MAXIMS OF EQUITY

Equity is not only an exclusive, consistent system or an articulate body of law but at the same time the equity law was not based on any arbitrary rule but was based on certain general principles granted by court of chancery which governed its jurisdiction. Equity is not a set of nebulous ideas but is well crystallized set of laws known as general principles which are embodied in its twelve maxims.

These maxims are of new genesis, even though these maxims do not point out to the origin of equity law, Hanbury points out, they are the fruits of observation of developed equitable doctrine and the ideas embodied in them are far older than their articulate expression.

The relation between law and equity, referring to the appropriate maxims on the point

Common law- The term "common law" signifies a law common to the whole British country. It is that part of the law of England created, refined and executed "by the old common law courts, which was based on the custom of the country and originally unwritten. The common law was created after the Norman conquest because of a strong Central Government and the extensive use of prerogative of the King.

Sl. No.	common law	equity
1.	The parties in a court of law were called Plaintiff and Defendant,	While the parties in a court of equity were called Suitors or Petitioners and Respondents.
2.	In a court of common law the plaintiff was entitled to only those reliefs which had been recognized by the law.	But in a court of equity, the relief to the suitor depended upon the court's grace. This means that the court would provide only that relief which the law did not provide but the King could by the exercise of his prerogative power of the relief.
3.	While granting relief to the Plaintiff and Defendant, a court of common law does not take into consideration his conduct in the matter	But the court of equity used to take into consideration suitor's conduct.
4.	The origin to common law is in the feudal customs.	While equity's origin is to Roman and Canon law.
5.	The legal title to the property was altered by the judgments of the common law courts. In equity, the property is transferred not by the order or decree of the court but by the conveyances made by the parties.
6.	The common law courts had both civil and criminal jurisdiction	While the equity courts had only civil jurisdiction.
7.	To sum up, Common law differs from equity in the sense that it comprised the body of rules administered by the common law courts.	Equity consisted of that portion of natural justice which although of a nature suitable for judicial enforcement, was for historical reasons not enforced by the common law courts and was enforced by the Court of Chancery.

The defects and rigidity of the old common law gave rise to equity. The difference between common law and equity has very well been summarized by Underhill in these words:

"Equity was originally the revolt of commonsense against the pedantry of law, and trammels of the feudal system, it became a highly artificial and refined body of legal principles and it is at the present day an amendment and modification of common law."

Statute law consists of the law down in Acts of Parliament while common law, as stated above, was based on the common custom of the country and was originally unwritten.

Common law also differs from special law, which is the law Administered in special courts, such as ecclesiastical law.

Common law also differs from civil law, which was the law of Rome.

Does the distinction exist in India? In India the distinction between equity and law does not exist. The equitable jurisdiction is vested in the general courts.

Dr. Banerjee observed that "the administration of justice in India does not suffer by reason of any unnatural divorce between law and equity."

High Courts in India have all the powers of a court of Equity in England of enforcing their decrees in personam. The proviso to S. 16 of the Code of Civil Procedure affords an application of the maxim "Equity acts in personam."

Statutory recognition of the principles of equity is found in the Specific Relief Act, the Indian Trusts Acts, Transfer of Property Act, Indian Succession Act, etc.

There is no recognition of any distinction in India between legal and equitable title or between legal and equitable property rights since the passing of the Transfer of Property Act.

1. "Equity will not suffer a wrong to be without a remedy."

This maxim offers the main crucial point of the total jurisdiction of equity laws. Every right will be applied and wrong amended by equity laws if it is to be dispensed by common law. No wrong should be permitted to remain un-redressed if it is capable of being remedied by courts of justice. Ubi jus ibi remedium, i.e., where there is a right there is a remedy. Rights and remedies co-exist. One cannot exist without the other. Thus it was held by Chief Justice Hall in the case of Ashby V. White (1 Sm. L.C., 11th Ed 240) that when the law clothed a man with a right he must have a means to vindicate and maintain it, and remedy if he is injured in the exercise and enjoyment of it; and indeed it is a vain thing to imagine a right without a remedy, for want of right and want of remedy are reciprocal. The common law courts failed to remedy wrongs either because the remedy was not available or the relief granted by them was inadequate or the procedure was defective. This led to the establishment of the court of chancery for the redressal of wrongs that remained un-redressed by the common law courts. But there was a limitations to this maxim in that it did not provide remedy for all un-redressed wrongs. It applied only to rights or wrongs which although capable of being judicially enforced were left un-redressed at common law owing to some technical defect. The maxim clearly left out of its purview moral rights and wrongs, for equity did not give any relief where there was no invasion of any legal or equitable right.  

Acting upon this maxim the court of chancery exercised its exclusive and auxiliary jurisdiction. The chancery court gave relief and enforced trust uses under its exclusive jurisdiction and because the common law courts did not recognize the equitable right or interest. Thus where the land was given by A to B for the use of or on trust for C and if B kept the benefit of the land to himself the common law provided no remedy to C. But equity gave redress to C holding that such an abuse of confidence was a distinct wrong capable of remedy. Under its concurrent jurisdiction the court of chancery contributed something to the legal doctrine for although the common law courts recognized the right but did not give adequate remedy. It gave relief by ordering specific performance of the contract Again, if a successful plaintiff could not have legal execution against the property of the judgment-debtor because of his equitable interest only, i.e., a mere equity of redemption, the court of chancery granted equitable relief by the appointment of a receiver and, if necessary by issuing an injunction restraining the debtor from dealing with the property. Finally, under the auxiliary jurisdiction the equity court lent its aid in matters of procedure, e.g., ordering production of evidence which might be required in an action at law and thus helped the suitors in the enforcement of their legal rights.

The maxim ubi jus remedium finds place in many Indian enactments also. The Specific Relief Act is replete with equitable remedies, such as specific performance of contracts, rectification of instruments, rescission of contracts, cancellation of instrument, declaratory decrees, injunctions, etc. The Indian Trusts Act deals with trusts.

limitations.-This maxim is subject to the following qualifications:

(1) It did not provide remedy for all wrongs. The maxim clearly left out of its purview moral rights or wrongs incapable of enforcement for equity did not give any relief where there was no invasion of any legal or equitable right.

(2) It did not apply where the party had destroyed, lost or waived his right to an equitable remedy by his own act or latches.

(3) It did not apply where the right and the remedy fell within the exclusive domain of common law Courts.

Recognition

i) The Trust Act

ii) Section 9 of CPC- entitles a civil court to entertain all kinds of suits unless they are prohibited.

iii) The Specific Relief Act- provides for equitable remedies like specific performance of contracts, injunction, declaratory suits.

2. "Equity follows the law."

Equity had not come to spoil the law, but to make it complete. Every jot and every title, observes Maitland, of the law was to be obeyed, but when all this had been done something might yet be needful, something that equity would require. In such cases equity frees the law against the abuses of the common law, but never did it contradict or override the express provisions of the law.

Story in describing the maxim observes that where a rule, either of the common or the statute law, is direct, or governs the case with all its circumstances, on the particular point, a court of equity is as much bound by it as a court of law, and can as little justify a departure from it. The court of chancery also never claimed to override the express provisions of the common law. The maxim may be examined in relation to legal estates, rights and interests and in relation to equitable estates and rights.

