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Unit – 1

Introduction

1) When a movable property is transferred from one living person to another living person, the
law applied is the Sale of Goods Act, 1930.
2) When property is transferred from dead person to living person/persons, the law applied is the
Law of Succession.
3) When an immovable property is transferred from one living person to another living person, the
law applied is, Transfer of Property Act, 1882
4) The transfer of property Act passed in 1882 and came into force from 1st july 1882. It mainly
deals with the transfer of immovable property and also movable property between two living
persons i.e. transfer inter vivos.
5) Property : the word property may be used in the objective sense of a physical thing which is the
subject of ownership or other rights; or it may be used in the sense of the rights and interests of
the owner or other person in the property.
6) Property may be divided into two classes, namely : a) immovable property and b) movable
property.
7) Movable property : Movable property is one which can be transferred from one place to
another place with human efforts.
8) According to General Clauses Act,1897 : movable property means property of any description
except immovable property.
9) According to Registration Act,1908 : movable property means property of any description
except immovable property but inclusive of standing timber, growing crops and grass.
10) Immovable property : section 3 para 2 of the Act defines Immovable property, as ‘immovable
property’ does not include standing timber , growing crops or grass.
11) The above definition as negatively defined under the T.P. Act, excluding the above three items is
not comprehensive.
12) According to General clauses Act,1897 : (sec 3k(26)) : Immovable property shall include land,
benefits arising out of land and things attached to the earth, or permanently fastened to
anything attached to the earth.
13) Transfer of property : the term ‘transfer’ means as process or an act by which something is
made over to another. The word property for the purposes of the Transfer of Property Act is not
restricted only to the physical thing but goes beyond what is seen, touched or felt by a layman
but much ahead what law considers to be property. It includes the right to let cattle graze on
property.
14) Transfer of property : the expression Transfer of Property means ‘passing of aright in the
property from one person to another.
15) The transfer of property under T.P.Act may be the transfer of absolute interest in the property
(sale,gift etc.) or the transfer of limited interest in the property(mortgage, lease etc)
16) Transfer of property means an act by which one living person conveys property in present or in
future to –
a) One or more other living persons; or
b) To himself; or
c) To himself and one or more other living persons and to transfer
property to perform such act.
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17) Essentials of transfer of property :

i. Act of parties : it must be by an act of parties but not by operation of law.
ii. Existence of property : the property must be in existence in his favour on the
date of transfer. Future property cannot be transferred.
iii. Present or future : a transfer may take place immediately or in future.
iv. Living persons : transfer should be between living persons. Company or
corporation can be treated as living persons.
18) What properties may be transferred?
i. Right to property includes the right to transfer property or interest, absolute or
limited in the property.
ii. Property of any kind may be transferred except those enshrined in clause (a) to
(i) of sec6 of TP ACT and any other law for time being in force may declare such
property as not transferrable.
19) What properties cannot be transferred?
i. Section 6 of the TP Act : provides for the general rules that all kind of property
is alienable/transferrable.
ii. However, certain exceptions are provided under clauses (a) to (i) of sec-6 of
T.Pact are not transferrable ---
1. Spes successionis [sec6(a)]
2. Mere right of re-entry [sec 6(b)]
3. Easement [sec 6(c)]
4. Personally restricted interest [sec 6(d)]
5. Right to future maintenance [Sec 6(dd)]
6. A mere right to sue [sec 6(e)]
7. Public offices [sec 6(f)]
8. Stipends and pensions [sec 6(g)]
9. Unlawful transfers [sec 6(h)]
10. Others or certain other occasions [sec 6(i)]

 Persons competent to transfer [Section 7]

