1.

Discuss the provision of the topa 1882 relating to transfer for the benefit of
unborn person.

Answer:

Introduction

The rules with respect to the transfer of property for the benefit of unborn person
and rule against perpetuity are mainly governed and operated under section 13 and
section 14 of The Transfer of Property Act, 1882.

Here unborn child refers to the person who is non-existence as of now but will

come into existence in future. A child in a mother’s womb is not a person in
existence. Although it has been treated under both the Hindu and Muslim law.

Status of unborn child

Unborn child refers to an individual who is not born yet or is not in existence and
there is nothing in the law to prevent the unborn child owning property before he is
born.

Transfer of property Act – Unborn child

Section 13 of the transfer of property act states that “Where, on a transfer of

property, an interest therein is created for the benefit of a person not in
existence at the date of transfer, subject to a prior interest created by the same
transfer, the interest created for the benefit of such person shall not take
effect, unless it extends to the whole of the remaining interest of the transfer in
the property.”

The transfer of property takes places between two living persons which means that
there cannot be a transfer to a person who is not born yet or not in existence. This
is the reason why section 13 of TOPA uses the term ‘for the benefit of’ and not
transfer ‘to’ unborn person.
A child in a mother’s womb is considered to be a person competent of the transfer.
Therefore a property can be transferred to a child in her mother’s womb because
the child exists but not to an unborn person who does not even exists in the womb
of her mother.

With every transfer of property, there is a transfer of interest which states that as
soon as the property gets transferred in the name of transferee the interest is vested
in the transferee. Therefore it is necessary that the transferee should be in existence
when the transfer is made. This is against the very concept of an interest.

For a transfer of property for the benefit of the unborn person two conditions are
necessary to be fulfilled:

1. Absolute interest should be transferred in the favour of the unborn person,

and
2. Prior life interest must be created in favour of a person in existence at the
date of transfer.

Pre-requisite for a valid transfer of property to an unborn person

Section 13 is enacted for the valid transfer of property to an unborn person. The
procedure for the same are as follows:

1. Any person who intends or wishes to transfer the property for the benefit
of an unborn person should first make a life estate in favour of a living
person and after this, an absolute estate in favour of the unborn person.
2. Till the time, in whose favour the life estate created is alive, would hold
the possession of the property, and enjoyment of the property.
3. If the person who was unborn during the time of creation of life estate, is
born, the title of the property gets immediately transferred to the person
born but he’ll get the possession only on the death of the life estate holder.

Rule against perpetuity

The term perpetuity means an indefinite or uncertain period. Perpetuity occurs

because of the people who want to retain the property in their own family from
generation to generation. So this will create a loss to the society because the
society would be deprived of any of the benefit arising out of that property that is
why the frequent circulation of a property is required and that is the policy of the
law to prevent the creation of such perpetuity.

Perpetuity may arise in two ways:

1. By taking away the power of alienation from the transferor.

2. By creating a remote interest in the future property.

A condition restraining the transferee’s power of alienation is void as per S.1O of

the Act. and a disposition to create a future remote interest is prohibited under S.14
of the Act.

Object

The main objective of this policy is the proper and free regulation of property both
for trade and commerce as well as for the advancement of property which is useful
for society. The object is to see that the property isn’t tied-up and the issue of
ceaselessness can be anticipated.

Conditions necessary for section 14

1. Transfer of property should be there

2. Transfer of property be such that it should create interest in favour of the
unborn person.
3. Interest created must take effect after the lifetime of one or more persons
living at the date of such a transfer and during the minority of the unborn
person.
4. The unborn person should be in existence during the expiration of interest
of living person.
5. The vesting of the interest in favour of the ultimate beneficiary may be
postponed only up to the life or lives of living persons plus the minority of
the ultimate beneficiary but not beyond that.
Perpetuity period – Extent

Position in India – Life or any number of lives in being + period of gestation +

minority period of the unborn beneficiary.

English Law – Life or lives in being +period of gestation +minority period.

Indian and English law – Difference

1. The minority period in both the countries is different. The minority period
in India is 18 whereas the minority period under the English law is 21
years.
2. The English law states that the property need not be absolutely given to
the unborn person whereas under the Indian law the property should be
absolutely transferred to the unborn.
3. Under English law, the period of gestation is a gross period whereas under
the Indian Law the period of gestation should be an actual period.
4. Under the Indian law, the unborn person must come into existence before
the death of the last life estate holder but under the English law, the
unborn person must come into existence within 21 years of the death of
the last life estate holder.

