Indian_Real_Estate_Law (2)
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1 Indian Real Estate Laws
0.0
Indian Real Estate Laws 2
0.0
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
ii
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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
Indian Real Estate Laws
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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
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Indian Real Estate Laws
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
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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
Indian Real Estate Laws 4
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
5 Indian Real Estate Laws
(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
Indian Real Estate Laws 6
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
1.1 1. THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016
7 Indian Real Estate Laws
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
1. THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 1.2
Indian Real Estate Laws 8
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
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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.
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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-
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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
plot, apartment or building, as the case may
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
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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
plot, apartment or building, as the case may
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-
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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,
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Indian Real Estate Laws 14
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.
(2) Notwithstanding anything contained in
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.
Explanation.—For the purpose of this
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-
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15 Indian Real Estate Laws
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.
Explanation.—For the purpose of this
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.
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(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
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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
apartment, plot or building, as the case may
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
apartment, plot or building, as the case may
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:
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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.
(2) Notwithstanding anything contained in
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.
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(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
28. (1) The appropriate Government may, in
consultation with the Authority appoint such
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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,
and the other terms and conditions of service
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;
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21 Indian Real Estate Laws
(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
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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.
(2) Notwithstanding anything contained in
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.
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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
43. (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 Appellate Tribunal to be known
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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.
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25 Indian Real Estate Laws
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.
1.7.6 Salary and allowances
payable to Chairperson
and Members
48. (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.
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(2) Notwithstanding anything contained in
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
49. (1) The appropriate Government may, in
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:
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 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
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27 Indian Real Estate Laws
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,
and the other terms and conditions of service
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.
1.7.12 Administrative powers of
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
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(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.
(2) Notwithstanding anything contained in
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.
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29 Indian Real Estate Laws
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.
1.8.6 Penalty for failure to comply
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.
1.8.7 Penalty for failure to comply
with orders of Authority
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
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Indian Real Estate Laws 30
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.
1.8.8 Penalty for failure to comply
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.
1.8.9 Penalty for failure to comply
with orders of Authority
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
default continues, which may cumulatively extend
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
default continues, which may cumulatively extend
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:
Provided that nothing contained in this
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.
(2) Notwithstanding anything contained in
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
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31 Indian Real Estate Laws
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
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Indian Real Estate Laws 32
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-
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33 Indian Real Estate Laws
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-
1. THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 1.10
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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
84. (1) The appropriate Government shall,
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
sub-section (7) of section 19;
(l) the manner of selection of Chairperson
and Members of Authority under section 22;
(m) the salaries and allowances payable to,
and the other terms and conditions of service
1.10 1. THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016
35 Indian Real Estate Laws
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,
and the other terms and conditions of service
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,
and the other terms and conditions of service
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,
and the other terms and conditions of service
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;
1. THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 1.10
Indian Real Estate Laws 36
@) 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
1.10 1. THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016
37 Indian Real Estate Laws
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.
1. THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 1.10
Indian Real Estate Laws 38
1.10 1. THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016
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
Indian Real Estate Laws 40
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
41 Indian Real Estate Laws
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
Indian Real Estate Laws 42
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.
2.2 2. RERA KARNATAKA RULES 2017
43 Indian Real Estate Laws
(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
Provided that the Authority may grant an
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:
Provided 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.
(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
2. RERA KARNATAKA RULES 2017 2.3
Indian Real Estate Laws 44
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
its name, registered address, type of enterprise,
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-
2.4 2. RERA KARNATAKA RULES 2017
45 Indian Real Estate Laws
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
facilities to be provided thereof including
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-
2. RERA KARNATAKA RULES 2017 2.4
Indian Real Estate Laws 46
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
by the competent authority;
(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
2.4 2. RERA KARNATAKA RULES 2017
47 Indian Real Estate Laws
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
its name, registered address, type of enterprise,
proprietorship, societies, co-operative
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
its name, registered address, type of enterprise,
proprietorship, societies, co-operative
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. RERA KARNATAKA RULES 2017 2.6
Indian Real Estate Laws 48
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:
2.7 2. RERA KARNATAKA RULES 2017
49 Indian Real Estate Laws
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
2. RERA KARNATAKA RULES 2017 2.7
Indian Real Estate Laws 50
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.
