EQUITABLE RIGHTS-4

MARRIED WOMEN

MARRIED WOMEN’S POSITION AT COMMON LAW

At common law the existence of the wife as a legal person, separate and distinct from her husband was not recognized

And the changes brought about from time to time by legislation in England and in India to it

The nature of a married woman’s position at common law has been very well described by Blackstone: “By marriage the husband and wife are one person in law, i.e., the very being or legal existence of a woman is suspended during the marriage or at least is incorporated or consolidated into that of the husband, under whose being, protection and cover she performs everything.” According to Bacon so long as the marriage continues, “the law looks upon the husband and wife but as one person, and therefore allows of but one will between them, which is placed in the husband as the fittest and ablest to provide for and govern the family.”

The court of equity, however, interfered with this position with a view to mitigating some of the disabilities and hardships under which a married woman suffered at common law. STORY generalises the innovations made by the Court of Chancery in the following words: “Now, in courts of equity, although the principles of law, in regard to husband and wife, are fully recognised and enforced in proper cases, yet they are not exclusively considered. On the contrary, courts of equity, for many purposes, treat the husband and wife, as civil law treats them, as distinct persons, capable (in a limited sense) of contracting with each other, of suing each other, and of having separate estates, debts and interests. A wife may, in a court of equity, sue her husband and be sued by him. And in cases respecting her separate estate, she may also be sued without him; although he is ordinarily required to be joined for the sake of conformity to the rule of law, as a nominal party, whenever he is within the jurisdiction of the court, and can be made a party.”

THE MARRIED WOMEN’S PROPERTY ACT, 1882, however, converted the above equitable rights of the wife into legal rights by providing that a married woman is capable of acquiring, holding or disposing of by will or otherwise any real or personal property as her separate property and that she is capable of entering into and rendering herself liable in respect of her separate property on any contract or in tort as if she were a feme sole. A married woman, after the enactment of THE MARRIED WOMEN’S PROPERTY ACT and THE LAW REFORM (MARRIED WOMEN AND TORT FEASORS) ACT, 1935, stands, with few exceptions, in the same legal position as a single woman.

With regard to the position of married women in India the Mohammedan law does not recognize THE DOCTRINE OF COVERTURE (which is the condition of being a married woman) and gives scope to a woman to retain her separate legal entity enabling her to deal with her property in any way she likes without her husband’s consent.

The Hindu Law recognizes THE DOCTRINE OF COVERTURE, but still allows a married woman to hold her separate property. She has absolute dominion over her     stridhan with the unrestricted power to alienate. A condition absolutely restraining alienation is void. Under THE HINDU SUCCESSION ACT, 1956, any property possessed by a female Hindu is held by her as its full owner and not as a limited owner.

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RESTRAINT ON ANTICIPATION

Anticipation is the act of assigning, charging, or otherwise dealing with income before it becomes due. A clause against anticipation is meant to protect the wife’s property from the influence of her husband by preventing her from depriving herself of the benefit of the future income. This clause was inserted in a settlement of property on a woman with a view to warding off the danger of yielding to the solicitations of her husband to dispose it off.

THE VALIDITY OF THE RESTRAINT has received statutory recognition in the MARRIED WOMEN’S PROPERTY ACT, 1882.

The courts of equity construed THE RESTRAINT ON ANTICIPATION clause very strictly so that the woman could not absolve herself of this restriction even though the alienation was distinctly to her benefit. THE LAW OF PROPERTY ACT, 1925, which is the reproduction of section 39 of THE CONVEYANCING ACT, 1881, however, permits the court to release the restraint with the consent of the wife if the court thinks that such release is to her benefit.

PIN-MONEY

It is an allowance settled upon the wife by the husband before marriage for her dress and personal expenses with a view to decking her person suitably to her husband’s rank. A wife has only a limited right to recover arrears to pin-money.

ALIMONY

 It is an allowance made to a wife out of her husband’s estate for her support during divorce or judicial separation proceedings or during their altercation. It is granted for the support of the wife and she has no power to assign it.

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GUARDIANS, INFANTS, IDIOTS AND LUNATICS

THE COURT OF CHANCERY EXERCISED A BENEFICIAL JURISDICTION OVER INFANTS, IDIOTS, LUNATICS AND MARRIED WOMEN

DIFFERENT CLASSES OF GUARDIANS, ADVERTING TO INDIAN LAW ON THE SUBJECT

The Court of Chancery, from the earliest times, exercised jurisdiction over infants, idiots, lunatics and married women. Since the passing of the Judicature Act of 1873 this jurisdiction of THE COURT OF CHANCERY has been assigned to the Chancery Division of the High Court of Justice. The jurisdiction over infants is founded on the prerogative of the Crown as parens patriae with a view to protecting the person and property of the infants. The Chancery Division has now authority over the appointment and removal of guardians, maintenance of infants and management and disposition of their property,

GUARDIANS

The guardian may be natural, testamentary or statutory. The common law gave to the father the guardianship of his legitimate children, children during the age of nurture and until the age of discretion. The limit was fixed at 14 years in the case of a boy and 16 in the case of a girl. The father’s legal right of guardianship now continues till the infant attains the age of twenty one.

A person appointed by the father or mother by means of a deed or will to act as guardian after his or her death is known as the testamentary guardian. He is entitled to manage the infant’s property and to look after his personality.

After the death of the father the mother is the statutory guardian jointly with the testamentary guardian, if any.

In India the Indian Majority Act, 1875, fixes the age of majority at 18 years, except those for whose person or property or both a guardian has been appointed by a court or those whose property is under the superintendence of the Court of Wards in which case the age is 21 years.

The High Courts in India possess the power to appoint a guardian of the person and property of minors independently of the Guardians and Wards Act.

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PERFORMANCE, SATISFACTION AND ADEMPTION

DOCTRINE OF PERFORMANCE

The equitable doctrine of performance is not to be confused with the doctrine of part performance, which has been discussed subsequently under the Specific Relief Act. The doctrine of performance is based upon the maxim “Equity imputes an intention to fulfill an obligation.” Strahan defines performance as meaning transfer of property which, whether the donee wishes or not, operates in law as a complete or pro tanto discharge of a previous legal liability of the donor. Thus where, A is bound in equity to do an act for B but leaves that act undone and instead does some other act which is of a kind applicable to the performance of the covenant, equity will seize upon something else that he has done and render it available for the benefit of B. In the same manner if a person has covenanted to purchase and settle realty and afterwards purchases it but does not settle the same, the purchase would be treated as a performance pro tanto if the lands purchased are of less value than the lands covenanted to be purchased and settled.

