CRITICAL ANALYSIS OF DOCTRINE OF PRIORITY OF RIGHTS

A Project submitted in partial fulfilment of the course PROPERTY LAW,

3rd SEMESTER during the Academic Year 2018-2019

SUBMITTED BY:
Abhishek Singh
Roll No. - 1606
B.B.A LL.B

SUBMITTED TO:
Dr. BRN Sharma
FACULTY OF PROPERTY LAW

SEPTEMBER, 2018

CHANAKYA NATIONAL LAW UNIVERSITY, NAYAYA NAGAR,

MEETHAPUR, PATNA-800001
 DECLARATION BY THE CANDIDATE

I hereby declare that the work reported in the BB.A. LL.B (Hons) Project Report entitled
“CRITICAL ANALYSIS OF DOCTRINE OF PRIORITY OF RIGHTS” submitted at
Chanakya National Law University; Patna is an authentic record of my work carried out
under the supervision of Dr. BRN Sharma. I have not submitted this work elsewhere for any
other degree or diploma. I am fully responsible for the contents of my Project Report.

(Signature of the Candidate)

ABHISHEK SINGH
Chanakya National Law University, Patna

i
 ACKNOWLEDGEMENT

“IF YOU WANT TO WALK FAST GO ALONE

IF YOU WANT TO WALK FAR GO TOGETHER”
A project is a joint endeavor which is to be accomplished with utmost compassion, diligence
and with support of all. Gratitude is a noble response of one’s soul to kindness or help
generously rendered by another and its acknowledgement is the duty and joyance. I am
overwhelmed in all humbleness and gratefulness to acknowledge from the bottom of my
heart to all those who have helped me to put these ideas, well above the level of simplicity
and into something concrete effectively and moreover on time.
This project would not have been completed without combined effort of my revered Property
Law teacher Dr. BRN Sharma whose support and guidance was the driving force to
successfully complete this project. I express my heartfelt gratitude to him. Thanks are also
due to my parents, family, siblings, my dear friends and all those who helped me in this
project in any way. Last but not the least; I would like to express my sincere gratitude to our
Property Law teacher for providing us with such a golden opportunity to showcase our
talents. Also this project was instrumental in making me know more about the CRITICAL
ANALYSIS OF DOCTRINE OF PRIORITY OF RIGHTS. This project played an important
role in making me understand more about the people who are competent to transfer and who
are not. It was truly an endeavour which enabled me to embark on a journey which redefined
my intelligentsia, induced my mind to discover the intricacies involved in the competency of
the people in the transfer of property.

Moreover, thanks to all those who helped me in any way be it words, presence,
Encouragement or blessings...

- ABHISHEK SINGH
- 3rd Semester
- B.BA LL.B

ii
 TABLE OF CONTENTS

Declaration…………………………………………………………………………………….i

Acknowledgement…………………………………………………………………………….ii

Table of Contents…………………………………………………………………………….iii

Aims and Objectives……………………………………………………………………….…iv

Research Methodology……………………………………………………………………….iv

Limitations……………………………………………………………………………………iv

1. Introduction………………………………………………………………………….1-3

2. Basis of Doctrine of Priority of Rights………………….…………………...……...4-5

3. Applicability of the Rule……..……………………………………………………...6-7

4. Equality of Partition……………………………………...…………………….......8-10

5. Exceptions to this Rule…………...…………………………….………………...11-13

6. Conclusion………………………………………………………………………..14-15

Bibliography……………………………………………………………………........………16

iii
 AIMS AND OBJECTIVES

The Aims and Objectives of this project are:

1. To study doctrine of priority of rights.
2. To study the basis of doctrine of priority of rights.
3. To study the evolution of doctrine of priority of rights.

RESEARCH METHODOLOGY

For this study, doctrinal research method was utilised. Various articles, e-articles, reports and
books from library were used extensively in framing all the data and figures in appropriate
form, essential for this study.
The method used in writing this research is primarily analytical.

