Legal Documents Submission and Limitation Act Quiz

Questions and Answers

Which type of goods can be subject to a pledge?

Loan agreements

Immovable property

Movable goods like stocks and ornaments (correct)

Auctionable claims

What does Section 172 of the Indian Contract Act pertain to?

Possession of auctionable claims

Rights of a borrower regarding pledged goods (correct)

Ownership transfer in lien arrangements

Possession of immovable property

Which legal provision governs lien according to the Indian Contract Act?

Section 58

Section 128

Section 130

Section 171 (correct)

In a scenario of lien, who retains possession of the property?

The lender Signup and view all the answers

What type of property is subject to a mortgage under Section 58 of the Transfer of Property Act?

Immovable property Signup and view all the answers

Which of the following is NOT included in the definition of 'assignment'?

Movable goods Signup and view all the answers

According to Section 130 of the Transfer of Property Act, what is required for the assignment of claims?

A written agreement Signup and view all the answers

In which legal scenario does possession remain with the creditor but ownership remains with the borrower?

Lien Signup and view all the answers

What must be obtained before accepting property located in Cantonment areas for Equitable Mortgage?

Approval from the cantonment authorities Signup and view all the answers

What is required to create an Equitable Mortgage?

An oral promise and deposit of title deeds Signup and view all the answers

In what situation can Equitable Mortgage be created with a certified copy of title deeds?

If the original title deeds are lost or destroyed Signup and view all the answers

What characterizes an anomalous mortgage?

A mortgage that does not fit into standard categories Signup and view all the answers

How is the priority of a mortgage determined?

From the date of execution of the mortgage deed or deposit of title deed Signup and view all the answers

What does the right to set-off involve?

The right to merge account balances between parties Signup and view all the answers

What is required for the details of the property mortgaged under Equitable Mortgage?

Inclusion in a signed memorandum of entry Signup and view all the answers

What is a prerequisite for set-off to occur between two parties in banking?

There must be mutual debtor and creditor status Signup and view all the answers

What obligation does a bailor have regarding faults in the goods?

To disclose known faults that may expose the bailee to risks. Signup and view all the answers

Under which condition is a bailor not liable to pay extraordinary expenses?

When the bailment is gratuitous. Signup and view all the answers

What responsibility does the bailee have if he uses the goods inconsistently with the agreement?

He may be liable for any resulting damages from that use. Signup and view all the answers

What must a bailee do at the end of the bailment period?

Return the goods according to the bailor's directions. Signup and view all the answers

In what scenario is a bailee not liable for loss of the bailed goods?

When the bailee has exercised ordinary care over the goods. Signup and view all the answers

Which of the following is NOT a duty of the bailor?

Ensure the bailee maximizes profit from the goods. Signup and view all the answers

What does the bailee need consent for when handling the bailed goods?

To mix up the bailed goods with his own. Signup and view all the answers

What must the bailor compensate the bailee for when terminating a gratuitous bailment early?

Damages incurred beyond the benefit received. Signup and view all the answers

What is one right of a bailor concerning bailment?

The bailor can demand the return of the goods at any time for gratuitous bailments. Signup and view all the answers

Which right allows a bailee to retain goods until they are compensated for their services?

Particular lien Signup and view all the answers

How can a contract of bailment be terminated?

By giving notice or upon the expiry of a specified time period. Signup and view all the answers

What happens to a gratuitous bailment upon the death of either the bailor or the bailee?

It terminates. Signup and view all the answers

What right allows the bailee to claim compensation for faulty goods?

Right to indemnity Signup and view all the answers

In the context of bailment, what is a joint owner's right regarding the delivery of goods?

The bailee can deliver to any one of the joint owners unless stated otherwise. Signup and view all the answers

Which of the following statements best describes a general lien?

It allows certain professionals to retain goods as security for an unspecified debt. Signup and view all the answers

What does the right to terminate bailment imply for a bailor if the bailee violates bailment conditions?

The bailor can choose to reclaim the goods immediately. Signup and view all the answers

What is the time limit for submitting a document for adjudication within India after its execution?

