TOPA

TRANSFER OF PROPERTY ACT, 1882

INTRODUCTION

  • The law relating to transfer of property is governed by the Transfer of Property Act, 1882.
  • The Act excludes from its purview the transfers by operation of law, i.e. by sale in execution of decree, forfeiture, insolvency or succession.
  • The scope of the Act is limited, as it is confined to transfers inter vivos (takes effect between two living persons and governed by the T.P. Act.) and excludes testamentary succession (takes effect after death and governed by the Indian Succession Act e.g. transfers by will).

CERTAIN DEFINATIONS

Instrument

  • “Instrument” means a non-testamentary instrument.

Absolute Interest

  • When a person owns property, he has an “absolute interest” in the property. For e.g.
    • If A is the owner of a land, he has an absolute interest in the land.
    • If A makes a gift of his property to B, there again B gets an absolute interest in the property which is gifted to him.

Reversion

  • A reversion is the residue of an original interest which is left after the grantor has granted the lessee a small interest for certain period. For example
    • A, the owner of a land may lease it to B for a period of 5 years. Here, after the period of 5 years the lease will come to an end and the property reverts back to the lessor (A). The property which reverts back to him (A) is called the reversion or the reversionery interest.

Remainder

  • When the owner of the property grants a limited interest in favour of a person or persons and gives the remaining to others, it is called a “remainder”. In the case of a “remainder”, the property will not come back to the owner, but it goes over to the other person. For example
    • A, the owner of a land transfers property to B for life and then to C absolutely.
      • Here the interest in favour of B is a limited interest, i.e., it is only for life.
      • He cannot sell away the property permanently. If he sells this interest it will be valid so long as he is alive.
      • After B’s death the property will go to C, such interest is called a remainder

Vested and Contingent Interests

Vested may mean

  • “vested in possession” or
  • “vested in interest”.

Vested in possession

  • A right is said to be “vested in possession” when it is a right to present possession of property

Vested in interest

  • A right is said to be “vested in interest” when it is a present right to future possession.

For instance, if a land is given to A for life with a remainder to B, A’s right is vested in possession, B’s right is vested in interest.

Distinction between a vested and a contingent interest

VESTED INTEREST

CONTINGENT INTEREST

When an interest is vested the transfer is complete. It creates an immediate proprietary interest in the property though the enjoyment may be postponed to a future date.

A contingent interest is dependent upon the fulfillment of some conditions which may or may not happen.
In other words,;

Here the owner’s title shall be perfect.

Here the title may not be imperfect till the fulfillment of contingency.

A vested interest takes effect from the date of transfer

A contingent interest may become vested only after happening of contingency (which may not occur)

A vested interest cannot be defeated by the death of the transferee before he obtains possession.

A contingent interest may fail in case of the death of transferee before the fulfillment of condition.

A vested interest is transferable as well as heritable.

A contingent interest cannot be inherited but it may be transferred subject to fulfillment of a conditions.

 

Example of vested and a contingent interest

  • A gift to “A” on the death of “B” creates a vested interest in A even during the life time of B for there is nothing more certain than death.
  • A gift to “A” on the marriage of “B” creates a contingent interest, for B may never marry at all but that contingent interest becomes vested if and when B marries.

June 2009 (4 marks)/ Dec 2009 (4 marks)/ June 2012 (4 marks)/Dec 2019 (3 marks)
Distinguish between: ‘Vested interest’ and ‘contingent interest’.

MOVEABLE AND IMMOVEABLE PROPERTY

Moveable property

  • The Transfer of Property Act does not define the term “moveable property”.
  • According to General Clauses Act, 1897 as to mean “property of every description except immoveable property”.
  • According to The Registration Act “moveable property” include property of every description excluding immoveable property but including standing timber, growing crops and grass.

Note:

  • Sometimes moveable property is also regarded as immoveable property, when such movable property is attached or embedded in earth. For instance, if a machinery or a plant is installed on the land, the question arises whether the machinery or the plant is moveable property or immoveable property.
    • If the machinery is fixed on the land permanently then it becomes immoveable property, whereas if the machinery or engine or any other thing is fixed on a temporary basis, then it will be regarded as moveable property.
    • The machinery installed on a cement platform and held in position by being attached to iron pillars fixed in the ground was held to be immoveable property.

Immoveable property
Again immoveable property is not defined under this Act. However according to the Act, immoveable property does not include standing timber, growing crops, or grass.

