Tag Archives: Transfer of Property Act

“Tenant at Sufferance”

        ‘Tenant at sufferance’ is one who comes into possession of land by lawful title, but who holds it by wrong after termination of term or expiry of lease by efflux of time. The tenant at sufferance is on who wrongfully continues in possession after extinction of a lawful title. There is little difference between him and a trespasser. A “tenancy at sufferance” does not create relationship of landlord and tenant.

        Moreover, even possession of lessee after determination of lease or expiry of period of lease becomes that of “Tenant at Sufferance”, therefore, even a quit notice is not necessary to be given and Section 106, Transfer of Property Act, 1882 is not at all attracted. Relying on earlier decision in R.V. Bhupal Prasad v. State of A.P., (1995) 5 SCC 698, the Hon’ble Apex Court in Sevoke Properties Ltd. v. West Bengal State Electricity Distribution Company Ltd., AIR 2019 SC 2664 held that once it is admitted by lessee that term of lease has expired, lease stood determined by efflux of time and in such a case, a quit notice under Section 106 of the Transfer of Property is not required to be given. It was held as under:

        “Once the lease stood determined by efflux of time, there was no necessity for a notice of termination under Section 106.” Lov Mandeshwari Saran Singh v. State of U.P., 2020 (138) ALR 845.

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Bona Vacantia or Escheat

Law relating to bona vacantia provides for conservation of abandoned properties. The nature of the property to which the Escheats Act applies must necessarily be abandoned property in the sense that there should be no claimants to the property.

        The question is, what exactly is “abandoned property” or what property is “bona vacantia”. In Bombay Dyeing Manufacturing Co. Ltd. v. State of Bombay, AIR 1958 SC 328, a Constitution Bench of the Hon’ble Supreme Court while deciding the challenge to the constitutional validity of the Bombay Labour Welfare Fund Act observed and held that the expression “abandoned property”, or to use the more familiar term “bona vacantia”, comprises properties of two different kinds, those which come in by escheat and those over which no one has a claim.

        Property is subject to the right of escheat, where upon intestacy, there is no heir. Escheat was a right, whereby land of which there was no longer any tenant, returned by reason of tenure, to the Lord by whom, or by whose predecessors in title, the tenure was created.

        In A-G of Ontario v. Mercer, (1883) 8 App Cas 767, it was held, that “Escheat is a term of art and derived from the French word escheat that is cadere excidere or accidere and signifyeth property when by accident the lands fall to the Lord of whom they are holden.” Escheat was an incident of feudal tenure and was based on the want of tenant to perform the feudal services. State of Rajasthan v. Lord Northbrook, 2020 (1) AWC 122.

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Conditional Gift – Where Possession Remains with the Donor during his lifetime

Gift means to transfer certain existing movable or immovable property voluntarily and without consideration by one person called the donor to another called the donee and accepted by or on behalf of the donee as held by the Hon’ble Supreme Court in Naramadaben Maganlal Thakker v. Pranjivandas Maganlal Thakker, (1997) 2 SCC 255. As further held by the Hon’ble Court in Naramadaben Maganlal Thakker, (1997) 2 SCC 255:

“It would thus be clear that the execution of a registered gift deed, acceptance of the gift and delivery of the property together make the gift complete. Thereafter, the donor is divested of his title and the donee becomes absolute owner of the property.”

 A conditional gift with no recital of acceptance and no evidence in proof of acceptance, where possession remains with the donor as long as he is alive, does not become complete during lifetime of the donor. When a gift is incomplete and title remains with the donor, the deed of gift might be cancelled.

In Renikuntla Rajamma v. K. Sarwanamma, (2014) 9 SCC 445,  a Hindu woman executed a registered gift deed of immovable property reserving to herself the right to retain possession and to receive rent of the property during her lifetime. The gift was accepted by the donee but later revoked.

 In Renikuntla Rajamma  v. K. Sarwanamma, (2014) 9 SCC 445, it was held that the fact that the donor had reserved the right to enjoy the property during her lifetime did not affect the validity of the deed. The Court held that a gift made by registered instrument duly executed by or on behalf of the donor and attested by at least two witnesses is valid, if the same is accepted by or on behalf of the donee. Such acceptance must, however, be made during the lifetime of the donor and while he is still capable of making an acceptance. S. Sarojini Amma v. Velayudhan Pillai Sreekumar, (2019) 11 SCC 391.

