## Facts

- Mr. Sood was the sole registered proprietor of a property held on trust for himself and his wife.
- The property was mortgaged in favour of the State Bank of India.
- The bank sought to enforce its mortgage security.
- Mr. Sood contested the validity of the mortgage, arguing it was executed without his wife’s consent and that no capital payment had been received.
- The dispute centred on whether the absence of a capital payment precluded the overreaching of Mrs. Sood’s equitable interest in the property.

## Issues

1. Whether overreaching under Sections 2 and 27 of the Law of Property Act 1925 requires the receipt of a capital payment.
2. Whether the absence of a capital payment invalidates the mortgage against a beneficiary’s equitable interest.
3. Whether proper execution by the requisite number of trustees is sufficient for overreaching, regardless of the transaction’s financial terms.

## Decision

- The Court of Appeal held that overreaching does not require the receipt of a capital payment.
- The mortgage was valid and capable of overreaching Mrs. Sood’s equitable interest, provided statutory requirements were met.
- The court confirmed that focus should remain on the transaction's compliance with Section 2 and Section 27 of the Law of Property Act 1925, not on its financial structure.
- Requiring a capital payment would unnecessarily complicate and jeopardise the efficiency of property transfers.

## Legal Principles

- Sections 2 and 27 of the Law of Property Act 1925 establish that overreaching occurs when property is dealt with by at least two trustees or a trust corporation, transferring equitable interests to the sale proceeds.
- Overreaching serves to protect purchasers by removing equitable interests from the land, making the land freely marketable.
- Overreaching operates as a matter of law and does not depend on capital payment or the specific financial details of the transaction.
- Compliance with statutory trustee requirements is fundamental to the effectiveness of overreaching.

## Conclusion

The Court of Appeal clarified that overreaching under the Law of Property Act 1925 does not depend on the receipt of a capital payment, reinforcing the mechanism's protective function for purchasers and supporting certainty and efficiency in property transactions involving trust land.

State Bank of India v Sood [1997] 1 All ER 169