As regards legal estates, rights and interests, the court equity had no option to depart from the legal principles where the common law or the statute law was clear on the point. Thus where a person died intestate, according to the old rule of primogeniture the eldest son was entitled to the whole real estate to the exclusion of younger sons and daughters. Equity in this case followed the law implicitly and did not grant relief to the other children although it meant hardship to them. Equity in such a case interfered only when the party seeking relief had been guilty of fraud. Thus if the eldest son had induced the father not to make a will by agreeing to divide the real estate with his brothers and sisters, equity would interfere 'and compel the eldest son to carry out his promise for it would be against conscience to allow him to keep the benefit of a legal estate which he obtained by making out a promise.

As regards equitable estates and interests, equity, though not bound by the rules of law, acted on an analogy with legal rules where such analogy existed. Lord Hardwicke observed that it is the maxim of the court of chancery that trust estates, which are the creatures of equity, shall be governed by the same rules as legal estate, in order to preserve the uniform rule of property. Equitable estates are thus guided by the same rules of descent as legal estates Little was, however, left, in regard to this maxim since the passing of the Law of Property Act, 1925, which cut down the list of legal estates to the fee simple absolute in possession, giving over to equity all particular estates and all future estates of freehold. Similarly, rules regarding the construction of covenants are the same in equity as at law. In matters of limitation also equity follows the law, and a period of limitation prescribed for a suit, appeal or application by a statute could not be abridged or enlarged by the rules of equity the only exception which has been engrafted to the above rule is found in the statute itself. For example, section 18 of the Indian Limitation Act provides that the right of a party defrauded cannot be affected by the lapse of time so long as he remains without any fault of his own in ignorance of the fraud committed on him.

It is apparent from the above that equity follows the law a where a rule of the common or statute law is clear and applicable to the case. But this maxim is subject to the previous maxim that equity will not suffer a wrong to be without a remedy and every right will be enforced and wrong redressed by equity if not by common law if it is capable of being remedied by courts of justice.

At common law, where a person died intestate who owned an estate in fee-simple, leaving sons and daughters, the eldest son was entitled to the whole of the land to the exclusion of his younger brothers and sisters. This was unfair, yet no relief was granted by Equity Courts. But in this case it was held that if the son had induced his father not to make a will by agreeing to divide the estate with his brothers and sisters, equity would have interfered and compelled him to carry out hi promise, because it would have been against conscience to allow the son to keep the benefit of a legal estate which he obtained by reason of his promise. This decision was held in Stickland v. Aldridge.

Equity follows the law and even if by analogy law can be followed, it should be followed.

Limitation

i) Where a rule of law did not specifically and clearly apply

ii) Where even by analogy the rule of law did not apply

Exceptions.-The maxim did not apply in two classes cases:

(1) Where the rules of law were not directly applicable nor were binding by specifically and clearly way of analogy, equity followed its own code of principles.

(2) When the equity court follows the rules of law right, it would follow them but then it would likewise go beyond them.

Recognition

In India has it is not recognized the well-known distinction between legal and equitable interests. Equity rules in India, therefore, cannot override the specific provisions of law. As for example, every suit in Bangladesh has to be brought within the limitation period and no judge can create an exception to this or can prolong the time-limit or stop the rule from taking effect on principles of equity. Such a decision was held in Indian Appa Narsappa Magdum case.

3. "Equity follows the law."

Story in elucidation of the maxim observes that where a rule, either of the common or the statute law, is direct, and governs the case with all its circumstances, on the particular point, a court of equity is as much bound by it as a court of law, and can as little justify a departure from It. The court of chancery also never claimed to override the express provisions of the common law. We have seen earlier that the relation between common law and equity was not that of conflict. Equity had not come to destroy the law, but to fulfill it. Every jot and every title, observes Maitland, of the law was to be obeyed, but when all this had been done something might yet be needful, something that equity would require. In such cases equity relieved against the abuses of the common law, but never did it contradict or override the express provisions of the law.

The maxim indicates the discipline which the Chancery Courts observed while administering justice according to conscience. As has been observed by Jekyll. M.R: ‘The discretion of the court is governed by the rules of law and equity, which are not to oppose, but each, in turn, to be subservient to the other.” Maitland said, “Thus equity came not to destroy the law but to fulfill it, to supplement it, to explain it.” The goal of equity and law is the same, but due to their nature and due to historic accident they chose different paths. Equity respected every word of law and every right at law but where the law was defective, in those instances, these Common Law rights were controlled by recognition of equitable Rights. Snell therefore explained this maxim in slightly different way: “Equity follows the law, but not slavishly, nor always.”

The maxim may be considered in relation to legal estates, rights and interests and in relation to equitable estates and rights.

As regards legal estates, rights and interests, the court equity had no option to depart from the legal principles where the common law or the statute law was clear on the point. Thus where a person died intestate, according to the old rule of primogeniture the eldest son was entitled to the whole real estate to the exclusion of younger sons and daughters. Equity in this case followed the law implicitly and did not grant relief to the other children although it meant hardship to them. Equity in such a case interfered only when the party seeking relief had been guilty .of fraud. Thus if the eldest son had induced the father not to make a will by agreeing to divide the real estate with his brothers and sisters, equity would interfere 'and compel the eldest son to carry out his promise for it would be against conscience to allow him to keep the benefit of a legal estate which he obtained by making out a promise.

As regards equitable estates and interests, equity, though not bound by the rules of law, acted on an analogy with legal rules where such analogy existed. Lord Hardwicke 'observed that it is the maxim of the court of chancery that trust estates, which are the creatures of equity, shall be governed by the same rules as legal estate, in order to preserve the uniform rule of property.

Equitable estates are thus guided by the same rules of descent as legal estates Little was, however, left, in regard to this maxim since the passing of the Law of Property Act, 1925, which cut down the list of legal estates to the fee simple absolute in possession, giving over to equity all particular estates and all future estates of freehold. Similarly, rules regarding the construction of covenants are the same in equity as at law. In matters of limitation also equity follows the law, and a period of limitation prescribed for a suit, appeal or· application by a statute could not be abridged or enlarged by the rules of equity The only exception which has been engrafted to the above rule is found in the statute itself. For example, section 18 of the Indian Limitation Act provides that the right of a party defrauded cannot be affected by the lapse of time so long as he remains without any fault of his own in ignorance of the fraud committed on him.

It is apparent from the above that equity follows the law where a rule of the common or statute law is clear and applicable to the case. But this maxim is subject to the previous maxim that equity will not suffer a wrong to be without a remedy and every right will be enforced and wrong redressed by equity if not by common law if it is capable of being remedied by courts of justice.

Exceptions.- The maxim did not apply in two classes cases:

(1) Where the rules of law were not directly applicable nor were binding by way of analogy, equity followed its own code of principles.

(2) When the equity court follows the rules of law, it would follow them right; but then; it too would likewise go beyond them.

