Election

Beepathuma v. Kadambolithaya (s. 35 – Doctrine of Election)

Facts: Testator bequeathed a land belonging to his niece, to his grandson, and left his niece a legacy
of Rs. 800.

Held: Niece must elect between land and legacy. Acceptance of a benefit implies an election.

Cooper v. Cooper – S. 35

There is an obligation on him who takes a benefit to give full effect to that instrument

Narayana v. Basava Rayappa AIR 1956 SC 727

Bhatt v. Bhatt AIR 1987 SC 1348

Samarendranath v. Krishna Kumar AIR 1967 SC 1440 - Facts are not pertinent since the case dealt
with the correction of a decree made by the lower Court (more related to CPC).

Held: The principle of lis pendens applies even to involuntary alienations like court sales. The
respondent having purchased the mortgaged property while the appeal against the preliminary
decree in respect of the property was pending in the High Court, the doctrine of lis pendens must
apply to his purchase and he was therefore bound by the result of the suit.

A. Prasad Sania v. Bank of Commerce Ltd. AIR 1996 SC 1762

U.O.I. v. Moksha Builders AIR 1977 SC 409

Abdul Saheb v. Papa Rao AIR 1963 SC 1150

D.S. Parvatamma v. A. Srinivasan 2003 SSC ILD 411

Nathulal v. Phoolchand AIR 1970 SC 546- Part Performance

Facts- The respondent made part payment at the time of the execution of the agreement and
promised to pay the balance by a fixed date. On the ground that the balance was not paid on the
due date, the appellant rescinded the contract and commenced an action. Whether a person is
willing to perform his part of the contract the sequence in which the obligations under a contract are
to be performed must be taken into account.
Held- Under the terms, of the contract the obligations of the parties have to be performed in a
certain sequence, one of the parties to the contract cannot require compliance with the obligations
by the other party without in the first instance performing his own part of the contract which in the
sequence of obligations is performable by him earlier. In view of the arrangement made by
Phoolchand to pay the balance of the agreed amount, it was clear that he had at all relevant times
made necessary arrangements for paying the amount due, but so long as Nathulal did not carry out
his part of the contract, Phoolchand could not be called upon to pay the balance of the price.

Sale

B. N. Ravi v. Anmol Devi AIR 1998 SC 3006- A stipulation in a sale deed that if the price is not
paid within a prescribed time, the sale will be void, is ineffective. If a sale has taken place, the only
rights of the vendor are either a charge on the property for unpaid purchase money or a suit for the
unpaid purchase money.

Pundit Chunchun Jha v. S.K. Ibbat Ali 1955 1 SCR 174

If a sale and agreement to repurchase are embodied in separate documents, then the transaction
cannot be a mortgage whether the documents are executed or not. But the converse does not hold
good, that is to say, the mere fact that there is only one document doe snot necessarily mean that it
must be a mortgage and cannot be a sale.

If the condition of repurchase is embodied in the document that effects or purports to effect the
sale, then it is a matter for construction which was meant.

Therefore, it is reasonable to suppose that person who choose not to use two documents, do not
intend the transaction to be a sale, unless they displace the presumption by clear and express words.

Commissioner of I.T. v. M.S. Motor & General Stores AIR 1968 SC 2000- An agreement was
concluded to effect a sale of a cinema hall and this was confirmed by the assessee-company at an
extra-ordinary general body meeting held on October 4, 1955. Pursuant thereto a deed called the
"exchange deed" was brought into existence on February 21, 1956 and the consideration was
received by the assessee. Whether the transaction of February 21, 1956 was a sale?

Held: It is not a sale, but an exchange. In the first place, the document is called "exchange deed".
Moreover, there was no price paid or promised to be paid for the transfer of the cinema house
known as Sree Rama Talkies together with machinery and equipment described in Sch. I to the deed
dated February 21,. 1956 but there was a consideration in the shape of transfer of 5% tax-free
cumulative preference shares of Sri Rama Sugar & industries Ltd.
Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana

Held- A transfer of immoveable property by way of sale can only be by a deed of conveyance (sale
deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no
right, title or interest in an immoveable property can be transferred.

