LC 0702 Property Law and Easement : Module 05 Sale under Transfer of Property Act

Sale under Transfer of Property Act

Author            :    legalpaathshala@gmail.com                            

What is sale under transfer of property act?

Meaning of Sale under Transfer of Property Act: – Sale is defined as the transfer of ownership of a property in exchange for a price paid or promised or partly paid or part promised. Sale simply means the purchase and sale of goods and services, the sale of immovable property is provided under Section 54 of Transfer of Property Act 1882.

 

Section 3 of the Act is the interpretation clause, which provides the meaning: –

1. Immovable Property: – Immovable property exclude standing timber, growing crops or grass,

2. Instrument: – It means a non-testamentary instrument. The instrument should be in writing, a formal or legal document in writing, such as a contract, deed, bond or lease or anything reduced to writing.

3. Registered: – A register is a book contains records of the facts as they are kept by the public authority. If the registration is done in violation of the provisions of the Registration Act, that document cannot be said to be duly registered.

4. Attached: – It is a term that describes the physical union of two independent structures or objects, which refers to the relationship between two parts of the structure each having its function.

Section 54 of the Transfer of Property Act

Section 54 of the Act defines the meaning of the ‘sale’ and also specifies how the sale of immovable property can be done. Here, sale refers to the sale of immovable property whether tangible or intangible (For example: – easement rights)

A sale under transfer of property act is a transfer of ownership for a money consideration.  It refers to the complete transfer of all rights in the property sold. No rights in the property sold, are left to the transferor.

Section 54: – Sale ownership is transferred in exchange for a price paid or promised or part-paid and part-promised.

What is contract for sale?

Meaning of Contract for Sale: – A contract for the sale of immovable property is a contract which takes place on the settled terms between the parties. In this, the seller agrees to sell or deliver something to the buyer for a fixed price that the buyer has agreed to pay. A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another.

What are the elements of Sale?

The elements of Sale are given as follows: –

1. Transfer of Ownership: – Ownership is the aggregation of all rights and liabilities in a property. When transfer of ownership occurs, all rights and liabilities in the property is transferred from transferor to transferee.

2. Money Consideration: – Where the ownership of the property is transferred for money, it amounts to sale, but if it is transferred for something else, it amounts to exchange.

3. The seller must be a person competent to transfer. The seller should be either the owner of the property or should have the authority to dispose of it.

4. The buyer must be a person competent to the transferee.

5. The subject matter must be a transferable immovable property which can be tangible or intangible.

6. There must be a transfer of ownership

7. The transfer must be in exchange for a price. ‘Price’ in the ordinary sense connotes money consideration for the sale of the property. The price must be paid or promised or partly paid.

What are the essentials of a Sale under Transfer of Property Act?

The essentials of a sale under transfer of property act are given as follows: –

• Parties i.e., Seller, Buyer

• Competency

• Money consideration

• Conveyance

• Registration

Explanation: –

1. Parties: – In a sale, there must be at least two parties. The person who transfers his property is known as the transferor/seller/vendor and the person to whom the property is transferred is known as the transferee/buyer/vendee.

2. Seller: –

o The seller must own the property which he is going to sell.

o The seller should have legal title to it only then he can sell the property.

o The seller should be competent to contract.

o He must not be a minor person.

o He should not be of unsound mind.

o He must not be statutorily incompetent.

o The seller may be a natural person / judicial person, for example, a corporation or any other legal person.

3. Buyer: –

o The buyer must be competent to get the ownership of the property.

o The buyer should not be disqualified from purchasing the immovable property under any law at the time of sale, for example: under section 136 of the Act, a judge, a legal practitioner or an officer of the court is incompetent for purchase of actionable claim.

o The seller may be a natural person / judicial person, for example: a corporation or other legal person.

4. Subject Matter: – The sale under Transfer of Property Act, 1882 specifically deals with the sale of immovable property. Immovable property includes the benefits from the land and the things attached to the earth and it does not include standing timber, growing crops and grass.

5. Competency: – A valid sale requires both the parties i.e., the buyer and seller to be competent on the date of sale.

6. Money Consideration: – The consideration must only be in money to constitute a sale. If it is for exchange or some other items then it is not sale. The consideration for the sale must be paid, partly paid, promised or partly promised. Therefore price is money but not necessarily money immediately paid in notes and coins, it includes money which might be already due or payable at a future date.

7. Conveyance: – Section 54 provides for two ways for transfer of property: –

o Where the property transferred is tangible immovable property of value of one hundred rupees and upward transfer can only be made by a registered instrument. Where the property is immovable property of less than one hundred rupees, it can be transferred either by registered instrument or delivery of property. The delivery of tangible immovable property occurs when the seller puts the buyer or such person as the buyer directs in possession of the property.

o Registration of sale deed: – Where the value of tangible immovable property is Rs. 100 or more, the sale of such property requires registration of the deed. Where the property is intangible immovable property of any valuation, it will require registration to complete the sale.

8. Registration: – Both section 8 and 54 of the Transfer of property act, 1882 suggests that through execution and registration of a sale deed, the ownership and all interests in the property passes to the transferee, yet this will  be on the  terms and conditions embodied in the deed indicating the intention of the parties. The intention of the parties can be gathered from the averments (formal statement) in the sale deed itself or under other attending circumstances. Where the sale is to be completed only by the registered instrument, the ownership is presumed to pass on the execution of the sale deed, not on the deed’s registration. The sale deed transferring immovable property of the value of 100 or more it will require registration under Indian Registration Act 1908.