 4. Doctrine of Equality

(i) Where there is equal equity the law shall prevail; and

(ii) Where the equities are equal, the first in time shall prevail.

Since these two maxims raise the same question of priority it will be convenient to discuss both of them together.

Plato defined that “If you cannot find any other, equality is the proper basis.” This maxim is also explained as “equity delighteth in equality”, which means that as far as possible equity would put the litigating parties on an equal level so far as their rights and responsibilities are concerned.

Justice Fry said, “When I say equality, I do not mean equality in its simplest form, but which has been sometimes called proportionate equity.”

Application of this maxim can be understood from the following:

i)    Equity’s dislike for joint tenancy and presumption of tenancy-in-common

ii)   Equal distribution of joint funds and joint purchases

iii)   Contribution between co-trustees, co-sureties and co-contractors

iv) Ratable distribution of legacies

v)   Marshalling of assets

The first maxim lays down that as between holders of equal equities the one who can get in legal estate will gain priority while the purport of the second maxim is that as between equitable mortgages the first in time prevails. Suppose a person mortgages his property successively to A, B, C, D and E. In such a case the legal estate in the property resides in A and the equitable estate in that property resides in B, C, 0 and E. Now if D wants to realize the mortgages he must redeem A, B, and C and foreclose E and the mortgagor. As a broad proposition it may be said that a person in possession of the legal estate, has priority over a person having only equitable estate on the basis of the earlier maxim discussed, viz., and “equity follows the law." And if .none has the legal estate then as between persons holding equitable interest the first in time ranks priority.

The principles of the above two maxims are enshrined in section 48 of the Transfer of Property Act, which lays down that where a person purports to create by transfer at different times rights in or over the same immovable property, and such rights cannot all exist or be exercised to their full extent together, each later created right shall, in the absence of a special contract or reservation binding the earlier transferees, be subject to the rights previously created. The general rule is that mortgages rank in order of priority. But this is subject to section 78 of the same Act, which lays down that this priority may be lost if 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 and in such a case the prior mortgagee shall be postponed to the subsequent mortgagee.

An interesting question of priority arose in Cave v. Cave, (1880, 15 Ch. D. 639) where A, trustee of certain property for B mortgaged it first to C, and then to D. C, being the bona fide purchaser for value of the legal estate, ranked first, but as between B, the beneficiary, and D, the former was preferred not because a cestui que trust was, as such, necessarily to be preferred to an equitable mortgagee, but simply because his equity was prior in point of time of two equities which were in other respects equal.

The above two maxims may now be discussed from four possible combinations of circumstances in which the question of priority might crop up.

A. Two legal rights

It is an established rule of law that as between the two legal rights, the first in time prevails.

B. Prior equitable and subsequent legal estate

An equitable right will be impotent against a purchaser of the legal estate, who has acquired the property for valuable consideration without notice of a prior equitable right. A, the owner of an estate, contracts with B to sell it to him, while the contract is in force, A sells the property to C and conveys the same to him, i.e. transfers the legal estate to C, who purchases It for valuable consideration without notice of B's equitable interest, i.e. without notice of any contract existing between A and B In regard to the same property C is entitled to priority over B. Such a purchaser takes a perfect title with the advantages that a perfect title Implies. He can pass on the title free from the equity to a purchaser even with notice.

In this connection the following points need special attention

1. Volunteer

The purchaser must have given value for acquiring the property, although it need not be shown that there was adequate consideration. A volunteer always acquires the property subject to any equitable rights attaching to the property, whether he had notice of them or not.

2. legal Estate

In order to acquire perfect title it is necessary that the subsequent purchaser must have obtained a legal estate.

3. Notice

Notice means knowledge of fact which would make any rational man act with reference to the knowledge so acquired. A person is said to have notice of a fact when he actually knows that fact, or when, but for willful abstention from an inquiry or search which he ought to have made, or gross negligence, he would have known it.

A Notice may be actual or constructive.

Actual Notice

Actual notice is notice whereby a person actually knows that fact. Actual notice must be definite, given in the same transaction or in the course of the negotiations and given to the person in the character in which such notice must affect him and not in any lither character.

Constructive notice

Constructive notice is that knowledge which the court imputes to a person from the circumstances of the case, upon a presumption so strong that the knowledge must exist though It may not ha1le been formally communicated. The knowledge of the fact is presumed or imputed by law

(1) Where here is willful abstention from inquiry or search which ought to have .been made; as where a purchaser designedly abstains from inquiries In order to avoid notice;

(2) Where there is gross negligence of a degree that a court may treat as evidence of fraud, as failure to call for the documents of the property;

(3) Where there is registration of an instrument relating to immovable property which is required by law to be registered;

(4) Where there is actual possession of a person other than the seller. Any person acquiring an immovable property shall be deemed to have notice of the title, if any  of a person who is for the time being in actual possession thereof;

(5) Where there is notice to agent,

(a) Who acquires the notice during the course of the agency ;

(b) The knowledge must have come to him as an agent;

(c) The fact must be material to the business for which the agent is employed, and

(d) The fact must not have been fraudulently withheld from the principal.

The doctrine of notice, which has acquired statutory recognition in India under section 3 of the Transfer of Property Act, lays down that a person who purchases an estate although for valuable consideration, after notice of prior equitable right, takes subject to that right.

The doctrine of notice, therefore, binds a purchaser not only by equities which he discovered on investigation but also by the equities which he would have discovered on exercising reasonable diligence. He is, therefore, affected not only by actual notice but also by constructive notice. And if the purchase was effected through an agent, notice to the agent is notice to the purchaser. Here also the purchaser was bound not only by the equities which the agent actually discovered but also by those which he ought to have discovered if he had used normal prudence and diligence. This type of notice is technically called Imputed notice.

To sum up, three conditions must be fulfilled to afford protection against a prior equitable interest:

(1) The purchaser must have obtained the legal estate;

(2) He should have given value of the property and should not be merely II volunteer; and

(3) He must have had no notice of the existence of equitable interest at the time of giving his consideration for the conveyance.

Exception.-The doctrine of notice has no application to the case of a subsequent transferee from a bona fide purchaser for value without notice.

C. Prior legal and subsequent equitable estate

 Where a legal mortgage is followed by an equitable mortgage, in the vast majority of cases the legal mortgage would rank first. Thus if A mortgages certain property to B and subsequently he creates another mortgage on the same property in favour of C giving the latter an equitable interest, B has priority over C unless B has been guilty of fraud or gross negligence bordering on fraud, i.e., failure to obtain the title deed relating to the mortgaged property. If, therefore, B's conduct, after he acquired the legal estate, led to the creation of C's equitable estate, then B forfeits his priority to C. But the court will not postpone a legal mortgagee to a subsequent equitable mortgagee on the ground of any mere carelessness or want of prudence on the part of the legal mortgagee. His rights are postponed only if he has been guilty of fraud or negligence, so gross as to render it unjust to allow him to retain his priority.

In India section 78 of the Transfer of Property Act embodies the above principle. It reads: "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."

