THE TRANSFER OF PROPERTY ACT, 1882

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THE TRANSFER OF PROPERTY ACT, 1882

CONTENTS

CHAPTER I

PRELIMINARY

Commencement

Extent

Saving of certain enactments, incidents, rights, liabilities, etc .

CHAPTER II

OF TRANSFERS OF PROPERTY BY ACT OF PARTIES

(A) Transfer of property, whether moveable or immoveable

5. "Transfer of property" defined

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disposition

does not happen

Election

Apportionment

Page 3 of 56

(B) Transfer of Immoveable Property

but not amounting to interest or easement

CHAPTER III

OF SALES OF IMMOVEABLE PROPERTY

54. "Sale" defined

Sale how made

Contract for sale

Discharge of Incumbrances on sale

Page 4 of 56

CHAPTER IV

OF MORTGAGES OF IMMOVEABLE PROPERTY AND CHARGES

58. "Mortgage," "mortgagor," "mortgagee," "mortgage-money" and "mortgage-deed" defined

Simple mortgage

Mortgage by conditional sale

Usufructuary mortgage

English mortgage

Mortgage by deposit of title-deeds

Anomalous mortgage

59 A. References to mortgagors and mortgagees to include persons deriving title from them

Rights and Liabilities of Mortgagor

Redempt ion of portion of mortgaged property

60 A. Obligation to transfer to third party instead of re-transference to M ortgagor

Accession acquired in virtue of transferred ownership

Rights and Liabilities of Mortgagee

69A Appointment of receiver

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74-75. [ Repealed ]

Loss occasioned by his default

Priority

80. [ Repealed ]

Marshalling and Contribution

Deposit in Court

83 Power to deposit in C ourt money due on mortgage

Right to money deposited by mortgagor

85 - 90. [ Repealed ]

Redemption

97. [ Repealed ]

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Anomalous Mortgages

99. [ Repealed ]

Charges

Notice and Tender

CHAPTER V

OF LEASES OF IMMOVEABLE PROPERTY

Lessor, lessee, premium and rent defined

Duration of lease for year

Option to determine lease

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CHAPTER VI

OF EXCHANGES

118. "Exchange" defin ed

CHAPTER VII

OF GIFTS

122. "Gift" defined

Acceptance when to be made

Onerous gift to disqualified person

CHAPTER VIII

OF TRANSFERS OF ACTIONABLE CLAIMS

130A. [ Repealed ]

135A. [ Repealed ]

THE SCHEDULE

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THE TRANSFER OF PROPERTY ACT, 1882

1
ACT No. IV OF 1882

[ 17th February, 1882 ]

An Act to amend the law relating to the Transfer of Property by a ct of Parties.

Preamble . WHEREAS it is expedient to define and amend certain parts of the law relating to

the transfer of property by act of parties; It is hereby enacted as follows:
__

CHAPTER I

PRELIMINARY

This Act may be called the Transfer of Property Act, 1882.

Commencement. It shall come into force on the first day of July, 1882.

2
[ * * * * * * * ]

Extent .
3
[
2
[This] Act or any Part thereof may by notification in the official Gazette be

extended to the whole or any part of
2
[a Province]
4
[by the Provincial Government] ] .

5
[And any
6
[Provincial Government] may,
7
[ * * * ] from time to time, by notification in the

6
[ official Gazette], exempt either retrospectively or prospectively, any part of the territories

administered by such
5
[Provincial Government] from all or any of the following provisions, namely:
__

Sections 54, paragraphs 2 and 3, 59, 107 and 123.]

1
This Act has been extended with effect from 1st January, 1915, to the Province of Sindh, see Bom. R. & O.

Ss. 54, 107 and 123 have been extended from 6th May, 1935, to all Municipalities in the Punjab and all notified areas declare d and notified under s. 2 41

of the Punjab Municipal Act, 1911, see Punjab Gazette Extraordinary, 1925, p. 27.

1924). It has been rep. as to Crown Grants by the Crown Grants Act, 1895 ( Act No. XV of 1895) , and amended in Sind by Sind Act No. XIV of 1939,

s.2.

This Act shall be deemed to have been amended in its appl ication to the Province of Sind , see Sind Act No. XIV of 1939.

The Act has been extended, in respect of non-agricultural lands, to Baluchistan States Union and the Khairpur State by G.G.Os . 4 and 5 of 1953, as

amended respectively.

The Act has been and shall be deemed to have been brought into force in Gwadu r with effect from the 8th Septemter, 1958, by the Gwadur (Application

of Central Laws) Ordinance, 1960 ( Ordinance No. XXXVII of 1960), s. 2.

The Act, as in force in the North-West Frontier Province immediately before the commencement of N.W.F.P. Regulatio n No. 2 of 1974, has been

applied to the Provincially Administered Tribal Areas of Chitral, Dir, Kalam, Swat and Malakand protected Area, by N.W.F.P. R egulation, No. 2 of

1974, s. 3.

2
O mitted and subs. by the Federal Adaptation of Laws Order, 1975 (Preside nt’s Order No. 4 of 1975), Art. 2 and Sch.

3
Subs. by the Central Laws (Statute Reform) Ordinance, 1960 ( Ordinance No. XXI of 1960), s. 3 and 2nd Sch.

4
Subs. by A. O., 1964, Art. 2 and Sch.

5
Sub s. by Act No. III of 1885, s. 1.

6
Subs. by A. O., 1937.

7
R ep . by the Devolution Act , 1920 (Act No. XXXVIII of 1920 ) , s. 2 and Sch. 1 .

Page 9 of 56

1
[Notwithstanding anything in the foregoing part of this section, sections 54, paragraphs 2 and

3, 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 Registration Act,
2
[ 1908( XVI of 1908 )], under the power conferred

by the first section of that Act or otherwise.]

2. Repeal of Acts . Saving of certain enactments, incidents, rights, liabilitie s, etc. — In the

territories to which this Act extends for the time being the enactments specified in the schedule hereto

annexed shall be repealed to the extent therein mentioned. But nothing herein contained shall be

deemed to affect
__

(a) the provisions o f 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
3
[ * ] ,

4
[Muslim]
3
[ * * ] law.

In this Act, unless there is something repugnant in the subject or

context,
__

“immoveable property” does not include standing timber, growing crops or grass:

“instrument” means a nontestamentary instrument :

5
[“attested”, in relation to an instrument, means
6
[and shall be deemed always to hav e 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 execu tant a personal acknowledgement or

his 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 b een present at the same time, and no particular form of attestation

shall be necessary:]

“registered” means registered in
7
[a province] under the law for the time being in force

regulating the registration of documents:

1
Ins. by Act No. III of 1885; it is to be deemed to have been added from the date on which Act 4 of 1882 came into force.

