Indian Real Estate Law by Chandra Nath

Indian Real Estate Law Collated and Typeset in LATEXby Chandra Nath1 July 19, 2022

1 cpcnath@gmail.com

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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 minuscule 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

Contents I

RERA Act

1 THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 1.1 CHAPTER I PRELIMINARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.1 Short title, extent and commencement . . . . . . . . . . . . . . . . . . . 1.1.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 CHAPTER II REGISTRATION OF REAL ESTATE PROJECT AND AGENTS 1.2.1 Prior registration of real estate project with Real Estate Regulatory Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.2 Application for registration of real estate projects . . . . . . . . . . . . . 1.2.3 Extension of registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.4 Revocation of registration. . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.5 Obligation of Authority consequent upon lapse of or on revocation of registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.6 Registration of real estate agents . . . . . . . . . . . . . . . . . . . . . . 1.2.7 Revocation of registration. . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.8 Functions of real estate agents. . . . . . . . . . . . . . . . . . . . . . . . 1.3 CHAPTER III FUNCTIONS AND DUTIES OF PROMOTER . . . . . . . . . 1.3.1 Obligations of promoter regarding veracity of the advertisement or prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.2 No deposit or advance to be taken by promoter without first entering into agreement for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.3 Adherence to sanctioned plans and project specifications by the promoter 1.3.4 Obligations of promoter in case of transfer of a real estate project to a third party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.5 Obligations of promoter regarding insurance of real estate project . . . . 1.3.6 Transfer of title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.7 Return of amount and compensation . . . . . . . . . . . . . . . . . . . . 1.4 CHAPTER V RIGHTS AND DUTIES OF ALLOTTEES . . . . . . . . . . . . . 1.5 CHAPTER V THE REAL ESTATE REGULATORY AUTHORITY . . . . . . 1.5.1 Establishment and incorporation of Real Estate Regulatory Authority . . 1.5.2 Composition of Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5.3 Term of office of Chairperson and Members . . . . . . . . . . . . . . . . 1.5.4 Salary and allowances payable to Chairperson and Members . . . . . . . 1.5.5 Administrative powers of Chairperson. . . . . . . . . . . . . . . . . . . . 1.5.6 Removal of Chairperson and Members from office in certain circumstances 1.5.7 Restrictions on Chairperson or Members on employment after cessation of office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5.8 Officers and other employees of Authority . . . . . . . . . . . . . . . . . 1.5.9 Meetings of Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5.10 Vacancies, etc., not to invalidate proceeding of Authority . . . . . . . . . v

3 3 3 3 7 7 8 10 10 11 11 11 12 12 13 14 14 15 15 16 16 16 17 17 18 18 18 19 19 19 19 20 20

1.5.11 1.5.12 1.5.13 1.5.14 1.5.15 1.5.16 1.5.17 1.5.18 1.5.19 1.5.20 1.6 1.7

1.8

1.9

Filing of complaints with the Authority or the adjudicating officer. . . . . Functions of Authority for promotion of real estate sector . . . . . . . . . Advocacy and awareness measures . . . . . . . . . . . . . . . . . . . . . Functions of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . Powers of Authority to call for information, conduct investigations . . . . Power to issue interim orders . . . . . . . . . . . . . . . . . . . . . . . . Powers of Authority to issue directions . . . . . . . . . . . . . . . . . . . Powers of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rectification of orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recovery of interest or penalty or compensation and enforcement of order, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CHAPTER VI CENTRAL ADVISORY COUNCIL . . . . . . . . . . . . . . . . 1.6.1 Establishment of Central Advisory Council . . . . . . . . . . . . . . . . . 1.6.2 Functions of Central Advisory Council . . . . . . . . . . . . . . . . . . . CHAPTER VII Tue REAL Estate APPELLATE TRIBUNAL . . . . . . . . . . 1.7.1 Establishment of Real Estate Appellate Tribunal . . . . . . . . . . . . . 1.7.2 Application for settlement of disputes and appeals to Appellate Tribunal 1.7.3 Composition of Appellate Tribunal . . . . . . . . . . . . . . . . . . . . . 1.7.4 Qualifications for appointment of Chairperson and Members . . . . . . . 1.7.5 Term of office of Chairperson and Members . . . . . . . . . . . . . . . . 1.7.6 Salary and allowances payable to Chairperson and Members . . . . . . . 1.7.7 Removal of Chairperson and Member from office in certain circumstances 1.7.8 Restrictions on Chairperson or Judicial Member or Technical or Administrative Member on employment after cessation of office . . . . . . . . . 1.7.9 Officers and other employees of Appellate Tribunal . . . . . . . . . . . . 1.7.10 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7.11 Powers of Tribunal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7.12 Administrative powers of Chairperson of Appellate Tribunal . . . . . . . 1.7.13 Vacancies, etc., not to invalidate proceeding of Appellate Tribunal . . . . 1.7.14 Right to legal representation . . . . . . . . . . . . . . . . . . . . . . . . . 1.7.15 Orders passed by Appellate Tribunal to be executable as a decree . . . . 1.7.16 Appeal to High Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . CHAPTER VIII OFFENCES, PENALTIES AND ADJUDICATION . . . . . . 1.8.1 Punishment for nonregistration under section 3 . . . . . . . . . . . . . . 1.8.2 Penalty for contravention of section 4 . . . . . . . . . . . . . . . . . . . . 1.8.3 Penalty for contravention of other provisions of this Act . . . . . . . . . . 1.8.4 Penalty for nonregistration and contravention under sections 9 and 10 . . 1.8.5 Penalty for failure to comply with orders of Authority by promoter . . . 1.8.6 Penalty for failure to comply with orders of Appellate Tribunal by promoter 1.8.7 Penalty for failure to comply with orders of Authority by real estate agent 1.8.8 Penalty for failure to comply with orders of Appellate Tribunal by real estate agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8.9 Penalty for failure to comply with orders of Authority by allottee . . . . 1.8.10 Penalty for failure to comply with orders of Appellate Tribunal by allottee 1.8.11 Offences by companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8.12 Compounding of offences . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8.13 Power to adjudicate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8.14 Factors to be taken into account by the adjudicating officer . . . . . . . . CHAPTER IX FINANCE, ACCOUNTS, AUDITS AND REPORTS . . . . . . . 1.9.1 Grants and loans by Central Government . . . . . . . . . . . . . . . . . .

20 20 21 21 21 22 22 22 22 23 23 23 23 23 23 24 25 25 25 25 26 26 27 27 27 27 27 28 28 28 29 29 29 29 29 29 29 29 30 30 30 30 30 31 31 31 31

1.9.2 1.9.3 1.9.4

Grants and loans by State Government . . . . . . . . . . . . . . . . . . . Constitution of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Crediting sums realised by way of penalties to Consolidated Fund of India or State account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9.5 Budget, accounts and audit . . . . . . . . . . . . . . . . . . . . . . . . . 1.9.6 Annual report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10 CHAPTER X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 1.10.1 Bar of jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10.2 Cognizance of offences . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10.3 Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10.4 Power of appropriate Government to supersede Authority . . . . . . . . . 1.10.5 Powers of appropriate Government to issue directions to Authority and obtain reports and returns . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10.6 Power of appropriate Government to make rules . . . . . . . . . . . . . . 1.10.7 Power to make regulations . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10.8 Laying of rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10.9 Members, etc. to be public servants . . . . . . . . . . . . . . . . . . . . . 1.10.10 Application of other laws not barred . . . . . . . . . . . . . . . . . . . . 1.10.11 Act to have overriding effect . . . . . . . . . . . . . . . . . . . . . . . . . 1.10.12 Protection of action taken in good faith . . . . . . . . . . . . . . . . . . . 1.10.13 Power to remove difficulties . . . . . . . . . . . . . . . . . . . . . . . . . 1.10.14 Maharashtra Act No. II of 2014 . . . . . . . . . . . . . . . . . . . . . . . 2 RERA Karnataka Rules 2017 2.1 CHAPTER I PRELIMINARY . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.1 Title and Commencement . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 CHAPTER II REAL ESTATE PROJECT . . . . . . . . . . . . . . . . . . . . . 2.2.1 Information and documents to be furnished by the promoter for registration of project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.2 Additional disclosure by promoters of ongoing projects . . . . . . . . . . 2.2.3 Withdrawal of sums deposited in separate bank account . . . . . . . . . 2.2.4 Grant or rejection of registration of the project . . . . . . . . . . . . . . 2.2.5 Extension of registration of project . . . . . . . . . . . . . . . . . . . . . 2.2.6 Revocation of registration of the project . . . . . . . . . . . . . . . . . . 2.3 CHAPTER III REAL ESTATE AGENT . . . . . . . . . . . . . . . . . . . . . . 2.3.1 Application for registration by the real estate agent . . . . . . . . . . . . 2.3.2 Grant of Registration to the real estate agent . . . . . . . . . . . . . . . 2.3.3 Renewal of registration of real estate agent . . . . . . . . . . . . . . . . 2.3.4 Revocation of registration of real estate agent . . . . . . . . . . . . . . . 2.3.5 Maintenance and preservation of books of accounts, records and documents 2.3.6 Other functions of a real estate agent . . . . . . . . . . . . . . . . . . . . 2.4 CHAPTER IV DETAILS TO BE PUBLISHED ON THE WEBSITE OF THE AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.1 Details to be published on the website . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . 2.5.2 Timelines for refund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 CHAPTER VI REAL ESTATE REGULATORY AUTHORITY . . . . . . . . .

31 32 32 32 32 33 33 33 33 33 34 34 35 36 36 36 36 36 36 37 39 39 39 39 39 39 41 42 42 42 43 43 43 43 43 44 44 44 44 44 47 47 47 48

2.7

2.8

2.9

2.10

2.11

2.12 2.13

2.14

2.6.1 Manner of Selection of Chairperson and Members of the Authority . . . . CHAPTER VII SALARY AND ALLOWANCES OF CHAIRPERSON AND MEMBERS OF REAL ESTATE REGULATORY AUTHORITY . . . . . . . . . 2.7.1 Salaries and Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7.2 Tenure of office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7.3 Oath of Office and Secrecy . . . . . . . . . . . . . . . . . . . . . . . . . 2.7.4 Administrative powers of the Chairperson of the regulatory authority . . CHAPTER VIII POWERS AND FUNCTIONS OF THE AUTHORITY . . . . 2.8.1 Functioning of the Authority . . . . . . . . . . . . . . . . . . . . . . . . 2.8.2 Additional powers of the Authority . . . . . . . . . . . . . . . . . . . . . 2.8.3 Manner of recovery of interest, penalty and compensation . . . . . . . . . 2.8.4 Manner of implementation of order, direction or decisions of the adjudicating officer, the Authority or the Appellate Tribunal . . . . . . . . . . CHAPTER IX CONDITIONS OF SERVICE OF OFFICERS AND OTHER EMPLOYEES OF THE AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . 2.9.1 Categories of Officers and employees of the Authority and pay scales . . . 2.9.2 Conditions of service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CHAPTER X FILING OF COMPLAINT . . . . . . . . . . . . . . . . . . . . . 2.10.1 Filing of complaint and manner of holding an inquiry by Regulatory Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10.2 Manner of filing a complaint with the adjudicating officer and the manner of holding an inquiry by the adjudicating officer . . . . . . . . . . . . . . CHAPTER XI REAL ESTATE APPELLATE TRIBUNAL . . . . . . . . . . . . 2.11.1 Manner of Selection of Member of the Appellate Tribunal . . . . . . . . . 2.11.2 Functioning of Appellate Tribunal . . . . . . . . . . . . . . . . . . . . . . 2.11.3 Appeal and the fees payable . . . . . . . . . . . . . . . . . . . . . . . . . 2.11.4 Procedure for inquiry of the charges against the Chairperson or Member of the Regulatory Authority or the Appellate Tribunal . . . . . . . . . . 2.11.5 Salary and allowances payable and other terms and conditions of service of Chairperson and Members of the Appellate Tribunal . . . . . . . . . . 2.11.6 Retirement from Government Service . . . . . . . . . . . . . . . . . . . 2.11.7 Oath of Office and Secrecy . . . . . . . . . . . . . . . . . . . . . . . . . . 2.11.8 Declaration of financial or other interest . . . . . . . . . . . . . . . . . . 2.11.9 Residuary provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.11.10 Categories of Officers and employees of the Tribunal . . . . . . . . . . . . 2.11.11 Conditions of service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.11.12 Additional powers of the Appellate Tribunal . . . . . . . . . . . . . . . . 2.11.13 Administrative powers of the Chairperson of the Appellate Tribunal . . . CHAPTER XI OFFENCES AND PENALTIES . . . . . . . . . . . . . . . . . . 2.12.1 Terms and conditions and the fine payable for compounding of offence . . CHAPTER-XII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 2.13.1 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.13.2 Residuary provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CHAPTER-XIII BUDGET AND REPORT . . . . . . . . . . . . . . . . . . . . 2.14.1 Budget, accounts and audit . . . . . . . . . . . . . . . . . . . . . . . . . 2.14.2 Annual Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

48 48 48 50 50 50 51 51 51 52 52 52 52 52 53 53 54 55 55 55 56 56 57 58 58 58 58 58 58 58 58 59 59 60 60 60 60 60 60

Classical Statutes

3 Introduction

4 The 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 4.20 4.21 4.22 4.23 4.24 4.25 4.26 4.27

87 87 87 87 88 89 89 89 89 90 90 90 90 90 91 91 91 91 91 92 92 92 92 92 93 93 93

4.28 4.29 4.30 4.31 4.32 4.33 4.34 4.35 4.36 4.37 4.38 4.39 4.40 4.41 4.42

Transfer of Property Act, 1882 (Extent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repeal of Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interpretation clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . “Transfer of property” defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . What may be transferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Persons competent to transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operation of transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Oral transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Condition restraining alienation . . . . . . . . . . . . . . . . . . . . . . . . . . . Restriction repugnant to interest created . . . . . . . . . . . . . . . . . . . . . . Condition making interest determinable on insolvency or attempted alienation . Transfer for benefit of unborn person . . . . . . . . . . . . . . . . . . . . . . . . Rule against perpetuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transfer to take effect on failure of prior interest. . . . . . . . . . . . . . . . . . Direction for accumulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transfer in perpetuity for benefit of public . . . . . . . . . . . . . . . . . . . . . Vested interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . When unborn person acquires vested interest on transfer for his benefit . . . . . Contingent interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transfer to members of a class who attain a particular age . . . . . . . . . . . . Transfer contingent on happening of specified uncertain event . . . . . . . . . . Transfer to such of certain persons as survive at some period not specified . . . . Conditional transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ulterior transfer conditional on happening or not happening of specified event . Fulfilment of condition subsequent . . . . . . . . . . . . . . . . . . . . . . . . . . Prior disposition not affected by invalidity of ulterior disposition . . . . . . . . . Condition that transfer shall cease to have effect in case specified uncertain event happens or does not happen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Such condition must not be invalid . . . . . . . . . . . . . . . . . . . . . . . . . Transfer conditional on performance of act, no time being specified for performance Transfer conditional on performance of act, time being specified . . . . . . . . . Election when necessary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Apportionment of periodical payments on determination of interest of person entitled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Apportionment of benefit of obligation on severance . . . . . . . . . . . . . . . . Transfer by person authorised only under certain circumstances to transfer . . . Transfer where third person is entitled to maintenance . . . . . . . . . . . . . . Burden of obligation imposing restriction on use of land . . . . . . . . . . . . . . Transfer by ostensible owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transfer by person having authority to revoke former transfer . . . . . . . . . . Transfer by unauthorised person who subsequently acquires interest in property transferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transfer by one co-owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Joint transfer for consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . Transfer for consideration by persons having distinct interests . . . . . . . . . .

93 94 94 94 94 95 95 96 96 96 97 97 97 97 98 98

4.43 4.44 4.45 4.46 4.47 4.48 4.49 4.50 4.51 4.52 4.53 4.54 4.55 4.56 4.57 4.58 4.59 4.60 4.61 4.62 4.63 4.64 4.65 4.66 4.67 4.68 4.69 4.70 4.71 4.72 4.73 4.74 4.75 4.76 4.77 4.78 4.79 4.80 4.81 4.82 4.83 4.84 4.85 4.86 4.87 4.88 4.89 4.90 4.91 4.92

Transfer by co-owners of share in common property . . . . . . . . . . . . . . Priority of rights created by transfer . . . . . . . . . . . . . . . . . . . . . . Transferee’s right under policy . . . . . . . . . . . . . . . . . . . . . . . . . . Rent bona fide paid to holder under defective title . . . . . . . . . . . . . . . Improvements made by bona fide holders under defective titles . . . . . . . . Transfer of property pending suit relating thereto . . . . . . . . . . . . . . . Fraudulent transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Part performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . “Sale” defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rights and liabilities of buyer and seller . . . . . . . . . . . . . . . . . . . . . Obligation to transfer to third party instead of re-transference to mortgagor Right to inspection and production of documents . . . . . . . . . . . . . . . Right of usufructuary mortgagor to recover possession.— . . . . . . . . . . . Accession to mortgaged property . . . . . . . . . . . . . . . . . . . . . . . . Improvements to mortgaged property.— . . . . . . . . . . . . . . . . . . . . Renewal of mortgaged lease . . . . . . . . . . . . . . . . . . . . . . . . . . . Implied contracts by mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . Mortgagor’s power to lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mortgagor’s power to lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . Waste by mortgagor in possession . . . . . . . . . . . . . . . . . . . . . . . . Right to fore-closure or sale . . . . . . . . . . . . . . . . . . . . . . . . . . . Mortgagee when bound to bring one suit on several mortgages . . . . . . . . Right to sue for mortgage-money . . . . . . . . . . . . . . . . . . . . . . . . Power of sale when valid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appointment of receiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accession to mortgaged property . . . . . . . . . . . . . . . . . . . . . . . . Renewal of mortgaged lease . . . . . . . . . . . . . . . . . . . . . . . . . . . Right of mortgagee in possession . . . . . . . . . . . . . . . . . . . . . . . . Right to proceeds of revenue sale or compensation on acquisition . . . . . . . Right of subsequent mortgagee to pay off prior mortgagee . . . . . . . . . . . Rights of mesne mortgagee against prior and subsequent mortgagees . . . . . Liabilities of mortgagee in possession.— . . . . . . . . . . . . . . . . . . . . . Receipts in lieu of interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . Postponement of prior mortgagee . . . . . . . . . . . . . . . . . . . . . . . . Mortgage to secure uncertain amount when maximum is expressed . . . . . . Tacking abolished . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Marshalling, securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Contribution to mortgage-debt.— . . . . . . . . . . . . . . . . . . . . . . . . Power to deposit in Court money due on mortgage . . . . . . . . . . . . . . Cessation of interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Parties to suits for foreclosure, sale and redemption . . . . . . . . . . . . . . Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prohibition of tacking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rights of mesne mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . . . . Right of redeeming co-mortgagor to expenses . . . . . . . . . . . . . . . . . Mortgage by deposit of title-deeds . . . . . . . . . . . . . . . . . . . . . . . . Rights and liabilities of parties to anomalous mortgages . . . . . . . . . . . . Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . No merger in case of subsequent encumbrance . . . . . . . . . . . . . . . . . Service or tender on or to agent . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

