Category Archives: Law of Property And Easement

What do you understand by “memorandum of association” of company. (2017)

The Memorandum of Association is a document which sets out the constitution of a company and is therefore the foundation on which the structure of the company is built. It defines the scope of the company’s activities and its relations with the outside world.

The first step in the formation of a company is to prepare a document called the memorandum of association. In fact, memorandum is one of the most essential pre-requisites for incorporating any form of company under the Act. This is evidenced in Section 3 of the Act, which provides the mode of incorporation of a company and states that a company may be formed for any lawful purpose by seven or more persons, where the company to be formed is a public company; two or more persons, where the company to be formed is a private company; or one person, where the company to be formed is a One Person Company by subscribing their names or his name to a memorandum and complying with the requirements of this Act in respect of its registration.

To subscribe means to append one’s signature or mark a document as an approval or attestation of its contents.

According to Section 2(56) of the Companies Act, 2013 “memorandum” means the memorandum of association of a company as originally framed and altered from time to time in pursuance of any previous company law or this Act.

Section 4 of the Act specifies in clear terms the contents of this important document which is the charter of the company. The memorandum of association of a company contains the objects to pursue which the company is formed It not only shows the objects of formation but also determines the scope of its operations beyond which its actions cannot go. “THE MEMORANDUM OF ASSOCIATION”, observed Palmer, “is a document of great importance in relation to the proposed company”.

FORM OF MEMORANDUM OF ASSOCIATION

Section 4(6) of the Companies Act, 2013 provides that the memorandum of association should be in any one of the Forms specified in Tables A, B, C, D or E of Schedule I to the Act, as may be applicable in relation to the type of company proposed to be incorporated or in a Form as near thereto as the circumstances admit.

(i) The Form in Table A is applicable in the case of companies limited by shares;

(ii) the Form in Table B is applicable to companies limited by guarantee not having a share capital;

(iii) the Form in Table C is applicable to the companies limited by guarantee having a share capital;

(iv) the Form in Table D is applicable to unlimited companies not having a share capital;

(v) the Form in Table E is applicable to unlimited companies having a share capital.

A company shall adopt any of the model Forms of the memorandum of association mentioned above, as may be applicable to it.


What is an Easement?

An easement is a legal right to use another’s land for a specific limited purpose. In other words, when someone is granted an easement, he is granted the legal right to use the property, but the legal title to the land itself remains with the owner of the land. Most commonly, easements are granted to utility companies to run power lines and cable lines. However, you may also grant an easement to your neighbor if your property is in the way of his access to a road, or to anyone else who needs to have a legal right to access your land.

Easement Appurtenant

Easements are classified as “appurtenant” or “in gross.” Easements classified as “appurtenant” are said to “run with the land,” which means they are part of the formal ownership of the land. For instance, if a neighbor, Sam is granted an easement known as an easement appurtenant to move his car in and out of the neighbor’s driveway, when Sam sells his property, the new owner also has the limited right to continue to have access to a neighbor’s driveway. In addition, both Sam and future property owners can use the neighbor’s driveway in only the limited manner arranged between the underlying land owner and original grantee of the easement. In this example, the neighbor, known as Joe, granted neighbor Sam an express (formally spelled out) easement which provided Sam with the limited right to use the driveway to move his car. Neither Sam nor future owners can use the driveway for other purposes such as playing basketball with his kids. A title search by a prospective owner of the underlying property would reveal an easement appurtenant.

Easement In Gross

An easement in gross is a personal easement that does not transfer with the property. For instance, if neighbor John grants Tom access to the beach by crossing over John’s property, when Tom sells his land, the new owner is not legally entitled to cross John’s property. The new owner does not have an easement to get to the beach through John’s land. A title search would not show an easement in gross.

If you are considering a real estate transaction that includes an easement or are considering creating an easement, it is best to get advice from a real estate attorney.

What is easement?