1. According to sec-7, any person can transfer a property provided the following conditions are
satisfied :
i. He must be competent to contract ; and
ii. He must have title to the property or authority to transfer the property, if it is
not his own.
2. Competent to contract :
i. Must be a major
ii. Must be of sound mind
iii. Must be qualified by the law in force or must not be disqualified by law
in force
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3. Entitled to transferable property or authorised to dispose of not his own :

i. The second requirement is that the transferor must either be entitled to the
transferable property or where property belongs to someone else, he must have
authority of owner of property to dispose/transfer the same.
ii. Where a person purports to transfer another’s property he must show that he has
right to do so as an agent, or a guardian of the owner or a trustee or the like.
iii. The extent of the power of transfer depends upon the interest of the transferor or
the limitation upon his authority.
4. If above mentioned conditions are fulfilled the transferor can transfer property either
wholly or in part, 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.
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Vested interest and contingent interest

Sections 19 to 24 of the transfer of property Act, 1882, lay down the provisions relating to
two kinds of interests, namely

i. Vested interest
ii. Contingent interest

1) Vested interest : when a person has fixed right to present or future possession of property he is
said to have ‘Vested interest’ in the property.
2) An estate is said to be vested in possession, when it gives a present right to the immediate
possession of the property.
3) In case of vested interest, a person on transfer of property gets an interest over a
thing/object/property in futures on happening of an event.
4) Within what time/term it happens is uncertain. But happening of the event is certain. ( A person
dies is certain, when dies is uncertain).
Example : ravi transfers his land to kalyan for life and then to siva. Here, siva has vested
interest. Siva’s interest depends upon the happening of an event i.e. the death of
kalyan, which is certain.
5) When an interest is vested, it becomes the property of the transferee and is transferable by
him(transferee) under section6 even before obtaining the possession.

Illustrations :
 A donates to B Rs.500 to be paid to him at the death of C. B acquires in
Rs.500 a vested interest although he will be entitled to the possession
thereof on the death of C only which is a certain event.
 A nominates B to receive the provident fund of A in the event of his
death. B takes a vested interest in the fund even before A’s death.
 A transfers the whole of his property to B upon the trust to pay certain
debts out of the income and then to hand over the property to C. C
acquires a vested interest in the property. Here the payment of debts
merely postpones enjoyment and not the vesting itself.
6) According to sec-20 of the Act, an unborn person acquires vested interest in property
transferred to him. But he/she is not entitled to the enjoyment immediately after the birth.
7) Contingent interest : contingent interest is the interest that take effect on the happening of an
uncertain event or contingency. In other words, an interest which arises upon contingency or
happening of an uncertain event is called ‘Contingent Interest’.
Example : A transfer his land to B for life and thereafter to C, if B had no
children. Here, C’s interest is contingent because it is uncertain whether B
would have children or not.
8) Effects/consequences of vested and contingent interests :

1. Where an interest is vested, the transfer is complete and the transferee acquires all rights
over the property, it is transferable and heritable.
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2. Where an interest is contingent, the transfer is not complete and the transferee acquires no
right over the property.(Until and unless the contingency / uncertain event takes place).

DISTINCTION BETWEEN VESTED INTEREST AND CONTINGENT INTEREST

VESTED INTEREST (SEC19) CONTINGENT INTEREST (SEC 21)

It is subject to happening of an event, which It is subject to happening of a contingency or

is certain. an uuncertain event.

Transfer is complete and transferee acquires Transfer is not complete and transferee
all rights over the property. acquires rights over the property only on
happening of the contingency or uncertain
event.

It is transferable and heritable. It is transferable, but heritability depends

upon nature of the interest.

It is not subject to fulfilment of a condition. It is subject to fulfilment of a condition.

If transferee dies before actual enjoyment, it In such case, contingent interest fails and
passes to his heirs. does not pass to heirs of transferee.
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 CONDITIONS PRECEDENT AND CONDITIONS SUBSEQUENT