98 98 99 99 99 99 99 100 100 100 105 105 105 105 106 106 106 107 107 107 108 108 108 109 109 111 111 111 111 112 112 112 113 113 113 113 113 114 114 114 115 115 115 115 115 116 116 116 116 116

4.93 Notice, etc., to or by person incompetent to contract . . . . . . . . . . 4.94 Power to make rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.95 Lease defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.96 Duration of certain leases in absence of written contract or local usage 4.97 Rights and liabilities of lessor and lessee . . . . . . . . . . . . . . . . . 4.98 Rights of lessor’s transferee . . . . . . . . . . . . . . . . . . . . . . . . . 4.99 Exclusion of day on which term commences . . . . . . . . . . . . . . . 4.100Determination of lease . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.101 Waiver of forfeiture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.102Waiver of notice to quit . . . . . . . . . . . . . . . . . . . . . . . . . . 4.103Relief against forfeiture for non-payment of rent . . . . . . . . . . . . . 4.104Effect of surrender and forfeiture on under-leases . . . . . . . . . . . . . 4.105Effect of holding over . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.106Exemption of leases for agricultural purposes . . . . . . . . . . . . . . . 4.107“Exchange” defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.108Right of party deprived of thing received in exchange . . . . . . . . . . 4.109 Rights and liabilities of parties . . . . . . . . . . . . . . . . . . . . . . 4.110Exchange of money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.111 “Gift” defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.112Gift of existing and future property . . . . . . . . . . . . . . . . . . . . 4.113Gift to several of whom one does not accept . . . . . . . . . . . . . . . 4.114 When gift may be suspended or revoked . . . . . . . . . . . . . . . . . 4.115 Onerous gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.116Universal donee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.117 Saving of donations mortis causa and Muhammadan Law . . . . . . . 4.118Transfer of actionable claim . . . . . . . . . . . . . . . . . . . . . . . . 4.119Mortgaged debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.120Assignment of rights under policy of insurance against fire . . . . . . . 4.121Assignment of rights under policy of marine insurance . . . . . . . . . . 4.122Incapacity of officers connected with Courts of Justice . . . . . . . . . . 4.123Saving of negotiable instruments, etc. . . . . . . . . . . . . . . . . . . . 5 The 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 5.15 5.16 5.17

Indian Easements Act, 1882 Short title . . . . . . . . . . . . . . . . . . . . . . . . . . . Commencement . . . . . . . . . . . . . . . . . . . . . . . . Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Servient owners . . . . . . . . . . . . . . . . . . . . . . . . Lessor and mortgagor . . . . . . . . . . . . . . . . . . . . . Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Who may acquire easements . . . . . . . . . . . . . . . . . Easements of necessity and quasi easements . . . . . . . . Direction of way of necessity . . . . . . . . . . . . . . . . Acquisition by prescription . . . . . . . . . . . . . . . . . . Exclusion in favour of reversioner of servient heritage . . . Rights which cannot be acquired by prescription . . . . . . Customary easement . . . . . . . . . . . . . . . . . . . . . Transfer of dominant heritage passes easement . . . . . . . Rules controlled by contract or title . . . . . . . . . . . . Bar to use unconnected with enjoyment . . . . . . . . . . . Exercise of easement. Confinement of exercise of easement

. . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

117 117 117 117 118 119 119 120 120 121 121 121 121 122 122 122 122 122 122 123 123 123 123 123 124 124 125 125 125 125 125

. . . . . . . . . . . . . . . . .

127 . 127 . 127 . 127 . 129 . 130 . 130 . 130 . 130 . 132 . 132 . 133 . 133 . 133 . 133 . 134 . 134 . 134

5.18 5.19 5.20 5.21 5.22 5.23 5.24 5.25 5.26 5.27 5.28 5.29 5.30 5.31 5.32 5.33 5.34 5.35 5.36 5.37 5.38 5.39 5.40 5.41 5.42 5.43 5.44 5.45 5.46 5.47 5.48 5.49 5.50 5.51 5.52 5.53 5.54 5.55 5.56 5.57 6 The 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8

Right to alter mode of enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . Right to do acts to secure enjoyment . . . . . . . . . . . . . . . . . . . . . . . Liability for expenses necessary for preservation of easements . . . . . . . . . Liability for damage from want of repair . . . . . . . . . . . . . . . . . . . . . Servient owner not bound to do anything . . . . . . . . . . . . . . . . . . . . . Extent of easements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase of easement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Partition of dominant heritage . . . . . . . . . . . . . . . . . . . . . . . . . . . Obstruction in case of excessive user . . . . . . . . . . . . . . . . . . . . . . . Right to enjoyment without disturbance . . . . . . . . . . . . . . . . . . . . . Suit for disturbance of easement . . . . . . . . . . . . . . . . . . . . . . . . . . When cause of action arises for removal of support . . . . . . . . . . . . . . . Injunction to restrain disturbance . . . . . . . . . . . . . . . . . . . . . . . . . Abatement of obstruction of easement . . . . . . . . . . . . . . . . . . . . . . Extinction by dissolution of right of servient owner . . . . . . . . . . . . . . . Extinction by release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Extinction by revocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Extinction on expiration of limited period or happening of dissolving condition Extinction on termination of necessity . . . . . . . . . . . . . . . . . . . . . . Extinction by permanent change in dominant heritage . . . . . . . . . . . . . . Extinction on permanent alteration of servient heritage by superior force . . . Extinction by destruction of either heritage . . . . . . . . . . . . . . . . . . . . Extinction by unity of ownership . . . . . . . . . . . . . . . . . . . . . . . . . Extinction by non-enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . Extinction of accessory right . . . . . . . . . . . . . . . . . . . . . . . . . . . . Suspension of easement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ervient owner not entitled to require continuance . . . . . . . . . . . . . . . . . Revival of easement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . License" defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Who may grant license . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Grant may be expressed or implied . . . . . . . . . . . . . . . . . . . . . . . . Accessory licenses annexed by law . . . . . . . . . . . . . . . . . . . . . . . . . License when transferable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Grantor’s duty to disclose defects . . . . . . . . . . . . . . . . . . . . . . . . . Grantor’s duty not to render property unsafe . . . . . . . . . . . . . . . . . . . Grantor’s transferee not bound by license . . . . . . . . . . . . . . . . . . . . . License when revocable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . License when deemed revoked . . . . . . . . . . . . . . . . . . . . . . . . . . . Licensee’s rights on revocation . . . . . . . . . . . . . . . . . . . . . . . . . . . Licensee’s rights on eviction . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Indian Contract Act, 1872 Short title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interpretation-clause . . . . . . . . . . . . . . . . . . . . . . . . Communication, acceptance and revocation of proposals . . . . Communication when complete . . . . . . . . . . . . . . . . . . Revocation of Proposals and acceptance . . . . . . . . . . . . . Revocation how made . . . . . . . . . . . . . . . . . . . . . . . Acceptance by performing conditions, or receiving consideration Promises, express and implied . . . . . . . . . . . . . . . . . . .

145 . 145 . 145 . 145 . 146 . 146 . 147 . 147 . 147

. . . . . . . .

134 135 135 135 135 136 136 136 137 137 137 138 138 138 138 138 139 139 139 140 140 140 140 141 141 141 141 142 142 142 142 142 143 143 143 143 143 143 144 144

6.9 6.10 6.11 6.12 6.13 6.14 6.15 6.16 6.17 6.18 6.19 6.20 6.21 6.22 6.23 6.24 6.25 6.26 6.27 6.28 6.29 6.30 6.31 6.32 6.33 6.34 6.35 6.36 6.37 6.38 6.39 6.40 6.41 6.42 6.43 6.44 6.45 6.46 6.47 6.48 6.49 6.50 6.51 6.52

What agreements are contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . Who are competent to contract . . . . . . . . . . . . . . . . . . . . . . . . . . . What is a sound mind for the purposes of contracting . . . . . . . . . . . . . . . ‘Consent’ defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ‘Free consent’ defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ‘Coercion’ defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ‘Undue influence’ defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ‘Fraud’ defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . “Misrepresentation” defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Voidability of agreements without free consent . . . . . . . . . . . . . . . . . . . Power to set aside contract induced by undue influence . . . . . . . . . . . . . . Agreement void where both parties are under mistake as to matter of fact . . . . Effect of mistakes as to law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Contract caused by mistake of one party as to matter of fact . . . . . . . . . . . Agreements void, if considerations and objects unlawful in part . . . . . . . . . . Agreement without consideration, void . . . . . . . . . . . . . . . . . . . . . . . Agreement in restraint of marriage, void . . . . . . . . . . . . . . . . . . . . . . Agreement in restraint of trade, void . . . . . . . . . . . . . . . . . . . . . . . . Agreements in restraint of legal proceedings, void . . . . . . . . . . . . . . . . . Agreements void for uncertainty . . . . . . . . . . . . . . . . . . . . . . . . . . . Agreements by way of wager, void . . . . . . . . . . . . . . . . . . . . . . . . . . “Contingent contract” defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . Enforcement of contracts contingent on an event happening . . . . . . . . . . . . Enforcement of contracts contingent on an event not happening . . . . . . . . . When event on which contract is contingent to be deemed impossible, if it is the future conduct of a living person . . . . . . . . . . . . . . . . . . . . . . . . . . When contracts become void, which are contingent on happening of specified event within fixed time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Agreements contingent on impossible event void . . . . . . . . . . . . . . . . . . Obligation of parties to contract . . . . . . . . . . . . . . . . . . . . . . . . . . . Effect of refusal to accept offer of performance . . . . . . . . . . . . . . . . . . . Effect of refusal of party to perform promise wholly . . . . . . . . . . . . . . . . Person by whom promise is to be performed . . . . . . . . . . . . . . . . . . . . Effect of accepting performance from third person . . . . . . . . . . . . . . . . Devolution of joint liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Any one of joint promisors may be compelled to perform . . . . . . . . . . . . . Effect of release of one joint promisor . . . . . . . . . . . . . . . . . . . . . . . . Devolution of joint rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Time for performance of promise, where no application is to be made and no time is specified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Time and place for performance of promise, where time is specified and no application to be made . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Application for performance on certain day to be at proper time and place . . . Place for the performance of promise, where no application to be made and no place fixed for performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Performance in manner or at time prescribed or sanctioned by promisee . . . . . Promisor not bound to perform, unless reciprocal promisee ready and willing to perform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Order of performance of reciprocal promises . . . . . . . . . . . . . . . . . . . . Liability of party preventing event on which the contract is to take effect . . . .

147 147 148 148 148 148 149 149 150 150 151 151 152 152 154 154 155 155 155 155 156 156 157 157 157 158 158 158 159 159 160 160 160 161 161 162 162 162 163 163 163 164 164 165

6.53 Effect of default as to that promise which should be performed, in contract consisting of reciprocal promises . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 6.54 Effect of failure to perform at a fixed time, in contract in which time is essential 166 6.55 Agreement to do impossible act.—An agreement to do an act impossible in itself is void . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 6.56 Reciprocal promise to do things legal, and also other things illegal . . . . . . . . 167 6.57 Alternative promise, one branch being illegal . . . . . . . . . . . . . . . . . . . . 168 6.58 Application of payment where debt to be discharged is indicated . . . . . . . . . 168 6.59 Application of payment where debt to be discharged is not indicated . . . . . . . 168 6.60 Application of payment where neither party appropriates . . . . . . . . . . . . . 168 6.61 Effect of novation, rescission, and alteration of contract . . . . . . . . . . . . . . 169 6.62 Promisee may dispense with or remit performance of promise . . . . . . . . . . . 169 6.63 Consequences of rescission of a voidable contract . . . . . . . . . . . . . . . . . . 170 6.64 Obligation of person who has received advantage under void agreement, or contract that becomes void . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 6.65 Mode of communicating or revoking rescission of voidable contract . . . . . . . . 171 6.66 Effect of neglect of promisee to afford promisor reasonable facilities for performance171 6.67 Claim for necessaries supplied to person incapable of contracting, or on his account171 6.68 Reimbursement of person paying money due by another, in payment of which he is interested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 6.69 Obligation of person enjoying benefit of non-gratuitous act . . . . . . . . . . . . 172 6.70 Responsibility of finder of goods . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 6.71 Liability of person to whom money is paid, or thing delivered, by mistake or under coercion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 6.72 Compensation for loss or damage caused by breach of contract . . . . . . . . . . 173 6.73 Compensation for breach of contract where penalty stipulated for . . . . . . . . 177 6.74 Party rightfully rescinding contract, entitled to compensation . . . . . . . . . . . 178 6.75 “Contract of indemnity” defined . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 6.76 Rights of indemnity-holder when sued . . . . . . . . . . . . . . . . . . . . . . . . 179 6.77 ‘Contract of guarantee’, ‘surety’, ‘principal debtor’ and ‘creditor’ . . . . . . . . . 179 6.78 Consideration for guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180 6.79 Surety’s liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180 6.80 ‘Continuing guarantee’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180 6.81 Revocation of continuing guarantee . . . . . . . . . . . . . . . . . . . . . . . . . 181 6.82 Revocation of continuing guarantee by surety’s death . . . . . . . . . . . . . . . 181 6.83 Liability of two persons, primarily liable, not affected by arrangement between them that one shall be surety on other’s default . . . . . . . . . . . . . . . . . . 181 6.84 Discharge of surety by variance in terms of contract . . . . . . . . . . . . . . . . 182 6.85 Discharge of surety by release or discharge of principal debtor . . . . . . . . . . 183 6.86 Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 6.87 Surety not discharged when agreement made with third person to give time to principal debtor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184 6.88 Creditor’s forbearance to sue does not discharge surety . . . . . . . . . . . . . . 184 6.89 Release of one co-surety does not discharge others . . . . . . . . . . . . . . . . . 184 6.90 Discharge of surety by creditor’s act or omission impairing surety’s eventual remedy184 6.91 Surety’s right to benefit of creditor’s securities . . . . . . . . . . . . . . . . . . . 185 6.92 Guarantee obtained by misrepresentation, invalid . . . . . . . . . . . . . . . . . 186 6.93 Guarantee obtained by concealment, invalid . . . . . . . . . . . . . . . . . . . . 186 6.94 Guarantee on contract that creditor shall not act on it until co-surety joins . . . 186

6.95 Implied promise to indemnify surety . . . . . . . . . . . . . . . . . . . . . . . . 6.96 Co-sureties liable to contribute equally . . . . . . . . . . . . . . . . . . . . . . . 6.97 Liability of co-sureties bound in different sums . . . . . . . . . . . . . . . . . . . 6.98 ‘Bailment’, ‘bailor’ and ‘bailee’ defined . . . . . . . . . . . . . . . . . . . . . . . 6.99 Delivery to bailee how made . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.100Bailor’s duty to disclose faults in goods bailed . . . . . . . . . . . . . . . . . . . 6.101Care to be taken by bailee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.102Bailee when not liable for loss, etc., of thing bailed . . . . . . . . . . . . . . . . 6.103 Termination of bailment by bailee’s act inconsistent with conditions . . . . . . . 6.104Liability of bailee making unauthorised use of goods bailed . . . . . . . . . . . . 6.105 Effect of mixture, with bailor’s consent, of his goods with bailee’s . . . . . . . . 6.106Effect of mixture, with bailor’s consent, of his goods with bailee’s . . . . . . . . 6.107Effect of mixture, without bailor’s consent, when the goods can be separated . . 6.108Effect of mixture, without bailor’s consent, when the goods cannot be separated 6.109 Repayment, by bailor, of necessary expenses . . . . . . . . . . . . . . . . . . . . 6.110Restoration of goods lent gratuitously . . . . . . . . . . . . . . . . . . . . . . . . 6.111Return of goods bailed, on expiration of time or accomplishment of purpose . . . 6.112Bailee’s responsibility when goods are not duly returned . . . . . . . . . . . . . 6.113Termination of gratuitous bailment by death.— . . . . . . . . . . . . . . . . . . 6.114Bailor entitled to increase or profit from goods bailed . . . . . . . . . . . . . . . 6.115Bailor’s responsibility to bailee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.116Bailment by several joint owners . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.117Bailee not responsible on re-delivery to bailor without title . . . . . . . . . . . . 6.118Right of third person claiming goods bailed . . . . . . . . . . . . . . . . . . . . . 6.119Right of finder of goods, may sue for specific reward offered . . . . . . . . . . . . 6.120When finder of thing commonly on sale may sell it . . . . . . . . . . . . . . . . . 6.121Bailee’s particular lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.122General lien of bankers, factors, wharfingers, attorneys and policy-brokers . . . . 6.123‘Pledge’, ‘pawnor’ and ‘pawnee’ defined . . . . . . . . . . . . . . . . . . . . . . . 6.124Pawnee’s right of retainer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.125Pawnee not to retain for debt or promise . . . . . . . . . . . . . . . . . . . . . . 6.126Pawnee’s right as to extraordinary expenses incurred . . . . . . . . . . . . . . . 6.127 Pawnee’s right where pawnor makes default . . . . . . . . . . . . . . . . . . . . 6.128Defaulting pawnor’s right to redeem . . . . . . . . . . . . . . . . . . . . . . . . . 6.129Pledge by mercantile agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.130Pledge by person in possession under voidable contract . . . . . . . . . . . . . . 6.131Pledge where pawnor has only a limited interest . . . . . . . . . . . . . . . . . . 6.132Suit by bailor or bailee against wrong-doer . . . . . . . . . . . . . . . . . . . . . 6.133Apportionment of relief or compensation obtained by such suits . . . . . . . . . 6.134‘Agent’ and ‘principal’ defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.135Who may employ agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.136 Who may be an agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.137Consideration not necessary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.138Agent’s authority may be expressed or implied . . . . . . . . . . . . . . . . . . . 6.139Definitions of express and implied authority . . . . . . . . . . . . . . . . . . . . 6.140Extent of agent’s authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.141Agent’s authority in an emergency . . . . . . . . . . . . . . . . . . . . . . . . . 6.142When agent cannot delegate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.143‘Sub-agent’ defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.144Representation of principal by sub-agent properly appointed . . . . . . . . . . .

