TRANSFER OF PROPERTY

Meaning of Property
Introduction
The word property is used in numerous senses in general. If one looks around in the surroundings,
everything available may be categorised as Property. Every object, whether tangible or intangible having
some value to human beings, may be termed as Property.
The essential characteristic of Property is the value attached to it. In one way or the other, it is a source
of wealth. In a general sense, therefore Property consists of land, shares, buildings and debts due to
another person.
However, the term when used in the legal sense has a definite connotation. It is the right to enjoy and to
dispose of certain things in an absolute manner as one thinks it fits.

Origin
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. Close observation of the
definitions given by them will help us understand the concept in a better manner.

Definition of Property
There are different definitions given in different Acts as per their uses and needs. But the most
important Act which exclusively talks about the property and rights related to property is Transfer
of Property Act (TOPA),1882. There is no definite definition of the term property given in TOPA,
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.

Interpretation of the word Property by the Apex Court of India

The honourable Supreme Court of India in the case of R.C. Cooper vs. Union of India AIR 1970 SC 564,
interpreted the concept of Property in the legal regime. The court, in this case, observed that the term
property includes both corporeal things such as land, furniture and incorporeal things such as copyrights
and patents.

Types of Property

Movable Property and Immovable Property -

All Corporeal Property is either movable or immovable. In English law, these are termed as chattels and
land respectively.
(I) Movable Property -

Transfer of property Act does not define a movable property.

The definition of movable property is given differently in many acts. Some of the definitions are as
follows:

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:

'Movable 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 “movable 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 movable property by severance from the earth.For
example Cart–loaded on earth, or stones quarried and carried away from the land become movable
property.

(II) Immovable Property -

It is surprising that the Transfer of Property Act does not contain a comprehensive definition of
Immovable property.
Section 3 Para 2 of the Transfer of Property Act 1882 defines immovable property as "immovable
property does not include standing Timber, growing crops or grass”. This is a negative definition and is
not satisfactory.
We can find a workable definition of immovable property in Section 3 (26) of the General Clauses Act,
1897 which reads as follows:
"Immovable property includes land, benefits arising out of land and things attached to the earth”.
The Transfer of Property Act has supplied us in Para 6 of section 3 a definition of the expression
“attached to the earth”. This expression means-
a. “Rooted to the earth, as in the case of trees and shrubs;
b. Embedded in the earth as in the case of walls of buildings, or
c. Attached to what is so embedded for the beneficial enjoyment of that to which it is attached”.
Things rooted to the earth are immovable property. By combining the above definitions, we may say that
the term includes land, benefits arising out of lands, and things attached to the earth, except
standing timber, growing crops and grass.

In Shanta Bai v. State of Bombay (1958 SC 532), the distinction between movable and immovable
property was observed. If the intention is to reap fruits from the trees, then it is regarded as an immovable
property. But if the intention is to cut down the tree and use it as timber, it would be regarded as movable
property.
Transfer of property

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

A property is a bundle of rights. It includes movable, immovable, tangible and intangible assets. When a
property is transferred, all the rights along with the property are also transferred. However arrangements
may be made by which some of the rights may be transferred but not all.

Meaning And Definition

The term ‘transfer’ means a contract plus conveyance. It is a process or an act by which something is
made over to another.
Under Transfer of Property Act, 1882 Section 5 defines ‘Transfer of Property’. According to this section,
transfer of property means an act by which a living person conveys the property in present or in future:
1. To one or more other living persons, or
2. To himself, or
3. To himself or one or more other living persons, and to transfer such property is to perform such an act.
In this section “Living Person” includes “a company or association or body of individuals whether
incorporated or not, but nothing herein contained shall affect any law for the time being in force relating
to transfer of property to or by companies, associations or bodies of individuals.”

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

The transfer of property as defined under Section 5, is an act between two living persons. Thus the
conveyance of the property must be from one living person to another living person. However, the
transferee need not be competent like a transferor. A transferee may be a minor, insane or child in the
mother's womb.
The word “living person” includes corporations and other associations of persons. A transfer can be made
by a person to himself, as for instance when a person vests property in trust and himself becomes the
whole trustee.

