Introduction: The concept of punishment has evolved over centuries, reflecting changing societal norms and philosophies. One such theory, the preventive theory of punishment, has its origins in the Enlightenment era and has since influenced legal systems worldwide. This essay explores the origins of the preventive theory, its founder, and how it is reflected in case law through various acts aimed at preventing future crimes.
Origins and Founder: The preventive theory of punishment emerged during the Enlightenment period in Europe, notably championed by Cesare Beccaria, an Italian philosopher, and jurist. Beccaria’s seminal work, “On Crimes and Punishments” (1764), laid the groundwork for modern criminology and criminal justice systems. Beccaria argued that punishment should serve a utilitarian purpose, primarily aimed at preventing future crimes rather than exacting revenge or retribution. He advocated for proportionate punishment, swift justice, and the certainty of punishment to deter potential offenders.
Acts Related to Preventive Theory: Acts related to the preventive theory of punishment encompass various measures aimed at deterring, incapacitating, or rehabilitating offenders to prevent future criminal behavior. These include:
Deterrence: Deterrence aims to discourage individuals from committing crimes by imposing punishments severe enough to outweigh the benefits of criminal behavior. Case laws reflecting deterrence include decisions to impose substantial fines or lengthy prison sentences for offenses deemed particularly harmful or egregious. For example, landmark cases involving white-collar crimes often result in significant financial penalties to deter corporate malfeasance.
Incapacitation: Incapacitation involves removing offenders from society to prevent them from committing further crimes. Case laws reflecting incapacitation may include mandatory minimum sentences or life imprisonment for habitual offenders or those convicted of violent crimes. Three-strikes laws in the United States, which mandate lengthy sentences for individuals convicted of three or more serious offenses, exemplify this approach.
Rehabilitation: Rehabilitation focuses on addressing the underlying causes of criminal behavior and reintegrating offenders into society as law-abiding citizens. Case laws reflecting rehabilitation may involve diversion programs, probation, or community-based rehabilitation initiatives. Drug courts, for instance, offer non-violent drug offenders the opportunity to undergo treatment and counseling as an alternative to incarceration.
Reflecting Preventive Theory in Case Law: Case law demonstrates the application of the preventive theory of punishment through judicial decisions that prioritize deterrence, incapacitation, or rehabilitation. For example:
In Roper v. Simmons (2005), the U.S. Supreme Court abolished the juvenile death penalty, citing evolving standards of decency and the need to rehabilitate youthful offenders rather than impose irreversible punishments.
Gideon v. Wainwright (1963) established the right to legal counsel for indigent defendants, ensuring fair trials and upholding the principle of deterrence by guaranteeing competent defense representation.
United States v. Booker (2005) rendered mandatory sentencing guidelines advisory rather than binding, allowing judges to consider individual circumstances and tailor sentences to promote rehabilitation while still deterring criminal conduct.
Conclusion: The preventive theory of punishment, pioneered by Cesare Beccaria, continues to shape contemporary criminal justice systems worldwide. Through deterrence, incapacitation, and rehabilitation, legal frameworks seek to prevent future crimes while balancing the principles of justice and proportionality. Case law reflects the application of this theory through decisions that prioritize preventive measures, ensuring a more effective and equitable administration of justice in society.
The concept that is closer to joint tenancy in India is often referred to as “joint ownership” or “co-ownership.” Under Indian law, co-ownership can be understood through the Indian Succession Act, 1925, and the Transfer of Property Act, 1882.
Here’s a general overview of co-ownership or joint ownership:
Joint Ownership or Co-Ownership: This refers to the situation where two or more persons jointly own a property. Each co-owner has an undivided interest in the property.
Right of Survivorship: In India, unlike some Western jurisdictions, there is no automatic right of survivorship in co-ownership. When one co-owner dies, their share in the property does not automatically pass to the surviving co-owner(s). Instead, it passes according to the deceased co-owner’s will or according to the Indian Succession Act, 1925, in case there is no will.
Equal Ownership: Unless otherwise specified, co-owners are presumed to have equal shares in the property, regardless of their contribution to the property’s purchase price or ongoing expenses.
Partition: Co-owners in India have the right to seek partition of the property, where the property is divided among the co-owners according to their respective shares. The partition can be either by mutual agreement or through a court decree.
Tenancy in Common: In the context of Indian property law, the concept that is closer to tenancy in common is known as “tenancy-in-common.” Each tenant-in-common holds a distinct and separate share in the property, which they can dispose of independently.
It’s essential to consult with an Indian legal expert or refer to the specific provisions of the Indian Succession Act, 1925, and the Transfer of Property Act, 1882, for a detailed understanding of co-ownership or joint ownership in India. Laws and legal interpretations may vary, and they can be subject to amendments and updates over time.
Joint tenancy is a form of property ownership where two or more people hold title to a property together, with equal rights to the property. When one of the joint tenants dies, their share of the property automatically passes to the surviving joint tenant(s) by the right of survivorship, rather than being passed on according to the deceased’s will or intestacy laws.
Characteristics of joint tenancy include:
Right of Survivorship: This is the defining feature of joint tenancy. When one joint tenant dies, their interest in the property is automatically absorbed by the surviving joint tenant(s).
Equal Ownership: Each joint tenant has an equal ownership interest in the property, regardless of their contribution to the property’s purchase price or ongoing expenses.
Unities: For a valid joint tenancy, four unities must be present:
Unity of Time: All joint tenants must acquire their interest in the property at the same time.
Unity of Title: All joint tenants must acquire their interest in the same transaction or document.
Unity of Interest: All joint tenants must have an equal share or interest in the property.
Unity of Possession: All joint tenants must have an equal right to possess the entire property.
4. Can Be Terminated: A joint tenancy can be terminated if any of the joint tenants decides to sever their interest. This can be done through a process known as “partition,” where the property is divided among the joint tenants or sold with proceeds divided among them.
It’s important to distinguish joint tenancy from “tenancy in common,” another form of co-ownership. Unlike joint tenancy, tenancy in common does not include the right of survivorship. When a tenant in common dies, their share of the property passes to their heirs or beneficiaries, not necessarily to the surviving co-owners.
In the Indian legal framework, joint tenancy, as understood in some Western jurisdictions, is not explicitly recognized under the Hindu Succession Act, 1956, or the Transfer of Property Act, 1882. However, there are provisions related to co-ownership and the devolution of property upon the death of a co-owner.
Hindu Succession Act, 1956: The Hindu Succession Act, 1956, governs the succession and inheritance of property among Hindus. Under this Act:
Section 8 deals with the general rules of succession in the case of males dying intestate. It provides for the devolution of property to heirs like sons, daughters, widow, mother, etc.
Section 15 specifies the rules for the devolution of a female Hindu’s property. It provides that the property of a female Hindu dying intestate shall devolve according to the rules set out in the Act.
Section 23 deals with the right of a female Hindu to maintenance and residence.