2
Subs . by Act No. XX of 1929 , for 1877.

3
Rep. by Act No. XX of 1929 , s. 3.

4
Subs. by the Federal Adaptation of Laws Order, 1975 (President’s Order No. 4 of 1975) , Art. 2 and Table .

5
Ins. by Act No. XXVII of 1926, s. 2.

6
Ins. by the Rep ealing and Amending Act, 1927 ( Act No. X of 1927), s. 2 and Sch. 1.

7
Subs. by A. O., 1949, Sch.

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“attached to the earth” means
__

(a) rooted in the earth, as in the case of trees and shrubs ;

(b) imbedded in the earth, as in the case of walls or buildings ; or

(c) attached to what is so imbedded for the permanent beneficial enjoyment of that

to which it is attached:

l
[“Actionable claim” means a claim to any debt, other than a debt secured by mortgage of

immoveable property or by hypothecation or pledge of moveable property, or to any beneficial

interest in moveable property not in the possession, either actual or constructive, of the

claimant, which the Civil Courts recognize as affording grounds for relief, whether such debt

or beneficial interest be existent, accruing, con ditional or contingent:]

2
[“a person is said to have notice” of a fact when he actually knows that fact, or when, but for

wilful abstention from an inquiry 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 su ch instrument as from the

date of registration or,
3
[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 Registration Act, 1908 ( XVI

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 a cquired,

or of the property wherein a share or interest is being acquired, is situated] :

Provided that
__

(1) the instrument has been registered and its registration completed in the manner prescribed

by the Registration Act, 1908( XVI of 1908 ), and the rules made thereunder,

(2) the instrument
3
[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 immoveable property or any share or interest in any

such propert y 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 hi s 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 fra ud.]

1
Ins. by Act No. II of 1900 , s. 2.

2
S ubs. by Act No. XX of 1929 , s. 4.

3
Ins. by Act No. V of 1930 , s. 2.

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The chapters and

sections of this Act which relate to contracts shall be taken as part of the Contract Act, 1872 (IX of 1872).

1
[And sections, 54 paragraphs 2 and 3, 59, 107 and 123 shall be read as supplemental to the

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

CHAPTER II

OF TRANSFERS OF PROPERTY BY ACT OF PARTIES

(A) Transfer of Property, whether moveable or immoveable

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,

2
[or to himself] and one or more other living persons; and “to transfer p roperty” is to perform such

act.

2
[In this section “living person” includes a company or association or body of individuals, whether

incorporated or 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.]

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-a pparent 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) An interest in property restricted in its enjoyment to the owner personally cannot

be transferred by him.

2
[(dd) A right to future maintenance, in whatsoever manner arising, secured or determined,

cannot be transferred.]

(e) A mere right to sue
3
[ * * * ] 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
4
[, naval],
5
[air-force] and civil pensioners of
6
[the

Government] an d political pensions cannot be transferred.

1
Ins. by Act No. III of 1885 , s. 3.

2
Subs. and ins. by Act No. XX of 1929 , ss. 5 - 7.

3
R ep. by Act No . II of 1900 , s. 3 (i).

4
Ins. by Act No. XXXV of 1934 , s. 2 and Sch.

5
Ins. by the Repe aling and Amending Act, 1927 ( Act No. X of 1927), s. 2 and Sch. I.

6
Subs . by the Central Laws (Adaptation) Order, 1961 (President’s Order No. 1 of 1961) , Art. 2 . ( with effect from the 23
rd
March, 1956 ).

Page 12 of 56

(h) No transfer can be made (1) in so far as it is opposed to the nature of the interest

affected thereby, or (2)
l
[for an unlawful object or consideration within the

meaning of section 23 of the contract Act, 1872 ( IX of 1872 ),] or (3) to a person

legally disqualified to be transferee.

2
[(i) Nothing in this section shall be deemed to authorize a tenant having an

untransferable right of occupancy, the farmer of an estate in re spect 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.]

Every person competent to contract and e ntitled to

transferable property, or authorized 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.

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 th en

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;

a nd, where the property is machinery attached to the earth, the moveable 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.

A transfer of property may be made without writing in every case in which

a writing is not expressly required by law.

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 woman (not being a Hindu,
3
[Muslim] or

Buddhist), so that she shall not have power during her marriage to transfer or charge the same or her

beneficial interest therein.

1
Subs. by Act No. II of 1900 , s. 3 (ii) .

2
I ns. by Act No. III of 1885 , s. 4.

3
Subs. by the Federal Adaptation of Laws Order, 1975 (President’s Order No. 4 of 1975) , Art. 2 and Table.

Page 13 of 56

1 1 . Restriction repugnant to interest created. — 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 r emedy which he may have in respect of a breach thereof.]

where property is transferred subject to a condition or limitation making any interest therein, reserved

or given to or for the benefit of any person, to cease on his becoming insolvent or endeavouring to

transfer or dispose of the same, such condition or limitation is void.

Nothing in this section applies to a condition in a lease for the benefit of the lessor or those

claiming under him.

Where, on a transfer of property, an interest

therein is created for the b enefit 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 o f 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.

No transfer of p roperty 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.

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 i nterest 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].

1
[ 16. Transfer to take effect on failure of prior interest. — 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 inte nded to take effect after or upon failure of such prior interest also fails.

(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 duri ng a period longer

than
__

(a) the life of the transferor, or

(b) a period of eighteen years from the date of the 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

last-mentioned period the property and the income th ereof shall be disposed of as if the period during

which the accumulation has been directed to be made had elapsed.

1
Subs. by Act No. XX of 1929, s s . 8 - 10.

Page 14 of 56

(2) This section shall not affect any direction for accumulation for the purpose of
__

(i) the paym ent of the debts of the transferor or any other person taking any interest

under the transfer, 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 pre servation or maintenance of the property transferred; and such direction

may be made accordingly.

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.]

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 i s 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 u ntil the time of enjoyment arrives, or from a provision that if a particular

event shall happen the interest shall pass to another person.

Where, on

a transfer of property, an int erest therein is created for the benefit of a person not then living, he

acquires upon his birth, unless a contrary intention appear from the terms of the transfer, a vested

interest, although he may not be entitled to the enjoyment thereof immediately on his birth.

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 ther eof as may be necessary

to be applied for his benefit, such interest is not contingent.

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.

Page 15 of 56

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 unle ss such event

happens before, or at the same time as, the intermediate or precedent interest ceases to exist.

Where,

on a transfer of property, an interest therein is to accru e 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 appea rs

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.

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.

Illustrations

(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 tran sfer is

void.

(d) A transfers Rs. 500 to his niece C if she will desert her husband. The transfer is

void.

Where the terms of a transfer of property impose a

condition to be fulfilled before a person can take an inter est in the property, the condition shall be

deemed to have been fulfilled if it has been substantially complied with.

Illustrations

(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.

Page 16 of 56

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 ult erior 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.

Illustrations

(a) A transfers Rs. 500 to B on c ondition 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 lifetime. The disposition in favour of C takes effect.

(b) A transfers property to his wife; but, in case she shou ld die in his life-time,

transfers 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.

On

a transfer of property an interest therein may be created to accrue to any person with the condition

superadded that in case a specified uncertain event shall happen such interest s hall 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.

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 a 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.

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 do not desert her husband, to C. B is entitled to

the farm during her life as if no condition had been inserted.

happens or does not happen. — Subject to the provisions of section 12, on a transfer of property an

interest therein may be created with the condition superadded that it shall cease to exist in case a

specified uncertain event shall happen, or in case a specified uncertain event shall not happen.

Page 17 of 56

Illustrations

(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 life-interest 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.

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.

performance. — 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

ac t, the condition is broken when he renders impossible, permanently or for an indefinite period, the

performance of the act.

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, a nd 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.

Election

Where a person professes to transfer property which he has

no right to transfer, and as part of the sa me 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.