Rights and liabilities of Buyer and Seller

The buyer and the seller of the immovable property respectively are subject to the liabilities, and have the rights, mentioned in the rules following: –

1. The seller is bound: –

o To disclose to the buyer any material defect in the property or in the seller’s title thereto of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover;

o To produce to the buyer on his request for examination all documents of title relating to the property which are in the seller’s possession or power;

o To answer to the best of his information all relevant questions put to him by the buyer with respect to the property or the title thereto;

o On payment or tender of the amount due in respect of the price, to execute a proper conveyance of the property when the buyer tenders it to him for execution at a proper time and place;

o Between the date of the contract of sale and the delivery of the property, to take as much care of the property and all documents of title relating thereto which are in his possession as an owner of ordinary prudence would take of such property and documents;

o To give, on being so required, the buyer, or such person as he directs, such possession of the property as its nature admits;

o To pay all public charges and rent accrued due in respect of the property up to the date of the sale, the interest on all encumbrances on such property due on such date, and,except where the property is sold subject to encumbrances, to discharge all encumbrances on the property then existing.

2. The seller is entitled: –

o To the rents and profits of the property till the ownership thereof passes to the buyer;

o Where the ownership of the property has passed to the buyer before payment of the whole of the purchase-money, to a charge upon the property in the hands of the buyer, any transferee without consideration or any transferee with notice of the non-payment, for the amount of the purchase money, or any part thereof remaining unpaid, and for interest on such amount or part from the date on which possession has been delivered.

3. The buyer is bound: –

o To disclose to the seller any fact as to nature or extent of the seller’s interest in the property of which the buyer is aware, but of which he has reason to believe that the seller is not aware, and which materially increases the value of such interest;

o To pay or tender, at the time and place of completing the sale, the purchase-money to the seller or such person as he directs. Provided that, where the property is sold free from encumbrances, the buyer may retain out of the purchase money the amount of any encumbrances on the property existing at the date of the sale, and shall pay the amount so retained to the persons entitled thereto;

o Where the ownership of the property has passed to the buyer, to bear any loss arising from the destruction, injury or decrease in value of the property not caused by the seller;

o Where the ownership of the property has passed to the buyer, as between himself and the seller, to pay all public charges and rent which may become payable in respect of the property, the principal money due on any encumbrances subject to which the property is sold, and the interest thereon afterwards accruing due.

4. The buyer is entitled: –

o Where the ownership of the property has passed to him, to the benefit of any improvement in, or increase in the value of, the property, and to the rents and profits thereof;

o Unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him, to the extent of the seller’s interest in the property, for the amount of any purchase-money properly paid by the buyer in anticipation of the delivery and for interest on such amount; and, when he properly declines to accept the delivery, also for the earnest (if any) and for the costs (if any) awarded to him of a suit to compel specific performance of the contractor to obtain a decree for its rescission.

Difference between Sale under Transfer of Property Act and Contract for Sale

S.NO.	SALE	CONTRACT FOR SALE
1.	There is a transfer of ownership of the property.	There is an agreement between the parties for the sale of the property with consent.
2.	Gives legal title to buyer.	Does not generate any interest in the property.
3.	Creates a right in rem.	Creates a right in personam
4.	Registration is mandatory where the sale is of immovable property of Rs. 100 or more.	Registration is not required.

Case laws of Sale under Transfer of Property Act

1. Nahar Lal vs. Brijnath 1928 AC 385

Judgments of the case: – In this case, the court held that if the registration is done in violation of the provisions of the Registration Act, a document cannot be said to be duly registered.

2. Umakanta Das vs. Pradip Kumar Ray, AIR 1983 Ori 196

Judgments of the case: – In this case, the court held that if the sale deed contains a condition that the price will be paid within one year, provided that possession is obtained within that time, and if possession is not obtained, the payment of the price will be postponed, or in the event of the vendee not getting the property, the price will not be paid. In all the above cases, the deed within the meaning of the section is the sale deed.

3. Raheja Universal Ltd. vs. NAC Ltd., 2012 4 SCC 148

Judgments of the case: – In this case, the court states that a contract for sale of immovable property or an agreement to sell is a contract that a sale of such property shall be on the terms settled between the parties. This in itself does not create any interest or charge on such property.

4. Misabul Enterprises vs. Vijaya Srivastava, AIR 2003 Del. 15.

Judgments of the case: – In this case, the court held that a contract of sale should be based on a mutual agreement between seller and buyer.

LC 0702 Property Law and Easement : Module 04 General Principles Relating to Transfer of Immovable Property (Sections 38 to 53A) :

 

LC 0702 Property Law and Easement : Module 04  General Principles Relating to Transfer of Immovable Property (Sections 38 to 53A) : 

The Transfer of Property Act came into existence in the year 1882.

It applies only to transfer by the act of parties and not by operation of law.

This Act deals with a transfer of property inter vivos, that is, a transfer between living persons.

It contains the transfer of both movable and immovable property but a major portion of the enactment is applicable to the transfers of immovable properties only.

General Principles of Transfer of Property are as follows :

1.    The property must be transferable. (Section 6):

It specifically speaks about, what may be transferred. Property of any kind may be transferred, except as otherwise provided by this act or even by any other law for time being in force.