Section 30 provides for the right of a female Hindu to claim a partition of the property. While the Hindu Succession Act, 1956, does not explicitly recognize joint tenancy, it deals with the devolution of property among co-owners and heirs upon the death of an individual.
Transfer of Property Act, 1882: The Transfer of Property Act, 1882, deals with the transfer of property in India. It contains provisions related to co-ownership and the rights and liabilities of co-owners.
Section 44 of the Transfer of Property Act deals with the rights of co-owners. It states that each co-owner has a right to possession and can use the property in any manner, provided it does not interfere with the rights of other co-owners.
Section 45 provides that if one co-owner is in sole possession of the property, they are not liable to account to the other co-owners for the profits earned by the use of the property.
Section 48 specifies that a co-owner can file a suit for partition of the property, where the property is divided among the co-owners according to their respective shares. While the Transfer of Property Act, 1882, does not explicitly recognize joint tenancy, it provides for the rights and liabilities of co-owners and the procedure for partitioning the property.
It’s important to note that while these Acts do not use the term “joint tenancy,” they do provide for co-ownership and the devolution of property among co-owners and heirs. For a detailed understanding and interpretation of these provisions, it is advisable to consult with a legal expert familiar with Indian property and succession laws.
Case Laws:
In India, the concept of joint tenancy, as understood in some Western jurisdictions, is not explicitly recognized under Indian law. However, the principles of co-ownership and the rights and obligations of co-owners have been dealt with in various Indian case laws. Courts in India have often interpreted and applied the principles of joint tenancy in the context of co-ownership and partition of property.
Here are some landmark Indian case laws related to co-ownership and partition:
P. Saraswathi Ammal vs. S. V. Gopalakrishna Naidu (1973):
In this case, the Supreme Court held that a co-owner has a right to file a suit for partition to claim his/her share in the jointly owned property. The court emphasized the principle that each co-owner has an equal right to the possession and enjoyment of the property.
Smt. Krishna Kumari vs. K. Srinivasan (1977):
The Supreme Court in this case reiterated that a co-owner has an absolute right to seek partition of the jointly owned property. The court held that a co-owner can file a suit for partition even if the other co-owners do not consent to the partition.
T. S. Chellappan vs. T. S. Gopalakrishnan (1979):
The Supreme Court held that the possession of one co-owner is deemed to be the possession of all co-owners unless there is a clear ouster of the other co-owners. The court emphasized that each co-owner has an equal right to the possession and enjoyment of the property.
Ram Charan Das vs. Girja Nandini Devi (1966):
In this case, the Supreme Court held that a co-owner can maintain a suit for possession of the entire property against a trespasser. The court recognized the right of a co-owner to protect the jointly owned property from unauthorized interference.
T. S. S. Soundararajan vs. P. J. Venkatachalam (2002):
The Supreme Court in this case held that the partition of joint family property can be sought by a co-owner at any time, even if the property was acquired by the joint family prior to the commencement of the Hindu Succession Act, 1956.
These case laws highlight the principles of co-ownership, possession, and partition of property under Indian law. While the term “joint tenancy” may not be explicitly used, the principles underlying joint tenancy have been interpreted and applied by Indian courts in the context of co-ownership and partition of property. It’s important to consult with legal experts and refer to the specific facts and judgments of these cases for a detailed understanding of the principles and their application in Indian law.
Introduction: The doctrine of part performance is a significant principle within the law of property that operates to enforce certain agreements or transactions that have not been completed in full. It provides an exception to the general rule that contracts for the transfer of interests in land must be in writing to be enforceable. Part performance recognizes that in some circumstances, parties may have relied on oral agreements or partially performed actions related to the transfer of property rights, and equity demands that they be protected. This essay aims to explore the doctrine of part performance, its historical development, its elements, and its application in modern property law.
Historical Development: The origins of the doctrine of part performance can be traced back to English common law principles and equitable doctrines. Historically, the Statute of Frauds enacted in 1677 required certain contracts, including those pertaining to land, to be in writing to be enforceable. However, courts gradually developed exceptions to this rule to prevent injustice where parties had partially performed their obligations under an oral agreement relating to land.
Elements of Part Performance: The doctrine of part performance typically requires the presence of certain elements to apply. These elements may vary slightly depending on jurisdiction, but generally include:
Acts of part performance: There must be some action taken by one party in reliance on the oral agreement. This could include payment of purchase money, occupation of the land, or making substantial improvements to the property.
Reliance: The party seeking enforcement must have reasonably relied on the oral agreement or representations made by the other party.
Change in position: The party seeking enforcement must have changed their position in some significant way as a result of the oral agreement, making it unfair to allow the other party to renege on the agreement.
Inequity: Enforcing the oral agreement must be necessary to prevent injustice or unconscionable conduct.
Application in Modern Property Law: In modern property law, the doctrine of part performance continues to play a vital role in ensuring fairness and equity in contractual arrangements involving land. Courts carefully consider the circumstances of each case to determine whether the elements of part performance are present and whether enforcement of the oral agreement is justified.
Case law provides numerous examples of the application of the doctrine of partial performance. For instance, in the case of Walsh v Lonsdale (1882), the House of Lords held that where a party had taken possession of land and made substantial improvements in reliance on an oral agreement for a lease, equity would enforce the agreement despite the lack of a formal written contract. Similarly, in Maddison v Alderson (1883), the court enforced an oral agreement for the sale of land where the purchaser had paid part of the purchase price and taken possession of the property.
However, it’s essential to note that the doctrine of part performance is not without its limitations and complexities. Courts must balance the interests of enforcing agreements to prevent injustice with the need for certainty and predictability in property transactions. Additionally, the requirements for part performance can vary between jurisdictions, and the application of the doctrine may differ depending on the specific facts of each case.
Ramchandra Ananta Jog v. Vithal Raoji Khyade (AIR 1950 Nag 71):
In this case, the Nagpur High Court held that if the transferee has taken possession of the property and has done some acts in furtherance of the contract, then the doctrine of part performance applies, and the transferee can enforce the contract, even if it is oral.
M.S. Madhav Rao v. Smt. Narsamma (AIR 1965 SC 1812):
The Supreme Court of India in this case laid down the principle that part performance of a contract for sale of immovable property can be considered an exception to the rule of written contract under the Transfer of Property Act, 1882. The Court emphasized that for part performance, there should be payment of consideration and delivery of possession, and the acts done in furtherance of the contract must be unequivocally referable to the contract.
Kanniammal v. Rajkumar (AIR 1979 SC 1729):
In this case, the Supreme Court reiterated that the doctrine of part performance is an exception to the general rule requiring written contracts for the transfer of immovable property. The Court held that possession coupled with payment of consideration can be considered part performance, and specific performance can be granted even in the absence of a registered sale deed.
The Supreme Court held that for the doctrine of part performance to apply, there must be unequivocal acts on the part of the transferee which are referable to the oral contract. Mere possession of the property by the transferee is not sufficient; there must be additional acts indicating performance of the contract.