DOCTRINE OF SATISFACTION

Satisfaction, according to Strahan, means a transfer of property which, if the donee accepts it, operates in law as a complete or pro tanto discharge of a previous legal liability of the donor.

SATISFACTION AND PERFORMANCE

Satisfaction relates to the doing of an act in substitution for the performance of an obligation, whereas in performance the identical act which the party covenanted to do is considered to have been done. Another difference between the two doctrines is that the doctrine of satisfaction is clearly based upon an implied intention of the testator, but the doctrine of performance rests on the ground of natural justice, i.e., equity will seize upon something else that he has done.

ORDINARY DEBTS AND PORTION DEBTS

The doctrine of satisfaction may be considered with regard to ordinary debts and portion debts.

Hanbury observes that if a debtor, without mentioning the debt in his will bequeaths by it to his creditor a sum as great as, or greater  than, the debt, his legacy destroys or swallows up the debt; but this result does not follow if the legacy were on a contingency, or were less than the debt. But it has to be noted that though there is an equitable presumption in favour of satisfaction of a debt by a legacy of equal or greater  amount, the courts will never make a great deal of resistance to circumstances which will lead up to its overthrow. And if the legacy is less than the debt, there will be no satisfaction, not even pro tanto. Then again in order to attract the application of the doctrine of satisfaction the amount of the legacy must be certain and should have been incurred before the will.

With regard to a portion debt (which is a debt incurred by a father or mother by way of making provision for a child of his or her, or a debt incurred by some other person standing in loco parent is to another in favour of the other), the rule is that there is the presumption of satisfaction of the outstanding obligation to make a provision if a parent gives subsequently legacy to his child. Equity leans against legacies being taken in satisfaction of debt, but leans in favour of a provision by will being in satisfaction of a portion by contract, feeling the great improbability of a parent intending a double portion for one child to the prejudice generally of other children. (Thynee v. Earl of Glengall, 2 H.L.C, 133). The difference in the two Cases is illustrated thus:

(1) In the case of debt, small circumstances of difference between the debt and the legacy are held to negative any presumption of satisfaction; whereas in the case of portions, small circumstances are disregarded;

(2) In the case of a debt, a smaller legacy is not held to be in satisfaction of part of a larger debt; but in the case of portions it may be satisfaction pro tanto; and

(3) It has been decided that in the case of debt, a gift of the whole or part of the residue cannot be considered as a satisfaction, because it is said that the amount being uncertain, it may prove less than the debt.

In India the rule with regard to satisfaction of portion by a subsequent legacy is opposed to the English law and is governed by the Indian Succession Act.

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ADEMPTION OF LEGACIES

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 by his will and subsequently in his life makes another gift also amounting to a portion, the portion is adeemed. Lord Selborne explained in Re. Pollock, Pollock v. Worrall (28 Ch. D. 552) as follows: When a testator gives a legacy to a child, or to any other person towards whom he has taken on himself parental obligations, and afterwards makes a gift or enters into a binding contract in his life-time in favour of the same legatee, then (unless there be distinctions between the nature and conditions of the two gifts) there is a presumption pr i m a f a de that both gifts were made to fulfil the same natural or moral obligation of providing for the legatee; and consequently that the gift inter vivos is either wholly or in part a substitution for, or an “ademption” of, the legacy.

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CONVERSION AND RECONVERSION AND COVENANT RUNNING WITH LAND

 “EQUITY LOOKS ON THAT AS DONE WHICH OUGHT TO BE DONE.”

RECONVERSION

Snell defines it as that imaginary process by which a prior notional conversion is annulled or discharged, and the notionally converted property restored in contemplation of equity to its original actual quality. Thus, if real estate is devised on trust to sell it and pay the proceeds to A, from the moment of the testator’s death A becomes absolutely entitled to the property as personality, whether or not a sale has actually taken place. But A has a right to elect in what form he will take the property. And according to his election the property will vest in him as land or money. An infant cannot ordinarily elect. Only the court can direct an inquiry whether it will be for his benefit to reconvert and order accordingly.

COVENANT RUNNING WITH THE LAND

It is an expression borrowed from English law of real property and forms an exception to the general rule that all covenants are personal. A covenant is said to run with the ‘land when either the liability to perform it, or the right to take advantage of it, passes to the assignee of that land. In India it is governed by sections 55, 65 and 108 of the Transfer of Property Act as also section 23 of the Specific Relief Act. There is an implied warranty of title by the mortgagor in the mortgaged property, the benefit of which runs with the land. The seller while selling the property also undertakes that he is entitled to sell the property and the benefit of this implied covenant also runs with the land. Similarly a covenant in a lease for renewal thereof also runs with the land. Covenants in the nature of easements pass to the transferee of the property whether he has notice of them or not Such covenants bind the land from the inception.

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THE DOCTRINE OF ELECTION AND IT’S THE EXCEPTIONS

STORY defines election as “the obligation imposed upon a party to choose between two inconsistent or alternative rights or claims, in cases where there is a dear intention of the person, from whom he derives one, that he should not enjoy both.”

The equitable doctrine of election implies that he who takes a benefit under an instrument must accept or reject the instrument as a whole. It is the choosing between two inconsistent rights. Thus where X makes a will gifting A’s property to B, and a gift to A, A can only take the gift by giving his own property or its value to B, otherwise he can elect to keep his own property by rejecting the gift as a whole. The principle hi that effect shall be given to every part of the instrument. 

Pomeroy places THE DOCTRINE OF ELECTION under the maxim, “He who seeks equity must do equity.”

The doctrine of election was thus explained by Chitty, J. In re lord Chesham (1886) 1 Ch. D. 466: “The principle on which the doctrine of election is based is that a main shall not be allowed to approbate and reprobate; that if he approbates he shall do all in his power to confirm the instrument which he approbates. The consequences of such a principle cannot be legitimately carried beyond the principle itself; if a man approbates, his obligation is confined to his adopting the· instrument as a whole and abandoning every right inconsistent with it.”