186 187 188 188 189 189 189 189 189 189 190 190 190 191 191 191 191 192 192 192 192 192 192 193 193 193 193 194 194 194 194 194 195 195 195 195 195 195 196 196 196 196 196 196 196 197 197 197 198 198

6.145Agent’s responsibility for sub-agent appointed without authority . . . . . . . . . 198 6.146Relation between principal and person duly appointed by agent to act in business of agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198 6.147Agent’s duty in naming such person . . . . . . . . . . . . . . . . . . . . . . . . . 199 6.148Right of person as to acts done for him without his authority. Effect of ratification199 6.149Ratification may be expressed or implied . . . . . . . . . . . . . . . . . . . . . . 199 6.150Knowledge requisite for valid ratification . . . . . . . . . . . . . . . . . . . . . . 199 6.151Effect of ratifying unauthorized act forming part of a transaction . . . . . . . . . 200 6.152Ratification of unauthorized act cannot injure third person . . . . . . . . . . . . 200 6.153Termination of agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200 6.154Termination of agency, where agent has an interest in subject-matter . . . . . . 200 6.155When principal may revoke agent’s authority . . . . . . . . . . . . . . . . . . . . 200 6.156Revocation where authority has been partly exercised . . . . . . . . . . . . . . . 200 6.157 Compensation for revocation by principal, or renunciation by agent . . . . . . . 201 6.158Notice of revocation or renunciation . . . . . . . . . . . . . . . . . . . . . . . . . 201 6.159Revocation and renunciation may be expressed or implied . . . . . . . . . . . . . 201 6.160When termination of agent’s authority takes effect as to agent, and as to third persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201 6.161Agent’s duty on termination of agency by principal’s death or insanity . . . . . 202 6.162Termination of sub-agent’s authority . . . . . . . . . . . . . . . . . . . . . . . . 202 6.163Agent’s duty in conducting principal’s business . . . . . . . . . . . . . . . . . . . 202 6.164Skill and diligence required from agent.— . . . . . . . . . . . . . . . . . . . . . . 202 6.165Agent’s accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203 6.166Agent’s duty to communicate with principal . . . . . . . . . . . . . . . . . . . . 203 6.167Right of principal when agent deals, on his own account, in business of agency without principal’s consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203 6.168 Principal’s right to benefit gained by agent dealing on his own account in business of agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203 6.169 Agent’s right of retainer out of sums received on principal’s account . . . . . . . 203 6.170Agent’s duty to pay sums received for principal . . . . . . . . . . . . . . . . . . 204 6.171When agent’s remuneration becomes due.— . . . . . . . . . . . . . . . . . . . . 204 6.172 Agent not entitled to remuneration for business misconducted . . . . . . . . . . 204 6.173Agent’s lien on principal’s property . . . . . . . . . . . . . . . . . . . . . . . . . 204 6.174Agent to be indemnified against consequences of lawful acts . . . . . . . . . . . 204 6.175Agent to be indemnified against consequences of acts done in good faith . . . . . 205 6.176Non-liability of employer of agent to do a criminal act . . . . . . . . . . . . . . . 205 6.177Compensation to agent for injury caused by principal’s neglect . . . . . . . . . . 205 6.178Enforcement and consequences of agent’s contracts. . . . . . . . . . . . . . . . . 205 6.179 Principal how far bound, when agent exceeds authority.— . . . . . . . . . . . . 206 6.180Principal not bound when excess of agent’s authority is not separable . . . . . . 206 6.181Consequences of notice given to agent . . . . . . . . . . . . . . . . . . . . . . . . 206 6.182Agent cannot personally enforce, nor be bound by, contracts on behalf of principal206 6.183Right of parties to a contract made by agent not disclosed.— . . . . . . . . . . . 207 6.184Performance of contract with agent supposed to be principal . . . . . . . . . . . 207 6.185Right of person dealing with agent personally liable . . . . . . . . . . . . . . . . 207 6.186 Consequence of inducing agent or principal to act on belief that principal or agent will be held exclusively liable . . . . . . . . . . . . . . . . . . . . . . . . . 207 6.187 Liability of pretended agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207 6.188 Person falsely contracting as agent, not entitled to performance . . . . . . . . . 208 6.189Liability of principal inducing belief that agent’s unauthorized acts were authorized208

6.190Effect, on agreement, of misrepresentation or fraud by agent . . . . . . . . . . . 208 7 The 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 7.11 7.12 7.13 7.14 7.15 7.16 7.17 7.18 7.19 7.20 7.21 7.22 7.23 7.24 7.25 7.26 7.27 7.28 7.29 7.30 7.31 7.32 7.33 7.34 7.35 7.36 7.37 7.38 7.39 7.40 7.41 7.42 7.43 7.44 7.45 7.46

Indian Stamp Act, 1899 213 Short title, extent and commencement . . . . . . . . . . . . . . . . . . . . . . . 213 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213 Instruments chargeable with duty . . . . . . . . . . . . . . . . . . . . . . . . . . 215 Several instruments used in single transaction of sale, mortgage or settlement . . 216 Instruments relating to several distinct matters . . . . . . . . . . . . . . . . . . 216 Instruments coming within several descriptions in Schedule I . . . . . . . . . . . 216 Policies of sea-insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 Bonds, debentures or other securities issued on loans under Act 11 of 1879 . . . 217 Power to reduce, remit or compound duties . . . . . . . . . . . . . . . . . . . . . 218 Duties how to be paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218 Use of adhesive stamps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218 Cancellation of adhesive stamps.— . . . . . . . . . . . . . . . . . . . . . . . . . 219 Instruments stamped with impressed stamps how to be written . . . . . . . . . . 219 Only one instrument to be on same stamp . . . . . . . . . . . . . . . . . . . . . 219 Instrument written contrary to section 13 or 14 deemed unstamped . . . . . . . 219 Denoting duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 Instruments executed in India . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 Instruments other than bills and notes executed out of India . . . . . . . . . . . 220 Bills and notes drawn out of India . . . . . . . . . . . . . . . . . . . . . . . . . . 220 Conversion of amount expressed in foreign currencies . . . . . . . . . . . . . . . 220 Stock and marketable securities how to be valued . . . . . . . . . . . . . . . . . 220 Effect of statement of rate of exchange or average price . . . . . . . . . . . . . . 220 Instruments reserving interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Valuation in case of annuity, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Stamp where value of subject-matter is indeterminate . . . . . . . . . . . . . . . 222 Facts affecting duty to be set forth in instrument . . . . . . . . . . . . . . . . . 222 Direction as to duty in case of certain conveyances . . . . . . . . . . . . . . . . . 222 Duties by whom payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223 Obligation to give receipt in certain cases . . . . . . . . . . . . . . . . . . . . . . 223 Adjudication as to proper stamp . . . . . . . . . . . . . . . . . . . . . . . . . . . 223 Certificate by Collector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224 Examination and impounding of instruments . . . . . . . . . . . . . . . . . . . . 224 Special provision as to unstamped receipts . . . . . . . . . . . . . . . . . . . . . 225 Instruments not duly stamped inadmissible in evidence, etc. . . . . . . . . . . . 225 Admission of instrument where not to be questioned . . . . . . . . . . . . . . . . 225 Admission of improperly stamped instruments . . . . . . . . . . . . . . . . . . . 225 Instruments impounded, how dealt with . . . . . . . . . . . . . . . . . . . . . . 226 Collector’s power to refund penalty paid under section 38, sub-section (1) . . . 226 Collector’s power to stamp instruments impounded . . . . . . . . . . . . . . . . 226 Collector’s power to stamp instruments impounded . . . . . . . . . . . . . . . . 226 Instruments unduly stamped by accident . . . . . . . . . . . . . . . . . . . . . . 227 Endorsement of instruments in which duty has been paid under section 35, 40 or 41. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 Prosecution for offence against Stamp-law . . . . . . . . . . . . . . . . . . . . . 227 Persons paying duty or penalty may recover same in certain cases . . . . . . . . 228 Power to Revenue authority to refund penalty or excess duty in certain cases . . 228 Non-liability for loss of instruments sent under section 38 . . . . . . . . . . . . . 228

xviii 7.47 7.48 7.49 7.50 7.51 7.52 7.53 7.54 7.55 7.56 7.57 7.58 7.59 7.60 7.61 7.62 7.63 7.64 7.65 7.66 7.67 7.68 7.69 7.70 7.71 7.72 7.73 7.74 7.75 7.76 7.77 7.78 7.79

0.0

Indian Real Estate Laws Power of payer to stamp bills and promissory notes received by him unstamped Recovery of duties and penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . Allowance for spoiled stamps . . . . . . . . . . . . . . . . . . . . . . . . . . . . Application for relief under section 49 when to be made . . . . . . . . . . . . . . Allowance in case of printed forms no longer required by Corporations . . . . . Allowance for misused stamps . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allowance for spoiled or misused stamps how to be made . . . . . . . . . . . . . Allowances for stamps in denominations of annas . . . . . . . . . . . . . . . . . Allowances for Refugee Relief stamps . . . . . . . . . . . . . . . . . . . . . . . . Allowance on renewal of certain debentures . . . . . . . . . . . . . . . . . . . . . Control of, and statement of case to, Chief Controlling Revenue-Authority . . . Statement of case by Chief Controlling Revenue-Authority to High Court . . . . Power of High Court to call for further particulars as to case stated . . . . . . . Procedure in disposing of case stated . . . . . . . . . . . . . . . . . . . . . . . . Statement of case by other Courts to High Court . . . . . . . . . . . . . . . . . Revision of certain decisions of Courts regarding the sufficiency of stamps . . . . Penalty for executing, etc., instrument not duty stamped . . . . . . . . . . . . . Penalty for failure to cancel adhesive stamp . . . . . . . . . . . . . . . . . . . . Penalty for refusal to give receipt, and for devices to evade duty on receipts . . . Penalty for not making out policy or making one not duly stamped . . . . . . . Penalty for not drawing full number of bills or marine policies purporting to be in sets.— . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Penalty for post-dating bills, and for other devices to defraud the revenue.—Any person who . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Penalty for breach of rule relating to sale of stamps and for unauthorized sale . . Institution and conduct of prosecutions . . . . . . . . . . . . . . . . . . . . . . . Jurisdiction of Magistrates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Place of trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Books, etc., to be open to inspection . . . . . . . . . . . . . . . . . . . . . . . . Powers to make rules relating to sale of stamps.— . . . . . . . . . . . . . . . . . Power to make rules generally to carry out Act.— . . . . . . . . . . . . . . . . . Publication of rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Saving as to court-fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Act to be translated, and sold cheaply . . . . . . . . . . . . . . . . . . . . . . . Repeal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

228 229 229 230 230 230 231 231 231 231 232 232 232 232 233 233 233 234 234 234 234 235 235 235 235 235 235 236 236 236 236 236 236

Part I RERA Act

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

MINISTRY OF LAW AND JUSTICE (Legislative Department) New Delhi, the 26th March, 2016/Chaitra 6, 1938 (Saka)

1.1.1

CHAPTER I LIMINARY

PRE-

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.

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.

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

BE it enacted by Parliament in the Sixtyseventh Year of the Republic of India as follows:— 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, 1.1

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

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 Uni-

5 versity 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

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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 1.1

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

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,

7 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 REGISTRATION 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

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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; 1.2

(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

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

Indian Real Estate Laws 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 authori-

9 ties; (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 tion.

registra-

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:— 1.2

(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-

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

Indian Real Estate Laws 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.

11 (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 tion.

registra-

(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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12 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 FUNCTIONS 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 1.3

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-

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

Indian Real Estate Laws 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

13 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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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

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-

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

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

15 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 Obligations of promoter in regarding insurance of real case of transfer of a real estate project estate project to a third 16. (1) The promoter shall obtain all such inparty. surances as may be notified by the appropriate

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

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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16 (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,— 1.4

(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

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

Indian Real Estate Laws 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

17 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 REGULATORY AUTHORITY

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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18 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: 1.5

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.

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

Indian Real Estate Laws (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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20 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 1.5

(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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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 EXTRAORDINARY 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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22 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, 1.5

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 CENTRAL 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 Af-

23 fairs, 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 APPELLATE 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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24 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

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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1.7.3

Composition of Appellate (2) The Chairperson of the Appellate Tribunal shall be appointed by the appropriate 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.

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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26 (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

1.7.8

Restrictions on Chairperson or Judicial Member or Technical or Administrative Member on employment after cessation of office

Removal of Chairperson and Member from office in certain circumstances 50. (7) The Chairperson or Judicial Member

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 1.7

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).

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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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.

27 (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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28 (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. 1.8

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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1.8.1

CHAPTER VIII OF- 1.8.4 Penalty for nonregistration and contravention unFENCES, PENALder sections 9 and 10 TIES AND ADJUDI62. If any real estate agent fails to comply CATION with or contravenes the provisions of section 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

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 contravention of other provisions of this Act

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 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.

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.

Penalty for contravention 1.8.6 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 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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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 1.8

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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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 adju-

31 dicating 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 FINANCE, ACCOUNTS, AUDITS AND REPORTS

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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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

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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1.10

CHAPTER X MISCELLANEOUS

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

33 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-

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34 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 ap1.10

propriate 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

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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;

35 (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;

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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

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 laws not barred

other

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

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from the date of the commencement of this Act.

1.10.14

(2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament.

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.

45 of 1860. Sec. 1] THE GAZETTE OF INDIA EXTRAORDINARY 37

Maharashtra Act No. II of 2014

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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 PRELIMINARY

2.1.1

Title and Commencement

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.

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.

2.2

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 39

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40 with those specified in sub-section (2) of Section 4 of the Act for registration of the real 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, 2.2

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 build-

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ing, as the case may be. (5) In case the promoter applies for withdrawal 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 pro-

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42 moter shall disclose the area of the plot being 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 de2.2

velopment 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 ‘E’, 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.

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(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 ‘D’. 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 ‘I’. (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

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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 case of renewal of registration, the regulatory authority shall inform the real estate agent about the same 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-I: 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. 2.4

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 DETAILS TO BE PUBLISHED 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-

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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

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46 schedule 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; (c) approvals 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 2.4

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 SubRegistrar 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

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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

2.5.1

CHAPTER V RATE OF INTEREST PAYABLE BY PROMOTER AND ALLOTTEE AND TIMELINES FOR REFUND 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

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48 such refund along with applicable interest and compensation, if any, becomes due.

2.6

CHAPTER VI REAL ESTATE REGULATORY 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 2.7

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

2.7.1

CHAPTER VII SALARY AND ALLOWANCES OF CHAIRPERSON AND MEMBERS OF REAL ESTATE REGULATORY AUTHORITY 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

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at the rate as are admissible to the Chief Secretary of the State Government or Secretary of the State Government respectively: Provided that, in case a person appointed as the Chairperson or a member is in receipt of any pension, the pay of such person shall be reduced by the gross amount of pension including any commuted portion thereof drawn by him: Provided further that, the Chairperson and other members shall be entitled to draw admissible allowance on the original basic pay before such fixation of pay. Leave (3) (a) Earned Leave : The Chairperson or a Member shall be entitled to thirty days of earned leave for every year of service. (b)Leave sanctioning authority.- Leave sanctioning authority in case of,(i) The Chairperson of the Authority, shall be the Additional Chief Secretary or Principal Secretary or Secretary, Housing Department of the State Government; and (ii) The Members of the Authority, shall be the Chairperson. Travelling Allowance and Daily Allowance (4) (i) The Chairperson and the Members while on tour (including the journey undertaken or on expiry of his term to proceed to his hometown) shall be entitled to travelling allowances, daily allowance, transportation of personal effects and other similar matters at the same rate as admissible to the Chief Secretary or the Secretary of the State Government as the case may be; (ii) The Chairperson or a every Member shall be his own controlling officer in respect of his bills relating to travelling allowances and daily allowances; and (iii) Domestic official tours: The Chairperson or a Member, while on tour, shall be entitled to the facility of government accommodation in the guest house or inspection bungalows run by the State Government or hotel accommodation in case Government accommo-

dation 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

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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. (11) Notwithstanding 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 2.7

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; (f) authorization of tours to be undertaken by any Member, officer or employee within and outside India and allowance to be granted for the same;

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(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); (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; 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.

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 engineering or from any other discipline as 2.8 CHAPTER VIII or it deems necessary, to assist the regulatory auPOWERS AND FUNC- thority in the conduct of any inquiry or proceedings before it. TIONS OF THE AU(3) The Authority may in the interest of the allottees, enquire into the payment of THORITY amounts imposed as penalty, interest or com2.8.1 Functioning of the Au- pensation, paid or payable by the promoter, in order to ensure that the promoter has not: thority (a) withdrawn the said amounts from the 23. (1) The office of the regulatory authority account maintained as provided under subshall be located at Bengaluru or at such place clause (D) of clause (1) of sub-section (2) of as may be determined by the State Govern- section 4; or ment by notification. (b) used any amounts paid to such pro(2) The working days and office hours of moter by the allottees for the real estate the regulatory authority shall be the same as project for which the penalty, interest or compensation is payable, or any other real estate that of the State Government. (3) The official common seal and emblem project; and of the regulatory authority shall be such as the (c) recovered the amounts paid as penalty, 2. RERA Karnataka Rules 2017

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52 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 2.9.1

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. 2.10

2.9

CHAPTER IX CONDITIONS OF SERVICE OF OFFICERS AND OTHER EMPLOYEES OF THE AUTHORITY 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

Conditions of service

28. (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.

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2.10

CHAPTER X FILING OF COMPLAINT

2.10.1

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

29. (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

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so.

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; (e) 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; (f) the adjudicating officer shall have the power to carry out an inquiry into the complaint on the basis of documents and submissions; (g)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, (h) the adjudicating officer 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 adjudicating officer upon consideration of the — evidence produced before him and other records and submissions is satisfied that the promoter is,(a) liable to pay compensation, the adjudicating officer may, by order in writing, order payment of such compensation, as deemed fit by the promoter to the complainant; or (b) not liable to any compensation, the adjudicating officer may, by order in writing, dismiss the complaint, with reasons to be recorded in writing. (j) if any person fails, neglects or refuses to appear, or present himself as required be-

(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) 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; (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; (d) on the date so fixed, the adjudicating officer shall explain to the promoter about the contravention alleged to have been committed 2.10

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fore 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 APPELLATE 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 Com-

mittee 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 panel of three persons name for the the post of vacancy or vacancies of the Members of the Appellate Tribunal, as the case may be. (9) The State Government shall nominate the Karnataka Appellate Tribunal as Interim Appellate Tribunal in terms of sub-section (4) of section 43.

2.11.2

Functioning of Appellate Tribunal

32 (1) The office of the Appellate Tribunal shall be located at such place as may be determined by the Government of Karnataka by notification. (2)The working days and office hours of the Appellate Tribunal shall be the same as that of the normal working days and office hours of the other offices of the Government of Karnataka.

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56 (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 payable

and

the

fees

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 2.11

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 regulatory 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,

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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 Judge. (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 evidence 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) 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

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58 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

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

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.

Retirement from Government Service 2.11.11

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

2.11.10

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

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.

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.

2.11.9

2.11.13

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

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:-

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(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);

2.12

CHAPTER XI OFFENCES AND PENALTIES

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

Punishable with Imprisonment under sub section (2) of section 59 Punishable with Imprisonment under sub section 64 Punishable with Imprisonment under section 66

(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.

Punishable with Imprisonment under section 68

Amount to be paid for compounding amount Up to ten percent of the real estate project Up to ten percent of the estimated cost of the real estate project 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 Up to ten percent of the estimated cost of the plot, 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

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60 custody in connection with that offence shall be set at liberty and no proceedings shall be instituted or continued against such person in any court. (3) The acceptance of the sum of money for compounding an offence in accordance with the table above, by the Court shall be deemed to amount to an acquittal within the meaning of section 300 of the Code of Criminal Procedure, 1973 (Central Act 2 of 1974). (4) The promoter, allottee or real estate agent, as the case may be, shall comply with the orders of the regulatory authority or the Appellate Tribunal, within the period specified by the court, which shall not be more than sixty days from the date of compounding of the offence.

2.13

CHAPTER-XII MISCELLANEOUS

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 BUDGET AND REPORT

2.14.1

Budget, accounts and audit

48. (1) At the end of the financial year of every year, the Authority shall prepare a budget, maintain proper accounts and other relevant records and prepare an annual statement of accounts in Form —’S’. (2) The Authority shall preserve the accounts and other relevant records prepared under sub-rule (1) for a minimum period of five years. (3) The accounts and other relevant records under sub-rule (1) shall be signed by the Chairperson, Members, Secretary and the officer in-charge of Finance and Accounts. (4) The accounts of the Authority and the audit report shall, as soon as possible, be submitted to the appropriate Government for laying before the Parliament.