In this case, the Supreme Court reiterated that the doctrine of part performance is based on equitable principles and is intended to prevent injustice. The Court emphasized that the essential requirements for part performance are payment of consideration and delivery of possession, along with acts unequivocally referable to the contract.
Conclusion: In conclusion, the doctrine of part performance is a crucial principle within the law of property that allows for the enforcement of oral agreements or partially performed transactions relating to land. It reflects the equitable principles of fairness and prevents injustice where parties have relied on such agreements to their detriment. While the doctrine has evolved over time, its underlying purpose remains to uphold the integrity of contractual arrangements while ensuring equity and justice in property transactions.
The “doctrine of election” in the context of the Transfer of Property Act, 1882 (TP Act) pertains to a situation where a person is given a choice to either accept or reject a transfer of property. This doctrine is primarily outlined in Sections 35 and 36 of the TP Act.
Section 35: Transfer by Ostensible Owner: According to Section 35, if a person transfers a property in which he has no interest but subsequently acquires an interest in the property, the transfer will take effect once he acquires the interest. The transferee is then bound to accept the transfer, and he cannot reject it.
Section 36: Transfer by an Unauthorized Person: Section 36 deals with a transfer made by a person not authorized to transfer the property. If the transferor subsequently acquires an interest in the property, the transfer becomes valid to the extent of his interest. The transferee is bound to accept the transfer.
Key Elements of the Doctrine of Election:
The transferor must not have an interest in the property at the time of the transfer.
The transferor subsequently acquires an interest in the property.
The transferee is then bound to accept the transfer.
Illustration: By a deed, X (transferor) gives to Y (transferee) a farmhouse belonging to Z (owner), and by the same deed, X gives a factory belonging to himself (X) to Z. Now, Z is put to election that means Z has to choose whether he wants to take over the factory of X by giving his farmhouse to Y or not. In this case, Z is entitled to X’s factory only when he conforms to all the provisions of the deed by renouncing his rights in the farmhouse and by giving it to Y.
What is the time limit applicable to elections under Section 35 of the TPA?
Section 35 of the TPA states that the transferor or his representative must get a notice from the property owner within a year of the transfer’s date. If they don’t respond after the term has passed, even if they are aware of the expiration date and have heard it through their representatives, they will be assumed to have confirmed the election.
Election by a person with a disability is not possible unless and until:
His condition gets better.
Someone else, who is not impaired, makes the decision on his behalf.
What are the exceptions applicable to the doctrine of election under Section 35 of the TPA?
According to the provisions of Section 35 of the TPA, a beneficiary clause must be made for the transferee when the transferee accepts the transfer. The transferor may then accept the transfer and make use of the beneficiary clause, or the transferee may object. However, there is a specific exemption to this regulation, which states that if the transferee does not expressly consent or make a firm decision, then it will be assumed that they have approved the transfer in the following circumstances:
It will be deemed that the transferee has accepted if they fully benefit from the beneficiary clause mentioned in the transfer or in other circumstances where they do.
The transferee is required to respond if, after a year, no approval has been given about the transfer of the property. If he or she didn’t, it would be assumed that they had given their consent to the transfer.
When there is a disability, such as a minority or insanity, the electoral duty is suspended unless the guardian makes the transfer.
Suppose the transferor includes both an independent beneficiary clause and a beneficiary clause at the moment of transfer. Therefore, the transferee will likewise receive the independent beneficiary clause, even if they did not consent to the transaction.
Case Laws:
Gangamai Ammal vs. Nachiappa Gounder (AIR 1959 SC 197): In this case, the Supreme Court held that Section 35 of the TP Act applies only when the transferor transfers the property without any interest, but subsequently, before the transferee’s decision to accept or reject, acquires an interest. If the transferor had an interest at the time of the transfer, Section 35 does not apply.
Ghulam Abbas vs. Rafiq Ahmad (AIR 1963 SC 884): The court in this case emphasized the importance of the transferor having no interest at the time of the transfer for the application of the doctrine of election under Section 35. If the transferor has an interest at the time of the transfer, the doctrine does not come into play.
These cases illustrate the application and interpretation of the doctrine of election under the Transfer of Property Act. It is essential to consult legal professionals and update legal resources for the most current information on legal doctrines and case laws.
The Limitation Act is a significant statute that establishes the window of time within which certain activities must have been completed. The limitation laws are there to inform people of their right to assert a property interest within a certain amount of time. One shouldn’t dwell on their rights for a lifetime. If the law does not specify a time frame for reserving rights or interests in property, there may be misunderstanding.
A person may assert ownership of another person’s land or property by continuous and unbroken possession for a predetermined amount of time under the legal notion of adverse possession. It thinks about hostile possession. Adverse possession has been a topic of discussion since it may violate the rights of property owners, even while it can offer a way to settle long-standing conflicts.
According to Section 3 of the Limitation Act, 1963, any lawsuit that has passed the statute of limitations set forth in this act will not be considered by the law. The person in possession gets ownership of the property through adverse possession when they are in possession of it against the will of the real owner and the real owner does not file a lawsuit to restore it within a set amount of time.
The Law Commission’s Latest Report and Recommendations
The Law Commission, a statutory authority mandated in many jurisdictions to study laws and make reform recommendations, recently looked into the subject of adverse possession. The report’s specifics may change depending on the jurisdiction, but its overall goal is to strike a compromise between upholding the rights of the real owner and ensuring transparency in real estate transactions.
The Law Commission of India has recommended against enlarging the period of limitation provided under Articles 64, 65, 111, or 112 of the Limitation Act, 1963, which encapsulates the law on adverse possession.
While Art. 64 deals with possession-only claims, Article 65 deals with possession suits based on title (The plaintiff will lose if the defendant establishes that he has the right to keep possession (honoring the plaintiff’s possession) as a lessee, licensee, mortgagee, etc.). (If evicted “otherwise than in due course of law,” the person has a right to receive their belongings back.) The plaintiff has the duty of proving his possession within 12 years under Article 64, while the defendant has the burden of proving when his ownership became unfavorable under Article 65.
To claim adverse possession, the occupier must prove that they have been in continuous, uninterrupted possession of the land for at least 12 years and that their possession was open, notorious, and hostile to the true owner.
Article 64 and 65 of the Limitation Act
The main conditions for asserting adverse possession are outlined in Articles 64 and 65 of the Limitation Act, which is included in numerous legal systems. Article 65 specifies the limitation period, which is normally between 10 and 30 years, within which the adverse possessor can claim ownership. Article 64 states that the possession must be actual, continuous, and uninterrupted for a particular amount of time. These laws ensure that simple possession without a valid title does not automatically result in ownership rights and give a legal foundation for adverse possession claims.
