CONCEPT OF PROPERTY MOVABLE & IMMOVABLE PROPERTY

INRODUCTION-TRANSFER OF PROPERTY ACT

Under the Indian legal system, properties are divided into two categories – movable and immovable.

The Transfer of Property Act (ToPA), 1882, which came into force on July 1, 1882, deals with the aspects
of transfer of properties between living beings. One of the oldest laws in the Indian legal system, the
Transfer of Property Act is an extension of the law of contracts and runs parallel to the succession laws.
For those planning to transfer their immovable property, knowing the key aspects of the Transfer of
Property Act is quite important.

SCOPE AND FEATURES OF THE TRANSFER OF PROPERTY ACT

Parties: Under the Transfer of Property Act, a transfer of property can be effectuated by an act of two or
more parties not an act by the operation of the law.

Type of property: The Transfer of Property Act is applicable primarily on transfer of immovable property
from one living being (inter vivos) to another. Also, the Act is applicable on property transfer by
individuals, as well as by companies. However, the Transfer of Property Act is applicable to acts of
parties and not on transfers applicable by the law.

The term transfer includes transfer through sale, mortgage, lease, actionable claim, gift or exchange. The
Act does not cover transfers by the operation of law, in the form of inheritance, forfeiture, insolvency, or
sale through the execution of a decree. The Act is also not applicable on the disposal of properties through
wills and does not deal with cases of succession of property.

•The Preamble of the Transfer Of Property Act, 1882 provides a uniform and a clear law concerning the
transfer of immovable property from one living person to another living person by the act of parties.

•The Transfer Of Property Law is not a copy of the English transfer of property laws that was enacted
based on socio-economic conditions of the country.

•Transfer of property is subject to the concurrent list that provides power to both the state legislature and
the parliament to pass laws related to the matter of transfer of property.

•The Act covers five types of transfer of immovable property they are as follows: a) Mortgage b) gift c)
sale d) actionable claims e) lease.

•Under the Transfer of Property Act, 1882 it mentions that absolute conditional restraint is void and
partial conditional restraint on the transfer of property is valid.

•The Transfer Of Property Act, 1882 is a law that applies lex-loci to all people living in that jurisdiction,
not like personal laws that differ from person to person.

•The Transfer Of Property Act, 1882 is governed by various principles like justice, equity, and good
conscience.

•Initially, at the time of implementation, the act didn’t apply to the State of Bombay, Punjab, and Delhi as
because they had their own acts related to property matters. Currently, the transfer of property act doesn’t
apply in Punjab; it complies with the rule of good conscience, equity, and justice.

•Transfer of Property Act, 1882 highlights the provision of inter-vivos parallel to the existing laws
relating to the testamentary and interstate transfer.

•The Transfer Of Property Act, 1882 is a general law and therefore it cannot prevail over the special laws
passed by the parliament

CONCEPT OF PROPERTY

The word “property” is derived from the Latin word proprietary and the French equivalent properties,
which means a thing owned. The concept of property and ownership are very similar to each other.
However, there is a fine line that distinguishes the two terms. It will not be incorrect to state that humans
have been aware of their rights to possess what they rightfully own for long. The term property has been
widely interpreted by various jurists such as Salmond, Bentham and Austin.

In general sense, property is any physical or virtual entity that is owned by an individual or jointly by a
group of individuals. An owner of the property has the right. Human life is not possible without property.
It has economic, socio-political, sometimes religious and legal implications. It is the legal domain, which
institutes the idea of ownership. The basic postulate of the idea is the exclusive control of an individual
over some ‘thing’. Here the most important aspect of the concept of ownership and property is the word
‘thing’, on which a person has control for use.

KINDS OF PROPERTY

Property is basically of two categories : Corporeal Property and Incorporeal Property. Corporeal Property
is visible and tangible, whereas incorporeal Property is not. Moreover, corporeal Property is the right of
ownership in material things, whereas incorporeal Property is an incorporeal right in rem. Corporeal
Property is further categorized into Movable and Immovable Property. Incorporeal Property is classified
into two categories : in re propria and rights in re aliena or encumbrances.

Corporeal and Incorporeal Property

These are the two categories of properties that exist.

(i) Corporeal Property has a tangible existence in the world and is related to material things such as land,
house, ornaments, silver, etc.

(ii) Incorporeal Property is intangible because it’s existence is neither visible nor tangible. Right of
easement and copyrights are incorporeal Property.

MOVABLE AND IMMOVABLE PROPERTY

All corporeal Property may either be movable or immovable in nature. There are different definitions are
given in different act as per there uses and needs. But in the most important act which exclusively talks
about the property and rights related to property Transfer Of Property Act 1882 has no definite definition
of the term property. But it is defined in some other act as per their use and need. Those definitions are as
follows:
Section 2(c) of the Benami Transactions (Prohibition) Act, 1988 defines property as: “Property” means
property of any kind, whether movable or immovable, tangible or intangible, and includes any right or
interest in such property.

Section 2 (11) of the Sale of Good Act, 1930 defines property as: “Property” means the general property
in goods, and not merely a special property.

Section 3 of the general clauses act, 1897; Section 2(6) of the Indian Registration Act, 1908 defines the
term immovable Property. It includes land, things attached and embedded in the land.

MOVABLE PROPERTY

On the other, movable Property includes any corporeal property which is not immovable property. It may
include furniture, stationery items, etc. The concept of immovable Property holds greater importance and
has elaborately been dealt with under Indian statutes. The following are not immovable property :

(1) Right to worship.

(2) Right of purchaser to have lands registered in his name.
(3) A machinery which is not permanently attached to the earth and which can be shifted from one place
to another.
(4) A decree for sale of immovable property.
(5) Royalty.
(6) Right to recover maintenance allowance even though charged on immovable property.
(7) Government promissory notes.
(8) Standing timber, i.e., trees which are to be used houses and which have not been severed from the
intended to be severed from the soil.
in building and repairing ground or which are not
(9) Growing crops.
(10) Grassy

DEFINITION OF MOVABLE PROPERTY

Section 3 (36) of the General Clauses Act defines movable property as: 'Movable property shall mean
property of every description, except immovable property."

Section 2 (9) of the Registration Act, 1908 defines property as: 'Moveable property' includes standing
timber, growing crops and grass, fruit upon and juice in trees, and property of every other description,
except immovable property."

Section 22 of IPC defines property as: The words “moveable property” is intended to include corporeal
property of every description, except land and things attached to the earth or permanently fastened to
anything, which is attached to the earth.

Things attached to the land may become moveable property by severance from the earth. for example
Cart–loaded of earth, or stones quarried and carried away from the land become movable property.
IMMOVABLE PROPERTY

According to section 3 of Transfer of Property Act, "immovable property" does not include standing
timber, growing crops or grass. Thus, the term is defined in the act by excluding certain things.
"Buildings" constitute immovable property and machinery, if embedded in the building for the beneficial
use thereof, must be deemed to be a part of the building and the land on which the building is situated.

As per section 3(26) of the 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". This definition of immovable property is also not exhaustive;

Section 2(6) of the Registration Act,1908 defines "immovable property" as: "Immovable property
includes land, building, hereditary allowances, rights to ways, lights, ferries, fisheries or any other benefit
to arise out of land, and things attached to the earth or permanently fastened to anything which is attached
to the earth but not standing timber, growing crops nor grass".

As per Section 269UA(d) of the Income Tax Act, 1961, Immovable Property is defined as under :

(i) Any land or any building or part of a building, and includes, where any land or any building or part
of a building is to be transferred together with any machinery, plant, furniture, fittings or other things,
such machinery, plant, furniture, fittings and other things also.

(ii) Any rights in or with respect to any land or any building or part of building (whether or not
including any machinery, plant, furniture, fittings or other things therein) which has been constructed or
which is to be constructed, accruing or arising from any transaction (whether by way of becoming a
member of, or acquiring shares in, a co-operative society, or other association of persons or by way of any
agreement or any arrangement of whatever nature, not being a transaction by way of sale, exchange or
lease of such land, building or part of a building.
Indian law has adopted the division of property into movable and immovable, and not the technical
division into real and personal property recognized by the English Law. In Futtehsang v. Kulliaraiji , their
Lordships of the Privy Council observed : "The term immovable property' comprehends certainly all that
would be real property according to English law and possibly more." Thus, a leasehold land would be
personal property in England but would be immovable property in this country.

Under T.P. Act.

The definition of immovable property is in two parts. Part I defines "immovable property". Part II is in
definition of "attached to earth". Both have to be read together for knowing "immovable property". The
definition of immovable property includes three things namely—Land, benefits to arise out of land, and
things attached to the earth. It excludes three things, namely—standing timber, growing crops and grass.
Complete meaning of immovable property read all three acts together. The term "immovable property"
includes three things which are described as under-

(i) "Land" —This does not include only the upper surface of the earth but is extensive enough to cover
things below it, for example, minerals and sea, ocean and properties below in their bottom. These are all
immovable property. Any interest in these or in respect of these or any other property in it are all
immovable property. Besides, well, tube-well, rivers, ponds, tanks, stream, canal dug on surface whether
natural or artificial and all interests in these would fall in enumeration of the term "land". As such all are
immovable property.

(ii) "Benefits arising out of land" —These benefits are immovables. The examples of benefits are rent
from the house, shops and jagir, revenue from agriculture, right to collect lac , leaf or other things from
forest, trees, etc. Similarly,, right to collect tax on ghats and bridges are all examples of benefits arising
out of the land.
 Apart from physical point of view, every benefits arise out of land is also regarded as immovable
property. Registration Act also includes as immovable property benefits to arise out of land, hereditary
allowances, right of way, lights, ferries and fisheries. In Anand Behera v. State of Orissa, AIR 1956 SC
17, the right to catch away fish from Chilka Lake, over a number of years, was held to be an equivalent of
profits a pendre in England and a benfits to arise out of land in India. Similarly, a right to collect a rent
and profits of immovable property, right to collect dues from a fair or heat or market on a land are
immovable property.

(iii) Things attached to earth: Section 3 of transfer of property defines the expression ‘attached to earth’ as
including (1) things rooted in the earth, (2) things embedded in the earth, (3) things attached to what is so
embedded, and (4) chattel attached to earth or building. (1) Things rooted in earth include trees and
shrubs, except standing timber, growing crops and grasses (Section 3, TPA). Whether tress 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 isimmovable property.
But if the intention is to oust them down sooner or later for the purpose utilizing 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) determining whether the tree is movable or
immovable, the intention if party is important if the parties intend that the tree should continue to have the
benefit of further nutriment to be afforded by soil, the tree is immovable property. But if intention is to
withdraw the tree from land, and the land is providing it only as a warehouse, it is to be treated as
movable property.

Things embedded in earth: It includes such things as house, buildings, etc., however certain things like an
anchor imbedded in the land to hold a ship is not an immovable property’ to determine whether such
things are movable or immovable property, depends upon circumstances of each case and there are two
main conditions to indicate intention.
Things attached to what is so embedded must be for the permanent beneficial enjoyment of the thing to
which it is attached, as section says for, e.g., door and windows of a house are immovable property to be
permanent, like electric fans or window blinds, they are movable property.

Chattel attached to earth or building if a chattel, i.e., movable property is attached to earth or building, it
is immovable property. The degree, manner, extent and strength of attachment are the main features to be
regarded in determining the question. Standing timber, growing crops and grasses are regarded as
severable from land and they are regarded as movable property. However if they and the land on which
they stand is sold.

EXCEPTIONS

•Standing Timber- The word standing timber includes Babool Tree, Shisham, Nimb, Papal Banyan, Teak,
Bamboo, etc. The fruit berating tree like Mango, Mahua, Jackfruit, Jamun, etc., are not standing timber,
and they are immovable properties (Fatimabibi v. Arrfana Begum, AIR 1980 All 394). But if intention is
to cut them down sooner or later for the purpose utilizing them as timber, and not to use them for the
purpose of enjoying their fruits, they are regarded as movable property. (T.A. Sankunni v. B.J. Philips,
AIR 1972 Mad 272).

•Growing Crops: Growing crops includes creepers like paan, angoor, etc., millets (Wheat, Sugarcane,
etc.), Veg like Lauki, Kaddo, etc. These crops don’t have any own independent existence beyond their
final produce.
•In Seeni Chettiar v. Santhanathan, the Madras High Court held that it has long been settled that an
agreement for the sale and purchase of uncut grass, growing timber plant or wood, or growing fruit
bearing tree, not made with a view to their immediate severance and removal from the soil and delivery as
chattels to the purchaser, plants in nurseries is a contract for the sale of an interest in land. It is not
movable property.
• Grass: It can only be used as fodder, and no other use is possible. Therefore it is movable. But a contract
to cut grass will be an interest in chattel, so is immovable property. The following has been judicially
recognized as immovable property:

•(1) Right to collect rent of immovable property. •(2) Right to dues from a fair on a piece of land. •(3) A
right of fisheries.
•(4) A right of ferry.

•(5) A right of way. (6) Hereditary offices. (7) The interest of a mortgagee in immovable property.

•Minerals: Upon transfer of immovable property, things not only rooted to it, but also anything found
deep down below the property goes along with the transfer. All minerals below the land sole are
immovable property.
DIFFERENCE BETWEEN-
MOVABLE PROPERTY
1. According to section 2 of Sales Of Goods
Act it includes stocks, growing crops, grass and things attaching to or forming part of the land and which
are agreed too be severed before sale or under contract of sale.

2. If the things is resting on the land merely on its own weight, the presumption is that it is movable
property unless contrary is proved.

3.If the purpose was only to enjoy the things itself, then it is movable property even though it is fixed in
the land.
4. No registration is required to transfer a movable property.

5. Right to worship, royalty, a decree for sale of immovable property, a decree for assessment of rent,
Govt. promissory notes, standing timber, growing crops and grass.

IMMOVABLE PROPERTY
1. According to section 3 of General Clauses Act, it includes lands, benefits arising out of land and things
attached to earth.