D. Two equitable claims

As between two equitable claims, i.e., where each of the parties has an equitable estate only, the governing maxim is that the first in time prevails. Qui prior est tempore, potior est jure, i.e., where the equities are equal, the first in time prevails. As between several equitable mortgagees of the same immovable property the first in time prevails. The mortgages rank in order of priority. Thus if a property, which is mortgaged successively to A., Band C, is sold, A will get the money first, B next and C in the last. In the above illustration both Band C have equitable interest in the property subject to A's rights and B's interests having

been created first in point of time rank prior to C's claims.

This rule applies only where the equities are equal. If the moral claims of two holders of equitable interests are not equal the maxim has no application. Thus if A mortgages a property to B and subsequently to C and if, B through fraud, neglects or by other wrongful act on his part, led C to suppose that no equitable right existed in his favour, B's interest would be postponed and C's claim though later in point of time would receive priority. Hanbury points out on the strength of Maundrell v. MauntIall (10 Yes. 271) and Rimmer v. Webster (2 Ch. 163) that the true position is that in order to postpone an earlier equitable mortgage to a later, it is not necessary to show fraud or gross negligence on the part of the earlier; ordinary negligence will suffice; but negligence must be clearly proved, otherwise the maxim "Qui prior est tempore, potior est jure" will operate.

The origin and development of the doctrine of constructive notice and reference to some decided cases whether its application has been extended or restricted

Doctrine of Constructive Notice

The rights of a bona fide purchaser of a property for valuable consideration have always been protected if he has no notice of a prior equitable light. In order that this defence of bona fide purchaser for value without notice may afford a protection against a prior equitable Interest, certain conditions must be fulfilled. One of those conditions is that he must have had no notice of the equitable interest at the time when he gave his consideration for the conveyance.

The doctrine of notice thus originated reached its high water mark in Le Neve v. te Neve [(1747) Amb. [436]. Certain lands in Middlesex settled by a deed which was not registered, were settled upon a second marriage, with the notice of the former settlement, and the second settlement was registered. The former settlement, was preferred to the second, the court stating that it was "a species of fraud and dolus malus itself" for a second purchaser, knowing that the first purchaser had the clear right to the estate. If, however,

the second purchaser had no notice of the first unregistered purchase at the time when he gave the valuable consideration for his purchase, the fact that he receives notice before he has registered his conveyance does not prevent him from obtaining priority by being the first to register. And the notice required to postpone a registered to an unregistered conveyance is actual notice to the purchaser or to his solicitor, mere negligence or constructive notice notwithstanding. Moreover the doctrine of le Neve v. le Neve will not be extended or applied to modern situations. For example, an unregistered bill of sale is void against an execution creditor even though he knew of its existence when his debt was contracted.

A purchaser is affected by notice of an equity in different ways discussed earlier. As regards constructive notice, this has been said to be "no more than evidence of notice," the presumption of which is so violent that the court will not allow even of its being controverted.

As an illustration of constructive notice reference may be made to Bisco v. Earl of Banbury in which it was held that a purchaser is bound by those encumbrances for he would have discovered their existence if he had inspected the deed, as any prudent man would have done.

But the intention of the legislature seems to be very restrictive rather than extensive in the use of the principle of constructive notice [Bailey v. Barnes ('1694)1 eh. 31].

A legal mortgage be postponed to a subsequent equitable mortgage

Postponement of legal mortgage to subsequent equitable mortgage

It was laid down in the Northern fire Insurance Co. v. Whipp (1834, 26 Ch.D. 482) that the court will postpone a legal mortgage to a subsequent equitable estate

(a) where the owner of the legal estate, i.e., the legal mortgagee has either assisted or connived at in the fraud which led to the creation of the subsequent equitable mortgage without notice of the prior legal estate. According to that case the omission to use ordinary care in inquiring after or keeping the title-,deeds may be deemed to be sufficient evidence of such assistance or connivance unless such conduct can otherwise be satisfactorily explained; or

(b) when the legal mortgagee has made the mortgagor his agent with authority to raise money and the security given for raising such money has by misconduct of the agent been represented as the first estate. It was, however, observed that the court shall not postpone the prior legal to the subsequent equitable mortgage on the ground of any mere carelessness or want of prudence on the part of the legal mortgagee. Negligence in the absence of fraud would not be a sufficient ground for postponement of a legal charge.

A vendor conveyed land to a purchaser without receiving the purchase-money and nevertheless endorsed a receipt for the purchase-money on the deed and delivered the title-deeds to the purchaser.  The purchaser subsequently deposited the title-deeds by way of equitable mortgage with a mortgagee who had no notice that the purchase-money was unpaid. The vendor wishes to enforce his equitable the equitable mortgagee. How would you decide?

Lien against; the maxim is that where equities are equal the first in time shall prevail. It implies that where there is no legal estate equitable estate ranks in order of time of creation. The rule is however, not applicable where equities are unequal in the sense that equity on the side of ''the person otherwise entitled to priority is worse than the one ranking subsequently. Such an example of unequal equity is furnished in the given problem. The vendor negligently gave a receipt when the money had not been paid and the purchaser subsequently deposits the title-deeds by way of equitable mortgage with a mortgagee who had no notice that the purchase-money was unpaid. The result is that the equities of the parties being not equal, the vendor’s equitable lien for the unpaid purchase-money though prior in time will be postponed to the equitable mortgage. [Rice v. Rice(1853) 2 Drew 73].

A, mortgages certain property to B. Due to his negligence B does not obtain the title-deeds. A subsequently secures advance from C on the basis of the title-deeds, C having no notice of any earlier mortgage. Will B lose priority over C?

In this case the legal mortgagee does not obtain the title deeds negligently and an equitable interest is created because of title-deeds lying in the hands of the mortgagor. In such circumstances it was held in Walker v. Linom [(1907) 2 Ch. 104] that the negligence of the legal owner in not obtaining the title-deeds was sufficient, even in the absence of any fraud on his part, to postpone him to an equitable mortgagee who had without notice subsequently advanced money on the title-deeds.

5. "He who seeks equity must do equity"

The Court of equity is a court of conscience. The relief granted by it is discretionary. The maxim provides that the court of equity will not assist a person seeking its assistance unless he is prepared to act fairly. The plaintiff must concede all equitable rights of his adversary which grow out of or are inseparably connected with the matter in dispute.

This does not mean that the court can impose arbitrary conditions upon a plaintiff simply because he stands in that position on the record. It only means that he must do justice as to the matters in respect of which the assistance of equity is asked.

Before the passing of the Married Women's Property Act in England the court of equity refused to render any assistance to a husband who claimed possession of his wife's property on the basis of his common law right unless he made a suitable provision for her and her children out of that property.