According to the Indian Easement Act, when a dominant owner (Gupta in this case) has enjoyed air and light and passage continuously for a period of two decades, he has a valid right on them without any condition or restriction. And, if a servient owner (Kant in this case) has to build a property that would hinder the dominant owner’s right in anyway, the servient owner will have to take the former’s permission for it.

An easement could be permanent or temporary, for a specific event or seasonal.

  • However, an easement does not mean transfer of property. It can be made, altered or released.
  • It must be in a written form, with easement by custom being the only exception.
  • A servient owner is not obliged to do anything for the advantage of the dominant heritage. He has no liability to construct a way for the use of the dominant owner or to carry out repairs in case of any damage to the passageway.
  • As the holder of the property, a servient owner is free to use the servient heritage in any manner but his acts should not dilute the rights of the dominant owner.

Doctrine of Lis Pendens

When there is a litigation between two person in regard to some immovable property and one of them transfer the subject-matter of the litigation, a conflict may arise between the right of the transferee and the rights of the parties as declared by the decree of the court. Section 52 of  the Transfer of Property Act,1882 provides the doctrine of lis pendens, i.e., ‘pending litigation.’

Section 52 Transfer of Property pending suit relating thereto – During the pendency in any court having authority within the limits of India excluding the State of Jammu and Kashmir or established beyond the limits of the Central Government, of any suit or proceeding which is not collusive and in which any right to immovable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so to affect the right 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.

Explanation- For the purpose of this section, the pendency of a suit or proceeding shall be deemed to commence from the date of the presentation of the plaint or the institution of the proceeding in a court of competent jurisdiction and to continue until the suit or proceeding, has been disposed of by a final decree or order and complete satisfaction is 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.”

The doctrine of lis pendens is expressed in the well-known maxim; ‘pendente lite nihil innovature’which means ‘during pendency of any suit regarding title of a property, any new interest in respect of that property should not be created. The effect of the applicability of the doctrine is that it does not annul the conveyance, but only renders it subservient to the rights of the parties to the litigation. The transferee will be bound by the result of the suit or proceeding, whether or not he had notice of the suit or proceeding.

The principle is explained in Bellamy v. Sabine, (1857) 1 Dec. & 566, where Turner, L.S  said, it that doctrine rests upon this foundation that, it would plainly be impossible that any action or suit could be brought to a successful termination if alienations pendente lite were to allowed prevail. The plaintiff would be liable in every case to be defeated by the defendants, alienating before the judgment or decree and would be driven to commence his proceeding de novo  subject again to the same course of proceeding.”

The doctrine is based upon expediency and it is immaterial whether the transferee pendente lite had or had not notice of the suit. This doctrine had been fully expounded by the Privy Council in Faiyaz Hussain Khan v. Prag Narain, (1907) 29 All 339 PC where their lordship quote with approval the observations of Lord Justice Turner is Bellamy’s case.

The rule of Lis pendens is based on the necessity for final adjudication. It aims at the prevention of multiplicity of suits or proceedings. For applicability of the- doctrine, folios° conditions must be fulfilled:

  • There must be pendency of a suit or proceeding.
  • The suit or proceeding must be pending in a competent court.
  • The suit or proceeding must not be collusive.
  • A right to immovable property must be directly and specifically in question in that suit or proceeding.
  • The property in dispute must be transferred or otherwise dealt with by any party to the litigation.
  • The alienation must effect the right of the other party.

Pendency of a Suit/Competent Court

Explanation to Section 52 provided that the pendency of a suit or proceeding beings from the date of the presentation of the plaint or institution of the proceeding in court of competent jurisdiction. In case the plaint is presented in a wrong court, and a transfer takes place during such pendency, the doctrine of lis pendens would not be applicable.

In Mahendra Nath v. Parineswar, (1921) 60 IC 439, it was held that if the plaint is insufficiently stamped and is rejected and then represented after making good the deficiency, a transfer between the two dates of presentation would not subject to lis pendens.

