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Introduction To Transfer Of Property Act

"Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place." - Frederic Bastiat

By its very existence, society mandates interaction, exchange or transfer. A property, movable or immovable, is transferred from one person to another under various different situations and circumstances and for different values. The transfer may be a gift, an inheritance or an asset acquired by paying full value.

When a movable property is transferred inter-vivos (between two living persons), Sales of Goods Act, 1930 comes into play. When an immovable property is transferred from living person to living person(s), the Transfer of Property Act, 1882 comes into play. In case, the property is transferred from a dead person to a living person(s), the law applied will be the Law of succession. Should a person die without leaving a will (intestate), the law of intestate succession is applicable and in cases where a person dies leaving a will, the law of testamentary succession is applicable.

Property has a very wider meaning in its real sense. It not only includes money and other tangible things of value, but also includes any intangible right considered as a source or element of income or wealth. It is the right and interest which a man has in lands and chattels to the exclusion of others. It is the right to enjoy and to dispose of certain things in the most absolute manner as he pleases, provided he makes no use of them prohibited by law.

The research paper would be an analysis of the scope of the Transfer of Property Act, 1882 in relation to its applicability over movable and immovable property in India. It would essentially seek to prove or disprove the hypothesis that:
"Transfer of Property Act deals only with immovable property."

Most of the provisions of the Act relate to immovable property, though some of them provide for movable property as well. All these aspects would be looked into and the thus, the research work would provide an insight into the kinds of transfer dealt with in the Act and their applicability to movable and immovable property as such.

Property And Interest In Property

The legislature has not attempted to define the word 'property', but it is used in the Transfer of Property Act, 1882 in its wider and most generic legal sense. Section 6 says that property of any kind may be transferred. Thus, an actionable claim is property and so is a right to re-conveyance of land. Property is anything which is the subject-matter of ownership, but also includes dominum or the right of ownership or partial ownership.

Movable And Immovable Property

Property may be movable and immovable.

Immovable Property:
The Act states that "Immovable Property does not include standing timber, growing crops or grass". The General Clauses Act defines "Immovable Property" as under: "Immovable property shall include land, benefits to arise out of land, and things attached to earth, or permanently fastened to anything attached to the earth." An equity of redemption is immovable property and so is the mortgagee's interest in the immovable property mortgaged.

There are many conflicting decisions as to whether a mortgage debt is immovable property, but since mortgage debt has been excluded from the definition of an actionable claim by Act 2 of 1900, it seems that a mortgage debt is for all intents and purposes, immovable property, though for the purpose of attachment it is treated as movable property.

A full Bench of Rangoon High Court has said that a mortgage, being transfer of an interest in immovable property, is immovable property, and that a suit to enforce a mortgage is a suit for land under the Letters Patent of the Chartered High Courts. Standing timbers are tree and therefore, they are not falling under the definition of immovable property. However, a fruit bearing tree is not a standing timber and therefore can be classified as immovable property.

Movable Property:
There is no definition of movable property in Transfer of Property Act, 1882, Movable property has been defined in the General Clauses Act,1897 to mean 'property of every description except immovable property'. The Registration Act, 1908 defines movable property to include property of every description except immovable property, but including standing timber, growing crops and grass.

Interest In Property

As ownership consists of bundle of rights, the various rights and interests may be vested in different persons, eg. A mortgager and a mortgagee, a lessor and a lessee, or tenant for life. An absolute ownership is an aggregate of component rights such as the right of possession, the right of enjoying the usufruct of the land, and so on. The subordinate rights, the aggregate of which make an absolute ownership, are referred in the Transfer of Property Act as interest in property. In section 58, however, the word interest is not distinguished from absolute ownership.

Meaning Of 'Transfer'

The word 'transfer' is defined with reference to the word 'convey'. This word in English law in its narrower and more usual sense refers to the transfer of an estate in land; but it is sometimes used in a much wider sense to include any form of an assurance inter vivos. The word 'convey' in section 5 of the Transfer of Property Act is used in the wider sense referred to above. Transferor must have an interest in the property. A lease comes within the meaning of the word 'transfer'.