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Mortgage by Conditional Sale Vis-à-vis Sale with Agreement to Repurchase

Considering the scope of proviso to Section 58(c) of the Transfer of Property Act which was added by Act 20 of 1929 and elaborating upon the distinction between “mortgage by conditional sale” and “sale with agreement to repurchase”, in Bhaskar Waman Joshi v. Narayan Rambilas Agarwal, AIR 1960 SC 301, it was held as under:

“The proviso to this clause was added by Act 20 of 1929. Prior to the amendment there was a conflict of decisions on the question whether the condition contained in a separate deed could be taken into account in ascertaining whether a mortgage was intended by the principal deed. The Legislature resolved this conflict by enacting that 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. The question whether by the incorporation of such a condition a transaction ostensibly of sale may be regarded as a mortgage is one of intention of the parties to be gathered from the language of the deed interpreted in the light of the surrounding circumstances. The circumstance that the condition is incorporated in the sale deed must undoubtedly be taken into account, but the value to be attached thereto must vary with the degree of formality attending upon the transaction. The definition of a mortgage by conditional sale postulates the creation by the transfer of a relation of mortgagor and mortgagee, the price being charged on the property conveyed. In a sale coupled with an agreement to reconvey there is no relation of debtor and creditor nor is the price charged upon the property conveyed, but the sale is subject to an obligation to retransfer the property within the period specified. What distinguishes the two transactions is the relationship of debtor and creditor and the transfer being a security for the debt. The form in which the deed is clothed is not decisive. The definition of a mortgage by conditional sale itself contemplates an ostensible sale of the property.” Dharmaji Shankar Shinde v. Rajaram Shripad Joshi, (2019) 8 SCC 401.

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Adverse Possession

Adverse Possession is hostile possession by assertion of a hostile title in denial of the title of the true owner as held in M. Venkatesh v. BDA, (2015) 17 SCC 1.In Chatti Konati Rao v. Palle Venkata Subba Rao, (2010) 14 SCC 316 it was held as under:         “Animus Possidendi as is well known is a requisite ingredient of adverse possession. Mere possession does not ripen into possessory title until the possessor holds the property adverse to the title of the true owner for the said purpose. The person who claims adverse possession is required to establish the date on which he came in possession, nature of possession and that possession was open and undisturbed. A person pleading adverse possession has no equities in his favour as he is trying to defeat the rights of the true owner and, hence, it is for him to clearly plead and establish all facts necessary to establish adverse possession.” Brijesh Kumar v. Sharda Rai, (2019) 9 SCC 369.

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SARFAESI Act – Rights of a Rightful Tenant

If a valid tenancy under law is in existence even prior to the creation of the mortgage, the tenant’s possession cannot be disturbed by the secured creditor by taking possession of the property. The lease has to be determined in accordance with Section 111 of the Transfer of Property Act for determination of leases. As the existence of a prior existing lease inevitably affects the risk undertaken by the bank while providing the loan, it is expected of banks/creditors to have conducted a standard due diligence in this regard. Where the bank has proceeded to accept such a property as mortgage, it will be presumed that it has consented to the risk that comes as a consequence of the existing tenancy. In such a situation, the rights of a rightful tenant cannot be compromised under the SARFAESI Act proceedings. Bajrang Shyamsunder Agarwal v. Central Bank of India, (2019) 9 SCC 94.

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Second Notice – A New Tenancy Cannot be Inferred

In Sarup Singh Gupta v. S. Jagdish Singh, (2006) 4 SCC 205, it was held as under:

       “In the instant case, two notices to quit were given on 10th February, 1979 and 17th March, 1979. The suit was filed on June 2, 1979. The tenant offered and the landlord accepted the rent for the months of April, May and thereafter. The question is whether this by itself constitutes an act on the part of the landlord showing an intention to treat the lease as subsisting. Mere acceptance of rent did not by itself constitute an act of the nature envisaged by Section 113, Transfer of Property Act showing an intention to treat the lease as subsisting. The fact remains that even after accepting the rent tendered, the landlord did file a suit for eviction, and even while prosecuting the suit accepted rent which was being paid to him by the tenant. It cannot therefore, be said that by accepting rent, he intended to waive the notice to quit and to treat the lease as subsisting. We cannot ignore the fact that in any event, even if rent was neither tendered nor accepted, the landlord in the event of success would be entitled to the payment of the arrears of rent. To avoid any controversy, in the event of termination of lease the practice followed by courts is to permit the landlord to receive each month by way of compensation for the use and occupation of the premises, an amount equal to the monthly rent payable by the tenant. It cannot, therefore, be said that mere acceptance of rent amounts to waiver of notice to quit unless there be any other evidence to prove or establish that the landlord so intended.”