Application and cases

This maxim has application in the following doctrines-

i) Illegal loans

ii) Doctrine of Election

iii) Consolidation of mortgages

iv) Notice to redeem mortgage

v) Wife’s equity to settlement

vi) Equitable estoppel

vii) Restitution of benefits on cancellation of transaction

viii) Set-off

i) Illegal loans  

In Lodge v. National Union Investment Co. Ltd., the facts were as follows. One B borrowed money from M by mortgaging certain securities to him. M was a unregistered money-lender. Under the Money-lenders’ Act, 1900, the contract was illegal and therefore void. B sued M for return of the securities. The court refused to make an order except upon the terms that B should repay the money which had been advanced to him.

ii) Doctrine of Election  

Where a donor A gives his own property to B and in the same instrument purports to give B’s property to C, B will be put to an election, either accept the benefit granted to him by the donor and give away his own property to C or retain his own property and refuse to accept the property of A on condition. But B can not retain his property and at the same time take the property of A.

iii) Consolidation of mortgages

Where a person has become entitled to two mortgages from the same mortgagor, he may consolidate these mortgages and refuse to permit the mortgagee to exercise his equitable right to redeem one mortgage unless the other is redeemed. The right of consolidation now exists in England but after the enactment of the Law of Property Act, 1925, it can exist only by express reservation in one of the mortgage deeds.

iv) Notice to redeem mortgage

Notice to a mortgagor to redeem one’s mortgage is an equitable right of the mortgagor.

v) Wife’s equity to settlement

There was a time when woman’s property was merged with that of her husband. She had no property of her own. Equity court imposed on the husband that he must make a reasonable provision for his wife and her children. But, now, Under the Law Reform (Married Women and Tortfeasors) Act, 1935, married women has full right on her property and it is not consolidated with her husband’s property.

vi) Equitable estoppels

A promissory estoppel arises where a party has expressly or impliedly, by conduct or by negligence, made a statement of fact, or so conducted himself, that another would reasonably understand that he made a promise thereon, then the party who made such promise has to carry out his promise.

vii) Restitution of benefits on cancellation of transaction

It is proper justice to return the benefits of a contract which was voidable, and, equity enforced this principle in cases where it granted relief of rescission of a contract. A party cannot be allowed to take advantage of his own wrong.

viii) Set-off

Where there have been mutual credits, mutual debts or other natural dealings between the debtor and any creditor, the sum due from one party is to be set-off against any sum due from the other party, and only the balance of the account is to be claimed or paid on either side respectively.

Section 51 and 54 of the Transfer of Property Act also provides the a transferee who makes improvement on any immovable property believing in good faith that he is absolutely entitled thereto, and is subsequently evicted there from by a person having better title is entitled to compensation for the improvements made by him. The section thus enjoins upon the rightful owner to do equity the transferee before he can evict the latter.

The maxim is also generally illustrated by the equitable doctrine of election, as embodied in section 35 of the Transfer of Property Act, which lays down that he who takes a benefit under an instrument must accept or reject the instrument as a whole.

Sections 64 and 65 of the Indian Contract Act also illustrate the application of this maxim. They provide that when a voidable contract is rescinded or when a contract becomes void, the party rescinding the contract or any person who has received any advantage under such void contract must restore it to the person from whom he received it.

The Specific Relief Act also furnishes examples in elucidation of the maxim. Sections 30 and 33 of the Act provide that, on adjudging the rescission of a contract or the cancellation the court may requiring the party to whom such relief is granted to make any compensation to the other which may require.

Various provisions of the Indian Trusts Act also illustrate the maxim. The right of trustees to indemnity against costs and expenses properly incurred by them in the execution of the trust is a first charge on all the trust property. A beneficiary will not get any assistance from equity against his trustee's legitimate chargeable expenses.

Section 62 of the Indian Trusts Act provides that if a trustee has wrongfully bought trust property, the beneficiary has a right to have the property declared subject to the trust, or retransferred by the trustee if it remains in his hands unsold only on his repaying the purchase-money paid by the trustee with interest and other expenses, if any, incurred in the preservation of the property.

Under sec 19-A of the Contract Act, 1872 if a contract becomes voidable and the party who entered into the contract voids the contract, he has return the benefit of the contract.

In Order 8, Rule 6 of the CPC, the doctrine of Set-off is recognized.

Limitations: There are two limitations for the application of this maxim:

(1) It applies only where the party asks for equitable relief in a suit that is pending and not purely legal rights even through a court of equity.

(2) The maxim applies where the equity is sought by or awarded to the defendant relates to the subject matter of the suit or to one and the same thing or grows out of the very controversy before the court.

6. "He who comes to equity must come with dean hands."

The maxim "he who comes to equity must come with clean hands" at first sight hardly seems to differ from the earlier one discussed above, viz. 'He who seeks equity must do equity." but the present maxim is wider than the last one. It provides that the plaintiff must not only be prepared to do what is right and fair, but as Snell observes, also must show that his past record in the transaction is clean. The person seeking relief must not himself be guilty of illegal or immoral conduct with regard to the same transaction which would disentitle him to any assistance of the court. The most common example to illustrate this maxim is that of the case of Overton v. Banister, (5 Hare, 503) where an infant, who fraudulently represented himself to be of full age, obtained from trustees stock to which she was entitled only on her attaining majority. Subsequently on coming of age she instituted a suit against the trustees to recover the stock again which they had improperly transferred to her during her minority. It was held that the infant could not enforce payment over again of the stock as she herself was guilty of the fraudulent act.

It was held in Abdul Kadir Ali Bhoy v. Mohomed Ally Hyderally (3 Bom. L.R. 220) that a person cannot be granted an injunction against another trader from imitating his label, if his own label is a deliberate combination of several other registered labels with a view to mislead customers into purchasing his wares thinking them to be manufactures of those registered companies.

In Highwaymen case, two robbers were partners in their own way. Due to a disagreement in shares one of them filed a bill against another for accounts of the profits of robbery. Courts of equity do grant relief in case of partnership but here was a case where the cause of action arose from an illegal occupation. So, the court refused to help them.

The working of this maxim could be seen while giving the relief of specific performance, injunction, rescission or cancellation.

The maxim is also applicable to benami transactions so commonly found in India. Where property is conveyed benami with a view to defeat the claims of creditors and that purpose is achieved, the real owner will not be all owed to recover the property. (Gobardhan v. Ritu, 32 C. 962).

Limitation

General or total conduct of the plaintiff is not to be considered. It will be seen whether he was of clean hands in the same suit he brought or not. Brandies J. in Loughran v. Loughran said that “Equity does not demand that its suitors shall have led blameless lives.”

Exception

i) If the transaction is a against public policy

ii) if the party repents for his conduct before his unjust plans are carried out.

Recognition

i) Section 23 of the Indian Trust Act- An infant cannot setup a defence of the invalidity of the receipt given by him.

ii) Section 17, 18 and 20 of the Specific Relief Act, 1877- Plaintiff’s unfair conduct will disentitle him to an equitable relief of specific performance of the contract.

Distinction between maxim no. 5 and 6-

He who seeks equity must do equity	He who comes into equity must come with clean hands
i) It is applicable when both the plaintiff and the defendant have claims of equitable relief against each other.	i) It is applicable when the defendant has no separate claim to relief and the plaintiff’s conduct is unfair.
ii) It exposes the condition subsequent to the relief sought.	ii) It is a condition precedent to seeking equitable relief.
iii) It refers to the plaintiff’s conduct as the court thinks it ought to be, after he comes to the court.	iii) It refers to the plaitiff’s conduct before he  approaches the court.
iv) The plaintiff has to mould his behavior according to the impositions by the court.	iv) If the plaintiff’s conduct is unfair, it would not entitle him to the relief sought.
v) The plaintiff has an option or a choice before him either to submit to the conditions put by the court, or to get out of the court.	v) The conduct of the plaintiff snatched his choice from him. His equitable right therefore neither be recognized nor enforced.
vi) This maxim looks to the future.	vi) This maxim looks at the past.