2. If the things is fixed to the land even slightly or it is caused to go deeper into the earth by external
agency, then it is deemed to be immovable property.

3. If the purpose of annexation of a thing is to confer a permanent benefit to land to which it is attached
then it is immovable property.
4. Registration is mandatory.

5. Benefits to arise out of kind of such as hereditary allowances, rights of way, ferries and fisheries, right
to collect rent and profits of immovable property, a mortgage debt, right to cut grass for one year, a
factory, etc.
 CASE LAWS

In Anand Behera v. State of Orissa, AIR 1956 SC 17, case, the petitioner had obtained a license to catch
and appropriate all fish in specific sections of the Chilka lake from its proprietor (Raja of Parikud). The
Orissa Estates Abolition Act, 1951 was passed and the ownership of the estate vested in the State of
Orissa. The State of Orissa refused to recognize the license of the petitioner. Petitioner contended that
their fundamental rights under Art 19(1)(f) and Art 31(1) are violated and also contended that “catching
and appropriating fish’ is a transaction relating to sale of future goods (which is the fish) and hence the
“Act which is applicable only to immovable property would not be applicable to him. The court held that
the lake is an immovable property and therefore the petitioner’s right to enter in that estate (which he did
not own) and carry away fish from the lake is equivalent to a ‘Profit a Prendre’ in England and in India it
is regarded as a benefit that arises out of the land and as such is immovable property.

In Shantabai v. State of Bombay, AIR 1958 SC 532 case, Shantabai’s husband had granted her the right to
take and appropriate all kinds of wood from certain forests in his Zamindari through an unregistered
document. With the passing of the Madhya Pradesh Abolition of Proprietary Rights Act, 1950, all
proprietary rights in land vested in the State of Madhya Pradesh and the petitioner was prohibited to cut
any wood. She applied to the Deputy Commissioner and obtained from him an order under Sec. 6(2) of
the Act permitting her to work the forest and started cutting the trees. The Divisional Forest Officer took
action against her and passed an ‘order directing that her name might be cancelled and the cut materials
forfeited. She moved the State Government against this order but to no effect, Thereafter she applied to
the Supreme Court under Art. 32 of the Constitution and contended that the order of Forest Officer
infringed her fundamental rights under “Art, 19(1)(f) and 19(1)(g), The Court talked about the phrase
‘benefit arising out of land’ and held that right to enter upon land and cut trees is a benefit arising out of
the land, This judgment was based on Anand Behera case.

In State of Orissa v. Titagarh Paper Mills Company Limited, AIR 1985 SC 12953 case, Section 3B of
Orissa Sales Tax Act, 1917 empowered the State Government to declare goods or class of goods liable to
be taxed. The government issued a notification through which standing trees and bamboos agreed to be
severed were liable to be taxed on the turnover of purchase. Writ petitions were filed by a group of those
people who had entered into bamboo contracts and timber contracts with the State. They contended
before the Court that the subject matter of the bamboo contract was not a sale or purchase of goods but
was a lease of immovable property or was a creation of an interest in immovable property by way of grant
of ‘Profit a Prendre’ and due to this the royalty payable ‘under the bamboo contracts could not be made
eligible to either sales tax or purchase tax. The Court held that “felling, cutting, obtaining and removing
bamboos from forest areas for the manufacture of paper” is a benefit to arise out of the land and it would
thus be an interest in immovable property.

In Mosammat Bibi Sayeeda v. State of Bihar, (1996) 9 SCC 516 case, certain municipal plots were
transferred to S. Sayed Haider Imam father of Sayed Abid Imam by his predecessor Zamindar. He
constructed 132 shops and let them out to diverse tenants on monthly rentals. ‘The Collection of ‘shops
was known as Patna Market in Patna. ‘The state wanted to acquire these shops ‘under the Bihar Land
Reforms Act. The question raised in this case was about the ‘meaning of the word Bazar’ within Section
4(a) of the Bihar Land Reforms Act 30 of 1950. The appellants claimed in the writ petition ‘that the shops
are one ‘homestead’ within the meaning ‘of Section 2 (j) of the Bihar Land Reforms Act and these shops
axe not bazars. Hence ‘they do not vest in the State and, therefore, they remain to be the property of the
appellants. The High Court held ‘that the - constitutionally of the provisions of the Act has not been
challenged and also held that ‘hats’ or ‘bazars’ are vested in the State. A congregation of buyers and
sellers is enough to constitute a bazaar and the right to hold a bazar is an - interest in the land. The
Supreme Court affirming the decision of the High Court held that right to hold a bazaar is a benefit
arising out of the immovabhle property.

In Duncan Industries Ltd. v. State of Uttar Pradesh, (2000) SCC 633 a company agreed to transfer its
fertilizer business including the plant and machinery. The issue before the court was with respect to the
character of plant and machinery. The parties had treated them as movables and had delivered possession
of the said plant and machinery as movables. This plant and machinery related to the fertilizer business of
manufacturing, marketing distribution and sale of urea fertilizer, and included ammonia manufacturing
plants, captive power plants, vehicles, furniture, air conditioners, standby systems, pipelines, railway
siding, etc. The machineries which formed the fertilizer plant were permanently embedded in the earth,
for running the fertilizer factory and at the time, when these machineries were embedded in earth, they
were done so by the owner with an intention, to use them permanently. Further, in the very nature of the
user of these machineries, it was necessary that they be permanently attached to the ground. The court
held that these were immovable properties.

In Surpur Paper Mills Ltd. v. CCE, (1998) 1 SCC 400, court held that in all cases where the machinery is
attached to or embedded in earth would not be categorized as immovable property. It would depend upon
the facts and circumstances of each case where the machinery is attached to the earth only because of its
operational efficiency, and removed from the base easily, it would continue to be called movable
property.

PUBLIC PROPERTY AND PRIVATE PROPERTY

Public Property is owned by the public as such in some governmental capacity. In other words, it is
owned by the government and used for the beneficial use of the public in general. A park or a government
hospital is a public property.

Private Property is that property which is owned by a particular individual or some other private person.
A residential house of a citizen may be his private property.

TANGIBLE AND INTANGIBLE PROPERTY

Tangible property-Tangible property refers to any type of property that can generally be moved (i.e., it is
not attached to real property or land), touched or felt. These generally include items such as furniture,
clothing, jewellery, art, writings, or household goods.

Intangible property- Intangible property refers to personal property that cannot actually be moved,
touched or felt, but instead represents something of value such as negotiable instruments, securities,
service (economics), and intangible assets including chose in action

REAL AND PERSONAL PROPERTY

(i) Real Property means all rights over land recognized by law.
(ii) Personal Property means all other proprietary rights, whether they are right in rem or in personam.
Right in re aliena and Right in re propria -Right in re aliena are also sometimes referred to as
encumbrances. These are the rights of a specific user. These prevent the owner from exercising some
definite right in reference to his Property. Lease, security and trust may be included under this category.
Right in re propria are immaterial forms of Property. These are a product of human skill and labour.
Patents, copyrights and commercial goodwill may be included under this category.
INTELLECTUAL PROPERTY

Intellectual property is a term referring to a number of distinct types of creations of the mind for which
property rights are recognized—and the corresponding fields of law.
Property does not just comprise of tangible things like houses, cars, furniture, currency, investments etc
and such assets are not the only kind that can be protected by law. There are many other forms of
intangible property known as intellectual property that have been recognized under the law and granted
protection against infringement.
Under intellectual property law, owners are granted certain exclusive rights to a variety of intangible
assets, such as musical, literary, and artistic works; discoveries and inventions; and words, phrases,
symbols, and designs. Patents, trademarks and copyrights, designs are the four main categories of
intellectual property.
DEFINITION OF TRANSFER OF PROPERTY AND REQUIREMENTS FOR TRANSFER
SECTION 5, 7, 8 & 9
INTRODUCTION
Transfer of property is an act by which a living person transfers the property in present or in future to one
or more living persons or to himself. The Transfer of Property Act 1882 is an Indian legislation which
regulates the transfer of property in India. Transfer of Property is defined under section 5 of the Act-
According to this section, transfer of property means 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 other living persons. The
phrase “living person”includes a company or association or body of individuals, whether incorporated or
not, but nothing in this section shall affect any law for the time being in force relating to or by companies,
associations or bodies of individuals.