2.14.2

Annual Report

49. (1) The Authority shall prepare its annual report in Form-T. (2) The Authority may also include in the Annual Report such other matters as deemed fit by the Authority for reporting to the appropriate Government. (3) The annual report shall, after adoption at a meeting of the Authority and signed by the Chairperson and Members and authenticated by affixing the common seal of the Authority, with requisite number of copies thereof, be submitted to the appropriate Government within a period of one hundred and eighty days immediately following the close of the year for which it has been prepared. By order and in the name of the Governor of Karnataka Kapil Mohan Principal Secretary to Government Department of Housing

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Refer to Original Rules for Forms FORM ‘A’ [See sub rule (2) of rule 3] APPLICATION FOR REGISTRATION OF PROJECT To The Real Estate Regulatory Authority (Name of Place) Sir, [I/We] hereby apply for the grant of registration of [my/our] project to be set up at: Thehsil: District: State: 1. The requisite particulars are as under:(i) Status of the applicant - [individual / company / proprietorship firm / societies /partnership firm / competent authority etc.]; (ii)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. (iii)PAN No. of the promoter: (iv)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; (v) Details of project land held by the applicant. ; (vi) 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. (vii) Agency to take up external development works. [Local Authority / Self Development]; (viii) Registration fee by way of a demand draft / bankers cheque dated drawn on: 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.): (ix) Any other information the applicant may like to furnish. 2. [I/We] enclose the following documents, namely:- (i) authenticated copy of the PAN card of the promoter (ii) 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; (iii) 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; 2. RERA Karnataka Rules 2017

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(iv) 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 at least ten years or from the revenue authority not below the rank of Tehshildar, as the case may be; (v) where the promoter is not the owner of the land on which development of project is proposed 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; (vi) 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; (vii) 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; (viii) 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; (ix) 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, (x) proforma of the allotment letter, agreement for sale, and the conveyance deed proposed to be signed with the allottees; (xi) 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; (xii) the number and areas of garage for sale in the project, (xiii) the number of open parking areas and the number of covered parking areas available in the real estate project; (xiv) the names and addresses of his real estate agents, if any, for the proposed project; (xv) the names and addresses of the contractors, architect, structural engineer, if any and other persons concerned with the development of the proposed project; (xvi) a declaration in Form B’. 3. [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) 4.[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. Dated: Place: Yours faithfully, Signature and seal of the applicant(s)

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Refer to Original Rules for Forms FORM-B [See sub-rule (4) of rule 3] DECLARATION, SUPPORTED BY AN AFFIDAVIT, WHICH SHALL BE SIGHNED BY THE PROMOTER OR ANY PERSON AUTHORIZED BY THE PROMOTER Affidavit cum Declaration Affidavit cum Declaration of Mr./Ms. promoter of the proposed project / duly authorized by the promoter of the proposed project, vide its/his/their authorization dated I, promoter of the proposed project / duly authorized by the promoter of the proposed project do hereby solemnly declare, undertake and state as under: 1. That I / promoter have / has a legal title to the land on which the development of the project is proposed OR have/has a legal title to the land on which the development of the proposed project is to be carried out AND a legally valid authentication of title of such land along with an authenticated copy of the agreement between such owner and promoter for development of the real estate project is enclosed herewith. 2. That the said land is free from all encumbrances. OR That details of encumbrances including details of any rights, title, interest or name of any party in or over such land, along with details. 3. That the time period within which the project shall be completed by me/ promoter is 4. That seventy per cent of the amounts realised by me/promoter for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose. 5. That the amounts from the separate account, to cover the cost of the project, shall be withdrawn in proportion to the percentage of completion of the project. 6. That the amounts from the separate account shall be withdrawn after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project. 7. That I / promoter shall get the accounts audited within six months after the end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly certified and signed by such chartered accountant and it shall be verified during the audit that the amounts collected for a particular project have been utilised for the project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project. 8. ThatI/ promoter shall take all the pending approvals on time, from the competent authorities. 9. ThatI/ promoter have / has furnished such other documents as have been prescribed by the rules and regulations made under the Act. 10. That I / promoter shall not discriminate against any allottee at the time of allotment of any apartment, plot or building, as the case may be, on any grounds. Deponent Verification The contents of my above Affidavit cum Declaration are true and correct and nothing material has been concealed by me therefrom. Verified by me at on this day of Deponent 22

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Refer to Original Rules for Forms FORM-C [See sub-rule (1) of rule 6] REGISTRATION 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

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Refer to Original Rules for Forms FORM ‘D’ [See sub-rules (2) of rule 6 and sub-rule (4) of rule 7 and rule 8] INTIMATION OF REJECTION OF APPLICATION FOR REGISTRATION OF PROJECT / REJECTION OF APPLICATION FOR EXTENSION 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

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Refer to Original Rules for Forms 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)

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Refer to Original Rules for Forms 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 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 co-operative 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. 2. RERA Karnataka Rules 2017

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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 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; 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)

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Refer to Original Rules for Forms 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 (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 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

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Refer to Original Rules for Forms FORM ‘I’ [See sub-rule (3) of rule 10 and sub rule (4) of rule 11 and rule 12] INTIMATION OF REJECTION OF APPLICATION FOR REGISTRATION OF REAL ESTATE AGENT OR REJECTION OF APPLICATION FOR RENEWAL OF REGISTRATION OF REAL ESTATE AGENT OR REVOCATION 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

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Refer to Original Rules for Forms FORM-J [See sub-rule (1) of rule 11] APPLICATION FOR RENEWAL OF REGISTRATION OF REAL ESTATE AGENT From: Sir, certificate bearing No. The Real Estate Regulatory Authority, I/we beg to apply for renewal my/our registration as a real estate agent under registration , which expires on. As required I/we submit the following documents and information, namely:(i) (ii) (iii) (iv) (v) A demand draft no. dated for rupees in favour of drawn on. bank as renewal fee; The original registration certificate; and Status of the applicant, whether individual or company or proprietorship firm or societies or co-operative society or partnership firm or limited liability partnership; In case of individual - (a) Name; (b) Father’s Name; (c) Occupation; (d) Permanent address; and (e) Photograph. OR In case of firm or societies or co-operative society or companies - (a) Name; (b) Address; (c) Copy of registration certificate; (d) Major activities; and (e) Name, photograph and address of partners or directors. income tax returns filed under the provisions of the Income Tax Act, 1961 for three financial years preceeding the application or in case the applicant was exempted from filing returns under the provisions of the Income Tax Act, 1961 for any of the three year preceeding the application, a declaration to such effect; (vi) (vii 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; 2. RERA Karnataka Rules 2017

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(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

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Refer to Original Rules for Forms 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 judgement, without fear or favour, affection or ill-will, (Name of the Chairperson / Member) Dated : Real Estate Regulatory Authority

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Refer to Original Rules for Forms 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 AUTHORITY 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 REGULATORY 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: 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)

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Refer to Original Rules for Forms FORM ‘O’ [See sub-rule (1) of rule 30] APPLICATION TO ADJUDICATING OFFICER Claim for compensation under section 31 read with section 71 of the Act For use of Adjudicating Officers office: Date of filing: Date of receipt by post: Application No.: Signature: Authorized Officer: IN THE ADJUDICATING OFFICERS OFFICE (Name of place) Between applicant(s) And Respondent(s) Details of claim: 1. Particulars of the applicant(s): (i) Name of the applicant: (ii) Address of the existing office / residence of the appellant: (iii) Address for service of all notices: (iv) Details of allottees apartment, plot or building 2. Particulars of the respondents: (i) Name(s) of respondent: (ii) Office address of the respondent: (iii) Address for service of all notices: (iv) Registration no. and address of project: 3. Jurisdiction of the Adjudicating Officer: The applicant declares that the subject matter of the claim falls within the jurisdiction of the adjudicating officer. 4. Facts of the case: 31 [give a concise statement of facts and grounds of claim against the promoter] 5. Compensation(s) sought: In view of the facts mentioned in paragraph 4 above, the applicant prays for the following compensation(s) [Specify below the compensation(s) claimed explaining the grounds of claim(s) and the legal provisions (if any) relied upon] 6. Claim not pending with any other court, etc.: The applicant further declares that the matter regarding which this appeal has been made is not pending before any court of law or any other authority or any other tribunal(s). 7. Particulars of bank draft in respect of the fee in terms of sub-rule (1) of rule 36: (iv) Amount (v) Name of the bank on which drawn (vi) Demand draft number 8. List of enclosures: [Specify the details of enclosures with the application] Verification I (name in full block letters) son / daughter of the applicant do hereby verify that the contents of paragraphs [1 to 8] are true to my personal knowledge and belief and that I have not suppressed any material fact(s). Place: Date: Signature of the applicant(s) FORM-P [See rule 38] Form of Oath of Office for the Chairperson or Members of the Appellate Tribunal i , having been appointed as the Chairperson or Member (cross the portion not applicable) solemnly affirm and (or) do swear in the name of God I will faithfully and conscientiously discharge my duties as the Chairperson or Member (cross the portion not applicable), of the Real Estate Regulatory Authority, to the best of my ability, knowledge and judgement, without fear or favour, affection or ill-will. (Name of the Chairperson / Member) Dated : Appellate Tribunal

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Refer to Original Rules for Forms 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] APPEAL 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 type-written, lithographed or printed in double spacing on one side of standard petition paper with an inner margin of about four centimetres width on top and with a right margin on 2.5 cm, and left margin of 5 cm, duly paginated, indexed and stitched together in paper book form. For use of Appellate Tribunal’s office: Date of filing: Date of receipt by post: Registration No.: Signature: Registrar: IN THE REAL ESTATE APPELLATE TRIBUNAL xx — here specify the place of Tribunal Between Appellant(s) And Respondent(s) Details of appeal: 1. Particulars of the appellants: (i) Name of the appellant; (ii) Address of the existing office / residence of the appellant; (iii) Address for service of all notices. 2. Particulars of the respondents: (i) Name(s) of respondent, (ii) Office address of the respondent; (iii) Address for service of all notices. 3. Jurisdiction of the Appellate Tribunal: The appellant declares that the subject matter of the appeal falls within the jurisdiction of the Appellate Tribunal. 4, Limitation: The appellant declares that the appeal is within the limitation specified in sub-section (2) of section 44 OR If the appeal is filed after the expiry of the limitation period specified under sub-section (2) of section 44 specify reasons for delay 5. Facts of the case: (give a concise statement of facts and grounds of appeal against the specific order of regulatory authority or the adjudicating officer, as the case may be passed under section(s) of the Act. 6. Relief(s) sought: In view of the facts mentioned in paragraph 5 above, the appellant prays for the following relief(s) [Specify below the relief(s) sought explaining the grounds of relief(s) and the legal provisions (if any) relied upon] 7. Interim order, if prayed for: Pending final decision on the appeal the appellant seeks issue of the following interim order: [specify here the nature of the interim order prayed for with reasons] 8. Matter not pending with any other court, etc.: The appellant further declares that the matter regarding which this appeal has been made is not pending before any court of law or any other authority or any other tribunal(s). 9. Particulars of bank draft in respect of the fee in terms of sub-rule (1) of rule 28 of the rules: (i) Amount (ii) | Name of the bank on which drawn (iii) Demand draft number 10. List of enclosures: (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 2.14

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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)

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Refer to Original Rules for Forms FORM- S [See sub-rule (1) of rule 43] ANNUAL 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. 9. To Sale of Assets 16. By Hire of Conveyance 10. To Sale on 17. By Wages Investments 11. To Recoveries from 18. By Overtime pay bills 11.1. | To Loans and Advances Principal Amount 19. By Honorarium 11.2. | To Interest on Loans and Advances 20. By Other office 11.3. | To Miscellaneous expenses 51 To Others (specify) 21. By Expenditure on Research 22. By Consultation expenses 2S: By Seminars and conferences 24. By Publications of Authority 25. By Rent and Taxes 26. By Interest on Loans 27Expenses 28. By Membership fee 29. By Subscription 30. By Purchase of Fixed) Assets (specify) 31. By Investments and Deposits: 31.1 By Investments 3L2 By Deposits 32. By Security Deposits So; By Loans and Advances to: 33.1 By Employees: 33.1. | By Bearing Interest 1. 33.1. | By Not bearing Interest 2. 33.2. | By Suppliers/contractors 33.3. | By others (specify) 34. By Repayment of loan 35. By Others 35.1. | By Leave Salary and Pension 35.2. | Contribution 35.3. | By Audit Fee 35.4. | By Misc: 36. By Balance carried down: 36.1 By Bank 36.2 | By Cash in hand Total Total Member(s) (Signature) Chairperson (Signature) For the 1st April 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 45. To expenditure on Research 46. To Consultation expenses 47. To Seminars and confer2.14

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ences 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 As on| (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 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 REPORT TO BE PREPARED BY REGULATORY 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: Serial Name of Address of Description of Fee Registration Number promoter promoter project for paid Number which registration has been 1 2 3 a 3 Date of issue of Date on which Date of extension of Remark registration registration expires registration with period of extension 7 8 9 10 Il. In relation to Real Estate Agents: Serial Name Address | Registratio | Registratio| Date of | Date on Date and Remark Number | of Real of Real n Fee nNumber| issue of which period of Estate Estate paid registrati | registratio renewal of Agent Agent on n registratio certificate | certificate n expires |certificate 1 2 3 S 5 6 E 8 9 disputes and number of cases disposed: C. Number of cases filed before the Authority and the adjudicating officer for settlement of No. of cases received during the No. of cases disposed of the last quarter with the adjudicating officer quarter by the adjudicating officer SI. No. No. of cases pending in the last quarter with the quarter by the by the Authority Authority Authority SL. No. | No. of cases pending in No. of cases received during the | No. of cases disposed of by the adjudicating officer 2. RERA Karnataka Rules 2017

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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. 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, category-wise for each category of orders passed along with a tabular statement indicating the sections under which the order was passed and brief particulars of the orders. Execution of the orders of the Authority and imposition of penalties: (i) monetary penalties - details of recovery of penalty imposed, details of penalty imposed but not recovered, total number of matters and total amount of monetary penalty levied, total amount realized by resorting to rule 23; (ii) matters referred to court under section 59 — total number of matters referred to the court during the year, total number of matters disposed of by the court during the year, total number of matters pending with the court at the end of the year; (iii) matters referred to court for execution of order under 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 2.14

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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 subsection (1) of section 75; (iii) actual expenditure under broad categories; (iv) balance available in the Real Estate Regulatory Fund under sub-section (1) of section 75; (v) any other information. R. International cooperation: A brief narrative of international cooperation, if any, undertaken by the Authority. S. Capacity Building: A brief narrative of capacity building initiative undertaken including (i) number of.employees (category wise and grade wise) trained in house with details of such programmes-like content, duration and faculty; (ii) number of employees (category wise and grade wise) trained by outside institutions (separately within Indian and outside India) with details of names of institutions and duration also to specify whether training was under internship, exchange programme, fellowships, study leave, special arrangements with foreign universities /institutions; (iii) expenditure of capacity building initiatives. T. Ongoing programmes: A brief narrative of ongoing programmes. U. Right to Information: A brief narrative of (i) number of applications received by CPIO/ACPIO seeking information under RTI Act; (ii) Number of applications for which information has been provided by CPIO; (iii) 2. RERA Karnataka Rules 2017

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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

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2. RERA Karnataka Rules 2017

Part II Classical Statutes

3 Introduction 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.

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

Indian Real Estate Laws

3.0

3. Introduction

4 The Transfer of Property Act, 1882 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.

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

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

Repeal of Acts

2. Repeal of Acts.—Saving of certain enactments, incidents, rights, liabilities, etc.—In 87

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88 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 4.4

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. The Transfer of Property Act, 1882

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.]

tenant, farmer or lessee.]

4.5

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.

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

4.6

4.7

Persons competent to transfer

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

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Indian Real Estate Laws

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 4.14

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. The Transfer of Property Act, 1882

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4.14

Transfer to take ef- 4.16 fect 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.

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

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Indian Real Estate Laws

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. 4.23

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. The Transfer of Property Act, 1882

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

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Indian Real Estate Laws

94 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. 4.31

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. The Transfer of Property Act, 1882

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. COMMENTS 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

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Indian Real Estate Laws

96 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.

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

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 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 4.36

Transfer where third person is entitled to maintenance

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-

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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.

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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

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.

Transfer by person having authority to revoke former trans4.40 fer

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

Transfer by unauthorised person who subsequently acquires interest in property transferred

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

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98 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 consideration

for

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 4.45

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.

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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

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100 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 per4.52

formance 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

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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 pro-

duce 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

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102 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 4.52

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,

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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 En-

glish 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

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104 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 4.53

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.

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Obligation to trans- entitled to redeem any one such mortgage sepor any two or more of such mortgages fer to third party in- arately, together. stead of re-transference to mortgagor 4.55 Right of usufructuary

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.

4.54

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.

Right to inspection 4.56 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

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

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106 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. 4.59

4.58

Renewal of gaged lease

mort-

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

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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

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Indian Real Estate Laws

108 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. 4.65

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

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(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

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110 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 in4.67

sured, 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

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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 gaged lease

mort-

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

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112 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; 4.74

(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-

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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

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

Postponement 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.

Tacking abolished

80.[Rep. by the Transfer of Property (Amendment) Act, 1929 (20 of 1929), sec. 41.]

4.79 4.76

Mortgage to secure uncertain amount when maximum is expressed

Marshalling, ties

securi-

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

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114 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 4.82

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

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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 mortgagee

mesne

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

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116 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

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 4.92

4.91

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

property has been transferred for consideration and without notice of the charge].

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

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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

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118 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 4.97

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,

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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 transferee

lessor’s

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.

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4.100

Determination 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. COMMENTS 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 4.102

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

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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 over

holding

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-

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122 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

“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 4.112

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.]

Exemption of leases 4.109 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

provided for the transfer of such property by sale.

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

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of the donor and while he is still capable of giving. If the donee dies before acceptance, the gift is void.

4.112

Onerous gifts Gift of existing and 4.115 future property 127.Where a gift is in the form of

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

but is void as to Rs. 10,000, which continue to belong to A.

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,

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.

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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 trans4.119

fer, 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.

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125

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 SCHEDULE (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.

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126 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

4.123

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. 31-122002). 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. The Transfer of Property Act, 1882

5 The Indian Easements Act, 1882 5.1

Short title

1 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;

5.2

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.

5.3

Savings

2. 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. 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

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128 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 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 5.3

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

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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 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.

5.4

Servient owners

9 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

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Indian Real Estate Laws

130 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.

5.5

Lessor and mortgagor

10. 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.