2.7.4 Administrative powers of
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
2.7 2. RERA KARNATAKA RULES 2017
51 Indian Real Estate Laws
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
2. RERA KARNATAKA RULES 2017 2.8
Indian Real Estate Laws 52
(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 2. RERA KARNATAKA RULES 2017
53 Indian Real Estate Laws
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
on the basis of the submissions made that
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
2. RERA KARNATAKA RULES 2017 2.10
Indian Real Estate Laws 54
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
on the basis of the submissions made that
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
2.10 2. RERA KARNATAKA RULES 2017
55 Indian Real Estate Laws
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.
(3) The procedure for day to day functioning
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
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.
2.11 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
2. RERA KARNATAKA RULES 2017 2.11
Indian Real Estate Laws 56
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
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 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.
(7) The procedure for day to day functioning
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-
2.11 2. RERA KARNATAKA RULES 2017
57 Indian Real Estate Laws
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.
2.11.5 Salary and allowances
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. RERA KARNATAKA RULES 2017 2.11
Indian Real Estate Laws 58
(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 2. RERA KARNATAKA RULES 2017
59 Indian Real Estate Laws
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
Up to ten percent of the estimated cost of
the real estate project
Punishable with Imprisonment under section
66
Up to ten percent of the estimated cost of
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
Up to ten percent of the estimated cost of
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
2. RERA KARNATAKA RULES 2017 2.12
Indian Real Estate Laws 60
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
2.14 2. RERA KARNATAKA RULES 2017
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
61 Indian Real Estate Laws
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-
2. RERA KARNATAKA RULES 2017 2.14
Indian Real Estate Laws 62
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
by the competent authority;
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;
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
2.14 2. RERA KARNATAKA RULES 2017
63 Indian Real Estate Laws
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
or the association of the allottees, as the case
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
in a separate account to be maintained in a
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
2. RERA KARNATAKA RULES 2017 2.14
Indian Real Estate Laws 64
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
You are hereby informed that your application
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
or the association of the allottees, as the case
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
in a separate account to be maintained in a
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
sub-section (2) of section 4;
(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
2.14 2. RERA KARNATAKA RULES 2017
65 Indian Real Estate Laws
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
the sale or purchase of any plot, apartment
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
the sale or purchase of any plot, apartment
or building, as the case may be, in a real
2. RERA KARNATAKA RULES 2017 2.14
Indian Real Estate Laws 66
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
to enable the allottee and promoter to
exercise their respective rights and fulfil their
respective obligations at the time of booking
and sale of any plot, apartment or building, as
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
accordance with the provisions of the Act or
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:
Signature and seal of the Authorized Officer
Real Estate Regulatory Authority
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
You are hereby informed that your application
for registration as real estate agent is
rejected.
OR
You are hereby informed that your application
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:
Signature and seal of the Authorized Officer
Real Estate Regulatory Authority
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.
2.14 2. RERA KARNATAKA RULES 2017
67 Indian Real Estate Laws
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
the sale or purchase of any plot, apartment
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
plot, apartment or building, as the case may
be;
(v) The real estate agent shall provide assistance
to enable the allottee and promoter to
exercise their respective rights and fulfil their
respective obligations at the time of booking
and sale of any plot, apartment or building, as
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
accordance with the provisions of the Act or
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:
Signature and seal of the Authorized Officer
Real Estate Regulatory Authority
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-
2. RERA KARNATAKA RULES 2017 2.14
Indian Real Estate Laws 68
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.
2.14 2. RERA KARNATAKA RULES 2017
69 Indian Real Estate Laws
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.
(Name of the Chairperson / Member)
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).
(Name of the Chairperson / Member)
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
2. RERA KARNATAKA RULES 2017 2.14
Indian Real Estate Laws 70
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
2.14 2. RERA KARNATAKA RULES 2017
71 Indian Real Estate Laws
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
2. RERA KARNATAKA RULES 2017 2.14
Indian Real Estate Laws 72
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
Details of the directions issued by the Authority
/ adjudicating officer
Penalty / interest / compensation s imposed
Whether paid
SI. No.
