impliedly – he can deliver it at a later date
as well – right of possession of property is acting as a security – until the amount is
satisfied, till then property acts as a security and the income generated will go towards
the payment?
 Passing on the right to collect rent – rent money will go to in the lieu of interest money
Case – Monappa Naika v Land Tribunal Puttur AIR 2012 KAR 161.
 Delivery of possession to mortgagee is essential
 Under a mortgage deed it is stipulated that possession given to mortgagee – and he
cant cultivate it and he transfers the possession to someone else to cultivate it. But he
cant further transfer it hence this will be a void way.
2. Enjoyment or use of the property
 Tenant can also keep on residing there
 interest which is adjusted – property ka enjoyment till the extent of the payoff
3. no personal right of mortgagee – as a mortgagor, I delivered the possession then the
rent will be yours as a mortgagee – there is no time stipulation – might be generated
in 5 years – there is no other payment I have to make.
Nature will change and will go to anomolous mortgage
Mortgagee cannot sue the mortgagor – either for personal recovery or sale of the
property – right to sue not there – under this type of mortgage – not a stipulated
Case: Saba Rayya v Subramanyam AIR 1952 2MAD.LJ55
 no time period fixed to pay this
 if any time period mentioned or the deed say the mortgagee to sell off the property
after the time lapsed – this is invalid
Case: Hikmatulla v. Imam Alid AIR 1890 ILR 12 ALL 203
Case: Ram Narayan Singh v Adhindranath AIR 1916 PC119
 registration if less than 100 not mandatory and for other it is mandatory
Section 58(e) – English mortgage
  absolute interest to the mortgagee subject to the condition on a given date if payment
done – the mortgagee will have to re-transfer the property to the mortgagor – its not
about the sale being
 mortgagor personally binding himself that he will repay the debt amount
 transferring the property on the condition that if I dont pay the property is yours
 the mrotgage property – the terms are absolute transferring and third element – subject
to a proviso
Case: Raj Kishore v Prem Singh AIR 2011 SC 382
 mortgagor personally binds himself
 how is the absolute transfer happening?
 Lifted from English law – equitable estate created in favour of mortgagor before and
after the payment
 We don’t follow it in India
 This is only in form but in substance – substantive right of redemption – ownership
doesn’t get transferred
 Sale is happening 2 times – first time when the mortgagor sells it to the mortgagee for
payment of loan and if he pays it on that date then the property reverts back
Case: Ram Kinkar v Satyacharan Air 1939 PC 14
 Privy council explains why absolute interest is a formality but substantive rights exists
which ensure mortgagor remains the owner of the property
 On a specified date this payment needs to happen – then obligation on mortgagee to
retransfer and if oayemnt does not happen tehn right of sale only gets invoked after
specified date has passed
Case: IDBI trusteeship services ltd v district collector, Pune and others AIR 2021 BOM.
28
2 broad points where diff between MBCS and Conditional sale –
No personal binding in case of MBCS – no personal undertaking – the personal promise to
repay the amount under EM
Vesting of rights – MBCS – there sale is happen on condition that if payment happens then
the sale becomes void – but under EM – it is always a valid sale but has to be reverted when
debt paid off

Section 58(f): mortgage by deposit of title deeds

It is a little peculiar that you don’t necessarily need registration. Urgency of the loan – this
type of mortgage wherein equity you hand over the title deeds or documents to the mortgagee
and ask for an advance in form of loan. Happens in more commercial transactions. Merely
giving money on basis of documents hence also called equitable mortgage that you will
return the money and ehnce money advanced in good faith
Peculiar in the sense that there need not be a necessary registration. Only kind of mortgage in
India without any mandate by law for registration. In equity, the documents are handed over
to the mortgagee, and an advance is asked for in the form of a loan. Happens in more
commercial transactions, in commercial hubs. Calcutta, Madras and Bombay being the
commercial hubs, such mortgages were allowed.
1. Borrowing transaction may be eased
2. Acting as sufficient evidnce under legal provisions hence registration not required
English equitable mortgage similar –
But difference – in England, its just an equitable transaction. Legal transaction – not a mere
equitable transaction
Purely equitable role – no transfer of interest in England but in india there is.
(f) Mortgage by deposit of title-deeds
Peculiar in the sense that there need not be a necessary registration. Only kind of mortgage in
India without any mandate by law for registration. In equity, the documents are handed over
to the mortgagee, and an advance is asked for in the form of a loan. Happens in more
commercial transactions, in commercial hubs. Calcutta, Madras and Bombay being the
commercial hubs, such mortgages were allowed.
The mortgagee lends the money merely on the basis of the documents that will be advanced
to him. The money is advanced on equity, and good faith. Very nature of a title deed is
sufficient proof of legal evidence of ownership. Borrowing transaction must be eased. The
intention with which this was brought.
Resembles English equitable mortgage because in equity, people deposit their title deeds and
then secure the loan. In England, it is only an equitable transaction, in India it has a statutory
recognition, and therefore, not merely equitable. It is a legal transaction. No transfer of
interest in the property by the reason of being equitable, but in India, there is a transfer of
interest. Largely resembles the English equitable mortgage.
Mortgage by deposit of title-deeds is based on the principle that the very deposit is taken as
the evidence of an implied agreement to give proper mortgage which has been partly
performed. Implied agreement that the mortgagor will retain his debts.
Essentials:
1. Existence of a debt: title-deed that is going to be delivered will be against some sort of
debt. The debt can be an existing debt, or a future debt. Merely on the basis of an oral
argument, to secure this debt, a mortgage can be made. Title deeds can also be
deposited against overdraft at a bank.
2. There must be deposit of title-deeds: regardless of what is done with the property, the
title must be in the hands of the mortgagee.
Syndicate Bank v, M Sivarudrappa AIR 2003 Kant.210
It is not necessary that the document being submitted should show the complete title of a
property. It could also be collective ownership, but the title of the mortgage must be shown,
or the share in the property must be able to be shown.
The bank denying the execution of the title deed said that the signature of the attesting
witnesses was not valid and therefore the deed was not valid.
The effective transaction can be anywhere as allowed by the law. The title should reflect the
existing interest.
Assiamma v. State Bank of Mysore AIR 1990 Ker 157
Syndicate Bank v. Modern Tele and Clay Works
Sulochna v. Pandyan Bank Ltd. AIR 1975 Mad 70
Intention to create the security against a debt. If there is no intention, an equitable mortgage
cannot be created.
Jakhi Bai v. Putli Bai
Not any equitable mortgage unless there is a connecting link between debt and possession of
title deeds. Suggesting a definite link on part of the debtor that deeds are deposited with the
creditor as security for a debt.
NGC Ltd. v. Mohd. Ghani AIR 2002 Mad 378
The 4th essential is the territorial restriction. Mortgage by deposit is only going to be
applicable to the towns that TPA as it is applies and any other town, by notification. Major
trading towns are covered.
State of Haryana v. Nabir Singh AIR 2014 SC 339
Transaction on the territorial restriction is based on where the transaction takes place. A
property can be anywhere, but the mortgage money can be obtained by depositing the title-
deeds anywhere. The mortgagee would have the same remedy as under simple mortgage. Suit
for decree for sale of property.
Mere delivery of title deeds is necessary. if the memorandum court gets the status of a deed
itself.
Satli Venkateswara Reddy v. Mallidi Venkata Reddy AIR 2016 Hyd 24
wherever the memorandum is styled as a simple document that states the fact that a mortgage
has been taken by depositing the title-deed, then it need not be registered. Where the
memorandum itself constitutes the terms and obligations in the nature of a mortgage, then
such memorandum must be registered.
Section 59 Mode of Transfer of Mortgage
 the property can be transferred by way of mortgage in three ways
o by a registered instrument
o by delivery of possession
o by deposit of title deeds
 registered instrument
o where principal money is more than 100 the mortgage can be affected
 a registered instrument
 instrument signed by mortgagor
 attested by at least two witnesses
 Delivery of possession
o Where the principal money secured is less than Rs 100, a mortgage may be
affected either by a registered instrument or by delivery of possession.
 Deposit of title deeds
o In mortgage by deposit of title deeds, whatever be the amount of mortgage
debt, writing and registration are not necessary. This type of mortgage is
allowed only in certain cities for promoting smooth flow of business
 Effect of non registration
o Where the mortgage requiring registration is not registered, the mortgage is
not converted into a charge under section but it may be used to establish a
personal liability.. In such a case, the mortgagor cannot sue for redemption
because the mortgage is invalid but he can sue for possession on his offering
to repay the loan
60. Right of mortgagor to redeem.—At any time after the principal money has become 9
[due], the mortgagor has a right, on payment or tender, at a proper time and place, of the
mortgage - money, to require the mortgagee
(a) to deliver 10 [to the mortgagor the mortgage-deed and all documents relating to the
mortgaged property which are in the possession or power of the mortgagee],
(b) where the mortgagee is in possession of the mortgaged property, to deliver possession
thereof to the mortgagor, and
(c) at the cost of the mortgagor either to re-transfer the mortgaged property to him or to such
third person as he may direct, or to execute and (where the mortgage has been effected by a
registered instrument) to have registered an acknowledgement in writing that any right in
derogation of his interest transferred to the mortgagee has been extinguished:
Provided that the right conferred by this section has not been extinguished by act of the
parties or by 11[decree] of a Court. The right conferred by this section is called a right to
redeem and a suit to enforce it is called a suit for redemption.
Nothing in this section shall be deemed to render invalid any provision to the effect that, if
the time fixed for payment of the principal money has been allowed to pass or no such time
has been fixed, the mortgagee shall be entitled to reasonable notice before payment or tender
of such money
Redemption of portion of mortgaged property.—Nothing in this section shall entitle a person
interested in a share only of the mortgaged property to redeem his own share only, on
payment of a proportionate part of the amount remaining due on the mortgage, except 1
[only] where a mortgagee, or, if there are more mortgagees than one, all such mortgagees, has
or have acquired, in whole or in part, the share of a mortgager. 2
[60A. Obligation to transfer to third party instead of re-transference to mortgagor.—
(1) Where a mortgagor is entitled to redemption, then, on the fulfilment of any conditions on
the fulfilment of which he would be entitled to require a re-transfer, he may require the
mortgagee, instead of re-transferring the property, to assign the mortgage-debt and transfer
the mortgaged property to such third person as the mortgagor may direct; and the mortgagee
shall be bound to assign and transfer accordingly.
(2) The rights conferred by this section belong to and may be enforced by the mortgagor or
by any encumbrancer notwithstanding an intermediate encumbrance; but the requisition of
any encumbrancer shall prevail over a requisition of the mortgagor and, as between
encumbrancers, the requisition of a prior encumbrancer shall prevail over that of a subsequent
encumbrancer.
(3) The provisions of this section do not apply in the case of a mortgagee who is or has been
in possession.
60B. Right to inspection and production of documents.—A mortgagor, as long as his right of
redemption subsists, shall be entitled at all reasonable times, at his request and at his own
cost, and on payment of the mortgagee’s costs and expenses in this behalf, to inspect and
make copies or abstracts of, or extracts from, documents of title relating to the mortgaged
property which are in the custody or power of the mortgagee.]