LIMITATIONS

The presented research is confined to a time limit of one month and this research contains
only doctrinal works which are limited to library sources.

iv
 INTRODUCTION

As per, section 48 of the Transfer of Property Act;

“Priority of rights created by transfer.—Where a person purports to create by transfer at
different times rights in or over the same immoveable property, and such rights cannot all
exist or be exercised to their full extent together, each later created right shall, in the absence
of a special contract or reservation binding the earlier transferees, be subject to the rights
previously created.”
Section 78 of the Act, provides that where a person intends to create by transfer at different
times, different rights over the same immovable property and such rights cannot exist
together, each later created shall in the absence of contract to contrary, binding the earlier
transferees, be subject t the rights previously created.
The transfer cannot prejudice the rights of the transferee by any subsequent dealing with the
property. This self-evident proposition is expressed in the equitable maxim qui prior est
tempore potior est jure. This means that the first in time prevails over the others. Section 48
of the Transfer of Property Act embodies this principle in legislation. 1 The application of this
maxim in English law is complex by the preference given to the legal estate over the
equitable interest. This complication does not occur in Indian Law, but the rule in India is
subject to certain exceptions which will presently be noticed. If there are successive transfers
of the same property, the later transfer is subject to the prior transfer.2
Mere registration does not convey the title to a purchaser.3 A transfer operates from the date
of execution of the deed, although it may have been registered at a later date. 4 Registration is
not a formality which creates any rights. It is prima facie proof of intention to transfer the
title. It is no proof of operative transfer.5 Customarily, the sale deed which was registered first
has to prevail in the matter of conveyance of title over others. 6 The title under sale deed
passes on the date of execution of the sale deed, even if the registration of the sale deed is
completed on later date, it must relate back to the date of sale.7 Therefore, an agreement to

1
S. Arunachalam v. Sivan Perumal Asari, AIR 1970 Mad 226 at p.230.
2
K.J. Nathan v. S.V.. Maruty Reddy and Ors. AIR 1965 SC 430
3
Gostho v. Dulabram AIR 1933 Cal 544
4
KJ Nathan v. SV Maruthi Rao AIR 1965 SC 430
5
Sheo Narain Singh v. Darbari Mohton (1897) 2 CWN 207
6
GN Devan v. Habitunissa & Others (1987) SCC 688 (Supp).
7
Kameshwar Choudhary v. State of Bihar 1998 Pat 141

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sell executed prior to date of attachment of judgment, but registered thereafter, would prevail
over such attachment.8
Section 48 of the Transfer of Property Act 1882 is founded upon the important principle that
no man can convey a title than what he has. If a person has already affected a transfer, he
cannot derogate from his grant and deal with the property free from the rights created under
the earlier transaction. Section 48 is an absolute in its terms and does not contain any
protection or reservation in favour of a subsequent transferee who has no knowledge of the
prior transfer.9
The ownership under sale deed passes on the date of the execution of the sale deed,
irrespective of the date of registration.10 So, a registered sale deed will not be defeated by
another deed executed later, but registered earlier.11 And if a deed is registered after suit is
filed, the transfer will not be subject to lis pendens if the deed was executed before the suit
was filed.12 The doctrine of lis pendens was intended to strike at attempts by parties to a
litigation to circumvent the jurisdiction of a court, in which a dispute on rights or interests in
immovable property is pending, by private dealings which may remove the subject matter of
litigation from the ambit of the court’s power to decide a pending dispute of frustrate its
decree.13 The whole object of the doctrine of lis pendens isto subject parties to the litigation
as well as others, who seek to acquire rights in immovable property which are the subject
matter of litigation, to the power and jurisdiction of the Court so as to prevent the object of a
pending action from being defeated.14 The real test is the intention of the parties. In order to
constitute a ‘sale’, the parties must intent to transfer the ownership of the property, and they
must also intend that the price would be paid either in praesenti or in future.
In case of Duraiswami Reddi v. Angappa Reddi15 it has been held that the prior transferee
would be entitled to enforce his rights though his document is registered later and even if the
subsequent transferee entered into transactions bona fide without knowledge of the first
transaction. It was held that this result was implicit and was a direct consequence of the
combined operation of Section 47 of the Registration Act and Section 48 of the Transfer
of Property Act. It is also observed that the right of priority of the first transferee would be

8
Adinarayana v. S. Gafoor Sab AIR 2004 AP 377
9
Duraiswami Reddi v. Angappa Reddi, (1945) I M.L.J 425
10
Supra Note 7
11
Narayan v. Laxuman (1905) ILR 29 Bom 42
12
Venkataramana v. Rangiah (1992) 41 Mad LJ 399
13
Rajendra Singh & Others v. Santa Singh & Others AIR 1973 SC 2537
14
ibid
15
Supra Note 9