Name of the real estate agent
Details of the directions issued by the Authority
/ adjudicating officer
Penalty / interest / compensation s imposed
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
2.14 2. RERA KARNATAKA RULES 2017
73 Indian Real Estate Laws
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
section 40 — 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. 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
section 40 — 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. 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,
2. RERA KARNATAKA RULES 2017 2.14
Indian Real Estate Laws 74
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
2.14 2. RERA KARNATAKA RULES 2017
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
Indian Real Estate Laws 78
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
Indian Real Estate Laws 80
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
81 Indian Real Estate Laws
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
Indian Real Estate Laws 82
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
13. Where, on a transfer of property, an interest
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 4. THE TRANSFER OF PROPERTY ACT, 1882
83 Indian Real Estate Laws
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
19. Where, on a transfer of property, an 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
20. Where, on a transfer of property, an interest
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. THE TRANSFER OF PROPERTY ACT, 1882 4.19
Indian Real Estate Laws 84
4.19 Contingent interest
21. Where, on a transfer of property, an 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
22. Where, on a transfer of property, an interest
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
23. Where, on a transfer of property, an interest
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
24. Where, on a transfer of property, an interest
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
4.23 4. THE TRANSFER OF PROPERTY ACT, 1882
85 Indian Real Estate Laws
(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
4. THE TRANSFER OF PROPERTY ACT, 1882 4.27
Indian Real Estate Laws 86
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
33. Where, on a transfer of property, an interest
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
4.31 4. THE TRANSFER OF PROPERTY ACT, 1882
87 Indian Real Estate Laws
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
4. THE TRANSFER OF PROPERTY ACT, 1882 4.33
Indian Real Estate Laws 88
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-
4.36 4. THE TRANSFER OF PROPERTY ACT, 1882
89 Indian Real Estate Laws
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
4. THE TRANSFER OF PROPERTY ACT, 1882 4.40
Indian Real Estate Laws 90
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
46. Where immovable property is transferred
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 4. THE TRANSFER OF PROPERTY ACT, 1882
91 Indian Real Estate Laws
4.45 Transferee’s right under
policy
49. Where immovable property is transferred
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
4. THE TRANSFER OF PROPERTY ACT, 1882 4.49
Indian Real Estate Laws 92
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
4.52 4. THE TRANSFER OF PROPERTY ACT, 1882
93 Indian Real Estate Laws
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
4. THE TRANSFER OF PROPERTY ACT, 1882 4.52
Indian Real Estate Laws 94
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,
4.52 4. THE TRANSFER OF PROPERTY ACT, 1882
95 Indian Real Estate Laws
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
4. THE TRANSFER OF PROPERTY ACT, 1882 4.52
Indian Real Estate Laws 96
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 4. THE TRANSFER OF PROPERTY ACT, 1882
97 Indian Real Estate Laws
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
4. THE TRANSFER OF PROPERTY ACT, 1882 4.56
Indian Real Estate Laws 98
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
65. In the absence of a contract to the contrary,
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
4.59 4. THE TRANSFER OF PROPERTY ACT, 1882
99 Indian Real Estate Laws
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
4. THE TRANSFER OF PROPERTY ACT, 1882 4.63
Indian Real Estate Laws 100
buildings, exceeds by one-half, the amount for
the time being due on the mortgage.
4.63 Right to fore-closure
or sale
67. In the absence of a contract to the contrary,
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
4.65 4. THE TRANSFER OF PROPERTY ACT, 1882
101 Indian Real Estate Laws
(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
4. THE TRANSFER OF PROPERTY ACT, 1882 4.67
Indian Real Estate Laws 102
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
4.67 4. THE TRANSFER OF PROPERTY ACT, 1882
103 Indian Real Estate Laws
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
4. THE TRANSFER OF PROPERTY ACT, 1882 4.71
Indian Real Estate Laws 104
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-
4.74 4. THE TRANSFER OF PROPERTY ACT, 1882
105 Indian Real Estate Laws
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
4. THE TRANSFER OF PROPERTY ACT, 1882 4.80
Indian Real Estate Laws 106
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
4.82 4. THE TRANSFER OF PROPERTY ACT, 1882
107 Indian Real Estate Laws
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.]
87. —[Rep. by the Code of Civil Procedure,
1908 (5 of 1908), sec. 156 and Sch. V.]
88. —[Rep. by the Code of Civil Procedure,
1908 (5 of 1908), sec. 156 and Sch. V.]
89. —[Rep. by the Code of Civil Procedure,
1908 (5 of 1908), sec. 156 and Sch. V.]
90. —[Rep. by the Code of Civil Procedure,
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
4. THE TRANSFER OF PROPERTY ACT, 1882 4.87
Indian Real Estate Laws 108
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.]