Exceptions

1. Transfer for public benefit – A property transferred is not void if it is

made for the benefit of people in general. E.g. religion, health, care or
anything helpful to the society.
2. Covenants of Redemption – This rule does not offend the covenants of
redemption in a mortgage.
3. Personal agreements – Agreements that do not create any interest in the
property are not affected by this rule. This rule applies only to transfers
where there is a transfer of interest.
4. Pre-emption – Pre-emption refers to the buying of goods and shares
before it is offered to any other person. In this, there is an option of
purchasing a land and there’s no question of any kind of interest in the
property, so this rule does not apply.
 5. Perpetual Lease – The contracts of perpetual renewal of leases is not
applicable here.
6. The rule is also not applicable to mortgages as there is no creation of
a future interest.

Rule under Hindu law and Muslim law

The transfer of property act has made possible the transfer of property for the
benefit of an unborn person. Before the transfer of property act, the rule under the
Hindu and Muslim law was that the gift given to a person who is not born or not in
existence was void. The position under the Muslim law keeps being the same.
However, for Hindus, the rule was modified by various of enactments to bring it
conformity with the section of transfer of property act. There have been parallel
provisions made under the Indian succession act, 1925, which allows bequest for
the person who is not born or unborn. Section 113 of Indian Succession Act
1925(IS Act), applies to legacies created for the person unborn and contain a
provision almost identical to section 13 of the transfer of property act.

Conclusion

Transfer of property to an unborn child has always raised questions. So to

overcome the questions the section 13 of transfer of property act was given as an
answer of the questions which states that the transfer of property for benefit of an
unborn child or the person who is not born. A child in mother’s womb is regarded
by a legal fiction as already born, in accordance with the maxim nasciturus pro iam
nato habetur. For the unborn person, there must be a transfer of absolute interest.

2. Define the morgage and explain the different kinds of mortgage and
rights and liabilities of mortagagee in details.

Mortgage:
A mortgage is the transfer of an interest in the specific immovable property to
secure 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.

Characteristics of Mortgage

1. A mortgage can be effected only on immovable property, the immovable

property includes land, benefits that arise out of 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
to be immovable property.

2. A mortgage is the transfer of an interest in the specific immovable property

and differs from sale wherein the ownership of the property is transferred.
Transfer of an interest in the property means that the owner transfers some
of the rights of ownership to the mortgagee and retains the remaining rights
with himself. For example, a mortgagor retains the right to redeem the
property mortgaged.

3. 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.

4. The property to be mortgaged must be a specific one, i.e., it can be identified

by its size, location, boundaries, etc.

5. The actual possession of the mortgaged property need not always be

transferred to the mortgagee.

6. The interest in the mortgaged property is re-conveyed to the mortgage on

repayment of the loan with interest due on.

7. 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.

Different Types of Mortgage

6 types of mortgages are;

1. Simple mortgage,

2. Mortgage by conditional sale,

3. Usufructuary mortgage,

4. English mortgage,

5. Mortgage by deposit of title deeds, and

6. Anomalous mortgage

These are described below;

Simple mortgage

A simple mortgage is one where;

Without delivering possession of the mortgaged property, the mortgagor binds

himself personally to pay the mortgage money and agrees expressly or impliedly
that in the event of his failure to pay according to his contract, the mortgagee shall
have a right to cause the mortgaged property to be sold and the proceeds of the sale
to be applied so far may be necessary, m the payment of the mortgage money.

However, the mortgagee cannot directly sell the property. The sale must be
through the intervention of the court.

The mortgagee will have to obtain first a decree from the court for the sale of the
mortgaged property since the words used are “cause the mortgaged property to be
sold”.

Mortgage by conditional sale

Mortgage by conditional sale is one where the mortgagor ostensibly sells the
mortgaged property on the condition that –

 On default of payment of the mortgage money on a certain date the sale shall
become absolute, or

 On such payment being made the sale shall become void, or

 On such payment being made the buyer shall transfer the property to the
seller.
 Usufructuary mortgage

A usufructuary mortgage is one where the mortgagor delivers or agrees to deliver

the possession of the mortgaged property to the mortgagee and authorizes him –

 To retain such possession until payment of the mortgage money,

 To receive the whole or any part of the rents and profits accruing from the
property, and

 To appropriate such rents or profits; (i) in lieu of interest, or (ii) in payment

of the mortgage money, or (iii) partly in lieu of interest and partly in lieu of the
mortgage money.