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postpones only if the later transferee establishes any informative circumstances like fraud,
estoppels or gross negligence.
Where two deeds bearing different dates are registered on different days, priority as between
them is ascertained with reference to the dates of the deeds and not with reference to the date
on which they were respectively registered; and this priority is not influenced by the fact that
the party having the later deed is in possession of the property.16 Where after execution, but
before registration, the deed is lost and another had to be executed in its place, the vendor
having between the two dates re-sold the property by a registered deed to another with notice
of the prior sale, it has been held that the first purchaser was entitled to a decree on his sale-
deed.17
Section 48 determines the priority when there are succeeding transfers. It provides 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 fullest 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. Section 49 of the
Registration Act provides that until the document is registered, it shall not affect any
immovable property nor can the document be received in operation of the provisions of
Sections 48 and 54 of the Transfer of Property Act and there would be compliance of
provisions of Section 54 of the Transfer of Property Act as well as Section 49 of the Indian
Registration Act.
The question of main concern has, therefore, to be determined only with reference to the
principle embodied in Section 48 of the Transfer of Property Act. Section 48 incorporates an
important principle that no man can convey a title better than he himself possessed. If a
person has affected a transfer of property, he cannot thereafter deal with the same property,
ignoring the rights already created by the earlier transfer effected by him.
Therefore, According to Section 48, the transferor cannot prejudice the rights of the
transferee by any subsequent dealing with the property. This self-evident proposition is
expressed in the equitable maxim qui prior est tempore prior est jure. The section is just an
expression of this well-known common law principle.

16
Supra Note 11
17
Nalappa Reddi v. Ramalingachi Reddi, I.L.R. 20 Mad. 250.

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 BASIS OF THE DOCTRINE OF PRIORITY OF RIGHTS

An agreement to sale always precedes the process of actual execution of the sale deed. An
agreement to sale is a very important stage of the whole process. An agreement to sell is an
important document in the process of sale and purchase of property. This agreement contains
the terms and conditions agreed upon between the parties. It further binds them too. An
agreement to sell is the basic document on which a conveyance deed is drafted. It is always
advisable to have an agreement to sell in writing.
It is a principle of natural justice that if rights are created in favour of two persons at different
times, the one who has the advantage in time should also have the advantage in law. This
rule, however, applies only to cases where the conflicting equities are otherwise equal.18
Section 48 of the Transfer of Property Act 1882 is founded upon the important principle that
no man can convey a title than what he has. If a person has already effected a transfer, he
cannot derogate from his grant and deal with the property free from the rights created under
the earlier transaction. Section 48 is an absolute in its terms and does not contain any
protection or reservation in favour of a subsequent transferee who has no knowledge of the
prior transfer.19
Madras High Court in Duraiswami Reddi v. Angappa Reddi20 held that the prior transferee
would be entitled to enforce his rights though his document is registered later and even if the
subsequent transferee entered into transactions bona fide without knowledge of the first
transaction. It was held that this result was implicit and was a direct consequence of the
combined operation of Section 47 of the Registration Act and Section 48 of the Transfer
of Property Act. It is also observed that the right of priority of the first transferee would be
postpones only if the later transferee establishes any informative circumstances like fraud,
estoppels or gross negligence.
Reference may be made to the following observations at page. 426. "Such a plea, if allowed
would lead to much fraud. If a later document registered earlier is to prevail over an earlier
document registered later it would always be easy for the vendor and the later purchaser to
enter into a transaction within the time given for registration of the earlier document and get
the new deed registered immediately and thus defeat the purchaser under the earlier deed."

18
S. Arunachalam v. Sivan Perumal Asari, AIR 1970 Mad 226 at p.230.
19
Supra Note 15
20
ibid

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This decision was followed in a later decision of the Madras High Court in Ramaswami Pillai
v. Ramaswami Naicker,21 as well as in the Bench decision of the Andhra Pradesh High Court
in Jagannatha Rao v. Raghavarao.22
In K.H. Nathan v. Maruthi Rao23, it was held by the Supreme Court that the mortgage-deed
became effective and operative from the 5th July, 1947, when the mortgage was registered
and would prevail over a transfer which took place between the date of the execution and
registration of the earlier transaction.
If there are successive transfers of the same property, the later transfer is subject to the prior
transfer.24
Mere registration does not convey the title to a purchaser. A transfer operates from the date of
execution of the deed, although it may have been registered at a later date. Registration is not
a formality which creates any rights. It is prima facie proof of intention to transfer the title. It
is no proof of operative transfer. Customarily, the sale deed which was registered first has to
prevail in the matter of conveyance of title over others. The title under sale deed passes on the
date of execution of the sale deed, even if the registration of the sale deed is completed on
later date, it must relate back to the date of sale.
Therefore, an agreement to sell executed prior to date of attachment of judgment, but
registered thereafter, would prevail over such attachment. Therefore, according to Section 48,
the transferor cannot prejudice the rights of the transferee by any subsequent dealing with the
property. This self-evident proposition is expressed in the equitable maxim qui prior est
tempore prior est jure.

