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Charge Under Section 100 of The Transfer of Property Act

This document defines and outlines the essential elements of a valid charge under Section 100 of the Transfer of Property Act of 1882 in India. A charge is an interest or right created over an asset or property to secure payment. It can be created on immovable property like land or buildings, or movable property. A charge is not a mortgage, as there is no transfer of property rights, but a personal obligation is created or a right to payment from a specific property. For a charge on immovable property to be valid, it must be in writing and clearly show intent to use the property as security for a debt. The property must also be owned by the person owing the payment. A charge is wider than a mortgage and provisions

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1K views2 pages

Charge Under Section 100 of The Transfer of Property Act

This document defines and outlines the essential elements of a valid charge under Section 100 of the Transfer of Property Act of 1882 in India. A charge is an interest or right created over an asset or property to secure payment. It can be created on immovable property like land or buildings, or movable property. A charge is not a mortgage, as there is no transfer of property rights, but a personal obligation is created or a right to payment from a specific property. For a charge on immovable property to be valid, it must be in writing and clearly show intent to use the property as security for a debt. The property must also be owned by the person owing the payment. A charge is wider than a mortgage and provisions

Uploaded by

Rajiv
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Charge under Section 100 of the Transfer of

Property Act, 1882

Introduction
Charge is a concept which is defined under Section 100 of Transfer of Property Act, 1882 (hereinafter TPA) and its
registration is covered under Companies Act, 2013. A charge is an interest or a right which is created over an
asset or a property. It can be either on immovable property like land or building or on movable property like a car,
gold etc.

“Charge” as defined in TPA, 1882


Section 100 of the TPA, 1882 defines charge as, “Where 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; and all the provisions hereinbefore contained
which apply to a simple mortgage shall, so far as may be, apply to such charge.

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.”

Essentials of a Valid Charge


There are certain essentials which need to be fulfilled to create a valid charge.

Immovable property
 The charge must be created against an immovable property which can be a current or future property
belonging to the borrower.
It is nothing but a device to create security which can be enforceable in court.  To create charge against immovable
property, it is necessary that it should be in written form. The most essential thing to be kept in mind is that there
must be a clear intention to use the property as a security for the payment of the money.

A charge cannot be created if the immovable property is not owned by the person from whom the
payment is due.
For example- A wife sought for the creation of a charge on house property in a maintenance suit. The court held
that since the property was neither constructed nor owned by the husband, no charge can be created against such
property. 

Does not amount to a Mortgage


A charge is not a mortgage as there is no transfer of property nor any right is transferred but a personal
obligation is created or a right to payment out of a specified property is generated.

 It has been specifically mentioned in section 100 that a charge doesn’t amount to mortgage, although all
the provisions which apply to a simple mortgage shall also be applicable to charge. In simple
mortgagee, the mortgagor is not required to give the possession of his property to the mortgagee.
Under a mutual agreement, it is decided that if the mortgagee fails to pay the money within the
prescribed time period, then the property can be sold as per the law. There is a transfer of an interest
in the property in a simple mortgage, but there is no such transfer in a charge. Despite this difference,
the section says that “The provision hereinbefore contained which apply to a simple mortgage shall, so
far may be, apply to charge.”

A charge is a wider term as it also includes a mortgage i.e. every mortgage is a charge but not every
charge is a mortgage.

The Calcutta High Court held that:

“If an instrument is expressly stated to be a mortgage and gives the power of realization of the mortgage money
by the sale of the mortgaged premises, it should be held to be a mortgage. The fact that the necessary formalities
of due execution were wanting would not convert the mortgage into a charge. If, on the other hand, the instrument
is not on the face of it a mortgage, but simply creates a lien, or directs the realization of money from a particular
property, without reference to sale, it creates a charge.” 

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