English Mortgage

English mortgage has the following characteristics:

 The mortgagor makes a personal promise to repay the mortgage money on a

certain day.

 The property mortgaged is transferred to the mortgagee. The mortgagee,

therefore, is entitled to take immediate possession of the property. He/She may,
under certain circumstances sell the mortgaged property without the intervention of
the court.

 The transfer is subject to this condition that the mortgagee will re-transfer
the property to the mortgagor upon making payment of the mortgage money as
agreed.

Mortgage by deposit, of title deeds

Where a person delivers to a creditor or his/her agent documents of title to

immovable property, to create a security thereon, the transaction is called a
mortgage by deposit of title deeds.

This mortgage does not require registration. It is the most popular with banks.

Anomalous mortgage

A mortgage other than any of the mortgages explained so far. It is an anomalous

mortgage.
 Such a mortgage includes a mortgage formed by the combination of two or more
types of mortgages as explained above.

It may, therefore, take various forms depending upon custom, local usage, or
contract.

Legal Mortgage and Equitable Mortgage – Advantages and Disadvantages

Based on the transfer of title to the mortgaged property, mortgages are divided into
types namely:

1. Legal Mortgage

2. Equitable Mortgage

Legal Mortgage

In a legal mortgage, the legal title to the property is transferred in favor of

mortgagee by a deed.

The deed is to be registered when the principal money is Rs.100 or more. On

repayment of the loan, the legal title is re-transferred to the mortgagor.

The method of creating a charge is expensive as it involves registration charges

and stamp duty.

Equitable Mortgage

An equitable mortgage is affected by the delivery of documents of title to the

property to the mortgagee.

The mortgagor through Memorandum of deposit undertakes to grant a legal

mortgage if he fails to pay the mortgage money.

Advantages

 No registration is required for an inequitable mortgage and so stamp duty is

saved.

 It involves minimum formalities.

 The information regarding such a mortgage is kept confidential between the

lender and the borrower. So the reputation of the borrower is not affected.
 Disadvantages

 If the mortgagor fails to repay, the mortgagee must get a decree for the sale
of the property. Getting a degree is expensive and time-consuming.

 The borrower may hold the title deeds not on his account, but in the capacity
of a trustee. If an equitable charge is created, the claim of the beneficiary under the
trust will prevail over the equitable mortgage.

 There is the risk of a subsequent legal mortgage in favor of another party. If

the equitable mortgagee parts with the security, even for a short period, the debtor
may create a second legal mortgage over the same property.

 Rights, Liabilities and Duties of Mortgagee: – A mortgagee possesses one

right against the property and another against the mortgagor personally.
Following are the rights of mortgagee: -·

 Right to Foreclosure or Sale.The right of foreclosure is a right available to

a mortgagee to recover his outstanding money. The transaction is affected
through a document called the mortgage deed. The relevant provision
regarding foreclosure are contained under section 67 of the transfer of
property act.·

 Right to sue for Mortgage Money: – A mortgagee has the right to sue for
the mortgage money where the mortgagor bind himself to repay, where the
mortgaged property wholly and partially destroyed, where the mortgagee is
deprived of his security due to a wrongful act and where the mortgagor has
failed to deliver possession of the property to the mortgagee. Section 68
deals with sue for mortgage money in transfer of property act.·

 Power of Sale when valid: – Section 69 of the transfer of property act, 1882
states that, the mortgagee has the power to sell the mortgaged property
without the intervention of the court, on default of payment of mortgage
money by the mortgagor in following three cases:

 1. When the mortgage is an English mortgage between non-Hindus, non-

Muslims, non-Mohammedi’s and member of the race or sect notified by the
by the state government of the official gazette.
 2. When government is mortgagee, with the express provision of sale
without intervention of the court.