One month Signup and view all the answers

If a document is executed in two different states, which state's stamp duty must the document bear?

The state where the document is signed by the first party Signup and view all the answers

What is the limitation period for recovering a debt through the right of set-off?

No limitation period Signup and view all the answers

What is the limitation period for repayment of a temporary overdraft without a Demand Promissory Note (DPN)?

3 years Signup and view all the answers

Which of the following transactions has a limitation period of 12 years?

Execution of a decree Signup and view all the answers

What is the limitation period for filing an appeal in a High Court against a lower court judgment?

90 days Signup and view all the answers

How long does a mortgagor have to recover possession of immovable property after it has been transferred?

12 years Signup and view all the answers

For a mortgagee to enforce a personal liability of the borrower, how long do they have?

3 years Signup and view all the answers

What is the limitation period for filing a suit by the Central Government?

30 years Signup and view all the answers

What action can be taken without a limitation period as per the law of limitation?

Recovering debts through sales of goods pledged Signup and view all the answers

What is the limitation period for a suit against a guarantor?

No limitation period defined Signup and view all the answers

Which of the following has a limitation period of 30 years?

Right of redemption for mortgaged property Signup and view all the answers

What is the limitation period for filing an appeal in lower courts, excluding the High Court?

30 days Signup and view all the answers

For usance bill of exchange, what is the limitation period to take action?

3 years from due date Signup and view all the answers

What is a characteristic of a floating charge?

It applies to both existing and future assets. Signup and view all the answers

What happens when a partner in a business dies?

The bank requires new documentation from surviving partners. Signup and view all the answers

What does a pari passu charge signify?

All creditors have equal rights and priority over the security. Signup and view all the answers

In a cash credit account, what occurs when a customer makes a deposit?

The deposit reduces the customer's debt by the deposit amount. Signup and view all the answers

What is defined as charging of security?

Establishing a right for the creditor over the security. Signup and view all the answers

What is the minimum age requirement for a person to be considered competent to contract?

18 years Signup and view all the answers

Which of the following individuals is NOT considered to have a sound mind for contracting purposes?

A person under the influence of alcohol Signup and view all the answers

What is the legal status of a contract made with a minor?

Void ab-initio Signup and view all the answers

How can a minor benefit from a contract?

By being a beneficiary of a valid agreement Signup and view all the answers

Which claim against a minor can be enforced by law?

Contracts for necessities supplied Signup and view all the answers

What is a minor's status regarding partnerships?

Cannot be a partner but can take benefits Signup and view all the answers

In what situation can a minor's guardian legally enter into a contract on behalf of the minor?

For contracts that are for the minor's benefit Signup and view all the answers

What legal principle prevents a minor from being estopped from pleading his minority status?

Minors' incapacity rule Signup and view all the answers

What role does the surety play in a contract of guarantee?

The party that provides the guarantee for another’s performance. Signup and view all the answers

Which statement accurately describes a specific guarantee?

It covers only a single debt and ends when that debt is settled. Signup and view all the answers

What is necessary for a contract of guarantee to be valid?

There should be a recoverable debt with an enforceable obligation. Signup and view all the answers

What type of guarantee remains in force until it is revoked?

Continuing Guarantee Signup and view all the answers

Which of the following is a reason that makes a guarantee invalid?

The guarantee was obtained due to misrepresentation by the creditor. Signup and view all the answers

What typically supports a contract of guarantee?

An enforceable liability or promise that is guaranteed. Signup and view all the answers

What does the term 'co-extensive liability' of the surety indicate?

The surety’s liability matches that of the principal debtor unless otherwise specified. Signup and view all the answers

What is NOT a feature of a guarantee as outlined in the contract?

There should be no principal debtor for the contract to be valid. Signup and view all the answers

What right does a bailee have if they deliver goods without receiving payment for their services?

Right to sue the bailor Signup and view all the answers

Which of the following best describes the right of general lien?

The ability to keep goods as security for the overall balance of account Signup and view all the answers

What is a negative lien?