2.    Restrains on Alienation of Property. (Section 10):

Section 10 of the Act states that any restriction or limitation that ‘absolutely’ restrains the buyer or transferee from alienating the property is a void condition. But there exist two exceptions to this rule which are:

a.     In cases of lease where a restraint is for the benefit of the lesser or the estate leased out.

b.     Where the property is transferred for the benefit of a woman who is not a Hindu, Muslim or a Buddhist, with a condition that she doesn’t. Have the power during her marriage to transfer or create any encumbrance in the sale of property transferred to her.Here, it must be taken into consideration that Section 10 only bars an absolute restraint on alienation whereas a partial restraint is permissible.

3.    Transfer to an Unborn Person (Section 13):

Section 13 of the Transfer of Property Act, 1882 says that a transfer cannot be directly made to an unborn person. The interest in favour of an unborn person must always be preceded by a prior interest created in favour of a living person. The transfer to an unborn person must be absolute and there should be no further transfer from him to any other person.

4.    Rule against Perpetuity (Section 14):

No transfer of property can operate to create an interest which is to take effect after the life-time of one or more persons living at the date of such transfer, and the minority of some person who shall be in existence at the expiration of that period, and to whom, if he attains full age, the interest created is to belong.

5.    Vested and Contingent Interest (Section 19 & 21) :

Section 19 of the Transfer of Property Act, 1882 states that it is an interest which is created in favour of a person where time is not specified or a condition of the happening of a specified certain event. The person having the vested interest does not get the possession of that property but has the expectancy to receive it upon happening of a specified certain event.

Section 21 of the Transfer of Property Act, 1882 states that it is an interest which is created in favour of a person on a condition of the happening of a specified uncertain event. The person having the contingent interest does not get the possession of that property but has the expectancy to receive it upon happening of that event but will not receive the property if the event does not happen as the condition is not fulfilled.

6.    Conditional Transfer (Section 25) :

It means that any transfer that happens on the fulfillment of a condition that is imposed on the other party for the transfer of property.

7.    Doctrine of Priority (Section 48) :

This rule is based on the maxim “Qui prior est tempore potior est jure” which means that “he who is prior in time is better in law, meaning that the subsequent dealings by the transferor of the same property cannot prejudice the rights of the transferee of the same property (prior transferee)”.

When a transferor transfers the same property in favour of several transferees, each transferee will take the property with the rights of the former transferee. It is also based upon the principle that no man can transfer the title other than which he is entitled to.

8.    Transfer by Ostensible owner (Section 41):

Transfer by ostensible owner : “Where, with the consent, express or implied, of the persons interested in immoveable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorised to make it: provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith.”

Section 41 says that, following are the essential which shall keep into mind these are:

A.    There is a transfer of immoveable property.

B.    Transfer is by Ostensible Owner.

C.    Consent must be obtained from Real Owner and it may be express or implied.

D.    The transfer is for Consideration.

E.    The transferee has acted in good faith.

F.    The transferee (Third party) has exercised reasonable care in finding out the power of the transferor to make the transfer.

9.    Rule of Estoppel (Section 43):

The doctrine of feeding the grant by estoppel is based on the maxim ‘nemo dat quod nonhabet’ which implies that ‘no one can give to another, which he himself does not possess’.

Section 43 of the Transfer of Property Act lays down “where a person fraudulently or erroneously represents that he is authorized to transfer certain immovable property and professes to transfer such property for consideration, such transfer shall at the option of the transferee, operate on any interest which the transferor may acquire in such property at any time during which the contract of transfer subsists”.

10.    Doctrine of lis Pendence (Section 52):

During the pendency in any Court having authority within the limits of India excluding the State of Jammu and Kashmir or established beyond such limits by the Central Government, of any suit or proceeding which is not collusive and in which any right to immovable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any other party thereto under any decree or order which may be made therein, except under the authority of the court and on such terms as it may impose. 

Essentials of doctrine of Lis Pendence:

A.    Pendency of suit or proceeding.

B.    Pending in the court of competent jurisdiction.

C.    There is a right involved which is of immovable property.

D.    Suit or proceeding must not be collusive.

E.    Property in dispute must be transferred.

F.    Transfer affects the right of other party.

Case Law : Bellany vs. Sabine

In this English case, it was held that, if there is any dispute regarding any property which is immovable one, in such situation property cannot be transferred when the litigation on that property is pending in the court of law. 

11.    Fraudulent Transfer (Section 53)

In order to attract this section, there must be a transfer. The transfer must be of immovable property. The transfer must be a real one which creates a vested title in favour of the third party. Fictitious transfers do not attract this section. The fictitious transfer is where the transferor remains the real owner of the property. Hence, in order to set aside the transfer under section 53, it has to be proved that the transfer was a real one and not a sham one.

12.    Rule of Part Performance (Section 53A):

Doctrine of Part Performance prevents a transferor from taking any advantage on account of non registration of documents, the provison  this is that the transferee has performed his part of the contract and in pursuance to that performance; the transferee has taken possession of some part of the property.

Case Law : D.S. Parvarthamma v. A. Srinivasan

In this case it was held that, where a person is already in possession of a property prior to contract, some act of part-performance done in furtherance of the contract would reap benefit to the transferee. 

Reference 

Legal Raj General Principles of Transfer of Property

LC 0702 Property Law and Easement : Module 03 General Principles Relating to Transfer of Property (Sections 10 to 37)

LC 0702 Property Law and Easement : Module 03 General Principles Relating to Transfer of Property  (Sections 10 to 37) 

The Transfer of Property Act came into existence in the year 1882.

It applies only to transfer by the act of parties and not by operation of law.