Page 18 of 56

Illustrations

The farm of
l
[Ulipur] is the property of C and worth Rs. 800. A by an instrument of gift

professes to transfer it to B, giving by the same instrument Rs. 1,000 to C. C elects to retain the farm.

He forfeits the gift of Rs. 1,000.

In the same case, A dies before the election. His representative must out of the Rs. 1,000 pay

Rs. 800 to B.

The rule in the first paragraph of this section applies whether the transferor does or does not

believe that which he professes to transfer to be his own.

A person taking no benefit directly under a transaction, but deriving a benefit un der 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 claim the property, he must relinquish the

particular benefit, but he is not bound to relinquish any other ben efit 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 th e 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 suc h

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 h e 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

representatives 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.

1
Subs. by the Central Laws (St atute Reform) Ordinance, 1960 ( Ordinance No . XXI of 1960), s. 3 and 2nd Sch. ( with effect from the 14
th
October, 1956 ).

Page 19 of 56

In case of disability, the election shall be postponed until the disability ceases, or until the

election is made by some competent authority.

Apportionment

entitled. — 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 payme nt thereof.

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 seve ral owners of the property, the corresponding

duty shall, in the absence of a contract to the contrary amongst the owners, be performed in favour of

each of such owners in proportion to the value of his share in the property, provided that the duty can

be served 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 suc h 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

l
[Provincial Government] by notification in the official Gazette so directs.

Illustrations

(a) A sells to B, C and D a house situat e 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. 7-1/2 to C, and Rs. 7-1/2 to D, and must d eliver 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.

(B) Transfer of Immoveable Property

Where

any person, authorized only under circumstances in their nature variable to dispose of immoveable

property, transfers such property for consideration, alleging the existence of such circumstances, they

1
Subs. by A.O., 1937.

Page 20 of 56

shall, as between the transferee on the one part and the transferor and other persons (if any) affected

by the transfer on the other part, be deemed to have existed, if the transferee, after using reasonable

care to ascertain the existence of such circumstances, has acted in good faith.

Illustration

A, a Hindu widow, whose husband has left collateral heirs, alleging that the property held by

her as such is insufficient for her maintenance, agrees, for purposes neither religious nor charitable, to

sell a field, part of such property, to B. B satisfies himself by reasonable enquiry that the income of

the property is insufficient for A’s maintenance, and that the sale of the field is necessary, and, acting

in good faith, buys the field from A. As between B on the one part and A and the collateral heirs on

the other part, a necessit for the sale shall be deemed to have existed.

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
1
[th ereof] 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.

1
[ * * * * * * * ]

ownership but not amounting to interest or easement. — Where, for the more beneficial enjoyment

of his own immoveable property, a third person has, independently of any interest in the immoveable

property of another or of any easement thereon, a right to restrain the enjoyment
1
[in a particular

manner of the latter property], or

Where a third person is entitled to the benefit of an obligation arising out of contract and

annexed to the ownership of immoveable property, but not amounting to an inter est 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 o r obligation, nor against such property in his hands.

Illustration

A contracts to sell
2
[Ulipur] to B. While the contract is still in force he sells
2
[ Ulipur] to C, who

has notice of the contract. B may enforce the contract against C to the same extent as against A.

Where, with the consent, express or implied, of the

persons interested in immoveable property, a person is the ostensible owner of such property and

transfers the same for consideration, the transfer s hall not be voidable on the ground that the transferor

was not authorized 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.

1
R ep. and subs. by A ct No. XX of 1929 , ss. 11 - 12.

2
Subs. by the Central Laws (Statute Reform) Ordinance, 1960 ( Ordinance No. XXI of 1960), s.3 and 2nd Sch. ( with effect from the 14
th
October, 1956 ).

Page 21 of 56

Where a person

transfers any immoveable property reserving power to revoke the transfer, and subsequently transfers

the property for consideration to another transferee, such transfer operates in favour of such transferee

(subject to any condition attached to the exercise of the power) as a revocation of the former transfer

to the extent of the power.

Illustration

A lets a house to B, and reserves power to revoke the lease if, in the opinion of a specified

surveyor, B should make a use of it detrimental to its value. Afterwards A, thinking that such a use has

been made, lets the house to C. This operates as a revocation of B’s lease subject to the opinion of the

surveyor as to B’s use of the house having been detrimental to its value.

transferred. — Where a person
1
[fraudulently or] erroneously represents that he is authorized to

transfer certain immoveable property and professes to transfer such property for consi deration, 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 transfer ees 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 authorized 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.

Where one of two or more co-owners of immoveable

property legally competent in that behalf transfers his share of such property or an y interest therein,

the transferee acquires, as to such share or interest, and so far as is necessary to give effect to the

transfer, the transferor’s right to joint possession or other common or part enjoyment of the property,

and to enforce a partition of the same, but subject to the conditions and liabilities affecting, at the date

of the transfer, the share or interest so transferred.

Where the transferee of a share of a dwelling-house belonging to an undivided family is not a

member of the family, no thing in this section shall be deemed to entitle him to joint possession or other

common or part enjoyment of the house.

Where immoveable property is transferred for

consideration to two or more persons, and such consi deration 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 entit led

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 interest in such property

in proportion to the shares of the consi deration which they respectively advanced.

1
Ins. by Act No. XX of 1929 , s. 13.

Page 22 of 56

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.

Where immoveable

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 interest in the property were of equal value, and, where such interests were of unequal value,

proportionately to the value of their respective interests .

Illustrations

(a) A, owning a moiety, and B and C each a quarter share, of mauza
1
[Ulipur],

exchange an eighth share of that mauza for a quarter share of mauza

1
[Mithapukur]. There being no agreement to the contrary, A is entitled to an

eighth share in
1
[Mithapukur], and B and C each to a sixteenth share in that

mauza.

(b) A, being entitled to a life-interest in mauza
1
[Jalkothi] and B and C to the

reversion, sell the mauza for Rs. 1,000. A’s lifeinterest 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.

Where several co-owners of

immoveable 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 eight-anna share, and B and C, each the owner of a four-anna share, in

mauza
1
[Ulipur], transfer a two-anna share in the mauza to D, withou t 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.

Where a person purports to create by transfer at

different times rights in or over the same immoveable 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

o r reservation binding the earlier transferees, be subject to the rights previously created.

Where immoveable property is transferred for

consideration, and such property or any part thereof is at the date of the transfe r 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.

1
Subs. by the Central Laws (St atute Reform) Ordinance, 1960 ( Ordinance No. XXI of 1960), s s . 3 - 4 and 2nd Sch. ( with effect from the 14
th
October,

1956 ).

Page 23 of 56

No person shall be chargeable with

any rents or profits of any immoveable 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 afterw ards 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.

When the transferee

of immoveable property makes any improvement on the property, believing in good faith that he is

absolutely entitled thereto, and h e is subsequently evicted there from 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 th e transferee, or to sell his 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 the m.

1
[ 52. Transfer of property pending suit relating thereto. — During the
2
[pendency] in any

Court having authority in
3
[Pakistan], or established beyond the limits of
3
[Pakistan] by
4
[the
5
[Federal

Government]
6
[ * * * ] , of
7
[any] suit or proceeding
7
[which is not collusive and] in which any right to

immoveable 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 sha ll 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 sa tisfaction 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.]