 A mortgagor has the following six rights:—

o (I) Right of Redemption
o (II) Right of transfer to a third party instead of re-transference to himself.
o (III) Right to inspection and production of documents.
o (IV) Right to accession
o (V) Right to grant a lease
o (VI) Right to reasonable waste.
 Given at time when payment done at time of advance money and mortgagor gets the
property back
 Right to recover something on payment of certain money – it is right of redemption
 Mortgagor’s right inherent to the capacity of any mortgagor
 No one can waive this right off
 Subsists with the mortgagor
 Payment of the money or loan done – any interest transferred should be reverted back
to the mortgagor
 Pay off the loan – debt comes to an end or closure then mortgagee cannot create any
further interest through the property
  If full ownership transferred then how does interest gets back to us – residuary
ownership - Remainder of the interest gets transferred still residuary ownership
always vests with the mortgagor
 Each transfer valid under mortgage – RO vests with mortgagor once he makes the
payment – then property reverts back
 Chancery courts of England allowed - Right of redemption co-exists with the right of
foreclosure of sale – balance to be made – date of payment of mortgage money – If
payment not made then does property gets sold off on the same day – because in
equity we try to give an extension of reasonable time – because no intention of
conveying the property and only get the loan back – even if u miss the last date of
payment – then there are warning letters
 Intention of transaction was not of any other nature – borrow some money only –
mortgagor is to raise money and interest of mortgagee is to get back the money –
therefore is there any default – equity principle makes it clear:
Ram Kishan Prasad v Manohar Lal Gupta AIR 2008 NOC 845
 Suit for redemption of property cannot convert into suit for title over property
Sec 60 B: Right of inspection and production of documents relevant to the transaction of
mortgage
 Any mortgage by deposit of title deeds or there is a mortgage deed that is registered -
right to collect rents, the record to check it, records of the interest – relevant document
– this right can be practiced and mortgagor can practice these rights – cost will be
borne by the mortgagor.

61. Right to redeem separately or simultaneously.—A mortgagor who has executed two or
more mortgages in favour of the same mortgagee shall, in the absence of a contract to the
contrary, when the principal money of any two or more of the mortgages has become due, be
entitled to redeem any one such mortgage separately, or any two or more of such mortgages
together.
 This section says that a mortgagor who has executed two or more mortgages in favour
of the same mortgagee shall be entitled to redeem any one such mortgage separately
or any two or more of such mortgages together. However, this is subject to contrary
contract
 Doctrine of consolidation
o w. It enabled the mortgagee of different properties mortgaged by the same
mortgagor to consolidate those mortgages and force him to redeem them all or
to prevent him from redeeming one of them without redeeming the other
o based on he who seeks equity must do equity
o example, where a mortgagor mortgaged two properties A and B to a
mortgagee and subsequently the value of property A increased considerably,
the mortgagor wanted to redeem that property only, this proved to be a bad
bargain for the mortgagee because he was left with only property B which was
of a lesser value while his loan amount was heavy.
 o Thus, in order to protect the interest of the mortgagee equity provided that the
mortgagee could require the mortgagor to redeem both mortgages together.
62. Right of usufructuary mortgagor to recover possession.—In the case of a usufructuary
mortgage, the mortgagor has a right to recover possession of the property 4 [together with the
mortgagedeed and all documents relating to the mortgaged property which are in the
possession or power of the mortgagee],— (a) where the mortgagee is authorised to pay
himself the mortgage-money from the rents and profits of the property.—when such money is
paid: (b) where the mortgagee is authorised to pay himself from such rents and profits 5 [or
any part thereof a part only of the mortgage -money],—when the term (if any), prescribed for
the payment of the mortgage-money has expired and the mortgagor pays or tenders to the
mortgagee 6 [the mortgage-money or the balance thereof] or deposits it in Court as
hereinafter provided.
 This section provides two conditions
o Where the mortgagee is authorised to pay himself the mortgage-money from
the rents and profits of the property, when such money is paid.
o Where the mortgagee is authorised to pay himself from such rents and profits
when the term prescribed for the payment of mortgage-money has expired and
the mortgagor pays or tenders the mortgage money to the mortgagee or
deposits it in the court.
 Where a usufructuary mortgagor could not recover possession on the basis of an oral
mortgage, he can still recover possession on the strength of his title
 Possession of property or right of enjoyment passed under UM
 At time of repayment – the mortgagor gets the possession back and the other interests
transferred.

63. Accession to mortgaged property.—Where mortgaged property in possession of the

mortgagee has, during the continuance of the mortgage, received any accession, the
mortgagor, upon redemption, shall, in the absence of a contract to the contrary, be entitled as
against the mortgagee to such accession
Accession acquired in virtue of transferred ownership.—Where such accession has been
acquired at the expense of the mortgagee, and is capable of separ ate possession or enjoyment
without detriment to the principal property, the mortgagor desiring to take the accession must
pay to the mortgagee the expense of acquiring it. If such separate possession or enjoyment is
not possible, the accession must be delivered with the property; the mortgagor being liable, in
the case of an acquisition necessary to preserve the property from destruction, forfeiture or
sale, or made with his assent, to pay the proper cost thereof, as an addition to the principal
money, 1 [with interest at the same rate as is payable on the principal, or, where no such rate
is fixed, at the rate of nine per cent. per annum]. In the case last mentioned the profits, if any,
arising from the accession shall be credited to the mortgagor. Where the mortgage is
usufructuary and the accession has been acquired at the expense of the mortgagee, the profits,
if any, arising from the accession shall, in the absence of a contract to the contrary, be set off
against interest, if any, payable on the money s o expended.
 This section deals with natural accessions and acquired accessions
  Accessions denote physical accretions or additions, whether brought by natural or
artificial means
 For example, where A mortgages a certain field bordering on a river to B and the field
is increased by alluvion, B is entitled to such increase for the purposes of his security.
Where A mortgages certain plot of building land to B and afterwards erects a house on
the plot, B is entitled to the house as well as the plot for the purposes of his security
 Accession – something got added to the mortgaged property
 At the time of redemption, the mortgagor will have right to this extra land
 Income generated from this by the mortgagee, unless any contract, the mortgagor can
charge 9% pa interest
 Natural accessions
o Accessions which are not made by the parties to the mortgage but arise as
assertions by the course of nature are known as natural accessions.
o Section 63 provides that as a general rule, natural accessions which arise
during the continuance of mortgage can be redeemed by the mortgagor
together with the mortgaged property. The mortgagee has no right to retain or
claim such accessions when mortgagor redeems the mortgage.
 Acquired Accessions
o Acquired accessions are of two types: separable acquired accessions and
inseparable acquired accessions
63A. Improvements to mortgaged property.—(1) Where mortgaged property in possession
of the mortgagee has, during the continuance of the mortgage, been improved, the mortgagor,
upon redemption, shall, in the absence of a contract to the contrary, be entitled to the
improvement; and the mortgagor shall not, save only in cases provided for in sub-section (2),
be liable to pay the cost thereof.
(2)Where any such improvement was effected at the cost of the mortgagee and was necessary
to preserve the property from destruction or deterioration or was necessary to prevent the
security from becoming insufficient, or was made in compliance with the lawful order of any
public servant or public authority, the mortgagor shall, in the absence of a contract to the
contrary, be liable to, pay the proper cost thereof as an addition to the principal money with
interest at the same rate as is payable on the principal, or, where no such rate is fixed, at the
rate of nine per cent. per annum, and the profits, if any, accruing by reason of the
improvement shall be credited to the mortgagor.
 The essential elements of this section are— (i) The mortgaged property should be in
possession of the mortgagee. (ii) The improvements to the property should have been
affected during the continuance of the mortgage. (iii) The improvements must have
been affected at the cost of the mortgagee.
 This section as a general rule provides that in the absence of a contract to the contrary,
if the mortgaged property has improved during the continuance of the mortgage, the
mortgagor shall be entitled to such improvement without paying its cost
 Exceptions n that the mortgagor is liable to pay the cost of improvements made
by the mortgagee
o Where improvements were necessary to preserve the property from
destruction or deterioration, o
 o Where improvement was necessary to prevent the security from becoming
insufficient in comparison to debt,
o Where improvement was made in compliance with the lawful order of any
public servant or public authority.
 Mortgagee has to maintain and has to make certain improvements in the property
 When the mortgage come to a closure the mortgagor has a right to retain all of the
improvements but if tehre was a cost paid by the mortgagee – the cost will have to be
paid back but he can retain those improvements