This Act deals with a transfer of property inter vivos, that is, a transfer between living persons.

It contains the transfer of both movable and immovable property but a major portion of the enactment is applicable to the transfers of immovable properties only.

General Principles of Transfer of Property are as follows :

1.    The property must be transferable. (Section 6):

It specifically speaks about, what may be transferred. Property of any kind may be transferred, except as otherwise provided by this act or even by any other law for time being in force.

2.    Restrains on Alienation of Property. (Section 10):

Section 10 of the Act states that any restriction or limitation that ‘absolutely’ restrains the buyer or transferee from alienating the property is a void condition. But there exist two exceptions to this rule which are:

a.     In cases of lease where a restraint is for the benefit of the lesser or the estate leased out.

b.     Where the property is transferred for the benefit of a woman who is not a Hindu, Muslim or a Buddhist, with a condition that she doesn’t. Have the power during her marriage to transfer or create any encumbrance in the sale of property transferred to her.Here, it must be taken into consideration that Section 10 only bars an absolute restraint on alienation whereas a partial restraint is permissible.

3.    Transfer to an Unborn Person (Section 13):

Section 13 of the Transfer of Property Act, 1882 says that a transfer cannot be directly made to an unborn person. The interest in favour of an unborn person must always be preceded by a prior interest created in favour of a living person. The transfer to an unborn person must be absolute and there should be no further transfer from him to any other person.

4.    Rule against Perpetuity (Section 14):

No transfer of property can operate to create an interest which is to take effect after the life-time of one or more persons living at the date of such transfer, and the minority of some person who shall be in existence at the expiration of that period, and to whom, if he attains full age, the interest created is to belong.

5.    Vested and Contingent Interest (Section 19 & 21) :

Section 19 of the Transfer of Property Act, 1882 states that it is an interest which is created in favour of a person where time is not specified or a condition of the happening of a specified certain event. The person having the vested interest does not get the possession of that property but has the expectancy to receive it upon happening of a specified certain event.

Section 21 of the Transfer of Property Act, 1882 states that it is an interest which is created in favour of a person on a condition of the happening of a specified uncertain event. The person having the contingent interest does not get the possession of that property but has the expectancy to receive it upon happening of that event but will not receive the property if the event does not happen as the condition is not fulfilled.

6.    Conditional Transfer (Section 25) :

It means that any transfer that happens on the fulfillment of a condition that is imposed on the other party for the transfer of property.

7.    Doctrine of Priority (Section 48) :

This rule is based on the maxim “Qui prior est tempore potior est jure” which means that “he who is prior in time is better in law, meaning that the subsequent dealings by the transferor of the same property cannot prejudice the rights of the transferee of the same property (prior transferee)”.

When a transferor transfers the same property in favour of several transferees, each transferee will take the property with the rights of the former transferee. It is also based upon the principle that no man can transfer the title other than which he is entitled to.

8.    Transfer by Ostensible owner (Section 41):

Transfer by ostensible owner : “Where, with the consent, express or implied, of the persons interested in immoveable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorised to make it: provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith.”

Section 41 says that, following are the essential which shall keep into mind these are:

A.    There is a transfer of immoveable property.

B.    Transfer is by Ostensible Owner.

C.    Consent must be obtained from Real Owner and it may be express or implied.

D.    The transfer is for Consideration.

E.    The transferee has acted in good faith.

F.    The transferee (Third party) has exercised reasonable care in finding out the power of the transferor to make the transfer.

9.    Rule of Estoppel (Section 43):

The doctrine of feeding the grant by estoppel is based on the maxim ‘nemo dat quod nonhabet’ which implies that ‘no one can give to another, which he himself does not possess’.

Section 43 of the Transfer of Property Act lays down “where a person fraudulently or erroneously represents that he is authorized to transfer certain immovable property and professes to transfer such property for consideration, such transfer shall at the option of the transferee, operate on any interest which the transferor may acquire in such property at any time during which the contract of transfer subsists”.

10.    Doctrine of lis Pendence (Section 52):

During the pendency in any Court having authority within the limits of India excluding the State of Jammu and Kashmir or established beyond such limits by the Central Government, of any suit or proceeding which is not collusive and in which any right to immovable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any other party thereto under any decree or order which may be made therein, except under the authority of the court and on such terms as it may impose. 

Essentials of doctrine of Lis Pendence:

A.    Pendency of suit or proceeding.

B.    Pending in the court of competent jurisdiction.

C.    There is a right involved which is of immovable property.

D.    Suit or proceeding must not be collusive.

E.    Property in dispute must be transferred.

F.    Transfer affects the right of other party.

Case Law : Bellany vs. Sabine

In this English case, it was held that, if there is any dispute regarding any property which is immovable one, in such situation property cannot be transferred when the litigation on that property is pending in the court of law. 

11.    Fraudulent Transfer (Section 53)

In order to attract this section, there must be a transfer. The transfer must be of immovable property. The transfer must be a real one which creates a vested title in favour of the third party. Fictitious transfers do not attract this section. The fictitious transfer is where the transferor remains the real owner of the property. Hence, in order to set aside the transfer under section 53, it has to be proved that the transfer was a real one and not a sham one.

12.    Rule of Part Performance (Section 53A):

Doctrine of Part Performance prevents a transferor from taking any advantage on account of non registration of documents, the provison  this is that the transferee has performed his part of the contract and in pursuance to that performance; the transferee has taken possession of some part of the property.