7
[ 53. Fradulent transfer .
__
(1) Every transfer of immoveable property made with intent to

1

2
Subs. by Act No. XX of 1929 , s.14 .

3
Subs. by the Cen tral Laws (Statute Reform) Ordinance, 1960 ( Ordinance No. XXI of 1960), s. 3 and 2nd Sch. ( with effect from the 14
th
October, 1956 ).

4
Subs. by A.O., 1937.

5
Subs. by the Federal Adaptation of Laws Order, 1975 (President’s Order No. 4 of 1975), Art. 2 and Table.

6
O mitted by A. O., 1949, Sch.

7
Subs. and ins. by Act No. XX of 1929, s. 14.

Page 24 of 56

defeat or delay the creditors of the transferor shall be voidable at the option of any creditor so defeated

or delayed.

Nothing in this sub-section shall impair the rights of a transferee in good faith and for

consideration.

Nothing in this sub-section shall aff ect any law for the time being in force relating to

insolvency.

A suit instituted by a credito r (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 immoveable property made without consideration with intent to

defraud a subsequent transferee shal l 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.]

1
[5 3A. Part performance. — Where any person contracts to transfer for consideration any

immoveable 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 the contract, though required to be registered, has not been

registered, or, where there is an instrument of transfer, that the tr ansfer 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 resp ect of the property of which the transferee has taken or continued in possession, other than

a right expressly provided by the terms of the contract:

Provided that nothing in this section shall affect the rights of a transferee for consideration who

has no notice of the contract or of the part performance thereof.]

CHAPTER III

OF SALES OF IMMOVEABLE PROPERTY

5 4 . “Sale” defined. — “Sale” is a transfer of ownership in exchange for a price paid or promised

or part-paid and part-promised.

1
Ins. by Act No. XX of 1929 , s. 16.

Page 25 of 56

Sale how made.
1
Such 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.

1
I n the case of tangible immoveable property, of a value less than one hundred rupees, such

transfer may be made either by a registere d 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 proper ty 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.

In the absence of a contract to the contrary,

the buyer and the seller of immoveable 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 d isclose to the buyer any material defect in the property
2
[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 exam ination 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 payme nt or tender of the amount due in respect of the price, to execute a

proper conveyance of the property when the buyer tenders it to him for

execution at a proper time and place;

(e) between the date of the contract of sale and the delivery of the property, to take

as much care of the property and all documents of title relating thereto which

are in his possession as an owner of ordinary prudence would take of such

property and documents;

(f) to give, on being so required, the buyer, or such person as he directs, such

possession of the property as its nature admits;

(g) to pay all public charges and rent accrued due in respect of the property up to

the date of the sale, the interest on all incumbrances on such property due on

such date, and, e xcept where the property is sold subject to incumbrances, to

discharge all incumbrances 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:

1
As to limitation to the territorial operation of paragraphs 2 and 3 of s. 54, see s. 1, supra . These paragraphs extend to every cantonment in the Provinces,

etc., see s. 287 of the Cantonments Act, 1924 ( Act No. II of 1924).

2
Ins. by Act No. VI of 1929 , s. 17.

Page 26 of 56

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 incumbered 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 purchase-money 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) whe re 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 buyer of the lot of greatest value is entitled to such documents. But in case (a) the

seller, and in case (b) the buyer, of the lot of greatest value, is bound, upon every reasonable request

by the buyer, or by any of the other buyers, as the case may be, and at the cost of the person making

the request, to produce the said documents and furnish such true copies thereof or extracts therefrom

as he may require; and in the mean time, 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-mon ey, 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 amoun t 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 t o 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 incumbrances, the buyer may retain out of the

purchase-money the amount of any incumbrances on the property existing at the

date of the sale, and shall pay the amount so retained to the persons entitled

thereto;

1
Ins. by Act No. XX of 1929 , s. 17.

Page 27 of 56

(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 incumbrances subject

to which the property is sold, and the interest thereon afterwards accruing due.

(6) The buyer is entitled
__

(a) where the ownership of the property has passed to him, to the benefit of any

improvement in, or increase in value of, the property, and to the rents and profits

thereof;

(b) unless he has improperly declined to accept delivery of the proper ty, to a charge

on the property, as against the seller and all persons claiming under him,
1
[ * *

* ] 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

f or 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 mortgage-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.]

Discharge of Incumbrances on Sale

__
(a) Where immoveable

property subject to any incumbrance, 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, dire ct 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 pr operty
__
of such amount as, when invested in securities of the

2
[Federal Government], the Court considers will be sufficient, by means of the interest thereof, to keep

down or otherwise provide for that charge, and

1
R ep. and subs. by Act No. XX of 1929 , s s. 1 7 - 18.

2
Subs. by the Federal Adaptation of Laws Order, 1975 (President’s Order No. 4 of 1975) , Art. 2 and Table.

Page 28 of 56

(2) in any other case of a capital sum charged on the property
__
of the amount sufficient to

meet the incumbrance and any interest due thereon.

But in either case there shall also be paid into Court such additional amount as the Court

considers will be sufficient to meet the contingency of further costs, expenses and interest, and any

other contingency, except depreciation of investments, not exceeding one-tenth part of the original

amount to be paid in, unless the Court for special reasons (which it shall record) thinks fit to require a

larger additional amount.

(b) T hereupon the Court may, if it thinks fit, and after notice to the incumbrancer,

unless the Court, for reasons to be recorded in writing, thinks fit to dispense

with such notice, decla re the property to be freed from the incumbrance, 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 di rect 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 declaratio n, order or direction under this section as

if the same were a decree.

(e) In this section “Court” means (l) 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) an y other Court which the
l
[Provincial Government] may, from time to time,

by notification in the official Gazette, declare to be competent to exercise the

jurisdiction conferred by this section.

CHAPTER IV

OF MORTGAGES OF IMMOVEABLE PROPERTY AND CHARGES

58. “Mortgage,” “mortgagor,” mortgagee,” “mortgagemoney” and “mortgagedeed”

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 wa y 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.

1
Subs. by A. O., 1937.

Page 29 of 56

Simple Mortgage. ( b) 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.

Mortgage by co nditional sale. ( c) Where the mortgagor ostensibly sells the mortgaged

property
__

on condition that on default of payment of the mortgage-money 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 a mortgage by conditional sale and the mortgagee a mortga gee by

conditional sale:

l
[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;]

Usufructuary mortgage. ( d) Where the mortgagor delivers possessio n
1
[or expressly or by

implication binds himself to deliver possession] of the mortgaged property to the mortgagee, and

authorizes him to retain such possession until payment of the mortgage-money, and to receive the rents

and profits accruing from the proper ty
1
[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
1
[or] partly

in payment of the mortgage-money, the transaction is called an usufructuary mortgag e and the

mortgagee an usufructuary mortgagee.

English Mortgage. (e) Where the mortgagor binds himself to re-pay 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.

Mortgage by deposit of title deeds.
1
[(f) Where a person
2
[ * * * ] delivers to a creditor or his

agent documents of title to immovea ble property, with intent to create a security thereon, the

transaction is called a mortgage by deposit of title-deeds
2
[:]

2
[Provided that, where a mortgage by deposit of title deeds is to be created in favour of a

banking company as defined in the Bankin g Tribunals Ordinance, 1984 (LVIII of 1984), the same may

also be created by an entry in the record of rights against the entry relating to such immovable

property.]