64. Renewal of mortgaged lease.—Where the mortgaged property is a lease 3***, and the
mortgagee obtains a renewal of the lease, the mortgagor, upon redemption, shall, in the
absence of a contract by him to the contrary, have the benefit of the new lease
 Where the mortgaged property is a lease, and
 The mortgagor obtains a renewal of the lease,
 The mortgagor upon redemption shall have the benefit of the new lease, in the
absence of the contract to the contrary
 However, under section 71, when the mortgaged property is a lease and the mortgagor
obtains a renewal of the lease, the mortgagee shall be entitled to the new lease for the
purposes of the security in the absence of the contract to the contrary
65. Implied contracts by mortgagor.—In the absence of a contract to the contrary, the
mortgagor shall be deemed to contract with the mortgagee,— (a) that the interest which the
mortgagor professes to transfer to the mortgagee subsists, and that the mortgagor has power
to transfer the same; (b) that the mortgagor will defend, or, if the mortgagee be in possession
of the mortgaged property, enable him to defend, the mortgagor’s title thereto; (c) that the
mortgagor will, so long as the mortgagee is not in possession of the mortgaged property, pay
all public charges accruing due in respect of the property; (d) and, where the mortgaged
property is a lease 4***, that the rent payable under the lease, the conditions contained
therein, and the contracts binding on the lessee have been paid, performed and observed
down to the commencement of the mortgage; and that the mortgagor will, so long as the
security exists and the mortgagee is not in possession of the mortgaged property, pay the rent
reserved by the lease, or, if the lease be renewed, the renewed lease, perform the conditions
contained therein and observe the contracts binding on the lessee, and indemnify the
mortgagee against all claims sustained by reason of the non-payment of the said rent or the a
non-performance or non-observance of the said conditions and contracts; (e) and, where the
mortgage is a second or subsequent incumbrance on the property, that the mortgagor will pay
the interest from time to time accruing due on each prior incumbrance as and when it
becomes due, and will at the proper time discharge the principal money due on such prior
incumbrance.
 Liabilities of a Mortgagor
 There are five contracts which a mortgagor is deemed to have entered into with the
mortgagee in the absence of a contract to the contrary
o Covenant for title [section 65(a)]
o Covenant for defence of title [section 65(b)]
 o Covenant for payment of public charges [section 65(c)]
o Covenant for payment of rents [section 65(d)]
o Covenant for discharge of prior mortgage [section 65(e)]
 Covenant for Title (65a)
o The mortgagor is deemed to contract with the mortgagee that the interest
which the mortgagor professes to transfer to the mortgagee subsists and that
the mortgagor has the power to transfer the sam
o The mortgagor's covenant of title is similar to that of vendor under section
55(2). This is two-fold: (a) as to the quantum of interest (b) as to the interest
being transferable
o If the title of the mortgagor turns out to be defective the mortgagee can sue for
the principal money as well as for damages even before the stipulated period
o When a person mortgages a property for a debt, he cannot afterwards take the
plea in a suit by the mortgagee that he had no power to effect the mortgage. He
will have to compensate the mortgagee.
o Where at the time of mortgage the mortgagor had no interest in the property
but afterwards he acquires the interest in the property, the mortgagee becomes
entitled to subsequently acquired interests for the purposes of his security.
 Covenant for Defencce of title 65b
o The mortgagor is deemed to contract with the mortgagee that he will defend,
or, if the mortgagee be in possession of the mortgaged property, enable him to
defend, the mortgagor's title thereto.
o , the mortgagor is under an implied covenant to defend the title if he himself is
in possession or to assist the mortgagee in defending the title if the mortgage is
in possession.
 Covenant for Payment of Public Charges [Section 65(c)]
o The mortgagor is deemed to contract with the mortgagee that the mortgagor
will, so long as the mortgagee is not in possession of the mortgaged property,
pay all the public charges accruing due in respect of the property. The
mortgagor has to pay government revenue and other public charges as long as
he remains in possession of property. After the death of mortgagor his heir is
liable to pay all the public charges. The same liability attaches to the
mortgagee when he comes in possession under section 76(c).
o If the mortgagor fails to pay and the property is sold for arrears of revenue,
and he again purchases that property, the property will remain under the
mortgage, for he cannot take advantage of his own wrong in order to better his
position
 Covenant for Payment of Rents [Section 65(d)]
o Where the mortgaged property is a lease, the mortgagor is deemed to contract
with the mortgagee that the rent payable under the lease, the conditions
contained therein, and the contracts binding on the lessee, have been paid,
performed and observed, down to the commencement of mortgage; and that
the mortgagor will pay the rent reserved by the lease (where the lease is
renewed, the renewed lease), and perform the conditions contained therein,
and observe the contracts binding on the lessee, and indemnify the mortgagee
 against all claims, sustained by reason of the non-payment of the said rent or
the nonperformance or non-observance of the said conditions and contracts.
 Covenant for Discharge of Prior Mortgage [Section 65(e)
o Where the mortgage is a second or subsequent encumbrance on the property,
the mortgagor is deemed to have contract that the mortgagor will pay the
interest from time to time accruing due on each prior encumbrance as and
when it becomes due, and will at the proper time discharge the principal
money due on such prior encumbrance.
o This is an implied covenant that the mortgagor will discharge prior mortgages,
for otherwise, the mortgagee may be deprived of his security
o The benefits of these implied covenants run with the land therefore, all the
assignees of the mortgagee will be entitled to the same. But the burden of
these covenants is confined to the mortgagor alone and does not pass to a
purchaser of the equity of redemption
o These implied covenants are subject to a contract to the contrary. Such a
contract may be presumed when the mortgagee was fully aware of the nature
and extent of the mortgagor's title.
65A. Mortgagor’s power to lease.—
(1) Subject to the provisions of sub-section (2), a mortgagor, while lawfully in possession of
the mortgaged property, shall have power to make leases thereof which shall be binding on
the mortgagee.
(2) (a) Every such lease shall be such as would be made in the ordinary course of
management of the property concerned, and in accordance with any local law, custom or
usage. (b) Every such lease shall reserve the best rent that can reasonably be obtained, and no
premium shall be paid or promised and no rent shall be payable in advance. (c) No such lease
shall contain a covenant for renewal. (d) Every such lease shall take effect from a date not
later than six months from the date on which it is made. (e) In the case of a lease of buildings,
whether leased it or without the land on which they stand, the duration of the lease shall in no
case exceed three years, and the lease shall contain a covenant for payment of the rent and a
condition of re-entry on the rent not being paid within a time therein specified.
(3) The provisions of sub-section (1) apply only if and as far as a contrary intention is not
expressed in the mortgage-deed; and the provisions of sub-section (2) may be varied or
extended by the mortgage-deed and, as so varied and extended, shall, as far as may be,
operate in like manner and with all like incidents, effects and consequences, as if such
variations or extensions were contained in that sub-section.
 A mortgagor, who is in lawful possession of the mortgaged property, shall have the
power to make the lease of the property which shall be binding on the mortgagee.
However, this right is subject to the provisions of sub-section (2)
 Conditions given under sub-section (2)
o Every lease should be made in the ordinary course of management of property
o lease should be made in accordance with local laws, customs and usage with
good intention. The burden of proof lies on the lessee that lease was made in
 the usual course of management and in accordance with local laws and
customs.
o no rent shall be paid in advance and no premium shall be paid or promised by
the leasee.
o There should be no provision for renewal of the lease. It there is any such
provision it shall not be binding on the mortgagee.
o Every such lease takes effect from a date not later than six months from the
date on which it is made
o where the property leased is a building, the term of the lease cannot be more
than 3 years. The lease provide for the payment of rent regularly and that in
case of non-payment of rent within specified time, the right of re-entry of the
lessor i.e., in case of non-payment of rent, the lessor (mortgagor) would be
entitled to resume possession
66. Waste by mortgagor in possession.—A mortgagor in possession of the mortgaged
property is not liable to the mortgagee for allowing the property to deteriorate; but he must
not commit any act which is destructive or permanently injurious thereto, if the security is
insufficient or will be rendered insufficient by such act. Explanation.—A security is
insufficient within the meaning of this section unless the value of the mortgaged property
exceeds by one-third, or, if consisting of buildings, exceeds by one-half, the amount for the
time being due on the mortgage.
 According to this section, a mortgagor in possession of the mortgaged property is not
liable to the mortgagee for allowing the property to deteriorate but he must not do an
act which is destructive or permanently injurious to the property, if the security is
insufficient or will be rendered insufficient by such act.
 The mortgagee who has given debt on the security of any property will not allow
destruction or injury to the mortgaged-property. That is why this section has imposed
a liability on mortgagor not to do anything which is destructive or injurious to the
mortgaged property
 The mortgage is prohibited in respect of active waste
o Cutting down the timber standing on the mortgaged property even though the
timber is very old and almost in the condition of falling down. Felling timber
may not be waste if the sum advanced on the mortgage is small in comparison
with the value of the land
o Removing valuable fixtures from the property
o Pulling down the mortgaged house and selling the materials
o Working new mines under the MP
o Minning under the MP so as to put them in danger
 Everything mentioned under Section 65- liabilities of mortgagor
Rights of the Mortgagee
Section 67: Right to foreclosure or sale.—In the absence of a contract to the contrary, the
mortgagee has, at any time after the mortgage-money has become 3 [due] to him, and before
a decree has been made for the redemption of the mortgaged property, or the mortgage-
money has been paid or deposited as hereinafter provided, a right to obtain from the Court 4
[a decree] that the mortgagor shall be absolutely debarred of his right to redeem the property,
or 4 [a decree] that the property be sold. A suit to obtain 4 [a decree] that a mortgagor shall be
absolutely debarred of his right to redeem the mortgaged property is called a suit for
foreclosure.
Nothing in this section shall be deemed— 1 [(a) to authorise any mortgagee other than a
mortgagee by conditional sale or a mortgagee under an anomalous mortgage by the terms of
which he is entitled to foreclose, to institute a suit for foreclosure, or an usufructuary
mortgagee as such or a mortgagee by conditional sale as such to institute a suit for sale; or]
(b) to authorise a mortgagor who holds the mortgagee's rights as his trustee or legal
representative, and who may sue for a sale of the property, to institute a suit for foreclosure;
or (c) to authorise the mortgagee of a railway, canal or other work in the maintenance of
which the public are interested, to institute a suit for foreclosure or sale; or (d) to authorise a
person interested in part only of the mortgage-money to-institute a suit relating only to a
corresponding part of the mortgaged property, unless the mortga gees have, with the consent
of the mortgagor, severed their interests under the mortgage.
67A. 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.
 According to this section, at any time after the mortgage money has become due and
before a decree has been made for the redemption of mortgaged property or the
mortgage money has been paid or deposited, the mortgagee has a right to obtain from
the court a decree that the mortgagor shall be absolutely debarred of his right to
redeem the property or a decree that the property be sold.
 The right to redeem and right to foreclose are co-extensive. In the absence of any
stipulation (express or implied) to the contrary, the two rights are co-extensive. Where
there is a stipulation of time for payment of mortgage-money, the mortgagor cannot
redeem before that time period.
 The difference between right of redemption and the right to foreclosure is that right of
redemption is an absolute right whereas right to foreclose is not. The mortgagor
cannot limit his right of redemption but the right to foreclose can be made subject to
the contract between the parties to mortgage.
 Section 67 provides two remedies to a mortgagee-foreclosure and sale
 Simple Mortgagee
o a simple mortgagee cannot foreclose.
o His remedy is to bring a suit for the sale of the mortgaged property in order to
recover his debt.
o Remedies
 He can be mortgagor personally on personal covenant and get a simple
money decree, or
 He may file a suit for the sale of mortgaged property to recover his
mortgagedebt.
 Usufructuary Mortgage
 o A usufructuary mortgagee is in possession of the mortgaged-property. He has
to recover his principal sum as well as interest out of the mortgaged property.
He can neither sue for sale nor foreclose the mortgage
 Mortgagee by conditional sale
o In such a mortgage, the condition of mortgage itself provides that in default of
payment on the stipulated date the mortgage will itself become a sale in favour
of the mortgagee. Therefore, in such a case the proper remedy is to deprive the
mortgagor of the right of redemption so that he might not be able to redeem
the mortgaged property
 Mortgagor as trustee for mortgagee
o Section 67(b) prohibits a mortgagor who is trustee of the mortgagee from
filing suit for foreclosure. This is so because if the mortgagor is allowed to
foreclose, he would acquire the property for his own benefit and thus become
a trustee of his own property. Therefore, the proper remedy in such a case is
sale of mortgaged property.
 Partial foreclosure
o The last paragraph of section 67 prohibits partial sale or foreclosure. One of
several mortgagees cannot foreclose or sell in respect of his share unless
several mortgagees have with the consent of the mortgagor severed their
interests under the mortgage. He can sell or foreclose his share only when
several mortgagees have separated their shares with the consent of the
mortgagee.
o Partial foreclosure is prohibited for the purpose of providing protection to the
mortgagor from multiplicity of suits being filed by several mortgagees
separately. Therefore, all the co-mortgagees must join together and file one
suit in respect of the whole mortgage-property.
 Section 67A provides that if a mortgagee holds two or more mortgages of the same
property or of different properties from the same mortgagor, he must enforce all or
more, in the absence of a contrary contract.
o It provides that—
o (i) a mortgagee who holds 2 or more mortgages executed by the same
mortgagor, and
o (ii) in respect of each mortgagee he has a right to obtain the same kind of
decree under section 67, and
o (iii) he sues to obtain such decree on anyone of the mortgages,
o (iv) he shall be bound to sue on all the mortgages in respect of which the
mortgage money has become due. However, this liability is subject to a
contract to the contrary that may be made between the mortgagor and the
mortgagee.
 This section is opposite to Section 61

