Indian_Real_Estate_Law (2)

1 Indian Real Estate Laws

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Indian Real Estate Laws 2

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Indian Real Estate

Law

Collated and Typeset in L A TEXby Chandra Nath 1

July 17, 2022

1 cpcnath@gmail.com

Indian Real Estate Laws

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Dedicated to ease the reading for the professionals and

members of the public who consult these laws. Research

validates: Faster readers had better comprehension scores

when reading the two/three column format, compared with

slower readers


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“Interpretation of laws and it’s right application in its true spirit is the bedrock of

any judicial mechanism and a legal system..There is a need to check the crevices

of its precedents in the light of the laws at hand and the facts that have been dealt

with. Though primafacie this may seem as a miniscule idea, it is wisdom to bear in

mind that the purpose of the law is executing proper justice and executing order, and

if this is ignored then, the purpose of the existence of such a mechanism of justice

is itself thwarted. Thereby discussion on the principles of application of laws and

it’s interpretation in administration of justice is called for.” — Henrietta Newton

Martin

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Contents

I RERA Act 1

1 THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 3

1.1 CHAPTER I PRELIMINARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

1.1.1 Short title, extent and commencement . . . . . . . . . . . . . . . . . . . 3

1.1.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

1.2 CHAPTER II REGISTRATION OF REAL ESTATE PROJECT AND AGENTS 7

1.2.1 Prior registration of real estate project with Real Estate Regulatory Authority.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

1.2.2 Application for registration of real estate projects . . . . . . . . . . . . . 8

1.2.3 Extension of registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

1.2.4 Revocation of registration. . . . . . . . . . . . . . . . . . . . . . . . . . . 10

1.2.5 Obligation of Authority consequent upon lapse of or on revocation of

registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

1.2.6 Registration of real estate agents . . . . . . . . . . . . . . . . . . . . . . 11

1.2.7 Revocation of registration. . . . . . . . . . . . . . . . . . . . . . . . . . . 11

1.2.8 Functions of real estate agents. . . . . . . . . . . . . . . . . . . . . . . . 12

1.3 CHAPTER III FUNCTIONS AND DUTIES OF PROMOTER . . . . . . . . . 12

1.3.1 Obligations of promoter regarding veracity of the advertisement or prospectus

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

1.3.2 No deposit or advance to be taken by promoter without first entering into

agreement for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

1.3.3 Adherence to sanctioned plans and project specifications by the promoter 14

1.3.4 Obligations of promoter in case of transfer of a real estate project to a

third party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

1.3.5 Obligations of promoter regarding insurance of real estate project . . . . 15

1.3.6 Transfer of title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

1.3.7 Return of amount and compensation . . . . . . . . . . . . . . . . . . . . 16

1.4 CHAPTER V RIGHTS AND DUTIES OF ALLOTTEES . . . . . . . . . . . . . 16

1.5 CHAPTER V THE REAL ESTATE REGULATORY AUTHORITY . . . . . . 17

1.5.1 Establishment and incorporation of Real Estate Regulatory Authority . . 17

1.5.2 Composition of Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . 18

1.5.3 Term of office of Chairperson and Members . . . . . . . . . . . . . . . . 18

1.5.4 Salary and allowances payable to Chairperson and Members . . . . . . . 18

1.5.5 Administrative powers of Chairperson. . . . . . . . . . . . . . . . . . . . 19

1.5.6 Removal of Chairperson and Members from office in certain circumstances 19

1.5.7 Restrictions on Chairperson or Members on employment after cessation

of office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

1.5.8 Officers and other employees of Authority . . . . . . . . . . . . . . . . . 19

1.5.9 Meetings of Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

1.5.10 Vacancies, etc., not to invalidate proceeding of Authority . . . . . . . . . 20

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1.5.11 Filing of complaints with the Authority or the adjudicating officer. . . . . 20

1.5.12 Functions of Authority for promotion of real estate sector . . . . . . . . . 20

1.5.13 Advocacy and awareness measures . . . . . . . . . . . . . . . . . . . . . 21

1.5.14 Functions of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

1.5.15 Powers of Authority to call for information, conduct investigations . . . . 21

1.5.16 Power to issue interim orders . . . . . . . . . . . . . . . . . . . . . . . . 22

1.5.17 Powers of Authority to issue directions . . . . . . . . . . . . . . . . . . . 22

1.5.18 Powers of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

1.5.19 Rectification of orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

1.5.20 Recovery of interest or penalty or compensation and enforcement of order,

etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

1.6 CHAPTER VI CENTRAL ADVISORY COUNCIL . . . . . . . . . . . . . . . . 23

1.6.1 Establishment of Central Advisory Council . . . . . . . . . . . . . . . . . 23

1.6.2 Functions of Central Advisory Council . . . . . . . . . . . . . . . . . . . 23

1.7 CHAPTER VII Tue REAL Estate APPELLATE TRIBUNAL . . . . . . . . . . 23

1.7.1 Establishment of Real Estate Appellate Tribunal . . . . . . . . . . . . . 23

1.7.2 Application for settlement of disputes and appeals to Appellate Tribunal 24

1.7.3 Composition of Appellate Tribunal . . . . . . . . . . . . . . . . . . . . . 25

1.7.4 Qualifications for appointment of Chairperson and Members . . . . . . . 25

1.7.5 Term of office of Chairperson and Members . . . . . . . . . . . . . . . . 25

1.7.6 Salary and allowances payable to Chairperson and Members . . . . . . . 25

1.7.7 Removal of Chairperson and Member from office in certain circumstances 26

1.7.8 Restrictions on Chairperson or Judicial Member or Technical or Administrative

Member on employment after cessation of office . . . . . . . . . 26

1.7.9 Officers and other employees of Appellate Tribunal . . . . . . . . . . . . 27

1.7.10 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

1.7.11 Powers of Tribunal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

1.7.12 Administrative powers of Chairperson of Appellate Tribunal . . . . . . . 27

1.7.13 Vacancies, etc., not to invalidate proceeding of Appellate Tribunal . . . . 27

1.7.14 Right to legal representation . . . . . . . . . . . . . . . . . . . . . . . . . 28

1.7.15 Orders passed by Appellate Tribunal to be executable as a decree . . . . 28

1.7.16 Appeal to High Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

1.8 CHAPTER VIII OFFENCES, PENALTIES AND ADJUDICATION . . . . . . 29

1.8.1 Punishment for nonregistration under section 3 . . . . . . . . . . . . . . 29

1.8.2 Penalty for contravention of section 4 . . . . . . . . . . . . . . . . . . . . 29

1.8.3 Penalty for contravention of other provisions of this Act . . . . . . . . . . 29

1.8.4 Penalty for nonregistration and contravention under sections 9 and 10 . . 29

1.8.5 Penalty for failure to comply with orders of Authority by promoter . . . 29

1.8.6 Penalty for failure to comply with orders of Appellate Tribunal by promoter 29

1.8.7 Penalty for failure to comply with orders of Authority by real estate agent 29

1.8.8 Penalty for failure to comply with orders of Appellate Tribunal by real

estate agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

1.8.9 Penalty for failure to comply with orders of Authority by allottee . . . . 30

1.8.10 Penalty for failure to comply with orders of Appellate Tribunal by allottee 30

1.8.11 Offences by companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

1.8.12 Compounding of offences . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

1.8.13 Power to adjudicate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

1.8.14 Factors to be taken into account by the adjudicating officer . . . . . . . . 31

1.9 CHAPTER IX FINANCE, ACCOUNTS, AUDITS AND REPORTS . . . . . . . 31

1.9.1 Grants and loans by Central Government . . . . . . . . . . . . . . . . . . 31

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1.9.2 Grants and loans by State Government . . . . . . . . . . . . . . . . . . . 31

1.9.3 Constitution of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

1.9.4 Crediting sums realised by way of penalties to Consolidated Fund of India

or State account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

1.9.5 Budget, accounts and audit . . . . . . . . . . . . . . . . . . . . . . . . . 32

1.9.6 Annual report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

1.10 CHAPTER X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 33

1.10.1 Bar of jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

1.10.2 Cognizance of offences . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

1.10.3 Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

1.10.4 Power of appropriate Government to supersede Authority . . . . . . . . . 33

1.10.5 Powers of appropriate Government to issue directions to Authority and

obtain reports and returns . . . . . . . . . . . . . . . . . . . . . . . . . . 34

1.10.6 Power of appropriate Government to make rules . . . . . . . . . . . . . . 34

1.10.7 Power to make regulations . . . . . . . . . . . . . . . . . . . . . . . . . . 35

1.10.8 Laying of rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

1.10.9 Members, etc. to be public servants . . . . . . . . . . . . . . . . . . . . . 36

1.10.10 Application of other laws not barred . . . . . . . . . . . . . . . . . . . . 36

1.10.11 Act to have overriding effect . . . . . . . . . . . . . . . . . . . . . . . . . 36

1.10.12 Protection of action taken in good faith . . . . . . . . . . . . . . . . . . . 36

1.10.13 Power to remove difficulties . . . . . . . . . . . . . . . . . . . . . . . . . 36

1.10.14 Maharashtra Act No. II of 2014 . . . . . . . . . . . . . . . . . . . . . . . 37

2 RERA Karnataka Rules 2017 39

2.1 CHAPTER I PRELIMINARY . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

2.1.1 Title and Commencement . . . . . . . . . . . . . . . . . . . . . . . . . . 39

2.1.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

2.2 CHAPTER II REAL ESTATE PROJECT . . . . . . . . . . . . . . . . . . . . . 39

2.2.1 Information and documents to be furnished by the promoter for registration

of project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

2.2.2 Additional disclosure by promoters of ongoing projects . . . . . . . . . . 41

2.2.3 Withdrawal of sums deposited in separate bank account . . . . . . . . . 42

2.2.4 Grant or rejection of registration of the project . . . . . . . . . . . . . . 42

2.2.5 Extension of registration of project . . . . . . . . . . . . . . . . . . . . . 42

2.2.6 Revocation of registration of the project . . . . . . . . . . . . . . . . . . 43

2.3 CHAPTER III REAL ESTATE AGENT . . . . . . . . . . . . . . . . . . . . . . 43

2.3.1 Application for registration by the real estate agent . . . . . . . . . . . . 43

2.3.2 Grant of Registration to the real estate agent . . . . . . . . . . . . . . . 43

2.3.3 Renewal of registration of real estate agent . . . . . . . . . . . . . . . . 43

2.3.4 Revocation of registration of real estate agent . . . . . . . . . . . . . . . 44

2.3.5 Maintenance and preservation of books of accounts, records and documents 44

2.3.6 Other functions of a real estate agent . . . . . . . . . . . . . . . . . . . . 44

2.4 CHAPTER IV DETAILS TO BE PUBLISHED ON THE WEBSITE OF THE

AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

2.4.1 Details to be published on the website . . . . . . . . . . . . . . . . . . . 44

2.5 CHAPTER V RATE OF INTEREST PAYABLE BY PROMOTER AND AL-

LOTTEE AND TIMELINES FOR REFUND . . . . . . . . . . . . . . . . . . . 47

2.5.1 Rate of interest payable by the promoter and the allottee . . . . . . . . . 47

2.5.2 Timelines for refund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

2.6 CHAPTER VI REAL ESTATE REGULATORY AUTHORITY . . . . . . . . . 48

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2.6.1 Manner of Selection of Chairperson and Members of the Authority . . . . 48

2.7 CHAPTER VII SALARY AND ALLOWANCES OF CHAIRPERSON AND

MEMBERS OF REAL ESTATE REGULATORY AUTHORITY . . . . . . . . . 48

2.7.1 Salaries and Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

2.7.2 Tenure of office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

2.7.3 Oath of Office and Secrecy.- . . . . . . . . . . . . . . . . . . . . . . . . . 50

2.7.4 Administrative powers of the Chairperson of the regulatory authority.- . 50

2.8 CHAPTER VIII POWERS AND FUNCTIONS OF THE AUTHORITY . . . . 51

2.8.1 Functioning of the Authority . . . . . . . . . . . . . . . . . . . . . . . . 51

2.8.2 Additional powers of the Authority . . . . . . . . . . . . . . . . . . . . . 51

2.8.3 Manner of recovery of interest, penalty and compensation . . . . . . . . . 52

2.8.4 Manner of implementation of order, direction or decisions of the adjudicating

officer, the Authority or the Appellate Tribunal.- . . . . . . . . . . 52

2.9 CHAPTER IX CONDITIONS OF SERVICE OF OFFICERS AND OTHER

EMPLOYEES OF THE AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . 52

2.9.1 Categories of Officers and employees of the Authority and pay scales . . . 52

2.9.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

2.10 CHAPTER X FILING OF COMPLAINT . . . . . . . . . . . . . . . . . . . . . 53

2.10.1 Filing of complaint and manner of holding an inquiry by Regulatory

Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

2.10.2 Manner of filing a complaint with the adjudicating officer and the manner

of holding an inquiry by the adjudicating officer . . . . . . . . . . . . . . 54

2.11 CHAPTER XI REAL ESTATE APPELLATE TRIBUNAL . . . . . . . . . . . . 55

2.11.1 Manner of Selection of Member of the Appellate Tribunal . . . . . . . . . 55

2.11.2 Functioning of Appellate Tribunal . . . . . . . . . . . . . . . . . . . . . . 55

2.11.3 Appeal and the fees payable . . . . . . . . . . . . . . . . . . . . . . . . . 56

2.11.4 Procedure for inquiry of the charges against the Chairperson or Member

of the Regulatory Authority or the Appellate Tribunal . . . . . . . . . . 56

2.11.5 Salary and allowances payable and other terms and conditions of service

of Chairperson and Members of the Appellate Tribunal . . . . . . . . . . 57

2.11.6 Retirement from Government Service . . . . . . . . . . . . . . . . . . . 58

2.11.7 Oath of Office and Secrecy . . . . . . . . . . . . . . . . . . . . . . . . . . 58

2.11.8 Declaration of financial or other interest . . . . . . . . . . . . . . . . . . 58

2.11.9 Residuary provision.- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

2.11.10 Categories of Officers and employees of the Tribunal.- . . . . . . . . . . . 58

2.11.11 Conditions of service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

2.11.12 Additional powers of the Appellate Tribunal . . . . . . . . . . . . . . . . 58

2.11.13 Administrative powers of the Chairperson of the Appellate Tribunal . . . 59

2.12 CHAPTER XI OFFENCES AND PENALTIES . . . . . . . . . . . . . . . . . . 59

2.12.1 Terms and conditions and the fine payable for compounding of offence . . 59

2.13 CHAPTER-XII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 60

2.13.1 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

2.13.2 Residuary provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

2.14 CHAPTER-XIII BUDGET AND REPORT . . . . . . . . . . . . . . . . . . . . 60

2.14.1 Budget, accounts and audit . . . . . . . . . . . . . . . . . . . . . . . . . 60

2.14.2 Annual Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

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II Classical Statutes 75

3 Introduction 77

4 The Transfer of Property Act, 1882 79

4.1 (Extent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

4.2 Repeal of Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

4.3 Interpretation clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

4.4 “Transfer of property” defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

4.5 What may be transferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

4.6 Persons competent to transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

4.7 Operation of transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

4.8 Oral transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

4.9 Condition restraining alienation . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

4.10 Restriction repugnant to interest created . . . . . . . . . . . . . . . . . . . . . . 82

4.11 Condition making interest determinable on insolvency or attempted alienation . 82

4.12 Transfer for benefit of unborn person . . . . . . . . . . . . . . . . . . . . . . . . 82

4.13 Rule against perpetuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

4.14 Transfer to take effect on failure of prior interest. . . . . . . . . . . . . . . . . . 83

4.15 Direction for accumulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

4.16 Transfer in perpetuity for benefit of public . . . . . . . . . . . . . . . . . . . . . 83

4.17 Vested interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

4.18 When unborn person acquires vested interest on transfer for his benefit . . . . . 83

4.19 Contingent interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

4.20 Transfer to members of a class who attain a particular age . . . . . . . . . . . . 84

4.21 Transfer contingent on happening of specified uncertain event . . . . . . . . . . 84

4.22 Transfer to such of certain persons as survive at some period not specified . . . . 84

4.23 Conditional transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

4.24 Ulterior transfer conditional on happening or not happening of specified event . 85

4.25 Fulfilment of condition subsequent . . . . . . . . . . . . . . . . . . . . . . . . . . 85

4.26 Prior disposition not affected by invalidity of ulterior disposition . . . . . . . . . 85

4.27 Condition that transfer shall cease to have effect in case specified uncertain event

happens or does not happen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

4.28 Such condition must not be invalid . . . . . . . . . . . . . . . . . . . . . . . . . 86

4.29 Transfer conditional on performance of act, no time being specified for performance 86

4.30 Transfer conditional on performance of act, time being specified . . . . . . . . . 86

4.31 Election when necessary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

4.32 Apportionment of periodical payments on determination of interest of person

entitled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

4.33 Apportionment of benefit of obligation on severance . . . . . . . . . . . . . . . . 87

4.34 Transfer by person authorised only under certain circumstances to transfer . . . 88

4.35 Transfer where third person is entitled to maintenance . . . . . . . . . . . . . . 88

4.36 Burden of obligation imposing restriction on use of land . . . . . . . . . . . . . . 88

4.37 Transfer by ostensible owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

4.38 Transfer by person having authority to revoke former transfer . . . . . . . . . . 89

4.39 Transfer by unauthorised person who subsequently acquires interest in property

transferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

4.40 Transfer by one co-owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

4.41 Joint transfer for consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

4.42 Transfer for consideration by persons having distinct interests . . . . . . . . . . 90

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4.43 Transfer by co-owners of share in common property . . . . . . . . . . . . . . . . 90

4.44 Priority of rights created by transfer . . . . . . . . . . . . . . . . . . . . . . . . 90

4.45 Transferee’s right under policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

4.46 Rent bona fide paid to holder under defective title . . . . . . . . . . . . . . . . . 91

4.47 Improvements made by bona fide holders under defective titles . . . . . . . . . . 91

4.48 Transfer of property pending suit relating thereto . . . . . . . . . . . . . . . . . 91

4.49 Fraudulent transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

4.50 Part performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

4.51 “Sale” defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

4.52 Rights and liabilities of buyer and seller . . . . . . . . . . . . . . . . . . . . . . . 92

4.53 Obligation to transfer to third party instead of re-transference to mortgagor . . 97

4.54 Right to inspection and production of documents . . . . . . . . . . . . . . . . . 97

4.55 Right of usufructuary mortgagor to recover possession.— . . . . . . . . . . . . . 97

4.56 Accession to mortgaged property . . . . . . . . . . . . . . . . . . . . . . . . . . 97

4.57 Improvements to mortgaged property.— . . . . . . . . . . . . . . . . . . . . . . 98

4.58 Renewal of mortgaged lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

4.59 Implied contracts by mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

4.60 Mortgagor’s power to lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

4.61 Mortgagor’s power to lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

4.62 Waste by mortgagor in possession . . . . . . . . . . . . . . . . . . . . . . . . . . 99

4.63 Right to fore-closure or sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

4.64 Mortgagee when bound to bring one suit on several mortgages . . . . . . . . . . 100

4.65 Right to sue for mortgage-money . . . . . . . . . . . . . . . . . . . . . . . . . . 100

4.66 Power of sale when valid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

4.67 Appointment of receiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

4.68 Accession to mortgaged property . . . . . . . . . . . . . . . . . . . . . . . . . . 103

4.69 Renewal of mortgaged lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103

4.70 Right of mortgagee in possession . . . . . . . . . . . . . . . . . . . . . . . . . . 103

4.71 Right to proceeds of revenue sale or compensation on acquisition . . . . . . . . . 103

4.72 Right of subsequent mortgagee to pay off prior mortgagee . . . . . . . . . . . . . 104

4.73 Rights of mesne mortgagee against prior and subsequent mortgagees . . . . . . . 104

4.74 Liabilities of mortgagee in possession.— . . . . . . . . . . . . . . . . . . . . . . . 104

4.75 Receipts in lieu of interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

4.76 Postponement of prior mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . . 105

4.77 Mortgage to secure uncertain amount when maximum is expressed . . . . . . . . 105

4.78 Tacking abolished . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

4.79 Marshalling, securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

4.80 Contribution to mortgage-debt.— . . . . . . . . . . . . . . . . . . . . . . . . . . 106

4.81 Power to deposit in Court money due on mortgage . . . . . . . . . . . . . . . . 106

4.82 Cessation of interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106

4.83 Parties to suits for foreclosure, sale and redemption . . . . . . . . . . . . . . . . 107

4.84 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

4.85 Prohibition of tacking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

4.86 Rights of mesne mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

4.87 Right of redeeming co-mortgagor to expenses . . . . . . . . . . . . . . . . . . . 107

4.88 Mortgage by deposit of title-deeds . . . . . . . . . . . . . . . . . . . . . . . . . . 108

4.89 Rights and liabilities of parties to anomalous mortgages . . . . . . . . . . . . . . 108

4.90 Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

4.91 No merger in case of subsequent encumbrance . . . . . . . . . . . . . . . . . . . 108

4.92 Service or tender on or to agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

0.0 CONTENTS

xi


4.93 Notice, etc., to or by person incompetent to contract . . . . . . . . . . . . . . . 109

4.94 Power to make rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

4.95 Lease defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

4.96 Duration of certain leases in absence of written contract or local usage . . . . . 109

4.97 Rights and liabilities of lessor and lessee . . . . . . . . . . . . . . . . . . . . . . 110

4.98 Rights of lessor’s transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

4.99 Exclusion of day on which term commences . . . . . . . . . . . . . . . . . . . . 111

4.100Determination of lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

4.101 Waiver of forfeiture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

4.102Waiver of notice to quit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

4.103Relief against forfeiture for non-payment of rent . . . . . . . . . . . . . . . . . . 113

4.104Effect of surrender and forfeiture on under-leases . . . . . . . . . . . . . . . . . . 113

4.105Effect of holding over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

4.106Exemption of leases for agricultural purposes . . . . . . . . . . . . . . . . . . . . 114

4.107“Exchange” defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

4.108Right of party deprived of thing received in exchange . . . . . . . . . . . . . . . 114

4.109 Rights and liabilities of parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

4.110Exchange of money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

4.111 “Gift” defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

4.112Gift of existing and future property . . . . . . . . . . . . . . . . . . . . . . . . . 115

4.113Gift to several of whom one does not accept . . . . . . . . . . . . . . . . . . . . 115

4.114 When gift may be suspended or revoked . . . . . . . . . . . . . . . . . . . . . . 115

4.115 Onerous gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115

4.116Universal donee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115

4.117 Saving of donations mortis causa and Muhammadan Law . . . . . . . . . . . . 116

4.118Transfer of actionable claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

4.119Mortgaged debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117

4.120Assignment of rights under policy of insurance against fire . . . . . . . . . . . . 117

4.121Assignment of rights under policy of marine insurance . . . . . . . . . . . . . . . 117

4.122Incapacity of officers connected with Courts of Justice . . . . . . . . . . . . . . . 117

4.123Saving of negotiable instruments, etc. . . . . . . . . . . . . . . . . . . . . . . . . 117

5 The Indian Easements Act, 1882 119

6 The Indian Contract Act, 1872 133

6.1 Short title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

6.2 Interpretation-clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

6.3 Communication, acceptance and revocation of proposals . . . . . . . . . . . . . 133

6.4 Communication when complete . . . . . . . . . . . . . . . . . . . . . . . . . . . 134

6.5 Revocation of Proposals and acceptance . . . . . . . . . . . . . . . . . . . . . . 134

6.6 Revocation how made . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134

7 The Indian Stamp Act, 1899 197

CONTENTS 0.0


xii

0.0 CONTENTS

Part I

RERA Act

1

1

THE REAL ESTATE (REGULATION

AND DEVELOPMENT) ACT, 2016

MINISTRY OF LAW AND JUSTICE

(Legislative Department)

New Delhi, the 26th March, 2016/Chaitra

6, 1938 (Saka)

The following Act of Parliament received

the assent of the President on the 25th March,

2016, and is hereby published for general information:—

THE REAL ESTATE (REGULATION

AND DEVELOPMENT) ACT, 2016

No. 16 oF 2016 [25th March, 2016.]

An Act to establish the Real Estate Regulatory

Authority for regulation and promotion

of the real estate sector and to ensure sale of

plot, apartment or building, as the case may

be, or sale of real estate project, in an efficient

and transparent manner and to protect

the interest of consumers in the real estate sector

and to establish an adjudicating mechanism

for speedy dispute redressal and also to

establish the Appellate Tribunal to hear appeals

from the decisions, directions or orders

of the Real Estate Regulatory Authority and

the adjudicating officer and for matters connected

therewith or incidental thereto.

BE it enacted by Parliament in the Sixtyseventh

Year of the Republic of India as follows:—

1.1 CHAPTER I PRE-

LIMINARY

1.1.1 Short title, extent and

commencement

1. (1) This Act may be called the Real Estate

(Regulation and Development) Act, 2016. —

(2) It extends to the whole of India except the

State of Jammu and Kashmir.

(3) It shall come into force on such date as

the Central Government may, by notification

in the Official Gazette, appoint:

Provided that different dates may be appointed

for different provisions of this Act and

any reference in any such provision to the commencement

of this Act shall be construed as a

reference to the coming into force of that provision.

1.1.2 Definitions

2. In this Act, unless the context otherwise

requires, —

(a) “adjudicating officer" means the adjudicating

officer appointed under sub-section (1)

of section 71;

(b) "advertisement" means any document

described or issued as advertisement through

any medium and includes any notice, circular

or other documents or publicity in any form,

informing persons about a real estate project,

or offering for sale of a plot, building or apartment

or inviting persons to purchase in any

manner such plot, building or apartment or to

3


make advances or deposits for such purposes;

(c) "agreement for sale" means an agreement

entered into between the promoter and

the allottee;

(d) “allottee" in relation to a real estate

project, means the person to whom a plot,

apartment or building, as the case may be,

has been allotted, sold (whether as freehold

or leasehold) or otherwise transferred by the

promoter, and includes the person who subsequently

acquires the said allotment through

sale, transfer or otherwise but does not include

a person to whom such plot, apartment

or building, as the case may be, is given on

rent;

(e) "apartment" whether called block,

chamber, dwelling unit, flat, office, showroom,

shop, godown, premises, suit, tenement, unit

or by any other name, means a separate and

self-contained part of any immovable property,

including one or more rooms or enclosed

spaces, located on one or more floors or any

part thereof, in a building or on a plot of land,

used or intended to be used for any residential

or commercial use such as residence, office,

shop, showroom or godown or for carrying on

any business, occupation, profession or trade,

or for any other type of use ancillary to the

purpose specified;

(f) "Appellate Tribunal " means the Real

Estate Appellate Tribunal established under

section 43;

(g) “appropriate Government” means in respect

of matters relating to.—

(i) the Union territory without Legislature,

the Central Government;

(ii) the Union territory of Puducherry, the

Union territory Government;

(iii) the Union territory of Delhi, the Central

Ministry of Urban Development;

(iv) the State, the State Government;

(h) "architect" means a person registered

as an architect under the provisions of the Architects

Act, 1972; 20 of 1972.

(i) "Authority" means the Real Estate

Regulatory Authority established under subsection

(1) of section 20;

(j) “building” includes any structure or

erection or part of a structure or erection

which is intended to be used for residential,

commercial or for the purpose of any business,

occupation, profession or trade, or for

any other related purposes;

(k) "carpet area” means the net usable

floor area of an apartment, excluding the area

covered by the external walls, areas under services

shafts, exclusive balcony or verandah

area and exclusive open terrace area, but includes

the area covered by the internal partition

walls of the apartment.

Explanation— For the purpose of this

clause, the expression "exclusive balcony or verandah

area" means the area of the balcony or

verandah, as the case may be, which is appurtenant

to the net usable floor area of an apartment,

meant for the exclusive use of the allottee;

and "exclusive open terrace area" means

the area of open terrace which is appurtenant

to the net usable floor area of an apartment,

meant for the exclusive use of the allottee;

(l) “Chairperson” means the Chairperson

of the Real Estate Regulatory Authority appointed

under section 21;

(m) "commencement certificate" means the

commencement certificate or the building permit

or the construction permit, by whatever

name called issued by the competent authority

to allow or permit the promoter to begin

development works on an immovable property,

as per the sanctioned plan;

(n) "common areas" mean—

(i) the entire land for the real estate project

or where the project is developed in phases

and registration under this Act is sought for a

phase, the entire land for that phase;

(ii) the stair cases, lifts, staircase and lift

lobbies, fir escapes, and common entrances

and exits of buildings;

(iii) the common basements, terraces,

parks, play areas, open parking areas and common

storage spaces;

(iv) the premises for the lodging of persons

employed for the management of the property

including accommodation for watch and ward

staffs or for the lodging of community service

personnel;

(v) installations of central services such

as electricity, gas, water and sanitation, airconditioning

and incinerating, system for water

conservation and renewable energy;

1.1 1. THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016


(vi) the water tanks, sumps, motors, fans,

compressors, ducts and all apparatus connected

with installations for common use;

(vii) all community and commercial facilities

as provided in the real estate project;

(viii) all other portion of the project necessary

or convenient for its maintenance, safety,

etc., and in common use;

(o) "company" means a company incorporated

and registered under the Companies Act,

2013 18 of 2013 and includes,—

(i) a corporation established by or under

any Central Act or State Act;

(ii) a development authority or any public

authority established by the Government

in this behalf under any law for the time being

in force;

(p) "competent authority” means the local

authority or any authority created or established

under any law for the time being in

force by the appropriate Government which

exercises authority over land under its jurisdiction,

and has powers to give permission for

development of such immovable property;

(q) "completion certificate" means the completion

certificate, or such other certificate,

by whatever name called, issued by the competent

authority certifying that the real estate

project has been developed according to

the sanctioned plan, layout plan and specifications,

as approved by the competent authority

under the local laws;

(r) "day" means the working day, in the

concerned State or Union territory, as the case

may be, notified by the appropriate Government

from time to time;

(s) "development" with its grammatical

variations and cognate expressions, means carrying

out the development of immovable property,

engineering or other operations in, on,

over or under the land or the making of any

material change in any immovable property or

land and includes re-development;

(t) "development works" means the external

development works and internal development

works on immovable property;

(uw) "engineer" means a person who possesses

a bachelor’s degree or equivalent from

an institution recognised by the All India

Council of Technical Education or any University

or any institution recognised under a

law or is registered as an engineer under any

law for the time being in force;

(v) “estimated cost of real estate project"

means the total cost involved in developing the

real estate project and includes the land cost,

taxes, cess, development and other charges;

(w) “external development works" includes

roads and road systems landscaping, water

supply, seweage and drainage systems, electricity

supply transformer, sub-station, solid

waste management and disposal or any other

work which may have to be executed. in the

periphery of, or outside, a project for its benefit,

as may be provided under the local laws;

(x) "family" includes husband, wife, minor

son and unmarried daughter wholly dependent

on a person;

(y) "garage" means a place within a project

having a roof and walls on three sides for parking

any vehicle, but does not include an unenclosed

or uncovered parking space such as open

parking areas;

(z) "immovable property" includes land,

buildings, rights of ways, lights or any other

benefit arising out of land and things attached

to the earth or permanently fastened to anything

which is attached to the earth, but not

standing timber, standing crops or grass;

(za) "interest" means the rates of interest

payable by the promoter or the allottee, as the

case may be.

Explanation.—For the purpose of this

clause—

(i)the rate of interest chargeable from the

allottee by the promoter, in case of default,

shall be equal to the rate of interest which the

promoter shall be liable to pay the allottee, in

case of default;

(ii) the interest payable by the promoter

to the allottee shall be from the date the promoter

received the amount or any part thereof

till the date the amount or part thereof and

interest thereon is refunded, and the interest

payable by the allottee to the promoter shall

be from the date the allottee defaults in payment

to the promoter till the date it is paid;

(zb) "internal development works" means

roads, footpaths, water supply, sewers, drains,

parks, tree planting, street lighting, provision

1. THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 1.1


for community buildings and for treatment

and disposal of sewage and sullage water, solid

waste management and disposal, water conservation,

energy management, fire protection

and fire safety requirements, social infrastructure

such as educational health and other public

amenities or any other work in a project for

its benefit, as per sanctioned plans;

(ze) "local authority" means the Municipal

Corporation or Municipality or Panchayats or

any other Local Body constituted under any

law for the time being in force for providing

municipal services or basic services, as the case

may be, in respect of areas under its jurisdication;

(zd) "Member" means the member of the

Real Estate Regulatory Authority appointed

under section 21 and includes the Chaiperson;

(ze) “notification” means a notification

published in the Official Gazette and the expression

"notify" shall be construed accordingly;

(zf) “occupancy certificate” means the occupancy

certificate, or such other certificate

by whatever name called, issued by the competent

authority permitting occupation of any

building, as provided under local laws, which

has provision for civic infrastructure such as

water, sanitation and electricity;

(zg) "Person" includes. — (i) an individual;

(ii) a Hindu undivided family;

(iii) a company;

(iv) a firm under the Indian Partnership

Act, 1932 9 of 1932. or the Limited Liability

Partnership Act, 2008, 6 of 2009 as the case

may be;

(v) a competent authority;

(vi) an association of persons or a body of

individuals whether incorporated or not;

(vii) a co-operative society registered under

any law relating to co-operative societies;

(viii) any such other entity as the appropriate

Government may, by notification, specify

in this behalf;

(zh) “planning area" means a planning area

or a development area or a local planning area

or a regional development plan area, by whatever

name called, or any other area specified

as such by the appropriate Government or any

competent authority and includes any area

designated by the appropriate Government or

the competent authority to be a planning area

for future planned development, under the law

relating to Town and Country Planning for the

time being in force and as revised from time

to time;

(zi) "prescribed" means prescribed by rules

made under this Act;

(zj) "project" means the real estate project

as defined in cluase (zn);

(zk) "promoter" means ,—

(i) a person who constructs or causes to

be constructed an independent building or a

building consisting of apartments, or converts

an existing building or a part thereof into

apartments, for the purpose of selling all or

some of the apartments to other persons and

includes his assignees; or

(ii) a person who develops land into a

project, whether or not the person also constructs

structures on any of the plots, for the

purpose of selling to other persons all or some

of the plots in the said project, whether with

or without structures thereon; or

(i) any development authority or any other

public body in respect of allottees of—

(a) buildings or apartments, as the case

may be, constructed by such authority or body

on lands owned by them or placed at their disposal

by the Government; or

(b) plots owned by such authority or body

or placed at their disposal by the Government,

for the purpose of selling all or some of the

apartments or plots; or

(iv) an apex State level co-operative housing

finance society and a primary co-operative

housing society which constructs apartments

or buildings for its Members or in respect of

the allottees of such apartments or buildings;

or

(v) any other person who acts himself as

a builder, coloniser, contractor, developer, estate

developer or by any other name or claims

to be acting as the holder of a power of attorney

from the owner of the land on which the

building or apartment is constructed or plot is

developed for sale; or

(vi) such other person who constructs any

building or apartment for sale to the general



public.

Explanation. For the purposes of this

clause, where the person who constructs or

converts a building into apartments or develops

a plot for sale and the persons who sells

apartments or plots are different persons, both

of them shall be deemed to be the promoters

and shall be jointly liable as such for the functions

and responsibilities specified, under this

Act or the rules and regulations made thereunder;

(zl) "prospectus" means any document described

or issued as a prospectus or any notice,

circular, or other document offering for

sale or any real estate project or inviting any

person to make advances or deposits for such

purposes;

(zm) “real estate agent" means any person,

who negotiates or acts on behalf of one

person in a transaction of transfer of his plot,

apartment or building, as the case may be, in

areal estate project, by way of sale, with another

person or transfer of plot, apartment or

building, as the case may be, of any other person

to him and receives remuneration or fees

or any other charges for his services whether

as commission or otherwise and includes a

person who introduces, through any medium,

prospective buyers and sellers to each other for

negotiation for sale or purchase of plot, apartment

or building, as the case may be, and includes

property dealers, brokers, middlemen

by whatever name called;

(zn) "real estate project" means the development

of a building or a building consisting

of apartments, or converting an existing building

or a part thereof into apartments, or the

development of land into plots or apartment,

as the case may be, for the purpose of selling

all or some of the said apartments or plots

or building, as the case may be, and includes

the common areas, the development works, all

improvements and structures thereon, and all

easement, rights and appurtenances belonging

thereto;

(zo) "regulations" means the regulations

made by the Authority under this Act; (zp)

"rule" means the rules made under this Act by

the appropriate Government;

(zq) “sanctioned plan" means the site plan,

building plan, service plan, parking and circulation

plan, landscape plan, layout plan,

zoning plan and such other plan and includes

structural designs, if applicable, permissions

such as environment permission and

such other permissions, which are approved by

the competent authority prior to start of a real

estate project;

(zr) words and expressions used herein but

not defined in this Act and defined in any law

for the time being in force or in the municipal

laws or such other relevant laws of the appropriate

Government shall have the same meanings

respectively assigned to them in those

laws.

1.2 CHAPTER II REGIS-

TRATION OF REAL

ESTATE PROJECT

AND AGENTS

1.2.1 Prior registration of real

estate project with Real

Estate Regulatory Authority.

3. (1) No promoter shall advertise, market,

book, sell or offer for sale, or invite persons

to purchase in any manner any plot, apartment

or building, as the case may be, in any

real estate project or part of it, in any planning

area, without registering the real estate

project with the Real Estate Regulatory Authority

established under this Act:

Provided that projects that are ongoing on

the date of commencement of this Act and for

which the completion certificate has not been

issued, the promoter shall make an application

to the Authority for registration of the

said project within a period of three months

from the date of commencement of this Act:

Provided further that if the Authority

thinks necessary, in the interest of allottees,

for projects which are developed beyond the

planning area but with the requisite permission

of the local authority, it may, by order,

direct the promoter of such project to register

with the Authority, and the provisions of this



Act or the rules and regulations made thereunder,

shall apply to such projects from that

stage of registration.

(2) Notwithstanding anything contained in

sub-section (1), no registration of the real estate

project shall be required—

(a) where the area of land proposed to be

developed does not exceed five hundred square

meters or the number of apartments proposed

to be developed does not exceed. eight inclusive

of all phases:

Provided that, if the appropriate Government

considers it necessary, it may, reduce the

threshold below five hundred square meters or

eight apartments, as the case may be, inclusive

of all phases, for exemption from registration

under this Act;

(b) where the promoter has received completion

certificate for a real estate project prior

to commencement of this Act;

(c) for the purpose of renovation or repair

or re-development which does not involve marketing,

advertising selling or new allotment of

any apartment, plot or building, as the case

may be, under the real estate project.

Explanation.—For the purpose of this section,

where the real estate project is to be developed

in phases, every such phase shall be

considered a stand alone real estate project,

and the promoter shall obtain registration under

this Act for each phase separately.

1.2.2 Application for registration

of real estate projects

4. (1) Every promoter shall make an application

to the Authority for registration of

the real estate project in such form, manner,

within such time and accompanied by such fee

as may be specified by the regulations made by

the Authority.

(2) The promoter shall enclose the following

documents along with the application referred

to in sub-section (l), namely:—

(a) a brief details of his enterprise including

its name, registered address, type of enterprise

(proprietorship, societies, partnership, companies,

competent authority), and the particulars

of registration, and the names and photographs

of the promoter;

(b) a brief detail of the projects launched

by him, in the past five years, whether already

completed or being developed, as the case may

be, including the current status of the said

projects, any delay in its completion, details

of cases pending, details of type of land and

payments pending;

(c) an authenticated copy of the approvals

and commencement certificate from the competent

authority obtained in accordance with

the laws as may be applicable for the real

estate project mentioned in the application,

and where the project is proposed to be developed

in phases, an authenticated copy of

the approvals and commencement certificate

from the competent authority for each of such

phases;

(d) the sanctioned plan, layout plan and

specifications of the proposed project or the

phase thereof, and the whole project as sanctioned

by the competent authority;

(e) the plan of development works to be

executed in the proposed project and the proposed

facilities to be provided thereof including

fire fighting facilities, drinking water facilities,

emergency evacuation services, use of

renewable energy;

(f) the location details of the project, with

clear demarcation of land dedicated for the

project along with its boundaries including the

latitude and longitude of the end points of the

project;

(g) proforma of the allotment letter, agreement

for sale, and the conveyance deed proposed

to be signed with the allottees;

(h) the number, type and the carpet area

of apartments for sale in the project along with

the area of the exclusive balcony or verandah

areas and the exclusive open terrace areas

apartment with the apartment, if any;

(i) the number and areas of garage for sale

in the project;

(j) the names and addresses of his real estate

agents, if any, for the proposed project;

(k) the names and addresses of the contractors,

architect, structural engineer, if any and

other persons concerned with the development

of the proposed project;

(1) a declaration, supported by an affidavit,

which shall be signed by the promoter or



any person authorised by the promoter, stating:

—

(A) that he has a legal title to the land on

which the development is proposed along with

legally valid documents with authentication of

such title, if such land is owned by another

person;

(B) that the land is free from all encumbrances,

or as the case may be details of

the encumbrances on such land including any

rights, title, interest or name of any party in

or over such land along with details;

(C) the time period within which he undertakes

to complete the project or phase thereof,

as the case may be;

(D) that seventy per cent. of the amounts

realised for the real estate project from the allottees,

from time to time, shall be deposited

in a separate account to be maintained in a

scheduled bank to cover the cost of construction

and the land cost and shall be used only

for that purpose:

Provided that the promoter shall withdraw

the amounts from the separate account, to

cover the cost of the project, in proportion to

the percentage of completion of the project:

Provided further that the amounts from

the separate account shall be withdrawn by

the promoter after it is certified by an engineer,

an architect and a chartered accountant

in practice that the withdrawal is in proportion

to the percentage of completion of the

project:

Provided also that the promoter shall get

his accounts audited within six months after

the end of every financial year by a chartered

accountant in practice, and shall produce a

statement of accounts duly certified and signed

by such chartered accountant and it shall be

verified during the audit that the amounts

collected for a particular project have been

utilised for the project and the withdrawal has

been in compliance with the proportion to the

percentage of completion of the project.

Explanation.— For the purpose of this

clause, the term "schedule bank" means a bank

included in the Second Scheduled to the Reserve

Bank of India

(E) that he shall take all the pending approvals

on time, from the competent authorities;

(F) that he has furnished such other documents

as may be prescribed by the rules or

regulations made under this Act; and

(m) such other information and documents

as may be prescribed.

(3) The Authority shall operationalise a

web based online system for submitting applications

for registration of projects within a

period of one year from the date of its establishment.

5. (1) On recipt of the application under

sub-section (/) of section 4, the Authority shall

within a period of thirty days.

(a) grant registration subject to the provisions

of this Act and the rules and regulations

made thereunder, and provide a registration

number, including a Login Id and password to

the applicant for accessing the website of the

Authority and to create his web page and to

fill therein the details of the proposed project;

or

(b) reject the application for reasons to

be recorded in writing,if such application does

not conform to the provisions of this Act or

the rules or regulations made thereunder:

Provided that no application shall be rejected

unless the applicant has been given an

opportunity of being heard in the matter.

(2) If the Authority fails to grant the registration

or reject the application, as the case

may be, as provided under sub-section (/), the

project shall be deemed to have been registered,

and the Authority shall within a period

of seven days of the expiry of the said period

of thirty days specified under sub-section (/),

provide a registration number and a Login Id

and password to the promoter for accessing

the website of the Authority and to create his

web page and to fill therein the details of the

proposed project.

(3) The registration granted under this section

shall be valid for a period declared by the

promoter under sub-clause (C) of clause (/) of

sub-section (2) of section 4 for completion of

the project or phase thereof, as the case may

be.



1.2.3 Extension of registration.

6. The registration granted under section 5

may be extended by the Authority on an application

made by the promoter due to force

majeure, in such form and on payment of such

fee as may be specified by regulations made by

the Authority:

Provided that the Authority may in reasonable

circumstances, without default on the

part of the promoter, based on the facts of

each case, and for reasons to be recorded in

writing, extend the registration granted to a

project for such time as it considers necessary,

which shall, in aggregate, not exceed a period

of one year:

Provided further that no application for

extension of registration shall be rejected unless

the applicant has been given an opportunity

of being heard in the matter.

Explanation.— For the purpose of this section,

the expression "force majeure" shall mean

a case of war, flood, drought, fire, cyclone,

earthquake or any other calamity caused by

nature affecting the regular development of the

real estate project.

1.2.4 Revocation of registration.

7. (1) The Authority may, on receipt of a complaint

or suo motu in this behalf or on the

recommendation of the competent authority,

revoke the registration granted under section

5, after being satisfied that—

(a) the promoter makes default in doing

anything required by or under this Act or the

rules or the regulations made thereunder;

(b) the promoter violates any of the terms

or conditions of the approval given by the competent

authority;

(c) the promoter is involved in any kind of

unfair practice or irregularities.

Explanation.—For the purposes of this

clause, the term "unfair practice means" a

practice which, for the purpose of promoting

the sale or development of any real estate

project adopts any unfair method or unfair or

deceptive practice including any of the following

practices, namely:—

(A) the practice of making any statement,

whether in writing or by visible representation

which,—

(i) falsely represents that the services are

of a particular standard or grade;

(ii) represents that the promoter has approval

or affiliation which such promoter does

not have;

(iii) makes a false or misleading representation

concerning the services;

(B) the promoter permits the publication

of any advertisement or prospectus whether

in any newspaper or otherwise of services that

are not intended to be offered;

(d) the promoter indulges in any fraudulent

practices.

(2) The registration granted to the promoter

under section 5 shall not be revoked unless

the Authority has given to the promoter

not less than thirty days notice, in writing,

stating the grounds on which it is proposed

to revoke the registraton, and has considered

any cause shown by the promoter within the

period of that notice against the proposed revocation.

(3) The Authority may, instead of revoking

the registration under sub-section (1), permit

it to remain in force subject to such further

terms and conditions as it thinks fit to impose

in the interest of the allottees, and any

such terms and conditions so imposed shall be

binding upon the promoter.

(4) The Authority, upon the revocation of

the registration,—

(a) shall debar the promoter from accessing

its website in relation to that project and

specify his name in the list of defaulters and

display his photograph on its website and also

inform the other Real Estate Regulatory Authority

in other States and Union territories

about such revocation or registration;

(b) shall facilitate the remaining development

works to be carried out in accordance

with the provisions of section 8;

(c) shall direct the bank holding the

project back account, specified under subclause

(D) of clause (1) of sub-section (2) of

section 4, to freeze the account, and thereafter

take such further necessary actions, including

consequent de-freezing of the said account, to-



wards facilitating the remaining development

works in accordance with the provisions of section

8;

(d) may, to protect the interest of allottees

or in the public interest, issue such directions

as it may deem necessary.

1.2.5 Obligation of Authority

consequent upon lapse of

or on revocation of registration.

8. Upon lapse of the registration or on revocation

of the registration under this Act, the

Authority, may consult the appropriate Government

to take such action as it may deem

fit including the carrying out of the remaining

development works by competent authority or

by the association of allottees or in any other

manner, as may be determined by the Authority:

Provided that no direction, decision or order

of the Authority under this section shall

take effect until the expiry of the period of appeal

provided under the provisions of this Act:

Provided further that in case of revocation

of registration of a project under this Act, the

association of allottees shall have the first right

of refusal for carrying out of the remaining development

works.

1.2.6 Registration of real estate

agents

9. (1) No real estate agent shall facilitate the

sale or purchase of or act on behalf of any person

to facilitate the sale or purchase of any


be, ina real estate project or part of it, being

the part of the real estate project registered

under section 3, being sold by the promoter in

any planning area, without obtaining registration

under this section.

(2) Every real estate agent shall make an

application to the Authority for registration in

such form, manner, within such time and accompanied

by such fee and documents as may

be prescribed.

(3) The Authority shall, within such period,

in such manner and upon satisfying itself

of the fulfillment of such conditions, as may be

prescribed—

(a) grant a single registration to the real

estate agent for the entire State of Union territory,

as the case may be;

(b) reject the application for reasons to be

recorded in writing, if such application does

not conform to the provisions of the Act or

the rules or regulations made thereunder:

Provided that no application shall be rejected

unless the applicant has been given an

opportunity of being heard in the matter.

(4) Whereon the completion of the period

specified under sub-section (3), if the applicant

does not receive any communication about the

deficiencies in his application or the rejection

of his application, he shall be deemed to have

been registered.

(5) Every real estate agent who is registered

as per the provisions of this Act or the

rules and regulations made thereunder, shall

be granted a registration number by the Authority,

which shall be quoted by the real estate

agent in every sale facilitated by him under

this Act.

(6) Every registration shall be valid for

such period as may be prescribed, and shall

be renewable for a period in such manner and

on payment of such fee as may be prescribed.

1.2.7 Revocation of registration.

(7) Where any real estate agent who has been

granted registration under this Act commits

breach of any of the conditions thereof or

any other terms and conditions specified under

this Act or any rules or regulations made

thereunder, or where the Authority is satisfied

that such registration has been secured by the

real estate agent through misrepresentation or

fraud, the Authority may, without prejudice

to any other provisions under this Act, revoke

the registration or suspend the same for such

period as it thinks fit:

Provided that no such revocation or suspension

shall be made by the Authority unless

an opportunity of being heard has been given



to the real estate agent.

1.2.8 Functions of real estate

agents.

10. Every real estate agent registered under

section 9 shall—

(a) not facilitate the sale or purchase of any


be, in a real estate project or part of it, being

sold by the promoter in any planning area,

which is not registered with the Authority;

(b) maintain and preserve such books of

account, records and documents as may prescribed;

(c) not involve himself in any unfair trade

practices, namely:—

(@ the practice of making any statement,

whether orally or in writing or by visible representation

which—

(A) falsely represents that the services are

of a particular standard or grade;

(B) represents that the promoter or himself

has approval or affiliation which such promoter

or himself does not have;

(C) makes a false or misleading representation

concerning the services;

(i) permitting the publication of any advertisement

whether in any newspaper or otherwise

of services that are not intended to be

offered.

(d) facilitate the possession of all the information

and documents, as the allottee, is

entitled to, at the time of booking of any plot,

apartment or building, as the case may be;

(e) discharge such other functions as may

be prescribed.

1.3 CHAPTER III FUNC-

TIONS AND DUTIES

OF PROMOTER

11. (1) The promoter shall, upon receiving his

Login Id and password under clause (a) of subsection

(1) or under sub-section (2) of section

5, as the case may be, create his web page on

the website of the Authority and enter all details

of the proposed project as provided under

sub-section (2) of section 4, in all the fields as

provided, for public viewing, including—

(a) details of the registration granted by

the Authority;

(b) quarterly up-to-date the list of number

and types of apartments or plots, as the case

may be, booked;

(c) quarterly up-to-date the list of number

of garages booked;

(d) quarterly up-to-date the list of approvals

taken and the approvals which are

pending subsequent to commencement certificate;

(e) quarterly up-to-date status of the

project; and

(f) such other information and documents

as may be specified by the regulations made

by the Authority.

(2) The advertisement or prospectus issued

or published by the promoter shall mention

prominently the website address of the Authority,

wherein all details of the registered

project have been entered and include the registration

number obtained from the Authority

and such other matters incidental thereto.

(3) The promoter at the time of the booking

and issue of allotment letter shall be responsible

to make available to the allottee, the

following information, namely:—

(a) sanctioned plans, layout plans, along

with specifications, approved by the competent

authority, by display at the site or such

other place as may be specified by the regulations

made by the Authority;

(b) the stage wise time schedule of completion

of the project, including the provisions for

civic infrastructure like water, sanitation and

electricity.

(4) The promoter shall—

(a) be responsible for all obligations, responsibilities

and functions under the provisions

of this Act or the rules and regulations

made thereunder or to the allottees as per the

agreement for sale, or to the association of allottees,

as the case may be, till the conveyance

of all the apartments, plots or buildings, as the

case may be, to the allottees, or the common

areas to the association of allottees or the competent

authority, as the case may be:

Provided that the responsibility of the pro-



moter, with respect to the structural defect or

any other defect for such period as is referred

to in sub-section (3) of section 14, shall continue

even after the conveyance deed of all the

apartments, plots or buildings, as the case may

be, to the allottees are executed.

(b) be responsible to obtain the completion

certificate or the occupancy certificate, or

both, as applicable, from the relevant competent

authority as per local laws or other laws

for the time being in force and to make it available

to the allottees individually or to the association

of allottees, as the case may be;

(c) be responsible to obtain the lease certificate,

where the real estate project is developed

on a leasehold land, specifying the period

of lease, and certifying that all dues and

charges in regard to the leasehold land has

been paid, and to make the lease certificate

available to the association of allottees;

(d) be responsible for providing and maintaining

the essential services, on reasonable

charges, till the taking over of the maintenance

of the project by the association of the allottees;

(e) enable the formation of an association

or society or co-operative society, as the case

may be, of the allottees, or a federation of the

same, under the laws applicable:

Provided that in the absence of local laws,

the association of allottees, by whatever name

called, shall be formed within a period of three

months of the majority of allottees having

booked their plot or apartment or building,

as the case may be, in the project;

(f) execute a registered conveyance deed of

the apartment, plot or building, as the case

may be, in favour of the allottee along with the

undivided proportionate title in the common

areas to the association of allottees or competent

authority, as the case may be, as provided

under section 17 of this Act;

(g) pay all outgoings until he transfers the

physical possession of the real estate project to

the allottee or the associations of allottees, as

the case may be, which he has collected from

the allottees, for the payment of outgoings (including

land cost, ground rent, municipal or

other local taxes, charges for water or electricity,

maintenance charges, including mortgage

loan and interest on mortgages or other encumbrances

and such other liabilities payable

to competent authorities, banks and financial

institutions, which are related to the project):

Provided that where any promoter fails to

pay all or any of the outgoings collected by

him from the allottees or any liability, mortgage

loan and interest thereon before transferring

the real estate project to such allottees,

or the association of the allottees, as the case

may be, the promoter shall continue to be liable,

even after the transfer of the property, to

pay such outgoings and penal charges, if any,

to the authority or person to whom they are

payable and be liable for the cost of any legal

proceedings which may be taken therefor by

such authority or person;

(h) after he executes an agreement for sale

for any apartment, plot or building, as the case

may be, not mortgage or create a charge on

such apartment, plot or building, as the case

may be, and if any such mortgage or charge is

made or created then

notwithstanding anything contained in any

other law for the time being in force, it shall

not affect the right and interest of the allottee

who has taken or agreed to take such apartment,

plot or building, as the case may be;

(5) The promoter may cancel the allotment

only in terms of the agreement for sale:

Provided that the allottee may approach

the Authority for relief, if he is aggrieved by

such cancellation and such cancellation is not

in accordance with the terms of the agreement

for sale, unilateral and without any sufficient

cause.

(6) The promoter shall prepare and maintain

all such other details as may be specified,

from time to time, by regulations made by the

Authority.

1.3.1 Obligations of promoter

regarding veracity of the

advertisement or prospectus

12. Where any person makes an advance or

a deposit on the basis of the information contained

in the notice advertisement or prospectus,

or on the basis of any model apartment,



plot or building, as the case may be, and sustains

any loss or damage by reason of any incorrect,

false statement included therein, he

shall be compensated by the promoter in the

manner as provided under this Act:

Provided that if the person affected by

such incorrect, false statement contained in

the notice, advertisement or prospectus, or the

model apartment, plot or building, as the case

may be, intends to withdraw from the proposed

project, he shall be returned his entire

investment along with interest at such rate as

may be prescribed and the compensation in

the manner provided under this Act.

1.3.2 No deposit or advance

to be taken by promoter

without first entering into

agreement for sale

13. (1) A promoter shall not accept a sum

more than ten per cent of the cost of the apartment,

plot, or building as the case may be,

as an advance payment or an application fee,

from a person without first entering into a

written agreement for sale with such person

and register the said agreement for sale, under

any law for the time being in force.

(2) The agreement for sale referred to in

sub-section (1) shall be in such format may be

prescribed and shall specify the particulars of

development of the project including the construction

of building and apartments, along

with specifications and internal development

works and external development works, the

dates and the manner by which payments towards

the cost of the apartment, plot or building,

as the case may be, are to be made by the

allottees and the date on which the possession

of the apartment, plot or building is to

be handed over, the rates of interest payable

by the promoter to the allottee and the allottee

to the promoter in case of default, and such

other particulars, as may be prescribed.

1.3.3 Adherence to sanctioned

plans and project specifications

by the promoter

14. (1) The proposed project shall be developed

and completed by the promoter in accordance

with the sanctioned plans, layout plans

and specifications as approved by the competent

authorities.


any law, contract or agreement, after the sanctioned

plans, layout plans and specifications

and the nature of the fixtures, fittings, amenities

and common areas, of the apartment, plot

or building, as the case may be, as approved

by the competent authority, are disclosed or

furnished to the person who agree to take one

or more of the said apartment, plot or building,

as the case may be, the promoter shall not

make—

(i) any additions and alterations in the

sanctioned plans, layout plans and specifications

and the nature of fixtures, fittings and

amenities described therein in respect of the

apartment, plot or building, as the case may

be, which are agreed to be taken, without the

previous consent of that person:

Provided that the promoter may make

such minor additions or alterations as may be

required by the allottee, or such minor changes

or alterations as may be necessary due to architectural

and structural reasons duly recommended

and verified by an authorised Architect

or Engineer after proper declaration and

intimation to the allottee.


clause, "minor additions or alterations” excludes

structural change including an addition

to the area or change in height, or the removal

of part of a building, or any change to the

structure, such as the construction or removal

or cutting into of any wall or a part of a wall,

partition, column, beam, joist, floor including

a mezzanine floor or other support, or a change

to or closing of any required means of access

ingress or egress or a change to the fixtures or

equipment, etc.

(ii) any other alterations or additions in

the sanctioned plans, layout plans and specifications

of the buildings or the common ar-



eas within the project without the previous

written consent of at least two-thirds of the

allottees, other than the promoter, who have

agreed to take apartments in such building.


clause, the allottees, irrespective of the number

of apartments or plots, as the case may be,

booked by him or booked in the name of his

family, or in the case of other persons such as

companies or firms or any association of individuals,

etc., by whatever name called, booked

in its name or booked in the name of its associated

entities or related enterprises, shall be

considered as one allottee only.

(3) Incase any structural defect or any

other defect in workmanship, quality or provision

of services or any other obligations of the

promoter as per the agreement for sale relating

to such development is brought to the notice

of the promoter within a period of five years

by the allottee from the date of handing over

possession, it shall be the duty of the promoter

to rectify such defects without further charge,

within thirty days, and in the event of promoter’s

failure to rectify such defects within

such time, the aggrieved allottees shall be entitled

to receive appropriate compensation in

the manner as provided under this Act.

1.3.4 Obligations of promoter in

case of transfer of a real

estate project to a third

party.

15. (1) The promoter shall not transfer or assign

his majority rights and liabilities in respect

of a real estate project to a third party

without obtaining prior written consent from

two-third allottees, except the promoter, and

without the prior written approval of the Authority:

Provided that such transfer or assignment

shall not affect the allotment or sale of the

apartments, plots or buildings as the case may

be, in the real estate project made by the erstwhile

promoter.

Explanation.—For the purpose of this subsection,

the allottee, irrespective of the number

of apartments or plots, as the case may be,

booked by him or booked in the name of his

family, or in the case of other persons such as

companies or firms or any association of individuals,

by whatever name called, booked in

its name or booked in the name of its associated

entities or related enterprises, shall be

considered as one allottee only.

(2) On the transfer or assignment being

permitted by the allottees and the Authority

under sub-section (1), the intending promoter

shall be required to independently comply

with all the pending obligations under the

provisions of this Act or the rules and regulations

made thereunder, and the pending obligations

as per the agreement for sale entered

into by the erstwhile promoter with the allottees:

Provided that any transfer or assignment

permitted under provisions of this section shall

not result in extension of time to the intending

promoter to complete the real estate project

and he shall be required to comply with all

the pending obligations of the erstwhile promoter,

and in case of default, such intending

promoter shall be liable to the consequences

of breach or delay, as the case may be, as provided

under this Act or the rules and regulations

made thereunder.

1.3.5 Obligations of promoter

regarding insurance of real

estate project

16. (1) The promoter shall obtain all such insurances

as may be notified by the appropriate

Government, including but not limited to insurance

in respect of —

(i) title of the land and building as a part

of the real estate project; and

(ii) construction of the real estate project.

(2) The promoter shall be liable to pay the

premium and charges in respect of the insurance

specified in sub-section (/) and shall pay

the same before transferring the insurance to

the association of the allottees.

(3) The insurance as specified under subsection

(/) shall stand transferred to the benefit

of the allottee or the association of allottees,

as the case may be, at the time of promoter

entering into an agreement for sale with the

allottee.



(4) On formation of the association of the

allottees, all documents relating to the insurance

specified under sub-section (/) shall be

handed over to the association of the allottees.

1.3.6 Transfer of title

17. (1) The promoter shall execute a registered

conveyance deed in favour of the allottee

along with the undivided proportionate title in

the common areas to the association of the allottees

or the competent authority, as the case

may be, and hand over the physical possession

of the plot, apartment of building, as the case

may be, to the allottees and the common areas

to the association of the allottees or the competent

authority, as the case may be, in a real

estate project, and the other title documents

pertaining thereto within specified period as

per sanctioned plans as provided under the local

laws:

Provided that, in the absence of any local

law, conveyance deed in favour of the allottee

or the association of the allottees or the competent

authority, as the case may be, under

this section shall be carried out by the promoter

within three months from date of issue

of occupancy certificate.

(2) After obtaining the occupancy certificate

and handing over physical possession to

the allottees in terms of sub-section (1), it shall

be the responsibility of the promoter to handover

the necessary documents and plans, including

common areas, to the association of

the allottees or the competent authority, as

the case may be, as per the local laws:

Provided that, in the absence of any local

law, the promoter shall handover the necessary

documents and plans, including common

areas, the association of the allottees or

the competent authority, as the case may be,

within thirty days after obtaining the occupancy

certificate.

1.3.7 Return of amount and

compensation

18. (1) If the promoter fails to complete or

is unable to give possession of an apartment,

plot or building,—

(a) in accordance with the terms of the

agreement for sale or, as the case may be, duly

completed by the date specified therein; or

(b) due to discontinuance of his business

as a developer on account of suspension or

revocation of the registration under this Act

or for any other reason, he shall be liable on

demand to the allottees, in case the allottee

wishes to withdraw from the project, without

prejudice to any other remedy available, to return

the amount received by him in respect

of that apartment, plot, building, as the case

may be, with interest at such rate as may be

prescribed in this behalf including compensation

in the manner as provided under this Act:

Provided that where an allottee does not

intend to withdraw from the project, he shall

be paid, by the promoter, interest for every

month of delay, till the handing over of the

possession, at such rate as may be prescribed.

(2) The promoter shall compensate the allottees

in case of any loss caused to him due to

defective title of the land, on which the project

is being developed or has been developed, in

the manner as provided under this Act, and

the claim for compensation under this subsection

shall not be barred by limitation provided

under any law for the time being in force.

(3) If the promoter fails to discharge any

other obligations imposed on him under this

Act or the rules or regulations made thereunder

or in accordance with the terms and conditions

of the agreement for sale, he shall be

liable to pay such compensation to the allottees,

in the manner as provided under this Act.

1.4 CHAPTER V RIGHTS

AND DUTIES OF

ALLOTTEES

19. (1) The allottee shall be entitled to obtain

the information relating to sanctioned plans,

layout plans along with the specifications, approved

by the competent authority and such

other information as provided in this Act or

the rules and regulations made thereunder or

the agreement for sale signed with the promoter.

(2) The allottee shall be entitled to know



stage-wise time schedule of completion of the

project, including the provisions for water,

sanitation, electricity and other amenities and

services as agreed to between the promoter

and the allottee in accordance with the terms

and conditions of the agreement for sale.

(3) The allottee shall be entitled to claim

the possession of apartment, plot or building,

as the case may be, and the association of allottees

shall be entitled to claim the possession

of the common areas, as per the declaration

given by the promoter under sub-clause (C) of

clause (J) of sub-section (2) of section 4.

(4) The allottee shall be entitled to claim

the refund of amount paid along with interest

at such rate as may be prescribed and compensation

in the manner as provided under this

Act, from the promoter, if the promoter fails

to comply or is unable to give possession of the


be, in accordance with the terms of agreement

for sale or due to discontinuance of his business

as a developer on account of suspension

or revocation of his registration under the provisions

of this Act or the rules or regulations

made thereunder.

(5) The allottee shall be entitled to have

the necessary documents and plans, including

that of common areas, after handing over the

physical possession of the apartment or plot or

building as the case may be, by the promoter.

(6) Every allottee, who has entered into an

agreement for sale to take an apartment, plot

or building as the case may be, under section

13, shall be responsible to make necessary payments

in the manner and within the time as

specified in the said agreement for sale and

shall pay at the proper time and place, the

share of the registration charges, municipal

taxes, water and electricity charges, maintenance

charges, ground rent, and other charges,

ifany.

(7) The allottee shall be liable to pay interest,

at such rate as may be prescribed, for

any delay in payment towards any amount or

charges to be paid under sub-section (6).

(8) The obligations of the allottee under

sub-section (6) and the liability towards interest

under sub-section (7) may be reduced when

mutually agreed to between the promoter and

such allottee.

(9) Every allottee of the apartment, plot or

building as the case may be, shall participate

towards the formation of an association or society

or cooperative society of the allottees, or

a federation of the same.

(10) Every allottee shall take physical possession

of the apartment, plot or building as

the case may be, within a period of two months

of the occupancy certificate issued for the said


be.

(11) Every allottee shall participate towards

registration of the conveyance deed of

the apartment, plot or building, as the case

may be, as provided under sub-section (1) of

section 17 of this Act.

Rights and duties of allottees.

Establishment and incorporation of Real

Estate Regulatory Authority.

Composition of Authority.

Qualifications of Chairperson and Members

of Authority.

Term of office of Chairperson and Members.

Salary and allowances payable to Chairperson

and Members.

1.5 CHAPTER V THE

REAL ESTATE REG-

ULATORY AUTHOR-

ITY

1.5.1 Establishment and incorporation

of Real Estate

Regulatory Authority

20. (1) The appropriate Government shall,

within a period of one year from the date

of coming into force of this Act, by notification,

establish an Authority to be known as

the Real Estate Regulatory Authority to exercise

the powers conferred on it and to perform

the functions assigned to it under this Act:

Provided that the appropriate Government

of two or more States or Union territories may,

if it deems fit, establish one single Authority:



Provided further that, the appropriate

Government may, if it deems fit, establish

more than one Authority in a State or Union

territory, as the case may be:

Provided also that until the establishment

of a Regulatory Authority under this section,

the appropriate Government shall, by order,

designate any Regulatory Authority or any officer

preferably the Secretary of the department

dealing with Housing, as the Regulatory

Authority for the purposes under this Act:

Provided also that after the establishment

of the Regulatory Authority, all applications,

complaints or cases pending with the Regulatory

Authority designated, shall stand transferred

to the Regulatory Authority so established

and shall be heard from the stage such

applications, complaints or cases are transferred.

(2) The Authority shall be a body corporate

by the name aforesaid having perpetual

succession and a common seal, with the

power, subject to the provisions of this Act,

to acquire, hold and dispose of property, both

movable and immovable, and to contract, and

shall, by the said name, sue or be sued.

1.5.2 Composition of Authority.

21. The Authority shall consist of a Chairperson

and not less than two whole time Members

to be appointed by the appropriate Government.

22. The Chairperson and other Members

of the Authority shall be appointed by the

appropriate Government on the recommendations

of a Selection Committee consisting of

the Chief Justice of the High Court or his nominee,

the Secretary of the Department dealing

with Housing and the Law Secretary, in such

manner as may be prescribed, from amongst

persons having adequate knowledge of and

professional experience of at-least twenty years

in case of the Chairperson and fifteen years

in the case of the Members in urban development,

housing, real estate development, infrastructure,

economics, technical experts from

relevant fields, planning, law, commerce, accountancy,

industry, management, social service,

public affairs or administration:

Provided that a person who is, or has been,

in the service of the State Government shall

not be appointed as a Chairperson unless such

person has held the post of Additional Secretary

to the Central Government or any equivalent

post in the Central Government or State

Government:

Provided further that a person who is, or

has been, in the service of the State Government

shall not be appointed as a member unless

such person has held the post of Secretary

to the State Government or any equivalent

post in the State Government or Central

Government.

1.5.3 Term of office of Chairperson

and Members

23. (1) The Chairperson and Members shall

hold office for a term not exceeding five years

fromthe date on which they enter upon their

office, or until they attain the age of sixty- five

years, whichever is earlier and shall not be eligible

for re-appointment.

(2) Before appointing any person as a

Chairperson or Member, the appropriate Government

shall satisfy itself that the person

does not have any such financial or other interest

as is likely to affect prejudicially his functions

as such Member.

1.5.4 Salary and allowances

payable to Chairperson

and Members

24, (1) The salary and allowances payable to,

and the other terms and conditions of service

of, the Chairperson and other Members shall

be such as may be prescribed and shall not

be varied to their disadvantage during their

tenure.


sub-sections (/) and (2) of section 23, the

Chairperson or a Member, as the case may

be, may,— (a) relinquish his office by giving

in writing, to the appropriate Government, notice

of not less than three months; or

(b) be removed from his office in accordance

with the provisions of section 26 of this

Act.



(3) Any vacancy caused to the office of

the Chairperson or any other Member shall be

filled-up within a period of three months from

the date on which such vacancy occurs.

1.5.5 Administrative powers of

Chairperson.

25. The Chairperson shall have powers of general

superintendence and directions in the conduct

of the affairs of Authority and he shall, in

addition to presiding over the meetings of the

Authority, exercise and discharge such administrative

powers and functions of the Authority

as may be prescribed.

1.5.6 Removal of Chairperson

and Members from office

in certain circumstances

26. (1) The appropriate Government may, in

accordance with the procedure notified, remove

from office the Chairperson or other

Members, if the Chairperson or such other

Member, as the case may be,—

(a) has been adjudged as an insolvent; or

(b) has been convicted of an offence, involving

moral turpitude; or

(c) has become physically or mentally incapable

of acting as a Member; or

(d) has acquired such financial or other

interest as is likely to affect prejudicially his

functions; or

(e) has so abused his position as to render

his continuance in office prejudicial to the

public interest.

(2) The Chairperson or Member shall not

be removed from his office on the ground specified

under clause (d) or clause (e) of subsection

(/) except by an order made by the appropriate

Government after an inquiry made

by a Judge of the High Court in which such

Chairperson or Member has been informed of

the charges against him and given a reasonable

opportunity of being heard in respect of

those charges.

1.5.7 Restrictions on Chairperson

or Members on employment

after cessation

of office

27. (1) The Chairperson or a Member, ceasing

to hold office as such, shall not—

(a) accept any employment in, or connected

with, the management or administration

of, any person or organisation which has

been associated with any work under this Act,

from the date on which he ceases to hold office:

Provided that nothing contained in this

clause shall apply to any employment under

the appropriate Government or a local authority

or in any statutory authority or any corporation

established by or under any Central,

State or provincial Act or a Government Company,

as defined under clause (45) of section 2

of the Companies Act, 2013, which is not a

promoter as per the provisions of this Act;

(b) act, for or on behalf of any person or

organisation in connection with any specific

proceeding or transaction or negotiation or a

case to which the Authority is a party and

with respect to which the Chairperson or such

Member had, before cessation of office, acted

for or provided advice to, the Authority;

(c) give advice to any person using information

which was obtained in his capacity as

the Chairperson or a Member and being unavailable

to or not being able to be made available

to the public;

(d) enter into a contract of service with,

or accept an appointment to a borad of directors

of, or accept an offer of employment with,

an entity with which he had direct and significant

official dealings during his term of office

as such.

(2) The Chairperson and Members shall

not communicate or reveal to any person any

matter which has been brought under his consideration

or known to him while acting as

such.

1.5.8 Officers and other employees

of Authority


consultation with the Authority appoint such



officers and employees as it considers necessary

for the efficient discharge of their functions under

this Act who would discharge their functions

under the general superintendence of the

Chairperson.

(2) The salary and allowances payable to,


of, the officers and of the employees of the Authority

appointed under sub-section (/) shall

be such as may be prescribed.

1.5.9 Meetings of Authority.

29. (1) The Authority shall meet at such

places and times, and shall follow such rules

of procedure in regard to the transaction of

business at its meetings, (including quorum at

such meetings), as may be specified by the regulations

made by the Authority.

(2) If the Chairperson for any reason, is unable

to attend a meeting of the Authority, any

other Member chosen by the Members present

amongst themselves at the meeting, shall preside

at the meeting.

(3) All questions which come up before any

meeting of the Authority shall be decided by

a majority of votes by the Members present

and voting, and in the event of an equality of

votes, the Chairperson or in his absence, the

person presiding shall have a second or casting

vote.

(4) The questions which come up before

the Authority shall be dealt with as expeditiously

as possible and the Authority shall dispose

of the same within a period of sixty days

from the date of receipt of the application:

Provided that where any such application

could not be disposed of within the said period

of sixty days, the Authority shall record

its reasons in writing for not disposing of the

application within that period.

1.5.10 Vacancies, etc., not to

invalidate proceeding of

Authority

30. No act or proceeding of the Authority shall

be invalid merely by reason of—

(a) any vacancy in, or any defect in the

constitution of, the Authority; or

(b) any defect in the appointment of a person

acting as a Member of the Authority; or

(c) any irregularity in the procedure of the

Authority not affecting the merits of the case.

1.5.11 Filing of complaints with

the Authority or the adjudicating

officer.

31. (1) Any aggrieved person may file a complaint

with the Authority or the adjudicating

officer, as the case may be, for any violation

or contravention of the provisions of this Act

or the rules and regulations made thereunder

against any promoter allottee or real estate

agent, as the cae may be.

Explanation.—For the purpose of this subsection

"person" shall include the association

of allottees or any voluntary consumer association

registered under any law for the time

being in force.

(2) The form, manner and fees for filing

complaint under sub-section (1) shall be such

as may be specified by regulations.

1.5.12 Functions of Authority

for promotion of real estate

sector

32. The Authority shall in order to facilitate

the growth and promotion of a healthy, transparent,

efficient and competitive real estate

sector make recommendations to the appropriate

Government of the competent authority, as

the case may be, on,—

(a) protection of interest of the allottees,

promoter and real estate agent;

(b) creation of a single window system

for ensuring time bound project approvals

and clearances for timely completion of the

project;

(c) creation of a transparent and robust

grievance redressal mechanism against acts of

omission and commission of competent authorities

and their officials;

(d) measures to encourage investment in

the real estate sector including measures to increase

financial assistance to affordable housing

segment;



(e) measures to encourage construction

of environmentally sustainable and affordable

housing, promoting standardisation and use of

appropriate construction materials, fixtures,

fittings and construction techniques;

(f) measures to encourage grading of

projects on various parameters of development

including grading of promoters;

Sec. 1] THE GAZETTE OF INDIA EX-

TRAORDINARY 21

(g) measures to facilitate amicable conciliation

of disputes between the promoters and

the allottees through dispute settlement forums

set up by the consumer or promoter associations;

(h) measures to facilitate digitization of

land records and system towards conclusive

property titles with title guarantee;

(i) to render advice to the appropriate

Government in matters relating to the development

of real estate sector;

(j) any other issue that the Authority may

think necessary for the promotion of the real

estate sector.

1.5.13 Advocacy and awareness

measures

33. (1) The appropriate Government may,

while formulating a policy on real estate sector

(including review of laws related to real estate

sector) or any other matter, make a reference

to the Authority for its opinion on possible effect,

of such policy or law on real estate sector

and on the receipt of such a reference, the Authority

shall within a period of sixty days of

making such reference, give its opinion to the

appropriate Government which may therafter

take further action as it deems fit.

(2) The opinion given by the Authority under

sub-section (/) shall not be binding upon

the appropriate Government in formulating

such policy or laws.

(3) The Authority shall take suitable measures

for the promotion of advocacy, creating

awareness and imparting training about laws

relating to real estate sector and policies.

1.5.14 Functions of Authority

34. The functions of the Authority shall include—

(a) to register and regulate real estate

projects and real estate agents registered under

this Act;

(b) to publish and maintain a website of

records, for public viewing, of all real estate

projects for which registration has been given,

with such details as may be prescribed, including

information provided in the application for

which registration has been granted;

(c) to maintain a database, on its website,

for public viewing, and enter the names and

photographs of promoters as defaulters including

the project details, registration for which

has been revoked or have been penalised under

this Act, with reasons therefor, for access

to the general public;

(d) to maintain a database, on its website,

for public viewing, and enter the names and

photograhps of real estate agents who have

applied and registered under this Act, with

such details as may be prescribed, including

those whose registration has been rejected or

revoked;

(e) to fix through regulations for each areas

under its jurisdiction the standard fees to

be levied on the allottees or the promoter or

the real estate agent, as the case may be;

(f) to ensure compliance of the obligations

cast upon the promoters, the allottees and the

real estate agents under this Act and the rules

and regulations made thereunder;

(g) to ensure compliance of its regulations

or orders or directions made in exercise of its

powers under this Act;

(h) to perform such other functions as may

be entrusted to the Authority by the appropriate

Government as may be necessary to carry

out the provisions of this Act.

1.5.15 Powers of Authority to

call for information, conduct

investigations

35. (1) Where the Authority considers it expedient

to do so, ona complaint or sue motu,

relating to this Act or the rules of regulations



made thereunder, it may, by order in writing

and recording reasons therefor call upon any

promoter or allottee or real estate agent, as the

case may be, at any time to furnish in writing

such information or explanation relating to its

affairs as the Authority may require and appoint

one or more persons to make an inquiry

in relation to the affairs of any promoter or allottee

or the real estate agent, as the case may

be.


any other law for the time being in force, while

exercising the powers under sub-section (/),

the Authority shall have the same powers as

are vested in a civil court under the Code of

Civil Procedure, 1908 while trying a suit, in

respect of the following matters, namely:—

(@) the discovery and production of books

of account and other documents, at such place

and at such time as may be specified by the

Authority;

(i) summoning and enforcing the attendance

of persons and examining them on oath;

(iii) issuing commissions for the examination

of witnesses or documents; (iv) any other

matter which may be perscribed.

1.5.16 Power to issue interim

orders

36. Where during an inquiry, the Authority is

satisfied that an act in contravention of this

Act, or the rules and regulations made thereunder,

has been committed and continues to

be committed or that such act is about to

be committed, the Authority may, by order,

restrain any promoter, allottee or real estate

agent from carrying on such act until the conclusion

of such inquiry of until further orders,

without giving notice to such party, where the

Authority deems it necessary.

1.5.17 Powers of Authority to

issue directions

37. The Authority may, for the purpose of discharging

its functions under the provisions of

this Act or rules or regulations made thereunder,

issue such directions from time to time, to

the promoters or allottees or real estate agents,

as the case may be, as it may consider necessary

and such directions shall be binding on

all concerned.

1.5.18 Powers of Authority

38. (1) The Authority shall have powers

to impose penalty or interest, in regard to

any contravention of obligations cast upon the

promoters, the allottees and the real estate

agents, under this Act or the rules and the

regulations made thereunder.

(2) The Authority shall be guided by the

principles of natural justice and, subject to the

other provisions of this Act and the rules made

thereunder, the Authority shall have powers to

regulate its own procedure.

(3) Where an issue is raised relating to

agreement, action, omission, practice or procedure

that—

(a) has an appreciable prevention, restriction

or distortion of competition in connection

with the development of a real estate project;

or

(b) has effect of market power of monopoly

situation being abused for affecting interest of

allottees adversely,

then the Authority, may suo motu, make

reference in respect of such issue to the Competition

Commission of India.

1.5.19 Rectification of orders

39. The Authority may, at any time within a

period of two years from the date of the order

made under this Act, with a view to rectifying

any mistake apparent from the record, amend

any order passed by it, and shall make such

amendment, if the mistake is brought to its

notice by the parties:

Provided that no such amendment shall be

made in respect of any order against which an

appeal has been preferred under this Act:

Provided further that the Authority shall

not, while rectifying any mistake apparent

from record, amend substantive part of its order

passed under the provisions of this Act.



1.5.20 Recovery of interest or

penalty or compensation

and enforcement of order,

etc.

40. (1) If a promoter or an allottee or a real

estate agent, as the case may be, fails to pay

any interest or penalty or compensation imposed

on him, by the adjudicating officer or

the Regulatory Authority or the Appellate Authority,

as the case may be, under this Act or

the rules and regualtions made thereunder, it

shall be recoverable from such promoter or allottee

or real estate agent, in such manner as

may be prescribed as an arrears of land revenue.

(2) If any adjudicating officer or the Regulatory

Authority or the Appellate Tribunal,

as the case may be, issues any order or directs

any person to do any act, or refrain from doing

any act, which it is empowered to do under

this Act or the rules or regulations made thereunder,

then in case of failure by any person to

comply with such order or direction, the same

shall be enforced, in such manner as may be

prescribed.

1.6 CHAPTER VI CEN-

TRAL ADVISORY

COUNCIL

1.6.1 Establishment of Central

Advisory Council

41. (1) The Central Government may, by notification,

establish with effect from such date as

it may specify in such notification, a Council

to be known as the Central Advisory Council.

(2) The Minister to the Government of India

in charge of the Ministry of the Central

Government dealing with Housing shall be the

ex officio Chairperson of the Central Advisory

Council.

(3) The Central Advisory Council shall

consist of representatives of the Ministry of

Finance, Ministry of Industry and Commerce,

Ministry of Urban Development, Minsitry of

Consumer Affairs, Minstry of Corporate Affairs,

Ministry of Law and Justice, Niti Aayog,

National Housing Bank, Housing and Urban

Development Corporation, five representatives

of State Governments to be selected by rotation,

five representatives of the Real Estate

Regulatory Authorities to be selected by rotation,

and any other Central Government department

as notified.

(4) The Central Advisory Council shall

also consist of not more than ten members

to represent the interests of real estate industry,

consumers, real estate agents, construction

labourers, non-governmental organisations

and academic and research bodies in

the real estate sector.

1.6.2 Functions of Central Advisory

Council

42. (1) The functions of the Central Advisory

Council shall be to advise and recommend the

Central Government,—

(a) on all matters concerning the implementation

of this Act;

(b) on major questions of policy;

(c) towards protection of consumer interest;

(d) to foster the growth and development

of the real estate sector;

(e) on any other matter as may be assigned

to it by the Central Government.

(2) The Central Government may specify

the rules to give effect to the recommendations

of the Central Advisory Council on matters as

provided under sub-section (/).

1.7 CHAPTER VII Tue

REAL Estate APPEL-

LATE TRIBUNAL

1.7.1 Establishment of Real Estate

Appellate Tribunal


within a period of one year from the date of

coming into force of this Act, by notification,

establish an Appellate Tribunal to be known



as the — (name of the State/Union territory)

Real Estate Appellate Tribunal.

(2) The appropriate Government may, if

it deems necessary, establish one or more

benches of the Appellate Tribunal, for various

jurisdictions, in the State or Union territory,

as the case may be.

(3) Every bench of the Appellate Tribunal

shall consist of at least one Judicial Member

and one Administrative to Technical Member.

(4) The appropriate Government of two

or more Staes or Union territories may, if it

deems fit, establish one single Appellate Tribunal:

Provided that, until the establishment of

an Appellate Tribunal under this section, the

appropriate Government shall designate, by

order, any Appellate Tribunal Functioning under

any law for the time being in force, to be

the Appellate Tribunal to hear appeals under

the Act:

Provided further that after the Appellate

Tribunal under this section is established, all

matters pending with the Appellate Tribunal

designated to hear appeals, shall stand transferred

to the Appellate Tribunal so established

and shall be heard from the stage such appeal

is transferred.

(5) Any person aggrieved by any direction

or decision or order made by the Authority or

by an adjudicating officer under this Act may

prefer an appeal before the Appellate Tribunal

having jurisdiction over the matter:

Provided that where a promoter files an

appeal with the Appellate Tribunal, it shall

not be entertained, without the promoter first

having deposited with the Appellate Tribunal

at least thirty per cent. of the penalty, or such

higher percentage as may be determined by

the Appellate Tribunal, or the total amount

to be paid to the allottee including interest

and compensation imposed on him, if any, or

with both, as the case may be, before the said

appeal is heard.

Explanation.—For the purpose of this subsection

“person” shall include the association

of allottees or any voluntary consumer association

registered under any law for the time

being in force.

1.7.2 Application for settlement

of disputes and appeals to

Appellate Tribunal

44. (1) The appropriate Government or the

competent authority or any person aggrieved

by any direction or order or decision of the Authority

or the adjudicating officer may prefer

an appeal to the Appellate Tribunal.

(2) Every appeal made under sub-section

(1) shall be preferred within a period of sixty

days from the date on which a copy of the

direction or order or decision made by the Authority

or the adjudicating officer is received

by the appropriate Government or the competent

authority or the aggrieved person and

it shall be in such form and accompanied by

such fee, as may be prescribed:

Provided that the Appellate Tribunal may

entertain any appeal after the expiry of sixty

days if it is satisfied that there was sufficient

cause for not filling it within that period.

(3) On receipt of an appeal under subsection

(/), the Appellate Tribunal may after

giving the parties an opportunity of being

heard, pass such orders, including interim orders,

as it thinks fit.

(4) The Appellate Tribunal shall send a

copy of every order made by it to the parties

and to the Authority or the adjudicating

officer, as the case may be.

(5) The appeal preferred under sub-section

(/), shall be dealt with by it as expeditiously

as possible and endeavour shall be made by

it to dispose of the appeal within a period of

sixty days from the date of receipt of appeal:

Provided that where any such appeal could

not be disposed of within the said period of

sixty days, the Appellate Tribunal shall record

its reasons in writing for not disposing of the

appeal within that period.

(6) The Appellate Tribunal may, for the

purpose of examining the legality or propriety

or correctness of any order or decision of the

Authority or the adjudicating officer, on its

own motion or otherwise, call for the records

relevant to deposing of such appeal and make

such orders as it thinks fit.



1.7.3 Composition of Appellate

Tribunal

45. The Appellate Tribunal shall consist of

a Chairperson and not less than two whole

time Members of which one shall be a Judicial

member and other shall be a Technical or

Administrative Member, to be appointed by

the appropriate Government.

Explanation.—For the purposes of this

Chapter,—

(4) “Judicial Member" means a Member of

the Appellate Tribunal appointed as such under

clause (b) of sub-section (/) of section 46;

(ii) "Technical or Administrative Member"

means a Member of the Appellate Tribunal appointed

as such under clause (c) of sub-section

(/) of section 46.

1.7.4 Qualifications for appointment

of Chairperson and

Members

46. (1) A person shall not be qualified for appointment

as the Chairperson or a Member of

the Appellate Tribunal unless he,—

(a) in the case of Chairperson, is or has

been a Judge of a High Court; and

(b) in the case of a Judicial Member he has

held a judicial office in the territory of India

for at least fifteen years or has been a member

of the Indian Legal Service and has held the

post of Additional Secretary of that service or

any equivalent post, or has been an advocate

for at least twenty years with experience in

dealing with real estate matters; and

(c) in the case of a Technical or Administrative

Member, he is a person who is wellversed

in the field of urban development, housing,

real estate development, infrastructure,

economics, planning, law, commerce, accountancy,

industry, management, public affairs or

administration and possesses experience of at

least twenty years in the field or who has held

the post in the Central Government, or a State

Government equivalent to the post of Additional

Secretary to the Government of India or

an equivalent post in the Central Government

or an equivalent post in the State Government.

(2) The Chairperson of the Appellate Tribunal

shall be appointed by the appropriate

Government in consultation with the Chief

Justice of High Court or his nominee.

(3) The judicial Members and Technical

or Administrative Members of the Appellate

Tribunal shall be appointed by the appropriate

Government on the recommendations of

a Selection Committee consisting of the Chief

Justice of the High Court or his nominee, the

Secretary of the Department handling Housing

and the Law Secretary and in such manner as

may be prescribed.