5.6

Lessee

11. 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. 5.8

5.7

Who may easements

acquire

12. An easement may be 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.

5.8

Easements of necessity and quasi easements

13 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,-

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(e) if an easement over the share of one of them is necessary for enjoying the share of another of them, the latter shall be entitled to such easement, or (f) if such an easement is apparent and continuous and necessary for enjoying the share of the latter as it was enjoyed when the partition took effect, he shall, unless a different intention is expressed or necessarily implied, be entitled to such easement. The easements mentioned in this section, clauses (a) , (c) and (e), are called easements of necessity. Where immovable property passes by operation of law, the persons from and to whom it so passes are, for the purpose of this section, to be deemed, respectively, the transferor and transferee. Illustrations (a) A sells B a field then used for agricultural purposes only. It is inaccessible except by passing over A ’s adjoining land or by trespassing on the land of a stranger. B is entitled to a right of way, for agricultural purposes only, over A ’s adjoining land to the field sold. (b) A, the owner of two fields, sells one to B, and retains the other. The field retained was, at the date of the sale, used for agricultural purposes only, and is inaccessible except by passing over the field sold to B. A is entitled to a right of way, for agricultural purposes only, over B ’s field to the field retained. (c) A sells B a house with windows overlooking A ’s land, which A retains. The light which passes over A ’s land to the windows is necessary for enjoying the house as it was enjoyed when the sale took effect. B is entitled to the light, and A cannot afterwards obstruct it by building on his land. (d) A sells B a house with windows overlooking A ’s land. The light passing over A ’s land to the windows is necessary for enjoying the house as it was enjoyed when the sale took effect. Afterwards A sells the land to C. Here C cannot obstruct the light by building on the land, for he takes it subject to the burdens to which it was subject in A ’s hands. (e) A is the owner of a house and adjoining land. The house has windows over-looking the land. A simultaneously sells the house to B and the land to C. The light passing over the land is necessary for enjoying the house as

it was enjoyed when the sale took effect. Here A impliedly grants B a right to the light, and C takes the land subject to the restriction that he may not build so as to obstruct such right. (f) A is the owner of a house and adjoining land. The house has windows over-looking the land. A, retaining the house, sells the land to B, without expressly reserving any easement. The light passing over the land is necessary for enjoying the house as it was enjoyed when the sale took effect. A is entitled to the light, and B cannot build on the land so as to obstruct such light. (g) A, the owner of a house, sells B a factory built on adjoining land. B is entitled, as against A, to pollute the air, when necessary, with smoke and vapours from the factory. (h) A, the owner of two adjoining houses, Y and Z, sells Y to B, and retains Z. B is entitled to the benefit of all gutters and drains common to the two houses and necessary for enjoying Y as it was enjoyed when the sale took effect, and A is entitled to the benefit of all the gutters and drains common to the two houses and necessary for enjoying Z as it was enjoyed when the sale took effect. (i) A, the owner of two adjoining buildings, sells one to B, retaining the other. B is entitled to a right to lateral support from A ’s building, and A is entitled to a right to lateral support from B ’s building. (j) A, the owner of two adjoining buildings, sells one to B and the other to C. C is entitled to lateral support from B ’s building, and B is entitled to lateral support from C ’s building. (k) A grants lands to B for the purpose of building a house thereon. B is entitled to such amount of lateral and subjacent support from A ’s land as is necessary for the safety of the house. (l) Under the Land Acquisition Act, 1870 (10 of 1870) 1, a Railway Company compulsorily acquires a portion of B ’s land for the purpose of making a siding. The Company is entitled to such amount of lateral support from B ’s adjoining land as is essential for the safety of the siding. (m) Owing to the partition of joint property, A becomes the owner of an upper room in a building, and B becomes the owner of the

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132 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.

5.9

Direction of way of necessity

14.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.

5.10

Acquisition by prescription

15 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 5.10

meaning of this section when it has been had in pursuance of an agreement with the owner or occupier of the property over which the right is claimed, and it is apparent from the agreement that such right has not been granted as an easement, or if granted as an easement, that it has been granted for a limited period, or subject to a condition on the fulfilment of which it is to cease. Explanation II. -Nothing is an interruption within the meaning of this section unless where there is an actual cessation of the enjoyment by reason of an obstruction by the act of some person other than the claimant, and unless such obstruction is submitted to or acquiesced in for one year after the claimant has notice thereof and of the person making or authorizing the same to be made. Explanation III. -Suspension of enjoyment in pursuance of a contract between the dominant and servient owners is not an interruption within the meaning of this section. Explanation IV. -In the case of an easement to pollute water, the said period of twenty years begins when the pollution first prejudices perceptibly the servient heritage. When the property over which a right is claimed under this section belongs to the 1 [Government], this section shall be read as if, for the words "twenty years" the words 2 ["thirty years"] were substituted. Illustrations (a) A suit is brought in 1883 for obstructing a right of way. The defendant admits the obstruction, but denies the right of way. The plaintiff proves that the right was peaceably and openly enjoyed by him, claiming title thereto, as an easement and as of right, without interruption, from 1st January, 1862 to 1st January, 1882. The plaintiff is entitled to judgment. (b) In a like suit the plaintiff shows that the right was peaceably and openly enjoyed by him for twenty years. The defendant proves that for a year of that time the plaintiff was entitled to possession of the servient heritage as lessee thereof and enjoyed the right as such lessee. The suit shall be dismissed, for the right of way has not been enjoyed "as an easement" for twenty years. (c) In a like suit the plaintiff shows that the right was peaceably and openly enjoyed by him for twenty years. The defendant proves

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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.

5.11

Exclusion in favour of reversioner of 5.13 Customary easement servient heritage 18 An easement may be acquired in virtue of

16 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 lastmentioned 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 lifeinterest 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.

5.12

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.

Rights which cannot be acquired by prescription

17. 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

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.

5.14

Transfer of dominant heritage passes easement

19. 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.

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5.15

Rules controlled by contract or title

20.The rules contained 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.

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.

5.18 5.16

Bar to use unconnected with enjoyment

21 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.

5.17

Exercise of easement. Confinement of exercise of easement

22 The dominant owner must exercise his right in the mode which is least onerous to the servient owner; and, when the exercise of an 5.19

Right to alter mode of enjoyment

23 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

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stream by discharging into it poisonous liquor.

5.19

dam.

Right to do acts to se- 5.20 cure enjoyment

24 The dominant owner is entitled 5 , as against the servient owner, to do all acts necessary to secure the full enjoyment of the easement; but such acts must be done at such time and in such manner as, without detriment to the dominant owner, to cause the servient owner as little inconvenience as possible; and the dominant owner must repair, as far as practicable, the damage (if any) caused by the act to the servient heritage. Accessory rights. -Rights to do acts necessary to secure the full enjoyment of an easement are called accessory rights. Illustrations (a) A has an easement to lay pipes in B’s land to convey water to A ’s cistern. A may enter and dig the land in order to mend the pipes, but he must restore the surface to its original state. (b) A has an easement of a drain through B ’s land. The sewer with which the drain communicates is altered. A may enter upon B ’s land and alter the drain, to adapt it to the new sewer, provided that he does not thereby impose any additional burden on B’ s land. (c) A, as owner of a certain house, has a right of way over B ’s land. The way is out of repair, or a tree is blown down and falls across it. A may enter on B ’s land and repair the way or remove the tree from it. (d) A, as owner of a certain field, has a right of way over B ’s land. B renders the way impassable. A may deviate from the way and pass over the adjoining land of B, provided that the deviation is reasonable. (e) A, as owner of a certain house has a right or way over B ’s field. A may remove rocks to make the way. (f) A has an easement of support from B ’s wall. The wall gives way. A may enter upon B ’s land and repair the wall. (g) A has an easement to have his land flooded by means of a dam in B ’s stream. The dam is half swept away by an inundation. A may enter upon B ’s land and repair the

Liability for expenses necessary for preservation of easements

25.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.

5.21

Liability for damage from want of repair

26.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.

5.22

Servient owner not bound to do anything

27 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.

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136 (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.

5.23

Extent of easements

28 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 coextensive 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 nontestamentary 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 pol5.25

lute air or water is the extent of the pollution at the commencement of the period of user on completion of which the right arose; and (e) Other prescriptive rights. -The extent of every other prescriptive right and the mode of its enjoyment must be determined by the accustomed user of the right.

5.24

Increase of easement

29 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.

5.25

Partition of nant heritage

domi-

30. 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

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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.

5.26

Obstruction in case of excessive user

31 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.

5.27

Right to enjoyment without disturbance

32 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.

5.28

Suit for disturbance of easement

33 The owner of any interest in the dominant heritage, or the occupier of such heritage, may institute a suit for compensation for the disturbance of the easement or of any right accessory thereto; provided that the disturbance has actually caused substantial damage to the plaintiff. Explanation I. -The doing of any act likely to injure the plaintiff by affecting the evidence of the easement, or by materially diminishing the value of the dominant heritage, is substantial damage within the meaning of this section and section 34. Explanation II. Where the easement disturbed is a right to the free passage of light passing to the openings in a house, no damage is substantial within the meaning of this section unless it falls within the first Explanation, or interferes materially with the physical comfort of the plaintiff, or prevents him from carrying on his accustomed business in the dominant heritage as beneficially as he had done previous to instituting the suit. Explanation III. -Where the easement disturbed is a right to the free passage of air to the openings in a house, damage is substantial within the meaning of this section if it interferes materially with the physical comfort of the plaintiff, though it is not injurious to his health. Illustrations (a) A places a permanent obstruction in a path over which B, as tenant of C ’s house, has a right of way. This is substantial damage to C, for it may affect the evidence of his reversionary right to the easement. (b) A, as owner of a house, has a right to

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138 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.

5.29

When cause of action arises for removal of support

34.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.

5.30

Injunction to restrain disturbance

35. 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.

5.31

Abatement of ob- 5.33 Extinction by release struction of easement 38 An easement is extinguished when the dom-

36. Notwithstanding the provisions of section 24, the dominant owner cannot himself abate a wrongful obstruction of an easement.

5.32

Extinction by dissolution of right of servient owner

37 When, from a cause which preceded the imposition of an easement, the person by whom it was imposed ceases to have any right in 5.33

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.

inant 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

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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 enjoyment 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.

5.34

Extinction by revocation

39. An easement is extinguished when the servient owner, in exercise of a power reserved in this behalf, revokes the easement.

5.35

Extinction on expiration of limited period or happening of dissolving condition

40. 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.

5.36

Extinction on termination of necessity

41. 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.

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5.37

Extinction by perma- 5.39 nent change in dominant heritage

43. 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.

5.38

Extinction on permanent alteration of servient heritage by superior force

44. 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. 5.41

Extinction by destruction of either heritage

45. 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. COMMENTs 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.

5.40

Extinction by unity of ownership

46 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 her-

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itages. 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.

5.41

Extinction by nonenjoyment

47 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.

5.42

Extinction of accessory right

48. 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.

5.43

Suspension of easement

49. An easement is suspended when the dominant owner becomes entitled to possession of the servient heritage for a limited interest therein, or when the servient owner becomes entitled to possession of the dominant heritage for a limited interest therein.

5.44

ervient owner not entitled to require continuance

50. 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

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142 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.

5.45

Revival of easement

51. 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 5.49

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.

5.46

License" defined

52 "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.

5.47

Who may grant license

53 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.

5.48

Grant may be expressed or implied

54. 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.

5.49

Accessory licenses annexed by law

55.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.

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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.

5.52

5.50

59. When the grantor of the license transfers the property affected thereby, the transferee is not as such bound by the license.

License when transferable

56 Unless a different intention is expressed or necessarily implied, a license to attend a place of public entertainment may be transferred by the licensee; but, save as aforesaid, a license cannot be transferred by the licensee or exercised by his servants or agents. Illustrations (a) A grants B a right to walk over A ’s field whenever he pleases. The right is not annexed to any immovable property of B. The right cannot be transferred. (b) The Government grant B a license to erect and use temporary grainsheds on Government land. In the absence of express provision to the contrary, B ’s servants may enter on the land for the purpose of erecting sheds, erect the same, deposit grain therein and remove grain therefrom.

5.51

Grantor’s duty to disclose defects

57. 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.

Grantor’s duty not to render property unsafe

58. 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.

5.53

5.54

Grantor’s transferee not bound by license

License when revocable

60. 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.

5.55

License when deemed revoked

62 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;

5. The Indian Easements Act, 1882

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144 (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 nonperformance 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.

5.57

5.56

Licensee’s rights on revocation

63. 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.

5.57

Licensee’s rights on eviction

64. 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. 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 accept-

ing 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

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146 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 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." 6.6

(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."

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147

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 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.

6.7

6.8

Promises, express and implied

9. 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."

6.9

What agreements are contracts

10. 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.

Acceptance by performing conditions, or 6.10 Who are competent to contract receiving consideration 11. Every person is competent to contract who

8.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."’

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."

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6.11

What is a sound mind 6.13 ‘Free consent’ defined for the purposes of 14. Consent is said to be free when it is not caused by— —Consent is said to be free when contracting

12. 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."

6.12

‘Consent’ defined

13. 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 agree upon the same thing in the same sense." 6.15

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.

6.14

‘Coercion’ defined

15. ‘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

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Code (45 of 1860) was not in force at the time when or place where the act was done."

6.15

‘Undue influence’ defined

6 . (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 un-

reasonable 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, 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. (c) A, being in debt to B, the money-lender 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.

6.16

‘Fraud’ defined

17. ‘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

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Indian Real Estate Laws

150 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."

6.17

“Misrepresentation” defined

18. “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 un6.18

der 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.

6.18

Voidability of agreements without free consent

19. When consent to an agreement is caused by coercion, 1[***] fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. —When consent to an agreement is caused by coercion, 1[***] fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused." A party to contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representations made had been true. (Exception) —If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence. Explanation.—A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practised, or to whom such misrepresentation was made, does not render a contract voidable. Illustrations (a) A, intending to deceive B, falsely represents that five hundred maunds of indigo are made annually at A’s factory, and thereby induces B to buy the factory. The contract is voidable at the option of B. (a) A, intending to deceive B, falsely represents that five hundred maunds of indigo are made annually at A’s factory, and thereby induces B to buy the factory. The contract is voidable at the option of B."

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(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."

6.19

Power to set aside contract induced by undue influence

10 When consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused. 2[19A. Power to set aside contract induced by undue influence.—When consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused." Any such contract may be set aside either absolutely or, if the party who was entitled to avoid it has received any benefit thereunder, upon such terms and conditions as to the Court may seem just. Illustrations (a) A’s son has forged B’s name to a promissory note. B under threat of prosecuting A’s son, obtains a bond from A for the amount of the forged note. If B sues on this bond, the Court may set the bond aside. (b) A, a money-lender, advances Rs. 100 to B, an agriculturist, and, by undue influence, induces B to execute a bond for Rs. 200 with interest at 6 per cent. per month. The Court may set the bond aside, ordering B to repay the Rs. 100 with such interest as may seem just.] (b) A, a money-lender, advances Rs. 100 to B, an agriculturist, and, by undue influence, induces B to execute a bond for Rs. 200 with interest at 6 per cent. per month. The Court may set the bond aside, ordering B to repay the Rs. 100 with such interest as may seem just.]"

6.20

Agreement void where both parties are under mistake as to matter of fact

20. 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-

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Indian Real Estate Laws

152 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."

6.21

Effect of mistakes as to law

21. 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 6.22

on the erroneous belief that a particular debt is barred by the Indian Law of Limitation; the contract is not voidable." 13 [***]

6.22

Contract caused by mistake of one party as to matter of fact

22. 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

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at the end of six months, if C, who owes that sum to B, fails to pay it. B promises to grant time to C accordingly. Here, the promise of each party is the consideration for the promise of the other party, and they are lawful considerations." (c) A promises, for a certain sum paid to him by B, to make good to B the value of his ship if it is wrecked on a certain voyage. Here, A’s promise is the consideration for B’s payment, and B’s payment is the consideration for A’s promise, and these are lawful considerations. (c) A promises, for a certain sum paid to him by B, to make good to B the value of his ship if it is wrecked on a certain voyage. Here, A’s promise is the consideration for B’s payment, and B’s payment is the consideration for A’s promise, and these are lawful considerations." (d) A promises to maintain B’s child, and B promises to pay A 1,000 rupees yearly for the purpose. Here, the promise of each party is the consideration for the promise of the other party. They are lawful considerations. (d) A promises to maintain B’s child, and B promises to pay A 1,000 rupees yearly for the purpose. Here, the promise of each party is the consideration for the promise of the other party. They are lawful considerations." (e) A, B and C enter into an agreement for the division among them of gains acquired or to be acquired, by them by fraud. The agreement is void, as its object is unlawful. (e) A, B and C enter into an agreement for the division among them of gains acquired or to be acquired, by them by fraud. The agreement is void, as its object is unlawful." (f) A promises to obtain for B an employment in the public service and B promises to pay 1,000 rupees to A. The agreement is void, as the consideration for it is unlawful. (f) A promises to obtain for B an employment in the public service and B promises to pay 1,000 rupees to A. The agreement is void, as the consideration for it is unlawful." (g) A, being agent for a landed proprietor, agrees for money, without the knowledge of his principal, to obtain for B a lease of land belonging to his principal. The agreement between A and B is void, as it implies a fraud

by concealment, by A, on his principal. (g) A, being agent for a landed proprietor, agrees for money, without the knowledge of his principal, to obtain for B a lease of land belonging to his principal. The agreement between A and B is void, as it implies a fraud by concealment, by A, on his principal." (h) A promises B to drop a prosecution which he has instituted against B for robbery, and B promises to restore the value of the things taken. The agreement is void, as its object is unlawful. (h) A promises B to drop a prosecution which he has instituted against B for robbery, and B promises to restore the value of the things taken. The agreement is void, as its object is unlawful." (i) A’s estate is sold for arrears of revenue under the provisions of an Act of the Legislature, by which the defaulter is prohibited from purchasing the estate. B, upon an understanding with A, becomes the purchaser, and agrees to convey the estate to A upon receiving from him the price which B has paid. The agreement is void, as it renders the transaction, in effect, a purchase by the defaulter and would so defeat the object of the law. (i) A’s estate is sold for arrears of revenue under the provisions of an Act of the Legislature, by which the defaulter is prohibited from purchasing the estate. B, upon an understanding with A, becomes the purchaser, and agrees to convey the estate to A upon receiving from him the price which B has paid. The agreement is void, as it renders the transaction, in effect, a purchase by the defaulter and would so defeat the object of the law." (j) A, who is B’s mukhtar, promises to exercise his influence, as such, with B in favour of C, and C promises to pay 1,000 rupees to A. The agreement is void, becuase it is immoral. (j) A, who is B’s mukhtar, promises to exercise his influence, as such, with B in favour of C, and C promises to pay 1,000 rupees to A. The agreement is void, becuase it is immoral." (k) A agrees to let her daughter to hire to B for concubinage. The agreement is void, because it is immoral, though the letting may not be punishable under the Indian Penal Code (45 of 1860).

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6.23

Agreements void, if considerations and objects unlawful in part

24. If any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void. —If any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void." Illustration A promises to superintend, on behalf of B, a legal manufacturer of indigo, and an illegal traffic in other articles. B promises to pay to A a salary of 10,000 rupees a year. The agreement is void, the object of A’s promise, and the consideration for B’s promise, being in part unlawful. A promises to superintend, on behalf of B, a legal manufacturer of indigo, and an illegal traffic in other articles. B promises to pay to A a salary of 10,000 rupees a year. The agreement is void, the object of A’s promise, and the consideration for B’s promise, being in part unlawful."

6.24

Agreement without consideration, void

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. 6.24

(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 consid-

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eration. (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.

6.25

Agreement in restraint of marriage, void

26. 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."

6.26

Agreement in restraint of trade, void

27. 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." Exception 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 [***]

6.27

Agreements in restraint of legal proceedings, void

28 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

6.28

Agreements void for uncertainty

29. 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

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156 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 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." (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." 6.31

6.29

Agreements by way of wager, void

30. 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 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." 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 horse-race." 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."

6.30

“Contingent tract” defined

con-

31. 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

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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."