4.89 Rights and liabilities
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
4.92 4. THE TRANSFER OF PROPERTY ACT, 1882
109 Indian Real Estate Laws
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.
(2) Notwithstanding anything contained in
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
4. THE TRANSFER OF PROPERTY ACT, 1882 4.96
Indian Real Estate Laws 110
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.]
4.97 Rights and liabilities
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,
4.97 4. THE TRANSFER OF PROPERTY ACT, 1882
111 Indian Real Estate Laws
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. THE TRANSFER OF PROPERTY ACT, 1882 4.100
Indian Real Estate Laws 112
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
4.102 4. THE TRANSFER OF PROPERTY ACT, 1882
113 Indian Real Estate Laws
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-
4. THE TRANSFER OF PROPERTY ACT, 1882 4.105
Indian Real Estate Laws 114
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.]
4.109 Rights and liabilities
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
4.112 4. THE TRANSFER OF PROPERTY ACT, 1882
115 Indian Real Estate Laws
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. THE TRANSFER OF PROPERTY ACT, 1882 4.117
Indian Real Estate Laws 116
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 4. THE TRANSFER OF PROPERTY ACT, 1882
117 Indian Real Estate Laws
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.
4. THE TRANSFER OF PROPERTY ACT, 1882 4.123
Indian Real Estate Laws 118
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.
4.123 4. THE TRANSFER OF PROPERTY ACT, 1882
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
Indian Real Estate Laws 120
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
121 Indian Real Estate Laws
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
Indian Real Estate Laws 122
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
5.0 5. THE INDIAN EASEMENTS ACT, 1882
123 Indian Real Estate Laws
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
5. THE INDIAN EASEMENTS ACT, 1882 5.0
Indian Real Estate Laws 124
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-
5.0 5. THE INDIAN EASEMENTS ACT, 1882
125 Indian Real Estate Laws
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
5. THE INDIAN EASEMENTS ACT, 1882 5.0
Indian Real Estate Laws 126
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
5.0 5. THE INDIAN EASEMENTS ACT, 1882
127 Indian Real Estate Laws
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
5. THE INDIAN EASEMENTS ACT, 1882 5.0
Indian Real Estate Laws 128
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-
5.0 5. THE INDIAN EASEMENTS ACT, 1882
129 Indian Real Estate Laws
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-
5. THE INDIAN EASEMENTS ACT, 1882 5.0
Indian Real Estate Laws 130
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
5.0 5. THE INDIAN EASEMENTS ACT, 1882
131 Indian Real Estate Laws
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.
5. THE INDIAN EASEMENTS ACT, 1882 5.0
Indian Real Estate Laws 132
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).
5.0 5. THE INDIAN EASEMENTS ACT, 1882
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,
unless a contrary intention appears from the
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
Indian Real Estate Laws 134
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
135 Indian Real Estate Laws
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
Indian Real Estate Laws 136
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-
6.6 6. THE INDIAN CONTRACT ACT, 1872
137 Indian Real Estate Laws
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,
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 138
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
6.6 6. THE INDIAN CONTRACT ACT, 1872
139 Indian Real Estate Laws
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
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 140
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
6.6 6. THE INDIAN CONTRACT ACT, 1872
141 Indian Real Estate Laws
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-
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 142
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-
6.6 6. THE INDIAN CONTRACT ACT, 1872
143 Indian Real Estate Laws
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
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." 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
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 144
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-
6.6 6. THE INDIAN CONTRACT ACT, 1872
145 Indian Real Estate Laws
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,
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." (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 ab-
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 146
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,
unless a contrary intention appears from the
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
6.6 6. THE INDIAN CONTRACT ACT, 1872
147 Indian Real Estate Laws
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,
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.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
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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
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149 Indian Real Estate Laws
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,
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Indian Real Estate Laws 150
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-
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151 Indian Real Estate Laws
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
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Indian Real Estate Laws 152
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-
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153 Indian Real Estate Laws
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,
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 154
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
6.6 6. THE INDIAN CONTRACT ACT, 1872
155 Indian Real Estate Laws
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-
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 156
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
6.6 6. THE INDIAN CONTRACT ACT, 1872
157 Indian Real Estate Laws
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
compensation, the difference between the contract
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
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 158
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
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."