1.7.5 Term of office of Chairperson

and Members

47, (1) The Chairperson of the Appellate Tribunal

or a Member of the Appellate Tribunal

shall hold office, as such for a term not exceeding

five years from the date on which he

enters upon his office, but shall not be eligible

for re-appointment:

Provided that in case a person, who is or

has been a Judge of a High Court, has been

appointed as Chairperson of the Tribunal, he

shall not hold office after he has attained the

age of sixty-seven years:

Provided further that no Judicial Member

or Technical or Administrative Member shall

hold office after he has attained the age of

sixty-five years.

(2) Before appointing any person as Chairperson

or Member, the appropriate Government

shall satisfy itself that the person does

not have any such financial or other interest,

as is likely to affect prejudicially his functions

as such member.


payable to Chairperson

and Members

48. (1) The salary and allowances payable to,


of, the Chairperson and other Members shall

be such as may be prescribed and shall not

be varied to their disadvantage during their

tenure.




sub-sections (/) and (2) of section 47, the

Chairperson or a Member, as the case may be,

may:—

(a) relinquish his office by giving in writing

to the appropriate Government a notice of not

less than three months;

(b) be removed from his office in accordance

with the provisions of section 49.

(3) A vacancy caused to the office of the

Chairperson or any other Member, as the case

may be, shall be filled-up within a period of

three months from the date on which such vacancy

occurs.

1.7.7 Removal of Chairperson

and Member from office in

certain circumstances


consultation with the Chief Justice of the High

Court, remove from office of the Chairperson

or any judicial Member or Technical or Administrative

Member of the Appellate Tribunal,

who—

(a) has been adjudged as an insolvent; or

(b) has been convicted of an offence which,

in the opinion of the appropriate Government

involves moral turpitude; or

(c) has become physically or mentally incapable;

or

(d) has acquired such financial or other

interest as is likely to affect prejudicially his

functions; or

(e) has so abused his position as to render

his continuance in office prejudicial to the

public interest.

(2) The Chairperson or Judicial member or

Technical or Administrative Member shall not

be removed from his office except by an order

made by the appropriate Government after

an inquiry made by the Judge of the High

Court in which such Chairperson or Judicial

member or Technical or Administrative Member

has been informed of the charges against

him and given a reasonable opportunity of being

heard in respect of those charges.

(3) The appropriate Government may suspend

from the office of the Chairperson or Judicial

member or Technical or Administrative

Member in respect of whom a reference of conducting

an inquiry has been made to the Judge

of the High Court under sub-section (2), until

the appropriate Government passes an order

on receipt of the report of inquiry made by the

Judge of the High Court on such reference.

(4) The appropriate Government may, by

rules, regulate the procedure for inquiry referred

to in sub-section (2).

1.7.8 Restrictions on Chairperson

or Judicial Member or

Technical or Administrative

Member on employment

after cessation of office

50. (7) The Chairperson or Judicial Member

or Technical or Administrative Member, ceasing

to hold office as such shall not:—

(a) Accept any employment in, or connected

with, the management or administration

of, any person or organisation which has

been associated with any work under this Act,

from the date on which he ceases to hold office:


clause shall apply to any employment under

the appropriate Government or a local authority

or in any statutory authority or any corporation

established by or under any Central,

State of provincial Act or a Government Company

as defined under clause (45) of section

2 of the Companies Act, 2013, which is not a

promoter as per the provisions of this Act;

(b) act, for or on behalf of any person or

organisation in connection with any specific

proceeding or transaction or negotiation or a

case to which the Authority is a party and with

respect to which the Chairperson or Judicial

Member or Technical or Administrative Member

had, before cessation of office, acted for or

provided advice to, the Authority;

(c) give advice to any person using information

which was obtained in his capacity as

the Chairperson or Judicial Member or Technical

or Administrative Member and being unavailable

to or not being able to be made available

to the public;

(d) enter into a contrat of service with, or



accept an appointment to a board of directors

of, or accept an offer of employment with, an

entity with which he had direct and significant

official dealings during his term of office

as such.

(2) The Chairperson or Judicial Member or

Technical or Administrative Member shall not

communicate or reveal to any person any matter

which has been brought under his consideration

or known to him while acting as such.

1.7.9 Officers and other employees

of Appellate Tribunal

51. (1) The appropriate Government shall provide

the Appellate Tribunal with such officers

and employees as it may deem fit.

(2) The officers and employees of the Appellate

Tribunal shall discharge their functions

under the general superintendence of its

Chairperson.

(3) The salary and allowances payable to,


of, the officers and employees of the Appellate

Tribunal shall be such as may be prescribed.

1.7.10 Vacancies

52. If, for reason other than temporary absence,

any vacancy occurs in the office of the

Chairperson or a Member of the Appellate Tribunal,

the appropriate Government shall appoint

another person in accordance with the

provisions of this Act to fill the vacancy and

the proceedings may be continued before the

Appellae Tribunal from the stage at which the

vacancy is filled.

1.7.11 Powers of Tribunal

53. (1) The Appellate Tribunal shall not be

bound by the procedure laid down by the Code

of Civil Procedure, 1908 but shall be guided by

the principles of natural justice.

(2) Subject to the provisions of this Act,

the Appellate Tribunal shall have power to

regulate its own procedure.

(3) The Appellate Tribunal shall also not

be bound by the rules of evidence contained.

in the Indian Evidence Act, 1872.

(4) The Appellate Tribunal shall have, for

the purpose of discharging its functions under

this Act, the same powers as are vested in

a civil court under the Code of Civil Procedure,

1908 in respect of the following matters,

namely:—

(a) summoning and enforcing the attendance

of any person and examining him on

oath;

(b) requiring the discovery and production

of documents;

(c) receiving evidence on affidavits;

(d) issuing commissions for the examinations

of witnesses or documents; (e) reviewing

its decisions;

(f) dismissing an application for default or

directing it ex parte; and

(g) any other matter which may be prescribed.

(5) All proceedings before the Appellate

Tribunal shall be deemed to be judicial proceedings

within the meaning of sections 193,

219 and 228 for the purposes of section 196

of the Indian Penal Code, and the Appellate

Tribunal shall be deemed to be civil court for

the purposes of section 195 and Chapter XX

VI of the Code of Criminal Procedure, 1973.


Chairperson of Appellate

Tribunal

54. The Chairperson shall have powers of

general superintendence and direction in the

conduct of the affairs of Appellate Tribunal

and he shall, in addition to presiding over the

meetings of the Appellate Tribunal exercise

and discharge such administrative powers and

functions of the Appellate Tribunal as may be

prescribed.

1.7.13 Vacancies, etc., not to

invalidate proceeding of

Appellate Tribunal

55. No act or proceeding of the Appellate Tribunal

shall be invalid merely by reason of—

(a) any vacancy in, or any defect in the constitution

of, the Appellate Tribunal, or



(b) any defect in the appointment of a person

acting as a Member of the Appellate Tribunal;

or

(c) Any irregularity in the procedure of the

Appellate Tribunal not affecting the merits of

the case.

1.7.14 Right to legal representation

56. The applicant or appellant may either appear

in person or authorise one or more chartered

accountants or company secretaries or

cost accountants or legal practitioners or any

of its officers to present his or its case before

the Appellate Tribunal or the Regulatory Authority

or the adjudicating officer, as the case

may be.

Explanation.—For the purposes of this section,—

(a) "chartered accountant" means a chartered

accountant as defined in clause (b) of

sub-section (/) of section 2 of the Chartered

Accountants Act, 1949 or any other law for

the time being in force and who has obtained

a certificate of practice under sub-section (/)

of section 6 of that Act;

(b) "company secretary" means a company

secretary as defined in clause (c) of sub-section

(/) of section 2 of the Company Secretaries

Act, 1980 or any other law for the time being

in force and who has obtained a certificate of

practice under sub-section (/) of section 6 of

that Act;

(c) "cost accountant" means a cost accountant

as defined in clause () of sub-section (/) of

section 2 of the Cost and Works Accountants

Act, 1959 or any other law for the time being

in force and who has obtained a certificate of

practice under sub-section (/) of section 6 of

that Act;

(d) "legal practitioner” means an advocate,

vakil or an attorney of any High Court, and

includes a pleader in practice.

1.7.15 Orders passed by Appellate

Tribunal to be executable

as a decree

57. (1) Every order made by the Appellate

Tribunal under this Act shall be executable

by the Appellate Tribunal as a decree of civil

court, and for this purpose, the Appellate Tribunal

shall have all the powers of a civil court.


sub-section (/), the Appellate Tribunal may

transmit any order made by it to a civil court

having local jurisdiction and such civil court

shall execute the order as if it were a decree

made by the court.

1.7.16 Appeal to High Court

58. (1) Any person aggrieved by any decision

or order of the Appellate Tribunal, may, file

an appeal to the High Court, within a period

of sixty days from the date of communication

of the decision or order of the Appellate

Tribunal, to him, on any one or more of the

grounds specified in section 100 of the Code of

Civil Procedure, 1908:

Provided that the High Court may entertain

the appeal after the expiry of the said period

of sixty days, if it is satisfied that the appellant

was prevented by sufficient cause from

preferring the appeal in time.

Explanation.—The expression "High

Court" means the High Court of a State or

Union territory where the real estate project

is situated.

(2) No appeal shall lie against any decision

or order made by the Appellate Tribunal with

the consent of the parties.



1.8 CHAPTER VIII OF-

FENCES, PENAL-

TIES AND ADJUDI-

CATION

1.8.1 Punishment for nonregistration

under section 3

59. (1) If any promoter contravenes the provisions

of section 3, he shall be liable to a penalty

which may extend up to ten per cent. of the

estimated cost of the real estate project as determined

by the Authority.

(2) If any promoter does not comply with

the orders, decisions or directions issued. under

sub-section (/) or continues to violate the

provisions of section 3, he shall be punishable

with imprisonment for a term which may extend

up to three years or with fine which may

extend up to a further ten per cent. of the estimated

cost of the real estate project, or with

both.

1.8.2 Penalty for contravention

of section 4

60. If any promoter provides false information

or contravenes the provisions of section 4, he

shall be liable to a penalty which may extend

up to five per cent. of the estimated cost of

the real estate project, as determined by the

Authority.

1.8.3 Penalty for contravention

of other provisions of this

Act

61. If any promoter contravenes any other provisions

of this Act, other than that provided

under section 3 or section 4, or the rules or

regulations made thereunder, he shall be liable

to a penalty which may extend up to five per

cent. of the estimated cost of the real estate

project as determined by the Authority.

1.8.4 Penalty for nonregistration

and contravention under

sections 9 and 10

62. If any real estate agent fails to comply

with or contravenes the provisions of section

9 or section 10, he shall be liable to a penalty

of ten thousand rupees for every day during

which such default continues, which may cumulatively

extend up to five per cent. of the

cost of plot, apartment or buildings, as the

case may be, of the real estate project, for

which the sale or purchase has been facilitated

as determined by the Authority.

1.8.5 Penalty for failure to comply

with orders of Authority

by promoter

63. If any promoter, who fails to comply with,

or contravenes any of the orders or directions

of the Authority, he shall be liable to a penalty

for every day during which such default continues,

which may cumulatively extend up to

five per cent., of the estimated cost of the real

estate project as determined by the Authority.


with orders of Appellate

Tribunal by promoter

64. If any promoter, who fails to comply with,

or contravenes any of the orders, decisions or

directions of the Appellate Tribunal, he shall

be punishable with imprisonment for a term

which may extend up to three years or with

fine for every day during which such default

continues, which may cumulatively extend up

to ten per cent. of the estimated cost of the

real estate project, or with both.



by real estate agent

65. If any real estate agent, who fails to comply

with, or contravenes any of the orders or

directions of the Authority, he shall be liable

to a penalty for every day during which such



default continues, which may cumulatively extend

up to five per cent., of the estimated cost

of plot, apartment or building, as the case may

be, of the real estate project, for which the sale

or purchase has been facilitated and as determined

by the Authority.


with orders of Appellate

Tribunal by real estate

agent

66. If any real estate agent, who fails to comply

with, or contravenes any of the orders, decisions

or directions of the Appellate Tribunal,

he shall be punishable with imprisonment for a

term which may extend up to one year or with

fine for every day during which such default

continues, which may cumulatively extend up

to ten per cent. of the estimated cost of plot,

apartment or building, as the case may be, of

the real estate project, for which the sale or

purchase has been facilitated, or with both.



by allottee

67. If any allottee, who fails to comply with,

or contravenes any of the orders, decisions or

directions of the Authority he shall be liable

to a penalty for the period during which such


up to five per cent. of the plot, apartment

or building cost, as the case may be, as determined

by the Authority.

1.8.10 Penalty for failure to

comply with orders of

Appellate Tribunal by allottee

68. If any allottee, who fails to comply with,

or contravenes any of the orders or directions

of the Applellate Tribunal, as the case may

be, he shall be punishable with imprisonment

for a term which may extend up to one year

or with fine for every day during which such


up to ten per cent. of the plot, apartment

or building cost, as the case may be, or with

both.

1.8.11 Offences by companies

69. (1) Where an Offence under this Act has

been committed by a company, every person

who, at the time, the offence was committed

was in charge of, or was responsible to the

company for the conduct of, the business of

the company, as well as the company, shall be

deemed to be guilty of the offence and shall be

liable to be proceeded against and punished

accordingly:


sub-section, shall render any such person liable

to any punishment under this Act if he

proves that the offence was committed without

his knowledge or that he had exercised all due

diligence to prevent the commission of such

offence.


sub-section (/), where an offence under this

Act has been committed by a company, and

it is proved that the offence has been committed

with the consent or connivance of, or

is attributable to, any neglect on the part of

any director, manager, secretary or other officer

of the company, such director, manager,

secretary or other officer shall also be deemed

to be guilty of that offence and shall be liable

to be proceeded against and punished accordingly.

Explanation.—For the purpose of this section,—

(a) “company” means any body corporate

and includes a firm, or other association of individuals;

and

(b) “director” in releation to a firm, means

a partner in the firm.

1.8.12 Compounding of offences

70. Notwithstanding anything contained in

the Code of Crimnal Procedure, 1973, if any

person is punished with imprisonment under

this Act, the punishment may, either before

or after the institution of the prosecution, be



compounded by the court on such terms and

conditions and on payment of such sums as

may be prescribed:

Provided that the sum prescribed shall not,

in any case, exceed the maximum amount of

the fine which may be imposed for the offence

so compounded.

1.8.13 Power to adjudicate

71. (1) For the purpose of adjudging compensation

under sections 12, 14, 18 and section

19, the Authority shall appoint in consultation

with the appropriate Government one

or more judicial officer as deemed necessary,

who is or has been a District Judge to be an

adjudicating officer for holding an inquiry in

the prescribed manner, after giving any person

concemed a reasonable opportunity of being

heard:

Provided that any person whose complaint

in respect of matters covered under sections

12, 14, 18 and section 19 is pending before

the Consumer Disputes Redressal Forum or

the Consumer Disputes Redressal Commission

or the National Consumer Redressal Commission,

established under section 9 of the

Consumer Protection Act, 1986, on or before

the commencement of this Act, he may, with

the permission of such Forum or Commission,

as the case may be, withdraw the complaint

pending before it and file an application before

the adjudicating officer under this Act.

(2) The application for adjudging compensation

under sub-section (/), shall be dealt

with by the adjudicating officer as expeditiously

as possible and dispose of the same

within a period of sixty days from the date

of receipt of the application:

Provided that where any such application

could not be disposed of within the said period

of sixty days, the adjudicating officer shall

record his reasons in writing for not disposing

of the application within that period.

(3) While holding an inquiry the adjudicating

officer shall have power to summon

and. enforce the attendance of any person acquainted

with the facts and circumstances of

the case to give evidence or to produce any

document which in the opinion of the adjudicating

officer, may be useful for or relevant

to the subject matter of the inquiry and if,

on such inquiry, he is satisfied that the person

has failed to comply with the provisions

of any of the sections specified in sub-section

(/), he may direct to pay such compensation

or interest, as the case any be, as he thinks

fit in accordance with the provisions of any of

those sections.

1.8.14 Factors to be taken into

account by the adjudicating

officer

72. While adjudging the quantum of compensation

or interest, as the case may be, under

section 71, the adjudicating officer shall have

due regard to the following factors, namely:—

(a) the amount of disproportionate gain or

unfair advantage, wherever quantifiable, made

as a result of the default;

(b) the amount of loss caused as a result

of the default; (c) the repetitive nature of the

default;

(d) such other factors which the adjudicating

officer considers necessary to the case in

furtherance of justice.

1.9 CHAPTER IX FI-

NANCE, ACCOUNTS,

AUDITS AND RE-

PORTS

1.9.1 Grants and loans by Central

Government

73. The Central Government may, after due

appropriation made by Parliament in this behalf,

make to the Authority grants and loans

of such sums of money as that Government

may consider necessary.

1.9.2 Grants and loans by State

Government

74. The State Government may, after due appropriation

made by State Legislature by law



in this behalf, make to the Authority, grants

and loans of such sums of money as the State

Government may think fit for being utilised

for the purposes of this Act.

1.9.3 Constitution of Fund

75. (1) The appropriate Government shall

constitute a fund to be called the ’Real Estate

Regulatory Fund’ and there shall be credited

thereto,—

(a) all Government grants received by the

Authority;

(b) the fees received under this Act;

(c) the interest accrued on the amounts referred

to in clauses (a) to (b). (2) The Fund

shall be applied for meeting—

(a) the salaries and allowances payable to

the Chairperson and other Members, the adjudicating

officer and the administrative expenses

including the salaries and allowances

payable to be officers and other employees of

the Authority and the Appellate Tribunal;

(b) the other expenses of the Authority in

connection with the discharge of its functions

and for the pruposes of this Act.

(3) The Fund shall be administered by a

committee of such Members of the Authority

as may be determined by the Chairperson.

(4) The committee appointed under subsection

(3) shall spend monies out of the Fund

for carrying out the objects for which the Fund

has been constituted.

1.9.4 Crediting sums realised by

way of penalties to Consolidated

Fund of India or

State account

76. (1) All sums realised, by way of penalties,

imposed by the Appellate Tribunal or the Authority,

in the Union territories, shall be credited

to the Consolidated Fund of India.

(2) All sums realised, by way of penalties,

imposed by the Appellate Tribunal or the Authority,

in a State, shall be credited to such

account as the State Government may specify.

1.9.5 Budget, accounts and audit

77. (1) The Authority shall prepare a budget,

maintain proper accounts and other relevant

records and prepare an annual statement of

accounts in such form as may be prescribed

by the appropriate Government in consultation

with the Comptroller and Auditor- General

of India.

(2) The accounts of the Authority shall be

audited by the Comptroller and Auditor- General

of India at such intervals as may be specified

by him and any expenditure incurred in

connection with such audit shall be

payable by the Authority to the Comptroller

and Auditor- General of India.

(3) The Comptroller and Auditor-General

and any person appointed by him in connection

with the audit of the accounts of the Authority

under this Act shall have the same

rights and privileges and authority in connection

with such audit as the Comptroller and

Auditor- General generally has in connection

with the audit of Government accounts and,

in particular shall have the right to demand

and production of books, accounts, connected

vouchers and other documents and papers,

and to inspect any of the offices of the Authority.

(4) The accounts of the Authority, as certified

by the Comprtoller and Auditor-General

of India or any other person appointed by him

in this behalf, together with the audit report

thereon shall be forwarded annually to the appropriate

Government by the Authority and

the appropriate Government shall cause the

audit report to be laid, as soon as may be after

it is received, before each House of Parliament

or, as the case may be, before the State

Legislature or the Union territory Legislature,

where it consists of two Houses, or where such

legislature consists of one House, before the

House.

1.9.6 Annual report

78. (1) The Authority shall prepare once in

every year, in such form and at such time as

may be prescribed by the appropriate Govern-



ment,—

(a) a description of all the activities of the

Authority for the previous year; (b) the annual

accounts for the previous year; and (c)

the programmes of work for the coming year.

(2) Acopy of the report received under subsection

(/) shall be laid, as soon as may be after

it is received, before each House of Parliament

or, as the case may be, before the State

Legislature or the Union Territory Legislature,

where it consists of two Houses, or where such

legislature consists of one House, before that

House.

1.10 CHAPTER X MIS-

CELLANEOUS

1.10.1 Bar of jurisdiction

79. No civil court shall have jurisdiction to

entertain any suit or proceeding in respect of

any matter which the Authority or the adjudicating

officer or the Appellate Tribunal is empowered

by or under this Act to determine and

no injunction shall be granted by any court or

other authority in respect of any action taken

or to be taken in pursuance of any power conferred

by or under this Act.

1.10.2 Cognizance of offences

80. (7) No court shall take cognizance of any

offence punishable under this Act or the rules

or regulations made thereunder save on a complaint

in writing made by the Authority or by

any officer of the Authority duly authorised by

it for this purpose.

(2) No court inferior to that of a Metropolitan

Magistrate or a Judicial Magistrate of the

first class shall try any offence punishable under

this Act.

1.10.3 Delegation

81. The Authority may, by general or special

order in writing, delegate to any member,

officer of the Authority or any other person

subject to such conditions, if any, as may be

specified in the order, such of its powers and

functions under this Act (except the power to

make regulations under section 85, as it may

deem necessary.

1.10.4 Power of appropriate

Government to supersede

Authority

82. (1) If, at any time, the appropriate Government

is of the opinion,—

(a) that, on account of circumstances beyond

the control of the Authority, it is unable

to discharge the functions or perform the duties

imposed on it by or under the provisions

of this Act; or

(b) that the Authority has persistently defaulted

in complying with any direction given

by the appropriate Government under this Act

or in the discharge of the functions or performance

of the duties imposed on it by or under

the provisions of this Act and as a result of

such default the financial position of the Authority

or the administration of the Authority

has suffered; or

(c) that circumstances exist which render

it necessary in the public interest so to do,

the appropriate Government may, by notification,

supersede the Authority for such

period, not exceeding six months, as may be

specified in the notification and appoint a person

or persons as the President or the Governor,

as the case may be, may direct to exercise

powers and discharge functions under this Act:

Provided that before issuing any such notification,

the appropriate Government shall

give a reasonable opportunity to the Authority

to make representations against the proposed

supersession and shall consider the representations,

if any, of the Authority.

(2) Upon the publication of a notification

under sub-section (/) superseding the Authority,—

(a) the Chairperson and other Members

shall, as from the date of supersession, vacate

their offices as such;

(b) all the powers, functions and duties

which may, by or under the provisions of this

Act, be exercised or discharged by or on behalf

of the Authority shall, until the Authority

is reconstitued under sub-section (3), be exer-



cised and discharged by the person or persons

referred to in sub-section (/); and

(c) all properties owned or controlled by

the Authority shall, until the Authority is reconstituted

under sub-section (3), vest in the

appropriate Government.

(3) On or before the expiration of the period

of supersession specified in the notification

issued under sub-section (/), the appropriate

Government shall reconstitute the Authority

by a fresh appointment of its Chairperson

and other members and in such case any

person who had vacated his office under clause

(a) of sub-section (2) shall not be deemed to

be disqualified for re-appointment.

(4) The appropriate Government shall

cause a copy of the notification issued under

sub-section (/) and a full report of any action

taken under this section and the circumstances

leading to such action to be laid before each

House of Parliament or, as the case may be,

before the State Legislature, or the Union Territory

Legislature, as the case may be, where it

consists of two Houses, or where such legislature

consists of one House, before that House.

1.10.5 Powers of appropriate

Government to issue directions

to Authority and

obtain reports and returns

83. (1) Without prejudice to the foregoing

provisions of this Act, the Authority shall, in

exercise of its powers and in performance of

its functions under this Act, be bound by such

directions on questions of policy, as the appropriate

Government may give in writing to

it from time to time :

Provided that the Authority shall, as far

as practicable, be given an opportunity to express

its views before any direction is given

under this sub-section.

(2) If any dispute arises between the appropriate

Government and the Authority as

to whether a question is or is not a question

of policy, the decision of the appropriate Government

thereon shall be final.

(3) The Authority shall furnish to the appropriate

Government such returns or other

information with respect to its activities as

the appropriate Government may, from time

to time, require.

1.10.6 Power of appropriate

Government to make

rules


within a period of six months of the

appropriate commencement of this Act, by

notification, make rules for carrying out the

provisions of this Government Act. to make

rules. (2) In particular, and without prejudice

to the generality of the foregoing power, such

rules may provide for all or any of the following

matters, namely:—

(a) information and documents for application

to Authority for registration under clause

(m) of sub-section (2) of section 4;

(b) the form and manner of making application

and fee and documents to be accompanied

with such application as under subsection

(2) of section 9;

(c) the period, manner and conditions under

which the registration is to be granted under

sub-section (3) of section 9;

(d) the validity of the period of registration

and the manner and fee for renewal under subsection

(6) of section 9;

(e) the maintenance and preservation of

books of account, records and documents under

clause (b) of section 10;

(f) the discharge of other functions by the

real estate agent under clause (e) of section 10;

(g) the rate of interest payable under section

12;

(h) the form and particulars of agreement

for sale under sub-section (2) of section 13;

(i) the rate of interest payable under clause

(b) of sub-section (/) of section 18; (j) the rate

of interest payable under sub-section (4) of section

19; (k) the rate of interest payable under


(l) the manner of selection of Chairperson

and Members of Authority under section 22;

(m) the salaries and allowances payable to,




of, the Chairperson and other Members of the

Authority under sub-section (1) of section 24;

(n) the administrative powers of the Chairpersons

under section 25;

(o) the salaries and allowances payable to,


of, the officers and other employees of the Authority

under sub-section (2) of section 28;

(p) the details to be published on the website

as under clause (b) and under clause (d)

of section 34;

(q) the additional functions which may be

performed by the Authority under clause (iv)

of sub-section (2) of section 35;

(r) the manner of recovery of interest,

penalty and compensation under sub-section

(1) of section 40;

(s) the manner of implementation of the

order, direction or decisions of the adjudicating

officer, the Authority or the Appellate Tribunal

under sub-section (2) of section 40;

(t) recommendations received from the

Central Advisory Council under sub-section

(2) of section 42;

(uw) the form and manner and fee for filling

of appeal under sub-section (2) of section

44;

(v) the manner of selection of Members of

the Tribunal under sub-section (3) of section

46;

Gy) the salaries and allowances payable to,


of, the Chairperson and other Members of the

Appellate Tribunal under sub-section (/) of

section 48;

(x) the procedure for inquiry of the charges

against the Chairperson or Judicial Member of

the Tribunal under sub-section (4) of section

49;

(y) the salaries and allowances payable to,


of, the officers and employees of the Appellate

Tribunal under sub-section (3) of section 51;

(z) any other powers of the Tribunal under

clause (/) of sub-section (4) of section 53;

(za) the powers of the Chairperson of the

Appellate Tribunal under section 54;

(zb) the terms and conditions and the payment

of such sum for compounding of the offences

under section 70;

(ze) the manner of inquiry under subsection

(/) of section 71;

(zd) the form to be specified in which the

Authority shall prepare a budget, maintain

proper accounts and other relevant records

and prepare an annual statement of accounts

under sub-section (/) of section 77;

(ze) the form in which and time at which

the Authority shall prepare an annual report

under sub-section (/) of section 78;

(zf) any other matter which is to be, or may

be, prescribed, or in respect of which provision

is to be made, by rules.

1.10.7 Power to make regulations

85. (1) The Authority shall, within a period

of three months of its establishment, by notification,

make regulations, consistent with this

Act and the rules made thereunder to carry

out the purposes of this Act.

(2) In particular, and without prejudice to

the generality of the foregoing power, such regulations

may provide for all or any of the following

matters, namely:—

(a) the form and manner of making application

and fee payable herewith under subsection

(1) of section 4;

(b) the form of application and the fees for

extension of registration under section 6;

(c) such other information and documents

required under clause (f) of sub-section (/) of

section 11;

(d) display of sanctioned plans, layout

plans along with specifications, approved by

the competent authority, for display under

clause (a) of sub-section (3) of section 11;

(e) preparation and maintenance of other

details under sub-section (6) of section 11;

(f) time, places and the procedure in regard

to transaction of business at the meetings of

the Authority under sub-section (/) of section

29;

(g) the form, manner and fees for filing a

complaint under sub-section (2) of section 31;

(h) standard fees to be levied on the promoter,

the allottees or the real estate agent

under clause (e) of section 34;



@) any other matter which is required to

be, or may be, specified by regulation or in

respect of which provision is to be made by

regulations.

1.10.8 Laying of rules

86. (1) Every rule made by the Central Government,

every regulation made by the Authority

under the Union terriotry of Delhi and

the Union territories without Legislature and

every notification issued by the Central Government

under this Act shall be laid, as soon

as may be after it is made, before each House

of Parliament, while it is in session, for a total

period of thirty days which may be comprised

in one session or in two or more successive sessions,

and if, before the expiry of the session

immediately following the session or the successive

sessions aforesaid, both Houses agree

in making any modification in the rule of regulation

or in the notification, as the case may

be, or both Houses agree that the rule or regulation

or the notification should not be made,

the rule or regulation or notification, as the

case may be, shall thereafter have effect only

in such modified form or be of no effect, as the

case may be; so, however, that any such modification

or annulment shall be without prejudice

to the validity of anything previously done

under that rule or regulation or notification, as

the case may be.

(2) Every rule made by a State Government

or the Union territory Government, as

the case may be, every regulation made by the

Authority under the State Government or the

Union territory Government of Puducherry, as

the case may be, and every notification issued

by the State Government or the Union territory

Government of Puducherry, as the case

may be, under this Act, shall be laid as soon

as may be, after it is made, before the State

Legislature, or the Union territory Legislature,

as the case may be, where it consists of two

Houses, or where such legislature consists of

one House, before that House.

1.10.9 Members, etc. to be public

servants

87. The Chairperson, Members and other officers

and employees of the Authority, and the

Appellate Tribunal and the adjudicating officer

shall be deemed to be public servants

within the meaning of section 21 of the Indian

Penal Code.

1.10.10 Application of other

laws not barred

88. The provisions of this Act shall be in addition

to, and not in derogation of, the provisions

of any other law for the time being in

force.

1.10.11 Act to have overriding

effect

89. The provisions of this Act shall have effect,

notwithstanding anything inconsistent therewith

contained in any other law for the time

being in force.

1.10.12 Protection of action

taken in good faith

90. No suit, prosecution or other legal proceedings

shall lie against the appropriate Government

or the Authority or any officer of the

appropriate Government or any member, officer

or other employees of the Authority for

anything which is in good faith done or intended

to be done under this Act or the rules

or regulations made thereunder.

1.10.13 Power to remove difficulties

91. (1) If any difficulty arises in giving effect to

the provisions of this Act, the Central Government

may, by order, published in the Official

Gazette, make such provisions not inconsistent

with the provisions of this Act as may appear

to be necessary for removing the difficulty:

Provided that no order shall be made under

this section after the expiry of two years



from the date of the commencement of this

Act.

(2) Every order made under this section

shall be laid, as soon as may be after it is

made, before each House of Parliament.

45 of 1860. Sec. 1] THE GAZETTE OF

INDIA EXTRAORDINARY 37

1.10.14 Maharashtra Act No. II

of 2014

92. The Maharashtra Housing (Regulation

and Development) Act, 2012 is hereby Repeal.

Act No. II of repealed.

DR. REETA VASISHTA,

Additional Secy. to the Govt. of India.




2

RERA Karnataka Rules 2017

Whereas the draft of the Karnataka Real

Estate (Regulation and Development) Rules,

2016 was published vide Government Order

No. DOH 128 KHB 2016, dated: 24 October,

2016, in part I of the Karnataka Gazette( Extra

Ordinary Number 1193), dated 24% October,

2016 inviting suggestions from all persons

likely to be affected thereby within fifteen days

from the date of its publication in the Official

Gazette.

And whereas, the said Gazette was made

available to public on 24th October, 2016.

And whereas, suggestions have been received

and considered by the State Government;

And whereas, the Government of India

vide S.O No.3347, dated 28 October 2016 had

made the order for removing certain difficulties

in implementing the provisions of the Act.

Now, therefore, in exercise of the powers

conferred by sub-section (1) of Section 84

of the Real Estate (Regulation and Development)

Act 2016 (Central Act 16 of 2016) the

Government of Karnataka hereby makes the

following rules, namely:-

2.1 CHAPTER I PRE-

LIMINARY

2.1.1 Title and Commencement

1. (1) These rules may be called the Karnataka

Real Estate (Regulation and Development)

Rules, 2017. (2) They shall come into

force from the date of their publication in the

Official Gazette.

2.1.2 Definitions

2.(1) In these rules, unless the context otherwise

requires, - (a) “Act” means the Real Estate

(Regulation and Development) Act, 2016

(Central Act 16 of 2016);

(b) "Association of allottees" means a collective

of the allottees of a real estate project

by whatever name called registered under any

law for the time being in force, acting as a

group to serve the cause of its members and

shall include the authorized representatives of

the allottees;

“Co-operative Society” means a society

registered or deemed to be registered under

the Karnataka Co-operative societies Act,

1959 (Karnataka Act 11 of 1959); (d) “Form”

means a form appended to these rules; and

(e) “Section” means a section of the Act. (2)

Words and expressions used herein and not defined,

but defined in the Act, shall have the

same meaning respectively assigned to them

in the Act.

2.2 CHAPTER II REAL

ESTATE PROJECT

2.2.1 Information and documents

to be furnished by

the promoter for registration

of project

3. (1) The promoter shall furnish the following

additional information and documents, along

with those specified in sub-section (2) of Section

4 of the Act for registration of the real

39


estate project with the regulatory authority

namely:-

(a) self attested copy of the PAN card of

the promoter;

(b) annual report including audited profit

and loss account, balance sheet, cash flow

statement, directors report and the auditors

report of the promoter for the immediately

preceding three financial years; and where annual

report is not available, the audited profit

and lost account, balance sheet, cash flow

statement and the auditor report of the promoter

for the immediately preceding three financial

years;

(c) the number of parking slots available in

the said real estate project;

(d) authenticated copy of the legal title

deed reflecting the title of the promoter to the

land on which development of project is proposed

along with legally valid documents for

chain of the title.

(e) the details of encumbrances on the land

for which permission given under section 109

of the Karnataka Land Reforms Act, 1961 if

applicable, the Certified copy of the conversion

order under section 95 of the Karnataka Land

Revenue Act, 1964 and permission of change

in land use granted under section 14 of the

Karnataka Town and Country Planning Act,

1961, if applicable on which development is

proposed including any rights, title, interest or

name of any party in or over such land along

with details;

(f) where the promoter is not the owner

of the land on which development is proposed

details of the consent of the owner of the

land along with self attested the collaboration

agreement, development agreement, joint development

agreement or any other agreement,

as the case may be, entered into between the

promoter and such owner and copies of title

and other documents reflecting the title of

such owner on the land proposed to be developed;

and

(g) name, photograph, contact details and

address of the promoter if it is an individual

and the name, photograph, contact details and

address of the chairman, partners, directors,

as the case may be, and the authorised person

in case of other entities.

(2) An application to the Authority for

registration of the real estate project shall be

made in

writing in Form ‘A’, in triplicate, until the

procedure is made web based for filing of such

application.

(3) The promoter shall pay a registration

fee at the time of application for registration

by way

of a demand draft or a bankers cheque

drawn on any scheduled bank or a Cooperative

Bank or through online payment

mode, as the case may be, for a sum calculated

at the rate of,-

(a) in case of group housing project,- five

rupees per square meter for projects where the

area of land proposed to be developed does not

exceed one thousand square meters; or rupees

ten per square meter for projects where the

area of land proposed to be developed exceeds

one thousand square meters, but shall not be

more than five lakhs rupees;

(b) in case of mixed development (residential

and commercial) project,- ten rupees per

square meter for projects where the area of

land proposed to be developed does not exceed

one thousand square meters; or fifteen rupees

per square meter for projects where the area

of land proposed to be developed exceeds one

thousand square meters, but shall not be more

than seven lakhs rupees;

(c) in case of commercial projects,- twenty

rupees per square meter for projects where the

area of land proposed to be developed does not

exceed one thousand square meters; or twenty

five rupees per square meter for projects where

the area of land proposed to be developed exceeds

one thousand square meters, but shall

not be more than ten lakhs rupees; and

(d) in case of plotted development

projects,- five rupees per square meter, but

shall not be more than two lakhs rupees.

(4) The declaration to be submitted under

clause (I) of sub-section (2) of section 4, shall

be in Form-B, which shall include a declaration

stating that the promoter shall not discriminate

against any allottee at the time of

allotment of any apartment, plot or a building,

as the case may be.

(5) In case the promoter applies for with-

2.2 2. RERA KARNATAKA RULES 2017


drawal of application for registration of the

project before the expiry of the period of thirty

days specified under sub-section (1) of section

5, registration fee to the extent of ten percent

paid under sub-rule (3), or rupees fifty thousand

whichever is more, shall be retained as

processing fee by the regulatory authority and

the remaining amount shall be refunded to the

promoter within thirty days from the date of

such withdrawal.

2.2.2 Additional disclosure by

promoters of ongoing

projects

4. (1) Upon the notification for commencement

of sub-section (1) of section 3, promoters

of all ongoing projects which have not received

completion certificate shall, within the

time specified in the said sub-section, make an

application to the Regulatory Authority in the

form and manner as specified in rule 3.

Explanation: For the purpose of this rule

“Ongoing project” means a project where development

is going on and for which completion

certificate has not been issued but excludes

such projects which fulfill any of the

following criteria on the date of notification of

these rules, namely:-

(i) in respect of layouts where the streets

and civic amenities sites and other services

have been handed over to the Local Authority

and Planning Authority for maintenance;

(ii) in respect of apartments where common

areas and facilities have been handed over

to the registered Association consisting of majority

of allottees;

(iii) where all development works have

been completed as per the Act and certified by

the competent agency and sale/lease deeds of

sixty percent of the apartments/houses/plots

have been registered and executed;

(iv) where all development works have

been completed as per the Act and certified

by the competent agency and application has

been filed with the competent authority for issue

of completion certificate /occupation certificate;

and

(v) where Partial occupancy certificate is

obtained to the extent of the portion for which

the partial Occupancy Certificate is obtained.

(2) The promoter shall in addition to disclosures

provided in rule 3 disclose the following

information, namely:-

(a) the original sanctioned plan, layout

plan and specifications and the subsequent

modifications carried out, if any, including the

existing sanctioned plan, layout plan and specifications;

Explanation:- For the purpose of clause (ii)

of sub-secticn (2) of section 14 of the Act, the

Prior written consent of at least two third of

the allottees would not be required if,- (i) implementation

of the proposed plan has already

been disclosed to the allottees

under the agreement prior to registration,

or

(ii) modification is required to be made in

compliance of any order or direction issued

by competent authority or statutory authority.

under the agreement for sale, the promoter

is not required to obtain the consent of allottee

in case of any alteration or addition to the

apartment required by Government authorities

or due to change in any law.

(b) the total amount of money collected

from the allottees and the total amount of

money used for development of the project including

the total amount of balance money

lying with the promoter; and status of the

project (extent of development carried out till

date and the extent of development pending)

including the original time period disclosed to

the allottee for completion of the project at the

time of sale including the delay and the time

period within which he undertakes to complete

the pending project, which shall be commensurate

with the extent of development already

completed, and this information shall be certified

by an engineer, an architect and a chartered

accountant in practice.

(3) The promoter shall disclose the size of

the apartment based on carpet area even if

earlier sold on any other basis such as super

area, super built up area, built up area etc.

which shall not affect the validity of the agreement

entered into between the promoter and

the allottee to that extent.

(4) In case of plotted development, the promoter

shall disclose the area of the plot being

2. RERA KARNATAKA RULES 2017 2.2


sold to the allottees as per the layout plan.

(5) For projects that are ongoing and have

not received completion certificate on the date

of commencement of the Act, the promoter

shall, within a period of three months of the

application for registration of the project with

the Authority, deposit in the separate bank

account, seventy per cent. of the amounts

already realized from the allottees, which

have not been utilized for construction of the

project or the land cost for the project as required

under sub-clause (D) of clause (1) of

sub-section (2) of section 4, which shall be

used for the purposes specified therein:

Provided that if the receivable of the ongoing

project is less than the estimated cost of

balance construction, then the promoter shall

deposit 100 per cent of the amounts to be realised

in the separate account.

2.2.3 Withdrawal of sums deposited

in separate bank

account

5. (1) For the purpose of sub-clause (D) of

clause (1) of sub section (2) of section 4 of the

Act, the land cost means,-

(i) the costs incurred by the promoter for

acquisition of ownership and title of the land

parcels for the real estate project as an outright

purchase lease etc., or the Guidance

Value in accordance with section 45-B of the

Karnataka Stamp Act 1957 relevant on the

date of registration of the real estate project

whichever is higher;

(ii) amount paid for acquisition/ purchase

of TDR etc.,

(iii) amount paid to the competent Authority

for project approval, No objection certificates,

stamps duty, transfer charges, registration

charges, conversion charges, change,

taxes, statuary payments to state and central

Government.

(2) For the purpose of sub-clause(D) of

Clause(l) of sub-section (2) of Section 4 of the

Act, the “Cost of Construction” means,-

The cost of construction shall include all

such costs, incurred by the promoter towards

on-site and off-site expenditure for the development

of the real estate project including

payment of Taxes, Fees, charges, premiums,

interests etc., to any competent Authority,

or statutory Authority of the Central or

State Government, including interest, paid or

payable to any Financial Institutions including

scheduled banks or non - banking financial

companies etc.,

2.2.4 Grant or rejection of registration

of the project

6. (1) Upon the registration of a project as

per section 5 read with rule 3, the Regulatory

Authority shall issue a registration certificate

with a registration number in Form-C to the

promoter.

(2) In case of rejection of the application as

per section 5, the Authority shall inform the

applicant in Form ‘D’:

Provided that the Authority may grant an

opportunity to the applicant to rectify the defects

in the application within such time period

as may be specified by it.

2.2.5 Extension of registration

of project

7. (1) The registration granted under the Act,

may be extended by the Authority, on an application

made by the promoter in Form ’, in

triplicate, until the application procedure is

made web based, within three months prior to

the expiry of the registration granted.

(2) The application for extension of registration

shall be accompanied with a demand

draft or a bankers cheque drawn on any scheduled

bank or Co-operative Bank through online

payment mode, as the case may be, for an

amount equivalent to half the registration fees

as prescribed under sub-rule (3) of rule 3 along

with an explanatory note setting out the reasons

for delay in the completion of the project

and the need for extension of registration for

the project, along with documents supporting

such reasons:

Provided that where the promoter applies

for extension of registration of the project due

to force majeure he shall not be liable to pay

any fee.



(3) The extension of registration of the

project shall not be beyond the period specified

under concerned State Acts for completion

of the project or phase thereof, as the case

may be.

(4) In case of extension of registration, the

Authority shall inform the promoter about

such extension in Form ‘F’ and in case of rejection

of the application for extension of registration

the Authority shall inform the promoter

about such rejection in Form De


opportunity to the promoter to rectify the defects

in the application within such time period

as may be specified by it.

2.2.6 Revocation of registration

of the project

8. Upon the revocation of registration of a

project under section 7 regulatory authority

shall inform the promoter about such revocation

in Form-‘D’.

2.3 CHAPTER III REAL

ESTATE AGENT

2.3.1 Application for registration

by the real estate

agent

9. (1) Every real estate agent required to register

as per sub-section (2) of section 9 shall

make an application in writing to the Regulatory

Authority in Form-‘G’ along with the

following documents, namely:-

(a) brief details of his enterprise including

its name, registered address, type of enterprise,

proprietorship, societies, co-operative

society, partnership, companies etc;

(b) particulars of registration including the

bye-laws, memorandum of association, articles

of association etc. as the case may be;

(c) name, address, contact details and photograph

of the real estate agent if it is an individual

and the photograph of the partners,

directors etc. in case of other entities;

(d) self attested copy of the PAN card; and

(e) self attested copy of the address proof

of the place of business.

(2) The real estate agent shall pay a registration

fee at the time of application for registration

by way of a demand draft or a bankers

cheque drawn on any scheduled Bank or a cooperative

Bank or through online payment, as

the case may be, for a sum of Twenty five thousand

rupees in case of the applicant being an

individual or Two Lakhs rupees in case of the

applicant other than an individual.

2.3.2 Grant of Registration to

the real estate agent

10. (1) On receipt of the application under

rule 10, the Authority shall within a period

of thirty days either grant registration to the

real estate agent or reject the application, as

the case may be:


opportunity to the real estate agent to rectify

the defects in the application within such time

period as may be specified by it.

(2) Upon the registration of a real estate

agent, the Authority shall issue a registration

certificate with a registration number in Form

‘H’ to the real estate agent.

(3) In case of rejection of the application,

the Authority shall inform the applicant in

Form T’.

(4) The registration granted under this rule

shall be valid for a period of five years.

2.3.3 Renewal of registration of

real estate agent

11. (1) The registration granted under section

9, may be renewed as per section 6, on

an application made by the real estate agent

in Form-‘J’ which shall not be less than three

months prior to the expiry of the registration

granted.

(2) The application for renewal of registration

shall be accompanied with a demand draft

or a bankers cheque drawn on any scheduled

Bank or a co-operative Bank or through online

payment, as the case may be, for a sum

of five thousand rupees in case of the real estate

agent being an individual or twenty Five



thousand rupees in case of the real estate agent

other than an individual.

(3) The real estate agent shall also submit

all the updated documents set out in clauses

(a) to (e) of rule 9 at the time of application

for renewal along with same fees as specified

in sub-rule (2).

(4) In caserof renewal of registration, the

regulatory authority shall inform the real estate

agent about the satne in Form-‘K’ and in

case of rejection of the application for renewal

of registration the regulatory authority, shall

inform the real estate agent in Form-T:

Provided that, no application for renewal

of registration shall be rejected, unless the applicant

has been given an opportunity of being

heard in the matter:

Provided further that, the Authority may

grant an opportunity to the real estate agent

to rectify the defects in the application within

such time period as may be specified by it.

(5) The renewal of registration of the real

estate agent shall be granted provided that the

real estate agent remains in compliance with

the provisions of the Act and the rules and

regulations made there under.

(6) The renewal granted under this rule

shall be valid for a period Five years.

2.3.4 Revocation of registration

of real estate agent

12. The Regulatory Authority may, due to

reasons specified under sub-section (7) of section

9, revoke the registration granted to the

real estate agent or renewal thereof, as the case

may be, and intimate the real estate agent of

such revocation in Form-1T’.

2.3.5 Maintenance and preservation

of books of accounts,

records and documents

13. The real estate agent shall maintain and

preserve books of account, records and documents

in accordance with the provisions of the

Income Tax Act, 1961.

2.3.6 Other functions of a real

estate agent

14. The real estate agent shall provide assistance

to enable the allottee and promoter to

exercise their respective rights and fulfill their

respective obligations at the time of booking

and sale of any plot, apartment or building, as

the case may be.

2.4 CHAPTER IV DE-

TAILS TO BE PUB-

LISHED ON THE

WEBSITE OF THE

AUTHORITY

2.4.1 Details to be published on

the website

15. (1) For the purpose of clause (b) of section

34, the regulatory authority shall ensure that

the following information shall be made available

on its website in respect of each project

registered, namely:-

(A) Details of the promoter including the

following, namely:-

(i) Promoter or Group Profile:

(a) a brief detail of his enterprise including


proprietorship, limited liability partnership,

societies, co-operative society, partnership,

company, competent authority and

the particulars of registration and in case of

a newly incorporated or registered entity, brief

details of the parent entity including its name,

registered address, type of enterprise (proprietorship,

societies, co-operative society, limited

liability partnership, partnership, companies,

competent authority);

(b) background of promoter- educational

qualification, work experience and in case of a

newly incorporated or registered entity work

experience of the parent entity; and

(c) name, address, contact details and photograph

of the promoter in case of an individual

and the name, address, contact details and

photograph of the chairman, directors, part-



ners, as the case may be and that of the authorised

persons.

(ii) Track record of the promoter:

(a) number of years of experience of the

promoter or parent entity in real estate construction

in the state;

(b) number of years of experience of the

promoter or parent entity in real estate construction

in other states;

(c) number of completed projects and area

constructed till date in the past five years including

the status of the projects, delay in its

completion, details of type of land and payments

pending;

(d) number of ongoing projects and proposed

area to be constructed launched in the

past five years including the status of the said

projects, delay in its completion, details of

type of land and payments pending; and

(e) details and profile of ongoing and completed

projects for the last five years as provided

under clause (b) of sub-section (2) of

section 4 of the Act.

(iii) Litigations: Details of past or ongoing

litigations in relation to the real estate project.

(iv) Website:

(a) Web link of the promoters or parent

entity as the case may; and

(b) Web link of the project.

(B) Details of the real estate project including

the following, namely:-

(i) advertisement and prospectus issued in

regard to the project;

(ii) Compliance and registration:

(a) authenticated copy of the approvals

and commencement certificate from the competent

authority as provided under clause (c)

of sub-section (2) of section 4;

(b) the sanctioned plan, layout plan and

specifications of the project or the phase

thereof, and the whole project as sanctioned

by the competent authority as provided under

clause (d) of sub-section (2) of section 4 of the

Act; and

(c) details of the registration granted by

the Authority.

(iii) Apartment, plot and garages if any related

details:

(a) details of the number, type and carpet

area of apartments for sale in the project along

with the area of the exclusive balcony or verandah

areas and the exclusive open terrace

areas with the apartment, if any, or details of

the number, type and area of plots for sale in

the project or both, as the case may be;

(b) details of the number of garages if any

for sale in the project as provided under clause

(i) of sub-section (2) of section 4 of the Act;

and

(c) details of the number of parking slots

available in the real estate project.

(iv) Registered Agents: Names and addresses

of real estate agents as provided under

clause (j) of sub-section (2) of section 4 of the

Act.

(v) Consultants: Details, including name

and addresses of contractors, architect and

structural engineers and other persons concerned

with the development of the real estate

project as provided under clause (k) of subsection

(2) of section 4, such as:-

(a) name and address of the firm;

(b) names of promoters;

(c) year of establishment; and

(d) names and profile of key projects completed.

(vi) Location: the location details of the

project, with clear demarcation of land dedicated

for the project along with its boundaries

including the latitude and longitude of the end

points of the project as provided under clause

(f) of sub-section (2) of section 4 of the Act.

(vii) Development Plan:

(a) The plan of development works to be

executed in the proposed project and the proposed


fire fighting facilities, drinking water facilities,

emergency evacuation services, use of renewable

energy etc. as provided under clause

(e) of sub-section (2) of section 4,

(b) Amenities: a detailed note explaining

the salient features of the proposed project

including access to the project, design for

electric supply including street lighting, water

supply arrangements and site for disposal

and treatment of storm and sullage water,

any other facilities and amenities or public

health services proposed to be provided in the

project;

(c) Project schedule: Detailed time sched-



ule of development works to be executed in the

project and the details of the proposed facilities

to be provided thereof; and

(d) the stage wise time schedule of completion

of the project, including the provisions for

civic infrastructure like water, sanitation and

electricity etc.

(C) Financial of the promoter

(i) self attested copy of the PAN card of

the promoter; and

(ii) the annual report including audited

profit and loss account, balance sheet, cash

flow statement, directors report and the auditors

report of the promoter for the immediately

preceding three financial years and where

annual report is not available then the audited

profit and lost account, balance sheet,

cash flow statement and the auditors report

of the promoter for the immediately preceding

three financial years and in case of newly incorporated

or registered entity such information

shall be disclosed for the parent entity;

(D) The promoter shall upload the following

updates on the webpage for the project,

within

Fifteen days from the expiry of each quarter:

(i) list of number and types of apartments

or plots, booked;

(ii) list of number of garages booked;

(iii) Status of the project:

(a)status of construction of each building

with photographs;

(b)status of construction of each floor with

photographs; and

(c)status of construction of internal infrastructure

and common areas with photographs.

(iv) Status of approvals: (a)approval received;

(b)approvals applied and expected date of

receipt; (cjapprovals to be applied and date

planned for application; and

(d)modifications, amendment or revisions,

if any, issued by the competent authority with

regard to any license, permit or approval

for the project.

(E) the details of approvals, permissions,

clearances, legal documents,-

(i) authenticated copy of the license or

land use permission, building sanction plan

and the commencement certificate from the

competent authority obtained in accordance

with the laws applicable for the project, and

where the project is proposed to be developed

in phases, an authenticated copy of the license

or land use permission, building sanction plan

and the commencement certificate for each of

such phases;

(ii) authenticated copy of the site plan or

site map showing the location of the project

land along with names of survey numbers,

khatha numbers and area of each parcels of

the project land;

(iii) authenticated copy of the layout plan

of the project or the phase thereof, and also

the layout plan of the whole project as sanctioned


(iv) floor plans for each tower and block

including clubhouse, amenities and common

areas;

(v) any other permission, approval, or license

that may be required under applicable

law; and

(vi) authenticated copy of occupancy certificate

and completion certificate including its

application.

(F) Legal Documents:

(a) details including the proforma of the

application form, allotment letter, agreement

for sale and the conveyance deed;

(b) authenticated copy of the legal title

deed reflecting the title of the | promoter to the

land on which development is proposed to be

developed along with legally valid documents

with authentication of such title, if such land

is owned by another person;

(c) land title search report from an advocate

having experience of at least ten years in

land related matters;

(d) details of encumbrances on the land on

which development is proposed including any

rights, title, interest or name of any party in

or over such land along with details or non encumbrance

certificate from the concerned Sub-

Registrar of past twelve years,

(e) where the promoter is not the owner

of the land on which development is proposed

details of the land along with self attested

collaboration agreement, development agreement,

joint development agreement or any



other agreement, as the case may be, entered

into between the promoter and such owner and

copies of title and other documents reflecting

the title of such owner on the land proposed

to be developed; and

(f) details of mortgage or charge, if any,

created on the land and the project.

(G) Contact details: (1) Contact address,

contact numbers and email-ids of the promoter

and other officials handling the project.

(2) the regulatory authority shall maintain

a database and ensure that the information

specified therein shall be made available on its

website in respect of each project revoked or

penalised, as the case may be.

(3) For the purpose of clause (d) of section

34, the regulatory authority shall ensure that

the following information shall be made available

on its website in respect of each real estate

agent registered with it or whose application

for registration has been rejected or revoked

namely:-

(a) For real estate agents registered with

the Authority:

(i) registration number and the period of

validity of the registration of the real estate

agent with the regulatory authority;

(ii) brief details of his enterprise including



society, partnership, companies etc,

(iii) particulars of registration including

the bye-laws, memorandum of association, articles

of association etc. as the case may be;

(iv) name, address, contact details and

photograph of the real estate agent, if it is an

individual and the name, address, contact details

and photograph of the partners, directors

etc. in case of other persons;

(v) photograph of the real estate agent if

it is an individual and the photograph of the

partners, directors etc. in case of other persons,

(vi) self attested copy of the PAN card; and

(vii) self attested copy of the address proof

of the place of business and the contact

address, contact numbers and email-ids of

the real estate agent and other officials responsible.

(b) In case of applicant whose application

for registration as a real estate agent has been

rejected or real estate agent whose registration

has been revoked by the regulatory authority:

(i) registration number and the period of

validity of the registration of the real estate

agent with the regulatory authority;

(ii) brief details of his enterprise including



society partnership, companies etc; and

(iii) Photograph of the real estate agent if

it is an individual and the photograph of the

partners, directors etc. in case of other persons.

(4) The Authority shall maintain a backup,

in digital form, of the contents of its website

in terms of this rule, and ensure that such

back-up is updated on the last day of each

month.

2.5 CHAPTER V RATE

OF INTEREST PAYABLE

BY PROMOTER

AND ALLOTTEE

AND TIMELINES

FOR REFUND

2.5.1 Rate of interest payable by

the promoter and the allottee

16. The rate of interest payable by the promoter

to the allottee or by the allottee to the

promoter, as the case may be, shall be the

State Bank of India highest marginal cost of

lending rate plus two percent.

2.5.2 Timelines for refund

17. Any refund of money along with the

applicable interest and compensation, if any,

payable by the promoter in terms of the Act

or the rules and regulations made there under,

shall be payable by the promoter to the allottee

within sixty days from the date on which

such refund along with applicable interest and

compensation, if any, becomes due.



2.6 CHAPTER VI REAL

ESTATE REGULA-

TORY AUTHORITY

2.6.1 Manner of Selection of

Chairperson and Members

of the Authority

18. (1) As and when vacancies of Chairperson

or a Member in the regulatory authority exist

or arise, or are likely to arise, the Government

of Karnataka may make a reference to the Selection

Committee in respect of the vacancies

to be filled as per the provisions of section 21.

(2) The State Government shall expeditiously

constitue a selection committee, as often

as may be required, to select persons for

appointment as Chairperson and Members.

(3) The Selection Committee shall normally

hold its meeting at Bengaluru or at such

places, as may be authorised by the Chairman

by recording the reasons for change of venue

of such meeting.

(4) The Notice or the Agenda, as the case

may be, for the meeting of the Selection Committee

shall be issued in advance. The date

and venue for the meeting shall be fixed as

per the convenience of the Chairman of the

selection committee.

(5) The Selection Committee constituted

under sub- rule (2) may, for the purpose of

selection of the Chairperson or a Member of

the Regulatory Authority, devise its own procedure

as deems fit including the appointment

of Search Committee and may lay down guidelines

and procedure to invite applications from

eligible persons as per the qualifications specified

in section 22. The Selection Committee

shall prepare a panel of names possessing

the requisite qualification and experience and

found suitable for consideration for appointment

as Chairperson or Member of the Regulatory

Authority.

(6) The Selection Committee shall thereafter

make its recommendations to the State

Government within a period of not exceeding

sixty days from the date of reference made under

sub-rule(2) for consideration in the form of

a panel of not more than three persons in order

of preference seperately for each vacancy

or posts referred by the State Government.

(7) The State Government shall within

thirty days from the date of the recommendation

made by the Selection Committee, appoint

one out of the panel of three persons

for the vacany of the Chairperson or Members

of the Regulatory Authority, or return

the panel only once for rec-consideration, as

the case may be.

(8) The State Governement shall appoint

the Secretary of the Housing Department as

Interim Regulatory Authority for the purpose

of this Act in terms of sub-secton (1) of section

20.

2.7 CHAPTER VII SALARY

AND ALLOWANCES

OF CHAIRPERSON

AND MEMBERS

OF REAL ESTATE

REGULATORY AU-

THORITY

2.7.1 Salaries and Allowances

19. (1) The salaries and allowances of the

Chairperson and Members of the Real Estate

Regulatory Authority shall be as follows,

namely:-

(a) the Chairperson of the Authority shall

be paid minimum of the pay of the Chief Secretary

of the State Government; and

(b) the Members of the Authority shall be

paid minimum of the pay of the Secretary of

the State Government.

Dearness Allowance and City Compensatory

Allowance

(2) The Chairperson or the Member of the Authority

shall be entitled to receive Dearness

Allowance and City Compensatory allowances

at the rate as are admissible to the Chief Secretary

of the State Government or Secretary

of the State Government respectively:



Provided that, in case a person appointed

as the Chairperson or a member is in receipt

of any pension, the pay of such person shall

be reduced by the gross amount of pension including

any commuted portion thereof drawn

by him:

Provided further that, the Chairperson

and other members shall be entitled to draw

admissible allowance on the original basic pay

before such fixation of pay.

Leave

(3) (a) Earned Leave : The Chairperson or

a Member shall be entitled to thirty days of

earned leave for every year of service.

(b) Leave sanctioning authority.- Leave

sanctioning authority in case of,-

(i) The Chairperson of the Authority, shall

be the Additional Chief Secretary or Principal

Secretary or Secretary, Housing Department

of the State Government; and

(ii) The Members of the Authority, shall

be the Chairperson.

Travelling Allowance and Daily Allowance

(4)

(i) The Chairperson and the Members

while on tour (including the journey undertaken

or on expiry of his term to proceed to

his hometown) shall be entitled to travelling

allowances, daily allowance, transportation of

personal effects and other similar matters at

the same rate as admissible to the Chief Secretary

or the Secretary of the State Government

as the case may be;

(ii) The Chairperson or a every Member

shall be his own controlling officer in respect

of

his bills relating to travelling allowances

and daily allowances; and

(iii) Domestic official tours: The Chairperson

or a Member, while on tour, shall be entitled

to the facility of government accommodation

in the guest house or inspection bungalows

run by the State Government or hotel accommodation

in case Government accommodation

is not available, as applicable to Chief

Secretary or Secretary of Government of Karnataka.

Medical Facilities

(5) The Chairperson and a Members shall be

entitled to medical treatment and hospital facilities

as admissible to the Chief Secretary or

the Secretary of the State Government as the

case may be;

Official Visits Abroad

(6) The Chairperson or a Members shall be entitled

to undertake official visits abroad with

the prior approval of the Government through

Housing Department and after clearance from

Ministry of External Affairs, Government of

India. The daily allowance and provision of accommodation

during the period of tour abroad

shall be regulated in accordance with the State

Government instructions as applicable to the

Chief Secretary or the Secretary respectively

of the State Government.

Conveyance facility

(7) The Chairperson or a Member shall be entitled

to conveyance facilities as admissible to

Chief Secretary and Secretary to the Government

respectively.

Accommodation to Chairperson and

Members

(8)

(a) The Chairperson of the Authority shall

be entitled to residential accommodation as

admissible to the Chief Secretary of the State

Government,

(b) A Member shall be entitled to residential

accommodation as admissible to the rank

of Secretary to the State Government drawing

an equivalent pay. On demitting office, the

Chairperson and Member shall be entitled to

retention of residential accommodation for one

month, on the same terms and conditions; and

(c) If the Chairperson or the Member has

his own accommodation or residential house in

Bengaluru and does not avail Government accommodation,

then he is entitled to get house



rent allowance admissible to the Chief Secretary

to the Government and Secretary to Government

respectively.

Notwithstanding

Telephone facilities

(9) The Chairperson or Members of the Authority

shall be entitled to telephone facilities

as admissible to the Chief Secretary and Secretary

of the State Government respectively.

Other allowance

(10) The Chairperson and Members of the

Authority shall be entitled to such other allowance

as are applicable to Chief Secretary

or Secretary respectively in the State Government.

Notwithstanding

(11) the provisions contained in this rule if the

Chairperson or the Member is a serving officer

of the State or Central Government, his entitlement

shall be higher of those admissible to

him under the applicable service rule.

2.7.2 Tenure of office

20. (1) The Chairperson and every Member

shall, unless removed from office under subsection

(1) of section 26, hold office for a period

not exceeding five years from the date he

takes charge of the office in that capacity, or

till the age of sixty five years, whichever is earlier.

(2) When the Chairperson is unable to discharge

his functions owing to absence, illness

or any other cause, the senior-most (in order

of appointment) Member of the Real Estate

Regulatory Authority holding office for the

time being shall discharge the functions of the

Chairperson until the day on which the Chairperson

resumes the charge of his functions.

(3) If a vacancy occurs in the office of the

Chairperson by reason of his death or resignation

or by removal the State Government

shall nominate Senior most Member as per seniority

of date of appointment to act as the

Chairperson and the Member so nominated

shall hold office of the Chairperson until the

vacancy is filled by a fresh appointment under

sub-section (3) of Section 24 of the Act. Till

that period the senior-most (in order of appointment)

Member of the Real Estate Regulatory

Authority holding office for the time being

shall discharge the functions of the Chairperson

until the day on which the Chairperson

resumes the charge of his functions.

2.7.3 Oath of Office and

Secrecy.-

21. (1) Every person appointed to be Chairperson

and Member shall, before entering

upon their office, make and subscribe to an

Oath of Office and of Secrecy in the Forms-‘L’

and “M’, respectively.

(2) Before appointment, the Chairperson

and the Member shall have to give an undertaking

that he does not and will not have any

such financial or other interest as is likely to

affect prejudicially his functions as such Chairperson

or Member.


the Chairperson of the

regulatory authority.-

22. Subject to the provisions of the Act, the

administrative powers of the Chairperson of

the regulatory authority shall include making

decisions with regard to the following;

namely:-

(a) all matters pertaining to staff strength,

wages and salaries structures, emoluments,

perquisites and personnel policies with

prior approval from the State Government;

(b) all matters pertaining to creation and

abolition of posts with prior approval from the

State

Government;

(c) all matter pertaining to appointments,

promotions and confirmation for all posts with

prior approval of the State Government;

(d) acceptance of resignations by any

Member, officer or employee;

(e) officiating against sanctioned posts;

() authorization of tours to be undertaken

by any Member, officer or employee within and



outside India and allowance to be granted

for the same;

(g) authorization of tours to be undertaken

by any Member, officer or employee outside India

and allowance to be granted for the same

with prior approval from the State Government;

(h) all matters in relation to reimbursement

of medical claims;

(j) all matters in relation to grant or rejection

of leaves;

(j) | permission for hiring of vehicles for

official use;

(k) nominations for attending seminars,

conferences and training courses in India or

abroad

as per clause (f) and(g);

() permission for invitation of guests to

carry out training course;

(m) all matters pertaining to staff welfare

expenses;

(n) sanction scrapping or write-off of capital

assets which due to normal wear and tear

have

become unserviceable or are considered beyond

economical repairs; and

(o) all matters relating to disciplinary action

against any Member, officer or employee;

(2) The Chairman of the Authority shall

also exercise such other powers that may be

required for the efficient functioning of the Authority

and enforcement of the provisions of

the Act and the rules and regulations made

thereunder.

2.8 CHAPTER VIII

POWERS AND FUNC-

TIONS OF THE AU-

THORITY

2.8.1 Functioning of the Authority

23. (1) The office of the regulatory authority

shall be located at Bengaluru or at such place

as may be determined by the State Government

by notification.

(2) The working days and office hours of

the regulatory authority shall be the same as

that of the State Government.

(3) The official common seal and emblem

of the regulatory authority shall be such as the

State Government may specify.

(4) Every notice, order and direction of the

Authority shall bear the seal of the Authority

which shall be in custody with the person designated

by the Chairperson.

(5) The Authority shall ordinarily have sittings

at its headquarters and at such other

places as the Chairperson may by general or

special order specify.

2.8.2 Additional powers of the

Authority

24.(1) In addition to the powers specified in

sub- section (2) of section 35 the regulatory

authority shall have the following additional

powers, namely:- (a) require the promoter, allottee

or real estate agent to furnish in writing

such information or explanation or produce

such documents within such reasonable

time, as it may deem

necessary; and

(b) requisitioning, subject to the provisions

of sections 123 and 124 of the Indian Evidence

Act, 1872 (Central Act 1 of 1872), any public

record or document or copy of such record or

document from any office.

(2) The regulatory authority may call upon

such experts or consultants from the fields of

economics, commerce, accountancy, real estate,

competition, construction, architecture

or engineering or from any other discipline as

it deems necessary, to assist the regulatory authority

in the conduct of any inquiry or proceedings

before it.

(3) The Authority may in the interest of

the allottees, enquire into the payment of

amounts imposed as penalty, interest or compensation,

paid or payable by the promoter, in

order to ensure that the promoter has not:

(a) withdrawn the said amounts from the

account maintained as provided under subclause

(D) of clause (1) of sub-section (2) of

section 4; or



(b) used any amounts paid to such promoter

by the allottees for the real estate

project for which the penalty, interest or compensation

is payable, or any other real estate

project; and

(c) recovered the amounts paid as penalty,

fine or compensation from the allottees of the

relevant real estate project or any other real

estate project.

2.8.3 Manner of recovery of interest,

penalty and compensation

25. Subject to the provisions of sub-section

(1) of section 40, the recovery of the amounts

due as arrears of land revenue shall be carried

out in the manner provided in the Karnataka

Land Revenue Act, 1964 and the rules made

there under.

2.8.4 Manner of implementation

of order, direction

or decisions of the adjudicating

officer, the Authority

or the Appellate

Tribunal.-

26. For the purpose of sub-section (2) of section

40, every order passed by the adjudicating

officer, regulatory authority or Appellate

Tribunal, as the case may be, under the Act

or the rules and regulations made thereunder,

shall be enforced by the adjudicating officer,

regulatory authority or the Appellate Tribunal

in the same manner as if it were a decree or

order made by the principal civil court in a

suit pending therein and it shall be lawful for

the adjudicating officer, regulatory authority

or Appellate Tribunal, as the case may be, in

the event of its inability to execute the order,

send such order to the principal civil court, to

execute such order either within the local limits

of whose jurisdiction the real estate project

is located or in the principal civil court within

the local limits of whose jurisdiction the person

against whom the order is being issued,

actually and voluntarily resides, or carries on

business, or personally works for gain.

2.9 CHAPTER IX CON-

DITIONS OF SER-

VICE OF OFFICERS

AND OTHER EM-

PLOYEES OF THE

AUTHORITY

2.9.1 Categories of Officers and

employees of the Authority

and pay scales

27. The nature and categories of officers and

employees of the Authority shall be recommended

by the Authority for consideration of

the State Government which shall be approved

with or without modifications, as the case may

be, by the State Government.

2.9.2

28. Conditions of service.- (1) The conditions

of service of the officers and employees of the

Authority and any other category of employees

in the matter of pay, allowances, leave, joining

time, joining time pay, age of superannuation

and other conditions of service shall be regulated

in accordance with such rules and regulations

as are, from time to time, applicable

to officers and employees of the State Government

and drawing the corresponding scales of

pay:

Provided that the provisions of the Karnataka

Civil Services (Classification, Control

and Appeal) Rules, 1957 shall apply to the officers

and employees of the Authority subject to

modification specified in the schedule to these

rules.

(2) Consultants or experts may be engaged

by the Authority to facilitate its discharge of

functions.

(3) The State Government shall have powers

to relax the provisions of any of these rules

in respect of any class or category of officers

or employees or consultants and experts as the

case may be for the reasons recorded in writing.



2.10 CHAPTER X FIL-

ING OF COM-

PLAINT

2.10.1 Filing of complaint and

manner of holding an inquiry

by Regulatory Authority

(1) Any aggrieved person may file a complaint

with the Regulatory Authority for any violation

under the Act or the rules and regulations

made there under, save as those provided to be

adjudicated by the adjudicating officer, as per

Form ‘N’ which shall be accompanied by a fee

of rupees one thousand in the form of a demand

draft drawn on a nationalized bank or

a co-operative Bank in favor of regulatory authority

and payable at the main branch of that

bank at the station where the seat of the said

Regulatory Authority is situated.

(2) The regulatory authority shall for the

purposes of deciding any complaint as specified

under sub-rule (1), follow summary procedure

for inquiry in the following manner,

namely:-

(a) Upon receipt of the complaint the regulatory

authority shall issue a notice along with

particulars of the alleged contravention and

the relevant documents to the respondent;

(b) the respondent against whom such notice

is issued under clause (a) of sub-rule (2),

may file his reply in respect of the complaint

within the period as specified in the notice;

(c) the notice shall specify a date and time

for further hearing; and

(d) on the date so fixed, the regulatory authority

shall explain to the respondent about

the contravention alleged to have been committed

in relation to any of the provisions

of the Act or the rules and regulations made

there under and if the respondent:

(i) pleads guilty, the regulatory authority

shall record the plea, and pass such orders including

imposition of penalty as it thinks fit in

accordance with the provisions of the Act or

the rules and regulations, made there under;

and

(ii) does not plead guilty and contests the

complaint the regulatory authority shall demand

an explanation from the respondent.

(e) in case the regulatory authority is satisfied

on the basis of the submissions made that

the complaint does not require any further inquiry

it may dismiss the complaint;

(f) in case the regulatory authority is satisfied


there is need for further hearing into the complaint

it may order production of documents

or other evidence on a date and time fixed by

it;

(g) the regulatory authority shall have the

power to carry out an inquiry into the complaint

on the basis of documents and submissions;

(h) the Authority shall have the power to

summon and enforce the attendance of any

person acquainted with the facts and circumstances

of the case to give evidence or to produce

any documents which in the opinion of

the adjudicating officer, may be useful for or

relevant to the subject matter of the inquiry,

and in taking such evidence, the Authority

shall not be bound to observe the provisions

of the Indian Evidence Act, 1872 (Central Act

11 of 1872);

(i) on the date so fixed, the regulatory

authority upon consideration of the evidence

produced before it and other records and submissions

is satisfied that -

(a) the respondent is in contravention of

the provisions of the Act or the rules and regulations

made there under it shall pass such

orders including imposition of penalty as it

thinks fit in accordance with the provisions

of the Act or the rules and regulations made

there under; and

(b) the respondent is not in contravention

of the provisions of the Act or the rules and

regulations made there under the regulatory

authority may, by order in writing, dismiss the

complaint, with reasons to be recorded in writing.

(j) if any person fails, neglects or refuses

to appear, or present himself as required before

the regulatory authority, the regulatory

authority shall have the power to proceed with

the inquiry in the absence of such person or

persons after recording the reasons for doing



so.

(3) The procedure for day to day functioning

of the Authority, which have not been provided

by the Act or the rules made thereunder,

shall be as specified by regulations made

by the Authority.

(4) Where a party to the complaint is represented

by an authorised person, as provided

under section 56, a copy of the authorisation

to act as such and the written consent thereto

by such authorised person, both in original,

shall be appended to the complaint or the reply

to the notice of the complaint, as the case

may be.

2.10.2 Manner of filing a complaint

with the adjudicating

officer and the manner

of holding an inquiry

by the adjudicating officer

30. (1) Any aggrieved person may file a complaint

with the adjudicating officer for compensation

under section 12, 14, 18 and 19 as

per Form ‘O’ which shall be accompanied by

a fee of rupees one thousand in the form of a

demand draft drawn on a nationalized bank

or a co-operative Bank in favor of regulatory

authority and payable at the main branch of

that bank at the station where the seat of the

said regulatory authority is situated.

(2) The adjudicating officer shall for the

purposes of adjudging compensation follow

summary procedure for inquiry in the following

manner:

(a) (b)

(c)

(d)

(e)

(g) (h)

(i)

upon receipt of the complaint the adjudicating

officer shall issue a notice along with

particulars of the alleged contravention and

the relevant documents to the promoter;

the respondent against whom such notice

is issued under clause (a) of sub-rule (2) may

file his reply in respect of the complaint within

the period as specified in the notice;

the notice shall specify a date and time for

further hearing;

on the date so fixed, the adjudicating officer

shall explain to the promoter about the

contravention alleged to have been committed

in relation to any of the provisions of the

Act or the rules and regulations made there

under and if the promoter:

(a) pleads guilty, the adjudicating officer

shall record the plea, and award such compensation

as he thinks fit in accordance with the

provisions of the Act or the rules and regulations,

made thereunder;

(b) does not plead guilty and contests the

complaint the adjudicating officer shall demand

an explanation from the promoter;

in case the adjudicating officer is satisfied

on the basis of the submissions made that the

complaint does not require any further inquiry

it may dismiss the complaint;

in case the adjudicating officer is satisfied


there is need for further hearing into the complaint

it may order production of documents

or other evidence on a date and time fixed by

him;

the adjudicating officer shall have the

power to carry out an inquiry into the complaint

on the basis of documents and submissions;

the adjudicating officer shall have the

power to summon and enforce the attendance

of any person acquainted with the facts and

circumstances of the case to give evidence or

to produce any documents which in the opinion

of the adjudicating officer, may be useful

for or relevant to the subject matter of the inquiry,

and in taking such evidence, the adjudicating

officer shall not be bound to observe the

provisions of the Indian Evidence Act, 1872

(Central Act 11 of 1872); on the date so fixed,

the adjudicating officer upon consideration of

the — evidence

produced before him and other records and

submissions is satisfied that the promoter is,-

(a) liable to pay compensation, the adjudicating

officer may, by order in writing, order

payment of such compensation, as deemed



fit by the promoter to the complainant; or

(b) not liable to any compensation, the

adjudicating officer may, by order in writing,

dismiss the complaint, with reasons to be

recorded in writing. )

if any person fails, neglects or refuses to

appear, or present himself as required before

the adjudicating officer, the adjudicating officer

shall have the power to proceed with the

inquiry in the absence of such person or persons

after recording the reasons for doing so.


of the adjudicating officer, which have not

been provided by the Act or the rules made

thereunder, shall be as specified by regulations

made by the Authority.

(4) Where a party to the complaint is represented





shall be appended to the complaint or the reply

to the notice of the complaint, as the case

may be.

2.11 CHAPTER XI REAL

ESTATE APPEL-

LATE TRIBUNAL

2.11.1 Manner of Selection of

Member of the Appellate

Tribunal

31. (1) As and when vacancies of a Member

in the Appellate Tribunal exist or arise, or are

likely to arise, the Government of Karnataka

may make a reference to the Selection Committee

in respect of the vacancies to be filled.

(2) The Chairperson of the Appellate Tribunal

shall be appointed by the State Government

under provisions of sub-section (2) of

section 46.

(3) For appointment of Members of the Appellate

Tribunal, the State Government shall

expeditiously constitute a Selection Committee

to select suitable persons for appointment

as Members of the Tribunal.

(4) The Selection Committee shall normally

hold its meetings at Bengaluru or at

such places, as may be authorised by the

Chairman by recording the reasons for the

change of the venue of such meetings.

(5) The Notice or Agenda, as the case

maybe, for the meeting of the Selection Committee

shall be issued in advance. The date

and venue for the meeting shall be fixed with

the convenience of the Chairman of the Selection

Committee.

(6) The Selection Committee constituted

under sub-rule (3) shall devise its own procedure

as it deemed fit including the appointment

of a Search Committee and may lay

down guidelines and procedure to invite applications

from the eligible persons as per qualification

specified under Section 46. The Selection

Committee shall prepare a panel of names

possessing the requisite qualification and experience

those who are suitable for consideration

for appointment as Members of the Appellate

Tribunal. Secretary, Housing Department is

the Convener of the Selection Committee.

(7) The Selection Committee shall thereafter

make its recommendation to the Government

of Karnataka within a period of not

exceeding sixty days from the date of reference

made by the Government under sub-rule(3)

for consideration in the form of a panel of not

more than three persons in the order of preference

separately for the post of vacancy or

vacancies referred by the State Government.

(8) The State Government shall within

thirty days from the date of the recommendation

made by the Selection committee, appoint

one out of panal of three persons name for the

the post of vacancy or vacancies of the Members

of the Appellate Tribunal, as the case may

be.

(9) The State Government shall nominate

the Karnataka Appellate Tribunal as Interim

Appellate Tribunal in terms of sub-section (4)

of section 43.

2.11.2 Functioning of Appellate

Tribunal

32 (1) The office of the Appellate Tribunal

shall be located at such place as may be determined

by the Government of Karnataka by



notification.

(2)The working days and office hours of the

Appellate Tribunal shall be the same as that

of the normal working days and office hours

of the other offices of the Government of Karnataka.

(3) The official common seal and emblem

of the Appellate Tribunal shall be such as the

appropriate Government may specify.

(4) Every notice, order and judgment of

the Appellate Tribunal shall bear the seal of

the Appellate Tribunal which shall be in custody

with the person designated by the Chairperson.

(5) The Appellate Tribunal shall ordinarily

have sittings at its headquarters and at such

places as the Chairperson may by general

or special order specify.

2.11.3 Appeal and the fees

payable

33. (1) Every appeal filed under sub-section

(1) of section 44 shall be accompanied by a

fees of five thousand rupees in the form of a

demand draft or a bankers cheque drawn on

a scheduled bank or a co-oparetive bank in

favour of the Appellate Tribunal and payable

at the branch of that Bank at the station

where the seat of the said Appellate Tribunal

is situated or through online payment, as the

case may be.

(2) Every appeal shall be filed in Form ‘ R

’, in triplicate, until the application procedure

is made web based, along with the following

documents, namely:-

(a) authenticated copy of the order against

which the appeal is filed;

(b) copies of the documents relied upon by

the appellant and referred to in the appeal;

and

(c) an index of the documents.

(3) Every appeal shall be either filed at

the filing counter of the Registry of the Appellate

Tribunal or through a registered post

or through online system, as applicable.

(4) In case of an appeal sent by post under

sub-rule (3), it shall be deemed to have

been presented to the Appellate Tribunal on

the day on which it is received in its office.

(5) Where a party to the appeal is represented





shall be appended to the appeal or the reply

to the notice of the appeal, as the case may

be.

(6) On the date of hearing or any other

date to which hearing could be adjourned,

it shall be obligatory on the parties or their

agents, as the case may be, to appear before

the Appellate Tribunal:

Provided that where the appellant or his

authorised person, as the case may be, fails to

appear before the Appellate Tribunal on such

days, the Appellate Tribunal may in its discretion

either dismiss the appeal for default

or decide it on merits and where the opposite

party or his authorised person fails to appear

on the date of hearing, the Appellate Tribunal

may decide the appeal ex-parte.


of the Appellate Tribunal, which have not

been provided by the Act or the rules made

thereunder, shall be as specified by the Appellate

Tribunal.

2.11.4 Procedure for inquiry of

the charges against the

Chairperson or Member

of the Regulatory Authority

or the Appellate

Tribunal

34. (1) In the event of the Housing Department

of Government of Karnataka becoming

aware of occurrence of any of the circumstances

specified in clause (d) or clause (e)

of sub-section (1) of section 26, in case of a

Chairperson or Member of the Regulatory Authority

or as specified under sub-section (1) of

section 49 in case of a Chairperson or Member

of the Appellate Tribunal, by receipt of a complaint

in this regard or suo motu, as the case

may be, the Housing Department of Government

of Karnataka shall make a preliminary

inquiry with respect to such charges against

the Chairperson or any Member of the regu-



latory authority or Appellate Tribunal, as the

case may be.

(2) If, on preliminary inquiry, the Housing

Department of Government of Karnataka

considers it necessary to investigate into the

allegation, it shall place the complaint, if any,

together with supporting material as may be

available, before a Judge of the High Court

designated for this purpose by the Chief Justice

of the High Court (hereinafter referred to

as the designated Judge).

(3) The Housing Department of Government

of Karnataka shall forward to the designated

Judge, copies of,

(a) the statement of charges against the

Chairperson or Member of the regulatory authority

or Appellate Tribunal, as the case may

be; and

(b) material documents relevant to the inquiry.

(4) The Chairperson or Member of the

Regulatory Authority or Appellate Tribunal,

as the case may be, shall be given a reasonable

opportunity of being heard with respect

to the charges within the time period as may

be specified in this behalf by the designated J

udge.

(5) Where it is alleged that the Chairperson

or Member of the Regulatory Authority

and Appellate Tribunal is unable to discharge

the duties of his office efficiently due to any

physical or mental incapacity and the allegation

is denied, the designated Judge may

arrange for the medical examination of the

Chairperson or Member of the Appellate Tribunal

or the Regulatory Authority.

(6) After the conclusion of the investigation,

the Judge shall submit his report to the

appropriate Government stating therein his

findings and the reasons thereof on each of the

articles of charges separately with such observations

on the whole case as he thinks fit.

(7) Thereafter, the State Government shall

in consultation with the Chief Justice of the

High Court Karnataka decide to either remove

or not to remove the Chairperson or Member

of the Regulatory Authority or Appellate Tribunal,

as the case may be.

35. Powers of the designated Judge.- (1)

The designated Judge shall not be bound by

the procedure laid down by the Code of Civil

Procedure, 1908 (Central Act 5 of 1908), but

shall be guided by the principles of natural justice

and shall have power to regulate his own

procedure including the fixing of places and

time of the enquiry.

(2)The designated Judge shall have, for the

purposes of discharging his functions under

these rules, the same powers as vested in a civil

court under the Code of Civil Procedure, 1908

(Central Act 5 of 1908), while trying a suit, in

respect of the following matters, namely :-

(a) summoning and enforcing the attendance

of any person and examining him on

oath;

(b) requiring the discovery and production

of document,

(c) receiving evidenc on affidavits; and

(d)subject to the provisions of sections 123

and 124 of the Indian Evidence Act, 1872

(Central Act 11 of 1872), requisitioning any

public record or document or copy of such

record or document from any office.


payable and other terms

and conditions of service

of Chairperson and

Members of the Appellate

Tribunal

36. (1) The salaries and allowances payable to

the Chairperson and Members of the Appellate

Tribunal shall be as follows, namely:-

(a) the Chairperson shall be paid a

monthly salary equivalent to the last drawn

salary by such person, as a Judge of a High

Court,

(b) the Member shall be paid a monthly

salary equivalent to the last drawn salary at

the post held by such person, prior to his appointment

as a Member of the Appellate Tribunal;

and

(c) the Member, who is not a servant of

the Government, shall be paid minimum of

the pay of the Principal Secretary to the state

Government.

17



(2) The Chairperson and every other Members

shall be entitled to thirty days of earned

leave for every year of service.

(3) The other allowances and conditions of

service of the Chairperson and the whole-time

Member shall be as admissible to a Judge of

High Court or Principal Secretary of the State

Government as the case may be:

Provided that, such entitlement shall not

be less than what he is otherwise eligible in

case of serving Government servant.

(4) The term of office of the Chairperson

and the Members shall be such as provided in

Section 47.

2.11.6 Retirement from Government

Service

37. A person in the service of the Government,

on his selection as a Member of the Regulatory

Authority or Appellate Tribunal, shall have to

retire from service before entering upon his office

as a Member.

2.11.7 Oath of Office and Secrecy

38. Every person appointed as the Chairperson

or a Member shall, before entering upon

his office, make and subscribe an oath of office

and secrecy, in Form-‘P’ and Form-‘Q’ respectively

annexed to these rules.

2.11.8 Declaration of financial

or other interest

39. Every person, on his appointment as the

Chairperson or Member, as the case may be,

shall have to give an undertaking that he does

not and will not have any such financial or

other interest as is likely to affect prejudicially

his functions as such Chairperson or Member.

2.11.9 Residuary provision.-

40. Matters relating to the terms and conditions

of service of the Chairperson or Member

with respect to which no express provision has

been made in these rules, shall be referred by

the Appellate Tribunal to the State Government

for its decision.

2.11.10 Categories of Officers

and employees of the

Tribunal.-

41. The nature and categories of officers and

employees of the Tribunal shall be recommended

by the Tribunal for consideration of

the State Government which shall be approved

with or without modifications, as the case may

be, by the State Government.

2.11.11 Conditions of service

42. The conditions of service of the officers

and employees of the Appellate Tribunal and

in any other category of employees in the matter

of pay, allowances, leave, joining time, joining

time pay, provident fund, age of superannuation,

pension and retirement benefits and

other conditions of service, shall be regulated

in accordance with such rules and regulations

as are, from time to time, applicable to officers

and employees of the State Government

and drawing the corresponding scales of pay:

Provided that the provisions of the Karnataka

Civil Services (Classification, Control

and Appeal) Rules, 1957 shall apply to these

officers and employees subject to modifications

specified in the schedule.

2.11.12 Additional powers of

the Appellate Tribunal

43. The Appellate Tribunal may call upon

such experts or consultants from the fields of

economics, commerce, accountancy, real estate,

competition, construction, architecture

or engineering or from any other discipline as

it deems necessary, to assist the Appellate Tribunal

in the conduct of any inquiry or proceedings

before it.



2.11.13 Administrative powers

of the Chairperson of

the Appellate Tribunal

44. The administrative powers of the Chairperson

of the Appellate Tribunal shall include

making decisions with regard to the following,

namely:-

(a) all matters pertaining to staff strength,

wages and salaries structures, emoluments,

perquisites and personnel policies with prior

approval from the State Government.

(b) all matters pertaining to creation and

abolition of posts with prior approval from the

State Government.

(c) all matter pertaining to appointments,

promotions and confirmation for all posts with

prior approval of the State Government.

