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Transfer of property Act (TOPA) (TPA)

The Transfer of Property Act [TPA] or TOPA came into existence in 1882. Before that, the transfer of immovable property was governed by principles of English law and equity. The preamble of Act sets out the objectives of the legislation. Scope of this Act is limited. It applies only to transfer by the act of parties and not by operation of law. Also this Act deals with a transfer of property inter vivos, i.e., a transfer between living persons. It contains transfer of both movable and immovable property but a major portion of the enactment is applicable to the transfers of immovable properties only. The Act is not exhaustive.

Q State the essential elements of immovable properties

The word property has not been defined in the Act, but it has a very wide meaning and includes properties of all descriptions. It includes movable properties such as case, books, etc., and includes immovable properties also such as lands or houses. It also includes intangible properties such as ownership, tenancy, copyrights, etc.

As per Section 3, immovable property does not include standing timber, growing crop and grass. The word standing timber includes Babool Tree, Shisham, Nimb, Papal Banyan, Teak, Bamboo, etc. The fruit bearing trees like Mango, Mahua, Jackfruit, Jamun, etc., are not standing timber, and they are immovable properties ( Fatimabibi v. Arrfana Begum, AIR 1980 All 394).

Whether trees can be regarded as movable or immovable depends upon the circumstances of the case. If the intention is that trees should continue to have the benefit of further sustenance or nutriment by the soil (land), e.g., enjoining their fruits, then such tree is immovable property. But if the intention is to cut them down sooner or later for the purpose utilising the wood for building or other industrial purpose, they would be timber and of accordingly be regarded as movable property (Shantabai v. State of Bombay, AIR 1958 SC 532)

Standing timbers: standing timbers are trees fit for use for building or repairing houses. Growing Crop:- It includes all vegetables growths which have no existence apart from their produce such as pan leave, sugarcane etc.

Grass: Grass is an movable property, but if it is right to cut grass it would be an interest in land and hence forms immovable property.

As per Section 3(25), General Clauses Act, 1897 Immovable property shall include land, benefits to arise out of land and things attached to the earth, or permanently fastened to anything attached to the earth.

The Indian Registration Act expressly includes under to immovable property the benefits to arise out of land, hereditary allowances, rights of way, lights, ferries and fisheries.

In the case of Sukry Kurdepa v. Goondakull (1872) court has explained that movability may be defined to be a capacity in~ a thing of suffering alteration. On the other hand, if a thing cannot change its place without injury to the quality it is immovable.


Example of immovable property
  •  Chattel embedded in earth.
  • Easement
  • Right of way
  • Right of enjoyment of immovable property under lease.
  • A right of fishery
  • A right to collect rent of immovable propert
  • Interest of mortgagee.

Q. State the difference between movable and immovable property

(a) Definition-
Movable Property- Not defined under Transfer of Property Act. • As per General Clauses Act, 1897 Movable property means property of every description except immovable property. As per Section 2(9) of Registration Act it include property of every description excluding immovable property but including standing timber, growing crops and grass.

Example of movable property- Machinery fixed on land temporary; Intellectual property right; Standing timber and growing grass; Right to recover maintenance allowance; Royalty; Copyright


Immovable Property-Not defined under Transfer of Property Act. As per Section 3, immovable property does not include standing timber, growing crop and grass.
  1. Standing timbers are tree fit for use for building or repairing houses. This is an exception to the general rule that growing tree are immovable property.
  2. Growing Crop:- It includes all vegetables growths which have no existence apart from their produce such as pan leave, sugarcane etc
  3. Grass:- Grass is an movable property, but if it is right to cut grass it would be an interest in land and hence forms immovable property.
As per Section 3(25), General Clauses Act, 1897 Immovable property shall include land, benefits to arise out of land and things attached to the earth, or permanently fastened to anything attached to the earth.

