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Transferable And Non Transferable Property

The Transfer of Property Act 1882 is an Indian legislation which regulates the transfer of property in India. It contains specific provisions regarding what constitutes a transfer and the conditions attached to it. It came into force on 1 July 1882.

According to the Act, 'transfer of property' means an act by which a person conveys the property to one or more persons, or himself and one or more other persons. The act of transfer may be done in the present or for the future. The person may include an individual, company or association or body of individuals, and any kind of property may be transferred, including the transfer of immovable property.

The object of the Transfer of Property Act is to define and amend law relating to Transfer of Property by act of parties and not to transfer by operation of law. A Transfer of Property is a contract hence all necessary requirements to constitute valid contract are to be fulfilled.

A property is a bundle of rights. It includes movable, immovable, tangible and intangible assets. When a property is transferred, all the rights along with the property are also transferred. However arrangements may be made by which some of the rights may be transferred but not all. A transfer of future property is not valid in India but conveyance of such property may be valid as a contract to assign. When the property comes into existence, the equity festers upon the property and the contract to assign becomes a complete assignment.

Meaning And Definition
The term ‘transfer’ means a contract plus conveyance. It is a process or an act by which something is made over to another.
Under Transfer of Property Act, 1882 Section 5 defines ‘Transfer of Property’. According to this section, transfer of property means an act by which a living person conveys the property in present or in future:
1. To one or more other living persons, or
2. To himself, or
3. To himself or one or more other living persons, and to transfer such property is to perform such act.

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.

The word ‘transfer’ has also very wide meaning. It may be either transfer of all the right and interests in the property or transfer of one or more of subordinate right in the property.

Kinds of Transfer

The Act contemplates the following kinds of transfers: (1) Sale, (2) Mortgage, (3) Lease (4) Exchange, and (5) Gift. Sale is an out-and-out transfer of property. In mortgage, there is a transfer of limited interest in property. A lease is a transfer of a right to enjoy immovable property for a certain time or in perpetuity. Exchange is like a sale, but differs from it as regards the consideration. In sale, the consideration is money, while in exchange, the consideration is another thing. In a gift, there is no consideration.

In Harish Chandra v. Chandra Shekhar, AIR 1977 All 44, it was held that a release-deed is a conveyance, hence a transfer of property. If the release deed states that the releaser was the owner and it shows an intention to transfer his title and its operative word sufficiently was the conveyed the title it would amount to transfer.

Analysis of Section 5 of Transfer of property, 1882
· Transfer of ‘inter vivos’ alone are included as transfer from living person/s to living person/s.
· Transfer can be present or future but transferor must be living person. Shamsuddin vs Abdul Hussain. ( Exception : Section 13 Transfer to an unborn Person)
· Living person include juristic persons like company and other like associations of individuals whether registered or not.
· Other laws governing transfer are not affected by TPA.
· There must be an ‘act of conveyance’. Property must be handed over to the other person. This can be expressed or implied.
· Act not exhaustive of all kinds of transfers. It deals with sale, gift, mortgage, lease and exchange.

Essentials of A Valid Transfer

1. Transfer must be between two or more living Persons (Section.5)
The Transfer must be inter vivos. Therefore there cannot be a transfer to person not in existence at the time of transfer. The living person including company or Association or body of individuals whether incorporated or not.

2. The property must be transferable (Section. 6)
Property of any kind of may be transferred, accepts as otherwise mentioned in S.6 (a) to (I) cannot be transferred. Therefore those properties described in the clauses (a) to (I) of Section.6 cannot be transferred. These are restrictions on the Transfer of Property and any transfer in contravention of any of the clauses given in Section 6(a) to (I) is null and void.

3. Persons competent to transfer (Section.7)
Every person is competent to contract and entitle to transferable property, or authorized to dispose of Transferable property not his own, is competent to transfer such a property either wholly or in part, and either absolutely or conditionally, in the circumstances to the extent and in the manner, allowed and prescribed by any law for the time being in force.

4. The Transfer must be made in the mode prescribed by the Act, under section 9
Section 9 of Transfer of property provides that for oral transfer, A Transfer of Property may be made without writing in every case in which a writing is not expressly required by law.