1. Introduction : every person , who is competent to contract (U/s-11 of Indian Contract

Act , 1872) is also competent to transfer his/her property.
2. When he wants to transfer the property upon fulfilment of a condition/obligation,
such transfer is called ‘Conditional Transfer’.
3. The conditional transfer may take place in two ways, namely :
a) Condition precedent
b) Condition subsequent.
4. Condition precedent means, a condition to be performed before an interest arises.
5. Condition subsequent is one, which destroys or divests ypon the happening of an
event. It literally means, a condition, which has to be fulfilled after an interest is created
upon the transfer of a property.
6. Section 25 lays down the general rule that, transfer takes effect, if a condition
precedent is satisfied. If condition precedent is :
a) Impossible; or
b) Forbidden by law; or
c) Of such a nature that , if permitted would defeat the provisions
of any law; or
d) Fraudulent ; or
e) Involves or implies injury to the person or property of another;
or
f) The court regards it as immoral or opposed to public policy

Such transfer is void/invalid.

Illustrations :

I. A lets a farm to B on condition that he shall walk a hundred miles in an

hour. The lease is void.
II. A transfer Rs.500 to B on condition that she shall murder C. The transfer
is void.
III. A transfer Rs.500 to his niece C, if she will desert her husband. The
transfer is void.
7. Fulfilment of condition precedent : According to sec 26, the condition is deemed to
have been fulfilled if it is substantially complied with.
Illustration : A transfers Rs.5000 to B on condition that he shall marry with the
consent of C,D and E. E dies. B marries with the consent of C and D. D is deemed
to have fulfilled the condition.
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8. Characteristics of condition precedent :

I. The condition shall be fulfilled before the property/estimate is
vested in the transferee;
II. The estate does not vest in the transferee until and unless, the
condition is fulfilled;
III. The condition should not be declared void under section 25
IV. The condition is deemed to be fulfilled, if it is substantially
complied with under sec 26.

9. Condition subsequent : A condition subsequent is one, which destroys or divests upon

the happening of an event. It literally means, a condition, which has to be fulfilled after
an interest is created upon the transfer of a property.
10. Section 28 deals with conditional limitation : it refers to ulterior transfer conditional
on happening ot not happening of specified event.
11. An interest in the property transferred may be created in favour of any person with a
condition that in case a specified uncertain event shall not happen such interest shall
pass to another person.
Illustration : A transfers Rs.5000 to B with the condition that B joins the bar
within 3 years from the date of the transfer and in case he does not join the bar
within the specified period, C gets Rs.5000.
In this illustration the transfer, in favour of C is an Ulterior Transfer, and
it takes effect on the failure of the prior treansfer. As regard the prior interest ,
the condition is a condition subsequent but as regards the ulterior disposition, it
is a condition precedent.
12. Fulfilment of condition subsequent (sec29) : An ulterior disposition of the kind
contemplated by the last preceding section cannot take effect unless the condition is
strictly fulfilled.
13. Section 32 speaks about invalid condition subsequent : following are the conditions
void-
i. Condition void for uncertainty
ii. Condition opposed to public policy
iii. Condition in restrain of marriage
iv. Condition, which is immoral
v. Condition , which is impossible to perform.
vi. Condition as to residence, where there is uncertainty as to it.
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DISTINCTION BETWEEN CONDITION PRECEDENT AND CONDITION SUBSEQUENT

CONDITION PRECEDENT CONDITION SUBSEQUENT

In condition precedent, the estate is not In condition subsequent, the estate vests in
vested in the grantee until the condition is the grantee immediately and remains in the
performed/fulfilled. grantee till the condition is broken.

It does not require strict compliance. It requires strict compliance or strict fulfilment
Substantial compliance is enough. of the condition.

If the performance of the condition precedent If the performance is impossible, the condition
is impossible, both the condition precedent subsequent fails, and the previous estate
and the estate limited upon it are void. becomes indefeasible.

If the condition precedent is illegal, the If condition subsequent is illegal, the previous
property limited upon it, fails. estate becomes indefeasible and the
condition is ignored.