Anomalous mortgage. (g) A mortgage which is not a simple mortgage, a mortgage by

condition al 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
Ins. and subs. by Act No. XX of 1929 , s. 19.

2
Omitted, subs. & added by the Finance Act, 1986 (Act No. 1 of 1986), s. 2 .

Page 30 of 56

* 59. Mortgage when to be by assurance. — Where the principal money secured is one hundred

rupees or upwards, a mortgage
1
[other than a mortgage by deposit of title-deeds] can be effected only

by a registered instrument signed by the mortgagor and attested by at least two witnesses.

Where the principal money secured is less than one hundred rupees, a mortgage may be effected

either by
2
[a registered instrument] signed and attested as aforesaid, or (except in t he case of a simple

mortgage) by delivery of the property.

1
[ * * * * * * * ]

1
[ 59A. References to mortgagors and mortgagees to include persons deriving title from

them. — U nless otherwise expressly provided, references in this Chapter to mortgagors and mortgagees

shall be deemed to include references to persons deriving title from them respectively.]

Rights and Liabilities of Mortgagor

At any tim e 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
1
[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 th e 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 transfer red to the mortgagee has been extinguished:

Provided that the right conferred by this section has not been extinguished by the act of the

parties or by
1
[decree] of a Court.

The right conferred by this section is called a right to redeem and a suit to enfo rce 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 shar e only, on payment of a

proportionate part of the amount remaining due on the mortgage, except
1
[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.

1
[ 60A. Obligation to transfer to third party instead of re-transference to Mortgagor . —

(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-transfe r, he may require the mortgagee, instead

of re-transferring the property, to assign the mortgage-debt and transfer the mortgaged property to such

* As to limitation to the territorial operation of s . 59, see s. 1, supra. Section 59 extends to every cantonment in the Provinces, etc. — see s. 287 of the

Cantonments Act, 1924 ( Act No. II of 1924).

1
Ins. , omitted and subs. by Act No. XX of 1929 , s s. 20 - 23 .

2
Subs. by Act No. VI of 1904 , s. 3 .

Page 31 of 56

third person as the mor tgagor 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 enfo rced by the mortgagor or by

any encumbrancer notwithstanding a n intermediate encumbrance; but the requisition of any

encumbrancer 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 provi sions of this section do not apply in the case of a mortgagee who is or has been in

possession.

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 t he mortgagee.]

1
[ 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 mo rtgages has become due, be entitled to redeem

any one such mortgage separately, or any two or more of such mortgages together.]

In the case of a usufructuary

mortgage, the mortgagor has a right to recover possession of the property
1
[together with the

mortgage-deed and all documents relating to the mortgaged property which are in the possession or

power of the mortgage],
__

(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 authorized to pay himself from such rents and profits

1
[or any part thereof a part only of the m ortgage-money] — when the term, if

any, prescribed for the payment of the mortgage-money has expired and the

mortgagor pays or tenders to the mortgagee
1
[the mortgage-money or the

balance thereof] or deposits it in Court as hereinafter provided.

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 agains t 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 a cquiring it. If such separate possession or enjoyment is not possible, the

1
Subs. and ins. by Act No. XX of 1929 , ss. 24 - 25.

Page 32 of 56

accession must be delivered with the property; the mortgagor being liable, in the case of an acquisition

necessary to preserve the property from destruction, forfeiture or sale, or made with his assent, to pay

the proper cost thereof, as an ad dition 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.

1
[ 63A. Improve ments to mortgaged property.
__
(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 i mprovement ; and the

mortgagor shall not, save only in cases provided for in sub-section (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 rea son of the improvement shall be credited to the mortgagor.]

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

contr act by him to the contrary, have the benefit of the new lease.

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 profes ses 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) t hat 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 exist s 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,

1
Subs. , i ns. and omitted by Act No. XX of 1929 , s s. 26 - 29.

Page 33 of 56

and indemnify the mortgagee against all 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 incumbrance on the property,

that the mortgagor will pay the interest from time to time accruing due on each

prior incumbrance as and when it becomes due, and will at the proper time

discharge the principal mo ney due on such prior incumbrance.

1
[ * * * * * * * ]

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.

1

[ 65A. Mortgagor’s power to lease.
__
(1) Subject to the provisions of sub-section (2), a

mortgagor, while lawfully in possession of the mortgaged property, shall have power to make leases

thereof which sha ll 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 fro m 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 r ent and a condition

of re-entry on the rent not being paid within 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 mortgagedeed; 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.]

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.

1
O mitted ., ins. and subs. by Act No. XX of 1929 , s s. 29 - 30. .

Page 34 of 56

Explanation .
__
A security is insufficient within the meaning of this section unless the value of the

mortgaged property exceeds by one-third, or, if consisting of buildings, exceeds by one-half, the amount

for the time being due on the mortgage.

Rights and Liabilities of Mortgagee

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
1
[a decree] that the mortgagor shall be absolutely debarred of his

right to redeem the property, or
1
[a decree] that the property be sold.

A suit to obtain
1
[a decree] that a mortgagor shall be abso lutely debarred of his right to redeem the

mortgaged property is called a suit for foreclosure.

Nothing in this section shall be deemed —

1
[(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 authorize 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 authorize the mortgagee of a railway, canal or other work in the main tenance of

which the public are interested, to institute a suit for foreclosure or sale; or

(d) to authorize 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.

1
[ 67A. Mortgagee when bound to bring one suit on several mortgages. — A mortgagee who

holds two or more mortgages executed by the same mortgagor in respect o f 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.]

1
[ 68. Right to sue for mortgage-money.
__
(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 meanin g of section 66, and the mortgagee has

given the mortgagor a reasonable opportunity of providing further security

1
Subs. and ins. by Act No. XX of 1929 , s s . 31 - 33.

Page 35 of 56

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 fro m the mortgagor or from his

legal representative shall not be liable to be sued for the mortgage-money.

(2) Where a suit is brought under clause (a) or clause (b) of sub-section (1), the Court may, at

its discretion, stay the suit and all proceedings ther ein, 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

p roperty.]

1
[(1)]
1
[
2
[ * * * ]
2
[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,
3
[Muslim] 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 Provincial

Government], in the
5
[official Gazette]];

6
[ (b) where the mortgagee is the Federal Government or a Provincial Government or

a banking company as defined in the Banking Tribunals Ordinance, 1984 (LVIII

o f 1984).]

(c) where
1
[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
1
[was, on the date of the execution of the mortgage-deed],

situate within the
7
[town of] Karachi,
8
[ * * * ] or in any other town
1
[or area]

which the
8
[Provincial Government] may, by notification in the
8
[official

Gazette], specify in this behalf.

1
N umbered , subs. and ins. by Act No. XX of 1929 , s. 34.

2
Omitted and subs. by the Federal Laws (Revision and Declaration) Ordinance, 1981 ( Ordinance No. XXVII of 1981), s. 3 and 2nd Sch.