An assurance that goods are free from encumbrances Signup and view all the answers

What is the primary role of a bailor in a pledge?

To provide goods as security for a debt or performance of a promise Signup and view all the answers

In the context of a pledge, who is the person receiving the goods called?

Pawnee Signup and view all the answers

What is one right of a pawnee regarding pledged goods?

Right to retain goods for debt payment with interest Signup and view all the answers

What distinguishes a bankers lien from other types of liens?

It is a general lien and an implied pledge Signup and view all the answers

What condition must generally be fulfilled for a general lien to apply?

There must be a balance of account owed to the lien holder Signup and view all the answers

What is the maximum fine for executing a document that is not duly stamped?

Rs. 500 Signup and view all the answers

When must documents executed in India be stamped?

On or before the date of its execution Signup and view all the answers

What is the duty for each additional instrument used in a sale, mortgage, or settlement transaction according to Section 4(1)?

One rupee Signup and view all the answers

What is the time limit for stamping documents executed outside India, excluding a Promissory Note and Usance Bill of Exchange?

3 months after receipt Signup and view all the answers

Which of the following statements correctly describes the aggregation of stamp duties according to Section 5?

Aggregate amount of duties applies to multiple distinct matters Signup and view all the answers

Which document is exempt from stamp duty according to the provisions mentioned?

Negotiable warehouse receipts Signup and view all the answers

What is required for instruments executed outside India to be accepted for negotiation in India?

Indian Stamp affixed by the first holder Signup and view all the answers

In the context of several instruments used in a single transaction, what is the principal instrument charged with?

The duty prescribed in Schedule I Signup and view all the answers

What should be done when it is difficult to determine the applicable stamp duty on a document?

Present the document to the collector for adjudication Signup and view all the answers

What must happen to policies of sea insurance covering both a voyage and time beyond a certain period?

They are charged with both duties Signup and view all the answers

Study Notes

Submission of Documents

Documents must be submitted for adjudication before execution or within one month after execution in India, and within three months for documents executed abroad.

Stamp Duty

For documents executed in different states, stamp duty must be based on the state where the first party signs.
If a document is executed in a state with a higher stamp duty, the difference must be paid before signing in that state.

Law of Limitation (1963 Act)

The Limitation Act establishes time limits for legal actions to enforce rights; no limitation applies for recovering debts through lien, set-off, or selling pledged goods.

Limitation Periods

Temporary Overdraft & Jewel Loan: 3 years from loan date.
Demand Loan: 3 years from loan date.
Demand Promissory Note: 3 years from DPN date.
Bill of Exchange (demand): 3 years from bill date.
Usance Bill/Promissory Note: 3 years from due date.
Term Loans (repayable in instalments): 3 years from due date of each instalment.
Demand Deposit Accounts: 3 years from depositor's demand.
Term Deposit Accounts: 3 years from depositor's demand.
Government Suits: 30 years from the date limitation starts for private suits.
High Court Appeals: 90 days from the decree date.
Other Court Appeals: 30 days from the decree date.
Execution of Decree: 12 years from decree date.
Fraud Recovery: 3 years from fraud detection.
Mortgage:
- To enforce payment: 12 years from when money is due.
- To recover possession: 12 years from transfer knowledge.
- Right of redemption: 30 years from accrual.
- Surplus recovery: 3 years from mortgagor re-entry.
- Personal liability of mortgagee: 3 years from due date.

Guarantor's Limitation

No specified limitation exists for suits against guarantors.

Types of Liens

Pledge: Involves movable goods, where possession remains with the creditor but ownership stays with the borrower.
Lien: Similar to pledge, covering movable goods, where creditor retains possession.

Assignment

Includes auctionable claims like life insurance policies, NSC, KVP, and receivables.

Mortgage Types and Regulations

Equitable Mortgage: Oral promise without the necessity of registration; can use original or certified copies of title deeds under specific conditions.
Anomalous Mortgage: Any mortgage not fitting standard types.
Mortgage Priority: Based on execution date of deed or deposit, with CERSAI filings having priority over later security interests.