Case Law : D.S. Parvarthamma v. A. Srinivasan

In this case it was held that, where a person is already in possession of a property prior to contract, some act of part-performance done in furtherance of the contract would reap benefit to the transferee. 

Reference 

Legal Raj General Principles of Transfer of Property

LC 0702 Property Law and Easement : Module 02 Transfer of Property by Act of Parties (Sections 5 to 9)

 LC 0702 Property Law and Easement : Module 02 Transfer of Property by Act of Parties (Sections 5 to 9) 

Transfer of Property : concept and nature

October 16, 2019

This article is written by Medha Tiwari, student of Shri Ramswaroop Memorial University, Lucknow. This article is an effort to simplify the concept of transfer of property for the readers.

Table of Contents

1. Introduction
1. Meaning of Transfer of Property
2. What may be Transferred
3. Person competent to Transfer
4. Operation of Transfer
5. Oral Transfer
6. Condition Restraining Alienation
1. Illustrations
7. Restrictions Repugnant to Interest Created
1. Illustrations
8. Conclusion 

Introduction

Meaning of Transfer of Property

Section 5 of the Transfer of Property Act, 1882 defines the term transfer of property. According to this section, transfer of property means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself and other living persons. The phrase “living person” includes a company or association or body of individuals, whether incorporated or not, but nothing in this section shall affect any law for the time being in force relating to or by companies, associations or bodies of individuals.

The word property in the Act has been used in one of the following senses:

(i) Tangible material things like house.

(ii) Rights which are exercised over material things like the right to sell or make a gift of things.

(iii) Rights which are not exercised over any material such as the right to repayment of a debt.

The expression transfer of property implies various meanings. One sense maybe transfers of things such as the sale of a house. Another sense maybe transfer of one or more of the rights in a thing such as mortgage of a house or transfer of a debt.

Thus, if a new title has not been created or some interest has not been transferred in favour of the Transferee, then the transfer of property cannot take effect.

An analysis of section 5 helps us understand the meaning of the phrase, “transfer of property”. Thus, transfer of property means an act which may take effect in the present or future. The property in question must be in existence at the time the transfer takes place. Moreover, the conveyance of the property must be from one living person to another.

What may be Transferred

Section 6 of the Transfer of Property Act, 1882 discusses the property which may be transferred. The section states that property of any kind may be transferred. However, Clauses (a) to (i) of section 6 mention the properties which cannot be transferred.

Clause (a) describes spes successionis cannot be transferred. This clause states that the transfer of a bare chance of a person to get a property is prohibited under this section. For example, Arun expecting that Chandini, his aunt, who had no issues, would bequeath her house worth Rs. 50,000 transfers it to Bhushan. The transfer is invalid as it is a mere matter of chance of receiving the property on the part of Arun. Thus, it is invalid.

Clause (b) mentions that the right of re-entry cannot be transferred. The right to re-entry implies a right to resume possession of the land which has been given to someone else for a certain time. The section mentions that the right of re-entry cannot be transferred by itself apart from the land. For example, A grants a lease of a plot of land to B with the condition that if shall build upon it, he would re-enter — transfers to C his right of re-entering in case of breach of the covenant not to build. The transfer is invalid.

Clause (c) mentions that easement cannot be transferred. An easement is a right to use or restrict the use of land of another in some way. For example, the right of way or right of light cannot be transferred.

Clause (d) mentions that an interest restricted in its enjoyment of himself cannot be transferred. For instance, if a house is lent to a man for his personal use, he cannot transfer his right of enjoyment to another.

Clause (dd) restricts the transfer of the right to maintenance. Such a right cannot be transferred as such right is for the personal benefit of the concerned person.

Clause (e) provides that mere right to sue cannot be transferred. The prohibition has been imposed as the right to sue is a right which is personal and exclusive to the aggrieved party. For example, a person cannot transfer his right to sue for the damages suffered by him due to breach of contract by the other party.

Clause (f) forbids the transfer of public offices. The philosophy behind the prohibition is that such a transfer may be opposed to public policy in general. A person is eligible to hold a public office on the grounds of his personal qualities, and such qualities cannot be transferred. Thus, the transfer of public offices is prohibited under this section.

Clause (g) of section 6 provides that pensions cannot be transferred. Pensions allowed to military and civil pensioners of government and political pensions cannot be transferred. In simpler terms, a pension may be understood as any periodical allowance which may be granted in regard to any right of office but only on account of the past services offered by the pensioner.

Clause (h) of this section is titled as nature of nature. This clause prohibits transfer which will oppose the interest affected thereby. The transfer is also forbidden if the object or consideration of the transfer is unlawful. Moreover, a transfer by a person who is legally disqualified from being a transferee is also forbidden.

Clause (i) of section 6 was inserted by the Amendment Act of 1885. The clause declares that certain interests are untransferable and inalienable. For example, a farmer of an estate, in respect of which default has been made in paying the revenue, cannot assign his interest in the holding.

Thus, section 6 containing clauses (a) to (i) specifically mention that certain things cannot be transferred. Such a transfer if undertaken would be invalid in the eyes of the law in India.

Person competent to Transfer

Section 7 enumerates the concept of competency of persons who may be allowed to transfer property. According to this section, a person is allowed to transfer property if he satisfies two conditions. The first condition is that the person must be competent to enter into contracts with other persons. The second condition is that the person who is willing to transfer property must have title to the property or authority to transfer it if he is not the real owner of the property.