Part (A) of Chapter Il makes it clear that provisions contained in this part of Chapter Il are
applicable to transfer of properties whether movable or immovable. Certain provisions of this Act
are applicable to the transfers of also movable properties. Sections 5 to 37 of this chapter are
applicable to transfers of movable and immovable, both kinds of properties. For example, what is
meant by transfer of property (Sec. 5) or when the interest of that property accrues to the
transferee, (Secs. 19, 21) are basic questions irrespective of the nature of property.
Similarly, what properties cannot be transferred (Sec. 6) or under what conditions a transfer can
be made for the benefit of unborn persons (Secs. 3, 14) etc. are also such issues where the nature
of property is irrelevant.
Part (B) of this chapter contains provisions for the transfer of only immovable properties because
the provisions laid down in Sections 38 to 53A necessarily suggest that they can be applicable
where the property is immovable.
ANALYSIS OF SECTION 5
Section 5 defines ‘transfer of property in the following words: “Transfer of Property” means 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 ‘to transfer property’ is to perform such act).
(i) Transfers of Property is an act- Under this something is done by the person who wants to
transfer his property; it is not transferred automatically without transferors act as is the case ly in
wills or inheritance. Transferring property would mean doing of this ‘act’ or performing such act.
The legal effect of this act is passing of property from one person to another.
(ii) Living Person - The person who makes the transfer is called the transferor. The transferor
may be human person or a juristic person. The living person i.e the transferor must be in existence
at the time of making of the transfer. The transferor must also be competent i.e of the age of
majority of sound mind and not otherwise disqualified to transfer a property. Court has not been
regarded as‘ living person therefore, transfer made by the order to the Court (e.g. Court-Sale) is
not a transfer of property within the meaning of Section 5 of the Transfer of Property Act.
(iii) Conveys- Conveyance means any act of the transferor by which certain new titles or
interests are created in favour of the transferee. In a transfer of property there is actually
transfer of title to or interests in that property. Before transfer of property, the transferee
does not have that particular interest. After the transfer of property the transferee gets
that particular interest which is given by the transferor. Anything done or any form of
assurance by virtue of which transferee gets new title or interest which he did not have
before the transfer, is called conveyance.
The test as to whether a transaction is a transfer of property or not is whether that
transaction passes on certain new rights or interests to the transferee or not.
Similarly, delivery of possession accompanied by an agreement of sale does not amount
to transfer of an interest in the property. A transfer can be effected only by a registered
sale deed, and not merely by an agreement to sell, general power of attorney or Will
(Suraj Lamp & Industries (P.) Ltd. V. State of Haryana, AIR 2012 SC 206).
(iv) In present or in Future- A transfer of property may be made so as to take place with
immediate effect or to take place on a future date. The transferor can make arrangement that the
property is vested or accrues to the transferee immediately after the completion of the transfer. He
may also make such arrangements in which the vesting of the interest of the property is postponed
to a future date. He is free to transfer a property also upon the fulfilment of certain conditions.
Illustrations-
§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 further transfer.
§A makes gift of his watch to B provided B gets first division in the next examination. Here.
although the gift has been declared today but it shall take effect only if B gets first division. Such
transfers are called conditional transfers. The conveyance may, therefore, be present future or
conditional.
(v) Property- The word ‘Property’ has been used in a comprehensive sense. It has a very wide
meaning and includes properties of all descriptions. It means movable properties. It means
immovable properties. It also means intangible properties such as right to catch fish or an
actionable claims or other beneficial interests in a property.
Property is essentially a bundle of rights or interest. When a property is transferred, there may be
transfer of all the rights in that property or only of some of it. All the rights in a property signifies
ownership or absolute interest. Only some of the rights or interests in a property would mean
partial or limited interest. Thus, if A makes a gift of his house to B, there is transfer of absolute
interest of the house. It is a transfer of ‘Property’. On the other hand. if A transfers the right of
enjoyment of his house to B for a certain period it is called ‘lease’. It is transfer of only partial
interest in the house but it is also a transfer of ‘property’.
The Property must be a present property. That is to say it exists on the date of the transfer.
Transfer of any non-existent property is void. Transfer of any non-existent or future property
operates only as a contract which may be performed in future and can be enforced as soon as the
property comes into existence.
(vi) To another living person- There must also be another person to whom the property may be
transferred. Such other person is called transferee. Under Section 5 is an act between two living
persons, the transferee must also be a living person. The transferee need not be a competent
person. Transferee may be minor, insane or even a child en ventre sa mere (child in mother’s
womb). But, the transferee must be in existence when the transfer is being made.
‘Another living person’ includes also juridical person such as firms. societies. companies.
corporations etc. and property may be transferred to them. An idol is a juristic person capable of
holding property but it is not a ‘living person within the meaning of Section 5 of the Act. It has
been held that an idol is a symbol of deity and it is against the Hindu Religion that a deity should
accept any property or worldly goods. Dedication of property to a temple is nota transfer of
property (Biopatral Nath v. Ramchandra, AIR 1926 Nag. 469).
§To Himself- A transfer: of property under Section 5 of the Act requires two ‘living
persons’, the transferor and transferee. One cannot transfer a property to himself. But,
one can transfer a property to himself in some other capacity. The transferor and the
transferee are physically the same person but as transferor he has the legal status of
settlor whereas as transferee his legal status is that of a trustee.
§The Property must be Transferable (Section 6)
Property of any kind may be transferred, except mentioned in Section 6 (a) to (i) cannot
be transferred. Therefore those properties described in the clauses (a) to (i) of Section 6
cannot be transferred. For Example: – A public office cannot be transferred, pensioners
allowed to government officers and political pension cannot be transferred, etc.
•The transfer must not be
•The property cannot be transferred if it is opposed to the nature of interest
affected thereby Section 6 (h);
•for unlawful object and consideration as per provision of Section 23 of the Indian
Contract Act 1872, which provides a consideration or object is unlawful if: –
• It is Forbidden by law, or
• It is of such a nature that it defeats the provision of any law, or
• is fraudulent, or
• it involves or implies injury to the person or property of another or
• the court regards it as immoral or opposed to public policy.
TRANSFER OF PROPERTY ACT, 1882 NOT AMOUNTING TO
TRANSFER OF PROPERTY
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.
1. 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.
2. 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]
3. 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
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].
4. Easement- The creation of an easement does not amount to a transfer.
5. 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.
6. 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.
7. 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.
V. N. SARIN v. AJIT KUMAR POPLAI (AIR 1966 SC 432)
Partition is not considered as a transfer of property because nothing new is obtained by a co-
sharer on the partition, it is not a transfer of property. his specific share, which vested in
him earlier, is simply separated. courts in India have given different views in this regard.
FACTS: There is a joint family, comprised of a father and his 2 sons. The property in question is
a bungalow. The property is partitioned into 3 parts. there are 3 coparceners. after the partitioner
each coparcener is getting 1/3rd of the property. The portion which one son A got was already
rented out to T. And A filed a suit for eviction against the tenant T. T has acquired this
property through a transfer and as per u/s 14(6) of the Delhi Rent Control, 1958 if any
premises a tenant is already living and meanwhile the property is transferred, then for the next
5 years the owner cannot evict the tenant. The suit of eviction is pre-mature, as this suit can be
filed only after 5 years.
ISSUE: Whether the partition of coparcenary property among the coparceners under Hindu Law
is a transfer within the meaning of S. 5 of the Transfer of Property Act, 1882, and therefore, can it
be said to be “an acquisition by transfer” within the meaning of s. 14(6) of the Act?
OBSERVATION: The Supreme Court observed that in the present case, there is a change of
landlord on partition, but not of the same character as change referred to by Sec. 14(6) of D.R.C.
Act.
PARTITION IS A DIVISION OF RIGHTS, NOT A TRANSFER U/s 5 of TPA: The Court
held that in a Hindu joint family, there is a community of interest and unity of
possession. Each coparcener has a title over the entire property and the effect of partition is to
give exclusive title to the coparcener over some properties to the exclusion of others.
Thus the coparcener has an antecedent title to the property. The word "transfer" in Sec. 5 of the
Transfer of Property Act, necessarily assumes that the title to property which the transferee
acquires did not vest in him prior to such transfer. Thus a person who acquires property under
partition, does not acquire it by "transfer“.
Reference was drawn to Girja Bai v S. Dhundiraj (1916)- The partition does not give a
coparcener a title or create a title in him. It only enables him to obtain what is his own
(specifically). By the partition, the joint title is transferred into separate titles. The coparceners get
exclusive titles to the property allotted to them and they renounce their rights in respect of other
properties.
PERSONS COMPETENT TO TRANSFER SECTION 7
Section 7 enumerates the concept of competency of persons who may be allowed to transfer property.
According to this section, a person is allowed to transfer property if he satisfies two conditions.
§The first condition is that the person must be competent to enter contracts with other persons.
§The second condition is that the person who is willing to transfer property must have title to the property
or authority to transfer it if he is not the real owner of the property. An important point to be noted in this
regard is the conditions mentioned in section 11 of the Indian Contract Act, which specifies the category
of persons who may be competent to transfer. In the section, it is stated that the person must have attained
majority, he must be of sound mind, and he must not be disqualified to enter into contracts by any other
law applicable in India.
OPERATION OF TRANSFER
Section 8 of the Transfer of Property Act expresses the concept of operation of the transfer. The first
paragraph states that the courts must, in the absence of a contrary intention, hold that the transferor
indented to transfer all his interests and legal incidents in the property. Where the property transferred is
land, all the legal incidents such as easements, rents and profits and things attached to earth shall be
transferred. Where the property to be transferred is a house, easements, the rents accruing after the
transfer, locks, keys, bars, doors etc. shall also be transferred.
Where the property to be transferred is machinery attached to the earth, in such a case, movable parts of
the machinery shall also be transferred. In cases where the debt is transferred, the legal incident that is
securities shall also be transferred.
Where the property is money or other property which may yield some kind of income, then the interest or
income accruing after the transfer takes effect shall also be transferred. In other words, the property and
the legal incidents attached to the property shall be transferred as part of the same transaction.
ORAL TRANSFER
Section 9 of the Transfer of Property Act, 1882 elaborates the concept of oral transfer. It mentions that
property may be transferred orally in cases wherein it has not been expressly mentioned that the property
must be by law transferred in writing. Writing is necessary in the following cases:
(i) Sale of immovable property having a value of more than rupees hundred. (Provided under section 54
of the Transfer of Property Act, 1882)
(ii) Sale or reversion of other intangible things. (Provided under section 54 of the Transfer of Property
Act, 1882)
(iii) Simple mortgage. (Provided under section 59 of the Transfer of Property Act, 1882)
(iv) All other mortgages are securing rupees hundred or more. (Provided under section 59 of the Transfer
of Property Act, 1882)
(v) Leases of immovable property from year to year or for a term exceeding one year or reserving a yearly
rent. (Provided under section 107 of the Transfer of Property Act,1882 )
(vi) Exchange. (Provided under section 108 of the Transfer of Property Act, 1882)
(vii) Gift of immovable property. (Provided under section 123 of the Transfer of Property Act, 1882)
(viii) Transfer of actionable claim. (Provided under section 130 of the Transfer of Property Act, 1882)
DIFFERENCE BETWEEN SECTION 6(a) AND 43
INTRODUCTION
In a legal context, the word “Property” refers to a collection of rights that can be
owned individually, collectively, or by a group of persons for enjoyment,
destruction, or disbursement.
Blackstone defined property as ‘the sole and full dominion which a man claims
over the things of the world to the exclusion of others.’ The term ‘property’
originated from the Latin word ‘proprius’ which means “one own” But it is not
necessary that property needs to be something materialistic, it can be virtual also.
In a legal atmosphere, there exist various provisions of property relating to its
transfer and existence. Consequently, properties are also separated into various
categories having distinctive features. To be specific, properties are of two types
movable and immovable.
In the case of immovable property in real movement of rights, possession, and
ownership takes place.
Under Section 3 of the Transfer of Property Act 1882, the term ‘immovable
property’ is not defined distinctively. The section gives a concept of immovable
property which states that the standing timber, growing grass is not immovable
property.
Whereas the General Clauses Act 1897 states that immovable property is
something attached to the earth, benefits of which arising out of the land. The
definition is given under Section 3 clause 26 of the Act.
Also, the definition given under Section 2 (6) of the Registration Act 1908 includes other particulates
such as hereditary allowances, rights to ways, light ferries, fisheries, or those which are attached to the
earth.
AN OVERVIEW OF SECTION 6(A) AND SECTION 43 OF THE TRANSFER OF PROPERTY
ACT
Section 6 of the Transfer of Property Act talks about what may be transferred. Property of any kind may
be transferred, except as otherwise provided by this Act or by any other law for the time being in force
Section 6(a) further says that:
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;
In common law, A property, which at the date of the assignment, is either not in existence, or not the
grantors property, is not transferable. Section 6 lays down the exceptions to what property may be
transferred. According to Section 6(a) no property can be transferred by the person who is an heir-
apparent. The term heir apparent is based on the maxim “nemo est heres viventis meaning that a living