Banker's Right to Set-Off

Right to combine accounts with debit and credit balances occurs when two parties owe each other, facilitating a mutual offset.

Duties and Rights in Bailment

Bailor Duties: Must disclose defects, compensate for extraordinary expenses, and receive goods after bailment.
Bailee Duties: Must care for bailed goods, return them post-bailment, and not mix with own goods without consent.
Bailor Rights: Terminate bailment, demand goods at any time if lent gratuitously, and file suit for enforcement of bailee's duties.
Bailee Rights: Indemnification for bailor's inability to make bailment, claim compensation for faulty goods, and lien rights.

Termination of Bailment

A bailment ends upon time expiry, fulfillment of purpose, notice, destruction of goods, or death of bailor/bailee.

Types of Liens

Particular Lien (Section 170): Right to retain goods until payment for rendered services is received.
General Lien (Section 171): Broader right where specific professions can retain goods for a general balance owed.

Stamp Duty Regulations

Unstamped receipts can be admitted as evidence upon a penalty payment of ₹1.
Executing a document without due stamping is an offence punishable by a fine up to ₹500.
Stamp duty applicability is determined by the place of execution, with the entire duty assigned to the respective State.
Documents executed in India must be stamped on or before their execution date or they are treated as unstamped.
Documents executed outside India (except certain notes) must be stamped within 3 months of receiving them in India.

Instruments and Stamp Duty Charges

In transactions involving multiple instruments for one sale, only the principal instrument is charged the full duty as per Schedule I. Additional instruments incur a duty of ₹1 each.
Instruments covering several distinct matters are charged with the aggregate duties applicable if treated separately.

Exemptions from Stamp Duty

Negotiable warehouse receipts are exempt from stamp duty.
Agreements for assignment of receivables to factors are not liable for stamp duty.
Conversion of a bank branch to a wholly owned subsidiary is exempt from stamp duty.
Transfers of financial interests to asset reconstruction companies are not subject to stamp duty.
Strategic sales and disinvestment of government-owned immovable properties are exempt from stamp duty.

Adjudication

For unclear stamp duty determinations, documents can be presented to the collector for assessment.
This may apply in banking scenarios to avoid liabilities post-death of a partner in a partnership firm.

Security Charges

Security charging creates creditor rights for debt recovery in case of repayment default.
Fixed charges apply to specific properties; floating charges apply broadly to existing and future assets.

Types of Charges

A first charge grants priority to the first creditor; subsequent charges rank second and lower.
Pari passu charges allow equal priority sharing among several creditors based on outstanding amounts.

Valid Contract Capacity

Competency as per Section 11 of the Indian Contract Act requires being of majority age (18 years), sound mind, and not disqualified by law.

Minor Contracts

Contracts with minors are void ab initio and cannot be ratified when they become of age.
Minors can benefit from contracts but cannot be held liable outside of claims for necessaries.
Minors cannot enter into partnerships but can be admitted to benefits; guardians may enter valid contracts on behalf of minors.

Guarantees

A guarantee involves three parties: the surety (guarantor), principal debtor, and creditor.
Requirements include an existing recoverable debt and consideration, but a guarantee can be oral or written.

Types of Guarantees

Specific guarantees cover single debts, ceasing when the debt is discharged; continuing guarantees apply to ongoing transactions, lasting until revoked.

Surety Liability

Sureties share co-extensive liability with the principal debtor unless specified otherwise in the contract.

Banker's Lien and Pledge

General lien permits certain professionals to retain goods until account balances are paid; it cannot be sold but can be retained.
Pledge involves the bailment of goods as security, with specific rights for the pawnee to retain goods for the debt owed, including related expenses.

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Description

Test your knowledge on the submission of legal documents, stamp duty regulations across different states in India, and the time limits established by the Limitation Act of 1963. This quiz covers essential topics including various loan types and their corresponding limitation periods. Perfect for law students and professionals looking to refresh their understanding of legal procedures.