3
Subs. by the Federal Adaptation of Laws Order, 1975 (President’s Order No. 4 of 1975) , Art. 2 and Table.

4
Ins. by Act No. III of 1885 , s. 5.

5
Subs. by A. O., 1937 .

6
Subs. by the Finance Act, 1986 (Act No. 1 of 1986), s. 2.

7
Subs. by A. O., 1949, Sch.

8
R ep. and subs. by A. O., 1937.

Page 36 of 56

1
[ * ]
1
[(2)]
2
[A power under sub-section (1) shall not] be exercised unless and until
__

1
[ (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 principa l money, or of part thereof, for three months after such

service; or

1
[ (b) ] some interest under the mortgage amounting at least to five hundred rupees is in

arrear and unpaid for three months after becoming due
2
[:]

2
[Provided that the power of a scheduled bank under clause (b) of sub-section (1) shall further

be subject to such conditions as may be prescribed in this behalf by notification in the official Gazette

by the
3
[Federal Government] in consultation with the State Bank of Pakistan. ]

1
[(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 authorize the sale, or that

due notice was not given, or that the power was otherwise improperly o r irregularly exercised; but any

person damnified by an unauthorized or improper or irregular exercise of the power shall have his

remedy in damages against the person exercising the power.

1
[(4)] The money which is received by the mortgagee, arising from the sale, after discharge of

prior incumbrances, if any, to which the sale is not made subject, or after payment into Court under

be held by him in tru st 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 mortga ge; 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.

4
[ * * * * * * * ]

1
[ * * * * * * * ]

1
[ 69A. Appointment of receiver.
__
(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.

1
Rep., numbered, lettered and ins. by Act No. XX of 1929 , ss. 34 - 35.

2
Subs. and added by Act No. V of 1966, s. 2.

3
Subs. by the Federal Adaptation of Laws Order, 1975 (President’s Order No. 4 of 1975) , Art. 2 and Table.

4
O mitted by the Federal Laws (Revision and Declaration) Ordinance, 1981 ( Ordinance No. XXVII of 1981), s. 3 and 2nd Sch.

Page 37 of 56

If no person has been so named, or if all persons named are unable or unwilling to act, or are

dead, the mortgagee may appoint any person to whose appointment the mortgagor agrees; failing such

agreement, the mortgagee shall be entitled to apply to the Cou rt 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 sub-

section.

(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 acts 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 th e

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 sat isfaction 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 mo rtgagee might have insured, and keep insured against loss or damage by fire, out of

the money received by him, the mortgaged property or any part thereof being of an insurable nature.

(8) Subject to the provisions of this Act as to the application of ins urance 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 mortgage-deed 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;

Page 38 of 56

(v) in or towards discharge of the principal money, if so directed in writing by the

mortg agee;

and shall pay the residue, if 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 mortgagedeed; and the provisions of subsections (3) to (8) inclusive may be varied or extended by

the mortgage-deed, and, as so va ried 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 institutio n 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

summar y disposal. A copy of such application shall be served upon, and the hearing thereof may be

attended by, such of the persons interested in the application as the Court may think fit.

The costs of every application under this sub-section shall be in the dis cretion of the Court.

(11) In this section, “the Court” means the Court which would have jurisdiction in a suit to enforce

the mortgage.]

I f, 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.

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, sha ll,

for the purposes of the security, be entitled to the new lease.

1
[A mortgagee] may spend such money as is necessary —

1
[ * * * * * * * ]

(b) for
1
[the preservation of the mortgaged property] from destruction, forfeiture or

sale;

1
R ep. and subs. by Act No. XX of 1929 , ss. 36 - 37.

Page 39 of 56

(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

ra te of interest payable on the principal, and where no such rate is fixed, at the rate of nine per cent.

per annum:

l
[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 an d 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
1
[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 require d in case of total destruction to reinstate the property insured.

Nothing in this section shall be deemed to authorize 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 mortgage e is

hereby authorized to insure.

1
[ 73. Right to proceeds of revenue sale or compensation on acquisition .
__
(1) Where the

mortgaged property or any part thereof or any interest therein is sold owing to failure to pay arrears of

revenue or other charges of a public nature or rent due in respect of such property, and such failure did

not arise from any default of the mortgagee, the mortgagee shall be entitled to claim payment of the

mortgage-money, in whole or in part, out of any surplus of the sale proceeds remaining after payment

of the arrears and of all charges and deductions directed by law.

(2) Where the mortgaged property or any part thereof or any interest therein is acquired under

the Land Acquisition Act, 1894(I 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 com-

pensation.

(3) Such claim s 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.]

74 .
1
[ * * * * * * * ]

75.
1
[ * * * * * * * ]

1
I ns. , subs. and rep. by Act No. XX of 1929 , s s. 37 - 39.

Page 40 of 56

When, during the continuance of the mortgage,

the mortgagee takes possession of the mortgaged property, —

(a) he must manage the property as a person of ordinary prudence would manage it

if it were his own;

(b) he must use his best endeavours to collect the rents and profits thereof;

(c) he must, in the absence of a contract to the contrary, out of the income of the

property, pay the Government revenue, all other charges of a public nature
l
[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 t he 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 whi ch

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 mortgagemoney;

(g) he must keep clear, full and accurate accounts of all sums r eceived 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
l
[properly incurred for the management of the property and the

collection of rents and profits and the other exp enses] 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
1
[ * * * ] and, so far

as such receipts exceed any interest due, in reduction or dis charge of the

mortgagemoney; the surplus, if any, shall be paid to the mortgagor;

(i) When the mortgagor tenders, or deposits in manner hereinafter provided, the

amount for the time being due on the mortgage, the mortgagee must,

notwithstanding the provis ions in the other clauses of this section, account for

his
1
[ * ] 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

1
Ins. and rep. by Act No. XX of 1929 , s. 40.

Page 41 of 56

expenses incurred after such date or time in connection with the mortgaged

property].

Loss occasioned by his default. If the mortgagee fail to perform any of the duties imposed

upon him by this section, he may, when accounts are ta ken in pursuance of a decree made under this

Chapter, be debited with the loss, if any, occasioned by such failure.

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 pri ncipal.

Priority

Where, through the fraud, misrepresentation or

gross neglect of a 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.

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.

80 .
1
[ * * * * * * *]

Marshalling and Contribution

1
[ 81. Marshalling securities. — 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 sat isfied out of

the property or properties not mortgaged to him, so far as the same will extend, but not so as to

prejudice the rights of the prior mortgagee or of any other person who has for consideration acquired

an interest in any of the properties.]

82 . Contribution to mortgage-debt. —
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

1
Rep. and subs. by Act No. XX of 1929 , ss. 41 - 43.

Page 42 of 56

to contribute rat e ably 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 m ortgage 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

p roperty, each property is, in the absence of a contract to the contrary, liable to contribute rat e ably 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 ap plies to a property liable under section 81 to the claim of the

1
[subsequent] mortgagee.

Deposit in Court

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 rem aining due on the mortgage.

Right to money deposited by mortgagor. The Court shall thereupon cause written notice of

the deposit to be served on the mortgagee, and the mortgagee may, on presenting a petition (verified

in manner prescribed by law for the ve rification 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
1
[and all documents in his possession or power

relating to the mortgaged property], apply for and receive the money, and the mortgage-deed
1
[and all

such other documents] so deposited shall be delivered to the mortgagor or such other person as

aforesaid.

1
[Where the mortgagee is in possession of the mo rtgaged 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 perso n 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 e xtinguished.]

When 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,
1
[and

the not ice 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

m oney shall be payable from the date of such withdrawal].

1
Subs. and ins. by Act No. XX of 1929, ss. 43 - 45.

Page 43 of 56

Nothing in this section or in section 83 shall be deemed to deprive the mortgagee of his right

to interest when there exists a contract that he shall be entitled to reasonable notice before payment or

tender of the mortgage-money
l
[and such notice has not been given before the making of the tender or

deposit, as the case may be].