  • Growing trees are immoveable property unless they are separated from land.
  • According to The General Clauses Act “immoveable 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”.
  • According to The Indian Registration Act immoveable property includes the benefits to arise out of land, hereditary allowances, rights of way, lights, ferries and fisheries.

Thus, from the above discussion, the meaning of immoveable property is as under:
Immoveable property” means land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth.

Example of grants of rights

  • A orally gives to B (for Rs. 700) the rights to catch and carry away fish from his lake.

The Supreme Court in Ananda Behra v. State of Orissa, held that such a right is a benefit arising out of immoveable property namely the lake. So under General Clauses Act it is immoveable property.|
But the sale of immovable property requires a registered instrument for its validity under Section 54 of the Transfer of Property Act. Therefore, the oral grant is invalid and cannot pass away any title in favour of B.

The following have been recognized as immoveable property:

  • right to collect rents of immoveable property;
  • a right to way;
  • a right to collect dues from fair on a piece of land;
  • hereditary offices;
  • the equity of redemption;
  • the interest of mortgagee;
  • right to collect lac from trees;
  • a right of ferry;
  • a right of fishery;
  • right to receive future rents and profits of land;
  • reversion in property leased;
  • a factory.

The following have been held not to be immoveable property:

  • right of worship;
  • government promissory notes;
  • royalty;
  • a right to recover maintenance allowance;
  • copyright;
  • a decree for sale on a mortgage-deed;
  • a decree for arrears of rent;
  • a machinery which is not permanently attached to earth;
  • standing timber, growing crop and grass.

Dec 2011 (4 marks)
Distinguish between: ‘Movable property’ and ‘immovable property’.

June 2013 (4 marks)
State the meaning and characteristics of immovable property as per the Transfer of Property Act, 1882.

Dec 2013 (5 marks)
Anuj orally grants the rights to catch and carry away fish from his lake to Barun for Rs. 700. Is the grant valid ? Give your answer under the relevant provisions of the Transfer of Property Act, 1882. Also cite an appropriate case law

RULES RELATING TO TRANSFER OF PROPERTY (WHETHER MOVEABLE OR IMMOVEABLE)
According to Section 5, 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 one or more other living persons.

Note:

  • Living person includes a company or AOP or BOI whether incorporated or not.
  • The word “transfer” means “to convey”.
  • A transfer of property not in existence operates as a contract to be performed in future which may be specially enforced as soon as the property comes into existence.
  • No transfer can be made in so far as it is opposed to the nature of the interest attached thereby or for an unlawful object or consideration or to a person legally disqualified to be a transferee.

WHO CAN TRANSFER THE PROPERTY? (Section 7)
Every person competent to contract and having ownership can transfer property.
According to Indian Contract Act, a person is competent to contract when

  • he is a major and of sound mind and is not disqualified from contracting by any law to which he is subject.

But under Transfer of Property Act, a minor can be a transferee. Thus, a mortgage can be validly executed in favour of a minor who has paid the consideration.

Further, persons who are authorised to transfer property can also transfer property validly. However, there are exceptions to this:

  • If a person holds himself out is the owner with the consent of the owner i.e. doctrine of holding out or
  • If a person represents to be the owner i.e. doctrine of feeding the grant by estoppel.

SUBJECT MATTER OF TRANSFER (Section 6)
Property of any kind may be transferred except as provided by this Act or any other law for the time being in force.

Note:
Future property cannot be transferred. A transfer of future property can only operate as a contract which may be specifically performed when the property comes into existence.

FORMALITIES OF TRANSFER
According to Section 54, transfer of immoveable property

  • in the case of tangible immoveable property of the value of Rs. 100 and upwards, or
  • in the case of a reversion or other intangible thing,

can be made only by a registered instrument.

How to execute transfer

  • When a transfer is effected in writing, the person who signs the document professing to transfer the property is called the executant.
  • Execution consists in affixing his signature to the document to the effect that he is transferring the property.
  • An illiterate person who cannot write may direct some literate person to sign it on his behalf and in his presence and the illiterate person may put his thumb impression.

(i) Attestation
Attestation, in relation to a document, signifies the fact of authentication of the signature of the executant of that document by the attestator by putting down his own signature on the document in testimony of the fact of its execution.

All transfers do not require attestation.

  • For example, a sale or a lease does not require attestation.
  • But a mortgage or a gift requires that a mortgage deed or a gift deed must be attested by two or more witnesses.