All claims for immovable property ownership based on title, specifically proprietary title as opposed to possessory title, are covered by Article 65, which is a stand-alone clause. Article 64 governs possession lawsuits based on possessory rights. The statute of limitations expires in accordance with Article 64 12 years after the date of possession. The well-known maxim that a restriction prohibits just the remedy but does not invalidate the title is an exception provided by Section 27, thus it must be read in conjunction with Section 27. This Section forbids the recovery of the property from the person in adverse possession after the limitation period has elapsed by someone who had a right to possession but allowed that right to be lost by doing nothing.
Case Laws where SC Held that One Cannot Sleep Over His Rights and that the Owner Needs to Be Aware
The Supreme Court has held that owners cannot simply “sleepover” their rights and must exercise due diligence and awareness regarding their property. The court has emphasized that if an owner neglects their property for an extended period, allowing an adverse possessor to openly and continuously occupy it, they may lose their rights due to their own inaction. These judgments underscore the importance of timely action and vigilance on the part of property owners to protect their interests:
Supreme Court Case Laws Recognizing the Rights of the Owner
The Supreme Court has recognized the rights of property owners in several cases involving adverse possession. In these judgments, the court emphasized the importance of protecting the genuine owner’s interests and held that adverse possession cannot be claimed against a person who is in possession of the property with a lawful title. The court’s decisions highlight the need to strike a balance between the interests of the adverse possessor and the rightful owner, ensuring that the rights of the latter are not unjustly infringed upon.
Case Laws Where the Supreme Court Recognized the Rights of the Owner
The Apex Court criticized the doctrine of adverse possession in Hemaji Waghaji Jat vs. Bhikhabhai Khengarbhai Harijan (2009) 16 SCC 517, contending that it is illogical, irrational, and wholly inappropriate because it punishes the actual owner for failing to take any action within the limitation period. The dishonest person who has illegally gained ownership of the property is rewarded, however. Further, the Supreme Court directed the Union of India to amend and recheck the doctrine.
Gurudwara Sahib v. Gram Panchayat Village Sirthala(2014) 1 SCC 669 The Supreme Court in this case reiterated the principle that adverse possession cannot be claimed against a religious institution unless it is established that the institution has abandoned the property. The court emphasized that the burden of proof lies on the adverse possessor to establish abandonment, and mere non-use of the property does not necessarily indicate abandonment.
Why the Law is Criticized?
Unjust Dispossession: Adverse possession can result in the unjust dispossession of genuine property owners who may have been temporarily absent or unaware of the adverse possessor’s occupation. The law may unintentionally reward those who exploit legal technicalities to claim ownership over someone else’s property.
Inequitable Outcomes: Adverse possession can lead to inequitable outcomes where innocent property owners, who may have legitimate reasons for not asserting their rights, lose their property due to their inaction.
Encouraging Illegal Activities: Adverse possession laws can encourage trespassers and encroachers to occupy and utilize someone else’s property unlawfully with the intention of acquiring ownership rights over time. This can encourage illegal activities and undermine the rule of law.
From my perspective, adverse possession is a legal doctrine that poses challenges and often leads to unjust outcomes for genuine property owners. While it serves a purpose in resolving long-standing disputes and rewarding continuous possession, the potential for abuse and injustice cannot be ignored. Striking a balance between the interests of the adverse possessor and the rightful owner is crucial, as the current legal framework can sometimes result in a loss of property rights without due consideration of the owner’s rights and circumstances.
It is a claim to any debt, other than secured by mortgage of immovable property or pledge or hypothecation of some movable property, or to any beneficial interest in movable property, not in possession either actual or constructive of the claimant. Section 3 of Transfer of Property Act, 1882 defines ; “actional claim means a claim to any debt , other than a debt secured by mortgage of immovable property or by the hypothecation or pledge of movable property , or to any beneficial interest in movable property not in the possession, either actual or constructive , of the claimant, which the civil courts recognises as affording grounds for relief, whether such debt or beneficial interest be existent, accruing ,conditional or contingent.”
Lets’ analyse above definition; Actionable Claims means a claim to – Any debt, other than a debt secured – By a mortgage of immovable property, or By hypothecation or pledge of movable property, or Any beneficial interest in the movable property- not in possession (either actual or constructive) of the claimant; which the civil courts recognise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.
An actionable claim is property and the assignee has a right to sue to enforce the claim. A right to recover an unascertained amount of damages resulting from breach of contract or tort is a mere right to sue. If, however, one has a right to recover an ascertained and definite debt, he may transfer it because it is an actionable claim. Thus, suppose A is indebted to B for ` 2000 and B transfers the right to recover the debt of C, the transfer is void. A beneficial interest in specific movable property is also an actionable claim. It has been held that the right to claim the benefit of an executory contract constitutes a beneficial interest in movable property [Jaffer Meher Ali v. Budge Budge Jute Mills (1906) ILR 33 Cal. 702.]
A Debt may be Secured or Unsecured. Where a debtor gives security of any immovable or movable property to secure payment of debt, called Secured Debt and other the other hand where no security has given for payment of debt, called unsecured debt. An Unsecured Debt is treated as Actionable Claim.
1. Where a debt is already due and become payable is called “Existing Debt”
2. on the other hand, where a debt or sum of money is due at present but payable on a future date, it is “Accruing Debt”; Where the claim for a sum of money exists but the payment depends upon the fulfilment of any condition, the debt is known as “Conditional Debt”.
CLAIMS WHICH ARE HELD TO BE ACTIONABLE CLAIM; following claims are included under the category of Actionable Claims;
1. A Claims for arrears of rent;
2. A share in partnership;
A Claim for money due under any insurance policy; 1. A claim for rent to fall due in future accruing debt; 2. A Claim for the return of earnest money; 3. A Claim for unpaid dower of a Muslim Woman; A right to get back the purchase-money when sale is set aside; A benefit of an executory contract for the purpose of goods is a beneficial interest in the movable property; 1. A right to proceeds of a business.
CLAIMS WHICH ARE NOT TREATED AS ACTIONABLE CLAIM; 1. A Decree is not an Actionable Claim; 2. A Right to get damages under the law of torts or for breach of contract; A Claim to mesne profit is not an actionable claim but it is a mere right to sue; 1. A Copyright; 2. A Debt secured by mortgage of immovable property or hypothecation of movable property.
TRANSFER OF ACTIONABLE CLAIM: Section 130 of Transfer of Property Act, 1882 provides that
(1) The transfer of an actionable claim (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, shall be complete and effectual upon the execution of such instruments, 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 proceeding and without making him a party thereto
Transfer of actionable claim takes effect only after execution and signing of the instrument. After execution, all the rights and remedies of the transferor vest in the assignee. The Assignee(transferee) becomes entitled to recover the claims and sue in his own name. The assignee also become liable for all the liabilities and equities to which the transferor was subject at time of the transfer.
Assignment of Insurance Policy: The insured has assigned his policies to a bank. He then made a claim as a complaint under the Consumer Protection Act against the insurance company. In this case it was held that the Bank has right to claim amount from insurance company on the basis of decree passed by consumer court. The Bank need not to get permission from the insured.