PRINCIPLE OF COMPENSATION

Maitland observes that it is now well settled that THE PRINCIPLE OF COMPENSATION is the true one. Election is not based on THE PRINCIPLE OF FORFEITURE OR CONFISCATION but on THE PRINCIPLE OF COMPENSATION.

ITS REQUIREMENTS

The two necessary conditions for the operation of the doctrine of election are the following:

(1) that the property given to the donee is property of which the donor, and

(2) that the property of the donee given to the third person is property of which the donee, were entitled freely to dispose.

ESSENTIALS FOR THE APPLICABILITY OF THE DOCTRINE:

The doctrine of election generally arises in powers of appointment; and Hanbury summarizes the following essentials which must be present in order to raise a case of election at all:

(1) It must appear by the will itself that the testator intended to give away property which did not in fact belong to him.

(2) The testator must have left something of his own to the person whose property he leaves away to a stranger.

(3) The property left to the stranger must have been something which belonged to the legatee, about whom the question of election arises.

(4). Normally no case far election arises, when a donee of a power makes an appointment in favour of an object of the power, but super adds some proviso in favor of a non-object

(5) The doctrine may apply, not only as between a gift under a claim adverse to the will and outside it, but also as between claims arising under two clauses in the same will.

(6) The doctrine cannot apply so as to compensate for the loss of a gift which was void as an attempt to the rule against perpetuities.

(7) The doctrine cannot operate, unless the person about whom the question arises has power to alienate both the property given to him the will and the property to which he is entitled independently of It.

(8) If the person who should elect dies without electing, the question whether his duty to do so devolves on any other person depends upon the question whether the interest taken by is identical with that of the deceased.

INDIAN LAW

Section 35 of the Transfer of Property Act 1882 embodies the doctrine of election. The requirements of this Section are as under:-

(1) That the transferor transfers a property to another which he has no right to transfer;

(2) And that by the same transaction he confers some benefit to the person whose property he transfers. Where the owner dissents from the transfer he must relinquish the benefit conferred upon him and the benefit intended for him reverts to the transferor.

Sections180-190 or the Indian Succession Act contains similar provisions with regard to election governing testamentary dispositions.

LIMITATIONS

This doctrine is not applicable:

(1) Where the testator has not left his own property to the person whose property he has transferred to a stranger; or

(2) Where [I testator makes two or more separate bequests of his own property in the same instrument. Thus where two distinct gifs are made, one being onerous and the other beneficial, the donee is not given the option to elect as to whether he will accept both or neither.

(3) It is also not applicable to the case of creditors, it being applicable to a case of bounty only. When, therefore, there is a devise to a creditor for the payment of his debts, he is at liberty to accept its benefit without prejudicing his legal rights.

CONSEQUENCES OF REFUSAL

If the person whose property is transferred does not agree to such transfer he must give up the benefit conferred. The benefit relinquished reverts to the transferor or his representative. For example, A transfers to C a property ‘X’, belonging to B and in the same instrument confers a benefit of Rs.500 upon B. If B does not agree to the transfer of his property ‘X’ to C, he cannot claim the benefit of Rs. 500.

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FAMILY SETTLEMENT

FAMILY ARRANGEMENT

EXTENT TO WHICH FAMILY ARRANGEMENTS MAY BE ALLOWED TO BE SPECIFICALLY PERFORMED

THE RULE OF STAPILTON V. STAPILTON (1 ATK.2)

A family arrangement is a settlement of a dispute between the members of a family by mutual agreement. A court of equity will decree the performance of such agreements which are entered into to save the honour of family provided the agreements are reasonable. Compromise of a doubtful right is a sufficient foundation of an agreement. It is now settled law that where a compromise is entered into with due deliberation and full disclosure, it will be upheld by the court and will not be set aside on the ground that the parties were under a mistake as to their rights. All that is essential to enable the court to enforce the agreement is that there must be full disclosure of all the material circumstances by the parties. The courts are enjoined to respect family arrangements as they adjust settlement of claims and are arranged expressly to end a controversy between members of the same family, all parties taking chances, and the only ground for setting them aside is that either party has taken advantage of the known ignorance of the other. Thus in Gordon v. Gordon (3 Swanst. 400) the court refused to uphold an arrangement between two brothers whereby the elder brother had given up some of his rights to the younger brother in order to avoid possible litigation about the legitimacy of the younger brother, because the younger brother knew all the time that the elder was undoubtedly legitimate.

STAPILTON V. STAPILTON

In Stapilton v. Stapilton the father wanted to make a provision for both of his sons. His elder son was illegitimate though it was not known to others. He thought that if the elder son was found illegitimate he would be left without any provision in the absence of such an agreement. But if his legitimacy was established then the younger son would have got nothing. In order to prevent the happening of any such contingency he brought about the agreement to make a division of his real estate. In a suit by the elder son to enforce the agreement against the younger one, it was found that the former was illegitimate. The court, however, held that the agreement could not be rescinded as it was a reasonable compromise of doubtful rights for peace and honour of the family. It was accordingly laid down as a rule that where agreements are entered into to save the honour of a family and are reasonable ones, a court of equity will, if possible, decree a specific performance of them.

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MISTAKE AND FRAUD

DIFFERENT WAYS IN WHICH THE COURT MAY GRANT RELIEF AGAINST MISTAKE OR FRAUD

RELIEFS AGAINST MISTAKE OR FRAUD

If there is a mistake or fraud in the contract the court may grant either of the following reliefs:

(a) It may order specific performance with a variation;

(b) It may refuse to enforce specific performance of the contract if the assent was obtained by misrepresentation;

(c) It may order rectification of the instrument so as to express the real intention of the parties;

(d) It may order rescission of the contract; or

(e) It may order cancellation of the instrument.

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MISTAKE

COURTS GRANT RELIEF ON THE GROUND OF MISTAKE OF FACT BUT NOT ON MISTAKE OF LAW

DISTINCTION BETWEEN A “MISTAKE OF FACT” AND A “MISTAKE OF LAW”

Mistake is some unintentional act or omission which is the result of an erroneous impression or ignorance or misplaced confidence.

MISTAKE OF LAW

With regard to the mistake of law the cardinal principle of law is expressed by the maxim ignorantia juris non excusat, i.e. ignorance of law does not excuse. Everyone is presumed to know the law of the land. Mistake of law, however, refers to an abstract question of law and not to the existence or private rights which may even depend on the construction of law. Thus money paid away under mistake of law cannot be recovered.