person does not have any heir”. The heir, to whom the property will be passed to and if the property will
be available or not can only be determined upon the death of the owner of the property.
According to Section 6(a) of the Act: The chance of an heir apparent succeeding to the property of an
intestate; the chance of a relation obtaining a legacy on the death of a kinsman, or any other possibility of
a like nature cannot be transferred. Now the chance of the heir-apparent to inherit a property intestate is
called spes successionis and the transfer of this chance is void ab initio. It does not convey any right in
favor of the transferee, even if the transferor who transfers a chance may in fact become the owner of the
same property in future.
Section 43 of the Act talks about Transfer by an unauthorized person who subsequently acquires interest
in property transferred. The statute says that, Where a person fraudulently or erroneously represents that
he is authorized to transfer certain immoveable property and professes to transfer such property for
consideration, such transfer shall, at the option of the transferee, operate on any interest which the
transferor may acquire in such property at any time during which the contract of transfer subsists.Nothing
in this section shall impair the right of transferees in good faith for consideration without notice of the
existence of the said option.
Now Section 43 talks about transfer of property by unauthorized person who subsequently acquired
interest in property transferred. According to this section if a person fraudulently misrepresents
themselves to transfer the interest of a certain immovable property more than what they own and then
later acquired the proper interest over such property, the transferee has the right to either rescind the
contract or go ahead with it. If the transferee has decided to go ahead with the sale then the willingness of
the transferor to sell or not to sell does not matter anymore.
The rule incorporated in this section deals with such transfers of property where the transferor has no
capacity to make such a transfer from the very beginning but has still decided to enter into a transaction to
transfer the said property by the way of misrepresentation with respect to the title of the property. The
transferor then makes the other party act on this representation and then acquires the title of the property
in the future.
This rule of estoppel is based on two doctrine of common law namely the equitable doctrine and the
doctrine of estoppel. The doctrine of estoppel prevents a person who promises more than what he can
perform from claiming his incompetency as a legitimate excuse to avoid his liabilities in a situation when
he acquires competency to fulfil his promise. The equitable doctrine states that, Such a person who makes
such a promise is compelled to make good his promise when he becomes competent to perform it.
DIFFERENCE BETWEEN SECTION 6(a) AND SECTION 43
Section 6(a) enacts a rule of substantive law, while section 43 incorporates a rule of
estoppel.
The doctrine of spec successionis applies both to movable and immovable properties, while the rule of
estoppel under section 43 applies only in case of transfer of immovable property.
Section 43 applies only in those cases, where the transfer is for consideration. It does not apply to
gratuitous transfers. It applies in cases where despite a misrepresentation, the transferor, either takes or
seeks to take a monetary benefit from the transferee. It,therefore, would not apply to cases where a person
transfers the property by way of gift.
On the other hand, the prohibition under section 6 (a) applies to all kinds of transfers, irrespective of
whether they are for consideration or gratuitous transfers. A gift of property that a person hopes to inherit
is also void.
Under section 6(a), the fact that it is a transfer of spes successions is within the knowledge of both the
transferor as well as the transferee. There is no misrepresentation from the side of the transferor about his
competency to pass a good title in present to the transferee. Under section 43, due to an express
representation, fraudulent or even erroneous, the transferee, at the behest of the transferor, is assured of a
good title. section 43 is very clear of the fact that its application will cover only those cases, where due to
the making of a representation by the transferor, that he is competent to transfer a piece of property, the
transferee has been expressly misled. The transferee had no knowledge about the defect or lack of title on
part of the transferor, and due to the express representation coming from the transferor, he is made to
believe in the competency of the transferor to transfer the property.
The status of a transfer under section 6(a) is void in its inception, i.e., void ab initio, However, under
section 43, the transfer is voidable at the option of the transferee provided two conditions are satisfied.
First, that the contract should be subsisting at the time the transferor attains competency to transfer the
property, i.e., it should not have been rescinded or brought to an end and secondly the property should be
available with the transferor. It should not be in the hands of a bona fide transferee for value.
JUMMA MASJID MERCARA V KODI MANIANDRA DEVIAH
A Hindu joint family which consisted of three brothers had collectively executed a usufructuary
mortgage. An usufructuary mortgage is one where a legal right called the usufruct is present or
accorded to a person or a party that bestows a temporary right to use and derive income or benefit
from another party’s property and is usually conferred for a limited time period. The family had
executed such a mortgage in favor of another party. After a litigation it was decided that the
mortgagee had the right to hold onto the property for a period of 20 years which is till 1920 after
the said period was over, the property would revert back to the family.
Out of the three brothers, one died without leaving any heirs while the other two died leaving
behind their widows but no children. The brothers had sisters who then bore three grandchildren
who were the reversioners to the property. One of the grandsons Santhappa was to get one-half of
the property whereas the other two grandsons namely Basappa and Mallappa were to inherit one-
fourth of the property each. This inheritance was however applicable upon the death of the two
widows.
Therefore, the interest of the three grandsons in the property was a mere spec
successionis and according to Section 6(a), untransferable. The grandsons made a
representation to the transferee that the property in question was a joint family property
and would devolve upon them as reversioners upon the death of the widows and hence
they were competent to make such a transfer.
However, the reversioners did not disclose the fact that one of the widows was still alive
and that her presence prevented them from making good on their promise to transfer the
property. Since the transferee was not aware of the presence of the widow, he gave the
consideration to the reversioners upon the representation made by them and then later
filed a suit for possession of property when the property was not delivered to them.
The widow countered this suit by arguing that she was still alive and that no one had the
right to transfer the property till she was alive. She argued that the property was her
husband’s self-acquisition and she being the legal heir of her husband had the right of
possession over it.
In the suit, the subordinate court, the district court and even the judicial commissioner accepted
her arguments and the possession were not given to the transferee. However, before the second
appeal which was filed in front of the judicial commissioner could be decided the widow
passed away and the transferee hence applied to the revenue authorities for the transfer to the
property which was in the name of the widow to strengthen the sale deed which was made and
executed by the reversioners.
At this stage, Jumma Masjid intervened and interrupted the transfer of property to the transferee.
They contended that the property in question in whole should be passed onto them because firstly,
an alleged gift deed was executed by the widow during her life time in their favor and secondly
they argued that one of the reversioners, Santhappa had allegedly sold his share of the property
for a consideration of Rs. 300. The revenue authorities upon hearing these arguments rejected the
contention made by Jumma Masjid and upheld the transfer of the property to the transferee.
Jumma Masjid later filed a suit for recovery of possession of property that ultimately went
to the Supreme Court.
The contention made by Jumma Masjid was that Section 43 must be read as subject to the
provisions of Section 6(a) of the Act, that specifically prohibits that transfer of spec successions
and therefore Section 43 should apply only in cases other than those covered under Section 6(a).
The issue in front of the court was therefore-Whether a transfer of property for consideration
made by a person who represents that he has a present and transferable interest therein,
while he possesses in fact only a spec successionis, is within the protection of Section 43 of
the Act.
The court rejected the argument made by Jumma Masjid and pointed out that both the sections
deal with different spheres of law and that there is no conflict between them. Section 43 is applied
when a person made a representation of having a title to a property but not actually having but
still making a transfer under the representation. The transferee taking the representation made by
the person can take a transfer for a consideration. When these following conditions are met,
Section 43 dictates that the if the transferor, who made the representation, later acquired good title
of the property in question, the transferee is entitled to that property if the transfer in the
meantime has not been cancelled. There is an exception in favor of transferees for consideration
in good faith and without notice of the rights under the prior transfer.
Apart from this exception, what the section says is absolute and unqualified. It is
applicable to all kinds of transfers that satisfy the conditions laid down in the statute and
it makes no difference in its application whether the defect of title in the transferor arises by
reason of his having no interest whatsoever in the property or of his interest therein being
that of an expectant heir.
The court in the issue said, Section 6(a) and Sec. 43 relate to two different subjects, and
there is no necessary conflict between them. Section 6(a) deals with certain kinds of
interests in property mentioned therein and prohibits a transfer simpliciter of those interests.
Section 43 deals with representations as to title made by a transferor who had no title at the
time of transfer and provides that the transfer shall fasten itself on the title which the
transferor subsequently acquires. Section 6(a) enacts a rule of substantive law, while s. 43
enacts a rule of estoppel, which is one of evidence. The two provisions operate on different
fields and under different conditions and there is no ground for reading a conflict between
them, or cutting down the ambit of the one by reference to the other.
The court in its opinion said that both the parties can be given the possession and
ownership of the property depending upon their respective spheres of law but to hold
that transfers by persons who have only a spes successionis at the date of the transfer are
not within the protection awarded under Section 43 of the Act., would destroy its utility
to a great extent. Section 43 of the Act enables a special provision for the protection of
the right of the transferees for the consideration given to the party that made a
representation of a current title, when in reality they do not have one.
The court further said that:
While it is true that rules of estoppel cannot be resorted to for defeating or
circumventing prohibitions enacted by statutes on grounds of public policy, but here, it is
not a ground of public policy alone by means of a specific provision in specific
enactment.
The court therefore held that the transferee in the given case entered into a
transaction because of the representation made by the reversioners that they had
an interest or title in the property in question. The transferee would therefore,
acquire the title of possession and ownership of the property in accordance
to Section 43 of the Act, when the reversioners received the true title of the
property after the death of the widow. The property was therefore awarded
to the transferee with whom the sale deed was executed by the reversioners
and the contentions made by Jumma Masjid were rejected. The Supreme
Court in doing so laid down certain and absolute distinction when it came to the
applicability of Section 6(a) and Section 43 of the Transfer of Property Act.
KARTAR SINGH V. HARBANS KAUR (1994) 4 SCC 730 (DB)
FACTS- The respondent (Harbans Kaur) executed the sale deed, in favour the
appellant/defendant (Kartar Singh) of alienating the lands on her behalf and on behalf of her
minor son S. On attaining majority, S filed case for a declaration that the sale of his share in
the lands by his mother was void and does not bind him. The decree ultimately was granted
declaring that the sale was void as against the minor. But before taking delivery of the
possession, S died. The respondent mother, being Class I heir under Section 8, HSA, 1956,
succeeded to the estate of the deceased son. The appellant/defendant, therefore, laid his
claim to the benefit of Section 43, TPA, 1882. The High Court, while setting aside the decree
of the trial court and declared that the sale is void, refused to grant the remedy under Section
43, TPA. Thus, the defendant came in appeal to this Court.
LEGAL ISSUE: Is it true to contend that in view of the finding that the respondent
(Harbans Kaur) had succeeded by operation of law, the appellant is entitled to the interest
acquired by the respondent by operation of Section 43, TPA?
SUPREME COURT’S OBSERVATION
For application of Section 43, TPA, two conditions must be satisfied, Firstly, that there is a
fraudulent or erroneous representation made by the transferor to the transferee that he is
authorized to transfer certain immovable property and in the purported exercise of authority,
professed to transfer such - property for consideration. Subsequently, when it is discovered
that the transferor acquired an interest in the transferred property, at the option of the
transferee, he is entitled to get the restitution of interest in property got by the transferor,
provided the transferor acquires such interest in the property during which contract of
transfer must subsist.
It is settled law that the transferee must make all reasonable and diligent enquiries regarding
the capacity of the transferor and the necessity to alienate the estate of the minor. On
satisfying those requirements, he is to enter into and have the sale deed from the guardian or
manager of the estate of the minor. Under the Guardian and Wards Act, the estate of the
minor cannot be alienated unless a specific permission in that behalf is obtained from the
District Court. Admittedly, no such permission was obtained. Therefore, the sale of the half
share of the interest of the son S made by his mother is void.
Section 43, TPA, feeds its estoppel. The rule of estoppel by deed of the transferor would
apply only when the transferee has been misled. The transferee must know or put on
notice that the transferor does not possess the title which he represents that he has. When
note in the sale deed had put the appellant on notice of limited right of the mother as
guardian, as a reasonable prudent man the appellant is required to enquire whether on
own the mother as guardian of minor son is competent to alienate estate of the minor.
When such acts were not done the first limb of section 43 is not satisfied. It is obvious
that it may be an erroneous representation and may not be fraudulent one made by the
mother that she is entitled to alienate the estate of the minor.
For the purpose of Section 43 it is not strong material for consideration. But on
declaration that the sale is void, in the eye of law the contact is non est to the extent of
the share of the minor from its inception. The second limb of Section 43 is that the
contract must be a subsisting on the time of the claim. A void contract is no contract in
the eye of law and was never in existence so the second limb of Section 43 is not satisfied.