21
AIR 1960 Mad 396.
22
(1963) Andh. W.R. 267
23
AIR 1965 SC 430
24
State of Andhra Pradesh v. Shri Rajah Ram Janaradhana Krishna Rangarao Bahadur Varu AIR 1966 A.P. 233

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 APPLICABILITY OF THE RULE

At the common law priority of right as between successive transfers of interests in land by the
same transferor is determined by priority in time.25 If A, who is seised in fee, makes a grant
of a term for years to B and subsequently grants another term to C, the second termor, C, is
not entitled to enter upon the land until the first term has ceased by effluxion of time,
surrender or otherwise. So if successive freehold interests are carved out of the fee by
different conveyances, the estate of the second grantee cannot take effect until the estate of
the first grantee has terminated.26 This results from the fact that if a grantor has transferred a
present interest and right to possession there is no present interest left for the second
transferee. Notice and lack of notice have no scope of operation in such a case. The good
faith of the purchaser can give rise to no interest where none can exist.27 Neither did the
absence of a valuable consideration affect the priority as between successive transferees from
the same transferor at the early law, except where it was provided otherwise by statute.28
As between competing successive equitable interests in the same subject matter, created by
the same transferor, the general equitable doctrine concerning priorities is that .the order of
time governs. If the owner of an equitable interest, the legal estate being outstanding, has
mortgaged his interest or granted an annuity and afterwards undertakes to convey his whole
interest to a purchaser, the latter acquires only such interest as was left in his transferor after
the mortgage or annuity was made.29 If the subsequent transferee has notice, at the time of the
transfer, of the prior competing equitable interest, priority of right is ordinarily not affected
thereby.30

25
Ralph W. Aigler, The Operation of the Recording Acts, 22 Mich. L. Rev. 405, 406 (1924).
26
Likewise, if A, who is seised of Blackacre in fee, transfers the fee to B and then purports to transfer the fee to
C, the latter would take nothing at law. There is a total absence of title in A to transfer to C. The departure
from this rule, resulting from the recording acts, will be subsequently discussed.
27
Iowa Land & Trust Co. v. United States, 217 Fed. 11 (1914).
28
There are some statutes that have this effect. For instance, the statute of 27 Eliz., c. 4, provides that transfers
of interests in land made for the purpose of defrauding subsequent purchasers for a valuable consideration are
void as to such purchasers. A conveyance made without valuable consideration, and followed by a conveyance
for value by the grantor, was voidable under this statute. Adams' Equity, 5th Am. ed., 303. The bankruptcy and
insolvency acts provide that certain transfers made by a bankrupt or insolvent shall be void. The principles that
govern, in construction of these acts, are foreign to this disc
29
Tiffany on Real Property, 2nd ed., § 566 (c); Phillips v. Phillips, 4 De G. F. & J. 208 (1861), per Lord Westbury.
"It is the settled doctrine of this court that where the equities of the parties are equal, and neither has the
legal title, the one who has the prior equity must prevail." Per Chancellor Walworth, in Grimstone v. Carter, 3
Paige's Ch. 420, 436 (1832).
30
Tiffany, op. cit. ibid

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Where the competition is between a mortgagee by deposit of title-deeds and a subsequent
purchaser, the principle embodied in Section 48 is applicable.31
Section 48 of the Transfer of Property Act does not admit of any exception.32
In Sitaram v. Rajnarain33, Rachpal Singh, J., and Smith, J., have held that the question of
priority between a mortgagee and a subsequent purchaser is governed by Section 48 and is
not protected by the provisions of Sec.41 there is no proof of negligence not the part of the
mortgagee.
The right of priority will have to be determined by the combined operation of Section 48 of
the Transfer of Property Act and Sections 47 and 49 of the Registration Act. Any undue
emphasis upon Section 49 of the Registration Act in isolation would render nugatory and
useless the equally important provisions in Section 47 of the Registration Act and Section 48
of the Transfer of Property Act. Once the document is registered, Section 49 of the
Registration Act has no relevance and the document takes effect from the date of its
execution by reason of Section 47 of the Registration Act will necessarily have to be
determined in accordance with the rule embodied in Section 48 of the Transfer
of Property Act.34
The charge which the Plaintiff has under the indemnity clause in the partition deed is not
entitled to priority or even equality with the charge which Defendant 1 has for the money due
to him for he is entitled to priority over the charge in Plaintiff's favour.35
Subsequent lease cannot operate to the prejudice of the old tenant.36

