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Introduction:-
In order to answer the above question one must look at the
provisions of the Transfer of Property Act. The Act defines
Transfer of Property
as 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
one or more other living persons; and "to
transfer property"
is to perform such act. In the case of
Jugal Kishore v. Raw Cotton Co
Supreme Court laid down that the words 'in
present or in future'
qualify the word conveys and not the word 'property'.
The conveyance may be in present or in future, but the conveyance
should be of property in existence. A transfer of property not in
existence operates as a contract to be performed in the future
which is specifically enforceable as soon as the property comes
into existence.
he Court went
on to say that "Where
there is a contract for the transfer of property which is not in
existence at the date of the contract, the intending transferee
may, when the property comes into existence, enforce the contract
by specific performance, provided the contract is of the kind
which is specifically enforceable in equity. It is only when the
transferor voluntarily executes a deed of transfer as in all
conscience he should do or is compelled to do so by a decree for
specific performance that the legal title of the transferor in
that property passes from him to the transferee. This transfer of
title is brought about not by the prior agreement for transfer but
by the subsequent deed of transfer." This principle
has been upheld and followed in numerous other judgments as well.
In the case of
Ranee Bhobosoondree Dassee v. Issur Chunder Dutt
, The Privy
Council observed that transaction of sale for future property did
not operate as a present transfer of the property, but only as an
agreement to transfer so much of it as might be recovered in a
suit to be instituted.
Further the
Privy Council in
Rajah Sahib Perhlad Sein v. Y. Baboo Budhee
Singh, stated
To support it, the execution of the bill of sale must be treated
as a constructive transfer of possession. But how can there be any
such transfer, actual or constructive, upon a contract under which
the vendor sells that of which he has no possession and to which
he may never establish a title. The bill of sale in such a case
can only be evidence of a contract to be performed in future and
upon the happening of a contingency of which the purchaser may
claim a specific performance.
Though this
particular case dealt with an instrument of sale of future
property, in effect 'sale' is just another mode of transferring
property under the act and so is 'mortgage'. Drawing more on the
same analogy, if a sale deed of future property is treated as an
agreement to transfer and not as a transfer itself the same
principle would apply to mortgage deed as well.
Section 58 of the Transfer of Property Act 1882 defines mortgage
as follows.
"A
mortgage is the transfer of an interest in specific immoveable
property for the purpose of securing the payment of money advanced
or to be advanced by way of loan, an existing or future debt, or
the performance of an engagement which may give rise to a
pecuniary liability."
There are two
essential elements for consideration before us. Firstly there must
be a transfer or a creation of a right over, or in respect of a
property by the instrument.
A mortgage of
future immovable property does not operate to pass any future
property and all that it passes is the interest which the
transferor can then, i.e., at the date of the transfer, pass.
The second
essential is that it must be a right over or in respect of 'specified'
property. The expression 'specified property' has not been defined
under the Act nor has the expression 'transfer'
The dictionary
meaning of the word "specify"
is: 'to mention, describe, or define in detail'. Property may be
considered to be 'specified'
if it is clearly defined so that there may be no difficulty in its
identification.
Non-existent
property cannot be considered to be clearly defined and capable of
identification at the time when the instrument is executed. May be
sufficient description is found in the instrument to enable
identification in future; but what the definition requires is
transfer or creation of rights over or in respect of specified
property, that is, at the time the instrument is executed. A
property cannot be regarded as certain and defined in praesenti
when all that is found is, hope and expectation and sustained
effort to produce property as specified and the thing is in the
course of production in accordance with specifications. There can
be no question that anticipated realisations on exhibition are not
specified properties.
In the above
case the Madras High Court had to decide whether the instrument in
question was a mortgage with possession coming under Art. 40(a) of
Schedule I of the Indian Stamp Act or simply an agreement.
It was held
that the said deed failed to meet the essentials of a Mortgage
Deed under section 2(17) of the Stamp Duty Act. It created a
charge over a property which was not in existence on the day of
making the agreement and hence could not qualify as a mortgage
deed and was only an agreement enforceable by the transferee on
the acquisition of the said property by the transferor.
In
Moti Ram v.
Khyali Ram, MANU/UP/0149/1967, it was held that a transfer could
be only of a specific property which is in existence, but
agreement to transfer can be of future property and equally, there
could be an agreement to assign interest in future.
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The
author can be reached at: gargshubhangi@legalserviceindia.com/
