CS Professional · Drafting, Pleadings and Appearances

Drafting of Agreements, Deeds and Documents: formula sheet

Full chapter guide

Key formulas

Section 10 test: Valid contract = free consent + competent parties + lawful consideration + lawful object + not expressly declared void; Apply every element to the facts. One missing element can leave you with an agreement that is not enforceable.
Agreement and contract: Contract = Agreement + enforceability by law; All contracts are agreements. Not all agreements are contracts.
Saving rule in Section 10: Section 10 does not affect any law requiring writing, witnesses or registration of documents; Check other laws, such as the Registration Act, 1908, after applying the five-part test.
Drafting map: Parties clause → competence; Recitals → background and consent; Operative clauses → consideration and object; Execution block → writing, witnesses; A practical way to link each essential to a part of the document.
Order of parts: Title → Date and place → Parties → Recitals → Operative part → Testimonium → Schedules → Execution and attestation; A convention of drafting, not a statutory list. Schedules may come after the testimonium, before signatures, depending on the document.
Recital versus operative part: Recitals = background; Operative part = legal effect; If operative words are clear, they prevail over recitals. Recitals help only to resolve ambiguity.
Section 24, Contract Act, 1872: Unlawful part of a single consideration or object → whole agreement void; Applies where any part of a single consideration for one or more objects, or any part of one of several considerations for a single object, is unlawful.
Section 28, Contract Act, 1872: Absolute restriction on legal proceedings, or limit on time to enforce rights → void to that extent; Exceptions save arbitration agreements (as set out in the section) and certain bank or financial institution guarantee clauses with a period of not less than one year.
Stamp duty burden, Section 29, Indian Stamp Act, 1899: Absent contrary agreement: conveyance → grantee; lease → lessee; mortgage-deed → person executing; exchange → parties in equal shares; Uttarakhand has a state amendment making the donee bear the duty on a gift instrument. A drafter can include a clause that allocates stamp duty differently.
Formality rule for mortgages (Section 59): Principal ₹100 or more: registered instrument + mortgagor's signature + two attesting witnesses, except mortgage by deposit of title-deeds; Deposit of title-deeds is carved out of this requirement. It needs no registered deed merely to create the mortgage.
Small-amount mortgage (Section 59): Principal below ₹100: registered instrument, or delivery of the property (not for a simple mortgage); Rarely relevant in practice, but a favourite theory point.
Mortgage by deposit of title-deeds (Section 96): Simple mortgage provisions apply, so far as may be; Do not say the whole law of simple mortgage applies unchanged. The text says "so far as may be".
Non-registration (Registration Act, Section 49): A document that must be registered does not affect the immovable property, and is not received as evidence of the transaction, unless registered; There is a proviso: it may be received as evidence of a contract in a suit for specific performance or of a collateral transaction not required to be registered.
Priority of registered mortgage (Registration Act, Section 48 proviso): A registered mortgage takes effect against a mortgage-deed later executed and registered for the same property; The proviso refers to a mortgage as defined in Section 58 of the Transfer of Property Act.
Stamp duty burden (Stamp Act, Section 29): Only in the absence of an agreement to the contrary: for Mortgage-deed (Art. 40), Security-bond or Mortgage-deed (Art. 57) and Agreement relating to Deposit of Title-deeds, Pawn or Pledge (Art. 6), the expense of the stamp is borne by the person drawing, making or executing such instrument; Section 29(a) uses the full phrase "the person drawing, making or executing such instrument". It applies only if the parties have not agreed otherwise, so add an express clause on who bears the duty. Article 6 of Schedule I is the article for a memorandum of deposit only subject to state amendments, and the actual rates are fixed by the state. Check your state's schedule.
Section 48 rule: Registered non-testamentary document > oral agreement or declaration about the same property; Applies to movable and immovable property. Exception: oral agreement accompanied or followed by delivery of possession AND a valid transfer under law.
Section 48 exception: Oral agreement + delivery of possession + valid transfer under law = prevails; Both conditions must be met. Possession alone is not enough.
Section 48 proviso: Registered mortgage (TPA s. 58) > later registered mortgage-deed on same property; Applies to a mortgage as defined in section 58 of the Transfer of Property Act, 1882.
Section 49 effect of non-registration: Compulsorily registrable but unregistered: cannot affect the immovable property, cannot be received as evidence of the transaction; Exceptions: evidence of a contract in a suit for specific performance; evidence of a collateral transaction not required to be effected by registered instrument.
Section 50(1) priority: Duly registered document (s. 17(1)(a)-(d), s. 18(a)-(b)) > every unregistered document on the same property, other than a decree or order; Holds whether the unregistered document is of the same nature or not. Section 50(2) lists exclusions, such as leases exempted under the proviso to section 17(1).
Section 23A(1) charge: Instrument on deposit of marketable security, or making a security-transfer redeemable → duty as an agreement under Article 5(c); Does not apply to a promissory note or bill of exchange. Himachal Pradesh refers to Schedule I-A.
Section 23A(2): Release or discharge of such instrument → only the like duty; Do not charge it as a reconveyance or at a higher rate.
Section 21 valuation: Duty base = market value of stock or security; Options: premium paid by buyer. Repo on corporate bonds: interest paid by borrower. Swap: first leg of cash flow only.
Section 4 single transaction: Principal instrument: full duty. Other instruments: ₹1 each; Applies to sale, mortgage or settlement. Some States change the ₹1 (Himachal Pradesh ₹2, Orissa ₹10, Manipur ₹2.50). If parties choose the principal instrument, duty is the highest applicable.
Section 4(3) securities: Issue, sale or transfer of securities → the Section 9A instrument is principal; no duty on other instruments; Overrides Section 4(1) and (2).
Section 29 who pays: Absent agreement: mortgage-deed, bond, release, settlement, etc. → executant; conveyance → grantee; lease → lessee; exchange → parties equally; sale of security via exchange → buyer; issue of security → issuer; Applies only if there is no agreement to the contrary. Uttarakhand adds a gift instrument, paid by the donee.
Who may claim: Mortgagor whose right of redemption subsists; Once the right of redemption is extinguished, the Section 60B right is no longer available.
What may be done: Inspect, and make copies, abstracts or extracts; The section speaks of inspection and copying, not of taking away the originals.
Documents covered: Documents of title relating to the mortgaged property, in the mortgagee's custody or power; Documents unrelated to the property, or not held by the mortgagee, fall outside the section.
Conditions of exercise: At reasonable times + at mortgagor's request + at mortgagor's own cost + on payment of mortgagee's costs and expenses; Check each condition separately in an answer.

