A charge under S.100 is created when immoveable property is made security for
payment of money to another, and the transaction does NOT amount to a mortgage. A charge is a weaker form of security than a mortgage it does not transfer any interest in the property to the charge-holder but merely gives them a right to have the payment made from the property.
Why: Many transactions create security over property without the formalities of a mortgage (e.g., unpaid seller's lien, statutory charges for maintenance). S.100 recognises these as enforceable interests.
Legal Framework
| Provision | Subject |
|---|---|
| S.100, TPA | Charge defined and governed |
| S.55(4)(b), TPA | Unpaid seller's charge (implied charge for unpaid price) |
| S.39, Hindu Adoption and Maintenance Act | Maintenance charge on property |
| S.100 last para | Charge-holder's remedies: same as simple mortgage (sale only) |
Definition and Elements
S.100: Where immoveable property of one person is by 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.
| Element | Explanation |
|---|---|
| Immoveable property as security | Property is identified and earmarked for payment |
| Payment of money | Must be a debt or monetary obligation |
| NOT a mortgage | Lacks essential formalities of mortgage (no transfer of interest) |
| By act of parties OR operation of law | Can be created contractually or imposed by statute |
How a Charge Arises
| Source | Example | Provision |
|---|---|---|
| Act of parties (express) | "My house is security for Rs. 5 lakhs payable to B" (without mortgage formalities) | S.100 |
| Statute (implied) | Unpaid seller's charge on sold property | S.55(4)(b) |
| Statute | Hindu wife's maintenance charge on husband's property | S.39 HAMA |
| Court decree | Court attaches property for debt recovery | O.XXI CPC |
| Contract without mortgage formalities | Unregistered agreement creating security but not meeting S.59 requirements | S.100 |
Charge vs. Mortgage
| Basis | Charge (S.100) | Mortgage (S.58) |
|---|---|---|
| Transfer of interest | NO interest transferred | Interest in property transferred |
| Nature of right | Right in rem against the property | Right in the property (limited ownership/interest) |
| Mode of creation | No specific formalities required | Registered instrument (except equitable mortgage) |
| Registration | Not required (unless created by registered instrument) | Required under S.59 |
| Remedies | Sale only (like simple mortgage) | Foreclosure/sale/personal suit (depending on type) |
| Personal liability | NO (unless separately agreed) | Yes (in simple/English mortgage) |
| Possession | Never passes | May pass (usufructuary) |
| Death of charge-holder | Charge survives; enforceable by heirs | Mortgage survives |
| Priority | Subsequent to mortgages (generally) | Priority by date of creation |
Illustrations
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Express charge: Ravi writes to Suresh: "I undertake to pay you Rs. 3 lakhs within 1 year. My house in Madhapur shall stand as security." This document is not registered. It does not transfer any interest in the house. No mortgage formalities. But it expressly makes the house security for Rs. 3 lakhs. Result: Suresh has a CHARGE on the house (S.100). If Ravi defaults, Suresh can apply to court for sale of the house (same remedy as simple mortgage).
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Unpaid seller's implied charge (S.55(4)(b)): Kavitha sells her plot to Deepak for Rs. 30 lakhs. Deepak pays Rs. 20 lakhs at registration and promises to pay Rs. 10 lakhs later. Without any express clause, Kavitha has an implied charge on the plot for the unpaid Rs. 10 lakhs. If Deepak fails to pay, Kavitha can enforce this charge by seeking court sale.
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Maintenance charge (statutory): Hindu wife Meena obtains a maintenance decree of Rs. 20,000/month against husband Arun. Court directs: "Husband's house in Kukatpally shall stand charged for payment of maintenance." This is a charge created by court order / operation of law. If Arun sells the house, the buyer takes it subject to the charge (if buyer had notice).
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Incomplete mortgage becomes charge: Ravi intends to mortgage his house to a bank. He signs a mortgage deed but FAILS to register it (registration is mandatory under S.59). The unregistered deed cannot operate as a mortgage. But it CAN create a charge under S.100 (because a charge does not require registration). The bank gets a charge, not a mortgage.
Remedies of Charge-Holder
S.100 provides: All provisions applicable to a simple mortgagee shall (so far as may be) apply to the charge-holder.
This means:
- Right to seek court SALE of the property (not foreclosure)
- NO personal liability on the property owner (unless separately agreed)
- No right to possession
- Right to priority over unsecured creditors (but generally subordinate to registered mortgagees)
Recall Check
- How does S.100 define a charge?
- What is the key difference between a charge and a mortgage?
- Name three ways a charge can arise.