(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
6.6 6. THE INDIAN CONTRACT ACT, 1872
159 Indian Real Estate Laws
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
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 160
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
6.6 6. THE INDIAN CONTRACT ACT, 1872
161 Indian Real Estate Laws
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
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." 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
the Sale of Goods Act, 1930 (3 of 1930) sec.
65] 81. Sale of Goods.— [Rep. by the Sale of
Goods Act, 1930 (3 of 1930) sec. 65] 82. Sale
of Goods.— [Rep. by the Sale of Goods Act,
1930 (3 of 1930) sec. 65] 83. Sale of Goods.—
[Rep. by the Sale of Goods Act, 1930 (3 of
1930) sec. 65] 84. Sale of Goods.— [Rep. by
the Sale of Goods Act, 1930 (3 of 1930) sec.
65] 85. Sale of Goods.— [Rep. by the Sale of
Goods Act, 1930 (3 of 1930) sec. 65] 86. Sale
of Goods.— [Rep. by the Sale of Goods Act,
1930 (3 of 1930) sec. 65] 87. Sale of Goods.—
[Rep. by the Sale of Goods Act, 1930 (3 of
1930) sec. 65] 88. Sale of Goods.— [Rep. by
the Sale of Goods Act, 1930 (3 of 1930) sec.
65] 89. Sale of Goods.— [Rep. by the Sale of
Goods Act, 1930 (3 of 1930) sec. 65] 90. Sale
of Goods.— [Rep. by the Sale of Goods Act,
1930 (3 of 1930) sec. 65] 91. Sale of Goods.—
[Rep. by the Sale of Goods Act, 1930 (3 of
1930) sec. 65] 92. Sale of Goods.— [Rep. by
the Sale of Goods Act, 1930 (3 of 1930) sec.
65] 93. Sale of Goods.— [Rep. by the Sale of
Goods Act, 1930 (3 of 1930) sec. 65] 94. Sale
of Goods.— [Rep. by the Sale of Goods Act,
1930 (3 of 1930) sec. 65] 95. Sale of Goods.—
[Rep. by the Sale of Goods Act, 1930 (3 of
1930) sec. 65] 96. Sale of Goods.— [Rep. by
the Sale of Goods Act, 1930 (3 of 1930) sec.
65] 97. Sale of Goods.— [Rep. by the Sale of
Goods Act, 1930 (3 of 1930) sec. 65] 98. Sale
of Goods.— [Rep. by the Sale of Goods Act,
1930 (3 of 1930) sec. 65] 99. Sale of Goods.—
[Rep. by the Sale of Goods Act, 1930 (3 of
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
Goods Act, 1930 (3 of 1930) sec. 65] 103. Sale
of Goods.— [Rep. by the Sale of Goods Act,
1930 (3 of 1930) sec. 65] 104. Sale of Goods.—
[Rep. by the Sale of Goods Act, 1930 (3 of
1930) sec. 65] 105. Sale of Goods.— [Rep. by
the Sale of Goods Act, 1930 (3 of 1930) sec.
65] 106. Sale of Goods.— [Rep. by the Sale of
Goods Act, 1930 (3 of 1930) sec. 65] 107. Sale
of Goods.— [Rep. by the Sale of Goods Act,
1930 (3 of 1930) sec. 65] 108. Sale of Goods.—
[Rep. by the Sale of Goods Act, 1930 (3 of
1930) sec. 65] 109. Sale of Goods.— [Rep. by
the Sale of Goods Act, 1930 (3 of 1930) sec.
65] 110. Sale of Goods.— [Rep. by the Sale of
Goods Act, 1930 (3 of 1930) sec. 65] 111. Sale
of Goods.— [Rep. by the Sale of Goods Act,
1930 (3 of 1930) sec. 65] 112. Sale of Goods.—
[Rep. by the Sale of Goods Act, 1930 (3 of
1930) sec. 65] 113. Sale of Goods.— [Rep. by
the Sale of Goods Act, 1930 (3 of 1930) sec.
65] 114. Sale of Goods.— [Rep. by the Sale of
Goods Act, 1930 (3 of 1930) sec. 65] 115. Sale
of Goods.— [Rep. by the Sale of Goods Act,
1930 (3 of 1930) sec. 65] 116. Sale of Goods.—
[Rep. by the Sale of Goods Act, 1930 (3 of
1930) sec. 65] 117. Sale of Goods.— [Rep. by
the Sale of Goods Act, 1930 (3 of 1930) sec.