By the performance of the condition an estate By the performance of the condition, an

not previously vested, becomes vested. estate previously vested becomes divested.
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Transfer to unborn person

1) Introduction : sections 13 and 14 of the transfer of property Act, 1882 lay down the provisions
relating to ‘Transfer for benefit of unborn person’. Section 13 refers to ‘Transfer for benefit of
unborn person’. Section 14 speaks about ‘the rule against perpetuity’.
2) The transfer of property Act mainly deals with the transfer of immovable property between two
living persons i.e. transfers inter-vivos.
3) According to section-5 of the Act, the general principle is that , both the parties to a transfer of
property must be living persons.
4) The expression ‘living person’ includes “juristic person” viz. Company or association or body of
individuals, whether incorporated or not.
5) Section 13, which deals with the transfer by born to unborn is a special law and is an exception
to this general rule i.e. transfer inter vivos.
6) Who is an unborn person : An unborn person is one, who is not existence or who is yet to born
or who will come into existence in future at any time or who is not even in uterus (in the womb
of mother).
7) Conditions :
i. No direct transfer :
a) There can be no transfer of property for the benefit of an
unborn person directly, but through the machinery of trusts.
b) This condition is intended that if it is made directly to unborn
person, the property will be leftout without the owner after the
death of testator and before coming into existence of unborn
transfree.
ii. Prior interest :
a) Life interest may be created upon the existing persons till
an unborn person comes into existence.
b) They can enjoy the limited interest one after another or
collectively.
iii. Unborn person must come into existence before the death of last life
estate holder.
iv. The whole remaining interest must be vested to unborn person the
moment he comes into existence .
8) Section 13 is applicable to Hindus since Hindu law allows transfers in favour of unborn
person. This section is not applicable to Mohammedans.
9) A gift to (unborn) a person not in existence is void except in the case of a waqf under
Mohammedan law (Abdul Khadur Vs. Turner, ILR 9B 158).
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Rule against Perpetuity (sec 14)

1. Introduction : Section 14 of the transfer of property Act deals with the ‘Rule Against
Perpetuity’. It is an extended provision of section 13.
2. Meaning : the word ‘Perpetuity’ means, “tying up property for an indefinite period or
for ever”. “Perpetual enjoyment” means enjoyment forever.
3. Jarman defines perpetuity as “a perpetuity in the primary sense of the word is a
disposition , which makes property inalienable for an indefinite period.
4. Principle : There are some persons, who wish to retain their properties in their own
family from generations to generations.
5. The policy of law has been to prevent property from being tied up forever.
6. Property can not be tied longer than for a life in being and beyond minority. This rule
/principle is called ‘The rule against Perpetuity’.
7. The object of the rule against perpetuity is to restrain the creation of future conditional
interest in property.
8. Ingredients : to attract sec-14, the following conditions are to be satisfied :
a) There should be a transfer of property.
b) Transfer should be to create an interest in favour of an unborn person.
c) Interest so created must take effect after the lifetime of one or more
persons living at the date of such transfer and during the minority of the
unborn person.
d) The unborn person should be in existence at the expiration of the
interest of the living persons.
9. Analysis of the rule :
i. The vesting cannot be postponed beyond the lifetime of any one or
more persons living at the date of transfer.
ii. The vesting of absolute interest in favour of an unborn person may be
postponed until he attains full age.

10) Perpetuity period : perpetuity period is life or living in existence at the time of transfer
and minority period of unborn transferee plus actual period of gestation.
i. Examples :
A transfers the property to B for 5 years then to C for 10 years and then
to unborn person.
In this example perpetuity period is
5+10+18 = 33years
ii. A transfers the property to B for 2 years, to C for 2years and to D for 2
years and finally to unborn person at 21years.
This transfer is not valid as the vesting is postponed.
The perpetuity period according to the above is
2+2+2+21 = 27 years.
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But the actual perpetuity period should be

2+ 2+ 2+ 18 = 24 years.
Distinction between English law and Indian Law
English law Indian law
It is 18 years
Minority period is 21 years.
It should be actual period
Period of gestation is a gross
period.
It should be given absolutely.
Property need not be given
absolutely to unborn person.
He must come into existence
The unborn person must come before the death of the last life
into existence within 21 years estate holder.
of the death of last life estate
holder.