The pendency of the suit continue until the suit or proceeding has been disposed of by a find decree or order and complete satisfaction or discharge of such decree or order has been obtained or has become unobtainable by reason of the expiration of any period of limitation prescribed (Explanation).

Bona Fide Litigation

The suit or proceeding must not be collusive. A collusive suit is one in which there is a fraudulent secret understanding between the plaintiff and the defendant that the suit would not be contested with a view to defeat the right of transferee of either parties.

Right to Property must be in Dispute Right

Right of an immovable property must be directly and specifically in issue in the suit or proceeding, e.g., a suit on mortgage, for partition for specific performance of a contract to transfer immovable property, etc.

Transfer by a Party to the Litigation

The property must be transferred or otherwise dealt with by any of the parties to the suit or proceeding. Doctrine of lis pendens cannot extend to person whose title is paramount to that of the parties to the suit, e.g., M grants a lease to N of certain land. N files a suit for ejectment against O who is in wrongful possession of the land. During the pendency of suit, M sells the land to P. The doctrine of lis does not apply to this sale by M to P.

Transfer must Effect the Other Party

In Sripal Snigh v Naresh, (1925) Pat 239, it was held that the doctrine is not applicable where in the right of the transfer alone are affected and not other party to the suit.

Exception

Section  provides that it is open to court to permit any party to the suit to transfer the property to on  terms which  it may think fit to impose.

In Amarnath v. Deputy Director of Consolidation, AIR 1985 All 169 it was held that  party  is said to be party to the suit, if the decision or judgement is likelt to affect the share of such a party and the decision would be binding on him too. Thus A,B,C, are brother ;C is residing in a distant town while A and B are residing together.  A files a suit for partition and does not implead C or his father X. Though X and C are not parties to the suit, yet the subject matter of suit is the same, and neither X nor C legally and validly transfer or alienate his share to a third party. In such case the ultimate decree is likely to affect the shares of X and C too. Thus, there may be case where a party may not be locked in a civil suit or proceeding; yet such a party may be affected by the judgment/decree is such a suit.

In Fayaz Husain Khan v. Prag Narain, (1907) 29 All 339, a mortgage sued to enforce his mortgage, but before the summons were served, the mortgagor effected a subsequent mortgage. The prior mortgagee continued his suit and obtained a sale order from the court, without making the subsequent mortgagee, a party to the suit. It was hold that the sale extinguished the subsequent mortgagee’s right to redeem the prior mortgagee.


Immovable property

Definition in Section 3 is not exhaustive. It says only that ‘immovable property’ does not include standing timber growing crops or grass. Definition of immovable property in Section 3(26) of General Clauses Act, 1897, is also not exhaustive. It defines immovable property as it shall include land, benefits to arise out of land, and things attached to earth. Thus we find that while Transfer of property excludes certain things. General Clauses Act, includes certain things under the head ‘immovable property’. By combing both definitions, we may say that, the term includes land, benefits to arise out of lands, and things attached to the earth, except standing timber, growing crops and grass.

      (A)Land: It means a determinate portion of the earth’s surface, which may be covered by water, the column of surface above the surface, the ground beneath the surface. All the objects which are on or under the surface in its natural State are included in the term land. Also all objects placed by human agency on or under the surface with the intention of permanent annexation are immovable property, e.g., Building, wall, fences.

     (B) Benefits to arise out of land: Apart from physical point of view, every benefits arise out of land is also regarded as immovable property. Registration Act also includes as immovable property benefits to arise out of land, hereditary allowances, right of way, lights, ferries and fisheries. In Anand Behera v. State of Orissa, AIR 1956 SC 17, the right to catch away fish from chilka lake, over   a number of years, was held to be an equivalent of profits a pendre in England and a benfits to arise out of land in India. Similarly, a right to collect a rent and profits of immovable property, right to collect dues from a fair or heat or market on a land are immovable property.