65] 118. Sale of Goods.— [Rep. by the Sale of
Goods Act, 1930 (3 of 1930) sec. 65] 119. Sale
of Goods.— [Rep. by the Sale of Goods Act,
1930 (3 of 1930) sec. 65] 120. Sale of Goods.—
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 162
[Rep. by the Sale of Goods Act, 1930 (3 of
1930) sec. 65] 121. Sale of Goods.— [Rep. by
the Sale of Goods Act, 1930 (3 of 1930) sec.
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
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." 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
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." 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
6.6 6. THE INDIAN CONTRACT ACT, 1872
163 Indian Real Estate Laws
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-
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 164
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,
6.6 6. THE INDIAN CONTRACT ACT, 1872
165 Indian Real Estate Laws
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-
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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
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167 Indian Real Estate Laws
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
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 168
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
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169 Indian Real Estate Laws
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
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Indian Real Estate Laws 170
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
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171 Indian Real Estate Laws
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
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." 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
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." 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
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." 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
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." 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
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 172
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 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." 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
6.6 6. THE INDIAN CONTRACT ACT, 1872
173 Indian Real Estate Laws
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
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 174
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
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."
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,
6.6 6. THE INDIAN CONTRACT ACT, 1872
175 Indian Real Estate Laws
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
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 176
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
6.6 6. THE INDIAN CONTRACT ACT, 1872
177 Indian Real Estate Laws
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
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." 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
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." 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-
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 178
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.
6.6 6. THE INDIAN CONTRACT ACT, 1872
179 Indian Real Estate Laws
—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,
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 180
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
6.6 6. THE INDIAN CONTRACT ACT, 1872
181 Indian Real Estate Laws
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,
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 182
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
6.6 6. THE INDIAN CONTRACT ACT, 1872
183 Indian Real Estate Laws
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
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 184
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
6.6 6. THE INDIAN CONTRACT ACT, 1872
185 Indian Real Estate Laws
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
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 186
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-
6.6 6. THE INDIAN CONTRACT ACT, 1872
187 Indian Real Estate Laws
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
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 188
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
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." 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
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." 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
6.6 6. THE INDIAN CONTRACT ACT, 1872
189 Indian Real Estate Laws
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
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 190
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-
6.6 6. THE INDIAN CONTRACT ACT, 1872
191 Indian Real Estate Laws
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
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 192
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-
6.6 6. THE INDIAN CONTRACT ACT, 1872
193 Indian Real Estate Laws
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
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 194
1932), sec. 73 and Sch. II.] 243. Of Partnership.—[Rep.
by the Indian Partnership Act,
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
Sch. II.] 246. Of Partnership.—[Rep. by the
Indian Partnership Act, 1932 (9 of 1932), sec.
73 and Sch. II.] 247. Of Partnership.—[Rep.
by the Indian Partnership Act, 1932 (9 of
1932), sec. 73 and Sch. II.] 248. Of Partnership.—[Rep.
by the Indian Partnership Act,
1932 (9 of 1932), sec. 73 and Sch. II.] 249. Of
Partnership.—[Rep. by the Indian Partnership
Act, 1932 (9 of 1932), sec. 73 and Sch.
II.] 250. Of Partnership.—[Rep. by the Indian
Partnership Act, 1932 (9 of 1932), sec. 73 and
Sch. II.] 251. Of Partnership.—[Rep. by the
Indian Partnership Act, 1932 (9 of 1932), sec.
73 and Sch. II.] 252. Of Partnership.—[Rep.
by the Indian Partnership Act, 1932 (9 of
1932), sec. 73 and Sch. II.] 253. Of Partnership.—[Rep.
by the Indian Partnership Act,
1932 (9 of 1932), sec. 73 and Sch. II.] 254. Of
Partnership.—[Rep. by the Indian Partnership
Act, 1932 (9 of 1932), sec. 73 and Sch.
II.] 255. Of Partnership.—[Rep. by the Indian
Partnership Act, 1932 (9 of 1932), sec. 73 and
Sch. II.] 256. Of Partnership.—[Rep. by the
Indian Partnership Act, 1932 (9 of 1932), sec.
73 and Sch. II.] 257. Of Partnership.—[Rep.
by the Indian Partnership Act, 1932 (9 of
1932), sec. 73 and Sch. II.] 258. Of Partnership.—[Rep.
by the Indian Partnership Act,
1932 (9 of 1932), sec. 73 and Sch. II.] 259. Of
Partnership.—[Rep. by the Indian Partnership
Act, 1932 (9 of 1932), sec. 73 and Sch.