 3. When the mortgaged property is situated at Calcutta, madras, Bombay or

any other gazette town or area.·

 Right to Accession – Increased Mortgaged Property: – If, after the date

of a mortgage, any accession is made to the mortgaged property, the
mortgagee, in the absence of a contract to the contrary, shall, for the
purposes of the security, be entitled to such accession. Provision of this act
is under Section 70 of Transfer of Property act, 1882.·

 Right to Accession – Renewal of Security. Section 71, Transfer of

Property Act, 1882 When the mortgaged property is a lease, and the
mortgagor obtains a renewal of the lease, the mortgagee, in the absence of a
contract to the contrary, shall, for the purposes of the security, be entitled to
the new lease.·

 Rights of Mortgagee in Possession: – A mortgagee may spend such money

as is necessary for the mortgaged property from destruction, for making his
own tittle thereto good against the mortgagor; and may in absence of a
contract to the contrary, add such money to the principal money, at the rate
of interest payable on the principal, and where no such rate is fixed, at the
rate of nine percent per annum.

 · Right to proceed of Revenue sale or Composition on Acquisition: –

 Section 73, Transfer of Property Act state that where the mortgaged property
or any interest therein is sold owing to failure to pay arrears of revenue or
other charges of a public nature or rent due in respect of such property, and
such failure did not arise from any default of the mortgagee, the mortgagee
shall be entitled to claim payment of the mortgage shall be entitled to claim
payment of the mortgage-money, in whole or in part.

 · Liabilities of Mortgagee Possession

 Section 76 of transfer of property act provides that when during the
continuance of the mortgage, the mortgagee takes possession of the
mortgaged property. Mortgagee must have to manage the property as a
person of ordinary prudence. He must use his best endeavors to collect the
rents and profit thereof; He must , in the absence of contract to the contrary,
make such necessary repairs of the property as he can pay for out of the rent
and profits thereof after deduction from such rents and profits the payments
and the interest on the principal money. He must not commit any act which
is destructive or permanently injurious to the property.

 He must keep clear, full accurate accounts of all sums received and spent
him as a mortgagee, and, at any time during the continuance of the
mortgage, give the mortgagor, as his request and cost, true copies of such
accounts and of the vouchers by which they are supported.

 A mortgagee is bound to sue on behalf of all the mortgagees in respect of

which the mortgage money has become due in the absence of express
contract. During the continuance of the mortgage, the mortgagee is bounded
to protect the mortgaged property.

 Legal aspects

Mortgages may be legal or equitable. Common law jurisdictions have

evolved two main forms of Mortgage:

 A. The mortgage by demise

In a mortgage by demise, the mortgagee becomes the owner of the
mortgaged property until the loan is repaid or other mortgage obligation
fulfilled in full, a process known as redemption. Mortgages by demise are
the original form of mortgages, and continue to be used in many
jurisdictions, and in a small minority of states in the united states.

 B. The Mortgage by Legal Charge.

A legal charge is a method by which a lender protects the money they have
lent to an individual or company. It is a legal document signed by the
 borrower and which is registered against a property at the land registry so as
to alert any potential buyer of the existence of the debt .One of the most
common types of a legal charge is a mortgage from a bank or building
society. In consideration of the mortgage funds that you are borrowing, the
bank or building society will require a legal charge to be secured against the
property.

 Case Study

 In the case of Venkata Reddy v. Pethi Reddy AIR 1963 SC 992, it is

indisputable that in a mortgage suit there will be two decrees, namely,
preliminary decree and final decree, and that ordinarily the preliminary
decree settles the rights of the parties and the final decree works out those
rights.

 In Kausalya v. Kauleshwar 1945 ILR 25 Pat 305, it cannot also be disputed

that a mortgage merges in the preliminary decree and the rights of the parties
are thereafter governed by the said decree.

 In the case of Stanley v. Wilde, it was held that any provision mentioned in
the mortgage-deed which has an effect of preventing or impeding the right to
redemption is void as a clog on redemption.

 Conclusion

 A mortgage deed comes up with many rights and liabilities for both the
parties involved i.e. mortgagor and mortgagee. These rights and liabilities
were being mentioned in the Transfer of Property Act 1882 which is quite
old. New amendments were also being made in the Amendment Act of 1929
which is not implemented in a proper way so there is way in which both the
mortgagor and mortgagee are having various ideas for deceiving each other.
So, the need of the hour is to amend the laws and make it more stringent so
that no party attempts to enter into a fraudulent transaction.
3. What is the difference between sale and exchange? What are the right and
liabilities of parties to the exchange?