Section 68: Right to sue mortgage-money

(1) The mortgagee has a right to sue for the mortgage-money in the following cases and no
others, namely:—
(a) where the mortgagor binds himself to repay the same;
(b) where, by any cause other than the wrongful act or default of the mortgagor or mortgagee,
the mortgaged property is wholly or partially destroyed or the security is rendered insufficient
within the meaning of section 66, and the mortgagee has given the mortgagor a reasonable
opportunity of providing further security enough to render the whole security sufficient, and
the mortgagor has failed to do so;
(c) where the mortgagee is deprived of the whole or part of his security by or in consequence
of the wrongful act or default of the mortgagor;
(d) where, the mortgagee being entitled to possession of the mortgaged property, the
mortgagor fails to deliver the same to him, or to secure the possession thereof to him without
disturbance by the mortgagor or any person claiming under a title superior to that of the
mortgagor:
Provided that, in the case referred to in clause (a), a transferee from the mortgagor or from his
legal representative shall not be liable to be sued for the mortgage-money. (2) Where a suit is
brought under clause (a) or clause (b) of sub-section (1), the Court may, at its discretion, stay
the suit and all proceedings therein, notwithstanding any contract to the contrary, until the
mortgagee has exhausted all his available remedies against the mortgaged property or what
remains of it, unless the mortgagee abandons his security and, if necessary, re-transfers the
mortgaged property.]
 In the following four cases the mortgagee has a right to sue for the mortgage-money:
—
o (i) Where the mortgagor binds himself to repay the same.
o (ii) Where the mortgaged property is destroyed, wholly or partially without
the fault of any party.
o (iii) Where the mortgagee is deprived of the whole or part of his security
by wrongful act or default of the mortgagor.
o (iv) Where the mortgagee being entitled to possession, the mortgagor fails
to deliver the same
 Clause 1 imp
 Personal Covenant 68(1)(a)
o Where the mortgagor binds himself to repay the debt personally, it is said
that there is a personal covenant by the mortgagor
o Clause (a) of section 68 gives a right to the mortgagee to sue for the
mortgage-money if there is a personal covenant by mortgagor to repay the
same. However, the personal covenant does not run with the land.
o Therefore, no decree can be passed against a purchaser of the right of
redemption. However, there is an implied covenant by such purchaser to
indemnify the mortgagor
 o The personal liability is not affected for want of registration or of
attestation of mortgage. But where the transaction of mortgage is illegal, a
suit will not lie on the personal covenant
 Destruction of Security 68(1(b)
o The essential requirements of this clause are that—
 (a) The mortgaged property is destroyed (wholly or partially) or the
security is rendered insufficient (under section 66)
 (b) The wrongful act or default of the mortgagor or mortgagee is
not involved in the destruction or insufficiency of security.
 (c) The mortgagee must have given the mortgagor a reasonable
opportunity of providing further security so that the whole security
becomes sufficient against the mortgage-debt.
 (d) But the mortgagor fails to provide the security. Here the
mortgagee's right to sue for the mortgage-money arises
 Wrongful Act or Default of the Mortgagor [Section 68(1)(c)
o This clause says that the mortgagee's right to sue arises when the
mortgagee is deprived of the whole or part of his security by or in
consequence of the wrongful act or default of the mortgagor
o This clause contemplates a situation where the mortgagedproperty is lost,
destroyed or is devolved due to any deliberate act or negligent omission of
the mortgagor
o When mortgaged property lost due to own default then he cannot sue
o When sold for arrears, he cannot bring suit
o Singjee v Tiresvengadam, (1890) 13 Mad 192
 Where A mortgaged his property to B and then to C;A failed to pay
off the prior encumbrance when it became due and B brought the
property to sale; it was held that C was entitled to sue at once for
his mortgage-mone
 Failure of Mortgagor to Deliver Possession [Section 68(1)(d)]
o The mortgagee may sue the mortgagor where he is entitled to the
possession of the mortgaged-property but the mortgagor fails to deliver it
to him or secure the possession of it to him without disturbance by the
mortgagor or any person claiming under a title superior than that of the
mortgagor. This clause refers to usufructuary mortgages
 Stay of the suit
o A suit under section 68 is a suit by the mortgagee for the mortgage-money.
The only decree that can be passed under this section is a decree for
money. Therefore, O XXXIV, rule 6 of the Code of Civil Procedure does
not apply to the suits under section 68. The mortgagee can, therefore,
execute his decree against the mortgagor personally while preserving his
rights under the mortgage. This results in a great hardship to the mortgagor
and to avoid this hardship the sub-section (2) provides that where the
mortgagor is not in default [clauses (a) and (b)], the suit under this section
shall be stayed until the mortgagee has exhausted his remedy against the
security
Section 69: Right to exercise power of sale if given under the mortgage-deed
 This section gives the mortgagee a right to sell without the intervention of the court
o Where the mortgage is an English mortgage and neither the mortgagor nor
the mortgagee is a,— (i) Hindu, (ii) Muhammadan, (iii) Buddhist, or (iv) a
member of any other race, sect, tribe or class from time to time specified in
this behalf by the State Government in the Official Gazette.
o Where a power of sale without the intervention of the court is expressly
conferred on the mortgagee by the mortgage deed and the mortgagee is the
government.
o Where a power of sale without the intervention of the court is expressly
conferred on the mortgagee and the mortgaged property is situated within
the specified towns. These towns included Calcutta, Madras and Bombay
originally. But later on Ahmedabad, Kanpur, Allahabad, Lucknow,
Coimbatore, Cochin and Delhi etc., were included by notification in the
Official Gazette.
 Who can exercise this power
o The power of sale without the intervention of the court is exercisable by
the mortgagee under this section. The term "mortgagee" here includes his
assignees or transferees also.
o The words "any person acting on his behalf" show that the mortgage-deed
may provide for the exercise of power of sale by an agent of the mortgagee
 What can be sold
o Mortgaged property or any part of it
 Conditions for exercise of power
o The conditions for the applicability of this section are given in sub-section
(2). These conditions are statutory conditions and cannot be modified by
the parties to the mortgage.
o (i) The first condition is regarding notice. Notice must have been served in
writing and three months must have passed after service of notice. It is
necessary before the exercise of power of sale that the notice in writing
requiring payment of the principal money has been served on the
mortgagor and default has been made in payment of the principal money
for three months after such notice. Where there are many mortgagors of
one property, the notice must have been served on one of the several
mortgagors and the default may have been made either about the whole
principal money or any part of it.
o (ii) This power can be exercised when some interest under the mortgage
amounting at least to Rs 500 is in arrear and unpaid for three months after
becoming due.
 The Bombay High Court in Jagjivan v Shridhar, 267. held that "the owner of equity
of redemption can only stay the sale pendente lite by paying the amount due into the
court, or by giving prima facie evidence that the power of sale is being exercised in a
fraudulent or improper manner, contrary to the terms of the mortgage." The mortgagor
should offer to redeem before he can bring the mortgagee before the court. A
 mortgagor may obtain an injunction to restrain a sale if the mortgagee is acting in a
fraudulent and improper manner, or contrary to the terms of the mortgage-deed
 The subsection (3) protects the interests of the purchaser and it says that when a sale
has been made in exercise of such power then title not impeachable
 Subsection (4) provides for appropriation of sale proceeds. It details about how the
amount received after sale is to be utilised
 Utilised by
o for discharge of prior encumbrances.
o for payment of costs, charges and expenses property incurred for the sale.
o for the discharge for mortgage-money.
o The surplus money (if any), will be paid to the person entitled to the
mortgaged property.
Section 69A: right to have a receiver appointment
 A mortgagee having the right to exercise a power of sale under section 69 is entitled to
appoint, in writing, a receiver of the income of the mortgaged property
 Any person who has been named in the mortgage-deed and is willing and is able to act
as a receiver may be appointed by the mortgagee. In case no person has been so
named, or all the named persons are dead or unable or unwilling to act, the mortgagee
may appoint any person with the consent of the mortgagor
 A receiver may be removed on due cause shown by the court on application made by
either mortgagor or mortgagee, or by a writing signed by the mortgagor and the
mortgagee.
 Because court cant sell by itself – need a person who acts as an intervener and how the
sale proceeds going to be – that is what receiver does and mortgagee can approach the
court to appoint him
*Have not gone into the details of this section. Mam has not taught in detail but you can refer
to avtar
Sec 70: Right to accession
 Accessions are additions to the property
 Additional land the mortgagee will get the benefits and that will act as a security to be
paid.
 Section 70 says that if after the date of the mortgage any accession is made to the
mortgaged-property, the mortgagee shall be entitled to such accession for the purposes
of security of his mortgage-debt
 Converse of S63 mortgagors right of accession
 The mortgagee is entitled to treat the acquired accession as part of his security and to
enforce his lien upon them. This section is not limited to physical accretions only. An
increase of interest or enlargement of the estate is also an accession.
 The first illustration given in the section is that A mortgages to B a certain land field
bordering on a river. The field is increased by alluvion. For the purposes of his
security, B is entitled to the increase. In this illustration, B, the mortgagee has been
held entitled to the accession to the mortgaged-property.
  In the second illustration, A mortgages a certain plot of building land to B and
afterwards erects a house on the plot. For the purposes of his security, B is entitled to
the house as well as the plot
Sec 71: Right to have benefit of renewed lease
 According to this section, when the mortgaged-property is a lease and the mortgagor
obtains a renewal of the lease, the mortgagee shall be entitled to the new lease for the
purposes of security in the absence of the contract to the contrary. This is based on the
principle that a renewal of lease is a graft upon the old stock and is, therefore, subject
to the same equities as the old lease
 Linked right – during subsistence of mortgage – mortgagee has a right to renew the
lease deed and if mortgage moent not paid off – mortggaee can ask for renewal of
lease as long as derives the benefit or premium
Section 72: right of mortgagee in possession
2 [A mortgagee] may spend such money as is necessary— 3* * * * * (b) for 4 [the
preservation of the mortgaged property] from destruction, forfeiture or sale; (c) for
supporting the mortgagor's title to the property; (d) for making his own title thereto good
against the mortgagor; and (e) when the mortgaged property is a renewable lease-hold, for the
renewal of the lease; and may, in the absence of a contract to the contrary, add such money to
the principal money, at the rate of interest payable on the principal, and, where no such rate is
fixed, at the rate of nine per cent. per annum:
[Provided that the expenditure of money by the mortgagee under clause (b) or clause (c) shall
not be deemed to be necessary unless the mortgagor has been called upon and has failed to
take proper and timely steps to preserve the property or to support the title.] Where the
property is by its nature insurable, the mortgagee may also, in the abs ence of a contract to the
contrary, insure and keep insured against loss or damage by fire the whole or any part of such
property; and the premiums paid for any such insurance shall be 2 [added to the principal
money with interest at the same rate as is payable on the principal money or, where no such
rate is fixed, at the rate of nine per cent. per annum]. But the amount of such insurance shall
not exceed the amount specified in this behalf in the mortgage-deed or (if no such amount is
therein specified) two-thirds of the amount that would be required in case of total destruction
to reinstate the property insured. Nothing in this section shall be deemed to authorise the
mortgagee to insure when an insurance of the property is kept up by or on behalf of the
mortgagor to the amount in which the mortgagee is hereby authorised to insure.
 Section 72 dealing with the right of mortgagee in possession provides for the
circumstances under which the mortgagee may spend money
 Circumstances
o for the preservation of the mortgaged property from destruction, forfeiture or
sale.
 . Mortgaged-property is the security for repayment of the debt.
Therefore, it is necessary to keep it protected and safe. It is the duty of
the mortgagor to keep the property protected
 If the mortgagor neglects to do so, this section gives the right to the
mortgagee to protect that property and spend money for the purpose.
 The expenditure incurred by the mortgagee in the preservation of
property is included in the mortgage- money.
o for supporting the mortgagor's title to the property.
 The mortgagor is under duty to defend his title but if fails to defend his
title and the mortgagee defends the mortgagor's title and incurs
expenses in doing so, he is entitled to add such money to the principal
amount
o for making his own title thereto good against the mortgagor i.e., for defending
his own title against the mortgagor.
 Where the mortgagor brings any suit to challenge the title of the
mortgagee in the mortgaged-property and the mortgagee defends his
title, he becomes entitled to add the expenses of the suit incurred by
him to the principal amount. However, he is not entitled to costs
incurred by him in defending his title against a strange
o when the mortgaged property is a renewable lease-hold, for the renewal of the
lease.
 The mortgagee is entitled to spend money for renewal of the lease
when the mortgaged property is a renewable leasehold. Although he is
under no liability to renew the lease but he may do so in order to
maintain his security and if he pays fine for the renewal he can add the
amount to the principal sum.
o Insuring the property where it is of insurable nature.
 Where the property is by its nature insurable, the mortgagee may in the
absence of the contract to the contrary insure and keep insured against
loss or damage by fire the mortgaged property and the premiums paid
for any such insurance shall be added to the principal money

Check only till the proviso – claim through adding in mortgaged amount or put 9% interest
on the repayment – additional interest subject to anything contrary has been decided
Section 73: Right to proceeds of revenue sale or compensation on acquisition.—
(1) Where the mortgaged property or any part thereof or any interest therein is sold owing to
failure to pay arrears of revenue or other charges of a public nature or rent due in respect of
such property, and such failure did not arise from any default of the mortgagee, the
mortgagee shall be entitled to claim payment of the mortgage-money, in whole or in part, out
of any surplus of the sale-proceeds remaining after payment of the arrears and of all charges
and deductions directed by law.
(2) Where the mortgaged property or any part thereof or any interest therein is acquired under
the Land Acquisition Act, 1894 (1 of 1894); or any other enactment for the time being in
force providing for the compulsory acquisition of immoveable property, the mortgagee shall
be entitled to claim payment of the mortgage-money, in whole or in part, out of the amount
due to the mortgagor as compensation.
(3) Such claims shall prevail against all other claims except those of prior encumbrancers,
and may be enforced notwithstanding that the principal money on the mortgage has not
become due.]