II.] 260. Of Partnership.—[Rep. by the Indian
Partnership Act, 1932 (9 of 1932), sec. 73 and
Sch. II.] 261. Of Partnership.—[Rep. by the
Indian Partnership Act, 1932 (9 of 1932), sec.
73 and Sch. II.] 262. Of Partnership.—[Rep.
by the Indian Partnership Act, 1932 (9 of
1932), sec. 73 and Sch. II.] 263. Of Partnership.—[Rep.
by the Indian Partnership Act,
1932 (9 of 1932), sec. 73 and Sch. II.] 264. Of
Partnership.—[Rep. by the Indian Partnership
Act, 1932 (9 of 1932), sec. 73 and Sch.
II.] 265. Of Partnership.—[Rep. by the Indian
Partnership Act, 1932 (9 of 1932), sec. 73 and
Sch. II.] 266. Of Partnership.—[Rep. by the
Indian Partnership Act, 1932 (9 of 1932), sec.
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
6.6 6. THE INDIAN CONTRACT ACT, 1872
195 Indian Real Estate Laws
“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
6. THE INDIAN CONTRACT ACT, 1872 6.6
Indian Real Estate Laws 196
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)."
6.6 6. THE INDIAN CONTRACT ACT, 1872
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
Indian Real Estate Laws 198
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
199 Indian Real Estate Laws
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
Indian Real Estate Laws 200
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
7.0 7. THE INDIAN STAMP ACT, 1899
201 Indian Real Estate Laws
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
7. THE INDIAN STAMP ACT, 1899 7.0
Indian Real Estate Laws 202
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
7.0 7. THE INDIAN STAMP ACT, 1899
203 Indian Real Estate Laws
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,
7. THE INDIAN STAMP ACT, 1899 7.0
Indian Real Estate Laws 204
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-
7.0 7. THE INDIAN STAMP ACT, 1899
205 Indian Real Estate Laws
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
7. THE INDIAN STAMP ACT, 1899 7.0
Indian Real Estate Laws 206
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
7.0 7. THE INDIAN STAMP ACT, 1899
207 Indian Real Estate Laws
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
7. THE INDIAN STAMP ACT, 1899 7.0
Indian Real Estate Laws 208
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
7.0 7. THE INDIAN STAMP ACT, 1899
209 Indian Real Estate Laws
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
7. THE INDIAN STAMP ACT, 1899 7.0
Indian Real Estate Laws 210
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-
7.0 7. THE INDIAN STAMP ACT, 1899
211 Indian Real Estate Laws
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-
7. THE INDIAN STAMP ACT, 1899 7.0
Indian Real Estate Laws 212
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
7.0 7. THE INDIAN STAMP ACT, 1899
213 Indian Real Estate Laws
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
7. THE INDIAN STAMP ACT, 1899 7.0
Indian Real Estate Laws 214
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-
7.0 7. THE INDIAN STAMP ACT, 1899
215 Indian Real Estate Laws
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,
7. THE INDIAN STAMP ACT, 1899 7.0
Indian Real Estate Laws 216
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 ).
20. Subs. by Act 43 of 1955, sec. 2, for “the
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-
1956). 40. Subs. by Act 19 of 1958, sec. 2, for
“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-
1956). 45. Subs. by Act 43 of 1955, sec. 2, for
“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).
60. Subs. by Act 43 of 1955, sec. 2, for “the
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.
by Act 15 of 1904, sec. 6. 74. Subs. by Act
19 of 1958, sec. 6, for “with a duty of anna
or half an anna” (w.e.f. 1-10-1958). 75. Ins.
by Act 15 of 1904, sec. 6. 76. Subs. by Act
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.
7.0 7. THE INDIAN STAMP ACT, 1899
217 Indian Real Estate Laws
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
by Act 5 of 1927, sec. 5. 85. Subs. by Act
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.
89. Subs. by Act 43 of 1955, sec. 2, for “the
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.
105. The words “Chief Court or Judicial Commissioner’s
Court” omitted by the A.O. 1950.
106. The words “Chief Court or Judicial Commissioner’s
Court” omitted by the A.O. 1950.
107. 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).
7. THE INDIAN STAMP ACT, 1899 7.0