7. Equity looks on that as done which ought to be done

Equity regards a person who has incurred an obligation to do something as having done it; thus if land is contracted to be sold, a court of equity will deem it to have been actually sold and converted. The true meaning of this maxim is that equity will treat the subject-matter of a contract as to its consequences and incidents in the same manner as if an act contemplated in the contract of the parties had been completely executed.- (Desai). Equity considers that a person who has undertaken to do something for consideration has discharged his obligation. Thus an agreement to sell certain property operates, according to this maxim, as if the sale had been actually made and the property transferred. Similarly agreements for leases, which are specifically enforceable and where possession has been given, are regarded as actual leases. The maxim, however, applies only to purchasers for valuable consideration, and does not apply to volunteers.

Part Performance

The above maxim finds place in section 53-A of the Transfer of Property Act, which embodies the equitable doctrine of part performance. It is to the effect: Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf and the transferee has, in part performance of the contract, taken possession of the property or any par t 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 the transferor shall be debarred form questioning the title of the transferee on the ground of want of registration or any other technicality. Equity looks on that as done which ought to have been done and want of registration of the contract will not be of any avail to the transferor.

The equitable doctrine of part performance was applied in England in the case of Walsh v. Lonsdale (1881, 21 Ch. D 9 ) where the contention of the plaintiff to take advantage of the absence of a deed, which was required by the Real Property Act, 1845, in the case of leases of upwards of three years, was repelled. It was observed by Jessel, M.R. that the tenant after the Judicature Act is protected in the same way as if a lease had been granted.

Section 27-A of the Specific Relief Act, 1877, which embodied the principle of part-performance relating to lease, also illustrates the maxim.

Conversion

The maxim also applies to conversion, which is the notional change of land into money, or money into land. According· to the doctrine of conversion if a testator directed land to he sold at his death and the proceeds to get to X, the land was to be regarded, as from his death, a sum of money, and devolved accordingly. The effect of conversion was to turn realty into personality and vice versa. It was important in the case of intestate succession, which was abolished by the Administration of Estate Act, 1925 Prior to this Act in case of a death, the beneficial interest in the deceased's realty devolved on his heir, whereas the beneficial interest in his personality devolved on his next of kin. But the doctrine is still important as regards wills, since a testator often disposes differently of his realty, and also with regard to the payment of death duties, for the duties on realty and personality are not the same.

The doctrine of conversion was explained by Sir Thomas Sewell, M.R.in fletcher v. Ashburner (1799) 1 Br. C,C. 497: "Nothing is better established than this principle, that money directed to be employed in the purchase of land and land directed to be sold and turned into money, are to be considered as that species of property into which they are directed to be converted and thus in whatever manner the direction is given whether by will, by way of contract, marriage articles, settlement or otherwise; and whether the money is actually deposited, or only covenanted to be paid, whether it is actual! y conveyed or only agreed to be conveyed, the owner of the fund or the contracting parties, may make money land or land money ."

Limitation

There is no conversion where there is a mere power to sell land, or to invest money in real estate, or where it is left optional whether an investment of money shall take the form of real or personal estate. It is applicable where a testator disposes differently, of his realty and in payment of death duties, for the duties are different on realty and personality.

Modes for Notional Conversion

These modes are as under:

(1) Trust

The doctrine is applicable where there is a trust for sale. The trustees are directed imperatively to sell or purchase realty. The property is converted from the date of the operation of the will.

(2) Contract

In order that a notional conversion property may take place it is essential that the contract must capable of being specifically enforced.

(3) Partnership Land

Unless there is an intention to the contrary in the partnership deed, equity regards partnership land as personal and not real estate for the land so held in partnership is impliedly treated as land in trust for sale.

(4) Order of Court

Conversion takes place from the order of the court directing the sale of land. Realty is treated aspersonality from the date of the order of the Court passed within its jurisdiction.

Effect of Conversion

When conversion has been effected in equity, whether of land into money, or money into land, the property

is treated in equity as having all the legal incidents of its new form.

8. Equality is Equity

The above maxim is also expressed as "equity delighteth in equality." This maxim aims to distribute property and losses in proportion to the claims and liabilities of the persons concerned. Equity here connotes proportionate and literal equality.

The most obvious illustration of this maxim is to be found the rule that equity leans against joint tenancy where the whole estate on the death of a joint tenant goes to the survivor or survivors it, on the other hand, prefers tenancy in common where the share of the deceased tenant goes to his heirs and not to the survivor

In the case of joint purchases, where two or more persons advance purchase-money in unequal shares, the survivor of them is treated in equity as a trustee for the heirs of the deceased to the extent of the deceased's share.

In the case of a mortgage executed in favour of two mortgagees jointly equity looks upon each of them as a trustee for the legal representatives and heirs of the deceased co-mortgagee irrespective of the amount of money advanced by each of them.

The Indian statutes also furnish examples of this maxim. Section 113 of the Indian Contract Act lays down that each of the two or more joint promisors may compel every other joint promisor to contribute equally with himself to the performance of the promise. Section 146 of the same Act provides that co-sureties for the same debt or duty are liable as between themselves to contribute equally.

Contribution

With regard to contribution among co-sureties the English court in Steel v. Dexon (17 Ch. D. 185) went to the length of holding that if one surety has taken a counter--security from the principal debtor, he is bound to share the benefit of it with his co-sureties, even though he consented to be a surety only on the terms of having the security; and so inherent is the principle of equality in the whole conception of the relations of co-sureties, that the others can claim this benefit, even though they were ignorant of its existence at the time when they became sureties.

Section 27 of the Indian Trusts Act also provides for contribution between co-trustees when they jointly commit a breach of trust or where one of them by his neglect enables the other to commit a breach of trust.

Section 45 of the Transfer of Property Act also lays down that when two or more persons acquire a property, without specification of their shares, the shares will be taken to be in proportion to the consideration paid.

Doctrine of Marshalling.-

Section 81 of the Transfer Property Act, which embodies the doctrine of marshalling, further illustrates the application of the maxim. It lays down that where there are two or more creditors of the same debtor and one creditor has a right to resort to two funds of the debtor for the payment of his debt and the other creditor a right to resort to one fund only, the court will order the first creditor to be paid out of the fund against which the second creditor has no claim so far as that fund will extend.

Section 73 of the Code of Civil Procedure also enunciates the principle of the maxim by providing for the distribution of proceeds of execution sale rateably among the decree-holders in case of money decrees held against the same judgment-debtor.