Section 76: liabilities of mortgagee in possession
 Section 76 provides for liabilities of the mortgagee in possession.
 The mortgagee is the person who gives a loan to the mortgagor on the security of
some property. Therefore, he has rights against the mortgagor and the mortgaged
property and as such he has no duty towards them.
 Although only the usufructuary mortgagee retains the possession of the property but
this section is applicable to all the mortgagees who may have obtained possession of
the mortgaged property for any reason
 Duties
o Duty to manage the property as a person of ordinary prudence.
 When in the possession of the mortgaged property, the mortgagee is
entitled to manage the property in the same manner as the person of
ordinary prudence will take care of his own property. Although the
mortgagee is not the trustee of the mortgaged property for the
mortgagor yet his duties towards the mortgaged property are similar to
the duties of a trustee under section 15 of the Indian Trust Act.
 The Supreme Court held in Asa Ram v Ram Kali 296. , that the
creation of a lease which creates occupancy rights in favour of the
tenants could not be regarded as a prudent transaction. A tenant of a
mortgagee in possession cannot resist eviction by the mortgagor by
relying on the Rent Acts after redemption
 n Pomel v Vraj Lal 298. , the Supreme Court held that a lease by the
mortgagee in possession of an urban property would prima facie be
imprudent and not binding on the mortgagor being beyond the powers
conferred by clause (a) of section 76. But if it can be shown in any case
that such a lease was prudent it would bind the mortgagor even after
redemption and even though the lessee acquires the right of a
permanent or quasipermanent nature
o Duty to collect rents and profits of the property to his best endeavour.
 Clause (b) provides that the mortgagee must use his best endeavours to
collect the rents and profits thereof. The mortgagee has to account not
only for the rents and profits which he has actually received but also
for those which he could not collect due to his negligence or
mismanagement
o Duty to pay Government dues unless there is a contract to the contrary.
 Clause (c) provides that the mortgagee, in the absence of contract to
the contrary, pay the government revenue, all other charges of a public
nature and all rent accruing due in its respect during such possession
and any arrears or of rent in default of payment of which the property
may be summarily sold, out of the income of the property.
o Duty to make necessary repairs of the mortgaged property unless there is a
contract to the contrary.
 According to clause (d), when the mortgagee takes possession of the
property, he must in the absence of a contract to the contrary, make
such necessary repairs to the property as he can pay out of rents and
profits of the property (after deducting from such rents and profits
government revenue and all other charges of pubic nature and interest
on the principal money)
o Duty not to commit any act which may destroy or injure the property
permanently.
 Clause (e) provides that the mortgagee in possession of the mortgaged
property must not commit any Act which is destructive of or
permanently injurious to the property. The mortgagee is put under this
duty like the mortgagor in possession (section 66) and the lessee
(section 108). The mortgagee in possession is not free to commit
waste. He is bound to use the mortgaged property with the care of a
prudent owner. However, he is not liable for accidental losses.
o Duty to apply insurance money in reinstating the property or in reduction of
the mortgage-money if he receives such money in respect of the
mortgagedproperty.
 Clause (f) provides that where the mortgagee has insured the property
against loss or damage by fire, then in case of such loss or damage he
must apply the money received by him under the policy in reinstating
the property or in reduction or discharge of the mortgage-money where
the mortgagor directs so.
o Duty to keep proper accounts of all sums received and spent by him as a
mortgagee.
 The mortgage is under an obligation to keep clear, full and accurate
accounts of all the sums received and spent by him as mortgagee.
o Duty to apply rents and profits in discharge of interest after making certain
deductions.
 Clause (h) deals with the manner in which income from the mortgaged
property is to be applied. The income must be applied in the following
order:— (a) expenses property incurred in the management of the
property and the collection of rents and profits and other expenses
mentioned in clauses (c) and (d), (b) interest on the amount the surplus
is to be applied towards the interest on the principal money, and (d)
towards the principal money.
o Duty to account for gross receipts.
 This clause provides that when the mortgagor tenders or deposits the
amount due on the mortgage, the mortgagee must account for his
receipts from the mortgaged property from the date of tender or from
the earliest time when he could take such amount out of court and shall
not be entitled to deduct any amount therefrom on account of any
expenses incurred after such date or time in connection with the
mortgaged property
[s 77] Receipts in lieu of interest.— Nothing in section 76, clauses (b), (d), (g) and (h),
applies to cases where there is a contract between the mortgagee and the mortgagor that the
receipts from the mortgaged property shall, so long as the mortgagee is in possession of the
property, be taken in lieu of interest on the principal money, or in lieu of such interest and
defined portions of the principal.
 Section 77 is an exception to section 76
 Section 77 provides that if it is agreed between the parties that rents and profits
received by the mortgagee are to be taken by him in lieu of interest on the
mortgagemoney the mortgagee is under no liability to give accounts of the income.
[s 78] Postponement of prior mortgagee.— Where, through the fraud, misrepresentation or
gross neglect of prior mortgagee, another person has been induced to advance money on the
security of the mortgaged property, the prior mortgagee shall be postponed to the subsequent
mortgagee.
 This section is an exception to the general rule of priority. It says that where a
subsequent mortgagee is induced to give money to the mortgagor due to fraud,
misrepresentation or gross neglect of the mortgagee prior to him, the prior mortgagee
shall be postponed to the subsequent mortgagee i.e., the subsequent mortgagee will be
repaid earlier than the prior mortgagee. The mortgagee later in time will be paid
before the person earlier in time.
 Fraud
o Fraud means an act done with the intention of deceiving another person. Fraud
occurs where there is dishonest intention
o Active concealment of a fact is fraud only when there is duty to speak. When
there is no duty to speak keeping silence is no fraud
o For example, where A mortgages his property at first to B and when he
subsequently tries to mortgage it to C again, C inquires from B whether the
property has any prior encumbrance, he conceals the fact of his own mortgage.
Here B has committed fraud, and, therefore, he will be postponed to
subsequent mortgagee C.
 Misrepresentations
o Mis-statement of a fact without any dishonest intention is misrepresentation.
Where there is only omission to notify a prior mortgage, the mistake, although
innocent, will amount to misrepresentation.
 Gross Negligence
o A negligence so grave that it cannot be believed that a person of ordinary
prudence would have committed it, is known as gross-negligence.
o In Lloyds Bank v PE Guzdar & Co, 303. one G deposited his title-deeds of
property with bank N to secure an overdraft. G then asked to return the deeds
by saying that he wanted to sell the property and clear the overdraft. The usual
practice for the prospective buyer was to inspect the titledeeds in the office of
the mortgagee's solicitors. However, G said that he would not get a good price
if the purchaser came to know that the bank had the title-deeds. The bank
returned the deeds to G. G again borrowed money from bank L on the deposit
of the same deeds falsely representing that there was no encumbrance. The
 question arose that as between bank N and L who had priority. It was held that
the bank N was guilty of gross and wilful negligence in handing over the title-
deeds to G which gave a chance to G to obtain another loan from bank L.
Therefore, bank N had lost its priority and it was held that bank L would get
priority over bank N

RIGHT OF REDEMPTION: (IMPORTANT)

Right to redemption
 Residuary ownership (remaining interest) that remains with the mortgagor
 Ram Krishan prasad v. Manoharlal Gupta
o In case of default it wont be converted into transfer of sale because the
intention of the parties is for payment of debt
o Suit for redemption cannot be converted into suit for sale
 Right of redemption co-exists with the right of foreclose
o Inconsistent rights
o They both do not run parallel
o Law wants to balance both these rights and therefore concept of equity applies
o Concept of equity
 Extention of reasonable amount of time
History of Equity
 It began in the chancery courts of England
 Moneylenders used to take away the property on the day of the default
 Slowly this affected rights of the bonafide person as well as of those who would have
paid in reasonable time
 When the courts interpreted equity, equity operates against express provisions as well
 Express provisions started coming in response to these principles of equity
o Once a mortgage always a mortgage
 Cannot be converted to sale
o Even in case of default
 Alokam peddabhayya v. Allahbad Bank
o There was a mortgage and the person defaulted. An auction took place and
sale happened. Owner later said that he can pay off the mortgage
o Held: the owner did not exercise his right of redemption during auction and
came after sale certificate was obtained and therefore ROR extinguished
 Ram Kishan v. Sheo Ram 2008
o Right of redemption cannot be taken away even by mutual agreement
mutually agreed by the parties or an agreement between them.
Clog on Redemption
 Even when the mortgagor agrees to provisions of giving up ROR but the parties had
intended that it cannot be converted to sale in such cases there exists a clog on
redemption
  There cannot be any stipulation or condition which obstructs the mortgagor from
exercising ROR
 Any such condition would be void even if it is put by the mortgagor
 Statutory and equity principles both hold this
Clog on redemption – obstruction on the right of redemption – any such condition will be a
void condition – cannot restrain anybody after he or she has paid.
Preventing mortgagor for very long time – then there is a clog on right of redemption
They depend on the facts and nature of the conditions
When can we say it is a clog on redemption?
 If the condition that I will sell off your property in case of default of property – this
condition is a clog on right of redemption
Essentials of clog
1. The clog must be imposed by the mortgagor/gee themselves
a. The third party can place restrictions and they will be valid
2. Such condition must be incorporated in the deed itself
a. ROR always flows from mortgage deed
b. Independently these conditions can exist
3. These conditions should not be against public policy and should not be malafide
4. Conditions must put absolute restraint on ROR or prevent redemption for a long time
(prevention must be absolute and restraint for long time)
Gulab Chand Sharma v. Saraswati Devi (1997)
 In a mortgage by conditional sale, the mortgagor was given a time-period of 4 years
from the date of execution of the mortgage-deed to repay the same. Another clause
provided that if the mortgagee received notice of re-entry from a public authority for
breach of covenants of lease before the expiry of time-period, then the transfer in
favour of the mortgagee shall become absolute and all the expenses will be borne by
the mortgagor. The Supreme Court held this to be a clog on redemption.

Long-Term for Redemption

 It is not necessary conclusion that a long-term for redemption is always a clog on
redemption. In fact, it may suit both the parties, relieving the mortgagor of the
necessity of finding another creditor and also enabling the mortgagee to make a long
term investment. So long as the right of redemption and foreclosure or sale go hand in
hand, it would not really matter how long redemption is postponed. However, if the
length of the term is found to be oppressive, redemption would be allowed before the
expiry of that period. A period of 200 years has been held to be unreasonable and a
clog on redemption
 Case: Seth Ganga Dhar v Shankar Lal AIR 2000 SC 770 –
o The mortgage time period was after 85 years you can repay, sounds like
unreasonable, court looked at that this was decided because there was
 some investment or coercion or what are the impact of the mortgage,
circumstances under which mortgage transaction happened?
o It wasn’t against the law hence even 85 years was reasonable
o Tested in this court – postponement is unreasonable if bargain is
oppressive or unconscionable.
Some instances where clog on redemption happens:
1. Any condition of sale of property on default
2. Postponement
3. Condition postponing redemption on a certain date
4. Condition restraining alienation
5. Penalty in default
6. Collateral benefits
When conditions postponing redemption on default of payments
 All such conditions shall be void
Conditions must not be such so as to restrain alienation
 The right of redemption can be exercised by the mortgagor as well as his assignees
who take the whole of his interest. If the mortgage contains a term that the mortgaged
property shall not be alienated by the mortgagor during the continuance of the
security even for the purpose of paying off the debt, it is void for being a clog on
redemption.
 Hasthimal and sons v P Tej Raj Sharma AIR 2007 SC 3246
o Restraint on alienation will amount to clog on redemption
You cannot put penalty in default of payment
 This is oppressive in nature
 This is not allowed because anyways interest is being paid
 Sarfaraz Singh v Udavat Singh AIR 1929 Oudh 30
o For every penny that has been lent out, you have to give 5 kgs of rice –
oppressive nature of the condition – this is void – interest we are already
giving – this penalty hence acts as a clog on redemption – this makes the
process of paying the mortgage money more difficult
Collateral benefit to the mortgagee:
 Additional liability is a clog on redemption
 Cases:
o Kreglinger v. Patagonia Meat and cold storage co ltd 1914 AC25
o English house of lords
o Nokes v Rice
Some instances where clog on redemption happens:
7. Any condition of sale of property on default
8. Postponement
 9. Condition postponing redemption on a certain date
10. Condition restraining alienation
11. Penalty in default
12. Collateral benefits