Any contract of sale (agreement to sell) which is not a registered deed of conveyance (deed of sale)
would fall short of the requirements of sections 54 and 55 of TP Act and will not confer any title
nor transfer any interest in an immovable property (except to the limited right granted under section
53A of TP Act). According to the TP Act, an agreement of sale, whether with possession or without
possession, is not a conveyance. Section 54 of TP Act enacts that sale of immovable property can be
made only by a registered instrument and an agreement of sale does not create any interest or charge
on its subject matter.

Shrimati Sunita v. Shankar Lakshman ILD 7 Bom HC

Held- Surrender of tenancy rights cannot be valid consideration. The 'sale' is defined by Section 54
of the Transfer of Property Act as "a transfer of ownership in exchange for a price paid or promised
or part-paid and part-promised." 'Promise' means money consideration. A promise made or a thing
given could be a consideration for a contract but the making, of a promise to do something or the
giving of a thing or the promise to give a thing is not equivalent to the payment of a price or promise
to pay a price, Under these circumstances, transaction in question cannot be said to be or treated as
'sale'. If that be so, Section 45 of the Transfer of Property Act would not be attracted, Therefore, the
theory of consideration sought to be put in service cannot be accepted. Exchange Can be effected
by one document or by different documents.

Brahm Parkash vs Manbir Singh And Others AIR 1963 SC 1607

Facts- MS the owner of properties A, B and C created several mortgages over them. The
appellant was one of the mortgagees of properties A and B and MG was one of the mortgagees
of property C. Subsequently, the mortgagor sold property B to MG. One of the mortgagees of
properties A and B filed a suit for recovery of the money due on the mortgage. MG claimed
that the mortgage debt should first be satisfied out of property A not sold to him. This claim to
marshalling was allowed. The appellant contended that under s. 56 of the Transfer of Property Act
a purchaser who was also a mortgagee marshalling and that marshalling should not have been
allowed in the present case as it was bound to prejudice the appellant.

Held: that MG was entitled to marshalling. When s. 56 refers to a subsequent purchaser it does not
exclude a purchaser who has a mortgage over some other property of the mortgagor not
connected with the proceedings. Further, it could not follow as a matter of law that marshalling
must necessarily prejudice a subsequent mortgagee. The question of prejudice is purely one of
fact and is intimately connected with the value of the property against which the mortgagee is
directed to proceed in the first instance. The appellant was not entitled to the benefit of the last
portion of s. 56 as he had not raised any plea as to the value of the property showing that
marshalling would prejudice him.

Jatturam v. Hakama Singh AIR 1994 SC 1653

Balakrishna v. Prakash AIR 2005 Bom HC 89

When the properties are held separately and there has been severance in their unity and jointness,
there cannot be mutual transfer of such properties by way of oral transaction of family settlement
for, it would amount to an exchange within the meaning of the term defined under Section 118 of
T.P. Act. In the instant case, admittedly the exchange of properties was on the basis of an oral
transaction and, therefore, it must be held that there was no exchange of suit house for Mainabai's
house, effective and valid in law

Chidambaram v. Swaminathan

Shrihari v. K. Mohan 2002 AIR Orissa HC

Mortgages

Narandas Karsondas vs S.A. Kamtam & Anr on 7 December, 1976 AIR 1977 SC 774- Whether
a mortgagor can exercise his right of redemption after a mortgagee under an English Mortgage with
power to sell mortgaged property without the intervention of the court gives notice to the
mortgagor to sell the mortgaged property by public auction and sells it by public auction?

Held- The principal question in this appeal is whether the right to redemption has been extinguished
by any act of the parties. The right of redemption which is embodied in section 60 of the Transfer of
Property Act is available to the Mortga- gor unless it has been extinguished by the Act of parties. In
India it is only on execution of the conveyance and registration of transfer of the mortgagor's
interest by registered instru- ment that the mortgagor's right of redemption will be extin- guished.
The conferment of power to sell without intervention of the Court in a Mortgage Deed by itself will
not deprive the mortgagor of his right to redemption. The mortgagor's right to redeem will survive
until there has been completion of sale by the mortgagee by a registered deed.