31
Bisseswar Poddar v. Nabadwip Chandra Poddar, AIR 1961 Cal 300
32
Ishwar Dass Malhotra v. Dhanwant Singh, 26 (1984) Delhi Law Times, 377
33
AIR 1934 Oudh. 283
34
(1969) 2 MLJ 530.
35
Narayana Bhatta v. Shankara Narayana Bhatta, 1958 Ker. L.T. 41
36
Nihal Chand v. Natha Singh, (1962) 64 Punj. L.R. 680. at pp. 684-85.

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 EQUALITY OF PARTITION

The Transfer of Property Act, 1882 happened to be one of the early legislations of the
nineteenth century. The Act is having an important place in the statute book with the main
objective to render the system of transfer of immovable property a system of public transfer.
Registration is therefore generally insisted upon for completing transfer, except in cases of
transactions of small value.
Property is a very wide term and would include anything which carries some value and over
which the right of ownership may be exercised. The word property in its most comprehensive
sense includes all legal rights of a person except his personal rights, which constitute his
status or personal condition.37
Under English law, property is generally classified into real property and personal property.
Real property comprises of all properties admitted to specific recovery and is freehold
interests in land. Property in respect of which only a personal action lay was classified as
personal property, i.e., which comprised of all forms of property other than real property. The
distinction in English law between real and personal property is paralleled in Indian law by
the distinction between immovable and movable property.
When there are successive mortgages in favour of different persons in respect of the same
property, questions of priority arise as between the mortgages inter se. The property may be
insufficient to meet all the encumbrances and so the question as to the order in which the
liabilities are to be discharged in such cases assumes great importance. The earlier in time
will have priority. But if the earlier mortgagee by fraud, misrepresentation or gross
negligence, induced another person to lend on the security of the mortgaged property, he
forfeits his priority.
Suppose A mortgages his house to a bank to secure his overdraft to the extent of Rs. 10,000.
When his overdraft is only Rs. 3,000, he mortgages the same house to X and borrows Rs.
8,000. Later on his overdraft with the bank rises to Rs. 12,000. The house is sold in
enforcement of the bank's mortgage and fetches Rs. 13,000. How should the money be paid?
If X had notice of the mortgage to the bank, the amount should be distributed thus: first to the
bank Rs. 10,000 (though part of it was advanced after X's mortgage), then Rs. 3,000 to X.
This is because the bank can claim priority for its subsequent advances also when the later
mortgagee had notice of its earlier mortgage.
37
Raichand v. Dattatrya AIR 1964 Bom. 344

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If X had no notice of the bank's mortgage, first to the bank Rs. 3,000, then to X Rs. 8,000,
then to bank Rs. 2,000. Here no priority can be claimed by the bank for the subsequent
advance.
While affecting a partition of the property belonging to the joint family, it would not be
possible to divide the properties by metes and bounds there being necessity of an allocation
of properties of unequal volumes amongst the members of the joint family. Properties of
larger value might go one member and properties of a smaller value of another and therefore
there would have to be an adjustment of the values: by providing for the payment by the
former of the latter by way of equalization of their shares. This position has been recognized
in law and a provision for such payment is termed "a provision for owelty or equality of
partition."38
This provision for owelty is construed as a lien which the co-sharer who is awarded owelty is
deemed to acquire on an excessive allotment of property to the other co-sharer.
It follows that when an owelty is awarded to a member on partition for equalization of the
shares on an excessive allotment of immovable properties to another member of the joint
family; such a provision of owelty ordinarily creates a lien or a charge on the land taken
under the partition. A lien or a charge may be created in express terms by the provisions of
the provisions of the partition decree itself. There would thus be the creation of a legal charge
in favour of a member to whom such owelty is awarded. If, however, no such charge is
created in express terms, even so the lien may even so the lien may exist because it is implied
by the very terms of the partition in the absence of an express provision in that behalf. The
member to whom excessive allotment of property has been made on such partition cannot
claim to acquire properties falling to his share irrespective of or discharged from the
obligation to pay owelty to the other members.39
The principle of the section cannot apply where the two interests do not conflict. Thus in a
case where the property is mortgaged to one and subsequently sold to another, this section
will not apply, for the purchaser has obtained only the equity of redemption. So there is no
conflict between a completed sale and contract for sale, as the latter confers no right on
the property.40

38
T.S.Swaminath Odayar v. Official Receiver of West Tanjore, AIR 1957 SC 577 at pp. 581-82.
39
Mahabir Prasad v. Chhoti Singh, 49 I.C. 39
40
Section 54, Transfer of Property Act.

