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Section 77: Receipts in lieu of interest

Transfer of Property Act • Official Statutory Text & Practice Guide

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Act 1882
Section 76 All 137 Sections of Transfer of Property Act Section 78

Legal Commentary & Landmark Judgments: Section 77

Section 77 creates an exception to Section 76 accounting duties, providing that where the parties agree that rents and profits shall be taken in lieu of interest or in lieu of interest and defined expenses, no accounts need be rendered.

  • Contract in Lieu of Accounts: Nothing in Section 76, clauses (b), (d), (g), and (h), applies to cases where there is a contract between the mortgagee and mortgagor that the receipts shall be taken in lieu of interest, or in lieu of interest and defined expenses.
  • Exemption from Detailed Accounting: Mortgagee is not required to maintain daily receipt registers or file annual accounts.
  • Fixed Return Arrangement: Common in traditional rural usufructuary mortgages where crop produce is accepted in lieu of interest.
Key Landmark Precedents:
  • Singh Ram v. Sheo Ram, (2014) 9 SCC 185: The Supreme Court recognized that under Section 77, parties can lawfully agree that usufruct will be set off against interest without requiring cumbersome accounting trials upon redemption.
  • Prithi Nath Singh v. Suraj Ahir, AIR 1963 SC 1041: Affirmed that Section 77 agreements relieve the mortgagee of accounting liabilities regarding annual agricultural profits.
Courtroom Practice & Strategic Litigation Guidance:

In usufructuary mortgage deeds, expressly stipulate that net rental receipts are taken in full satisfaction of annual interest under Section 77, eliminating complex accounting disputes upon redemption.

Section 76 All 137 Sections of Transfer of Property Act Section 78