Puzhakkal Kuttappu vs C. Bhargavi AIR 1977 SC 105

When there are some mixed elements in an instrument disclosing features of mortgage as well as
of lease. The Court will have to find out the predominant intention of the parties executing the
document viewed from the essential aspect of the reality of the transaction.
In construing a document it is always necessary to find the intention of the party executing it. The
intention has to be gathered from the recitals and the terms in the entire document and from the
surrounding circumstances and how the parties or even their representatives-in-interest treated the
deed in question. In the instant case the document taken as a whole lacks the most essential
ingredient of a mortgage, namely, that the transfer of the property has to be made as a security for
the debt. The document stated that fixed rent was to be paid annually in addition to the
Government revenue which the transferee was required to pay. This feature of payment of rent
tilts the balance in favour of construing the document as a lease.

Mangala v. Puthiyaveethile AIR 1971 SC 1575

Held-Though the nature of transaction has to be judged taking the transaction as a whole,39 the
quantum of money advanced may also be taken as a determining test. If the money advanced is a
substantial proportion of the value of the property the transaction is a mortgage.

Ram Kinkan v. Satyacharan-

Held- English Mortgage is not absolute transfer in actuality

Nokas Co. v. Rice 902 AC 24-

Facts- The mortgagee was a brewer. The mortgagor mortgaged the leasehold of a public house to
him. The mortgagor entered into an agreement with the mortgagee that the former would buy all
the beer consumed in the public house only from the mortgagee. It was held that the stipulation
would be valid during the continuance of the mortgage, but on redemption, the mortgagor would be
free from it.

Held- that redemption is of the very nature and essence of a mortgage. It is inherent in the thing
itself. Equity will not permit any device or contrivance designed or calculated to prevent or impede
redemption. When the money secured by a mortgage of land is paid off, the land itself and the
owner of the land in the use and enjoyment of it must be as free and unfettered to all intents and
purposes as if the land had never been made the subject of the security.

Mohammed Sherkhan v. Set Swami Dayal 1921 IL 60

Facts- The mortgagor mortgaged his property for 5 years and agreed that if he did not redeem it at
the end of the period, the mortgagee had a right to take and keep possession for 12 years, during
which time the mortgagor had no right to redeem. The mortgagor committed default at the end of
five years, but later sued to redeem, but the mortgagee opposed it.
Held that rights and liabilities of the litigants must depend on the terms of the instrument as
controlled by the TOPA, for, even if it were an anomalous mortgage, its provisions offend against
the statutory right of redemption conferred by Section 60, and the provisions of one section cannot
be used to defeat those of another unless it is impossible to effect reconciliation between them.
However, under Section 60, the mortgagor has a right to payment of mortgage money to redeem.
The section is unqualified in its terms, and contains no saving provision as other sections do in
favour of contracts to the contrary. Thus, the mortgagor's right to redeem must be affirmed,

Jayasingh v. Krishna AIR 1985 SC 1646

Whether by reason of the grant made in favour of the defendants the right to redeem the mortgage
can be treated as having become extinguished.

Held- It is well settled that the right of redemption under a mortgage deed can come to an end only
in a manner known to law. Such extinguishment of the right can take place by a contract between the
parties, by a merger or by a statutory provision which debars the mortgagor from redeeming the
mortgage. A mortagee who has entered into possession of the mortgaged property under a
mortgage will have to give up possession of the property when a suit for redemption is filed unless
he is able to show that the right of redemption has come to an end or that the suit is liable to be
dismissed on some other valid ground.

Champa Lal v. Rupan Singh- S. 72

Held- Rebuilding a house after demolishing an old one or where money is spent on constructing a
new upper storey when rebuilding a portion of a house that had fallen down or making additions
where the intention of the mortgagee is not bona fide are not improvements within the meaning of
this rule; and the mortgagee is not entitled to claim its costs.

Pestonji v. Gangadhar

SBI v. Kerala Finance Corpn. AIR 1983 Ker 38- It was not, nor could it be, the case of the
respondent-Corporation that it was entitled to priority of charge on the ground that the mortgage in
favour of the Corporation was under a registered document, whereas what the Bank was having was
an equitable mortgage. It is well settled that in India, where, except as provided by statute, no
distinction exists in the status of mortgages; priority of mortgages depends upon the respective dates
of their creation, irrespective whether they are registered mortgages or equitable mortgages, the
earlier in date having precedence.