Subrogation of claim under insurance: A consignor has filed a suit against the carrier of cargo for loss of stock due to negligence and heavy rain. The insurance company after accessing claim amount has paid to the consignor and filed a recovery suit against the carrier on the basis of letter of subrogation and power of attorney received from the insured(consignor) in its own name. The court held that the suit of recovery of loss should be in the name of consignor name, not in the name of the insurance company on the basis of Power of Attorney;
Notice of Assignment: A notice of assignment to the debtor is not compulsory to perfect the title of the assignee(transferee) but until the debtor receives notice of the assignment to a third person, his dealings with original creditor shall be protected. Thus, it is necessary for an assignee to give notice to the debtor as soon as possible;
Exception: the provisions of Section 130 are not applicable to the transfer of a marine or fire insurance policy or affect the provisions of Section 38 of the Insurance Act, 1938.
Indu Kakkar Vs. Harayana State Industrial Development Corporation Ltd., AIR 1999 SC 296C (1999): The Supreme Court held that the transferee cannot compel the corporation allotting the land to treat him as an allottee. In this case a plot was allotted to the allottee for the establishment of an industrial unit within a specified time-period by the Industrial Development Corporation. The original allottee has transferred the plot without the consent of the corporation. The Supreme Court held that the corporation could not ne compelled to treat him as an original allottee. He has no locus standi to challenge the order of resumption passed by the corporation.
Section 131 of The Transfer of Property Act, 1882 deals with Notice in case of assignment of Actionable Claim: provides that every notice of transfer of actionable claim must be in writing and signed by the transferor or his duly authorised agent in this behalf. Where transferor refuses to sign, then the notice must be signed by the transferee or his agent. The notice must be in express terms of notice and name and address of the transferee must be written clearly on the notice. Notice must be unconditional.
Sadasook Ramprotap Vs. Hoar Miller & Co. it was held that there is no time limit within which the notice must be given. Notice given within one year was held to be reasonable.
Section 132 of the Transfer of Property Act, 1882 deals with Liability of Transferee of Actionable Claim; the transferee of an actionable claim shall take it subject to all the liabilities and equities and to which the transferor was subject in respect thereof at the date of the transfer.
Example: Let’s consider Mr. X transfers to Mr. Y a debt due to him by Mr. Z, Mr. X being then indebted to Mr. Y. Mr. Z sues Mr. Y for the debt due by Mr. Y to Mr. X. In this case Mr. Y is entitled to set off the debt due by Mr. X to Mr. Z, although Mr. Y was unaware of it at the date of transfer.
Note: – The principal of this section is that the assignee can get no better title than the assignor. If nothing is due to the assignor the assignee gets nothing.
Section 133 of the Transfer of Property Act, 1882 : 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. A warranty of solvency is not implied. Warranty is sometimes given by the transferor as a precautionary measure that the debtor is solvent so that the transferee becomes assured that he may not lose his claim. The warranty of solvency of debtor is limited only for the time of transfer or time of the assignment. Where the transfer is for consideration, such warranty extends only to the amount of such consideration.
Section 134 of Transfer of Property Act, 1882 provides that; 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 Residue if any, belongs to the transferor or other person entitled to receive the same.
Section 135[ inserted by 1944 amendment act of the Act, 1882 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 has been made with himself.
Section 135 provides that any assignee 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 him all rights of suit as if the contract contained in the policy has been made with him.
Note: Section 130 of the Act, 1882 exempts the assignments of marine or fire policies of insurance from its operation because mere assignment of such policy does not entitle the assignee to the ownership of the subject matter of policy.
Section 136 deals with the incapacity of officers connected with the Court of justice. The person who includes in section 136 are as Legal practitioner; Judges of the Court; and The legal or officer who concerned with the justice of the Court. And the last Section 137 describes the saving of negotiable instruments and etc.In the case, State of Kerala and Ors. Vs. Mini Shamsudin and Ors State of Kerala and ors. Vs. Mini Shamsudin and ors, (2009) insc 1 (2 jan 2009)., the Court said that actionable claims are ‘goods’ and movable property but it is not for the purpose of the sales tax acts. SECTION 137 of the Transfer of Property Act, 1882: the provisions of Sections 130 to 136 of the Transfer of Property Act, 1882 dealing with transfer of actionable claim do not apply to stocks, shares or debentures , or to instruments whish are for the time being , by law or custom, negotiable ,or to any mercantile document of title to goods.
Mercantile Document of Tile of Goods; includes a bill of landing, dock-warrant, warehouse-keeprs’ certificate, railway receipt, warrant or order for the delivery of goods, and any other document used in ordinary course of business as a proof of the possession or control of goods, or authorising or purporting to authorise ,either by endorsement or by delivery, the purpose of the document to transfer or receive goods thereby represented.
what is actionable claim in gst?
Actionable Claims are those that meet the definition outlined in Section 3 of the Transfer of Property Act, 1882, according to Section 2(1) of the CGST Act, 2017.
According to Section 2(52) of the CGST Act, “goods” include any type of moveable property other than money and securities, including anything attached to land that is agreed to be severed before supply, growing crops, grass, and actionable claims.
Is GST applicable on actionable claim?
Transactions/activities in actionable claims are kept outside the ambit of GST, except for the following claims: lottery, betting, and gambling
Why actionable claims are not goods?
2(7) of the Act. It states that “‘goods’ means every kind of movable property other than actionable claim and money”. Thus, actionable claims are not covered by the provisions of the Sale of Goods Act. This is because they are defined and dealt with under the Transfer of Property Act.
Why is actionable claim a good?
Actionable claims are recognised by the court of law in order to provide with relief in reference to unsecured debt or beneficial interest in movable property. Debt: A debt is a liquidated or certain sum of money which debtor is under the obligation to pay. It can vary from being in present and in future
Conclusion
Every debt in movable property that could be enforced by the court is referred to as a “Actionable Claim.” Any type of financial claim, regardless of whether the amount was fixed or undetermined, is actionable under this definition. These were sometimes made unclear, and there used to be decisions that conflicted; the law was inconsistent or unclear. The Transfer of Property Act should be revised to include both parties’ rights and obligations in transactions..
Section 3 of the Transfer of Property Act of 1882 specifies what constitutes an actionable claim. A claim to any debt, other than a debt secured by a mortgage of immovable property or by the hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in the claimant’s possession, either actually or constructively, is considered an actionable claim under Section 3 of the Transfer of Property Act, regardless of whether the debt or beneficial interest is actual, accruing, or confidential.