5. The consideration or object of the transfer must be lawful.
No transfer can be made for an unlawful object or consideration as provided in Section 23 of the Indian Contract Act, 1872.

6. The transfer must not be opposed to the nature of the interest effected thereby.
If the nature of property to be transferred does not admit of such transfer, it cannot be transferred. (Section 6(h))

Persons Competent To Transfer (Section 7)

Competency to contract has been defined under section 11 of the Indian Contract Act, 1872.
Section 11 says that every person is competent to contract-
a) Who is of the age of majority according to the law to which he is subject,
b) Who is of sound mind, and
c) Is not disqualified from contracting by any law to which he is subject.

Age of Majority
Generally the age of majority is 18 except when a guardian of minor’s person or property has been appointed by the court in which case it is 21. The age of majority is to be determined according to the law to which a person is subject.

Mallikarjuna vs. Mareppa, AIR 2008 a person purchased certain property in the name of his minor son and subsequently resold it while the son was still minor. Court permission was necessary under section 8 of the Hindu Minority and Guardianship Act, 1956 but no such permission was taken. The provision being mandatory the sale was held to be void.
Minor as a transferor: a minor’s contract is void. Raja Balwant Singh vs Rao Maharaj Singh a transfer of property by a minor is void.

Minor as a transferee: there is no specific provision of law incapacitating a minor from holding property under a transfer in his favour.

Sound mind
Under section 12 of the Indian Contract Act, a person is of sound mind of the purpose of making contract if he is capable of understandings it and of forming a rational judgment as to its effect upon his interest. A contract made by a person of unsound mind is void.

A person who is usually of unsound mind but occasionally of sound mind may make contract when he is of sound mind.

Disqualified person
An insolvent and alien enemy is disqualified from contracting. A transfer by a defacto Guardian of minor’s property is invalid and will be hit by section 11 of Hindu minority and guardianship Act, 1956. Johri vs Mahila Darupati, AIR 1991.

Persons authorized to dispose of property not his own
If the transferor has no title to the property, he must have authority to transfer it. For e.g. an agent acting under power of attorney.

Chittu Singh vs Chatan Singh, 1923 a person who has no right at all to have possession cannot make any valid transfer.
Also, the power of such person cannot exceed the power of the person who has so appointed him.

What May Be Transferred (Section 6)

The transferability of property if the general rule and non-transferability is an exception. Transferability of property is based on the maxim alienation rei prae fertur juri accrescendi which means to say that alienation is favoured by the law rather than accumulation. The general policy of law is to promote free alienation and circulation of property rather than accumulation.
Section 6 of the transfer of property act, 1882 says that property may be transferred excepting the exceptions given in this section. This section consists of exception in clause (a) to (i), it is Exceptions: - section 6 says that the property of any kind may be transferred, except as otherwise provided by the act or by any law for the time being in force. These exceptions are discussed below:
Kansing Kalusing Thakore vs. Rabari Maganbhai Vashrambhai (2006)
Transfer of the property can be prohibited only by provisions of law and not by a judgement or direction. Restriction contained in a tenancy legislation can be waived by the competent authority.

Clause (a): Spes successions
Spes Succession means exception of succession, it is a possibility of getting property in future through succession. Under this clause, spes succession include:-
(a) Chance of an heir apparent succeeding the an estate,
(b) Chance of a relation obtaining a legacy on the death of a kinsman, or
(c) Any other mere possibility of a like nature.

This clause says that spes succession is not transferable.
(a) Chances of an Heir Apparent
Heir apparent is not a legal heir but apparently an heir. Heir apparent is that person who would be the heir if he survived the propositus and if the propositus dies intestate. Propositus is a deceased person whose property the heir-apparent is going to inherit. When the propositus dies intestate, i.e. without making any will, the heir will inherit the property.

(b) Legacy
Clause (a) provides that the chance of a relation obtaining a legacy on the death of a Kinsman is not transferable =. Legacy means expectancy of getting certain property under a will. A will becomes operative only after the death of the testator, i.e, the person who has made the will. Legatee under the last will only will get the legacy. Expectancy to receive legacy is uncertain because the legatee may or may not survive the testation and the testator may have changed the name of the legatee in his last will. Therefore, the chance of a legacy has been made non-transferable.