DECISION
Admittedly, ‘S’ was a minor on the date when the respondent mother transferred
the property. Where the transferee knows as a fact that the transferor does not
possess the title which he represents he has, then he cannot be said to have acted
on it when taking a transfer.
Section 43 would then have no application and the transfer will fail under Section
6(a), TPA. In view of the finding that no diligent and reasonable enquiries were
made regarding the entitlement of the mother to alienate the half share of the
minor’s estate, it cannot be said that the appellant had acted reasonably in getting
the transfer in his favour.In the face of the existence of the note in the sale deed about minority of ‘S’ and
in the light of the law, it could be concluded that Section 43, TPA does not apply
to the facts of this case. The appeals are accordingly dismissed.
CONCLUSION
In cases like this, where there are limited grounds for getting the favor of the court, it is necessary to
consider some essential points. Those include the timing of the petitions filed, and because the validity of
the grounds won’t be for a longtime, after considering all the facts of the case it is really necessary to
raise the effective ground to get the decision of the court in favor of the appeal. Even a small initiative
could make the case upside down. For instance, if the transferee did not claim for his transfer of property,
then Jumma Masjid, will get all the grounds to pull the case in his favor. So in case of subsequent appeals,
it is important to analyze the facts as a small gap can lead to a big change.
TRANSFERABLE & NON-TRANSFERABLE PROPERTY SECTION 6
INTRODUCTION
The transferability of property is the general rule and non-transferability is an exception. It is
generally based on the maxim alienation rei prae fertur jurisdiction accrescendi which states
that law leans in favour of transferability not accumulation.
Any property which is transferable, it can be passed or moved from one person or organization to
another and used by them. Section 6 to the transfer of property act, 1882 states that property of
any kind may be transferred, except those which are provided by this act or by any other law for
the time being in force. Unless there is some legal restriction preventing the transfer, the owner of
the property may transfer it.
The person insisting non-transferability must prove the existence of some law or custom which
restricts the right of transfer. Unless there is some legal restriction preventing the transfer, the
owner of the property may transfer it. However, in some cases, there may be a transfer of property
by an unauthorized person who subsequently acquires an interest in such property.
SECTION 6
It specifically speaks about, what may be transferred. Property of any kind may be
transferred, except as otherwise provided by this act or even by any other law for time
being in force, and these exceptions will be discussed in detail in the following sub-
sections.
CONDITIONS TO EXAMINE A VALID TRANSFER OF PROPERTY-
1. Property must be Transferable
2. Object of the transfer must be lawful
3. The transferee must not be legally disqualified to take the transfer
4. The transfer must not be opposed to the nature of the interest affected thereby
5. The transferor must be competent to transfer
6. It must be made in the prescribed manner or form
WHAT CANNOT BE TRANSFERRED-
1. Spes Succession [Section 6(a)]: –
Clause (a) describes spes successionis cannot be transferred. Spes Successionis means
expectation of succession, i.e., a possibility of getting property-in-future through
succession, (inheritance or Will). It is, therefore, not any present property. This clause
states that the transfer of a bare chance of a person to get a property is prohibited
under this section. 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. The chance of an heir-apparent in succeeding of getting the property, the
chance of inherited relationship upon the death of any relative, or any other mere
possibility of this nature cannot be transferred.
(a) Chance of an heir apparent- The term heir apparent is borrowed from the English
law, based on the maxim “nemo est heres viventis” i.e., no one is the heir of a living
person “He is that person who would be the heir if he survived the propositus and if the
propositus dies intestate, i.e., without making any will. Propositus is a deceased person
whose property the heir-apparent is going to inherit.
Chance of an heir-apparent is a non-transferable property: An heir apparent has
only a chance of inheriting the property subject to two possibilities-
(a) he survives the propositus and
(b) the propositus dies intestate i.e., without making any will. It is possible that though
the son survives his father but he finds that his father had made a will under which the
property is to be given to another person after his death and not to his heirs.
Thus, before the intestate death of the propositus, the ‘chance’ of an heir-apparent of
getting the property is merely a future possible interest. Law cannot treat it as a present
fixed right in the property. It is a bare or naked hope or expectation which may be
defeated by act of some person having the present power to dispose of property.
Basis of this Rule: Public policy demands that such rights ought to be inalienable. Bare
possibility or expectancy not coupled with any interest cannot be made the subject of a
valid transfer, for it may be defeated by the act of some persons having the present
disposal of property. If these transfers were allowed there is likelihood of speculators
purchasing the chance of succession from possible heirs and there would be increase in
speculative litigations.
(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 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 was held that he could not
be allowed benefit of the doctrine of spes successions. He became estopped from claiming share in
the inheritance.
The concept of Spes Succession can be explained with the help of an Example– A family
consists of father F and son S, F being the owner of the property has the ownership with
him during his lifetime and no one else including his son is allowed to sell the property,
without his consent. Now, if F dies intestate, s would inherit his property and hence, here it
can be said that S is the Heir Apparent. Here S’s succession to the property in the future is
a chance due to two main reasons.
Firstly, As F is the owner of the property he may sell it, dispose of it in any manner he
thinks or make a will in someone’s favour. Eventually, nothing will be left for S.
Secondly, son S dies during the lifetime of his father. Thus, if S during the lifetime of his
father transfers the property without his father’s consent then the transfer would be void ab
initio and is also expressly prohibited by the act. In the case of Official Assignee, Madras v.
Sampath Naidu, it was observed by the court that a mortgage executed by an heir apparent
is void even if he subsequently acquired the property as an heir. Hence, from above it can
be concluded that the transfer of spes succession is void ab initio.
RIGHT OF RE-ENTRY [SECTION 6(b)]
•Clause (b) mentions that the right of re-entry cannot be transferred. The right to re-
entry implies a right to resume possession of the land which has been given to someone
else for a certain time. The section mentions that the right of re-entry cannot be
transferred by itself apart from the land.
•A mere right to re-entry cannot be transferred to anyone except the owner of the property
affected thereby.
•For example: – ‘A’ grants his plot to ‘B’ on a lease, for 5 years; with a condition that ‘B’
cannot dig a tank on the land, if ‘B’ does any such act then ‘A’ has the right to re-enter.
So, here ‘A’ cannot transfer his right to re-entry to ‘C’ for the breach of the condition. If
‘A’ does any such act of transfer of his right to ‘C’ then this transfer will be regarded as
invalid.
EASEMENT [SECTION 6(c)]
•Clause (c) mentions that easement cannot be transferred. An easement is a right to use or
restrict the use of land of another in some way. For example, the right of way or right of
light cannot be transferred.
•An Easement cannot be transferred except the dominant heritage.
•An easement can be quoted as a right which the owner or the occupier of certain land has in
his possession for the beneficial enjoyment of the said land, or it may even be to do, or to
continue to do something or to prevent something from being done. This very concept of
easement includes under its ambit an important principle of ‘profits a pendre’, which
actually means– A right to enjoy the benefits arising out of the land
•For example: – Right to way, right to light, right to water, etc. These rights cannot be
transferred without property which has its benefits.
RESTRICTED INTEREST [SECTION 6(d)]
•Clause (d) mentions that an interest restricted in its enjoyment of himself cannot be
transferred. For instance, if a house is lent to a man for his personal use, he cannot
transfer his right of enjoyment to another.
•A person having right to a property can transfer the same either subject to a restriction or
without restriction. Where property is transferred subject to a restriction the transferee is
supposed not to act contrary to the restriction. Thus, if property is transferred to the
transferee with a restriction that it is to be enjoyed him personally, he shall have no right
to transfer such a property and if he transfers the property in violation of the restriction
the transfer shall be void under this clause. Under this clause, a trustee cannot alienate
his office because his office is based on personal confidence.
The following kinds of interest can be held non-transferable: Services Tenure, Religious
Office and A right of Pre-emption.
RIGHT TO FUTURE MAINTENANCE [SECTION 6(dd)]
•Clause (dd) restricts the transfer of the right to maintenance. Such a right cannot be
transferred as such right is for the personal benefit of the concerned person.
•The right to future maintenance is only for the personal benefit of the person to
whom it has been granted, thus it cannot be transferred.
•“A right to future maintenance, in whatsoever manner arising secured or determined,
cannot be transferred”. A right to receive maintenance is a personal right, although
any particular property or the income thereof may be charged with it. The right of
maintenance is a personal right and it is not transferable. But this right can be
transfer in case of any arrears of maintenance but as to future maintenance it is not
valid.
MERE RIGHT TO SUE [SECTION 6(e)]
•Clause (e) provides that mere right to sue cannot be transferred. The prohibition has
been imposed as the right to sue is a right which is personal and exclusive to the
aggrieved party. For example, a person cannot transfer his right to sue for the damages
suffered by him due to breach of contract by the other party.
•A mere right to sue cannot be transferred. The right to sue is personal to the party
aggrieved.
•These rights cannot be transferred.
•For example: – Damages for the breach of contract or tort, as it claims for past means
profits for suing an agent for his accounts, for pre-emption, etc.
PUBLIC OFFICE [SECTION 6(f)]
•Clause (f) forbids the transfer of public offices. The philosophy behind the prohibition
is that such a transfer may be opposed to public policy in general. A person is eligible to
hold a public office on the grounds of his personal qualities, and such qualities cannot be
transferred. Thus, the transfer of public offices is prohibited under this section.
•A public office is non-transferable property therefore cannot be transferred, nor can the
salary of the public officer be transferred.
•Thus, prohibition is based on public policy as a public office is held for personal
qualities.
•If the office is not public, it will be transferable, even if the discharge of its duties is
indirectly beneficial to the public.
PENSIONS [SECTION 6(g)]
•Clause (g) of section 6 provides that pensions cannot be transferred. Pensions
allowed to military and civil pensioners of government and political pensions
cannot be transferred. In simpler terms, a pension may be understood as any
periodical allowance which may be granted in regard to any right of office but
only on account of the past services offered by the pensioner.
•The stipends which are paid to military, naval and air forces and civil pensions of
government and political pensions cannot be transferred.
•Pensions mean personal allowance or stipend not concerning any right of office
but of special merit.
NATURE OF INTERESTS [SECTION 6(h)]
•In this, no transfer can be made in three conditions: –This clause prohibits transfer
which will oppose the interest affected thereby. The transfer is also forbidden if the
object or consideration of the transfer is unlawful. Moreover, a transfer by a person who
is legally disqualified from being a transferee is also forbidden.
•Opposed to the nature of business: – There are things which from their very nature are
not transferable. It includes, res communes (i.e. things of which no one in particular is
the owner) or also known as res nullius (i.e. thing without an owner such as air, water of
rivers etc.). These things from their very nature are not transferable. Similarly, res extra
commercium (i.e. things which cannot be the subject of commerce) e.g. property
dedicated to a idol cannot be transferred.
•Anything with an unlawful object or consideration within the meaning of Section
23 of the Indian contract act, 1872 cannot be transferred. A property otherwise
transferable become non-transferable when the object or the consideration of the
transfer is unlawful. Thus a house given on rent for the purpose of gambling or
prostitution being immoral or opposed the public policy is invalid.
• Is fraudulent
• It is against public policy
• It is prohibited by law.
• Is of such a nature to defeat the provisions of any law.
•A person legally disqualified to be a transferee: – A transfer cannot be made in favor
of a person who is disqualified to be transferee. Under Section 36 of Transfer of
property act, a judge, a legal practitioner or an officer connected with courts of justice
are disqualified for purchasing any actionable claims.
STATUTORY PROHIBITIONS ON THE TRANSFER OF INTEREST [SECTION 6(i)]
•Clause (i) of section 6 was inserted by the Amendment Act of 1885. The clause declares
that certain interests are untransferable and inalienable. For example, a farmer of an
estate, in respect of which default has been made in paying the revenue, cannot assign
his interest in the holding.
•The general rule is that leasehold are transferable but this clause makes an exception to
this rule and declares certain interest untransferable. 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 cannot assign or transfer their interest in the
holding.
•This section makes it clear that a tenant cannot have an occupancy of a non-transferable
right in any way to transfer his interest.
CASE LAWS
Official Assignee, Madras vs. Sampath Naidu, AIR 1933 Mad. 795
It was observed by the court that a mortgage executed by an heir is void even if he has
subsequently acquired the property as heir. Therefore, it can be concluded from above that the
transfer of spes succession is void ab initio.
Ananthayya vs. Subba Rao, AIR 1960 Mad 188
In this case, the court held that where there is an agreement between two people and according to
which a person agrees to give a certain proportion of his income to his brother in consideration of
having being maintained by the later. Now in such cases, this provision will not apply.
Saundariya Bai vs. Union of India, AIR 2008 MP 227
It was believed that the pension is non-transferable property, as long as it is unpaid and in the
hands of the government. Another important aspect that needs to be noted is that pensions are
separate from bonuses and rewards, and on the contrary, these are transferable.
CONCLUSION
Lastly, it can be said that the section 6 of property act in detail with the addition
of case laws in order to explain the different clauses involved in the sections. In
addition to this, there were even illustrations and examples given, which in fact
make it for the better understanding of the numerous clauses involved and
connected with section 6 of Transfer of Property Act. In the legal arena, it
becomes of paramount importance for the parties and the lawyers to have a
detailed understanding of these clauses and provisions.
FORMALITIES OF TRANSFER
ATTESTATION, REGISTRATION & NOTICE