The Indian Registration Act expressly includes under to immovable property the benefits to arise out of land, hereditary allowances, rights of way, lights, ferries and fisheries.
Example of immovable property -Chattel embedded in earth; Easement.; Right of way; Right of enjoyment of immovable property under lease; A right of fishery; A right to collect rent of immovable property; Interest of mortgagee

(b) Movement
  • The movable property can easily be transported from one place to another, without changing its shape, capacity, quantity or quality.
  • The immovable property cannot easily be transported from one place to another. If transported, it will lose its original shape, capacity, quantity or quality
     
(c) Transfer
  • Movable Property- Mere delivery with intention to transfer the movable property completes the transfer.
  • Immovable Property- Mere delivery does not sufficient for a valid transfer. The property must be registered in the name of the transferee

(d) Registration
  • Movable Property- Registration is optional under the Indian Registration Act, 1908.
  • Immovable Property- Compulsorily registration under the Indian Registration Act, 1908, subject to condition that its value if exceeds Rs.100

Q. What is transfer? Or Essentials of a valid transfer?

According to the Transfer of Property Act, transfer of property means when a living person conveys the property, in present or in future, to one or more persons, or himself and one or more other persons and to transfer property is to perform such act.[section -5]

Legal rules for a valid transfer are:
Transfer must be between two or more living persons [section 5]

Living person  includes a company or association or body of individuals whether incorporated or not. A juristic person was defined in the case Shiromanigurudwara Prabhandak committee, Amritsar v. Sri Somnath Dass. In this case, the court said that a juristic person can be an individual, firm, corporate company, association, society, not including partnership firm. Any individual who can sue or be sued under law would satisfy this requirement.

The transfer must be inter vivos. Therefore there cannot be a transfer to a person not in existence at the time of transfer.

A transfer can be made by a person to himself, as for instance when a person vests property in trust and himself becomes the whole trustee.

The transfer must be through a conveyance.

Conveyance can be present or future. However conveyance can take place only if there is a creation of a new title. Therefore, there should have been nothing with the transferee before the title
Property itself must be transferred

The transfer of property may be made to take place with immediate effect or to take place on a future date; however the property must be in existence at the date of transfer. There can be no transfer of future property. The expression ‘in present or in future' governs the word ‘conveys' and not the word ‘property', e.g., A transfers his property to B for life and then to C. The transfer in favour of B is present (although he gets only life interest) but the transfer in favour of C is future transfer.

Property must be transferable. [section 6]

Person competent to transfer [Section 7] Every person, competent to contract (competency defined in section 11 of Contract Act) and having ownership can transfer property [Krishna Kurhai Versus Grindlays bank]. A minor can be a transferee but a minor is not competent to be a transferor . In other words, transferee need not be a competent person like transferor. A transferee may be a minor, insane or child in mother's womb. However, under Section 6(h)(3) the person must not be a legally disqualified transferee. For example under Section 136 of TOPA judges, legal practitioners and officers connected to the court are disqualified from purchasing actionable claims:
  • Consideration and object of transfer must be lawful.[no contract of transfer unlawful as per section 23 of the contract Act]
  • Transfer must take place as per method prescribed under the Act. [section 9]
[Types of transfer-sale, mortgage, lease, exchange, gift]

Formalities for transfer:
Section 54
  • Movable property- Orally (by delivery of possession) / Writing (by executing agreement)
  • Immovable property- Tangible of Value of 100 Rs. or above (Registration mandatory)/ of Value of less than 100 Rs. (Registration optional)

Intangible -Registration compulsory

Q. What does not constitute transfer?

As the transfer of property' means ‘conveying of property', i.e., creation of new title or interest in the favour of the transferee, if new title or interest has not created in favour of transferee , the property cannot be said to be conveyed, thus no transfer of property.

Partition: As nothing new is obtained by a co-sharer on partition, it is not a transfer of property. His specific share, which vested in him earlier, is simply separated.
Charge: The only right created in a charge is a right to payment out of the property subjected to charge, thus it is not a transfer. [Gobind Chandra v. Dwarka Nath, (1908) 35 Cal 837]
Relinquishment:-It is an extinction of a right and therefore, there is nothing left to transfer.

Thus a relinquishment by a reversioner of his reversionary interest does not amount to transfer (Barati Lal V. Salik Ram, 38 All 107). But if the person in whose favour the ‘release' is executed, gets certain rights by virtue of such release, the transaction may amount to a transfer [Maniapp pillai v. Periasami, (1975) 1 MU 236].