(d) acceptance of resignations by any

Member, officer or employee;

(e) officiating against sanctioned posts;

(f) authorization of tours to be undertaken

by any Member, officer or employee within India

and allowance to be granted for the same;

(g) authorization of tours to be undertaken

by any Member, officer or employee outside India

and allowance to be granted for the same

with prior approval from the State Government;

(h) all matters in relation to reimbursement

of medical claims;

(i) all matters in relation to grant or rejection

of leaves;

(j) permission for hiring of vehicles for official

use;

(k) nominations for attending seminars,

conferences and training courses in India or

abroad as per clause (f) and (g);

(l) permission for invitation of guests to

carry out training course;

(m) all matters pertaining to staff welfare

expenses;

(n) sanction scrapping or write-off of capital

assets which due to normal wear and tear

have become unserviceable or are considered

beyond economical repairs;

o) all matters relating to disciplinary action

against any member, officer or employee,

and

(p) any other powers that may be required

for the efficient functioning of the Appellate

Tribunal and enforcement of the provisions of

the Act and these rules.

2.12 CHAPTER XI OF-

FENCES AND PENAL-

TIES

2.12.1 Terms and conditions

and the fine payable for

compounding of offence

45. (1) The Court, Authority/Tribunal shall,

for the purposes of compounding any offence

punishable with imprisonment under the Act,

accept an amount as specified in the Table below:

Offence

Amount to be paid for compounding

amount

Punishable with Imprisonment under sub

section (2) of section 59

Up to ten percent of the estimated cost of

the real estate project

Punishable with Imprisonment under section

64


the real estate project

Punishable with Imprisonment under section

66


the plot, apartment or building, as the case

may be, of the real estate project, for which

the sale or purchase has been! facilitated

Punishable with Imprisonment under


the plot,

section 68 apartment or building, as the

case may be

(2) On payment of the sum of money in accordance

with the table above, any person in

custody in connection with that offence shall

be set at liberty and no proceedings shall be

instituted or continued against such person in

any court.

(3) The acceptance of the sum of money

for compounding an offence in accordance with

the table above, by the Court shall be deemed



to amount to an acquittal within the meaning

of section 300 of the Code of Criminal Procedure,

1973 (Central Act 2 of 1974).

(4) The promoter, allottee or real estate

agent, as the case may be, shall comply with

the orders of the regulatory authority or the

Appellate Tribunal, within the period specified

by the court, which shall not be more than

sixty days from the date of compounding of

the offence.

2.13 CHAPTER-XII MIS-

CELLANEOUS

2.13.1 Interpretation

46. If any question arises relating to the interpretation

of these rules or when express provision

has not been made in these rules about

a particular matter, the same shall be referred

to the Housing Department for its decision

and decision of the State Government shall be

binding.

2.13.2 Residuary provision

47. Matters relating to the terms and conditions

of service of the Chairperson or a Member

with respect to which no express provision

has been made in these rules, shall be

referred by the Authority to the State Government

for its decision, and the decision of

the State Government thereon shall be applicable

to the Chairperson or Member, as the

case may be.

2.14 CHAPTER-XIII BUD-

GET AND REPORT

2.14.1 Budget, accounts and audit

48. (1) At the end of the financial year of every

year, the Authority shall prepare a budget,

maintain proper accounts and other relevant

records and prepare an annual statement of

accounts in Form —’S’.

(2) The Authority shall preserve the accounts

and other relevant records prepared under

sub-rule (1) for a minimum period of five

years.

(3) The accounts and other relevant

records under sub-rule (1) shall be signed by

the Chairperson, Members, Secretary and the

officer in-charge of Finance and Accounts.

(4) The accounts of the Authority and the

audit report shall, as soon as possible, be submitted

to the appropriate Government for laying

before the Parliament.

2.14.2 Annual Report


49. (1) The Authority shall prepare its annual

report in Form-T.

(2) The Authority may also include in the

Annual Report such other matters as deemed

fit by the Authority for reporting to the appropriate

Government.

(3) The annual report shall, after adoption

at a meeting of the Authority and signed

by the Chairperson and Members and authenticated

by affixing the common seal of

the Authority, with requisite number of copies

thereof, be submitted to the appropriate Government

within a period of one hundred and

eighty days immediately following the close of

the year for which it has been prepared. By

order and in the name of the Governor of Karnataka

Kapil Mohan Principal Secretary to Government

Department of Housing FORM ‘A’

[See sub rule (2) of rule 3] APPLICATION

FOR REGISTRATION OF PROJECT To

Sir,

i) (ii)

(iii) (iv)

(v) (vi)

(vii) (viii)

(ix)

The Real Estate Regulatory Authority

(Name of Place)

[I/We] hereby apply for the grant of registration

of [my/our] project to be set up

Sanat 98 SEAT MA AAC ieee Eco atone

tan Rapa saeloesomese Nes UN gnee mateo

meeeIia Tehsil


District ...........cccceeseeeeeeeeee State

....ceeeseeseeneeee eee

The requisite particulars are as under:-

Status of the applicant - [individual / company

/ proprietorship firm / societies /

partnership firm / competent authority

etc.];

In case of individual -

(a) Name

(b) Father’s Name

(c) Occupation

(d) Address

(e) Contact Details (Phone number, E-

mail, Fax Number etc.) (f) Name, photograph,

contact details and address

of the promoter OR

In case of [firm / societies / trust / company

/ limited liability partnership / competent

authority etc.] -

(a) Name (b) Address (c) Copy of registration

certificate as [firm / societies / trust /

company / limited

liability partnership / competent authority

etc.] (d) Main objects

(e) Contact Details (Phone number, E-

mail, Fax Number etc.)

6) Name, photograph, contact details and

address of [chairman / partners / directors]

and authorised person etc.

PAN No. of the promoter;

Name and address of the bank or banker

with which account in terms of sub-clause (D)

of clause (1) of sub- section (2) of section 4

will be maintained;

Details of project land held by the applicant.

;

Brief details of the projects launched by

the promoter in the last five years, whether

already completed or being developed, as the

case may be, including the current status of

the said projects, any delay in its completion,

details of cases pending, details of type

of land and payments pending etc. .........:ccceeeseeseescee

eee eneeteueeeeeeeaes

Agency to take up external development

works. [Local Authority / Self Development];

Registration fee by way of a demand draft /

bankers cheque dated drawn on

wiaepeaeeuens bearing no. ............... for

an amount of Rs.......... /- calculated as per

sub-rule (3) of rule 3. or through online payment

as the case may be.............. (give details

of online payment such as date paid, transaction

no. etc.);

Any other information the applicant may

like to furnish.

[I/We] enclose the following documents,

namely:-

4.

Dated: Place:

@ (ii)

(iii)

(iv)

(v)

(vi)

(vii)

(viii)

(ix)

(x) (xi) (xii) (xiii)

(xiv)

(xv)

(xvi)

20

authenticated copy of the PAN card of the

promoter;

annual report including audited profit and

loss account, balance sheet, cash flow statement,

directors report and the auditors report

of the promoter for the immediately preceding

three financial years and where annual report

is not available, the audited profit and lost account,

balance sheet, cash flow statement and

the auditors report of the promoter for the immediately

preceding three financial years;

authenticated copy of the legal title deed

reflecting the title of the promoter to the land

on which development of project is proposed

along with legally valid documents for chain

of title with authentication of such title;

details of encumbrances on the land on

which development of project is proposed including

details of any rights, title, interest,

dues, litigation and name of any party in or

over such land or no encumbrance certificate

from an advocate having experience of atleast

ten years or from the revenue authority not

below the rank of tehshildar, as the case may

be;

where the promoter is not the owner of the

land on which development of project is pro-



posed details of the consent of the owner of

the land along with a copy of the collaboration

agreement, development agreement, joint

development agreement or any other agreement,

as the case may be, entered into between

the promoter and such owner and copies of title

and other documents reflecting the title of

such owner on the land on which project is

proposed to be developed;

an authenticated copy of the approvals and

commencement certificate from the competent

authority obtained in accordance with

the laws as may be applicable for the real

estate project mentioned in the application,

and where the project is proposed to be developed

in phases, an authenticated copy of

the approvals and commencement certificate

from the competent authority for each of such

phases; the sanctioned plan, layout plan and

specifications of the proposed project or the

phase thereof, and the whole project as sanctioned


the plan of development works to be executed

in the proposed project and the proposed


fire-fighting facilities, drinking water facilities,

emergency evacuation services, use of renewable

energy;

the location details of the project, with

clear demarcation of land dedicated for the

project along with its boundaries including the

latitude and longitude of the end points of the

project,

proforma of the allotment letter, agreement

for sale, and the conveyance deed proposed

to be signed with the allottees;

the number, type and the carpet area of

apartments for sale in the project along with

the area of the exclusive balcony or verandah

areas and the exclusive open terrace areas with

the apartment, if any;

the number and areas of garage for sale in

the project,

the number of open parking areas and the

number of covered parking areas available in

the real estate project;

the names and addresses of his real estate

agents, if any, for the proposed project; the

names and addresses of the contractors, architect,

structural engineer, if any and other persons

concerned with the development of the

proposed project;

a declaration in Form B’.

[I/We] enclose the following additional

documents and information regarding ongoing

projects, as required under rule 4, and under

other provisions of the Act or the rules and

regulations made thereunder, namely:-

(i) (ii) (iii)

[I/We] solemnly affirm and declare that the

particulars given herein are correct to

[my/our] knowledge and belief and nothing

material has been concealed by [me/ us]

therefrom.

Yours faithfully, Signature and seal of the

applicant(s)

21

FORM-B [See sub-rule (4) of rule 3] DEC-

LARATION, SUPPORTED BY AN AFFI-

DAVIT, WHICH SHALL BE SIGHNED BY

THE PROMOTER OR ANY PERSON AU-

THORIZED BY THE PROMOTER Affidavit

cum Declaration Affidavit cum Declaration of

Mr./Ms. promoter of the proposed project /

duly authorized by the promoter of the proposed

project, vide its/his/their authorization

dated

I, promoter of the proposed project / duly

authorized by the promoter of the proposed

project do hereby solemnly declare, undertake

and state as under:

1. That I / promoter have / has a legal

title to the land on which the development of

the project is proposed

OR

have/has a legal title to the land on which

the development of the proposed project is to

be carried out AND a legally valid authentication

of title of such land along with an

authenticated copy of the agreement between

such owner and promoter for development of

the real estate project is enclosed herewith.

2. That the said land is free from all encumbrances.

OR That details of encumbrances including

details of any rights, title, interest or

name of any party in or over such land, along

with details. 3. That the time period within

which the project shall be completed by me/

promoter is

4. That seventy per cent of the amounts



realised by me/promoter for the real estate

project from the allottees, from time to time,

shall be deposited in a separate account to be

maintained in a scheduled bank to cover the

cost of construction and the land cost and shall

be used only for that purpose.

5. That the amounts from the separate account,

to cover the cost of the project, shall be

withdrawn in proportion to the percentage of

completion of the project.

6. That the amounts from the separate account

shall be withdrawn after it is certified

by an engineer, an architect and a chartered

accountant in practice that the withdrawal is

in proportion to the percentage of completion

of the project.

7. That I / promoter shall get the accounts

audited within six months after the end of every

financial year by a chartered accountant in

practice, and shall produce a statement of accounts

duly certified and signed by such chartered

accountant and it shall be verified during

the audit that the amounts collected for

a particular project have been utilised for the

project and the withdrawal has been in compliance

with the proportion to the percentage

of completion of the project.

8. ThatI/ promoter shall take all the pending

approvals on time, from the competent authorities.

9. ThatI/ promoter have / has furnished

such other documents as have been prescribed

by the

rules and regulations made under the Act.

10. That I / promoter shall not discriminate

against any allottee at the time of allotment

of any apartment, plot or building, as

the case may be, on any grounds.

Deponent Verification The contents of my

above Affidavit cum Declaration are true and

correct and nothing material has been concealed

by me therefrom. Verified by me at

on this day of

Deponent 22

FORM-C [See sub-rule (1) of rule 6] REG-

ISTRATION CERTIFICATE OF PROJECT

This registration is granted under section 5 of

the Act to the following project under project

registration number ‘

(Specify Details of Project including the

project address);

1. (in the case of an individual) Mr./Ms.

son of Mr. /Ms. Taluk District

State ;

OR

(in the case of a firm or society or company

or competent authority) firm or

society or company or competent authority

having its registered office or

principal place of business at ‘ 2. This registration

is granted subject to the following

conditions, namely:-

a. The promoter shall enter into an agreement

for sale with the allottees as provided in

Annexure A;

b. The promoter shall execute and register

a conveyance deed in favour of the allottee


may be, of the apartment or the common areas

as per section 17;

c. The promoter shall deposit seventy percent

of the amounts realised by the promoter


schedule bank to cover the cost of construction

and the land cost to be used only for that

purpose as per sub-clause (D) of clause (I) of

sub-section (2) of section 4 of the Act;

d. The registration shall be valid for a period

of years commencing from

and ending with unless renewed by the

Real Estate Regulatory Authority in accordance

with section 6 of the Act read with rule

7 of these rules; e. The promoter shall comply

with the provisions of the Act and the rules

and regulations made thereunder; f. The promoter

shall not contravene the provisions of

any other law for the time being in force in

the area where the project is being developed.

3. Ifthe above mentioned conditions are

not fulfilled by the promoter, the regulatory

authority may take necessary action against

the promoter including revoking the registration

granted herein, as per the Act and the

rules and regulations made thereunder.

Dated: Place:

Signature and seal of the Authorized Officer

Real Estate Regulatory Authority

23

FORM ‘D’ [See sub-rules (2) of rule 6 and

sub-rule (4) of rule 7 and rule 8] INTIMATION



OF REJECTION OF APPLICATION FOR

REGISTRATION OF PROJECT / REJEC-

TION OF APPLICATION FOR EXTEN-

SION OF REGISTRATION OF PROJECT

/ REVOCATION OF REGISTRATION OF

PROJECT

From: The Real Estate Regulatory Authority

(Name of place)

To

[Application / Registration] No.: Dated:

You are hereby informed that your application

for registration of your project is rejected. or


for extension of the registration of your

project is rejected. or You are hereby informed

that the registration granted to your project is

hereby revoked. for the reasons set out:- Place:

Dated: Signature and seal of the Authorised

Officer Real Estate Regulatory Authority

FORM ‘E’ [See sub- rule (1) of rules 7]

APPLICATION FOR EXTENSION OF

REGISTRATION OF PROJECT From:

To

Sir, [I/We] hereby apply for extension of

registration of the following project: registered

with the Authority vide project registration

certificate bearing No., which expires

on : As required [I/We] submit the following

documents and information, namely:- (i) A demand

Draft No. / Bankers Cheque No. .........

dated oo... for TUPEES sceuas in

favour of ..........00 APAWN, ON viseswscisisasvenss

bank as extension fee as provided

under sub- rule (2) of rule 6 or through online

payment as the case may be€..........c cece

eens (give details of online payment such as

date paid, transaction no. etc.);

(ii) Authenticated Plan of the project

showing the stage of development works undertaken

till date;

(iii) Explanatory note regarding the state

of development works in the project and

reason for not completing the development

works in the project within the period

declared in the declaration submitted in

Form B’ at the time of making application

for the registration of tHE PTOJECt occ.

cceeceeeeeeeeeseeeeeeeeeeseneeeenereaees 3

(iv) Authenticated copy of the [permission/approval]

from the competent authority

which is valid for a period which is longer than

the proposed term of extension of the registration

sought from the Authority;

24

(v) The authenticated copy of the project

registration certificate; and (vi) Any other information

as may be specified by regulations.

Place: Dated: Yours faithfully, Signature and

seal of the applicant(s)

FORM ’‘F’ [See sub-rule (4) of rule 7]

CERTIFICATE FOR EXTENSION OF

REGISTRATION OF PROJECT This extension

of registration is granted under section 6,

to the following project:

registered with the Authority vide project

registration certificate bearing No. of:- 1. [in

the case of an individual] [Mr./Ms.] son of

[Mr. /Ms.| Tehsil District. State of

Karnataka; OR

[in the case of a firm / society / company

/ competent authority etc.] [firm / society /

company / competent authority etc.|. having

its [registered office /principal place of

business] Ab Liccccceccee sees eee tee een

eaeseeeseeeesereenereesesseneneeees 9. This

extension of registration is granted subject to

the following conditions, namely:-

(i) The promoter shall execute and register

a conveyance deed in favour of the allottee


may be, of the apartment, plot or building, as

the case may be, or the common areas as per

section 17;

(ii) The promoter shall deposit seventy per

cent. of the amounts realised by the promoter


schedule bank to cover the cost of construction

and the land cost to be used only for that

purpose as per sub-clause (D) of clause (1) of


(iii) The registration shall be extended by

a period of, [days / weeks / months] and shall

be valid until

(iv) The promoter shall comply with the

provisions of the Act and the rules and regulations

made thereunder;

(v) The promoter shall not contravene the

provisions of any other law for the time being

in force as applicable to the project;

(vi) If the above mentioned conditions are



not fulfilled by the promoter, the Authority

may take necessary action against the

promoter including revoking the registration

granted herein, as per the Act and the rules

and regulations made thereunder.

Date:

Place Signature and seal of the Authorised

Officer Real Estate Regulatory Authority

FORM-G [See sub-rule (1) of rule 9]

APPLICATION FOR REGISTRATION OF

REAL ESTATE AGENT To

The Real Estate Regulatory Authority

Sir, I/We beg to apply for the grant of registration

as a real estate agent to facilitate

the sale or purchase of any plot, apartment

or building, as the case may be, in real estate

projects registered in

the Government of Karnataka in terms of

the Act and the rules and regulations made

thereunder,

1. (in the case of an individual) Mr./Ms.

son of Mr. /Ms. Taluk. District State

OR 25

(in the case of a firm or societies or cooperative

society or company) firm or society

or company having its registered office or principal

place of business at. ‘ 2. The requisite

particulars are as under:-

(i) Status of the applicant, whether individual

or company or proprietorship firm or

societies or co-operative society or partnership

firm or limited liability partnership; (ii) In case

of individual,

(a) Name;

(b) Father’s Name;

(c) Occupation;

(d) Permanent address; (e) Photograph.

OR In case of firm or societies or companies

- (a) Name; (b) Address; (c) Copy of registration

certificate; (d) Major activities; (e)

Name, photograph and address of partners /

directors etc.

income tax returns filed under the provisions

of the Income Tax Act, 1961 for three

financial years preceeding the application or

in case the applicant was exempted from filing

returns under the provisions of the Income Tax

Act, 1961 for any of the three year preceeding

the application, a declaration to such effects;

particulars of registration including the byelaws,

memorandum of association, articles of

association etc. as the case may be; authenticated

copy of the address proof of the place of

business; Details of registration in any other

State or Union territory; and Any other information

the applicant may like to furnish.

3. I/we enclose the following documents

along with, namely:-

(i) Demand Draft No. dated for a sum of

Rs.

; in favour of , drawn on bank as registration

fee as per sub-rule (2) of rule 10 of these

rules; (ii) Income tax returns of the last 3 years

or declaration as the case may be;

(iii) authenticated copy of the PAN card of

the real estate agent; and

(iv) authenticated copy of the registration

as a real estate agent in any other State or

Union territory, if applicable;

4. I/we solemnly affirm and declare that

the particulars given in herein are correct to

my /our knowledge and belief.

Dated: Place: Yours faithfully, Signature

and seal of the applicant(s)

FORM-H [See sub-rule (2) of rule 10]

REGISTRATION CERTIFICATE OF

REAL ESTATE AGENT

1. This registration is granted under section

9 of the Act with registration certificate

bearing No. to -

(in the case of an individual) Mr./Ms. son

of Mr./Ms. Taluk, District, State

2

OR

26

(in the case of a firm or society or company)

firm or society or company having its

registered office / principal place of business

at

to act as a real estate agent to facilitate


or building, as the case may be, in real estate

projects registered in the State in terms of the

Act and the rules and regulations made thereunder,

2. This registration is granted subject to

the following conditions, namely:-

(i) The real estate agent shall not facilitate


or building, as the case may be, in a real



estate project or part of it, being sold by the

promoter which is required but not registered

with the regulatory authority;

(ii) The real estate agent shall maintain

and preserve such books of account, records

and documents as provided under rule 14;

(iii) The real estate agent shall not involve

himself in any unfair trade practices as specified

under clause (c) of section 10 of the Act;

(iv) The real estate agent shall provide assistance


exercise their respective rights and fulfil their



the case may be.

(v) The real estate agent shall comply with

the provisions of the Act and the rules and regulations

made thereunder; (vi) The real estate

agent shall not contravene the provisions of

any other law for the time

being in force in the area where the project

is being developed; (vii) The real estate agent

shall discharge such other functions as may be

specified by the regulatory authority by regulations;

3: The registration is valid for a period

of five years commencing from and ending with

unless renewed by the regulatory authority in


the rules and regulations made thereunder.

4. If the above mentioned conditions are

not fulfilled by the real estate agent, the regulatory

authority may take necessary action

against the real estate agent including revoking

the registration granted herein, as per the

Act and the rules and regulations made thereunder.

Dated: Place:



FORM ‘I’ [See sub-rule (3) of rule 10 and

sub rule (4) of rule 11 and rule 12] INTI-

MATION OF REJECTION OF APPLICA-

TION FOR REGISTRATION OF REAL ES-

TATE AGENT OR REJECTION OF APPLI-

CATION FOR RENEWAL OF REGISTRA-

TION OF REAL ESTATE AGENT OR RE-

VOCATION OF REGISTRATION OF REAL

ESTATE AGENT

From:

The Real Estate Regulatory Authority,

To

Application or Registration No.:

Dated:

27


for registration as real estate agent is

rejected.

OR


for the renewal of the registration as real

estate

agent is rejected.

OR

You are hereby informed that the registration

granted to you as real estate agent is

hereby

revoked. for the reasons set out:-

Place: Dated:



FORM-J [See sub-rule (1) of rule 11]

APPLICATION FOR RENEWAL OF

REGISTRATION OF REAL ESTATE

AGENT

From:

Sir,

certificate bearing No.

The Real Estate Regulatory Authority,

I/we beg to apply for renewal my/our registration

as a real estate agent under registration

, which expires on.

As required I/we submit the following documents

and information, namely:-

(i) (ii) (iii)

(iv)

(v)

A demand draft no. dated for rupees in

favour of drawn on. bank as renewal fee;

The original registration certificate; and Status

of the applicant, whether individual or

company or proprietorship firm or societies or

co-operative society or partnership firm or limited

liability partnership; In case of individual

- (a) Name; (b) Father’s Name; (c) Occupation;

(d) Permanent address; and (e) Photograph.

OR In case of firm or societies or

co-operative society or companies - (a) Name;

(b) Address; (c) Copy of registration certificate;

(d) Major activities; and (e) Name, photograph

and address of partners or directors.



income tax returns filed under the provisions

of the Income Tax Act, 1961 for three financial

years preceeding the application or in case

the applicant was exempted from filing returns

under the provisions of the Income Tax Act,

1961 for any of the three year preceeding the

application, a declaration to such effect;

(vi)

(vii

28

particulars of registration including the

bye-laws, memorandum of association, articles

of association etc. as the case may be; ) authenticated

copy of the address proof of the

place of business; and

(viii) Details of registration in any other

State or Union territory;

(x)

Da

Any other information as specified by regulations.

ted:

Place:

Yours faithfully, Signature and seal of the

applicant(s)

FORM-K [See sub-rule(4) of rule 11]

RENEWAL OF REGISTRATION OF

REAL ESTATE AGENT

1. This renewal of registration is granted

under section 9 of the Act to -

(in the case of an individual) Mr./Ms. son

of Mr. /Ms. Taluk. District, State F OR (in

the case of a firm / society / company) firm /

society / company having its registered office

/ principal place of business at in continuation

to registration certificate bearing No. ; of

2. This renewal of registration is granted

subject to the following conditions, namely:-

(i) The real estate agent shall not facilitate


or building, as the case may be, in a real

estate project or part of it, being sold by the

promoter which is required but not registered

with the regulatory authority;

(ii) The real estate agent shall maintain

and preserve such books of account, records

and documents as provided under rule 14 of

these rules;

(iii) The real estate agent shall not involve

himself in any unfair trade practices as specified

under clause (c) of section 10 of the Act;

(iv) The real estate agent shall facilitate

the possession of all documents, as the allottee

is entitled to, at the time of booking of any


be;

(v) The real estate agent shall provide assistance


exercise their respective rights and fulfil their



the case may be.

(vi) The real estate agent shall comply

with the provisions of the Act and the rules

and regulations made thereunder,

(vii) The real estate agent shall not contravene

the provisions of any other law for

the time being in force in the area where the

project is being developed; and

(viii) The real estate agent shall discharge

such other functions as may be specified by

the regulatory authority by regulations.

3. The registration is valid for a period of

five years commencing from and ending with

unless renewed by the regulatory authority in


the rules and regulations made thereunder.

4. If the above mentioned conditions are

not fulfilled by the real estate agent, the regulatory

authority may take necessary action

against the real estate agent including revoking

the registration granted herein, as per the

Act and the rules and regulations made thereunder.

Dated:

Place:



29

FORM-L [See sub rule (1) of rule 21] Form

of Oath of Office for the Chairperson or Members

of the Real Estate Regulatory Authority

I, , having been appointed as the Chairperson

or Member (cross the portion not applicable)

solemnly affirm and (or) do swear in

the name of God I will faithfully and conscientiously

discharge my duties as the Chairperson

or Member (cross the portion not applicable),

of the Real Estate Regulatory Authority, to

the best of my ability, knowledge and judge-



ment, without fear or

favour, affection or ill-will, (Name of the

Chairperson / Member)

Dated : Real Estate Regulatory Authority

FORM-M [See sub-rule (1) of rule 21]

Form of Oath of Secrecy for the Chairperson

or Members of the Real Estate Regulatory

Authority I, , having been appointed as

the Chairperson or Member (cross the portion

not applicable) solemnly affirm and do swear

in the name of God I will not directly or indirectly

communicate or reveal to any person or

persons any matter which shall be brought under

my consideration or shall become known

to me as the Chairperson or Member (cross

the portion not applicable, of the said Real

Estate Regulatory Authority, except as may

be required of my duties as the Chairperson

or Member (cross the portion not applicable).

(Name of the Chairperson / Member)

Dated : Real Estate Regulatory Authority

FORM ‘N’ [See sub-rule (1) of rule

29] COMPLAINT TO REGULATORY AU-

THORITY Complaint under section 31 of the

Act

For use of Regulatory Authority(s) office:

Date of filing:

Date of receipt by post:

Complaint No.:

Signature: Registrar: IN THE REGULA-

TORY AUTHORITIES OFFICE (Name of

place)

Between

Complainant(s) And

Respondent(s) Details of claim:

1. Particulars of the complainant(s): (i)

Name of the complainant: (ii) Address of the

existing office / residence of the complainant:

(iii) Address for service of all notices: 2. Particulars

of the respondents: (i) Name(s) of respondent:

(ii) Office address of the respondent:

(iii) Address for service of all notices: 3.

Jurisdiction of the regulatory authority: The

complainant declares that the subject matter

of the claim falls within the jurisdiction of the

regulatory authority. 4. Facts of the case:

[give a concise statement of facts and grounds

for complaint] 5. Relief(s) sought:

30

In view of the facts mentioned in paragraph

4 above, the complainant prays for the following

relief(s) [Specify below the relief(s) claimed

explaining the grounds of relief(s) and the legal

provisions (if any) relied upon]

6. Interim order, if prayed for:

Pending final decision on the complaint the

complainant seeks issue of the following interim

order: [Give here the nature of the interim

order prayed for with reasons] 7. Complainant

not pending with any other court,

etc.: The complainant further declares that

the matter regarding which this complaint has

been made is not pending before any court of

law or any other authority or any other tribunal(s).

8. Particulars of bank draft in respect

of the fee in terms of sub-rule (1) of rule

36: (i) Amount (ii) Name of the bank on which

drawn (iii) Demand draft number 9. List of

enclosures: [Specify the details of enclosures

with the complaint]

Verification

I (name in full block letters) son / daughter

of the complainant do hereby verify that

the contents of paragraphs [1 to 9] are true to

my personal knowledge and belief and that I

have not suppressed any material fact(s).

Place: Date:

Signature of the complainant(s)

FORM ‘OQ’ [See sub-rule (1) of rule 30]

APPLICATION TO ADJUDICATING OFFI-

CER

Claim for compensation under section 31

read with section 71 of the Act For use of Adjudicating

Officers office: Date of filing: Date

of receipt by post: Application No.: Signature:

Authorized Officer:

IN THE ADJUDICATING OFFICERS

OFFICE (Name of place)

Between

applicant(s) And

Respondent(s) Details of claim:

1. Particulars of the applicant(s): (i)

Name of the applicant: (ii) Address of the existing

office / residence of the appellant: (iii)

Address for service of all notices: (iv) Details

of allottees apartment, plot or building 2. Particulars

of the respondents: (i) Name(s) of respondent:

(ii) Office address of the respondent:

(iii) Address for service of all notices:

(iv) Registration no. and address of project: 3.



Jurisdiction of the Adjudicating Officer: The

applicant declares that the subject matter of

the claim falls within the jurisdiction of the

adjudicating officer. 4. Facts of the case:

31

[give a concise statement of facts and

grounds of claim against the promoter]

5. Compensation(s) sought: In view of

the facts mentioned in paragraph 4 above, the

applicant prays for the following compensation(s)

[Specify below the compensation(s)

claimed explaining the grounds of claim(s)

and the legal provisions (if any) relied upon]

6. Claim not pending with any other court,

etc.: The applicant further declares that the

matter regarding which this appeal has been

made is not pending before any court of law or

any other authority or any other tribunal(s).

7. Particulars of bank draft in respect of

the fee in terms of sub-rule (1) of rule 36:

(iv) Amount (v) Name of the bank on which

drawn (vi) Demand draft number 8. List of

enclosures: [Specify the details of enclosures

with the application]

Verification I (name in full block letters)

son / daughter of the applicant do hereby verify

that

the contents of paragraphs [1 to 8] are true

to my personal knowledge and belief and that

I have not suppressed any material fact(s).

Place: Date: Signature of the applicant(s)

FORM-P [See rule 38] Form of Oath of Office

for the Chairperson or Members of the Appellate

Tribunal i , having been appointed as the

Chairperson or Member (cross the portion not

applicable) solemnly affirm and (or) do

swear in the name of God I will faithfully

and conscientiously discharge my duties as the

Chairperson or Member (cross the portion not

applicable), of the Real Estate Regulatory Authority,

to the best of my ability, knowledge

and judgement, without fear or favour, affection

or ill-will.


Dated : Appellate Tribunal

FORM-Q [See rule 38] Form of Oath of Secrecy

for the Chairperson or Members of the

Appellate Tribunal

I, , having been appointed as the Chairperson

or Member (cross the portion not applicable)

solemnly affirm and do swear in the name

of God I will not directly or indirectly communicate

or reveal to any person or persons

any matter which shall be brought under my

consideration or shall become known to me as

the Chairperson or Member (cross the portion

not applicable), of the said Real Estate Regulatory

Authority, except as may be required

+ of my duties as the Chairperson or Member

(cross the portion not applicable).


Dated : Appellate Tribunal

32

FORM-R [See sub-rule (2) of rule 33] AP-

PEAL TO APPELLATE TRIBUNAL Appeal

under section 44 of the Act

Every appeal shall be filed in English and

in case it is in some other Indian language, it

shall be accompanied by a copy translated in

English and shall be fairly and legibly typewritten,

lithographed or printed in double

spacing on one side of standard petition paper

with an inner margin of about four centimetres

width on top and with a right margin on 2.5

cm, and left margin of 5 cm, duly paginated,

indexed and stitched together in paper book

form.

For use of Appellate Tribunal’s office:

Date of filing:

Date of receipt by post: Registration No.:

Signature:

Registrar:

IN THE REAL ESTATE APPELLATE

TRIBUNAL

xx — here specify the place of Tribunal

Between

Appellant(s) And Respondent(s)

Details of appeal: 1. Particulars of the appellants:

(i) Name of the appellant; (ii) Address

of the existing office / residence of the

appellant; (iii) Address for service of all notices.

2. Particulars of the respondents: (i)

Name(s) of respondent, (ii) Office address of

the respondent; (iii) Address for service of all

notices. 3. Jurisdiction of the Appellate Tribunal:

The appellant declares that the subject

matter of the appeal falls within the jurisdiction

of the Appellate Tribunal. 4, Limitation:

The appellant declares that the appeal



is within the limitation specified in sub-section

(2) of section 44 OR If the appeal is filed after

the expiry of the limitation period specified

under sub-section (2) of section 44 specify reasons

for delay 5. Facts of the case: (give a concise

statement of facts and grounds of appeal

against the specific order of regulatory authority

or the adjudicating officer, as the case may

be passed under section(s) of the Act.

6. Relief(s) sought: In view of the facts

mentioned in paragraph 5 above, the appellant

prays for the following relief(s) [Specify below

the relief(s) sought explaining the grounds of

relief(s) and the legal provisions (if any) relied

upon]

7. Interim order, if prayed for: Pending final

decision on the appeal the appellant seeks

issue of the following interim order: [specify

here the nature of the interim order prayed

for with reasons]

8. Matter not pending with any other

court, etc.: The appellant further declares

that the matter regarding which this appeal

has been made is not pending before any court

of law or any other authority or any other tribunal(s).

9. Particulars of bank draft in respect of

the fee in terms of sub-rule (1) of rule 28 of

the rules: (i) Amount (ii) | Name of the bank

on which drawn (iii) Demand draft number

10. List of enclosures:

33

(i) An attested true copy of the order

against which the appeal is filed; (ii) | Copies

of the documents relied upon by the appellant

and referred to in the appeal; (ili) An index

of the documents. Verification I (name in

full block letters) son / daughter of the appellant

do hereby verify that the contents of

paragraphs [1 to 10] are true to my personal

knowledge and belief and that I have not suppressed

any material fact(s).

Place: Date: Signature of the appellant(s)

FORM- S [See sub-rule (1) of rule 43] AN-

NUAL STATEMENT OF ACCOUNTS Receipts

and Payments Account For the year

ended A/c Receipts Current Previo A/c Payments

Curre Previo Code year us Code nt us

As On Year year year (inrupees| Ason As on

As on (in rupees) (in rupees)|(in rupees 1.

To Balance Brought 13. By Chairperson and

down: Members: 1.1. | To Bank 13.1. By

Pay and Allowances 1.2. | To Cash in hand

13.2, By Other benefits 2. To Fee, Charges

and 13.3. By Travelling expenses: Fine: 2.1. |

To Fees 13.3; By Overseas Ls 2.2. | To Charges

13.3, By Domestic 2. 2.3. | To Fines 14. By

Officers: 2.4. | To Others (specify) 14.1, By

Pay and Allowances 3: To Grants: 14.2. By

Retirement benefits 3.1. | To Accounts with

14.3. By Other benefits Government 3.2. | To

Others (specify) 14.4. By Travelling expenses:

4. To Gifts 14.4. By Overseas 1. 5. To Seminars

and 14.4. By Domestic conferences 2.

6. To Sale of 15. By Staff: Publications 7;

To Income on 15:1. By Pay and Allowances

investments and Deposits : 7.1. | To Income

on “15.2. By Retirement benefits investments

7.2. | To Income on 15.3. By Other benefits

Deposits 8. To Loans: 15.4. By Travelling expenses:

8.1. | To Government 15.4. By Overseas

1. 8.2. | To Others (specify) 15.4. By

Domestic 2.

34

9. To Sale of Assets 16. By Hire of Conveyance

10. To Sale on 17. By Wages Investments

11. To Recoveries from 18. By Overtime

pay bills 11.1. | To Loans and Advances

Principal Amount 19. By Honorarium 11.2.

| To Interest on Loans and Advances 20. By

Other office 11.3. | To Miscellaneous expenses

51 To Others (specify) 21. By Expenditure on

Research 22. By Consultation expenses 2S:

By Seminars and conferences 24. By Publications

of Authority 25. By Rent and Taxes

26. By Interest on Loans 27Expenses 28. By

Membership fee 29. By Subscription 30. By

Purchase of Fixed) Assets (specify) 31. By Investments

and Deposits: 31.1 By Investments

3L2 By Deposits 32. By Security Deposits So;

By Loans and Advances to: 33.1 By Employees:

33.1. | By Bearing Interest 1. 33.1. |

By Not bearing Interest 2. 33.2. | By Suppliers/contractors

33.3. | By others (specify) 34.

By Repayment of loan 35. By Others 35.1. |

By Leave Salary and Pension 35.2. | Contribution

35.3. | By Audit Fee 35.4. | By Misc:

36. By Balance carried down: 36.1 By Bank

36.2 | By Cash in hand

Total



Total

Member(s) (Signature)

Chairperson (Signature)

For the 1st April

35

Income and Expenditure Account to 31st

March

Curre Previo A/c Income Current nt us

Code Year Previous Year Year As on Year

As A/c As on As on (in On Code (in (in rupees)

|(in rupees) Expenditure rupees) | rupees)

37. To Chairperson and 61. By Fee,

Charges Members and Fine 37.1. | To Pay and

Allowances 61.1. | By Fee 37.2. | To Other

benefits 61.2. | By Charges 37.3. | To Travelling

Expenses 61.3. | By Fines 37.3. | To

Overseas 61.4. | By Others (specify) 1. 37.3.

| To Domestic 62. By Grants 2, 38, To Officers

62.1. | By Account with Government

38.1. | To Pay and Allowances 62.2. | By

Others (Specify) 38.2. | To retirement Benefits

63. By Gifts 38.3. | To Other Benefits

64. By Seminars and Conferences 65. By Sale

of 38.4. | To Traveling Expenses Publications

38.4. | To Overseas 66. By Income on Ley

investments and Deposits 38.4. | To Domestic

66.1. | By Income on 2; investments 39.

To Staff 66.2. | By Income on Deposits 39.1.

| To Pay and Allowances 66.3. | By Interest

on Loan and Advances 39.2. | To Retirement

Benefits 67. By Miscellaneous Income 39.3. |

To Other Benefits 67.1. | By Gain on Sales of

Assets 67.2. | By Excess of expenditure over

39.4. | To Traveling expenses income 39.4. |

To Overseas 67.3.| (Transferred to 1. Capital

Fund Account) 39.4. | To Domestic 2. 40.

To hire of Conveyance 41. To Wages 42. To

Overtime 43. To Honorarium 44. To Other

office

expenses

36

45. To expenditure on Research 46. To

Consultation expenses 47. To Seminars and

conferences 48. To Publications of Real Estate

Regulatory Authority 49. To Rent and

Taxes 50. To Interest on loans Sl. To Promotional

Expenses 52. To membership fee 53. To

Subscription 54. To Others 54.1. | To Leave

Salary and Pension 54.2. | Contribution 54.3.

| To Audit Fee 54.4. | To Misc. 55% To Depreciation

56. To Loss on sale of assets ors To

Bad Debts written off 38. To Provision for bad

& doubtful debts 59. To Excess of income over

Expenditure 60. (Transferred to capital Fund

Account) Total Total Member(s) (Signature)

Chairperson (Signature) Balance Sheet as on

31st March Curre Previou Previous nt s Year

Year As Year As on Assets Current On A/c As

on (in A/c Year Ason| (in rupees) Code Liabilities

(in rupees)| rupees) | Code ( in rupees)

68. Funds 72. Fixed Assets 68.1 Capital Fund

72.1. Gross Block at

Cost

37

68.2 72.2: Less Add Excess of Cumulative

Income over depreciation Expenditure/

less excess of Expenditure over Income 68.3

Other Funds 72.3. Net Block ‘ (Specify) 69.

Reserves 73: Capital Work- in-progress 70.

— Loans 74. Investments & Deposits 70.1

Government 74.1. Investment 70.2 | Others

74.2. Deposits 71. Current 75. Loans and

Liabilities Advances and provisions 75.1. Account

with Government 76. Sundry Debtors

Cash and 77. Bank Balances Other 78. Current

Assets Total Total Accounting Policies

and Notes: Member(s) (Signature) Chairperson

(Signature) FORM-T

[See sub-rule (1) of rule 49] ANNUAL RE-

PORT TO BE PREPARED BY REGULA-

TORY AUTHORITY

(i) Chairman’s statement: (ii) Objectives:

(iii) Important achievements: (iv) The year in

review:

a. Landmark decisions:

b. Legislative work:

c. Outreach programme: (v) Capacity

building: (vi) International engagements:

(vii) Impact on:

a. Allottees:

b. Promoters:

c, Real Estate Agents:

d. Economy:

B. Registration of promoters and real estate

agents under the Act:

I. In relation to Promoters:

38

Serial Name of Address of Description of

Fee Registration Number promoter promoter

project for paid Number which registration



has been 1 2 3 a 3 Date of issue of Date

on which Date of extension of Remark registration

registration expires registration with

period of extension 7 8 9 10 Il. In relation

to Real Estate Agents: Serial Name Address

| Registratio | Registratio| Date of | Date on

Date and Remark Number | of Real of Real n

Fee nNumber| issue of which period of Estate

Estate paid registrati | registratio renewal of

Agent Agent on n registratio certificate | certificate

n expires |certificate 1 2 3 S 5 6 E 8

9

disputes and number of cases disposed:

C. Number of cases filed before the Authority

and the adjudicating officer for settlement

of

No. of cases received during the

No. of cases disposed of

the last quarter with the adjudicating officer

quarter by the adjudicating officer

SI. No. No. of cases pending in the last

quarter with the quarter by the by the Authority

Authority Authority

SL. No. | No. of cases pending in No. of

cases received during the | No. of cases disposed

of

by the adjudicating officer

D. Statement on the periodical survey conducted

by the Authority to monitor the compliance

of the provisions of the Act by the promoters,

allottees and real estate agents:

Sl. No.

Survey conducted during the quarter with

details

Observation of Authority

Remedial steps taken

E. Statement on steps taken to mitigate

any non-compliance of the provisions of the

Act and the rules and regulations made thereunder

by the promoters, allottees and real estate

agents:

Sl. No.

Subject

Steps taken

Results achieved

F.

39

Statements on directions of the Authority

and the penalty imposed for contraventions

of the Act and the rules and regulations

made thereunder and statement on interest

and compensations ordered by the adjudicating

officer:

Sl. No.

Name of the promoter

Details of the directions issued by the Authority

/ adjudicating officer

Penalty / interest / compensation s imposed

Whether paid

Sl. No.

Name of the allottee




Whether paid

SI. No.

Name of the real estate agent




Whether paid

Investigations and inquiries ordered by the

Authority or the adjudicating officer: A brief

narrative of investigations and inquiries taken

up by the Authority or the adjudicating officers

and references received from the competent

authority or the appropriate Government.

Orders passed by the Authority and the adjudicating

officer: A brief narrative of orders

passed by the Authority or the adjudicating officers

separately for where no offence is made

out, and in case offence is proved, categorywise

for each category of orders passed along

with a tabular statement indicating the sections

under which the order was passed and

brief particulars of the orders. Execution of

the orders of the Authority and imposition of

penalties: (i) monetary penalties - details of

recovery of penalty imposed, details of penalty

imposed but not recovered, total number of

matters and total amount of monetary penalty

levied, total amount realized by resorting to

rule 23; (ii) matters referred to court under

section 59 — total number of matters referred



to the court during the year, total number of

matters disposed of by the court during the

year, total number of matters pending with

the court at the end of the year; (iii) matters

referred to court for execution of order under


to the court during the year, total number of

matters disposed of by the court during the

year, total number of matters pending with

the court at the end of the year. Execution of

the orders of the adjudicating officer and imposition

of interest and compensation: (i) interest

and compensations - details of interest

and compensation imposed, details of interest

and compensation imposed but not paid, total

number of matters and total amount of interest

and compensations imposed, total amount

realized by resorting to rule 23; and (ii) matters

referred to court for execution of order under


to the court during the year, total number

of matters disposed of by the court during

the year, total number of matters pending

with the court at the end of the year. Appeals:

(i) Number of appeals filed against the orders

of the Authority or the adjudicating officer

in the year: (ii) | Number of appeals pending

at the beginning of the year: (iii) Appeals

filed during the year:

40

(iv) Number of appeals allowed by the Appellate

Tribunal during the year: (v) Number

of appeals disallowed by the Appellate Tribunal

during the year: (vi) Brief write up on

the appeals allowed by the Appellate Tribunal:

L. References received from the appropriate

Government under section 33: a brief narrative

on references received from the appropriate

Government under section 33 providing

for — number of references received during the

year, number of references disposed of during

the year, number of references pending at the

end of the year.

M. Advocacy measures under sub-section

(3) of section 33: a brief narrative on activities

undertaken under sub- section (3) of section

33 - (i) workshops, seminars and other interactions

with public / experts / policy-makers

/ regulatory bodies on laws and polices relating

to the real estate sector and for creating

awareness on the same; (ii) papers and studies

published for advocacy on laws and policies

relating to the real estate sector and for

creating awareness on the same; (iii) consultation

papers published/ placed on website of

the Authority; (iv) analytical papers prepared

and examined, (v) others.

N. Administration and establishment matters:

(i) report of the Secretary; (ii) composition

of the Authority; (iii) details of Chairperson

and Members appointed in the year and

of those who demitted office (iv) details of adjudicating

officers appointed in the year and

those who demitted office; (v) organizational

structure; (vi) a tabular statement containing

information on personnel in the Authority,

category-wise: sanctioned posts, posts filled

up, vacancies, appointments made in the year

etc.

0. Experts and consultants engaged: details

of number of experts and consultants appointed

in the year and of those who demitted

office.

P. Employee welfare measures, if any, beyond

the regular terms and conditions of employment,

undertaken by the Authority.

Q. Budget and Accounts: (i) budget estimates

and revised estimates, under broad categories;

(ii) receipts under broad categories in

the Real Estate Regulatory Fund established

under sub-section (1) of section 75; (iii) actual

expenditure under broad categories; (iv) balance

available in the Real Estate Regulatory

Fund under sub-section (1) of section 75; (v)

any other information.

R. International cooperation: A brief narrative

of international cooperation, if any, undertaken

by the Authority.

S. Capacity Building: A brief narrative of

capacity building initiative undertaken including

(i) number of.employees (category wise

and grade wise) trained in house with details

of such programmes-like content, duration and

faculty; (ii) number of employees (category

wise and grade wise) trained by outside institutions

(separately within Indian and outside

India) with details of names of institutions

and duration also to specify whether training

was under internship, exchange programme,



fellowships, study leave, special arrangements

with foreign universities /institutions; (iii) expenditure

of capacity building initiatives.

T. Ongoing programmes: A brief narrative

of ongoing programmes.

U. Right to Information: A brief narrative

of (i) number of applications received by

CPIO/ACPIO seeking information under RTI

Act; (ii) Number of applications for which information

has been provided by CPIO; (iii)

number of applications pending with

CPIO; (iv) number of appeals filed before the

First Appellate Authority against the ordaer

of CPIO; (v) number of appeals which have

been disposed of by First Appellate Authority;

(vi) number of appeals pending with the

First Appellate Authority; (vii) number of applications/

appeals not disposed of in the stipulated

time frame.

Chairperson- (Signature)- Member(s)-

(Signature)-

By Order and in the name of the Governor

of Karnataka

KAPIL MOHAN Principal Secretary to

Government Department of Housing


Part II

Classical Statutes

75

3

Introduction

Indian Stamp Act, 1899 and Registration Act, 1908: These acts govern laws regarding the

need for the registration of different types of deeds, instruments and documents relating to the

transfer of an interest in immovable property and the payment of stamp duty on the same.

Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and

Resettlement Act, 2013: This Act governs the acquisition of private land parcels by the government

for a company or specific public purposes. It lays out the remuneration and rehabilitative

measures to be taken by the government in acquisition cases.

Transfer of Property Act, 1882: This is a central act and lays down general principles of

immovable and movable property, such as exchange, sale, lease, mortgage and gift of property.

Indian Easement Act, 1882: This governs the regulation regarding easement rights to immovable

property.

Indian Contract Act, 1872: This governs the laws regarding contracts in India, including

but not limited to the capacity to enter into a contract, its execution, implementation, breach,

and remedies available to the signees in case of issues. The sections and chapters of the Transfer

of Property Act, 1882, that are related to contracts will be taken as part of this act.

Land Revenue Codes: Different states in India have formulated their own land revenue rules

that govern regulations regarding land revenue, tenancy types, agricultural land holding, and

other related matters. The specified code comprises the division and classes of immovable property

in a state, transfer restrictions, duties and powers of revenue officers, rules and penalties

for contravening such code.

Besides the laws stated above, the Indian real estate sector is also governed by multiple

state/local/municipal laws, customs and policies, including any nuances with respect to

slum rehabilitation/redevelopment, rent control, urban development, property tax, ownership of

property, building bye-laws, Benami transactions, insolvency, Special Economic Zones (SEZs),

land pooling, land ceiling, land zoning and land use, and environmental protection.

77


3.0 3. INTRODUCTION

4

The Transfer of Property Act, 1882

1. Short title.—This Act may be called the

Transfer of Property Act, 1882.

(Commencement) —It shall come into

force on the first day of July, 1882.

4.1 (Extent)

1It extends in the first instance to the whole

of India except 3[the territories which, immediately

before the 1st November, 1956, were

comprised in Part B States or in the States of]

Bombay, Punjab and Delhi.] 4[But this Act or

any part thereof may by notification in the Official

Gazette be extended to the whole or any

part of the 5[said territories] by the 6[State

Government] concerned.] 7[And any 6[State

Government] may 8[***] from time to time, by

notification in the Official Gazette, exempt, either

retrospectively or prospectively, any part

of the territories administered by such State

Government from all or any of the following

provisions, namely:— Section 54, paragraph 2

and sections 3, 59, 107 and 123.] 9[Notwithstanding

anything in the foregoing part of this

section, section 54, paragraphs 2 and 3, and

sections 59, 107 and 123 shall not extend or

be extended to any district or tract of country

for the time being excluded from the operation

of the Indian Registration Act, 10[1908],

(16 of 1908), under the power conferred by the

first section of that Act or otherwise.]

4.2 Repeal of Acts

2. Repeal of Acts.—Saving of certain enactments,

incidents, rights, liabilities, etc.—In

the territories to which this Act extends for

the time being the enactments specified in the

Schedule hereto annexed shall be repealed to

the extent therein mentioned. But nothing

herein contained shall be deemed to affect—

(a) the provisions of any enactment not

hereby expressly repealed;

(b) any terms or incidents of any contract

or constitution of property which are consistent

with the provisions of this Act, and are

allowed by the law for the time being in force;

(c) any right or liability arising out of a legal

relation constituted before this Act comes

into force, or any relief in respect of any such

right or liability; or (d) save as provided by

section 57 and Chapter IV of this Act, any

transfer by operation of law or by, or in execution

of, a decree or order of a Court of competent

jurisdiction, and nothing in the second

Chapter of this Act shall be deemed to affect

any rule of 1[***] Muhammadan 2[***] law.

4.3 Interpretation clause

3. In this Act, unless there is something repugnant

in the subject or context,— “immovable

property” does not include standing timber,

growing crops or grass; “instrument” means a

non-testamentary instrument; 1[“attested”, in

relation to an instrument, means and shall be

deemed always to have meant attested by two

or more witnesses each of whom has seen the

executant sign or affix his mark to the instrument,

or has seen some other person sign the

instrument in the presence and by the direction

of the executant, or has received from the

executant a personal acknowledgement of his

79


signature or mark, or of the signature of such

other person, and each of whom has signed

the instrument in the presence of the executant;

but it shall not be necessary that more

than one of such witnesses shall have been

present at the same time, and no particular

form of attestation shall be necessary;] “registered”

means registered in 2[3[any part of the

territories] to which this Act extends] under

the law4 for the time being in force regulating

the registration of documents; “attached

to the earth” means—

(a) rooted in the earth, as in the case of

trees and shrubs;

(b) embedded in the earth, as in the case

of walls or buildings; or

(c) attached to what is so embedded for

the permanent beneficial enjoyment of that

to which it is attached; 5[“actionable claim”

means a claim to any debt, other than a

debt secured by mortgage of immoveable property

or by 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 recognise as affording grounds for

relief, whether such debt or beneficial interest

be existent, accruing, conditional or contingent;]

6[“a person is said to have notice” of

a fact when he actually knows that fact, or

when, but for wilful abstention from an enquiry

or search which he ought to have made,

or gross negligence, he would have known it.

Explanation I.—Where any transaction relating

to immoveable property is required by law

to be and has been effected by a registered

instrument, any person acquiring such property

or any part of, or share or interest in,

such property shall be deemed to have notice

of such instrument as from the date of registration

or, where the property is not all situated

in one sub-district, or where the registered

instrument has been registered under

sub-section (2) of section 30 of the Indian Registration

Act, 1908 (16 of 1908), from the earliest

date on which any memorandum of such

registered instrument has been filed by any

Sub-Registrar within whose sub-district any

part of the property which is being acquired,

or of the property wherein a share or interest is

being acquired, is situated:] Provided that—

(1) the instrument has been registered and

its registration completed in the manner prescribed

by the Indian Registration Act, 1908

(16 of 1908), and the rules made thereunder,

(2) the instrument or memorandum has

been duly entered or filed, as the case may be,

in books kept under section 51 of that Act,

and

(3) the particulars regarding the transaction

to which the instrument relates have been

correctly entered in the indexes kept under

section 55 of that Act. Explanation II.—Any

person acquiring any immovable property or

any share or interest in any such property shall

be deemed to have notice of the title, if any,

of any person who is for the time being in actual

possession thereof. Explanation III.—A

person shall be deemed to have had notice of

any fact if his agent acquires notice thereof

whilst acting on his behalf in the course of

business to which that fact is material: Provided

that, if the agent fraudulently conceals

the fact, the principal shall not be charged

with notice thereof as against any person who

was a party to or otherwise cognizant of the

fraud.

4. Enactments relating to contracts to be

taken as part of Contract Act and supplemental

to the Registration Act.—The Chapters

and sections of this Act which relate to contracts

shall be taken as part of the Indian Contract

Act, 1872 (9 of 1872). 1[And section 54,

paragraphs 2 and 3, and sections 59, 107 and

123 shall be read as supplemental to the Indian

Registration Act, 2[1908 (16 of 1908)].]

4.4 “Transfer of property”

defined

5. In the following sections “transfer of property”

means an act by which a living person

conveys property, in present or in future, to

one or more other living persons, or to himself,

1[or to himself] and one or more other

living persons; and “to transfer property” is

to perform such act. 1[In this section “living

person” includes a company or association or

body of individuals, whether incorporated or

4.4 4. THE TRANSFER OF PROPERTY ACT, 1882


not, but nothing herein contained shall affect

any law for the time being in force relating to

transfer of property to or by companies, associations

or bodies of individuals.]

4.5 What may be transferred

6. Property of any kind may be transferred,

except as otherwise provided by this Act or by

any other law for the time being in force,—

(a) The chance of an heir-apparent succeeding

to an estate, the chance of a relation

obtaining a legacy on the death of a kinsman,

or any other mere possibility of a like nature,

cannot be transferred;

(b) A mere right of re-entry for breach of

a condition subsequent cannot be transferred

to any one except the owner of the property

affected thereby;

(c) An easement cannot be transferred

apart from the dominant heritage;

(d) All interest in property restricted in its

enjoyment to the owner personally cannot be

transferred by him; 1[(dd) A right to future

maintenance, in whatsoever manner arising,

secured or determined, cannot be transferred;]

(e) A mere right to sue 2[***] cannot be

transferred;

(f) A public office cannot be transferred,

nor can the salary of a public officer, whether

before or after it has become payable;

(g) Stipends allowed to military 3[naval],

4[air-force] and civil pensioners of the 5[Government]

and political pensions cannot be

transferred;

(h) No transfer can be made (1) in so far

as it is opposed to the nature of the interest

affected thereby, or (2) 6[for an unlawful

object or consideration within the meaning of

section 23 of the Indian Contract Act, 1872

(9 of 1872)], or (3) to a person legally disqualified

to be transferee; 7[(i) Nothing in this

section shall be deemed to authorise a tenant

having an untransferable right of occupancy,

the farmer of an estate in respect of which default

has been made in paying revenue, or the

lessee of an estate, under the management of a

Court of Wards, to assign his interest as such

tenant, farmer or lessee.]

4.6 Persons competent to

transfer

7. Every person competent to contract and

entitled to transferable property, or authorised

to dispose of transferable property not

his own, is competent to transfer such property

either wholly or in part, and either absolutely

or conditionally, in the circumstances,

to the extent and in the manner, allowed and

prescribed by any law for the time being in

force.

4.7 Operation of transfer

8. Unless a different intention is expressed

or necessarily implied, a transfer of property

passes forthwith to the transferee all the interest

which the transferor is then capable of

passing in the property and in the legal incidents

thereof. Such incidents include, where

the property is land, the easements annexed

thereto, the rents and profits thereof accruing

after the transfer, and all things attached

to the earth; and, where the property is machinery

attached to the earth, the movable

parts thereof; and, where the property is a

house, the easements annexed thereto, the

rent thereof accruing after the transfer, and

the locks, keys, bars, doors, windows, and all

other things provided for permanent use therewith;

and, where the property is a debt or

other actionable claim, the securities therefor

(except where they are also for other debts

or claims not transferred to the transferee),

but not arrears of interest accrued before the

transfer; and, where the property is money or

other property yielding income, the interest

or income thereof accruing after the transfer

takes effect.

4.8 Oral transfer

9. A transfer of property may be made without

writing in every case in which a writing is

not expressly required by law.

4. THE TRANSFER OF PROPERTY ACT, 1882 4.9


4.9 Condition restraining

alienation

10. .—Where property is transferred subject

to a condition or limitation absolutely restraining

the transferee or any person claiming

under him from parting with or disposing

of his interest in the property, the condition

or limitation is void, except in the case of a

lease where the condition is for the benefit of

the lessor or those claiming under him: provided

that property may be transferred to or

for the benefit of a women (not being a Hindu,

Muhammadan or Buddhist), so that she shall

not have power during her marriage to transfer

or charge the same or her beneficial interest

therein.

4.10 Restriction repugnant

to interest created

11. Where, on a transfer of property, an interest

therein is created absolutely in favour of

any person, but the terms of the transfer direct

that such interest shall be applied or enjoyed

by him in a particular manner, he shall be entitled

to receive and dispose of such interest as

if there were no such direction. 1[Where any

such direction has been made in respect of one

piece of immoveable property for the purpose

of securing the beneficial enjoyment of another

piece of such property, nothing in this section

shall be deemed to affect any right which the

transferor may have to enforce such direction

or any remedy which he may have in respect

of a breach thereof.]

4.11 Condition making interest

determinable

on insolvency or attempted

alienation

12. Where property is transferred subject to

a condition or limitation making any interest

therein, reserved or given to or for the benefit

of any person, to cease on his becoming insolvent

or endeavouring to transfer or dispose of

the same, such condition or limitation is void.

Nothing in this section applies to a condition

in a lease for the benefit of the lessor or those

claiming under him.

4.12 Transfer for benefit

of unborn person


therein is created for the benefit of a person

not in existence at the date of the 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 transferor in the property. Illustration

A transfers property of which he is the owner

to B in trust for A and his intended wife successively

for their lives, and, after the death of

the survivor, for the eldest son of the intended

marriage for life, and after his death for A’s

second son. The interest so created for the

benefit of the eldest son does not take effect,

because it does not extend to the whole of A’s

remaining interest in the property.

4.13 Rule against perpetuity

14. No transfer of property can operate to create

an interest which is to take effect after the

life-time of one or more persons living at the

date of such transfer, and the minority of some

person who shall be in existence at the expiration

of that period, and to whom, if he attains

full age, the interest created is to belong.

15. Transfer to class some of whom come

under sections 13 and 14.—If, on a transfer

of property, an interest therein is created for

the benefit of a class of persons with regard to

some of whom such interest fails by reason of

any of the rules contained in sections 13 and

14, such interest fails 1[in regard to those persons

only and not in regard to the whole class].



4.14 Transfer to take effect

on failure of prior

interest.

16. Where, by reason of any of the rules contained

in sections 13 and 14, an interest created

for the benefit of a person or of a class

of persons fails in regard to such person or the

whole of such class, any interest created in the

same transaction and intended to take effect

after or upon failure of such prior interest also

fails.

4.15 Direction for accumulation

17. (1) Where the terms of a transfer of property

direct that the income arising from the

property shall be accumulated either wholly

or in part during a period longer than—

(a) the life of the transferor, or

(b) a period of eighteen years from the

date of transfer, such direction shall, save as

hereinafter provided, be void to the extent to

which the period during which the accumulation

is directed exceeds the longer of the

aforesaid periods, and at the end of such lastmentioned

period the property and the income

thereof shall be disposed of as if the period

during which the accumulation has been directed

to be made had elapsed.

(2) This section shall not affect any direction

for accumulation for the purpose of—

(i) the payment of the debts of the transferor

or any other person taking any interest

under the transferor; or

(ii) the provision of portions for children or

remoter issue of the transferor or of any other

person taking any interest under the transfer;

or

(iii) the preservation or maintenance of the

property transferred, and such direction may

be made accordingly.

4.16 Transfer in perpetuity

for benefit of public

18. The restrictions in sections 14, 16 and 17

shall not apply in the case of a transfer of property

for the benefit of the public in the advancement

of religion, knowledge, commerce,

health, safety or any other object beneficial to

mankind.]

4.17 Vested interest


therein is created in favour of a person

without specifying the time when it is to

take effect, or in terms specifying that it is

to take effect forthwith or on the happening

of an event which must happen, such interest

is vested, unless a contrary intention appears

from the terms of the transfer. A vested interest

is not defeated by the death of the transferee

before he obtains possession. Explanation.—An

intention that an interest shall not

be vested is not to be inferred merely from

a provision whereby the enjoyment thereof is

postponed, or whereby a prior interest in the

same property is given or reserved to some

other person, or whereby income arising from

the property is directed to be accumulated until

the time of enjoyment arrives, or from a

provision that if a particular event shall happen

the interest shall pass to another person.

4.18 When unborn person

acquires vested interest

on transfer for his

benefit


therein is created for the benefit of a

person not then living, he acquires upon his

birth, unless a contrary intention appears from

the terms of the transfer, a vested interest, although

he may not be entitled to the enjoyment

thereof immediately on his birth.



4.19 Contingent interest


therein is created in favour of a person to

take effect only on the happening of a specified

uncertain event, or if a specified uncertain

event shall not happen, such person thereby

acquires a contingent interest in the property.

Such interest becomes a vested interest, in the

former case, on the happening of the event, in

the latter, when the happening of the event

becomes impossible.

(Exception) —Where, under a transfer of

property, a person becomes entitled to an interest

therein upon attaining a particular age,

and the transferor also gives to him absolutely

the income to arise from such interest before

he reaches that age, or directs the income or

so much thereof as may be necessary to be applied

for his benefit, such interest is not contingent.

4.20 Transfer to members

of a class who attain

a particular age


therein is created in favour of such members

only of a class as shall attain a particular

age, such interest does not vest in any member

of the class who has not attained that age.

4.21 Transfer contingent

on happening of specified

uncertain event


therein is to accrue to a specified person if

a specified uncertain event shall happen, and

no time is mentioned for the occurrence of that

event, the interest fails unless such event happens

before, or at the same time as, the intermediate

or precedent interest ceases to exist.

4.22 Transfer to such of

certain persons as

survive at some period

not specified


therein is to accrue to such of certain persons

as shall be surviving at some period, but

the exact period is not specified, the interest

shall go to such of them as shall be alive when

the intermediate or precedent interest ceases

to exist, unless a contrary intention appears

from the terms of the transfer. Illustration A

transfers property to B for life, and after his

death to C and D, equally to be divided between

them, or to the survivor of them. C dies

during the life of B. D survives B. At B’s death

the property passes to D.

4.23 Conditional transfer

25. An interest created on a transfer of property

and dependent upon a condition fails if

the fulfilment of the condition is impossible,

or is forbidden by law, or is of such a nature

that, if permitted, it would defeat the provisions

of any law, or is fraudulent, or involves

or implies injury to the person or property of

another, or the Court regards it as immoral or

opposed to public policy. Illustration:

(a) A lets a farm to B on condition that

he shall walk a hundred miles in an hour. The

lease is void.

(b) A gives Rs. 500 to B on condition that

he shall marry A’s daughter C. At the date of

the transfer C was dead. The transfer is void.

(c) A transfers Rs. 500 to B on condition

that she shall murder C. The transfer is void.

(d) A transfers Rs. 500 to his niece C, if

she will desert her husband. The transfer is

void.

26. Fulfilment of condition precedent.—Where

the terms of a transfer of property

impose a condition to be fulfilled before

a person can take an interest in the property,

the condition shall be deemed to have been

fulfilled if it has been substantially complied

with. Illustration



(a) A transfers Rs. 5,000 to B on condition

that he shall marry with the consent of

C, D and E. E dies. B marries with the consent

of C and D. B is deemed to have fulfilled

the condition.

(b) A transfers Rs. 5,000 to B on condition

that he shall marry with the consent of C, D

and E. B marries without the consent of C,

D and E, but obtains their consent after the

marriage. B has not fulfilled the condition.

27. Conditional transfer to one person coupled

with transfer to another on failure of prior

disposition.—Where, on a transfer of property,

an interest therein is created in favour of one

person, and by the same transaction an ulterior

disposition of the same interest is made

in favour of another, if the prior disposition

under the transfer shall fail, the ulterior disposition

shall take effect upon the failure of the

prior disposition, although the failure may not

have occurred in the manner contemplated by

the transferor. But, where the intention of the

parties to the transaction is that the ulterior

disposition shall take effect only in the event

of the prior disposition failing in a particular

manner, the ulterior disposition shall not take

effect unless the prior disposition fails in that

manner. Illustration

(a) A transfers Rs. 500 to B on condition

that he shall execute a certain lease within

three months after A’s death, and, if he should

neglect to do so, to C. B dies in A’s life-time.

The disposition in favour of C takes effect.

(b) A transfers property to his wife; but,

in case she should die in his life-time, transfer

to B that which he had transferred to her.

A and his wife perish together, under circumstances

which make it impossible to prove that

she died before him. The disposition in favour

of B does not take effect.

4.24 Ulterior transfer conditional

on happening

or not happening

of specified event

28. On a transfer of property an interest

therein may be created to accrue to any person

with the condition super added that in case a

specified uncertain event shall happen such interest

shall pass to another person, or that in

case a specified uncertain event shall not happen

such interest shall pass to another person.

In each case the dispositions are subject to the

rules contained in sections 10, 12, 21, 22, 23,

24, 25 and 27.

4.25 Fulfilment of condition

subsequent

29. An ulterior disposition of the kind contemplated

by the last preceding section cannot,

take effect unless the condition is strictly

fulfilled. Illustration A transfers Rs. 500 to B,

to be paid to him on his attaining his majority

or marrying, with a proviso that, if B dies

as minor or marries without C’s consent, the

Rs. 500 shall go to D. B marries when only 17

years of age, without C’s consent. The transfer

to D takes effect.

4.26 Prior disposition not

affected by invalidity

of ulterior disposition

30. If the ulterior disposition is not valid, the

prior disposition is not affected by it. Illustration

A transfers a farm to B for her life,

and, if she does not desert her husband to C.

B is entitled to the farm during her life as if

no condition had been inserted.

4.27 Condition that transfer

shall cease to have

effect in case specified

uncertain event

happens or does not

happen

31. Subject to the provisions of section 12, on

a transfer of property an interest therein may

be created with the condition super added that



it shall cease to exist in case a specified uncertain

event shall happen, or in case a specified

uncertain event shall not happen. Illustration

(a) A transfers a farm to B for his life, with

a proviso that, in case B cuts down a certain

wood, the transfer shall cease to have any effect.

B cuts down the wood. He loses his lifeinterest

in the farm.

(b) A transfers a farm to B, provided that,

if B shall not go to England within three years

after the date of the transfer, his interest in

the farm shall cease. B does not go to England

within the term prescribed. His interest

in the farm ceases.

4.28 Such condition must

not be invalid

32. In order that a condition that an interest

shall cease to exist may be valid, it is necessary

that the event to which it relates be one

which could legally constitute the condition of

the creation of an interest.

4.29 Transfer conditional

on performance of

act, no time being

specified for performance


therein is created subject to a condition

that the person taking it shall perform a certain

act, but no time is specified for the performance

of the act, the condition is broken when

he renders impossible, permanently or for an

indefinite period, the performance of the act.

4.30 Transfer conditional

on performance of

act, time being specified

34. Where an act is to be performed by a

person either as a condition to be fulfilled before

an interest created on a transfer of property

is enjoyed by him, or as a condition on

the non-fulfilment of which the interest is to

pass from him to another person, and a time

is specified for the performance of the act, if

such performance within the specified time is

prevented by the fraud of a person who would

be directly benefited by non-fulfilment of the

condition, such further time shall as against

him be allowed for performing the act as shall

be requisite to make up for the delay caused

by such fraud. But if no time is specified for

the performance of the act, then, if its performance

is by the fraud of a person interested in

the non-fulfilment of the condition rendered

impossible or indefinitely postponed, the condition

shall as against him be deemed to have

been fulfilled.

4.31 Election when necessary

35. Where a person professes to transfer property

which he has no right to transfer, and as

part of the same transaction confers any benefit

on the owner of the property, such owner

must elect either to confirm such transfer or

to dissent from it; and in the latter case he

shall relinquish the benefit so conferred, and

the benefit so relinquished shall revert to the

transferor or his representative as if it had not

been disposed of, subject nevertheless, where

the transfer is gratuitous, and the transferor

has, before the election, died or otherwise become

incapable of making a fresh transfer, and

in all cases where the transfer is for consideration,

to the charge of making good to the

disappointed transferee the amount or value

of the property attempted to be transferred

to him. Illustrations The farm of Sultanpur

is the property of C and worth Rs. 800. A



by an instrument of gift professes to transfer

it to B, giving by the same instrument Rs.

1,000 to C. C elects to retain the farm. He

forfeits the gift of Rs. 1,000. In the same

case, A dies before the election. His representative

must out of the Rs. 1,000 pay Rs. 800

to B. The rule in the first paragraph of this

section applies whether the transferor does or

does not believe that which he professes to

transfer to be his own. A person taking no

benefit directly under a transaction, but deriving

a benefit under it indirectly, need not

elect. A person who in his one capacity takes

a benefit under the transaction may in another

dissent therefrom. Exception to the last preceding

four rules.—Where a particular benefit

is expressed to be conferred on the owner of

the property which the transferor professes to

transfer, and such benefit is expressed to be

in lieu of that property, if such owner claims

the property, he must relinquish the particular

benefit, but he is not bound to relinquish any

other benefit conferred upon him by the same

transaction. Acceptance of the benefit by the

person on whom it is conferred constitutes an

election by him to confirm the transfer, if he is

aware of his duty to elect and of those circumstances

which would influence the judgment

of a reasonable man in making an election, or

if he waives enquiry into the circumstances.

Such knowledge or waiver shall, in the absence

of evidence to the contrary, be presumed, if

the person on whom the benefit has been conferred

has enjoyed it for two years without doing

any act to express dissent. Such knowledge

or waiver may be inferred from any act of his

which renders it impossible to place the persons

interested in the property professed to be

transferred in the same condition as if such act

had not been done. Illustration A transfers to

B an estate to which C is entitled, and as part

of the same transaction gives C a coal-mine.

C takes possession of the mine and exhausts

it. He has thereby confirmed the transfer of

the estate to B. If he does not within one year

after the date of the transfer signify to the

transferor or his representatives his intention

to confirm or to dissent from the transfer, the

transferor or his representative may, upon the

expiration of that period, require him to make

his election; and, if he does not comply with

such requisition within a reasonable time after

he has received it, he shall be deemed to

have elected to confirm the transfer. In case

of disability, the election shall be postponed

until the disability ceases, or until the election

is made by some competent authority. COM-

MENTS When question of election arises A

case of election arises only when the transferee

takes a benefit directly under a transaction.

When the transferee derives any benefit indirectly,

no question of election arises, as he, in

that case, cannot be said to take under the

deed; Valliammai v. Nagappa, AIR 1967 SC

1153.

4.32 Apportionment of

periodical payments

on determination of

interest of person entitled

36. In the absence of a contract or local usage

to the contrary, all rents annuities, pensions,

dividends and other periodical payments in

the nature of income shall, upon the transfer

of the interest of the person entitled to receive

such payments, be deemed, as between

the transferor and the transferee, to accrue

due from day to day, and to be apportionable

accordingly, but to be payable on the days appointed

for the payment thereof.

4.33 Apportionment of

benefit of obligation

on severance

37. When, in consequence of a transfer, property

is divided and held in several shares, and

thereupon the benefit of any obligation relating

to the property as a whole passes from one

to several owners of the property, the corresponding

duty shall, in the absence of a contract,

to the contrary amongst the owners, be

performed in favour of each of such owners

in proportion to the value of his share in the



property, provided that the duty can be severed

and that the severance does not substantially

increase the burden of the obligation;

but if the duty cannot be severed, or if the severance

would substantially increase the burden

of the obligation the duty shall be performed

for the benefit of such one of the several owners

as they shall jointly designate for that purpose:

Provided that no person on whom the burden

of the obligation lies shall be answerable for

failure to discharge it in manner provided by

this section, unless and until he has had reasonable

notice of the severance. Nothing in

this section applies to leases for agricultural

purposes unless and until the State Government

by notification in the Official Gazette so

directs. Illustration

(a) A sells to B, C and D a house situated

in a village and leased to E at an annual rent

of Rs. 30 and delivery of one fat sheep, B having

provided half the purchase-money and C

and D one quarter each. E, having notice of

this, must pay Rs. 15 to B, Rs. 7.50 to C,

and Rs. 7.50 to D and must deliver the sheep

according to the joint direction of B, C and D.

(b) In the same case, each house in the village

being bound to provide ten days’ labour

each year on a dyke to prevent inundation. E

had agreed as a term of his lease to perform

this work for A. B, C and D severally require

E to perform the ten days’ work due on account

of the house of each. E is not bound to

do more than ten days’ work in all, according

to such directions as B, C and D may join in

giving.

4.34 Transfer by person

authorised only under

certain circumstances

to transfer

38. Where any person, authorised only under

circumstances in their nature variable to dispose

of immoveable property, transfers such

property for consideration, alleging the existence

of such circumstances, they shall, as between

the transferee on the one part and the

transferor and other persons (if any) affected

by the transfer on the other part, be deemed

to have existed, if the transferee, after using

reasonable care to ascertain the existence of

such circumstances, has acted in good faith.

Illustration A, a Hindu widow, whose husband

has left collateral heirs, alleging that the property

held by her as such is insufficient for her

maintenance, agrees, for purposes neither religious

nor charitable to sell a field, part of such

property, to B. B satisfies himself by reasonable

enquiry that the income of the property

is insufficient for A’s maintenance, and that

the sale of the field is necessary, and acting in

good faith, buys the field from A. As between

B on the one part and A and the collateral

heirs on the other part, a necessity for the sale

shall be deemed to have existed.

4.35 Transfer where third

person is entitled to

maintenance

39. Where a third person has a right to receive

maintenance, or a provision for advancement

or marriage, from the profits of immoveable

property, and such property is transferred,

1[***] the right may be enforced against the

transferee, if he has notice 2[thereof] or if the

transfer is gratuitous; but not against a transferee

for consideration and without notice of

the right, nor against such property in his

hands. 3[* * *]

4.36 Burden of obligation

imposing restriction

on use of land

40. Where, for the more beneficial enjoyment

of his own immovable property, a third person

has, independently of any interest in the

immovable property of another or of any easement

thereon, a right to restrain the enjoyment

1[in a particular manner of the latter

property], or Or of obligation annexed to ownership

but not amounting to interest or easement.—Where

a third person is entitled to

the benefit of an obligation arising out of con-



tract and annexed to the ownership of immovable

property, but not amounting to an interest

therein or easement thereon, such right or

obligation may be enforced against a transferee

with notice thereof or a gratuitous transferee

of the property affected thereby, but

not against a transferee for consideration and

without notice of the right or obligation, not

against such property in his hands. Illustration

A contracts to sell Sultanpur to B. While

the contract is still in force he sells Sultanpur

to C, who has notice of the contract. B may

enforce the contract against C to the same extent

as against A.

4.37 Transfer by ostensible

owner

41. Where, with the consent, express or implied,

of the persons interested in immovable

property, a person is the ostensible owner of

such property and transfers the same for consideration,

the transfer shall not be voidable

on the ground that the transferor was not authorised

to make it: provided that the transferee,

after taking reasonable care to ascertain

that the transferor had power to make

the transfer, has acted in good faith.

4.38 Transfer by person

having authority to

revoke former transfer

42. Where a person transfers any immovable

property, reserving power to revoke the transfer,

and subsequently transfers the property

for consideration to another transferee, such

transfer operates in favour of such transferee

(subject to any condition attached to the exercise

of the power) as a revocation of the former

transfer to the extent of the power. Illustration

A lets a house to B, and reserves power to

revoke the lease if, in the opinion of a specified

surveyor, B should make a use of it detrimental

to its value. Afterwards A, thinking that

such a use has been made, lets the house to

C. This operates as a revocation of B’s lease

subject to the opinion of the surveyor as to

B’s use of the house having been detrimental

to its value.

4.39 Transfer by unauthorised

person who subsequently

acquires interest

in property

transferred

43. Where a person 1[fraudulently or] erroneously

represents that he is authorised to

transfer certain immovable property and professes

to transfer such property for consideration,

such transfer shall, at the option of the

transferee, operate on any interest which the

transferor may acquire in such property at any

time during which the contract of transfer subsists.

Nothing in this section shall impair the

right of transferees in good faith for consideration

without notice of the existence of the said

option. Illustration A, a Hindu who has separated

from his father B, sells to C three fields,

X, Y and Z, representing that A is authorised

to transfer the same. Of these fields Z does not

belong to A, it having been retained by B on

the partition; but on B’s dying A as heir obtains

Z. C, not having rescinded the contract

of sale, may require A to deliver Z to him.

4.40 Transfer by one coowner

44. Where one of two or more co-owners of

immovable property legally competent in that

behalf transfers his share of such property or

any interest therein, the transferee acquires as

to such share or interest, and so far as is necessary

to give, effect to the transfer, the transferor’s

right to joint possession or other common

or part enjoyment of the property, and to

enforce a partition of the same, but subject to

the conditions and liabilities affecting at the

date of the transfer, the share or interest so

transferred. Where the transferee of a share



of a dwelling-house belonging to an undivided

family is not a member of the family, nothing

in this section shall be deemed to entitle him

to joint possession or other common or part

enjoyment of the house.

4.41 Joint transfer for

consideration

45. Where immovable property is transferred

for consideration to two or more persons and

such consideration is paid out of a fund belonging

to them in common, they are, in the

absence of a contract to the contrary, respectively

entitled to interests in such property

identical, as nearly as may be, with the interests

to which they were respectively entitled

in the fund; and, where such consideration is

paid out of separate funds belonging to them

respectively, they are, in the absence of a contract

to the contrary, respectively entitled to

interests in such property in proportion to the

shares of the consideration which they respectively

advanced. In the absence of evidence as

to the interests in the fund to which they were

respectively entitled, or as to the shares which

they respectively advanced, such persons shall

be presumed to be equally interested in the

property.

4.42 Transfer for consideration

by persons having

distinct interests


for consideration by persons having distinct interests

therein, the transferors are, in the absence

of a contract to the contrary, entitled

to share in the consideration equally, where

their interests in the property were of equal

value, and, where such interests were of unequal

value, proportionately to the value of

their respective interests. Illustration

(a) A, owing a moiety, and B and C, each a

quarter share, of mauza Sultanpur, exchange

an eighth share of that mauza for a quarter

share of mauza. There being no agreement to

the contrary, A is entitled to an eighth share

in Lalpura, and B and C each to a sixteenth

share in the mauza.

(b) A, being entitled to a life-interest in

mauza Atrali and B and C to the reversion,

sell the mauza for Rs. 1,000. A’s life-interest

is ascertained to be worth Rs. 600, the reversion

Rs. 400. A is entitled to receive Rs. 600

out of the purchase-money. B and C to receive

Rs. 400.

4.43 Transfer by coowners

of share in

common property

47. Where several co-owners of immovable

property transfer a share therein without specifying

that the transfer is to take effect on

any particular share or shares of the transferors,

the transfer, as among such transferors,

takes effect on such shares equally where the

shares were equal, and, where they were unequal,

proportionately to the extent of such

shares. Illustration A, the owner of an eightanna

share, and B and C, each the owner of a

four-anna share, in mauza Sultanpur, transfer

a two-anna share in the mauza to D, without

specifying from which of their several shares

the transfer is made. To give effect to the

transfer one-anna share is taken from the share

of A, and half-an-anna share from each of the

shares of B and C.

4.44 Priority of rights created

by transfer

48.Where a person purports to create by transfer

at different times rights in or over the same

immovable property, and such rights cannot

all exist or be exercised to their full extent together,

each later created right shall, in the absence

of a special contract or reservation binding

the earlier transferees, be subject to the

rights previously created.



4.45 Transferee’s right under

policy


for consideration, and such property or any

part thereof is at the date of the transfer insured

against loss or damage by fire, the transferee,

in case of such loss or damage, may, in

the absence of a contract to the contrary, require

any money which the transferor actually

receives under the policy, or so much thereof as

may be necessary, to be applied in reinstating

the property.

4.46 Rent bona fide paid

to holder under defective

title

50. No person shall be chargeable with any

rents or profits of any immovable property,

which he has in good faith paid or delivered

to any person of whom he in good faith held

such property, notwithstanding it may afterwards

appear that the person to whom such

payment or delivery was made had no right

to receive such rents or profits. Illustration A

lets a field to B at a rent of Rs. 50, and then

transfers the field to C. B, having no notice of

the transfer, in good faith pays the rent to A.

B is not chargeable with the rent so paid.

4.47 Improvements made

by bona fide holders

under defective titles

51. When the transferee of immoveable property

makes any improvement on the property,

believing in good faith that he is absolutely

entitled thereto, and he subsequently evicted

therefrom by any person having a better title,

the transferee has a right to require the person

causing the eviction either to have the value

of the improvement estimated and paid or secured

to the transferee, or to sell interest in

the property to the transferee at the then market

value thereof, irrespective of the value of

such improvement. The amount to be paid or

secured in respect of such improvement shall

be the estimated value thereof at the time of

the eviction. When, under the circumstances

aforesaid, the transferee has planted or sown

on the property crops which are growing when

he is evicted therefrom, he is entitled to such

crops and to free ingress and egress to gather

and carry them.

4.48 Transfer of property

pending suit relating

thereto

52. During the 1[pendency] in any Court having

authority 2[3[within the limits of India

excluding the State of Jammu and Kashmir]

or established beyond such limits] by 4[the

Central Government] 5[* * *] of 6[any] suit

or proceedings which is not collusive and in

which any right to immovable property is directly

and specifically in question, the property

cannot be transferred or otherwise dealt

with by any party to the suit or proceeding

so as to affect the rights of any other party

thereto under any decree or order which may

be made therein, except under the authority of

the Court and on such terms as it may impose.

7[Explanation.—For the purposes of this section,

the pendency of a suit or proceeding shall

be deemed to commence from the date of the

presentation of the plaint or the institution of

the proceeding in a Court of competent jurisdiction,

and to continue until the suit or proceeding

has been disposed of by a final decree

or order and complete satisfaction or discharge

of such decree or order has been obtained, or

has become unobtainable by reason of the expiration

of any period of limitation prescribed

for the execution thereof by any law for the

time being in force.]

4.49 Fraudulent transfer

53. (1) Every transfer of immovable property

made with intent to defeat or delay the creditors

of the transferor shall be voidable at the

option of any creditor so defeated or delayed.

Nothing in this sub-section shall impair the



rights of a transferee in good faith and for consideration.

Nothing in this sub-section shall

affect any law for the time being in force relating

to insolvency. A suit instituted by a

creditor (which term includes a decree-holder

whether he has or has not applied for execution

of his decree) to avoid a transfer on the

ground that it has been made with intent to

defeat or delay the creditors of the transferor

shall be instituted on behalf of, or for the benefit

of, all the creditors.

(2) Every transfer of immovable property

made without consideration with intent to defraud

a subsequent transferee shall be voidable

at the option of such transferee. For the

purposes of this sub-section, no transfer made

without consideration shall be deemed to have

been made with intent to defraud by reason

only that a subsequent transfer for consideration

was made.]

4.50 Part performance

53A. Where any person contracts to transfer

for consideration any immovable property by

writing signed by him or on his behalf from

which the terms necessary to constitute the

transfer can be ascertained with reasonable

certainty, and the transferee has, in part performance

of the contract, taken possession of

the property or any part thereof, or the transferee,

being already in possession, continues in

possession in part performance of the contract

and has done some act in furtherance of the

contract, and the transferee has performed or

is willing to perform his part of the contract,

then, notwithstanding that 2[***] where there

is an instrument of transfer, that the transfer

has not been completed in the manner prescribed

therefor by the law for the time being

in force, the transferor or any person claiming

under him shall be debarred from enforcing

against the transferee and persons claiming

under him any right in respect of the property

of which the transferee has taken or continued

in possession, other than a right expressly

provided by the terms of the contract: Provided

that nothing in this section shall affect

the rights of a transferee for consideration who

has no notice of the contract or of the part performance

thereof.]

4.51 “Sale” defined

54. “Sale” is a transfer of ownership in

exchange for a price paid or promised or

part-paid and part-promised. Sale how

made.—3Such transfer, in the case of tangible

immoveable property of the value of one hundred

rupees and upwards, or in the case of a reversion

or other intangible thing, can be made

only by a registered instrument. 1In the case

of tangible immoveable property of a value less

than one hundred rupees, such transfer may

be made either by a registered instrument or

by delivery of the property. Delivery of tangible

immoveable property takes place when the

seller places the buyer, or such person as he directs,

in possession of the property. Contract

for sale.—A contract for the sale of immoveable

property is a contract that a sale of such

property shall take place on terms settled between

the parties. It does not, of itself, create

any interest in or charge on such property.

4.52 Rights and liabilities

of buyer and seller

55. In the absence of a contract to the contrary,

the buyer and the seller of immovable

property respectively are subject to the liabilities,

and have the rights, mentioned in the

rules next following, or such of them as are

applicable to the property sold:—

(1) The seller is bound—

(a) to disclose to the buyer any material

defect in the property 1[or in the seller’s title

thereto] of which the seller is, and the buyer

is not, aware, and which the buyer could not

with ordinary care discover;

(b) to produce to the buyer on his request

for examination all documents of title relating

to the property which are in the seller’s possession

or power;

(c) to answer to the best of his information

all relevant questions put to him by the buyer

in respect to the property or the title thereto;

(d) on payment or tender of the amount

due in respect of the price, to execute a proper



conveyance of the property when the buyer

tenders it to him for execution at a proper

time and place;

(e) between the date of the contract of sale

and the delivery of the property, to take as

much care of the property and all documents

of title relating thereto which are in his possession

as an owner of ordinary prudence would

take of such property and documents;

(f) to give, on being so required, the buyer,

or such person as he directs, such possession

of the property as its nature admits;

(g) to pay all public charges and rent accrued

due in respect of the property up to the

date of the sale, the interest on all encumbrances

on such property due on such date,

and, except where the property is sold subject

to encumbrances, to discharge all encumbrances

on the property then existing.

(2) The seller shall be deemed to contract

with the buyer that the interest which the

seller professes to transfer to the buyer subsists

and that he has power to transfer the

same: Provided that, where the sale is made

by a person in a fiduciary character, he shall

be deemed to contract with the buyer that the

seller has done no act whereby the property is

encumbered or whereby he is hindered from

transferring it. The benefit of the contract

mentioned in this rule shall be annexed to, and

shall go with, the interest of the transferee as

such, and may be enforced by every person in

whom that interest is for the whole or any part

thereof from time to time vested.