LEASE
105. Lease defined.—A lease of immoveable property is a transfer of a right to enjoy such
property, made for a certain time, express or implied, or in perpetuity, in consideration of a
price paid or promised, or of money, a share of crops, service or any other thing of value, to
be rendered periodically or on specified occasions to the transferor by the transferee, who
accepts the transfer on such terms. Lessor, lessee, premium and rent defined.—The
transferor is called the lessor, the transferee is called the lessee, the price is called the
premium, and the money, share, service or other thing to be so rendered is called the rent.
 Lease is a partial transfer of certain rights in the property. It is a transfer of "right of
enjoyment" of an immovable property made for a certain period, in consideration of a
price paid or promised to be paid, or money, share of crops, service or any other thing
of value to be given periodically or on specified occasions to the transferor by the
transferee.
 In a lease transaction, the transferor is called the lessor, the transferee is called the
lessee, the price paid or promised to be paid is called the premium and the money,
share, service or other thing to be so rendered is called the rent.
 Essential Elements (B Arvind Kumar v. Govt of India)
o The parties to lease—lessor and lessee
o The subject-matter of lease—immovable property
o There must be transfer of a right
o Duration of lease
o Consideration of lease—premium
o Acceptance of transfer by the lessee
o Lease must be made in the mode under section 10
 Parties to a lease
o There must be two parties in a lease, i.e., lessor (transferor) and the lessee
(transferee).
o A lease arises in an agreement between the owner of a property and the person
who proposes to take that property for a term on payment of consideration
o Every tenancy is based upon an agreement between two persons and contains
covenants expressed or implied by one person with the other. Now if a man
cannot agree with himself … and cannot covenant with himself, how he can
grant a tenancy to himself …
o Every person who is competent to contract and entitled to transferable
property or authorized to dispose of transferable property not his own is
competent to grant a lease. Only an absolute owner of property can grant a
lease for any period he likes. A limited owner can grant a lease only to the
 extent permitted by law. A person holding a property for life cannot grant a
lease beyond his life unless he is especially empowered under the terms of the
deed of settlement.
o A lessee may himself grant a lease further and such a lease is commonly
known as sub-lease or under-lease
o The lessee must also be competent to contract. A lease may be granted to one
or more than one person jointly. In the case of joint tenancy, in the absence of
a clear provision to the contrary, the entire body of tenants constitute single
tenan
 Subject Matter of Lease
o The subject-matter of a lease must be specific immovable property
o IP defined under S3 of this act
 Transfer of Right
o In lease there is a transfer of right of enjoyment of property. Right of
enjoyment is transferred only when there is transfer of possession.
o In mortgage and lease only a partial interest is transferred, therefore, it is
transfer of a limited estate. This limited estate i.e., right of enjoyment of
property is known as "demise".
o Lease hold estate is transferred after being separated from ownership. This is a
right in rem.
 Duration of the Lease
o The essential of a lease is that the right to enjoy the property must be
transferred for a certain time, express or implied or in perpetuity.
o The document of lease must show the time-period of operation of lease and
when it is going to commence.
o The commencement of the lease must be certain in the first instance or capable
of being made certain afterwards. It may commence either in the present or in
future or on the happening of a certain contingency which is bound to happen.
o Three deeds recognised by this section
 Leases for certain time
 Periodic leases
 Leases in perpetuity
o A lease for life is a lease for a certain time, for it terminates with the death of
the lessee. It is necessary for lease for a certain time that the lease deed should
be capable of being made certain on a future date. If in the fluxion of time a
day will arrive which will make it certain, that is sufficient for such a lease
o The periodic leases are tenancies from month to month or year to year. A
tenancy from year to year differs from a tenancy at will in that it can only be
terminated by notice duly given and the interest created is not terminated by
death of either party. A lease from year to year is a periodical lease which
continues from one period to another period. In periodic leases the duration of
the term is continuous from period to period.
o In India, perpetual leases (for example, agricultural leases) are created by an
express or a presumed grant. In a case, a question arose whether a lease for
999 years is legal especially in view of the fact that substantial stamp duty can
 be saved by executing such a lease. The Calcutta High Court held that there
was nothing illegal in executing a lease for 999 years and just because stamp
duty is saved thereby, the transaction does not become unlawful. (Molla
Sirajul Haque v Gorachand Mullick)
 Consideration
o A lease is a transaction which has always to be supported by consideration.
o It may be either premium or rent
o When whole amount is payable as consideration in lump sum it is called
premium
o The consideration paid periodically is rent
 Rent fixed must be certain
o In CIT, Assam, Tripura and Manipur v Panbari Tea Co Ltd, 27 the
Supreme Court made a distinction between premium and rent and observed:
"when the interest of the lessor is parted with for a price, the price paid is
premium or Salami. But the periodical payments for continuous enjoyment of
the benefits under the lease are in the nature of rent. The former is a capital
income and the latter is a revenue receipt."
 Agreement to lease
o "agreement" indicates there is no transfer of possession or right of enjoyment
with immediate effect.
o Agreement to lease is a contract under which a person promises to grant lease
on a future date
 Difference between Lease and Agreement to lease
Lease Agreement to Lease
Right in rem is created Does not create a right in rem
Lease operates as a transfer Does not transfer right of enjoyment
with immediate effect
Relationship of landlord tenant No such relationshiop created
established
Aspect Lease Licence
Transfer of interest in immovable
Nature of Transfer property No transfer; Right to occupy property
Treatment of Accretion Accretion deemed to be part of lease Licensee acquires no rights in property
Neither transferable nor heritable;
Transferability Transferable and heritable Personal privilege
Licensee gets personal right to use land;
Nature of Rights Lessee gets proprietary right (demise) Permission
Generally irrevocable; Exceptions
Revocability apply Generally revocable; Exceptions apply
Lessee entitled to notice to quit before
Notice for Eviction eviction Licensee not entitled to notice
Lessee entitled to sue trespassers and
Suit Against Trespass strangers Licensee not entitled to sue trespassers
Effect of Subsequent Lessee's interest not affected by Licence terminated upon grantor's
Transfer subsequent transfer assignment
 Lease unaffected by death of either Licence terminated upon death of either
Effect of Death party party
 Difference between Lease and License

 Lease and Mortgage

o There is no automatic merger of two rights where mortgage is executed in
favour of a tenant and on redemption of mortgage, the tenancy rights kept in
abeyance would revive and entitle the tenant to continue in possession even
after the redemption of mortgage. On execution of mortgage, tenancy rights
would terminate only if it is clear expressly or impliedly by conduct or from
other related circumstances that the parties had intended so which would be a
question of fact. Thus, as a normal rule, except where there is contrary
intention, mortgage and lease operate independent of each other and on
mortgage coming to an end by redemption, tenancy would revive
106, 107, 108 pending (*108 is important)
[s 109] Rights of lessor's transferee.— If the lessor transfers the property leased, or any part
thereof, or any part of his interest therein, the transferee, in the absence of a contract to the
contrary, shall possess all the rights, and, if the lessee so elects, be subject to all the liabilities
of the lessor as to the property or part transferred so long as he is the owner of it; but the
lessor shall not, by reason only of such transfer cease to be subject to any of the liabilities
imposed upon him by the lease, unless the lessee elects to treat the transferee as the person
liable to him:
Provided that the transferee is not entitled to arrears of rent due before the transfer, and that,
if the lessee, not having reason to believe that such transfer has been made, pays rent to the
lessor, the lessee shall not be liable to pay such rent over again to the transferee.
The lessor, the transferee and the lessee may determine what proportion of the premium or
rent reserved by the lease is payable in respect of the part so transferred, and, in case they
disagree, such determination may be made by any Court having jurisdiction to entertain a suit
for the possession of the property leased
 In the case of a lease of immovable property, the right of enjoyment of that property is
transferred in favour of the lessee. The remaining interest of the lessor in that property
is known as reversion
 Section 109 deals with the rights of the lessor's transferee
 It deals with a situation in which the leased property is transferred by the lessor. After
the lease of the property, the lessor may transfer the remaining interest to another
person. In such a transfer the transferee too becomes entitled to all the rights and
liabilities of the lessor which he had at that time. However, such entitlement is subject
to a contract to the contrary i.e., the parties may agree on some other terms
 Lessor is not subject to any liabilities imposed by the lease unless the lessee elects to
treat transferee as person liable to him
  The transferee is not entitled to arrears of rent due before the transfer but if the lessee
not having knowledge of such a transfer, pays the rents to the lessor, he shall not be
liable to pay such rent over again to the transferee.
 The lessor, the transferee and the lessee may determine about the apportionment of
rent between them in the case when only a part of reversion has been transferred. In
apportionment of rent, regard must be had to the value and quality of the property. In
case they are unable to agree, the court having jurisdiction to entertain a suit for
possession of the property leased may determine the apportionment of rent
 The substantive part of section 109 read with the proviso necessarily indicates that the
arrears of rent due is one of the lessor's right as to the property transferred. Right to
recover the arrears of rent vested with the original owner and on transfer of all his
rights the same vests in the transferee as per provisions of section 109. The proviso to
section 109 clearly indicates that if there is an assignment of rent due then the
transferee/landlord would be entitled to recover the same from the tenant as arrears of
rent. Where it was found that the landlord had assigned the right to recover arrears of
rent in favour of transferee landlord, it was held that this fact cannot be allowed to be
disputed by tenants who were certainly in arrears of rent for more than six months.
Therefore, it was held that the tenants would be liable to be evicted from premises in
dispute on the ground of default on their part in payment of rent (Sheikh Noor v.
Sheikh Ibrahim)
 Lease does not affect the rights and title of the owner of property. The law does not
permit any restrictions on the owner's right to transfer his property. If the property is
under lease, the right of the seller's ownership and those of the seller on lessor become
transferred to the buyer. The lessor's right to resume possession and terminate lease,
both can co-exis

[s 110] Exclusion of day on which term commences.— Where the time limited by a lease
of immoveable property is expressed as commencing from a particular day, in computing that
time such day shall be excluded. Where no day of commencement is named, the time so
limited begins from the making of the lease. Duration of lease for a year.—Where the time so
limited is a year or a number of years, in the absence of an express agreement to the contrary,
the lease shall last during the whole anniversary of the day from which such time
commences. Option to determine lease.—Where the time so limited is expressed to be
terminable before its expiration, and the lease omits to mention at whose option it is so
terminable, the lessee, and not the lessor, shall have such option.
 Section 110 lays down the rule for computation of period of lease. Where the time
limited by a lease of immovable property is expressed as commencing from a
particular day, in computing the period of lease, such day shall be excluded. But
where no such day of commencement is named, the time of the lease will begin to run
from the time of its execution
 In the absence of an express contract to the contrary, in the case of a lease for a year
or a number of years, the lease shall last during the whole anniversary of the day from
which such time commences
 Does not apply to month to month tenancy and only applies to periodical tenancies
  When not specified who has the option to terminate then the lessee shall have the
option to terminate