9|Page
An unregistered sale-deed, where registration is compulsory, would confer also no rights
upon the vendee, and he cannot, therefore, claim as against the registered transferee. 41 But it
is otherwise if the latter had notice of the former.42
If A mortgages or sells to B and afterwards C purchases at a Court-sale the then existing
right, title, and interest of A, C buys in the first case the equity of redemption and in the
second nothing at all. In such a case registration cannot help, for on the very face of his
certificate of sale, the property comprised therein is not the property previously conveyed to
B, but only the residue of A's estate after such conveyance.43
In Chouth Mal v. Hira Lal44, an agreement to sell land in favour of one defendant was
executed on 17th January, 1932. The sale-deed was executed in defendant's favour on 5th
May, 1932. But in the meanwhile owners executed an usufructuary mortgage of the same
land in the plaintiff's favour on 20th February, 1932. It was held that the mortgage must have
its due effect as against the subsequent sale.
Once it is accepted that the parties really intended to convey the suit properties and
possession of the said properties was in fact delivered to the conveyee in pursuance of the
said conveyance, the mere omission of the plot numbers in the sale-deed is not of any
consequence.45
According to Section 48 to the Transfer of Property Act, if the same property has been
transferred at different times the subsequent transfer shall not confer any right, title or interest
on the basis of the subsequent transfer vis-à-vis the first transfer.46

41
Waman Ramchandran v. Dhondiba Krishnaii, 4 Bom. 126
42
Anundo v. Dhonendro, 14 M.I.A. 101
43
Sobhagchand Gulabchand v. Baichand, 6 Bom. 193 F.B.
44
AIR 1950 Ajmer 50.
45
P. Rammurty v. A. Kalpo Patra, AIR 1958 Pat. 193 at pp. 195-96
46
Hafiz Md. Anwar v. Jamuna Prasad Singh, AIR 1958 Pat. 193 at pp. 195-96

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 EXCEPTIONS TO THIS RULE

Section 78 provides that where a person intends to create by transfer at different times,
different rights over the same immovable property, and such rights cannot all exist or be
exercised to their fullest extent together, each later created shall, in the absence of contract to
contrary, binding the earlier transferees, be subject to the rights previously created.
Section 78 acts as an exception to the doctrine of priority of rights by allowing the subsequent
mortgagee to have precedence over the prior mortgagee.
The rule prescribes that the prior mortgagee can receive his claims only after mortgagees
subsequent to him are satisfied with their claims. However, such benefits to the subsequent
mortgagees shall be accrued only when the prior mortgagee played fraud, misrepresentation
or has committed gross negligence whereby another mortgagee advances the money. Section
78, therefore confers a right of recovery into the subsequent mortgagees postponing the claim
of prior mortgagees which played fraud.
Some of the other exceptions to the rule of doctrine of priority of rights are:
(i) Salvage Charges
An exception to the rule qui prior est tempore is to be found in the salvage charges created on
account of advances made to save the encumbered property from loss or destruction. Such
advances are payable in priority to all other charges of earlier date, and amongst themselves
have precedence in the inverse order of their respective dates.47 On the same principle, where
the court authorises the Receiver to borrow money on a mortgage directing that it should
constitute a first charge on the property, it will take priority over any other mortgage though
of an earlier date.48 But in order to confer such priority the loan must have been raised for the
purpose of preserving the property.49 If in such a case the Court even improperly confers
priority, of which the mortgagees affected thereby have notice, the order may hold good
against them unless it is set aside.
(ii) Estoppel
The rule also yields to the equitable principle of estoppel. This, in a case where the first
mortgagee was a witness to the second mortgagee, though there was no actual proof of his
knowing the contents thereof, yet, since the presumption is that he might have known the