But as Jessel M.R., observed in Eaglcsfield v. Lord Londonerry (4 Ch. D., 693) it is difficult to draw a hard and fast line between questions of fact and questions of law. There is hardly any question of fact that does not involve incidentally a question of law.

The above proposition that mistake of law does not excuse is hedged in by the following exceptions, viz., it does not apply

(1) to the ignorance of a private right;

(2) to the ignorance of a right which depends upon questions of mixed law and fact;

(3) to mistake as to the law of a foreign country; and

(4) relief will be provided against a mistake of law on the ground of fraud or undue influence or when the mistake is combined with surprise.

MISTAKE OF FACT

With regard to mistake of fact the rule is expressed by the maxim ignorantia facti excusat. i.e. ignorance of fact is a good excuse. Thus it is common place that money paid away under mistake of fact can generally be recovered back. Relief is, however, given only where mistake is material, whether unilateral or mutual, and such as a party could not ascertain by inquiry and reasonable diligence, and which the party knowing ought to have disclosed. But, as Desai observes, no relief can be had if the means of the information were equally open to both parties and no confidence was reposed.

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FRAUD

ACTUAL AND CONSTRUCTIVE FRAUD

NOTES ON ACTUAL FRAUD

HOW FAR EQUITY RELIEVES IN CASES OF ACTUAL FRAUD

STORY defines fraud as all acts, omissions and concealments which involve a breach of legal or equitable duty, trust or confidence, justly reposed, and are injurious to another, or by which an undue or unconscientious advantage is taken by another.

Section 17 of the Indian Contract Act defines ‘fraud’ so as to mean and induce the suggestion as a fact, of that which is not true, by one who does not believe it to be true; the active concealment of a fact by one having knowledge or belief of the fact; a promise made without any intention uf performing it ; any other act fitted to deceive; and any such act or omission as the law specially declares, to be fraudulent.

Fraud is either actual or constructive. Actual fraud is again Sub-divided into misrepresentation and concealment.

ACTUAL FRAUD

Actual fraud is, therefore, anything done or omitted to be done, with a view to committing designedly positive fraud.

Equity will relieve, in the following cases of actual fraud:

1. If there be a misrepresentation or suggestio falsi.

It consists in a false representation of fact made knowingly without a belief in its truth, or recklessly, careless whether it be true or false. No action for damages will lie if the defendant honestly believed in the truth of his assertion.

2. If there is a fraudulent concealment of suppression-veri where it was the legal duty of a person to disclose.

3. If it is an unconscionable bargain as shown by the grossly inadequate consideration which is indicative of the existence of fraud or undue advantage taken.

4. If the transaction has been entered into by a person of unsound mind.

5. if the transaction has been entered into under duress.

In all the above cases of actual fraud, the transaction will be voidable at the option of the party whose consent was caused by fraud or misrepresentation.

CONSTRUCTIVE FRAUD

STORY defines a constructive fraud to mean such ads or contract although not originating in any actual evil design or contrivance to perpetrate a positive fraud or injury upon other persons, are yet, by their tendency to deceive or mislead other persons, or to violate private or public confidence, or to impair or injure the public interests, deemed equally reprehensible with positive fraud, and, therefore, are prohibited by law, as within the same reason and mischief, as acts and contracts done malo-animo.

CONSTRUCTIVE FRAUD FALLS UNDER THREE HEADS

1. Transactions which are treated as fraudulent as being contrary to the general public policy, as contracts in restraint of trade, marriage brokerage contracts, i.e., a contract to reward third Person for bringing about a marriage, contracts to suppress criminal proceedings, etc.

2. Frauds arising on account of an abuse of some fiduciary relationship, as gifts by children to their parents, transactions between client and legal adviser or patient and medical adviser, agent and principal, guardian and ward or trustee and beneficiary.

3. Frauds arising out of catching bargains with heirs, reversioners and expectants during the life of their parents or other ancestors.

The presumption of constructive fraud is made on the weaker party. The courts view with great caution the contracts entered into between persons who stand in such fiduciary relationship that they can influence the will of the other and unless such contracts are entered into with scrupulous good faith they will be set aside. The governing principle is that where influence is acquired and abused or confidence reposed and betrayed equity will give relief; and influence is presumed in cases mentioned in (2) above until the contrary is shown.

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SET-OFF

Set-off is a reciprocal acquittal of debts. In an action to recover money a set-off is a cross-claim for money by the defendant, for which he might maintain an action against the plaintiff, and which has the effect of extinguishing the plaintiff’s claim pro-tanto.

Set-off may be either legal or equitable.

LEGAL SET-OFF

Where in a suit for the recovery of money, the defendant claims to set-off against the plaintiff’s demand any ascertained sum of money legally recoverable by him from the plaintiff not exceeding the pecuniary limits of the jurisdiction of the court, and both parties fill the same character, as they fill in the plaintiff’s suit the defendant may, at the first hearing of the suit, but not afterwards unless permitted by the Court, present a written-statement containing the particulars of the debt sought to be set-off.

THE SET-OFF MENTIONED ABOVE IS A LEGAL SET-OFF WHICH REQUIRES THE FULFILLMENT OF THE FOLLOWING CONDITIONS:

(a) The suit must be for recovery of money.

(b) The defendant should claim ascertained sum of money.

(c) The ascertained sum must be legally recoverable from the plaintiff.

(d) The plaintiff’s claim and the set-off must be claimed in the same character. The amount must be recoverable by the defendant and if there are more than one defendant, the debt must be recoverable by all the defendants.

(e) The set-off should be within the pecuniary jurisdiction of the court.

EQUITABLE SET-OFF

By equitable set-off we mean that form of set-off which the Courts of Equity in England allowed when cross-demands arose out of the same transaction, even if the money claimed by way of set-off was an unascertained sum of money.

Such a set-off is called an equitable set-off.

It was observed by Lord Mansfield in Green v. Farmer (4 Burr. 2220), that natural equity said that cross-demands should compensate each other by deducting the lesser sum from the greater; and that the difference was the only sum which could be justly due.