Surrender.-It is not a transfer as it is the manager of a lesser estate with a greater one [Multhan Lal Saha v. Nagendra Nath Adhikari, (1933) 60 Cal 379].
Easement.-The creation of an easement does not amount to a transfer.

Will.-Because it operates from the death of the person making it, while the definition contemplates a transfer by a living person, does not fall within the definition of transfer.
Compromise.-It may or may not amount to transfer. It depends on the facts and circumstances of each case. In Hussiaa Banu v. Shivanarayan, AIR 1968 MP 307, it was held that where one of the parties to a settlement gives up a claim to receive a certain sum of money from the other, in consideration of the latter's given up the right to certain property claimed by him, it would amount to a transfer.

Family arrangement/settlement: A family settlement entered into by the parties for the purpose of putting an end to the disputes among family members does not amount to transfer, not being an alienation it does not amount to the creation of an interest.

Q. Property of any kind can be transferred. Discuss exception to this rule OR Q. State the properties which cannot be transferred under the TPA

The general Rule is that : Every kind of property can be transferred. But there are certain exceptions-
Subject matter of transfer:
Section 6 Every kind of property can be transferred. But following properties cannot be transferred:
  • Chance of an heir apparent
  • Transfer of easement
  • Restricted interest
  • Right to future maintenance.
  • Right to sue.
  • Transfer of public office, salary and pension

Following properties cannot be transferred:
Chance of heir apparent (Spes successionis)
Specs succession means exception to succession. Possibility of getting property in future through succession. It is in anticipation or hope of succeeding to an estate of a deceased person. Such a chance is not property and as such cannot be transferred, if it is transferred, the transfer is wholly void.

Example: A is the owner of the property and B is his son. B is the heir of A. This type of property which B hopes to get after the death of the father cannot be transferred, during the life time of A.

Right of re- entry • It means right of lessor to re-claim the leased property from lessee on breach of contract or express condition. It is personal benefit which can't be transferred. • Example: If A leases his property to B with a condition that if he sublets the leased land, A will have the right to reenter, i.e., the lease will terminate. This right to reenter is personal benefit available to A, which can't be transferred.

Transfer of easement
An easement means an interest in land owned by another that entitled his holders to a specific limited use or enjoyment. An easement cannot be transferred. • Example: If A, the owner of a house X, has a right of way over an adjoining plot of land belonging to B, he cannot transfer this right of way to C. But if A transfers the house itself to C, the easement is also transferred to C.

Restricted interest • Certain rights enjoyment of which is reserved for certain person. If it is so, it is known as restricted interest. Restricted interest can't be transferred to another person. It includes ‘religious office'.

Example: The right of PUJARI in a temple to receive offering. The right of WIDOW under Hindu law to residence

Right to future maintenance
Right to future maintenance is personal benefit to whom it is granted. However arrears of past maintenance can be transferred.
Example: The right of a Hindu widow to maintenance is a personal right which cannot be transferred.

Right to sue:
A mere right to sue cannot be transferred. The right refers to a right to damages arising both out of contracts as well as torts. • Example: A commits an assault on B. B can file a suit to obtain damages; but he cannot assign the right to C and allow him to obtain damages.

Transfer of public office
It is against public policy to transfer public offices, salary and pension. Pension and salary are given on personal basis, it can't be transferred. [In Corporation of Liverpool v. Wright: Where the law assigns fees to an office, it is for the purpose of upholding the dignity and performing properly the duties of that office and the policy of the law will not allow the officer to bargain away those fees to the appointer or anyone else.]

stipends and Pensions: stipends allowed to military, naval, air-force, and civil pensions of the Government and political pensions cannot be transferred.

Unlawful object or consideration- No transfer can be made in for an unlawful object or consideration within the meaning of section 23 of the Indian Contract Act, 1872; or to a person legally disqualified to be transferee.

Occupancy Rights
  • Transfer of occupancy rights of a tenant is prohibited.
Example: Tenant can't transfer his right of tenancy and farmer can't transfer his right to land if he himself is a lease.