The provision in Section 78 of the T. P. Act is in the nature of an exception to the general rule in
Section 48 of the Act which provides that prior mortgagee takes precedence over subsequent
mortgagee in the present case for the subsequent mortgagee to invoke Section 78 of the T. P. Act, he
must plead and prove that through the gross neglect on the part of the prior mortgagee (there being
no case here that there was fraud or misrepresentation on the part of the prior mortgagee) he was
induced to advance money on the security of the mortgaged property. Being an exception, the onus
of proof is on the person who sets up the plea based on Section 78. The legislature has guardedly
used the expression "gross neglect" in order to eschew the possibility of slight neglect or
carelessness on the part of the prior mortgagee being set up as a ground for invoking S. 78 of the
Act.

To succeed in the plea based on S. 78 of the Act, it is necessary that it is proved and| found that the
subsequent mortgagee was directly, not remotely, induced by reason of gross neglect on the part of
the prior mortgagee to advance money on the security of the mortgaged property. Negligence would
consist of omitting to do something which a reasonable man would do, or the doing of something
which a reasonable man would not do, in either case causing unintentionally some mischief to a third
party. "Gross neglect" in Section 78 means and involves the absence of care that was requisite under
the circumstances on the part of the prior mortgagee; and it being a relative term it might depend
upon the facts of each case inasmuch as the prior mortgagee was found guilty of gross neglect in
not having taken care to keep the title deed deposited with it in its custody, but allowed it to pass
into the hands of the mortgagors to enable them to deceive the puisne mortgages who had no
notice of the prior mortgages, the Court held that section 78 would apply and prior mortgagee
would be postponed to the subsequent mortgagee.

Kedarilal v. Harilal AIR 1952 SC 47- Held: Where three persons jointly mortgaged their three
properties, the remedy of the mortgagor is to sue for redemption and claim contribution from the
other co-mortgagors

E.S. Md. Seth v. Manickchand AIR 1969 SC 751

Ganesh Lal v. Jyoti Prasad

Facts- a co-mortgagor in Punjab paid to the mortgagee less than the amount due and redeemed the
mortgaged prop- case pilot erty. He however, claimed from the co-mortgagor, contribution, on the
basis of the full amount.

Held- It is not denied that... [the appellant] who redeemed the prior mortgage is subrogated to the
mortgagee's rights, but the controversy is about the extent of his rights as subrogee. By virtue of
redemption, does he get all the rights of the mortgagee and hold the mortgage as a shield against the
co-mortgagors for the full amount due on the mortgage on the date of redemption whatever he may
have himself paid to get it discharged, or does he stand in the mortga gee's shoes only to the extent
of getting reimbursed from the co-mortgagors for their shares in the amount actually paid by him?

Such being the legal position as among the co-mortgagors, if one of them redeems a mortgage over the property which
belongs jointly to himself and the rest, equity confers on him a right to reimburse himself for the amount spent in excess
by him in the matter of redemption; he can call upon the co-mortgagors to contribute towards the excess which he has
paid over his own share.

Prakash v. Manbir Singh (Minor) AIR 1963 SC 1607

Held- The prior mortgagee cannot be compelled to proceed against a security which may be
insufficient or doubtful or which may involve him in litigation.

1. Chennammal v. Munimalaiyan - Diff between Mortgage by conditional sale and sale with
a condition of repurchase
- Held:
o In a mortgage with conditional sale, the relation of a debtor and creditor subsists.
There is no such relationship in a sale with an option of re-purchase.
o Mortgage by conditional sale is effected by a single document, as opposed to two
different independent documents.
o In a mortgage with conditional sale the debt subsists, in the other case, there is
no debt but a consideration for sale.
o In a mortgage with conditional sale, the right of redemption subsists in favour of
the mortgagor despite the expiry of the time stipulated. This right to redemption
is lost in a sale.

2. Bapuswami v. Pattayai Gunder – MCS

- Facts: Document in form of a sale deed containing a stipulation that the vendee
should re-convey the property on vendor after he repays the amount.
- Held:
o A transaction shall not be deemed to be a mortgage unless the condition referred
to in the clause is embodied in the document which effects or purports to effect
the sale. But it does not follow that if the condition is incorporated in the deed
effecting or purporting to effect a sale a mortgage transaction must of necessity
have been intended.
o If the language is plain and unambiguous it must in the light of the surrounding
circumstances be given its true legal effect. If there is ambiguity in the language
employed, the intention may be ascertained from the contents of the deed with
such extrinsic evidence as may by law be permitted to be adduced