       In the Judgment rendered by Orissa High Court in Bhagabat Patnaik v. Madhusudan Panda, AIR 1965 Ori 11, Section 113 has been interpreted to hold that since a valid notice to quit a lease or to determine a tenancy cannot be waived without the assent of the landlord and the tenant both, the question as to whether such facts and circumstances of the case. An English Authority in Lawenthanfal v. Banhoute, 1947 (1) ALL ER 116, was quoted to say that a new tenancy cannot be inferred on the issuance of second notice. It is in this context that it was observed that a “subsequent notice to quit is of no effect.” It was held that a tenancy is not revived by anything short of a new tenancy and in order to create a new tenancy there must be an express or implied agreement to that effect.

       The mere fact that the tenant continues in possession and rent is accepted and the suit is not instituted are insufficient circumstances for inferring an intention to create a new tenancy after expiration of the first. It was further held thus:

       “Generally speaking, giving a second notice to quit does not amount to a waiver of a notice previously given unless, with other circumstances, it is the basis for inferring an intention to create a new tenancy after expiration of the first.” Praveen Kumar Jain v. Jagdish Prasad Gupta, 2019 (132) ALR 357.

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Transfer of – Right, Title or Interest in Tangible Property

It is a settled principle of law that a person can only transfer to other person a right, title or interest in any tangible property which he is possessed of to transfer it for consideration or otherwise. In other words, whatever interest a person is possessed of in any tangible property, he can transfer only that interest to the other person and no other interest, which he himself does not possess in that tangible property. So, once it is proved that on the date of transfer of any tangible property, the seller of the property did not have any subsisting right, title or interest over it, then a buyer of such property would not get any right, title and interest in the property purchased by him for consideration or otherwise. Such transfer would be an illegal and void transfer. In such eventuality and subject to any terms and conditions, if agreed between the parties, a buyer will have a right to claim refund of sale consideration from his seller, which he paid for purchase of the property under the law of contract. The reason is that the contract to purchase has failed and, therefore the parties have to be restored back to their original positions, which existed at the time of execution of the contract. Eureka Builders v. Gulabchand¸(2018) 8 SCC 67

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SARFAESI ACT – RIGHT OF A MORTGAGOR

Under the provisions of the SARFAESI Act and the relevant Rules applicable under Section 13(1), a free hand is given to a secured creditor to resort to a sale without the intervention of the Court or Tribunal. However, under Section 13(8), it is clearly stipulated that the mortgagor, i.e. the borrower, who is otherwise called as a debtor, retains his full right to redeem the property by tendering all all the dues to the secured creditor at any time before the date fixed for sale or transfer. Under sub-section (8) of Section 13 the secured asset should not be sold or transferred by the secured creditor when such tender is made by the borrower at the last moment before the sale or transfer. The said sub-section also states that no further step should be taken by the secured creditor for transfer or sale of that secured asset. Dwarika Prasad v. State of U.P., 2018 (129) ALR 220.

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Essentials of an Agreement – To qualify as a mortgage

The essentials of an agreement, to qualify as a mortgage by conditional sale, can succinctly be broadly summarized. An ostensible sale with transfer of possession and ownership, but containing a clause for reconveyance in accordance with Section 58 (c) of the Transfer of Property Act, will clothe the agreement as a mortgage by conditional sale. The execution of a separate agreement for reconveyance, either contemporaneously or subsequently, shall militate against the agreement being mortgage by conditional sale. There must exist a debtor and creditor relationship. The valuation of the property, and the transactional value, alongwith the duration of time for reconveyance, are important considerations to decide the nature of the agreement. There will have to be a cumulative consideration of these factors, alongwith the recitals in the agreement, intention of the parties, coupled with other attendant circumstances, considered in a holistic manner. Vishal Tukaram Kadam v. Vamanrao Sawalaram Bhosale, 2017 (5) AWC 4821.

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