Attestation is valid and complete when two witnesses sign the instrument.

According to the definition given in the Transfer of Property Act (Section 3), the following essentials are required for a valid attestation:

  • There must be at least two or more witnesses;
  • Each witness must see and verify the signature of executants or his authorized person
  • Each witness must sign the instrument, (i.e. document), in the presence of the executant.

The attesting witness must have put his signature antmus attestandi, i.e., with intention to attest.

  • Thus, where a Register or an identifying witness puts his signature on the document he cannot be regarded as an attesting witness unless it is duly proved that he signed with the necessary intention to attest.

(ii) Registration
The advantage of registering a document is that any person who deals with the property would be bound by the rights that are created in earlier registered document.

Illustration

  • A executes a mortgage on property X and gets it registered. Subsequently he sells property X to B, B is bound by the right of the mortgagee over the property X. Thus, whether B knows actually or not that there was a mortgage the fact that the earlier document was registered is a notice to B and B takes property, subject to the rights of the mortgagee.

Therefore, if a document of transfer relating to immoveable property is required by the law to be and has been effected by registered instrument, the persons who deal with the property subsequently are deemed in the eye of law as having knowledge of the such registered instrument from the date of its registration.

iii) Notice
Notice, may be actual or constructive.

  • If a person knows about a fact, he has an actual notice.
  • Where a man ought to have notice of fact even though he did not in fact know it, such notice is called constructive notice.

A person is deemed to have constructive notice of a fact when

  • There is willful absentation from an enquiry or search, which he ought reasonably to have made; or
  • There is gross negligence on his part, he would have known it.

Example of constructive notice

  • If a person proposes to sell his property to X who, at the same time knows that rents due in respect of the property are paid by the tenants to a third person Y, X will be fixed with notice of the rights of Y.
  • If A buys property from B and does not care to ask whether any amount by way of municipal tax is due on that property and if the municipal corporation asks him to pay the arrears of tax, then B is responsible, and if he does not pay, then the arrears of tax may be made a charge on the property.
  • Where a purchaser was informed that the title deeds were in the possession of a bank for safe custody and yet failed to make any enquiry in the bank. It was held that he was guilty of gross negligence and must be deemed to have notice of the rights of the bank which has the custody of the title needs.
  • Where a person abstained from making further enquiries about the right of a person and did not cause a search, to be made in the office of the Sub-Registrar to ascertain if there was any encumbrance over the property, his omission must be held to be willful or grossly negligent and he would be said to have notice of the prior encumbrances.

RESTRAINT ON TRANSFERS (RULE AGAINST INALIENABILITY) (Section 10)

When property is transferred,

  • the transferee should not be restrained absolutely from alienating the property.

Means restrain is allowed but not absolute.

Example:

  • Suppose, B gives property to A and his heirs adding a condition that if the property is alienated it should revert to B. This condition is invalid and void and the transferee can ignore such condition.
  • Suppose, A gives to B property worth only 2,000 rupees and adds a condition that B should sell property for Rs. 50,000 and not below that amount, this condition will at once become invalid for no one will buy the property which is only worth Rs. 2,000 for Rs. 50,000.
  • A gives to B property worth Rs. 50,000 and stipulates that if B wants to sell the property he should sell it to C only for Rs. 1,000. This again will operate as an absolute restraint.
  • The father gave his estate to his son and added a condition that if his son wanted to sell the property he should first give an option to the his mother who should be able to buy for £ 3,000. The market value of the property when the father died was £ 15,000. It was held by the Court that the condition which compelled the son to sell the property for £ 3,000 was void.
  • There was a partition between a Hindu father and his five sons. The deed of partition provided that if any one of the sons wanted to sell his share, he should not sell it to a stranger but to one of his brothers who should have the option to buy for a sum not exceeding Rs. 1,000. It was held by the Court that the condition absolutely prevented the son from selling the property to any one for good value and there for such condition is void.

Partial restraint valid
If there are conditions which restrain the transferee not to alienate the property outside the family, it has been held by the Courts that they are partial restraints. For example

  • Whenever there are conditions in a family settlement whereby the members are not allowed to sell their shares to a stranger, such conditions are valid (if there is no monetary restrain or time restrain).

When absolute restraint valid? (Exceptions to rule against inalienability)
There are two exceptions to the rule that absolute restraints are void.