47
Fisher, Mortgage, Sec.958.
48
Girdharilal v. Drivendra, I.L.R. 34 Cal 427 at p.441.
49
Ibid

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same, he was postponed to the second encumbrancer.50 So also, where the registered
purchaser was present when possession was made over to the unregistered purchaser, the
former was on that account postpones to the latter.51 A party paying off a prior mortgage is
not stopped but has a right to use that mortgage as a shield against a subsequent mortgage if
his intention was to keep the prior mortgage alive.52 No subsequent mortgage is bound in law
to give notice of his encumbrance to the prior encumbrancers. In any case nothing short of
estoppels would postpone him to the subsequent transferee. The rule is same in England, and
no rule of Hindu law requires such a notice. Mere absence of activity on the part of an
equitable encumbrancer cannot postpone his encumbrance.
(iii) By the Registration
An instrument operates from the date of its execution, and it is immaterial that it is
compulsorily registrable, for in that case too, it will operate from the same date. Where two
or more deeds are executed on the same day and the order of their execution cannot be
ascertained, all the deeds will take effect at once, and pari passu. Such a case is analogous to
that of a devise to A, and then devise of the same estate to B in a subsequent part of the will,
which will give the estate to A and B either jointly or as tenants in common. 53 Where two
deeds bearing different dates are registered on different days, priority as between them is
ascertained with reference to the dates of the deeds and not with reference to the date on
which they were respectively registered; and this priority is not influenced by the fact that the
party having the later deed is in possession of the property.54 Where after execution, but
before registration, the deed is lost and another had to be executed in its place, the vendor
having between the two dates re-sold the property by a registered deed to another with
notice of the prior sale, it has been held that the first purchaser was entitled to a decree on his
sale-deed.55
(iv) By notice
Section 78 enunciates the cases in which the rule of this section would be departed from.
Thus, it has been held that Section 50 of the Registration Act, 1877, did not avoid to give the
holder of a subsequent registered deed priority in respect of his deed over the holder of an
earlier unregistered deed not being compulsorily registrable, if in fact, the holder of the

50
Mocatta v. Murgatroyd, I.P. Wms. 393.
51
Somnathdas v. Sindhu, 5 C.P.L.R. 97
52
Gokaldas Gopaldas v. Puranmal Prem Sukhdas, I.L.R. 10 Cal. 1035 (P.C.)
53
Hopgood v. Earnest, 46 E.R. 581 at p. 582.
54
Supra Note 11
55
Supra Note 17

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registered deed had, at the time of its execution, notice of the earlier unregistered deed. 56 So
where a bona fide contract, whether oral or written, is made for the sale of property, and a
third party, afterwards buys the property with notice of the prior contract, the title of party
claiming under the prior contract prevails against the subsequent purchaser, although the
latter's purchase may have been registered, and although he has obtained possession under
this purchase.57
(v) By possession.
If a person who is about to take a mortgage which must be made by registered deed, finds
some person other than the intending mortgager in possession, the fact of such possession is
sufficient to put the would be mortgagee on enquiry as to the title of such person, and if such
person's title is that of a prior mortgagee under a document not compulsorily registrable, the
second mortgagee cannot, by getting his mortgage registered, obtain priority over the first
mortgagee. Possession in certain cases is notice of the title of the person in possession and a
party intending to deal with the property is bound to inquire into the nature of the
possession. If he assumes that the occupant is a tenant and it appears that he had since
purchased the land, the subsequent transferee would be affected with notice of the purchase.58
(vi) By decree or order
A decree or order passed in respect of a property does not by itself acquire any priority over
registered deeds. A decree or order obtained upon an unregistered prior deed against the
mortgagor alone, subsequently to a registered transfer of the mortgaged property, does not
obtain preference in competition with the latter.59

56
Shivram v. Genu & Hanmantrao, I.L.R. 6 Bom 515.
57
Chunder Kant Roy v. Krishna Sunder Roy, I.L.R. 10 Cal. 710.
58
Khondiba Bin Babaji v. Nana Shidras, I.L.R. 27 Bom 408.
59
Ishan Chandra v. Gonesh, I.L.R. 28 Cal. 139 at p.141.