A transfer of property does not exclude property situated outside India or the territories where Transfer of Property Act, 1882 does not apply. If the transfer is effecte where the Transfer of Property Act, 1882 is in force, the right of the parties are to be determined by the Court under the Transfer of Property Act.

Charge:
A charge is not a transfer of property. For the charge no right is transferred but a personal obligation is created or a right to payment out of property specified can be generated. In the insolvency Acts, a transfer of property, however, defined as including a charge. The definition is wider because any obligation incurred by a debtor affecting his property may be voidable as a fraudulent preference.

Compromise:
A compromise of doubtful rights is not a transfer, but based on assumption that there was an antecedent title of some kind in the parties which the agreement acknowledged and defined. The position would be different if such a compromise also transferred properties to a person who has neither a pre-existing title, nor a claim to such title.

Deed of Appointment:
A transfer is not necessarily contractual, and includes a deed of appointment. Section 5 of the Transfer of Property Act does not require that the 'living person' who conveys should necessarily be the same person as who owns, or owned, the property conveyed. All that is required is that there should be an act of conveyance by some living person; under the section there may be a transfer by a person exercising powers over the property of another. Thus, where the donee of power of appointment, having power to appoint a beneficial interest in the property, exercises that power, it would amount to a transfer.

Exchange:
An exchange is a mutual transfer of the ownership of one thing for another. The main factor that distinguishes an exchange from a sale is that in an exchange, no monetary consideration is involved. Exchange of one property for money is a sale, and an exchange of movable property with another movable property is barter. An exchange of one stamp for another, or shares in a limited company, as consideration, is an exchange.

Will:
Will operates from the death of testator. Transfer of shares or interest in a co-operative society to the nominee of its member operating on his death would also be executed like transfers by will. Where the beneficiary is not a living person, the expression used is the creation of an interest in an unborn person contemplated under section 13 of the Transfer Property Act, 1882. A Muslim person executed a document styled as 'will''. By virtue of the executed document he delivered certain properties amongst his daughter and nephew in his life time and gave possession to person named. It was held that it was a conveyance and not a will, even though it described the beneficiaries as heirs. Not being a registered document, it was invalid.

Person Competent To Transfer

Every person competent to contract and entitled to transferable property, or authorised to dispose off transferable property not his own, is competent to transfer such property either wholly or in part, and either absolutely or conditionally, in circumstances, to the extent and in manner, allowed and prescribed by any law for the time being in force.

This means that the parties must:
  1. Have Attained The Age Of Majority I.E., 18 Years;
  2. Be Of Sound Mind; And
  3. Not Be Disqualified To Enter Into A Contract By Some Other Law Applicable To Them.
The Act, the Transfer of Property passes forthwith to the transferee all the interest which the transferor is capable of passing and the legal incidents thereof. The Act also allows for oral transfer except in cases where writing is expressly required by law.

Authority to dispose off property- If the transferor has no title to the property, he must have authority to transfer it. As instance of authority to transfer the property of another, the following may be cited:- 'An agent acting under power of attorney, the donee of power of appointment, the guardian of a minor duly authorised by the Court in that behalf, the manager of a Hindu family in case of necessity or for the benefit of the family, the committee of manager of lunatic, a receiver when empowered by the Court, an executor or administrator having authority to dispose off the property of the deceased regulated by section 307 of the Indian Succession Act, 1925.

Conditional transfer- An interest created on a transfer of property and dependent upon a condition fails if the fulfilment of the condition is impossible, or is forbidden by law, or is of such nature that, if permitted, it would defeat the provisions of any law, or is fraudulent, or involves or implies injury to the person or property of another, or the Court regards it as immoral or opposed to public policy.

Disqualified To Transfer:

A statutory disqualification to contract imports, as in the case of a minor, inability to transfer. Such a disqualification ensues when the owner's property is under the management of the Court of wards, or of an officer appointed under Encumbered Estates Act.

Minor as a transferor- The transferor must have attained the age of majority according to the law to which he is subject. The Privy Council has held that a contract by minor is void. Prior to the decision of the Privy Council, it was generally assumed that a minor's contract is voidable and could be ratified. These decisions are now absolute, and as the contract is void there is no question of ratification. The rule of estoppels is not applicable in case of minor as it could have the effect of enlarging powers of the minor to contract. Although a minor is not capable to contract, a transfer to minor is valid.

