A Charge Under Transfer of property Act | Immovable Property | The National TV






Where immovable property of a person is made security for the payment of money to another person, without transferring any interest in the property is a charge. Section 100 of the Transfer of Property Act 1882 talks about the charge. The creation of charge is different from the creation of the mortgage.  Charge on an immoveable property is created to secure the payment of money.



A charge can be created either by the act of the parties or by the operation of law. A charge is said to be created by the act of parties when it takes place between 2 living persons. An agreement between 2 or more persons on some immovable property, as a security for repayment of a certain sum of money, without transferring any interest in that property. Where agreement creating charge is in writing and is of the value of rupees 100 or more, it must be registered.



Where a charge is created without reference to any agreement or stipulation between the parties, the charge is created by the law. Charge by operation of law is created by some obligation of law. A charge created by operation of law need not be registered.



A mortgage though looks like a charge but is different than the charge. A mortgage is wider than charge. In every mortgage, there is a charge, but every charge is not a mortgage.  In the case of Raja Shri Shiv Prasad v. Beni Madhab AIR 1922 Pat. 529. the court distinguished between mortgage and charge and observed that whereas a charge only gives a right to payment out of particular fund or property without transferring any interest In the property while a mortgage is a transfer of an interest in specific immovable property.



Hypothecation of moveable property is the creation of charge. It does not operate as a transfer of property and is not required to be stamped.


Lien is also the right of an individual to satisfy a claim out of the property of another.  But it differs from a charge. A charge is jus ad rem and entitles charge-holder to hold the property unless payment is satisfied. Charge- holder also has a right to file a suit for recovery of that money. Lien is not jus ad rem nor jus in rem but entitles a person to hold the property until the claim is satisfied. Lien is created only by the operation of law and can be created on moveable as well as immovable property.



A charge is enforced like a simple mortgage and can be extinguished In the same manner as a simple mortgage.  A charge- holder if abandons his right to claim, his charge may be extinguished, if he releases his debt or claims to recover the money.

A charge can be extinguished by ‘novation’, where a charge-holder enters into an agreement which automatically negatives the effect of the earlier agreement creating charge is novation. A charge can be extinguished also by a merger. The merger is a union of lesser interest with greater interest, charge-holder gets greater security including the earlier lower security and earlier lower security is deemed to be extinguished.



A charge is an important provision of the Transfer of Property Act, with the help of which a person can retain his money, without having any interest in the property, unlike mortgage.





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