FORMALITIES OF TRANSFER
Movable property can be transferred by means of delivery or by registration. While
immovable property can be transferred as per the provisions of this act. Generally
immovable property may be transferred through registered instrument only but if value
of tangible immovable property is less than rupees hundred than registered instrument is
not required. A person who sign the documents of transfer is called executant or a
person who execute the transfer by affixing signature on document is called
executant. A illiterate person who cannot sign may direct some literate person to sign
the documents on his behalf and the illiterate person may put his thumb impression only.
Formalities of transfer may be construed as follows :ATTESTATION
REGISTRATION
NOTICE
ATTESTATION
According to the Section 3 of Transfer of Property Act, Attestation means that a person
has signed the document by way of testimony of the fact that he saw it executed. It does
not import anything more, and therefore it must be distinguished from cases where a
person signs a document merely as a witness to the execution but also with a view to
giving consent to the transaction. A person who is a party to the deed cannot under any
circumstances be allowed to sign the instrument as an attesting witness.
For the purpose of attesting, the signature put by the witness should essentially be
‘animus attestandi’, that he has seen the executant sign or has received from him a
personal acknowledgement of his signature. If a person has put his signature on the
document for some other purpose, e.g., to clarify that he is a scribe or an identifier or a
registering officer, he is not an attesting witness. ‘Animus attestandi’ must be there for a
valid attestation.
Supreme Court in the case of M.N Abdul Jabbar v. H. Venkata Shastri, AIR
1965 SC 1147 laid down the essential conditions of a valid attestation as follows:
For an attestation to be valid it must be done by two or more persons. The witnesses
must have seen the executant sign the document concerned or should have received the
personal acknowledgement from the executant himself.
Each attesting witness must see the executant signing or fixing his mark (thumb
impression), or see some other person signing in the presence and by under the direction
of the executant.
With the view to witness or attest the document, each of them should sign the instrument
in the presence of the executant, confirming that he has seen the executant sign or has
received the personal acknowledgement of the same. But in case the attestation is done
for some other purposes for example to certify that he is a scribe or a registering officer,
he fails to be an attesting witness. Thus, it is essential that the witness put his signature
with the purpose of attesting.
Three modes of attestation are recognized. e.g.:
Each sees the executant signing or fixing Mark, or each sees some other person signing in
the presence and by the direction of the executant, or each has received from the executant the
personal acknowledgement(a) of executant's sign
(b) of executant's mark
(c) sign of one who signed for the executant in his presence and by his direction.
The attestation can only take place after the execution of the legal instrument is ready for it to
be a valid one.
 Signature by an attesting witness at the legal document is acceptable with all form and
formality may constitute valid attestation. There is no particular form of attestation is
prescribed that parties need to adhere to.
QUALIFICATION OF ATTESTOR
An attestor must be a major and a person of sound mind. He may be literate or
illiterate. A party of deed should not attest.
Effect of invalid attestation: Where attestation is compulsory, is must be attested
properly. Otherwise, it is ineffective. According to Section 59 of the act, if a mortgage
deed is not duly attested, it can not be enforced in a Court.
Attestation is an important formality in execution of Transfer. All transfers do not
require attestation. It is necessary in certain cases like gift, mortgage etc. optional in case
of sale, lease etc.
Attestation is valid and complete, when to witnesses sign the instrument. The object of
attestation is to ensure that there is no fraud or vitiating circumstances in the execution
of a document.
CASE LAWS
KUMAR HARISH CHANDRA SINGH DEO V BANSIDHAR MOHANTY (AIR 1965 SC
1738)
The case relates to a mortgage deed. In the deed, the parties to the transaction, had been he
mortgagor and the mortgagee, but the money to the mortgagor was advanced by a third person.
The third person, i.e., the moneylender was one of the attesting witnesses. The third person, i.e.,
the moneylender was one of the attesting witnesses. The question arose whether the mortgage
deed was validly attested.
It was held by the Supreme Court that as the object of attestation is to protect executant from
being required to execute a document by the other party thereto by force, fraud or undue
influence, a party to the transaction cannot attest it. It must, however, be borne in mind that the
law requires that the testimony of the parties to the document cannot dispense with the necessity
of examining at least one attesting witness to prove the execution of the deed. Inferentially,
therefore, it debars a party to the transaction from attesting a document which is required by law
to be attested.
Although, a person interested in the transaction and he is not a party to the deed may
attest the document. In this case, the money lender was a person who was very much
interested in the transaction of mortgage, but he was not a party to a deed. It was
observed by the Supreme Court that a distinction has to be drawn between a person who
is a party to the deed and a person who though not a party to the deed, is a party to the
transaction, and the latter is competent to the deed.
KUNDAN LAL VS. MUSHAR
In this case the executant was a Pardanashin lady was sitting behind the thin curtain
when the attestors signed. The Privy council held that the attestation was valid as the
executant, if so minded, could have seen the witnesses, even if she did not actually see
them, through the curtain. It is tantamount to say that an attesting witness should sign his
name in the presence of the executant.
RAO GANGA PRASAD SINGH VS. ISTURI PRASAD SINGH
In this case deed of mortgage was signed behind the purdah and was brought to the
witness bearing a signature which the son of the lady said was her signature. The Privy
council held that there was no valid attestation, the attestator must have actually
witnessed execution or received from the executant an acknowledgement of execution.
NAGULAPATI LAKSHMAMMA V. MUPPARAJU SUBBAIAH
The apex court in this case relying on the number of judgements held that the definition
of 'sign' under General Clauses Act, 1897 would apply and therefore the word 'Sign' in
section 3 of the Transfer Property Act will include the mark or thumb impression by the
attestor.
REGISTRATION
It is essential legal formality to effect a valid transfer in certain cases.
Main advantage of registration is that any person deals with the property always abide by the rights and
liabilities specified in registered document.
Registration is a term used in legal and official language and Registration is taking care by Section 17
of the Registration Act, 1908 and with Registration the condition precedent is payment of Stamp Duty.
Registration ofany documents shall be done within 4 months from the date of execution of the
agreements.
Registration of the documents of sale and purchase of immovable property is mandatory and
ensuresconservation of evidence, prevention of fraud and assurance of title. The provision of the
Registration Act,1908 provides for the registration of various documents, to ensure conservation of
evidence, prevention of fraud and assurance of title.
As per Section 17 of the Registration Act, 1908, all transactions that involve the sale of an immovable
property for a value exceeding Rs 100, should be registered. This effectively means that all the
transactions of sale of immovable property have to be registered, as no immovable property can be
purchased for merely Rs 100.
Section 17 of the Indian Registration Act,1908 provides for mandatory registration of
certain documents. They are:
1. Instruments of gift of immovable property;
2. Non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish,
whether in present or in future, any right, title or interest, whether vested or contingent, of the value of
one hundred rupees and upwards, to or inimmovable property. This means that all transactions that
involve the sale of an immovable property for a value exceeding Rs 100, must be registered;
3. Leases of immovable property from year to year, or for any term exceeding one year,
or reserving a yearly rent;
4. The documents containing contracts to transfer for consideration, any immovable
property for the purpose of section 53A of the Transfer of Property Act, 1882.
NOTICE
According to Section 3 of Transfer of Property Act, “a person is said to have notice” of a fact
when he actually knows that fact, or when, but for willful abstention from an enquiry or
search which he ought to have made, or gross negligence, he would have known it.
It means notice of all the facts related to property.
Notice may be actual or constructive.
If a person knows about the fact it is known as actual notice and when in certain
circumstances law deems that a person ought to know about the fact even though he did not
know the fact.
For Example:- A person who refuse to accept registered letter is deemed to have constructive
notice of the content of that particular letter.
ACTUAL NOTICE
Actual notice, to constitute a binding force, must be definite information given by a
person interested in the thing in respect of which the notice is issued, as it is settled rule
that a person is not bound to attend to vague rumors or statements by mere strangers, and
that a notice to be binding must proceed from some person interested in the thing. A mere
casual conversation in which knowledge of a certain thing is imparted, is not notice of it,
unless the mind of a person has, in some way been brought to an intelligent apprehension
of the nature of the thing, so that a reasonable man or any normal man of business would
act upon the information, and would regulate his conduct accordingly. In other words, the
party imputing notice must show that the other party had knowledge which would operate
upon the mind of any rational man, or man of business, and make him act with reference
to the knowledge he has so acquired. A vague or general report or the mere existence of
suspicious circumstances is not in itself notice of the matter to which it relates.
A general claim is not sufficient to affect a purchaser with notice of a deed of which he
does not appear to have knowledge. If a person knows that another has or claims an
interest in property for which he is negotiating he is bound to inquire what his interest is,
and if he omits to do so, he will be bound, although the notice was inaccurate as to the
particulars to the extent of such interest.
The notice must be given in the same transaction. A person is not bound by notice given
in a previous transaction which he may have forgotten. Notice to a purchaser by his title
papers in one transaction will not be notice to him in an independent subsequent
transaction in which the instruments containing recitals are not necessary to his title, but
he is charged constructively with notice merely of that which affects the purchase of the
property in the chain of title of which the payer forms the necessary link.
CONSTRUCTIVE NOTICE
Constructive notice is the knowledge which the Courts impute to a party upon a presumption so
strong that it cannot be allowed to be rebutted, that knowledge must have been communicated.
"The doctrine of constructive notice" said Lord Brougham in Kennedy v. Green, depends upon
two considerations first that certain things existing in relation or the conduct of parties, or in the
case between them, begets a presumption so strong of actual knowledge that the law holds the
knowledge to exist because it is highly improbable it should not, and next, that policy and safety
of the public forbids a person to deny knowledge while he is so dealing as to keep himself
ignorant or so as that he may keep himself ignorant, and yet all the while let his agent know, and
himself perhaps, profit by that knowledge.
The broad principle underlying the doctrine of constructive notice is that a person who is bound
to make an inquiry and fails to do it should be held to have notice of all facts which would have
come to his knowledge had he made the inquiry. Where, on the other hand, a person is not bound
to make an inquiry he cannot be charged with constructive notice of the facts that might have
been ascertained on such inquiry. Again, where a fact, of which a person has notice, would not
put him on inquiry as to the matters in question, it cannot be constructive notice of such matter.
The Courts in India should be very careful about applying the English decisions on constructive notice
to this country, and should do so only when the circumstances are really similar. The cases of Daniels v.
Davisons and Barnhart v. Greenshields, as well as other cases are freely quoted and applied by Indian
Courts, and the result is that the doctrine of constructive notice is carried to great lengths. When the
Indian Courts apply the principle that a man has notice because if he had made reasonable inquiries he
would have ascertained the facts and if he has not ascertained the facts he has been guilty of gross
negligence-the Court must carefully regard all the circumstances of the case and of the people to whom
the Courts are going to apply the principle.
Classes of constructive noticeWillful abstention from inquiry or search.
Gross negligence,
Registration,
Actual possession, Notice to agent and State of property amounts to notice.
Willful abstention from search which one ought to make- Even in the absence of
actual notice a person may constructively and in the eye of law be affected with notice of
fact when he has willfully abstained from an inquiry or search which he ought to have
made as a prudent person. In Kausalsi Ammal v. Shankarmthiar; it was held that the
use of the word ‘willful in the definition shows that the abstention from inquiry should
be designed and due to a desire to avoid an inquiry which would lead him to ultimate
knowledge. It means such abstention from inquiry, as would show want of bona fides.
Illustrations.- A proposes to sell his property to B who, at the same time knows that
rents due in respect of the property are paid by the tenants to a third person C, whose
receipt is inconsistent with the title of the vendor, B will be fixed with notice of the
rights of C, and if B abstains from prosecuting his inquiries, his conduct will amount to
willful abstention.
Gross negligence.- Negligence may be stated to be the omission to do some thing
which a reasonable man, guided by those considerations which ordinarily regulate the
conduct of human affairs, would do or doing something which a prudent and reasonable
man would not do. It means the absence of such care, skill and diligence, as it is the duty
of the person to bring to the performance of the work which he is not to have performed.
The distinction between willful abstention and negligence is the existence of a mental
advertence to the consequence of an act in the one case and the absence of such
advertence in the other. A person who is a prudent and reasonable man to inquire into the
contents of a document, cannot be said to be guilty of either willful abstention from
inquiry or gross negligence. But there may be circumstances in which a document is
attested, which will raise presumption of notice of its contents. This presumption is a
rebuttable one.
LLOYDS BANK LTD. V. P.E. GUZDER AND CO. LTD., (1929) 56 CAL 868
Respondent (A) deposited title deeds of his house in Calcutta with the claimant Bank (N) to
secure the loan he had taken from the bank.
A deposited title deeds of his property with Bank Y for securing an over draft. A then asked
for the return of the title deeds saying that he wished to sell the property and clear the
overdraft. The usual practice is that prospective buyers to inspect the original title deeds from
Bank's counsel. In this case A feels that he would not get good price if the purchaser came to
know that the bank had title deeds. Due to the reason, the bank returned the title deeds to A, He
then borrowed money from Bank Z by falsely representing that the property is free from
encumbrances and the charge was created. In the above circumstances, Bank Y was held guilty
of gross negligence in surrendering the title deeds to A. The Bank Z had priority over the
mortgage to Bank Y.
Registration as a notice- Explanation I supersedes the former case law as to whether
registration of a document under Registration Act is constructive notice of its contents.
The Bombay and Allahabad High Courts had held earlier that registration was notice.
The Madras High Court held the registration was not notice on the ground that if the
Legislature had so intended it would have said so. The Calcutta High Court in some
cases took the same view as Madras; but the prevailing view in Calcutta was that
whether registration operates as notice depends upon the circumstances of each case, i.e.,
whether or not the omission to search the register taken with facts of the case would
amount to gross negligence so as to attract the consequences which result from notice.
The Privy Council in Tilakdhari Lal v. Khedan Lal reviewed all the Indian decisions,
and approve the decisions of Sir Lawrence Jenkins of Calcutta High Court in Mahindra
v. Torylucko that the question was not one of law but of fact to be determined according
to the circumstances of each case.
Their Lordships held that they were impressed with the view that though registration had been held for
two centuries not to operate as notice in England, yet the Indian Legislature when framing different
Registration Acts and the definition of notice in the Transfer of Property Act had omitted to enact the
principle that registration is notice. This omission has now been supplied. The definite rule now
enacted, the effect of which is to oblige all purchasers to exercise diligence in examining titles recorded
in the register, avoid the uncertainty and the risk of perjury involved in taking parole evidence as to
whether the omission to search the register should in any particular case be attributed to gross
negligence. It also fulfils the chief object of registration, which is to provide a record on which every
person dealing with property can rely for a full and complete account of all transactions by which his
title may be affected.
When does registration operate as notice(a) The instrument should be compulsorily registerable. (Section
17 of Registration Act). If it is not
required by law to be registered (Section 18 of Registration Act) its registration does not amount to
notice. So the registration of an agreement to mortgage or of a hypothecation of goods or of an
agreement not to alienate property is no notice.
(b) The instrument should be registered in the manner prescribed by the Indian
Registration Act, 1908. It should be entered into the books kept under Section 51 of
that Act and its particulars correctly entered in the indices under Section 55 of the Act.
A mistake of the Registration Department in entering a transaction in the wrong book
does not invalidate the transfer. It is a mistake of procedure covered by Section 87 of the
Registration Act and so the registration is not rendered invalid. An innocent third party,
however, is not to be prejudiced by the negligence of the transferee in not getting the
mistake rectified. Where the third party fails to make proper inquiries he would be
deemed to have notice of the transfer notwithstanding the mistake in registration,
(c) The person affected with notice should have acquired his interest subsequent to
the registration-The registration of a sub-mortgage is not notice of it to the mortgagor.
Possession as notice- Before the insertion of Explanation II, in the section, there was a
difference of opinion how far possession was to be regarded as notice. It was generally held
that it should be regarded as constructive notice of the rights of the person in possession. In
National Bank v. Paul Hamilton, their Lordships of the Privy Council observed: "It has
always been held that such possession is in itself notice of the title under which such
possession is retained which anyone dealing with the property cannot, without risk, ignore.“
Notice of a deed is notice of the contents- Actual notice of a deed is also a constructive
notice of all the material facts affecting the property, which appear on the face of the deed or
could be reasonably inferred from its contents. Notice must be given in the same transaction.
Moreover, actual notice of an instrument affecting one's title is constructive notice of all
documents which are recited in the instrument and which on examination of the instrument
would have brought to his knowledge, provided the documents relate to the title and form
part of the chain of the title.
If a purchaser omits to inspect title-deeds he may be affected with constructive notice of all facts
which he would have discovered had he chosen to make proper investigation of title. Where a
property subject to a maintenance charge was sold and the purchaser, even though knowing that
there were several maintenance allowances, did not make inquiries whether any allowance was
made a charge on the property, and omitted to inspect title-deeds. Held, that the purchaser must
be deemed to have constructive notice of the charge.
Attestation does not amount to notice- The above rule applies only to the parties to an
instrument, and not to the attesting witness. A witness subscribing to a deed need not know the
contents of the deed, for a witness in practice is not privy to the contents of the deed. Therefore,
attestation of document does not by itself import consent to or knowledge of the contents of the
document, nor fix him with notice of its provisions. There may, however, be circumstances under
which the witness may be deemed to have notice of the contents of the document he is attesting
e.g., where attestator was present throughout the transaction and attested the deed after hearing
its contents, he must be fixed with notice of its contents, and cannot afterwards challenge the
right of the transferee.
NOTICE TO AGENT
Notice through agency is defined in Explanation III to Section 3 of the Transfer of Property
Act. For such notice to arise the following circumstances should be present:
Notice should have been received in his capacity as agent- i.e. while acting on behalf of
the principal. In re David Payne and Co. a company borrowed within its borrowing powers
but for a purpose not authorized by its memorandum of association. The security in the
hands of the lending company in such a case would be invalid only if it had knowledge or
notice of the fact that the money would be applied for an improper use. The question was
whether lending company had knowledge of the fact before the borrowing company had
applied for the loan. It was held that this knowledge could not be imputed to the company
because the director did not then profess to act on behalf of the lending company.
Notice must have been given in the course of agency business- Notice should have been
received in the course of the agency business.
In Chabildas v. Dayal Mawzi, property was sold under a power of sale in an English
mortgage. A depreciatory condition was introduced in the contract of sale. After the sale
was completed, the purchaser instructed a solicitor to act for him in the preparation of the
conveyance. The solicitor knew that the title was good and that the depreciatory condition
was not justified. The Bombay High Court held that the purchaser was affected with
constructive notice of the true state of title. Reversing the decision Sir Arthur Wilson
delivered the judgement of the Privy Council observed:
"Till the contract of sale was signed, the attorney was not acting for the purchaser. The only
thing in which he did so act was the subsequent preparation of the conveyance. The view of
the Court of appeal imputes to the principal the knowledge of an agent not acquired in the
matter for which he was agent and used it to upset a transaction of a date before the agency
commenced. This is an extension of the doctrine of constructive notice in which their
Lordships concur.“
Notice must be of a fact which is material to the Agency Business- The notice should
be of a matter material to the agency business. In Wyllis v. Polien, an assignment of a
mortgage was effected through the mortgagee's solicitor. The solicitor knew that there
was another encumbrance on the property. That fact not being material to the transaction
of assignment, no notice could be imputed to the assignee of the mortgagee. Subsequent
advances made by him to the mortgagor were, therefore, held to be unaffected by notice
to the intermediate mortgage.
Fraud by an agent- In English law where an agent is guilty of fraud and has an interest
in concealing the knowledge from the principal and does so conceal it, the general rule
that notice to agent is notice to principal does not apply and the principal is not to be
imputed with notice of the fraud. This exception will apply with greater force where the
party seeking the benefit of the doctrine of constructive notice is a party to or is
cognizant of the fraud.
In Sharpe v. Foy, S, advanced moneys on a mortgage executed in his favour by F, the transaction
being negotiated by C, a solicitor's clerk who acted for both parties. It appeared that there was a
previous settlement affecting the land comprised in the mortgage and F had communicated that
fact to C. C, however, told F that he would not communicate it to S, as it would make him
nervous and cause him to hesitate about advancing money. It was held that when C refused to
communicate the fact to S, it was the duty of F himself to communicate it to S, that by his failure
to do so F must be considered to be a party to what amounted to a fraud committed by C upon his
client S and that "If it were to be held that notice given under these circumstances was binding
upon the principal, it would amount to robbing the person who advanced the money." A similar
view was taken in Cave v. Cave.
In introducing the proviso to Explanation III, by the Amending Act XX of 1929, the Legislature
seems to have departed to some extent from the English Law as stated above under the proviso,
notice even to an agent who fraudulently conceals his knowledge from the principal, will be
notice to the principal except against a person who is a party to or otherwise cognizant of the
fraud.
State of Property- Sometimes the situation and condition of a property speaks louder than the man.
A necessary inference, therefore, may be drawn about the probable users thereof, for example
situation of tombs in any field is notice of the fact that the land has been and would be used for burial
purposes. The Statue of Ravana in a ground points out the holding of Ram Lila there; the marks left
by egress (right to exit a property) and ingress (right to enter a property) may operate as notice
of right to way.
Fraudulent party cannot plead constructive notice.- A person who is himself guilty of fraud in
transactions with another cannot plead that the other had constructive notice of the facts which he
was bound to disclose and which he actively concealed from him. Thus, where a person who had a
registered mortgage in his favor obtained a decree against the mortgagor on another debt and sold the
property in execution but fraudulently concealed the fact of his mortgage in execution proceedings, it
was held that he was stopped from charging the execution purchaser with constructive notice of the
registered document. Similarly, it was held, the doctrine of constructive notice by the omission of a
purchaser to call for and examine the title-deeds of his vendor, would not cover a case where the
vendor practiced a fraud on the purchaser.
ACTUAL AND CONSTRUCTIVE NOTICE: A COMPARISON
An actual notice is in the form of an express intimation whereas a constructive notice is
an assumption. In actual notice the person having notice is said to be consciously aware
of the existence of the fact, there is no assumption but an assurance of information on
the part of the person having an actual notice. Whereas, in case of a constructive notice,
knowledge of a fact is assumed on existence of certain circumstances.
There is no absolute conscious awareness of the fact, rather the knowledge is imputed to
the person. In accordance with Section 3 of the Transfer of Property Act, 1882 a
constructive notice upon the parties is deemed when there were means of acquiring
knowledge and had the means been rightly exhausted, the person would have received a
conscious awareness about the fact. Further, a similar notice (constructive) is deemed
when the party has been grossly negligent.