(c) Any other possibility of a like nature
Clause (a) excludes any other possibility of s like nature from the purview of transferability. If there is any other possibility property or interest which is as uncertain as specs succession or legacy, that too will not be transferable. Any property which is merely a future uncertain possible interest should not be made a transferable property.

Where an heir apparent received advantage for giving up his future right of property, it eas held that he could not be allowed benefit of the doctrine of spes successions. He became estopped from claiming share in the inheritance.

Clause (b): Right to Re-entry
Clause (b) constitutes second exception to the general rule of transferability. It says that a mere right of re-entry for breach of a condition subsequent cannot be transferred to anyone except the owner of the property affected thereby. This is the right which a lessor keeps reserved for himself after parting with the whole estate.

Clause (c): Right to Easement
An easement cannot be transferred apart from the dominant heritage, easement is a right which exists for beneficial enjoyment of a land and is exercised upon the land of another person. Easement is an incident of ownership, it is a right attached with the property and has no independent existence. Hence it cannot be transferred.

Clause (d): Restricted Interest
It says that an interest in property restricted in its enjoyment to the owner personally cannot be transferred by him. This means that a person’s right or interest which is only for his enjoyment cannot be transferred by him.

R. Rajegowda vs. H.R Shankere Gowda, Air (2006)
A person having life interest in property cannot bequeath it by executing a Will; a document evidence partition between father and son under which an interest in the property was allotted to the father for his maintenance, an absolute right of alienation was not given , hence, no right to bequeath by making will.

K. Balakrishna vs. K. Kamalam, Air 2004
The restriction on transferability contained in the clause are not applicable to a will, because it is not equivalent to transfer.

Clause (dd): Right to Future Maintenance
It is for the personal benefit of the person to whom it is granted, therefore, it cannot be transferred. This right to future maintenance may have been secured by a charge on the property or its income, or in any other manner. Although the right of maintenance is not transferable, the arrears of maintenance can be transferred. The right of maintenance is a personal right of a Hindu widow which is incapable of assignment but arrears of maintenance can be attached and sold like any other debt.

Clause (e): Right to Sue
A mere right to sue cannot be transferred. Right to sue for a definite sum of money is an actionable claim and can be transferred but right to sue for indefinite sum of money is not transferable. Right of action for damages in tort or breach of contract are bare rights to sue, and therefore, cannot be transferred.

Clause (f): Public office
This clause provides that a public office cannot be transferred, nor the salary of a public office, whether before or after it has become payable. These interests are made non-transferable to ensure the dignity of the office held by him and proper performance of his duties.

Clause (g): Stipends and Pensions
It provides that the stipends allowed to military, naval, air-force, and civil pensioners of the government and political pensions cannot be transferred, a will can be executed only in respect of an estate.

Sundariya Bai Chaudhary vs. Union of India, Air 2008
The family pension of the deceased was not in the nature of an estate and it being not transferable could not be bequeathed by a will. The court added that other benefits like provident funds, gratuity and other retrial dues and extra-remunerations would be in the category of an estate.
Clause (h): Nature of Interest, Unlawful Object, Disqualification of transferee
(i) In so far as it is opposed is the nature of the interest affected thereby; or
(ii) For an unlawful object or consideration within the meaning of section 23 of the Indian Contract Act,1872 ; or
(iii) To a person legally disqualified to be transferee

Section 8. Operation of Transfer
Section 8 dealing with effects of transfer provides that unless a different intention is present a transfer of property passes all the interests which the transferor is then capable of passing in the property and its legal incidents to the transferee.

Bishwanath Prasad Singh vs. Rajendra Singh, Air 2006
The object of this section is to clearly define what are the legal incidents of each particular class of property which pass along with the property when it is transferred.
Section 8 states on the transfer of property not only all the interest of the transferor in the property passes to the transferee but also his interest in the legal incidents of the property.

A) Land
Where property to be transferred is land its legal incidents will include:
(i) Easement attached to it
(ii) Rent & Profit occurring after the Transfer
(iii) All the things attached to the earth

B) Machinery
All the movable and immovable parts of the machinery essential for using it are to be transferred.