Q. General principle of TPA is that property or interest is transferred between living persons. Are there any exceptions to this principle. If yes, explain
According to the Transfer of Property Act, transfer of property means when a living person conveys the property, in present or in future, to one or more persons, or himself and one or more other persons and to transfer property is to perform such act. [section -5]

Generally property can only be transferred to living person, as on date of transfer, i.e property cannot be directly transferred to unborn person.
However there are certain exception to this rule.

Transfer for benefit of unborn person - Section 13
Section 13 of the Transfer of property Act read as follows:
Where, on a transfer of property, an interest therein is created for the benefit of a person not in existence at the date of transfer, subject to a prior interest created by the same transfer, the interest created for the benefit of such person shall not take effect, unless it extends to the whole of the remaining interest of the transfer in the property.

Section 13 gives effect to the general rule that a transfer can be effected only between living persons. There cannot be a direct transfer to a person who is not in existence or is unborn. This is the reason why section 13 uses the expression transfer ‘for the benefit of' and not transfer to unborn person.

A child in the mother's womb is considered to be competent transferee. Therefore, the property can be transferred to a child in the mother's womb because the child exists at that time but not to an unborn person who does not even exist in the mother's womb. Every transfer of property involves the transfer of interest. As soon as the property is transferred, the transferor is divested of that interest and the interest is vested in the transferee. For vesting of interest, therefore, it is necessary that the transferee, must be in existence. Otherwise the interest will remain in abeyance till the transferee comes into existence. This is against the very concept of an interest.
Section 13 provides that the property cannot transfer directly to an unborn person but it can be transferred for the benefit of an unborn person

Pre-Requisites For A Valid Transfer Of Property To An Unborn Person

Section 13 provides a mechanism for a specific mechanism for transferring property validly for the benefit of unborn persons.

The procedure as follows:
  1. The person intending to transfer the property for the benefit of an unborn person should first create a life estate in favor of a living person and after it, an absolute estate in favor of the unborn person.
  2. Till the person, in whose favor a life interest is created is alive, he would hold the possession of the property, enjoy its usufruct i.e. enjoyment the property.
  3. During his lifetime if the person, (who on the day of creation of the life estate was unborn) is born, the title of the property would immediately vest in him, but he will get the possession of the property only on the death of the life holder.
Creation of a Prior Life Interest
As far as the creation of a prior interest is concerned, first, the property is given for life to a living person. It is not necessary that life interest should be created in favor of only one living person. The transfer is competent to create successive life interests in favor of several living persons at the same time.

For instance, A transfer property to B for life, and after him, to C, and then to D again for their lives and then absolutely to B's unborn child UB.

On B's death, the possession would be taken by C and on C's death, by D. On D's death, the possession would go to B's child, who should have come in existence by this time. If he not there, the property would revert back to A, if he is alive, else to his hiers.

No Life Interest for an Unborn Person but only absolute interest

As far as the unborn is concerned, no life interest can be created for the benefit of an unborn person. Section 13, specifically prohibits that, by the use of the expression, ‘the interest created for the benefit of such person' shall not take effect, unless it extends to the whole of the remaining interest of the transferor in the property.

It means that the transfer must convey to the unborn person, whatever interest he had in the property, without retaining anything with him. Thus, no limited estate can be conferred for the benefit of the unborn person. If limited interest in the property is settled for him, the same would be void.

So, when property is transferred in favour of an unborn person, the transferor first gives a life interest to an existing person. After transferring it, he retains with him the remaining interest of the property. This remaining interest with the transferor must be given to the unborn so after the termination of prior life interest, the unborn gets the whole or absolute interest in the property.

Q. explain the rule against perpetual. What are the exceptions to this rule
Rule against perpetuity:
It is basic rule of Transfer of Property that one must enjoy the property absolutely during his lifetime. One cannot be deprived of his right of enjoyment in respect of the property as he like in his lifetime. The policy of the law has been to prevent property from being tied up forever. Perpetuity is an interest, which will not vest till a remote period. One cannot postpone the vesting of the property in the transferee beyond a certain limit. The period for which vesting may be lawfully postponed is called :perpetuity period.

Section 14 of TOPA- Rules against perpetuities also helps us understand this provision by providing that:
No transfer of property can operate to create an interest which is to take effect after the lifetime 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.