 (C)Things attached to earth: Section 3 of transfer of property defines the expression ‘attached to earth’ as including (1) things rooted in the earth, (2) things embedded in the earth, (3) things attached to what is so embedded, and (4) chattel attached to earth or building.

(1) Things rooted in earth include trees and shrubs, except standing timber, growing crops and grasses (Section 3, TPA). Whether tress regarded as movable or immovable depends upon the circumstances of the case. If the intention is that trees should continue to have the benefit of further sustenance or nutriment by the soil (land), e.g., enjoining their fruits, then such tree is immovable property. But if the intention is to oust them down sooner or later for the purpose utilizing the wood for building or other industrial purpose, they would be timber and of accordingly be regarded as movable property (Shantabai v. State of Bombay, AIR 1958 SC 532) determining whether the tree is movable or immovable, the intention if party is important if the parties intend that the tree should continue to have the benefit of further nutriment to be afforded by soil, the tree is immovable property. But if intention is to withdraw the tree from land, and the land is providing it only as a warehouse, it is to be treated as movable property.

(2)Things embedded in earth: It includes such things as house, buildings, etc., however certain things like an anchor imbedded in the land to hold a ship is not an immovable property’  to determine whether such things are movable or immovable property, depends upon circumstances of each case and there are two main conditions to indicate intention:

  • the degree or mode of annexation, e.g. tie-up seats fastened to the floor of cinema halls are immovable property on brick-work and timber and tapestries;
  • the object of annexation, for, e.g., Blocks of stone placed one on the top of other without any mater or cement for the purpose of forming a dry wall, will become part of land, so immovable property, but not the stones deposited in the builder’s yard.

(3) Things attached to what is so embedded must be for the permanent beneficial enjoyment  of the to which it is attached, as section says for, e.g., door and windows of a house are immovable property to be permanent, like electric fans or window blinds, they are movable property.

(4)Chattel attached to earth or building if a chattel, i.e., movable property is attached to earth or building, if is immovable property. The degree, manner, extent and strength of attachment are the main features to be regarded in determining the question. Standing timber, growing crops and grasses are regarded as severable from land and they are regarded as movable property. However if they and the land on which they stand is sold, such standing timber, growing crops or grasses will pass to purchases.

(d) Standing timber: The word standing timber includes Babool Tree, Shisham, Nimb, Papal Banyan, Teak, Bamboo, etc. The fruit berating tree like Mango, Mahua, Jackfruit, Jamun, etc., are not standing timber, and they are immovable properties ( Fatimabibi v. Arrfana Begum, AIR 1980 All 394). But if intention is to cut them down sooner or later for the purpose utilising them as timber, and not to use them for the purpose of enjoying their fruits, they are regarded as movable property. (T.A. Sankunni v. B.J. Philips, AIR 1972 Mad 272).

 (e) Growing crops: Growing crops includes creepers like pan, angoor, etc., millets (Wheat, Sugarcane, etc.), Veg like Lauki, Kaddo, etc. These crops don’t have any own independent existence beyond their final produce.

(f) Grasses: It can only be used as fodder, and no other use is possible. Therefore it is movable. But a contract to cut grass will be an interest in chattel, so is immovable property. The following has been judicially recognised as immovable property:

(1) Right to collect rent of immovable property.

(2) Right to dues from a fair on a piece of land.

(3) A right of fisheries.

(4) A right of terry.

(5) A right of way.

(6) Hereditary offices.

(7) The interest of a mortgagee in immovable property.

Minerals: Upon transfer of immovable property, things not only rooted to it, but also anything found deep down below the property goes along with the transfer. All minerals below the land sole are immovable property.

Movable Property

Transfer of property does not define movable property. In General Clauses Act, it is defined as “Property of every description except immovable property”. Some examples are right of worship, royalty, machinery not attached to earth which can be shifted, a decree for arrear of rent