6.31

Enforcement of contracts contingent on an event happening

32. 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."

6.32

Enforcement of contracts contingent on an event not happening

33. 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."

6.33

When event on which contract is contingent to be deemed impossible, if it is the future conduct of a living person

34. If the future event on which a contract is contingent is the way in which a person will act at an unspecified time, the event shall be considered to become impossible when such person does anything which renders it impossible that he should so act within any definite time, or otherwise than under further contingencies. —If the future event on which a contract is contingent is the way in which a person will act at an unspecified time, the event shall be considered to become impossible when such person does anything which renders it impossible that he should so act within any definite time, or otherwise than under further contingencies." Illustration A agrees to pay B a sum of money if B marries C, C marries D. The marriage of B to C must now be considered impossible, although it is possible that D may

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158 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."

6.34

When contracts become void, which are contingent on happening of specified event within fixed 6.35 time

35. 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 6.36

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."

Agreements contingent on impossible event void

36. 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."

6.36

Obligation of parties to contract

37. 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

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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 provisions 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."

6.37

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."

Effect of refusal to accept offer of perfor- 6.38 mance

38. 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

Effect of refusal of party to perform promise wholly

39. 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

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160 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 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. (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."

6.39

6.40

Effect of accepting performance from third person

41.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."

Person by whom promise is to be performed 6.41

40. 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 per6.41

son 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."

Devolution of joint liabilities

42. 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

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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."

6.42

Any one of joint promisors may be compelled to perform

43. 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 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."

6.43

Effect of release of one joint promisor

44. 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

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6.44

Devolution of joint rights

45. 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."

6.45

Time for performance of promise, where no application is to be made and no time is specified

46. 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 6.47

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.

6.46

Time and place for performance of promise, where time is specified and no application to be made

47. When a promise is to be performed on a certain day, and the promisor has undertaken to perform it without application by the promisee, the promisor may perform it at any time during the usual hours of business on such day and at the place at which the promise ought to be performed. —When a promise is to be performed on a certain day, and the promisor has undertaken to perform it without application by the promisee, the promisor may perform it at any time during the usual hours of business on such day and at the place at which the promise ought to be performed." Illustration A promises to deliver goods at B’s warehouse on the first January. On the day A brings the goods to B’s warehouse, but after the usual hour closing it, and they are not received. A has not performed his promise. A promises to deliver goods at B’s warehouse on the first January. On the day A brings the goods to B’s warehouse, but after the usual hour closing it, and they are not received. A has not performed his promise."

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6.47

Application for per- reasonable place for the purpose of receiving formance on certain it, and must deliver it to him at such place." day to be at proper 6.49 Performance in mantime and place ner or at time pre48. When a promise is to be performed on scribed or sanctioned a certain day, and the promisor has not undertaken to perform it without application by by promisee 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.

6.48

Place for the performance of promise, where no application to be made and no place fixed for performance

49. 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

50. 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

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164 payment." (d) A desires B, who owes him Rs.100, to send him a note for Rs.100 by post. The debt is discharged as soon as B puts into the post a letter containing the note duly addressed to A. (d) A desires B, who owes him Rs.100, to send him a note for Rs.100 by post. The debt is discharged as soon as B puts into the post a letter containing the note duly addressed to A."

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."

6.51 6.50

Promisor not bound to perform, unless reciprocal promisee ready and willing to perform

51. 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 6.52

Order of performance of reciprocal promises

52. 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 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. (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."

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Liability of party preventing event on which the contract is to take effect

53. When a contract contains reciprocal promises, and one party to the contract prevents the other from performing his promise, the contract becomes viodable at the option of the party so prevented: and he is entitled to compensation 23 from the other party for any loss which he may sustain in consequence of the non-performance of the contract. Illustration A and B contract that B shall execute certain work for A for a thousand rupees. B is ready and willing to execute the work accordingly, but A prevents him from doing so. The contract is voidable at the option of B; and, if he elects to rescind it, he is entitled to recover from A compensation for any loss which he has incurred by its non-performance. A and B contract that B shall execute certain work for A for a thousand rupees. B is ready and willing to execute the work accordingly, but A prevents him from doing so. The contract is voidable at the option of B; and, if he elects to rescind it, he is entitled to recover from A compensation for any loss which he has incurred by its non-performance."

6.53

Effect of default as to that promise which should be performed, in contract consisting of reciprocal promises

54. 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

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166 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."

6.54

Effect of failure to perform at a fixed time, in contract in which time is essential

55. 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 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." Effect of such failure when time is 6.55

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"

6.55

Agreement to do impossible act.—An agreement to do an act impossible in itself is void

56. 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

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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 nonperformance of his promise." (d) A contracts to take in cargo for B at a foreign port. A’s Government afterwards declares war against the country in which the port is situated. The contract becomes void when war is declared. (d) A contracts to take

in cargo for B at a foreign port. A’s Government afterwards declares war against the country in which the port is situated. The contract becomes void when war is declared." (e) A contracts to act at a theatre for six months in consideration of a sum paid in advance by B. On several occasions A is too ill to act. The contract to act on those occasions becomes void. (e) A contracts to act at a theatre for six months in consideration of a sum paid in advance by B. On several occasions A is too ill to act. The contract to act on those occasions becomes void."

6.56

Reciprocal promise to do things legal, and also other things illegal

57. 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."

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6.57

Alternative promise, one branch being illegal

58. 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."

6.58

Application of payment where debt to be discharged is indicated

59. 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 6.60

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."

6.59

Application of payment where debt to be discharged is not indicated

60. 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 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."

6.60

Application of payment where neither party appropriates

61. 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

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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."

6.61

Effect of novation, rescission, and alteration of contract

62. 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."

6.62

Promisee may dispense with or remit performance of promise

63. 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

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170 ascertained. A, without ascertaining the amount, gives to B, and B, in satisfaction thereof, accepts, the sum of 2,000 rupees. This is a discharge of the whole debt, whatever may be its amount. (d) A owes B, under a contract, a sum of money, the amount of which has not been ascertained. A, without ascertaining the amount, gives to B, and B, in satisfaction thereof, accepts, the sum of 2,000 rupees. This is a discharge of the whole debt, whatever may be its amount." (e) A owes B 2,000 rupees, and is also indebted to another creditors. A makes an arrangement with his creditors, including B, to pay them a 28 [composition] of eight annas in the rupee upon their respective demands. Payment to B of 1,000 rupees is a discharge of B’s demand.

6.63

Consequences of rescission of a voidable contract

64. 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

6.64

Obligation of person who has received advantage under void agreement, or contract that becomes void

65. 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 per6.64

son 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

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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."

6.65

Mode of communicating or revoking rescission of voidable contract

66. 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

6.66

Effect of promisee promisor facilities mance

6.67

68. 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."

neglect of to afford reasonable 6.68 for perfor-

67. If any promisee neglects or refuses to afford the promisor reasonable facilities for the performance of his promise, the promisor is excused by such neglect or refusal as to any non-performance caused thereby. —If any promisee neglects or refuses to afford the promisor reasonable facilities for the performance of his promise, the promisor is excused by such neglect or refusal as to any non-performance caused thereby." Illustration A contracts with B to repair B’s house. B neglects or refuses to point out to A the places in which his house requires repair. A is excused for the non-performance of the contract, if it is caused by such neglect or refusal.

Claim for necessaries supplied to person incapable of contracting, or on his account

Reimbursement of person paying money due by another, in payment of which he is interested

69.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

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172 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."

6.69

Obligation of person enjoying benefit of non-gratuitous act

70. 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." 6.72

6.70

Responsibility finder of goods

71. A person who finds goods belonging to another, and takes them into his custody, is subject to the same responsibility as a bailee. 33

6.71

Liability of person to whom money is paid, or thing delivered, by mistake or under coercion

72. 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 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. (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."

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Compensation for loss or damage caused by breach of contract

73. When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. —When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it." Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. Compensation for failure to discharge obligation resembling those created by contract.—When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract. —When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract." Explanation.—In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account. Illustrations (a) A contracts to sell and deliver 50 maunds of saltpetre to B, at a certain price to be paid on delivery. A breaks his promise. B is

entitled to receive from A, by way of compensation, the sum, if any, by which the contract price falls short of the price for which B might have obtained 50 maunds of saltpetre of like quality at the time when the saltpetre ought to have been delivered. (a) A contracts to sell and deliver 50 maunds of saltpetre to B, at a certain price to be paid on delivery. A breaks his promise. B is entitled to receive from A, by way of compensation, the sum, if any, by which the contract price falls short of the price for which B might have obtained 50 maunds of saltpetre of like quality at the time when the saltpetre ought to have been delivered." (b) A hires B’s ship to go to Bombay, and there takes on board, on the first of January, a cargo, which A is to provide, and to bring it to Calcutta, the freight to be paid when earned. B’s ship does not go to Bombay, but A has opportunities of procuring suitable conveyance for the cargo upon terms as advantageous as those on which he had chartered the ship. A avails himself of those opportunities, but is put to trouble and expense in doing so. A is entitled to receive compensation from B in respect of such trouble and expense. (b) A hires B’s ship to go to Bombay, and there takes on board, on the first of January, a cargo, which A is to provide, and to bring it to Calcutta, the freight to be paid when earned. B’s ship does not go to Bombay, but A has opportunities of procuring suitable conveyance for the cargo upon terms as advantageous as those on which he had chartered the ship. A avails himself of those opportunities, but is put to trouble and expense in doing so. A is entitled to receive compensation from B in respect of such trouble and expense." (c) A contracts to buy of B, at a stated price, 50 maunds of rice, no time being fixed for delivery. A afterwards informs B that he will not accept the rice if tendered to him. B is entitled to receive from A, by way of compensation, the amount, if any, by which the contract price exceeds that which B can obtain for the rice at the time when A informs B that he will not accept it. (c) A contracts to buy of B, at a stated price, 50 maunds of rice, no time being fixed for delivery. A afterwards informs B that he will not accept the rice if tendered

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174 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. 6.72

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 of the machine, and A, in consequence, loses a profitable contract with the Government. A is entitled to receive from B,

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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 rebuilding of

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176 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 6.72

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, 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,

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and thereby put to some expense, proceeds to Sydney in another vessel, and, in consequence, arriving too late in Sydney, loses a sum of money. A is liable to repay to B his deposit, with interest, and the expense to which he is put by his detention in Calcutta, and the excess, if any, of the passage-money paid for the second ship over that agreed upon for the first, but not the sum of money which B lost by arriving in Sydney too late. (r) A, a ship owner, contracts with B to convey him from Calcutta to Sydney in A’s ship, sailing on the first of January, and B pays to A, by way of deposit, one-half of his passage-money. The ship does not sail on the first of January, and B, after being, in consequence, detained in Calcutta for some time, and thereby put to some expense, proceeds to Sydney in another vessel, and, in consequence, arriving too late in Sydney, loses a sum of money. A is liable to repay to B his deposit, with interest, and the expense to which he is put by his detention in Calcutta, and the excess, if any, of the passage-money paid for the second ship over that agreed upon for the first, but not the sum of money which B lost by arriving in Sydney too late."

6.73

Compensation for breach of contract where penalty stipulated for

74 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 in-

strument 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. (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 moneylender, 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.

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178 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.]

6.74

Party rightfully rescinding contract, entitled to compensation

75. A person who rightfully rescinds a contract is entitled to compensation for any damage which he has sustained through the nonfulfilment of the contract. —A person who rightfully rescinds a contract is entitled to compensation for any damage which he has sustained through the non-fulfilment of the contract." Illustration A, a singer, contracts with B, the manager of a theatre, to sing at his theatre for two nights in every week during the next two months, and B engages to pay her 100 rupees for each night’s performance. On the sixth night, A wilfully absents herself from the theatre, and B, in consequence, rescinds the contracts. B is entitled to claim compensation for the damage which he has sustained through the non-fulfilment of the contract. A, a singer, contracts with B, the manager of a theatre, to sing at his theatre for two nights in every week during the next two months, and B 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] 6.74

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,

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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.— [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]

6.75

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."

6.76

125. 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.

“Contract of indem6.77 nity” defined

124. 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

Rights of indemnityholder when sued

‘Contract of guarantee’, ‘surety’, ‘principal debtor’ and ‘creditor’

126. 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 guaran-

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180 tee 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."

6.78

Consideration guarantee

for

127. Anything done, or any promise made, for the benefit of the principal debtor, may be a sufficient consideration to the surety for giving the guarantee. —Anything done, or any promise made, for the benefit of the principal debtor, may be a sufficient consideration to the surety for giving the guarantee." Illustrations (a) B requests A to sell and deliver to him goods on credit. A agrees to do so, provided C will guarantee the payment of the price of the goods. C promises to guarantee the payment in consideration of A’s promise to deliver the goods. This is a sufficient consideration for C’s promise. (a) B requests A to sell and deliver to him goods on credit. A agrees to do so, provided C will guarantee the payment of the price of the goods. C promises to guarantee the payment in consideration of A’s promise to deliver the goods. This is a sufficient consideration for C’s promise." (b) A sells and delivers goods to B. C afterwards requests A to forbear to sue B for the debt for a year, and promises that, if he does so, C will pay for them in default of payment by B. A agrees to forbear as requested. This is a sufficient consideration for C’s promise. (b) A sells and delivers goods to B. C afterwards requests A to forbear to sue B for the debt for a year, and promises that, if he does so, C will pay for them in default of payment by B. A agrees to forbear as requested. This is a sufficient consideration for C’s promise." (c) A sells and delivers goods to B. C afterwards, without consideration, agrees to pay for 6.80

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."

6.79

Surety’s liability

128. 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."

6.80

‘Continuing guarantee’

129. 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 teadealer, 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

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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."

6.81

Revocation of continuing guarantee

130. 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. 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 ru-

pees, 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."

6.82

Revocation of continuing guarantee by surety’s death

131. 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."

6.83

Liability of two persons, primarily liable, not affected by arrangement between them that one shall be surety on other’s default

132. 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

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182 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."

6.84

Discharge of surety by variance in terms of contract

133. 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 6.84

of money." A is discharged from his suretyship by the variance made without his consent, and is not liable to make good this loss. A is discharged from his suretyship by the variance made without his consent, and is not liable to make good this loss." (b) A guarantees C against the misconduct of B in an office to which B is appointed by C, and of which the duties are defined by an Act of the Legislature. By a subsequent Act, the nature of the office is materially altered. Afterwards, B misconducts himself. A is discharged by the change from future liability under his guarantee, though the misconduct of B is in respect of a duty not affected by the later Act. (b) A guarantees C against the misconduct of B in an office to which B is appointed by C, and of which the duties are defined by an Act of the Legislature. By a subsequent Act, the nature of the office is materially altered. Afterwards, B misconducts himself. A is discharged by the change from future liability under his guarantee, though the misconduct of B is in respect of a duty not affected by the later Act." (c) C agrees to appoint B as his clerk to sell goods at a yearly salary, upon A’s becoming surety to C for B’s duly accounting for moneys received by him as such clerk. Afterwards, without A’s knowledge or consent, C and B agree that B should be paid by a commission on the goods sold by him and not by a fixed salary. A is not liable for subsequent misconduct of B. (c) C agrees to appoint B as his clerk to sell goods at a yearly salary, upon A’s becoming surety to C for B’s duly accounting for moneys received by him as such clerk. Afterwards, without A’s knowledge or consent, C and B agree that B should be paid by a commission on the goods sold by him and not by a fixed salary. A is not liable for subsequent misconduct of B." (d) A gives to C a continuing guarantee to the extent of 3,000 rupees for any oil supplied by C to B on credit. Afterwards B becomes embarrassed, and, without the knowledge of A, B and C contract that C shall continue to supply B with oil for ready money, and that the payments shall be applied to the then, existing debts between B and C. A is not liable

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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."

6.85

Discharge of surety by release or discharge of principal debtor

134. 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 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."

6.86

Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor

135. 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, dis-

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184 charges 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."

6.87

Surety not dis6.89 Release of one cocharged when agreesurety does not disment made with charge others third person to give time to principal 138. Where there are co-sureties, a release by the creditor of one of them does not discharge debtor the others, neither does it free the surety so

136. 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."

6.88

Creditor’s forbearance to sue does not discharge surety

137. 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 6.90

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."

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"

6.90

Discharge of surety by creditor’s act or omission impairing surety’s eventual remedy

139. 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

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the knowledge of A, prepays to B the last two instalments. A is discharged by this prepayment. (a) B contracts to build a ship for C for a given sum, to be paid by instalments as the work reaches certain stages. A becomes surety to C for B’s due performance of the contract. C, without the knowledge of A, prepays to B the last two instalments. A is discharged by this prepayment." (b) C lends money to B on the security of a joint and several promissory note made in C’s favour by B, and by A as surety for B, together with a bill of sale of B’s furniture, which gives power to C to sell the furniture, and apply the proceeds in discharge of the note. Subsequently, C sells the furniture, but, owing to his misconduct and wilful negligence, only a small price is realized. A is discharged from liability on the note. (b) C lends money to B on the security of a joint and several promissory note made in C’s favour by B, and by A as surety for B, together with a bill of sale of B’s furniture, which gives power to C to sell the furniture, and apply the proceeds in discharge of the note. Subsequently, C sells the furniture, but, owing to his misconduct and wilful negligence, only a small price is realized. A is discharged from liability on the note." (c) A puts M as apprentice to B, and gives a guarantee to B for M’s fidelity. B promises on his part that he will at least once a month, see M make up the cash. B omits to see this done as promised, and M embezzles. A is not liable to B on his guarantee. (c) A puts M as apprentice to B, and gives a guarantee to B for M’s fidelity. B promises on his part that he will at least once a month, see M make up the cash. B omits to see this done as promised, and M embezzles. A is not liable to B on his guarantee." 140. Rights of surety on payment or performance.—Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety, upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor. —Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety, upon payment or performance of all that he is liable

for, is invested with all the rights which the creditor had against the principal debtor."

6.91

Surety’s right to benefit of creditor’s securities

141. 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 exe-

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186 cution 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."

6.92

Guarantee obtained by misrepresentation, invalid

142. 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."

6.93

Guarantee obtained by concealment, invalid

143. Any guarantee which the creditor has obtained by means of keeping silence as to a material circumstance, is invalid. —Any guarantee which the creditor has obtained by means of keeping silence as to a material circumstance, is invalid." Illustrations (a) A engages B as clerk to collect money for him. B fails to account for some of his receipts, and A in consequence calls upon him to furnish security for his duly accounting. C gives his guarantee for B’s duly accounting. A does not acquaint C with B’s previous conduct. B afterwards makes default. The guarantee is invalid. (a) A engages B as clerk to 6.95

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."

6.94

Guarantee on contract that creditor shall not act on it until co-surety joins

144. 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 cosurety, 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."