(3) Where the whole of the purchasemoney

has been paid to the seller, he is also

bound to deliver to the buyer all documents of

title relating to the property which are in the

seller’s possession or power: Provided that, (a)

where the seller retains any part of the property

comprised in such documents, he is entitled

to retain them all, and, (b) where the

whole of such property is sold to different buyers,

the buye of the lot of greatest value is entitled

to such documents. But in case (a) the

seller, and in case (b) the buyer, of the lot of

greatest value, is bound, upon every reasonable

request by the buyer, or by any of the

other buyers, as the case may be, and at the

cost of the person making the request, to produce

the said documents and furnish such true

copies thereof or extracts therefrom as he may

require; and in the meantime, the seller, or the

buyer of the lot of greatest value, as the case

may be, shall keep the said documents safe,

uncancelled and undefaced, unless prevented

from so doing by fire or other inevitable accident.

(4) The seller is entitled—

(a) to the rents and profits of the property

till the ownership thereof passes to the buyer;

(b) where the ownership of the property

has passed to the buyer before payment of the

whole of the purchase-money, to a charge upon

the property in the hands of the buyer, 1[any

transferee without consideration or any transferee

with notice of the non-payment], for the

amount of the purchase-money, or any part

thereof remaining unpaid, and for interest on

such amount or part 1[from the date on which

possession has been delivered].

(5) The buyer is bound—

(a) to disclose to the seller any fact as to

the nature or extent of the seller’s interest in

the property of which the buyer is aware, but

of which he has reason to believe that the seller

is not aware, and which materially increases

the value of such interest;

(b) to pay or tender, at the time and place

of completing the sale, the purchase-money to

the seller or such person as he directs: provided

that, where the property is sold free

from encumbrances, the buyer may retain out

of the purchase-money the amount of any encumbrances

on the property existing at the

date of the sale, and shall pay the amount so

retained to the persons entitled thereto;

(c) where the ownership of the property

has passed to the buyer, to bear any loss arising

from the destruction, injury or decrease in

value of the property not caused by the seller;

(d) where the ownership of the property

has passed to the buyer, as between himself

and the seller, to pay all public charges and

rent which may become payable in respect of

the property, the principal moneys due on any

encumbrances subject to which the property

is sold, and the interest thereon afterwards accruing

due.

(6) The buyer is entitled— (a) where the



ownership of the property has passed to him,

to the benefit of any improvement in, or increase

in value of, the property, and to the

rents and profits thereof; (b) unless he has

improperly declined to accept delivery of the

property, to a charge on the property, as

against the seller and all persons claiming under

him, 2[* * *] to the extent of the seller’s

interest in the property, for the amount of any

purchase-money properly paid by the buyer in

anticipation of the delivery and for interest on

such amount; and, when he properly declines

to accept the delivery, also for the earnest (if

any) and for the costs (if any) awarded to him

of a suit to compel specific performance of the

contract or to obtain a decree for its rescission.

An omission to make such disclosures

as are mentioned in this section, paragraph

(1), clause (a), and paragraph (5), clause (a),

is fraudulent. 1[56. Marshalling by subsequent

purchaser.—If the owner of two or more

properties mortgages them to one person and

then sells one or more of the properties to another

person, the buyer is, in the absence of

a contract to the contrary, entitled to have

the mortgaged-debt satisfied out of the property

or properties not sold to him, so far as

the same will extend, but not so as to prejudice

the rights of the mortgagee or persons

claiming under him or of any other person

who has for consideration acquired an interest

in any of the properties.] 57. Provision by

Court for encumbrances and sale freed therefrom.—

(a) Where immoveable property subject

to any encumbrances, whether immediately

payable or not, is sold by the court or

in execution of a decree, or out of court, the

court may, if it thinks fit, on the application

of any party to the sale, direct or allow payment

into Court,— (1) in case of an annual or

monthly sum charged on the property, or of a

capital sum charged on a determinable interest

in the property—of such amount as, when

invested in securities of the Central Government,

the Court considers will be sufficient,

by means of the interest thereof, to keep down

or otherwise provide for that charge, and (2)

in any other case of a capital sum charged

on the property—of the amount sufficient to

meet the encumbrance and any interest due

thereon. But in either case there shall also be

paid into court such additional amount as the

Court considers will be sufficient to meet the

contingency of further costs, expenses and interest,

and any other contingency, except depreciation

of investment, not exceeding onetenth

part of the original amount to be paid

in, unless the Court for special reasons (which

it shall record) thinks fit to require a large additional

amount. (b) Thereupon the Court

may, if it thinks fit, and after notice to the

encumbrance, unless the Court, for reasons to

be recorded in writing, thinks fit to dispense

with such notice, declare the property to be

freed from the encumbrance, and make any

order for conveyance, or vesting order, proper

for giving effect to the sale, and give directions

for the retention and investment of the

money in Court. (c) After notice served on

the persons interested in or entitled to the

money or fund in Court, the Court may direct

payment or transfer thereof to the persons

entitled to receive or give a discharge for

the same, and generally may give directions

respecting the application or distribution of

the capital or income thereof. (d) An appeal

shall lie from any declaration, order or direction

under this section as if the same were a

decree. (e) In this section “Court” means (1)

a High Court in the exercise of its ordinary

or extraordinary original civil jurisdiction, (2)

the Court of a District Judge within the local

limits of whose jurisdiction the property or

any part thereof is situate, (3) any other Court

which the State Government may, from time

to time, by notification in the Official Gazette,

declare to be competent to exercise the jurisdiction

conferred by this section. 58. “Mortgage”,

“mortgagor”, “mortgagee”, “mortgagemoney”

and “mortgage-deed” defined.— (a) A

mortgage is the transfer of an interest in specific

immoveable property for the purpose of

securing the payment of money advanced or

to be advanced by way of loan, an existing or

future debt, or the performance of an engagement

which may give rise to a pecuniary liability.

The transferor is called a mortgagor, the

transferee a mortgagee; the principal money

and interest of which payment is secured for

the time being are called the mortgage-money,



and the instrument (if any) by which the

transfer is effected is called a mortgage-deed.

(b) Simple mortgage.—Where, without delivering

possession of the mortgaged property,

the mortgagor binds himself personally to pay

the mortgage-money, and agrees, expressly or

impliedly, that, in the event of his failing to

pay according to his contract, the mortgagee

shall have a right to cause the mortgaged property

to be sold and the proceeds of sale to be

applied, so far as may be necessary, in payment

of the mortgage-money, the transaction

is called a simple mortgage and the mortgagee

a simple mortgagee. (c) Mortgage by conditional

sale.—Where, the mortgagor ostensibly

sells the mortgaged property— on condition

that on default of payment of the mortgagemoney

on a certain date the sale shall become

absolute, or on condition that on such payment

being made the sale shall become void,

or on condition that on such payment being

made the buyer shall transfer the property

to the seller, the transaction is called mortgage

by conditional sale and the mortgagee

a mortgagee by conditional sale: 1[Provided

that no such transaction shall be deemed to

be a mortgage, unless the condition is embodied

in the document which effects or purports

to effect the sale.] (d) Usufructuary mortgage.—Where

the mortgagor delivers possession

1[or expressly or by implication binds

himself to deliver possession] of the mortgaged

property to the mortgagee, and authorises him

to retain such possession until payment of

the mortgage-money, and to receive the rents

and profits accruing from the property 2[or

any part of such rents and profits and to appropriate

the same] in lieu of interest, or in

payment of the mortgage-money, or partly in

lieu of interest 3[or] partly in payment of the

mortgage-money, the transaction is called an

usufructuary mortgage and the mortgagee an

usufructuary mortgagee. (e) English mortgage.—Where

the mortgagor binds himself to

repay the mortgage-money on a certain date,

and transfers the mortgaged property absolutely

to the mortgagee, but subject to a proviso

that he will re-transfer it to the mortgagor

upon payment of the mortgage-money

as agreed, the transaction is called an English

mortgage. 4[(f) Mortgage by deposit of

title-deeds.—Where a person in any of the

following towns, namely, the towns of Calcutta,

Madras, 5[and Bombay], 6[* * *] and

in any other town7 which the 8[State Government

concerned] may, by notification in the

Official Gazette, specify in this behalf, delivers

to a creditor or his agent documents of

title to immoveable property, with intent to

create a security thereon, the transaction is

called a mortgage by deposit of title-deeds. (g)

Anomalous mortgage.—A mortgage which is

not a simple mortgage, a mortgage by conditional

sale, an usufructuary mortgage, an English

mortgage or a mortgage by deposit of

title-deeds within the meaning of this section

is called an anomalous mortgage.] 58. “Mortgage”,

“mortgagor”, “mortgagee”, “mortgagemoney”

and “mortgage-deed” defined.— (a) A

mortgage is the transfer of an interest in specific

immoveable property for the purpose of

securing the payment of money advanced or

to be advanced by way of loan, an existing or

future debt, or the performance of an engagement

which may give rise to a pecuniary liability.

The transferor is called a mortgagor, the

transferee a mortgagee; the principal money

and interest of which payment is secured for

the time being are called the mortgage-money,

and the instrument (if any) by which the

transfer is effected is called a mortgage-deed.

(b) Simple mortgage.—Where, without delivering

possession of the mortgaged property,

the mortgagor binds himself personally to pay

the mortgage-money, and agrees, expressly or

impliedly, that, in the event of his failing to

pay according to his contract, the mortgagee

shall have a right to cause the mortgaged property

to be sold and the proceeds of sale to be

applied, so far as may be necessary, in payment

of the mortgage-money, the transaction

is called a simple mortgage and the mortgagee

a simple mortgagee. (c) Mortgage by conditional

sale.—Where, the mortgagor ostensibly

sells the mortgaged property— on condition

that on default of payment of the mortgagemoney

on a certain date the sale shall become

absolute, or on condition that on such payment

being made the sale shall become void,

or on condition that on such payment being



made the buyer shall transfer the property

to the seller, the transaction is called mortgage

by conditional sale and the mortgagee

a mortgagee by conditional sale: 1[Provided

that no such transaction shall be deemed to

be a mortgage, unless the condition is embodied

in the document which effects or purports

to effect the sale.] (d) Usufructuary mortgage.—Where

the mortgagor delivers possession

1[or expressly or by implication binds

himself to deliver possession] of the mortgaged

property to the mortgagee, and authorises him

to retain such possession until payment of

the mortgage-money, and to receive the rents

and profits accruing from the property 2[or

any part of such rents and profits and to appropriate

the same] in lieu of interest, or in

payment of the mortgage-money, or partly in

lieu of interest 3[or] partly in payment of the

mortgage-money, the transaction is called an

usufructuary mortgage and the mortgagee an

usufructuary mortgagee. (e) English mortgage.—Where

the mortgagor binds himself to

repay the mortgage-money on a certain date,

and transfers the mortgaged property absolutely

to the mortgagee, but subject to a proviso

that he will re-transfer it to the mortgagor

upon payment of the mortgage-money

as agreed, the transaction is called an English

mortgage. 4[(f) Mortgage by deposit of

title-deeds.—Where a person in any of the

following towns, namely, the towns of Calcutta,

Madras, 5[and Bombay], 6[* * *] and

in any other town7 which the 8[State Government

concerned] may, by notification in the

Official Gazette, specify in this behalf, delivers

to a creditor or his agent documents of

title to immoveable property, with intent to

create a security thereon, the transaction is

called a mortgage by deposit of title-deeds.

(g) Anomalous mortgage.—A mortgage which

is not a simple mortgage, a mortgage by

conditional sale, an usufructuary mortgage,

an English mortgage or a mortgage by deposit

of title-deeds within the meaning of

this section is called an anomalous mortgage.]

1[59A. References to mortgagors and mortgagees

to include persons deriving title from

them.—Unless otherwise expressly provided,

references in this Chapter to mortgagors and

mortgagees shall be deemed to include references

to persons deriving title from them respectively.]

60. Right of mortgagor to redeem.—At

any time after the principal money

has become 1[due], the mortgagor has a right,

on payment or tender, at a proper time and

place, of the mortgage-money, to require the

mortgagee (a) to deliver 2[to the mortgagor

the mortgage-deed and all documents relating

to the mortgaged property which are in

the possession or power of the mortgagee],

(b) where the mortgagee is in possession of

the mortgaged property, to deliver possession

thereof to the mortgagor, and (c) at the cost of

the mortgagor either to re-transfer the mortgaged

property to him or to such third person

as he may direct, or to execute and (where the

mortgage has been effected by a registered instrument)

to have registered an acknowledgement

in writing that any right in derogation

of his interest transferred to the mortgagee

has been extinguished: Provided that the right

conferred by this section has not been extinguished

by act of the parties or by 3[decree]

of a Court. The right conferred by this section

is called a right to redeem and a suit to

enforce it is called a suit for redemption. Nothing

in this section shall be deemed to render

invalid any provision to the effect that, if the

time fixed for payment of the principal money

has been allowed to pass or no such time has

been fixed, the mortgagee shall be entitled to

reasonable notice before payment or tender of

such money. Redemption of portion of mortgaged

property.—Nothing in this section shall

entitle a person interested in a share only of

the mortgaged property to redeem his own

share only, on payment of a proportionate part

of the amount remaining due on the mortgage,

except 4[only] where a mortgagee, or, if there

are more mortgagees than one, all such mortgagees,

has or have acquired, in whole or in

part, the share of a mortgagor.



4.53 Obligation to transfer

to third party instead

of re-transference

to mortgagor

1[60A. (1) Where a mortgagor is entitled to redemption,

then, on the fulfilment of any conditions

on the fulfilment of which he would be

entitled to require a re-transfer, he may require

the mortgagee, instead of re-transferring

the property, to assign the mortgage-debt and

transfer the mortgaged property to such third

person as the mortgagor may direct; and the

mortgagee shall be bound to assign and transfer

accordingly.

(2) The rights conferred by this section belong

to and may be enforced by the mortgagor

or by any encumbrancer notwithstanding an

intermediate encumbrance; but the requisition

of any encumbrance shall prevail over a requisition

of the mortgagor and, as between encumbrancers,

the requisition of a prior encumbrancer

shall prevail over that of a subsequent

encumbrancer.

(3) The provisions of this section do not

apply in the case of a mortgagee who is or has

been in possession.

entitled to redeem any one such mortgage separately,

or any two or more of such mortgages

together.

4.55 Right of usufructuary

mortgagor to recover

possession.—

62. In the case of a usufructuary mortgage,

the mortgagor has a right to recover possession

of the property 1[together with the mortgagedeed

and all documents relating to the mortgaged

property which are in the possession or

power of the mortgagee],—

(a) where the mortgagee is authorized to

pay himself the mortgage-money from the

rents and profits of the property,—when such

money is paid;

(b) where the mortgagee is authorised to

pay himself from such rents and profits 2[or

any part thereof a part only of the mortgagemoney],—when

the term (if any) prescribed

for the payment of the mortgage-money has

expired and the mortgagor pays or tenders to

the mortgagee 3[the mortgage-money or the

balance thereof] or deposits it in Court as hereinafter

provided.

4.54 Right to inspection

and production of

documents

60B. A mortgagor, as long as his right of redemption

subsists, shall be entitled at all reasonable

times, at his request and at his own

cost, and on payment of the mortgagee’s costs

and expenses in this behalf, to inspect and

make copies or abstracts of, or extracts from,

documents of title relating to the mortgaged

property which are in the custody or power of

the mortgagee.]

61. Right to redeem separately or simultaneously.—A

mortgagor who has executed two

or more mortgages in favour of the same mortgagee

shall, in the absence of a contract to the

contrary, when the principal money of any two

or more of the mortgages has become due, be

4.56 Accession to mortgaged

property

63. Where mortgaged property in possession

of the mortgagee has, during the continuance

of the mortgage, received any accession, the

mortgagor, upon redemption shall, in the absence

of a contract to the contrary, be entitled

as against the mortgagee to such accession.

Accession acquired in virtue of transferred

ownership.—Where such accession has

been acquired at the expense of the mortgagee,

and is capable of separate possession or enjoyment

without detriment to the principal property,

the mortgagor desiring to take the accession

must pay to the mortgagee the expense

of acquiring it. If such separate possession or

enjoyment is not possible, the accession must

be delivered with the property; the mortgagor



being liable, in the case of an acquisition necessary

to preserve the property from destruction,

forfeiture or sale, or made with his assent,

to pay the proper cost thereof, as an addition

to the principal money, 1[with interest

at the same rate as is payable on the principal,

or, where no such rate is fixed, at the rate

of nine per cent per annum]. In the case last

mentioned the profits, if any, arising from the

accession shall be credited to the mortgagor.

Where the mortgage is usufructuary and the

accession has been acquired at the expense of

the mortgagee, the profits, if any, arising from

the accession shall, in the absence of a contract

to the contrary, be set off against interest, if

any, payable on the money so expended.

4.57 Improvements to

mortgaged property.—

63A. (1) Where mortgaged property in possession

of the mortgagee has, during the continuance

of the mortgage, been improved, the

mortgagor, upon redemption, shall, in the absence

of a contract to the contrary, be entitled

to the improvement; and the mortgagor shall

not, save only in cases provided for in subsection

(2), be liable to pay the cost thereof.

(2) Where any such improvement was effected

at the cost of the mortgagee and was

necessary to preserve the property from destruction

or deterioration or was necessary to

prevent the security from becoming insufficient,

or was made in compliance with the

lawful order of any public servant or public

authority, the mortgagor shall, in the absence

of a contract to the contrary, be liable to pay

the proper cost thereof as an addition to the

principal money with interest at the same rate

as is payable on the principal, or, where no

such rate is fixed, at the rate of nine per cent

per annum, and the profits, if any, accruing by

reason of the improvement shall be credited to

the mortgagor.

4.58 Renewal of mortgaged

lease

64. Where the mortgaged property is a lease

1[***], and the mortgagee obtains a renewal

of the lease, the mortgagor, upon redemption,

shall, in the absence of a contract by him to

the contrary, have the benefit of the new lease.

4.59 Implied contracts by

mortgagor


the mortgagor shall be deemed to contract

with the mortgagee,—

(a) that the interest which the mortgagor

professes to transfer to the mortgagee subsists,

and that the mortgagor has power to transfer

the same;

(b) that the mortgagor will defend, or, if

the mortgagee be in possession of the mortgaged

property, enable him to defend, the

mortgagor’s title thereto;

(c) that the mortgagor will, so long as the

mortgagee is not in possession of the mortgaged

property, pay all public charges accruing

due in respect of the property;

(d) and, where the mortgaged property is

a lease 1[***], that the rent payable under

the lease, the conditions contained therein,

and the contracts binding on the lessee have

been paid, performed and observed down to

the commencement of the mortgage; and that

the mortgagor will, so long as the security exists

and the mortgagee is not in possession

of the mortgaged property, pay the rent reserved

by the lease, or, if the lease be renewed,

the renewed lease, perform the conditions contained

therein and observe the contracts binding

on the lessee, and indemnify the mortgagee

against all the claims sustained by reason

of the non-payment of the said rent or the

non-performance or non-observance of the said

conditions and contracts;

(e) and, where the mortgage is a second

or subsequent encumbrance on the property,

that the mortgagor will pay the interest from

time to time accruing due on each prior encumbrance

as and when it becomes due, and



will at the proper time discharge the principal

money due on such prior incumbrance. 2[***]

The benefit of the contracts mentioned in this

section shall be annexed to and shall go with

the interest of the mortgagee as such, and may

be enforced by every person in whom that interest

is for the whole or any part thereof from

time to time vested.

4.60 Mortgagor’s power to

lease

65A. (1) Subject to the provisions of subsection

(2), a mortgagor, while lawfully in possession

of the mortgaged property, shall have

power to make leases thereof which shall be

binding on the mortgagee.

(2) (a) Every such lease shall be such as

would be made in the ordinary course of management

of the property concerned, and in accordance

with any local law, custom or usage,

(b) Every such lease shall reserve the best

rent that can reasonably be obtained, and no

premium shall be paid or promised and no rent

shall be payable in advance,

(c) No such lease shall contain a covenant

for renewal,

(d) Every such lease shall take effect from

a date not later than six months from the date

on which it is made,

(e) In the case of a lease of buildings,

whether leased with or without the land on

which they stand, the duration of the lease

shall in no case exceed three years, and the

lease shall contain a covenant for payment of

the rent and a condition of re-entry on the rent

not being paid with a time therein specified.

(3) The provisions of sub-section (1) apply

only if and as far as a contrary intention is not

expressed in the mortgage-deed; and the provisions

of sub-section (2) may be varied or extended

by the mortgage-deed and, as so varied

and extended, shall, as far as may be, operate

in like manner and with all like incidents, effects

and consequences, as if such variations or

extensions were contained in that sub-section.]

4.61 Mortgagor’s power to

lease

65A. (1) Subject to the provisions of subsection

(2), a mortgagor, while lawfully in possession

of the mortgaged property, shall have

power to make leases thereof which shall be

binding on the mortgagee. (2) (a) Every such

lease shall be such as would be made in the

ordinary course of management of the property

concerned, and in accordance with any

local law, custom or usage, (b) Every such

lease shall reserve the best rent that can reasonably

be obtained, and no premium shall be

paid or promised and no rent shall be payable

in advance, (c) No such lease shall contain

a covenant for renewal, (d) Every such lease

shall take effect from a date not later than six

months from the date on which it is made,

(e) In the case of a lease of buildings, whether

leased with or without the land on which they

stand, the duration of the lease shall in no case

exceed three years, and the lease shall contain

a covenant for payment of the rent and a condition

of re-entry on the rent not being paid

with a time therein specified. (3) The provisions

of sub-section (1) apply only if and as

far as a contrary intention is not expressed in

the mortgage-deed; and the provisions of subsection

(2) may be varied or extended by the

mortgage-deed and, as so varied and extended,

shall, as far as may be, operate in like manner

and with all like incidents, effects and consequences,

as if such variations or extensions

were contained in that sub-section.

4.62 Waste by mortgagor

in possession

66. A mortgagor in possession of the mortgaged

property is not liable to the mortgagee

for allowing the property to deteriorate; but

he must not commit any act which is destructive

or permanently injurious thereto, if the

security is insufficient or will be rendered insufficient

by such act. Explanation.—A security

is insufficient within the meaning of this

section unless the value of the mortgaged property

exceeds by one-third, or, if consisting of



buildings, exceeds by one-half, the amount for

the time being due on the mortgage.

4.63 Right to fore-closure

or sale


the mortgagee has, at any time after the

mortgage-money has become 1[due] to him,

and before a decree has been made for the redemption

of the mortgaged property, or the

mortgage-money has been paid or deposited

as hereinafter provided, a right to obtain from

the Court 2[a decree] that the mortgagor shall

be absolutely debarred of his right to redeem

the property, or 2[a decree] that the property

be sold. A suit to obtain 2[a decree] that

a mortgagor shall be absolutely debarred of

his right to redeem the mortgaged property is

called a suit for foreclosure. Nothing in this

section shall be deemed—

3[ (a) to authorise any mortgagee other

than a mortgagee by conditional sale or a

mortgagee under an anomalous mortgage by

the terms of which he is entitled to foreclose, to

institute a suit for foreclosure, or an usufructuary

mortgagee as such or a mortgagee by

conditional sale as such to institute a suit for

sale; or]

(b) to authorise a mortgagor who holds the

mortgagee’s rights as his trustee or legal representative,

and who may sue for a sale of the

property, to institute a suit for foreclosure; or

(c) to authorise the mortgagee of a railway,

canal, or other work in the maintenance

of which the public are interested, to institute

a suit for foreclosure or sale; or

(d) to authorise a person interested in part

only of the mortgage-money to institute a suit

relating only to a corresponding part of the

mortgaged property, unless the mortgagees

have, with the consent of the mortgagor, severed

their interests under the mortgage.

4.64 Mortgagee when

bound to bring one

suit on several mortgages

67A. A mortgagee who holds two or more

mortgages executed by the same mortgagor in

respect of each of which he has a right to obtain

the same kind of decree under section 67,

and who sues to obtain such decree on any

one of the mortgages, shall, in the absence of

a contract to the contrary, be bound to sue

on all the mortgages in respect of which the

mortgage-money has become due.]

4.65 Right to sue for

mortgage-money

68. (1) The mortgagee has a right to sue for

the mortgage-money in the following cases and

no others, namely:—

(a) where the mortgagor binds himself to

repay the same;

(b) where, by any cause other than the

wrongful act or default of the mortgagor or

mortgagee, the mortgaged property is wholly

or partially destroyed or the security is rendered

insufficient within the meaning of section

66, and the mortgagee has given the mortgagor

a reasonable opportunity of providing

further security enough to render the whole security

sufficient, and the mortgagor has failed

to do so;

(c) where the mortgagee is deprived of the

whole or part of his security by or in consequence

of the wrongful act or default of the

mortgagor;

(d) where, the mortgagee being entitled

to possession of the mortgaged property, the

mortgagor fails to deliver the same to him, or

to secure the possession thereof to him without

disturbance by the mortgagor or any person

claiming under a title superior to that of the

mortgagor: Provided that, in the case referred

to in clause (a), a transferee from the mortgagor

or from his legal representative shall not

be liable to be sued for the mortgage-money.

(2) Where a suit is brought under clause



(a) or clause (b) of sub-section (1), the Court

may, at its discretion, stay the suit and all

proceedings therein, notwithstanding any contract

to the contrary, until the mortgagee has

exhausted all his available remedies against

the mortgaged property or what remains of

it, unless the mortgagee abandons his security

and, if necessary, re-transfers the mortgaged

property.]

4.66 Power of sale when

valid

69. [ (1) ] 2[3[***] A mortgagee, or any person

acting on his behalf, shall, subject to the

provisions of this section have power to sell

or concur in selling the mortgaged property

or any part thereof, in default of payment of

the mortgage-money, without the intervention

of the court, in the following cases and in no

others, namely:—]

(a) where the mortgage is an English mortgage,

and neither the mortgagor nor the mortgagee

is a Hindu, Muhammadan or Buddhist

4[or a member of any other race, sect, tribe

or class from time to time specified in this behalf

by 5[the State Government], in the Official

Gazette];

(b) where 6[a power of sale without the intervention

of the court is expressly conferred

on the mortgagee by the mortgage-deed and]

the mortgagee is 7[the Government];

(c) where 6[a power of sale without the intervention

of the court is expressly conferred

on the mortgagee by the mortgage-deed and]

the mortgaged property or any part thereof

8[was, on the date of the execution of the

mortgage-deed], situate within the towns of

Calcutta, Madras, Bombay, 9[***] 10[or in any

other town11 or area which the State Government

may, by notification in the Official

Gazette, specify in this behalf.] 12[(2)] 13[***]

No such power shall be exercised unless and

until— 14[(a)] notice in writing requiring payment

of the principal money has been served

on the mortgagor, or on one of several mortgagors,

and default has been made in payment

of the principal money, or of part thereof,

for three months after such service; or 15[(b)]

some interest under the mortgage amounting

at least to five hundred rupees is in arrear and

unpaid for three months after becoming due.

16[(3)] When a sale has been made in professed

exercise of such a power, the title of

the purchaser shall not be impeachable on the

ground that no case had arisen to authorise

the sale, or that due notice was not given, or

that the power was otherwise improperly or irregularly

exercised; but any person damnified

by an unauthorised or improper or irregular

exercise or the power shall have his remedy

in damages against the person exercising the

power. 17[(4)] The money which is received by

the mortgagee, arising from the sale, after discharge

of prior encumbrances, if any, to which

the sale is not made subject, or after payment

into Court under section 57 of a sum to meet

any prior encumbrance, shall, in the absence

of a contract to the contrary, be held by him

in trust to be applied by him, first, in payment

of all costs, charges and expenses properly incurred

by him as incident to the sale or any

attempted sale; and, secondly, in discharge

of the mortgage-money and costs and other

money, if any, due under the mortgage; and

the residue of the money so received shall be

paid to the person entitled to the mortgaged

property, or authorised to give receipts for the

proceeds of the sale thereof. 18[(5) Nothing in

this section or in section 69A applies to powers

conferred before the first day of July, 1882.]

19[***]

4.67 Appointment of receiver

69A. (1) A mortgagee having the right to exercise

a power of sale under section 69 shall,

subject to the provisions of sub-section (2), be

entitled to appoint, by writing signed by him

or on his behalf, a receiver of the income of

the mortgaged property or any part thereof.

(2) Any person who has been named in

the mortgage-deed and is willing and able to

act as receiver may be appointed by the mortgagee.

If no person has been so named, or if all

persons named are unable or unwilling to act,

or are dead, the mortgagee may appoint any



person to whose appointment the mortgagor

agrees; failing such agreement, the mortgagee

shall be entitled to apply to the Court for the

appointment of a receiver, and any person appointed

by the Court shall be deemed to have

been duly appointed by the mortgagee. A receiver

may at any time be removed by writing

signed by or on behalf of the mortgagee and

the mortgagor, or by the court on application

made by either party and on due cause shown.

A vacancy in the office of receiver may be filled

in accordance with the provisions of this subsection.

(3) A receiver appointed under the powers

conferred by this section shall be deemed to be

the agent of the mortgagor; and the mortgagor

shall be solely responsible for the receiver’s act

or defaults, unless the mortgage-deed otherwise

provides or unless such acts or defaults

are due to the improper intervention of the

mortgagee.

(4) The receiver shall have power to demand

and recover all the income of which he

is appointed receiver, by suit, execution or otherwise,

in the name either of the mortgagor or

of the mortgagee to the full extent of the interest

which the mortgagor could dispose of,

and to give valid receipts accordingly for the

same, and to exercise any powers which may

have been delegated to him by the mortgagee,

in accordance with the provisions of this section.

(5) A person paying money to the receiver

shall not be concerned to inquire if the appointment

of the receiver was valid or not.

(6) The receiver shall be entitled to retain

out of any money received by him, for his remuneration,

and in satisfaction of all costs,

charges and expenses incurred by him as receiver,

a commission at such rate not exceeding

five per cent, on the gross amount of all

money received as is specified in his appointment,

and, if no rate is so specified, then at the

rate of five per cent. on that gross amount, or

at such other rate as the court thinks fit to

allow, on application made by him for that

purpose.

(7) The receiver shall, if so directed in writing

by the mortgagee, insure to the extent, if

any, to which the mortgagee might have insured,

and keep insured against loss or damage

by fire, out of the money received by him, the

mortgaged property or any part thereof being

of an insurable nature.

(8) Subject to the provisions of this Act as

to the application of insurance money, the receiver

shall apply all money received by him

as follows, namely:—

(i) in discharge of all rents, taxes, land revenue,

rates and outgoings whatever affecting

the mortgaged property;

(ii) in keeping down all annual sums or

other payments, and the interest on all principal

sums, having priority to the mortgage in

right whereof he is receiver;

(iii) in payment of his commission, and of

the premiums on fire, life or other insurances,

if any, properly payable under the mortgagedeed

or under this Act, and the cost of executing

necessary or proper repairs directed in

writing by the mortgagee;

(iv) in payment of the interest falling due

under the mortgage;

(v) in or towards discharge of the principal

money, if so directed in writing by the mortgagee,

and shall pay the residue, of any, of the

money received by him to the person who, but

for the possession of the receiver, would have

been entitled to receive the income of which

he is appointed receiver, or who is otherwise

entitled to the mortgaged property.

(9) The provisions of sub-section (1) apply

only if and as far as a contrary intention is not

expressed in the mortgage-deed; and the provisions

of sub-sections (3) to (8) inclusive may

be varied or extended by the mortgage-deed;

and, as so varied or extended, shall, as far as

may be, operate in like manner and with all

the like incidents, effects and consequences, as

if such variations or extensions were contained

in the said sub-sections.

(10) Application may be made, without

the institution of a suit, to the court for its

opinion, advice or direction on any present

question respecting the management or administration

of the mortgaged property, other

than questions of difficulty or importance not

proper in the opinion of the court for summary

disposal. A copy of such application shall be

served upon, and the hearing thereof may be



attended by, such of the persons interested in

the application as the Court may think fit.

The costs of every application under this subsection

shall be in the discretion of the Court.

(11) In this section, “the Court” means the

Court which would have jurisdiction in a suit

to enforce the mortgage.]

4.68 Accession to mortgaged

property

70. 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. Illustrations

(a) A mortgages to B a certain field bordering

on a river. The field is increased by

alluvion. For the purposes of his security, B is

entitled to the increase.

(b) A mortgages a certain plot of building

land to B and afterwards erects a house on

the plot. For the purposes of his security, B is

entitled to the house as well as the plot.

4.69 Renewal of mortgaged

lease

71. When the mortgaged property is a lease

1[***] 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.

4.70 Right of mortgagee in

possession

72. 1[A mortgagee] may spend such money as

is necessary— 2[***]

(b) for 3[the preservation of the mortgaged

property] from destruction, forfeiture or sale;

(c) for supporting the mortgagor’s title to

the property;

(d) for making his own title thereto good

against the mortgagor; and

(e) when the mortgaged property is a renewable

lease-hold, for the renewal of the

lease, and may, in the absence of a contract

to the contrary, add such money to the principal

money, at the rate of interest payable

on the principal, and, where no such rate is

fixed, at the rate of nine per cent. per annum:

4[Provided that the expenditure of money by

the mortgagee under clause (b) or clause (c)

shall not be deemed to be necessary unless the

mortgagor has been called upon and has failed

to take proper and timely steps to preserve the

property or to support the title.] Where the

property is by its nature insurable, the mortgagee

may also, in the absence of a contract to

the contrary, insure and keep insured against

loss or damage by fire the whole or any part of

such property, and the premiums paid for any

such insurance shall be 5[added to the principal

money with interest at the same rate as is

payable on the principal money or, where no

such rate is fixed, at the rate of nine per cent.

per annum]. But the amount of such insurance

shall not exceed the amount specified in

this behalf in the mortgage-deed or (if no such

amount is therein specified) two-thirds of the

amount that would be required in case of total

destruction to reinstate the property insured.

Nothing in this section shall be deemed to authorise

the mortgagee to insure when an insurance

of the property is kept up by or on behalf

of the mortgagor to the amount in which the

mortgagee is hereby authorised to insure.

4.71 Right to proceeds of

revenue sale or compensation

on acquisition

73. (1) Where the mortgaged property or any

part thereof or any interest therein is sold owing

to failure to pay arrears of revenue or other

charges of a public nature or rent due in respect

of such property, and such failure did

not arise from any default of the mortgagee,

the mortgagee shall be entitled to claim payment

of the mortgage-money, in whole or in

part, out of any surplus of the sale-proceeds



remaining after payment of the arrears and of

all charges and deductions directed by law.

(2) Where the mortgaged property or any

part thereof or any interest therein is acquired

under the Land Acquisition Act, 1894 (1 of

1894); or any other enactment for the time

being in force providing for the compulsory

acquisition of immoveable property, the mortgagee

shall be entitled to claim payment of the

mortgage-money, in whole or in part, out of

the amount due to the mortgagor as compensation.

(3) Such claims shall prevail against

all other claims except those of prior encumbrancers,

and may be enforced notwithstanding

that the principal money on the mortgage

has not become due.

4.72 Right of subsequent

mortgagee to pay off

prior mortgagee

74. [Rep. by the Transfer of Property

(Amendment) Act, 1929 (20 of 1929), sec. 39.]

4.73 Rights of mesne

mortgagee against

prior and subsequent

mortgagees

75. [Rep. by the Transfer of Property

(Amendment) Act, 1929 (20 of 1929), sec. 39.]

4.74 Liabilities of mortgagee

in possession.—

76. When, during the continuance of the mortgage,

the mortgagee takes possession of the

mortgaged property,—

(a) he must manage the property as a person

of ordinary prudence would manage it if it

were his own;

(b) he must use his best endeavours to collect

the rents and profits thereof;

(c) he must, in the absence of a contract to

the contrary, out of the income of the property,

pay the Government revenue, all other charges

of a public nature 1[and all rent] accruing due

in respect thereof during such possession, and

any arrears of rent in default of payment of

which the property may be summarily sold;

(d) he must in the absence of a contract

to the contrary, make such necessary repairs

of the property as he can pay for out of the

rents and profits thereof after deducting from

such rents and profits the payments mentioned

in clause (c) and the interest on the principal

money;

(e) he must not commit any act which is

destructive or permanently injurious to the

property;

(f) where he has insured the whole or any

part of the property against loss or damage by

fire, he must, in case of such loss or damage,

apply any money which he actually receives

under the policy or so much thereof as may be

necessary, in reinstating the property, or, if the

mortgagor so directs, in reduction or discharge

of the mortgage-money;

(g) he must keep clear, full and accurate

accounts of all sums received and spent by him

as mortgagee, and, at any time during the continuance

of the mortgage, give the mortgagor,

at his request and cost, true copies of such accounts

and of the vouchers by which they are

supported;

(h) his receipts from the mortgaged property,

or, where such property is personally occupied

by him, a fair occupation-rent in respect

thereof, shall, after deducting the expenses

1[properly incurred for the management

of the property and the collection of

rents and profits and the other expenses] mentioned

in clauses (c) and (d), and interest

thereon, be debited against him in reduction

of the amount (if any) from time to time due

to him on account of interest 2[***] and, so far

as such receipts exceed any interest due, in reduction

or discharge of the mortgage-money;

the surplus, if any, shall be paid to the mortgagor;

(i) when the mortgagor tenders, or deposits

in the manner hereinafter provided, the

amount for the time being due on the mort-



gage, the mortgagee must, notwithstanding

the provisions in the other clauses of this section,

account for his 3[***] receipts from the

mortgaged property from the date of the tender

or from the earliest time when he could

take such amount out of court, as the case may

be 1[and shall not be entitled to deduct any

amount therefrom on account of any expenses

incurred after such date or time in connection

with the mortgaged property]. Loss occasioned

by his default.—If the mortgagee fails

to perform any of the duties imposed upon

him by this section, he may, when accounts

are taken in pursuance of a decree made under

this Chapter, be debited with the loss, if

any, occasioned by such failure.

4.75 Receipts in lieu of interest

77. Nothing in section 76, clauses (b), (d),

(g) and (h), applies to cases where there is a

contract between the mortgagee and the mortgagor

that the receipts from the mortgaged

property shall, so long as the mortgagee is in

possession of the property, be taken in lieu of

interest on the principal money, or in lieu of

such interest and defined portions of the principal.

4.77 Mortgage to secure

uncertain amount

when maximum is expressed

79. If a mortgage made to secure future advances,

the performance of an engagement or

the balance of a running account, expresses

the maximum to be secured thereby, a subsequent

mortgage of the same property shall,

if made with notice of the prior mortgage, be

postponed to the prior mortgage in respect of

all advances or debits not exceeding the maximum,

though made or allowed with notice of

the subsequent mortgage. Illustration A mortgages

Sultanpur to his bankers, B & Co., to

secure the balance of his account with them

to the extent of Rs.10,000. A then mortgages

Sultanpur to C, to secure Rs.10,000, C having

notice of the mortgage to B & Co., and C gives

notice to B & Co. of the second mortgage. At

the date of the second mortgage, the balance

due to B & Co. does not exceed Rs. 5,000. B

& Co. subsequently advance to A sums making

the balance of the account against him exceed

the sum of Rs.10,000. B & Co. are entitled,

to the extent of Rs.10,000, to priority

over C.

4.78 Tacking abolished

80.[Rep. by the Transfer of Property (Amendment)

Act, 1929 (20 of 1929), sec. 41.]

4.76 Postponement of

prior mortgagee

78. Where, through the fraud, misrepresentation

or gross neglect of prior mortgagee,

another person has been induced to advance

money on the security of the mortgaged property,

the prior mortgagee shall be postponed

to the subsequent mortgagee.

4.79 Marshalling, securities

81. If the owner of two or more properties

mortgages them to one person and then mortgages

one or more of the properties to another

person, the subsequent mortgagee is, in the

absence of a contract to the contrary, entitled

to have the prior mortgage-debt satisfied out

of the property or properties not mortgaged

to him, so far as the same will extend, but

not so as to prejudice the rights of the prior

mortgagee or of any other person who has for



consideration acquired an interest in any of the

properties.]

4.80 Contribution to

mortgage-debt.—

82. 1[Where property subject to a mortgage

belongs to two or more persons having distinct

and separate rights of ownership therein, the

different shares in or parts of such property

owned by such persons are, in the absence of

a contract to the contrary, liable to contribute

rateably to the debt secured by the mortgage,

and, for the purpose of determining the rate

at which each such share or part shall contribute,

the value thereof shall be deemed to be

its value at the date of the mortgage after deduction

of the amount of any other mortgage

or charge to which it may have been subject on

that date.] Where, of two properties belonging

to the same owner, one is mortgaged to

secure one debt and then both are mortgaged

to secure another debt, and the former debt is

paid out of the former property, each property

is, in the absence of a contract to the contrary,

liable to contribute rateably to the latter debt

after deducting the amount of the former debt

from the value of the property out of which it

has been paid. Nothing in this section applies

to a property liable under section 81 to the

claim of the 2[subsequent] mortgagee.

4.81 Power to deposit in

Court money due on

mortgage

83. At any time after the principal money

1[payable in respect of any mortgage has become

due] and before a suit for redemption of

the mortgaged property is barred, the mortgagor,

or any other person entitled to institute

such suit, may deposit, in any court in which

he might have instituted such suit, to the account

of the mortgagee, the amount remaining

due on the mortgage. Right to money deposited

by mortgagor.—The court shall thereupon

cause written notice of the deposit to be

served on the mortgagee, and the mortgagee

may, on presenting a petition (verified in manner

prescribed by law2 for the verification of

plaints) stating the amount then due on the

mortgage, and his willingness to accept the

money so deposited in full discharge of such

amount, and on depositing in the same Court

the mortgage-deed 3[and all documents in his

possession or power relating to the mortgaged

property], apply for and receive the money,

and the mortgage-deed, 4[and all such other

documents] so deposited shall be delivered to

the mortgagor or such other person as aforesaid.

5[Where the mortgagee is in possession

of the mortgaged property, the court shall, before

paying to him the amount so deposited,

direct him to deliver possession thereof to the

mortgagor and at the cost of the mortgagor either

to re-transfer the mortgaged property to

the mortgagor or to such third person as the

mortgagor may direct or to execute and (where

the mortgage has been effected by a registered

instrument) have registered an acknowledgement

in writing that any right in derogation

of the mortgagor’s interest transferred to the

mortgagee has been extinguished.]

4.82 Cessation of interest

84. When the mortgagor or such other person

as aforesaid has tendered or deposited in Court

under section 83 the amount remaining due on

the mortgage, interest on the principal money

shall cease from the date of the tender or 1[in

the case of a deposit, where no previous tender

of such amount has been made] as soon as the

mortgagor or such other person as aforesaid

has done all that has to be done by him to enable

the mortgagee to take such amount out of

Court, 2[and the notice required by section 83

has been served on the mortgagee: Provided

that, where the mortgagor has deposited such

amount without having made a previous tender

thereof and has subsequently withdrawn

the same or any part thereof, interest on the

principal money shall be payable from the date

of such withdrawal.] Nothing in this section or

in section 83 shall be deemed to deprive the

mortgagee of his right to interest when there

exists a contract that he shall be entitled to



reasonable notice before payment or tender of

the mortgage-money 3[and such notice has not

been given before the making of the tender or

deposit, as the case may be].

4.83 Parties to suits for

foreclosure, sale and

redemption

85. [Rep. by the Code of Civil Procedure,

1908 (5 of 1908), sec. 156 and Sch. V.]

86. —[Rep. by the Code of Civil Procedure,

1908 (5 of 1908), sec. 156 and Sch. V.]


1908 (5 of 1908), sec. 156 and Sch. V.]


1908 (5 of 1908), sec. 156 and Sch. V.]


1908 (5 of 1908), sec. 156 and Sch. V.]


1908 (5 of 1908), sec. 156 and Sch. V.]

1[91. Persons who may sue for redemption.—Besides

the mortgagor, any of the following

persons may redeem, or institute a suit

for redemption of, the mortgaged property,

namely:—

(a) any person (other than the mortgagee

of the interest sought to be redeemed) who has

any interest in, or charge upon, the property

mortgaged or in or upon the right to redeem

the same;

(b) any surety for the payment of the

mortgage-debt or any part thereof; or

(c) any creditor of the mortgagor who has

in a suit for the administration of his estate

obtained a decree for sale of the mortgaged

property.]

4.84 Subrogation

1[92.Any of the persons referred to in section

91 (other than the mortgagor) and any comortgagor

shall, on redeeming property subject

to the mortgage, have, so far as regards

redemption, foreclosure or sale of such property,

the same rights as the mortgagee whose

mortgage he redeems may have against the

mortgagor or any other mortgagee. The right

conferred by this section is called the right of

subrogation, and a person acquiring the same

is said to be subrogated to the rights of the

mortgagee whose mortgage he redeems. A person

who has advanced to a mortgagor money

with which the mortgage has been redeemed

shall be subrogated to the rights of the mortgagee

whose mortgage has been redeemed, if

the mortgagor has by a registered instrument

agreed that such persons shall be so subrogated.

Nothing in this section shall be deemed

to confer a right of subrogation on any person

unless the mortgage in respect of which the

right is claimed has been redeemed in full.]

4.85 Prohibition of tacking

1 [93. No mortgagee paying off a prior mortgage,whether

with or without notice of an

intermediate mortgage, shall thereby acquire

any priority in respect of his original security;

and, except in the case provided for by section

79, no mortgagee making a subsequent

advance to the mortgagor, whether with or

without notice of an intermediate mortgage,

shall thereby acquire any priority in respect of

his security for such subsequent advance.]

4.86 Rights of mesne

mortgagee

2 [94. Where a property is mortgaged for

successive debts to successive mortgagees, a

mesne mortgagee has the same rights against

mortgagees posterior to himself as he has

against the mortgagor.]

4.87 Right of redeeming

co-mortgagor to expenses

1[95.Where one of several mortgagors redeems

the mortgaged property, he shall, in enforcing

his right of subrogation under section 92

against his co-mortgagors, be entitled to add



to the mortgage money recoverable from them

such proportion of the expenses properly incurred

in such redemption as is attributable

to their share in the property.]

4.88 Mortgage by deposit

of title-deeds

4 [96. The provisions hereinbefore contained

which apply to a simple mortgage shall, so far

as may be, apply to a mortgage by deposit of

title-deeds.]

1[97. Application of proceeds.—[Rep. by

the Code of Civil Procedure, 1908 (5 of 1908),

sec. 156 and Sch. V.]


of parties to anomalous

mortgages

98. In the case of 1[an anomalous mortgage]

the rights and liabilities of the parties shall be

determined by their contract as evidenced in

the mortgage-deed, and, so far as such contract

does not extend, by local usage.

1[99. Attachment of mortgaged property.—[Rep.

by the Code of Civil Procedure,

1908 (5 of 1908), sec.156 and Sch. V.]

4.90 Charges

100. Where immoveable property of one person

is by act of parties or operation of law

made security for the payment of money to another,

and the transaction does not amount to

a mortgage, the latter person is said to have a

charge on the property; and all the provisions

hereinbefore contained 1[which apply to a simple

mortgage shall, so far as may be, apply to

such charge]. Nothing in this section applies

to the charge of a trustee on the trust-property

for expenses properly incurred in the execution

of his trust, 2[and, save as otherwise expressly

provided by any law for the time being in force,

no charge shall be enforced against any property

in the hands of a person to whom such

property has been transferred for consideration

and without notice of the charge].

4.91 No merger in case

of subsequent encumbrance

1[101. Any mortgagee of, or person having

a charge upon, immoveable property, or

any transferee from such mortgagee or chargeholder,

may purchase or otherwise acquire the

rights in the property of the mortgagor or

owner, as the case may be, without thereby

causing the mortgage or charge to be merged

as between himself and any subsequent mortgagee

of, or person having a subsequent charge

upon, the same property; and no such subsequent

mortgagee or charge-holder shall be entitled

to foreclose or sell such property without

redeeming the prior mortgage or charge,

or otherwise than subject thereto.]

4.92 Service or tender on

or to agent

102. Where the person on or to whom any

notice or tender is to be served or made under

this Chapter does not reside in the district

in which the mortgaged property or some

part thereof is situate, service or tender on

or to an agent holding a general power-ofattorney

from such person or otherwise duly

authorised to accept such service or tender

shall be deemed sufficient. 1[Where no person

or agent on whom such notice should be

served can be found or is known] to the person

required to serve the notice, the latter person

may apply to any court in which a suit

might be brought for redemption of the mortgaged

property, and such court shall direct in

what manner such notice shall be served, and

any notice served in compliance with such direction

shall be deemed sufficient: 2[Provided

that, in the case of a notice required by section

83, in the case of a deposit, the application

shall be made to the court in which the

deposit has been made.] 3[Where no person



or agent to whom such tender should be made

can be found or is known] to the person desiring

to make the tender, the latter person may

deposit 4[in any Court in which a suit might

be brought for redemption of the mortgaged

property] the amount sought to be tendered,

and such deposit shall have the effect of a tender

of such amount.

4.93 Notice, etc., to or

by person incompetent

to contract

103.Where, under the provisions of this Chapter,

a notice is to be served on or by, or a tender

or deposit made or accepted or taken out

of court by, any person incompetent to contract,

such notice may be served 1[on or by] or

tender or deposit made, accepted or taken, by

the legal curator of the property of such person;

but where there is no such curator, and

it is requisite or desirable in the interest of

such person that a notice should be served or

a tender or deposit made under the provisions

of this Chapter, application may be made to

any court in which a suit might be brought for

the redemption of the mortgage to appoint a

guardian ad litem for the purpose of serving or

receiving service of such notice, or making or

accepting such tender, or making or taking out

of court such deposit, and for the performance

of all consequential acts which could or ought

to be done by such person if he were competent

to contract2; and the provisions of 3[order

XXXII in the First Schedule to the Code of

Civil Procedure, 1908 (5 of 1908)] shall, so far

as may be, apply to such application and to

parties thereto and to the guardian appointed

thereunder.

4.94 Power to make rules

104. The High Court may, from time to time,

make rules consistent with this Act for carrying

out, in itself and in the Courts of Civil

Judicature subject to its superintendence, the

provisions contained in this Chapter.

4.95 Lease defined

105.A lease of immoveable property is a transfer

of a right to enjoy such property, made

for a certain time, express or implied, or in

perpetuity, in consideration of a price paid or

promised, or of money, a share of crops, service

or any other thing of value, to be rendered

periodically or on specified occasions to

the transferor by the transferee, who accepts

the transfer on such terms. Lessor, lessee,

premium and rent defined.—The transferor is

called the lessor, the transferee is called the

lessee, the price is called the premium, and

the money, share, service or other thing to be

so rendered is called the rent.

4.96 Duration of certain

leases in absence of

written contract or

local usage

1[106.

(1) In the absence of a contract or local

law or usage to the contrary, a lease of immovable

property for agricultural or manufacturing

purposes shall be deemed to be a lease from

year to year, terminable, on the part of either

lessor or lessee, by six months’ notice; and a

lease of immovable property for any other purpose

shall be deemed to be a lease from month

to month, terminable, on the part of either

lessor or lessee, by fifteen days’ notice.


any other law for the time being in force, the

period mentioned in sub-section (1) shall commence

from the date of receipt of notice.

(3) A notice under sub-section (1) shall not

be deemed to be invalid merely because the

period mentioned therein falls short of the period

specified under that sub-section, where a

suit or proceeding is filed after the expiry of

the period mentioned in that sub-section.

(4) Every notice under sub-section (1)

must be in writing, signed by or on behalf of

the person giving it, and either be sent by post

to the party who is intended to be bound by it

or be tendered or delivered personally to such



party, or to one of his family or servants at

his residence, or (if such tender or delivery is

not practicable) affixed to a conspicuous part

of the property.]


of lessor and lessee

108. In the absence of a contract or local usage

to the contrary, the lessor and the lessee of

immoveable property, as against one another,

respectively, possess the rights and are subject

to the liabilities mentioned in the rules next

following, or such of them as are applicable to

the property leased:—

(A) Rights and Liabilities of the Lessor

(a) The lessor is bound to disclose to the

lessee any material defect in the property, with

reference to its intended use, of which the former

is and the latter is not aware, and which

the latter could not with ordinary care discover;

(b) the lessor is bound on the lessee’s request

to put him in possession of the property;

(c) the lessor shall be deemed to contract

with the lessee that, if the latter pays the

rent reserved by the lease and performs the

contracts binding on the lessee, he may hold

the property during the time limited by the

lease without interruption. The benefit of such

contract shall be annexed to and go with the

lessee’s interest as such, and may be enforced

by every person in whom that interest is for

the whole or any part thereof from time to

time vested.

(B) Rights and Liabilities of the Lessee

(d) If during the continuance of the lease

any accession is made to the property, such accession

(subject to the law relating to alluvion

for the time being in force) shall be deemed to

be comprised in the lease;

(e) if by fire, tempest or flood, or violence

of an army or of a mob, or other irresistible

force, any material part of the property be

wholly destroyed or rendered substantially and

permanently unfit for the purposes for which

it was let, the lease shall, at the option of the

lessee, be void: Provided that, if the injury

be occasioned by the wrongful act or default

of the lessee, he shall not be entitled to avail

himself of the benefit of this provision;

(f) if the lessor neglects to make, within a

reasonable time after notice, any repairs which

he is bound to make to the property, the lessee

may make the same himself, and deduct the

expense of such repairs with interest from the

rent, or otherwise recover it from the lessor;

(g) if the lessor neglects to make any payment

which he is bound to make, and which, if

not made by him, is recoverable from the lessee

or against the property, the lessee may make

such payment himself, and deduct it with interest

from the rent, or otherwise recover it

from the lessor;

(h) the lessee may 1[even after the determination

of the lease] remove, at any time

2[whilst he is in possession of the property

leased but not afterwards] all things which he

has attached to the earth; provided he leaves

the property in the state in which he received

it;

(i) when a lease of uncertain duration determines

by any means except the fault of the

lessee, he or his legal representative is entitled

to all the crops planted or sown by the lessee

and growing upon the property when the lease

determines, and to free ingress and egress to

gather and carry them;

(j) the lessee may transfer absolutely or by

way of mortgage or sub-lease the whole or any

part of his interest in the property, and any

transferee of such interest or part may again

transfer it. The lessee shall not, by reason only

of such transfer, cease to be subject to any of

the liabilities attaching to the lease; Nothing

in this clause shall be deemed to authorise a

tenant having an untransferable right of occupancy,

the farmer of an estate in respect of

which default has been made in paying revenue,

or the lessee of an estate under the management

of a Court of Wards, to assign his

interest as such tenant, farmer or lessee;

(k) the lessee is bound to disclose to the

lessor any fact as to the nature or extent of the

interest which the lessee is about to take, of

which the lessee is, and the lessor is not, aware,

and which materially increases the value of

such interest;

(l) the lessee is bound to pay or tender,



at the proper time and place, the premium or

rent to the lessor or his agent in this behalf;

(m) the lessee is bound to keep, and on the

termination of the lease to restore, the property

in as good condition as it was in at the

time when he was put in possession, subject

only to the changes caused by reasonable wear

and tear or irresistible force, and to allow the

lessor and his agents, at all reasonable times

during the term, to enter upon the property

and inspect the condition thereof and give or

leave notice of any defect in such condition;

and, when such defect has been caused by any

act or default on the part of the lessee, his servants

or agents, he is bound to make it good

within three months after such notice has been

given or left;

(n) if the lessee becomes aware of any proceeding

to recover the property or any part

thereof, or of any encroachment made upon, or

any interference with, the lessor’s rights concerning

such property, he is bound to give,

with reasonable diligence, notice thereof to the

lessor;

(o) the lessee may use the property and its

products (if any) as a person of ordinary prudence

would use them if they were his own;

but he must not use, or permit another to use,

the property for a purpose other than that for

which it was leased, or fell 3[or sell] timber,

pull down or damage buildings 3[belonging to

the lessor, or] work mines or quarries not open

when the lease was granted, or commit any

other act which is destructive or permanently

injurious thereto;

(p) he must not, without the lessor’s consent,

erect on the property any permanent

structure, except for agricultural purposes;

(q) on the determination of the lease, the

lessee is bound to put the lessor into possession

of the property.

4.98 Rights of lessor’s

transferee

109. If the lessor transfers the property leased,

or any part thereof, or any part of his interest

therein, the transferee, in the absence of a

contract to the contrary, shall possess all the

rights, and, if the lessee so elects, be subject to

all the liabilities of the lessor as to the property

or part transferred so long as he is the owner

of it; but the lessor shall not, by reason only

of such transfer cease to be subject to any of

the liabilities imposed upon him by the lease,

unless the lessee elects to treat the transferee

as the person liable to him: Provided that the

transferee is not entitled to arrears of rent due

before the transfer, and that, if the lessee, not

having reason to believe that such transfer has

been made, pays rent to the lessor, the lessee

shall not be liable to pay such rent over again

to the transferee. The lessor, the transferee

and the lessee may determine what proportion

of the premium or rent reserved by the lease is

payable in respect of the part so transferred,

and, in case they disagree, such determination

may be made by any Court having jurisdiction

to entertain a suit for the possession of

the property leased.

4.99 Exclusion of day on

which term commences

110. Where the time limited by a lease of immoveable

property is expressed as commencing

from a particular day, in computing that

time such day shall be excluded. Where no

day of commencement is named, the time

so limited begins from the making of the

lease. Duration of lease for a year.—Where

the time so limited is a year or a number of

years, in the absence of an express agreement

to the contrary, the lease shall last during

the whole anniversary of the day from which

such time commences. Option to determine

lease.—Where the time so limited is expressed

to be terminable before its expiration, and the

lease omits to mention at whose option it is

so terminable, the lessee, and not the lessor,

shall have such option.



4.100 Determination of

lease

111. A lease of immovable property determines—

(a) by efflux of the time limited thereby;

(b) where such time is limited conditionally

on the happening of some event—by the

happening of such event;

(c) where the interest of the lessor in the

property terminates on, or his power to dispose

of the same extends only to, the happening

of any event—by the happening of such

event;

(d) in case the interests of the lessee and

the lessor in the whole of the property become

vested at the same time in one person in the

same right;

(e) by express surrender; that is to say, in

case the lessee yields up his interest under the

lease to the lessor, by mutual agreement between

them;

(f) by implied surrender;

(g) by forfeiture; that is to say, (1) in case

the lessee breaks an express condition which

provides that, on breach thereof, the lessor

may re-enter 1[* * *]; or (2) in case the lessee

renounces his character as such by setting up

a title in a third person or by claiming title

in himself; 2[or (3) the lessee is adjudicated

an insolvent and the lease provides that the

lessor may re-enter on the happening of such

event]; and in 3[any of these cases] the lessor or

his transferee 4[gives notice in writing to the

lessee of] his intention to determine the lease;

(h) on the expiration of a notice to determine

the lease, or to quit, or of intention to

quit, the property leased, duly given by one

party to the other. Illustration to clause (f)

A lessee accepts from his lessor a new lease

of the property leased, to take effect during

the continuance of the existing lease. This

is an implied surrender of the former lease,

and such lease determines thereupon. COM-

MENTS Doctrine of merger The doctrine of

merger is attracted when a leasehold and revision

coincide. If the lessee purchases the

lessor’s interest, the lease is relinquished as the

same person cannot at the same time be both

landlord and tenant. The doctrine of merger is

based on the principle of union of two conflicting

interests which cannot be held by one person

at the same time. Therefore, the leasehold

rights in favour of the appellants stand extinguished;

Ramesh Kumar Jhambh v. Official

Assignee, High Court Bombay, AIR 1993 Bom

374. Implied surrender There can be implied

surrender, if the lessor grants a new lease to a

third person with the assent of the lessee under

the existing lease who delivers the possession

to such person or where the lessee directs

his sub-tenant to pay the rent directly to the

lessor. Since the respondents had by executing

the agreement impliedly surrendered their

leasehold rights, they were no longer lessees;

P.M.C. Kunhiraman Nair v. C.R. Nagaratha

Iyer, AIR 1993 SC 307. Clause (1) of section

111(g) has no application as there was

no covenant prohibiting sale or on its breach,

of the right of re-entry. Clause (2) of section

111(g) is also of no avail to the landlord for

forfeiture because there is no unequivocal and

clear disclaimer of title of the landlord. Therefore

neither clause (1) nor (2) of section 111(g)

are of any avail for forfeiture; Guru Amarjit

Singh v. Rattan Chand, AIR 1994 SC 227.

The statement by the tenant that he was not

aware of as to who was his landlord cannot be

held to be denial of title of landlord and no

eviction decree by forfeiture was granted; Munisami

Naidu v. C. Ranganathan, AIR 1991

SC 492. It has been held that the Board was

entitled to institute proceedings against the

tenant as the notice period had expired; Vasant

Kumar Radhakishan Vora v. The Board

of Trustees of the Port of Bombay, AIR 1991

SC 14.

4.101 Waiver of forfeiture

112.A forfeiture under section 111, clause (g)

is waived by acceptance of rent which has become

due since the forfeiture, or by distress

for such rent, or by any other act on the part

of the lessor showing an intention to treat the

lease as subsisting: Provided that the lessor

is aware that the forfeiture has been incurred:

Provided also that, where rent is accepted after

the institution of a suit to eject the lessee

on the ground of forfeiture, such acceptance is



not a waiver.

4.102 Waiver of notice to

quit

113. A notice given under section 111, clause

(h), is waived, with the express or implied consent

of the person to whom it is given, by any

act on the part of the person giving it showing

an intention to treat the lease as subsisting.

Illustrations

(a) A, the lessor, gives B, the lessee, notice

to quit the property leased. The notice expires.

B tenders and A accepts, rent which has

become due in respect of the property since the

expiration of the notice. The notice is waived.

(b) A, the lessor, gives B, the lessee; notice

to quit the property leased. The notice

expires, and B remains in possession. A gives

to B as lessee a second notice to quit. The first

notice is waived.

4.103 Relief against forfeiture

for nonpayment

of rent

114. Where a lease of immoveable property

has determined by forfeiture for non-payment

of rent, and the lessor sues to eject the lessee,

if, at the hearing of the suit, the lessee pays

or tenders to the lessor the rent in arrear,

together with interest thereon and his full

costs of the suit, or gives such security as the

Court thinks sufficient for making such payment

within fifteen days, the Court may, in

lieu of making a decree for ejectment, pass

an order relieving the lessee against the forfeiture;

and thereupon the lessee shall hold the

property leased as if the forfeiture had not occurred.

1[114A. Relief against forfeiture in certain

other cases.—Where a lease of immoveable

property has determined by forfeiture for a

breach of an express condition which provides

that on breach thereof the lessor may re-enter,

no suit for ejectment shall lie unless and until

the lessor has served on the lessee a notice in

writing—

(a) specifying the particular breach complained

of; and

(b) if the breach is capable of remedy, requiring

the lessee to remedy the breach, and

the lessee fails, within a reasonable time from

the date of the service of the notice, to remedy

the breach, if it is capable of remedy. Nothing

in this section shall apply to an express

condition against the assigning, under-letting,

parting with the possession, or disposing, of

the property leased, or to an express condition

relating to forfeiture in case of non-payment of

rent.]

4.104 Effect of surrender

and forfeiture on

under-leases

115. The surrender, express or implied, of a

lease of immoveable property does not prejudice

an under-lease of the property or any part

thereof previously granted by the lessee, on

terms and conditions substantially the same

(except as regards the amount of rent) as those

of the original lease; but, unless the surrender

is made for the purpose of obtaining a new

lease, the rent payable by, and the contracts

binding on, the under-lessee shall be respectively

payable to and enforceable by the lessor.

The forfeiture of such a lease annuls all such

under-leases, except where such forfeiture has

been procured by the lessor in fraud of the

under-lessees, or relief against the forfeiture is

granted under section 114.

4.105 Effect of holding

over

116. If a lessee or under-lessee of property remains

in possession thereof after the determination

of the lease granted to the lessee, and

the lessor or his legal representative accepts

rent from the lessee or under-lessee, or otherwise

assents to his continuing in possession,

the lease is, in the absence of an agreement

to the contrary, renewed from year to year, or

from month to month, according to the pur-



pose for which the property is leased, as specified

in section 106. Illustrations

(a) A lets a house to B for five years. B underlets

the house to C at a monthly rent of Rs.

100. The five years expire, but C continues in

possession of the house and pays the rent to

A. C’s lease is renewed from month to month.

(b) A lets a farm to B for the life of C. C

dies, but B continues in possession with A’s

assent. B’s lease is renewed from year to year.

COMMENTS Tenant at sufferance A person

who is a tenant at sufferance has no estate or

interest in the leasehold property. A tenant

holding after the expiry of his term is a tenant

at sufferance, which is a term useful to distinguish

a possession rightful in its inception

but wrongful in its continuance from a trespass

which is wrongful both in its inception and in

its continuance. A co-owner can maintain a

suit by himself in ejectment of a trespasser or

a tenant at sufferance; B. Valsala v. Sundram

Nadar Bhaskaran, AIR 1994 Ker 164.

4.106 Exemption of leases

for agricultural purposes

117. None of the provisions of this Chapter

apply to leases for agricultural purposes, except

in so far as the State Government 1[***]

may by notification published in the Official

Gazette declare all or any of such provisions

to be so applicable 2[in the case of all or any

of such leases], together with, or subject to,

those of the local law, if any, for the time being

in force. Such notification shall not take

effect until the expiry of six months from the

date of its publication.

4.107 “Exchange” defined

118. When two persons mutually transfer the

ownership of one thing for the ownership of

another, neither thing or both things being

money only, the transaction is called an “exchange”.

A transfer of property in completion

of an exchange can be made only in manner

provided for the transfer of such property by

sale.

4.108 Right of party deprived

of thing received

in exchange

1[119. .—If any party to an exchange or any

person claiming through or under such party

is by reason of any defect in the title of the

other party deprived of the thing or any part

of the thing received by him in exchange, then,

unless a contrary intention appears from the

terms of the exchange, such other party is liable

to him or any person claiming through

or under him for loss caused thereby, or at

the option of the person so deprived, for the

return of the thing transferred, if still in the

possession of such other party or his legal representative

or a transferee from him without

consideration.]


of parties

120. Save as otherwise provided in this Chapter,

each party has the rights and is subject

to the liabilities of a seller as to that which he

gives, and has the rights and is subject to the

liabilities of a buyer as to that which he takes.

4.110 Exchange of money

121. On an exchange of money, each party

thereby warrants the genuineness of the money

given by him.

4.111 “Gift” defined

122..—“Gift” is the transfer of certain existing

movable or immovable property made voluntarily

and without consideration, by one person,

called the donor, to another, called the

donee, and accepted by or on behalf of the

donee. Acceptance when to be made.—Such

acceptance must be made during the lifetime



of the donor and while he is still capable of

giving. If the donee dies before acceptance,

the gift is void.

4.112 Gift of existing and

future property

124. A gift comprising both existing and future

property is void as to the latter.

4.113 Gift to several of

whom one does not

accept

125. A gift of a thing to two or more donees,

of whom one does not accept it, is void as to

the interest which he would have taken had he

accepted.

4.114 When gift may

be suspended or revoked

126.The donor and donee may agree that on

the happening of any specified event which

does not depend on the will of the donor a gift

shall be suspended or revoked; but a gift which

the parties agree shall be revocable wholly or

in part, at the mere will of the donor, is void

wholly or in part, as the case may be. A gift

may also be revoked in any of the cases (save

want or failure of consideration) in which, if it

were a contract, it might be rescinded. Save as

aforesaid, a gift cannot be revoked. Nothing

contained in this section shall be deemed to affect

the rights of transferees for consideration

without notice. Illustrations

(a) A gives a field to B, reserving to himself,

with B’s assent, the right to take back the

field in case B and his descendants die before

A. B dies without descendants in A’s lifetime.

A may take back the field.

(b) A gives a lakh of rupees to B, reserving

to himself, with B’s assent, the right to

take back at pleasure Rs. 10,000 out of the

lakh. The gift holds goods as to Rs. 90,000,

but is void as to Rs. 10,000, which continue

to belong to A.

4.115 Onerous gifts

127.Where a gift is in the form of a single

transfer to the same person of several things of

which one is, and the others are not burdened

by an obligation, the donee can take nothing

by the gift unless he accepts it fully. Where

a gift is in the form of two or more separate

and independent transfers to the same person

of several things, the doneee is at liberty to

accept one of them and refuse the others, although

the former may be beneficial and the

latter onerous. Onerous gift to disqualified

person.—A donee not competent to contract

and accepting property burdened by any obligation

is not bound by his acceptance. But

if, after becoming competent to contract and

being aware of the obligation, he retains the

property given, he becomes so bound. Illustrations

(a) A shares in X, prosperous joint stock

company, and also shares in Y, a joint stock

company in difficulties. Heavy calls are expected

in respect of the shares in Y. A gives

B all his shares in joint stock companies. B

refuses to accept the shares in Y. He cannot

take the shares in X.

(b) A, having a lease for a term of years of

a house at a rent which he and his representatives

are bound to pay during the term, and

which is more than the house can be let for,

gives to B the lease, and also, as a separate

and independent transaction, a sum of money.

B refuses to accept the lease. He does not by

this refusal forfeit the money.

4.116 Universal donee

128. Subject to the provisions of section 127,

where a gift consists of the donor’s whole property,

the donee is personally liable for all the

debts due by 1[and liabilities of] the donor at

the time of the gift to the extent of the property

comprised therein.



4.117 Saving of donations

mortis causa

and Muhammadan

Law

129. Nothing in this Chapter relates to gifts

of moveable property made in contemplation

of death, or shall be deemed to affect any rule

of Muhammadan law 1[***].

4.118 Transfer of actionable

claim

130. (1) The transfer of an actionable claim

1[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, 2[***] 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. (Exception) —Nothing in this

section applies to the transfer of a marine or

fire policy of insurance 3[or affects the provisions

of section 38 of the Insurance Act, 1938

(4 of 1938)]. Illustrations

(i) A owes money to B, who transfers the

debt to C. B then demands the debt from A,

who, not having received notice of the transfer,

as prescribed in section 131, pays B. The

payment is valid, and C cannot sue A for the

debt.

(ii) A effects a policy on his own life with an

Insurance Company and assigns it to a Bank

for securing the payment of an existing or future

debt. If A dies, the Bank is entitled to

receive the amount of the policy and to sue

on it without the concurrence of A’s executor,

subject to the proviso in sub-section (1)

of section 130 and to provisions of section 132.

1[130A. Transfer of policy of marine insurance.—[Rep.

by the Marine Insurance Act,

1963 (11 of 1963), sec. 92 (w.e.f. 1-8-1963)].]

131. Notice to be in writing, signed.—Every

notice of transfer of an actionable claim shall

be in writing, signed by the transferor or his

agent duly authorised in this behalf, or, in case

the transferor refuses to sign, by the transferee

or his agent, and shall state the name and address

of the transferee.

132. Liability of transferee of actionable

claim.—The transferee of an actionable claim

shall take it subject to all the liabilities and equities

and to which the transferor was subject

in respect thereof at the date of the transfer.

Illustrations

(i) A transfers to C a debt due to him by B,

A being then indebted to B. C sues B for the

debt due by B to A. In such suit B is entitled

to set off the debt due by A to him; although C

was unaware of it at the date of such transfer.

(ii) A executed a bond in favour of B under

circumstances entitling the former to have

it delivered up and cancelled. B assigns the

bond to C for value and without notice of such

circumstances. C cannot enforce the bond

against A.

133. Warranty of solvency of

debtor.—Where the transferor of a debt warrants

the solvency of the debtor, the warranty,

in the absence of a contract to the contrary,

applies only to his solvency at the time of the

transfer, and is limited, where the transfer

is made for consideration, to the amount or

value of such consideration.



4.119 Mortgaged debt

134. Where a debt is transferred for the purpose

of securing an existing or future debt, the

debt so transferred, if received by the transferor

or recovered by the transferee, is applicable,

first, in payment of the costs of such

recovery; secondly, in or towards satisfaction

of the amount for the time being secured by

the transfer; and the residue, if any, belongs

to the transferor or other person entitled to

receive the same.

4.120 Assignment of rights

under policy of insurance

against fire

1[135. 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.]

4.121 Assignment of rights

under policy of marine

insurance

1[135A. [Rep. by the Marine Insurance Act,

1963 (11 of 1963), sec.92, (w.e.f. 1-8-1963)].]

4.122 Incapacity of officers

connected with

Courts of Justice

136. No judge, legal practitioner or officer connected

with any Court of Justice shall buy or

traffic in, or stipulate for, or agree to receive

any share of, or interest in, any actionable

claim, and no Court of Justice shall enforce, at

his instance, or at the instance of any person

claiming by or through him, any actionable

claim so dealt with by him as aforesaid.

4.123 Saving of negotiable

instruments, etc.

137. Nothing in the foregoing sections of this

Chapter applies to stocks, shares or debentures,

or to instruments which are for the time

being, by law or custom, negotiable, or to any

mercantile document of title to goods. Explanation.—The

expression “mercantile document

of title to goods” includes a bill of

lading, dock-warrant, warehouse-keeper’s certificate,

railway receipt, warrant or order for

the delivery of goods, and any other document

used in the ordinary course of business

as proof of the possession or control of goods,

or authorising or purporting to authorise, either

by endorsement or by delivery, the possessor

of the document to transfer or receive

goods thereby represented. THE TRANSFER

OF PROPERTY ACT, 1882 THE SCHED-

ULE (A) STATUTES Year and Chapter Subject

Extent of repeal 27 Hen. VIII c. 10 Uses

The Whole. 13 Eliz., c. 5 Fraudulent conveyances

The Whole. 27 Eliz., c. 4 Fraudulent

conveyances The Whole. 4 Wm and marry,

c. 16 Clandestine mortgages The Whole. (B)

ACT OF THE GOVERNOR GENERAL IN

COUNCIL Number and Year Subject Extent

of repeal X of 1842 Lease and re-lease The

Whole XXXI of 1854 Modes of conveying land

Section117 XI of 1855 Mesne profit and improvement

Section 1; in the title, the word

"to mesne profits and", and in the preamble

"to limit the liability for mesne profits and"

XXVII of 1866 Indian Trustee Act Section 31.

V of 1872 Punjab Laws Act So fas as it related

to Bengal Regulations 1 of 1798 and XVII of

1806 XX of 1875 Central Provinvces Laws Act

So fas as it related to Bengal Regulations 1 of

1798 and XVII of 1806 XVIII of 1876 Oudh

Laws Act So fas as it related to Bengal Regulations

XVII of 1806 1 of 1877 Specific Relief

In section 35 and 36, the word "in writing".

(C) REGULATIONS Number and years Subject

Extent of repeal Bengal Regulation 1 of

1798 Conditional Sale The Whole Regulation

Bengal Regulation XVII of 1806 Redemption

The Whole Regulation Bombay Regulation V

of 1827 Acknowledgement of debts; interest;

Mortgagees in possession Section 15 1. Ins.



by Act 20 of 1929, sec. 47. Original sections

93 were repealed by Act 5 of 1908, sec. 156

and Sch.V. 2. Ins. by Act 20 of 1929, sec. 47.

Original sections 94 were repealed by Act 5 of

1908, sec. 156 and Sch.V. 3. Subs. by Act

20 of 1929, sec. 48, for the original section 95.

Original section 96 was repealed by Act 5 of

1908, sec. 156 and Sch.V. 4. Subs. by Act

20 of 1929, sec. 48, for the original section

95. Original section 96 was repealed by Act

5 of 1908, sec. 156 and Sch.V. 5. For the repealed

provisions as re-enacted, see the Code

of Civil Procedure, 1908 (5 of 1908), Sch. I,

Order XXXIV, rules 12 and 13. 6. Subs. by

Act 20 of 1929, sec. 49, for “a mortgage, not

being a simple mortgage, a mortgage by conditional

sale, an usufructuary mortgage or an

English mortgage or a combination of the first

and third, or the second and third, of such

forms”. 7. For the repealed provisions as reenacted,

see the Code of Civil Procedure, 1908

(5 of 1908), Sch. I, Order XXXIV, rule 14. 8.

Subs. by Act 20 of 1929, sec. 50, for “as to

a mortgagor shall, so far as may be, apply to

the owner of such property, and the provisions

of sections 81 and 82 shall, so far as may be,

apply to the person having such charge”. 9.

Subs. by Act 20 of 1929, sec. 51, for the original

section. 10. Subs. by Act 20 of 1929, sec.

52, for “Where the person or agent on whom

such notice should be served cannot be found

in the said district, or is unknown”. 11. Ins.

by Act 20 of 1929, sec. 53. 12. Subs. by Act

3 of 2003, sec. 2, for section 106 (w.e.f. 31-12-

2002). Section 106, before substitution, stood

as under: 13. As to limitation to the territorial

operation of section 107, see section 1, supra,

section 107 extends to every cantonment—see

section 287 of the Cantonments Act, 1924 (2

of 1924). 14. Ins. by Act 20 of 1929, sec. 56.

15. The words “or the lease shall become void”

omitted by Act 20 of 1929, sec. 57. 16. Ins. by

Act 20 of 1929, sec. 58. 17. The words “with

the previous sanction of the Governor General

in Council” omitted by Act 38 of 1920, sec.

2 and Sch. I. 18. Subs. by Act 20 of 1929,

sec. 59, for the original section. 19. As to limitation

to the territorial operation of section

123, see section 1, supra, section 123 extends

to every cantonment—see section 287 of the

Cantonments Act, 1924 (2 of 1924). 20. Ins.

by Act 20 of 1929, sec. 60. 21. The words and

figures “or, save as provided by section 123,

any rule of Hindu or Buddhist law” omitted

by Act 20 of 1929, sec. 61. 22. Ins. by Act 20

of 1929, sec. 62. 23. Ins. by Act 6 of 1944,

sec. 2. 24. Subs. by Act 6 of 1944, sec. 3, for

the original section. 25. Section 135A ins. by

Act 6 of 1944, sec. 4.


5

The Indian Easements Act, 1882

1 Short title. -This Act may be called the

Indian Easements Act, 1882. Local extent. -It

extends 1 to the territories respectively administered

by the Governor of Madras in Council

and the Chief Commissioners of the Central

Provinces and Coorg; Commencement -And

it shall come into force on the first day of

July, 1882. (1) Ajmer -Merwara by notification

under section 5 of the Scheduled Districts

Act, 1874 (14 of 1874), see Gazette of India,

1897, Pt. II. p. 1413; (2) Bombay and the

U.P. by Act 8 of 1891 and continues in force,

with modifications in the territory transferred

to Delhi State, see the Delhi Laws Act, 1915

(7 of 1915), sec. 3 and Sch. III; (3) Whole

of Madhya Pradesh by Madhya Pradesh Act

23 of 1958; (4) Punjab by Punjab Act 29 of

1961. (5) Kerala by Kerala Act 5 of 1962. (6)

Pondicherry by Act 26 of 1968, sec. 3 and Sch.

The Act has been repealed in its application

to Bellary District by Mysore Act 14 of 1955.

2. Savings.-Nothing herein contained shall be

deemed to affect any law not hereby expressly

repealed; or to derogate from- (a) any right

of the 1[Government] to regulate the collection,

retention and distribution of the water of

rivers and streams flowing in natural channels,

and of natural lakes and ponds, or of the water

flowing, collected, retained or distributed in or

by any channel or other work constructed at

the public expense for irrigation; (b) any customary

or other right (not being a license) in

or over immovable property which the 1[Government],

the public or any person may possess

irrespective of other immovable property;

or (c) any right acquired, or arising out of a

relation created, before this Act comes into

force. 1[3. Construction of certain references

to Act XV of 1877 and Act IX of 1871.-All references

in any Act or Regulation to sections 26

and 27 of the Indian Limitation Act, 18772, or

to sections 27 and 28 of Act No. IX of 18713,

shall, in the territories to which this Act extends,

be read as made to sections 15 and 16 of

this Act.] 4 "Easement" defined. -An easement

is a right 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.

Dominant and servient heritages and owners. -

The land for the beneficial enjoyment of which

the right exists is called the dominant heritage,

and the owner or occupier thereof the dominant

owner; the land on which the liability is

imposed is called the servient heritage, and the

owner or occupier thereof the servient owner.

Explanation. -In the first and second clauses

of this section, the expression "land" includes

also things permanently attached to the earth;

the expression "beneficial enjoyment" includes

also possible convenience, remote advantage,

and even a mere amenity; and the expression

"to do something" includes removal and appropriation

by the dominant owner, for the beneficial

enjoyment of the dominant heritage, of

any part of the soil of the servient heritage, or

anything growing or subsisting thereon. Illustrations

(a) A, as the owner of a certain house,

has a right of way thither over his neighbour

B’s land for purposes connected with the beneficial

enjoyment of the house. This is an

easement. (b) A, as the owner of a certain

119


house, has the right to go on his neighbour B

’s land, and to take water for the purposes of

his household, out of a spring therein. This is

an easement. (c) A, as the owner of a certain

house, has the right to conduct water from B ’s

stream to supply the fountains in the garden

attached to the house. This is an easement.

(d) A, as the owner of a certain house and

farm, has the right to graze a certain number

of his own cattle on B ’s field, or to take, for

the purpose of being used in the house, by himself,

his family, guests, lodgers and servants,

water or fish out of C ’s tank, or timber out of

D ’s wood, or to use, for the purpose of manuring

his land, the leaves which have fallen

from the trees in E ’s land. These are easements.

(e) A dedicates to the public the right

to occupy the surface of certain land for the

purpose of passing and re-passing. This right

is not an easement. (f) A is bound to cleanse

a water course running through his land and

keep it free from obstruction for the benefit of

B, a lower riparian owner. This is not an easement.

5 Continuous and discontinuous, apparent

and non-apparent, easements. -Easements

are either continuous or discontinuous, apparent

or non-apparent. A continuous easement

is one whose enjoyment is, or may be, continual

without the act of man. A discontinuous

easement is one that needs the act of man for

its enjoyment. An apparent easement is one

the existence of which is shown by some permanent

sign which, upon careful inspection by

a competent person, would be visible to him.

A non-apparent easement is one that has no

such sign. Illustrations (a) A right annexed

to B’ s house to receive light by the windows

without obstruction by his neighbour A. This

is a continuous easement. (b) A right of way

annexed to A ’s house over B ’s land. This is a

discontinuous easement. (c) Rights annexed to

A ’s land to lead water thither across B ’s land

by an aqueduct and to draw off water thence

by a drain. The drain would be discovered

upon careful inspection by a person conversant

with such matters. These are apparent easements.

(d) A right annexed to A ’s house to

prevent B from building on his own land. This

is a non-apparent easement. 6. Easements

for limited time or on condition.-An easement

may be permanent, or for a term of years or

other limited period, or subject to periodical

interruption, or exercisable only at a certain

place, or at certain times, or between certain

hours, or for a particular purpose, or on condition

that it shall commence or become void or

voidable on the happening of a specified event

or the performance or non-performance of a

specified Act. 7 Easements restrictive of certain

rights. -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.

Illustrations of the Rights above referred to (a)

The exclusive right of every owner of land in a

town to build on such land, subject to any municipal

law for the time being in force. (b) The

right of every owner of land that the air passing

thereto shall not be unreasonably polluted

by other persons. (c) The right of every owner

of a house that his physical comfort shall not

be interfered with materially and unreasonable

by noise or vibration caused by any other person.

(d) The right of every owner of land to so

much light and air as pass vertically thereto.

(e) The right of every owner of land that such

land, in its natural condition, shall have the

support naturally rendered by the subjacent

and adjacent soil of another person. Explanation.

-Land is in its natural condition when it

is not excavated and not subjected to artificial

pressure; and the "subjacent and adjacent soil"

mentioned in this illustration means such soil

only as in its natural condition would support

the dominant heritage in its natural condition.

(f) The right of every owner of land that,

within his own limits, the water which naturally

passes or percolates by, over or through

his land shall not, before so passing or percolating,

be unreasonably polluted by other persons.

(g) The right of every owner of land to

collect and dispose within his own limits of all

5.0 5. THE INDIAN EASEMENTS ACT, 1882


water under the land which does not pass in

a defined channel and all water on its surface

which does not pass in a defined channel. (h)

The right of every owner of land that the water

of every natural stream which passes by,

through or over his land in a defined natural

channel shall be allowed by other persons

to flow within such owner’s limits without interruption

and without material alteration in

quantity, direction, force or temperature; the

right of every owner of land abutting on a natural

lake or pond into or out of which a natural

stream flows, that the water of such lake or

pond shall be allowed by other persons to remain

within such owner’s limits without material

alteration in quantity or temperature. (i)

The right of every owner of upper land that

water naturally rising in, or falling on such

land, and not passing in defined channels, shall

be allowed by the owner of adjacent lower land

to run naturally thereto. (j) The right of every

owner of land abutting on a natural stream,

lake or pond to use and consume its water for

drinking, household purposes and watering his

cattle and sheep; and the right of every such

owner to use and consume the water for irrigating

such land, and for the purposes of any

manufactory situate thereon, provided that he

does not thereby cause material injury to other

like owners. Explanation. -A natural stream

is a stream, whether permanent or intermittent,

tide or tideless, on the surface of land

or underground, which flows by the operation

of nature only and in a natural and known

course. 8 Who may impose easements. -An

easement may be imposed by any one in the

circumstances, and to the extent, in and to

which he may transfer his interest in the heritage

on which the liability is to be imposed.

Illustrations (a) A is tenant of B ’s land under

a lease for an unexpired term of twenty

years, and has power to transfer his interest

under the lease. A may impose an easement

on the land to continue during the time that

the lease exists or for any shorter period. (b)

A is tenant for his life of certain land with

remainder to B absolutely. A cannot, unless

with B ’s consent, impose an easement thereon

which will continue after the determination of

his life-interest. (c) A, B and C are co-owners

of certain land. A cannot, without the consent

of B and C, impose an easement on the land

or on any part thereof. (d) A and B are lessees

of the same lessor, A of a field X for a term

of five years, and B of a field Y for a term

of ten years. A’ s interest under his lease is

transferable; B’ s is not. A may impose on X,

in favour of B, a right of way terminable with

A ’s lease. 9 Servient owners. -Subject to the

provisions of section 8, a servient owner may

impose on the servient heritage any easement

that does not lessen the utility of the existing

easement. But he cannot, without the consent

of the dominant owner, impose an easement

on the servient heritage which would lessen

such utility. Illustrations (a) A has in respect

of his mill, a right to the uninterrupted flow

thereto, from sunrise to noon, of the water of

B ’s stream. B may grant to C the right to divert

the water of the stream from noon to sunset:

provided that A’s supply is not thereby

diminished. (b) A has, in respect of his house,

a right of way over B’ s land. B may grant

to C, as the owner of a neighbouring farm,

the right to feed his cattle on the grass growing

on the way: provided that A ’s right of

way is not thereby obstructed. 10. Lessor and

mortgagor.-Subject to the provisions of section

8, a lessor may impose, on the property leased,

any easement that does not derogate from the

rights of the lessee as such, and a mortgagor

may impose, on the property mortgaged, any

easement that does not render the security insufficient.

But a lessor or mortgagor cannot,

without the consent of the lessee or mortgagee,

impose any other easement on such property,

unless it be to take effect on the termination of

the lease of the redemption of the mortgage.