3. Musheer Mohamad Khan v. Sajeda Bano 2000 (Usufructuary Mortgage)

- Facts: Owner (respondent) executed a sale deed in favour of appellant. Appellant
executed an agreement to another agreeing to reconvey the house if the amount
was paid back in two years. This person also executed a rent notice. Suit for
redemption, thus question as to whether mortgage or not
- Held: Agreement of reconveyance does not normally constitute part of transaction by
which a usufructuary mortgage is created and where parties executed three
documents almost contemporaneously, all three documents have to be taken into
consideration to find out true nature of transaction. Not a mortgage.
- [The High Court was of the opinion that all the ingredients which go to constitute a
usufructuary mortgage were present in the instant case inasmuch as the property
 was given away to the defendant for a price which was less than its original price or
the market value on the date on which the sale was executed in favour of the
defendant. The High Court also found that possession of the property in question
was symbolically delivered]
o On account of the Proviso to Clause (c) of Section 58 of the Transfer of Property
Act, it came to the conclusion that since the condition for re-conveyance of the
property in favour of the plaintiff was not contained in the Sale Deed, the
transaction could not be treated as a "mortgage by conditional sale"

4. Venkataramma v. Veeraiya
5. Mangalam v. Tuthi Yavethi
6. Cherian Shobhamma v. Sunderesa

7. Ram Kinker v. Satya Charan – English Mortgage

- Held: English mortgage not absolute transfer in actuality

8. Veera Machanelli v. Gandarao Andhra Bank Ltd

9. Bradjvan v. Chen Ma Phee
10. Kidarnath v Mangat Rai – usurious loans under rent act?

11. Seth Ganga Dhar v. Shankarlal 1959(1) SCR 509 (Right to Redeem)
- Facts: A usufructuary mortgage provided that “I or my heirs will not be entitled to
redeem the property for a period of 85 years, after which we shall redeem it within 6
months. If not, then we shall have no claim over the property, and the deed becomes
a sale deed.” Suit for redemption filed 47 years later.
- Held: 85 years is not a clog on redemption. The length of the term itself does not
lead to the conclusion that it was oppressive. If it was impossible and oppressive,
would have been realised earlier

. Gulab Chand v Sarawati Devi AIR 1977 SC 242 (Clog on Redemption)

- Facts: Mortgage by conditional sale of a perpetual sale, the mortgagor was given 4
years time to repay. Provided in deed that if the mortgagee received a notice of
re-entry by a public authority for breach of covenant of the lease before 4 years, the
transfer would be absolute
- Held: Mortgagor could successfully redeem as the clause was a clog.

Chagganlal v Patel 1982

- Held: A person interested in only a share of the mortgage property and not the
whole, is not entitled to redeem his own share only, on payment of a proportionate
part of the mortgage amount

Section 60
Noakes Co. v. Rice –redemption
- Facts: Covenant in the mortgage agreement stipulated that the mortgagee would
buy all the beer he would consume on his property from the mortgagor who was a
brewer.
 - Held: Collateral benefit does not extend beyond period of mortgage. It ends on
redemption

Sher Khan v. Seth Dayal

- Held: The mortgagor mortgaged his property for 5 years and agreed that is he did
not redeem it at the end of the period, the mortgagee had a right to take and keep
possession for 12 years, during which time the mortgagor had no right to redeem.
The mortgagor committed default at the end of five years, but later sued to redeem,
but the mortgagee opposed it.
- Held that right of redemption not subject to contract to contrary. Rights and liabilities
of the litigants must depend on the terms of the instrument as controlled by the
TOPA, for, even if it were an anomalous mortgage, its provisions offend against the
statutory right of redemption conferred by Section 60, and the provisions of one
section cannot be used to defeat those of another unless it is impossible to effect
reconciliation between them.
- However, under Section 60, the mortgagor has a right to payment of mortgage
money to redeem. The section is unqualified in its terms and contains no saving
provision as other sections do in favour of contracts to the contrary.
- Thus, the mortgagor's right to redeem must be affirmed