CASE LAWS ON CONDITIONS RESTRICTING TRANSFER

SECTION 10, 11 & 12
TULK V. MOXHAY, (1843-60) All ER Rep. 9
Facts: The plaintiff (P) was the owner of a vacant piece of ground as well as several of
the houses forming the square in London. He sold the piece of ground by the description
of: “Pleasure Ground, with the iron railing and stone work round the same”. The deed of
conveyance contained a covenant by purchaser/transferee (E), for himself, his heirs and
assigns with the transferor (P), his heirs, executors and administrator. As per covenant,
the transferee, his heirs and assignee should, and would from time to time, and at all
times thereafter at his and their own cost and charges, keep and maintain the said piece
of ground and square garden and the iron railing round the same in its then form, and in
sufficient and proper repair as a square garden and pleasure ground, in an open state,
uncovered with any buildings, in neat and ornamental order; and that it should be lawful
for the inhabitants of the square, tenants of the plaintiff, on payment of a reasonable rent
for the same, to have keys, at their own expense and the privilege of admission therewith
at any time or times into the said square garden and pleasure ground.
The said piece of ground passed by diverse intermediary conveyances into the hands of
the defendant (d), whose purchase deed contained no similar covenant with his vendor,
but he admitted that he had purchased with notice of the covenant. However, he wished
to alter the character of the Square garden and asserted his right, if he wished, to build
upon it. P, who continued to be the owner of the adjoining buildings seeks an injunction
to restrain d from altering the character of the square garden or to build upon it. An
injunction was granted restraining d from converting or using the piece of ground and
square garden for any other purpose than a square garden and pleasure garden and to
keep the same as an open space.
Legal Issues: Whether this covenant runs with the land? Whether Party shall be
permitted to use the land in a manner inconsistent with the contract entered into by his
vendor, with notice of which he made the purchase?
Lord Cottonham’s Observations
His Lordships granted the injunction and refused to accept the contention, of the
defendant. It was contended by d that the vendee could not violate the contract, but he
could sell it and the purchaser from him may violate the contract and that the Court had
no power to interfere. Now if this contention is accepted, it would be impossible for an
owner of land to sell part of it without incurring the risk of rendering what he retains
worthless. It cannot be disputed that the Court has jurisdiction to enforce a contract
between the owner of the land and his neighbour (purchasing a part of it) that the
purchaser shall either use or abstain from using the land purchased in a particular way.
Here there is no question about the contract. Here the owner of certain houses in the
square sells the land adjoining, with a covenant from the purchaser not to use it for any
other purpose than as a square garden. It is contended by d that the covenant being one
which does not run with the land, the Court cannot enforce it.
Here the question is not whether the covenant runs with the land, but whether a party
shall be permitted to use the land in a manner inconsistent with the contract entered into
by his vendor, with notice of which he purchased. Of course, the price would be affected
by the covenant, but nothing could be more inequitable than that the original purchaser
should be able to sell the property the next day for a greater price, is consideration of the
assignee being allowed to escape from the liability which he had himself undertaken.
Decision: The question does not depend upon whether the covenant runs the land. If
there was a mere agreement and no covenant, this Court enforce it against a party
purchasing with notice of it, for if an equity is attached to property by the owner, no one
purchasing with notice of that equity can stand in a different situation from that of the
party from whom he purchased, Thus, the subsequent purchaser, who was aware of the
conditions in the contract, irrespective of their character, was bound by it.
ZOROASTRIAN COOP. HOUSING SOCIETY LTD. V. DISTRICT REGISTRAR, COOP.
SOCIETIES (URBAN) (2005)
FACTS
The first appellant is a Co-Operative Society, registered under the Bombay Co-operative
Societies Act, and the second appellant is its member and the President. The main object of
the appellant Society is the construction of houses meant for residential purposes and the
allotment of the same to its members. The clauses in the Act and the by-laws of the society
restricted granting membership to members of the Parsi Community. According to the
appellants, other members shall be elected by the Committee provided that all members
belong to the Parsi Community.
The 2nd respondent who was a Parsi was allowed a bungalow and he had an intention to
demolish and rebuild it. Appellants apprehended that he would transfer the reconstructed
building to a non-Parsi, and they initiated proceedings against this. The contention was that
no person has got a fundamental right to become part of the Society as it is only a statutory
right given by a relevant act and the provisions contained in the Act and the appellant-
society would be well within its rights to deny membership to a person to qualified under
their by-laws, hence not violative of Article 19 (1) (c) and 21 of Indian Constitution.
ISSUE
The question that is to be considered is whether a housing Society, registered under the
Co-operative Societies Act and founded by members of a particular religious
community, could restrict the membership of the society exclusively to the members of
that community?
DECISION
The High Court of Bombay stated that a restriction based on religion, race, or caste
contained in a bylaw on the "member’s right in a co-operative housing society to transfer
his membership coupled with his right to alienate his interest in the immovable property
would be bad in the eyes of law. Restriction on the member’s right to transfer
membership and/or his interest in the property, to a non-Parsi was held violative of sec.
10 and is therefore void. The matter went to the Supreme Court in appeal.
The Apex Court allowed the appeal and held that when a person accepts the membership of
co-operative society by submitting himself to its bylaws and places on himself a qualified
restriction on his right to transfer property by stipulating that same would be transferred with
the prior consent of society to a person qualified to be a member of the society, it could not
be held to be an absolute restraint on alienation offending sec. 10 of the TP Act. Hence, it set
aside the finding of the High Court that the restriction placed on the rights of members of a
society not to sell the property allotted, to non-Parsis, was an absolute restraint on alienation
as unsustainable. The Supreme Court held that this clause in the bylaws that a person could
sell it only to Parsis and not to a non-Parsi was a partial restraint and not an absolute one.
The membership of the Zoroastrian cooperative society could have only been taken by any
person by submitting to the bylaws and the persons were informed about them before getting
the membership. Hence, if someone was a member of the society, there can be a safe
presumption that he/she was aware of the bylaws and agrees to be bound by the same,
Hence, the decision of the Supreme Court that the restraint was partial was appropriate,

TRANSFER TO AN UNBORN PERSON AND RULE AGAINST PERPETUITY

SECTION 13 TO 18, 20 & 22

INTRODUCTION

The Transfer of Property Act which came into force on 1st July 1882, is major Indian legislation, which
regulates the transfer of property in the country. The act in section 5 defines the phrase transfer of
property. It defines it as an act which conveys property in present or in the future, by a living person to
another living person, or to himself and one or more than one living person. The act includes in the
definition of living persons, a company or association or body of individuals, whether incorporated or not.

It can be understood by reading section 5 that property can be transferred between one living person and
another living person i.e transfer is inter vivos. But the act has created an exception to this provision;
section 13 of the act talks about the transfer of property in favor of an unborn child.

TRANSFER OF PROPERTY TO AN UNBORN CHILD

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. For transfer of property for the benefit
of unborn person two conditions are required to be fulfilled:

1) Prior life interest must be created in favor of a person in existence at the date of transfer, and

2) Absolute interest must be transferred in favor of an unborn person.

Ex: A transfers his property in 1960 to B for life and then to C for life and finally to C’s son S, who is
unborn at this time. Both B and C are alive at this time. the property would be first possessed by B for his
life and then by C. S is born in 1970. At this time, he takes a vested interest in the property but the
possession of it is postponed till the death of C (which say for instance took place in 1975) If S died in
1974, then because he had a vested interest in the property since 1970 i.e. when he was born, the property
would after the death of C go to the heirs of S. But if S was not born till 1975 (i.e. when the last life estate
in favour of C ended) then the property would revert back to A or his heirs as the case maybe.

PRE-REOUISITES 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 should first create a life estate in favor of a
living person and estate in favor of the unborn person.of an unborn person after it, an absolute
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.

Fig. 1-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.

A ———————————B (life interest) ———————————-C (life interest)

———————————-D (life interest) ———————————-UB (Absolute interest)
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 heirs.

NO LIFE INTEREST FOR AN UNBORN PERSON

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.

Fig. 2-For instance, A creates a life estate in favor of his friends B, and a life estate for the benefit of B’s
unborn first child UB1 and then absolutely to B’s second child UB2.

A ———————– B ———————– UB1

———————– UB2

(Life interest) (Life interest)

(Absolute interest)

The second figure is of limited interest in the property for the benefit of an unborn person and would
therefore be void and incapable of taking effect in law. After the death of B, here, the property would
revert back to A or his heirs as the case may be, as even though the transfer for the benefit of UB2
appears to be proper, as it is dependent on a void transfer that cannot take effect in law; a transfer
subsequent to, or dependent on a void transfer can also not take effect.

Thus, where a father gave a life interest in his properties to his son and then to his unborn child
absolutely, it was held that the settlement was valid. But where the interest in favor of the unborn child
was a life interest the settlement would be void, and a subsequent interest would also fail.

Similarly, where there is a possibility of the interest in favor of the unborn child being defeated either by
a contingency or by a clause of defeasance, it would not be a bequest of the whole interest, and would be
therefore be void.
In the example cited previously, in figure (ii), suppose UB1 dies before B and UB2 is alive when the life
estate in favor of B comes to an end. Even then, the transfer of the benefit of UB2 will not take effect as
the validity of the transfer has to be assessed from the language of the document and not with respect to
probable or actual events that may take place in future. It is the substance of the transfer that will
determine whether it is permissible under the law or not and not how the situation may emerge in the
future.

In Girish Dutt v. Data Din AIR 1934 Oudh 35, A made a gift of her property to B for her life and then to
her sons absolutely. On the date of execution, B had no child. According to the deed if B had only
daughters and no male child then the property would go to such daughters, but only for their life. And if B
had no child then the property would absolutely go to C. This deed was held invalid by the court as it was
creating life interest in the favour of B’s unborn. In the facts of the case, B died without any child and C
claimed the property. The court further held such a claim invalid. It held that where a transfer in favour of
the person if void and subsequent transfer taking effect on the failure of such transfer would also be void.

RULE AGAINST PERPETUITY

Perpetuity means an uncertain period or time or indefinite period. There are people who want to retain
their property in their own families from generations to generations. This will be a loss to the society
because it will be deprived of any benefit arising out of that property. Free and frequent circulation is
important and the policy of the law is to prevent the creation of such perpetuity. Perpetuity may arise in
two ways- (a) By taking away the power of alienation from the transferee (b) By creating a remote
interest in the future property. A condition restraining the transferee’s power of alienation is void as per
Sec.10 of the Act. And a disposition to create a future remote interest is prohibited under Sec.14 of the
Act.

Object:

As discussed earlier, it is important to ensure free and active circulation of property both for trade and
commerce as well as for the betterment of the property that ultimately is good for the society. Thus, the
object of this section is to see that the property is not tied- up and to prevent the creation of perpetuity.

ESSENTIAL CONDITIONS FOR SECTION 14

1.There must be a transfer of property.

2.The transfer should be to create an interest in favor of an unborn person.

3.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.

4.The unborn person must be in existence at the expiration of the interest of the living persons.

5.The vesting of the interest in favor 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.
If the interest is alienated beyond the period as mentioned under Section 14, such a transfer would be
void.
EXTENT OF PERPETUITY PERIOD

Position in India– Life or being + period of gestation unborn beneficiary.

any number of lives in + minority period of the
English gestation
Law– Life or lives in being + period of + minority period.
MINORITY
supervision of Court at the age of 21 years. But in Saundara Rajantv. Natarajan, A.I.R
can be postponed only up to the life of the prior interest holder and the .minority i.e. i18
NUMBER OF LIVES
which an estate may be limited as indicated by the statute text “one or more persons.” As a loophole to
escape the rule against perpetuity. Various transfers I have been held to be circulated.

PERIOD OF GESTATION

The maximum limit fixed for postponing the vesting of interest is the life or lives of the prior interest
holder/s plus the minority of the ultimate beneficiary. But when a child is in his mother’s womb at the
time of the expiration of the interest of the prior interest holder and since for the purposes of being a
transferee a child in the mother’s womb is a competent person, the latest period up to which the vesting
may be postponed would be the life of the prior interest holder/s plus the period of gestation (i.e. the
period during which a child remains in womb after being conceived which is normally about 9 months or
280 days) plus minority of the ultimate beneficiary. The period of gestation shall not be counted in
addition to minority if the ultimate beneficiary is already a born person.

Example- If A (prior interest holder) dies then the ultimate beneficiary i.e. X must already be in existence
at that time either in the mother’s womb or as a born child. If X is in mother’s womb, say of 6 months
then the maximum period up to which vesting of period may be postponed would be life of A plus six
months (period of gestation) plus 18 years ( minority of X).

DIFFERENCE BETWEEN INDIAN AND ENGLISH LAW

1.The minority period in both the countries is different. The minority period in India is 18 whereas the
minority period under the English law is 21 years.

2.The English law states that the property need not be absolutely given to the unborn person whereas
under the Indian law the property should be absolutely transferred to the unborn.

3.Under English law, the period of gestation is a gross period whereas under the Indian Law the period of
gestation should be an actual period (9 months or 280 days).

4.Under the Indian law, the unborn person must come into existence before the death of the last life estate
holder but under the English law, the unborn person must come into existence within 21 years of the
death of the last life estate holder.

EXCEPTIONS TO THE RULE AGAINST PERPETUITIES

Provision for payment of debt section 17 (2)- When income of a property is accumulated for the
purpose of the payment of debts of the transferor or any other person taking interest under the transfer
such a direction is not affected by the rule against perpetuity

Transfer for public benefit (Sec. 18) – A property transferred is not void if it is made for the benefit of
people in general. E.g. religion, health, care or anything helpful to the society.

Covenants of Redemption – This rule does not offend the covenants of redemption in a mortgage.

Personal agreements – Agreements that do not create any interest in the property are not affected by this
rule. This rule applies only to transfers where there is a transfer of interest.