In India, the distinction between legal and equitable set-off remains. The provisions as to legal set-off are laid down in O. 8, r. 6 of the Code of Civil Procedure. So far as equitable set-off is concerned, it is provided by O. 20, r. 19 (3) which reads:

“The provisions of this rule (relating to a decree for set-off and an appeal there from) shall apply whether the set-off is admissible under S.6 of Order VIII or otherwise.”

AS REGARDS A SET-OFF THE FOLLOWING POINTS MAY BE NOTED:

(1) For set-off, the claim must be enforceable by an action. It is not available if the debt is barred by the statute.

(2) A set-off is allowed only when the claim exists between the same parties and in the same right.

(3) A debt of which the defendant is only an assignee may bet set-off.

(4) A set-off will not be allowed if the right of the third person is affected.

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.

EQUITABLE RIGHTS-3

SALE WITHOUT THE INTERVENTION OF THE COURT

Section 69 of the Transfer of Property Act deals with the power of the mortgagee to sell the mortgaged property without the intervention of the court. The ordinary rule is that the mortgagee must sue for foreclosure or sale through court or sue for the mortgage money.

But in certain special cases this section gives the mortgagee the power to sell without recourse to courts. Those cases, which have been enumerated in this section, are detailed as under:

(1) Where the mortgage is an English mortgage and neither of the parties is Hindus, Mohammadan or Buddhist or a member. The doctrine of tacking is based upon two maxims of equity, of any other race, sect, tribe or class from time to time specified by the State Government.

(2) Where the mortgagee is the Government and the deed confers an express power of sale.

(3) Where the mortgaged property or any part thereof was, on the date of the execution of the mortgage, situate within the

town of Calcutta, Madras, Bombay or in any other town which the

State Government may specify in this behalf and the deed contained

an express power of sale.

CONDITIONS FOR THE EXERCISE OF POWER

Sub-section (2) prescribed certain conditions to be observed before the power can be exercised.

The power arises when default is made in payment of the mortgage money on the due date. But in no case the power be exercised till after three months’ notice to the mortgagor. This notice may be given to anyone of the mortgagors if there are more than one mortgagor. If the mortgagor has come to acquire the knowledge of the sale he has no right of complaint that he has not received notice if there has been no fraud or coil usion in th e matter. (Santosh Kumar Madar v India Bank Ltd., 1967 S.C. 1925).

The mortgagee exercising the power of sale cannot himself purchase the property.

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THE DOCTRINE OF TACKING OF MORTGAGES

The doctrine of tacking applies to equitable interest arising under a mortgage or in any other way.

Tacking means adding a subsequent mortgage to an earlier one. It unites securities given at different times, so as to prevent any intermediate purchasers from claiming a title to redeem the mortgage which is prior, without redeeming or discharging the other mortgages also, which are subsequent to his own title. Thus a third mortgagee having no notice of a second mortgage at the time his mortgage was made, might subsequently acquire the first mortgage and squeeze out the second mortgagee.

“There is, certainly, great apparent hardship in the application of the doctrine of tacking; for it seems conformable to natural justice that each mortgagee should, in such a case, be paid according to the order and priority of his incumbrance.”

The doctrine of tackling is based upon two maxims of equity viz.,

(i) He who seeks equity must do equity; and

(ii) where ere equities are equal the law shall prevail. When two persons have equitable claims over one and the same property and one of them in addition also gets the law on his side, i.e., obtains legal possession and equal equity, then he who has got legal estate shall have prior\claim. Thus suppose there are successive mortgages such as

X is mortgage d to …………….A

X is subsequently mortgaged to ……………B

X is again mortgaged to …………C

and A is in possession of the legal estate, the subsequent mortgagees B and C having equitable right only. Under the doctrine of tacking, if C who had advanced on his mortgage without notice of a second mortgage to B at the time his mortgage was made, pays off A and gets into possession of the estate X, he gets priority over B and might squeeze out the second mortgagee, though C’s mortgage was executed subsequently to that of B. But if the third mortgagee had paid off the first mortgage with notice of the intermediate mortgage of B, he could not squeeze out the second mortgage by uniting the two mortgages on the maxim where equities are equal, the first in time shall prevail. It was held in Marsh v. lee (1670) 9 Ventris, 337, that if a third mortgagee, having advanced his money  

without notice of a second mortgage, afterwards buys in a first mortgage, then such third mortgagee, having obtained the first mortgage and having the law on his· side and equal equity, shall there by squeeze out and gain priority over the second mortgagee.

The doctrine of tacking was, however, inapplicable where it was equitable to get in the legal estate as where the third mortgagee had notice of the first mortgagee’s being trustee for the second, or the mortgagor being himself a trustee for a third party. That proposition is based on the doctrine that a person claiming to be a bona fide purchaser for value of the legal estate must definitely establish himself as such.

The doctrine of tacking has been abolished in England by the Law of Property Act, 1925. It has introduced the principle of adapting to mortgage of a legal estate in land of the new system or priority by registration. Section 97 of the Law of Property Act, 1952, provides that:

“Every mortgage affecting a legal estate in land made after the commencement of this Act, whether legal or equitable (not being a mortgage protected by the deposit of documents relating mortgages the to the legal estate affacted) shall rank according to its date of registration as a land charge pursuant to the land Charges Act, 1925.”

It thus appears that priority of mortgages, whether legal or equitable, of a legal estate in land depends on registration, except in the case of a mortgage protected by the deposit of documents relating to the legal estate affected.

Section 93 of the Transfer of Property Act: also prohibits tacking in India by providing that “no mortgagee paying off a prior mortgage, whether with or without notice of an intermediate mortgage, shall there by acquire any priority in respect of the original security.” Thus in the above example C may redeem A and be subrogated to the rights of A, but he only takes priority over B in respect of A’s mortgage which he pays off and not in respect of his own mortgage.

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‘HE WHO IS PRIOR IN TIME IS PRIOR IN RIGHT’

As a property may be mortgaged more than once, a conflict is likely to arise as to the rights which the mortgagees possess among themselves. The fundamental rule is:  ‘he who is prior in time is prior in right.’ Suppose a property of the value of Rs. 10,000 is mortgaged first to A for Rs. 5,000 and then to B for Rs. 2,000 and then to C for Rs. 1,000. If the mortgage money is not paid and the property comes to be sold A will get his money first, and then out of the balance B will be paid before C.

