WHAT IS A CHARGE AND TYPES OF IT

Section 100 states that charge under TPA is where the immovable property of one person is by an act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property.

Nothing in this section applies to the charge of a trustee on the trust-property for expenses properly incurred in the execution of his trust, and, save as otherwise expressly provided by any law for the time being in force, no charge shall be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of the charge.

It may be that in a particular case, there may not be an actual mortgage of immovable property, in the sense that any interest in the property is transferred to the transferee and yet a person may have a right to recover debt from that property.

A charge need not be in writing. No particular form of words is necessary is that there must be a clear intention to give property as security for payment of money in praesenti.

Charge by Act of parties

A charge by an act of parties can be created by an instrument inter vivos or by will. A will devising immovable properties and directing the devisee to pay certain debts of the testator from these properties creates a charge in them in respect of these debts.

Charge by Operation of Law

Charges by operation of law are based upon the consideration of duty or implied intention on the part of the owner of the property to make it answerable for a specific claim. A charge created by a decree of a competent court is created by operation of law. The creation of charge by operation of a statue does not create an interest in the property.

Enforcement of a Charge

A charge is enforced by sale and if it carries with a personal liability the charge holder is entitled to a personal decree. A person who purchases a portion of a property which is subject to charge with notice of the charge is liable to pay the whole amount.

A charge can be extinguished by an act of parties by a release by the chargee of the debt or security or by novation or by merger.

Requisites of a Charge

  • A charge does not contemplate any transfer of an interest in the immovable property.
  • The property should be specified and it should be made security for the payment of money. A clear and accurate specification of the property is mandatory for the creation of charge.
  • In order to constitute a charge, the form of words is immaterial; it is not necessary to use any technical terms.
  • A charge must be created in favour of a particular person specifically named.
  • A charge may be created orally, although if it is created by an instrument in writing, it must be registered unless made by a will or unless the amount secured is less than one hundred rupees.
  • A charge cannot be created on a future contingency. A charge created by a person on the unknown and uncertain share which one of his heirs may succeed to is invalid as a charge.
  • A charge on the future property is valid and operates on such property when it comes into existence
  • A charge could be assigned
  • A charge cannot ordinarily be split up by apportioning liability amongst various persons.

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