Essentials of valid transfer

The following are the essentials for a valid transfer:

1) In a transfer of property, the transfer should be between two or more living persons.The living
person including company or Association or body of individuals whether incorporated or not .
2) The property that is going to be transferred should be free from encumbrances (hindrances of any
form) and be of a transferable nature.
3) The transfer should not be:
- for an unlawful object or an unlawful consideration
- involving a person legally disqualified to be a transferor or transferee.
4) The transferor who transfers the property must ( refer Sections 11 & 12 of Indian Contract Act,
1872)
- be competent to make the transfer;
- be entitled to the transferable property;
 - be authorised to dispose of the property if the property is not his own property.
5) The transfer should be made according to the appropriate mode of transfer. Necessary formalities
like registration, attestation, etc. should be complied with.
6) In the case of a conditional transfer, where an interest is created on the fulfilment of a condition,
the condition should not be illegal, immoral, impossible or opposed to public policy.
7) The transfer must not be opposed to the nature of the interest affected thereby.
8) If the nature of property to be transferred does not admit of such transfer, it cannot be transferred.
(Section 6(h))
9) The Transfer must not be contrary to the rule against perpetuity (section 14) -
10) S.14 provides that vesting cannot be postponed beyond the life of a living person or minority of
unborn persons. Such transfer if made is void.

Who is competent to transfer ? (Section 7)

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

Competency to contract has been defined under Sections 11 and section 12 of the Indian Contract Act,
1872.

1) Competent to contract -
According to Section 11 of the Indian Contract Act, every person is competent to contract who is the age
of majority. under section.3 of the Indian majority Act,1875 a person attains majority at the age of 18
years and if a Guardian is appointed, he would attend majority at the age of 21.

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

3) Disqualified person -
An insolvent and alien enemy are disqualified from contracting. A transfer by a de facto Guardian of
minors property is invalid and will be hit by section 11 of Hindu minority and guardianship Act, 1956.

4) Transferor must be entitled to transferable property - or authorised to dispose of Transferable

property not his own -
One who is the absolute owner of the property and is free from encumbrances is capable of transferring
the same. An owner of the property may authorise his power of attorney to the holder to transfer the
property for him and on his behalf. If the transferor has no title to the property, he must have authority to
transfer it. For e.g. an agent acting under power of attorney.

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

Mode of Transfer
 Section 9 of Transfer of property provides for oral transfer, A Transfer of Property may be made without
writing in every case in which a writing is not expressly required by law.
The mode of transfer of property varies according to the value of the property. If the value of the property
is more than 100/-, then transfer has to be made only by a registered instrument. If the property is tangible
and the value of the property is less than 100/-, irrespective of the value of the property, then transfer has
to be made only by delivery; whereas for intangible property, irrespective of the value of the property,
transfer has to be made only by registered instrument.

A registered instrument has to be attested at least by two persons who are parties to the transfer.
Attestation means affixing the signature in the registered instrument. The witnesses should mark their
signature too on the instrument with an intention to attest. Registration of the instrument is an essential
legal formality. During registration, the parties to the transfer must be present to affix their signatures in
the document and complete the transaction with regard to immovable property. While doing so, the
document containing the rights, obligations and liabilities of the parties should be clearly mentioned in
the document which is registered. Registration shall take place by affixing a seal of the Registrar office
which shall be subsequently included in the official records.

Doctrine of Lis Pendens

The law incorporated in Section 52 of Transfer of Property Act, 1882 is based on the doctrine of lis
pendens.
Meaning
1. ‘Lis’ means ‘litigation’ and ’pendens’ means ‘pending’.
2. So, lis pendens would mean ‘pending litigation’.
3. The doctrine of lis pendens is expressed in the well-known maxim: pendente lite nail innovator, which
means ``during pendency of litigation, nothing new should be introduced”.

Features
Following are essential ingredients for the application of the doctrine of lis pendent as provided in Section
52:
1. There is a pendency of a suit of proceeding.
2. The suit or proceeding must be pending in a competent Court.
3. A right to immovable property is directly and specifically involved in the suit.
4. The suit or proceeding must not be collusive. (involving secret or unlawful cooperation aimed at
deceiving or gaining an advantage over others.)
5. The property in dispute must be transferred or otherwise dealt with by any party to suit.
6. The transfer must affect the rights of the other party to litigation.

Justice Turner established the doctrine of ‘Lis Pendens’ in Bellamy vs. Sabine. It means that while the
case is Pendente Lite (Pending), neither party can transfer the property in issue in such a way that it
adversely affects the rights of his opponents.