Examples:
1. X owes 500 rupees to Y. this is an actionable claim.
2. A agrees to sell to B, a product P in future. Here B gains a beneficial interest and hence is an actionable claim.
Transfer of Actionable Claim:
Section 130 of the transfer of property explains the transfer of an actionable claim as following ; ‘the transfer of actionable claim , whether with or without consideration, shall be effected only by the execution of an instrument in writing signed by the transferor or his duly authorized agent, 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 is given or not’
The above mode of transfer can be broken down as following;
1. The transfer can be done only by:
2. An instrument in writing,
3. Signed by the transferor or his duly assigned agent.
4. The transfer can be with or without consideration.
5. The transfer will be complete and effective when executed.
6. The transfer vests all the rights and remedies of the transferor in the transferee.
Notice of Transfer:
The transfer of an actionable claim will be valid irrespective of the fact whether the debtor had the knowledge of it or not. But if the notice has not been given to the debtor, then he is not bound by the transfer. Hence, the payment made by him to the principle creditor would be valid.
Section 131 explains the mode of notice as; The notice must be :
1. In writing,
2. Signed by the transferor or his duly authorized agent on his behalf, or where the transferor refuses to sign, the transferee or his agent shall specify the name and address of the transferee.
Liability of Transferee:
Section 132 of TPA provides with the liabilities of the transferee of actionable claim. It provides that the transferee takes all the liabilities and equities which the transferor was subjected to at the date of the transfer in the same respect. Thus transferee cannot get a better title.
Illustrations:
(i) B owes Rs. 1000 to A. A owes Rs. 500 to B. A transfers the debt due to him by B to C. C sues B for the recovery of debt. B here is entitled to set off irrespective of the fact whether C was aware of it or not. C would get Rs. 500.
Warranty of solvency :
Section 133 of Transfer of Property Act, 1882 deals with 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.
Restrictions:
Section 136 of TPA provides with a list of persons who are unable / barred to take actionable claim by transfer. The persons include:
1. Judge,
2. Legal practitioner, and
3. The officer concerned with any court of justice
The right to an easement goes from the time when humanity first emerged from savagery and acquired the habit of being neighbors to one another or respecting one another’s rights. The broad idea that a person should enjoy their property fully and exclusively while avoiding interfering with a neighbor’s lawful enjoyment of his own property rights was deemed essential for the common welfare. It appears that the original tenet of easements was this beneficial principle.
Definition:
Section 4 of the Indian Easements Act defines easement as: An easement is aright which the owner or occupier of certain land possesses, as such, for the beneficial enjoyment of that land, to do and continue to do something, or to prevent and continue to prevent something being done, in or upon, or in respect of , certain other land not his own. Eg.: ‘A’ the owner of the house has a right of way over B’s land. This is for the beneficial enjoyment of As house. This is an Easement.
According to Salmond, “Easement is that legal servient which can be exercised on some other piece of land for the benefit of a piece of land”
Dominant land; parcel of land with the benefit of the easement
Servient Land; parcel of land being burdened by the easement
Positive Easements; give rights of entry onto another person’s land to enable something to be done on the land e.g. right of way, rights to discharge water
Negative Easements; rights to prevent something being done e.g. rights to flow air through defined apertures, to support a building etc
REQUIREMENTS OF A VALID EASEMENT The essential features of an easement, in the strict sense of the doctrine, are as follows: (a) It is an incorporeal right; a right to the utilize and enjoyment of land not to the land itself; (b) it is trusted upon corporeal property; (c) it demands for its constitution two distinct tenements the “dominant tenement” which enjoys the right, and the “servient tenement” which submits to it. The characteristics that are required for the validity of an easement has been laid down by the court in Re Ellen borough Park. The Court of Appeal had to decide the status with respect to a right for residents to use a garden in the middle of a square around which their houses were built.
CREATION OF EASEMENTS
The title to easement may be by grant, by custom, by prescription or necessity. An easement can be acquired by grant. A grant is given by an agreement executed by a grantor in favour of a grantee for a consideration. The grant becomes effective when the grantee has the right to enter upon the grantor’s land. The deed of easement may be separate or the grant may be included in a deed relating to the dominant heritage.
For example, X sells his land to Y and by the same deed he may grant a right of way to Y for such land for another land of his. Grant is given by an agreement executed by the grantor in favour of the grantee for a consideration. The grant becomes effective when the grantee has the right to enter upon the grantor’s land.
Easement by virtue of custom is a legal right acquired by the operation of law through continuous use of a land over a long period of time. Therefore the right of way continues to exist by grant, prescription or by virtue of custom.Easements, which are the subject matters of agreement between the parties, are for right of way, right to air and light. Some easements are acquired by grant and others prescription and custom. Creation of an easement does not mean transfer of property.
In the same manner, surrendering an easement right does not imply transfer of property. Easement can be made, altered and released. Easement right cannot be created or modified orally. It must be in a written form. However, easements by prescription and custom need not be in writing.A deed of grant must clearly mention the purpose of which easement is granted. By the deed of grant the subservient owner gives full and free right to the dominant owner and his successors a passage wide enough for movement of people and vehicles between the dominant owner’s premises and the public road against a price consideration. In Moody v Steggles the grant of a right to fix a signboard to the adjoining property advertising the public house which constituted the dominant tenement was held to comprise an easement.
DURATION AND NATURE OF EASEMENTS
The Indian Easements Act, 1882 states in Section 6 that “An easement may be permanent, for a term of years or other limited period, or subject to periodic interruption, or exercisable only at a particular place, or at certain times, or between certain hours, or for a particular purpose, or on condition that it shall commerce or become void or voidable upon the happening of a specified event or the performance or nonperformance of a specified Act..”
The nature of easements is described in section 7 of the Indian Easement Act, 1882 which states that easements are restrictions of one or other of the following rights (namely):(a) Exclusive right to enjoy -The exclusive right of every owner of immovable property (subject to any law for the time being in force) to enjoy and dispose of the same and all products thereof and accessions thereto.(b) Rights to advantages arising from situation – The right of every owner of immovable property (subject to any law for the time being in force) to enjoy without disturbance by another the natural advantages arising from its situation
Section 105 states the definition of a lease which states that it is a transfer of immovable property for a particular time period for a consideration of which the transferee has accepted the terms surrounding the agreement.
A lease is a contract wherein the lessor grants the lessee temporary use and pleasure of a thing, in whole or in part, in exchange for payment (rent).If the lease is for real estate that cannot be moved, the lessor is the owner and the lessee is the tenant. In this situation, the rent may take the form of cash or a share of the property’s profits.
What are the essentials of a lease?
Parties must be competent: The parties in a lease agreement should be competent to enter into a contract. Lesser should be entitled to a property and have absolute rights over that property.
Right of possession: Ownership rights are not transferred in a lease, only the possession of the property is transferred.
Rent: Consideration for a lease can be taken in the form of a rent or premium.
Acceptance: Lessee, who is to get the interest in the property after lease, has to accept the lease agreement along with the time period and terms & conditions imposed on the transfer.
Time Period: Lease always takes place for a particular time period which is to be specified in the lease agreement. It can be relaxed at the option of the lessor.