Explanation.-A security is insufficient within

the meaning of this section unless the value of

the mortgaged property exceeds by one-third,

or, if consisting of building, exceeds by onehalf,

the amount for the time being due on the

mortgage. 11. Lessee.-No lessee or other person

having a derivative interest may impose

on the property held by him as such an easement

to take effect after the expiration of his

own interest, or in derogation of the right of

the lessor or the superior proprietor. 12. Who

may acquire easements.-An easement may be

5. THE INDIAN EASEMENTS ACT, 1882 5.0


acquired by the owner of the immovable property

for the beneficial enjoyment of which the

right is created, or on his behalf, by any person

in possession of the same. One of two or

more co-owners of immovable property may, as

such, with or without the consent of the other

or others, acquire an easement for the beneficial

enjoyment of such property. No lessee of

immovable property can acquire, for the beneficial

enjoyment of other immovable property

of his own, an easement in or over the property

comprised in his lease. 13 Easements of necessity

and quasi easements. -Where one person

transfers or bequeaths immovable property to

another,- (a) if an easement in other immovable

property of the transferor or testator is

necessary for enjoying the subject of the transfer

or bequest, the transferee or legatee shall

be entitled to such easement; or (b) if such an

easement is apparent and continuous and necessary

for enjoying the said subject as it was

enjoyed when the transfer or bequest took effect,

the transferee or legatee shall, unless a

different intention is expressed or necessarily

implied, be entitled to such easement; or (c)

if an easement in the subject of the transfer

or bequest is necessary for enjoying other immovable

property of the transferor or testator,

the transferor or the legal representative of the

testator shall be entitled to such easement; or

(d) if such an easement is apparent and continuous

and necessary for enjoying the said property

as it was enjoyed when the transfer or

bequest took effect, the transferor, or the legal

representative of the testator, shall, unless

a different intention is expressed or necessarily

implied, be entitled to such easement. Where

a partition is made of the joint property of

several persons,- (e) if an easement over the

share of one of them is necessary for enjoying

the share of another of them, the latter

shall be entitled to such easement, or (f) if

such an easement is apparent and continuous

and necessary for enjoying the share of the latter

as it was enjoyed when the partition took

effect, he shall, unless a different intention is

expressed or necessarily implied, be entitled

to such easement. The easements mentioned

in this section, clauses (a) , (c) and (e), are

called easements of necessity. Where immovable

property passes by operation of law, the

persons from and to whom it so passes are,

for the purpose of this section, to be deemed,

respectively, the transferor and transferee. Illustrations

(a) A sells B a field then used for

agricultural purposes only. It is inaccessible

except by passing over A ’s adjoining land or

by trespassing on the land of a stranger. B is

entitled to a right of way, for agricultural purposes

only, over A ’s adjoining land to the field

sold. (b) A, the owner of two fields, sells one

to B, and retains the other. The field retained

was, at the date of the sale, used for agricultural

purposes only, and is inaccessible except

by passing over the field sold to B. A is entitled

to a right of way, for agricultural purposes

only, over B ’s field to the field retained. (c) A

sells B a house with windows overlooking A ’s

land, which A retains. The light which passes

over A ’s land to the windows is necessary for

enjoying the house as it was enjoyed when the

sale took effect. B is entitled to the light, and

A cannot afterwards obstruct it by building

on his land. (d) A sells B a house with windows

overlooking A ’s land. The light passing

over A ’s land to the windows is necessary for

enjoying the house as it was enjoyed when the

sale took effect. Afterwards A sells the land to

C. Here C cannot obstruct the light by building

on the land, for he takes it subject to the

burdens to which it was subject in A ’s hands.

(e) A is the owner of a house and adjoining

land. The house has windows over-looking the

land. A simultaneously sells the house to B

and the land to C. The light passing over the

land is necessary for enjoying the house as it

was enjoyed when the sale took effect. Here A

impliedly grants B a right to the light, and C

takes the land subject to the restriction that

he may not build so as to obstruct such right.

(f) A is the owner of a house and adjoining

land. The house has windows over-looking the

land. A, retaining the house, sells the land to

B, without expressly reserving any easement.

The light passing over the land is necessary

for enjoying the house as it was enjoyed when

the sale took effect. A is entitled to the light,

and B cannot build on the land so as to obstruct

such light. (g) A, the owner of a house,

sells B a factory built on adjoining land. B



is entitled, as against A, to pollute the air,

when necessary, with smoke and vapours from

the factory. (h) A, the owner of two adjoining

houses, Y and Z, sells Y to B, and retains Z.

B is entitled to the benefit of all gutters and

drains common to the two houses and necessary

for enjoying Y as it was enjoyed when

the sale took effect, and A is entitled to the

benefit of all the gutters and drains common

to the two houses and necessary for enjoying

Z as it was enjoyed when the sale took effect.

(i) A, the owner of two adjoining buildings,

sells one to B, retaining the other. B is entitled

to a right to lateral support from A ’s

building, and A is entitled to a right to lateral

support from B ’s building. (j) A, the owner

of two adjoining buildings, sells one to B and

the other to C. C is entitled to lateral support

from B ’s building, and B is entitled to lateral

support from C ’s building. (k) A grants

lands to B for the purpose of building a house

thereon. B is entitled to such amount of lateral

and subjacent support from A ’s land as

is necessary for the safety of the house. (l)

Under the Land Acquisition Act, 1870 (10 of

1870) 1, a Railway Company compulsorily acquires

a portion of B ’s land for the purpose

of making a siding. The Company is entitled

to such amount of lateral support from B ’s

adjoining land as is essential for the safety of

the siding. (m) Owing to the partition of joint

property, A becomes the owner of an upper

room in a building, and B becomes the owner

of the portion of the building immediately beneath

it, A is entitled to such amount of vertical

support from B ’s portion as is essential

for the safety of the upper room. (n) A lets a

house and grounds to B for a particular business.

B has no access to them other than by

crossing A ’s land. B is entitled to a right of

way over that land suitable to the business to

be carried on by B in the house and grounds.

14. Direction of way of necessity.-When 1[a

right] to a way of necessity is created under

section 13, the transferor, the legal representative

of the testator, or the owner of the share

over which the right is exercised, as the case

may be, is entitled to set out the way; but it

must be reasonably convenient for the dominant

owner. When the person so entitled to

set out the way refuses or neglects to do so,

the dominant owner may set it out. 15 Acquisition

by prescription. -Where the access

and use of light or air to and for any building

have been peaceably enjoyed therewith,

as an easement, without interruption, and for

twenty years, and where support from one person’s

land, or things affixed thereto, has been

peaceably received by another person’s land

subjected to artificial pressure, or by things

affixed thereto, as an easement, without interruption,

and for twenty years, and where a

right of way or any other easement has been

peaceably and openly enjoyed by any person

claiming title thereto, as an easement and as

of right, without interruption, and for twenty

years, the right to such access and use of light

or air, support or other easement shall be absolute.

Each of the said periods of twenty years

shall be taken to be a period ending within

two years next before the institution of the

suit wherein the claim to which such period

relates is contested. Explanation I. -Nothing

is an enjoyment within the meaning of this

section when it has been had in pursuance of

an agreement with the owner or occupier of

the property over which the right is claimed,

and it is apparent from the agreement that

such right has not been granted as an easement,

or if granted as an easement, that it has

been granted for a limited period, or subject

to a condition on the fulfilment of which it is

to cease. Explanation II. -Nothing is an interruption

within the meaning of this section

unless where there is an actual cessation of the

enjoyment by reason of an obstruction by the

act of some person other than the claimant,

and unless such obstruction is submitted to or

acquiesced in for one year after the claimant

has notice thereof and of the person making or

authorizing the same to be made. Explanation

III. -Suspension of enjoyment in pursuance of

a contract between the dominant and servient

owners is not an interruption within the meaning

of this section. Explanation IV. -In the

case of an easement to pollute water, the said

period of twenty years begins when the pollution

first prejudices perceptibly the servient

heritage. When the property over which a

right is claimed under this section belongs to



the 1 [Government], this section shall be read

as if, for the words "twenty years" the words

2 ["thirty years"] were substituted. Illustrations

(a) A suit is brought in 1883 for obstructing

a right of way. The defendant admits

the obstruction, but denies the right of way.

The plaintiff proves that the right was peaceably

and openly enjoyed by him, claiming title

thereto, as an easement and as of right, without

interruption, from 1st January, 1862 to

1st January, 1882. The plaintiff is entitled to

judgment. (b) In a like suit the plaintiff shows

that the right was peaceably and openly enjoyed

by him for twenty years. The defendant

proves that for a year of that time the plaintiff

was entitled to possession of the servient heritage

as lessee thereof and enjoyed the right as

such lessee. The suit shall be dismissed, for

the right of way has not been enjoyed "as an

easement" for twenty years. (c) In a like suit

the plaintiff shows that the right was peaceably

and openly enjoyed by him for twenty

years. The defendant proves that the plaintiff

on one occasion during the twenty years

had admitted that the user was not of right

and asked his leave to enjoy the right. The

suit shall be dismissed, for the right of way

has not been enjoyed "as of right" for twenty

years. 16 Exclusion in favour of reversioner of

servient heritage. -Provided that, when any

land upon, over or from which any easement

has been enjoyed or derived has been held under

or by virtue of any interest for life or any

term of years exceeding three years from the

granting thereof, the time of the enjoyment of

such easement during the continuance of such

interest or term shall be excluded in the computation

of the said last-mentioned period of

twenty years, in case the claim is, within three

years next after the determination of such interest

or term, resisted by the person entitled,

on such determination, to the said land. Illustration

A sues for a declaration that he is entitled

to a right of way over B ’s land, A proves

that he has enjoyed the right for twenty-five

years; but B shows that during ten of these

years C had a life-interest in the land; that on

C’s death B became entitled to the land; and

that within two years after C ’s death he contested

A ’s claim to the right. The suit must

be dismissed, as A, with reference to the provisions

of this section, has only proved enjoyment

for fifteen years. 17. Rights which cannot

be acquired by prescription.-Easements

acquired under section 15 are said to be acquired

by prescription, and are called prescriptive

rights. None of the following rights can

be so acquired:- (a) a right which would tend

to the total destruction of the subject of the

right, or the property on which, if the acquisition

were made, liability would be imposed;

(b) a right to the free passage of light or air

to an open space of ground; (c) a right to

surface-water not flowing in a stream and not

permanently collected in a pool, tank or otherwise;

(d) a right to underground water not

passing in a defined channel. 18 Customary

easement. -An easement may be acquired in

virtue of a local custom. Such easements are

called customary easements. Illustrations (a)

By the custom of a certain village every cultivator

of village land is entitled, as such, to

graze his cattle on the common pasture. A

having become the tenant of a plot of uncultivated

land in the village breaks up and cultivates

that plot. He thereby acquires an easement

to graze his cattle in accordance with the

custom. (b) By the custom of a certain town

no owner or occupier of a house can open a

new window therein so as substantially to invade

his neighbour’s privacy. A builds a house

in the town near B ’s house. A thereupon

acquires an easement that B shall not open

new windows in his house so as to command

a view of the portions of A ’s house which

are ordinarily excluded from observation, and

B acquires a like easement with respect to

A ’s house. 19. Transfer of dominant heritage

passes easement.-Where the dominant

heritage is transferred or devolves, by act of

parties or by operation of law, the transfer or

devolution shall, unless a contrary intention

appears, be deemed to pass the easement to

the person in whose favour the transfer or devolution

takes place. Illustration A has certain

land to which a right of way is annexed.

A lets the land to B for twenty years. The

right of way vests in B and his legal representatives

so long as the lease continues. 20. Rules

controlled by contract or title.-The rules con-



tained in this Chapter are controlled by any

contract between the dominant and servient

owners relating to the servient heritage, and

by the provisions of the instrument or decree,

if any, by which the easement referred to was

imposed. Incidents of customary easements.-

And when any incident of any customary easement

is inconsistent with such rules, nothing

in this Chapter shall affect such incident. 21

Bar to use unconnected with enjoyment. -An

easement must not be used for any purpose

not connected with the enjoyment of the dominant

heritage. Illustrations (a) A, as owner

of a farm Y, has a right of way over B’s land

to Y. Lying beyond Y, A has another farm Z,

the beneficial enjoyment of which is not necessary

for the beneficial enjoyment of Y. He must

not use the easement for the purpose of passing

to and from Z. (b) A, as owner of a certain

house, has a right of way to and from it. For

the purpose of passing to and from the house,

the right may be used, not only by A, but by

the members of his family, his guests, lodgers,

servants, workmen, visitors and customers; for

this is a purpose, connected with the enjoyment

of the dominant heritage. So, if A lets

the house, he may use the right of way for

the purpose of collecting the rent and seeing

that the house is kept in repair. 22 Exercise

of easement. Confinement of exercise of easement.

-The dominant owner must exercise his

right in the mode which is least onerous to the

servient owner; and, when the exercise of an

easement can without detriment to the dominant

owner be confined to a determinate part

of the servient heritage, such exercise shall, at

the request of the servient owner, be so confined.

Illustrations (a) A has a right of way

over B ’s field. A must enter the way at either

end and not at any intermediate point. (b) A

has a right annexed to his house to cut thatching

grass in B ’s swamp. A, when exercising

his easement, must cut the grass so that the

plants may not be destroyed. 23 Right to alter

mode of enjoyment. -Subject to the provisions

of section 22, the dominant owner may, from

time to time, alter the mode and place of enjoying

the easement, provided that he does not

thereby impose any additional burden on the

servient heritage. (Exception) -The dominant

owner of a right of way cannot vary his line

of passage at pleasure, even though he does

not thereby impose any additional burden on

the servient heritage. Illustrations (a) A, the

owner of a saw-mill, has a right to a flow of water

sufficient to work the mill. He may convert

the saw-mill into a corn-mill; provided that it

can be worked by the same amount of water.

(b) A has a right to discharge on B ’s land the

rain-water from the eaves of A ’s house. This

does not entitle A to advance his eaves if, by

so doing, he imposes a greater burden on B

’s land. (c) A as the owner of a paper-mill,

acquires a right to pollute a stream by pouring

in the refuse-liquor produced by making in

the mill paper from rags. He may pollute the

stream by pouring in similar liquor produced

by making in the mill paper by a new process

from bamboos, provided that he does not substantially

increase the amount, or injuriously

change the nature, of the pollution. (d) A, a

riparian owner, acquires as against the lower

riparian owners, a prescriptive right to pollute

a stream by throwing sawdust into it. This

does not entitle A to pollute the stream by discharging

into it poisonous liquor. 24 Right to

do acts to secure enjoyment. -The dominant

owner is entitled 5 , as against the servient

owner, to do all acts necessary to secure the

full enjoyment of the easement; but such acts

must be done at such time and in such manner

as, without detriment to the dominant owner,

to cause the servient owner as little inconvenience

as possible; and the dominant owner

must repair, as far as practicable, the damage

(if any) caused by the act to the servient

heritage. Accessory rights. -Rights to do acts

necessary to secure the full enjoyment of an

easement are called accessory rights. Illustrations

(a) A has an easement to lay pipes in

B’s land to convey water to A ’s cistern. A

may enter and dig the land in order to mend

the pipes, but he must restore the surface to

its original state. (b) A has an easement of

a drain through B ’s land. The sewer with

which the drain communicates is altered. A

may enter upon B ’s land and alter the drain,

to adapt it to the new sewer, provided that he

does not thereby impose any additional burden

on B’ s land. (c) A, as owner of a certain



house, has a right of way over B ’s land. The

way is out of repair, or a tree is blown down

and falls across it. A may enter on B ’s land

and repair the way or remove the tree from it.

(d) A, as owner of a certain field, has a right of

way over B ’s land. B renders the way impassable.

A may deviate from the way and pass

over the adjoining land of B, provided that

the deviation is reasonable. (e) A, as owner of

a certain house has a right or way over B ’s

field. A may remove rocks to make the way.

(f) A has an easement of support from B ’s

wall. The wall gives way. A may enter upon

B ’s land and repair the wall. (g) A has an

easement to have his land flooded by means

of a dam in B ’s stream. The dam is half

swept away by an inundation. A may enter

upon B ’s land and repair the dam. 25. Liability

for expenses necessary for preservation

of easements.-The expenses incurred in constructing

works, or making repairs, or doing

any other act necessary for the use or preservation

of an easement, must be defrayed by

the dominant owner. 26. Liability for damage

from want of repair.-Where an easement

is enjoyed by means of an artificial work, the

dominant owner is liable to make compensation

for any damage to the servient heritage

arising from the want of repair of such work1.

27 Servient owner not bound to do anything.

-The servient owner is not bound to do anything

for the benefit of the dominant heritage

and he is entitled, as against the dominant

owner, to use the servient heritage in any way

consistent with the enjoyment of the easement;

but he must not do any act tending to restrict

the easement or to render its exercise

less convenient. Illustrations (a) A, as owner

of a house, has a right to lead water and send

sewage through B ’s land. B is not bound,

as servient owner, to clear the watercourse or

scour the sewer. (b) A grants a right of way

through his land to B as owner of a field. A

may feed his cattle on grass growing on the

way, provided that B ’s right of way is not

thereby obstructed; but he must not build a

wall at the end of his land so as to prevent B

from going beyond it, nor must he narrow the

way so as to render the exercise of the right

less easy than it was at the date of the grant.

(c) A, in respect of his house, is entitled to

an easement of support from B ’s wall. B is

not bound, as servient owner to keep the wall

standing and in repair. But he must not pull

down or weaken the wall so as to make it incapable

of rendering the necessary support. (d)

A, in respect of his mill, is entitled to a watercourse

through B ’s land. B must not drive

stakes so as to obstruct the watercourse. (e)

A, in respect of his house, is entitled to a certain

quantity of light passing over B ’s land.

B must not plant trees so as to obstruct the

passage to A ’s windows of that quantity of

light. 28 Extent of easements. -With respect

to the extent of easements and the mode of

their enjoyment, the following provisions shall

take effect:- Easement of necessity. -An easement

of necessity is co-extensive with the necessity

as it existed when the easement was

imposed. Other easements. -The extent of

any other easement and the mode of its enjoyment

must be fixed with reference to the

probable intention of the parties, and the purpose

for which the right was imposed or acquired.

In the absence of evidence as to such

intention and purpose- (a) Right of way. -A

right of way of any one kind does not include

a right of way of any other kind; (b) Right

to light or air acquired by grant. -The extent

of a right to the passage of light or air to a

certain window, door on other opening, imposed

by a testamentary or non-testamentary

instrument, is the quantity of light or air that

entered the opening at the time the testator

died or the non-testamentary instrument was

made; (c) Prescriptive right to light or air. -

The extent of a prescriptive right to the passage

of light or air to a certain window, door

or other opening is that quantity of light or

air which has been accustomed to enter that

opening during the whole of the prescriptive

period irrespectively of the purposes for which

it has been used; (d) Prescriptive right to pollute

air or water. -The extent of a prescriptive

right to pollute air or water is the extent of

the pollution at the commencement of the period

of user on completion of which the right

arose; and (e) Other prescriptive rights. -The

extent of every other prescriptive right and the

mode of its enjoyment must be determined by



the accustomed user of the right. 29 Increase

of easement. -The dominant owner cannot,

by merely altering or adding to the dominant

heritage, substantially increase an easement.

Where an easement has been granted or bequeathed

so that its extent shall be proportionate

to the extent of the dominant heritage,

if the dominant heritage is increased by

alluvion, the easement is proportionately increased,

and if the dominant heritage is diminished

by diluvion, the easement is proportionately

diminished. Save as aforesaid, no easement

is effected by any change in the extent of

the dominant or the servient heritage. Illustrations

(a) A, the owner of a mill, has acquired

a prescriptive right, to divert to his mill part

of the water of a stream. A alters the machinery

of his mill. He cannot thereby increase his

right to divert water. (b) A has acquired an

easement to pollute a stream by carrying on a

manufacture on its banks by which a certain

quantity of foul matter is discharged into it.

A extends his works and thereby increases the

quantity discharged. He is responsible to the

lower riparian owners for injury done by such

increase. (c) A, as the owner of a farm, has a

right to take, for the purpose of manuring his

farm, leaves which have fallen from the trees

on B ’s land. A buys a field and unites it to his

farm. A is not thereby entitled to take leaves

to manure this field. 30. Partition of dominant

heritage.-Where a dominant heritage is

divided between two or more persons, the easement

becomes annexed to each of the shares,

but not so as to increase substantially the burden

on the servient heritage: Provided that

such annexation is consistent with the terms of

the instrument, decree or revenue-proceeding

(if any) under which the division was made,

and in the case of prescriptive rights, with the

user during the prescriptive period. Illustrations

(a) A house to which a right of way by a

particular path is annexed is divided into two

parts, one of which is granted to A, the other

to B. Each is entitled, in respect of his part, to

a right of way by the same path. (b) A house

to which is annexed the right of drawing water

from a well to the extent of fifty buckets

a day is divided into two distinct heritages,

one of which is granted to A, the other to B,

A and B are each entitled, in respect of his

heritage, to draw from the well fifty buckets a

day; but the amount drawn by both must not

exceed fifty buckets a day. (c) A, having in respect

of his house an easement of light, divides

the house into three district heritages. Each

of these continues to have the right to have

its windows unobstructed. 31 Obstruction in

case of excessive user. -In the case of excessive

user of an easement the servient owner

may, without prejudice to any other remedies

to which he may be entitled, obstruct the user,

but only on the servient heritage: Provided

that such user cannot be obstructed when the

obstruction would interfere with the lawful enjoyment

of the easement. Illustration A, having

a right to the free passage over B ’s land

of light to four windows six feet by four, increases

their size and number. It is impossible

to obstruct the passage of light to the new

windows without also obstructing the passage

of light to the ancient windows. B cannot

obstruct the excessive user. 32 Right to enjoyment

without disturbance. -The owner or

occupier of the dominant heritage is entitled

to enjoy the easement without disturbance by

any other person. Illustration A, as owner of

a house, has a right of way over B ’s land. C

unlawfully enters on B ’s land and obstructs

A in his right of way. A may sue C for compensation,

not for the entry, but for the obstruction.

33 Suit for disturbance of easement.

-The owner of any interest in the dominant

heritage, or the occupier of such heritage, may

institute a suit for compensation for the disturbance

of the easement or of any right accessory

thereto; provided that the disturbance

has actually caused substantial damage to the

plaintiff. Explanation I. -The doing of any act

likely to injure the plaintiff by affecting the

evidence of the easement, or by materially diminishing

the value of the dominant heritage,

is substantial damage within the meaning of

this section and section 34. Explanation II. -

Where the easement disturbed is a right to the

free passage of light passing to the openings in

a house, no damage is substantial within the

meaning of this section unless it falls within

the first Explanation, or interferes materially

with the physical comfort of the plaintiff, or



prevents him from carrying on his accustomed

business in the dominant heritage as beneficially

as he had done previous to instituting

the suit. Explanation III. -Where the easement

disturbed is a right to the free passage of

air to the openings in a house, damage is substantial

within the meaning of this section if

it interferes materially with the physical comfort

of the plaintiff, though it is not injurious

to his health. Illustrations (a) A places a permanent

obstruction in a path over which B, as

tenant of C ’s house, has a right of way. This

is substantial damage to C, for it may affect

the evidence of his reversionary right to the

easement. (b) A, as owner of a house, has a

right to walk along one side of B ’s house. B

builds a verandah overhanging the way about

ten feet from the ground, and so as not to

occasion any inconvenience to foot-passengers

using the way. This is not substantial damage

to A. 34. When cause of action arises for removal

of support.-The removal of the means of

support to which a dominant owner is entitled

does not give rise to a right to recover compensation

unless and until substantial damage is

actually sustained. 35. Injunction to restrain

disturbance.-Subject to the provisions of the

Specific Relief Act, 1877 (1 of 1877)1, sections

52 to 57 (both inclusive), an injunction may

be granted to restrain the disturbance of an

easement- (a) if the easement is actually disturbed

- when compensation for such disturbance

might be recovered under this Chapter;

(b) if the disturbance is only threatened

or intended - when the act threatened or intended

must necessarily, if performed, disturb

the easement. 36. Abatement of obstruction

of easement.-Notwithstanding the provisions

of section 24, the dominant owner cannot himself

abate a wrongful obstruction of an easement.

37 Extinction by dissolution of right of

servient owner. -When, from a cause which

preceded the imposition of an easement, the

person by whom it was imposed ceases to have

any right in the servient heritage, the easement

is extinguished. (Exception) -Nothing in

this section applies to an easement lawfully imposed

by a mortgagor in accordance with section

10. Illustrations (a) A transfers Sultanpur

to B on condition that he does not marry C.

B imposes an easement on Sultanpur. Then B

marries C. B ’s interest in Sultanpur ends, and

with it the easement is extinguished. (b) A, in

1860, let Sultanpur to B for thirty years from

the date of the lease. B, in 1861, imposes an

easement on the land in favour of C, who enjoys

the easement peaceably and openly as an

easement without interruption for twenty-nine

years, B ’s interest in Sultanpur then ends,

and with it C’ s easement. (c) A and B, tenants

of C, have permanent transferable interests

in their respective holdings. A imposes on

his holding an easement to draw water from a

tank for the purpose of irrigating B ’s land. B

enjoys the easement for twenty years. Then

A ’s rent falls into arrear and his interest is

sold. B ’s easement is extinguished. (d) A

mortgages Sultanpur to B, and lawfully imposes

an easement on the land in favour of

C in accordance with the provisions of section

10. The land is sold to D in satisfaction

of the mortgage-debt. The easement is

not thereby extinguished. 38 Extinction by

release. -An easement is extinguished when

the dominant owner releases it, expressly or

impliedly, to the servient owner. Such release

can be made only in the circumstances and

to the extent in and to which the dominant

owner can alienate the dominant heritage. An

easement may be released as to part only of

the servient heritage. Explanation I. -An easement

is impliedly released- (a) where the dominant

owner expressly authorises an act of a

permanent nature to be done on the servient

heritage, the necessary consequence of which

is to prevent his future enjoyment of the easement,

and such act is done in pursuance of

such authority; (b) where any permanent alteration

is made in the dominant heritage of

such a nature as to show that the dominant

owner intended to cease to enjoy the easement

in future. Explanation II. -Mere non-user of

an easement is not an implied release within

the meaning of this section. Illustrations (a)

A, B and C are co-owners of a house to which

an easement is annexed. A, without the consent

of B and C, releases the easement. This

release is effectual only as against A and his

legal representative. (b) A grants B an easement

over A’s land for the beneficial enjoy-



ment of his house. B assigns the house to C,

B then purports to release the easement. The

release is ineffectual. (c) A, having the right

to discharge his eavesdroppings into B ’s yard,

expressly authorises B to build over this yard

to a height which will interfere with the discharge.

B builds accordingly. A ’s easement

is extinguished to the extent of the interference.

(d) A, having an easement of light to

a window, builds up that window with bricks

and mortar so as to manifest an intention to

abandon the easement permanently. The easement

is impliedly released. (e) A, having a

projecting roof by means of which he enjoys

an easement to discharge eavesdroppings on

B ’s land, permanently alters and roof so as

to direct the rain-water into a different channel

and discharge it on C ’s land. The easement

is impliedly released. 39. Extinction by

revocation.-An easement is extinguished when

the servient owner, in exercise of a power reserved

in this behalf, revokes the easement.

40. Extinction on expiration of limited period

or happening of dissolving condition.-An

easement is extinguished where it has been imposed

for a limited period, or acquired on condition

that it shall become void on the performance

or non-performance of a specified

act, and the period expires or the condition

is fulfilled. 41. Extinction on termination of

necessity.-An easement of necessity is extinguished

when the necessity comes to an end.

Illustration A grants B a field inaccessible except

by passing over A’s adjoining land. B

afterwards purchases a part of that land over

which he can pass to his field. The right of

way over A’s land which B had acquired is

extinguished. COMMENTS (i) The plaintiff

claimed that the disputed pathway was the

only way for their egress and ingress and without

this pathway they could not come out of

their houses. In this case, no specific finding

by lower courts as to whether easement of necessity

was specifically established. Therefore,

if it will amount to an easement of necessity

under section 13 of the Easement Act, then

it is to be extinguished under section 41 of

the Act by this court; Nepal Chandra Saha

v. Nirmala Paul, AIR 1994 NOC 159 (Gau).

(ii) The right of way of necessity which arises

by implication of law is a grant of a right of

way until such time as the grantee may acquire

the power from some other source of reaching

the quasi-dominant tenement; Karunakaran v.

Janaki Amma, 1987 (2) KLT 1010. 42. Extinction

of useless easement.-An easement is

extinguished when it becomes incapable of being

at any time and under any circumstances

beneficial to the dominant owner. 43. Extinction

by permanent change in dominant

heritage.-Where, by any permanent change

in the dominant heritage, the burden on the

servient heritage is materially increased and

cannot be reduced by the servient owner without

interfering with the lawful enjoyment of

the easement, the easement is extinguished

unless- (a) it was intended for the beneficial

enjoyment of the dominant heritage, to whatever

extent the easement should be used; or

(b) the injury caused to the servient owner by

the change is so slight that no reasonable person

would complain of it; or (c) the easement is

an easement of necessity. Nothing in this section

shall be deemed to apply to an easement

entitling the dominant owner to support of the

dominant heritage. 44. Extinction on permanent

alteration of servient heritage by superior

force.-An easement is extinguished where

the servient heritage is by superior force so

permanently altered that the dominant owner

can no longer enjoy such easement: Provided

that, where a way of necessity is destroyed by

superior force, the dominant owner has a right

to another way over the servient heritage; and

the provisions of section 14 apply to such way.

Illustrations (a) A grants to B, as the owner

of a certain house, a right to fish in a river

running through A’s land. The river changes

its course permanently and runs through C’s

land. B’s easement is extinguished. (b) Access

to a path over which A has a right of

way is permanently cut off by an earthquake.

A’s right is extinguished. 45. Extinction by

destruction of either heritage.-An easement is

extinguished when either the dominant or the

servient heritage is completely destroyed. Illustration

A has a right of way over a road running

along the foot of a sea-cliff. The road is

washed away by a permanent encroachment of

the sea. A’s easement is extinguished. COM-



MENTs There is nothing in this Act to support

the contention that where a right to light

and air to a building has been acquired, a partial

destruction of it extinguishes that right;

F.S. Pathuck v. F.E. Davar, 7 Bom LR 352.

46 Extinction by unity of ownership. -An easement

is extinguished when the same person becomes

entitled to the absolute ownership of the

whole of the dominant and servient heritages.

Illustrations (a) A, as the owner of a house,

has a right of way over B ’s field. A mortgages

his house, and B mortgages his field to

C. Then C forecloses both mortgages and becomes

thereby absolute owner of both house

and field. The right of way is extinguished.

(b) The dominant owner acquires only part

of the servient heritage; the easement is not

extinguished, except in the case illustrated in

section 41. (c) The servient owner acquires the

dominant heritage in connection with a third

person; the easement is not extinguished. (d)

The separate owners of two separate dominant

heritages jointly acquire the heritage which

is servient to the two separate heritages; the

easements are not extinguished. (e) The joint

owners of the dominant heritage jointly acquire

the servient heritage; the easement is extinguished.

(f) A single right of way exists over

two servient heritages for the beneficial enjoyment

of a single dominant heritage. The dominant

owner acquires one only of the servient

heritages. The easement is not extinguished.

(g) A has a right of way over B ’s road. B

dedicates the road to the public. A’s right of

way is not extinguished. 47 Extinction by nonenjoyment.

-A continuous easement is extinguished

when it totally ceases to be enjoyed as

such for an unbroken period of twenty years. A

discontinuous easement is extinguished when,

for a like period, it has not been enjoyed as

such. Such period shall be reckoned, in the

case of a continuous easement, from the day

on which its enjoyment was obstructed by the

servient owner, or rendered impossible by the

dominant owner; and, in the case of a discontinuous

easement, from the day on which

it was last enjoyed by any person as dominant

owner: Provided that if, in the case of a

discontinuous easement, the dominant owner,

within such period, registers, under the Indian

Registration Act, 1877 (3 of 1877) 8 , a declaration

of his intention to retain such easement,

it shall not be extinguished until a period

of twenty years has elapsed from the date

of the registration. Where an easement can

be legally enjoyed only at a certain place, or

at certain times, or between certain hours, or

for a particular purpose, its enjoyment during

the said period at another place, or at other

times, or between other hours, or for another

purpose, does not prevent its extinction under

this section. The circumstance that, during

the said period, no one was in possession

of the servient heritage, or that the easement

could not be enjoyed, or that a right accessory

thereto was enjoyed, or that the dominant

owner was not aware of its existence, or that

he enjoyed it in ignorance of his right to do

so, does not prevent its extinction under this

section. An easement is not extinguished under

this section- (a) where the cessation is in

pursuance of a contract between the dominant

and servient owners; (b) where the dominant

heritage is held in co-ownership, and one of

the co-owners enjoys the easement within the

said period; or (c) where the easement is a necessary

easement. Where several heritages are

respectively subject to rights of way for the

benefit of a single heritage, and the ways are

continuous, such rights shall, for the purposes

of this section, be deemed to be a single easement.

Illustration A has, as annexed to his

house, rights of way from the high road thither

over the heritages X and Z and the intervening

heritage Y. Before the twenty years expire, A

exercises his right of way over X. His rights of

way over Y and Z are not extinguished. 48.

Extinction of accessory right.-When an easement

is extinguished, the rights (if any) accessory

thereto are also extinguished. Illustration

A has an easement to draw water from

B’s well. As accessory thereto, he has a right

of way over B’s land to and from the well.

The easement to draw water is extinguished

under section 47. The right of way is also

extinguished. 49. Suspension of easement.-

An easement is suspended when the dominant

owner becomes entitled to possession of the

servient heritage for a limited interest therein,

or when the servient owner becomes entitled to



possession of the dominant heritage for a limited

interest therein. 50. Servient owner not

entitled to require continuance.-The servient

owner has no right to require that an easement

be continued; and, notwithstanding the provisions

of section 26, he is not entitled to compensation

for damage caused to the servient

heritage in consequence of the extinguishment

or suspension of the easement, if the dominant

owner has given to the servient owner such

notice as will enable him, without unreasonable

expense, to protect the servient heritage

from such damage. Compensation for damage

caused by extinguishment or suspension.-

Where such notice has not been given, the

servient owner is entitled to compensation for

damage caused to the servient heritage in consequence

of such extinguishment or suspension.

Illustration A, in exercise of an easement,

diverts to his canal the water of B’s stream.

The diversion continues for many years, and

during that time the bed of the stream partly

fills up. A then abandons his easement, and

restores the stream to its ancient course. B’s

land is consequently flooded. B sues A for

compensation for the damage caused by the

flooding. It is proved that A gave B a month’s

notice of his intention to abandon the easement,

and that such notice was sufficient to

enable B, without unreasonable expense, to

have prevented the damage. The suit must be

dismissed. 51. Revival of easement.-An easement

extinguished under section 45 revives (a)

when the destroyed heritage is, before twenty

years have expired, restored by the deposit of

alluvion; (b) when the destroyed heritage is a

servient building and before twenty years have

expired such building is rebuilt upon the same

site, and (c) when the destroyed heritage is

a dominant building and before twenty years

have expired such building is rebuilt upon the

same site and in such a manner as not to impose

a greater burden on the servient heritage.

An easement extinguished under section 46 revives

when the grant or bequest by which the

unity of ownership was produced is set aside

by the decree of a competent Court. A necessary

easement extinguished under the same

section revives when the unity of ownership

ceases from any other cause. A suspended

easement revives if the cause of suspension is

removed before the right is extinguished under

section 47. Illustration A, as the absolute

owner of field Y, has right of way thither over

B’s field Z. A obtains from B a lease of Z for

twenty years. The easement is suspended so

long as A remains lessee of Z. But when A assigns

the lease to C, or surrenders it to B, the

right of way revives. 52 "License" defined. -

Where one person grants to another, or to a

definite number of other persons, a right to

do, or continue to do, in or upon the immovable

property of the grantor, something which

would, in the absence of such right, be unlawful,

and such right does not amount to an easement

or an interest in the property, the right is

called a license. 53 Who may grant license. -A

license may be granted by any one in the circumstances

and to the extent in and to which

he may transfer his interests in the property

affected by the license. 54. Grant may be expressed

or implied.-The grant of a license may

be expressed or implied from the conduct of

the grantor, and an agreement which purports

to create an easement, but is ineffectual for

that purpose, may operate to create a license.

55. Accessory licenses annexed by law.-All licenses

necessary for the enjoyment of any interest,

or the exercise of any right, are implied

in the constitution of such interest or right.

Such licenses are called accessory licenses. Illustration

A sells the trees growing on his land

to B. B is entitled to go on the land and take

away the trees. COMMENTS If a tenant of

a portion of a building cannot reasonable enjoy

the amenities like, Television, Radio, Telephone

etc., in his premises without fixing the

Television Antenna or the Radio-Aerial or the

Telephone wire on some other portion of the

building, he should be deemed to have accessory

licence to do so, so long the tenancy lasts,

in accordance with the principles enshrined in

section 55 of the Act; Ratnamala Dasi v. R.S.

Bawa, AIR 1990 Cal 26. 56 License when

transferable. -Unless a different intention is

expressed or necessarily implied, a license to

attend a place of public entertainment may be

transferred by the licensee; but, save as aforesaid,

a license cannot be transferred by the

licensee or exercised by his servants or agents.



Illustrations (a) A grants B a right to walk

over A ’s field whenever he pleases. The right

is not annexed to any immovable property of

B. The right cannot be transferred. (b) The

Government grant B a license to erect and use

temporary grainsheds on Government land. In

the absence of express provision to the contrary,

B ’s servants may enter on the land for

the purpose of erecting sheds, erect the same,

deposit grain therein and remove grain therefrom.

57. Grantor’s duty to disclose defects.-

The grantor of a license is bound to disclose to

the licensee any defect in the property affected

by the license, likely to be dangerous to the

person or property of the licensee, of which the

grantor is, and the licensee is not, aware. 58.

Grantor’s duty not to render property unsafe.-

The grantor of a license is bound not to do

anything likely to render the property affected

by the license dangerous to the person or property

of the licensee. 59. Grantor’s transferee

not bound by license.-When the grantor of the

license transfers the property affected thereby,

the transferee is not as such bound by the license.

60. License when revocable.-A license

may be revoked by the grantor, unless- (a)

it is coupled with a transfer of property and

such transfer is in force; (b) the licensee, acting

upon the license, has executed a work of

a permanent character and incurred expenses

in the execution. 61. Revocation express or

implied.-The revocation of a license may be express

or implied. Illustrations (a) A, the owner

of a field, grants a license to B, to use a path

across it. A, with intent to revoke the license,

locks a gate across the path. The license is

revoked. (b) A, the owner of a field, grants a

license to B to stack hay on the field. A lets

or sells the field to C. The license is revoked.

62 License when deemed revoked. -A license is

deemed to be revoked- (a) when, from a cause

preceding the grant of it, the grantor ceases

to have any interest in the property affected

by the license; (b) when the licensee releases

it, expressly or impliedly, to the grantor or his

representative; (c) where it has been granted

for a limited period, or acquired on condition

that it shall become void on the performance

or non-performance of a specified act, and the

period expires, or the condition is fulfilled; (d)

where the property affected by the license is

destroyed or by superior force so permanently

altered that the licensee can no longer exercise

his right; (e) where the licensee becomes

entitled to the absolute ownership of the property

affected by the license; (f) where the license

is granted for a specified purpose and

the purpose is attained, or abandoned, or becomes

impracticable; (g) where the license is

granted to the licensee as holding a particular

office, employment or character, and such

office, employment or character ceases to exist;

(h) where the license totally ceases to be

used as such for an unbroken period of twenty

years, and such cessation is not in pursuance

of a contract between the grantor and the licensee;

(i) in the case of an accessory license,

when the interest or right to which it is accessory

ceases to exist. 63. Licensee’s rights on

revocation.-Where a license is revoked, the licensee

is entitled to a reasonable time to leave

the property affected thereby and to remove

any goods which he has been allowed to place

on such property. 64. Licensee’s rights on

eviction.-Where a license has been granted for

a consideration, and the licensee, without any

fault of his own, is evicted by the grantor before

he has fully enjoyed, under the license,

the right for which he contracted, he is entitled

to recover compensation from the grantor.

1. The Act was extended to- 2. Subs. by the

A.O. 1950, for "Crown". tc" 3. Subs. by the

A.O. 1950, for "Crown"." 3. Subs. by Act 10

of 1914, sec. 2 and Sch. I, for section 3. tc"

1. Subs. by Act 10 of 1914, sec. 2 and Sch.

I, for section 3." 4. Subs. by Act 12 of 1891,

sec. 2 and Sch. II, for "right". tc" 1. Subs. by

Act 12 of 1891, sec. 2 and Sch. II, for "right"."

5. But see section 36, infra, as to abatement

of obstruction of easement. 6. But see section

50, infra, as to extinguishment or suspension

of easement. tc" 2. But see section 50, infra, as

to extinguishment or suspension of easement."

7. See now the Specific Relief Act, 1963 (47 of

1963). tc" 1. See now the Specific Relief Act,

1963 (47 of 1963)." 8. See now the Registration

Act, 1908 (16 of 1908).


6

The Indian Contract Act, 1872

The Indian Contract Act, 1872

6.1 Short title

1..—This Act may be called the Indian Contract

Act, 1872. —This Act may be called

the Indian Contract Act, 1872." Extent, Commencement.—It

extends to the whole of India

1 [except the State of Jammu and Kashmir];

and it shall come into force on the first day of

September, 1872. (Saving) — 2 [***] Nothing

herein contained shall affect the provisions of

any Statute, Act or Regulation not hereby expressly

repealed, nor any usage or custom of

trade, nor any incident of any contract, not

inconsistent with the provisions of this Act.

6.2 Interpretation-clause

2. .—In this Act the following words and expressions

are used in the following senses, unless

a contrary intention appears from the context:—

—In this Act the following words and

expressions are used in the following senses,


context —" (a) When one person signifies to

another his willingness to do or to abstain from

doing anything, with a view to obtaining the

assent of that other to such act or abstinence,

he is said to make a proposal; (b) When the

person to whom the proposal is made signifies

his assent thereto, the proposal is said

to be accepted. A proposal, when accepted,

becomes a promise; (c) The person making

the proposal is called the “promisor”, and the

person accepting the proposal is called the

“promisee”; (d) When, at the desire of the

promisor, the promisee or any other person

has done or abstained from doing, or does or

abstains from doing, or promises to do or to

abstain from doing, something, such act or abstinence

or promise is called a consideration

for the promise; (e) Every promise and every

set of promises, forming the consideration

for each other, is an agreement; (f) Promises

which form the consideration or part of the

consideration for each other, are called reciprocal

promises; (g) An agreement not enforceable

by law is said to be void; (h) An agreement

enforceable by law is a contract; (i) An

agreement which is enforceable by law at the

option of one or more of the parties thereto,

but not at the option of the other or others,

is a voidable contract; (j) A contract which

ceases to be enforceable by law becomes void

when it ceases to be enforceable.

6.3 Communication, acceptance

and revocation

of proposals

3. .—The communication of proposals, the

acceptance of proposals, and the revocation

of proposals and acceptances, respectively, are

deemed to be made by any act or omission

of the party proposing, accepting or revoking,

by which he intends to communicate such

proposal, acceptance or revocation, or which

has the effect of communicating it. —The

communication of proposals, the acceptance

of proposals, and the revocation of proposals

and acceptances, respectively, are deemed to

133


be made by any act or omission of the party

proposing, accepting or revoking, by which he

intends to communicate such proposal, acceptance

or revocation, or which has the effect of

communicating it."

6.4 Communication when

complete

4. .—The communication of a proposal is complete

when it comes to the knowledge of the

person to whom it is made. —The communication

of a proposal is complete when it comes

to the knowledge of the person to whom it is

made." The communication of an acceptance

is complete,— as against the proposer, when

it is put in a course of transmission to him

so as to be out of the power of the acceptor;

as against the acceptor, when it comes to the

knowledge of the proposer. The communication

of a revocation is complete,— as against

the person who makes it, when it is put into a

course of transmission to the person to whom

it is made, so as to be out of the power of

the person who makes it; as against the person

to whom it is made, when it comes to his

knowledge. Illustrations (a) A proposes, by

letter, to sell a house to B at a certain price.

(a) A proposes, by letter, to sell a house to

B at a certain price." The communication of

the proposal is complete when B receives the

letter. The communication of the proposal is

complete when B receives the letter." (b) B

accepts A’s proposal by a letter sent by post.

(b) B accepts A’s proposal by a letter sent by

post." The communication of the acceptance

is complete, The communication of the acceptance

is complete," as against A when the letter

is posted; as against A when the letter is

posted;" as against B, when the letter is received

by A. as against B, when the letter is

received by A." (c) A revokes his proposal by

telegram. (c) A revokes his proposal by telegram."

The revocation is complete as against

A when the telegram is despatched. The revocation

is complete as against A when the telegram

is despatched." It is complete as against

B when B receives it. It is complete as against

B when B receives it." B revokes his acceptance

by telegram. B’s revocation is complete

as against B when the telegram is despatched,

and as against A when it reaches him. B revokes

his acceptance by telegram. B’s revocation

is complete as against B when the telegram

is despatched, and as against A when it

reaches him."

6.5 Revocation of Proposals

and acceptance

5. A proposal may be revoked at any time

before the communication of its acceptance is

complete as against the proposer, but not afterwards.

—A proposal may be revoked at

any time before the communication of its acceptance

is complete as against the proposer,

but not afterwards." An acceptance may be revoked

at any time before the communication

of the acceptance is complete as against the

acceptor, but not afterwards. Illustrations A

proposes, by a letter sent by post, to sell his

house to B. A proposes, by a letter sent by

post, to sell his house to B." B accepts the

proposal by a letter sent by post. B accepts

the proposal by a letter sent by post." A may

revoke his proposal at any time before or at

the moment when B posts his letter of acceptance,

but not afterwards. A may revoke his

proposal at any time before or at the moment

when B posts his letter of acceptance, but not

afterwards." B may revoke his acceptance at

any time before or at the moment when the

letter communicating it reaches A, but not afterwards.

B may revoke his acceptance at any

time before or at the moment when the letter

communicating it reaches A, but not afterwards."

6.6 Revocation how made

6. A proposal is revoked— —A proposal is

revoked—" (1) by the communication of notice

of revocation by the proposer to the other

party; (2) by the lapse of the time prescribed

in such proposal for its acceptance, or, if no

time is so prescribed, by the lapse of a reasonable

time, without communication of the

acceptance; (3) by the failure of the acceptor

6.6 6. THE INDIAN CONTRACT ACT, 1872


to fulfil a condition precedent to acceptance;

or (4) by the death or insanity of the proposer,

if the fact of his death or insanity comes to the

knowledge of the acceptor before acceptance.

7. Acceptance must be absolute.—In order to

convert a proposal into a promise the acceptance

must— —In order to convert a proposal

into a promise the acceptance must—" (1) be

absolute and unqualified; (2) be expressed in

some usual and reasonable manner, unless the

proposal prescribes the manner in which it is

to be accepted. If the proposal prescribes a

manner in which it is to be accepted, and the

acceptance is not made in such manner, the

proposer may, within a reasonable time after

the acceptance is communicated to him, insist

that his proposal shall be accepted in the

prescribed manner, and not otherwise; but, if

he fails to do so, he accepts the acceptance.

8. Acceptance by performing conditions, or

receiving consideration.—Performance of the

conditions of a proposal, or the acceptance

of any consideration for a reciprocal promise

which may be offered with a proposal, is an

acceptance of the proposal. —Performance of

the conditions of a proposal, or the acceptance

of any consideration for a reciprocal promise

which may be offered with a proposal, is an

acceptance of the proposal." 9. Promises, express

and implied.—In so far as the proposal or

acceptance of any promise is made in words,

the promise is said to be express. In so far

as such proposal or acceptance is made otherwise

than in words, the promise is said to

be implied. —In so far as the proposal or acceptance

of any promise is made in words, the

promise is said to be express. In so far as such

proposal or acceptance is made otherwise than

in words, the promise is said to be implied." 10.

What agreements are contracts.—All agreements

are contracts if they are made by the

free consent of parties competent to contract,

for a lawful consideration and with a lawful

object, and are not hereby expressly declared

to be void. —All agreements are contracts if

they are made by the free consent of parties

competent to contract, for a lawful consideration

and with a lawful object, and are not

hereby expressly declared to be void." Nothing

herein contained shall affect any law in force in

1[India], and not hereby expressly repealed, by

which any contract is required to be made in

writing 2or in the presence of witnesses, or any

law relating to the registration of documents.

11. Who are competent to contract.—Every

person is competent to contract who is of the

age of majority according to the law to which

he is subject,1 and who is of sound mind and is

not disqualified from contracting by any law to

which he is subject. —Every person is competent

to contract who is of the age of majority

according to the law to which he is subject,1

and who is of sound mind and is not disqualified

from contracting by any law to which he

is subject." 12. What is a sound mind for the

purposes of contracting.—A person is said to

be of sound mind for the purpose of making a

contract, if, at the time when he makes it, he

is capable of understanding it and of forming

a rational judgment as to its effect upon his

interests. —A person is said to be of sound

mind for the purpose of making a contract, if,

at the time when he makes it, he is capable

of understanding it and of forming a rational

judgment as to its effect upon his interests."

A person who is usually of unsound mind, but

occasionally of sound mind, may make a contract

when he is of sound mind. A person

who is usually of sound mind, but occasionally

of unsound mind, may not make a contract

when he is of unsound mind. Illustrations (a)

A patient in a lunatic asylum, who is, at intervals,

of sound mind, may contract during

those intervals. (a) A patient in a lunatic asylum,

who is, at intervals, of sound mind, may

contract during those intervals." (b) A sane

man, who is delirious from fever, or who is so

drunk that he cannot understand the terms

of a contract, or form a rational judgment as

to its effect on his interests, cannot contract

whilst such delirium or drunkenness lasts. (b)

A sane man, who is delirious from fever, or

who is so drunk that he cannot understand the

terms of a contract, or form a rational judgment

as to its effect on his interests, cannot

contract whilst such delirium or drunkenness

lasts." 13. ‘Consent’ defined.—Two or more

persons are said to consent when they agree

upon the same thing in the same sense. —Two

or more persons are said to consent when they

6. THE INDIAN CONTRACT ACT, 1872 6.6


agree upon the same thing in the same sense."

14. ‘Free consent’ defined.—Consent is said

to be free when it is not caused by— —Consent

is said to be free when it is not caused

by—" (1) coercion, as defined in section 15, or

(2) undue influence, as defined in section 16,

or (3) fraud, as defined in section 17, or (4)

misrepresentation, as defined in section 18, or

(5) mistake, subject to the provisions of sections

20, 21 and 22. Consent is said to be so

caused when it would not have been given but

for the existence of such coercion, undue influence,

fraud, misrepresentation or mistake. 15.

‘Coercion’ defined.—‘Coercion’ is the committing,

or threatening to commit, any act forbidden

by the Indian Penal Code (45 of 1860)

or the unlawful detaining, or threatening to

detain, any property, to the prejudice of any

person whatever, with the intention of causing

any person to enter into an agreement. —‘Coercion’

is the committing, or threatening to

commit, any act forbidden by the Indian Penal

Code (45 of 1860) or the unlawful detaining,

or threatening to detain, any property, to

the prejudice of any person whatever, with the

intention of causing any person to enter into

an agreement." Explanation.—It is immaterial

whether the Indian Penal Code (45 of 1860) is

or is not in force in the place where the coercion

is employed. Illustrations A, on board

an English ship on the high seas, causes B to

enter into an agreement by an act amounting

to criminal intimidation under the Indian Penal

Code (45 of 1860). A afterwards sues B

for breach of contract at Calcutta. A afterwards

sues B for breach of contract at Calcutta."

A has employed coercion, although his

act is not an offence by the law of England,

and although section 506 of the Indian Penal

Code (45 of 1860) was not in force at the time

when or place where the act was done. A has

employed coercion, although his act is not an

offence by the law of England, and although

section 506 of the Indian Penal Code (45 of

1860) was not in force at the time when or

place where the act was done." 6 [16. ‘Undue

influence’ defined.— (1) A contract is said to

be induced by ‘undue influence’ where the relations

subsisting between the parties are such

that one of the parties is in a position to dominate

the will of the other and uses that position

to obtain an unfair advantage over the

other. 1[16. ‘Undue influence’ defined.—(1) A

contract is said to be induced by ‘undue influence’

where the relations subsisting between

the parties are such that one of the parties is

in a position to dominate the will of the other

and uses that position to obtain an unfair advantage

over the other." (2) In particular and

without prejudice to the generality of the foregoing

principle, a person is deemed to be in a

position to dominate the will of another— (a)

where he holds a real or apparent authority

over the other, or where he stands in a fiduciary

relation to the other; or (b) where he

makes a contract with a person whose mental

capacity is temporarily or permanently affected

by reason of age, illness, or mental or

bodily distress. (3) Where a person who is

in a position to dominate the will of another,

enters into a contract with him, and the transaction

appears, on the face of it or on the

evidence adduced, to be unconscionable, the

burden of proving that such contract was not

induced by undue influence shall be upon the

person in a position to dominate the will of the

other. Nothing in the sub-section shall affect

the provisions of section 111 of the Indian Evidence

Act, 1872 (1 of 1872). Illustrations (a)

A having advanced money to his son, B, during

his minority, upon B’s coming of age obtains,

by misuse of parental influence, a bond

from B for a greater amount than the sum due

in respect of the advance. A employs undue

influence. (a) A having advanced money to

his son, B, during his minority, upon B’s coming

of age obtains, by misuse of parental influence,

a bond from B for a greater amount

than the sum due in respect of the advance.

A employs undue influence." (b) A, a man enfeebled

by disease or age, is induced, by B’s

influence over him as his medical attendant,

to agree to pay B an unreasonable sum for his

professional services, B employes undue influence.

(b) A, a man enfeebled by disease or

age, is induced, by B’s influence over him as

his medical attendant, to agree to pay B an

unreasonable sum for his professional services,

B employes undue influence." (c) A, being in

debt to B, the money-lender of his village, con-



tracts a fresh loan on terms which appear to

be unconscionable. It lies on B to prove that

the contract was not induced by undue influence.

(c) A, being in debt to B, the moneylender

of his village, contracts a fresh loan on

terms which appear to be unconscionable. It

lies on B to prove that the contract was not

induced by undue influence." (d) A applies to

a banker for a loan at a time when there is

stringency in the money market. The banker

declines to make the loan except at an unusually

high rate of interest. A accepts the loan

on these terms. This is a transaction in the

ordinary course of business, and the contract

is not induced by undue influence.] (d) A applies

to a banker for a loan at a time when

there is stringency in the money market. The

banker declines to make the loan except at an

unusually high rate of interest. A accepts the

loan on these terms. This is a transaction in

the ordinary course of business, and the contract

is not induced by undue influence.]" 17.

‘Fraud’ defined.—‘Fraud’ means and includes

any of the following acts committed by a party

to a contract, or with his connivance, or by his

agent1, with intent to deceive another party

thereto or his agent, or to induce him to enter

into the contract:— —‘Fraud’ means and includes

any of the following acts committed by

a party to a contract, or with his connivance,

or by his agent1, with intent to deceive another

party thereto or his agent, or to induce

him to enter into the contract —" (1) the suggestion,

as a fact, of that which is not true,

by one who does not believe it to be true; (2)

the active concealment of a fact by one having

knowledge or belief of the fact; (3) a promise

made without any intention of performing it;

(4) any other act fitted to deceive; (5) any such

act or omission as the law specially declares to

be fraudulent. Explanation.—Mere silence as

to facts likely to affect the willingness of a person

to enter into a contract is not fraud, unless

the circumstances of the case are such that, regard

being had to them, it is the duty of the

person keeping silence to speak2, or unless his

silence, is, in itself, equivalent to speech. Illustrations

(a) A sells, by auction, to B, a horse

which A knows to be unsound. A says nothing

to B about the horse’s unsoundness. This is

not fraud in A. (a) A sells, by auction, to B,

a horse which A knows to be unsound. A says

nothing to B about the horse’s unsoundness.

This is not fraud in A." (b) B is A’s daughter

and has just come of age. Here the relation

between the parties would make it A’s duty

to tell B if the horse is unsound. (b) B is A’s

daughter and has just come of age. Here the

relation between the parties would make it A’s

duty to tell B if the horse is unsound." (c) B

says to A—“If you do not deny it, I shall assume

that the horse is sound”. A says nothing.

Here, A’s silence is equivalent to speech. (c)

B says to A—“If you do not deny it, I shall

assume that the horse is sound”. A says nothing.

Here, A’s silence is equivalent to speech."

(d) A and B, being traders, enter upon a contract.

A has private information of a change

in prices which would affect B’s willingness to

proceed with the contract. A is not bound to

inform B. (d) A and B, being traders, enter

upon a contract. A has private information

of a change in prices which would affect B’s

willingness to proceed with the contract. A is

not bound to inform B." 18. “Misrepresentation”

defined.—“Misrepresentation” means

and includes— —“Misrepresentation” means

and includes—" (1) the positive assertion, in

a manner not warranted by the information of

the person making it, of that which is not true,

though he believes it to be true; (2) any breach

of duty which, without an intent to deceive,

gains an advantage of the person committing

it, or any one claiming under him, by misleading

another to his prejudice, or to the prejudice

of any one claiming under him; (3) causing,

however innocently, a party to an agreement,

to make a mistake as to the substance

of the thing which is the subject of the agreement.

19. Voidability of agreements without

free consent.—When consent to an agreement

is caused by coercion, 1[***] fraud or misrepresentation,

the agreement is a contract voidable

at the option of the party whose consent was

so caused. —When consent to an agreement is

caused by coercion, 1[***] fraud or misrepresentation,

the agreement is a contract voidable

at the option of the party whose consent was

so caused." A party to contract, whose consent

was caused by fraud or misrepresentation,



may, if he thinks fit, insist that the contract

shall be performed, and that he shall be put

in the position in which he would have been if

the representations made had been true. (Exception)

—If such consent was caused by misrepresentation

or by silence, fraudulent within

the meaning of section 17, the contract, nevertheless,

is not voidable, if the party whose consent

was so caused had the means of discovering

the truth with ordinary diligence. Explanation.—A

fraud or misrepresentation which

did not cause the consent to a contract of the

party on whom such fraud was practised, or to

whom such misrepresentation was made, does

not render a contract voidable. Illustrations

(a) A, intending to deceive B, falsely represents

that five hundred maunds of indigo are

made annually at A’s factory, and thereby induces

B to buy the factory. The contract is

voidable at the option of B. (a) A, intending to

deceive B, falsely represents that five hundred

maunds of indigo are made annually at A’s

factory, and thereby induces B to buy the factory.

The contract is voidable at the option of

B." (b) A, by a misrepresentation, leads B erroneously

to believe that five hundred maunds

of indigo are made annually at A’s factory. B

examines the accounts of the factory, which

show that only four hundred maunds of indigo

have been made. After this B buys the factory.

The contract is not voidable on account of A’s

misrepresentation. (b) A, by a misrepresentation,

leads B erroneously to believe that five

hundred maunds of indigo are made annually

at A’s factory. B examines the accounts of

the factory, which show that only four hundred

maunds of indigo have been made. After

this B buys the factory. The contract is not

voidable on account of A’s misrepresentation."

(c) A fraudulently informs B that A’s estate is

free from incumbrance. B thereupon buys the

estate. The estate is subject to a mortgage.

B may either avoid the contract, or may insist

on its being carried out and mortgage-debt redeemed.

(c) A fraudulently informs B that

A’s estate is free from incumbrance. B thereupon

buys the estate. The estate is subject

to a mortgage. B may either avoid the contract,

or may insist on its being carried out

and mortgage-debt redeemed." (d) B, having

discovered a vein of ore on the estate of A,

adopts means to conceal, and does conceal the

existence of the ore from A. Through A’s ignorance

B is enabled to buy the estate at an

under-value. The contract is voidable at the

option of A. (d) B, having discovered a vein of

ore on the estate of A, adopts means to conceal,

and does conceal the existence of the ore

from A. Through A’s ignorance B is enabled

to buy the estate at an under-value. The contract

is voidable at the option of A." (e) A is

entitled to succeed to an estate at the death

of B; B dies: C, having received intelligence of

B’s death, prevents the intelligence reaching

A, and thus induces A to sell him his interest

in the estate. The sale is voidable at the option

of A. (e) A is entitled to succeed to an estate at

the death of B; B dies C, having received intelligence

of B’s death, prevents the intelligence

reaching A, and thus induces A to sell him his

interest in the estate. The sale is voidable at

the option of A." 10 [19A. Power to set aside

contract induced by undue influence.—When

consent to an agreement is caused by undue

influence, the agreement is a contract voidable

at the option of the party whose consent

was so caused. 2[19A. Power to set aside

contract induced by undue influence.—When

consent to an agreement is caused by undue

influence, the agreement is a contract voidable

at the option of the party whose consent

was so caused." Any such contract may be set

aside either absolutely or, if the party who was

entitled to avoid it has received any benefit

thereunder, upon such terms and conditions

as to the Court may seem just. Illustrations

(a) A’s son has forged B’s name to a promissory

note. B under threat of prosecuting A’s

son, obtains a bond from A for the amount

of the forged note. If B sues on this bond,

the Court may set the bond aside. (b) A, a

money-lender, advances Rs. 100 to B, an agriculturist,

and, by undue influence, induces B

to execute a bond for Rs. 200 with interest at

6 per cent. per month. The Court may set

the bond aside, ordering B to repay the Rs.

100 with such interest as may seem just.] (b)

A, a money-lender, advances Rs. 100 to B, an

agriculturist, and, by undue influence, induces

B to execute a bond for Rs. 200 with interest



at 6 per cent. per month. The Court may set

the bond aside, ordering B to repay the Rs.

100 with such interest as may seem just.]" 20.

Agreement void where both parties are under

mistake as to matter of fact.—Where both the

parties to an agreement are under a mistake as

to a matter of fact essential to the agreement

the agreement is void. Explanation.—An erroneous

opinion as to the value of the thing

which forms the subject-matter of the agreement,

is not to be deemed a mistake as to a

matter of fact. Illustrations (a) A agrees to sell

to B a specific cargo of goods supposed to be

on its way from England to Bombay. It turns

out that, before the day of the bargain the

ship conveying the cargo had been cast away

and the goods lost. Neither party was aware

of these facts. The agreement is void. (a) A

agrees to sell to B a specific cargo of goods

supposed to be on its way from England to

Bombay. It turns out that, before the day of

the bargain the ship conveying the cargo had

been cast away and the goods lost. Neither

party was aware of these facts. The agreement

is void." (b) A agrees to buy from B a certain

horse. It turns out that the horse was dead at

the time of the bargain, though neither party

was aware of the fact. The agreement is void.

(b) A agrees to buy from B a certain horse.

It turns out that the horse was dead at the

time of the bargain, though neither party was

aware of the fact. The agreement is void." (c)

A, being entitled to an estate for the life of

B, agrees to sell it to C, B was dead at the

time of agreement, but both parties were ignorant

of the fact. The agreement is void. (c)

A, being entitled to an estate for the life of B,

agrees to sell it to C, B was dead at the time

of agreement, but both parties were ignorant

of the fact. The agreement is void." 21. Effect

of mistakes as to law.—A contract is not voidable

because it was caused by a mistake as to

any law in force in 11 [India]; but a mistake as

to a law not in force in 1[India] has the same

effect as a mistake of fact. —A contract is not

voidable because it was caused by a mistake

as to any law in force in 1[India]; but a mistake

as to a law not in force in 1[India] has the

same effect as a mistake of fact." 12 [***] Illustration

A and B make a contract grounded

on the erroneous belief that a particular debt

is barred by the Indian Law of Limitation; the

contract is not voidable. A and B make a contract

grounded on the erroneous belief that a

particular debt is barred by the Indian Law of

Limitation; the contract is not voidable." 13

[***] 22. Contract caused by mistake of one

party as to matter of fact.—A contract is not

voidable merely because it was caused by one

of the parties to it being under a mistake as to

a matter of fact. —A contract is not voidable

merely because it was caused by one of the parties

to it being under a mistake as to a matter

of fact." 23. What consideration and objects

are lawful, and what not.—The consideration

or object of an agreement is lawful, unless—

—The consideration or object of an agreement

is lawful, unless—" it is forbidden by law; 14

or is of such a nature that, if permitted, it

would defeat the provisions of any law; or is

fraudulent; or involves or implies, injury to the

person or property of another; or the Court regards

it as immoral, or opposed to public policy.

In each of these cases, the consideration or

object of an agreement is said to be unlawful.

Every agreement of which the object or consideration

is unlawful is void. Illustrations (a) A

agrees to sell his house to B for 10,000 rupees.

Here, B’s promise to pay the sum of 10,000 rupees

is the consideration for A’s promise to sell

the house and A’s promise to sell the house is

the consideration for B’s promise to pay the

10,000 rupees. These are lawful considerations.

(a) A agrees to sell his house to B for

10,000 rupees. Here, B’s promise to pay the

sum of 10,000 rupees is the consideration for

A’s promise to sell the house and A’s promise

to sell the house is the consideration for B’s

promise to pay the 10,000 rupees. These are

lawful considerations." (b) A promises to pay

B 1,000 rupees at the end of six months, if

C, who owes that sum to B, fails to pay it. B

promises to grant time to C accordingly. Here,

the promise of each party is the consideration

for the promise of the other party, and they

are lawful considerations. (b) A promises to

pay B 1,000 rupees at the end of six months,

if C, who owes that sum to B, fails to pay it. B

promises to grant time to C accordingly. Here,

the promise of each party is the consideration



for the promise of the other party, and they

are lawful considerations." (c) A promises, for

a certain sum paid to him by B, to make good

to B the value of his ship if it is wrecked on a

certain voyage. Here, A’s promise is the consideration

for B’s payment, and B’s payment

is the consideration for A’s promise, and these

are lawful considerations. (c) A promises, for

a certain sum paid to him by B, to make good

to B the value of his ship if it is wrecked on a

certain voyage. Here, A’s promise is the consideration

for B’s payment, and B’s payment

is the consideration for A’s promise, and these

are lawful considerations." (d) A promises to

maintain B’s child, and B promises to pay A

1,000 rupees yearly for the purpose. Here, the

promise of each party is the consideration for

the promise of the other party. They are lawful

considerations. (d) A promises to maintain B’s

child, and B promises to pay A 1,000 rupees

yearly for the purpose. Here, the promise of

each party is the consideration for the promise

of the other party. They are lawful considerations."

(e) A, B and C enter into an agreement

for the division among them of gains acquired

or to be acquired, by them by fraud.

The agreement is void, as its object is unlawful.

(e) A, B and C enter into an agreement for

the division among them of gains acquired or

to be acquired, by them by fraud. The agreement

is void, as its object is unlawful." (f) A

promises to obtain for B an employment in the

public service and B promises to pay 1,000 rupees

to A. The agreement is void, as the consideration

for it is unlawful. (f) A promises

to obtain for B an employment in the public

service and B promises to pay 1,000 rupees to

A. The agreement is void, as the consideration

for it is unlawful." (g) A, being agent for

a landed proprietor, agrees for money, without

the knowledge of his principal, to obtain

for B a lease of land belonging to his principal.

The agreement between A and B is void, as it

implies a fraud by concealment, by A, on his

principal. (g) A, being agent for a landed proprietor,

agrees for money, without the knowledge

of his principal, to obtain for B a lease

of land belonging to his principal. The agreement

between A and B is void, as it implies a

fraud by concealment, by A, on his principal."

(h) A promises B to drop a prosecution which

he has instituted against B for robbery, and

B promises to restore the value of the things

taken. The agreement is void, as its object is

unlawful. (h) A promises B to drop a prosecution

which he has instituted against B for

robbery, and B promises to restore the value

of the things taken. The agreement is void, as

its object is unlawful." (i) A’s estate is sold for

arrears of revenue under the provisions of an

Act of the Legislature, by which the defaulter

is prohibited from purchasing the estate. B,

upon an understanding with A, becomes the

purchaser, and agrees to convey the estate to

A upon receiving from him the price which B

has paid. The agreement is void, as it renders

the transaction, in effect, a purchase by

the defaulter and would so defeat the object

of the law. (i) A’s estate is sold for arrears of

revenue under the provisions of an Act of the

Legislature, by which the defaulter is prohibited

from purchasing the estate. B, upon an

understanding with A, becomes the purchaser,

and agrees to convey the estate to A upon receiving

from him the price which B has paid.

The agreement is void, as it renders the transaction,

in effect, a purchase by the defaulter

and would so defeat the object of the law." (j)

A, who is B’s mukhtar, promises to exercise

his influence, as such, with B in favour of C,

and C promises to pay 1,000 rupees to A. The

agreement is void, becuase it is immoral. (j)

A, who is B’s mukhtar, promises to exercise

his influence, as such, with B in favour of C,

and C promises to pay 1,000 rupees to A. The

agreement is void, becuase it is immoral." (k)

A agrees to let her daughter to hire to B for

concubinage. The agreement is void, because

it is immoral, though the letting may not be

punishable under the Indian Penal Code (45 of

1860). 24. Agreements void, if considerations

and objects unlawful in part.—If any part of

a single consideration for one or more objects,

or any one or any part of any one of several

considerations for a single object, is unlawful,

the agreement is void. —If any part of a single

consideration for one or more objects, or

any one or any part of any one of several considerations

for a single object, is unlawful, the

agreement is void." Illustration A promises to



superintend, on behalf of B, a legal manufacturer

of indigo, and an illegal traffic in other

articles. B promises to pay to A a salary of

10,000 rupees a year. The agreement is void,

the object of A’s promise, and the consideration

for B’s promise, being in part unlawful. A

promises to superintend, on behalf of B, a legal

manufacturer of indigo, and an illegal traffic in

other articles. B promises to pay to A a salary

of 10,000 rupees a year. The agreement is void,

the object of A’s promise, and the consideration

for B’s promise, being in part unlawful."

25. Agreement without consideration, void,

unless it is in writing and registered or is a

promise to compensate for something done or

is a promise to pay a debt barred by limitation

law.—An agreement made without consideration

is void, unless— —An agreement

made without consideration is void, unless—"

(1) it is expressed in writing and registered

under the law for the time being in force for

the registration of 1[documents], and is made

on account of natural love and affection between

parties standing in a near relation to

each other; or unless (2) it is a promise to

compensate, wholly or in part, a person who

has already voluntarily done something for the

promisor, or something which the promisor

was legally compellable to do; or unless. (3)

It is a promise, made in writing and signed by

the person to be charged therewith, or by his

agent generally or specially authorized in that

behalf, to pay wholly or in part a debt of which

the creditor might have enforced payment but

for the law for the limitation of suits. In any of

these cases, such an agreement is a contract.

Explanation 1.—Nothing in this section shall

affect the validity, as between the donor and

donee, of any gift actually made. Explanation

2.—An Agreement to which the consent of the

promisor is freely given is not void merely because

the consideration is inadequate; but the

inadequacy of the consideration may be taken

into account by the Court in determining the

question whether the consent of the promisor

was freely given. Illustrations (a) A promises,

for no consideration, to give to B Rs. 1,000.

This is a void agreement. (a) A promises, for

no consideration, to give to B Rs. 1,000. This

is a void agreement." (b) A, for natural love

and affection, promises to give his son, B, Rs.

1,000. A puts his promise to B into writing

and registers it. This is a contract. (b) A,

for natural love and affection, promises to give

his son, B, Rs. 1,000. A puts his promise to

B into writing and registers it. This is a contract."

(c) A finds B’s purse and gives it to

him. B promises to give A Rs. 50. This is

a contract. (c) A finds B’s purse and gives it

to him. B promises to give A Rs. 50. This is

a contract." (d) A supports B’s infant son. B

promises to pay A’s expenses in so doing. This

is a contract. (d) A supports B’s infant son. B

promises to pay A’s expenses in so doing. This

is a contract." (e) A owes B Rs. 1,000, but the

debt is barred by the Limitation Act. A signs

a written promise to pay B Rs. 500 on account

of the debt. This is a contract. (e) A owes B

Rs. 1,000, but the debt is barred by the Limitation

Act. A signs a written promise to pay

B Rs. 500 on account of the debt. This is a

contract." (f) A agrees to sell a horse worth Rs.

1,000 for Rs. 10. A’s consent to the agreement

was freely given. The agreement is a contract

notwithstanding the inadequacy of the consideration.

(f) A agrees to sell a horse worth Rs.

1,000 for Rs. 10. A’s consent to the agreement

was freely given. The agreement is a contract

notwithstanding the inadequacy of the consideration."

(g) A agrees to sell a horse worth Rs.

1,000 for Rs. 10. A denies that his consent to

the agreement was freely given. (g) A agrees

to sell a horse worth Rs. 1,000 for Rs. 10. A

denies that his consent to the agreement was

freely given." The inadequacy of the consideration

is a fact which the Court should take

into account in considering whether or not A’s

consent was freely given. 26. Agreement in restraint

of marriage, void.—Every agreement in

restraint of the marriage of any person, other

than a minor, is void. —Every agreement in

restraint of the marriage of any person, other

than a minor, is void." 27. Agreement in restraint

of trade, void.—Every agreement by

which any one is restrained from exercising

a lawful profession, trade or business of any

kind, is to that extent void. —Every agreement

by which any one is restrained from exercising

a lawful profession, trade or business

of any kind, is to that extent void." Excep-



tion 1.—Saving of agreement not to carry on

business of which goodwill is sold.—One who

sells the goodwill of a business may agree with

the buyer to refrain from carrying on a similar

business, within specified local limits, so long

as the buyer, or any person deriving title to

the goodwill from him, carries on a like business

therein, provided that such limits appear

to the Court reasonable, regard being had to

the nature of the business. 16 [***] 28 Agreements

in restraint of legal proceedings, void.

— 17 [Every agreement,— (a) by which any

party thereto is restricted absolutely from enforcing

his rights under or in respect of any

contract, by the usual legal proceedings in the

ordinary tribunals, or which limits the time

within which he may thus enforce his rights; or

(b) which extinguishes the rights of any party

thereto, or discharges any party thereto, from

any liability, under or in respect of any contract

on the expiry of a specified period so as

to restrict any party from enforcing his rights,

is void to that extent.] Exception 1.— Saving

of contract to refer to arbitration dispute that

may arise. —This section shall not render illegal

a contract, by which two or more persons

agree that any dispute which may arise between

them in respect of any subject or class

of subjects shall be referred to arbitration, and

that only the amount awarded in such arbitration

shall be recoverable in respect of the

dispute so referred. 18 [***] Exception 2.—

Saving of contract to refer questions that have

already arisen. —Nor shall this section render

illegal any contract in writing, by which two

or more persons agree to refer to arbitration

any question between them which has already

arisen, or affect any provision of any law in

force for the time being as to references to

arbitration. 19 29. Agreements void for uncertainty.—Agreements,

the meaning of which

is not certain, or capable of being made certain,

are void. —Agreements, the meaning of

which is not certain, or capable of being made

certain, are void." Illustrations (a) A agrees to

sell B “a hundred tons of oil”. There is nothing

whatever to show what kind of oil was intended.

The agreement is void for uncertainty.

(a) A agrees to sell B “a hundred tons of oil”.

There is nothing whatever to show what kind

of oil was intended. The agreement is void

for uncertainty." (b) A agrees to sell B one

hundred tons of oil of a specified description,

known as an article of commerce. There is no

uncertainty here to make the agreement void.

(b) A agrees to sell B one hundred tons of oil

of a specified description, known as an article

of commerce. There is no uncertainty here

to make the agreement void." (c) A, who is

a dealer in coconut-oil only, agrees to sell to

B “one hundred tons of oil”. The nature of

A’s trade affords an indication of the meaning

of the words, and A has entered into a

contract for the sale of one hundred tons of

coconut-oil. (c) A, who is a dealer in coconutoil

only, agrees to sell to B “one hundred tons

of oil”. The nature of A’s trade affords an indication

of the meaning of the words, and A

has entered into a contract for the sale of one

hundred tons of coconut-oil." (d) A agrees to

sell B “all the grain in my granary at Ramnagar”.

There is no uncertainty here to make

the agreement void. (d) A agrees to sell B “all

the grain in my granary at Ramnagar”. There

is no uncertainty here to make the agreement

void." (e) A agrees to sell to B “one thousand

maunds of rice at a price to be fixed

by C”. As the price is capable of being made

certain, there is no uncertainty here to make

the agreement void. (e) A agrees to sell to

B “one thousand maunds of rice at a price to

be fixed by C”. As the price is capable of being

made certain, there is no uncertainty here

to make the agreement void." (f) A agrees to

sell to B “my white horse for rupees five hundred

or rupees one thousand”. There is nothing

to show which of the two prices was to be

given. The agreement is void. (f) A agrees to

sell to B “my white horse for rupees five hundred

or rupees one thousand”. There is nothing

to show which of the two prices was to

be given. The agreement is void." 30. Agreements

by way of wager, void.—Agreements by

way of wager are void; and no suit shall be

brought for recovering anything alleged to be

won on any wager, or entrusted to any person

to abide the result of any game or other

uncertain event on which any wager is made.

—Agreements by way of wager are void; and

no suit shall be brought for recovering any-



thing alleged to be won on any wager, or entrusted

to any person to abide the result of any

game or other uncertain event on which any

wager is made." Exception in favour of certain

prizes for horse-racing.—This section shall not

be deemed to render unlawful a subscription

or contribution, or agreement to subscribe or

contribute, made or entered into for or toward

any plate, prize or sum of money, of the value

or amount of five hundred rupees or upwards,

to be rewarded to the winner or winners of any

horse-race. —This section shall not be deemed

to render unlawful a subscription or contribution,

or agreement to subscribe or contribute,

made or entered into for or toward any plate,

prize or sum of money, of the value or amount

of five hundred rupees or upwards, to be rewarded

to the winner or winners of any horserace."

Section 294A of the Indian Penal Code

not affected.—Nothing in this section shall be

deemed to legalize any transaction connected

with horse-racing, to which the provisions of

section 294A of the Indian Penal Code (45 of

1860) apply. —Nothing in this section shall be

deemed to legalize any transaction connected

with horse-racing, to which the provisions of

section 294A of the Indian Penal Code (45 of

1860) apply." 31. “Contingent contract” defined.—A

“contingent contract” is a contract

to do or not to do something, if some event,

collateral to such contract, does or does not

happen. —A “contingent contract” is a contract

to do or not to do something, if some

event, collateral to such contract, does or does

not happen." Illustration A contracts to pay

to B Rs.10,000 if B’s house is burnt. This

is a contingent contract. A contracts to pay

to B Rs.10,000 if B’s house is burnt. This is

a contingent contract." 31. “Contingent contract”

defined.—A “contingent contract” is a

contract to do or not to do something, if some


not happen. —A “contingent contract” is a

contract to do or not to do something, if some


not happen." Illustration A contracts to pay


is a contingent contract. A contracts to pay


is a contingent contract." 32. Enforcement

of contracts contingent on an event happening.—Contingent

contracts to do or not to do

anything if an uncertain future event happens,

cannot be enforced by law unless and until

that event has happened. —Contingent contracts

to do or not to do anything if an uncertain

future event happens, cannot be enforced

by law unless and until that event has

happened." If the event becomes impossible,

such contracts become void. Illustrations (a)

A makes a contract with B to buy B’s horse

if A survives C. This contract cannot be enforced

by law unless and until C dies in A’s

lifetime. (a) A makes a contract with B to buy

B’s horse if A survives C. This contract cannot

be enforced by law unless and until C dies in

A’s lifetime." (b) A makes a contract with B

to sell a horse to B at a specified price, if C,

to whom the horse has been offered, refuses to

buy him. The contract cannot be enforced by

law unless and until C refuses to buy the horse.

(b) A makes a contract with B to sell a horse to

B at a specified price, if C, to whom the horse

has been offered, refuses to buy him. The contract

cannot be enforced by law unless and until

C refuses to buy the horse." (c) A contracts

to pay B a sum of money when B marries C.

C dies without being married to B. The contract

becomes void. (c) A contracts to pay B a

sum of money when B marries C. C dies without

being married to B. The contract becomes

void." 33. Enforcement of contracts contingent

on an event not happening.—Contingent

contracts to do or not to do anything if an

uncertain future event does not happen, can

be enforced when the happening of that event

becomes impossible, and not before. —Contingent

contracts to do or not to do anything

if an uncertain future event does not happen,

can be enforced when the happening of that

event becomes impossible, and not before." Illustration

A agrees to pay B a sum of money

if a certain ship does not return. The ship is

sunk. The contract can be enforced when the

ship sinks. A agrees to pay B a sum of money

if a certain ship does not return. The ship is

sunk. The contract can be enforced when the

ship sinks." 34. When event on which contract

is contingent to be deemed impossible, if it is

the future conduct of a living person.—If the



future event on which a contract is contingent

is the way in which a person will act at an unspecified

time, the event shall be considered

to become impossible when such person does

anything which renders it impossible that he

should so act within any definite time, or otherwise

than under further contingencies. —If

the future event on which a contract is contingent

is the way in which a person will act at

an unspecified time, the event shall be considered

to become impossible when such person

does anything which renders it impossible that

he should so act within any definite time, or

otherwise than under further contingencies."

Illustration A agrees to pay B a sum of money

if B marries C, C marries D. The marriage of

B to C must now be considered impossible, although

it is possible that D may die and that C

may afterwards marry B. A agrees to pay B a

sum of money if B marries C, C marries D. The

marriage of B to C must now be considered

impossible, although it is possible that D may

die and that C may afterwards marry B." 35.

When contracts become void, which are contingent

on happening of specified event within

fixed time.—Contingent contracts to do or not

to do anything, if a specified uncertain event

happens within a fixed time, become void if, at

the expiration of the time fixed, such event has

not happened, or if, before the time fixed, such

event becomes impossible. —Contingent contracts

to do or not to do anything, if a specified

uncertain event happens within a fixed time,

become void if, at the expiration of the time

fixed, such event has not happened, or if, before

the time fixed, such event becomes impossible."

When contracts may be enforced, which

are contingent on specified event not happening

within fixed time.—Contingent contracts

to do or not to do anything, if a specified uncertain

event does not happen within a fixed

time, may be enforced by law when the time

fixed has expired, and such event has not happened,

or before the time fixed has expired,

if it becomes certain that such event will not

happen. —Contingent contracts to do or not

to do anything, if a specified uncertain event

does not happen within a fixed time, may be

enforced by law when the time fixed has expired,

and such event has not happened, or before

the time fixed has expired, if it becomes

certain that such event will not happen." Illustrations

(a) A promises to pay B a sum of

money if a certain ship returns within a year.

The contract may be enforced if the ship returns

within the year; and becomes void if the

ship is burnt within the year. (a) A promises

to pay B a sum of money if a certain ship returns

within a year. The contract may be enforced

if the ship returns within the year; and

becomes void if the ship is burnt within the

year." (b) A promises to pay B a sum of money

if a certain ship does not return within a year.

The contract may be enforced if the ship does

not return within the year, or is burnt within

the year. (b) A promises to pay B a sum of

money if a certain ship does not return within

a year. The contract may be enforced if the

ship does not return within the year, or is

burnt within the year." 36. Agreements contingent

on impossible event void.—Contingent

agreements to do or not to do anything, if an

impossible event happens, are void, whether

the impossibility of the event is known or not

to the parties to the agreement at the time

when it is made. —Contingent agreements

to do or not to do anything, if an impossible

event happens, are void, whether the impossibility

of the event is known or not to the

parties to the agreement at the time when it

is made." Illustrations (a) A agrees to pay B

1,000 rupees if two straight lines should enclose

a space. The agreement is void. (a) A

agrees to pay B 1,000 rupees if two straight

lines should enclose a space. The agreement is

void." (b) A agrees to pay B 1,000 rupees if B

will marry A’s daughter C. C was dead at the

time of the agreement. The agreement is void.

(b) A agrees to pay B 1,000 rupees if B will

marry A’s daughter C. C was dead at the time

of the agreement. The agreement is void." 37.

Obligation of parties to contract.—The parties

to a contract must either perform, or offer

to perform, their respective promises, unless

such performance is dispensed with or excused

under the provisions of this Act, or of

any other law. —The parties to a contract

must either perform, or offer to perform, their

respective promises, unless such performance

is dispensed with or excused under the provi-



sions of this Act, or of any other law." Promises

bind the representatives of the promisors in

case of the death of such promisors before performance,

unless a contrary intention appears

from the contract. Illustrations (a) A promises

to deliver goods to B on a certain day on payment

of Rs.1,000. A dies before that day. A’s

representatives are bound to deliver the goods

to B, and B is bound to pay the Rs. 1,000 to

A’s representatives. (a) A promises to deliver

goods to B on a certain day on payment of

Rs.1,000. A dies before that day. A’s representatives

are bound to deliver the goods to

B, and B is bound to pay the Rs. 1,000 to

A’s representatives." (b) A promises to paint

a picture for B by a certain day, at a certain

price. A dies before the day. The contract

cannot be enforced either by A’s representatives

or by B. (b) A promises to paint a picture

for B by a certain day, at a certain price.

A dies before the day. The contract cannot

be enforced either by A’s representatives or

by B." 38. Effect of refusal to accept offer

of performance.—Where a promisor has made

an offer of performance to the promisee, and

the offer has not been accepted, the promisor

is not responsible for non-performance, nor

does he thereby lose his right under the contract.

—Where a promisor has made an offer

of performance to the promisee, and the

offer has not been accepted, the promisor is

not responsible for non-performance, nor does

he thereby lose his right under the contract."

Every such offer must fulfil the following conditions:—

(1) it must be unconditional; (2) it

must be made at a proper time and place, and

under such circumstances that the person to

whom it is made may have a reasonable opportunity

of ascertaining that the person by

whom it is made is able and willing there and

then to do the whole of what he is bound by

his promise to do; (3) if the offer is an offer

to deliver anything to the promisee, the

promisee must have a reasonable opportunity

of seeing that the thing offered is the thing

which the promisor is bound by his promise

to deliver. An offer to one of several joint

promisees has the same legal consequences as

an offer to all of them. Illustration A contracts

to deliver to B at his warehouse, on the

1st March, 1873, 100 bales of cotton of a particular

quality. In order to make an offer of

performance with the effect stated in this section.

A must bring the cotton to B’s warehouse,

on the appointed day, under such circumstances

that B may have a reasonable opportunity

of satisfying himself that the thing

offered is cotton of the quality contracted for,

and that there are 100 bales. A contracts

to deliver to B at his warehouse, on the 1st

March, 1873, 100 bales of cotton of a particular

quality. In order to make an offer of performance

with the effect stated in this section. A

must bring the cotton to B’s warehouse, on the

appointed day, under such circumstances that

B may have a reasonable opportunity of satisfying

himself that the thing offered is cotton

of the quality contracted for, and that there

are 100 bales." 39. Effect of refusal of party

to perform promise wholly.—When a party to

a contract has refused to perform, or disabled

himself from performing, his promise in its entirety,

the promisee may put an end to the

contract, unless he has signified, by words or

conduct, his acquiescence in its continuance.

—When a party to a contract has refused to

perform, or disabled himself from performing,

his promise in its entirety, the promisee may

put an end to the contract, unless he has signified,

by words or conduct, his acquiescence in

its continuance." Illustrations (a) A, a singer,

enters into a contract with B, the manager of

a theatre, to sing at his theatre two nights in

every week during next two months, and B

engages to pay her 100 rupees for each night’s

performance. On the sixth night A wilfully absents

herself from the theatre. B is at liberty

to put an end to the contract. (a) A, a singer,



every week during next two months, and B


performance. On the sixth night A wilfully absents

herself from the theatre. B is at liberty

to put an end to the contract." (b) A, a singer,



every week during next two months, and B engages

to pay her at the rate of 100 rupees for

each night. On the sixth night A wilfully ab-



sents herself. With the assent of B, A sings on

the seventh night. B has signified his acquiescence

in the continuance of the contract, and

cannot now put an end to it, but is entitled

to compensation for the damage sustained by

him through A’s failure to sing on the sixth

night. (b) A, a singer, enters into a contract

with B, the manager of a theatre, to sing at

his theatre two nights in every week during

next two months, and B engages to pay her at

the rate of 100 rupees for each night. On the

sixth night A wilfully absents herself. With

the assent of B, A sings on the seventh night.

B has signified his acquiescence in the continuance

of the contract, and cannot now put

an end to it, but is entitled to compensation

for the damage sustained by him through A’s

failure to sing on the sixth night." 40. Person

by whom promise is to be performed.—If

it appears from the nature of the case that it

was the intention of the parties to any contract

that any promise contained in it should be performed

by the promisor himself, such promise

must be performed by the promisor. In other

cases, the promisor or his representative may

employ a competent person to perform it. —If

it appears from the nature of the case that it

was the intention of the parties to any contract

that any promise contained in it should be performed

by the promisor himself, such promise

must be performed by the promisor. In other

cases, the promisor or his representative may

employ a competent person to perform it." Illustrations

(a) A promises to pay B a sum of

money. A may perform this promise, either by

personally paying the money to B or by causing

it to be paid to B by another; and, if A

dies before the time appointed for payment,

his representatives must perform the promise,

or employ some proper person to do so. (a) A

promises to pay B a sum of money. A may perform

this promise, either by personally paying

the money to B or by causing it to be paid to B

by another; and, if A dies before the time appointed

for payment, his representatives must

perform the promise, or employ some proper

person to do so." (b) A promises to paint a

picture for B. A must perform this promise

personally. (b) A promises to paint a picture

for B. A must perform this promise personally."