Key Cases
Prabhu Dayal v. Official Receiver (1937) Prabhu-Dayal-v-Official-Receiver-1937 Issue: Whether an unregistered document creating security over immoveable property creates a valid charge under S.100 even though it cannot operate as a mortgage. Rule: Where a document fails as a mortgage (for want of registration), it may still create a valid charge under S.100 if it clearly identifies the property as security for a debt. Held: An unregistered instrument that makes property security for money, though ineffective as a mortgage, is effective to create a charge. The charge-holder can enforce by court sale.
Distinctions
| Basis | Charge (S.100) | Lien |
|---|---|---|
| Nature | Right against specific property | Right to retain possession until paid |
| Possession | Not required | Essential (lien requires possession) |
| Transferability | Enforceable against successors (with notice) | Personal; generally not transferable |
| Creation | Act of parties / operation of law | Possession + debt |
| Remedy | Court sale | Retain possession (no sale right generally) |
| Example | Unpaid seller's charge (S.55(4)(b)) | Agent's lien for commission (S.171 ICA) |
Flashcards
Q: What is a charge under S.100 TPA? A: When immoveable property is made security for payment of money, but the transaction does NOT amount to a mortgage, the creditor has a charge on the property.
Q: What is the KEY difference between a charge and a mortgage? A: A mortgage transfers an INTEREST in property. A charge does NOT transfer any interest it merely gives the right to have payment made from the property.
Q: What remedy does a charge-holder have? A: Same as a simple mortgagee can seek COURT SALE of the property. No foreclosure. No personal suit (unless separately agreed).
Q: Can an unregistered document create a charge? A: Yes. A document that fails as a mortgage (for want of registration) can still create a valid charge (Prabhu Dayal, 1937). Registration is not mandatory for a charge.
Q: What is the unpaid seller's charge? A: Under S.55(4)(b), where purchase money remains unpaid, the seller has an implied charge on the property for the unpaid amount even without express agreement.
Q: Does a charge-holder have personal liability against the property owner? A: No (unless separately agreed). The charge-holder's remedy is limited to the property itself.
Q: Define "charge" under S.100. A: Where immovable property is made liable for payment of money to another, and the transaction does not amount to a mortgage, the latter acquires a charge on the property.
Q: Does a charge create personal liability? A: No. A charge-holder can only proceed against the property, not personally against the owner.
Q: What remedies does a charge-holder have? A: Judicial sale (same as simple mortgagee). No foreclosure. No personal suit.
Q: Which provisions of TPA apply to a charge by default? A: S.81 (marshalling) and S.82 (contribution); plus, by reference, all provisions applicable to a simple mortgage.
Exam Scenario
A sells property to B for Rs. 50 lakhs. B pays Rs. 40 lakhs and promises to pay the balance of Rs. 10 lakhs within 6 months. The sale deed contains no clause about security for the unpaid amount. B defaults on the Rs. 10 lakhs. A discovers that B has sold the property to C (bona fide purchaser for value). Can A enforce the implied charge against C?
Approach: (1) Under S.55(4)(b), A has an implied charge on the property for the unpaid Rs. 10 lakhs. (2) Can this charge be enforced against C? S.100 makes provisions of simple mortgage applicable. Under S.78 read with general principles, a charge binds transferees with NOTICE. (3) Did C have notice? If the sale deed from A to B mentions that Rs. 10 lakhs is "to be paid later" this is constructive notice (registered document). C takes subject to the charge. (4) If the sale deed from A to B says "full consideration received" (acknowledgment of full payment) C has no notice. C is a bona fide purchaser without notice and is NOT bound by A's charge. (5) A's remedy against C depends entirely on notice. If no notice: A can only sue B personally for Rs. 10 lakhs (contractual claim). If notice exists: A can enforce the charge against C (court sale to recover Rs. 10 lakhs). (6) Lesson for sellers: always include an express charge clause in the deed when consideration is partly deferred.
created: 2026-06-30 modified: 2026-07-19 tags:
- property-law
- charge
- section-100
- TPA
- semester-3
- unit-3
Charges
A charge under S.100 is created when immoveable property is made security for payment of money to another, and the transaction does NOT amount to a mortgage. A charge is a weaker form of security than a mortgage it does not transfer any interest in the property to the charge-holder but merely gives them a right to have the payment made from the property.
Why: Many transactions create security over property without the formalities of a mortgage (e.g., unpaid seller's lien, statutory charges for maintenance). S.100 recognises these as enforceable interests.