Lunatic as a transferor- In terms of the provisions of the Indian Contract Act, 1872, a person is of sound mind for the purpose of making a contract if he is capable of undertaking it, and of forming a rational judgement as to its effect upon his interest. A contract made by lunatic person is void under section 11 of the Indian Contract Act 1872, and so also, a transfer by him of his property is void.

A lunatic is competent to contract during his lucid interval, and a transfer by a lunatic during a lucid interval would be valid. However, a person adjudged a lunatic would be incapable of making a transfer even during a lucid interval. The unsoundness of mind may be established by proving such conduct as was not in keeping with the character of the person concerned, but such that it could not be explained on any reasonable basis.

Burden to prove or establish at least on balance of probability the transferor's action in executing transfer deed in favour of the transferee was outcome of an unsound mind, is on the person who alleges it.

Person not authorised to dispose off minor's property- Where the de facto guardian of the minor's property sells it, the sale is invalid, and will be hit by section 11 of the Hindu Minority and Guardianship Act, 1956. Even subsequent ratification by the natural guardian does not validate it.

What Property Can Be Transferred?

The Transfer of Property Act specifies that property of any kind may be transferred, except as otherwise provided by the Act or by any other law in force.

Depending on the type of property to be transferred, transfer of property would include:
  1. When the property is land:
    1. The easements annexed thereto;
    2. The rents and profits thereof accruing after the transfer; and
    3. All things attached to the earth.
  2. Where the property is a house:
    1. The easements annexed thereto;
    2. The rent thereof accruing after the transfer;
    3. The locks, keys, bars, doors, windows; and
    4. All other things provided for permanent use therewith.
       
  3. Where the property is a debt or other actionable claim, the securities therefore (except where they are also for other debts or claims not transferred to the transferee), but not arrears of interest accrued before the transfer. Actionable claim is defined as a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the Civil Courts recognize as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.
     
  4. Where the property is money or other property yielding income, the interest or income thereof accruing after the transfer takes effect.
Where property is transferred subject to a condition or limitation absolutely restraining the transferee or any person claiming under him from parting with or disposing of his interest in the property, the condition or limitation is void, except in the case of lease, under Section 10 of the Act. Also, where, on a transfer of property, under Section 11, an interest is created absolutely in favour of any person, but the terms of the transfer direct that such interest shall be applied or enjoyed by him in a particular manner, he shall be entitled to receive and dispose of such interest as if there were no such direction.

Property which cannot be transferred:
The Act specifically provides for the properties which cannot be transferred under the provisions of the Act. The same are as follows:
  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. 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.
  3. An easement cannot be transferred apart from the dominant heritage.
  4. An interest in property restricted in its enjoyment to the owner personally cannot be transferred by him.
  5. A right to future maintenance, in whatsoever manner arising, secured or determined, cannot be transferred.
  6. A mere right to sue cannot be transferred.
  7. A public office cannot be transferred, nor can the salary of a public officer, whether before or after it has become payable.
  8. Stipends allowed to military, naval, air-force and civil pensioners of the government and political pensions cannot be transferred.
  9. No transfer can be made:
    1. Insofar as it is opposed to the nature of the interest affected thereby, or
    2. For an unlawful object or consideration within the meaning of Section 23 of the Indian Contract Act, 1872 (9 of 1872), or
    3. To a person legally disqualified to be transferee.
  10. Nothing in this section shall be deemed to authorise a tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the lessee of an estate, under the management of a Court of Wards, to assign his interest as such tenant, farmer or lessee. According to Section 8 of the Act, the transfer of property passes to the transferee all the interest the transferor is capable of passing.

Different Ways In Which Property Can Be Transferred

Sale of immovable property: Chapter III of the Act, treats transfer of ownership in exchange for a price paid or promised or part-paid and part-promised as sale of immovable property. A contract for the sale of immovable property is a contract stating that a sale of such property will take place on terms settled between the parties. Delivery of tangible immovable property takes place when the seller places the buyer, or such person as he directs, in possession of the property.