41. Effect of accepting performance

from third person.—When a promisee accepts

performance of the promise from a third person,

he cannot afterwards enforce it against

the promisor. —When a promisee accepts

performance of the promise from a third person,

he cannot afterwards enforce it against

the promisor." 42. Devolution of joint liabilities.—When

two or more persons have made

a joint promise, then, unless a contrary intention

appears by the contract, all such persons,

during their joint lives, and, after the death

of any of them, his representative jointly with

the survivor or survivors, and, after the death

of the last survivor, the representatives of all

jointly, must fulfil the promise. —When two or

more persons have made a joint promise, then,

unless a contrary intention appears by the contract,

all such persons, during their joint lives,

and, after the death of any of them, his representative

jointly with the survivor or survivors,

and, after the death of the last survivor, the

representatives of all jointly, must fulfil the

promise." 43. Any one of joint promisors may

be compelled to perform.—When two or more

persons make a joint promise, the promisee

may, in the absence of express agreement to

the contrary, compel any 1[one or more] of

such joint promisors to perform the whole

of the promise. —When two or more persons

make a joint promise, the promisee may,

in the absence of express agreement to the

contrary, compel any 1[one or more] of such

joint promisors to perform the whole of the

promise." Each promisor may compel contribution.—Each

of two or more joint promisors

may compel every other joint promisor to contribute

equally with himself to the performance

of the promise, unless a contrary intention

appears from the contract. —Each of

two or more joint promisors may compel every

other joint promisor to contribute equally with

himself to the performance of the promise,


contract." Sharing of loss by default in contribution.—If

any one of two or more joint

promisors makes default in such contribution,

the remaining joint promisors must bear the

loss arising from such default in equal shares.

—If any one of two or more joint promisors



makes default in such contribution, the remaining

joint promisors must bear the loss

arising from such default in equal shares." Explanation.—Nothing

in this section shall prevent

a surety from recovering, from his principal,

payments made by the surety on behalf

of the principal, or entitle the principal to recover

anything from the surety on account of

payment made by the principal. Illustrations

(a) A, B and C jointly promise to pay D 3,000

rupees. D may compel either A or B or C to

pay him 3,000 rupees. (a) A, B and C jointly

promise to pay D 3,000 rupees. D may compel

either A or B or C to pay him 3,000 rupees."

(b) A, B and C jointly promise to pay D the

sum of 3,000 rupees. C is compelled to pay the

whole. A is insolvent, but his assets are sufficient

to pay one-half of his debts. C is entitled

to receive 500 rupees from A’s estate, and

1,250 rupees from B. (b) A, B and C jointly

promise to pay D the sum of 3,000 rupees. C

is compelled to pay the whole. A is insolvent,

but his assets are sufficient to pay one-half of

his debts. C is entitled to receive 500 rupees

from A’s estate, and 1,250 rupees from B." (c)

A, B and C are under a joint promise to pay D

3,000 rupees. C is unable to pay anything, and

A is compelled to pay the whole. A is entitled

to receive 1,500 rupees from B. (c) A, B and

C are under a joint promise to pay D 3,000

rupees. C is unable to pay anything, and A is

compelled to pay the whole. A is entitled to receive

1,500 rupees from B." (d) A, B and C are

under a joint promise to pay D 3,000 rupees. A

and B being only sureties for C. C fails to pay.

A and B are compelled to pay the whole sum.

They are entitled to recover it from C. (d) A,

B and C are under a joint promise to pay D

3,000 rupees. A and B being only sureties for

C. C fails to pay. A and B are compelled

to pay the whole sum. They are entitled to

recover it from C." 44. Effect of release of

one joint promisor.—Where two or more persons

have made a joint promise, a release of

one of such joint promisors by the promisee

does not discharge the other joint promisor or

joint promisors, neither does it free the joint

promisors so released from responsibility to

the other joint promisor or joint promisors.

21 45. Devolution of joint rights.—When a

person has made a promise to two or more

persons jointly, then, unless a contrary intention

appears from the contract, the right to

claim performance rests, as between him and

then, with them during their joint lives, and,

after the death of any of them, with the representative

of such deceased person jointly with

the survivor or survivors, and, after the death

of the last survivor, with the representatives

of all jointly.1 —When a person has made a

promise to two or more persons jointly, then,


contract, the right to claim performance rests,

as between him and then, with them during

their joint lives, and, after the death of any of

them, with the representative of such deceased

person jointly with the survivor or survivors,

and, after the death of the last survivor, with

the representatives of all jointly.3" Illustration

A, in consideration of 5,000 rupees lent to him

by B and C, promises B and C jointly to repay

them that sum with interest on a day specified.

B dies. The right to claim performance rests

with B’s representative jointly with C during

C’s life, and after the death of C, with the representatives

of B and C jointly. A, in consideration

of 5,000 rupees lent to him by B and C,

promises B and C jointly to repay them that

sum with interest on a day specified. B dies.

The right to claim performance rests with B’s

representative jointly with C during C’s life,

and after the death of C, with the representatives

of B and C jointly." 46. Time for performance

of promise, where no application is

to be made and no time is specified.—Where,

by the contract, a promisor is to perform his

promise without application by the promisee,

and no time for performance is specified, the

engagement must be performed within a reasonable

time. —Where, by the contract, a

promisor is to perform his promise without application

by the promisee, and no time for performance

is specified, the engagement must be

performed within a reasonable time." Explanation.—The

question “what is a reasonable

time” is, in each particular case, a question of

fact. 47. Time and place for performance of

promise, where time is specified and no application

to be made.—When a promise is to be

performed on a certain day, and the promisor



has undertaken to perform it without application

by the promisee, the promisor may perform

it at any time during the usual hours of

business on such day and at the place at which

the promise ought to be performed. —When

a promise is to be performed on a certain day,

and the promisor has undertaken to perform

it without application by the promisee, the

promisor may perform it at any time during

the usual hours of business on such day and

at the place at which the promise ought to be

performed." Illustration A promises to deliver

goods at B’s warehouse on the first January.

On the day A brings the goods to B’s warehouse,

but after the usual hour closing it, and

they are not received. A has not performed his

promise. A promises to deliver goods at B’s

warehouse on the first January. On the day

A brings the goods to B’s warehouse, but after

the usual hour closing it, and they are not

received. A has not performed his promise."

48. Application for performance on certain

day to be at proper time and place.—When

a promise is to be performed on a certain day,

and the promisor has not undertaken to perform

it without application by the promisee, it

is the duty of the promisee to apply for performance

at a proper place and within the usual

hours of business. —When a promise is to be

performed on a certain day, and the promisor

has not undertaken to perform it without application

by the promisee, it is the duty of the

promisee to apply for performance at a proper

place and within the usual hours of business."

Explanation.—The question “what is a proper

time and place” is, in each particular case, a

question of fact. 49. Place for the performance

of promise, where no application to be made

and no place fixed for performance.—When a

promise is to be performed without application

by the promisee, and no place is fixed for

the performance of it, it is the duty of the

promisor to apply to the promisee to appoint

a reasonable place for the performance of the

promise, and to perform it at such a place.

—When a promise is to be performed without

application by the promisee, and no place is

fixed for the performance of it, it is the duty

of the promisor to apply to the promisee to appoint

a reasonable place for the performance

of the promise, and to perform it at such a

place." Illustration A undertakes to deliver a

thousand maunds of jute to B on a fixed day.

A must apply to B to appoint a reasonable

place for the purpose of receiving it, and must

deliver it to him at such place. A undertakes

to deliver a thousand maunds of jute to B on a

fixed day. A must apply to B to appoint a reasonable

place for the purpose of receiving it,

and must deliver it to him at such place." 50.

Performance in manner or at time prescribed

or sanctioned by promisee.—The performance

of any promise may be made in any manner, or

at any time which the promisee prescribes or

sanctions. —The performance of any promise

may be made in any manner, or at any time

which the promisee prescribes or sanctions."

Illustrations (a) B owes A 2,000 rupees. A desires

B to pay the amount to A’s account with

C, a banker. B, who also banks with C, orders

the amount to be transferred from his account

to A’s credit, and this is done by C. Afterwards,

and before A knows of the transfer, C

fails. There has been a good payment by B. (a)

B owes A 2,000 rupees. A desires B to pay the

amount to A’s account with C, a banker. B,

who also banks with C, orders the amount to

be transferred from his account to A’s credit,

and this is done by C. Afterwards, and before

A knows of the transfer, C fails. There has

been a good payment by B." (b) A and B are

mutually indebted. A and B settle an account

by setting off one item against another, and

B pays A the balance found to be due from

him upon such settlement. This amounts to a

payment by A and B, respectively, of the sums

which they owed to each other. (b) A and B

are mutually indebted. A and B settle an account

by setting off one item against another,

and B pays A the balance found to be due

from him upon such settlement. This amounts

to a payment by A and B, respectively, of the

sums which they owed to each other." (c) A

owes B 2,000 rupees. B accepts some of A’s

goods in reduction of the debt. The delivery

of the goods operates as a part payment. (c)

A owes B 2,000 rupees. B accepts some of A’s

goods in reduction of the debt. The delivery

of the goods operates as a part payment." (d)

A desires B, who owes him Rs.100, to send



him a note for Rs.100 by post. The debt is

discharged as soon as B puts into the post a

letter containing the note duly addressed to

A. (d) A desires B, who owes him Rs.100, to

send him a note for Rs.100 by post. The debt

is discharged as soon as B puts into the post

a letter containing the note duly addressed to

A." 51. Promisor not bound to perform, unless

reciprocal promisee ready and willing to perform.—When

a contract consists of reciprocal

promises to be simultaneously performed, no

promisor need perform his promise unless the

promisee is ready and willing to perform his

reciprocal promise. —When a contract consists

of reciprocal promises to be simultaneously

performed, no promisor need perform

his promise unless the promisee is ready and

willing to perform his reciprocal promise." Illustrations

(a) A and B contract that A shall

deliver goods to B to be paid for by B on delivery.

A need not deliver the goods, unless B

is ready and willing to pay for the goods on

delivery. (a) A and B contract that A shall

deliver goods to B to be paid for by B on delivery.

A need not deliver the goods, unless B

is ready and willing to pay for the goods on

delivery." B need not pay for the goods, unless

A is ready and willing to deliver them on

payment. B need not pay for the goods, unless

A is ready and willing to deliver them on

payment." (b) A and B contract that A shall

deliver goods to B at a price to be paid by instalments,

the first instalment to be paid on

delivery. (b) A and B contract that A shall

deliver goods to B at a price to be paid by

instalments, the first instalment to be paid on

delivery." A need not deliver, unless B is ready

and willing to pay the first instalment on delivery.

A need not deliver, unless B is ready and

willing to pay the first instalment on delivery."

B need not pay the first instalment, unless A is

ready and willing to deliver the goods on payment

of the first instalment. B need not pay

the first instalment, unless A is ready and willing

to deliver the goods on payment of the first

instalment." 52. Order of performance of reciprocal

promises.—Where the order in which

reciprocal promises are to be performed is expressly

fixed by the contract, they shall be performed

in that order; and where the order is

not expressly fixed by the contract, they shall

be performed in that order which the nature of

the transaction requires. —Where the order in

which reciprocal promises are to be performed

is expressly fixed by the contract, they shall

be performed in that order; and where the order

is not expressly fixed by the contract, they

shall be performed in that order which the nature

of the transaction requires." Illustrations

(a) A and B contract that A shall build a house

for B at a fixed price. A’s promise to build the

house must be performed before B’s promise

to pay for it. (a) A and B contract that A

shall build a house for B at a fixed price. A’s

promise to build the house must be performed

before B’s promise to pay for it." (b) A and

B contract that A shall make over his stockin-trade

to B at a fixed price, and B promise

to give security for the payment of the money.

A’s promise need not be performed until the

security is given, for the nature of transaction

requires that A should have security before he

delivers up his stock. (b) A and B contract

that A shall make over his stock-in-trade to B

at a fixed price, and B promise to give security

for the payment of the money. A’s promise

need not be performed until the security is

given, for the nature of transaction requires

that A should have security before he delivers

up his stock." 53. Liability of party preventing

event on which the contract is to take

effect.—When a contract contains reciprocal

promises, and one party to the contract prevents

the other from performing his promise,

the contract becomes viodable at the option

of the party so prevented: and he is entitled

to compensation 23 from the other party for

any loss which he may sustain in consequence

of the non-performance of the contract. Illustration

A and B contract that B shall execute

certain work for A for a thousand rupees. B

is ready and willing to execute the work accordingly,

but A prevents him from doing so.

The contract is voidable at the option of B;

and, if he elects to rescind it, he is entitled

to recover from A compensation for any loss

which he has incurred by its non-performance.

A and B contract that B shall execute certain

work for A for a thousand rupees. B is ready

and willing to execute the work accordingly,



but A prevents him from doing so. The contract

is voidable at the option of B; and, if he

elects to rescind it, he is entitled to recover

from A compensation for any loss which he

has incurred by its non-performance." 54. Effect

of default as to that promise which should

be performed, in contract consisting of reciprocal

promises.—When a contract consists of

reciprocal promises, such that one of them

cannot be performed, or that its performance

cannot be claimed till the other has been performed,

and the promisor of the promise last

mentioned fails to perform it, such promisor

cannot claim the performance of the reciprocal

promise, and must make compensation to

the other party to the contract for any loss

which such other party may sustain by the

non-performance of the contract. —When a

contract consists of reciprocal promises, such

that one of them cannot be performed, or

that its performance cannot be claimed till the

other has been performed, and the promisor of

the promise last mentioned fails to perform it,

such promisor cannot claim the performance of

the reciprocal promise, and must make compensation

to the other party to the contract for

any loss which such other party may sustain by

the non-performance of the contract." Illustrations

(a) A hires B’s ship to take in and convey,

from Calcutta to the Mauritius, a cargo to be

provided by A, B receiving a certain freight for

its conveyance. A does not provide any cargo

for the ship. A cannot claim the performance

of B’s promise, and must take compensation

to B for the loss which B sustains by the nonperformance

of the contract. (a) A hires B’s

ship to take in and convey, from Calcutta to

the Mauritius, a cargo to be provided by A, B

receiving a certain freight for its conveyance.

A does not provide any cargo for the ship. A

cannot claim the performance of B’s promise,

and must take compensation to B for the loss

which B sustains by the non-performance of

the contract." (b) A contracts with B to execute

certain builder’s work for a fixed price, B

supplying the scaffolding and timber necessary

for the work. B refuses to furnish any scaffolding

or timber, and the work cannot be executed.

A need not execute the work, and B is

bound to make compensation to A for any loss

caused to him by the non-performance of the

contract. (b) A contracts with B to execute

certain builder’s work for a fixed price, B supplying

the scaffolding and timber necessary for

the work. B refuses to furnish any scaffolding

or timber, and the work cannot be executed. A

need not execute the work, and B is bound to

make compensation to A for any loss caused to

him by the non-performance of the contract."

(c) A contracts with B to deliver to him, at a

specified price, certain merchandise on board

a ship which cannot arrive for a month, and

B engages to pay for the merchandise within

a week from the date of the contract. B does

not pay within the week. A’s promise to deliver

need not be performed, and B must make

compensation. (c) A contracts with B to deliver

to him, at a specified price, certain merchandise

on board a ship which cannot arrive

for a month, and B engages to pay for the merchandise

within a week from the date of the

contract. B does not pay within the week. A’s

promise to deliver need not be performed, and

B must make compensation." (d) A promises

B to sell him one hundred bales of merchandise,

to be delivered next day, and B promises

A to pay for them within a month. A does not

deliver according to his promise. B’s promise

to pay need not be performed, and A must

make compensation. (d) A promises B to sell

him one hundred bales of merchandise, to be

delivered next day, and B promises A to pay

for them within a month. A does not deliver

according to his promise. B’s promise to pay

need not be performed, and A must make compensation."

55. Effect of failure to perform at

a fixed time, in contract in which time is essential.—When

a party to a contract promises

to do a certain thing at or before a specified

time, or certain things at or before specified

times, and fails to do any such thing at or

before the specified time, the contract, or so

much of it as has not been performed, becomes

voidable at the option of the promisee, if the

intention of the parties was that time should

be of the essence of the contract. —When a

party to a contract promises to do a certain

thing at or before a specified time, or certain

things at or before specified times, and fails

to do any such thing at or before the spec-



ified time, the contract, or so much of it as

has not been performed, becomes voidable at

the option of the promisee, if the intention of

the parties was that time should be of the

essence of the contract." Effect of such failure

when time is not essential.—If it was not

the intention of the parties that time should

be of the essence of the contract, the contract

does not become voidable by the failure to do

such thing at or before the specified time; but

the promisee is entitled to compensation from

the promisor for any loss occasioned to him by

such failure. —If it was not the intention of

the parties that time should be of the essence

of the contract, the contract does not become

voidable by the failure to do such thing at or

before the specified time; but the promisee is

entitled to compensation from the promisor

for any loss occasioned to him by such failure."

Effect of acceptance of performance at

time other than that agreed upon.—If, in

case of a contract voidable on account of the

promisor’s failure to perform his promise at

the time agreed, the promisee accepts performance

of such promise at any time other than

that agreed, the promisee cannot claim compensation

for any loss occasioned by the nonperformance

of the promise at the time agreed,

unless, at the time of such acceptance he gives

notice to the promisor of his intention to do

so.1 —If, in case of a contract voidable on account

of the promisor’s failure to perform his

promise at the time agreed, the promisee accepts

performance of such promise at any time

other than that agreed, the promisee cannot

claim compensation for any loss occasioned

by the non-performance of the promise at the

time agreed, unless, at the time of such acceptance

he gives notice to the promisor of his intention

to do so.1" 56. Agreement to do impossible

act.—An agreement to do an act impossible

in itself is void. —An agreement to do an

act impossible in itself is void." Contract to do

act afterwards becoming impossible or unlawful.—A

contract to do an act which, after the

contract is made, becomes impossible, or, by

reason of some event which the promisor could

not prevent, unlawful, becomes void when the

act becomes impossible or unlawful.1 —A contract

to do an act which, after the contract

is made, becomes impossible, or, by reason

of some event which the promisor could not

prevent, unlawful, becomes void when the act

becomes impossible or unlawful.2" Compensation

for loss through non-performance of act

known to be impossible or unlawful.—Where

one person has promised to do something

which he knew, or, with reasonable diligence,

might have known, and which the promisee

did not know, to be impossible or unlawful,

such promisor must make compensation to

such promisee for any loss which such promisee

sustains through the non-performance of the

promise. —Where one person has promised to

do something which he knew, or, with reasonable

diligence, might have known, and which

the promisee did not know, to be impossible

or unlawful, such promisor must make

compensation to such promisee for any loss

which such promisee sustains through the nonperformance

of the promise." Illustrations (a)

A agrees with B to discover treasure by magic.

The agreement is void. (a) A agrees with B to

discover treasure by magic. The agreement

is void." (b) A and B contract to marry each

other. Before the time fixed for the marriage,

A goes mad. The contract becomes void. (b)

A and B contract to marry each other. Before

the time fixed for the marriage, A goes

mad. The contract becomes void." (c) A contracts

to marry B, being already married to

C, and being forbidden by the law to which he

is subject to practise polygamy. A must make

compensation to B for the loss caused to her

by the non-performance of his promise. (c) A

contracts to marry B, being already married to

C, and being forbidden by the law to which he

is subject to practise polygamy. A must make

compensation to B for the loss caused to her

by the non-performance of his promise." (d)

A contracts to take in cargo for B at a foreign

port. A’s Government afterwards declares war

against the country in which the port is situated.

The contract becomes void when war is

declared. (d) A contracts to take in cargo for B

at a foreign port. A’s Government afterwards

declares war against the country in which the

port is situated. The contract becomes void

when war is declared." (e) A contracts to act

at a theatre for six months in consideration of



a sum paid in advance by B. On several occasions

A is too ill to act. The contract to act on

those occasions becomes void. (e) A contracts

to act at a theatre for six months in consideration

of a sum paid in advance by B. On

several occasions A is too ill to act. The contract

to act on those occasions becomes void."

57. Reciprocal promise to do things legal, and

also other things illegal.—Where persons reciprocally

promise, firstly to do certain things

which are legal, and secondly, under specified

circumstances, to do certain other things

which are illegal, the first set of promises is

a contract, but the second is a void agreement.

—Where persons reciprocally promise,

firstly to do certain things which are legal, and

secondly, under specified circumstances, to do

certain other things which are illegal, the first

set of promises is a contract, but the second is

a void agreement." Illustration A and B agree

that A shall sell B a house for 10,000 rupees,

but that, if B uses it as a gambling house, he

shall pay A 50,000 rupees for it. A and B

agree that A shall sell B a house for 10,000

rupees, but that, if B uses it as a gambling

house, he shall pay A 50,000 rupees for it." The

first set of reciprocal promises, namely, to sell

the house and to pay 10,000 rupees for it, is a

contract. The first set of reciprocal promises,

namely, to sell the house and to pay 10,000 rupees

for it, is a contract." The second set is for

an unlawful object, namely, that B may use

the house as a gambling house, and is a void

agreement. The second set is for an unlawful

object, namely, that B may use the house

as a gambling house, and is a void agreement."

58. Alternative promise, one branch being illegal.—In

the case of an alternative promise, one

branch of which is legal and the other illegal,

the legal branch alone can be enforced. —In

the case of an alternative promise, one branch

of which is legal and the other illegal, the legal

branch alone can be enforced." Illustration A

and B agree that A shall pay B 1,000 rupees,

for which B shall afterwards deliver to A either

rice or smuggled opium. A and B agree that

A shall pay B 1,000 rupees, for which B shall

afterwards deliver to A either rice or smuggled

opium." This is a valid contract to deliver rice,

and a void agreement as to the opium. This

is a valid contract to deliver rice, and a void

agreement as to the opium." 59. Application

of payment where debt to be discharged is indicated.—Where

a debtor, owing several distinct

debts to one person, makes a payment to

him, either with express intimation, or under

circumstances implying, that the payment is

to be applied to the discharge of some particular

debt, the payment, if accepted, must be

applied accordingly. —Where a debtor, owing

several distinct debts to one person, makes a

payment to him, either with express intimation,

or under circumstances implying, that

the payment is to be applied to the discharge

of some particular debt, the payment, if accepted,

must be applied accordingly." Illustrations

(a) A owes B, among other debts, 1,000

rupees upon a promissory note, which falls due

on the first June. He owes B no other debt of

that amount. On the first June, A pays to B

1,000 rupees. The payment is to be applied

to the discharge of the promissory note. (a)

A owes B, among other debts, 1,000 rupees

upon a promissory note, which falls due on

the first June. He owes B no other debt of

that amount. On the first June, A pays to B

1,000 rupees. The payment is to be applied

to the discharge of the promissory note." (b)

A owes to B, among other debts, the sum of

567 rupees. B writes to A and demands payment

of this sum. A sends to B 567 rupees.

This payment is to be applied to the discharge

of the debt of which B had demanded payment.

(b) A owes to B, among other debts,

the sum of 567 rupees. B writes to A and demands

payment of this sum. A sends to B

567 rupees. This payment is to be applied

to the discharge of the debt of which B had

demanded payment." 60. Application of payment

where debt to be discharged is not indicated.—Where

the debtor has omitted to intimate,

and there are no other circumstances

indicating to which debt the payment is to be

applied, the creditor may apply it at his discretion

to any lawful debt actually due and

payable to him from the debtor, whether its

recovery is or is not barred by the law in force

for the time being as to the limitations of suits.

—Where the debtor has omitted to intimate,

and there are no other circumstances indicat-



ing to which debt the payment is to be applied,

the creditor may apply it at his discretion to

any lawful debt actually due and payable to

him from the debtor, whether its recovery is

or is not barred by the law in force for the time

being as to the limitations of suits." 61. Application

of payment where neither party appropriates.—Where

neither party makes any

appropriation, the payment shall be applied

in discharge of the debts in order of time,

whether they are or are not barred by the law

in force for the time being as to the limitation

of suits. If the debts are of equal standing, the

payment shall be applied in discharge of each

proportionably. —Where neither party makes

any appropriation, the payment shall be applied

in discharge of the debts in order of time,

whether they are or are not barred by the law

in force for the time being as to the limitation

of suits. If the debts are of equal standing,

the payment shall be applied in discharge

of each proportionably." 62. Effect of novation,

rescission, and alteration of contract.—If

the parties to a contract agree to substitute a

new contract for it, or to rescind or alter it,

the original contract need not be performed.

—If the parties to a contract agree to substitute

a new contract for it, or to rescind or

alter it, the original contract need not be performed."

Illustrations (a) A owes money to B

under a contract. It is agreed between A, B

and C, that B shall thenceforth accept C as

his debtor, instead of A. The old debt of A to

B is at an end, and a new debt from C to B

has been contracted. (a) A owes money to B

under a contract. It is agreed between A, B

and C, that B shall thenceforth accept C as

his debtor, instead of A. The old debt of A

to B is at an end, and a new debt from C to

B has been contracted." (b) A owes B 10,000

rupees. A enters into an agreement with B,

and gives B a mortgage of his (A’s), estate for

5,000 rupees in place of the debt of 10,000 rupees.

This is a new contract and extinguishes

the old. (b) A owes B 10,000 rupees. A enters

into an agreement with B, and gives B a

mortgage of his (A’s), estate for 5,000 rupees

in place of the debt of 10,000 rupees. This

is a new contract and extinguishes the old."

(c) A owes B 1,000 rupees under a contract,

B owes C 1,000 rupees, B orders A to credit

C with 1,000 rupees in his books, but C does

not assent to the agreement. B still owes C

1,000 rupees, and no new contract has been

entered into. (c) A owes B 1,000 rupees under

a contract, B owes C 1,000 rupees, B orders

A to credit C with 1,000 rupees in his books,

but C does not assent to the agreement. B

still owes C 1,000 rupees, and no new contract

has been entered into." 63. Promisee

may dispense with or remit performance of

promise.—Every promisee may dispense with

or remit, wholly or in part, the performance

of the promise made to him, or may extend

the time for such performance,1or may accept

instead of it any satisfaction which he thinks

fit. —Every promisee may dispense with or remit,

wholly or in part, the performance of the

promise made to him, or may extend the time

for such performance,1or may accept instead

of it any satisfaction which he thinks fit." Illustrations

(a) A promises to paint a picture

for B. B afterwards forbids him to do so. A is

no longer bound to perform the promise. (a)

A promises to paint a picture for B. B afterwards

forbids him to do so. A is no longer

bound to perform the promise." (b) A owes B

5,000 rupees. A pays to B, and B accepts,

in satisfaction of the whole debt, 2,000 rupees

paid at the time and place at which the

5,000 rupees were payable. The whole debt

is discharged. (b) A owes B 5,000 rupees. A

pays to B, and B accepts, in satisfaction of the

whole debt, 2,000 rupees paid at the time and

place at which the 5,000 rupees were payable.

The whole debt is discharged." (c) A owes B

5,000 rupees. C pays to B 1,000 rupees, and

B accepts them, in satisfaction of his claim on

A. This payment is a discharge of the whole

claim.2 (c) A owes B 5,000 rupees. C pays to

B 1,000 rupees, and B accepts them, in satisfaction

of his claim on A. This payment is a

discharge of the whole claim.2" (d) A owes B,

under a contract, a sum of money, the amount

of which has not been ascertained. A, without

ascertaining the amount, gives to B, and

B, in satisfaction thereof, accepts, the sum of

2,000 rupees. This is a discharge of the whole

debt, whatever may be its amount. (d) A

owes B, under a contract, a sum of money,



the amount of which has not been ascertained.

A, without ascertaining the amount, gives to

B, and B, in satisfaction thereof, accepts, the

sum of 2,000 rupees. This is a discharge of

the whole debt, whatever may be its amount."

(e) A owes B 2,000 rupees, and is also indebted

to another creditors. A makes an arrangement

with his creditors, including B, to

pay them a 28 [composition] of eight annas

in the rupee upon their respective demands.

Payment to B of 1,000 rupees is a discharge

of B’s demand. 64. Consequences of rescission

of a voidable contract.—When a person

at whose option a contract is voidable rescinds

it, the other party thereto need not perform

any promise therein contained in which he is

the promisor. The party rescinding a voidable

contract shall, if he had received any benefit

thereunder from another party to such contract,

restore such benefit, so far as may be,

to the person from whom it was received.1 65.

Obligation of person who has received advantage

under void agreement, or contract that

becomes void.—When an agreement is discovered

to be void, or when a contract becomes

void, any person who has received any advantage

under such agreement or contract is

bound to restore it, or to make compensation

for it to the person from whom he received it.

—When an agreement is discovered to be void,

or when a contract becomes void, any person

who has received any advantage under such

agreement or contract is bound to restore it,

or to make compensation for it to the person

from whom he received it." Illustrations (a)

A pays B 1,000 rupees, in consideration of B’s

promising to marry C, A’s daughter. C is dead

at the time of the promise. The agreement is

void, but B must repay A the 1,000 rupees.

(a) A pays B 1,000 rupees, in consideration of

B’s promising to marry C, A’s daughter. C is

dead at the time of the promise. The agreement

is void, but B must repay A the 1,000 rupees."

(b) A contracts with B to deliver to him

250 maunds of rice before the first of May. A

delivers 130 maunds only before that day, and

none after. B retains the 130 maunds after the

first of May. He is bound to pay A for them.

(b) A contracts with B to deliver to him 250

maunds of rice before the first of May. A delivers

130 maunds only before that day, and none

after. B retains the 130 maunds after the first

of May. He is bound to pay A for them." (c)

A, a singer, contracts with B, the manager of a

theatre, to sing at his theatre for two nights in

every week during the next two months, and B

engages to pay her a hundred rupees for each

night’s performance. On the sixth night, A

wilfully absents herself from the theatre, and

B, in consequence, rescinds the contract. B

must pay A for the five nights on which she

had sung. (c) A, a singer, contracts with B,

the manager of a theatre, to sing at his theatre

for two nights in every week during the next

two months, and B engages to pay her a hundred

rupees for each night’s performance. On

the sixth night, A wilfully absents herself from

the theatre, and B, in consequence, rescinds

the contract. B must pay A for the five nights

on which she had sung." (d) A contracts to

sing for B at a concert for 1,000 rupees, which

are paid in advance. A is too ill to sing. A is

not bound to make compensation to B for the

loss of the profits which B would have made

if A had been able to sing, but must refund

to B the 1,000 rupees paid in advance. (d) A

contracts to sing for B at a concert for 1,000

rupees, which are paid in advance. A is too ill

to sing. A is not bound to make compensation

to B for the loss of the profits which B would

have made if A had been able to sing, but must

refund to B the 1,000 rupees paid in advance."

66. Mode of communicating or revoking rescission

of voidable contract.—The rescission of a

voidable contract may be communicated or revoked

in the same manner, and subject to the

same rules, as apply to the communication or

revocation of the proposal. 30 67. Effect of neglect

of promisee to afford promisor reasonable

facilities for performance.—If any promisee neglects

or refuses to afford the promisor reasonable

facilities for the performance of his

promise, the promisor is excused by such neglect

or refusal as to any non-performance

caused thereby. —If any promisee neglects or

refuses to afford the promisor reasonable facilities

for the performance of his promise, the

promisor is excused by such neglect or refusal

as to any non-performance caused thereby." Illustration

A contracts with B to repair B’s



house. B neglects or refuses to point out to

A the places in which his house requires repair.

A is excused for the non-performance

of the contract, if it is caused by such neglect

or refusal. 68. Claim for necessaries supplied

to person incapable of contracting, or on his

account.—If a person, incapable of entering

into a contract, or any one whom he is legally

bound to support, is supplied by another person

with necessaries suited to his condition in

life, the person who has furnished such supplies

is entitled to be reimbursed from the

property of such incapable person. 31 Illustrations

(a) A supplies B, a lunatic, with necessaries

suitable to his condition in life. A is

entitled to be reimbursed from B’s property.

(a) A supplies B, a lunatic, with necessaries

suitable to his condition in life. A is entitled

to be reimbursed from B’s property." (b) A suplies

the wife and children of B, a lunatic, with

necessaries suitable to their condition in life.

A is entitled to be reimbursed from B’s property.

(b) A suplies the wife and children of B, a

lunatic, with necessaries suitable to their condition

in life. A is entitled to be reimbursed

from B’s property." 69. Reimbursement of person

paying money due by another, in payment

of which he is interested.—A person who is

interested in the payment of money which another

is bound by law to pay, and who therefore

pays it, is entitled to be reimbursed by the

other. —A person who is interested in the payment

of money which another is bound by law

to pay, and who therefore pays it, is entitled

to be reimbursed by the other." Illustration B

holds land in Bengal, on a lease granted by

A, the zamindar. The revenue payable by A

to the Government being in arrear, his land is

advertised for sale by the Government. Under

the revenue law, the consequence of such sale

will be the annulment of B’s lease. B to prevent

the sale and the consequent annulment of

his own lease, pays the Government the sum

due from A. A is bound to make good to B

the amount so paid. B holds land in Bengal,

on a lease granted by A, the zamindar. The

revenue payable by A to the Government being

in arrear, his land is advertised for sale

by the Government. Under the revenue law,

the consequence of such sale will be the annulment

of B’s lease. B to prevent the sale and

the consequent annulment of his own lease,

pays the Government the sum due from A.

A is bound to make good to B the amount

so paid." 70. Obligation of person enjoying

benefit of non-gratuitous act.—Where a person

lawfully does anything for another person,

or delivers anything to him, not intending to

do so gratuitously, and such other person enjoys

the benefit thereof, the latter is bound to

make compensation to the former in respect of,

or to restore, the thing so done or delivered.1

—Where a person lawfully does anything for

another person, or delivers anything to him,

not intending to do so gratuitously, and such

other person enjoys the benefit thereof, the

latter is bound to make compensation to the

former in respect of, or to restore, the thing

so done or delivered.1" Illustrations (a) A, a

tradesman, leaves goods at B’s house by mistake.

B treats the goods as his own. He is

bound to pay A for them. (a) A, a tradesman,

leaves goods at B’s house by mistake. B

treats the goods as his own. He is bound to

pay A for them." (b) A saves B’s property from

fire. A is not entitled to compensation from

B, if the circumstances show that he intended

to act gratuitously. (b) A saves B’s property

from fire. A is not entitled to compensation

from B, if the circumstances show that he intended

to act gratuitously." 71. Responsibility

of finder of goods.—A person who finds goods

belonging to another, and takes them into his

custody, is subject to the same responsibility

as a bailee. 33 72. Liability of person to whom

money is paid, or thing delivered, by mistake

or under coercion.—A person to whom money

has been paid, or anything delivered, by mistake

or under coercion, must repay or return it.

—A person to whom money has been paid, or

anything delivered, by mistake or under coercion,

must repay or return it." Illustrations (a)

A and B jointly owe 100 rupees to C, A alone

pays the amount to C, and B, not knowing

this fact, pays 100 rupees over again to C. C

is bound to repay the amount to B. (a) A and

B jointly owe 100 rupees to C, A alone pays

the amount to C, and B, not knowing this fact,

pays 100 rupees over again to C. C is bound

to repay the amount to B." (b) A railway com-



pany refuses to deliver up certain goods to the

consignee except upon the payment of an illegal

charge for carriage. The consignee pays the

sum charged in order to obtain the goods. He

is entitled to recover so much of the charge as

was illegal and excessive. (b) A railway company

refuses to deliver up certain goods to the

consignee except upon the payment of an illegal

charge for carriage. The consignee pays

the sum charged in order to obtain the goods.

He is entitled to recover so much of the charge

as was illegal and excessive." 73. Compensation

for loss or damage caused by breach of

contract.—When a contract has been broken,

the party who suffers by such breach is entitled

to receive, from the party who has broken

the contract, compensation for any loss or

damage caused to him thereby, which naturally

arose in the usual course of things from

such breach, or which the parties knew, when

they made the contract, to be likely to result

from the breach of it. —When a contract has

been broken, the party who suffers by such

breach is entitled to receive, from the party

who has broken the contract, compensation

for any loss or damage caused to him thereby,

which naturally arose in the usual course of

things from such breach, or which the parties

knew, when they made the contract, to

be likely to result from the breach of it." Such

compensation is not to be given for any remote

and indirect loss or damage sustained by reason

of the breach. Compensation for failure to

discharge obligation resembling those created

by contract.—When an obligation resembling

those created by contract has been incurred

and has not been discharged, any person injured

by the failure to discharge it is entitled to

receive the same compensation from the party

in default, as if such person had contracted

to discharge it and had broken his contract.

—When an obligation resembling those created

by contract has been incurred and has

not been discharged, any person injured by

the failure to discharge it is entitled to receive

the same compensation from the party

in default, as if such person had contracted to

discharge it and had broken his contract." Explanation.—In

estimating the loss or damage

arising from a breach of contract, the means

which existed of remedying the inconvenience

caused by the non-performance of the contract

must be taken into account. Illustrations (a)

A contracts to sell and deliver 50 maunds of

saltpetre to B, at a certain price to be paid on

delivery. A breaks his promise. B is entitled to

receive from A, by way of compensation, the

sum, if any, by which the contract price falls

short of the price for which B might have obtained

50 maunds of saltpetre of like quality at

the time when the saltpetre ought to have been

delivered. (a) A contracts to sell and deliver 50

maunds of saltpetre to B, at a certain price to

be paid on delivery. A breaks his promise. B is

entitled to receive from A, by way of compensation,

the sum, if any, by which the contract

price falls short of the price for which B might

have obtained 50 maunds of saltpetre of like

quality at the time when the saltpetre ought

to have been delivered." (b) A hires B’s ship

to go to Bombay, and there takes on board,

on the first of January, a cargo, which A is

to provide, and to bring it to Calcutta, the

freight to be paid when earned. B’s ship does

not go to Bombay, but A has opportunities

of procuring suitable conveyance for the cargo

upon terms as advantageous as those on which

he had chartered the ship. A avails himself of

those opportunities, but is put to trouble and

expense in doing so. A is entitled to receive

compensation from B in respect of such trouble

and expense. (b) A hires B’s ship to go to

Bombay, and there takes on board, on the first

of January, a cargo, which A is to provide, and

to bring it to Calcutta, the freight to be paid

when earned. B’s ship does not go to Bombay,

but A has opportunities of procuring suitable

conveyance for the cargo upon terms as advantageous

as those on which he had chartered the

ship. A avails himself of those opportunities,

but is put to trouble and expense in doing so.

A is entitled to receive compensation from B

in respect of such trouble and expense." (c) A

contracts to buy of B, at a stated price, 50

maunds of rice, no time being fixed for delivery.

A afterwards informs B that he will not

accept the rice if tendered to him. B is entitled

to receive from A, by way of compensation, the

amount, if any, by which the contract price exceeds

that which B can obtain for the rice at



the time when A informs B that he will not

accept it. (c) A contracts to buy of B, at a

stated price, 50 maunds of rice, no time being

fixed for delivery. A afterwards informs B

that he will not accept the rice if tendered to

him. B is entitled to receive from A, by way

of compensation, the amount, if any, by which

the contract price exceeds that which B can

obtain for the rice at the time when A informs

B that he will not accept it." (d) A contracts to

buy B’s ship for 60,000 rupees, but breaks his

promise. A must pay to B, by way of compensation,

the excess, if any, of the contract price

over the price which B can obtain for the ship

at the time of the breach of promise. (d) A

contracts to buy B’s ship for 60,000 rupees,

but breaks his promise. A must pay to B, by

way of compensation, the excess, if any, of the

contract price over the price which B can obtain

for the ship at the time of the breach of

promise." (e) A, the owner of a boat, contracts

with B to take a cargo of jute to Mirzapur,

for sale at that place, starting on a specified

day. The boat, owing to some avoidable cause,

does not start at the time appointed, whereby

the arrival of the cargo at Mirzapur is delayed

beyond the time when it would have arrived

if the boat had sailed according to the contract.

After that date, and before the arrival

of the cargo, the price of jute falls. The measure

of the compensation payable to B by A is

the difference between the price which B could

have obtained for the cargo at Mirzapur at the

time when it would have arrived if forwarded

in due course, and its market price at the time

when it actually arrived. (e) A, the owner of a

boat, contracts with B to take a cargo of jute

to Mirzapur, for sale at that place, starting

on a specified day. The boat, owing to some

avoidable cause, does not start at the time appointed,

whereby the arrival of the cargo at

Mirzapur is delayed beyond the time when it

would have arrived if the boat had sailed according

to the contract. After that date, and

before the arrival of the cargo, the price of

jute falls. The measure of the compensation

payable to B by A is the difference between

the price which B could have obtained for the

cargo at Mirzapur at the time when it would

have arrived if forwarded in due course, and

its market price at the time when it actually

arrived." (f) A contracts to repair B’s house in

a certain manner, and receives payment in advance.

A repairs the house, but not according

to contract. B is entitled to recover from A

the cost of making the repairs conform to the

contract. (f) A contracts to repair B’s house

in a certain manner, and receives payment in

advance. A repairs the house, but not according

to contract. B is entitled to recover from

A the cost of making the repairs conform to

the contract." (g) A contracts to let his ship

to B for a year, from the first of January, for

a certain price. Freights rise, and, on the first

of January, the hire obtainable for the ship

is higher than the contract price. A breaks

his promise. He must pay to B, by way of

compensation, a sum equal to the difference

between the contract price and the price for

which B could hire a similar ship for a year on

and from the first of January. (g) A contracts

to let his ship to B for a year, from the first

of January, for a certain price. Freights rise,

and, on the first of January, the hire obtainable

for the ship is higher than the contract

price. A breaks his promise. He must pay to

B, by way of compensation, a sum equal to the

difference between the contract price and the

price for which B could hire a similar ship for

a year on and from the first of January." (h)

A contracts to supply B with a certain quantity

of iron at a fixed price, being a higher

price than that for which A could procure and

deliver the iron. B wrongfully refuses to receive

the iron. B must pay to A, by way of

compensation, the difference between the contract

price of the iron and the sum for which

A could have obtained and delivered it. (h)

A contracts to supply B with a certain quantity

of iron at a fixed price, being a higher

price than that for which A could procure and

deliver the iron. B wrongfully refuses to receive

the iron. B must pay to A, by way of


price of the iron and the sum for which

A could have obtained and delivered it." (i) A

delivers to B, a common carrier, a machine,

to be conveyed, without delay, to A’s mill, informing

B that his mill is stopped for want of

machine. B unreasonably delays the delivery



of the machine, and A, in consequence, loses

a profitable contract with the Government. A

is entitled to receive from B, by way of compensation,

the average amount of profit which

would have been made by the working of the

mill during the time that delivery of it was delayed,

but not the loss sustained through the

loss of the Government contract. (i) A delivers

to B, a common carrier, a machine, to be

conveyed, without delay, to A’s mill, informing

B that his mill is stopped for want of machine.

B unreasonably delays the delivery of

the machine, and A, in consequence, loses a

profitable contract with the Government. A

is entitled to receive from B, by way of compensation,

the average amount of profit which

would have been made by the working of the

mill during the time that delivery of it was delayed,

but not the loss sustained through the

loss of the Government contract." (j) A, having

contracted with B to supply B with 1,000

tons of iron at 100 rupees a ton, to be delivered

at a stated time, contracts with C for

the purchase of 1,000 tons of iron at 80 rupees

a ton, telling C that he does so for the purpose

of performing his contract with B. C fails

to perform his contract with A, who cannot

procure other iron, and B, in consequence, rescinds

the contract. C must pay to A 20,000

rupees, being the profit which A would have

made by the performance of his contract with

B. (j) A, having contracted with B to supply B

with 1,000 tons of iron at 100 rupees a ton, to

be delivered at a stated time, contracts with

C for the purchase of 1,000 tons of iron at 80

rupees a ton, telling C that he does so for the

purpose of performing his contract with B. C

fails to perform his contract with A, who cannot

procure other iron, and B, in consequence,

rescinds the contract. C must pay to A 20,000

rupees, being the profit which A would have

made by the performance of his contract with

B." (k) A contracts with B to make and deliver

to B, by a fixed day, for a specified price, a certain

piece of machinery. A does not deliver the

piece of machinery, at the time specified, and,

in consequence of this, B is obliged to procure

another at a higher price than that which he

was to have paid to A, and is prevented from

performing a contract which B had made with

a third person at the time of his contract with

A (but which had not been communicated to

A), and is compelled to make compensation

for breach of that contract. A must pay to

B, by way of compensation, the difference between

the contract price of the price of machinery

and the sum paid by B for another,

but not the sum paid by B to the third person

by way of compensation. (k) A contracts with

B to make and deliver to B, by a fixed day,

for a specified price, a certain piece of machinery.

A does not deliver the piece of machinery,

at the time specified, and, in consequence

of this, B is obliged to procure another at a

higher price than that which he was to have

paid to A, and is prevented from performing a

contract which B had made with a third person

at the time of his contract with A (but

which had not been communicated to A), and

is compelled to make compensation for breach

of that contract. A must pay to B, by way of


price of the price of machinery and the

sum paid by B for another, but not the sum

paid by B to the third person by way of compensation."

(l) A, a builder, contracts to erect

and finish a house by the first of January, in

order that B may give possession of it at that

time to C, to whom B has contracted to let

it. A is informed of the contract between B

and C. A builds the house so badly that, before

the first of January, it falls down and has

to be re-built by B, who, in consequence, loses

the rent which he was to have received from C,

and is obliged to make compensations to C for

the breach of his contract. A must make compensation

to B for the cost of rebuilding of the

house, for the rent lost, and for the compensation

made to C. (l) A, a builder, contracts

to erect and finish a house by the first of January,

in order that B may give possession of it

at that time to C, to whom B has contracted

to let it. A is informed of the contract between

B and C. A builds the house so badly

that, before the first of January, it falls down

and has to be re-built by B, who, in consequence,

loses the rent which he was to have

received from C, and is obliged to make compensations

to C for the breach of his contract.

A must make compensation to B for the cost of



rebuilding of the house, for the rent lost, and

for the compensation made to C." (m) A sells

certain merchandise to B, warranting it to be

of a particular quality, and B, in reliance upon

this warranty, sells it to C with a similar warranty.

The goods prove to be not according to

the warranty, and B becomes liable to pay C

a sum of money by way of compensation. B is

entitled to be reimbursed this sum by A. (m)

A sells certain merchandise to B, warranting it

to be of a particular quality, and B, in reliance

upon this warranty, sells it to C with a similar

warranty. The goods prove to be not according

to the warranty, and B becomes liable to

pay C a sum of money by way of compensation.

B is entitled to be reimbursed this sum

by A." (n) A contracts to pay a sum of money

to B on a day specified. A does not pay the

money on that day. B, in consequence of not

receiving the money on that day, is unable to

pay his debts, and is totally ruined. A is not

liable to make good to B anything except the

principal sum he contracted to pay, together

with interest upto the day of payment. (n)

A contracts to pay a sum of money to B on

a day specified. A does not pay the money

on that day. B, in consequence of not receiving

the money on that day, is unable to pay

his debts, and is totally ruined. A is not liable

to make good to B anything except the

principal sum he contracted to pay, together

with interest upto the day of payment." (o)

A contracts to deliver 50 maunds of saltpetre

to B on the first of January, at a certain

price, B, afterwards, before the first of January,

contracts to sell the saltpetre to C at a

price higher than the market price of the first

of January. A breaks his promise. In estimating

the compensation payable by A to B, the

market price of the first of January, and not

the profit which would have arisen to B from

the sale to C, is to be taken into account. (o)

A contracts to deliver 50 maunds of saltpetre

to B on the first of January, at a certain

price, B, afterwards, before the first of January,

contracts to sell the saltpetre to C at a

price higher than the market price of the first

of January. A breaks his promise. In estimating

the compensation payable by A to B, the

market price of the first of January, and not

the profit which would have arisen to B from

the sale to C, is to be taken into account."

(p) A contracts to sell and deliver 500 bales

of cotton to B on a fixed day. A knows nothing

of B’s mode of conducting his business. A

breaks his promise, and B, having no cotton,

is obliged to close his mill. A is not responsible

to B for the loss caused to B by closing

of the mill. (p) A contracts to sell and deliver

500 bales of cotton to B on a fixed day. A

knows nothing of B’s mode of conducting his

business. A breaks his promise, and B, having

no cotton, is obliged to close his mill. A is

not responsible to B for the loss caused to B

by closing of the mill." (q) A contracts to sell

and deliver to B, on the first of January, certain

cloth which B intends to manufacture into

caps of a particular kind, for which there is no

demand, except at that season. The cloth is

not delivered till after the appointed time, and

too late to be used that year in making caps.

B is entitled to receive from A, by way of compensation,

the difference between the contract

price of the cloth and its market price at the

time of delivery, but not the profits which he

expected to obtain by making caps, nor the

expenses which he has been put to in making

preparation for the manufacture. (q) A

contracts to sell and deliver to B, on the first

of January, certain cloth which B intends to

manufacture into caps of a particular kind, for

which there is no demand, except at that season.

The cloth is not delivered till after the

appointed time, and too late to be used that

year in making caps. B is entitled to receive

from A, by way of compensation, the difference

between the contract price of the cloth

and its market price at the time of delivery,

but not the profits which he expected to obtain

by making caps, nor the expenses which

he has been put to in making preparation for

the manufacture." (r) A, a ship owner, contracts

with B to convey him from Calcutta to

Sydney in A’s ship, sailing on the first of January,

and B pays to A, by way of deposit, onehalf

of his passage-money. The ship does not

sail on the first of January, and B, after being,

in consequence, detained in Calcutta for

some time, and thereby put to some expense,

proceeds to Sydney in another vessel, and, in



consequence, arriving too late in Sydney, loses

a sum of money. A is liable to repay to B

his deposit, with interest, and the expense to

which he is put by his detention in Calcutta,

and the excess, if any, of the passage-money

paid for the second ship over that agreed upon

for the first, but not the sum of money which

B lost by arriving in Sydney too late. (r) A,

a ship owner, contracts with B to convey him

from Calcutta to Sydney in A’s ship, sailing

on the first of January, and B pays to A, by

way of deposit, one-half of his passage-money.

The ship does not sail on the first of January,

and B, after being, in consequence, detained

in Calcutta for some time, and thereby put to

some expense, proceeds to Sydney in another

vessel, and, in consequence, arriving too late

in Sydney, loses a sum of money. A is liable

to repay to B his deposit, with interest, and

the expense to which he is put by his detention

in Calcutta, and the excess, if any, of the

passage-money paid for the second ship over

that agreed upon for the first, but not the sum

of money which B lost by arriving in Sydney

too late." 74 Compensation for breach of contract

where penalty stipulated for:- 34 [When

a contract has been broken, if a sum is named

in the contract as the amount to be paid in

case of such breach, or if the contract contains

any other stipulation by way of penalty, the

party complaining of the breach is entitled,

whether or not actual damage or loss is proved

to have been caused thereby, to receive from

the party who has broken the contract reasonable

compensation not exceeding the amount

so named or, as the case may be, the penalty

stipulated for. Explanation.— A stipulation

for increased interest from the date of default

may be a stipulation by way of penalty.] (Exception)

— When any person enters into any

bail-bond, recognizance or other instrument of

the same nature or, under the provisions of

any law, or under the orders of the 35 [Central

Government] or of any 36 [State Government],

gives any bond for the performance of

any public duty or act in which the public are

interested, he shall be liable, upon breach of

the condition of any such instrument, to pay

the whole sum mentioned therein. Explanation.—

A person who enters into a contract

with Government does not necessarily thereby

undertake any public duty, or promise to do an

act in which the public are interested. Illustrations

(a) A contracts with B to pay B Rs.

1,000 if he fails to pay B Rs. 500 on a given

day. A fails to pay B Rs. 500 on that day. B is

entitled to recover from A such compensation,

not exceeding Rs. 1,000, as the Court considers

reasonable. (b) A contracts with B that, if

A practises as a surgeon within Calcutta, he

will pay B Rs. 5,000. A practises as a surgeon

in Calcutta. B is entitled to such compensation;

not exceeding Rs. 5,000 as the court considers

reasonable. (c) A gives a recognizance

binding him in a penalty of Rs. 500 to appear

in Court on a certain day. He forfeits his recognizance.

He is liable to pay the whole penalty.

37 [(d) A gives B a bond for the repayment of

Rs. 1,000 with interest at 12 per cent. at the

end of six months, with a stipulation that, in

case of default, interest shall be payable at the

rate of 75 per cent. from the date of default.

This is a stipulation by way of penalty, and B

is only entitled to recover from A such compensation

as the Court considers reasonable.

(e) A, who owes money to B, a money-lender,

undertakes to repay him by delivering to him

10 maunds of grain on a certain date, and stipulates

that, in the event of his not delivering

the stipulated amount by the stipulated date,

he shall be liable to deliver 20 maunds. This is

a stipulation by way of penalty, and B is only

entitled to reasonable consideration in case of

breach. (f) A undertakes to repay B a loan of

Rs. 1,000 by five equal monthly instalments,

with a stipulation that, in default, of payment

of any instalment, the whole shall become due.

This stipulation is not by way of penalty, and

the contract may be enforced according to its

terms. (g) A borrows Rs. 100 from B and

gives him a bond for Rs. 200 payable by five

yearly instalments of Rs. 40, with a stipulation

that, in default of payment of any instalment,

the whole shall become due. This

is a stipulation by way of penalty.] 75. Party

rightfully rescinding contract, entitled to compensation.—A

person who rightfully rescinds

a contract is entitled to compensation for any

damage which he has sustained through the

non-fulfilment of the contract. —A person



who rightfully rescinds a contract is entitled

to compensation for any damage which he has

sustained through the non-fulfilment of the

contract." Illustration A, a singer, contracts

with B, the manager of a theatre, to sing at

his theatre for two nights in every week during

the next two months, and B engages to pay her

100 rupees for each night’s performance. On

the sixth night, A wilfully absents herself from

the theatre, and B, in consequence, rescinds

the contracts. B is entitled to claim compensation

for the damage which he has sustained

through the non-fulfilment of the contract. A,

a singer, contracts with B, the manager of a

theatre, to sing at his theatre for two nights in

every week during the next two months, and B


performance. On the sixth night, A wilfully

absents herself from the theatre, and B, in consequence,

rescinds the contracts. B is entitled

to claim compensation for the damage which

he has sustained through the non-fulfilment of

the contract." 76. Sale of Goods.— [Rep. by

the Sale of Goods Act, 1930 (3 of 1930) sec.

65] 77. Sale of Goods.— [Rep. by the Sale of

Goods Act, 1930 (3 of 1930) sec. 65] 78. Sale

of Goods.— [Rep. by the Sale of Goods Act,

1930 (3 of 1930) sec. 65] 79. Sale of Goods.—

[Rep. by the Sale of Goods Act, 1930 (3 of

1930) sec. 65] 80. Sale of Goods.— [Rep. by



































1930) sec. 65] 100. Sale of Goods.— [Rep.

by the Sale of Goods Act, 1930 (3 of 1930)

sec. 65] 101. Sale of Goods.— [Rep. by the

Sale of Goods Act, 1930 (3 of 1930) sec. 65]

102. Sale of Goods.— [Rep. by the Sale of





































65] 122. Sale of Goods.— [Rep. by the Sale

of Goods Act, 1930 (3 of 1930) sec. 65] 123.

Sale of Goods.— [Rep. by the Sale of Goods

Act, 1930 (3 of 1930) sec. 65] 124. “Contract

of indemnity” defined.—A contract by which

one party promises to save the other from loss

caused to him by the conduct of the promisor

himself, or by the conduct of any other person,

is called a “contract of indemnity.” —A contract

by which one party promises to save the

other from loss caused to him by the conduct

of the promisor himself, or by the conduct of

any other person, is called a “contract of indemnity.”"

Illustration A contracts to indemnify

B against the consequences of any proceedings

which C may take against B in respect

of a certain sum of 200 rupees. This is a

contract of indemnity. A contracts to indemnify



of a certain sum of 200 rupees. This

is a contract of indemnity." 124. “Contract

of indemnity” defined.—A contract by which

one party promises to save the other from loss

caused to him by the conduct of the promisor

himself, or by the conduct of any other person,

is called a “contract of indemnity.” —A contract

by which one party promises to save the

other from loss caused to him by the conduct

of the promisor himself, or by the conduct of

any other person, is called a “contract of indemnity.”"

Illustration A contracts to indemnify



of a certain sum of 200 rupees. This is a

contract of indemnity. A contracts to indemnify



of a certain sum of 200 rupees. This

is a contract of indemnity." 125. Rights of

indemnity-holder when sued.—The promisee

in a contract of indemnity, acting within the

scope of his authority, is entitled to recover

from the promisor— —The promisee in a contract

of indemnity, acting within the scope of

his authority, is entitled to recover from the

promisor—" (1) all damages which he may be

compelled to pay in any suit in respect of any

matter to which the promise to indemnify applies;

(2) all costs which he may be compelled

to pay in any such suit if, in bringing or defending

it, he did not contravene the orders of

the promisor, and acted as it would have been

prudent for him to act in the absence of any

contract of indemnity, or if the promisor authorized

him to bring or defend the suit; (3)

all sums which he may have paid under the

terms of any compromise of any such suit, if

the compromise was not contrary to the orders

of the promisor, and was one which it would

have been prudent for the promisee to make

in the absence of any contract of indemnity,

or if the promisor authorized him to compromise

the suit. 126. ‘Contract of guarantee’,

‘surety’, ‘principal debtor’ and ‘creditor’—A

‘contract of guarantee’ is a contract to perform

the promise, or discharge the liability,

of a third person in case of his default. The

person who gives the guarantee is called the

‘surety’; the person in respect of whose default

the guarantee is given is called the ‘principal

debtor’, and the person to whom the guarantee

is given is called the ‘creditor’. A guarantee

may be either oral or written. —A ‘contract

of guarantee’ is a contract to perform the

promise, or discharge the liability, of a third

person in case of his default. The person who

gives the guarantee is called the ‘surety’; the

person in respect of whose default the guarantee

is given is called the ‘principal debtor’, and

the person to whom the guarantee is given is

called the ‘creditor’. A guarantee may be either

oral or written." 127. Consideration for

guarantee.—Anything done, or any promise

made, for the benefit of the principal debtor,

may be a sufficient consideration to the surety

for giving the guarantee. —Anything done, or

any promise made, for the benefit of the principal

debtor, may be a sufficient consideration

to the surety for giving the guarantee." Illustrations

(a) B requests A to sell and deliver

to him goods on credit. A agrees to do so,

provided C will guarantee the payment of the

price of the goods. C promises to guarantee

the payment in consideration of A’s promise

to deliver the goods. This is a sufficient consideration

for C’s promise. (a) B requests A



to sell and deliver to him goods on credit. A

agrees to do so, provided C will guarantee the

payment of the price of the goods. C promises

to guarantee the payment in consideration of

A’s promise to deliver the goods. This is a

sufficient consideration for C’s promise." (b)

A sells and delivers goods to B. C afterwards

requests A to forbear to sue B for the debt for

a year, and promises that, if he does so, C will

pay for them in default of payment by B. A

agrees to forbear as requested. This is a sufficient

consideration for C’s promise. (b) A sells

and delivers goods to B. C afterwards requests

A to forbear to sue B for the debt for a year,

and promises that, if he does so, C will pay for

them in default of payment by B. A agrees to

forbear as requested. This is a sufficient consideration

for C’s promise." (c) A sells and delivers

goods to B. C afterwards, without consideration,

agrees to pay for them in default of

B. The agreement is void. (c) A sells and delivers

goods to B. C afterwards, without consideration,

agrees to pay for them in default of

B. The agreement is void." 128. Surety’s liability.—The

liability of the surety is co-extensive

with that of the principal debtor, unless it is

otherwise provided by the contract. —The liability

of the surety is co-extensive with that

of the principal debtor, unless it is otherwise

provided by the contract." Illustration A guarantees

to B the payment of a bill of exchange

by C, the acceptor. The bill is dishonoured

by C. A is liable, not only for the amount of

the bill, but also for any interest and charges

which may have become due on it. A guarantees

to B the payment of a bill of exchange by

C, the acceptor. The bill is dishonoured by C.

A is liable, not only for the amount of the bill,

but also for any interest and charges which

may have become due on it." 129. ‘Continuing

guarantee’.—A guarantee which extends to a

series of transactions, is called a ‘continuing

guarantee’. —A guarantee which extends to

a series of transactions, is called a ‘continuing

guarantee’." Illustrations (a) A, in consideration

that B will employ C in collecting the

rents of B’s zamindari, promises B to be responsible,

to the amount of 5,000 rupees, for

the due collection and payment by C of those

rents. This is a continuing guarantee. (a) A,

in consideration that B will employ C in collecting

the rents of B’s zamindari, promises B

to be responsible, to the amount of 5,000 rupees,

for the due collection and payment by C

of those rents. This is a continuing guarantee."

(b) A guarantees payment to B, a tea-dealer,

to the amount of £ 100, for any tea he may

from time to time supply to C. B supplies C

with tea of above the value of £ 100, and C

pays B for it. Afterwards, B supplies C with

tea of the value of £ 200. C fails to pay. The

guarantee given by A was a continuing guarantee,

and he is accordingly liable to B to the

extent of £ 100. (c) A guarantees payment to

B of the price of five sacks of flour to be delivered

by B to C and to be paid for in a month.

B delivers five sacks to C. C pays for them.

Afterwards B delivers four sacks to C, which

C does not pay for. The guarantee given by A

was not a continuing guarantee, and accordingly

he is not liable for the price of the four

sacks. (c) A guarantees payment to B of the

price of five sacks of flour to be delivered by B

to C and to be paid for in a month. B delivers

five sacks to C. C pays for them. Afterwards

B delivers four sacks to C, which C does not

pay for. The guarantee given by A was not

a continuing guarantee, and accordingly he is

not liable for the price of the four sacks." 130.

Revocation of continuing guarantee.—A continuing

guarantee may at any time be revoked

by the surety, as to future transactions, by notice

to the creditor. —A continuing guarantee

may at any time be revoked by the surety, as

to future transactions, by notice to the creditor."

Illustrations (a) A, in consideration of B’s

discounting, at, A’s request, bills of exchange

for C, guarantees to B, for twelve months, the

due payment of all such bills to the extent of

5,000 rupees. B discounts bills for C to the extent

of 2,000 rupees. Afterwards, at the end of

three months, A revokes the guarantee. This

revocation discharges A from all liability to B

for any subsequent discount. But A is liable to

B for the 2,000 rupees, on default of C. (a) A,

in consideration of B’s discounting, at, A’s request,

bills of exchange for C, guarantees to B,

for twelve months, the due payment of all such

bills to the extent of 5,000 rupees. B discounts

bills for C to the extent of 2,000 rupees. After-



wards, at the end of three months, A revokes

the guarantee. This revocation discharges A

from all liability to B for any subsequent discount.

But A is liable to B for the 2,000 rupees,

on default of C." (b) A guarantees to B,

to the extent of 10,000 rupees, that C shall

pay all the bills that B shall draw upon him.

B draws upon C, C accepts the bill. A gives

notice of revocation. C dishonours the bill at

maturity. A is liable upon his guarantee. (b) A

guarantees to B, to the extent of 10,000 rupees,

that C shall pay all the bills that B shall draw

upon him. B draws upon C, C accepts the bill.

A gives notice of revocation. C dishonours the

bill at maturity. A is liable upon his guarantee."

131. Revocation of continuing guarantee

by surety’s death.—The death of the surety

operates, in the absence of any contract to the

contrary, as a revocation of a continuing guarantee,

so far as regards future transactions.

—The death of the surety operates, in the absence

of any contract to the contrary, as a revocation

of a continuing guarantee, so far as

regards future transactions." 132. Liability of

two persons, primarily liable, not affected by

arrangement between them that one shall be

surety on other’s default.—Where two persons

contract with a third person to undertake a

certain liability, and also contract with each

other that one of them shall be liable only on

the default of the other, the third person not

being a party to such contract, the liability

of each of such two persons to the third person

under the first contract is not affected by

the existence of the second contract, although

such third person may have been aware of its

existence. —Where two persons contract with

a third person to undertake a certain liability,

and also contract with each other that one of

them shall be liable only on the default of the

other, the third person not being a party to

such contract, the liability of each of such two

persons to the third person under the first contract

is not affected by the existence of the second

contract, although such third person may

have been aware of its existence." Illustration

A and B make a joint and several promissory

note to C. A makes it, in fact, as surety for B,

and C knows this at the time when the note

is made. The fact that A, to the knowledge

of C, made the note as surety for B, is no answer

to a suit by C against A upon the note.

A and B make a joint and several promissory

note to C. A makes it, in fact, as surety for

B, and C knows this at the time when the

note is made. The fact that A, to the knowledge

of C, made the note as surety for B, is

no answer to a suit by C against A upon the

note." 133. Discharge of surety by variance in

terms of contract.—Any variance, made without

the surety’s consent, in the terms of the

contract between the principal 1[debtor] and

the creditor, discharges the surety as to transactions

subsequent to the variance. —Any

variance, made without the surety’s consent,

in the terms of the contract between the principal

1[debtor] and the creditor, discharges the

surety as to transactions subsequent to the

variance." Illustrations (a) A becomes surety

to C for B’s conduct as manager in C’s bank.

Afterwards, B and C contract, without A’s

consent, that B’s salary shall be raised, and

that he shall become liable for one-fourth of

the losses on overdrafts. B allows a customer

to over-draw, and the bank loses a sum of

money. (a) A becomes surety to C for B’s

conduct as manager in C’s bank. Afterwards,

B and C contract, without A’s consent, that

B’s salary shall be raised, and that he shall

become liable for one-fourth of the losses on

overdrafts. B allows a customer to over-draw,

and the bank loses a sum of money." A is discharged

from his suretyship by the variance

made without his consent, and is not liable to

make good this loss. A is discharged from his

suretyship by the variance made without his

consent, and is not liable to make good this

loss." (b) A guarantees C against the misconduct

of B in an office to which B is appointed

by C, and of which the duties are defined by an

Act of the Legislature. By a subsequent Act,

the nature of the office is materially altered.

Afterwards, B misconducts himself. A is discharged

by the change from future liability under

his guarantee, though the misconduct of B

is in respect of a duty not affected by the later

Act. (b) A guarantees C against the misconduct

of B in an office to which B is appointed

by C, and of which the duties are defined by an

Act of the Legislature. By a subsequent Act,



the nature of the office is materially altered.

Afterwards, B misconducts himself. A is discharged

by the change from future liability under

his guarantee, though the misconduct of B

is in respect of a duty not affected by the later

Act." (c) C agrees to appoint B as his clerk

to sell goods at a yearly salary, upon A’s becoming

surety to C for B’s duly accounting for

moneys received by him as such clerk. Afterwards,

without A’s knowledge or consent, C

and B agree that B should be paid by a commission

on the goods sold by him and not by a

fixed salary. A is not liable for subsequent misconduct

of B. (c) C agrees to appoint B as his

clerk to sell goods at a yearly salary, upon A’s

becoming surety to C for B’s duly accounting

for moneys received by him as such clerk. Afterwards,

without A’s knowledge or consent, C

and B agree that B should be paid by a commission

on the goods sold by him and not by

a fixed salary. A is not liable for subsequent

misconduct of B." (d) A gives to C a continuing

guarantee to the extent of 3,000 rupees for

any oil supplied by C to B on credit. Afterwards

B becomes embarrassed, and, without

the knowledge of A, B and C contract that C

shall continue to supply B with oil for ready

money, and that the payments shall be applied

to the then, existing debts between B and C.

A is not liable on his guarantee for any goods

supplied after this new arrangement. (d) A

gives to C a continuing guarantee to the extent

of 3,000 rupees for any oil supplied by C to B

on credit. Afterwards B becomes embarrassed,

and, without the knowledge of A, B and C contract

that C shall continue to supply B with

oil for ready money, and that the payments

shall be applied to the then, existing debts

between B and C. A is not liable on his guarantee

for any goods supplied after this new

arrangement." (e) C contracts to lend B 5,000

rupees on the 1st March. A guarantees repayment.

C pays the 5,000 rupees to B on the 1st

January, A is discharged from his liability, as

the contract has been varied, inasmuch as C

might sue B for the money before the first of

March. (e) C contracts to lend B 5,000 rupees

on the 1st March. A guarantees repayment.

C pays the 5,000 rupees to B on the 1st January,

A is discharged from his liability, as the

contract has been varied, inasmuch as C might

sue B for the money before the first of March."

134. Discharge of surety by release or discharge

of principal debtor.—The surety is discharged

by any contract between the creditor

and the principal debtor, by which the principal

debtor is released, or by any act or omission

of the creditor, the legal consequence of

which is the discharge of the principal debtor.

—The surety is discharged by any contract between

the creditor and the principal debtor, by

which the principal debtor is released, or by

any act or omission of the creditor, the legal

consequence of which is the discharge of the

principal debtor." Illustrations (a) A gives a

guarantee to C for goods to be supplied by

C to B. C supplies goods to B, and afterwards

B becomes embarrassed and contracts

with his creditors (including C) to assign to

them his property in consideration of their releasing

him from their demands. Here B is

released from his debt by the contract with C,

and A is discharged from his suretyship. (a) A

gives a guarantee to C for goods to be supplied

by C to B. C supplies goods to B, and afterwards

B becomes embarrassed and contracts

with his creditors (including C) to assign to

them his property in consideration of their releasing

him from their demands. Here B is

released from his debt by the contract with C,

and A is discharged from his suretyship." (b)

A contracts with B to grow a crop of indigo on

A’s land and to deliver it to B at a fixed rate,

and C guarantees A’s performance of this contract.

B diverts a stream of water which is necessary

for irrigation of A’s land, and thereby

prevents him from raising the indigo. C is no

longer liable on his guarantee. (b) A contracts

with B to grow a crop of indigo on A’s land

and to deliver it to B at a fixed rate, and C

guarantees A’s performance of this contract.

B diverts a stream of water which is necessary

for irrigation of A’s land, and thereby prevents

him from raising the indigo. C is no longer liable

on his guarantee." (c) A contracts with B

for a fixed price to build a house for B within

a stipulated time. B supplying the necessary

timber. C guarantees A’s performance of the

contract. B omits to supply the timber. C

is discharged from his suretyship. (c) A con-



tracts with B for a fixed price to build a house

for B within a stipulated time. B supplying

the necessary timber. C guarantees A’s performance

of the contract. B omits to supply

the timber. C is discharged from his suretyship."

135. Discharge of surety when creditor

compounds with, gives time to, or agrees

not to sue, principal debtor.—A contract between

the creditor and the principal debtor, by

which the creditor makes a composition with,

or promises to give time to, or not to sue, the

principal debtor, discharges the surety, unless

the surety assents to such contract. —A contract

between the creditor and the principal

debtor, by which the creditor makes a composition

with, or promises to give time to, or

not to sue, the principal debtor, discharges the

surety, unless the surety assents to such contract."

136. Surety not discharged when agreement

made with third person to give time to

principal debtor.—Where a contract to give

time to the principal debtor is made by the

creditor with a third person, and not with the

principal debtor, the surety is not discharged.

—Where a contract to give time to the principal

debtor is made by the creditor with a third

person, and not with the principal debtor, the

surety is not discharged." Illustration C, the

holder of an overdue bill of exchange drawn

by A as surety for B, and accepted by B,

contracts with M to give to B. A is not discharged.

C, the holder of an overdue bill of

exchange drawn by A as surety for B, and accepted

by B, contracts with M to give to B.

A is not discharged." 137. Creditor’s forbearance

to sue does not discharge surety.—Mere

forbearance on the part of the creditor to sue

the principal debtor or to enforce any other

remedy against him does not, in the absence

of any provision in the guarantee to the contrary,

discharge the surety. —Mere forbearance

on the part of the creditor to sue the

principal debtor or to enforce any other remedy

against him does not, in the absence of

any provision in the guarantee to the contrary,

discharge the surety." Illustration B owes to C

a debt guaranteed by A. The debt becomes

payable. C does not sue B for a year after the

debt has become payable. A is not discharged

from his suretyship. B owes to C a debt guaranteed

by A. The debt becomes payable. C

does not sue B for a year after the debt has

become payable. A is not discharged from

his suretyship." 138. Release of one co-surety

does not discharge others.—Where there are

co-sureties, a release by the creditor of one of

them does not discharge the others, neither

does it free the surety so released from his

responsibility to the other sureties.1 —Where

there are co-sureties, a release by the creditor

of one of them does not discharge the others,

neither does it free the surety so released from

his responsibility to the other sureties.1" 139.

Discharge of surety by creditor’s act or omission

impairing surety’s eventual remedy.—If

the creditor does any act which is inconsistent

with the rights of the surety, or omits to

do any act which his duty to the surety requires

him to do, and the eventual remedy of

the surety himself against the principal debtor

is thereby impaired, the surety is discharged.

—If the creditor does any act which is inconsistent

with the rights of the surety, or omits

to do any act which his duty to the surety requires

him to do, and the eventual remedy of

the surety himself against the principal debtor

is thereby impaired, the surety is discharged."

Illustrations (a) B contracts to build a ship

for C for a given sum, to be paid by instalments

as the work reaches certain stages. A

becomes surety to C for B’s due performance

of the contract. C, without the knowledge of

A, prepays to B the last two instalments. A

is discharged by this prepayment. (a) B contracts

to build a ship for C for a given sum,

to be paid by instalments as the work reaches

certain stages. A becomes surety to C for B’s

due performance of the contract. C, without

the knowledge of A, prepays to B the last two

instalments. A is discharged by this prepayment."

(b) C lends money to B on the security

of a joint and several promissory note made in

C’s favour by B, and by A as surety for B, together

with a bill of sale of B’s furniture, which

gives power to C to sell the furniture, and apply

the proceeds in discharge of the note. Subsequently,

C sells the furniture, but, owing to

his misconduct and wilful negligence, only a

small price is realized. A is discharged from liability

on the note. (b) C lends money to B on



the security of a joint and several promissory

note made in C’s favour by B, and by A as

surety for B, together with a bill of sale of B’s

furniture, which gives power to C to sell the

furniture, and apply the proceeds in discharge

of the note. Subsequently, C sells the furniture,

but, owing to his misconduct and wilful

negligence, only a small price is realized. A is

discharged from liability on the note." (c) A

puts M as apprentice to B, and gives a guarantee

to B for M’s fidelity. B promises on his

part that he will at least once a month, see M

make up the cash. B omits to see this done as

promised, and M embezzles. A is not liable to

B on his guarantee. (c) A puts M as apprentice

to B, and gives a guarantee to B for M’s

fidelity. B promises on his part that he will at

least once a month, see M make up the cash.

B omits to see this done as promised, and M

embezzles. A is not liable to B on his guarantee."

140. Rights of surety on payment or

performance.—Where a guaranteed debt has

become due, or default of the principal debtor

to perform a guaranteed duty has taken place,

the surety, upon payment or performance of

all that he is liable for, is invested with all the

rights which the creditor had against the principal

debtor. —Where a guaranteed debt has

become due, or default of the principal debtor

to perform a guaranteed duty has taken place,

the surety, upon payment or performance of

all that he is liable for, is invested with all the

rights which the creditor had against the principal

debtor." 141. Surety’s right to benefit of

creditor’s securities.—A surety is entitled to

the benefit of every security which the creditor

has against the principal debtor at the

time when the contract of suretyship is entered

into, whether the surety knows of the

existence of such security or not; and if the

creditor loses, or without the consent of the

surety, parts with such security, the surety is

discharged to the extent of the value of the security.

—A surety is entitled to the benefit of

every security which the creditor has against

the principal debtor at the time when the contract

of suretyship is entered into, whether the

surety knows of the existence of such security

or not; and if the creditor loses, or without the

consent of the surety, parts with such security,

the surety is discharged to the extent of the

value of the security." Illustrations (a) C, advances

to B, his tenant, 2,000 rupees on the

guarantee of A. C has also a further security

for the 2,000 rupees by a mortgage of B’s furniture.

C, cancels the mortgage. B becomes

insolvent and C sues A on his guarantee. A is

discharged from liability to the amount of the

value of the furniture. (a) C, advances to B,

his tenant, 2,000 rupees on the guarantee of

A. C has also a further security for the 2,000

rupees by a mortgage of B’s furniture. C, cancels

the mortgage. B becomes insolvent and C

sues A on his guarantee. A is discharged from

liability to the amount of the value of the furniture."

(b) C, a creditor, whose advance to

B is secured by a decree, receives also a guarantee

for that advance from A. C afterwards

takes B’s goods in execution under the decree,

and then, without the knowledge of A, withdraws

the execution. A is discharged. (b) C,

a creditor, whose advance to B is secured by a

decree, receives also a guarantee for that advance

from A. C afterwards takes B’s goods in

execution under the decree, and then, without

the knowledge of A, withdraws the execution.

A is discharged." (c) A, as surety for B, makes

a bond jointly with B to C, to secure a loan

from C to B. Afterwards, C obtains from B

a further security for the same debt. Subsequently,

C gives up the further security. A is

not discharged. (c) A, as surety for B, makes a

bond jointly with B to C, to secure a loan from

C to B. Afterwards, C obtains from B a further

security for the same debt. Subsequently,

C gives up the further security. A is not discharged."

142. Guarantee obtained by misrepresentation,

invalid.—Any guarantee which

has been obtained by means of misrepresentation

made by the creditor, or with his knowledge

and assent, concerning a material part of

the transaction, is invalid. —Any guarantee

which has been obtained by means of misrepresentation

made by the creditor, or with his

knowledge and assent, concerning a material

part of the transaction, is invalid." 143. Guarantee

obtained by concealment, invalid.—Any

guarantee which the creditor has obtained by

means of keeping silence as to a material circumstance,

is invalid. —Any guarantee which



the creditor has obtained by means of keeping

silence as to a material circumstance, is

invalid." Illustrations (a) A engages B as clerk

to collect money for him. B fails to account

for some of his receipts, and A in consequence

calls upon him to furnish security for his duly

accounting. C gives his guarantee for B’s duly

accounting. A does not acquaint C with B’s

previous conduct. B afterwards makes default.

The guarantee is invalid. (a) A engages B as

clerk to collect money for him. B fails to account

for some of his receipts, and A in consequence

calls upon him to furnish security for

his duly accounting. C gives his guarantee

for B’s duly accounting. A does not acquaint

C with B’s previous conduct. B afterwards

makes default. The guarantee is invalid." (b)

A guarantees to C payment for iron to be supplied

by him to B to the amount of 2,000 tons.

B and C have privately agreed that B should

pay five rupees per ton beyond the market

price, such excess to be applied in liquidation

of an old debt. This agreement is concealed

from A. A is not liable as a surety. (b) A guarantees

to C payment for iron to be supplied by

him to B to the amount of 2,000 tons. B and

C have privately agreed that B should pay five

rupees per ton beyond the market price, such

excess to be applied in liquidation of an old

debt. This agreement is concealed from A. A

is not liable as a surety." 144. Guarantee on

contract that creditor shall not act on it until

co-surety joins.—Where a person gives a guarantee

upon a contract that the creditor shall

not act upon it until another person has joined

in it as co-surety, the guarantee is not valid if

that other person does not join. —Where a

person gives a guarantee upon a contract that

the creditor shall not act upon it until another

person has joined in it as co-surety, the guarantee

is not valid if that other person does

not join." 145. Implied promise to indemnify

surety.—In every contract of guarantee there is

an implied promise by the principal debtor to

indemnify the surety, and the surety is entitled

to recover from the principal debtor whatever

sum he has rightfully paid under the guarantee,

but no sums which he has paid wrongfully.

—In every contract of guarantee there is an

implied promise by the principal debtor to indemnify

the surety, and the surety is entitled

to recover from the principal debtor whatever

sum he has rightfully paid under the guarantee,

but no sums which he has paid wrongfully."

Illustrations (a) B is indebted to C, and

A is surety for the debt. C demands payment

from A, and on his refusal sues him for the

amount. A defends the suit, having reasonable

grounds for doing so, but he is compelled

to pay the amount of debt with costs. He can

recover from B the amount paid by him for

costs, as well as the principal debt. (a) B is

indebted to C, and A is surety for the debt. C

demands payment from A, and on his refusal

sues him for the amount. A defends the suit,

having reasonable grounds for doing so, but he

is compelled to pay the amount of debt with

costs. He can recover from B the amount paid

by him for costs, as well as the principal debt."

(b) C lends B a sum of money, and A, at the

request of B, accepts a bill of exchange drawn

by B upon A to secure the amount. C, the

holder of the bill, demands payment of it from

A, and, on A’s refusal to pay, sues him upon

the bill. A, not having reasonable grounds for

so doing, defends the suit, and has to pay the

amount of the bill and costs. He can recover

from B the amount of the bill, but not the sum

paid for costs, as there was no real ground for

defending the action. (b) C lends B a sum

of money, and A, at the request of B, accepts

a bill of exchange drawn by B upon A to secure

the amount. C, the holder of the bill,

demands payment of it from A, and, on A’s

refusal to pay, sues him upon the bill. A, not

having reasonable grounds for so doing, defends

the suit, and has to pay the amount of

the bill and costs. He can recover from B the

amount of the bill, but not the sum paid for

costs, as there was no real ground for defending

the action." (c) A guarantees to C, to the

extent of 2,000 rupees, payment for rice to be

supplied by C to B. C supplies to B rice to

a less amount than 2,000 rupees, but obtains

from A payment of the sum of 2,000 rupees in

respect of the rice supplied. A cannot recover

from B more than the price of the rice actually

supplied. (c) A guarantees to C, to the

extent of 2,000 rupees, payment for rice to be

supplied by C to B. C supplies to B rice to



a less amount than 2,000 rupees, but obtains

from A payment of the sum of 2,000 rupees

in respect of the rice supplied. A cannot recover

from B more than the price of the rice

actually supplied." 146. Co-sureties liable to

contribute equally.—Where two or more persons

are co-sureties for the same debt or duty,

either jointly or severally, and whether under

the same or different contracts, and whether

with or without the knowledge of each other,

the co-sureties, in the absence of any contract

to the contrary, are liable, as between themselves,

to pay each an equal share of the whole

debt, or of that part of it which remains unpaid

by the principal debtor.1 —Where two

or more persons are co-sureties for the same

debt or duty, either jointly or severally, and

whether under the same or different contracts,

and whether with or without the knowledge of

each other, the co-sureties, in the absence of

any contract to the contrary, are liable, as between

themselves, to pay each an equal share

of the whole debt, or of that part of it which

remains unpaid by the principal debtor.1" Illustrations

(a) A, B and C are sureties to D

for the sum of 3,000 rupees lent to E. E makes

default in payment. A, B and C are liable, as

between themselves, to pay 1,000 rupees each.

(a) A, B and C are sureties to D for the sum

of 3,000 rupees lent to E. E makes default in

payment. A, B and C are liable, as between

themselves, to pay 1,000 rupees each." (b) A,

B and C are sureties to D for the sum of 1,000

rupees lent to E, and there is a contract between

A, B and C that A is to be responsible

to the extent of one-quarter, B to the extent of

one-quarter, and C to the extent of one-half.

E makes default in payment. As between the

sureties, A is liable to pay 250 rupees, B 250

rupees, and C 500 rupees. (b) A, B and C are

sureties to D for the sum of 1,000 rupees lent to

E, and there is a contract between A, B and C

that A is to be responsible to the extent of onequarter,

B to the extent of one-quarter, and C

to the extent of one-half. E makes default in

payment. As between the sureties, A is liable

to pay 250 rupees, B 250 rupees, and C 500

rupees." 147. Liability of co-sureties bound in

different sums.—Co-sureties who are bound in

different sums are liable to pay equally as far

as the limits of their respective obligations permit.

—Co-sureties who are bound in different

sums are liable to pay equally as far as the

limits of their respective obligations permit."

Illustrations (a) A, B and C, as sureties for D,

enter into three several bonds, each in a different

penalty, namely, A in the penalty of 10,000

rupees, B in that of 20,000 rupees, C in that

of 40,000 rupees, conditioned for D’s duly accounting

to E. D makes default to the extent

of 30,000 rupees. A, B and C are liable to pay

10,000 rupees. (a) A, B and C, as sureties for

D, enter into three several bonds, each in a

different penalty, namely, A in the penalty of

10,000 rupees, B in that of 20,000 rupees, C in

that of 40,000 rupees, conditioned for D’s duly

accounting to E. D makes default to the extent

of 30,000 rupees. A, B and C are liable to pay

10,000 rupees." (b) A, B and C, as sureties for

D, enter into three several bonds, each in a

different penalty, namely, A in the penalty of

10,000 rupees, B in that of 20,000 rupees, C in

that of 40,000 rupees, conditioned for D’s duly

accounting to E. D makes default to the extent

of 40,000 rupees. A is liable to pay 10,000 rupees,

and B and C 15,000 rupees each. (b) A,

B and C, as sureties for D, enter into three several

bonds, each in a different penalty, namely,

A in the penalty of 10,000 rupees, B in that of

20,000 rupees, C in that of 40,000 rupees, conditioned

for D’s duly accounting to E. D makes

default to the extent of 40,000 rupees. A is liable

to pay 10,000 rupees, and B and C 15,000

rupees each." (c) A, B and C, as sureties for D,

enter into three several bonds, each in a different

penalty, namely, A in the penalty of 10,000

rupees, B in that of 20,000 rupees, C in that

of 40,000 rupees, conditioned for D’s duly accounting

to E. D makes default to the extent of

70,000 rupees. A, B and C have to pay the full

penalty of his bond. (c) A, B and C, as sureties

for D, enter into three several bonds, each in

a different penalty, namely, A in the penalty

of 10,000 rupees, B in that of 20,000 rupees,

C in that of 40,000 rupees, conditioned for D’s

duly accounting to E. D makes default to the

extent of 70,000 rupees. A, B and C have to

pay the full penalty of his bond." 148. ‘Bailment’,

‘bailor’ and ‘bailee’ defined.—A ‘bailment’

is the delivery of goods by one person



to another for some purpose, upon a contract

that they shall, when the purpose is accomplished,

be returned or otherwise disposed of

according to the directions of the person delivering

them. The person delivering the goods

is called the ‘bailor’. The person to whom they

are delivered is called the ‘bailee’. —A ‘bailment’

is the delivery of goods by one person

to another for some purpose, upon a contract

that they shall, when the purpose is accomplished,

be returned or otherwise disposed of

according to the directions of the person delivering

them. The person delivering the goods is

called the ‘bailor’. The person to whom they

are delivered is called the ‘bailee’." Explanation.—If

a person is already in possession of

the goods of other contracts to hold them as

a bailee, he thereby becomes the bailee, and

the owner becomes the bailor of such goods,

although they may not have been delivered

by way of bailment. 149. Delivery to bailee

how made.—The delivery to the bailee may

be made by doing anything which has the effect

of putting the goods in the possession of

the intended bailee or of any person authorised

to hold them on his behalf. —The delivery

to the bailee may be made by doing anything

which has the effect of putting the goods in

the possession of the intended bailee or of any

person authorised to hold them on his behalf."

150. Bailor’s duty to disclose faults in goods

bailed.—The bailor is bound to disclose to the

bailee faults in the goods bailed, of which the

bailor is aware, and which materially interfere

with the use of them, or expose the bailee to

extraordinary risks; and if he does not make

such disclosure, he is responsible for damage

arising to the bailee directly from such faults.

If such goods are bailed for hire, the bailor is

responsible for such damage, whether he was

or was not aware of the existence of such faults

in the goods bailed. Illustrations (a) A lends

a horse, which he knows to be vicious, to B.

He does not disclose the fact that the horse is

vicious. The horse runs away. B is thrown and

injured. A is responsible to B for damage sustained.