A sells property to B for Rs. 50 lakhs. B pays Rs. 40 lakhs; balance Rs. 10 lakhs due in 6 months. Sale deed says "full consideration received." B defaults. A claims implied charge. B has sold to C (bona fide purchaser). Advise.
Approach: (1) S.55(4)(b): A has an implied charge for unpaid Rs. 10 lakhs. (2) Against C: charge binds transferees with NOTICE. (3) Sale deed says "full consideration received" C has no notice (registered deed shows full payment). (4) C is bona fide purchaser without notice NOT bound. (5) A's remedy: sue B personally for Rs. 10 lakhs. Cannot enforce against C. (6) Lesson: sellers should expressly state deferred payment in the deed to create constructive notice via registration.
Problem: Under a family settlement, the ancestral house is allotted to eldest brother A, with a condition: "A's house shall be liable to pay Rs.5 lakhs each to B and C (younger brothers) within 3 years." A fails to pay. B and C want to recover the money. Advise them on:
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(a) whether this creates a charge or a mortgage
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(b) their remedies
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(c) whether they can sue A personally.
Legal Framework
| Provision | Subject |
|---|---|
| S.100, TPA | Charge defined and governed |
| S.55(4)(b), TPA | Unpaid seller's charge (implied charge for unpaid price) |
| S.39, Hindu Adoption and Maintenance Act | Maintenance charge on property |
| S.100 last para | Charge-holder's remedies: same as simple mortgage (sale only) |
Definition and Elements
| Element | Explanation |
|---|---|
| Immoveable property as security | Property is identified and earmarked for payment |
| Payment of money | Must be a debt or monetary obligation |
| NOT a mortgage | Lacks essential formalities of mortgage (no transfer of interest) |
| By act of parties OR operation of law | Can be created contractually or imposed by statute |
Charge vs. Mortgage
| Basis | Charge (S.100) | Mortgage (S.58) |
|---|---|---|
| Transfer of interest | NO interest transferred | Interest in property transferred |
| Mode of creation | No specific formalities required | Registered instrument (except equitable) |
| Registration | Not required | Required under S.59 |
| Remedies | Sale only (like simple mortgage) | Foreclosure/sale/personal suit |
| Personal liability | NO (unless separately agreed) | Yes (in simple/English) |
| Possession | Never passes | May pass (usufructuary) |
How a Charge Arises
| Source | Example |
|---|---|
| Act of parties (express) | "My house is security for Rs. 5 lakhs to B" |
| Statute (implied) | Unpaid seller's charge (S.55(4)(b)) |
| Statute | Hindu wife's maintenance charge (S.39 HAMA) |
| Court decree | Attachment of property for debt recovery |
| Failed mortgage | Unregistered mortgage deed operates as charge |
Recall Check
- How does S.100 define a charge?
- What is the key difference between a charge and a mortgage?
- Name three ways a charge can arise.
Key Cases
Prabhu Dayal v. Official Receiver (1937) Prabhu-Dayal-v-Official-Receiver-1937 Issue: Whether an unregistered document creating security over immoveable property creates a valid charge under S.100. Rule: Where a document fails as a mortgage (for want of registration), it may still create a valid charge if it clearly identifies property as security for a debt. Held: An unregistered instrument making property security for money, though ineffective as mortgage, is effective as a charge. Charge-holder can enforce by court sale.
Distinctions
| Basis | Charge (S.100) | Lien |
|---|---|---|
| Possession | Not required | Essential |
| Transferability | Enforceable against successors (with notice) | Personal; generally not transferable |
| Remedy | Court sale | Retain possession only |
| Example | Unpaid seller's charge | Agent's lien for commission |
Illustrations (from consolidated notes)
-
Charge by act of parties: A says to B: "I owe you Rs.3 lakhs. My house shall be liable for this debt." No mortgage deed is executed, no interest is transferred. B has a charge on A's house. B can seek judicial sale of the house to recover Rs.3 lakhs. B cannot sue A personally.
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Charge by operation of law (seller's lien): A sells land to B for Rs.10 lakhs. B pays Rs.7 lakhs, takes possession. Under S.55(4)(b), A has a charge (seller's lien) on the land for the unpaid Rs.3 lakhs. A cannot evict B but can seek sale of the property to recover Rs.3 lakhs.
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Not a charge (mere personal promise): A writes to B: "I will pay you Rs.5 lakhs from the sale proceeds of my house." This does NOT create a charge because the property itself is not made liable; it is merely an indication of the source of payment.
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Distinction from mortgage: A deposits title deeds with B, saying "This is your security." This is a mortgage (S.58(f)) because an interest is transferred. If A merely says "My property is answerable for the debt," without transferring any interest, it is a charge.