An important point to be noted in this regard is the conditions mentioned in section 11 of the Indian Contract Act, which specifies the category of persons who may be competent to transfer. In the section, it is stated that the person must have attained majority, he must be of sound mind, and he must not be disqualified to enter into contracts by any other law applicable in India.

Operation of Transfer

Section 8 of the Transfer of Property Act expresses the concept of operation of the transfer. The first paragraph states that the courts must, in the absence of a contrary intention, hold that the transferor indented to transfer all his interests and legal incidents in the property. Where the property transferred island, all the legal incidents such as easements, rents and profits and things attached to earth shall be transferred. Where the property to be transferred is a house, easements, the rents accruing after the transfer, locks, keys, bars, doors etc. shall also be transferred. Where the property to be transferred is machinery attached to the earth, in such a case, movable parts of the machinery shall also be transferred. In cases where the debt is transferred, the legal incident that is securities shall also be transferred. Where the property is money or other property which may yield some kind of income, then the interest or income accruing after the transfer takes effect shall also be transferred. In other words, the property and the legal incidents attached to the property shall be transferred as part of the same transaction. 

Oral Transfer

Section 9 of the transfer of property act, 1882 elaborates the concept of oral transfer. It mentions that property may be transferred orally in cases wherein it has not been expressly mentioned that the property must be by law transferred in writing. Writing is necessary in the following cases:

(i) Sale of immovable property having a value of more than rupees hundred. (Provided under section 54 of the Transfer of Property Act, 1882)

(ii) Sale or reversion of other intangible things. (Provided under section 54 of the Transfer of Property Act, 1882)

(iii) Simple mortgage. (Provided under section 59 of the Transfer of Property Act, 1882)

(iv) All other mortgages are securing rupees hundred or more. (Provided under section 59 of the Transfer of Property Act, 1882)

(v) Leases of immovable property from year to year or for a term exceeding one year or reserving a yearly rent. (Provided under section 107 of the Transfer of Property Act, 1882 )

(vi) Exchange. (Provided under section 108 of the Transfer of Property Act, 1882)

(vii) Gift of immovable property. (Provided under section 123 of the Transfer of Property Act, 1882)

(viii) Transfer of actionable claim.(Provided under section 130 of the Transfer of Property Act, 1882)

Condition Restraining Alienation

The section 10 of the Transfer of Property Act states that where a property is transferred subject to a condition absolutely restraining the Transferee from parting with his interest in the property, the condition is void. For instance, if A transfers his property to B with the condition that B shall never resell it. The condition imposed is void and B may sell or not sell as he wishes to do. The philosophy behind this section is that a right of transfer cannot be separated from the ownership of the property. The rule that a condition of absolute restraint is void is based on the principle of a public policy allowing free circulation and disposal of property.

Illustrations

A transferred a field to B with the condition that if B sold it, he must sell it to C and to nobody else. The condition was held to be void as the name of the person who alone was permitted to purchase might be so selected as to render it reasonably certain that he would not buy the property at all.

Restrictions Repugnant to Interest Created

Section 11 of the Transfer of Property Act, 1882 is titled as restriction repugnant to interest created. The section states that any condition restraining the lawful enjoyment of the property which is transferred absolutely is void. Any such condition if imposed shall be considered non-existent and any such transfer will operate as if no such condition was imposed in the first place. In other words, if a man makes a transfer of property absolutely, he shall not be allowed to impose upon the Transferee any condition which imposes a restriction on the right of the Transferee to dispose or enjoy the property as per his own will. The section refers to absolute interest only. Absolute interest implies that:

(i) There should be a transfer of property.

(ii) An interest in the property in favour of Transferee should be created.

(iii) The term of transfer should direct that such interest shall be applied for enjoyment in a particular manner only.

A careful reading of section 11 helps us understand that the second paragraph of the section states the exception that has been provided by the Act. The second paragraph states that,

“Where any such direction has been made in respect of one piece of immovable property for the purpose of securing the beneficial enjoyment of another piece of such property, nothing in this section shall be deemed to affect any right which the transferor may have to enforce such direction or any remedy which he may have in respect of a breach thereof.”

Thus the general rule provided under section 11 is subject to the above-mentioned exception. In simpler words, the transferor may impose condition restraining the enjoyment of land if such restriction is for the benefit of the adjoining land. 

Illustrations

A makes a gift of the house to B on a condition that the gift will be forfeited if B does not reside in it. The Condition is valid for the gift is not an absolute gift. The condition would have been void if the gift was an absolute gift.

Conclusion 

Hence, it can now be clearly understood that the transfer of property is a multi dimensional concept. The person transferring the property and the person receiving the property become a part of the transaction owing to their rights and legal obligations enshrined in the Transfer of Property Act, 1882

Reference 

Ipleaders Blog (Section 5 to 9) 

LC 0702 Property Law and Easement : Module 01 Concepts, Meaning and types of Properties (Sections 1 to 4 of the T.P. Act, 1882) :

 LC 0702 Property Law and Easement : A brief on Transfer of Property Act, 1882 

Transfer of Property Act        

October 19, 2020  

This article is written by Darshit Vora, from Narsee Monjee Institute of Management Studies. The article covers various important elements mentioned in the Transfer of Property Act, 1882.  