(a) A lends a horse, which he knows to

be vicious, to B. He does not disclose the fact

that the horse is vicious. The horse runs away.

B is thrown and injured. A is responsible to B

for damage sustained." (b) A hires a carriage

of B. The carriage is unsafe, though B is not

aware of it, and A is injured. B is responsible

to A for the injury. (b) A hires a carriage of B.

The carriage is unsafe, though B is not aware

of it, and A is injured. B is responsible to A

for the injury." 41151. Care to be taken by

bailee.—In all cases of bailment the bailee is

bound to take as much care of the goods bailed

to him as a man of ordinary prudence would,

under similar circumstances, take of his own

goods of the same bulk, quantity and value as

the goods bailed. 42 43152. Bailee when not liable

for loss, etc., of thing bailed.—The bailee,

in the absence of any special contract, is not

responsible for the loss, destruction or deterioration

of the thing bailed, if he has taken

the amount of care of it described in section

151. 153. Termination of bailment by bailee’s

act inconsistent with conditions.—A contract

of bailment is voidable at the option of the

bailor, if the bailee does any act with regard

to the goods bailed, inconsistent with the conditions

of the bailment. Illustration A lets to

B, for hire, a horse for his own riding. B drives

the horse in his carriage. This is, at the option

of A, a termination of the bailment. A lets

to B, for hire, a horse for his own riding. B

drives the horse in his carriage. This is, at the

option of A, a termination of the bailment."

154. Liability of bailee making unauthorised

use of goods bailed.—If the bailee makes any

use of the goods bailed which is not according

to the conditions of the bailment, he is liable

to make compensation to the bailor for any

damage arising to the goods from or during

such use of them. —If the bailee makes any

use of the goods bailed which is not according

to the conditions of the bailment, he is liable

to make compensation to the bailor for any

damage arising to the goods from or during

such use of them." Illustrations (a) A lends a

horse to B for his own riding only. B allows C,

a member of his family, to ride the horse. C

rides with care, but the horse accidentally falls

and is injured. B is liable to make compensation

to A for the injury done to the horse. (a)

A lends a horse to B for his own riding only.

B allows C, a member of his family, to ride

the horse. C rides with care, but the horse



accidentally falls and is injured. B is liable to

make compensation to A for the injury done

to the horse." (b) A hires a horse in Calcutta

from B expressly to march to Banaras. A rides

with due care, but marches to Cuttack instead.

The horse accidentally falls and is injured. A

is liable to make compensation to B for the

injury to the horse. (b) A hires a horse in Calcutta

from B expressly to march to Banaras.

A rides with due care, but marches to Cuttack

instead. The horse accidentally falls and is injured.

A is liable to make compensation to B

for the injury to the horse." 155. Effect of mixture,

with bailor’s consent, of his goods with

bailee’s.—If the bailee, with the consent of the

bailor, mixes the goods of the bailor with his

own goods, the bailor and the bailee shall have

an interest, in proportion to their respective

shares, in the mixture thus produced. —If the

bailee, with the consent of the bailor, mixes

the goods of the bailor with his own goods,

the bailor and the bailee shall have an interest,

in proportion to their respective shares, in the

mixture thus produced." 155. Effect of mixture,

with bailor’s consent, of his goods with

bailee’s.—If the bailee, with the consent of the

bailor, mixes the goods of the bailor with his

own goods, the bailor and the bailee shall have

an interest, in proportion to their respective

shares, in the mixture thus produced. —If the

bailee, with the consent of the bailor, mixes

the goods of the bailor with his own goods,

the bailor and the bailee shall have an interest,

in proportion to their respective shares,

in the mixture thus produced." 156. Effect of

mixture, without bailor’s consent, when the

goods can be separated.—If the bailee, without

the consent of the bailor, mixes the goods

of the bailor with his own goods, and the goods

can be separated or divided, the property in

the goods remains in the parties respectively;

but the bailee is bound to bear the expense of

separation or division, and any damage arising

from the mixture. —If the bailee, without

the consent of the bailor, mixes the goods of

the bailor with his own goods, and the goods





from the mixture." Illustration A bails 100

bales of cotton marked with a particular mark

to B. B, without A’s consent, mixes the 100

bales with other bales of his own, bearing a

different mark; A is entitled to have his 100

bales returned, and B is bound to bear all the

expense incurred in the separation of the bales,

and any other incidental damage. A bails 100







and any other incidental damage." 156. Effect

of mixture, without bailor’s consent, when the

goods can be separated.—If the bailee, without

the consent of the bailor, mixes the goods

of the bailor with his own goods, and the goods





from the mixture. —If the bailee, without


the bailor with his own goods, and the goods





from the mixture." Illustration A bails 100







and any other incidental damage. A bails 100







and any other incidental damage." 157. Effect

of mixture, without bailor’s consent, when

the goods cannot be separated.—If the bailee,

without the consent of the bailor, mixes the

goods of the bailor with his own goods in such

a manner that it is impossible to separate the



goods bailed from the other goods and deliver

them back, the bailor is entitled to be

compensated by the bailee for the loss of the

goods. —If the bailee, without the consent

of the bailor, mixes the goods of the bailor

with his own goods in such a manner that it is

impossible to separate the goods bailed from

the other goods and deliver them back, the

bailor is entitled to be compensated by the

bailee for the loss of the goods." Illustration A

bails a barrel of Cape flour worth Rs. 45 to B.

B, without A’s consent, mixes the flour with

country flour of his own, worth only Rs. 25 a

barrel. B must compensate A for the loss of

his flour. A bails a barrel of Cape flour worth

Rs. 45 to B. B, without A’s consent, mixes

the flour with country flour of his own, worth

only Rs. 25 a barrel. B must compensate A

for the loss of his flour." 157. Effect of mixture,

without bailor’s consent, when the goods

cannot be separated.—If the bailee, without


the bailor with his own goods in such a manner

that it is impossible to separate the goods

bailed from the other goods and deliver them

back, the bailor is entitled to be compensated

by the bailee for the loss of the goods. —If

the bailee, without the consent of the bailor,

mixes the goods of the bailor with his own

goods in such a manner that it is impossible

to separate the goods bailed from the other

goods and deliver them back, the bailor is entitled

to be compensated by the bailee for the

loss of the goods." Illustration A bails a barrel

of Cape flour worth Rs. 45 to B. B, without

A’s consent, mixes the flour with country

flour of his own, worth only Rs. 25 a barrel. B

must compensate A for the loss of his flour. A

bails a barrel of Cape flour worth Rs. 45 to B.

B, without A’s consent, mixes the flour with

country flour of his own, worth only Rs. 25 a

barrel. B must compensate A for the loss of

his flour." 158. Repayment, by bailor, of necessary

expenses.—Where, by the conditions of

the bailment, the goods are to be kept or to be

carried, or to have work done upon them by

the bailee for the bailor, and the bailee is to

receive no remuneration, the bailor shall repay

to the bailee the necessary expenses incurred

by him for the purpose of the bailment.

—Where, by the conditions of the bailment,

the goods are to be kept or to be carried, or to

have work done upon them by the bailee for

the bailor, and the bailee is to receive no remuneration,

the bailor shall repay to the bailee

the necessary expenses incurred by him for the

purpose of the bailment." 159. Restoration

of goods lent gratuitously.—The lender of a

thing for use may at any time require its return,

if the loan was gratuitous, even though

he lent it for a specified time or purpose. But

if, on the faith of such loan made for a specified

time or purpose, the borrower has acted

in such a manner that the return of the thing

lent before the time agreed upon would cause

him loss exceeding the benefit actually derived

by him from the loan, the lender must, if he

compels the return, indemnify the borrower

for the amount in which the loss so occasioned

exceeds the benefit so derived. —The lender

of a thing for use may at any time require its

return, if the loan was gratuitous, even though

he lent it for a specified time or purpose. But

if, on the faith of such loan made for a specified

time or purpose, the borrower has acted

in such a manner that the return of the thing

lent before the time agreed upon would cause

him loss exceeding the benefit actually derived

by him from the loan, the lender must, if he

compels the return, indemnify the borrower

for the amount in which the loss so occasioned

exceeds the benefit so derived." 160. Return of

goods bailed, on expiration of time or accomplishment

of purpose.—It is the duty of the

bailee to return, or deliver according to the

bailor’s directions, the goods bailed, without

demand, as soon as the time for which they

were bailed has expired, or the purpose for

which they were bailed has been accomplished.

—It is the duty of the bailee to return, or deliver

according to the bailor’s directions, the

goods bailed, without demand, as soon as the

time for which they were bailed has expired,

or the purpose for which they were bailed has

been accomplished." 44161. Bailee’s responsibility

when goods are not duly returned.—If

by the fault of the bailee, the goods are not

returned, delivered or tendered at the proper

time, he is responsible to the bailor for any

loss, destruction or deterioration of the goods



from that time. 45 46161. Bailee’s responsibility

when goods are not duly returned.—If

by the fault of the bailee, the goods are not

returned, delivered or tendered at the proper

time, he is responsible to the bailor for any

loss, destruction or deterioration of the goods

from that time. 47 162. Termination of gratuitous

bailment by death.—A gratuitous bailment

is terminated by the death either of the

bailor or of the bailee. —A gratuitous bailment

is terminated by the death either of the

bailor or of the bailee." 163. Bailor entitled

to increase or profit from goods bailed.—In

the absence of any contract to the contrary,

the bailee is bound to deliver to the bailor,

or according to his directions, any increase or

profit which may have accrued from the goods

bailed. —In the absence of any contract to the

contrary, the bailee is bound to deliver to the

bailor, or according to his directions, any increase

or profit which may have accrued from

the goods bailed." Illustration A leaves a cow

in the custody of B to be taken care of. The

cow has a calf. B is bound to deliver the calf

as well as the cow to A. A leaves a cow in the

custody of B to be taken care of. The cow has

a calf. B is bound to deliver the calf as well as

the cow to A." 164. Bailor’s responsibility to

bailee.—The bailor is responsible to the bailee

for any loss which the bailee may sustain by

reason that the bailor was not entitled to make

the bailment, or to receive back the goods,

or to give directions respecting them. —The

bailor is responsible to the bailee for any loss

which the bailee may sustain by reason that

the bailor was not entitled to make the bailment,

or to receive back the goods, or to give

directions respecting them." 164. Bailor’s responsibility

to bailee.—The bailor is responsible

to the bailee for any loss which the bailee

may sustain by reason that the bailor was not

entitled to make the bailment, or to receive

back the goods, or to give directions respecting

them. —The bailor is responsible to the bailee

for any loss which the bailee may sustain by

reason that the bailor was not entitled to make

the bailment, or to receive back the goods, or

to give directions respecting them." 165. Bailment

by several joint owners.—If several joint

owners of goods bail them, the bailee may deliver

them back to, or according to the directions

of, one joint owner without the consent of

all in the absence of any agreement to the contrary.

—If several joint owners of goods bail

them, the bailee may deliver them back to, or

according to the directions of, one joint owner

without the consent of all in the absence of any

agreement to the contrary." 166. Bailee not

responsible on re-delivery to bailor without title.—If

the bailor has no title to the goods, and

the bailee, in good faith, delivers them back to,

or according to the directions of, the bailor,

the bailee is not responsible to the owner in

respect of such delivery. 48 167. Right of

third person claiming goods bailed.—If a person,

other than the bailor, claims goods bailed

he may apply to the Court to stop delivery of

the goods to the bailor, and to decide the title

to the goods. —If a person, other than the

bailor, claims goods bailed he may apply to

the Court to stop delivery of the goods to the

bailor, and to decide the title to the goods."

168. Right of finder of goods, may sue for specific

reward offered.—The finder of goods has

no right to sue the owner for compensation

for trouble and expense voluntarily incurred

by him to preserve the goods and to find out

the owner; but he may retain the goods against

the owner until he receives such compensation;

and where the owner has offered a specific reward

for the return of goods lost, the finder

may sue for such reward, and may retain the

goods until he receives it. —The finder of

goods has no right to sue the owner for compensation

for trouble and expense voluntarily

incurred by him to preserve the goods and

to find out the owner; but he may retain the

goods against the owner until he receives such

compensation; and where the owner has offered

a specific reward for the return of goods

lost, the finder may sue for such reward, and

may retain the goods until he receives it." 169.

When finder of thing commonly on sale may

sell it.—When a thing which is commonly the

subject of sale is lost, if the owner cannot with

reasonable diligence be found, or if he refuses

upon demand, to pay the lawful charges of the

finder, the finder may sell it— —When a thing

which is commonly the subject of sale is lost,

if the owner cannot with reasonable diligence



be found, or if he refuses upon demand, to

pay the lawful charges of the finder, the finder

may sell it—" (1) when the thing is in danger

of perishing or of losing the greater part of

its value, or (2) when the lawful charges of the

finder, in respect of the thing found, amount to

two-thirds of its value. 170. Bailee’s particular

lien.—Where the bailee has, in accordance

with the purpose of the bailment, rendered any

service involving the exercise of labour or skill

in respect of the goods bailed, he has, in the

absence of a contract to the contrary, a right

to retain such goods until he receives due remuneration

for the services he has rendered in

respect of them. Illustrations (a) A delivers

a rough diamond to B, a jeweller, to be cut

and polished, which is accordingly done. B is

entitled to retain the stone till he is paid for

the services he has rendered. (a) A delivers a

rough diamond to B, a jeweller, to be cut and

polished, which is accordingly done. B is entitled

to retain the stone till he is paid for the

services he has rendered." (b) A gives cloth to

B, a tailor, to make into a coat. B promises A

to deliver the coat as soon as it is finished, and

to give a three months credit for the price. B is

not entitled to retain the coat until he is paid.

(b) A gives cloth to B, a tailor, to make into a

coat. B promises A to deliver the coat as soon

as it is finished, and to give a three months

credit for the price. B is not entitled to retain

the coat until he is paid." 170. Bailee’s particular

lien.—Where the bailee has, in accordance

with the purpose of the bailment, rendered any

service involving the exercise of labour or skill

in respect of the goods bailed, he has, in the

absence of a contract to the contrary, a right

to retain such goods until he receives due remuneration

for the services he has rendered in

respect of them. Illustrations (a) A delivers


and polished, which is accordingly done. B is

entitled to retain the stone till he is paid for

the services he has rendered. (a) A delivers


and polished, which is accordingly done. B

is entitled to retain the stone till he is paid

for the services he has rendered." (b) A gives

cloth to B, a tailor, to make into a coat. B

promises A to deliver the coat as soon as it

is finished, and to give a three months credit

for the price. B is not entitled to retain the

coat until he is paid. (b) A gives cloth to B,

a tailor, to make into a coat. B promises A to

deliver the coat as soon as it is finished, and to

give a three months credit for the price. B is

not entitled to retain the coat until he is paid."

171. General lien of bankers, factors, wharfingers,

attorneys and policy-brokers.—Bankers,

factors, wharfingers, attorneys of a High Court

and policy-brokers may, in the absence of a

contract to the contrary, retain as a security

for a general balance of account, any goods

bailed to them; but no other persons have a

right to retain, as a security for such balance,

goods bailed to them, unless there is an express

contract to that effect.1 —Bankers, factors,

wharfingers, attorneys of a High Court

and policy-brokers may, in the absence of a

contract to the contrary, retain as a security

for a general balance of account, any goods

bailed to them; but no other persons have a

right to retain, as a security for such balance,

goods bailed to them, unless there is an express

contract to that effect.1" 172. ‘Pledge’,

‘pawnor’ and ‘pawnee’ defined.—The bailment

of goods as security for payment of a debt

or performance of a promise is called ‘pledge’.

The bailor is in this case called the ‘pawnor’.

The bailee is called ‘pawnee’. —The bailment

of goods as security for payment of a debt

or performance of a promise is called ‘pledge’.

The bailor is in this case called the ‘pawnor’.

The bailee is called ‘pawnee’." 173. Pawnee’s

right of retainer.—The pawnee may retain the

goods pledged, not only for payment of the

debt or the performance of the promise, but

for the interests of the debt, and all necessary

expenses incurred by him in respect of the

possession or for the preservation of the goods

pledged. —The pawnee may retain the goods

pledged, not only for payment of the debt or

the performance of the promise, but for the interests

of the debt, and all necessary expenses

incurred by him in respect of the possession

or for the preservation of the goods pledged."

173. Pawnee’s right of retainer.—The pawnee

may retain the goods pledged, not only for

payment of the debt or the performance of

the promise, but for the interests of the debt,



and all necessary expenses incurred by him

in respect of the possession or for the preservation

of the goods pledged. —The pawnee

may retain the goods pledged, not only for

payment of the debt or the performance of

the promise, but for the interests of the debt,

and all necessary expenses incurred by him

in respect of the possession or for the preservation

of the goods pledged." 174. Pawnee

not to retain for debt or promise other than

that for which goods pledged. Presumption

in case of subsequent advances.—The pawnee

shall not, in the absence of a contract to that

effect, retain the goods pledged for any debt

or promise other than the debt or promise for

which they are pledged; but such contract, in

the absence of anything to the contrary, shall

be presumed in regard to subsequent advances

made by the pawnee. —The pawnee shall

not, in the absence of a contract to that effect,

retain the goods pledged for any debt or

promise other than the debt or promise for

which they are pledged; but such contract, in

the absence of anything to the contrary, shall

be presumed in regard to subsequent advances

made by the pawnee." 175. Pawnee’s right

as to extraordinary expenses incurred.—The

pawnee is entitled to receive from the pawnor

extraordinary expenses incurred by him for

the preservation of the goods pledged. —The

pawnee is entitled to receive from the pawnor

extraordinary expenses incurred by him for

the preservation of the goods pledged." 175.

Pawnee’s right as to extraordinary expenses

incurred.—The pawnee is entitled to receive

from the pawnor extraordinary expenses incurred

by him for the preservation of the goods

pledged. —The pawnee is entitled to receive

from the pawnor extraordinary expenses incurred

by him for the preservation of the goods

pledged." 176. Pawnee’s right where pawnor

makes default.—If the pawnor makes default

in payment of the debt, or performance; at

the stipulated time or the promise, in respect

of which the goods were pledged, the pawnee

may bring a suit against the pawnor upon the

debt or promise, and retain the goods pledged

as a collateral security; or he may sell the thing

pledged, on giving the pawnor reasonable notice

of the sale. —If the pawnor makes default

in payment of the debt, or performance;

at the stipulated time or the promise, in respect

of which the goods were pledged, the

pawnee may bring a suit against the pawnor

upon the debt or promise, and retain the goods

pledged as a collateral security; or he may sell

the thing pledged, on giving the pawnor reasonable

notice of the sale." If the proceeds of

such sale are less than the amount due in respect

of the debt or promise, the pawnor is

still liable to pay the balance. If the proceeds

of the sale are greater than the amount so due,

the pawnee shall pay over the surplus to the

pawnor. 176. Pawnee’s right where pawnor

makes default.—If the pawnor makes default

in payment of the debt, or performance; at

the stipulated time or the promise, in respect

of which the goods were pledged, the pawnee

may bring a suit against the pawnor upon the

debt or promise, and retain the goods pledged

as a collateral security; or he may sell the thing

pledged, on giving the pawnor reasonable notice

of the sale. —If the pawnor makes default

in payment of the debt, or performance;

at the stipulated time or the promise, in respect

of which the goods were pledged, the

pawnee may bring a suit against the pawnor

upon the debt or promise, and retain the goods

pledged as a collateral security; or he may sell

the thing pledged, on giving the pawnor reasonable

notice of the sale." If the proceeds of

such sale are less than the amount due in respect

of the debt or promise, the pawnor is

still liable to pay the balance. If the proceeds

of the sale are greater than the amount so due,

the pawnee shall pay over the surplus to the

pawnor. 177. Defaulting pawnor’s right to redeem.—If

a time is stipulated for the payment

of the debt, or performance of the promise,

for which the pledge is made, and the pawnor

makes default in payment of the debt or performance

of the promise at the stipulated time,

he may redeem the goods pledged at any subsequent

time before the actual sale of them1,

but he must, in that case, pay, in addition,

any expenses which have arisen from his default.

177. Defaulting pawnor’s right to redeem.—If

a time is stipulated for the payment

of the debt, or performance of the promise,

for which the pledge is made, and the pawnor



makes default in payment of the debt or performance

of the promise at the stipulated time,

he may redeem the goods pledged at any subsequent

time before the actual sale of them1,

but he must, in that case, pay, in addition, any

expenses which have arisen from his default.

1[178. Pledge by mercantile agent.—Where a

mercantile agent is, with the consent of the

owner, in possession of goods or the document

of title to goods, any pledge made by him,

when acting in the ordinary course of business

of a mercantile agent, shall be as valid as

if he were expressly authorised by the owner

of the goods to make the same; provided that

the pawnee acts in good faith and has not at

the time of the pledge notice that the pawnor

has not authority to pledge. Explanation.—In

this section, the expressions ‘mercantile agent’

and ‘documents of title’ shall have the meanings

assigned to them in the Indian Sale of

Goods Act, 1930 (3 of 1930).] 53 [178A. Pledge

by person in possession under voidable contract.—When

the pawnor has obtained possession

of the goods pledged by him under a

contract voidable under section 19 or section

19A, but the contract has not been rescinded

at the time of the pledge, the pawnee acquires

a good title to the goods, provided he acts in

good faith and without notice of the pawnor’s

defect of title.] 179. Pledge where pawnor

has only a limited interest.—Where a person

pledges goods in which he has only a limited

interest, the pledge is valid to the extent of

that interest. —Where a person pledges goods

in which he has only a limited interest, the

pledge is valid to the extent of that interest."

180. Suit by bailor or bailee against wrongdoer.—If

a third person wrongfully deprives

the bailee of the use of possession of the goods

bailed, or does them any injury, the bailee

is entitled to use such remedies as the owner

might have used in the like case if no bailment

had been made; and either the bailor or the

bailee may bring a suit against a third person

for such deprivation or injury. —If a third person

wrongfully deprives the bailee of the use of

possession of the goods bailed, or does them

any injury, the bailee is entitled to use such

remedies as the owner might have used in the

like case if no bailment had been made; and

either the bailor or the bailee may bring a suit

against a third person for such deprivation or

injury." 181. Apportionment of relief or compensation

obtained by such suits.—Whatever

is obtained by way of relief or compensation

in any such suit shall, as between the bailor

and the bailee, be dealt with according to

their respective interests. —Whatever is obtained

by way of relief or compensation in any

such suit shall, as between the bailor and the

bailee, be dealt with according to their respective

interests." 182. ‘Agent’ and ‘principal’ defined.—An

‘agent’ is a person employed to do

any act for another, or to represent another

in dealings with third person. The person for

whom such act is done, or who is so represented,

is called the ‘principal’. —An ‘agent’

is a person employed to do any act for another,

or to represent another in dealings with third

person. The person for whom such act is done,

or who is so represented, is called the ‘principal’."

183. Who may employ agent.—Any person

who is of the age of majority according

to the law to which he is subject, and who is

of sound mind, may employ an agent. —Any

person who is of the age of majority according

to the law to which he is subject, and who

is of sound mind, may employ an agent." 184.

Who may be an agent.—As between the principal

and third person any person may become

an agent, but no person who is not of the age

of majority and of sound mind can become an

agent, so as to be responsible to his principle

according to the provisions in that behalf

herein contained. —As between the principal

and third person any person may become an

agent, but no person who is not of the age of

majority and of sound mind can become an

agent, so as to be responsible to his principle

according to the provisions in that behalf

herein contained." 185. Consideration not necessary.—No

consideration is necessary to create

an agency. —No consideration is necessary

to create an agency." 186. Agent’s authority

may be expressed or implied.—The authority

of an agent may be expressed or implied. 54

186. Agent’s authority may be expressed or

implied.—The authority of an agent may be

expressed or implied. 55 187. Definitions of

express and implied authority.—An authority



is said to be express when it is given by words

spoken or written. An authority is said to be

implied when it is to be inferred from the circumstances

of the case; and things spoken or

written, or the ordinary course of dealing, may

be accounted circumstances of the case. —An

authority is said to be express when it is given

by words spoken or written. An authority is

said to be implied when it is to be inferred

from the circumstances of the case; and things

spoken or written, or the ordinary course of

dealing, may be accounted circumstances of

the case." Illustration A owns a shop in Serampor,

living himself in Calcutta, and visiting

the shop occasionally. The shop is managed

by B, and he is in the habit of ordering goods

from C in the name of A for the purposes of

the shop, and of paying for them out of A’s

funds with A’s knowledge. B has an implied

authority from A to order goods from C in

the name of A for the purposes of the shop.

A owns a shop in Serampor, living himself in

Calcutta, and visiting the shop occasionally.

The shop is managed by B, and he is in the

habit of ordering goods from C in the name

of A for the purposes of the shop, and of paying

for them out of A’s funds with A’s knowledge.

B has an implied authority from A to

order goods from C in the name of A for the

purposes of the shop." 188. Extent of agent’s

authority.—An agent having an authority to

do an act has authority to do every lawful

thing which is necessary in order to do such

act. —An agent having an authority to do

an act has authority to do every lawful thing

which is necessary in order to do such act." An

agent having an authority to carry on a business,

has authority to do every lawful thing

necessary for the purpose, or usually done in

the course, of conducting such business. Illustrations

(a) A is employed by B, residing in

London, to recover at Bombay a debt due to

B. A may adopt any legal process necessary for

the purpose of recovering the debt, and may

give a valid discharge for the same. (a) A is

employed by B, residing in London, to recover

at Bombay a debt due to B. A may adopt any

legal process necessary for the purpose of recovering

the debt, and may give a valid discharge

for the same." (b) A constitutes B his

agent to carry on his business of a ship-builder.

B may purchase timber and other materials,

and hire workmen, for the purpose of carrying

on the business. (b) A constitutes B his




on the business." 188. Extent of agent’s

authority.—An agent having an authority to

do an act has authority to do every lawful

thing which is necessary in order to do such

act. —An agent having an authority to do

an act has authority to do every lawful thing

which is necessary in order to do such act." An

agent having an authority to carry on a business,

has authority to do every lawful thing

necessary for the purpose, or usually done in

the course, of conducting such business. Illustrations

(a) A is employed by B, residing in

London, to recover at Bombay a debt due to

B. A may adopt any legal process necessary for

the purpose of recovering the debt, and may

give a valid discharge for the same. (a) A is

employed by B, residing in London, to recover

at Bombay a debt due to B. A may adopt any

legal process necessary for the purpose of recovering

the debt, and may give a valid discharge

for the same." (b) A constitutes B his




on the business. (b) A constitutes B his




on the business." 189. Agent’s authority in

an emergency.—An agent has authority, in an

emergency, to do all such acts for the purpose

of protecting his principal from loss as would

be done by a person of ordinary prudence,

in his own case under similar circumstances.

—An agent has authority, in an emergency, to

do all such acts for the purpose of protecting

his principal from loss as would be done by a

person of ordinary prudence, in his own case

under similar circumstances." Illustrations (a)

An agent for sale may have goods repaired if it

be necessary. (a) An agent for sale may have

goods repaired if it be necessary." (b) A consigns

provisions to B at Calcutta, with direc-



tions to send them immediately to C, at Cuttack.

B may sell the provisions at Calcutta,

if they will not bear the journey to Cuttack

without spoiling. (b) A consigns provisions to

B at Calcutta, with directions to send them

immediately to C, at Cuttack. B may sell the

provisions at Calcutta, if they will not bear

the journey to Cuttack without spoiling." 189.

Agent’s authority in an emergency.—An agent

has authority, in an emergency, to do all such

acts for the purpose of protecting his principal

from loss as would be done by a person of

ordinary prudence, in his own case under similar

circumstances. —An agent has authority,

in an emergency, to do all such acts for

the purpose of protecting his principal from

loss as would be done by a person of ordinary

prudence, in his own case under similar

circumstances." Illustrations (a) An agent for

sale may have goods repaired if it be necessary.

(a) An agent for sale may have goods repaired

if it be necessary." (b) A consigns provisions

to B at Calcutta, with directions to send

them immediately to C, at Cuttack. B may

sell the provisions at Calcutta, if they will not

bear the journey to Cuttack without spoiling.

(b) A consigns provisions to B at Calcutta,

with directions to send them immediately to

C, at Cuttack. B may sell the provisions at

Calcutta, if they will not bear the journey to

Cuttack without spoiling." 190. When agent

cannot delegate.—An agent cannot lawfully

employ another to perform acts which he has

expressly or impliedly undertaken to perform

personally, unless by the ordinary custom of

trade a sub-agent may, or, from the nature of

the agency, a sub-agent must, be employed.

—An agent cannot lawfully employ another

to perform acts which he has expressly or impliedly

undertaken to perform personally, unless

by the ordinary custom of trade a subagent

may, or, from the nature of the agency,

a sub-agent must, be employed." 191. ‘Subagent’

defined.—A ‘sub-agent’ is a person employed

by, and acting under the control of, the

original agent in the business of the agency.

—A ‘sub-agent’ is a person employed by, and

acting under the control of, the original agent

in the business of the agency." 192. Representation

of principal by sub-agent properly

appointed—Where a sub-agent is properly appointed,

the principal is, so far as regards third

persons, represented by the sub-agent, and is

bound by and responsible for his acts, as if

he were an agent originally appointed by the

principal. —Where a sub-agent is properly

appointed, the principal is, so far as regards

third persons, represented by the sub-agent,

and is bound by and responsible for his acts,

as if he were an agent originally appointed by

the principal." Agent’s responsibility for subagent.—The

agent is responsible to the principal

for the acts of the sub-agent. —The

agent is responsible to the principal for the

acts of the sub-agent." Sub-agent’s responsibility.—The

sub-agent is responsible for his acts

to the agent, but not to the principal, except

in cases of fraud or wilful wrong. —The subagent

is responsible for his acts to the agent,

but not to the principal, except in cases of

fraud or wilful wrong." 193. Agent’s responsibility

for sub-agent appointed without authority.—Where

an agent, without having authority

to do so, has appointed a person to

act as a sub-agent, the agent stands towards

such person in the relation of a principal to an

agent, and is responsible for his acts both to

the principal and to third persons; the principal

is not represented by or responsible for

the acts of the person so employed, nor is that

person responsible to the principal. —Where

an agent, without having authority to do so,

has appointed a person to act as a sub-agent,

the agent stands towards such person in the

relation of a principal to an agent, and is responsible

for his acts both to the principal and

to third persons; the principal is not represented

by or responsible for the acts of the

person so employed, nor is that person responsible

to the principal." 193. Agent’s responsibility

for sub-agent appointed without

authority.—Where an agent, without having

authority to do so, has appointed a person

to act as a sub-agent, the agent stands towards

such person in the relation of a principal

to an agent, and is responsible for his

acts both to the principal and to third persons;

the principal is not represented by or responsible

for the acts of the person so employed,

nor is that person responsible to the principal.



—Where an agent, without having authority

to do so, has appointed a person to act as a

sub-agent, the agent stands towards such person

in the relation of a principal to an agent,

and is responsible for his acts both to the principal

and to third persons; the principal is not

represented by or responsible for the acts of

the person so employed, nor is that person responsible

to the principal." 194. Relation between

principal and person duly appointed by

agent to act in business of agency.—Where an

agent, holding an express or implied authority

to name another person to act for the principal

in the business of the agency, has named

another person accordingly, such person is not

a sub-agent, but an agent of the principal for

such part of the business of the agency as is entrusted

to him. —Where an agent, holding an

express or implied authority to name another

person to act for the principal in the business

of the agency, has named another person accordingly,

such person is not a sub-agent, but

an agent of the principal for such part of the

business of the agency as is entrusted to him."

Illustrations (a) A directs B, his solicitor, to

sell his estate by auction, and to employ an

auctioneer for the purpose. B names C, an

auctioneer, to conduct the sale. C is not a subagent,

but is A’s agent for the conduct of the

sale. (b) A authorizes B, a merchant in Calcutta,

to recover the moneys due to A from C

& Co. B instructs D, a solicitor, to take legal

proceedings against C & Co. for the recovery

of the money. D is not a sub-agent, but

is solicitor for A. 195. Agent’s duty in naming

such person.—In selecting such agent for

his principal, an agent is bound to exercise the

same amount of discretion as a man of ordinary

prudence would exercise in his own case;

and, if he does this, he is not responsible to

the principal for the acts or negligence of the

agent so selected. —In selecting such agent

for his principal, an agent is bound to exercise

the same amount of discretion as a man

of ordinary prudence would exercise in his own

case; and, if he does this, he is not responsible

to the principal for the acts or negligence of

the agent so selected." Illustrations (a) A instructs

B, a merchant, to buy a ship for him.

B employs a ship-surveyor of good reputation

to choose a ship for A. The surveyor makes

the choice negligently and the ship turns out

to be unseaworthy and is lost. B is not, but

the surveyor is, responsible to A. (a) A instructs

B, a merchant, to buy a ship for him.

B employs a ship-surveyor of good reputation

to choose a ship for A. The surveyor makes

the choice negligently and the ship turns out

to be unseaworthy and is lost. B is not, but the

surveyor is, responsible to A." (b) A consigns

goods to B, a merchant, for sale. B, in due

course, employs an auctioneer in good credit

to sell the goods of A, and allows the auctioneer

to receive the proceeds of the sale. The

auctioneer afterwards becomes insolvent without

having accounted for the proceeds. B is

not responsible to A for the proceeds. (b) A

consigns goods to B, a merchant, for sale. B,

in due course, employs an auctioneer in good

credit to sell the goods of A, and allows the

auctioneer to receive the proceeds of the sale.

The auctioneer afterwards becomes insolvent

without having accounted for the proceeds. B

is not responsible to A for the proceeds." 195.

Agent’s duty in naming such person.—In selecting

such agent for his principal, an agent

is bound to exercise the same amount of discretion

as a man of ordinary prudence would

exercise in his own case; and, if he does this, he

is not responsible to the principal for the acts

or negligence of the agent so selected. —In selecting

such agent for his principal, an agent

is bound to exercise the same amount of discretion

as a man of ordinary prudence would

exercise in his own case; and, if he does this,

he is not responsible to the principal for the

acts or negligence of the agent so selected." Illustrations

(a) A instructs B, a merchant, to

buy a ship for him. B employs a ship-surveyor

of good reputation to choose a ship for A. The

surveyor makes the choice negligently and the

ship turns out to be unseaworthy and is lost.

B is not, but the surveyor is, responsible to

A. (a) A instructs B, a merchant, to buy a

ship for him. B employs a ship-surveyor of

good reputation to choose a ship for A. The

surveyor makes the choice negligently and the

ship turns out to be unseaworthy and is lost.

B is not, but the surveyor is, responsible to

A." (b) A consigns goods to B, a merchant,



for sale. B, in due course, employs an auctioneer

in good credit to sell the goods of A,

and allows the auctioneer to receive the proceeds

of the sale. The auctioneer afterwards

becomes insolvent without having accounted

for the proceeds. B is not responsible to A

for the proceeds. (b) A consigns goods to B,

a merchant, for sale. B, in due course, employs

an auctioneer in good credit to sell the

goods of A, and allows the auctioneer to receive

the proceeds of the sale. The auctioneer

afterwards becomes insolvent without having

accounted for the proceeds. B is not responsible

to A for the proceeds." 196. Right of person

as to acts done for him without his authority.

Effect of ratification.—Where acts are done by

one person on behalf of another, but without

his knowledge or authority, he may elect to

ratify or to disown such acts. If he ratify them,

the same effects will follow as if they had been

performed by his authority. —Where acts are

done by one person on behalf of another, but

without his knowledge or authority, he may

elect to ratify or to disown such acts. If he ratify

them, the same effects will follow as if they

had been performed by his authority." 196.

Right of person as to acts done for him without

his authority. Effect of ratification.—Where

acts are done by one person on behalf of another,

but without his knowledge or authority,

he may elect to ratify or to disown such acts.

If he ratify them, the same effects will follow

as if they had been performed by his authority.

—Where acts are done by one person on behalf

of another, but without his knowledge or

authority, he may elect to ratify or to disown

such acts. If he ratify them, the same effects

will follow as if they had been performed by his

authority." 197. Ratification may be expressed

or implied.—Ratification may be expressed or

may be implied in the conduct of the person

on whose behalf the acts are done. —Ratification

may be expressed or may be implied in the

conduct of the person on whose behalf the acts

are done." Illustrations (a) A, without authority,

buys goods for B. Afterwards B sells them

to C on his own account; B’s conduct implies

a ratification of the purchase made for him

by A. (a) A, without authority, buys goods

for B. Afterwards B sells them to C on his

own account; B’s conduct implies a ratification

of the purchase made for him by A." (b)

A, without B’s authority, lends B’s money to

C. Afterwards B accepts interest on the money

from C. B’s conduct implies a ratification of

the loan. (b) A, without B’s authority, lends

B’s money to C. Afterwards B accepts interest

on the money from C. B’s conduct implies a

ratification of the loan." 198. Knowledge requisite

for valid ratification.—No valid ratification

can be made by a person whose knowledge

of the facts of the case is materially defective.

—No valid ratification can be made

by a person whose knowledge of the facts of

the case is materially defective." 199. Effect

of ratifying unauthorized act forming part of a

transaction.—A person ratifying any unauthorized

act done on his behalf ratifies the whole

of the transaction of which such act formed a

part. —A person ratifying any unauthorized

act done on his behalf ratifies the whole of the

transaction of which such act formed a part."

200. Ratification of unauthorized act cannot

injure third person—An act done by one person

on behalf of another, without such other

person’s authority, which, if done with authority

would have the effect of subjecting a third

person to damages, or of terminating any right

or interest of a third person, cannot, by ratification,

be made to have such effect. —An

act done by one person on behalf of another,

without such other person’s authority, which,

if done with authority would have the effect

of subjecting a third person to damages, or of

terminating any right or interest of a third person,

cannot, by ratification, be made to have

such effect." Illustrations (a) A, not being authorized

thereto by B, demands, on behalf of

B, the delivery of a chattel, the property of B,

from C who is in possession of it. This demand

cannot be ratified by B, so as to make C liable

for damages for his refusal to deliver. (a) A,

not being authorized thereto by B, demands,

on behalf of B, the delivery of a chattel, the

property of B, from C who is in possession of

it. This demand cannot be ratified by B, so

as to make C liable for damages for his refusal

to deliver." (b) A holds a lease from B, terminable

on three months’ notice. C, an unauthorized

person, gives notice of termination to



A. The notice cannot be ratified by B, so as

to be binding on A. (b) A holds a lease from

B, terminable on three months’ notice. C, an

unauthorized person, gives notice of termination

to A. The notice cannot be ratified by

B, so as to be binding on A." 201. Termination

of agency.—An agency is terminated by

the principal revoking his authority, or by the

agent renouncing the business of the agency;

or by the business of the agency being completed;

or by either the principal or agent dying

or becoming of unsound mind; or by the

principal being adjudicated an insolvent under

the provisions of any Act for the time being in

force for the relief of insolvent debtors. —An

agency is terminated by the principal revoking

his authority, or by the agent renouncing

the business of the agency; or by the business

of the agency being completed; or by either

the principal or agent dying or becoming of

unsound mind; or by the principal being adjudicated

an insolvent under the provisions of

any Act for the time being in force for the relief

of insolvent debtors." 202. Termination of

agency, where agent has an interest in subjectmatter.—Where

the agent has himself an interest

in the property which forms the subjectmatter

of the agency, the agency cannot, in the

absence of an express contract, be terminated

to the prejudice of such interest. —Where the

agent has himself an interest in the property

which forms the subject-matter of the agency,

the agency cannot, in the absence of an express

contract, be terminated to the prejudice

of such interest." Illustrations (a) A gives authority

to B to sell A’s land, and to pay himself,

out of the proceeds, the debts due to him

from A. A cannot revoke this authority, nor

can it be terminated by his insanity or death.

(a) A gives authority to B to sell A’s land,

and to pay himself, out of the proceeds, the

debts due to him from A. A cannot revoke this

authority, nor can it be terminated by his insanity

or death." (b) A consigns 1,000 bales of

cotton to B, who has made advances to him

on such cotton, and desires B to sell the cotton,

and to repay himself out of the price the

amount of his own advances. A cannot revoke

this authority, nor is it terminated by his insanity

or death. (b) A consigns 1,000 bales of

cotton to B, who has made advances to him

on such cotton, and desires B to sell the cotton,

and to repay himself out of the price the

amount of his own advances. A cannot revoke

this authority, nor is it terminated by

his insanity or death." 203. When principal

may revoke agent’s authority—The pricnipal

may, save as is otherwise provided by the last

preceding section, revoke the authority given

to his agent at any time before the authority

has been exercised so as to bind the principal.

—The pricnipal may, save as is otherwise

provided by the last preceding section, revoke

the authority given to his agent at any time

before the authority has been exercised so as

to bind the principal." 203. When principal

may revoke agent’s authority—The pricnipal

may, save as is otherwise provided by the last

preceding section, revoke the authority given

to his agent at any time before the authority

has been exercised so as to bind the principal.

—The pricnipal may, save as is otherwise provided

by the last preceding section, revoke the

authority given to his agent at any time before

the authority has been exercised so as to bind

the principal." 204. Revocation where authority

has been partly exercised.—The principal

cannot revoke the authority given to his agent

after the authority has been partly exercised,

so far as regards such acts and obligations as

arise from acts already done in the agency.

—The principal cannot revoke the authority

given to his agent after the authority has been

partly exercised, so far as regards such acts

and obligations as arise from acts already done

in the agency." Illustrations (a) A authorizes

B to buy 1,000 bales of cotton on account of

A and to pay for it out of A’s moneys remaining

in B’s hands. B buys 1,000 bales of cotton

in his own name, so as to make himself personally

liable for the price. A cannot revoke

B’s authroty so far as regards payment for the

cotton. (a) A authorizes B to buy 1,000 bales

of cotton on account of A and to pay for it out

of A’s moneys remaining in B’s hands. B buys

1,000 bales of cotton in his own name, so as to

make himself personally liable for the price. A

cannot revoke B’s authroty so far as regards

payment for the cotton." (b) A authorizes B

to buy 1,000 bales of cotton on account of A,



and to pay for it out of A’s money remaining

in B’s hands. B buys 1,000 bales of cotton in

A’s name, and so as not to render himself personally

liable for the price. A can revoke B’s

authority to pay for the cotton. (b) A authorizes

B to buy 1,000 bales of cotton on account

of A, and to pay for it out of A’s money remaining

in B’s hands. B buys 1,000 bales of

cotton in A’s name, and so as not to render

himself personally liable for the price. A can

revoke B’s authority to pay for the cotton."

205. Compensation for revocation by principal,

or renunciation by agent.—Where there is

an express or implied contract that the agency

should be continued for any period of time,

the principal must make compensation to the

agent, or the agent to the principal, as the case

may be, for any previous revocation or renunciation

of the agency without sufficient cause.

—Where there is an express or implied contract

that the agency should be continued for

any period of time, the principal must make

compensation to the agent, or the agent to the

principal, as the case may be, for any previous

revocation or renunciation of the agency

without sufficient cause." 206. Notice of revocation

or renunciation.—Reasonable notice

must be given of such revocation or renunciation,

otherwise the damage thereby resulting

to the principal or the agent, as the case

may be, must be made good to the one by the

other. —Reasonable notice must be given of

such revocation or renunciation, otherwise the

damage thereby resulting to the principal or

the agent, as the case may be, must be made

good to the one by the other." 207. Revocation

and renunciation may be expressed or

implied.—Revocation or renunciation may be

expressed or may be implied in the conduct

of that principal or agent respectively. —Revocation

or renunciation may be expressed or

may be implied in the conduct of that principal

or agent respectively." Illustration A empowers

B to let A’s house. Afterwards A lets

it himself. This is an implied revocation of B’s

authority. A empowers B to let A’s house. Afterwards

A lets it himself. This is an implied

revocation of B’s authority." 208. When termination

of agent’s authority takes effect as

to agent, and as to third persons.—The termination

of the authority of an agent does not,

so far as regards the agent, take effect before

it becomes known to him, or, so far as regards

third persons, before it becomes known

to them. —The termination of the authority

of an agent does not, so far as regards the

agent, take effect before it becomes known to

him, or, so far as regards third persons, before

it becomes known to them." Illustrations (a) A

directs B to sell goods for him, and agrees to

give B five per cent. commission on the price

fetched by the goods. A afterwards by letter,

revokes B’s authority. B after the letter is sent,

but before he receives it, sells the goods for 100

rupees. The sale is binding on A, and B is entitled

to five rupees as his commission. (a) A

directs B to sell goods for him, and agrees to

give B five per cent. commission on the price

fetched by the goods. A afterwards by letter,

revokes B’s authority. B after the letter is

sent, but before he receives it, sells the goods

for 100 rupees. The sale is binding on A, and

B is entitled to five rupees as his commission."

(b) A, at Madras, by letter directs B to sell

for him some cotton lying in a warehouse in

Bombay, and afterwards, by letter revokes his

authority to sell, and directs B to send the

cotton to Madras. B after receiving the second

letter, enters into a contract with C, who

knows of the first letter, but not of the second

for the sale to him of the cotton. C pays B the

money, with which B absconds. C’s payment

is good as against A. (b) A, at Madras, by letter

directs B to sell for him some cotton lying

in a warehouse in Bombay, and afterwards, by

letter revokes his authority to sell, and directs

B to send the cotton to Madras. B after receiving

the second letter, enters into a contract

with C, who knows of the first letter, but not

of the second for the sale to him of the cotton.

C pays B the money, with which B absconds.

C’s payment is good as against A." (c) A directs

B, his agent, to pay certain money to C.

A dies, and D takes out probate to his will.

B, after A’s death, but before hearing of it,

pays the money to C. The payment is good

as against D, the executor. (c) A directs B,

his agent, to pay certain money to C. A dies,

and D takes out probate to his will. B, after

A’s death, but before hearing of it, pays the



money to C. The payment is good as against

D, the executor." 208. When termination of

agent’s authority takes effect as to agent, and

as to third persons.—The termination of the

authority of an agent does not, so far as regards

the agent, take effect before it becomes

known to him, or, so far as regards third persons,

before it becomes known to them. —The

termination of the authority of an agent does

not, so far as regards the agent, take effect before

it becomes known to him, or, so far as regards

third persons, before it becomes known

to them." Illustrations (a) A directs B to sell

goods for him, and agrees to give B five per

cent. commission on the price fetched by the

goods. A afterwards by letter, revokes B’s authority.

B after the letter is sent, but before he

receives it, sells the goods for 100 rupees. The

sale is binding on A, and B is entitled to five

rupees as his commission. (a) A directs B to

sell goods for him, and agrees to give B five per

cent. commission on the price fetched by the

goods. A afterwards by letter, revokes B’s authority.

B after the letter is sent, but before he

receives it, sells the goods for 100 rupees. The

sale is binding on A, and B is entitled to five

rupees as his commission." (b) A, at Madras,

by letter directs B to sell for him some cotton

lying in a warehouse in Bombay, and afterwards,

by letter revokes his authority to sell,

and directs B to send the cotton to Madras. B

after receiving the second letter, enters into a

contract with C, who knows of the first letter,

but not of the second for the sale to him of the

cotton. C pays B the money, with which B absconds.

C’s payment is good as against A. (b)

A, at Madras, by letter directs B to sell for him

some cotton lying in a warehouse in Bombay,

and afterwards, by letter revokes his authority

to sell, and directs B to send the cotton to

Madras. B after receiving the second letter,

enters into a contract with C, who knows of

the first letter, but not of the second for the

sale to him of the cotton. C pays B the money,

with which B absconds. C’s payment is good

as against A." (c) A directs B, his agent, to

pay certain money to C. A dies, and D takes

out probate to his will. B, after A’s death,

but before hearing of it, pays the money to C.

The payment is good as against D, the executor.

(c) A directs B, his agent, to pay certain

money to C. A dies, and D takes out probate

to his will. B, after A’s death, but before hearing

of it, pays the money to C. The payment is

good as against D, the executor." 209. Agent’s

duty on termination of agency by principal’s

death or insanity.— When an agency is terminated

by the principal dying or becoming of

unsound mind, the agent is bound to take, on

behalf of the representatives of his late principal,

all reasonable steps for the protection

and preservation of the interests entrusted to

him. — When an agency is terminated by the

principal dying or becoming of unsound mind,

the agent is bound to take, on behalf of the

representatives of his late principal, all reasonable

steps for the protection and preservation

of the interests entrusted to him." 209. Agent’s

duty on termination of agency by principal’s

death or insanity.— When an agency is terminated

by the principal dying or becoming of

unsound mind, the agent is bound to take, on

behalf of the representatives of his late principal,

all reasonable steps for the protection

and preservation of the interests entrusted to

him. — When an agency is terminated by the

principal dying or becoming of unsound mind,

the agent is bound to take, on behalf of the

representatives of his late principal, all reasonable

steps for the protection and preservation

of the interests entrusted to him." 210. Termination

of sub-agent’s authority.—The termination

of the authority of an agent causes the

termination (subject to the rules herein contained

regarding the termination of an agent’s

authority) of the authority of all sub-agents

appointed by him. —The termination of the

authority of an agent causes the termination

(subject to the rules herein contained regarding

the termination of an agent’s authority)

of the authority of all sub-agents appointed

by him." 210. Termination of sub-agent’s authority.—The

termination of the authority of

an agent causes the termination (subject to

the rules herein contained regarding the termination

of an agent’s authority) of the authority

of all sub-agents appointed by him.

—The termination of the authority of an agent

causes the termination (subject to the rules

herein contained regarding the termination of



an agent’s authority) of the authority of all

sub-agents appointed by him." 211. Agent’s

duty in conducting principal’s business.—An

agent is bound to conduct the business of his

principal according to the directions given by

the principal, or in the absence of any such

directions according to the custom which prevails

in doing business of the same kind at the

place where the agent conducts such business.

When the agent acts otherwise, if any loss be

sustained, he must make it good to his principal,

and if any profit accrues, he must account

for it. —An agent is bound to conduct the

business of his principal according to the directions

given by the principal, or in the absence

of any such directions according to the custom

which prevails in doing business of the same

kind at the place where the agent conducts

such business. When the agent acts otherwise,

if any loss be sustained, he must make it good

to his principal, and if any profit accrues, he

must account for it." Illustrations (a) A, an

agent engaged in carrying on for B a business,

in which it is the custom to invest from time

to time, at interest, the moneys which may be

in hand, on its to make such investments. A

must make good to B the interest usually obtained

by such investments. (a) A, an agent

engaged in carrying on for B a business, in

which it is the custom to invest from time to

time, at interest, the moneys which may be in

hand, on its to make such investments. A must

make good to B the interest usually obtained

by such investments." (b) B, a broker in whose

business it is not the custom to sell on credit,

sells goods of A on credit to C, whose credit

at the time was very high. C, before payment,

becomes insolvent. B must make good the loss

to A. (b) B, a broker in whose business it is

not the custom to sell on credit, sells goods

of A on credit to C, whose credit at the time

was very high. C, before payment, becomes

insolvent. B must make good the loss to A."

211. Agent’s duty in conducting principal’s

business.—An agent is bound to conduct the

business of his principal according to the directions

given by the principal, or in the absence

of any such directions according to the custom

which prevails in doing business of the same

kind at the place where the agent conducts

such business. When the agent acts otherwise,

if any loss be sustained, he must make it good

to his principal, and if any profit accrues, he

must account for it. —An agent is bound to

conduct the business of his principal according

to the directions given by the principal,

or in the absence of any such directions according

to the custom which prevails in doing

business of the same kind at the place where

the agent conducts such business. When the

agent acts otherwise, if any loss be sustained,

he must make it good to his principal, and if

any profit accrues, he must account for it." Illustrations

(a) A, an agent engaged in carrying

on for B a business, in which it is the custom

to invest from time to time, at interest, the

moneys which may be in hand, on its to make

such investments. A must make good to B

the interest usually obtained by such investments.

(a) A, an agent engaged in carrying

on for B a business, in which it is the custom

to invest from time to time, at interest, the

moneys which may be in hand, on its to make

such investments. A must make good to B

the interest usually obtained by such investments."

(b) B, a broker in whose business it

is not the custom to sell on credit, sells goods

of A on credit to C, whose credit at the time

was very high. C, before payment, becomes

insolvent. B must make good the loss to A.

(b) B, a broker in whose business it is not the

custom to sell on credit, sells goods of A on

credit to C, whose credit at the time was very

high. C, before payment, becomes insolvent.

B must make good the loss to A." 212. Skill

and diligence required from agent.—An agent

is bound to conduct the business of the agency

with as much skill as is generally possessed

by persons engaged in similar business unless

the principal has notice of this want of skill.

The agent is always bound to act with reasonable

diligence, and to use such skill as he possesses;

and to make compensation to his principal

in respect of the direct consequences of

his own neglect, want of skill, or misconduct,

but not in respect of loss or damage which are

indirectly or remotely caused by such neglect,

want of skill, or misconduct. —An agent is

bound to conduct the business of the agency

with as much skill as is generally possessed



by persons engaged in similar business unless

the principal has notice of this want of skill.

The agent is always bound to act with reasonable

diligence, and to use such skill as he possesses;

and to make compensation to his principal

in respect of the direct consequences of

his own neglect, want of skill, or misconduct,

but not in respect of loss or damage which are

indirectly or remotely caused by such neglect,

want of skill, or misconduct." Illustrations (a)

A, a merchant in Calcutta, has an agent, B, in

London, to whom a sum of money is paid on

A’s account, with orders to remit. B retains

the money for a considerable time. A, in consequence

of not receiving the money, becomes

insolvent. B is liable for the money and interest,

from the day on which it ought to have

been paid, according to the usual rate, and for

any further direct loss—as, e.g., by variation

of rate of exchange—but not further. (a) A,

a merchant in Calcutta, has an agent, B, in

London, to whom a sum of money is paid on

A’s account, with orders to remit. B retains

the money for a considerable time. A, in consequence

of not receiving the money, becomes

insolvent. B is liable for the money and interest,

from the day on which it ought to have

been paid, according to the usual rate, and for

any further direct loss—as, e.g., by variation of

rate of exchange—but not further." (b) A, an

agent for the sale of goods, having authority

to sell on credit, sells to B on credit, without

making the proper and usual enquiries as to

the solvency of B. B at the time of such sale is

insolvent. A must make compensation to his

principal in respect of any loss thereby sustained.

(b) A, an agent for the sale of goods,

having authority to sell on credit, sells to B on

credit, without making the proper and usual

enquiries as to the solvency of B. B at the time

of such sale is insolvent. A must make compensation

to his principal in respect of any

loss thereby sustained." (c) A, an insurancebroker

employed by B to effect an insurance

on a ship, omits to see that the usual clauses

are inserted in the policy. The ship is afterwards

lost. In consequence of the omission of

the clauses nothing can be recovered from the

underwriters. A is bound to make good the

loss to B. (c) A, an insurance-broker employed

by B to effect an insurance on a ship, omits to

see that the usual clauses are inserted in the

policy. The ship is afterwards lost. In consequence

of the omission of the clauses nothing

can be recovered from the underwriters. A is

bound to make good the loss to B." (d) A, a

merchant in England, directs B, his agent at

Bombay, who accepts the agency, to send him

100 bales of cotton by a certain ship. B, having

it in his power to send the cotton, omits

to do so. The ship arrives safely in Engalnd.

Soon after her arrival the price of cotton rises.

B is bound to make good to A the profit which

he might have made by the 100 bales of cotton

at the time of ship arrived, but not any

profit he might have made by the subsequent

rise. (d) A, a merchant in England, directs B,

his agent at Bombay, who accepts the agency,

to send him 100 bales of cotton by a certain

ship. B, having it in his power to send the

cotton, omits to do so. The ship arrives safely

in Engalnd. Soon after her arrival the price of

cotton rises. B is bound to make good to A

the profit which he might have made by the

100 bales of cotton at the time of ship arrived,

but not any profit he might have made by the

subsequent rise." 213. Agent’s accounts.—An

agent is bound to render proper accounts to

his principal on demand. —An agent is bound

to render proper accounts to his principal on

demand." 213. Agent’s accounts.—An agent is

bound to render proper accounts to his principal

on demand. —An agent is bound to render

proper accounts to his principal on demand."

214. Agent’s duty to communicate with principal.—It

is the duty of an agent, in cases

of difficulty, to use all reasonable diligence in

communicating with his principal, and in seeking

to obtain his instructions. —It is the duty

of an agent, in cases of difficulty, to use all

reasonable diligence in communicating with

his principal, and in seeking to obtain his instructions."

214. Agent’s duty to communicate

with principal.—It is the duty of an agent, in

cases of difficulty, to use all reasonable diligence

in communicating with his principal,

and in seeking to obtain his instructions. —It

is the duty of an agent, in cases of difficulty,

to use all reasonable diligence in communicating

with his principal, and in seeking to obtain



his instructions." 215. Right of principal when

agent deals, on his own account, in business

of agency without principal’s consent.—If an

agent deals on his own account in the business

of the agency, without first obtaining the consent

of his principal and acquainting him with

all material circumstances which have come to

his own knowledge on the subject, the principal

may repudiate the transaction, if the case

shows, either that any material fact has been

dishonestly concealed from him by the agent,

or that the dealings of the agent have been disadvantageous

to him. —If an agent deals on

his own account in the business of the agency,

without first obtaining the consent of his principal

and acquainting him with all material

circumstances which have come to his own

knowledge on the subject, the principal may

repudiate the transaction, if the case shows,

either that any material fact has been dishonestly

concealed from him by the agent, or that

the dealings of the agent have been disadvantageous

to him." Illustrations (a) A directs B

to sell A’s estate. B buys the estate for himself

in the name of C. A, on discovering that B has

bought the estate for himself, may repudiate

the sale, if he can show that B has dishonestly

concealed any material fact, or that the sale

has been disadvantageous to him. (a) A directs

B to sell A’s estate. B buys the estate

for himself in the name of C. A, on discovering

that B has bought the estate for himself,

may repudiate the sale, if he can show that

B has dishonestly concealed any material fact,

or that the sale has been disadvantageous to

him." (b) A directs B to sell A’s estate. B, on

looking over the estate before selling it, finds

a mine on the estate which is unknown to A.

B informs A that he wishes to buy the estate

for himself, but conceals the discovery of the

mine. A allows B to buy, in ignorance of the

existence of the mine. A, on discovering that

B knew of the mine at the time he bought

the estate, may either repudiate or adopt the

sale at his option. (b) A directs B to sell A’s

estate. B, on looking over the estate before

selling it, finds a mine on the estate which is

unknown to A. B informs A that he wishes

to buy the estate for himself, but conceals the

discovery of the mine. A allows B to buy, in

ignorance of the existence of the mine. A, on

discovering that B knew of the mine at the

time he bought the estate, may either repudiate

or adopt the sale at his option." 216. Principal’s

right to benefit gained by agent dealing

on his own account in business of agency.—If

an agent, without the knowledge of his principal,

deals in the business of the agency on

his own account instead of on account of his

principal, the principal is entitled to claim

from the agent any benefit which may have

resulted to him from the transaction. —If an

agent, without the knowledge of his principal,

deals in the business of the agency on his own

account instead of on account of his principal,

the principal is entitled to claim from the

agent any benefit which may have resulted to

him from the transaction." Illustration A directs

B, his agent, to buy a certain house for

him. B tells A it cannot be bought, and buys

the house for himself. A may, on discovering

that B has bought the house, compel him

to sell it to A at the price he gave for it. A

directs B, his agent, to buy a certain house

for him. B tells A it cannot be bought, and

buys the house for himself. A may, on discovering

that B has bought the house, compel

him to sell it to A at the price he gave for

it." 216. Principal’s right to benefit gained by

agent dealing on his own account in business

of agency.—If an agent, without the knowledge

of his principal, deals in the business of

the agency on his own account instead of on

account of his principal, the principal is entitled

to claim from the agent any benefit which

may have resulted to him from the transaction.

—If an agent, without the knowledge of his

principal, deals in the business of the agency

on his own account instead of on account of

his principal, the principal is entitled to claim

from the agent any benefit which may have resulted

to him from the transaction." Illustration

A directs B, his agent, to buy a certain

house for him. B tells A it cannot be bought,

and buys the house for himself. A may, on discovering

that B has bought the house, compel

him to sell it to A at the price he gave for it.

A directs B, his agent, to buy a certain house

for him. B tells A it cannot be bought, and

buys the house for himself. A may, on dis-



covering that B has bought the house, compel

him to sell it to A at the price he gave for it."

217. Agent’s right of retainer out of sums received

on principal’s account.—An agent may

retain, out of any sums received on account of

the principal in the business of the agency, all

moneys due to himself in respect of advances

made or expenses properly incurred by him in

conducting such business, and also such remuneration

as may be payable to him for acting

as agent. —An agent may retain, out of

any sums received on account of the principal

in the business of the agency, all moneys due

to himself in respect of advances made or expenses

properly incurred by him in conducting

such business, and also such remuneration as

may be payable to him for acting as agent."

217. Agent’s right of retainer out of sums received

on principal’s account.—An agent may

retain, out of any sums received on account of

the principal in the business of the agency, all

moneys due to himself in respect of advances

made or expenses properly incurred by him in

conducting such business, and also such remuneration

as may be payable to him for acting

as agent. —An agent may retain, out of

any sums received on account of the principal

in the business of the agency, all moneys

due to himself in respect of advances made

or expenses properly incurred by him in conducting

such business, and also such remuneration

as may be payable to him for acting as

agent." 218. Agent’s duty to pay sums received

for principal.—Subject to such deductions, the

agent is bound to pay to his principal all sums

received on his account. —Subject to such deductions,

the agent is bound to pay to his principal

all sums received on his account." 218.

Agent’s duty to pay sums received for principal.—Subject

to such deductions, the agent

is bound to pay to his principal all sums received

on his account. —Subject to such deductions,

the agent is bound to pay to his principal

all sums received on his account." 219.

When agent’s remuneration becomes due.—In

the absence of any special contract, payment

for the performance of any act is not due to

the agent until the completion of such act; but

an agent may detain moneys received by him

on account of goods sold, although the whole

of the goods consigned to him for sale may

not have been sold, or although the sale may

not be actually complete. —In the absence of

any special contract, payment for the performance

of any act is not due to the agent until

the completion of such act; but an agent may

detain moneys received by him on account of

goods sold, although the whole of the goods

consigned to him for sale may not have been

sold, or although the sale may not be actually

complete." 219. When agent’s remuneration

becomes due.—In the absence of any special

contract, payment for the performance of any

act is not due to the agent until the completion

of such act; but an agent may detain moneys

received by him on account of goods sold, although

the whole of the goods consigned to

him for sale may not have been sold, or although

the sale may not be actually complete.

—In the absence of any special contract, payment

for the performance of any act is not due

to the agent until the completion of such act;

but an agent may detain moneys received by

him on account of goods sold, although the

whole of the goods consigned to him for sale

may not have been sold, or although the sale

may not be actually complete." 220. Agent not

entitled to remuneration for business misconducted.—An

agent who is guilty of misconduct

in the business of the agency, is not entitled to

any remuneration in respect of that part of the

business which he has misconducted. —An

agent who is guilty of misconduct in the business

of the agency, is not entitled to any remuneration

in respect of that part of the business

which he has misconducted." Illustrations

(a) A employs B to recover 1,00,000 rupees

from C, and to lay it out on good security,

B recovers the 1,00,000 rupees and lays out

90,000 rupees on good security, but lays out

10,000 rupees on security which he ought to

have known to be bad, whereby A loses 2,000

rupees. B is entitled to remuneration for recovering

the 1,00,000 rupees and for investing

the 90,000 rupees. He is not entitled to any

remuneration for investing the 10,000 rupees,

and he must make good the 2,000 rupees to

B. (a) A employs B to recover 1,00,000 rupees

from C, and to lay it out on good security,

B recovers the 1,00,000 rupees and lays out



90,000 rupees on good security, but lays out

10,000 rupees on security which he ought to

have known to be bad, whereby A loses 2,000

rupees. B is entitled to remuneration for recovering

the 1,00,000 rupees and for investing

the 90,000 rupees. He is not entitled to any

remuneration for investing the 10,000 rupees,

and he must make good the 2,000 rupees to

B." (b) A employs B to recover 1,000 rupees

from C. Through B’s misconduct the money is

not recovered. B is entitled to no remuneration

for his services, and must make good the

loss. (b) A employs B to recover 1,000 rupees

from C. Through B’s misconduct the money is

not recovered. B is entitled to no remuneration

for his services, and must make good the

loss." 221. Agent’s lien on principal’s property.—In

the absence of any contract to the

contrary, an agent is entitled to retain goods,

papers, and other property, whether movable

or immovable of the principal received by him,

until the amount due to himself for commission,

disbursements and services in respect of

the same has been paid or accounted for to

him. —In the absence of any contract to the







him." 221. Agent’s lien on principal’s property.—In

the absence of any contract to the







him. —In the absence of any contract to the







him." 222. Agent to be indemnified against

consequences of lawful acts.—The employer of

an agent is bound to indemnify him against

the consequences of all lawful acts done by

such agent in exercise of the authority conferred

upon him. —The employer of an agent

is bound to indemnify him against the consequences

of all lawful acts done by such agent in

exercise of the authority conferred upon him."

Illustrations (a) B, at Singapure, under instructions

from A of Calcutta, contracts with

C to deliver certain goods to him. A does not

send the goods to B, and C sues B for breach

of contract. B informs A of the suit, and A

authorises him to defend the suit. B defends

the suit, and is compelled to pay damages and

costs, and incurs expenses. A is liable to B

for such damages, costs and expenses. (a)

B, at Singapure, under instructions from A of

Calcutta, contracts with C to deliver certain

goods to him. A does not send the goods to

B, and C sues B for breach of contract. B

informs A of the suit, and A authorises him

to defend the suit. B defends the suit, and is

compelled to pay damages and costs, and incurs

expenses. A is liable to B for such damages,

costs and expenses." (b) B, a broker at

Calcutta, by the orders of A, a merchant there,

contracts with C for the purchase of 10 casks

of oil for A. Afterwards A refuses to receive

the oil, and C sues B. B informs A, who repudiates

the contract altogether. B defends, but

unsuccessfully, and has to pay damages and

costs and incurs expenses. A is liable to B for

such damages, costs and expenses. (b) B, a

broker at Calcutta, by the orders of A, a merchant

there, contracts with C for the purchase

of 10 casks of oil for A. Afterwards A refuses

to receive the oil, and C sues B. B informs A,

who repudiates the contract altogether. B defends,

but unsuccessfully, and has to pay damages

and costs and incurs expenses. A is liable

to B for such damages, costs and expenses."

223. Agent to be indemnified against consequences

of acts done in good faith.—Where

one person employs another to do an act, and

the agent does the act in good faith, the employer

is liable to indemnify the agent against

the consequences of that act, though it may

cause an injury to the rights of third persons.

—Where one person employs another to do an

act, and the agent does the act in good faith,

the employer is liable to indemnify the agent

against the consequences of that act, though it



may cause an injury to the rights of third persons."

Illustrations (a) A, a decree-holder and

entitled to execution of B’s goods requires the

officer of the Court to seize certain goods, representing

them to be the goods of B. The officer

seizes the goods, and is sued by C, the true

owner of the goods. A is liable to indemnify

the officer for the sum which he is compelled to

pay to C, in consequence of obeying A’s directions.

(a) A, a decree-holder and entitled to

execution of B’s goods requires the officer of

the Court to seize certain goods, representing

them to be the goods of B. The officer seizes

the goods, and is sued by C, the true owner of

the goods. A is liable to indemnify the officer

for the sum which he is compelled to pay to C,

in consequence of obeying A’s directions." (b)

B, at the request of A, sells goods in the possession

of A, but which A had no right to dispose

of. B does not know this, and hands over

the proceeds of the sale to A. Afterwards C,

the true owner of the goods, sues B and recovers

the value of the goods and costs. A is liable

to indemnify B for what he has been compelled

to pay to C, and for B’s own expenses. (b) B,

at the request of A, sells goods in the possession

of A, but which A had no right to dispose

of. B does not know this, and hands over the

proceeds of the sale to A. Afterwards C, the

true owner of the goods, sues B and recovers

the value of the goods and costs. A is liable to

indemnify B for what he has been compelled to

pay to C, and for B’s own expenses." 224. Nonliability

of employer of agent to do a criminal

act.—Where one person employs another to do

an act which is criminal, the employer is not

liable to the agent, either upon an express or

an implied promise to indemnify him against

the consequences of that Act.1 —Where one

person employs another to do an act which

is criminal, the employer is not liable to the

agent, either upon an express or an implied

promise to indemnify him against the consequences

of that Act.1" Illustrations (a) A employs

B to beat C, and agrees to indemnify him

against all consequences of the act. B thereupon

beats C, and has to pay damages to C

for so doing. A is not liable to indemnify B for

those damages. (a) A employs B to beat C,

and agrees to indemnify him against all consequences

of the act. B thereupon beats C, and

has to pay damages to C for so doing. A is not

liable to indemnify B for those damages." (b)

B, the proprietor of a newspaper, publishes,

at A’s request, a libel upon C in the paper,

and A agrees to indemnify B against the consequences

of the publication, and all costs and

damages of any action in respect thereof. B is

sued by C and has to pay damages, and also

incurs expenses. A is not liable to B upon the

indemnity. (b) B, the proprietor of a newspaper,

publishes, at A’s request, a libel upon

C in the paper, and A agrees to indemnify B

against the consequences of the publication,

and all costs and damages of any action in respect

thereof. B is sued by C and has to pay

damages, and also incurs expenses. A is not

liable to B upon the indemnity." 225. Compensation

to agent for injury caused by principal’s

neglect.—The principal must make compensation

to his agent in respect of injury1

caused to such agent by the principal’s neglect

or want of skill. —The principal must

make compensation to his agent in respect of

injury1 caused to such agent by the principal’s

neglect or want of skill." Illustration A employs

B as a bricklayer in building a house, and puts

up the scaffolding himself. The scaffolding is

unskilfully put up, and B is in consequence

hurt. A must make compensation to B. A employs

B as a bricklayer in building a house,

and puts up the scaffolding himself. The scaffolding

is unskilfully put up, and B is in consequence

hurt. A must make compensation

to B." 225. Compensation to agent for injury

caused by principal’s neglect.—The principal

must make compensation to his agent in respect

of injury1 caused to such agent by the

principal’s neglect or want of skill. —The principal

must make compensation to his agent in

respect of injury1 caused to such agent by the

principal’s neglect or want of skill." Illustration

A employs B as a bricklayer in building

a house, and puts up the scaffolding himself.

The scaffolding is unskilfully put up, and B is

in consequence hurt. A must make compensation

to B. A employs B as a bricklayer in

building a house, and puts up the scaffolding

himself. The scaffolding is unskilfully put up,

and B is in consequence hurt. A must make



compensation to B." 226. Enforcement and

consequences of agent’s contracts.—Contracts

entered into through an agent, and obligations

arising from acts done by an agent, may be

enforced in the same manner, and will have

the same legal consequences as if the contracts

had been entered into the acts done by the

principal in person. —Contracts entered into

through an agent, and obligations arising from

acts done by an agent, may be enforced in

the same manner, and will have the same legal

consequences as if the contracts had been

entered into the acts done by the principal in

person." Illustrations (a) A buys goods from B,

knowing that he is an agent for their sale, but

not knowing who is the principal. B’s principal

is the person entitled to claim from A

the price of the goods, and A cannot, in a suit

by the principal, set-off against that claim a

debt due to himself from B. (a) A buys goods

from B, knowing that he is an agent for their

sale, but not knowing who is the principal. B’s

principal is the person entitled to claim from

A the price of the goods, and A cannot, in a

suit by the principal, set-off against that claim

a debt due to himself from B." (b) A, being B’s

agent, with authority to receive money on his

behalf, receives from C a sum of money due

to B. C is discharged of his obligation to pay

the sum in question to B. (b) A, being B’s

agent, with authority to receive money on his

behalf, receives from C a sum of money due to

B. C is discharged of his obligation to pay the

sum in question to B." 226. Enforcement and

consequences of agent’s contracts.—Contracts

entered into through an agent, and obligations

arising from acts done by an agent, may be

enforced in the same manner, and will have

the same legal consequences as if the contracts

had been entered into the acts done by the

principal in person. —Contracts entered into

through an agent, and obligations arising from

acts done by an agent, may be enforced in

the same manner, and will have the same legal

consequences as if the contracts had been

entered into the acts done by the principal in

person." Illustrations (a) A buys goods from B,

knowing that he is an agent for their sale, but

not knowing who is the principal. B’s principal

is the person entitled to claim from A

the price of the goods, and A cannot, in a suit

by the principal, set-off against that claim a

debt due to himself from B. (a) A buys goods

from B, knowing that he is an agent for their

sale, but not knowing who is the principal. B’s

principal is the person entitled to claim from

A the price of the goods, and A cannot, in a

suit by the principal, set-off against that claim

a debt due to himself from B." (b) A, being

B’s agent, with authority to receive money on

his behalf, receives from C a sum of money

due to B. C is discharged of his obligation to

pay the sum in question to B. (b) A, being

B’s agent, with authority to receive money on

his behalf, receives from C a sum of money

due to B. C is discharged of his obligation to

pay the sum in question to B." 227. Principal

how far bound, when agent exceeds authority.—When

an agent does more than he is

authorized to do, and when the part of what

he does, which is within his authority, can be

separated from the part which is beyond his

authority, so much only of what he does as

is within his authority is binding as between

him and his principal. —When an agent does

more than he is authorized to do, and when the

part of what he does, which is within his authority,

can be separated from the part which

is beyond his authority, so much only of what

he does as is within his authority is binding as

between him and his principal." Illustration A,

being owner of a ship and cargo, authorizes B

to procure an insurance for 4,000 rupees on the

ship. B procures a policy for 4,000 rupees on

the ship, and another for the like sum on the

cargo. A is bound to pay the premium for the

policy on the ship, but not the premium for the

policy on the cargo. A, being owner of a ship

and cargo, authorizes B to procure an insurance

for 4,000 rupees on the ship. B procures

a policy for 4,000 rupees on the ship, and another

for the like sum on the cargo. A is bound

to pay the premium for the policy on the ship,

but not the premium for the policy on the

cargo." 228. Principal not bound when excess

of agent’s authority is not separable.—Where

an agent does more than he is authroized to

do, and what he does beyond the scope of his

authority cannot be separated from what is

within it, the principal is not bound to recog-



nize the transaction. —Where an agent does

more than he is authroized to do, and what he

does beyond the scope of his authority cannot

be separated from what is within it, the principal

is not bound to recognize the transaction."

Illustration A, authorizes B to buy 500 sheep

for him. B buys 500 sheep and 200 lambs for

one sum of 6,000 rupees. A may repudiate

the whole transaction. A, authorizes B to buy

500 sheep for him. B buys 500 sheep and 200

lambs for one sum of 6,000 rupees. A may repudiate

the whole transaction." 228. Principal

not bound when excess of agent’s authority

is not separable.—Where an agent does more

than he is authroized to do, and what he does

beyond the scope of his authority cannot be

separated from what is within it, the principal

is not bound to recognize the transaction.

—Where an agent does more than he

is authroized to do, and what he does beyond

the scope of his authority cannot be separated

from what is within it, the principal is not

bound to recognize the transaction." Illustration

A, authorizes B to buy 500 sheep for him.

B buys 500 sheep and 200 lambs for one sum

of 6,000 rupees. A may repudiate the whole

transaction. A, authorizes B to buy 500 sheep

for him. B buys 500 sheep and 200 lambs for

one sum of 6,000 rupees. A may repudiate the

whole transaction." 229. Consequences of notice

given to agent.—Any notice given to or

information obtained by the agent, provided

it be given or obtained in the course of the

business transacted by him for the principal,

shall, as between the principal and third parties,

have the same legal consequences as if it

had been given to or obtained by the principal.

—Any notice given to or information obtained

by the agent, provided it be given or obtained

in the course of the business transacted by him

for the principal, shall, as between the principal

and third parties, have the same legal

consequences as if it had been given to or obtained

by the principal." Illustrations (a) A is

employed by B to buy from C certain goods,

of which C is the apparent owner, and buys

them accordingly. In the course of the treaty

for the sale, A learns that the goods really belonged

to D, but B is ignorant of that fact. B

is not entitled to set-off a debt owing to him

from C against the price of the goods. (a) A is

employed by B to buy from C certain goods, of

which C is the apparent owner, and buys them

accordingly. In the course of the treaty for the

sale, A learns that the goods really belonged

to D, but B is ignorant of that fact. B is not

entitled to set-off a debt owing to him from C

against the price of the goods." (b) A is employed

by B to buy from C goods of which C is

the apparent owner. A was, before he was so

employed, a servant of C, and then learnt that

the goods really belonged to D, but B is ignorant

of that fact. In spite of the knowledge

of his agent, B may set-off against the price

of the goods a debt owing to him from C. (b)

A is employed by B to buy from C goods of

which C is the apparent owner. A was, before

he was so employed, a servant of C, and

then learnt that the goods really belonged to

D, but B is ignorant of that fact. In spite

of the knowledge of his agent, B may set-off

against the price of the goods a debt owing to

him from C." 230. Agent cannot personally

enforce, nor be bound by, contracts on behalf

of principal.—In the absence of any contact

to that effect an agent cannot personally enforce

contracts entered into by him on behalf

of his principal, nor is he personally bound

by them. —In the absence of any contact to

that effect an agent cannot personally enforce

contracts entered into by him on behalf of his

principal, nor is he personally bound by them."

Presumption of contract to contrary.—Such a

contract shall be presumed to exist in the following

cases:— (1) where the contract is made

by an agent for the sale or purchase of goods

for a merchant resident abroad; (2) where the

agent does not disclose the name of his principal;

(3) where the principal, though disclosed,

cannot be sued. 231. Right of parties to a

contract made by agent not disclosed.—If an

agent makes a contract with a person who neither

knows, nor has reason to suspect, that

he is an agent, his principal may require the

performance of the contract; but the other

contracting party has, as against the principal,

the same rights as he would have had as

against the agent if the agent had been principal.

—If an agent makes a contract with

a person who neither knows, nor has reason



to suspect, that he is an agent, his principal

may require the performance of the contract;

but the other contracting party has, as against

the principal, the same rights as he would have

had as against the agent if the agent had been

principal." If the principal discloses himself before

the contract is completed, the other contracting

party may refuse to fulfil the contract,

if he can show that, if he had known

who was the principal in the contract, or if he

had known that the agent was not a principal,

he would not have entered into the contract.

232. Performance of contract with agent supposed

to be principal.—Where one man makes

a contract with another, neither knowing nor

having reasonable ground to suspect that the

other is an agent, the principal, if he requires

the performance of the contract, can only obtain

such performance subject to the right and

obligations subsisting between the agent and

the other party to the contract. —Where one

man makes a contract with another, neither

knowing nor having reasonable ground to suspect

that the other is an agent, the principal,

if he requires the performance of the contract,

can only obtain such performance subject to

the right and obligations subsisting between

the agent and the other party to the contract."

Illustration A, who owes 500 rupees to B, sells

1,000 rupees worth of rice to B. A is acting as

agent for C in the transaction, but B has no

knowledge nor reasonable ground of suspicion

that such is the case. C cannot compel B to

take the rice without allowing him to set-off

A’s debt. A, who owes 500 rupees to B, sells

1,000 rupees worth of rice to B. A is acting

as agent for C in the transaction, but B has

no knowledge nor reasonable ground of suspicion

that such is the case. C cannot compel B

to take the rice without allowing him to setoff

A’s debt." 233. Right of person dealing

with agent personally liable.—In cases where

the agent is personally liable, a person dealing

with him may hold either him or his principal,

or both of them liable. —In cases where

the agent is personally liable, a person dealing

with him may hold either him or his principal,

or both of them liable." Illustrations A

enters into a contract with B to sell him 100

bales of cotton, and afterwards discovers that

B was acting as agent for C. A may sue either

B or C, or both, for the price of the cotton. A

enters into a contract with B to sell him 100

bales of cotton, and afterwards discovers that

B was acting as agent for C. A may sue either

B or C, or both, for the price of the cotton."

234. Consequence of inducing agent or principal

to act on belief that principal or agent

will be held exclusively liable.—When a person

who has made a contract with an agent

induces the agent to act upon the belief that

the principal only will be held liable, or induces

the principal to act upon the belief that

the agent only will be held liable, he cannot

afterwards hold liable the agent or principal

respectively. —When a person who has made

a contract with an agent induces the agent to

act upon the belief that the principal only will

be held liable, or induces the principal to act

upon the belief that the agent only will be held

liable, he cannot afterwards hold liable the

agent or principal respectively." 235. Liability

of pretended agent.—A person untruly representing

himself to be the authorized agent of

another, and thereby inducing a third person

to deal with him as such agent, is liable, if his

alleged employer does not ratify his acts, to

make compensation to the other in respect of

any loss or damage which he has incurred by so

dealing. —A person untruly representing himself

to be the authorized agent of another, and

thereby inducing a third person to deal with

him as such agent, is liable, if his alleged employer

does not ratify his acts, to make compensation

to the other in respect of any loss

or damage which he has incurred by so dealing."

236. Person falsely contracting as agent,

not entitled to performance.—A person with

whom a contract has been entered into in the

character of agent, is not entitled to require

the performance of it, if he was in reality acting,

not as agent, but on his own account. —A

person with whom a contract has been entered

into in the character of agent, is not entitled

to require the performance of it, if he was in

reality acting, not as agent, but on his own account."

237. Liability of principal inducing belief

that agent’s unauthorized acts were authorized.—When

an agent has, without authority,

done acts or incurred obligations to third per-



sons on behalf of his principal, the principal is

bound by such acts or obligations, if he has by

his words or conduct induced such third persons

to believe that such acts and obligations

were within the scope of the agent’s authority.

—When an agent has, without authority,

done acts or incurred obligations to third persons

on behalf of his principal, the principal is

bound by such acts or obligations, if he has by

his words or conduct induced such third persons

to believe that such acts and obligations

were within the scope of the agent’s authority."

Illustrations (a) A consigns goods to B

for sale, and gives him instructions not to sell

under a fixed price. C, being ignorant of B’s

instructions, enters into a contract with B to

buy the goods at a price lower than the reserved

price. A is bound by the contract. (a)

A consigns goods to B for sale, and gives him

instructions not to sell under a fixed price. C,

being ignorant of B’s instructions, enters into

a contract with B to buy the goods at a price

lower than the reserved price. A is bound by

the contract." (b) A entrusts B with negotiable

instruments endorsed in blank. B sells them

to C in violation of private orders from A. The

sale is good. (b) A entrusts B with negotiable

instruments endorsed in blank. B sells them to

C in violation of private orders from A. The

sale is good." 237. Liability of principal inducing

belief that agent’s unauthorized acts

were authorized.—When an agent has, without

authority, done acts or incurred obligations

to third persons on behalf of his principal,

the principal is bound by such acts or

obligations, if he has by his words or conduct

induced such third persons to believe that such

acts and obligations were within the scope of

the agent’s authority. —When an agent has,

without authority, done acts or incurred obligations

to third persons on behalf of his principal,

the principal is bound by such acts or

obligations, if he has by his words or conduct

induced such third persons to believe that such

acts and obligations were within the scope of

the agent’s authority." Illustrations (a) A consigns

goods to B for sale, and gives him instructions

not to sell under a fixed price. C,

being ignorant of B’s instructions, enters into

a contract with B to buy the goods at a price

lower than the reserved price. A is bound by

the contract. (a) A consigns goods to B for

sale, and gives him instructions not to sell under

a fixed price. C, being ignorant of B’s

instructions, enters into a contract with B to

buy the goods at a price lower than the reserved

price. A is bound by the contract." (b)

A entrusts B with negotiable instruments endorsed

in blank. B sells them to C in violation

of private orders from A. The sale is good. (b)

A entrusts B with negotiable instruments endorsed

in blank. B sells them to C in violation

of private orders from A. The sale is good."

238. Effect, on agreement, of misrepresentation

or fraud by agent.—Misrepresentation

made or frauds committed, by agents acting

in the course of their business for their principals,

have the same effect on agreements

made by such agents as if such misrepresentations

or frauds had been made or committed

by the principals; but misrepresentations

made, or frauds committed, by agents, in matters

which do not fall within their authority,

do not affect their principals. —Misrepresentation

made or frauds committed, by agents

acting in the course of their business for their

principals, have the same effect on agreements

made by such agents as if such misrepresentations

or frauds had been made or committed

by the principals; but misrepresentations

made, or frauds committed, by agents, in matters

which do not fall within their authority,

do not affect their principals." Illustrations (a)

A, being B’s agent for the sale of goods, induces

C to buy them by a misrepresentation,

which he was not authorized by B to make.

The contract is voidable, as between B and C,

at the option of C. (b) A, the captain of B’s

ship, signs bills of lading without having received

on board the goods mentioned therein.

The bills of lading are void as between B and

the pretended consignor. 239. Of Partnership.—[Rep.

by the Indian Partnership Act,

1932 (9 of 1932), sec. 73 and Sch. II.] 240.

Of Partnership.—[Rep. by the Indian Partnership

Act, 1932 (9 of 1932), sec. 73 and

Sch. II.] 241. Of Partnership.—[Rep. by the

Indian Partnership Act, 1932 (9 of 1932), sec.

73 and Sch. II.] 242. Of Partnership.—[Rep.

by the Indian Partnership Act, 1932 (9 of



1932), sec. 73 and Sch. II.] 243. Of Partnership.—[Rep.


1932 (9 of 1932), sec. 73 and Sch. II.] 244. Of

Partnership.—[Rep. by the Indian Partnership

Act, 1932 (9 of 1932), sec. 73 and Sch.

II.] 245. Of Partnership.—[Rep. by the Indian

Partnership Act, 1932 (9 of 1932), sec. 73 and









Act, 1932 (9 of 1932), sec. 73 and Sch.











Act, 1932 (9 of 1932), sec. 73 and Sch.











Act, 1932 (9 of 1932), sec. 73 and Sch.











Act, 1932 (9 of 1932), sec. 73 and Sch.





73 and Sch. II.] The Indian Contract Act, 1872

SCHEDULE Enactments repealed.—[Rep. by

the Repealing and Amending Act, 1914 (10

of 1914) sec. 3 and Sch. II.] 1. Subs. by

Act 3 of 1951, sec. 3 and Sch., for “except

Part B States”. 2. The words “The enactments

mentioned in the Schedule hereto are

repealed to the extent specified in the third

column thereof, but” rep. by Act 10 of 1914,

sec. 3 and Sch. II. 3. Subs. by Act 3 of 1951,

sec. 3 and Sch., for “Part A States and Part

C States”. Earlier the words “Part A States

and Part C States” were substituted by the

A.O. 1950, for the words “the Provinces”. 4.

See e.g., sec. 25, the Copyright Act, 1957 (14

of 1957), section 19, the Carriers Act, 1865 (3

of 1865) sections 6 and 7; the Companies Act,

1956 (1 of 1956) sections 12, 30, 46 and 109. 5.

See the Indian Majority Act, 1875 (9 of 1875).

tc" 1. See the Indian Majority Act, 1875 (9 of

1875)." 6. Subs. by Act 6 of 1899, sec. 2, for

section 16. 7. Cf. section 238, infra. tc" 1. Cf.

section 238, infra." 8. See section 143, infra.

tc" 1. See section 143, infra." 9. The words

“undue influence” rep. by Act 6 of 1899, sec.

3. tc" 1. The words “undue influence” rep. by

Act 6 of 1899, sec. 3." 10. Ins. by Act 6 of

1899, sec. 3. 11. The original words “British

India” have successively been amended by the

A.O. 1948 and the A.O. 1950 to read as above.

12. Paragraph 2 omitted by the A.O. 1950.

Earlier paragraph 2 was inserted by the A.O.

1937. 13. The second Illustration rep. by Act

24 of 1917, sec. 3 and Sch. II. 14. See sections

26, 27, 28 and 30, infra. tc" 1. See sections

26, 27, 28 and 30, infra." 15. Subs. by Act 12

of 1891, sec. 2 and Sch. II, Pt. I, for “assurances”.