The following conditions must be satisfied to attract Section 14:
  • There must be a transfer of property.
  • The transfer should be to create an interest in favour of an unborn person.
  • The unborn person must be in existence at the expiration of the interest of the living persons.
  • Interest created must take effect after the lifetime of one or more persons living at the date of such a transfer and during the minority of the unborn person.
  • The vesting of the interest in favour of the ultimate beneficiary may be postponed only up to the life or lives of living persons plus the minority of the ultimate beneficiary but not beyond that.
     
Section 14 Perpetuity means continuing forever. Rule provides that 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 for that period, and to whom, if he attains full age, the interest created is to belong.

Following are elements of rule against perpetuity:
Property can be transferred to different living persons for their successive lives, before property is transferred to unborn person.
  • Unborn person must come in to existence before expiry of existing life of transferor.
  • Transfer must be absolute.
Example 1: A transfers a piece of land to his friend B for life, and afterwards to his friend C for life, then to his friend D for life, and then to the son that may be born to B, for his son's life, •then to the son that may be born to C for his life, and then ultimately to the son that may be born to D forever.

In case of such disposition of the land, B cannot alienate the property, because he has only a life interest therein. For the same reason, neither C nor D, nor the sons of B and C can alienate the property. When the property finally vests in D's son, only he will be entitled to alienate the property.

This would be certainly a restraint on the free alienation of the piece of land for a considerable long period. Section 14 prevents this and lays down that one can tie up property and stop it's free alienation only for one generation, because all friends of A, now living must die within that time, as they are all candles lighted together.

Extent of Perpetuity Period

Position in India – Life or any number of lives in being + period of gestation + minority period of the unborn beneficiary.
English Law – Life or lives in being +period of gestation +minority period.

Difference Between Indian And English Law

  • The minority period in India is 18 years whereas it is 21 years under English law.
  • The period of gestation should be an actual period under Indian Law but it is a gross period under English law.
  • Under Indian law, the property should be given absolutely to the unborn person whereas in English law, need not be absolutely given.
  • The unborn person must come into existence before the death of the last life estate holder as per Indian law whereas he must come into existence within 21 years of the death of the last life estate holder in case of English law.
Further Section 20 of TOPA provides that unless a contrary intention appears from the terms and conditions of the transfer, the moment the person not in existence is born, he or she acquires an interest in the property in question, even though he or she may not be entitled to enjoy it until a certain age, as the property may be in the possession of the life estate holder.

Exception to the rule against perpetuity
Following are the nine exception to the rule against perpetuity:
  1. vested interest is not affected by the rule because once the interest are vested it cannot be bad for remoteness.
  2. The rule is not applicable to land purchased or held by Corporation.
  3. Gift to charities, the rule does not apply to transfer for the benefit of public for religious, pious, or charitable purposes.
  4. Properties settled upon individuals for memorable Public Service.
  5. The rule against perpetuity does not apply to Personal agreement. for example.. agreement which do not create any interest in the property.
  6. A covenant of redemption in mortgage is not affected by the rule.
  7. The does not apply to contacts for Perpetual renewal of lease.
  8. The rule also does not apply where only charges is created which does not amount to a transfer of an interest.
  9. Contract of preemption also not affected by rule against perpetuity.
Case Law:
  1. Anand Rao Vinayak v/s Administrator general of Bombay,1896
    In this case Bombay High Court declared that the gift void as offering against perpetuity when a gift was made of movable property to a son with gift of shares in the property to son's sons son when they should attend the age of 21.
  2. Abdul fata Mahomed v/s Rasamaya ,1894.
    The privy Council held that a gift to an Unborn generations is Forbidden by Mohammedan law except in the case of Wakf.
  3. Rambaran v/s Ram Mohit AIR 1967 S.C. 744 .
    Supreme Court held that the rule against perpetuity does not apply to Personal agreements, for example.... agreements which do not create an interest in the property.
In short......the rule against perpetuity provides that vesting cannot be postponed beyond the lifetime of anyone or more persons living at the Date of transfer. The basis of the rule against perpetuity is that Liberty of alienation shall not be exercised to its own destruction. The rule of perpetuity is not absolute but it has certain exceptions.

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