Illustrations
1. A, B, C are brothers; C is residing in a distant town while A and B are residing together. A files a suit for
partition and does not implead C or his father X. Though X and C are not parties to the suit, yet the subject-matter
of suit is the same, and neither X nor C can legally and validly transfer or alienate his share to a third party. In
such cases the ultimate decree is likely to affect the shares of X and C too. Thus, there may be cases where a party
may not be locked in a civil suit or proceeding, yet such a party may be affected by the judgement/decree in such
a suit.
2. A sues B in respect of a house in B’s possession. During the pendency of the suit B sells it to C. A’s suit is
decreed. The transfer to C is voidable and A’s right to take the house is not affected.

Doctrine of Election. (Sec 35).

The doctrine of election was enunciated by the House of Lords in the leading case Cooper Vs. Cooper. It
states that there is an obligation on him who takes a benefit under a will or other instrument, to give full
effect to that instrument under which he takes a benefit.
According to the principle of Doctrine of Election Section 35 of the TPA , a party to the transfer cannot
accept as well as reject in a single transaction. In other words, while claiming advantage of an instrument,
the burden of the instrument should also be accepted.
If a person to the transfer gets two selections (a benefit and a burden), then he has to accept both the
benefit and the burden or none. He cannot accept the benefit and reject the burden in a single transaction.
Illustration A sells his garden as well as his house through one instrument to B. Hereas, B wants to retain
only the house and wants to cancel the transfer regarding the garden. According to the doctrine of
election, B has to retain the garden if he wants to retain the house, or cancel the whole transaction. B
cannot retain the house and cancel the transfer regarding the garden.

Hence according to ‘the doctrine’ the following are essentials:

a) The transferor should have no right in the property he has transferred.
b) The transferor should confer a benefit on the owner of that property.
c) In one and same transaction there must be the transfer of property and the benefit conferred. In the
above circumstances the owner is given a right of election. He may elect either to have the benefit
conferred or to retain the property. Hence the acceptance or rejection must be in the same transaction, i.e.,
he cannot approbate and reprobate at the same time. He cannot blow hot and cold in the same breath.

SALE of IMMOVABLE PROPERTY

There are different modes by virtue of which immovable property can be transferred.

● Sale [ Sections 54-57]

● Mortgage [Sections 58-104]
● Lease [Sections 105-117]
● Exchange [Sections 118-121]
● Gift [Sections 122-129]
● Actionable Claims [Sections 130-137]

Transfer of immovable property by each of the aforesaid modes has its own significance, advantages and
disadvantages.
In this section, we should study the meaning of the word ‘Sale’ and its essentials.

What is Sale ?
According to section 54 of Transfer of Property Act 1882 sale is defined as –

"Sale" is a transfer of ownership in exchange for a price paid or promised or part-paid and part-
promise.”

How is Sale made?

Sale can be made in 2 ways:
 1. Where the value of Tangible Immovable Property is Rs.100 or more than that or in the case of a
reversion or other intangible thing, sale can only be made through Registered Instrument.
2. Where the value of Tangible Immovable Property is less than Rs.100, sale can be made through
Delivery of Possession.
Delivery of Tangible Immovable Property is said to be completed when the Seller hands over the
possession of property to buyer or such person as he directs.
Section 3 of the Act is the Interpretation-clause, which provides for the meaning of key terminologies -
1. Immovable property – does not include standing timber, growing crops or grass,
2. Instrument – means a non-testamentary instrument. The instrument is a written document, a
formal or legal document in writing, such as a contract, deed, bond or lease or anything
reduced to writing.
3. Registered – register is a book containing a record of facts as they occur, kept by public
authority. A document cannot be said to have been duly registered if the registration has
been made in contravention of the provisions of the Registration Act.
4. Attached – is a term describing the physical union of two otherwise independent structures
or objects, or the relation between two parts of a single structure, each having its function.

Essential elements of Sale:

● Parties to Sale
● Subject Matter of a Sale
● Price or Consideration
● Registration
● Conveyance of Property

Mortgage
What is a Mortgage
A mortgage is a legal agreement for securing a loan where a person uses an immovable property as
collateral for the loan. Section-58(a) of the Transfer of Property Act, 1882 has defined mortgage as the
transfer of an interest in a specific immovable property for securing:
● The payment of money advanced or to be advanced through loan,
● An existing or future debt, or
● The performance of an engagement which may give rise to a pecuniary liability.
The transferor is called a mortgagor, the transferee a mortgagee. Mortgage loan meaning is where the
property or the real estate is used as collateral.
Mortgage meaning in simpler terms, it is a contract between a person and a bank usually, to receive a
loan. The loan is used to buy a property in which the bank or the party, which lends money, has interest in
the property. The interest in the property means that if the person fails to repay the loan on time according
to their agreement, then the bank or the party has the right to either sell the property for repayment of the
loan or acquire the property and more.