Mortgage of immovable property: Mortgage, defined by Section 58 in Chapter IV, is an instrument to secure a loan. The transferor is called a mortgagor, the transferee a mortgagee. The principal money and interest on which payment is secured for the time being are called the mortgage-money, and the instrument (if any) by which the transfer is effected is called a mortgage-deed.

Leases of immovable property: Chapter V also states that a lease of immovable property is a transfer of a right to enjoy such property for a certain time, in consideration of a price paid or promised, or of money or service or a share of crop or any other thing of value, that is rendered periodically or as specified by the agreement between the transferor and the transferee.

Exchange of property: As per Chapter VI, when two persons mutually transfer the ownership of one thing for the ownership of another, neither things or both things being money only, the transaction is called an "exchange". A transfer of property in completion of an exchange can be made only in manner provided for the transfer of such property by sale.

Gift of Immovable Property: Chapter VII of the Act covers the transfer of property by gift. Accordingly, a gift is the transfer of existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by, or on behalf of the donee. The Act states that State Governments, through notification in the official gazette, may exempt provisions under Section 54, paragraph 2 and 3, 107 and 123, but any district or tract of country excluded from the operation of the Indian Registration Act, 1908, cannot be covered by this exemption.

The Act specifically deals with priority of rights created by transfers. It lays down that where a person purports to create by transfer at different times rights in or over the same immovable property, each later created right shall, in the absence of a special contract or reservation binding the earlier transferees, be subject to the rights previously created.

When the property is in dispute and in which any right to immovable property is in question, the property cannot be transferred 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.

For this purposes, the pendency of a suit or proceeding is deemed to commence from the date of the presentation of the plaint or the institution of the proceeding in a Court of competent jurisdiction, and to continue until the suit or proceeding has been disposed of by a final decree or order, and complete satisfaction or discharge of such decree or order has been obtained, or has become unobtainable by reason of the expiration of any period of limitation prescribed for the execution thereof by any law for the time being in force.

Conclusion
The Transfer of Property Act, 1882 mainly deals with transfer of immovable property. Except for certain instances, the Act does not govern the transfer of property by operation of law, such as sale by the order of court, auction or forfeiture as well as transmission of title under other laws like Hindu Succession Act. As such, transfers by will and inheritance are not governed by the Act.

The researcher has thus, come to the conclusion that the hypothesis stands disproved. The Transfer of Property Act does not exclusively deal with immovable property; it essentially deals with transfer of immovable property. Sections 1-37 of the Act state the general provisions which apply to movable property as well as immovable property. Thereafter, all the provisions of the Act deal with the transfer of immovable property.

The 137 sections contained within have been divided into 8 chapters. Interestingly, nowhere does the Act define 'What is a transfer of property'. But it does define 'transfer' as a standalone in Section 5. There are various modes of transfer of property contained in the Act, though it does not incorporate rules for all modes of transfer in existence. The Act does not even claim to be a complete code as apparent from omission of the term 'consolidate' from its Preamble.

As per the Preamble of the Act, the Transfer of Property Act, 1882 is to amend or regulate the law relating to transfer of property by the acts of the parties. The Act provides a clear, systematic and uniform law for the transfer of immovable property. The Act completes the Code of Contract since it is an enacted law for transfers that take place in furtherance of a contract.

With provision for inter-vivos transfers, the Transfer of Property Act, 1882 provides a law parallel to the existing laws of testamentary and intestate transfers. The Act is not exhaustive and provides scope to apply the principles of Justice, Equity and Good Conscience if a particular case is not governed by any provision of law.

Bibliography
Books:
  • Dr.Avtar Singh, "Textbook on The Transfer of Property Act", Universal Law Publishing Co. Pvt. Ltd., New Delhi, Third edn., 2012.
  • Dr. Poonam Pradhan Saxena, "Property Law", LexisNexis, New Delhi, Second edn., 2015(Reprint).
  • D. S. Mulla, Dr. G. C. Bharuka(ed.), "The Transfer of Property Act", LexisNexis, New Delhi, Tenth edn., 2008(Reprint).
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