Quick revision

A mortgage is the transfer of an interest in specific immoveable property to secure money advanced or to be advanced, an existing or future debt, or performance of an engagement giving rise to a pecuniary liability.
The transferor is the mortgagor and the transferee is the mortgagee. The mortgage-deed is the instrument, if any, that effects the transfer.
Simple mortgage: possession is not delivered, the mortgagor binds himself personally to pay, and the mortgagee may have the property sold on default.
Mortgage by conditional sale: an ostensible sale with a condition, and the condition must be embodied in the document that effects the sale.
Usufructuary mortgage: possession is delivered or promised, and the mortgagee keeps the property and takes rents and profits in lieu of interest or in payment of the debt.
English mortgage: the mortgagor binds himself to repay on a certain date and transfers the property absolutely, subject to a proviso to re-transfer on repayment.
Mortgage by deposit of title-deeds: delivering title documents to a creditor or his agent with intent to create security, in Calcutta, Madras, Bombay or any other town notified by the State Government.
An anomalous mortgage is any mortgage that does not fit the other five types.
Section 96 of the Transfer of Property Act, 1882 applies the provisions for a simple mortgage, so far as may be, to a mortgage by deposit of title-deeds.
Under section 48 of the Registration Act, 1908, a duly registered non-testamentary document relating to property takes effect against an oral agreement or declaration, unless the oral agreement was accompanied or followed by delivery of possession and constitutes a valid transfer under any law in force.
Under section 29 of the Indian Stamp Act, 1899, and in the absence of a contrary agreement, the maker or executor bears the stamp duty on a mortgage-deed, while the grantee bears it on a conveyance.
Under section 60B of the Transfer of Property Act, 1882, a mortgagor whose right of redemption subsists may, at reasonable times and at his own cost, inspect and copy documents of title held by the mortgagee, on paying the mortgagee's costs and expenses.

Common mistakes

Treating agreement and contract as the same thing. Fix: Say that a contract is an agreement enforceable by law, and show which Section 10 element makes it so.
Listing the essentials from memory and leaving out 'not expressly declared void'. Fix: Quote the full wording of Section 10 and include the 'not hereby expressly declared to be void' element.
Treating recitals as the place for obligations Fix: Keep recitals to background facts. Put every right, duty and payment in the operative part.
Skipping the testimonium or attestation Fix: Always write both, even if short. They show execution and are part of the expected structure.
Saying every mortgage needs a registered deed. Fix: Write that a mortgage other than one by deposit of title-deeds, with principal of ₹100 or more, needs a registered instrument.
Treating delivery of title-deeds as enough without recording intention. Fix: Draft a memorandum that records the debt, the documents deposited and the intention to create security.
Saying a registered document always defeats an oral agreement. Fix: Always test for delivery of possession and a valid transfer under law. Both must exist for the oral agreement to prevail.
Treating possession alone as enough to defeat the registered document. Fix: The section also requires that the agreement constitutes a valid transfer under any law in force. Write both conditions.
Applying Section 23A to a promissory note or bill of exchange. Fix: Read the exclusion first. A promissory note or bill of exchange is outside Section 23A(1).
Charging a release or discharge under Section 23A at a different or higher duty. Fix: Section 23A(2) says a release or discharge of such an instrument is chargeable only with the like duty.

Exam tips

Quote the wording of Section 10 early. It earns marks and anchors your analysis.
Use the pattern provision, analysis, conclusion, then a drafting point.
Always link each essential to a part of the document: parties, recitals, consideration, execution.
Mention the saving rule on writing, witnesses and registration when the facts involve property or formal documents.
When asked to draft, write the actual clause in full instead of describing it.
When asked for a draft, show all eight parts in order, with headings in the margin so the examiner sees structure quickly.
For 'distinguish' questions, give the function of each part in one line, and state the rule that clear operative words prevail over recitals.
Use the names, amounts and property details given in the question. Do not invent new facts, and leave blanks for missing particulars.