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 CONCLUSION

There are two distinct ideas underlying the “priority of rights” thesis. The first concerns the
relationship between justice and perfectionist ideals. Here the basic liberal idea is that rights
protect the individuals from paternalistic prescriptions as to how to live their lives, such as
those arising from dominant religious practises. The idea captures clearly the idea of priority
of the right over the good. One might say that, in terms of political justice, it does not matter
whether the claims of certain religious tradition are, in fact, true.
By its very existence, society mandates interaction, exchange or transfer. A property,
movable or immovable, is transferred from one person to another under various different
situations and circumstances and for different values. The transfer may be a gift, an
inheritance or an asset acquired by paying full value.
When a movable property is transferred inter-vivos (between two living persons), Sales of
Goods Act, 1930 comes into play. When an immovable property is transferred from living
person to living person(s), the Transfer of Property Act, 1882 comes into play. In case, the
property is transferred from a dead person to a living person(s), the law applied will be the
Law of succession. Should a person die without leaving a will (intestate), the law of intestate
succession is applicable and in cases where a person dies leaving a will, the law of
testamentary succession is applicable.
Property has a very wider meaning in its real sense. It not only includes money and other
tangible things of value, but also includes any intangible right considered as a source or
element of income or wealth. It is the right and interest which a man has in lands and chattels
to the exclusion of others. It is the right to enjoy and to dispose of certain things in the most
absolute manner as he pleases, provided he makes no use of them prohibited by law. The
research paper would be an analysis of the scope of the Transfer of Property Act, 1882 in
relation to its applicability over movable and immovable property in India. It would
essentially seek to prove or disprove the hypothesis that “Transfer of Property Act deals only
with immovable property.” Most of the provisions of the Act relate to immovable property,
though some of them provide for movable property as well. All these aspects would be
looked into and the thus, the research work would provide an insight into the kinds of transfer
dealt with in the Act and their applicability to movable and immovable property as such.
The legislature has not attempted to define the word ‘property’, but it is used in the Transfer
of Property Act, 1882 in its wider and most generic legal sense. Section 6 says that property

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of any kind may be transferred. Thus, an actionable claim is property and so is a right to re-
conveyance of land. Property is anything which is the subject-matter of ownership, but also
includes dominum or the right of ownership or partial ownership.
Section 48 determines the priority when there are successive transfers. It provides 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 fullest 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. Section 49 of the
Registration Act provides that until the document is registered, it shall not affect any
immovable property nor can the document be received in operation of the provisions of
Sections 48 and 54 of the Transfer of Property Act and there would be compliance of
provisions of Section 54 of the Transfer of Property Act as well as Section 49 of the Indian
Registration Act.
The question of priority has, therefore, to be determined only with reference to the principle
embodied in Section 48 of the Transfer of Property Act. Section 48 incorporates an important
principle that no man can convey a title better than he himself possessed. If a person has
effected a transfer of property, he cannot thereafter deal with the same property, ignoring the
rights already created by the earlier transfer effected by him.
Thus, according to Section 48, the transferor cannot prejudice the rights of the transferee by
any subsequent dealing with the property. This self-evident proposition is expressed in the
equitable maxim qui prior est tempore prior est jure. The section is just an expression of this
well-known common law principle.

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 BIBLIOGRAPHY

Statutes
1. The Transfer of Property Act, 1882
2. Indian Registration Act, 1908

Books
1. Dr. Sir Hari Singh Gour, The Transfer Of Property Act (11th Ed. 2008)
2. M.R. Malik, Goyle's A Commentary On The Transfer Of Property Act ( 2nd Ed.)
3. Mulla, The Transfer Of Property Act 1882 (10th Ed. 2010)
4. R.K.Sinha, The Transfer Of Property Act (11th Ed. 2010)
5. Vera P. Sarthi, G.C.V Subba Rao's Law Of Transfer Of Property (Easments, Trusts
And Wills) (Reprint Ed. 2005)

Websites
1. https://www.manupatrafast.com/articles/PopOpenArticle.aspx?ID=9b1e9f15-12c3-
45a8-ab6f-689dfd38a958&txtsearch=Subject:%20Property
2. https://www.linkedin.com/pulse/doctrine-priorty-rajesh-a/
3. https://indiankanoon.org/doc/177158/
4. http://www.lawskills.in/ResourceDetails/61/rule-of-priority-under-the-transfer-of-
property-act
5. https://lawlex.org/lex-pedia/first-in-time-prevails-over-the-others/2500
6. https://scholarship.law.nd.edu/cgi/viewcontent.cgi?article=4200&context=ndlr
7. http://www.lawyersclubindia.com/articles/Fate-of-simultaneous-agreements-to-sale--
8615.asp
8. https://lawexplores.com/general-law-land-and-priority-principles/
9. http://www.pathlegal.in/Doctrines---principles-udner-the-Property-Laws-blog-922
10. http://14.139.60.114:8080/jspui/bitstream/123456789/738/21/Property%20Law.pdf

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