LEASE
Introduction
Transfer of immovable property will take place by transferring it from one person to another. To make the
transfer valid it is very essential that the person should be competent to make a contract and it should not
be forbidden by law.
Lease under Transfer of Property Act, 1882 deals with section 105 to section 117. A lease can be done
only on immovable property. A lease is the enjoyment of immovable property for a certain period of time
or in perpetuity. But, in lease transfer of immovable property is not absolute like it is in sale. The right of
possession is separated from the right of ownership.
Definition ( Section 105 )
Lease is defined as, a lease of immovable property is a transfer of a right to enjoy such property, made for
a certain time, express or implied, or in perpetuity, in consideration of price or promised, or of money, a
share of crops, service or any other thing, of value, to be rendered periodically or on specified occasion to
the transferor by the transferee who accepts the transfer on such terms.
To simplify, Lease is a transfer of right to enjoy a property for a specific period of time in
consideration for a price.

GIFT
Introduction

Gifts are governed by Transfer of Property Act, 1882. A gift can be given of any property -Movable or
Immovable.
Definition
The “Gift” is defined under section 122 of Transfer of Property act which states that “Gift” is the transfer
of certain existing movable or immovable property made voluntarily and without consideration, by one
person, called donor, to another, called the donee and accepted by and on behalf of the donee.

As per Sec 122, for a Gift to be valid -

1. The property that is to be gifted must be in existence at the time of making the gift (for example,
future expected crop produce cannot be gifted)
2. The donor must be the lawful owner of the property
3. Must be voluntary
4. Must be without consideration
5. Must be accepted by the donee
As per S. 123, if the gift is of an immovable property, the gift deed must be registered and attested.
The gift of a movable property can be effected by registration or by delivery of the property.
Examples:
1.A makes a gift of his jewels to B. This may be done by delivery.
2.A makes a gift of a piece of land worth Rs.500/-. This is to be registered.
3. A gives B a plot of land, reserving to himself with the consent of B, to take back the plot if B or his
descendants die before A. B dies without any descendants during A's lifetime. The condition is valid and
A may take back the plot.
4. A makes a gift to C, a concubine, for her continued relationship with the donor. The condition is
immoral therefore the gift is void.
5. A gives Rs. 1 lakh to B reserving to himself with B's consent, the right to take Rs. 25,000 at his
pleasure. Gift is valid upto Rs.75,000/ - only. It is void in respect of Rs. 25,000/-

Exchange under the Transfer Property Act, 1882 (Chapter VI)

Definition
Section 118 of the said Act defines “Exchange” as “When two persons mutually transfer the ownership
of one thing for the ownership of another, neither thing or both things being money only, the transaction
is called an exchange.”
Illustration:
1. A offers to sell his cottage to B. B in consideration of the cottage sells his farm to A. Instead of
getting money for his cottage, A has received a farm from B. This is an example for exchange.
The rights and liabilities of A will be that of the seller towards the sale of the cottage and will be
that of the buyer towards the sale of the farm. Similarly, the rights and liabilities of B will be that
of buyer towards the sale of the cottage and that of seller towards the sale of the farm.
2. A transfers his house to B and B transfers his wet land and pays cash of Rs.5,000/- to A as
consideration. This is an Exchange. If B had given money only, then it is not an Exchange.

Difference between “exchange of movable property” and “exchange of immovable property” is that the
former is known as “barter” and is subject to the Indian Contract Act, 1872, whereas the latter is known
as “exchange” and is subject to the “Transfer of Property Act, 1882.”

Difference between Exchange and sale

The difference between a sale and an exchange is that in a sale the price is paid in money while in an
exchange it is paid in another property by way of barter. The sale is always for a price, which means
money or the current coin of the realm while no price is paid in an exchange, there is only a transfer of
one specific property for another. And although payment of price may be made in addition to the transfer
of property, by way of equality of exchange, such payment does not make the exchange lose its character
as such.