16. Exceptions 2 and 3 rep. by Act 9

of 1932, sec. 73 and Sch. II. tc" 1. Exceptions

2 and 3 rep. by Act 9 of 1932, sec. 73 and

Sch. II." 17. Subs. by Act 1 of 1997, sec. 2,

for certain words (w.e.f. 8-1-1997). 18. The

second clause of Exception 1 rep. by Act 1 of

1877, sec. 2 and Sch. 19. Cf. the Arbitration

Act, 1940 (10 of 1940) and the Companies Act,

1956 (1 of 1956), section 389. 20. Subs. by

Act 12 of 1891, sec. 2 and Sch. II Pt. I, for



“one”. tc" 1. Subs. by Act 12 of 1891, sec. 2

and Sch. II Pt. I, for “one”." 21. See section

138. infra. tc" 2. See section 138. infra." 22.

For an exception to section 45 in case of Government

securities, see the Public Debt Act,

1944 (18 of 1944), section 8. 23. See section

73, infra. tc" 1. See section 73, infra." 24. Cf.

sections 62 and 63, infra. tc" 1. Cf. sections

62 and 63, infra." 25. See section 65, infra. tc"

2. See section 65, infra." 26. But See section

135, infra. tc" 1. But See section 135, infra."

27. See section 41, supra. tc" 2. See section

41, supra." 28. Subs. by Act 12 of 1891, sec.

2 and Sch. II, Pt. I, for “compensation”. 29.

See section 75, infra. tc" 2. See section 75, infra."

30. See sections 3 and 5, supra. tc" 1. See

sections 3 and 5, supra." 31. The property of

a Government ward in Madhya Pradesh is not

liable under this section; see the C.P. Court of

Wards Act, 1899 (C.P. Act 24 of 1899), section

31(I). 32. As to suits by minors under section

70 in Presidency Small Clause Courts, see the

Presidency Small Cause Courts Act, 1882 (15

of 1882), section 32. 33. See sections 151 and

152, infra. 34. Subs. by Act 6 of 1899, sec.

4, for the first paragraph. 35. Subs. by the

A.O. 1937, for “Government of India ”. 36.

Subs. by the A.O. 1950, for “Provincial Government”.

37. Ins. by Act 6 of 1899, sec. 4(2).

38. Ins. by Act 24 of 1917, sec. 2 and Sch. I.

tc" 1. Ins. by Act 24 of 1917, sec. 2 and Sch.

I." 39. See section 44, supra. tc" 1. See section

44, supra." 40. See section 43, supra. tc" 1.

See section 43, supra." 41. The responsibility

of the Trustees of the Port of Madras constituted

under the Madras Port Trust Act, 1905

(Madras Act 2 of 1905), in regard to goods

has been declared to be that of a bailee under

these sections, without the qualifying words

“in the absence of any special contract” in section

152, see section 40(1) of that Act. tc" 1.

The responsibility of the Trustees of the Port

of Madras constituted under the Madras Port

Trust Act, 1905 (Madras Act 2 of 1905), in

regard to goods has been declared to be that

of a bailee under these sections, without the

qualifying words “in the absence of any special

contract” in section 152, see section 40(1) of

that Act." 42. As to railway contracts see the

Indian Railways Act, 1890 (9 of 1890), section

72. [Ed. The Indian Railways Act, 1890 (9 of

1890) has been repealed by the Railways Act,

1989 (24 of 1989), sec. 200.] As to the liability

of common carriers, see the Carriers Act, 1865

(3 of 1865), section 8. tc" 2. As to railway contracts

see the Indian Railways Act, 1890 (9 of

1890), section 72. [Ed. The Indian Railways

Act, 1890 (9 of 1890) has been repealed by

the Railways Act, 1989 (24 of 1989), sec. 200.]

As to the liability of common carriers, see the

Carriers Act, 1865 (3 of 1865), section 8." 43.

The responsibility of the Trustees of the Port

of Madras constituted under the Madras Port

Trust Act, 1905 (Madras Act 2 of 1905), in

regard to goods has been declared to be that

of a bailee under these sections, without the

qualifying words “in the absence of any special

contract” in section 152, see section 40(1)

of that Act. tc" 1. The responsibility of the

Trustees of the Port of Madras constituted under

the Madras Port Trust Act, 1905 (Madras

Act 2 of 1905), in regard to goods has been

declared to be that of a bailee under these sections,

without the qualifying words “in the absence

of any special contract” in section 152,

see section 40(1) of that Act." 44. Section 161

has been declared to apply to the responsibility

of the Trustees of the Port of Madras as to

goods in their possession see the Madras Port

Trust Act, 1905 (Madras Act 2 of 1905). tc"

1. Section 161 has been declared to apply to

the responsibility of the Trustees of the Port of

Madras as to goods in their possession see the

Madras Port Trust Act, 1905 (Madras Act 2

of 1905)." 45. As to Railway contracts, see the

Indian Railways Act, 1890 (9 of 1890), section

72 [Ed. The Indian Railways Act, 1890 (9 of

1980) has been repealed by the Railways Act,

1989 (24 of 1989), sec. 200.] tc" 2. As to Railway

contracts, see the Indian Railways Act,

1890 (9 of 1890), section 72 [Ed. The Indian

Railways Act, 1890 (9 of 1980) has been repealed

by the Railways Act, 1989 (24 of 1989),

sec. 200.]" 46. Section 161 has been declared

to apply to the responsibility of the Trustees

of the Port of Madras as to goods in their possession

see the Madras Port Trust Act, 1905

(Madras Act 2 of 1905). tc" 1. Section 161

has been declared to apply to the responsibility

of the Trustees of the Port of Madras as to



goods in their possession see the Madras Port

Trust Act, 1905 (Madras Act 2 of 1905)." 47.

As to Railway contracts, see the Indian Railways

Act, 1890 (9 of 1890), section 72 [Ed.

The Indian Railways Act, 1890 (9 of 1980) has

been repealed by the Railways Act, 1989 (24

of 1989), sec. 200.] tc" 2. As to Railway contracts,

see the Indian Railways Act, 1890 (9

of 1890), section 72 [Ed. The Indian Railways

Act, 1890 (9 of 1980) has been repealed by the

Railways Act, 1989 (24 of 1989), sec. 200.]"

48. See the Indian Evidence Act, 1872 (1 of

1872), section 117. 49. As to lien of an agent,

see section 221, infra. As to lien of a Railway

Administration, see the Indian Railways Act,

1890 (9 of 1890), section 55. [Ed. The Indian

Railways Act, 1890 (9 of 1890) has been repealed

by the Railways Act, 1989 (24 of 1989)

See. 200. Now see the Railways Act 1989 (24

of 1989, section 83.] 50. For limitation, see

the Limitation Act, 1963 (36 of 1963), Schedule

1. tc" 1. For limitation, see the Limitation

Act, 1963 (36 of 1963), Schedule 1." 51. For

limitation, see the Limitation Act, 1963 (36 of

1963), Schedule 1. tc" 1. For limitation, see

the Limitation Act, 1963 (36 of 1963), Schedule

1." 52. Sections 178 subs. by Act 4 of

1930, sec. 2, for original section 178. 53. Sections

178A subs. by Act 4 of 1930, sec. 2,

for original section 178. 54. See, however, the

Registration Act, 1908 (16 of 1908), section

33; See also the Code of Civil Procedure, 1908

(5 of 1908), Schedule I, Order III, rule 4. 55.

See, however, the Registration Act, 1908 (16

of 1908), section 33; See also the Code of Civil

Procedure, 1908 (5 of 1908), Schedule I, Order

III, rule 4. 56. See section 24, supra. tc"

1. See section 24, supra." 57. Cf. the Indian

Fatal Accidents Act, 1855 (13 of 1855). tc" 1.

Cf. the Indian Fatal Accidents Act, 1855 (13

of 1855)." 58. Cf. the Indian Fatal Accidents

Act, 1855 (13 of 1855). tc" 1. Cf. the Indian

Fatal Accidents Act, 1855 (13 of 1855)."


7

The Indian Stamp Act, 1899

THE INDIAN STAMP ACT, 1899

1. Short title, extent and commencement.—

(1) This Act may be called the Indian

Stamp Act, 1899. 1 [(2) It extends to

the whole of India except the State of Jammu

and Kashmir: Provided that it shall not apply

to 2 [the territories which, immediately

before the 1st November, 1956, were comprised

in Part B States] (excluding the State

of Jammu and Kashmir) except to the extent

to which the provisions of this Act relate to

rates of stamp-duty in respect of the documents

specified in entry 91 of List I in the

Seventh Schedule to the Constitution.] (3) It

shall come into force on the first day of July,

1899. 2 Definitions. —In this Act, unless

there is something repugnant in the subject

or context,— (1) “Banker” includes a bank

and any person acting as a banker; (2) “Bill

of exchange” means a bill of exchange as defined

by the Negotiable Instruments Act, 1881

(26 of 1881), and includes also a hundi, and

any other document entitling or purporting to

entitle any person, whether named therein or

not, to payment by any other person of, or

to draw upon any other person for, any sum

of money; (3) “Bill of exchange payable on demand”

includes— (a) an order for the payment

of any sum of money by a bill of exchange or

promissory note, or for the delivery of any bill

of exchange or promissory note in satisfaction

of any sum of money, or for the payment of

any sum of money out of any particular fund

which may or may not be available, or upon

any condition or contingency which may or

may not be performed or happen; (b) an order

for the payment of any sum of money weekly,

monthly, or at any other stated period; and

(c) a letter of credit, that is to say, any instrument

by which one person authorizes another

to give credit to the person in whose

favour it is drawn; (4) “Bill of lading” includes

a “through bill lading”, but does not include

a mate’s receipt; (5) “Bond” includes— (a)

any instrument whereby a person obliges himself

to pay money to another, on condition

that the obligation shall be void if a specified

act is performed, or is not performed, as the

case may be; (b) any instrument attested by

a witness and not payable to order or bearer,

whereby a person obliges himself to pay money

to another; and (c) any instrument so attested,

whereby a person obliges himself to deliver

grain or other agricultural produce to another;

(6) “Chargeable” means, as applied to an instrument

executed or first executed after the

commencement of this Act, chargeable under

this Act, and, as applied to any other instrument,

chargeable under the law in force

in 3 [India] when such instrument was executed

or, where several persons executed the

instrument at different times, first executed;

(7) “Cheque” means a bill of exchange drawn

on a specified banker and not expressed to be

payable otherwise than on demand; 4 [***] (9)

“Collector”— (a) means, within the limits of

the towns of Calcutta, Madras and Bombay,

the Collector of Calcutta, Madras and Bombay,

respectively, and, without those limits,

the Collector of a district, and (b) includes

a Deputy Commissioner and any officer whom

5 [the 6 [State Government]] may, by notification

in the Official Gazette, appoint in this behalf;

(10) “Conveyance” includes a conveyance

197


on sale and every instrument by which property,

whether movable or immovable, is transferred

inter vivos and which is not otherwise

specifically provided for by Schedule I; (11)

“Duly stamped”, as applied to an instrument,

means that the instrument bears an adhesive

or impressed stamp of not less than the proper

amount and that such stamp has been affixed

or used in accordance with law for time being

in force in 3 [India]; (12) “Executed” and “execution”,

used with reference to instruments,

mean “signed” and “signature”; 7 [***] (13)

“Impressed stamp” includes— (a) labels affixed

and impressed by the proper officer, and

(b) stamps embossed or engraved on stamped

paper; 8 [(13A) “ India ” means the territory

of India excluding the State of Jammu and

Kashmir ;] (14) “Instrument” includes every

document by which any right or liability is,

or purports to be, created, transferred, limited,

extended, extinguished or record; (15)

“Instrument of partition” means any instrument

whereby co-owners of any property divide

or agree to divide such property in severalty,

and includes also a final order for effecting

a partition passed by any revenue-authority or

any Civil Court and an award by an arbitrator

directing a partition; (16) “Lease” means

a lease of immovable property, and includes

also— (a) a patta; (b) a Kabuliyat or other

undertaking in writing, not being a counterpart

of a lease, to cultivate, occupy, or pay

or deliver rent for, immovable property; (c)

any instrument by which tolls of any description

are let; (d) any writing on an application

for a lease intended to signify that the application

is granted; 9 [(16A) “Marketable security”

means a security of such a description

as to be capable of being sold in any stock

market in 10 [ India ] or in the United Kingdom

;] (17) “Mortgage-deed” includes every

instrument whereby, for the purpose of securing

money advanced, or to be advanced, by

way of loan, or an existing or future debt, or

the performance of an engagement, one person

transfers, or creates, to, or in favour of,

another, a right over or in respect of specified

property; (18) “Paper” includes vellum,

parchment or any other material on which an

instrument may be written; (19) “Policy of

insurance” includes— (a) any instrument by

which one person, in consideration of a premium,

engages to indemnify another against

loss, damage or liability arising from an unknown

or contingent event; (b) a life-policy,

and any policy insuring any person against accident

or sickness, and any other personal insurance;

11 [***] 12 [***] 13 [(19A) “Policy of

group insurance” means any instrument covering

not less than fifty or such smaller number

as the Central Government may approve, either

generally or with reference to any particular

case, by which an insurer, in consideration

of a premium paid by an employer or by an

employer and his employees jointly, engages

to cover, with or without medical examination

and for the sole benefit of persons other

than the employer, the lives of all the employees

or of any class of them, determined by

conditions pertaining to the employment, for

amounts of insurance based upon a plan which

precludes individual selection;] (20) “Policy

of sea-insurance” or “sea-policy”— (a) means

any insurance made upon any ship or vessel

(whether for marine or inland navigation), or

upon the machinery, tackle or furniture of any

ship or vessel, or upon any goods, merchandise

or property of any description whatever on

board of any ship or vessel, or upon the freight

of, or any other interest which may be lawfully

insured in, or relating to, any ship or vessel,

and (b) includes any insurance of goods, merchandise

or property for any transit which includes,

not only a sea risk within the meaning

of clause (a), but also any other risk incidental

to the transit insured from the commencement

of the transit to the ultimate destination

covered by the insurance; Where any person,

in consideration of any sum of money paid or

to be paid for additional freight or otherwise,

agrees to take upon himself any risk attending

goods, merchandise or property of any description

whatever while on board of any ship

or vessel, or engages to indemnify the owner of

any such goods, merchandise or property form

any risk, loss or damage, such agreement or

engagement shall be deemed to be a contract

for sea-insurance; (21) “Power-of-attorney” includes

any instrument (not chargeable with a

fee under the law relating to court-fees for the

7.0 7. THE INDIAN STAMP ACT, 1899


time being in force) empowering a specified

person to act for and in the name of the person

executing it; (22) “Promissory note” means a

promissory note as defined by the Negotiable

Instruments Act, 1881 (26 of 1881); It also includes

a note promising the payment of any

sum of money out of any particular fund which

may or may not be available, or upon any condition

or contingency which may or may not

be performed or happen; (23) “Receipt” includes

any note, memorandum or writing—

(a) whereby any money, or any bill of exchange,

cheque or promissory note is acknowledged

to have been received, or (b) whereby

any other movable property is acknowledged

to have been received in satisfaction of a debt,

or (c) whereby any debt or demand, or any

part of a debt or demand, is acknowledged to

have been satisfied or discharged, or (d) which

signifies or imports any such acknowledgment,

and whether the same is or is not signed with

the name of any person; 14 [***] (24) “Settlement”

means any non-testamentary disposition,

in writing, of movable or immovable

property made— (a) in consideration of marriage,

(b) for the purpose of distributing property

of the settler among his family or those

for whom he desires to provide, or for the

purpose of providing for some person dependent

on him, or (c) for any religious or charitable

purpose; and includes an agreement in

writing to make such a disposition 15 [and,

where, any such disposition has not been made

in writing, any instrument recording, whether

by way of declaration of trust or otherwise,

the terms of any such disposition]; 16 [***]

17 [(25) “Soldier” includes any person below

the rank of non-commissioned officer who is

enrolled under the Indian Army Act, 1911 (8

of 1911) 18 ;] 19 [(26) “Stamp” means any

mark, seal or endorsement by any agency or

person duly authorised by the State Government,

and includes an adhesive or impressed

stamp, for the purpose of duty chargeable under

this Act.] 3. Instruments chargeable with

duty.—Subject to the provisions of this Act

and the exemptions contained in Schedule I,

the following instruments shall be chargeable

with duty of the amount indicated in that

Schedule as the proper duty therefore, respectively,

that is to say— (a) every instrument

mentioned in that Schedule which, not having

been previously executed by any person, is executed

in 20 [India] on or after the first day

of July, 1899; (b) every bill of exchange 21

[payable otherwise than on demand] 22 [***]

or promissory note drawn or made out of 20

[India] on or after that day and accepted or

paid, or presented for acceptance or payment,

or endorsed, transferred or otherwise negotiated,

in 20 [India]; and (c) every instrument

(other than a bill exchange 22 [***] or promissory

note) mentioned in that Schedule, which,

not having been previously executed by any

person, is executed out of 20 [India] on or

after that day relates to any property situate,

or to any matter or thing done or to be

done, in 20 [India] and is received in 20 [India]:

Provided that no duty shall be chargeable in

respect of— (1) any instrument executed by,

or on behalf of, or in favour of, the Government

in cases where, but for this exemption,

the Government would be liable to pay the

duty chargeable in respect of such instrument;

(2) any instrument for the sale, transfer or

other disposition, either absolutely or by way

of mortgage or otherwise, of any ship or vessel,

or any part, interest, share or property of

or in any ship or vessel, registered under the

Merchant Shipping Act, 1894, or under Act

19 of 1938, or the Indian Registration of Ships

Act, 1841 (10 of 1841) as amended by subsequent

Acts. 23 [(3) any instrument executed,

by, or, on behalf of, or, in favour of, the Developer,

or Unit or in connection with the carrying

out of purposes of the Special Economic

Zone. Explanation.—For the purposes of this

clause, the expressions “Developer”, “Special

Economic Zone” and “Unit” shall have meanings

respectively assigned to them in clause

(g), (za) and (zc) of section 2 of the Special

Economic Zones Act, 2005.] 24 [3A. Instruments

chargeable with additional duty.—[Rep.

by the Refugee Relief Taxes (Abolition) Act,

1973 (13 of 1973), sec. 2 (w.e.f. 1-4-1973).]]

4. Several instruments used in single transaction

of sale, mortgage or settlement.— (1)

Where, in the case of any sale, mortgage or

settlement, several instruments are employed

for completing the transaction, the principal

7. THE INDIAN STAMP ACT, 1899 7.0


instrument only shall be chargeable with the

duty prescribed in Schedule I, for the conveyance,

mortgage or settlement, and each of

the other instruments shall be chargeable with

a duty of one rupee instead of the duty (if any)

prescribed for it in that Schedule. (2) The

parties may determine for themselves which

of the instrument so employed shall, for the

purposes of sub-section (1), be deemed to be

the principal instrument: Provided that the

duty chargeable on the instrument so determined

shall be the highest duty which would

be chargeable in respect of any of the said instruments

employed. 5. Instruments relating

to several distinct matters.—Any instrument

comprising or relating to several distinct

matters shall be chargeable with the aggregate

amount of the duties with which separate

instruments, each comprising or relating

to one of such matters, would be chargeable

under this Act. 6. Instruments coming within

several descriptions in Schedule I.—Subject to

the provisions of the last preceding section,

an instrument so framed as to come within

two or more of the descriptions in Schedule

I, shall, where the duties chargeable thereunder

are different, be chargeable only with the

highest of such duties: Provided that nothing

in this Act contained shall render chargeable

with duty exceeding one rupee a counterpart

or duplicate of any instrument chargeable with

duty and in respect of which the proper duty

has been paid. 7. Policies of sea-insurance.—

25 [***] (4) Where any sea-insurance is made

for or upon a voyage and also for time, or to

extend to or cover any time beyond thirty days

after the ship shall have arrived at her destination

and been there moored at anchor, the

policy shall be charged with duty as a policy

for or upon a voyage, and also with duty as

a policy for time. 8. Bonds, debentures or

other securities issued on loans under Act 11

of 1879.— (1) Notwithstanding anything contained

in this Act, any local authority raising

a loan under the provisions of the Local

Authorities Loan Act, 1879, or of any other

law for the time being in force, by the issue of

bonds, debentures or other securities, shall, in

respect of such loan, be chargeable with a duty

of 26 [one per centum] on the total amount

of the bonds, debentures or other securities

issued by it, and such bonds, debentures or

other securities need not be stamped and shall

not be chargeable with any further duty on

renewal, consolidation, sub-division or otherwise.

(2) The provisions of sub-section (1)

exempting certain bonds, debentures or other

securities from being stamped and from being

chargeable with certain further duty shall

apply to the bonds, debentures or other securities

of all outstanding loans of the kind mentioned

therein, and all such bonds, debentures

or other securities shall be valid, whether the

same are stamped or not: Provided that nothing

herein contained shall exempt the local authority

which has issued such bonds, debentures

or other securities from the duty chargeable

in respect thereof prior to the twentysixth

day of March, 1897, when such duty

has not already been paid or remitted by order

issued by the 27 [Central Government].

(3) In the case of wilful neglect to pay the

duty required by this section, the local authority

shall be liable to forfeit to the Government

a sum equal to ten per centum upon

the amount of duty payable, and a like penalty

for every month after the first month during

which the neglect continues. 28 [ 8A Securities

dealt in depository not liable to stamp

duty. —Notwithstanding anything contained

in this Act or any other law for the time being

in force,— (a) an issuer, by the issue of

securities to one or more depositories shall,

in respect of such issue, be chargeable with

duty on the total amount of security issued by

it and such securities need not be stamped;

(b) where an issuer issues certificate of security

under sub-section (3) of section 14 of the

Depositories Act, 1996 (22 of 1996), on such

certificate duty shall be payable as is payable

on the issue of duplicate certificate under this

Act; (c) the transfer of— (i) registered ownership

of securities from a person to a depository

or from a depository to a beneficial owner; (ii)

beneficial ownership of securities, dealt with

by a depository; (iii) beneficial ownership of

units, such units being units of a Mutual Fund

including units of the Unit Trust of India established

under sub-section (1) of section 3

of the Unit Trust of India Act, 1963 (52 of



1963), dealt with by a depository, shall not

be liable to duty under this Act or any other

law for the time being in force. Explanation

1.— For the purposes of this section, the expressions

“beneficial owner”, “depository” and

“issuer”, shall have the meanings respectively

assigned to them in clauses (a) , (e) and (f)

of sub-section (1) of section 2 of the Depositories

Act, 1996 (22 of 1996). Explanation

2 .—For the purposes of this section, the expression

"securities" shall have the meaning assigned

to it in clause (h) of section 2 of the Securities

Contracts (Regulation) Act, 1956 (42

of 1956).] 29 [8B. Corporatisation and demutualisation

schemes and related instruments

not liable to duty.—Notwithstanding anything

contained in this Act or any other law for the

time being in force,— (a) a scheme for corporatisation

or demutualisation, or both of a

recognised stock exchange; or (b) any instrument,

including an instrument of, or relating

to, transfer of any property, business, asset

whether movable or immovable, contract,

right, liability and obligation, for the purpose

of, or in connection with, the corporatisation

or demutualisation, or both of a recognised

stock exchange pursuant to a scheme, as approved

by the Securities and Exchange Board

of India under sub-section (2) of section 4B

of the Securities Contracts (Regulation) Act,

1956, shall not be liable to duty under this Act

or any other law for the time being in force.

Explanation.—For the purposes of this section,—

(a) the expressions "corporatisation",

"demutualisation" and "scheme" shall have the

meanings respectively assigned to them in

clauses (aa), (ab) and (ga) of section 2 of the

Securities Contracts (Regulation) Act, 1956;

(b) "Securities and Exchange Board of India"

means the Securities and Exchange Board of

India established under section 3 of the Securities

and Exchange Board of India Act,

1992.] [8C. Negotiable warehouse receipts not

liable to stamp duty.—Notwithstanding anything

contained in this Act, negotiable warehouse

receipts shall not be liable to stamp

duty]. 9. Power to reduce, remit or compound

duties.— 30 [ (1) ] 31 [The 32 [***]

Government] may, by rule or order published

in the Official Gazette,— (a) reduce or remit*,

whether prospectively or retrospectively,

in the whole or any part of 33 [the territories

under its administration], the duties with

which any instruments or any particular class

of instruments, or any of the instruments belonging

to such class, or any instruments when

executed by or in favour of any particular class

of persons or by or in favour of any members

of such class, are chargeable, and (b) provide

for the composition or consolidation of duties

34 [of policies of insurance and] in the case of

issues by any incorporated company or other

body corporate 35 [or of transfers (where there

is a single transferee, whether incorporated

or not)] of debentures, bonds or other marketable

securities. 36 [(2) In this section, the

expression “the Government” means,— (a) in

relation to stamp-duty in respect of bills of

exchange, cheques, promissory notes, bills of

lading, letters of credit, policies of insurance,

transfer of shares, debentures, proxies and receipts,

and in relation to any other stamp-duty

chargeable under this Act and falling within

entry 96 of List I in the 37 [Seventh Schedule

to the Constitution, except the subject matters

referred to in clause (b) of sub-section

(1)]; (b) save as aforesaid, the State Government.]

10. Duties how to be paid.—(l) Except

as otherwise expressly provided in this

Act, all duties with which any instruments

are chargeable shall be paid, and such payment

shall be indicated on such instruments

by means of stamps— (a) according to the

provisions herein contained; or (b) when no

such provision is applicable thereto, as the 38

[State Government] may by rule direct. (2)

The rules made under sub-section (1) may,

among other matters, regulate,— (a) in the

case of each kind of instrument — the description

of stamps which may be used; (b) in the

case of instruments stamped with impressed

stamps— the number of stamps which may be

used; (c) in the case of bills of exchange or

promissory notes 39 [***] the size of the paper

on which they are written. 11. Use of adhesive

stamps.—The following instruments may be

stamped with adhesive stamps, namely:— (a)

instruments chargeable 40 [with a duty not exceeding

ten naye paise], except parts of bills of

exchange payable otherwise than on demand



and drawn in sets; (b) bills of exchange 41

[***] and promissory notes drawn or made out

of 42 [India]; (c) entry as an advocate, vakil or

attorney on the roll of a High Court; (d) notarial

acts; and (e) transfers by endorsement of

shares in any incorporated company or other

body corporate. 12. Cancellation of adhesive

stamps.—(l) (a) Whoever affixes any adhesive

stamp to any instrument chargeable with duty

which has been executed by any person shall,

when affixing such stamp, cancel the same so

that it cannot be used again; and (b) Whoever

executes any instrument on any paper bearing

an adhesive stamp shall, at the time of execution,

unless such stamp has been already

cancelled in manner aforesaid, cancel the same

so that it cannot be used again. (2) Any instrument

bearing an adhesive stamp which has

not been cancelled so that it cannot be used

again, shall so far as such stamp is concerned,

be deemed to be unstamped. (3) The person

required by sub-section (1) to cancel an

adhesive stamp may cancel it by writing on

or across the stamp his name or initials or

the name or initials of his firm with the true

date of his so writing, or in any other effectual

manner. 13. Instruments stamped with

impressed stamps how to be written.—Every

instrument written upon paper stamped with

an impressed stamp shall be written in such

manner that the stamp may appear on the

face of the instrument and cannot be used for

or applied to any other instrument. 14. Only

one instrument to be on same stamp.—No second

instrument chargeable with duty shall be

written upon a piece of stamped paper upon

which an instrument chargeable with duty has

already been written: Provided that nothing

in this section shall prevent any endorsement

which is duly stamped or is not chargeable

with duty being made upon any instrument for

the purpose of transferring any right created

or evidenced thereby, or of acknowledging the

receipt of any money or goods the payment or

delivery of which is secured thereby. 15. Instrument

written contrary to section 13 or 14

deemed unstamped.—Every instrument written

in contravention of section 13 or section 14

shall be deemed to be unstamped. 16. Denoting

duty.—Where the duty with which an instrument

is chargeable, or its exemption from

duty, depends in any manner upon the duty

actually paid in respect of both the instruments,

be denoted upon such first mentioned

instrument by application is made in writing

to the Collector for that purpose, and on production

of both the instruments, be denoted

upon such first mentioned instrument by endorsement

under the hand of the Collector or

in such other manner (if any) as the 43 [State

Government] may by rule prescribe. 17. Instruments

executed in India.—All instrument

chargeable with duty and executed by any person

in 44 [India] shall be stamped before or at

the time of execution. 18. Instruments other

than bills and notes executed out of India.—

(1) Every instrument chargeable with duty executed

only out of 45 [India] and not being a

bill of exchange 46 [***] or promissory note,

may be stamped within three months after it

has been first received in 45 [India]. (2) Where

any such instrument cannot, with reference to

the description of stamp prescribed therefor,

be duly stamped by a private person, it may be

taken within the said period of three months

to the Collector, who shall stamp the same,

in such manner as the 47 [State Government]

may by rule prescribe, with a stamp of such

value as the person so taking such instrument

may require and pay for. 19. Bills and notes

drawn out of India.—The first holder in 48 [India]

of any bill of exchange 49 [payable otherwise

than on demand], 50 [***] or promissory

note drawn or made out of 48 [India] shall,

before he presents the same for acceptance or

payment, or endorses, transfers or otherwise

negotiates the same in 48 [India], affix thereto

the proper stamp and cancel the same: Provided

that,— (a) if, at the time any such bill

of exchange 50 [***] or note comes into the

hands of any holder thereof in 48 [India], the

proper adhesive stamp is affixed thereto and

cancelled in manner prescribed by section 12

and such holder has no reason to believe that

such stamp was affixed or cancelled otherwise

than by the person and at the time required

by this Act, such stamp shall, so far as relates

to such holder, by deemed to have been

duly affixed and cancelled; (b) nothing contained

in this proviso shall relieve any person



from any penalty incurred by him for omitting

to affix or cancel a stamp. 20. Conversion

of amount expressed in foreign currencies.—

(1) Where an instrument is chargeable with

ad valorem duty in respect of any money expressed

in any currency other than that of 51

[India] such duty shall be calculated on the

value of such money in the currency of 51 [India]

according to the current rate of exchange

on the day of the date of the instrument. (2)

The 52 [Central Government] may, from time

to time, by notification in the Official Gazette,

prescribe a rate of exchange for the conversion

of British or any foreign currency into the currency

of 51 [India] for the purposes of calculating

stamp-duty, and such rate shall be deemed

to be the current rate for the purposes of subsection

(1). 21. Stock and marketable securities

how to be valued.—Where an instrument

is chargeable with ad valorem duty in respect

of any stock or of any marketable or other security,

such duty shall be calculated on the

value of such stock or security according to

the average price or the value thereof on the

day of the date of the instrument. 22. Effect

of statement of rate of exchange or average

price.—Where an instrument contains a statement

of current rate of exchange, or average

price, as the case may require, and is stamped

in accordance with such statement, it shall,

so far as regards they subject-matter of such

statement, be presumed, until the contrary

is proved, to be duly stamped. 23. Instruments

reserving interest.—Where interest is

expressly made payable by the terms of an instrument,

such instrument shall not be chargeable

with duty higher than that with which it

would have been chargeable had not mention

of interest been made therein. [23A. Certain

instruments connected with mortgages of marketable

securities to be chargeable as agreements.—

(1) Where an instrument (not being

a promissory note or bill of exchange)—

(a) is given upon the occasion of the deposit

of any marketable security by way of security

for money advanced or to be advanced

by way of loan, or for an existing or future

debt, or (b) makes redeemable or qualifies a

duly stamped transfer, intended as a security,

of any marketable security, it shall be chargeable

with duty as if it were an agreement or

memorandum of an agreement chargeable with

duty under 53 [Article No. 5(c)] of Schedule I.

(2) A release or discharge of any such instrument

shall only be chargeable with the like

duty.] 24. How transfer in consideration of

debt, or subject to future payment, etc., to be

charged.—Where any property is transferred

to any person in consideration, wholly or in

part, of any debt due to him, or subject either

certainly or contingently to the payment

or transfer of any money or stock, whether being

or constituting a charge or incumbrance

upon the property or not, such debt, money

or stock is to be deemed the whole or part,

as the case may be, of the consideration in respect

whereof the transfer is chargeable with

ad valorem duty: Provided that nothing in

this section shall apply to any such certificate

of sale as is mentioned in Article No. 18

of Schedule I. Explanation.—In the case of a

sale of property subject to a mortgage or other

incumbrance, any unpaid mortgage money or

money charged, together with the interest (if

any) due on the same, small be deemed to be

part of the consideration for the sale: Provided

that, where property, subject to a mortgage is

transferred to the mortgagee, he shall be entitled

to deduct from the duty payable on the

transfer the amount of any duty already paid

in respect of the mortgage. Illustrations (1) A

owes B Rs. 1,000. A sells a property to B, the

consideration being Rs. 500 and the release of

the previous debt of Rs. 1,000 Stamp-duty is

payable on Rs. 1,500. (2) A sells property to B

for Rs. 500 which is subject to a mortgage to

C for Rs. 1,000 and unpaid interest Rs. 200.

Stamp-duty is payable on Rs. 1,700. (3) A

mortgages a house of the value of Rs. 10,000

to B for Rs. 5,000. B afterwards buys the

house from A. Stamp-duty is payable on Rs.

10,000 less the amount of stamp-duty already

paid for the mortgage. 25. Valuation in case

of annuity, etc.—Where an instrument is executed

to secure the payment of an annuity or

other sum payable periodically, or where the

consideration for a conveyance is an annuity

or other sum payable periodically, the amount

secured by such instrument or the consideration

for such conveyance, as the case may be,



shall, for the purposes of this Act be deemed

to be— (a) where the sum is payable for a

definite period so that the total amount to be

paid can be previously ascertained—such total

amount; (b) where the sum is payable in perpetuity

or for an indefinite time not terminable

with any life in being at the date of such

instrument or conveyance—the total amount

which, according to the terms of such instrument

or conveyance, will or may be payable

during the period to twenty years calculated

from the date on which the first payment becomes

due; and (c) where the sum is payable

for an indefinite time terminable with any life

in being at the date of such instrument or conveyance—the

maximum amount which will or

may be payable as aforesaid during the period

of twelve years calculated from the date

on which the first payment becomes due. 26.

Stamp where value of subject-matter is indeterminate.—Where

the amount or value of

the subject-matter of any instrument chargeable

with ad valorem duty cannot be, or (in

the case of an instrument executed before the

commencement of this Act) could not have

been, ascertained at the date of its execution

or first execution, nothing shall be claimable

under such instrument more than the highest

amount of value for which if stated in an instrument

of the same description, the stamp

actually used would, at the date of such execution,

have been sufficient: 54 [Provided that,

in the case of the lease of a mine in which royalty

or a share of the produce is received as the

rent or part of the rent, it shall be sufficient

to have estimated such royalty or the value of

such share, for the purpose of stamp-duty,—

(a) when the lease has been granted by or only

behalf of 55 [the Government], at such amount

or value as the Collector may, having regard

to all the circumstances of the case, have estimated

as likely to be payable by way of royalty

or share to the Government under the

lease, or (b) when the lease has been granted

by any other person, at twenty thousand rupees

a year, and the whole amount of such

royalty or share, whatever it may be, shall

be claimable under such lease:] Provided also

that where proceedings have been taken in respect

of an instrument under section 31 or 41,

the amount certified by the Collector shall be

deemed to be the stamp actually used at the

date of execution. 27. Facts affecting duty to

be set forth in instrument.—The consideration

(if any) and all other facts and circumstances

affecting the chargeability of any instrument

with duty, or the amount of the duty with

which it is chargeable, shall be fully and truly

set forth therein. 28. Direction as to duty in

case of certain conveyances.— (1) when any

property has been contracted to be sold for one

consideration for the whole, and is conveyed

to the purchaser in separate parts by different

instruments, the consideration shall be apportioned

in such manner as the parties think fit,

provided that a distinct consideration for each

separate part is set forth in the conveyance relating

thereto, and such conveyance shall be

chargeable with ad valorem duty in respect of

such distinct consideration. (2) Where property

contracted to be purchased for one consideration

for the whole, by two or more persons

jointly, or by any person for himself and others,

or wholly for others, is conveyed in parts

by separate instruments to the persons by or

for whom the same was purchased, for distinct

parts of the consideration, the conveyance of

each separate part shall be chargeable with ad

valorem duty in respect of the distinct part of

the consideration therein specified. (3) Where

a person, having contracted for the purchase

of any property but not having obtained a

conveyance thereof, contracts to sell the same

to any other person and the property is in

consequence conveyed immediately to the subpurchaser,

the conveyance shall be chargeable

with ad valorem duty in respect of the consideration

for the sale by the original purchaser to

the sub-purchaser. (4) Where a person, having

contracted for the purchase of any property

but not having obtained a conveyance

thereof, contracts to sell the whole, or any

part thereof, to any other person or persons

and the property is in consequence conveyed

by the original seller to different persons in

parts, the conveyance of each part sold to a

sub-purchaser shall be chargeable with ad valorem

duty in respect only of the consideration

paid by such sub-purchaser, without regard to

the amount or value of the original considera-



tion, and the conveyance of the residue (if any)

of such property to the original purchaser shall

be chargeable with ad valorem duty in respect

only of the excess of the original consideration

over the aggregate of the considerations

paid by the sub-purchasers: Provided that the

duty on such last-mentioned conveyance shall

in no case be less than one rupee. (5) Where

a sub-purchaser takes an actual conveyance of

the interest of the person immediately selling

to him, which is chargeable with ad valorem

duty in respect of the consideration paid by

him and is duly stamped accordingly, any conveyance

to be afterward made to him of the

same property by the original seller shall be

chargeable with a duty equal to that which

would be chargeable on a conveyance for the

consideration obtained by such original seller,

or, where such duty would exceed five rupees,

with a duty of five rupees. 29. Duties by

whom payable.—In the absence of an agreement

to the contrary, the expense of providing

the proper stamp shall be borne— (a) in

the case of any instrument described in any of

the following Articles of Schedule I, namely:—

(No) 2. (Administration Bonds), 56 [(No) 6.

(Agreement relating to deposit of Title deeds,

Pawn or Pledge)], (No) 13. (Bill of Exchange),

(No) 15. (Bonds), (No) 16. (Bottomry Bond),

(No) 26. (Customs Bond), (No) 27. (Debenture),

(No) 32. (Further Charge), (No) 34.

(Indemnity-Bond), (No) 40. (Mortgage-deed),

(No) 49. (Promissory-note), (No) 55. (Release),

(No) 56.(Respondentia Bond), (No) 57.

(Security Bond or Mortgage-deed), (No) 58.

(Settlement), (No) 62(a). (Transfer of shares

in an incorporated company or other body

corporate), (No) 62(b). (Transfer of debentures,

being marketable securities, whether

the debenture is liable to duty or not, except

debentures provided for by section 8), (No)

62(c). (Transfer of any interest secured by a

bond, mortgage-deed or policy of insurance);

by the person drawing, making or executing

such instrument; 57 [(b) in the case of a policy

of insurance other than fire-insurance—by

the person effecting the insurance; (bb) in the

case of a policy of fire-insurance—by the person

issuing the policy;] (c) in the case of a

conveyance (including a reconveyance of mortgaged

property) by the grantee; in the case of

a lease or agreement to lease—by the lessee or

intended lessee; (d) in the case of a counterpart

of a lease—by the lessor; (e) in the case

of an instrument of exchange—by the parties

in equal shares; (f) in the case of a certificate

of sale—by the purchaser of the property

to which such certificate relates; and (g) in

the case of an instrument of partition—by the

parties thereto in proportion to their respective

shares in the whole property partitioned,

or, when the partition is made in execution

of an order passed by a Revenue authority

or Civil Court or arbitrator, in such proportion

as such authority, Court or arbitrator directs.

30. Obligation to give receipt in certain

cases.—Any person receiving any money; exceeding

twenty rupees in amount, or any bill

of exchange, cheque or promissory note for an

amount exceeding twenty rupees, or receiving

in satisfaction or part satisfaction of a debt

any movable property exceeding twenty rupees

in value, shall, on demand by the person paying

or delivering such money, bill, cheque, note

or property, give a duly stamped receipt for

the same. 58 [Any person receiving or taking

credit for any premium or consideration for

any renewal of any contract of fire-insurance,

shall, within one month after receiving or taking

credit for such premium or consideration,

give a duly stamped receipt for the same.] 31.

Adjudication as to proper stamp.— (1) When

any instrument, whether executed or not and

whether previously stamped or not, is brought

to the Collector, and the person bringing it applies

to have the opinion of that officer as to

the duty (if any) with which it is chargeable,

and pays a fee of such amount (not exceeding

five rupees and not less than 59 [fifty naye

paise]) as the Collector may in each case direct,

the Collector shall determine the duty (if

any) with which, in his judgment the instrument

is chargeable. (2) For this purpose the

Collector may require to be furnished with an

abstract of the instrument, and also with such

affidavit or other evidence as he may deem

necessary to prove that all the facts and circumstances

affecting the chargeability of the

instrument with duty, or the amount of the

duty with which it is chargeable, are fully and



truly set forth therein, and may refuse to proceed

upon any such application until such abstract

and evidence have been furnished accordingly:

Provided that— (a) no evidence

furnished in pursuance of this section shall be

used against any person in any civil proceeding,

except in an enquiry as to the duty with

which the instrument to which it relates is

chargeable; and (b) every person by whom any

such evidence is furnished, shall, on payment

of the full duty with which the instrument to

which it relates, is chargeable, be relieved from

any penalty which he may have incurred under

this Act by reason of the omission to state

truly in such instrument any of the facts or circumstances

aforesaid. 32. Certificate by Collector.—

(1) When an instrument brought to

the Collector under section 31 is, in his opinion,

one of a description chargeable with duty,

and— (a) the Collector determines that it is

already fully stamped, or (b) the duty determined

by the Collector under section 31, or

such a sum as, with the duty already paid in

respect of the instrument, is equal to the duty

so determined, has been paid, the Collector

shall certify by endorsement on such instrument

that the full duty (stating the amount)

with which it is chargeable has been paid.

(2) When such instrument is, in his opinion,

not chargeable with duty, the Collector shall

certify in manner aforesaid that such instrument

is not so chargeable. (3) Any instrument

upon which an endorsement has been

made under this section, shall be deemed to

be duly stamped or not chargeable with duty,

as the case may be; and, if chargeable with

duty, shall be receivable in evidence or otherwise,

and may be acted upon and registered

as if it had been originally duly stamped: Provided

that nothing in this section shall authorise

the Collector to endorse— (a) any instrument

executed or first executed in 60 [India]

and brought to him after the expiration of one

month from the date of its execution or first

execution, as the case may be; (b) any instrument

executed or first executed out of 60 [India]

and brought to him after the expiration of

three months after it has been first received in

60 [India]; or (c) any instrument chargeable 61

[with a duty not exceeding ten naye paise], or

any bill of exchange or promissory note, when

brought to him, after the drawing or execution

thereof, on paper not duly stamped. 33. Examination

and impounding of instruments.—

(1) Every person having by law or consent of

parties, authority to receive evidence, and every

person in charge of a public office, except

an officer of police, before whom any instrument,

chargeable, in his opinion, with duty, is

produced or comes in the performance of his

functions, shall, if it appears to him that such

instrument is not duly stamped, impound the

same. (2) For that purpose every such person

shall examine every instrument so chargeable

and so produced or coming before him, in order

to ascertain whether it is stamped with a

stamp of the value and description required by

the law in force in 62 [India] when such instrument

was executed or first executed: Provided

that— (a) nothing herein contained shall be

deemed to require any Magistrate or Judge

of a Criminal Court to examine or impound,

if he does not think fit so to do, any instrument

coming before him in the course of

any proceeding other than a proceeding under

Chapter XII or Chapter XXXVI of the Code

of Criminal Procedure, 1898 (5 of 1898); (b)

in the case of a Judge of a High Court, the

duty of examining and impounding any instrument

under this section may be delegated to

such officer as the Court appoints in this behalf.

(3) For the purposes of this section, in

cases of doubt,— (a) 62 [the 63 [State Government]]

may determine what offices shall be

deemed to be public offices; and (b) 62 [the

63 [State Government]] may determine who

shall be deemed to be persons in charge of

public offices. 34. Special provision as to unstamped

receipts.—Where any receipt chargeable

64 [with a duty not exceeding ten naye

paise] is tendered to or produced before any

officer unstamped in the course of the audit of

any public account, such officer may in his discretion

instead of impounding the instrument,

require a duly stamped receipt to be substituted

therefore. 35. Instruments not duly

stamped inadmissible in evidence, etc.—No instrument

chargeable with duty shall be admitted

in evidence for any purpose by any person

having by law or consent of parties authority



to receive evidence, or shall be acted upon,

registered or authenticated by any such person

or by any public officer, unless such instrument

is duly stamped: Provided that—

(a) any such instrument 65 [shall], be admitted

in evidence on payment of the duty with

which the same is chargeable, or, in the case

of an instrument insufficiently stamped, of the

amount required to make up such duty, together

with a penalty of five rupees, or, when

ten times the amount of the proper duty or

deficient portion thereof exceeds five rupees,

of a sum equal to ten times such duty or

portion; (b) where any person from whom a

stamped receipt could have been demanded,

has given an unstamped receipt and such receipt,

if stamped, would be admissible in evidence

against him, then such receipt shall be

admitted in evidence against him, then such

receipt shall be admitted in evidence against

him on payment of a penalty of one rupee by

the person tendering it; (c) where a contract or

agreement of any kind is effected by correspondence

consisting of two or more letters and any

one of the letters bears the proper stamp, the

contract or agreement shall be deemed to be

duly stamped; (d) nothing herein contained

shall prevent the admission of any instrument

in evidence in any proceeding in a Criminal

Court, other than a proceeding under Chapter

XII or Chapter XXXVI of the Code of Criminal

Procedure, 1898 (5 of 1898); (e) nothing

herein contained shall prevent the admission

of any instrument in any Court when such

instrument has been executed by or on behalf

of 66 [the 67 [Government]] or where it

bears the certificate of the Collector as provided

by section 32 or any other provision of

this Act. 36. Admission of instrument where

not to be questioned.—Where an instrument

has been admitted in evidence, such admission

shall not, except as provided in section 61, be

called in question at any stage of the same

suit or proceeding on the ground that the instrument

has not duly stamped. 37. Admission

of improperly stamped instruments.— 68

[The 69 [State Government]] may make rules

providing that, where an instrument bears a

stamp of sufficient amount but of improper description,

it may, on payment of the duty with

which the same is chargeable be certified to

be duly stamped, and any instrument so certified

shall then be deemed to have been duly

stamped as from the date of its execution. 38.

Instruments impounded, how dealt with.— (1)

Where the person impounding an instrument

under section 33 has by law or consent of parties

authority to receive evidence and admits

such instrument in evidence upon payment of

a penalty as provided by section 35 or of duty

as provided by section 37, he shall send to the

Collector an authenticated copy of such instrument,

together with a certificate in writing,

stating the amount of duty and penalty levied

in respect thereof, and shall send such amount

to the Collector, or to such person as he may

appoint in this behalf. (2) In every other case,

the person so impounding an instrument shall

send it in original to the Collector. 39. Collector’s

power to refund penalty paid under section

38, sub-section (1) .—(1) When a copy

of an instrument is sent to the Collector under

section 38, sub-section (1), he may, if he

thinks fit 70 [***] refund any portion of the

penalty in excess of five rupees which has been

paid in respect of such instrument. (2) When

such instrument has been impounded only because

it has been written in contravention of

section 13 or section 14, the Collector may refund

the whole penalty so paid. 39. Collector’s

power to refund penalty paid under section

38, sub-section (1) .—(1) When a copy of

an instrument is sent to the Collector under

section 38, sub-section (1), he may, if he thinks

fit 71 [***] refund any portion of the penalty

in excess of five rupees which has been paid

in respect of such instrument. (2) When such

instrument has been impounded only because

it has been written in contravention of section

13 or section 14, the Collector may refund the

whole penalty so paid. 40. Collector’s power

to stamp instruments impounded.— (1) When

the Collector impounds any instrument under

section 33, or receives any instrument sent to

him under section 38, sub-section (2), not being

an instrument chargeable 72 [with a duty

not exceeding ten naye paise] only or a bill of

exchange or promissory note, he shall adopt

the following procedure:— (a) if he is of opinion

that such instrument is duly stamped, or



is not chargeable with duty, he shall certify by

endorsement thereon that it is duly stamped,

or that it is not so chargeable, as the case

may be; (b) if he is of opinion that such instrument

is chargeable with duty and is not

duly stamped, he shall require the payment

of the proper duty or the amount required to

make up the same, together with a penalty

of the five rupees; or, if he thinks fit, 73 [an

amount not exceeding] ten times the amount

of the proper duty or of the deficient portion

thereof, whether such amount exceeds or falls

short of five rupees: Provided that, when such

instrument has been impounded only because

it has been written in contravention of section

13 or section 14, the Collector may, if he

thinks fit, remit the whole penalty prescribed

by this section. (2) Every certificate under

clause (a) of sub-section (1) shall, for the purposes

of this Act, be conclusive evidence of

the matters stated therein. (3) Where an instrument

has been sent to the Collector under

section 38, sub-section (2), the Collector

shall, when he has dealt with it as provided

by the section, return it to the impounding

officer. 40. Collector’s power to stamp instruments

impounded.— (1) When the Collector

impounds any instrument under section 33, or

receives any instrument sent to him under section

38, sub-section (2), not being an instrument

chargeable 74 [with a duty not exceeding

ten naye paise] only or a bill of exchange or

promissory note, he shall adopt the following

procedure:— (a) if he is of opinion that such

instrument is duly stamped, or is not chargeable

with duty, he shall certify by endorsement

thereon that it is duly stamped, or that it is

not so chargeable, as the case may be; (b) if he

is of opinion that such instrument is chargeable

with duty and is not duly stamped, he

shall require the payment of the proper duty

or the amount required to make up the same,

together with a penalty of the five rupees; or,

if he thinks fit, 75 [an amount not exceeding]

ten times the amount of the proper duty or

of the deficient portion thereof, whether such

amount exceeds or falls short of five rupees:

Provided that, when such instrument has been

impounded only because it has been written in

contravention of section 13 or section 14, the

Collector may, if he thinks fit, remit the whole

penalty prescribed by this section. (2) Every

certificate under clause (a) of sub-section

(1) shall, for the purposes of this Act, be conclusive

evidence of the matters stated therein.

(3) Where an instrument has been sent to the

Collector under section 38, sub-section (2),

the Collector shall, when he has dealt with

it as provided by the section, return it to

the impounding officer. 41. Instruments unduly

stamped by accident.—If any instrument

chargeable with duty and not duly stamped,

not being an instrument chargeable 76 [with

a duty not exceeding ten naye paise] only or

a bill of exchange or promissory note, is produced

by any person of his own motion before

the Collector within one year from the date of

its execution or first execution, and such person

brings to the notice of the Collector the

fact that such instrument is not duly stamped

and offers to pay the Collector the amount of

the proper duty, or the amount required to

make up the same, and the Collector is satisfied

that the omission to duly stamp such

instrument has been occasioned by accident,

mistake or urgent necessity, he may, instead

of proceeding under sections 33 and 40, receive

such amount and proceed as next hereinafter

prescribed. 42. Endorsement of instruments

in which duty has been paid under section 35,

40 or 41.— (1) When the duty and penalty (if

any) leviable in respect of any instrument have

been paid under section 35, section 40 or section

41, the person admitting such instrument

in evidence or the Collector, as the case may

be, shall certify by endorsement thereon that

the proper duty or, as the case may be, the

proper duty and penalty (stating the amount

of each) have been levied in respect thereof,

and the name and residence of the person paying

them. (2) Every instrument so endorsed

shall thereupon be admissible in evidence, and

may be registered and acted upon and authenticated

as if it had been duly stamped, and

shall be delivered on his application in this

behalf to the person from whose possession it

came into the hands of the officer impounding

it, or as such person may direct: Provided

that— (a) no instrument which has been admitted

in evidence upon payment of duty and



a penalty under section 35, shall be so delivered

before the expiration of one month from

the date of such impounding, or if the Collector

has certified that its further detention

is necessary and has not cancelled such certificate;

(b) nothing in this section shall affect

the 3Code of Civil Procedure, 1882 (14 of

1882), section 144 clause 3. 43. Prosecution

for offence against Stamp-law.—The taking of

proceedings or the payment of a penalty under

this Chapter in respect of any instrument shall

not bar the prosecution of any person who appears

to have committed an offence against the

Stamp-law in respect of such instrument: Provided

that no such prosecution shall be instituted

in the case of any instrument in respect

of which such a penalty has been paid, unless

it appears to the Collector that the offence was

committed with an intention of evading payment

of the proper duty. 44. Persons paying

duty or penalty may recover same in certain

cases.— (1) When any duty or penalty has

been paid under section 35, section 37, section

40 or section 41, by any person in respect

of an instrument, and, by agreement or under

the provisions of section 29 or any other enactment

in force at the time such instrument

was executed, some other person was bound

to bear the expense of providing the proper

stamp for such instrument, the first-mentioned

person shall be entitled to recover from such

other person the amount of the duty or penalty

so paid. (2) For the purpose of such recovery

any certificate granted in respect of such instrument

under this Act shall be conclusive

evidence of the matters therein certified. (3)

Such amount may, if the Court thinks fit, be

included in any order as to costs in any suit

or proceeding to which such persons are parties

and in which such instrument has been

tendered in evidence. If the Court does not include

the amount in such order, no further proceedings

for the recovery of the amount shall

be maintainable. 45. Power to Revenue authority

to refund penalty or excess duty in certain

cases.— (1) Where any penalty is paid under

section 35 or section 40, the Chief Controlling

Revenue-Authority may, upon application

in writing made within one year from the date

of the payment, refund such penalty wholly or

in part. (2) Where, in the opinion of the Chief

Controlling Revenue-Authority, stamp-duty in

excess of that which is legally chargeable has

been charged and paid under section 35 or section

40, such authority may, upon application

in writing made within three months of the order

charging the same, refund the excess. 46.

Non-liability for loss of instruments sent under

section 38.— (1) If any instrument sent to the

Collector under section 38, sub-section (2), is

lost, destroyed or damaged during transmission,

the person sending the same shall not

be liable for such loss, destruction or damage.

(2) When any instrument is about to be so

sent, the person from whose possession it came

into the hands of the person impounding the

same, may require a copy thereof to be made

at the expense of such first-mentioned person

and authenticated by the person impounding

such instrument. 47. Power of payer to stamp

bills and promissory notes received by him unstamped.—When

any bill of exchange 77 [or

promissory note] chargeable 78 [with a duty

not exceeding ten naye paise] is presented for

payment unstamped, the person to whom it

is so presented, may affix thereto the necessary

adhesive stamp, and, upon cancelling the

same in manner hereinbefore provided, may

pay the sum payable upon such bill 79 [or

note], and may charge the duty against the

person who ought to have paid the same, or

deduct it from the sum payable as aforesaid,

and such bill 79 [or note] shall, so far as respects

the duty, be deemed good and valid:

Provided that nothing herein contained shall

relieve any person from any penalty or proceeding

to which he may be liable in relation

to such bill 80 [or note]. 48. Recovery of duties

and penalties.—All duties, penalties and other

sums required to be paid under this Chapter

may be recovered by the Collector by distress

and sale of the movable property of the person

from whom the same are due, or by any

other process for the time being in force for the

recovery of arrears of land-revenue. 49. Allowance

for spoiled stamps.—Subject to such

rules as may be made by 81 [the 82 [State Government]]

as to the evidence to be required or,

the enquiry to be made, the Collector may, on

application made with the period prescribed in



section 50, and if he is satisfied as to the facts,

make allowance for impressed stamps spoiled

in the cases hereinafter mentioned, namely:—

(a) the stamp on any paper inadvertently and

undesignedly spoiled, obliterated or by error

in writing or any other means rendered unfit

for the purpose intended before any instrument

written thereon is executed by any person;

(b) the stamp on any document which is

written out wholly or in part, but which is not

signed or executed by any party thereto; (c) in

the case of bills of exchange 83 [payable otherwise

than on demand] 84 [***] or promissory

notes— (1) the stamp on 85 [any such bill of

exchange] 86 [***] signed by or on behalf of the

drawer which has not been accepted or made

use of in any manner whatever or delivered out

of his hands for any purpose other than by way

of tender for acceptance: Provided that the

paper on which any such stamp is impressed,

does not bear any signature intended as or

for the acceptance of any bill of exchange 86

[***] to be afterwards written thereon; (2) the

stamp on any promissory note signed by or on

behalf of the maker which has not been made

use of in any manner whatever or delivered out

of his hands; (3) the stamp used or intended

to be used for 86 [any such bill of exchange] 87

[***] or promissory note signed by, or on behalf

of, the drawer thereof, but which from any

omission or error has been spoiled or rendered

useless, although the same, being a bill of exchange

88 [***] may have been presented for

acceptance or accepted or endorsed, or, being

a promissory note, may have been delivered to

the payee: Provided that another completed

and duly stamped bill of exchange 88 [***] or

promissory note is produced identical in every

particular, except in the correction of such

omission or error as aforesaid, with the spoiled

bill 88 [***] or note; (d) the stamp used for

an instrument executed by any party thereto

which— (1) has been afterwards found to be

absolutely void in law from the beginning; (2)

has been afterwards found unfit, by reason of

any error or mistake therein, for the purpose

originally intended; (3) by reason of the death

of any person by whom it is necessary that it

should be executed, without having executed

the same, or of the refusal of any such person

to execute the same, cannot be completed

so as to effect the intended transaction in the

form proposed; (4) for want of the execution

thereof by some material party, and his inability

or refusal to sign the same, is in fact incomplete

and insufficient for the purpose for

which it was intended; (5) by reason of the refusal

of any person to act under the same, or

to advance any money intended to be thereby

secured, or by the refusal or non-acceptance

of any office thereby granted, totally fails of

the intended purpose; (6) become useless in

consequence of the transaction intended to

be thereby effected being effected by some

other instrument between the same parties

and bearing a stamp of not less value; (7) is

deficient in value and the transaction intended

to the thereby effected has been effected by

some other instrument between the same parties

and bearing a stamp of not less value; (8)

is inadvertently and undesignedly spoiled, and

in lieu whereof another instrument made between

the same parties and for the same purpose

is executed and duly stamped: Provided

that, in the case of an executed instrument, no

legal proceeding has been commenced in which

the instrument could or would have been given

or offered in evidence and that the instrument

is given up to be cancelled. Explanation.—The

certificate of the Collector under

section 32 that the full duty with which an

instrument is chargeable, has been paid is an

impressed stamp within the meaning of this

section. 50. Application for relief under section

49 when to be made.—The application for

relief under section 49 shall be made within

the following periods, that is to say— (1) in

the cases mentioned in clause (d) (5), within

two months of the date of the instrument; (2)

in the case of a stamped paper on which no

instrument has been executed by any of the

parties thereto, within six months after the

stamp has been spoiled; (3) in the case of a

stamped paper in which an instrument has

been executed by any of the parties thereto,

within six months after the date of the instrument,

or, if it is not dated, within six

months after the execution thereof by the person

by whom it was first or alone executed:

Provided that— (a) when the spoiled instru-



ment has been for sufficient reasons sent out

of 89 [India], the application may be made

within six months after it has been received

back in 89 [India]; (b) when, from unavoidable

circumstances, any instrument for which

another instrument has been substituted, cannot

be given up to be cancelled within the

aforesaid period, the application may be made

within six-months after the date of execution

of the substituted instrument. 51. Allowance

in case of printed forms no longer required

by Corporations.—The Chief Controlling

Revenue-Authority 90 [or the Collector if

empowered by the Chief Controlling Revenue-

Authority in this behalf] may, without limit

of time, make allowance for stamped papers

used for printed forms of instruments, 91 [by

any banker or] by any incorporated company

or other body corporate, if for any sufficient

reason such forms have ceased to be required

by the said 91 [banker], company or body corporate:

Provided that such authority is satisfied

that the duty in respect of such stamped

paper has been duly paid. 52. Allowance for

misused stamps.— (a) When any person has

inadvertently used for an instrument chargeable

with duty, a stamp of a description other

than that prescribed for such instrument by

the rules made under this Act, or a stamp of

greater value than was necessary, or has inadvertently

used any stamp for an instrument

not chargeable with any duty; or (b) When

any stamp used for an instrument has been inadvertently

rendered useless under section 15,

owing to such instrument having been written

in contravention of the provisions of section

13, the Collector may, on application made

within six months after the date of the instrument,

or, if it is not dated, within six months

after the execution thereof by the person by

whom it was first or alone executed, and upon

the instrument, if chargeable with duty, being

re-stamped with the proper duty, cancel

and allow as spoiled the stamp so misused or

rendered useless. 53. Allowance for spoiled

or misused stamps how to be made.—In any

case in which allowance is made for spoiled

or misused stamps, the Collector may give in

lieu thereof— (a) other stamps of the same description

and value; or (b) if required and he

thinks fit, stamps of any other description to

the same amount in value; or (c) at his discretion,

the same value in money, deducting 92

[ten naye paise] for each rupee or fraction of a

rupee. 54. Allowance for stamps not required

for use.—When any person is possessed of a

stamp or stamp which have not been spoiled

or rendered unfit or useless for the purpose

intended, but for which he has no immediate

use, the Collector shall repay to such person

the value of such stamp or stamps in money,

deducting 93 [ten naye paise] for each rupee or

portion of a rupee, upon such person delivering

up the same to be cancelled, and proving

to the Collector’s satisfaction— (a) that such

stamp or stamps were purchased by such person

with a bona fide intention to use them;

and (b) that he has paid the full price thereof;

and (c) that they were so purchased within the

period of six months next preceding the date

on which they were so delivered: Provided

that, where the person is a licensed vendor

of stamps, the Collector may, if he thinks fit,

make the repayment of the sum actually paid

by the vendor without any such deduction as

aforesaid. 94 [54A. Allowances for stamps

in denominations of annas.—Notwithstanding

anything contained in section 54, when any

person is possessed of a stamp or stamps in any

denominations other than in denominations

of annas four or multiples thereof and such

stamp or stamps has or have not been spoiled,

the Collector shall repay to such person the

value of such stamp or stamps in money calculated

in accordance with the provisions of

sub-section (2) of section 14 of the Indian

Coinage Act, 1906 (3 of 1906), upon such person

delivering up, within six months from the

commencement of the Indian Stamp (Amendment)

Act, 1958 (19 of 1958), such stamp or

stamps to the Collector.] 95 [54B. Allowances

for Refugee Relief stamps.—Notwithstanding

anything contained in section 54, when any

person is possessed of stamps bearing the inscription

“Refugee Relief” (being stamps issued

in pursuance of section 3A before its

omission) and such stamps have not been

spoiled, the Collector shall, upon such person

delivering up, within six month, from the commencement

of the Refugee Relief Taxes (Abo-



lition) Act, 1973 (13 of 1973), such stamps

to the Collector, refund of such person the

value of such stamps in money or give in lieu

thereof other stamps of the same value: Provided

that, the State Government may, with

a view to facilitating expeditious disposal of

claims for such refunds, specify, in such manner

as it deems fit, any other procedure which

may also be followed for claiming such refund.]

55. Allowance on renewal of certain debentures.—When

any duty stamped debenture is

renewed by the issue of a new debenture in

the same terms, the Collector shall, upon application

made within one month, repay to the

person issuing such debenture, the value of the

stamp on the original or on the new debenture,

whichever shall be less: Provided that

the original debenture is produced before the

Collector and cancelled by him in such manner

as the State Government may direct. Explanation.—A

debenture shall be deemed to be

renewed in the same terms within the meaning

of this section notwithstanding the following

charges:— (a) the issue of two or more

debentures in place of one original debenture,

the total amount secured being the same; (b)

the issue of one debenture in place of two or

more original debentures, the total amount

secured being the same; (c) the substitution

of the name of the holder at the time of renewal

for the name of the original holder; and

(d) the alteration of the rate of interest or

the dates of payment thereof. 56. Control

of, and statement of case to, Chief Controlling

Revenue-Authority.— (1) The power exercisable

by a Collector under Chapter IV and

Chapter V 96 [and under clause (a) of the

first proviso to section 26] shall in all cases

be subject to the control of the Chief Controlling

Revenue-Authority. (2) If any Collector,

acting under section 31, section 40 or section

41, feels doubts as to the amount of duty with

which any instrument is chargeable, he may

draw up a statement of the case, and refer it,

with his own opinion thereon, for the decision

of the Chief Controlling Revenue-Authority.

(3) Such authority shall consider the case and

send a copy of its decision to the Collector

who shall proceed to assess and charge the

duty (if any) in conformity with such decision.

57. Statement of case by Chief Controlling

Revenue-Authority to High Court.—

(1) The Chief Controlling Revenue-Authority

may state any case referred to it under section

56, sub-section (2), or otherwise coming to its

notice, and refer such case, with its own opinion

thereon,— 97 [(a) if it arises in a State

to the High Court for that State; 98 [(b) if

it arises in the Union territory of Delhi to

the High Court of Delhi;] 99 [(c) if it arises

in the Union territory of Arunachal Pradesh

or Mizoram, to the Gauhati High Court (the

High Court of Assam, Nagaland, Meghalaya,

Manipur and Tripura;)] (d) if it arises in the

Union territory of the Andaman and Nicobar

Islands, to the High Court at Calcutta; 100

[***] (e) if it arises in the Union territory of

the 101 [Lakshadweep], to the High Court of

Kerala;] 102 [(ee) if it arises in the Union territory

of Chandigarh, to the High Court of Punjab

and Haryana;] 103 [(f) if it arises in the

Union territory of Dadra and Nagar Haveli,

to the High Court of Bombay.] (2) Every

such case shall be decided by not less then

three Judges of the High Court 104 [***] to

which it is referred, and in case of difference

the opinion of the majority shall prevail. 58.

Power of High Court to call for further particulars

as to case stated.—If the High Court

[***] is not satisfied that the statements contained

in the case are sufficient to enable it

to determine the questions raised thereby, the

Court may refer the case back to the Revenue-

Authority by which it was stated, to make

such additions thereto or alterations therein

as the Court may direct in that behalf. 59.

Procedure in disposing of case stated.— (1)

The High Court 106 [***] upon the hearing

of any such case, shall decide the questions

raised thereby, and shall deliver its judgment

thereon containing the grounds on which such

decision is founded. (2) The Court shall send

to the Revenue-Authority by which the case

was stated, a copy of such judgment under the

seal of the Court and the signature of the Registrar;

and the Revenue-Authority shall, on

receiving such copy, dispose of the case conformably

to such judgment. 60. Statement of

case by other Courts to High Court.— (1) If

any Court, other than a Court mentioned in



section 57, feels doubts as to the amount of

duty to be paid in respect of any instrument

under proviso (a) to section 35, the Judge may

draw up a statement of the case and refer it,

with his own opinion thereon, for the decision

of the High Court 107 [***] to which, if he were

the Chief Controlling Revenue-Authority, he

would, under section 57, refer the same. (2)

Such Court shall deal with the case as if it

had been referred under section 57, and send

a copy of its judgment under the seal of the

Court and the signature of the Registrar to

the Chief Controlling Revenue-Authority and

other like copy to the Judge making the reference,

who shall, on receiving such copy dispose

of the case conformably to such judgment.

(3) References made under sub-section

(1), when made by a Court subordinate to a

District Court, shall be made through the District

Court, and, when made by any subordinate

Revenue Court, shall be made through

the Court immediately superior. 61. Revision

of certain decisions of Courts regarding the

sufficiency of stamps.— (1) When any Court

in the exercise of its civil or revenue jurisdiction

of any Criminal Court in any proceeding

under Chapter XII or Chapter XXXVI of the

Code of Criminal Procedure, 1898 (5 of 1898),

makes any order admitting any instrument in

evidence as duly stamped or as not requiring a

stamp, or upon payment of duty and a penalty

under section 35, the Court to which appeals

lie from, or references are made by, such firstmentioned

Court may, of its own motion or

on the application of the Collector, take such

order into consideration. (2) If such Court, after

such consideration, is of opinion that such

instrument should not have been admitted in

evidence without the payment of duty and

penalty under section 35, or without the payment

of a higher duty and penalty than those

paid, it may record a declaration to that effect,

and determine the amount of duty with which

such instrument is chargeable, and may require

any person in whose possession or power

such instrument then is, to produce the same,

and may impound the same when produced.

(3) When any declaration has been recorded

under sub-section (2), the Court recording the

same shall send a copy thereof to the Collector,

and, where the instrument to which it relates

has been impounded or is otherwise in the

possession of such Court, shall also send him

such instrument. (4) The Collector may thereupon,

notwithstanding anything contained in

the order admitting such instrument in evidence,

or in any certificate granted under section

42, or in section 43, prosecute any person

for any offence against the Stamp-law which

the Collector considers him to have committed

in respect of such instrument: Provided

that— (a) no such prosecution shall be instituted

where the amount (including duty and

penalty) which, according to the determination

of such Court, was payable in respect of

the instrument under section 35, is paid to the

Collector, unless he thinks that the offence was

committed with an intention of evading payment

of the proper duty; (b) except for the

purposes of such prosecution, no declaration

made under this section shall effect the validity

of any order admitting any instrument in

evidence, or of any certificate granted under

section 42. 62. Penalty for executing, etc.,

instrument not duty stamped.— (1) Any person—

(a) drawing, making, issuing, endorsing

or transferring, or signing otherwise than as a

witness, or presenting for acceptance or payment,

or accepting, paying or receiving payment

of or in any manner negotiating, any bill

of exchange 108 [payable otherwise than on

demand] 109 [***] or promissory note without

the same being duly stamped; or (b) executing

or signing otherwise than as a witness any

other instrument chargeable with duty without

the same being duly stamped; or (c) voting

or attempting to vote under any proxy

not duly stamped, shall for every such offence

be punishable with fine which may extend to

five hundred rupees: Provided that, when any

penalty has been paid in respect of any instrument

under section 35, section 40 or section

61, the amount of such penalty shall be

allowed in reduction of the fine (if any) subsequently

imposed under this section in respect

of the same instrument upon the person who

paid such penalty. (2) If a share warrant is

issued without being duly stamped, the company

issuing the same, and also every person

who, at the time when it is issued, is the



managing director or secretary or other principal

officer of the company, shall be punishable

with fine which may extend to five hundred rupees.

63. Penalty for failure to cancel adhesive

stamp.—Any person required by section 12 to

cancel an adhesive stamp, and failing to cancel

such stamp in manner prescribed by that section,

shall be punishable with fine which may

extend to one hundred rupees. 64. Penalty

for omission to comply with provisions of section

27.—Any person who, with intent to defraud

the Government,— (a) executes any instrument

in which all the facts and circumstances

required by section 27 to be set forth

in such instrument are not fully and truly set

forth; or (b) being employed or concerned in

or about the preparation of any instruments,

neglects or omits fully and truly to set forth

therein all such facts and circumstances; or (c)

does any other act calculated to deprive the

Government of any duty or penalty under this

Act, shall be punishable with fine which may

extend to five thousand rupees. 65. Penalty

for refusal to give receipt, and for devices to

evade duty on receipts.—Any person who,—

(a) being required under section 30 to give a

receipt, refuses or neglects to give the same; or

(b) with intent to defraud the Government of

any duty, upon a payment of money or delivery

of property exceeding twenty rupees in amount

or value, gives a receipt for an amount or value

not exceeding twenty rupees, or separates or

divides the money or property paid or delivered,

shall be punishable with fine which may

extend to one hundred rupees. 66. Penalty

for not making out policy or making one not

duly stamped.—Any person who,— (a) receives,

or takes credit for, any premium or consideration

for any contract of insurance and

does not, within one month after receiving, or

taking credit for, such premium or consideration,

make out and execute a duly stamped

policy of such insurance; or (b) makes, executes

or delivers out any policy which is not

duly stamped, or pays or allows in account, or

agrees to pay or allow in account, any money

upon, or in respect of, any such policy, shall

be punishable with fine which may extend to

two hundred rupees. 67. Penalty for not drawing

full number of bills or marine policies purporting

to be in sets.—Any person drawing

or executing a bill or exchange 110 [payable

otherwise than on demand] or a policy of marine

insurance purporting to be drawn or executed

in a set of two or more, and not at

the same time drawing or executing on paper

duly stamped the whole number of bills

or policies of which such bill or policy purports

the set to consist, shall be punishable

with fine which may extend to one thousand

rupees. 68. Penalty for post-dating bills, and

for other devices to defraud the revenue.—Any

person who,— (a) with intent to defraud the

Government of duty, draws, makes or issues

any bill of exchange or promissory note bearing

a date subsequent to that on which such

bill or note is actually drawn or made; or

(b) knowing that such bill or note has been

so post-dated, endorses, transfers, presents for

acceptance or payment, or accepts, pays or receives

payment of, such bill or note, or in any

manner negotiates the same; or (c) with the

like intent, practices or is concerned in any

act, contrivance or device not specially provided

for by this Act or any other law for the

time being in force, shall be punishable with

fine which may extend to one thousand rupees.

69. Penalty for breach of rule relating

to sale of stamps and for unauthorized sale.—

(a) Any person appointed to sell stamps who

disobeys any rule made under section 74, and

(b) any person not so appointed who sells or

offers for sale any stamp (other than a 111 [ten

naye paise or five naye paise] adhesive stamp),

shall be punishable with imprisonment for a

term which may extend to six months, or with

fine which may extend to five hundred rupees,

or with both. 70. Institution and conduct of

prosecutions.— (1) No prosecution in respect

of any offence punishable under this Act or

any Act hereby repealed, shall be instituted

without the sanction of the Collector or such

other officer as 112 [the 113 [State Government]]

generally, or the Collector specially, authorizes

in that behalf. (2) The Chief Controlling

Revenue-Authority, or any officer generally

or specially authorized by it in this behalf,

may stay any such prosecution or compound

any such offence. (3) The amount of any such

composition shall be recoverable in the man-



ner provided by section 48. 71. Jurisdiction

of Magistrates.—No Magistrate other than a

Presidency Magistrate or a Magistrate whose

powers are not less than those of a Magistrate

of the second class, shall try any offence under

this Act. 72. Place of trial.—Every such offence

committed in respect of any instrument

may be tried in any district or presidencytown

in which such instrument is found, as

well as in any district or presidency-town in

which such offence might be tried under the

Code of Criminal Procedure for the time being

in force. 73. Books, etc., to be open

to inspection.—Every public officer having in

his custody any registers, books, records, papers,

documents or proceedings, the inspection

whereof may tend to secure any duty, or

to prove or lead to the discovery of any fraud

or omission in relation to any duty, shall at

all reasonable times permit any person authorized

in writing by the Collector to inspect for

such purpose the registers, books, papers, documents

and proceedings and to take such notes

and extracts as he may deem necessary, without

fee or charge. 74. Powers to make rules relating

to sale of stamps.—The 114 [State Government]

115 [***] may make rules for regulating—

(a) the supply and sale of stamps

and stamped papers, (b) the persons by whom

alone such sale is to be conducted, and (c) the

duties and remuneration of such persons: Provided

that such rules shall not restrict the sale

of 116 [ten naye paise or five naye paise] adhesive

stamps. 75. Power to make rules generally

to carry out Act.—The 117 [State Government]

may make rules to carry out generally

the purposes of this Act, and may by

such rules prescribe the fines, which shall in

no case exceed five hundred rupees, to be incurred

on breach thereof. 76. Publication of

rules.— 118 [ (1) All rules made under this Act

shall be published in the Official Gazette.] (2)

All rules published as required by this section

shall, upon such publication, have effect as if

enacted by this Act. 119 [(3) Every rule made

by the State Government under this Act shall

be laid, as soon as may be after it is made,

before the State Legislature.] 120 [76A. Delegation

of certain powers.— 121 [ 122 [***] The

State Government, may, by notification in the

Official Gazette], delegate— (a) all or any of

the powers conferred on it by sections 2(9),

33(3) (b), 70(1), 74 and 78 to the Chief Controlling

Revenue-Authority, and (b) all or any

of the powers conferred as the Chief Controlling

Revenue-Authority by sections 45(1) (2),

56(1) and 70(2) to such subordinate Revenue-

Authority as may be specified in the notification.]

77. Saving as to court-fees.—Nothing

in this Act contained shall be deemed to affect

the duties chargeable under any enactment

for the time being in force relating to

court-fees. 123 [77A. Saving as to certain

stamps.—All stamps in denominations of annas

four or multiples thereof shall be deemed

to be stamps of the value of twenty-five naye

paise or, as the case may be, multiples thereof

and shall, accordingly, be valid for all the purpose

of this Act.] 78. Act to be translated, and

sold cheaply.—Every 124 [State Government]

shall make provision for the sale of translations

of this Act in the principal vernacular

languages of the territories administered by it

at a price not exceeding 125 [twenty-five naye

paise] per copy. 79. Repeal.—[Rep. by the Repealing

and Amending Act, 1914 (10 of 1914),

sec. 3 and Sch. II.] THE INDIAN STAMP

ACT, 1899 SCHEDULE II.—Enactments repealed.—[Rep.

by the Repealing and Amending

Act, 1914 (10 of 1914), sec. 3 and Sch.

II.]. 1. Subs. by Act 43 of 1955, sec. 3, for

sub-section (2) (w.e.f. 1-4-1956). 2. Subs. by

the A.O. (No. 2) 1956, for “Part B States”.

3. Subs. by Act 43 of 1955, sec. 2, for “the

States” (w.e.f. 1-4-1956 ). 4. Clause (8) omitted

by the A.O. 1937. 5. Subs. by the A.O.

1937, for “the Local Government”. 6. Subs. by

the A.O. 1950, for “collecting Government”. 7.

Clause (12A) ins. by the A.O. 1937 and omitted

by the A.O. 1950. 8. Ins. by Act 43 of

1955, sec. 4 (w.e.f. 1-4-1956 ). 9. Ins. by Act

15 of 1904, sec. 2. 10. Subs. by Act 43 of

1955, sec. 2, for “the States” (w.e.f. 1-4-1956

). 11. The word “and” omitted by Act 5 of

1906, sec. 2. 12. Sub-clause (c) omitted by

Act 5 of 1906, sec. 2. 13. Ins. by Act 43 of

1955, sec. 4 (w.e.f 1-4-1956 ). 14. The word

“and” omitted by Act 18 of 1928, sec. 2 and

Sch. I. 15. Ins. by Act 15 of 1904, sec. 2.

16. The word “and” ins. by Act 18 of 1928,



sec. 2 and Sch. I and omitted by the A.O.

1950. 17. Ins. by Act 18 of 1928, sec. 2 and

Sch. I. 18. Now see the Army Act, 1950 (46

of 1950). 19. Ins. by Act 23 of 2004, sec.

117 (w.e.f. 10-9-2004 ). Earlier clause (26)

was added by the A.O. 1950 and was omitted

by Act 43 of 1955, sec. 4 (w.e.f. 1-4-1956 ).


States” (w.e.f. 1-4-1956). 21. Ins. by Act 5 of

1927, sec. 5. 22. The word “cheque” omitted

by Act 5 of 1927, sec. 5. 23. Ins. by Act

28 of 2005, sec. 57 and Third Sch., Pt. III.

24. Ins. by Act 44 of 1971, sec. 2 (w.r.e.f.

15-11-1971). 25. Sub-sections (1), (2) and (3)

rep. by Act 11 of 1963, sec. 92 (w.e.f. 1-8-

1963). 26. Subs. by Act 6 of 1910, sec. 2, for

“eight annas per centum”. 27. Subs. by the

A.O. 1937, for "Governor-General in Council".

28. Section 8A subs. by Act 10 of 2000, sec.

118 (w.e.f. 12-5-2000 ). Earlier section 8A was

inserted by Act 22 of 1996, sec. 30 and Sch.

(w.r.e.f. 20-9-1995 ). 29. Ins. by Act 18 of

2005, sec. 114 (w.e.f. 13-5-2005). 30. Section

9 re-numbered as sub-section (1) of that section

by the A.O. 1950. 31. Subs. by the A.O.

1937, for “The Governor-General in Council.”

32. The word “collecting” omitted by the A.O.

1950. 33. Subs. by the A.O. 1937, for “British

India”. 34. Ins. by Act 23 of 2004, sec. 117

(w.e.f. 10-9-2004). 35. Ins. by Act 32 of

1994, sec. 99 (w.e.f. 13-5-1994). 36. Ins. by

the A.O. 1950. 37. Subs. by Act 21 of 2006,

sec. 69, for “Seventh Schedule to the Constitution”

(w.e.f. 18-4-2006). 38. Subs. by the

A.O. 1950, for “collecting Government”. 39.

The words “written in any Oriental language”

omitted by Act 43 of 1955, sec. 5 (w.e.f. 1-4-


“with the duty of one anna or half an anna”

(w.e.f. 1-10-1958). 41. The word “cheques”

omitted by Act 5 of 1927, sec. 5. 42. Subs. by

Act 43 of 1955, sec. 2, for “the States” (w.e.f.

1-4-1956). 43. Subs. by the A.O. 1950, for

“collecting Government”. 44. Subs. by Act 43

of 1955, sec. 2, for “the States” (w.e.f. 1-4-


“the States” (w.e.f. 1-4-1956). 46. The word

“cheque” omitted by Act 5 of 1927, sec. 5. 47.

Subs. by the A.O. 1950, for “collecting Government”.

48. Subs. by Act 43 of 1955, sec. 2,

for “the States” (w.e.f. 1-4-1956). 49. Ins. by

Act 5 of 1927, sec. 5. 50. The word “cheque”

omitted by Act 5 of 1927, sec. 5. 51. Subs. by

Act 43 of 1955, sec. 2, for “the States” (w.e.f.

1-4-1956). 52. Subs. by the A.O. 1937, for

"Governor-General in Council". 53. Subs. by

Act 1 of 1912, sec. 3, for “Articles No. 5(b).”

54. Subs. by Act 15 of 1904, sec. 4, for the

proviso. 55. Subs. by the A.O. 1937, for “the

Secretary of State in Council”. 56. Subs. by

Act 15 of 1904, sec. 5, for “No. 6. (Agreement

to mortgage)”. 57. Subs. by Act 5 of

1906, sec. 4, for clause (b). 58. Added by Act

5 of 1906, sec. 5. 59. Subs. by Act 19 of 1958,

sec. 3, for “eight annas” (w.e.f. 1-10-1958).


States” (w.e.f. 1-4-1956). 61. Subs. by Act

19 of 1958, sec. 4, for “with the duty of one

anna or half an anna” (w.e.f. 1-10-1958). 62.

Subs. by the A.O. 1937, for “the Governor-

General in Council”. 63. Subs. by the A.O.

1950, for “collecting Government”. 64. Subs.

by Act 19 of 1958, sec. 5, for "with a duty

of one anna" (w.e.f. 1-10-1958). 65. Subs.

by Act 21 of 2006, sec. 69, for “not being an

instrument chargeable with a duty not exceeding

ten naye paise only or a bill of exchange

or promissory note shall subject to all first exceptions”

(w.e.f. 18-4-2006). 66. Subs. by the

A.O. 1937, for “the Government”. 67. Subs.

by the A.O. 1950, for “Crown”. 68. Subs. by

the A.O. 1937, for “the Governor-General in

Council”. 69. Subs. by the A.O. 1950, for

“collecting Government”. 70. Certain words

omitted by Act 4 of 1914, sec. 2, and Sch.,

Pt. I. 71. Certain words omitted by Act 4 of

1914, sec. 2, and Sch., Pt. I. 72. Subs. by Act

19 of 1958, sec. 6, for “with a duty of anna

or half an anna” (w.e.f. 1-10-1958). 73. Ins.


19 of 1958, sec. 6, for “with a duty of anna

or half an anna” (w.e.f. 1-10-1958). 75. Ins.


19 of 1958, sec. 6, for “with a duty of one

anna or half an anna” (w.e.f. 1-10- 1958). 77.

Subs. by Act. 5 of 1927, sec. 5, for “promissory

note or cheque”. 78. Subs. by Act 19 of

1958, sec. 7, for “with the duty of one anna”

(w.e.f. 1-10-1958). 79. Subs. by Act 5 of

1927, sec. 5, for “note or cheque”. 80. Subs.



by Act 5 of 1927, sec. 5, for “note or cheque”.

81. Subs. by the A.O. 1937, for “the Local

Government”. 82. Subs. by the A.O. 1950, for

“collecting Government”. 83. Ins. by Act 5 of

1927, sec. 5. 84. The word “cheques” omitted


5 of 1927, sec. 5, for “any bill of exchange”.

86. The words "or cheque" omitted by Act 5

of 1927, sec. 5. 87. The word "cheque" omitted

by Act 5 of 1927, sec. 5. 88. The words

“or cheque” omitted by Act 5 of 1927, sec. 5.


States” (w.e.f. 1-4-1956). 90. Ins. by Act 4

of 1914, sec. 2 and Sch., Pt. I. 91. Ins. by

Act 5 of 1906, sec. 6. 92. Subs. by Act 19 of

1958 sec. 8, for “one anna” (w.e.f. 1-10-1958).

93. Subs. by Act 19 of 1958 sec. 8, for “one

anna” (w.e.f. 1-10-1958). 94. Ins. by Act 19

of 1958, sec. 9 (w.e.f. 1-10-1958). 95. Ins. by

Act 13 of 1973, sec. 2 (w.e.f. 1-4-1973). 96.

Ins. by Act 5 of 1904, sec. 7. 97. Subs. by

the A.O. (No.2), 1956, for clauses (a) to (g).

98. Subs. by G.S.R. 1944, published in the

Gazette of India., Extra., Pt. II, Sec. 3 (ii),

p. 578, dated 30th October, 1968. 99. Subs.

by G.S.R. 7 (E), published in the Gazette of

India, Extra., Pt. II, Sec. 3(ii), dated 2nd

January, 1974. 100. Omitted by Regulation

6 of 1963, sec. 2 and Sch. 101. Subs. by

G.S.R. 432, published in the Gazette of India,

Extra., Pt. II, Sec. 3 (ii), dated 21st October,

1974. 102. Ins. by G.S.R. 1944, published

in the Gazette of India, Extra., Pt. II, Sec.

3(ii), p. 548, dated 30th October, 1968. 103.

Ins. by Regulation 6 of 1963, sec. 2 and Sch.

104. The words “Chief Court or Judicial Commissioner’s

Court” omitted by the A.O. 1950.







108. Ins. by Act 5 of 1927, sec. 5. 109.

The word “cheque” omitted by Act 5 of 1927,

sec. 5. 110. Ins. by Act 5 of 1927, sec. 5.

111. Subs. by Act 19 of 1958, sec. 10, for

“one anna or half an anna” (w.e.f 1-10-1958).

112. Subs. by the A.O. 1937, for “the Local

Government”. 113. Subs. by the A.O. 1950,

for “collecting Government”. 114. Subs. by

the A.O. 1950, for “collecting Government”.

115. The words “subject to the control of the

Governor-General in Council” omitted by the

A.O. 1937. 116. Subs. by the Act 19 of 1958,

sec. 10, for “one anna or half an anna” (w.e.f.

1-10-1958). 117. Subs. by the A.O. 1950, for

“collecting Government”. 118. Subs. by the

A.O. 1937, for sub-section (1). 119. Ins. by

Act 4 of 2005, sec. 2 and Sch. 120. Ins. by

Act 4 of 1914, sec. 2 and Sch., Pt. I. 121.

Subs. by the A.O. 1937, for “The Local Government

may by notification in the local Official

Gazette”. 122. The words, brackets and

figures “The Central Government, subject to

the provisions of section 124(1) of the Government

of India Act, 1935, and” omitted by the

A.O. 1950. 123. Ins. by Act 19 of 1958, sec.

11 (w.e.f 1-10-1958). 124. Subs. by the A.O.

1950, for “Provincial Government”. 125. Subs.

by Act 19 of 1958, sec. 12, for “four annas”

(w.e.f. 1-10-1958).


Indian_Real_Estate_Law (2)

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