2
Suits for Foreclosure, Sale or Redemption

85.
3
[ * * * * * * * ]

2
Foreclosure and Sale

[86 to 90.]
3
[* * * * * * *]

Redemption

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 mortgagedebt or any part thereof; or

(c) any creditor of the mortgagor who has in a suit for the administration of his

es tate obtained a decree for sale of the mortgaged property.]

1
[ 92. Subrogation. — Any of the persons referred to in section 91 (other than the mortgagor)

and any co-mortgagor shall, on redeeming property subject to the mortgage, have, so far as regards

redemp tion, 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 red eemed, 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.

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 subseque nt

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.

1
Ins. and subs. by Act No. XX of 1929 , ss. 45 - 47 .

2
For the repealed provisions, as re-enacted, see the Code of Civil Procedure, 1908 (Act No. V of 1908), Sch. I, Order XXXIV.

3
Rep. by the Code of Civil Procedure, 1908 (Act No. V of 1908), s. 156 and Sch. V.

Page 44 of 56

Where a property i s mortgaged for successive debts to

successive mortgagees, a mesne mortgagee has the same rights against mortgagee s posterior to himself

as he has against the mortgagor.]

1
[95. Right of redeeming co-mortgagor to expenses. — Where one of several mortgagors

redeems the mortgaged property, he shall, in enforcing his right of subrogation under section 92 against

his co- mortgagors, be entitled to add to the mortgage-money recoverable from them such proportion

of the expenses prop erly incurred in such redemption as is attributable to their share in the property.

The provisions hereinbefore contained which apply

to a simple mortgage shall, so far as may be, apply to a mortgage by deposit of t itle-deeds.]

97.
2
[ * * * * * * *]

Anomalous Mortgages

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.

99.
3
[* * * * * * *]

Charges

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 provis ions 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,
1
[and, save as otherwise expressly provided by any law

for the time being in force, no charge shall be enforced against any property in the hands of a person

to whom such property has been tran sferred for consideration and without notice of the charge].

1
[ 101. No merger in case of subsequent encumbrance. — Any mortgagee of, or person having

a charge upon, immoveable property, or any transferee from such mortgagee or charge-holder, 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.]

1
S ubs. and ins. by Act No. XX of 1929 , s s . 48 - 51.

2
Rep. by the Code of Civil Procedure, 1908 (Act No. V of 1908), s. 156 and Sch. V. For the repealed provisions as re-enacted, see the Code of Civil

Procedure, 1908 (Act No. V of 1908), Sch. I, Order XXXIV, rules 12 and 13.

3
Rep. by the Code of Civil Proced ure, 1908 (Act No. V of 1908 ), s. 156 and Sch. V. For the repealed provisions as re-enacted, see Act V of 1908, Sch.

I, Order XXXIV, rule 14.

Page 45 of 56

Notice and Tender

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-

of- attorney from such person or otherwise duly authorized 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 la tter 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

su fficient:

1
[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.]

1
[Where no person or agent to whom such tender should be made can be found or is known] to

the person desiring to make the tender, the latter person may deposit
1
[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 te nder of such amount.

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 interests of such person that a notice should be

served or a tender or deposit made under the provisions of this Cha pter, 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 t aking 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 contract; and the

provisions of
1
[ Order XXXII in the First Schedule to the Code of Civil Procedure, 1 908( V of 1908 )]

shall, so far as may be, apply to such application and to the parties thereto and to the guardian appointed

thereunder.

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.

CHAPTER V

OF LEASES OF IMMOVEABLE PROPERTY

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.

1
Subs. and ins. by Act No. XX of 1929 , ss. 52 - 53.

Page 46 of 56

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.

In the

absence of a contract or local law or usage to the contrary, a lease of immoveable 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 month s' notice expiring with the end of a year of the tenancy;

and a lease of immoveable 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 expiring with the

end of a month of the tenancy.

Every notice under this section must be in writing signed by or on behalf of the person giving

it, and
l
[either be sent by post to the party who is intended to be bound by it or be tendered or delivered

personally to su ch 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.

2

A lease of immoveable property from year to year, or for any term

exceeding one year, or reserving a yearly rent, can be made only by a registered instrument.

3
[All other leases of immoveable property may be made either by a registered instrument or by

oral agreement accompanied by delivery of possession.]

1
[Where a leas e of immoveable property is made by a registered instrument, such instrument

or, where there are more instruments than one, each such instrument shall be executed by both the

lessor and the lessee:]

3
[Provided that the
4
[Provincial Government] may,
4
[ * * * ] from time to time, by notification

in the
4
[official Gazette], direct that leases of immoveable property, other than leases from year to year,

or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made

by unregistered instrument or by oral agreement without delivery of possession.]

In the absence of a contract or local usage

to the contrary, the lessor and the lessee of immoveable property, as against one an other, 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 : —

1
Subs. and ins. by Act No. XX of 1929 , ss. 54 - 55.

2
As to limitation to the ter ritorial operation of s. 107, see s. 1, supra . S. 107 extends to every cantonment in the Provinces, etc., see s. 287 of the

Cantonments Act, 1924 ( Act No. II of 1924).

3
Subs. and ins. by Act No. VI of 1904 , s s . 5 .

4
Subs. and rep. by A. O., 1937 .

Page 47 of 56

(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 ordi nary 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 bind ing 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 th at, if the injury be occasioned by the wrongful act or default of the

lessee, he shall not be entitled to avail himself of the benefit of this provision:

(f) if the lessor neglects to make, within a reasonable time after notice, any repairs

which he is bou nd 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 whi ch,

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
l
[even after the determination of the lease] remove, at any time

1
[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 du ration 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 c arry them:

1
Ins. and subs. by Act No. XX of 1929 , s. 56.

Page 48 of 56

(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 authorize a tenant having an

un-transferable right of occupancy, the farmer of an estate in respect of which

default has been made in paying revenue, or th e 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 tak e, of which the lessee is, and the

lessor is not, aware, and which materially increases the value of such interest:

(l) the lessee is bound to pay or tender, at the proper time and place, the premium

or rent to the lessor or his agent in this behalf:

(m) the lessee is bound to keep, and on the termination of the lease to restore, the

property in as good condition as it was in at the time when he was put in

possession, subject only to the changes caused by reasonable wear and tear or

irresistible force, an d 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 defaul t 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 encroac hment 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

pr udence 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
1
[or sell] timber, pull down or damage buildings
1
[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 pur poses:

(q) on the determination of the lease, the lessee is bound to put the lessor into

possession of the property.

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

1
Ins. by Act No. XX of 1929 , s. 56.

Page 49 of 56

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 propor tion 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.

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 begi ns from the

making of the lease.

Duration of lease for 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 tim e 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.

A lease of immoveable 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 les sor 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;
1
[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
1
[any of these cases] the lessor or his transferee
1
[gives

notice in writing to the lessee of] his intention to deter mine 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 prop erty 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.

1
Rep., ins. and subs. by Act No. XX of 1929 , s. 57.

Page 50 of 56

A forfeiture under section 111, clause (g), is waived by

acceptance of rent which has become due since the forfeiture, or by distress for such rent, or by any

other act on the part of the lessor showing an intention to treat the lease as subsisting:

Provided that the lessor is aware that the forfeiture has been incurred:

Provided also that, where rent is accepted after the institution of a suit to eject the lessee on the

ground of forfeiture, such acceptance is not a waiver.