Section 111 Determination of Lease

A lease of immoveable property determines—
(a) by efflux of the time limited thereby;
(b) where such time is limited conditionally on the happening of some event— by the
happening of such event;
(c) where the interest of the lessor in the property terminates on, or his power to dispose of
the same extends only to, the happening of any event—by the happening of such event;
(d) in case the interests of the lessee and the lessor in the whole of the property become
vested at the same time in one person in the same right;
(e) by express surrender; that is to say, in case the lessee yields up his interest under the lease
to the lessor, by mutual agreement between them;
(f) by implied surrender;
(g) by forfeiture; that is to say, (1) in case the lessee breaks an express condition which
provides that, on breach thereof, the lessor may re-enter 228[***]; or
(2) in case the lessee renounces his character as such by setting up a title in a third person or
by claiming title in himself; 229[or
(3) the lessee is adjudicated an insolvent and the lease provides that the lessor may re-enter
on the happening of such event]; and in 230[any of these cases] the lessor or his transferee
231[gives notice in writing to the lessee of] his intention to determine the lease;
(h) on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the
property leased, duly given by one party to the other.
Illustration to clause (f) A lessee accepts from his lessor a new lease of the property leased, to
take effect during the continuance of the existing lease. This is an implied surrender of the
former lease, and such lease determines thereupon.
8 modes that TPA gives out through which a lease can be closed
1. By efflux of time
a. Where the term of lease is fixed, the lease determines after the expiry of the
timeperiod automatically
b. The lease terminates on the last-day of the time period of lease and the lessor
becomes entitled to take possession of the leased property. In case of lease for
fixed period no notice to quit is necessary
c. Determination of lease by efflux of time is available when duration of lease is
fixed by a valid lease. Unregistered lease deed cannot be determined by efflux
of time.
2. By happening of some event
 a. Clause (b) provides that a lease of immovable property determines where such
time is limited conditionally on the happening of some event—by the
happening of such event.
b. Where the lease contains a condition that the lease will terminate on the
happening of some event, it will terminate on the happening of that event. So
long as such event does not happen, the lessee will be entitled to the
possession of the leased property. On the determination of the lease the lessor
may either re-enter the property or maintain a suit for ejectment.
3. ] By Termination of Lessor's Interest in Propert
a. Clause (c) provides that a lease of immovable property determines where the
interest of the lessor in the property terminates or his power to dispose of the
same extends only to the happening of any event, by the happening of such
event.
b. Where a lessor has only a limited interest or power to grant a lease, the lease is
determined with the loss of that interest. For example, a lease by a Hindu
widow who is entitled only to a life-estate, determines on her death
4. By merger
a. Clause (d) provides that a lease of immovable property determines in case the
interests of the lessee and the lessor in the whole of the property become
vested at the same time in one person in the same right
b. It is necessary for a merger that two immediate estates should come into the
hands of the same person at the same time and in respect of the whole property
c. Merger takes place when the tenant himself becomes the absolute owner of the
tenanted premises
5. Effect of demolition of Building Superstructures
a. A bare reading of the doctrine of merger, as statutorily recognised in India,
contemplates (i) coalescence of the interest of the lessee and the interest of the
lessor, in the whole of the property, (iii) at same time, (iv) in one person, (v) in
the same right. There must be a complete union of the whole interests of the
lessor and the lessee so as to enable the lesser interest of the lessee sinking
into the larger interest of the lessor in the reversion.
b. The law as to co-owners is well settled. Where any property is held by several
coowners, each co-owner has interest in every inch of the common property,
but his interest is qualified and limited by similar interest of the other co-
owners
6. By express surrender
a. According to clause (e), a lease of immovable property terminates by express
surrender; that is to say, in case the lessee yields up his interest under the lease
to the lessor, by material agreement between them
b. The surrender consists in the yielding up of the term of the lease accompanied
by delivery of possession.
7. By implied surrender
a. Clause (f) provides that a lease determines by an implied surrender. An
implied surrender takes place either by the creation of new relationship
between the lessor and the lessee or by the relinquishment of possession by the
lessee and taking over by the lessor. In the illustration appended to this clause
 a lessee accepts from his lessor a new lease of the property leased, to take
effect during the continuance of the existing lease. This is an implied surrender
for the former lease, and such lease determines thereupon
8. By forfeiture
a. (a) in the case lessee breaks on express condition which provides that on
breach of it, the lessor may re-enter the property, or
b. (b) in case the lessee renounces his character as such by setting up a title in a
third person or by claiming title in himself, or
c. (c) the lessee is adjudicated an insolvent and the lease provides that the lessor
may re-enter on the happening of such event
9. Breach of express condition
a. The lease terminates when the express condition is broken by the lessee which
had provided that in case of breach of the condition by the lessee the lessor
will re-enter the leased property. The right of forfeiture is exercised only when
the condition is in fact broken.
b. . In the case of Nil Madhab v Narottam, 269 the lease deed contained an
express condition that the lessee shall not alienate his leasehold, but he
alienated the property in violation of the condition. It was held that the lessor
cannot forfeit property because the lease-deed did not contain provision for re-
entry.
Simply because there is forfeiture doesn’t mean lessor will exercise it or not. This right
can be waived off
 He took the rent and when lessee came – then there is waiver of forfeitrue
 Distress of such rents and u asked for arrears – 5 months of delay – then need arrears
in lieu of rent – hence waiver
 Any other act showing intention – notice to lessee to quit and vacate the premises –
even after 1 to 2 years, lessee is staying there – can the lessor still give the notice after
2 years – still he waived off his right and hence, cant evict.

Sections 113 and 114 – what will be the relief against forfeiture of non-payment.
Waiver to notice to quit
Section 115 – effect of surrender: safeguard for the interest of the sub-lessees – the terms and
conditions on which the property were sub-leased – similarly he becomes lessee to the oginal
lessor and then there are fraudulent transactions then – forfeiture of such lease

Distinction between a lease and a license –

Section for lease from 105 and license (permission against some consideration, then granted
some right over a property to do something) from section 52, easements act

EXCHANGES
118. “Exchange” defined.—When two persons mutually transfer the ownership of one thing
for the ownership of another, neither thing or both things being money only, the transaction is
called an “exchange”. A transfer of property in completion of an exchange can be made only
in manner provided for the transfer of such property by sale. 3
119. Right of party deprived of thing received in exchange.—If any party to an exchange
or any person claiming through or under such party is by reason of any defect in the title of
the other party deprived of the thing or any part of the thing received by him in exchange,
then, unless a contrary intention appears from the terms of the exchange, such other party is
liable to him or any person claiming through or under him for loss caused thereby, or at the
option of the person so deprived, for the return of the thing transferred, if still in the
possession of such other party or his legal representative or a transferee from him without
consideration.]
120. Rights and liabilities of parties.—Save as otherwise provided in this Chapter, each
party has the rights and is subject to the liabilities of a seller as to that which he gives, and
has the rights and is subject to the liabilities of a buyer as to that which he takes.
121. Exchange of money.—On an exchange of money, each party thereby warrants the
genuineness of the money given by him
Exchange – Section 118

 Basically like barter

 No consideration
 As one property given for another
 Money is also form of property but if money is part of the transaction then it is sale
 If both money – then exchange
 There need to e 2 people involved and inter-vivos
 Can be exchanged by a juristic person
 As long as transferring ownership over one thing and over another thing – absolute
interest transfer in exchange for absolute interest over another.
 Value of one property much higher then to make good that difference we added some
money – then it will still remain a valid exchange

Elements of exchange:

1. Transfer of ownership
2. Nature of property – not necessary IP, either movable or immovable
3. Exchange includes your barter – like if movable property being exchanged – then
SOGA comes into picture – similar rights and liabilities apply
4. Sale Sec 54 – the way all the procedure was there – same applied to exchange –
necessarily registered exchange deed – otherwise inadmissible – value of property is
above 100 rupees
5. There is an inherent covenant of a good title – otherwise there is a remedy – either ask
for compensation or ask for return of your property

*According to mam, these sections are self explanatory so bare reading of the
sections will be enough
 GIFTS
122 Gift defines- Gift” is the transfer of certain existing moveable or immoveable
property made voluntarily and without consideration, by one person, called the donor, to
another, called the donee, and accepted by or on behalf of the donee.
Acceptance when to be made.—Such acceptance must be made during the lifetime of the
donor and while he is till capable of giving, If the donee dies before acceptance, the gift is
void.
 Transferee might not be competent –
 A donor has to be above age of majority, soundness of mind
 But for donee – a child, an unsound mind, a baby in mother’s womb
 Subject to valid authority on behalf of them accepting the gift

Like a Minor, natural guardian or court appointed guardian have to accept the gift. If not
accepted, then it does not matter whether gifted or not – you cannot utilise the benefits. It
(gifts) comes with liabilities and hence it is the donee’s choice to take that option or not.

Without CONSIDERATION

 Gratutious transaction
 Operational inter-vivos
 Transaction will not go through if he dies before accepting or even after accepting but
before the whole transaction
 Morti causa; such gifts are not valid because in apprehension of death I transferred or
the trye nature of the gift wasn’t thought previously

Elements:

1. There must be transfer of ownership

2. Donor (must be competent to contract) completely divests himself of all the rights he
has and it vests with the done (anyone in existence at time of transfer)
3. Property must be in existence when transfer taking place – S. 124 and S. 6
4. Transfer must be without consideration – pecuniary considerations not allowed
5. Love and affection not part of consideration
6. Gift cannot be given without consent – all rights and liabilities go with a gift – not
everybody will want – hence donee has a right to reject the whole gift – acceptance
must take place during the lifetime of the donor.
 7. Age of discretion: 16 to 18 – child of sufficient age and understands the basic
concepts – in case the donor is the natural guardian and there is a silent acceptance
and the court regards it as implied acceptance and now the child can’t say he didn’t
know
8. Acceptance must be voluntary and made from free will
9. Gift can be both for movable and immovable property
10. The person whom we are giving the property must be ascertainable or in existence or
specific - If u say you want to gift the property to public at large – that is void.

Interest of child is of paramount importance – without courts’ intervention, the child cant
transfer the property – only when he is major he can dispose off the property, Gifts crucial
element is acceptance – not a unilateral transaction – typically means acceptance is important

Imposing Conditions – must stand the test of the entire contracts act and apply to any transfer
even in case of gifts. How are gifts are effected?

123. Transfer how effected.—For the purpose of making a gift of immoveable property,
the transfer must be effected by a registered instrument signed by or on behalf of the
donor, and attested by at least two witnesses. For the purpose of making a gift of
moveable property, the transfer may be effected either by a registered instrument signed
as aforesaid or by delivery. Such delivery may be made in the same way as goods sold
may be delivered.
 Any exchange should be registered above 100 rupees – then it is effected but that is
nit the case with gift – can be done for any property and the gift of immovable
property – the value of property of no consideration – compulsory registration is
required.
 Attestation by 2 witnesses, for a valid Registration, all of the other things as well
 If registration done and then the donor dies – still it can be enforced – the gift deed
remains enforceable subject to all the conditions validly placed (S. 10-34)
 If there is just registration – it doesn’t validate the transaction – u need to fulfil the
elements of the gift = donee might say I never accepted it – hence the 5 elements must
co-exist.
 For a valid gift transaction, registration along with valid fulfilment of conditions
 Delivery of possession – u bring effect to the deed
 Gift of existing or future property: u need to have the property in existence at the time
of transfer
 In the same transaction – I am gifting u all my property and the property I inherit from
my grandfather – the second part of the transaction becomes void because of doctrine
of severance.