Exceptions.-This general rule is subject to the following Under S. 61 of the two exceptions:-

 (1) Section 78 of the Transfer of Property Act lays down that where through the fraud, misrepresentation or gross neglect of a prior mortgagee, another person been induced to advance money on the security of the property mortgaged, the prior mortgagee shall be postponed to the subsequent mortgagee. For example, A has advanced Rs. 5,000 to B by way of deposit of title deeds. C, before advancing money to B enquires of A whether the property is free from incumbrance and A does not mention his own mortgage and tells C that the property is free from mortgage. In such circumstances C will have priority over A.

 (2) Another exception is provided under Section 79. It lays down that a mortgagee who makes a subsequent advance does not acquire priority with respect to that advance over an intermediate mortgagee. Thus A mortgages X to B to secure Rs. 5,000. A thereafter same property to C to secure Rs. 2,000. Subsequently B advances Rs. 1,000 to A on the same security. Here B’s mortgage of Rs. 5,000 is prior to C’s mortgage. Under the rule of priority, the subsequent advance of Rs. 1,000 mare by B is not prior to C’s mortgage. In fact, C’s mortgage of Rs. 2,000 is prior to B’s subsequent advance  of Rs. 1,000. But the exception mare by this section is that if B’s of mortgage No. 1 is to secure a present advance as well as future advances up to a fixed maximum, then any further advance mare by B within that maximum will be treated as part of the first mortgage and take priority over C’s mortgage of Rs. 2,000, No.2, provided C had notice of that type of mortgage.

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CONSOLIDATION OF MORTGAGES

IS A MORTGAGEE BOUND TO REDEEM TWO OR MORE MORTGAGES IN FAVOUR OF THE SAME MORTGAGEE TOGETHER?

It is an equitable doctrine that a mortgagee who held several mortgages by the same mortgagor could insist on the redemption of all, if the mortgagee sought to redeem any of them. This is based upon equitable maxim, “He who seeks equity must do equity”, i.e., a mortgagor seeking to redeem one of sever al mortgages is obliged to redeem all so as ‘to do equity to the mortgagee by redeeming all the mortgages.

The doctrine is now excluded by S. 93 of the Law of Property Act, 1925, unless a contrary intention is expressed in the deeds. The court does not favour the extension of the doctrine of ‘consolidation of mortgage’.

Under Sec 61 the Transfer of Property Act the law against consolidation lays down that a mortgagor who has executed two or more mortgages in favour of the same mortgagee shall be entitled to redeem separately or simultaneously.

Illustrations

(1) A, the owner of farms Z and Y, mortgages Z to B for Rs.1,000. A afterwards mortgages Y to B for Rs. 1,000. A may institute a suit’ for the redemption of the mortgage of Z alone, or for the redemption of both Z and Y. B the mortgagee, cannot compel A to redeem both Z and Y together.

(2) A mortgages X to B. Later on A mortgages X again to B by a subsequent mortgage. In this case A may either redeem the later mortgage or prior one or redeem them together unless restrained by a contract to the contrary.

In either of the two illustrations the mortgagor has a right to redeem separately or simultaneously and the mortgagee cannot insist the mortgagor to consolidate the mortgage, i..e., redeem all together.

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Marshalling of Securities

Where there are two or more creditors of the same debtor, one creditor having a right to resort to two funds of the debtor for the payment of his debt, and the other to resort to one fund only, the court will so marshal or arrange the funds that both creditors are paid as far as possible.

Thus suppose-

A mortgages X and Y to ……….B

A again mortgages X to ……………C

then, under the doctrine of marshalling B is to realise his debt first out of Y in order to leave as much as possible of X to satisfy C.

The doctrine is thus explained in Halsbury’s Laws of England.

“If the owner of two properties mortgages both to the same person, and afterwards mortgages only one to a second mortgage the court will marshal the two properties so as to throw the first mortgage as far as possible on the property not included in the second mortgage. The principle applies whatever be the nature of the estate, whether, for instance, they are freehold or copyhold; and it extend to charges and liens. But in accordance with the rule that marshalling will not be allowed to the prejudice of a third party, where two

estates, X and Y, are 1fI00tgaqed to A, and X to B, and then Y is mortgagee to C;  B cannot require A to himself out of Y and soexclude C, but, A must satisfy himself rateably out of the estates.  If, however, C s mortgage is expressly subject to prior satisfaction of A and B s debts, then B is entitled to marshal.

In order that a case for marshalling may arise, there must be two or more mortgages of the same mortgage or a common debtor.

The doctrine of marshalling has application to marshalling of assets and marshalling of securities. Applying that doctrine to the marshalling of securities, Lord Hardwicke observed in Lanoy v. Duches5 of Athol [(1742) 2 At K. 444]: “If a creditor has two funds, he shall take his satisfaction out of that fund upon which another creditor has no lien.”

Section 81 of the Transfer of Property Act enacts the provision of the doctrine of marshalling in India.

The doctrine of marshalling lays down a rule of natural justice that none should be permitted from wantonness or caprice to do an injury to another. But marshalling will not be enforced to the prejudice of the prior mortgagee. The prior mortgagee cannot be compelled where there is any doubt as to the sufficiency of the fund or where the fund is of a dubious character or is one which may involve him in litigation to realize. Thus

A mortgages  X and Y to ……………..B.

A mortgages X to ……………..C.

A mortgages Y to ……………..D.

If in the above case C were to insist that B should pay himself

out of Y, there might nothing be left for D. Marshalling will not, therefore, be enforced.

It should be noted that this section safeguards the interests or consideration and not those of a volunteer. The right of marshalling may be excluded by a contract between the parties.

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CONTRIBUTION

It is based on “equality is equity.”

Where several properties, whether of one or several owners, are mortgaged for one debt, they shall contribute rateably to its discharge. 1he rule is based upon the principle that a fund wi1i en is equally liable with another to pay a debt shall not escape because the creditor has been paid out of the other fund alone, but that both should rateably contribute to the debt.

Illustration.-X and Yare mortgaged to M. X belongs to A and Y to B. The value of X is Rs. 10,000 and the value of Y is Rs20,000. X and Y must contribute to the payment of M’s mortgage in the ratio of 1: 2.