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.

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 thereu pon 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 prov ides 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.]

1
I ns. by Act No. XX of 1929 , s. 58.

Page 51 of 56

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 substan tially 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 pay able 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.

11 6. Effect of holding over. — 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 otherwi se 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 purpose for which the property is leased, as specified in section

106. Illustratio ns

(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 f or the life of C. C dies, but B continues in possession with

A’s assent. B’s lease is renewed from year to year.

None of the provisions of this Chapter

apply to leases for agricultural purposes, except i n so far as the
1
[Provincial Government]
2
[ * * * ] may,

by notification published in the
1
[official Gazette], declare all or any of such provisions to be so

applicable
3
[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.

CHAPTER VI

OF EXCHANGES

When two persons mutually transfer the ownership of one thing

for the ownership of another, neither thing or both things being money only, the transaction is called

an “exchange”.

A transfer of property in completion of an exchange can be made only in manner provided for

the transfer of such property by sale.

1
Subs. by A. O., 1937 .

2
R ep. by the Devolution Act, 1920 ( Act No. XXXVIII of 1920), s. 2 and Sch. I.

3
Ins. by Act No. VI of 1904 , s. 6.

Page 52 of 56

1
[119. Right of party deprived of thing received in exchange. — 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.]

Save as otherwise provided in this Chapter, each party

has the rights and is subject to the liabilities of a seller as to tha t which he gives, and has the rights and

is subject to the liabilities of a buyer as to that which he takes.

On an exchange of money, each party thereby warrants the

genuineness of the money given by him.

CHAPTER VII

OF GIFTS

“Gift” is the transfer of certain existing moveable or immoveable

property made voluntarily and without consideration, by one person, called the donor, to another,

called the donee, and accepted by or on behalf of the donee.

Acceptance when to be made. Such acceptance must be made during the lifetime of the donor

and while he is still capable of giving.

If the donee dies before acceptance, the gift is void.

2

For the purpose of making a gift of immoveable pr operty, the

transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested

by at least two witnesses.

For the purpose of making a gift of moveable property, the transfer may be effected either by

a registered instrument signed as aforesaid or by delivery.

Such delivery may be made in the same way as goods sold may be delivered.

A gift comprising both existing and future

property is void as to the latter.

125 . Gift to several of whom one does not accept. — 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.

1
Subs. by Act No. XX of 1929 , s. 59.

2
As to limitation to the territorial operation of s. 123, see s. 1, supra . S. 123 extends to every cantonment in the Provinces, etc.
__
see s. 287 of the

Cantonments Act, 1924 ( Act No. II of 1924).

Page 53 of 56

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 voi d 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 se ction 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 good as to Rs.

90,000, but is void as to Rs. 10,000, which continue to belong to A.

Where a gift is in the form of a single transfer to the same person of

several things of which one is, and the others are not, burden 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 donee 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 co mpetent 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 ha s shares in, X, a 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 l et 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.

Page 54 of 56

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
l
[and liabilities of] the

donor at the time of the gift to the extent of the property comprised therein.

12 9. Saving of donations mortis ca su a and Muslim law. — Nothing in this Chapter relates to

gifts of moveable property made in contemplation of death, or shall be deemed to affect any rule of

2
[Muslim] law
1
[ * * * ] .
3
[ CHAPTER VIII

OF TRANSFERS OF ACTIONABLE CLAIMS

(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 authorized agent,
1
[ * * * ] shall be complete and effectual upon the execution

of such instrument, 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 acti onable 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 proceedings and without making him a party thereto.

Excep tion.
__
Nothing in this section applies to the transfer of a marine or fire policy of insurance

1
[or affects the provisions of section 38 of the Insurance Act, 1938(IV of 1938)].

Illustrations

( i ) A owes money to B, who transfers the debt to C. B then demands the debt from

A, who, not having received notice of the transfer, as prescribed in section 131,

pays B. The payment is valid, and C cannot sue A for the debt.

( ii ) A effects a policy on his own life with an Insurance Company and assigns it to

a Ban k 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 subsection (1) of section

130 and to the prov isions of section 132.

1
Ins. and rep. by Act No. XX of 1929 , s s. 60 - 62.

2
Subs. by the Federal Adaptation of Laws Order, 1975 (President’s Order No. 4 of 1975) , Art. 2 and Table.

3
Subs. by Act No. II of 1900 , s. 4.

4
Add ed by the Insurance Act, 1938 ( Act No. IV of 1938), s. 121.

Page 55 of 56

I30A.
1
[* * * * * * * ]

Every notice of transfer of an actionable claim shall be

in writing, signed by the trans feror or his agent duly authoris ed in this behalf, or, in case the transfe ror

refuses to sign, by the transferee or his agent, and shall state the name and address of the transferee.

13 2. Liability of transferee of actionable claim. The transferee of an actionable claim shall

take it subject to all the liabilities and equities 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 i ndebted 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.

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.

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.

2
[ 135. Assignment of ri ghts under policy of insurance against fire. — 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 had been made with himself.]

135A.
1
[* * * * * * * ]

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 t hrough him, any actionable claims, so dealt with by

him as aforesaid.

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,

dockwarrant, warehousekeeper’s certificate, railway receipt, warrant or order for the delivery of

goods, and any other document used in the ordinary course of business as p roof of the possession or

control of goods, or authorizing or purporting to authorize, either by endorsement or by delivery, the

possessor of the document to transfer or receive goods thereby represented.]

___________

1
R epealed by the Marine Insurance Act , 2018 (Act No. V of 2018 ) , s. 92.

2
Subs. by Act No. VI of 1944 , s. 3 .

Page 56 of 56

THE SCHEDULE

Year and chapter Subject Extent of repeal

(a) STATUTES

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 Mary, c.16 Clandestine mortgages The whole.

(b) ACTS OF THE GOVERNOR GENERAL IN COUNCIL

1
[ * * ]
1
[ * * ]
1
[ * * ]

1
[ * * ]
1
[ * * ]
1
[ * * ]

XI of 1855 Mesne profits and improvements. Section 1; in the title, the words

“to mesne profits and,” and in

the preamble “to limit the

liability for mesne profits and”.

XXVII of 1866
2
[ * ] Trustee Act Section 31.

IV of 1872 Punjab Laws Act So far as it relates to Bengal

Regulations I of 1798 and

XVII of 1806.

2
[ * * ]
2
[ * * ]
2
[ * * ]

2
[ * * ]
2
[ * * ]
2
[ * * ]

I of 1877 Specific Relief . . In sections 35 and 36, the

words “in writing”.

3
[ * * ]

________

5626363 Date: 21 - 01 - 2025

1
O mitted by the Central Laws (Sta tute Reform) Ordinance, 1960 ( Ordinance No. XXI of 1960), s. 3 and 2nd Sch. ( with effect from the 14
th
October,

1955).

2
R epealed by the Federal Laws (Revisi on and Declaration) Act, 1951 ( Act No. XXVI of 1951), s. 3 and 2nd Sch.

3
O mitted by the Federal Laws (Revision and Declaration) Or dinance, 1981 ( Ordinance No. XXVII of 1981), s. 3 and 2nd Sch.