Maintain: Provision for the payment of the costs of maintenance and repair, taxes, insurance, and other expenses appertaining to the asset leased.
Term of Lease: The term of the lease is the period for which the agreement of lease remains in operation.
Ownership: During the lease period, ownership of the assets is being kept with the lessor, and its use is allowed to the lessee.
Terminating: At the end of the period, the contract may be terminated.
Renew or Purchase: An option to renew the lease or to purchase the assets at the end of the basic period.
Default: The lessee may be liable for all future payments at once, receiving title to the asset in exchange.
What happens when the lease agreement does not prescribe the time period of the lease?
Section 106 provides for the duration of the lease in the absence of the lease agreement. It lays down that in the absence of a contract, lease can be ended by both parties to the lease by issuing a notice to quit. The prescribed time period always commences from the date of receiving the notice to quit. Following are the circumstances:
Purpose
Term (Deemed)
Notice
Prescribed End
Agricultural or manufacturing purpose.
Year to Year
6 month
1 year
Any other purpose.
Month to Month
15 days
1 month
In this table, there is a distinction of two purposes in regard to Section 106 i.e. Agricultural or manufacturing and other purposes. Hence, two things can be derived from this table:
When a lease for Agricultural or manufacturing purpose is deemed to be of year to year, then it will attract a 6-month notice that the lease will end on the expiry of 1 year from the date of the commencement of the lease.
When a lease for any other purpose is deemed to be of the month to month, then it will attract a 15-day notice that the lease will end on the expiry of 1 month from the commencement of the lease.
There is proviso to this section which states that the notice to quit in this section should be written and conveyed to the party who is required to abide by it. If this is not possible then it should be attached to a conspicuous place in that property.
How is a lease executed?
Section 107 states about lease how made. This section covers three aspects:
When there is a lease of Immovable property for a term of 1 year or more – This can only be made by a registered deed.
All other leases of Immovable property – Can be either made by a registered deed or an oral agreement or settlement along with the transfer of possession of that property.
When the lease is of multiple properties that require multiple deeds, it will be made by both the parties of the lease.
Advantages of Lease
The advantages from the viewpoint of the lessee
Saving of Capital: Leasing covers the full cost of the equipment used in the business by providing 100% finance. The lessee is not to provide or pay any margin money as there is no down payment. In this way, the saving in capital or financial resources can be used for other productive purposes, e.g., the purchase of inventories.
Flexibility and Convenience: The lease agreement can be tailor-made in respect of lease period and lease rentals according to the convenience and requirements of all lessees.
Planning Cash Flows: Leasing enables the lessee to plan its cash flows properly. The rentals can be paid out of the cash coming into the business from the use of the same assets.
Improvement in Liquidity: Leasing enables the lessee to improve its liquidity position by adopting the sale and leaseback technique.
Shifting of Risk of Obsolescence: The lessee can shift the risk upon the lessor by acquiring the use of assets rather than buying the asset.
Maintenance And Specialized Services: In the case of a special kind of lease arrangement, the lessee can avail specialized services of the lessor for maintenance of asset leased. Although lesser charges higher rentals for providing such services, leases see overall administrative and service costs are reduced because of specialized services of the lessor.
Off-the-Balance-Sheet-Financing: Leasing provides “off-balance-sheet” financing for the lessee in that the lease is recorded neither as an asset nor as a liability.
The advantages from the viewpoint of the lessor
There are several extolled advantages of acquiring capital assets on lease:
Higher profits: The Lessor can get higher profits by leasing the asset.
Tax Benefits: The Lessor being the owner of an asset, can claim various tax benefits such as depreciation.
Quick Returns: By leasing the asset, the lessor can get quick returns than investing in other projects of the long gestation period.
Disadvantages of Lease
The disadvantages from the viewpoint lessee
Higher Cost: The lease rental includes a margin for the lessor as also the cost of risk of obsolescence; it is, thus, regarded as a form of financing at a higher cost.
Risk: Risk of being deprived of the use of assets in case the leasing company winds up.
No Alteration in Asset: Lessee cannot make changes in assets as per his requirement.
Penalties On Termination of Lease: The lessee has to pay penalties in case he has to terminate the lease before the expiry lease period.
The disadvantages from the viewpoint of lessor
High Risk of Obsolescence: The Lessor has to bear the risk of obsolescence as there are rapid technological changes.
Price Level Changes: In the case of inflation, the prices of an asset rise, but the lease rentals remain fixed.
Long term Investment: Leasing requires the long term investment in the purchase of an asset and takes a long time to cover the cost of that asset
Types of the Lease
Leasing takes different types, which are given below;
Based on Nature.
Operating lease.
Financial lease.
Based on the Method of Lease.
Direct lease.
Sale & Leaseback.
Leverage lease.
Operating Lease: An operating lease is a cancelable contractual agreement whereby the lessee agrees to make periodic payments to the lessor, often for 5 or fewer years, to obtain an asset set’s services. According to the International Accounting Standards (IAS-17), an operating lease is one that is not a finance lease.
Financial Lease: A financial (or capital) lease is a longer-term lease than an operating lease that is non-cancelable and obligates the lessee to make payments for the use of an asset over a predetermined period of time. According to the International Accounting Standard (IAS-17), in a financial lease, the lessor transfers to the lessee substantially all the risks and rewards identical to the ownerships of the asset whether or not the title is eventually transferred.
Direct Lease: Under direct leasing, a firm acquires the right to use an asset from the manufacturer directly. The ownership of the asset leased out remains with the manufacturer itself.
Sale & Leaseback: Under the sale & leaseback arrangement, the firm sells an asset that it owns and then leases to the same asset back from the buyer. This way, the lessee gets the assets for use, and at the same time, it gets cash.
Leveraged Lease: Leveraged lease is the same as the direct lease, except that a third party, the lender, is involved in addition to the lessee & lessor. The lender partly finances the purchase of the asset to be leased; the lessor turns to be a borrower.
Distinguish between the Operating and Financial Lease
Topics
Operating Lease
Financial Lease
Definition
An operating lease is a short term lease used to finance assets & is not fully amortized over the life of the asset.
A financial lease is the lease used in connection with long-term assets & amortizes the entire cost of the asset over the life of the lease.
Duration
Short term leasing
Long term leasing
Cost
The lessor pays the maintenance cost.
Lessee pays the maintenance cost.
Cancel & Changeable
Cancelable lease & It is a changeable lease contract.
Non-cancelable lease & It is not a changeable lease contract.
Risk
the landlord bears the risk of the asset.
The lessee bears the risk of the asset.
Purchase
At the end of the asset is hot purchasable.
At the end of the contract, the asset is purchasable.
Renew
It is a renewable contract.
It is not a renewable contract.
Also called
Service lease, short term lease, cancelable lease.
A capital lease, long term lease, non-cancelable lease.
So, from the above discussion, we can say that a lease is a contract under which one party the lessor (owner) of an asset agrees to grant the use of that asset to another, the lessee in exchange for periodic rental payments. The rent is a tax-deductible expense.