9. Delay defeats equity

The maxim is technically expressed as Vigilantibus non-dor mientibus, aequitas subvenit, i.e., equity will not assist those who slumber over their rights. As Lord Camden observed in the case of Smith v Clay, (3 Bro. C.C. 640). "A court of equity has always refused its aid to stale demands, where a party has slept upon his right and acquiesced for a great length of time. Nothing can call forth this court into activity, but conscience, good faith, and reasonable diligence; where these are wanting, the court is passive, and does nothing." If a person has negligently slept over his rights for a length of time disproportionately long, equity will not allow him to litigate in respect of them. Reasonable diligence is, therefore, the first requisite for an equitable relief.

The maxim promotes diligence in suitors, discourages laches by making it a bar to relief and prevents the enforcement of stale demands. The equity court does not extend relief, because the person seeking its aid has been guilty of laches or undue delay or because he has tacitly or expressly acquiesced in the infringement of his rights. Therefore the plaintiff seeking the equitable remedy has to explain even a short period of delay unless fraud or other unavoidable circumstances have occasioned the same. And it has been held that where a purchaser seeks to set aside or rescind a contract induced by fraud, he must apply for relief with reasonable diligence and where owing to his delay other parties have acquired right or the property has deteriorated in value or changed in condition a court of equity will refuse rescission.

Limitation

This maxim, however, does not apply to cases to which the Statutes of Limitation apply, expressly or by analogy. In all such cases equity follows the law and allows the same time for enforcing the right, whether legal or equitable, as a court of law would allow; delay short of the statutory period is no bar a legal or equitable claim.

Latches

Latches means negligence or unreasonable delay in asserting or enforcing a right. Delay defeats equity. Equity aids the vigilant and not the indolent. The doctrine of laches, therefore, enjoins upon a plaintiff to prosecute his claim without delay.

Acquiescence

Acquiescence denotes assent to an infringement of one's rights, which may be either expressed or implied from conduct. The plaintiff in such a case remains standing by for a considerable time while the violation of his right is in progress. The plaintiff allows another person to go on with his work and layout his money and labour upon his (plaintiff's) land without objections. this signifies the giving of assent in an implied manner even after the plaintiff became aware of the infringement of his right and disentitles him to the assistance of the court. Acquiescence is thus dependent upon the knowledge and conduct of the party.

Distinction between laches and Acquiescence

The distinction between laches and acquiescence may also be noticed. acquiescence is the larger of the two. It includes laches. Laches is merely passive while acquiescence implies active consent. Hanbury points out that when a defendant pleads laches on the part of the plaintiff, he asserts simply that the plaintiff has allowed time to elapse, but where he charges him with acquiescence, he charges him also with actively waiving his rights. Brunyate points out that the law of acquiescence is a coherent body of law rather than a set of disconnected principles. The law of laches in the narrow sense is not coherent for it, is the sum of the various reasons why lapse of time should in various circumstances operate of itself as a defence.

Effect of laches and Acquiescence

The effect of laches and acquiescence on a suit may now be studied. In the case of laches there is no fixed period of time beyond which the suit, if brought, is dismissed. The courts look into the facts and circumstances of each case and decide for themselves whether there was unreasonable delay in bringing the suit on the part of the plaintiff; whether the plaintiff's delay has resulted in loss or destruction of evidence and whether the plaintiff has by the delay and omission induced the defendant to incur any expense or to alter his position. In order to defeat the claim of the plaintiff on the ground of laches it is necessary for the defendant to show that the plaintiff had suffiIcient knowledge of the facts constituting his title and that he knowingly forbore to exercise his rights. The defence of laches, however, is not permissible where there is a statutory period of limitation. In such a case the plaintiff is allowed the benefit of that statutory period as no court has the power to abridge or enlarge the period of limitation prescribed by the Act.

The effect of acquiescence is however different because here the plaintiff has by his conduct waived his rights. He remained standing by silent while the violation of his right was in progress. He thus gave assent in an implied manner even after he had become aware of the infringement of his right. In these circumstances lapse of time or statutory limitation is of no importance. The plaintiff is estopped immediately by his conduct. It has been held that when the plaintiff has by his conduct induced a reasonable belief that a right is foregone, the party who acts upon the belief so induced and whose position is altered by his belief entitled to plead acquiescence and the plea, If proved, is a good answer to an action, although the action may have been brought within the prescribed period limitation.  

"The acquiescence which deprives a man of his rights must amount to fraud."

Acquiescence to amount to fraud for deprivation of rights

Acquiescence which will deprive a man his legal rights must amount to fraud and the elements necessary to constitute such a fraud have been laid down in the case of Willmott v. Barber (15 Ch. D. 96) as under:

(1) the party plead acquiescence must have made a mistake as to his legal rights,

(2) he must have expended some money or done some act on the faith of mistaken belief,

(3) the party possessing he legal right must know of the existence of his own right which is inconsistent with the right claimed by the other, and he must know of that other's mistaken belief of his rights and he must have encouraged that other in his expenditure of money or in the other acts done by him.

10. Equity imputes an intention to fulfill an obligation

Snell amplifying this maxim remarks that where a man is under an obligation to do an act and he does some other act which is capable of being considered as a fulfillment of his obligation, the latter act will be so considered. Thus if a man has covenanted to buy and settle land and afterwards buys the land but dies with A. Equity looks to the intent rather than to settling the same, the court of equity will presume that the purchase was made with the intention of fulfilling the obligation of settling it.

The equitable doctrines of performance, satisfaction, advancement. and ademption are applicable to this maxim.

Doctrine of Performance

The principle of the Doctrine of Performance is that where a is bound in equity to do something for the benefit of B. (Hanbury).  Section 92 of the Indian Trust Act is an Illustration of this doctrine. It says "where a person contracts to buy property to be held on trust for certain beneficiaries and buys the property accordingly he must hold the property for their benefit to extent necessary and give effect to the contract.”

Doctrine of Satisfaction

The equitable doctrine of satisfaction relates to the doing of an act in substitution for the performance of an obligation. It applies to a legacy to a creditor, in which case the legacy, of equal or greater amount, is prima facie considered to be a satisfaction of the debt. In India, however, section 177 of the Indian Succession Act abolishes the doctrine of satisfaction.

Doctrine of Advancement

The equitable doctrine of advancement is that if a purchase or investment is made by a father or person in loco parentis (a child or a grand-child when father is dead) in the name of a child, a presumption arises that it was intended as an advancement, i.e., for the benefit of the child, which the father owed a moral obligation to fulfill. The doctrine of advancement, however, does not apply in India.

Ademption

Ademption is the complete or partial extinction or withholding of a legacy by some act of the testator during his life other than revocation by a testamentary instrument. Where a father or person in loco parentis provides a portion (provision made for a child by a parent) by his will and subsequently in his life makes or covenants to make another gift also amounting to a portion, the portion is adeemed.

11. “Equity looks to the intent rather than to the form”

The above maxim connotes that equity regards the spirit of the transaction and not the letter of the law. The real intention of the parties entering into a transaction is more material than the from the transaction itself. This maxim is applicable to the determination of a dispute as to whether a particular transaction is a sale or mortgage, to penalty and forfeitures and to precatory trusts.