124. Gift of existing and future property.—A gift comprising both existing and future
property is void as to the latter.
 The Transfer of Property Act, 1882 provides that the gift can be made only of an
existing property. The property which is not in existence cannot be gifted.
Therefore, a gift comprising both the existing and future property is valid for
existing property but void for future property.
125. Gift to several, of whom one does not accept.—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.
 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
126. When gift may be suspended or revoked.—The donor and donee may agree that
on the happening of any specified event which does not depend on the will of the donor a
gift shall be suspended or revoked; but a gift which the parties agree shall be revocable
wholly or in part, at the mere will of the donor, is void wholly or in part, as the case may
be.
A gift may also be revoked in any of the cases (save want or failure of consideration) in
which, if it were a contract, it might be rescinded. Save as aforesaid, a gift cannot be
revoked. Nothing contained in this section shall be deemed to affect the rights of
transferees for consideration without notice.
Illustrations
(a) A gives a field to B, reserving to himself, with B’s assent, the right to take back the
field in case B and his descendants dies before A. B dies without descendants in A’s
lifetime. A may take back the field.
(b) A gives a lakh of rupees to B, reserving to himself, with B’s assent, the right to take
back at pleasure Rs. 10,000 out of the lakh. The gift holds good as to Rs. 90,000, but is vo
id as to Rs.10,000, which continue to belong to A.
 A gift is a transfer of ownership without consideration. A deed of gift once
executed and registered cannot be revoked unless it can be shown that the
mandatory requirements of the section were not complied with.
 A gift can be made subject to certain conditions. It is necessary that these
conditions must be valid conditions according to the provisions of this Act. Where
an unconditional gift-deed and an agreement between the donor and donee were
executed on the same day, it was held that the condition prescribed in the
agreement would attach to the gift as the gift-deed and the agreement formed part
of the same transaction
 A gift once made is irrevocable, except in the following two cases provided by
this section:—
o (1) A gift is revocable if the donor and the donee have agreed that on the
happening of a specified event (not depending upon the will of the donor),
the gift should be suspended or revoked.
o A gift may also be revoked in any of the case (save want or failure of
consideration) in which, if it were a contract, it might be rescinded.
 Suspension or Revocation by Agreement
o A gift may be suspended or revoked by mutual agreement between the
parties i.e., donor and donee. They may agree that on the happening of any
specified event the gift will be revoked. But this specified event must not
depend on the will of the donor. If the happening of the event is dependent
on the will of the donor, suspension or revocation of gift will be void
 Recession
o A gift may be revoked in any of the cases in which, if it were a contract, it
might be rescinded except for want or failure of consideration. A contract
may be rescinded in the following circumstances according to section 19
of the Indian Contract Act, 1872:— (i) coercion (ii) undue influence (iii)
fraud (iv) misrepresentation
o Section 19 of Indian Contract Act, 1872 provides that "where a consent to
an agreement is caused by coercion, undue influence, fraud,
misrepresentation, the agreement is voidable at the option of the party,
whose consent was so obtained. Therefore, where the consent of the donor
to make the gift has been obtained by coercion, fraud, undue influence or
misrepresentation, the donor may revoke the gif
o Sita Sundar Devi v Savitri Devi, AIR 2015 Pat 217A gives a field to B,
reserving to himself, with B's assent, the right to take back the field in case
B and his descendants die before A. B dies without descendants in A's
lifetime, A may take back the field. Donees were not relatives of the donor
and the gift was made by the donor in their favour without making any
provision either for himself or for his wife and daughter, grand-daughters,
etc. Scribe of the gift deed was not examined. The donee's evidence was
full of contradictions. They failed to prove that they were agnates of the
donor. Their plea was that the donor's daughter had deserted him.
Documentary evidence showed that he was living with his whole family. It
was held that the defendants fraudulently got the gift deed executed and as
such it was not a genuine document
  Kinds of Gifts
o Void gifts
 The following are included under the category of void gifts:— (a)
Gifts depending on unlawful purposes. (Section 6) (b) Gifts made
upon a condition, the fulfillment of which is impossible or
forbidden by law. (Section 6) (c) Gifts by a person incompetent to
contract. (d) Where the donee of the gift dies before acceptance. (e)
A gift comprising of both the existing and future property is void as
to the future propert
o Onerous gifts
 Section 127
 Quiesensit commodum debet et sentire onus – one who accepts the benefit of a
transaction must also accept the burden of it.

127. Onerous gifts.—Where a gift is in the form of a single transfer to the same person
of several things of which one is, and the others are not, burdened by an obligation, the
donee can take nothing by the gift unless he accepts it fully.
Where a gift is in the form of two or more separate and independent transfers to the same
person of several things, the donee is at liberty to accept one of them and refuse the
others, although the former may be beneficial and the latter onerous.
Onerous gift to disqualified person.—A donee not competent to contract and accepting
property burdened by any obligation is not bound by his acceptance. But if, after
becoming competent to contract and being aware of the obligation, he retains the property
given, he becomes so bound
Illustrations (a) A has 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 s hares 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, given 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 his refusal
forfeit the money.
 A gift is said to be onerous when it is accompanied with a burden or obligation.
This section is based on the maxim qui sentit commodum sentire debetet onus
which means that he who receives advantage must also bear the burden.
 First paragraph of section 127 provides that where a gits is in the form of a single
transfer to the same person of several things of which one is, and the others are
not burdened by an obligation, the donee can take nothing by the gift unless he
accepts it fully
 Essentials
o the gift must be in the form of a single transfer;
o to the same person
 o of several things (properties);
o of such thing only one is burdened with obligation and others are no
o When such conditions are present, the donee will have to accept the gift
fully. He cannot accept the benefits of gift only and reject the burdens or
obligation. This provision provides that the donee may either accept the
full gift or reject that, partial acceptance is not allowed.
 Section 127 provides that a donee not competent to contract and accepting
property burdened by any obligation is not bound by his acceptance. But if, after
becoming competent to contract and being aware of the obligation, he retains the
property given, he becomes so bound.
128. Universal donee.—Subject to the provisions of section 127, where a gift consists of
the donor’s whole property, the done is personally liable for all the debts due by 1 [and
liabilities of] the donor at the time of the gift to the extent of the property comprised
therein.
 Universal donee is such a person who gets the whole property of the donor under
a gift. Both movable as well as immovable properties of the donor are given in a
gift to him.
 Section 128 provides that the universal donee is liable personally for all the debts
due and liabilities by the donor at the time of the gift to the extent of the property
comprised therein. Therefore, the donee which has taken all the properties of the
donor in a gift becomes liable to pay all the debts due by the donor and also to
discharge all the liabilities of the donor because nothing is left with the donor to
discharge them. However, his liability is only to the extent of the property
comprised in the gift. This section incorporates on equitable principle that one
who gets certain benefits under a transaction must bear the burden also.
 The essential requirement of this section is that all the properties of the transferor
(donor) should be transferred to the donee
129. Saving of donations mortis causa and Muhammadan law.—Nothing in this
Chapter related to gifts of moveable property made in contemplation of death, or shall be
deemed to affect any rule of Muhammadan law
 Gifts which are made in contemplation of death are known as donatis mortis
cousa.
 Section 129 has exempted such gifts from the operation of this Chapter.
 Another exemption is made in the favour of Muslim gifts, where the gifts are
made by Muslims.

ACTIONABLE CLAIMS
 mam has taught it in a clubbed manner and not section by section
130. Transfer of actionable claim.—(1) The transfer of an actionable claim 4
[whether with or without consideration] shall be effected only by the execution of an
instrument in writing signed by the transferor or his duly authorised agent, 5*** shall
be complete and effectual upon the execution of such instrument, and thereupon all
the rights and remedies of the transferor, whether by way of damages or otherwise,
shall vest in the transferee, whether such notice of the transfer as is hereinafter
provided be given or not:
Provided that every dealing with the debt or other actionable claim by the debtor or
other person from or against whom the transferor would, but for such instrument of
transfer as aforesaid, have been entitled to recover or enforce such debt or other
actionable claim, shall (save where the debtor or other person is a party to the transfer
or has received express notice thereof as hereinafter provided) be valid as against such
transfer.
(2) The transferee of an actionable claim may, upon the execution of such instrument
of transfer as aforesaid, sue or institute proceedings for the same in his own name
without obtaining the transferor's consent to such suit or proceedings and without
making him a party thereto.
Exception.—Nothing in this section applies to the transfer of a marine or fire policy
of insurance 6 [or affects the provisions of section 38 of the Insurance Act, 1938 (4 of
1938)]. Illustrations (i) A owes money to B, who transfers the debt to C. B then
demands the debt from A, who, not having received notice of the transfer, as
prescribed in section 131, pays B. The payment is valid, and C cannot sue A for the
debt. (ii) A effects a policy on his own life with an Insurance Company and assigns it
to a Bank for securing the payment of an existing or future debt. If A dies, the Bank is
entitled to receive the amount of the policy and to sue on it without the concurrence of
A's executor, subject to the proviso in sub-section (1) of section 130 and to the
provisions of section 132. 7
130A. Transfer of policy of marine insurance.] Rep. by the Marine Insurance Act,
1963 (11 of 1963), s. 92 (w.e.f. 1-8-1963).
131. Notice to be in writing, signed.—Every notice of transfer of an actionable claim
shall be in writing, signed by the transferor or his agent duly authorised in this behalf,
or, in case the transferor refuses to sign, by the transferee or his agent, and shall state
the name and address of the transferee.
132. Liability of transferee of actionable claim.—The transferee of an actionable
claim shall take it subject to all the liabilities and equities to which the transferor was
subject in respect thereof at the date of the transfer.
Illustrations (i) A transfers to C a debt due to him by B, A being then indebted to B. C
sues B for the debt due by B to A. In such suit B is entitled to set off the debt due by A
to him; although C was unaware of it at the date of such transfer. (ii) A executed a
bond in favour of B under circumstances entitling the former to have it delivered up
and cancelled. B assigns the bond to C for value and without notice of such
circumstances. C cannot enforce the bond against A.
133. Warranty of solvency of debtor.—Where the transferor of a debt warrants the
solvency of the debtor, the warranty, in the absence of a contract to the contrary,
 applies only to his solvency at the time of the transfer, and is limited, where the
transfer is made for consideration, to the amount or value of such consideration.
134. Mortgaged debt.—Where a debt is transferred for the purpose of securing an
existing or future debt, the debt so transferred, if received by the transferor or
recovered by the transferee, is applicable, first, in payment of the costs of such
recovery: secondly, in or towards satisfaction of the amount for the time being secured
by the transfer; and the residue, if any, belongs to the transferor or other person
entitled to receive the same. 1
135. Assignment of rights under policy of insurance against fire.—Every assignee
by endorsement or other writing, of a policy of insurance against fire, in whom the
property in the subject insured shall be absolutely vested at the date of the assignment,
shall have transferred and vested in him all rights of suit as if the contract contained in
the policy had been made with himself.] 2
136. Incapacity of officers connected with Courts of Justice.—No Judge, legal
practitioner or officer connected with any Court of Justice shall buy or traffic in, or
stipulate for, or agree to receive any share of, or interest in, any actionable claim, and
no Court of Justice shall enforce, at his instance, or at the instance of any person
claiming by or through him, any actionable claim so dealt with by him as aforesaid.
 certain people who have been DQ from dealing in AC. They cannot get any AC to
which they are themselves a party. Hence, they have to withdraw the AC, any
legal practitioners or Judge are not valid transferees. Specific exclusion to avoid
any malpractices
137. Saving of negotiable instruments, etc.—Nothing in the foregoing sections of
this Chapter applies to stocks, shares or debentures, or to instruments which are for
the time being, by law or custom, negotiable, or to any mercantile document of title to
goods. Explanation.—The expression “mercantile document of title to goods”
includes a bill of lading, dock-warrant, warehouse keeper's certificate, railway receipt,
warrant or order for the delivery of goods, and any other document used in the
ordinary course of business as proof of the possession or control of goods, or
authorising or purporting to authorise, either by endorsement or by delivery, the
possessor of the document to transfer or receive goods thereby represented.

 Not on immovable property

 This is for unsecured debts
 If there is security then it will take the nature of pledge, mortgage etc and hence not
actionable claims
 Any unsecured debt claim or any beneficial interest in a movable property
  Ex – rights attached to immovable property – but if u don’t get the debt back, then u
can use the right to collect rent which becomes due and payable to get the tangible
money gets an actionable claim.
 Understanding where the right ends and where does the actionable claim arise

Actionable claims:

No relation to immovable property,

Chose in action – cover all intangible property in – any arrears of rent etc – intangible
rights and hence these can be actionable claims
Chose in possession – refrigerator, TV, car

1. Claim must relate to a movable property

2. Such movable property must be in possession of another person
3. The beneficial interest or the right of possession of the claimant should be recognized
in the civil court

Some courts refused to recognise a right over money as an actionable claim. Registration of
property – mere delivery of possession effectuates the transfer. No pattern or mode, just need
an acknowledgment that the actionable claim is being transferred.

Compulsory registration not covered – simple delivery of possession effected the transfer –
since intangible movable property – how can we show that there has been a transfer

In case of actionable claims – must necessarily execute through a written document

There are assignee and assignor in this case – typically talking about unsecured debts which
are assigned.

Debts per se banks will treat as an asset – these can be transferred – same thing applies to AC
– can be transferred through sale, exchange, gifts – any mode of transfer – a written
instrument is necessary with a signature – a notice is necessary – debtor and a creditor –
owed a debt to me and I owe it to X – as a creditor – right to transfer In favour of someone
else – the debtor should be given the information – that your debt has been assigned to
someone else – notice in writing with address of the debtor – even if no notice – it doesn’t
invalidate the whole transfer-
His right is protected under 131 even if no notice. When AC assigned whatever rights and
liabilities also get transferred to the subsequent assignee.