Kreglinger v. New Patagonia Metal Storage - clog

- Facts: In 1910 Kreglinger, who ran a woolbroker firm, agreed to lend New Patagonia
Meat Ltd £10,000 secured by a floating charge on its business, repayable in five
years, with an option to repay the remaining sum on a month’s notice. In addition,
New Patagonia agreed to sell sheepskins exclusively to Kreglinger, or pay a
commission if they sold to other persons, so long as New Patagonia gave the best
price. When New Patagonia paid off the loan in 1913, and wished to start selling its
sheepskins to other firms, Kreglinger claimed the right to an injunction. New
Patagonia argued that the exclusivity provision was a clog on the equity of
redemption and should be consequently held void.
- Held: option to purchase the sheepskins exclusively for five years was separate and
sound from the main contract and not void, given that the purpose of the clog on
equity of redemption rules was chiefly to preclude unconscionable bargains

Sangar v. Shah Laxmi Ben - clog

- Facts: A mortgaged his property to B to be repayable on the expiry of 99 years from

date of transaction, and on the consideration being repaid, the mortgagor shall be
entitled to redeem property. Mortgagee took property with rights to reconstruct the
same or make further construction
- Held: Denial of right to redeem or delaying the exercise of right to redeem by an
unconscionable period is not acceptable. But merely because the mortgagor's right
to redeem is delayed or postponed by a long period of time would not ipso facto
amounts to a clog.
o Whether condition found to be a clog is void ab initio or merely voidable? The
condition in a mortgage deed which is found to be clog on the equity of
 redemption is ab initio void or invalid but it is not so in absolute sense, meaning
that it would become so only upon the mortgagor resorting to remedy in a Court
o When was starting point of period of limitation for suit of redemption? Right to
redeem would accrue to mortgagor only when the court lifts the clog on equity.
Limitation would run only from that day

Devraj v. Gyanchand - Section 65A

- Held: section 52 operates in regard to leases granted pendente lite even though the
lessor is the mortgagor in possession acting under section 65A

Aiyappa v. Kuppusami – 66
- Facts: During subsistence of mortgage, the hose is sold to cotenant who fells the
trees to cause a deficit in the prices realized at sale
- Held: It is not binding on the mortgagee. Validity of the grant by the mortgagor
depends upon whether it reduces the security below the prescribed standards.

SanthanKumar v. Indian Bank – 69

- Held: that the requisite notice may be given to the mortgagor, or to one of the several
mortgagors. Where there is a number of them, the mortgagor who is given the notice
is constituted of the agent of the other mortgagor to receive the same, in the absence
of fraud or collusion or a provision in the mortgage deed that notice shall be given to
all of them or their assigns.
- If the mortgagor has transferred his interest, either to a purchaser or to a subsequent
mortgagee, and the mortgagee is aware of it, he should give notice to the transferee,
but it not if the transfer has taken place after the mortgagee has already given notice
to the mortgagor.

Lloyd Bank v. Guzdar – 78

- Held: Subsequent mortgagee priority due to wrong act of prior one

State Bank of India v. Kerala Financial Corporation - 78

- Facts:
- Held: bank entitled to get prior charge, subsequent mortgagee did not get priority

Kedarilal v. Harilal – 81/60 - Marshalling

- Held: Where three persons jointly mortgaged their three properties, the remedy of
the mortgagor is to sue for redemption and claim contribution from the other
co-mortgagors

Charge

Dattatreya Motors v. Anand Datta 1974 (2) SCC 799

Held- second category (section 100, proviso- cases when a charge is not applicable) would include
even charges created by a decree of court, except in the case of a transferee pendente lite, that is, in
the case of a transferee during the pendency of a litigation in which the court creates a charge by its
decree.

M.C. Chacko v. State Bank of Travancore AIR 1970 SC 504-

Held- In order to create a charge through the act of parties, a mere undertaking to discharge an
obligation or liability is not enough if the intention to make a specified property or fund liable is
absent

Hanuman Rice Mill v. Electricity Board (Haryana) 2010 SC 3835- case wrt buyers liability if he
declines to accept delivery of possession- section 55(4)(b)

Earnest Money- is the amount paid by the buyer to show that his interest in the property is
genuine

It was observed: From a review of the decision cited above, the following principles emerge
regarding 'earnest': '(i) It must be given at the moment at which the contract is concluded, (z) It
represents a guarantee that the contract will be fulfilled or, in other words, "earnest" is given to bind
the contract. (3) It is part of the purchase price when the transaction is carried out. (4) It is forfeited
when the transaction falls through by reason of the default or failure of the purchaser. (5) Unless
there is anything to the contrary in the terms of the contract, on default committed by the buyer, the
seller is entitled to forfeit the earnest.'

