Rule
Where immovable property of one person is made security for the payment of money to another, by act of parties or by operation of law, and the transaction is not a mortgage, the other person has a charge on the property (S.100).
- No interest in the property passes to the charge-holder. He gets a right to be paid out of the property.
- The rules for a simple mortgage apply to a charge, so far as they can.
- A charge cannot be enforced against a person who took the property for consideration and without notice of the charge, unless a law says otherwise (S.100, second paragraph).
Not every security over land takes the form of a mortgage. Unpaid sellers, family members and courts often make land answerable for money. S.100 gives these rights a clear remedy without treating them as a transfer.
| Provision | What it says |
|---|---|
| S.100, TPA | Definition of charge; simple mortgage rules apply; no enforcement against a buyer for value without notice |
| S.55(4)(b), TPA | Unpaid seller's charge for the price |
| S.39, TPA | Right to maintenance from the profits of property can be enforced against a transferee with notice |
| S.27, HAMA | Maintenance is a charge only if created by will, decree, agreement or otherwise |
| S.17(1)(b), Registration Act | A document creating a charge on immovable property worth Rs.100 or more must be registered |
Requirements
| # | Requirement | What to check |
|---|---|---|
| 1 | Immovable property of one person | Specific property identified |
| 2 | Made security for payment of money to another | The property itself is made answerable, not merely named as a source of payment |
| 3 | By act of parties or operation of law | Agreement, decree or statute |
| 4 | Not a mortgage | No interest in the property is transferred |
| 5 | Proper form if created by a document | Registration where S.17(1)(b), Registration Act requires it |
An unregistered mortgage deed does not turn into a charge. A document that needed registration and was not registered cannot create any interest or charge (S.49, Registration Act).
How a charge arises
| Source | Example |
|---|---|
| Act of parties | "My house shall stand liable for the Rs.5 lakhs I owe B" |
| Operation of law | Unpaid seller's charge (S.55(4)(b)) |
| Decree or agreement for maintenance | A decree that the husband's house stands charged with the wife's maintenance (S.27, HAMA) |
| Family settlement | One member takes a house subject to paying others |
Remedies of the charge-holder
- He may sue for sale of the property, as a simple mortgagee does.
- He cannot sue for foreclosure, and he has no right to possession.
- S.100 itself gives no personal remedy. Any personal claim depends on the underlying debt or promise.
Illustrations
1. Charge by act of parties
- Facts: Ravi signs a registered document saying he owes Suresh Rs.3 lakhs and that his house shall stand as security. Nothing is transferred.
- Result: Suresh has a charge (S.100). On default he can sue for sale of the house.
- Why: The house is made answerable for the money, but no interest passes.
2. Unpaid seller's charge
- Facts: Kavitha sells her plot to Deepak for Rs.30 lakhs. He pays Rs.20 lakhs and promises the rest later. The deed says nothing about security.
- Result: Kavitha has a charge for Rs.10 lakhs and interest (S.55(4)(b)).
- Why: The charge arises by law when ownership passes before full payment.
3. Maintenance charge
- Facts: A court decree for Meena's maintenance directs that Arun's house stands charged with it. Arun sells the house to a buyer who knows of the decree.
- Result: The buyer takes the house subject to the charge.
- Why: The charge was created by decree, and the buyer had notice (S.39, S.100).
4. Mere source of payment
- Facts: A writes to B: "I will pay you Rs.5 lakhs from the sale money of my house."
- Result: No charge.
- Why: The house is only named as a source of payment. It is not made security.
Key Cases
S.100 is mostly applied on its own words. The case cited in the earlier version could not be verified and has been removed (see the review report).
Distinctions
| Basis | Charge (S.100) | Mortgage (S.58) |
|---|---|---|
| Interest transferred | None | Yes |
| Creation | Act of parties or operation of law | Act of parties only |
| Form | Registration if by document worth Rs.100 or more | S.59 registered deed, except deposit of title deeds |
| Remedy | Sale | Foreclosure or sale, by kind |
| Possession | Never passes | Passes in usufructuary |
| Buyer for value without notice | Not bound | Bound by a registered mortgage |
| Basis | Charge (S.100) | Lien |
|---|---|---|
| Possession | Not needed | Essential |
| Right | To be paid out of the property | To keep goods until paid |
| Remedy | Suit for sale | Retention |
| Example | Unpaid seller's charge (S.55(4)(b)) | Agent's lien (S.221, Contract Act) |
Exam Scenario
A sells property to B for Rs.50 lakhs. B pays Rs.40 lakhs and promises the rest within 6 months. The registered sale deed says "full consideration received". B defaults and sells the property to C, who pays the full price and knows nothing of the unpaid amount. Can A enforce a charge against C?
Approach
- Met: A has a statutory charge for Rs.10 lakhs (S.55(4)(b)).
- Issue: Against C, the charge binds only a transferee without consideration or with notice of non-payment (S.55(4)(b); S.100, second paragraph).
- Not met: Notice. The deed records full payment, so C had no actual or constructive notice.
- Met: C paid consideration.
Conclusion: A cannot enforce the charge against C.
Remedy: A can sue B personally for Rs.10 lakhs and interest on the contract of sale.
Scenario 2
Under a family settlement, the ancestral house goes to the eldest brother A, on condition that "the house shall be liable to pay Rs.5 lakhs each to B and C within 3 years". A does not pay. Advise B and C.
Approach
- Met: The house is made security for money payable to B and C.
- Met: Created by act of parties (the settlement).
- Met: No interest is transferred to B or C, so it is not a mortgage.
- Issue: Personal liability depends on whether A personally promised to pay in the settlement.
Conclusion: B and C have a charge on the house under S.100.
Remedy: They can sue for sale of the house. If A personally undertook to pay, they can also claim a personal decree against him.
Recall Check
- How does S.100 define a charge?
- What is the main difference between a charge and a mortgage?
- Against whom can a charge not be enforced?
- Name three ways a charge can arise.
Flashcards
What is a charge under S.100 TPA?
Where immovable property of one person is, by act of parties or operation of law, made security for payment of money to another, and the transaction is not a mortgage, the other person has a charge on the property.
What is the KEY difference between a charge and a mortgage?
A mortgage transfers an interest in the property. A charge transfers none. It only gives a right to be paid out of the property.
What remedy does a charge-holder have?
The remedy of a simple mortgagee: a suit for sale of the property. No foreclosure and no possession.
Can an unregistered document create a charge?
Not if the document needed registration. A document creating a charge on immovable property worth Rs.100 or more must be registered (S.17(1)(b), Registration Act). A charge arising by operation of law needs no document.
What is the unpaid seller's charge?
Under S.55(4)(b), where ownership passes before the whole price is paid, the seller has a charge on the property for the unpaid price and interest, even without express agreement.
Does a charge-holder have personal liability against the property owner?
S.100 gives no personal remedy. Any personal claim rests on the underlying debt or promise.
Define "charge" under S.100.
Where immovable property is made security for payment of money to another, and the transaction does not amount to a mortgage, the latter has a charge on the property.
Does a charge create personal liability?
Not by itself. The charge is against the property. A personal claim exists only if there is a separate debt or promise.
What remedies does a charge-holder have?
A suit for sale, as for a simple mortgagee. No foreclosure.
Which provisions of TPA apply to a charge by default?
All provisions that apply to a simple mortgage, so far as they can (S.100), which include S.81 (marshalling) and S.82 (contribution).