6.95

Implied promise to indemnify surety

145. 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

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implied promise by the principal debtor to indemnify the surety, and the surety is entitled to recover from the principal debtor whatever sum he has rightfully paid under the guarantee, but no sums which he has paid wrongfully." Illustrations (a) B is indebted to C, and A is surety for the debt. C demands payment from A, and on his refusal sues him for the amount. A defends the suit, having reasonable grounds for doing so, but he is compelled to pay the amount of debt with costs. He can recover from B the amount paid by him for costs, as well as the principal debt. (a) B is indebted to C, and A is surety for the debt. C demands payment from A, and on his refusal sues him for the amount. A defends the suit, having reasonable grounds for doing so, but he is compelled to pay the amount of debt with costs. He can recover from B the amount paid by him for costs, as well as the principal debt." (b) C lends B a sum of money, and A, at the request of B, accepts a bill of exchange drawn by B upon A to secure the amount. C, the holder of the bill, demands payment of it from A, and, on A’s refusal to pay, sues him upon the bill. A, not having reasonable grounds for so doing, defends the suit, and has to pay the amount of the bill and costs. He can recover from B the amount of the bill, but not the sum paid for costs, as there was no real ground for defending the action. (b) C lends B a sum of money, and A, at the request of B, accepts a bill of exchange drawn by B upon A to secure the amount. C, the holder of the bill, demands payment of it from A, and, on A’s refusal to pay, sues him upon the bill. A, not having reasonable grounds for so doing, defends the suit, and has to pay the amount of the bill and costs. He can recover from B the amount of the bill, but not the sum paid for costs, as there was no real ground for defending the action." (c) A guarantees to C, to the extent of 2,000 rupees, payment for rice to be supplied by C to B. C supplies to B rice to a less amount than 2,000 rupees, but obtains from A payment of the sum of 2,000 rupees in respect of the rice supplied. A cannot recover from B

more than the price of the rice actually supplied. (c) A guarantees to C, to the extent of 2,000 rupees, payment for rice to be supplied by C to B. C supplies to B rice to a less amount than 2,000 rupees, but obtains from A payment of the sum of 2,000 rupees in respect of the rice supplied. A cannot recover from B more than the price of the rice actually supplied."

6.96

Co-sureties liable to contribute equally

146. Where two or more persons are cosureties 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 cosureties, 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,

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188 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."

6.97

Liability of cosureties bound in different sums

147. 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 6.99

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."

6.98

‘Bailment’, ‘bailor’ and ‘bailee’ defined

148. A ‘bailment’ is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the ‘bailor’. The person to whom they are delivered is called the ‘bailee’. —A ‘bailment’ is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the ‘bailor’. The person to whom they are delivered is called the ‘bailee’." Explanation.—If a person is already in possession of the goods of other contracts to hold them as a bailee, he thereby becomes the bailee, and the owner becomes the bailor of such goods, although they may not have been delivered by way of bailment.

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Delivery to how made

bailee 6.101

149. 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."

6.100

Bailor’s duty to disclose faults in goods bailed

150. 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."

Care to be taken by bailee

151. 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

6.102

Bailee when not liable for loss, etc., of thing bailed

152. 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.

6.103

Termination of bailment by bailee’s act inconsistent with conditions

153.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."

6.104

Liability of bailee making unauthorised use of goods bailed

154. If the bailee makes any use of the goods bailed which is not according to the conditions

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190 of the bailment, he is liable to make compensation to the bailor for any damage arising to the goods from or during such use of them. —If the bailee makes any use of the goods bailed which is not according to the conditions of the bailment, he is liable to make compensation to the bailor for any damage arising to the goods from or during such use of them." Illustrations (a) A lends a horse to B for his own riding only. B allows C, a member of his family, to ride the horse. C rides with care, but the horse accidentally falls and is injured. B is liable to make compensation to A for the injury done to the horse. (a) A lends a horse to B for his own riding only. B allows C, a member of his family, to ride the horse. C rides with care, but the horse accidentally falls and is injured. B is liable to make compensation to A for the injury done to the horse." (b) A hires a horse in Calcutta from B expressly to march to Banaras. A rides with due care, but marches to Cuttack instead. The horse accidentally falls and is injured. A is liable to make compensation to B for the injury to the horse. (b) A hires a horse in Calcutta from B expressly to march to Banaras. A rides with due care, but marches to Cuttack instead. The horse accidentally falls and is injured. A is liable to make compensation to B for the injury to the horse."

6.105

Effect of mixture, with bailor’s consent, of his goods with bailee’s

155. 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." 6.107

6.106

Effect of mixture, with bailor’s consent, of his goods with bailee’s

6.107

Effect of mixture, without bailor’s consent, when the goods can be separated

156. 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

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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."

6.108

Effect of mixture, without bailor’s 6.110 Restoration of goods consent, when the lent gratuitously goods cannot be 159. The lender of a thing for use may at any separated time require its return, if the loan was gra-

157. 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."

6.109

ditions 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."

tuitous, 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."

Repayment, by 6.111 bailor, of necessary expenses

158.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 con-

Return of goods bailed, on expiration of time or accomplishment of purpose

160. It is the duty of the bailee to return, or deliver according to the bailor’s directions, the goods bailed, without demand, as soon

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192 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."

6.112

Bailee’s responsibility when goods are not duly returned

161. If by the fault of the bailee, the goods are not returned, delivered or tendered at the proper time, he is responsible to the bailor for any loss, destruction or deterioration of the goods from that time. 45

6.113

Bailor entitled to increase or profit from goods bailed

163. 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 6.118

6.115

Bailor’s responsibility to bailee

164. 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."

Termination of gra- 6.116 tuitous bailment by death.—

162. 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."

6.114

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."

Bailment by several joint owners

165. 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."

6.117

Bailee not responsible on re-delivery to bailor without title

166. 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

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193

Right of third person claiming goods bailed

167. 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."

6.119

Right of finder of goods, may sue for 6.121 specific reward offered

168. 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."

6.120

finder, the finder may sell it— —When a thing which is commonly the subject of sale is lost, if the owner cannot with reasonable diligence be found, or if he refuses upon demand, to pay the lawful charges of the finder, the finder may sell it—" (1) when the thing is in danger of perishing or of losing the greater part of its value, or (2) when the lawful charges of the finder, in respect of the thing found, amount to two-thirds of its value.

When finder of thing commonly on sale may sell it

169. 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

Bailee’s lien

particular

170. 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."

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6.122

General lien of bankers, factors, wharfingers, attorneys and policybrokers

171. 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"

6.123

‘Pledge’, ‘pawnor’ and ‘pawnee’ defined

172. 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’."

6.124

Pawnee’s right of retainer

173. 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, 6.127

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."

6.125

Pawnee not to retain for debt or promise

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."

6.126

Pawnee’s right as to extraordinary expenses incurred

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."

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195

Pawnee’s right where pawnor makes default

176.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.

6.128

Defaulting pawnor’s right to redeem

177. 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.

6.129

Pledge by mercantile agent

178. 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).]

6.130

Pledge by person in possession under voidable contract

178A. 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.]

6.131

Pledge where pawnor has only a limited interest

179. 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."

6.132

Suit by bailor or bailee against wrong-doer

180. 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

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196 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."

6.133

Apportionment of relief or compensation obtained by such suits

181. 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."

6.134

Who may employ agent

183. 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 6.139

6.136

Who may be an agent

184.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."

6.137

Consideration necessary

not

185. No consideration is necessary to create an agency. —No consideration is necessary to create an agency."

‘Agent’ and ‘princi6.138 pal’ defined

182. 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’."

6.135

majority according to the law to which he is subject, and who is of sound mind, may employ an agent."

Agent’s authority may be expressed or implied

186. The authority of an agent may be expressed or implied. 54

6.139

Definitions of express and implied authority

187. An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case. —An authority is said to

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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."

6.140

Extent of authority

agent’s

188. 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."

6.141

Agent’s authority in an emergency

189. 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. (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.

6.142

When agent cannot delegate

190. 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 sub-agent may, or, from the nature of the agency, a sub-agent must, be employed."

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6.143

‘Sub-agent’ defined

191. A ‘sub-agent’ is a person employed by, and acting under the control of, the original agent in the business of the agency. —A ‘subagent’ is a person employed by, and acting under the control of, the original agent in the business of the agency."

6.144

Representation of principal by subagent properly appointed

192. 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."

6.145

Agent’s responsibility for sub-agent appointed without authority

193. 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 prin6.147

cipal 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."

6.146

Relation between principal and person duly appointed by agent to act in business of agency

194. 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 sub-agent, 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.

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Agent’s duty in 6.148 naming such person

195. 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."

196. 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.

6.149

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."

Right of person as to acts done for him without his authority. Effect of ratification

Ratification may be expressed or implied

197. 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. (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.

6.150

Knowledge requisite for valid ratification

198. 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."

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6.151

Effect of ratifying of any Act for the time being in force for the unauthorized act relief of insolvent debtors. forming part of a 6.154 Termination of transaction agency, where agent 199. A person ratifying any unauthorized has an interest in act done on his behalf ratifies the whole of subject-matter 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."

6.152

Ratification of unauthorized act cannot injure third person

200. 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. (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.

6.153

Termination agency

201. 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 6.156

202. 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. 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. (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.

6.155

When principal may revoke agent’s authority

203. The principal 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 principal 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."

6.156

Revocation where authority has been partly exercised

204. The principal cannot revoke the authority given to his agent after the authority has

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been partly exercised, so far as regards such acts and obligations as arise from acts already done in the agency.

6.159

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. (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.

6.157

Compensation for revocation by principal, or renunciation by agent

205.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.

6.158

Notice of revocation or renunciation

206. 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.

Revocation and renunciation may be expressed or implied

207. 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. This is an implied revocation of B’s authority."

6.160

When termination of agent’s authority takes effect as to agent, and as to third persons

208. 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. (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.

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6.161

Agent’s duty on ter- high. C, before payment, becomes insolvent. mination of agency B must make good the loss to A. by principal’s death 6.164 Skill and dilior insanity gence required from When an agency is terminated by the agent.—

209. 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.

6.162

Termination of subagent’s authority

210. 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.

6.163

Agent’s duty in conducting principal’s business

211. 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. (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 6.164

212. An agent is bound to conduct the business of the agency with as much skill as is generally possessed by persons engaged in similar business unless the principal has notice of this want of skill. The agent is always bound to act with reasonable diligence, and to use such skill as he possesses; and to make compensation to his principal in respect of the direct consequences of his own neglect, want of skill, or misconduct, but not in respect of loss or damage which are indirectly or remotely caused by such neglect, want of skill, or misconduct. Illustrations (a) A, a merchant in Calcutta, has an agent, B, in London, to whom a sum of money is paid on A’s account, with orders to remit. B retains the money for a considerable time. A, in consequence of not receiving the money, becomes insolvent. B is liable for the money and interest, from the day on which it ought to have been paid, according to the usual rate, and for any further direct loss—as, e.g., by variation of rate of exchange—but not further. (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 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

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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.

6.165

Agent’s accounts

213. 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."

6.166

Agent’s duty to communicate with principal 6.168

214. 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."

6.167

(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.

Right of principal when agent deals, on his own account, in business of agency without principal’s consent

215. 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

Principal’s right to benefit gained by agent dealing on his own account in business of agency

216.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.

6.169

Agent’s right of retainer out of sums received on principal’s account

217.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

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Indian Real Estate Laws

204 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.

6.170

Agent’s duty to pay sums received for principal

218. 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."

6.171

When agent’s remuneration becomes due.—

219. 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.

6.172

Agent not entitled to remuneration for business misconducted

220.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 6.174

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.

6.173

Agent’s lien on principal’s property

221. 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.

6.174

Agent to be indemnified against consequences of lawful acts

222. 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. (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

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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.

6.175

Agent to be indemnified against consequences of acts done in good faith

223. Where one person employs another to do an act, and the agent does the act in good faith, the employer is liable to indemnify the agent against the consequences of that act, though it may cause an injury to the rights of third persons. Illustrations (a) A, a decree-holder and entitled to execution of B’s goods requires the officer of the Court to seize certain goods, representing them to be the goods of B. The officer seizes the goods, and is sued by C, the true owner of the goods. A is liable to indemnify the officer for the sum which he is compelled to pay to C, in consequence of obeying A’s directions. (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.

6.176

Non-liability of employer of agent to do a criminal act

224. 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. (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.

6.177

Compensation to agent for injury caused by principal’s neglect

225. 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.

6.178

Enforcement and consequences of agent’s contracts.

226. 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. (b) A, being B’s agent, with authority to

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206 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.

6.179

Principal how far bound, when agent exceeds authority.—

227.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.

6.180

Consequences of notice given to agent

229. Any notice given to or information obtained by the agent, provided it be given or ob6.183

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. (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 setoff against the price of the goods a debt owing to him from C.

Principal not bound 6.182 when excess of agent’s authority is not separable

228. 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.

6.181

tained 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.

Agent cannot personally enforce, nor be bound by, contracts on behalf of principal

230. 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.

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Right of parties to 6.185 a contract made by agent not disclosed.—

231. If an agent makes a contract with a person who neither knows, nor has reason to suspect, that he is an agent, his principal may require the performance of the contract; but the other contracting party has, as against the principal, the same rights as he would have had as against the agent if the agent had been principal. If the principal discloses himself before the contract is completed, the other contracting party may refuse to fulfil the contract, if he can show that, if he had known who was the principal in the contract, or if he had known that the agent was not a principal, he would not have entered into the contract.

6.184

Performance of contract with agent supposed to be principal

232. 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.

Right of person dealing with agent personally liable

233. 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.

6.186

Consequence of inducing agent or principal to act on belief that principal or agent will be held exclusively liable

234. 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.

6.187

Liability of pretended agent

235.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.

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6.188

Person falsely contracting as agent, not entitled to performance

236.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.

6.189

Liability of principal inducing belief that agent’s unauthorized acts were authorized

237. 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. (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.

6.190

Effect, on agreement, of misrepresentation or fraud by agent

238. Misrepresentation made or frauds committed, by agents acting in the course of their 6.190

business for their principals, have the same effect on agreements made by such agents as if such misrepresentations or frauds had been made or committed by the principals; but misrepresentations made, or frauds committed, by agents, in matters which do not fall within their authority, do not affect their principals. Illustrations (a) A, being B’s agent for the sale of goods, induces C to buy them by a misrepresentation, which he was not authorized by B to make. The contract is voidable, as between B and C, at the option of C. (b) A, the captain of B’s ship, signs bills of lading without having received on board the goods mentioned therein. The bills of lading are void as between B and the pretended consignor. 239. Of Partnership.—[Rep. by the Indian Partnership Act, 1932 (9 of 1932), sec. 73 and Sch. II.] 240. Of Partnership.—[Rep. by the Indian Partnership Act, 1932 (9 of 1932), sec. 73 and Sch. II.] 241. Of Partnership.—[Rep. by the Indian Partnership Act, 1932 (9 of 1932), sec. 73 and Sch. II.] 242. Of Partnership.—[Rep. by the Indian Partnership Act, 1932 (9 of 1932), sec. 73 and Sch. II.] 243. Of Partnership.—[Rep. 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

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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.

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210 II."

17. Subs. by Act 1 of 1997, sec. 2, for certain words (w.e.f. 8-1-1997). 18. The second clause of Exception 1 rep. by Act 1 of 1877, sec. 2 and Sch. 19. Cf. the Arbitration Act, 1940 (10 of 1940) and the Companies Act, 1956 (1 of 1956), section 389. 20. Subs. by Act 12 of 1891, sec. 2 and Sch. II Pt. I, for “one”. tc" 1. Subs. by Act 12 of 1891, sec. 2 and Sch. II Pt. I, for “one”." 21. See section 138. infra. tc" 2. See section 138. infra." 22. For an exception to section 45 in case of Government securities, see the Public Debt Act, 1944 (18 of 1944), section 8. 23. See section 73, infra. tc" 1. See section 73, infra." 24. Cf. sections 62 and 63, infra. tc" 1. Cf. sections 62 and 63, infra." 25. See section 65, infra. tc" 2. See section 65, infra." 26. But See section 135, infra. tc" 1. But See section 135, infra." 27. See section 41, supra. tc" 2. See section 41, supra." 28. Subs. by Act 12 of 1891, sec. 2 and Sch. II, Pt. I, for “compensation”. 29. See section 75, infra. tc" 2. See section 75, infra." 30. See sections 3 and 5, supra. tc" 1. See sections 3 and 5, supra." 31. The property of a Government ward in Madhya Pradesh is not liable under this section; see the C.P. Court of Wards Act, 1899 (C.P. Act 24 of 1899), section 31(I). 32. As to suits by minors under section 70 in Presidency Small Clause Courts, see the Presidency Small Cause Courts Act, 1882 (15 of 1882), section 32. 33. See sections 151 and 152, infra. 34. Subs. by Act 6 of 1899, sec. 4, for the first paragraph. 35. Subs. by the A.O. 1937, for “Government of India ”. 36. Subs. by the A.O. 1950, for “Provincial Government”. 37. Ins. by Act 6 of 1899, sec. 4(2). 38. Ins. by Act 24 of 1917, sec. 2 and Sch. I. tc" 1. Ins. by Act 24 of 1917, sec. 2 and Sch. I."

6.190

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." 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. 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

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of 1989), sec. 200.] tc" 2. 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. 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. 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. 51. For limitation, see the Limitation Act, 1963 (36 of 1963), Schedule 1. tc" 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. 58. Cf. the Indian Fatal Accidents Act, 1855 (13 of 1855). tc" 1.

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6. The Indian Contract Act, 1872

7 The Indian Stamp Act, 1899 THE INDIAN STAMP ACT, 1899

7.1

Short title, extent and commencement

1. (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 stampduty 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.

7.2

Definitions

2 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,

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214 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 [***] 8 [(13A) “ India ” means the territory of India excluding the State of Jammu and Kashmir ;] (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 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; (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 revenueauthority or any Civil Court and an award by an arbitrator directing a partition; (16) “Lease” means a lease of immovable property, and includes also— 7.2

(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; (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 [***] (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 “seapolicy”— (a) means any insurance made upon any

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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 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 ac-

knowledgment, and whether the same is or is not signed with the name of any person; 14 [***] (24) “Settlement” means any nontestamentary 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 [***] (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 ;] (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.]

7.3

Instruments chargeable with duty

3. 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

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216 (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).]]

7.4

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 instrument only shall be chargeable 7.7

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.

7.5

Instruments to several matters

relating distinct

5. 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.

7.6

Instruments coming within several descriptions in Schedule I

6. 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.

7.7

Policies of sea-insurance

7. 25 [***] (4) Where any sea-insurance is made for or upon a voyage and also for time, or to extend

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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.

7.8

Bonds, debentures or other securities issued on loans under Act 11 of 1879

8. (1) Notwithstanding anything contained in this Act, any local authority raising a loan under the provisions of the Local Authorities Loan Act, 1879, or of any other law for the time being in force, by the issue of bonds, debentures or other securities, shall, in respect of such loan, be chargeable with a duty of 26 [one per centum] on the total amount of the bonds, debentures or other securities issued by it, and such bonds, debentures or other securities need not be stamped and shall not be chargeable with any further duty on renewal, consolidation, sub-division or otherwise. (2) The provisions of sub-section (1) exempting certain bonds, debentures or other securities from being stamped and from being chargeable with certain further duty shall apply to the bonds, debentures or other securities of all outstanding loans of the kind mentioned therein, and all such bonds, debentures or other securities shall be valid, whether the same are stamped or not: Provided that nothing herein contained shall exempt the local authority which has issued such bonds, debentures or other securities from the duty chargeable in respect thereof prior to the twentysixth day of March, 1897, when such duty has not already been paid or remitted by order issued by the 27 [Central Government]. (3) In the case of wilful neglect to pay the duty required by this section, the local authority shall be liable to forfeit to the Government a sum equal to ten per centum upon the amount of duty payable, and a like penalty for every month after the first month during which the neglect continues.