RIGHTS & LIABILITIES OF LESSOR & LESSEE.
Rights and Liabilities of a Lessor
We already know who is a lessor, so legally a lessor is granted certain rights and certain liabilities. Section 108A talks about the rights and liabilities of a lessor, so let’s further analyse the rights and liabilities of a lessor.
Rights of a lessor
Right to accretions- If during the tenancy period or during the duration of the tenancy any further accretion, accumulation or addition is made in the property then the lessor is entitled to such property. Such addition can be natural or by the expense of the lessee but after the termination of the tenancy period, the lessee must deliver the title to the lessor.
Right to collect rent- The lessor has the right to collect rent or any form of consideration as mentioned in the terms and conditions of the contract from the tenant without any form of interruptions.
Liabilities of a lessor
Duty of disclosure- The lessor is bound to disclose any form of a material defect in the property. There are two kinds of defects:
Latent defect- Latent defect cannot be discovered rationally or through inspection by the lessor.
Apparent defect- Apparent defect can be easily discovered through some inspection.
So basically a lessor shall disclose any apparent defect to the lessee and it is vital to disclose such defects as they interfere with the enjoyment of the property by the lessee.
To give possession- The lessor must give possession of the property to the lessee on lessee’s request. However, this liability only arises when there is a request on behalf of the lessee.
Covenant for quiet enjoyment- The lessee has all the rights to enjoy the property. It is the duty of the lessor to not cause any form of interruptions during the tenancy period. The Madhya Pradesh HC stated that actions such as physical interference or direct interference in the premises lead to a breach of enjoyment and interruptions.
Rights and liabilities of a lessee
Just like a lessor, a lessee has also some rights and liabilities which are granted to him by the Transfer of Property Act. So now we will analyse the rights and liabilities of a lessee.
Rights of a lessee
To charge for repair- If the lessor fails to make any repairs in the property which the lessor is bound to do in that case the lessee can make such repairs by his personal expenses. If a lessee makes such repairs by his personal expenses then, in that case, it is the right of the lessee to deduct the cost of such repairs from the rent or the lessee may simply charge the lessor for such repair.
Right to remove fixtures- The lessee has the right to remove any fixture in the property during the time period of the lease, however, after the termination of the lease deed the lessee must leave the property in the condition in which he received it. In case the lessee fails to do so, the lessor can sue the lessee.
Right to assign his interest- The lessee can sub-lease the property or the lessee can absolutely transfer his interests. However, if the lease deed restricts a lessee to assign his interest then the lessee is prohibited to do so and even after the transfer of his rights, the lessee is still subject to all the liabilities related to the lease deed.
Right to have benefits of crops- When the lease is of uncertain duration then, in that case, the lessee or his/her legal representative has been given the right to gain benefits from all the crops grown by them.
Liabilities of a lessee
Duty to disclose material facts– The lessee is bound to inform the lessor of any material fact which the lessee is aware of and the lessor is not. In case the lessee does not disclose such fact and the lessor suffers any loss then the lessee is bound to compensate the lessor.
Duty to pay rent- The lessee is bound to pay the rent or the premium to the lessor or his agent in the proper time and proper place as decided by the lease deed. In case the lessee fails to pay his/her rent then, in that case, the lessor can eject the lessee on the ground of non-payment of rent or file a suit for arrears of rent.
Duty to maintain the property- The lessee is bound to maintain the property in a good condition as it was when he was given the possession of the property. The lessor or his agent are allowed to inspect the property at the reasonable ground. Only the changes caused by irresistible forces can act as an exception for this liability.
Duty to give notice– If the lessee becomes aware that any person has tried or is trying to damage the rights of the lessor or the title of the lessor is endangered then, in that case, the lessee must give notice to the lessor.
Duty to use the property in a reasonable manner- The lessee must use Duty not to erect any permanent structure- A lessee cannot erect any permanent structures except in the case of agriculture without the consent of the lessor.
Duty to restore possession– After the determination of the lease, the lessee must restore the possession of the property to the lessor.
7 Duty to restore possession- After the determination of the lease, the lessee must restore the possession of the property to the lessor. If the lessee does not vacate the premises even after the expiry of the notice, the lessee is then bound to pay the damages.
If the lessee does not vacate the premises even after the expiry of the notice, the lessee is then bound to pay the damages.
the property in a manner as if it was his/her own property.
Termination of a lease
A lease is terminated in eight different ways that are discussed below:
A lease is terminated after the expiry of the specified time period.
If the length of the lease is until the happening of some event and when that event happens the lease is terminated.
If the lessor’s interest in the property is to terminate the lease on the happening of some event and when the event happens the lease is terminated.
When the lessee surrenders by implying.
When both the lessor and lessee mutually agree to end the contract.
On the expiry of a notice which expressly conveys the intention to terminate the vacancy and such notice must be unconditional.
Through forfeiture which legally allows a lessor to re-enter and reclaim his property.
If the interest of both the lessor and the lessee in the whole property becomes vested at the same time in one person in the same right, then by the operation of law merger takes place
An immovable property is pledged as collateral for a loan under the terms of a mortgage, which is a legal contract. “A mortgage is the transfer of an interest in specific immovable 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,” states section 58(a) of the Transfer of Property Act, 1882.
The term “mortgagor” refers to the transferor, and “mortgagee” to the transferee. Real estate or other assets are used as collateral for mortgage loans.
Simply , a mortgage is an agreement between a person and, typically, a bank for the purpose of receiving a loan. The loan is utilized to purchase a property in which the lending party or bank has an ownership interest. The bank has the authority to either purchase the property outright or sell it to recoup the loan if the borrower fails to repay the loan in accordance with their agreement if they have an interest in the property.
Characteristics of Mortgage
A mortgage can be effected only on immovable property. The immovable property includes land and benefits arising from things attached to the earth like trees, buildings, and machinery. But a machine that is not permanently fixed to the earth and is shiftable from one place to another is not considered immovable property.
A mortgage is the transfer of an interest in the specific immovable property and differs from a sale wherein the ownership of the property is transferred. Transferring an interest in the property means that the owner transfers some of the ownership rights to the mortgagee and retains the remaining rights with himself. For example, a mortgagor retains the right to redeem the property mortgaged.
The object of transfer of an interest in the property must be to secure a loan or performance of a contract which results in monetary obligation. Transfer of property for purposes other than the above will not amount to the mortgage. For example, a property transferred to liquidate prior debt will not constitute a mortgage.
The property to be mortgaged must be a specific one, i.e., It can be identified by its size, location, boundaries, etc.
The actual possession of the mortgaged property need not always be transferred to the mortgagee.
The interest in the mortgaged property is re-conveyed to the mortgage on repayment of the loan with interest due on.
In case the mortgager fails to repay the loan, the mortgagee gets the right to recover the debt out of the sale proceeds of the mortgaged property