(1) Relief against penalties

The common law courts insisted on the literal form of the contract and adherence to stipulations in agreements. Thus where parties named a penal sum as due and payable on a breach of contract that penalty was enforced by the common law although, according to the parties, that sum was the maximum of damages. Equity interprets the purpose and intent of the contract itself. Equity, however, took a different view and allowed only real damages to be recoverable. The principal object of the contract is to perform it and not the compensation. The compensation is a subsidiary matter.

It was observed in the leading English case of Soloman Vs Walter (1 Bro. C.C., 418) a penalty clause is Inserted in an instrument merely to secure performance of some act or the enjoyment of some benefit, the performance of the act or the enjoyment of the benefit is the substantial intent of the instrument and the penalty is only accessory.

Section 74 of the Indian Contract Act relieves debtors against penalties and allows any reasonable compensation not exceeding the amount so named as penalty.

(2) Forfeitures

Relief against forfeiture is governed on the same principles as are applicable to penalties. Since equity looks to the essence of the transaction, it relieves against the condition of forfeiture which is simply a security for the rent, and such a condition is deemed to be a penalty.

Sections 114 and 114-A of the Transfer of Property Act provides relief against forfeiture for non-payment of rent or breach of an express condition.

(3) Equity of Redemption

An equitable estate arises under a legal mortgage on the expiry of the date of payment of the mortgage money without payment having been made. Equity looked at the real intent of the parties on the ground that the principal right of the mortgagee is to the money and the right to the land is only a security for the money. The Court of Chancery, therefore, relieved the mortgagor against the forfeiture, although his right to redeem had been forfeited at law on nonpayment of the mortgage money on the date for redemption.

(4) Precatory Trusts

A trust is created with- (1) an intention on his part to create a trust thereby, (2) the purpose of the trust, (3) the beneficiary, and (4) the trust property. Where an author uses words such as ‘I hope’, ‘I request’ or ‘I recommend’ the first condition is missing. In cases where subsequent ingredients are found, in early days, it was held by the equity courts that he had the intention. This view is in use now but not as liberally as before.

The maxim is also applicable to precatory trusts which arise when recommendatory words accompany a gift. It may at first sight appear to be a complete transfer of property together with a desire capable of being ignored, but the Court of Equity seeks to discover the true intention of the transfer and declares it to be trust property if it appeared that -the donor wanted to impose an obligation on the donee to carry out his wishes.

(5) Doctrine of Part Performance and statute of Frauds

The statute of Frauds provided for the Writing and signature of the parties or their agents with a view to prevent frauds and perjuries. The Court of Chancery, however, engrafted two exceptions to it. The first was that if the agreement was intended to be written but could not be put into writing on account of the fraud of the defendant, the defendant could for not plead the statute as a bar to the action of the plaintiff. The second exception was based on the equitable doctrine of part performance which provides that where a contract is not enforceable of formality like writing under the Statute of Frauds, if it has been partly carried into effect by one of the parties the other cannot set up the informality. Part performance took the case out of statute.

12. Equity acts in personam

The maxim in a sense comprises the whole of equity. It lays down the procedure rather than any substantive law. In England the Chancery Court had and now the Chancery division of the High Court has jurisdiction to entertain certain suits respecting immovable property, though the property might be situated abroad if the relief sought could be obtained through the personal obedience of the defendant. The personal obedience of the defendant could be secured only if the defendant resided within the local limits of the jurisdiction of the court or carried on business with those limits. Its essential feature was that the land in respect of which the suit was brought was situated abroad, but the person of the defendant or his personal property was within the jurisdiction of the court in which the suit was brought. The land being situate abroad the decree could not be executed against the land, but the person or personal property of the defendant being within the jurisdiction of the court the decree could be executed in person.

The jurisdiction in personam wielded by the Chancery Court gave it a longer arm than that of the common law courts, specially in cases of land falling outside the jurisdiction of the court. But the court of equity never assumed to determine questions of title In the land which was situate in England or abroad; all that it did was to get hold of the defendant or other personal property of his and bring pressure to bear on him. In the case of Penn v. lord Baltimore (1750) 1 Ves. Sen 444, the plaintiff and the defendant, being in England, had entered into an agreement for settling the boundaries of two provinces in American--Pennsylvania and Maryland, the former of which belonged to the plaintiff and the latter to the defendant-and the plaintiff sought a specific performance of the agreement. The objection of the defendant that the property was out of the jurisdiction of the court was overruled. It was held that the plaintiff was entitled to specific performance of the articles, for the court acted in personam. The principle on which the court acted was that although the land was not situated within its jurisdiction yet the court had it in its power to prevent the defendant from ever returning to enjoy his land, unless he would fulfill his agreement. The assumption of the jurisdiction in this case has been criticized. It was observed by Lord Esher in Companba de Mocambic, v. British South Africa Co., (1892) 2 B, that “the decision in Penn v. Baltimore which has been acted by other great judges in equity seems to me to be open to the strong objection that the court is doing indirectly what it dare not do directly." The tendency of modern decisions is, however to restrict rather than to enlarge the limits within which the jurisdiction will be exercised. Summing up his conclusions, Hanbury observes that the court will decree specific performance of a contract relating to land out of the jurisdiction if the defendant is within the jurisdiction, and nothing more than his imprisonment if required to render the decree effective ; but it will never decide the title to land, nor will it give specific performance of a contract relating to land outside the jurisdiction unless that land is in a country subject to the Crown.

Limitations:

The limits within which this jurisdiction can be assumed by the court are as under:-

 (1) The court will only intervene where the defendant is resident in England or he submits to the jurisdiction of the court, and when its order can be executed by the process of the court.

(2) The remedy sought must be ail equitable remedy.

(3) The court will only interfere when there is not already freeman and litigation in the appropriate foreign court..

(4) The dispute must be 'one of the conscience', the personal obligation arising out of contract or implied contract, fiduciary relationship, or fraud or other conduct which would be unconscionable.

(5) The court will not interfere in a case which involves breach of the foreign law properly governing the party or its disposition.

The proviso to section 16 of the Code of Civil Procedure is an application in a modified form of the above maxim. It provides that where a suit to obtain relief in respect of immovable property can be obtained through the personal obedience of the defendant, the suit may be instituted either within the local limits of the court where the property is situate, or in the court within whose jurisdiction the defendant the defendant actually and voluntarily resides, or carries on business, personally works for gain. 

Disclaimer: In this note, we have attempted to summarise some of the significant aspects to be kept in mind by readers to ensure compliance of tax laws and regulations. Readers should ensure to verify specific provisions as applicable to each case before taking any business decisions. It would be pertinent to note that some changes are being made to the tax laws and rules and regulations on a continuous basis by way of notifications, clarifications etc issued by the department based on their practical experience in implementing the legislation.

It may be noted that nothing contained in this note should be regarded as our opinion.  Professional advice should be sought for applicability of legal provisions based on specific facts. Though reasonable efforts have been taken to avoid errors or omissions in this note we are not responsible for any liability arising to readers directly or indirectly due to any mis-statements or error contained in this note. It must be noted that the views expressed in the note are based on our understanding of the law and regulations as published by the Government authorities and we may or may not agree or subscribe to such views. This blog, between contributor and readers, shall not create any attorney-client relationship.