C) Home/House
Legal incidents of a house includes:
(i) An easement annexed with it
(ii) Rent & Profits Occurring After the transfer
(iv) Locks, keys, widows & all the other things provided with it for permanent use.

D) Debt
Where the property to be transferred is a debt or other actionable Claim, those securities will be with that particular debt transferred to the transferee.

E) Money
Where the property to be transferred is money or other property yielding money its legal incidents will include its income and interests occurring after the transfer.
The general rule regarding transfer is that the transferor conveyed all that he was possessed of in the property transferred. A person cannot transfer something to another by doing acts which he himself is not entitled to do. A transferee cannot have a better title than what the transferor himself had in the thing transferred. If the transferor has held the property with certain limitations, the transferee would get it too with those limitations and not without them.

Ram Gopal vs. Nand Lal, 1950
The Supreme Court held that having regard to section 8 of the Transfer of Property Act, a transfer passes the entire estate of the transferor when no restriction is indicated by the deed and in Hindi law, there are texts requiring a gift to a female to be constructed only as a limited gift.

Nathu Lal vs. Durga Prasad, AIR 1954
A women obtained property under the will of her father. On her death, the plaintiff, who was her sister’s son, claimed the property as reversioner on the ground that she had only a limited estate. The second claimant was the woman’s husband who claimed to succeed the property as heir to her stridhan. The High Court of Rajasthan held that the woman had only limited estate and gave a decree to the plaintiff. The Supreme Court reversed the decision and held that an absolute estate had passed to the legatee. It was observed that there is no difference between the case of a female and the case of a male and the fact that the done is a women does not make the gift less absolute where the words are sufficient to convey an absolute estate to a female.

According to section 8, on the transfer of a property not only all the interests of the transferor in the property pass to the transferee but also his interests in the legal incidents of such property. An incident is a thing necessarily depending upon or appertaining to, or following another that is more worthy as rent to incident is a reversion.

A) Land
Generally the transfer of land would include transfer of everything annexed to it permanently. Therefore, the transferee would get not only the surface of the land but also the easement annexed to it and also the minerals beneath the surface unless there is a contrary intention. According to this section, the legal incidents of a land include everything attached to it, rents and profits accruing after the transfer of land and all the easement related to the land. All the houses, structure and trees standing on the land are transferred along to the land by necessary implication.

Jai Narayan Misra vs. Hashmathunnisa Begum, AIR 2002
Where one partner contributed land and the other constructed theatre and a clause in the partnership deed provided that the partnership will continue foe certain number of years. The court rejected the contention that the deed was a licence to use the land. A partnership deed usually does not have the effect.

Ram Chandra vs. Kalyan Singh, AIR 2006
Trees were planted on land in question subsequent to the agreement ,the seller objected saying that standing trees could not be transferred in execution proceedings, this was held to be not tenable as under section 8 that property also passes to the transferee which is capable of passing with the land.

B) Machinery
Where machinery is attached to the earth, it is transferred along with the land transferred. The incidents of machinery includes all the movable parts of the machinery like nuts, bolts, etc.

C) House
Legal incidents of a house are easements like right to way, right of support, permanent fixture like bars, windows, keys, locks, etc. which are part of the house and provided for permanent use. Besides these, rents accruing after the date of transfer are also transferred along with the house.

D) Debt
Where property transferred is a debt or an actionable claim, securities of it will also pass to the transferee as legal incident of the property transferred on the basis of the principle that every principal thing attracts accessories towards it. In this section, the word ‘debt’ refers to only those debts which come within the general definition of actionable claims.

Ganpat Rai vs. Sarupi, 1878
Where a money-decree is obtained for a secured debt and then transferred, the securities will not pass with the decree and purchaser could not claim to enforce securities.

The provision of this section are not applicable to mortgage debts because such debts are not actionable claims. However, a charge annexed passes on to the transferee in the assignment of a debt. A promissory note is a conditional payment of the debt. If a mortgage holds a promissory note for a part of the debt and retains it after transferring the mortgage, he will be restrained from suing on it pending a suit for redemption.

Written by: Ruth Diya Chattopadhyay

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