Chandrasamma’s Case

Gift

Kalyana Sundaram v. Karruppa Mukhanar 50 Mad. 1927 PC-

Held- A gift deed once executed is effective but cannot be enforced until the deed is registered.
Moreover, while acceptance of the gift must be during the lifetime of the donor, its registration need
not be during his lifetime.

Subsequent actions of the donor and the donee like mutation in the municipal register after filing a
suit claiming his ownership would lead to the presumption that the gift has been accepted or acted
upon.

Lease

Associated Portal of India v. R. N. Kapoor AIR 1956 SC 1262

Facts- The appellant was a proprietor of a hotel and the respondent was occupying a certain space
in the "ladies and Gents" cloak rooms. The respondent applied under the Rent Control Act for
fixation of fair rent alleging that he was a tenant. The appellant contended inter alia that he was only
a licencee and not a lessee.

Held- that there is a marked distinction between a lease and a licence. The following propositions
may be taken as well established:

o To ascertain whether a document creates a licence or a lease, the substance of the document must
be preferred to the form.
o The rest test is the intention of the parties -whether they intended to create a lease or a licence.
o If the document creates an interest in the property, it is a lease, but, if it only permits another to
make use of the property, of which legal possession continues with the owner, it is a license.
o If under the document a party gets exclusive possession of the property, prima facie, he is
considered to be a tenant; but circumstances may be established which negative the intention to
create a lease.

B. V. D'Souza v. Antonio Fausto Fernandes AIR 1989 SC 1816-

Facts- In BV D’souza v Antonio Fausto Fernandes, the issue before the Supreme Court again was
whether the document created lease or a licence. The document was described as an agreement of
leave and licence and the parties were described as the licensor and the licencee. The very first
sentence of the document contained the words, ‘landlord hereinafter called the licensor’. According
to the document, the grantee was let in as a tenant on the monthly rent of Rs 350, besides the water
and electricity charges. It was agreed that the grantee would not sublet, under-let or part possession
of the premises to any stranger nor would he keep the premises vacant for more than three months
without the consent of the licensor.

Held- The court held that this document created a lease as the question of subletting can arise only
in a lease.

Delta International Ltd. v. Shyam Sunder AIR 1999 SC 2607

Held- For determining whether the phrase "demised premises" is to be construed as a lease as
expressly stated in the agreement, it has to be construed in the context in which it has been used.

Shanti Devi v. Ammal Kumar AIR 1981 SC 1550

Held- Generally, leases have a term permitting renewal and it requires the lessee to give notice to the
lessor of his intention to renew within a reasonable time before the expiry of the lease. Consent of
the lessor is not necessary unless expressly provided for.
PMC Kunchiraman v. C. Naganath Iyer AIR 1993 SC 307

Facts- In this case, the appellants had leased a building and mill premises for a period of one year.
The agreement stated that at the completion of one year, the property revert back to the
respondents. But, before the expiry of the term, the respondents (No.1-5) entered into another
agreement where TM which provided that on paying the amountdue to the appellant
after the stipulated period TM could take up the management by himself, pay the rent of the
building. Subsequently, a suit was filed by the respondents claiming that the agreement with TM was
a scam. It was taken to court stating that the respondents continued to have a leasehold right on the
premises.

Held- Clause (f) of Section 111 of the Transfer of Property Act, 1882, implied surrender is a
mode for determination of a lease of immovable property. In English Law, delivery of possession by
tenant to a landlord and his acceptance of possession effects a surrender by operation of law. It is
also called implied surrender in contradistinction to express surrender which must be either by
deed or in writing. Under the illustration to clause (f) of Section 111 of the Transfer of Property
Act, there would be an implied surrender of the former lease if a lessee accepts from his lessor a
new lease of the property leased to take effect during the continuance of the existing lease. The
said illustration is, however, not exhaustive of cases in which there may be an implied surrender of
the lease. Just as under the English Law, there can be an implied surrender under the law of
transfer of property in India, if the lessor grants a new lease to a third person with the assent of
the lessee under the existing lease who delivers the possession to such a person or where the
lessee directs his sub-tenant to pay the rent directly to a lessor.