Table of Contents

1. Introduction 
2. Background of the Transfer of Property Act, 1882  
1. Important concepts highlighted in the Act
2. Essential elements of the Transfer of Property Act, 1882
3. Kinds of transfer under the Transfer of Property Act, 1882
4. Features of Transfer of Property Act, 1882 
5. Conclusion 
6. References 

Introduction 

A transfer refers to a conversion of a thing from one person to another person. Property may be defined as anything physical or a virtual entity owned by an individual or a group of people. A property can be transferred from one person to another person by transferring rights, or interest, or ownership, or possession the party can satisfy either or all the ingredients. 

The transfer of property can be made in the two following ways:

• First: act of the parties; 
• Second: by law. 

Transfer of property is defined under Section 5 of the Transfer of Property Act, 1882. It refers to an act done by a living person conveying property to one or more person or by himself or by one or more living persons in the present or the future. Living people include a company, an association, or body of individuals whether incorporated or not. 

Illustration

A is the grandson of G and A owns three estates of which he wanted to transfer one estate to his grandpa D but he died two years ago the transfer won’t be held valid because the transfer of property should happen between two living persons.

Sr. No	Property	Transfer between	Act
1	Immovable property	Living to living	Transfer of property Act, 1882
2	Movable property	Living to living	Sale of goods Act, 1930
3	Immovable property and Movable property	Dead to living	Indian Succession Act, 1925

Background of the Transfer of Property Act, 1882  

Before the advent of the British Raj system in India, Hindus, and Muslims were governed by their personal laws for the transfer of property. When Britishers were actively involved in the Indian Legal system they established informal Courts in which clear and concrete law was absent as compared to the law that was prevailing in England. Various High Court expressed the need for creating specific acts related to the transfer of property. As the principle of a good conscience, equity, and justice was confusing and created various uncertainties, the privy council noted the uncertainties and also told the authorities to take immediate action.

So, the first commission was appointed by the British Queen Elizabeth II to remove uncertainties. On matters related to the transfer of property. The draft was sent in India after certain amendments were introduced in the legislative Council in 1877. It was then sent to the selection committee but it was reversed due to the public criticism. The Bill was redrafted by the Second law commission. Some of the provisions were borrowed from English law on real property, the Law of Conveyancing and Property Act, 1881. Mostly the law was shaped in such a manner that suits the Indian population and can be easily understood by a non-professional judge. 

Despite various amendments made by the Second Commission, there was an expansion of the law. Therefore a special committee was appointed to make the amendments in the prevailing act. So various amendments were made in the act to expand its scope and correct the existing errors.

Important concepts highlighted in the Act

• Immovable property: According to the General Clauses Act, 1897 immovable property includes land, benefits arising out of the land, things that are attached to the land. Under transfer of property, the immovable property can be defined as all property are immovable property other than standing timber, growing crops, or grass. 

Narayana Sa vs. Balaguruswami (1923)

In this case, large artillery was fixed for blowing liquor. The Court held that it would be considered as movable property if it was fixed in the land, not with an intention for beneficial enjoyment. 

• Mortgage debt: After the amendment of 1900 mortgage debt was excluded from actionable claims. In Peruma animal vs. Peruma Naicker, Wallis C.J.held that before 1900 mortgage debts could be transferred as actionable claims, it was excluded from the actionable claims, the legislature intended that the mortgage debt must be transferred in mortgagee’s interest through a registered instrument.

• Instrument: According to the transfer of property Act, 1882 instrument refers to a non-testamentary instrument. It acts as evidence of the transfer of property between living parties. According to the legal dictionary, an instrument refers to a formal legal document. 

• Attested: It refers to a formal document signed by a witness. The transferors of the property are known as the executant. The amendment act was introduced in 1926 which mentioned that there must be two or more witnesses who must sign the document in presence of the executant not necessarily at the same time but they shouldn’t be the party to the transfer. 

• Registered: According to the transfer of property Act, 1882 registered refers to any property registered where the act is operative. One must comply with various procedures of registration. 

1. The description of the property should be mentioned.
2. Avoid fraud. 
3. Deeds should be presented by a competent person. 
4. The property must be registered in the same territory where the registered office is situated. 

• Actionable claims: A claim to any debt, other than the debt secured by mortgage of immovable property or by hypothecation or pledge of movable property or to any beneficial interest in a movable property or to any beneficial interest in movable property not in the  possession, either actual, or constructive possession of the claimant which the civil courts recognize as affording grounded of relief, whether such debt or beneficial interest be existent, accusing, conditional or contingent.

Illustration: A has given his house to B for rent but B hasn’t paid the rent because this would amount to an actionable claim. 

• Notice: Notice refers to knowledge of the fact. The person has knowledge of facts about various circumstances. According to the Transfer of Property Act, 1882 it prescribed two kinds of notices 

Actual or implied notice: The person having actual knowledge about a particular fact. 

Constructive notice: The knowledge of the fact is obtained through circumstances.  