Pre-emption – Pre-emption refers to the buying of goods and shares before it is offered to any other
person. In this, there is an option of purchasing a land and there’s no question of any kind of interest in
the property, so this rule does not apply.
Charges- The rule has no application in the case of a charge where a present interest is
created and there is no transfer of an interest in property, but the property is made merely security for the
payment of money. But if there is no charge on land, a trust for payment of income to a payee and his
descendants from generation to generation is void as offending the rule against perpetuity.

Vested interest-Vested interests are not affected by this rule, as when the interest has once existed it
cannot be taken away.

Right to entry and re-entry- If a covenant is broken, a provision giving the right to re-
enter and determine the lease, which most leases give to the landlord, is expected from the perpetuity rule.
Covenant running with land Section 40- A covenant which runs with the land is free
from any taint of perpetuity. This is so because it is annexed to the land and passes to the transferee along
with land much the same way as the title deeds of the property.

The rule is also not applicable to mortgages as there is no creation of a future interest.
ILLUSTRATIONS

1. A’s property is transferred to B for life and after his death, to such son of B as shall first attain the age
of 25 years, B having no son on the date of transfer. Here, the life-estate in favor of B is perfectly
valid ,but the interest created in favor of B’s son is void, as the vesting of the interest is intended to be
postponed beyond the minority of an unborn Person.

2. Property is transferred to A for life, then to B for life, and to such of B’s son as shall first attain the age
of 17 years/ or the 18 years. The transfer is valid.

3. Property is transferred to A for life, then to B for life, and then to such of B’s son as shall first attain the
age of 18 years and one day. The transfer is void

4. Property is transferred to B for life, and then to B’ s first child when be attains the age of 10 years. The
transfer is valid, and the property would vest in his favor on his attaining the age of 10 years.

Section 20- When unborn person acquires vested interest on transfer for his benefit

Where, on a transfer of property, an interest therein is created for the benefit of a person not then living,
he acquires upon his birth, unless a contrary intention appears from the terms of the transfer, a vested
interest, although he may not be entitled to the enjoyment thereof immediately on his birth.

The provision mentions the circumstances under which vested interest is acquired by the unborn person.
The unborn person does not get possession of the property which is transferred for his benefit, as soon as
he is born, but he does acquire a vested interest in the property upon his birth. Such interest remains
vested even though he is not entitled to the enjoyment. This provision can be waived off if something
contrary is mentioned in the contract.

If an estate is transferred for the benefit of an unborn child and a period is mentioned in the contract
according to which, such unborn child, after his birth, is entitled to enjoyment then also the child would
acquire the vested interest in the property upon his birth.

RULE UNDER HINDU LAW AND MUSLIM LAW

Prior to the enactment of the TP Act, the rule under Hindu and Muslim law was that a gift to a person
who was not in existence, was void. The position under Muslim law continues to be the same. However,
for Hindus, the rule was modifies by a series of enactments to bring it conformity with sec.13 of the TP
Act.

Parallel provisions have also been provided under Indian Succession Act 1925, which permits bequest for
the benefit of an unborn person. Section 113 of India Succession Act 1925(IS Act), applies to legacies
created for the person not in existence and contain a provision almost identical to Sec.13 of the TP Act.

LEGAL CONSEQUENCES FOR TRANSFER TO UNBORN CHILD

The intermediary person living at the date of the transfer is to be assumed only life interest. He has to
preserve the property like a trustee during his life-time on behalf of the unborn. If absolute interest is
given to this living person, he may be entitled to dispose it off to anyone. If he holds it, the property after
his death shall go to his legal heir and not to the unborn for whose ultimate benefit the disposition was
made.

The unborn must come into existence before the death of the person holding property for life. If the
unborn comes into existence say, after one month after the death of the last living person (i.e. after
termination of the preceding interest), the property is to revert back to the transferor or his legal heirs.
This is apparent because after termination of the life-interest, it cannot remain in abeyance and cannot
wait even for a moment for the next person to come into existence.

For instance, A transfer property of which he is the owner to B and his future wife successively for their
lives, and after the death of the survivor for the eldest son of the intended marriage for life and after his
death for A's second son. Here, the successive life interests in favour of B and his intended wife is a valid
transfer. But the eldest son of the intended marriage who is unborn has been given the property only for
life and not an absolute interest. Therefore, the transfer in his favour is void and does not take effect.

TRANSFER TO CLASS (SECTION 15)

Property may be transferred for the benefit of single unborn person or for the benefit of a class of such
persons. In both situations the transfer must be in accordance with section 13 and 14. Section 15 states
that if on transfer of property an interest is created for benefit of a class of persons with regard to some of
whom the interest fails by reason of rules contained in section 13 and 14, such interest fails in regard to
such persons only and not in regard to the whole class. Thus as per section 15, the transfer should be
given effect to as far as possible.

This Section comes into operation only if transfer is made in favor of a class of persons. A transfer shall
be deemed to have been made in favor of persons if it is to all those who shall come within a certain
category or description defined by a general or collective formula and who, if they take at we to take one
divisible subject in certain proportionate share.
A number of persons are popularly said to form a class when they can be designated by some general
name as ‘children’, ‘grand children’, “nephews, but in legal language the question whether a gift is one to
a class depends not upon these consideration but upon the mode of the gift itself, namely, that it is gift of
an aggregate sum to a body of persons uncertain in number at the time of the gift, to be ascertained at a
future time, and who are all to take in equal or in some other definite proportions, the share of each being
dependent for its amount upon ultimate number of persons.

Example- A transfers his properties to B for life and then to X, Y and Z (who are all unborn at the date of
transfer) with a condition that X and Y shall get the property when they attain the age of majority but Z
shall get when he attains the age of 25 years. The transfer in regard to Z fails under Section 14 but in
regard to X and Y the transfer is valid and shall take effect.

A makes a transfer of his property to B for life and then to B's unborn children with a condition that a
female child was to get only a life interest. B dies leaving three sons and one daughter. The interest of the
daughters fails by reason of the rules contained in section 13 but it does not fail in regard to the whole
class, that is, other three sons will take.

TRANSFER TO TAKE EFFECT ON FAILURE OF PRIOR INTEREST (SECTION 16)

As per this section, if due to violation of section 13 and 14 a specific transfer fails, any transfer that is
intended to take effect after or upon failure of such transfer also fails.

Eg. A transfers property to B for life and then to B’s sons on attaining age of 25 years. The deed further
provides that if B, dies without any son, the property would vest absolutely in C. B and C were alive on
date of transaction but there was no son of B at that time. Here transfer for unborn is hit by section 14 and
so is void. As per section 16 and considering the present example, transfer in favour of C which was to
take effect upon failure of this prior transfer that is void, would also fail and cannot take effect.

The use of term “after or upon failure of prior interest” means that a transfer subsequent to or after void
transfer fails and that the prior one would take effect. Thus in the above example transfer in favour of B
because it is before the void transfer would be valid and would take effect.

RULE AGAINST ACCUMULATION-SECTION 17

This section applies to those transfers where the property and the income arising from the property are
separated by the transferor. The transferee is directed not to spend the income arising from the property
but to accumulate it for a specific or non-specific purpose. If the period for which the transferee must
accumulate the income exceeds the life of the transferor or 18 years, the direction is considered to be void
and can be ignored by the transferee for the exceeding period.

Section 17 therefore specifies the time period beyond which the direction for accumulation of income
would be void. The prescribed time period is life of transferor from the date of transfer or a period of 18
years. These limitations are alternative and cumulative.

Ex. A transfers his property to B in 1970 with a direction that the income arising from it has to be
accumulated till 30 years. A dies in 1975, the maximum period for which the income can be accumulated
would be 1970+18 years i.e. 1988 after which B is free to use the property as he likes.

PRESCRIBED LIMIT

Section 17 deals with what you cannot do directly, you will not be allowed to get the same by doing
something indirectly. One cannot create perpetuity by circumventing Section 14. Income of any property
cannot be accumulate in perpetuity. Section 17(1) prescribes the limits beyond which a direction for
accumulation of the income arising out of the property transferred shall be void. The limits prescribed
are:-

(a) the life of the transferor, or

(b) a period of 18 years from the date of transfer whichever is longer one.
The transferor can direct for accumulation of income either for his life or for a period of 18 years only.
These limits are alternative. If he prescribes any other limits, it shall be void to the extent to which it
exceeds the longer of the aforementioned period.
Amongst the two the longer one will decide the fate of the direction, for example, A transfers property to
B in 1940 with a direction that the income arising out of the property is to be accumulated till 1970 (i.e.
for 30 years). A dies in 1965. The period during which the transferor is alive is more than 18 years from
the date of the transfer, but being the longer of the two periods, the direction is valid till 1965. If,
however, the transferor dies in 1950, then longer period would be 18 years and accordingly the direction
would remain valid till 1988.
But where a direction for accumulation is made without specifying either of the period referred to above,
in that case it will be seen what happens subsequent to the date of the transfer. If the transferor dies more
than 18 years after the date of the transfer, the direction will be void after the death of the transferor. In
case he dies before the expiry of 18 years from the date of the transfer, the direction will be void beyond
the period of 18 years. The same rule will apply where direction for accumulation is for a period
exceeding 18 years from the date of transfer.

COMPUTATION OF PERIOD

The period of 18 years must be computed from the date of the transfer. In computation, the actual date of
transfer should be excluded on the general principle of law that the day of an act done or the event
happening, ought to, in cases, be excluded rather than to be included.

Where the income is directed to be accumulated for a period of 18 years which is to commence at a future
time, the accumulation will be allowed only during that portion of the period specified by the transferor
which falls within the period of 18 years from the date of the transfer, and the direction will be void for
the rest of the period prescribed, e.g. A transfers his property to B in 1960 with a direction for
accumulation of income for 18 years from 1965. The accumulation will be valid for 13 years only, i.e., till
1978. The period shall running from 1960 and not from 1965 even though it is prescribed to commence
from 1965.

EXCEPTIONS

Accumulation for payment of debts- The rule against accumulation is not applicable where the purpose
of such accumulation is payment of debts incurred by the transferor or any other person having an interest
in the transfer. The debt may be an existing debt or may arise in future. Such provisions do not tie up the
property absolutely so as to prevent its being transferred absolutely because the creditor may at any time
insist on payment or the person indebted can at any time discharge the debt.

A makes a gift of his house to B with a direction that from the rents of the house B shall pay Rs. 500/-
month towards the satisfaction of a debt of Rs. 5 lacs incurred by A. The direction for accumulation of
income is valid even though it continues after, the life of A.

Accumulation for preservation or maintenance of the property transferred: If the direction is for
accumulation of income with the object of preservation or maintenance of the property transferred, then
direction is valid even if it is for a period longer than embodied in Section 17(1).

Accumulation for raising portions- A “portion” means property settled or provided in favour of children
or their issues. This exception that where a direction for accumulation of income for the purpose of
providing portions for children or remoter issue of the transferor or any other person taking any interest
under the transfer is valid. This exception does not apply, however, where there is not existing obligation
to use the fund for portions but a mere future discretionary power, nor where the direction is to
accumulate the income from the whole of a transferor’s estate, for, it is not raising a portion at all, it is
giving everything.

TRANSFER IN PERPETUITY FOR BENEFIT OF PUBLIC (SECTION 18)

As per this section the rules regarding perpetuity and accumulation do not apply if the transfer is made for
the benefit of public. It makes a distinction between transfers that are purely personal or commercial in
nature and those that are for the benefit of public. It includes transfers that are for the benefit of public in
advancement of religion, knowledge, commerce, health, safety or any other object beneficial to mankind.
If transfer includes both charitable and non-charitable objects, it would remain valid for charitable ones
and not for the non-charitable ones.

Section 18 provides that where property is transferred for the benefit of the public in the advancement of
religion, knowledge, commerce, health, safety, or any other object beneficial to mankind, the restrictions
imposed in Sections 14, 16 and 17 shall not apply. These objects are “charitable” in nature. The objects
enumerated here are charitable objects and transfer ‘for the benefit of public’ means transfer made for
society at large. Such transfers are made through the medium of religious or charitable trusts.
“For the benefit of the Public”: A transfer must, in order to fall within the exception provided by this
Section, be “for the benefit of the public”. The law recognizes no purpose as charitable unless it is of
public character. It is, however, difficult to draw a distinction between a public and a non-public purpose.
The general principle is that if the intention of the donor is merely to benefit specific individuals, the gift
is not charitable even though the motive of the gift may be relief to their poverty or to accomplish some
purpose in reference to those particular individuals which would not be charitable if not so confined; on
the other hand, if the donor’s object is to accomplish the abstract purpose of relieving poverty, advancing
education or religion, etc. without reference to any particular individual and without giving any particular
individual the right to claim the funds, the gift is charitable.

The following have been held to be good as charitable objects:

gift to hospitals
trust for promoting the knowledge of the poor and ignorant inhabitants of a certain place;
gift to a voluntary association having for its object the teaching of ignorant and nursing of the sick.
trust for the provision of play fields, parks, gymnasiums for the health and welfare of the working
classes;
gift for the endowment of a university; .
gift for the establishment and worship of an idol;
gift for maintaining: sadavrata for giving food to travelers;
gift for the advancement of religion;
gift to “poor and pious persons, male or female, old and infirm, as the trustees see fit including sick
families of good character.
gift for keeping in good order a burial ground.

CONCLUSION

The property act allows the transfer of the property in favor of the unborn person, provided that a prior
interest is created in a living person. This prior interest shall be for life whereas the interest in the unborn
person shall be absolute. Further, the interest in favor of unborn person is created only when it is in its
mother’s womb. And the unborn person would be vested with its interest upon his birth.

Transfer in favor of unborn person is a welcomed provision. Its major fallacy, that is restriction of
disposition, is removed by its subsequent section by the rule against the remoteness of vesting; thus
protecting the society from suffering the stagnation of property and its eventual effect, which can be
detrimental to trade and commerce. These provisions, thus, ensure free and active circulation of the
property for the betterment of the society.