In India S. 82 of the Transfer of Property Act enshrines the principles of, contribution. It lays down that where property subject to a mortgage belongs to two or more persons having distinct and separate rights of ownership therein, the different shares in or parts of such property owned by such persons are, in the absence of a contract to the contrary, liable to contribute ratably to the debt secured by the mortgage, and for the purpose of determining the rate at which each such share or part shall contribute, the value thereof shall be deemed to be its value at the date of the mortgage after deduction of the amount of any other mortgage or charge to which it may have been subject on that date. Further, where, of two properties belonging to the same owner, one is mortgaged to secure one debt and then both are mortgaged to secure another debt, and the former debt is paid out of the former property, each property in the absence of a contract to the contrary, liable to contribute rateably to the latter debt after deducting the amount of the former debt from the value of the property out of which has been paid. The section, further lays down that where marshalling and contribution might conflict with each other, marshalling is to prevail.

It is therefore evident that the contribution must be rateably and no alternative method can be adopted for the purpose of ascertaining the rate at which persons who are jointly responsible are to contribute to do so. [Indian Overseas Bank Ltd. v. R.E.M. Ibrahim & others, A.I.R. (1975) Mad. 92].

The doctrine, in the words of Fisher, provides that if several estates be mortgaged for a subject equally to one debt, the several estates shall, contribute rateably to that debt, being valued for the purpose after deducting from each estste any other incumbrance by which it is affected.

The obligation to contribute is personal but not attaches to the properties.

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CONTRIBUTION AND MARSHALLING

Contribution is the converse of marshalling, Marshalling requires that a mortgagee who has the means of satisfying his debt out of several properties shall exercise his right as not to take from another mortgagee the property which forms his only security. Contribution requires that a property which is equally liable with another to pay a debt shall not escape because that mortgagee has been paid out of that fund alone.

The right of contribution is subject to the right of marshalling. Suppose there are two properties X and Y. X is worth Rs. 1,000 and Y is worth Rs.200andYaremortgagedtoAforRs.600.Y is mortgaged to B, for Rs. 1SO.If X and Y contribute towards the debt of A, X must furnish. Rs.500andYRs.100.It means that if the rule of contribution is applied Rs. 100 would be left out of which B will have to be paid. In this case marshalling is to be applied. A shall have his Rs. 600 paid out of X. Y should be left to satisfy the debt due to B.

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THE PERSONS, BESIDES THE MORTGAGOR, WHO CAN CLAIM REDEMPTION OF THE MORTGAGED PROPERTY

 PERSONS WHO MAY SUE FOR REDEMPTION

Besides the mortgagor, any of the fallowing persons may redeem or institute a suit for redemption of the mortgaged property, namely

(a) any person (other than the mortgagee of the interest sought to be redeem) who has any inter.est in, or charge upon, the property mortgaged or In or upon the right to redeem-this will include puisne mortgagees:

 (b) any surety for the payment of the mortgage debt or any part thereof this will include the purchaser of the equity of redemption ;or

 (c) any creditor of the mortgagor who has in a suit for the administration of his estate obtained a decree for sale of the mortgaged property.

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PRINCIPLE OF SUBROGATION

IT IS BASED ON ‘EQUALITY IS EQUITY’

WHO ARE THE PERSONS ENTITLED TO THE RIGHT OF SUBROGATION?

SUBROGATION

The term ‘subrogation’ means substitution.

It is the substitution of one person or thing for another, so the same rights and duties which attached to the original person or thing attach to the substituted person or thing. Prior to the Transfer of Property (Amendment) Act of 1929, this doctrine was only confined to a subsequent mortgagee paying off a prior mortgagee. As a matter of justice and equity, it should apply generally to all cases other than those of a mortgagor who pays off his own debt or of a mere volunteer. In Biseswar Prasad v. Lala Sarnam Singh (1907) 6 Cal. L.J. 134, it was observed as follows:

“While ‘the doctrine will be applied in general wherever the person other than a mere volunteer pays a debt or a demand, which in equity or good conscience should have been satisfied by another or where the liability of one person is discharged out of a fund belonging to another, or where one person is compelled for his own protection or that of some interest which he represents to pay a debt for which another is primarily responsible or wherever a denial of the right would be contrary to equity and good conscience, the doctrine will never be permitted where application of it would work injusticeto the rights of those having equal or superior equities.”

The Report of the Special Committee pointed out:

“In our opinion, all persons who have an interest in the mortgaged property or in the right of redemption, except the mortgagor, that is, all those who are referred to in section 91 as having the right of redemption, should be entitled to be subrogated to or substituted in the place of the creditor who is paid off.”

In order to give effect to the above re commendation, the Amending Act of 1929 omitted sections 74 and 75 and provided section 92, which is more comprehensive than the old sections.

Section 92 of the Transfer of Property Act lays down that when a person other than mortgagor pays off the mortgage money he is substituted in the place of the mortgagee whom he pays off.

ILLUSTRATIONS:-

(1) A mortgages to B.

A mortgages to C.

C pays off B and stand in his place.

(2) A and B mortgage ‘X’ to C. B is the surety. B can payoff C and be subrogated to the place of C.

In equity the doctrine of subrogation has been applied in three cases:

 (1) Where a person has supplied money to the wife for necessaries;

 (2) where a person has lent money to a company which borrowed it in excess of its borrowing powers, and the money has been applied in reducing the liabilities of the company; and

(3) where an executor has incurred debts in carrying on the business of a testator.

Kinds of subrogation.-Subrogation is of two kinds:

(a) legal and

(b) conventional, i.e., by agreement.

(a) Legal subrogation.-It arises by operation of law. According to section 92, any of the persons referred to in section 91 on redeeming property subject to the mortgage have, so far as regards redemption, foreclosure or sale of such property, the same rights as the mortgagee whose mortgage he redeems may have against the mortgagor or any other mortgagee. In Laxmi Ramji v. Smt. Lohana Rao. A.I.R. 1970 Guj. 73, it was observed that the person desiring the legal subrogation must prove-

(i) that he had pre-existing interest or charge on the property;

(ii) that he had redeemed the same in full; and

(iii) That he had paid the amount for the protection of his interest.

 (b) Conventional Subrogation.-A conventional subrogation takes place where the person paying off the mortgage debt is a stranger and has no interest of his own to protect, but he advances money under an agreement, express or implied, that he would be subrogated to the rights and remedies of the mortgagee whose mortgage is paid off by his money.

