Abstract
Sec 100 of Transfer of Property Act, 1882 deals with concept of charge on immovable property, a security interest falling short of mortgage yet secures interest of the creditor. This doctrinal analysis undertakes a critical study of section 100 through statutory interpretation,judicial precedent and comparative analysis ofconcepts like mortgage and lien. The research analyses essential elements of valid charge,its creation either through operation of law or act of parties. There is no note on how the transferee for consideration without notice is protected. The research further evaluates formalities like requirement of registration, notice and enforceability of charges, their priority and the extent to which equitable principles apply to charge. This article also covers the procedural aspect through analysis of Civil Procedure Code, 1908 in relation with section 100 of Transfer of Property Act, 1882.
Keywords: Charge, security, mortgage,extinguishment, notice, creditor, attestation, priority.
INTRODUCTION
According to the Osborn’s Dictionary in Property Law,“Charge” is defined as a form of security for payment of debt or the performance of an obligation, involving the right of the creditor to receive payment out of the proceeds of the sale of specific property. Section 100 of the Transfer of Property Act, 1882 deals with charge on immovable property.Charge can be defined as creation of security over an immovable property for payment of money advanced. Though it has similar characteristics as a simple mortgage, it doesn’t amount to a mortgage. Theproviso to section 100 clarifies that the provision does not apply to charges created in case of charge over trust property and that a transferee for consideration who acquires the property without notice of charge is protected.[1] The essentials for creation of charge are intention, identification of specific immovable property, notice and the conditions analogous to simple mortgage. A charge may be created by the act of parties or operation of law. The extinction of charge is done by novation, merger and by act of parties. With respect to priority between charges, the law mandate registration and its role in priority between charges. It further draws a distinction between a charge and a mortgage, as well as a charge and a lien. In conclusion, the article elaborates on procedural aspect of Charge under Civil Procedure Code.
[1] Section 100 of Transfer of Property Act, 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 provision herein before applied to simple mortgage, so far as may be applies to 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,[and, save as otherwise expressly provided by any law for the time being in force, no charge shall be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of the charge].