28 [ 8A Securities dealt in depository not liable to stamp duty. —Notwithstanding anything contained in this Act or any other law for the time being in force,— (a) an issuer, by the issue of securities to one or more depositories shall, in respect of such issue, be chargeable with duty on the total amount of security issued by it and such securities need not be stamped; (b) where an issuer issues certificate of security under sub-section (3) of section 14 of the Depositories Act, 1996 (22 of 1996), on such certificate duty shall be payable as is payable on the issue of duplicate certificate under this Act; (c) the transfer of— (i) registered ownership of securities from a person to a depository or from a depository to a beneficial owner; (ii) beneficial ownership of securities, dealt with by a depository; (iii) beneficial ownership of units, such units being units of a Mutual Fund including units of the Unit Trust of India established under sub-section (1) of section 3 of the Unit Trust of India Act, 1963 (52 of 1963), dealt with by a depository, shall not be liable to duty under this Act or any other law for the time being in force. Explanation 1.— For the purposes of this section, the expressions “beneficial owner”, “depository” and “issuer”, shall have the meanings respectively assigned to them in clauses (a) , (e) and (f) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996). Explanation 2 .—For the purposes of this section, the expression "securities" shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956).] 29 [8B. Corporatisation and demutualisation schemes and related instruments not liable to duty.—Notwithstanding anything contained in this Act or any other law for the time being in force,— (a) a scheme for corporatisation or demutualisation, or both of a recognised stock exchange; or (b) any instrument, including an instrument of, or relating to, transfer of any prop-

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218 erty, 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].

7.9

Power to reduce, remit or compound duties

9. 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, 7.11

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.]]

7.10

Duties how to be paid

10. (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.

7.11

Use of stamps

adhesive

11.The following instruments may be stamped with adhesive stamps, namely:— (a) instruments chargeable 40 [with a duty not exceeding ten naye paise], except parts of bills of exchange payable otherwise than on demand and drawn in sets;

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(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.

7.12

Cancellation of adhesive stamps.—

12. (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.

7.13

Instruments stamped with impressed stamps how to be written

13. 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.

7.14

Only one instrument to be on same stamp

14. 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.

7.15

Instrument written contrary to section 13 or 14 deemed unstamped

15. Every instrument written in contravention of section 13 or section 14 shall be deemed to be unstamped.

7.16

Denoting duty

16. 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.

7.17

Instruments cuted in India

exe-

17. All instrument chargeable with duty and executed by any person in 44 [India] shall be stamped before or at the time of execution.

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7.18

Instruments other 7.20 than bills and notes executed out of India

18. (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.

7.19

7.23

20. (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 sub-section (1).

Bills and notes drawn 7.21 out of India

19. The first holder in 48 [India] of any bill of exchange 49 [payable otherwise than on demand], 50 [***] or promissory note drawn or made out of 48 [India] shall, before he presents the same for acceptance or payment, or endorses, transfers or otherwise negotiates the same in 48 [India], affix thereto the proper stamp and cancel the same: Provided that,— (a) if, at the time any such bill of exchange 50 [***] or note comes into the hands of any holder thereof in 48 [India], the proper adhesive stamp is affixed thereto and cancelled in manner prescribed by section 12 and such holder has no reason to believe that such stamp was affixed or cancelled otherwise than by the person and at the time required by this Act, such stamp shall, so far as relates to such holder, by deemed to have been duly affixed and cancelled; (b) nothing contained in this proviso shall relieve any person from any penalty incurred by him for omitting to affix or cancel a stamp.

Conversion of amount expressed in foreign currencies

Stock and marketable securities how to be valued

21. 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.

7.22

Effect of statement of rate of exchange or average price

22.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.

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Instruments ing interest

221

reserv-

23. 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.

7.24

Valuation in case of annuity, etc.

25. Where an instrument is executed to secure the payment of an annuity or other sum payable periodically, or where the consideration for a conveyance is an annuity or other sum payable periodically, the amount secured by such instrument or the consideration for such conveyance, as the case may be, shall, for the purposes of this Act be deemed to be— (a) where the sum is payable for a definite period so that the total amount to be paid can be previously ascertained—such total amount; (b) where the sum is payable in perpetuity or for an indefinite time not terminable with any life in being at the date of such instrument or conveyance—the total amount which, according to the terms of such instrument or conveyance, will or may be payable during the period to twenty years calculated from the date on which the first payment becomes due; and (c) where the sum is payable for an indefinite time terminable with any life in being at the date of such instrument or conveyance—the maximum amount which will or may be payable as aforesaid during the period of twelve years calculated from the date on which the first payment becomes due.

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7.25

Stamp where value of 7.27 subject-matter is indeterminate

26. Where the amount or value of the subjectmatter 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.

7.26

Facts affecting duty to be set forth in instrument

27. 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. 7.27

Direction as to duty in case of certain conveyances

28. (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 sub-purchaser, 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 consideration, and the conveyance of the residue (if any) of such property to the original purchaser shall be chargeable with ad

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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.

7.28

Duties payable

whom

29.n 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 Mortgagedeed), (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 in-

surance; (bb) in the case of a policy of fireinsurance—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.

7.29

Obligation to give receipt in certain cases

30. 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.]

7.30

Adjudication as proper stamp

31. (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

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224 amount (not exceeding five rupees and not less than 59 [fifty naye paise]) as the Collector may in each case direct, the Collector shall determine the duty (if any) with which, in his judgment the instrument is chargeable. (2) For this purpose the Collector may require to be furnished with an abstract of the instrument, and also with such affidavit or other evidence as he may deem necessary to prove that all the facts and circumstances affecting the chargeability of the instrument with duty, or the amount of the duty with which it is chargeable, are fully and truly set forth therein, and may refuse to proceed upon any such application until such abstract and evidence have been furnished accordingly: Provided that— (a) no evidence furnished in pursuance of this section shall be used against any person in any civil proceeding, except in an enquiry as to the duty with which the instrument to which it relates is chargeable; and (b) every person by whom any such evidence is furnished, shall, on payment of the full duty with which the instrument to which it relates, is chargeable, be relieved from any penalty which he may have incurred under this Act by reason of the omission to state truly in such instrument any of the facts or circumstances aforesaid.

7.31

Certificate by Collector

32. (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 7.32

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.

7.32

Examination and impounding of instruments

33. (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

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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.

7.33

Special provision as to unstamped receipts

34. 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.

7.34

Instruments not duly stamped inadmissible in evidence, etc.

35. No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped: Provided that— (a) any such instrument 65 [shall], be admitted in evidence on payment of the duty with which the same is chargeable, or, in the case of an instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion; (b) where any person from whom a stamped receipt could have been demanded, has given an unstamped receipt and such receipt, if stamped, would be admissible in evi-

dence 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.

7.35

Admission of instrument where not to be questioned

36. 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.

7.36

Admission of improperly stamped instruments

37. 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.

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7.37

Instruments im- 7.39 pounded, how dealt with

38. (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.

7.38

Collector’s power to refund penalty paid under section 38, sub-section (1)

39.(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. 7.40

Collector’s power to stamp instruments impounded

40. Collector’s power to stamp instruments impounded.— (1) When the Collector impounds any instrument under section 33, or receives any instrument sent to him under section 38, sub-section (2), not being an instrument chargeable 72 [with a duty not exceeding ten naye paise] only or a bill of exchange or promissory note, he shall adopt the following procedure:— (a) if he is of opinion that such instrument is duly stamped, or is not chargeable with duty, he shall certify by endorsement thereon that it is duly stamped, or that it is not so chargeable, as the case may be; (b) if he is of opinion that such instrument is chargeable with duty and is not duly stamped, he shall require the payment of the proper duty or the amount required to make up the same, together with a penalty of the five rupees; or, if he thinks fit, 73 [an amount not exceeding] ten times the amount of the proper duty or of the deficient portion thereof, whether such amount exceeds or falls short of five rupees: Provided that, when such instrument has been impounded only because it has been written in contravention of section 13 or section 14, the Collector may, if he thinks fit, remit the whole penalty prescribed by this section. (2) Every certificate under clause (a) of sub-section (1) shall, for the purposes of this Act, be conclusive evidence of the matters stated therein. (3) Where an instrument has been sent to the Collector under section 38, sub-section (2), the Collector shall, when he has dealt with it as provided by the section, return it to the impounding officer.

7.40

Collector’s power to stamp instruments impounded

40. (1) When the Collector impounds any instrument under section 33, or receives any instrument sent to him under section 38, subsection (2), not being an instrument charge-

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able 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.

7.41

Instruments unduly stamped by accident

41. 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.

7.42

Endorsement of instruments in which duty has been paid under section 35, 40 or 41.

42. (1) When the duty and penalty (if any) leviable in respect of any instrument have been paid under section 35, section 40 or section 41, the person admitting such instrument in evidence or the Collector, as the case may be, shall certify by endorsement thereon that the proper duty or, as the case may be, the proper duty and penalty (stating the amount of each) have been levied in respect thereof, and the name and residence of the person paying them. (2) Every instrument so endorsed shall thereupon be admissible in evidence, and may be registered and acted upon and authenticated as if it had been duly stamped, and shall be delivered on his application in this behalf to the person from whose possession it came into the hands of the officer impounding it, or as such person may direct: Provided that— (a) no instrument which has been admitted in evidence upon payment of duty and a penalty under section 35, shall be so delivered before the expiration of one month from the date of such impounding, or if the Collector has certified that its further detention is necessary and has not cancelled such certificate; (b) nothing in this section shall affect the 3Code of Civil Procedure, 1882 (14 of 1882), section 144 clause 3.

7.43

Prosecution for offence against Stamplaw

43. The taking of proceedings or the payment of a penalty under this Chapter in respect of any instrument shall not bar the prosecution

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228 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.

7.44

Persons paying duty or penalty may re- 7.46 cover same in certain cases

44. (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.

7.45

Power to Revenue authority to refund penalty or excess duty in certain cases

45. (1) Where any penalty is paid under section 35 or section 40, the Chief Controlling Revenue-Authority may, upon application in 7.47

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.

Non-liability for loss of instruments sent under section 38

46. (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.

7.47

Power of payer to stamp bills and promissory notes received by him unstamped

47. 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

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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].

7.48

Recovery of duties and penalties

48. 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.

7.49

Allowance spoiled stamps

for

49.ubject to such rules as may be made by 81 [the 82 [State Government]] as to the evidence to be required or, the enquiry to be made, the Collector may, on application made with the period prescribed in section 50, and if he is satisfied as to the facts, make allowance for impressed stamps spoiled in the cases hereinafter mentioned, namely:— (a) the stamp on any paper inadvertently and undesignedly spoiled, obliterated or by error in writing or any other means rendered unfit for the purpose intended before any instrument written thereon is executed by any person; (b) the stamp on any document which is written out wholly or in part, but which is not signed or executed by any party thereto; (c) in the case of bills of exchange 83 [payable otherwise than on demand] 84 [***] or promissory notes— (1) the stamp on 85 [any such bill of exchange] 86 [***] signed by or on behalf of the drawer which has not been accepted or made use of in any manner whatever or delivered out of his hands for any purpose other than by way of tender for acceptance: Provided that the paper on which any such stamp is impressed, does not bear any signature intended as or for the acceptance of any bill of exchange 86 [***] to be afterwards written thereon; (2) the stamp on any promissory note signed by or on behalf of the maker which has not been made

use of in any manner whatever or delivered out of his hands; (3) the stamp used or intended to be used for 86 [any such bill of exchange] 87 [***] or promissory note signed by, or on behalf of, the drawer thereof, but which from any omission or error has been spoiled or rendered useless, although the same, being a bill of exchange 88 [***] may have been presented for acceptance or accepted or endorsed, or, being a promissory note, may have been delivered to the payee: Provided that another completed and duly stamped bill of exchange 88 [***] or promissory note is produced identical in every particular, except in the correction of such omission or error as aforesaid, with the spoiled bill 88 [***] or note; (d) the stamp used for an instrument executed by any party thereto which— (1) has been afterwards found to be absolutely void in law from the beginning; (2) has been afterwards found unfit, by reason of any error or mistake therein, for the purpose originally intended; (3) by reason of the death of any person by whom it is necessary that it should be executed, without having executed the same, or of the refusal of any such person to execute the same, cannot be completed so as to effect the intended transaction in the form proposed; (4) for want of the execution thereof by some material party, and his inability or refusal to sign the same, is in fact incomplete and insufficient for the purpose for which it was intended; (5) by reason of the refusal of any person to act under the same, or to advance any money intended to be thereby secured, or by the refusal or non-acceptance of any office thereby granted, totally fails of the intended purpose; (6) become useless in consequence of the transaction intended to be thereby effected being effected by some other instrument between the same parties and bearing a stamp of not less value; (7) is deficient in value and the transaction intended to the thereby effected has been effected by some other instrument between the same parties and bearing a stamp of not less value; (8) is inadvertently and undesignedly spoiled, and in lieu whereof another instrument made between the same parties and for the same purpose is executed and duly stamped: Provided that, in the case of

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230 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.

7.50

Application for relief under section 49 when to be made

50. 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 instrument 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. 7.53

7.51

Allowance in case of printed forms no longer required by Corporations

51.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.

7.52

Allowance for used stamps

mis-

52. (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 restamped with the proper duty, cancel and allow as spoiled the stamp so misused or rendered useless.

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Allowance for spoiled or misused stamps how to be made

53. 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.

7.54

Allowances for stamps in denominations of annas

54A. 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 sec-

tion 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.]

7.55

Allowances for Refugee Relief stamps

54B. 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 (Abolition) 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.]

7.56

Allowance on renewal of certain debentures

55. 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

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232 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.

7.57

Control of, and statement of case to, Chief Controlling RevenueAuthority

56. (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.

7.58

7.59

Power of High Court to call for further particulars as to case stated

58. 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.

Statement of case by Chief Controlling 7.60 Revenue-Authority to High Court

57. (1) The Chief Controlling RevenueAuthority 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, 7.61

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.

Procedure in disposing of case stated

59. (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.

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Statement of case by other Courts to High Court

60. (1) If any Court, other than a Court mentioned in section 57, feels doubts as to the amount of duty to be paid in respect of any instrument under proviso (a) to section 35, the Judge may draw up a statement of the case and refer it, with his own opinion thereon, for the decision of the High Court 107 [***] to which, if he were the Chief Controlling Revenue-Authority, he would, under section 57, refer the same. (2) Such Court shall deal with the case as if it had been referred under section 57, and send a copy of its judgment under the seal of the Court and the signature of the Registrar to the Chief Controlling Revenue-Authority and other like copy to the Judge making the reference, who shall, on receiving such copy dispose of the case conformably to such judgment. (3) References made under sub-section (1), when made by a Court subordinate to a District Court, shall be made through the District Court, and, when made by any subordinate Revenue Court, shall be made through the Court immediately superior.

7.62

Revision of certain decisions of Courts regarding the sufficiency of stamps

61. (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, af-

ter 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.

7.63

Penalty for executing, etc., instrument not duty stamped

62. (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 [***]

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234 or promissory note without the same being duly stamped; or (b) executing or signing otherwise than as a witness any other instrument chargeable with duty without the same being duly stamped; or (c) voting or attempting to vote under any proxy not duly stamped, shall for every such offence be punishable with fine which may extend to five hundred rupees: Provided that, when any penalty has been paid in respect of any instrument under section 35, section 40 or section 61, the amount of such penalty shall be allowed in reduction of the fine (if any) subsequently imposed under this section in respect of the same instrument upon the person who paid such penalty. (2) If a share warrant is issued without being duly stamped, the company issuing the same, and also every person who, at the time when it is issued, is the managing director or secretary or other principal officer of the company, shall be punishable with fine which may extend to five hundred rupees.

7.65

7.64

66. 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.

Penalty for failure to cancel adhesive stamp

63. 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. 7.67

Penalty for refusal to give receipt, and for devices to evade duty on receipts

65. 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.

7.66

7.67

Penalty for not making out policy or making one not duly stamped

Penalty for not drawing full number of bills or marine policies purporting to be in sets.—

67. Any person drawing or executing a bill or exchange 110 [payable otherwise than on demand] or a policy of marine insurance pur-

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porting 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.

7.68

Penalty for postdating bills, and for other devices to defraud the revenue.—Any person who

68. (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.

7.69

7.70

70. (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 manner provided by section 48.

7.71

Jurisdiction of Magistrates

71.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.

7.72

Place of trial

72. Every such offence committed in respect of any instrument may be tried in any district or presidency-town in which such instrument is found, as well as in any district or presidencytown in which such offence might be tried under the Code of Criminal Procedure for the time being in force.

Penalty for breach of rule relating to sale of stamps and for unau- 7.73 thorized sale

69. (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.

Institution and conduct of prosecutions

Books, etc., to be open to inspection

73. 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

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236 proceedings and to take such notes and extracts as he may deem necessary, without fee or charge.

7.74

Powers to make rules relating to sale of stamps.—

74. 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.

7.75

Publication of rules.

76. 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 Revenue7.79

7.77

Saving as to courtfees

77. 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 twentyfive naye paise or, as the case may be, multiples thereof and shall, accordingly, be valid for all the purpose of this Act.]

Power to make rules 7.78 Act to be translated, and sold cheaply generally to carry out 78. Every 124 [State Government] shall make Act.—

75. 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.

7.76

Authority as may be specified in the notification.]

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.

7.79

Repeal

79.[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

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237

“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 14-1956 ). 14. The word “and” omitted by Act 18 of 1928, sec. 2 and Sch. I. 15. Ins. by Act 15 of 1904, sec. 2. 16. The word “and” ins. by Act 18 of 1928, sec. 2 and Sch. I and omitted by the A.O. 1950. 17. Ins. by Act 18 of 1928, sec. 2 and Sch. I. 18. Now see the Army Act, 1950 (46 of 1950). 19. Ins. by Act 23 of 2004, sec. 117 (w.e.f. 10-9-2004 ). Earlier clause (26) was added by the A.O. 1950 and was omitted by Act 43 of 1955, sec. 4 (w.e.f. 14-1956 ). 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. 1-81963). 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. 1-41956). 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. 1-41956). 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 GovernorGeneral 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

7. The Indian Stamp Act, 1899

7.79

Indian Real Estate Laws

238 19 of 1958, sec. 6, for “with a duty of one anna or half an anna” (w.e.f. 1-10- 1958). 77. Subs. by Act. 5 of 1927, sec. 5, for “promissory note or cheque”. 78. Subs. by Act 19 of 1958, sec. 7, for “with the duty of one anna” (w.e.f. 1-10-1958). 79. Subs. by Act 5 of 1927, sec. 5, for “note or cheque”. 80. Subs. by Act 5 of 1927, sec. 5, for “note or cheque”. 81. Subs. by the A.O. 1937, for “the Local Government”. 82. Subs. by the A.O. 1950, for “collecting Government”. 83. Ins. by Act 5 of 1927, sec. 5. 84. The word “cheques” omitted 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.

7.79

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

Indian Real Estate Law

Articles inside

4.97 Rights and liabilities of lessor and lessee

4.4 “Transfer of property” defined

2.2.2 Additional disclosure by promoters of ongoing projects

1.10.7 Power to make regulations

of Chairperson and Members of the Appellate Tribunal

1.2.2 Application for registration of real estate projects

1.10.14 Maharashtra Act No. II of 2014

tus

of holding an inquiry by the adjudicating officer

1.7.2 Application for settlement of disputes and appeals to Appellate Tribunal