Essential elements of the Transfer of Property Act, 1882

• To be a living or juristic person: For a transfer of property, there must be a transfer between living or a juristic person. In Shiromanigurudwara Prabhakar committee, Amritsar v. Sri Somnath Dass (2000) the court defines a juristic person which can be an individual firm, corporate, company society, association, but not a partnership. Anyone who can sue or can be sued would satisfy this requirement. 
• Transfer through Conveyance: Conveyance of property can be either done in the present or in the future. It is necessary to ensure nothing is transferred before the title. 
• The Property must be transferable: According to Section 6 of transfer of property Act, 1882 there are properties which cannot be transferred:

1. The chance of an heir-apparent succeeding to an estate, the chance of a relation obtaining a legacy on the death of a kinsman, or any other mere possibility of a like nature cannot be transferred. 
2. The mere right to re-entry for breach of a condition subsequent cannot be transferred to anyone except the owner.
3. The easement right cannot be transferred. 
4. The interest of the property restricted in its enjoyment to the owner cannot be transferred. 
5. Political pensions, public office, the salary of the public officer cannot be transferred. 
6. The right to sue cannot be transferred. 
7. Stipends to military, navy or the airforce, political pensioners, and civil pensioners cannot be transferred. 
8. No transfer cannot be made as opposed to the natural interest or if the object or the consideration is unlawful then the transfer cannot be held valid. 
9. The right to future maintenance cannot be transferred.
10. Tenants having an untransferable right to occupancy, the farmer of an estate in respect of which default has been made in paying revenue or lessee of an estate under the management of the court of wards, to assign his interest as the tenant, farmer, or lessee.   

• Transfer of property must be done by a competent person: For a valid transfer, it is necessary that the property transferred should be of a sound mind, should not be intoxicated, must be a major or he is not a person disqualified by law cannot enter into a contract of transfer of property with another person. 
• The transfer should be made in a prescribed form: The transfer of property need not be in  be made in writing however certain property to transfer then it must be in writing:

1. Sale of movable property value more than a hundred rupees. 
2. Sale of intangible must be in a written format. 
3. All mortgages which are more than a hundred rupees should be transferred in a written form.  
4. The transfer of actionable claims must be in a written form. 
5. A gift in a form of immovable property. 
6. Lease of immovable property exceeding more than one year. 

• The rule against perpetually: It is necessary that the property must be transferred during the lifetime of an individual perpetuity rule should not be followed during the time of transfer of property. 
• Property cannot be transferred to an unborn child:  A property cannot be transferred to an unborn child necessary to consider that while transferring the interest of the property person should be above the age of 18 years.
• Conditional transfer of property: Under Section 25 of the transfer of property Act, 1882, the property can be transferred complying to the condition mentioned. If the condition becomes impossible, forbidden by law, opposed to public policy, or is immoral the transfer would be held void. 

Illustration: A is interested in purchasing B’s property but B sets a condition that A in order to purchase B’s property has to kill C here the transfer is through unlawful act, therefore, the transfer would be held void. 

Kinds of transfer under the Transfer of Property Act, 1882

1. Sale of immovable property: There is a transfer of ownership from the buyer to the seller in exchange for the price. Delivery of tangible property from the seller to the buyer. 
2. Mortgage of immovable property: The property gets transferred from the buyer to the seller in the form of a mortgage where the immovable property is mortgaged to secure a loan. The mortgagor has to pay the principal loan along with the interest to release the immovable property from the mortgage. 
3. Leases of immovable property: The possession of the property is being transferred from one person to another person for a fixed price in this scenario there is no transfer of ownership. 
4. Exchange of immovable property: When two persons mutually decide to transfer immovable property it would be referred to as an exchange of property. 
5. Gift of immovable property:  According to the transfer of property Act, 1882,  gift refers to a transfer of movable or immovable property violently or without the consideration, by one person that is donee, to donor transfer is accepted by and on behalf of the donee.  

Features of Transfer of Property Act, 1882 

• The preamble of the transfer of property Act lays down that it is related to the transfer of property by the act of the properties.
• The transfer of property act, 1882 provides a uniform and a clear law concerning the transfer of movable property from one living person to another living person by the act of parties. 
• The Transfer of Property Act, 1882 is an extension of the Indian Contract Act,1872 because the contract act was recognized as an inexhaustive code. 
• The transfer of property law is not a copy of the English transfer of property laws that was enacted based on socio-economic conditions of the country.  
• The transfer of property Act, 1882 cannot be considered as totally exhaustive; it covers the transfer of immovable property from the act of parties. 
• Transfer of property is subject to the concurrent list that provides power to both the state legislature and the parliament to pass laws related to the matter of transfer of property.
• The act covers five types of transfer of immovable property they are as follows: a) Mortgage b) gift c) sale d) actionable claims e) lease.
• The transfer of property Act, 1882 is a law that applies lex-loci to all people living in that jurisdiction, not like personal laws that differ from person to person. 
• The transfer of property Act, 1882 is governed by various principles like justice, equity, and good conscience. 
• Initially, at the time of implementation, the act didn’t apply to the State of Bombay, Punjab, and Delhi as because they had their own acts related to property matters. Currently, the transfer of property act doesn’t apply in Punjab; it complies with the rule of good conscience, equity, and justice. 
• Transfer of property Act, 1882 highlights the provision of inter-vivos parallel to the existing laws relating to the testamentary and interstate transfer.
• The transfer of property act, 1882 is a general law and therefore it cannot prevail over the special laws passed by the parliament. 
• Under the Transfer of Property Act, 1882 it mentions that absolute conditional restraint is void and partial conditional restraint on the transfer of property is valid.  

Conclusion 

The Act was introduced with an intention to create a comprehensive Act which provides information about the transfer in a very simple language during the time of introduction it was not complete and had various uncertainties. It has gone through various amendment processes and the act has proved it time and again about its effectiveness. In India, many more such acts like transfer of property Act, 1882 are still in need to be implemented. 

References 

[1] Blog.Ipleaders.in/transfer-property-act/

[2] Lawctopus.com/academike/transferability-immovable-property/

[3] Shodhganga.inflibnet.ac.in

[4] Fklinknotes.wordpress.com