The doctrine of subrogation is not applicable to a mere stranger and volunteer who has paid the debt to another without any agreement for subrogation. Partial redemption of the mortgage debt also does not give rise to the right of subrogation.

PERSONS ENTITLED TO THE RIGHT

The persons who are entitled to the right of subrogation are the following:

1. Any person who has any interest in the property mortgaged or in the right to redeem, viz., a puisne mortgagee redeeming a prior mortgagee and a purchaser of the right of redemption redeeming a mortgage 2. A co-mortgagor redeeming the mortgage.

3. A mortgagor’s surety redeeming the mortgage.

4. Any creditor of the mortgagor who has obtained a decree for sale of the mortgaged property.

Section 69 of the Indian Contract Act also embodies the doctrine of subrogation. It enacts: “FA person who is interested in the payment of money which another is bound by law to pay, and who therefore pays it is entitled to be reimbursed by the other.

ILLUSTRATIONS

B holds land in Bengal, on a lease granted by A, the zamindar. The revenue payable by A to the Government being in arrear, his land is advertised for sale by the Government. Under the revenue law, the consequence of such sale will be the annulment of B’s lease. B, to prevent the sale and the consequent annulment of his own lease, pays to the Government of the sum due from A. A is bound to make good to B the amount so paid.

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A MORTGAGED A HOUSE TO B. THE HOUSE WAS LATER ON ACQUIRED BY THE GOVERNMENT UNDER THE LAND ACQUISITION ACT

IS B ENTITLED TO LAY CLAIM TO THE COMPENSATION MONEY PAYABLE TO A?

Sub-section (2) of S. 73 provides that where the mortgaged property or any part thereof or any interest therein is acquired under THE LAND ACQUISITION ACT, 1894, or any other enactment for the time being in force providing for the compulsory acquisition of immovable property, the mortgagee shall be entitled to claim payment of the mortgage-money, in whole or in part, out of the amount due to the mortgagor as compensation. In accordance with these provisions the mortgagee B is entitled to claim payment out of the sum awarded as compensation.

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LIEN

VARIOUS DIVISIONS AND DISTINCTION BETWEEN THEM

EQUITABLE LIEN AND SOLICITOR’S LIEN

A lien is the right to hold the property of another as security for the performance of an obligation.· According to STORY a lien is not, in strictness, a jus in re or jus ad rem but it is simply a right to possess and retain the property subject thereto, until some charge attaching to it is paid or discharged.

A lien may either be legal or equitable. A legal lien is that which was recognized by the common law; an equitable lien is that which was recognized and enforceable only in courts of equity.

POSSESSORY LIEN

An instance of legal lien recognized by common law is furnished by possessory ‘lien. Bankers, factors, wharfingers attorneys of a High Court and policy brokers may retain, as a security for general balance of account, any goods bailed to them. Possessory liens may either be general or particular. The former III enables the person in possession of chattels to retain them until all his claims against the owner of the chattels are satisfied. There is a general lien in the case of solicitors, bankers, factors, stockbrokers,  etc. A particular lien enables the possessor to retain the goods until all charges incurred by him in respect of those goods only have been paid. An artisan’s right to retain an article delivered to him to work until he is paid for the labour expended thereon furnishes an instance of particular lien.

EQUITABLE LIEN

An equitable lien is an equitable right conferred upon one man to a charge upon the real or personal property of another until the satisfaction of certain specific claims. An equitable lien does not depend upon possession and is not enforceable against a purchaser for value without notice.

A legal lien differs from an equitable lien in two ways, viz.,

(1) There is an element of possession involved in a legal lien, conferring on the person in possession to detain the property until payment; equitable lien exists irrespective of possession, and enables the owner of such lien to have the right to a judicial sale to satisfy the lien;

(2) The common law lien is lost as soon as the person loses possession of the property subject to the lien, but as long as it lasts it is available against the whole world; an equitable lien cannot be asserted against the purchaser of the legal estate for value without notice of the lien, but it binds every person receiving the property even for value if such person had notice of the lien.

Kinds of Equitable lien.-The two important kinds of equitable lien are:

(1) vendor’s lien on land, and

(2) vendee’s lien on land.

 (1) Vendor’s lien on Land.

The principle underlying the vendor’s lien on land was thus explained by Lord Eldon in Mackreth v. Symmons (15 Ves.  329) ;

“Where a vendor, in compliance with a contract for the sale of an estate, executes conveyance thereof but the purchase money is wholly or partially unpaid, then, notwithstanding that on the face of the conveyance it is expressed to have been paid, or that a receipt for it is endorsed thereon, the vendor has a lien on the estate for the money remaining due to him.”

The vendor’s lien is enforceable against

(i). the purchaser himself and his heirs and all persons taking under him or them as volunteers;

(ii) subsequent purchasers of the property for valuable consideration but with notice of the lien; and

(iii) the assignee in bankruptcy of the purchaser.

The vendor’s lien may be lost by express or implied waiver, latches, or by limitation.

(2.) Vendee’s lien on Land.-This arises where the vendee after having paid the purchase--money or any part of it is unable to enforce the contract for want of title in the vendor, or for any other valid reason does not enforce the contract.

Solicitor’s lien.-A solicitor may have

(i) a general, passive or retaining lien,

(ii) a common law lien on property recovered or preserved through his instrumentality, or

(iii) a statutory lien enforceable by a charging order.

The solicitor’s general lien enables him to retain deeds, books and papers of his clients coming into his hands as solicitor for the purpose of his cost of litigation. The lien is available only against the client and not against third persons. The lien is not defeated on account of his discharge by the client.

The solicitor’s lien at common law extends to property recovered or preserved or proceeds of any judgment obtained for the client by his efforts. Such lien extends only to costs of recovering or preserving the property in dispute including, of course, costs or protecting his right to such trusts, and does not extend to the general balance of account or to real property.

In India, in the absence of a statute governing solicitor’s lien, the English common law governs the rights and duties of attorneys and it has been held that this lien is upon the funds, money or property recovered for the client by his solicitor. Section 171 of the Indian Contract Act provides that attorneys may, in the absence of a contract to the contrary, retain as a security for general balance of account, any goods bailed to them. A solicitor has therefore, a general lien upon all his client’s papers and documents for payment of all taxable costs, charges and expenses incurred by him on behalf of his client.

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.