  1. In the case of a lease, the lessor can impose a condition that the lessee shall not sublet the property or sell his leasehold interest. Such conditions are valid.
  2. In respect of a woman who is not a Hindu, Buddhist or Muslim.
    • In such a case, a condition to the effect that she shall not have power during her marriage to transfer the property is valid.

June 2011 (5 marks)
There was a partition of property b/w a hindu father and his 5 sons. The deed provided that if anyone of his sons wanted to sell his share, he shall sell it to one of his brothers only and not to any stranger. The consideration for that share shall be Rs. 1000 only. Are these conditions valid?

Dec 2012 (4 Marks)
Exceptions to the rule that absolute restraint on transfer of property is void. Comment.

RESTRAINT ON ENJOYMENT IS INVALID (Section 11)
Where land is transferred by one to another, the transferor should not impose conditions as to how and in what manner the transferee should enjoy the property.

Illustrations
A sells his house to B and adds a condition that B only should reside in that house, the condition is invalid.

Note:

  • If a person transfers a plot of land keeping another plot for himself, he can impose certain conditions which may interfere with the right of enjoyment of the transferee. For example
    • A has properties X and Y. He sells property Y to B and puts a condition that B should not construct on property Y more than one storey so that A’s property X which he retains should have good light and free air.

Dec 2009 (5 marks)
Anil has two properties – Property-X and Property-Y. He sells Property-Y to Sunil and puts a condition that Sunil should not construct on Property-Y more than one storey so that Anil’s Property-X which he retains should have good light and free air. Is such a condition valid ? Give reasons in support of your answer.

Dec 2010 (4 marks)
Distinguish between the following:
‘Condition restraining alienation’ and ‘condition restraining enjoyment’.

Transfer of the property with the condition to revert the property in case of insolvency (Section 12)
If a property is transferred to any person adding a condition that if such person becomes insolvent he ceases to hold that property, such condition is void.

Note:

  • If a landlord leases his property he can impose a condition on the lessee that if the lessee becomes insolvent the lease should come to an end.

TRANSFER FOR BENEFIT OF UNBORN PERSON (Section 13)

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,

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.

Thus if a property is given to an unborn person, two conditions should be satisfied:

  1. It should be preceded by a life estate in favour of a living person, and
  2. It should comprise the whole of the remaining interest of the transferor so that there can be no further interest in favour of others.

Illustration

  • A transfers property of which he is the owner to B in trust for A and his intended 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. The interest so created for the benefit of the eldest son does not take effect, because it does not extend to the whole of A’s remaining interest in the property.

June 2009
Arjun transfers his property to Bhanu for life and after Bhanu’s death to that of his unborn sons as shall first attain the age of 25 years and if no son of Bhanu shall attain that age, to Chandan who is living at the time of the transfer. Decide the validity of this transfer. (5 marks)

June 2010 (4 Marks)
State the circumstances in which a property may be transferred in favour of an unborn person.

Dec 2014
Akash transfers his property to Bimal for life and after Bimal’s death to that of his unborn sons as shall first attain the age of 25 years and if no son of Bimal shall attain that age, to Chandan who is living at the time of the transfer. Examine the validity of the transfer. (5 marks)

RULE AGAINST PERPETUITY (Section 14)

No transfer of property can operate to create an interest which is to take effect after the life time of one or more persons living at the date of such transfer, and the minority of some person who shall be in existence at the expiration for that period, and to whom, if he attains full age, the interest created is to belong.

Section 14 of the Act fixes the perpetuity period as: Life (or Lives) living at the time of transfer and actual minority of the then unborn ultimate transferee.

The rule against perpetuities applies to both moveable and immoveable property.
Thus, the rule against perpetuity contains two propositions, i.e.:

  • No transfer is valid after the life-time of one or more persons living at the date of such transfer. Transfer can remain in effect only during the life time of an existing person.
  • Transfer can be extended to a person who is not in existence but if he is in existence at the time of termination of the period of last transfer. The moment the person is born he shall have contingent interest and after minority i.e. after the age of 18 years, he shall have vested interest.

However, Section 18 provides an exception to the above rule of perpetuity, where the transfer of property is for the benefit of the public in the advancement of religion, knowledge, commerce, health, safety, or any other object beneficial to mankind.

Effect of a transfer on failure of prior interest (Section 16)
Further, where by reason of any rules or the rules contained in Sections 13 and 14, interest created for the benefit of a person or class of persons fails in regard to such person or the whole of such class, any interest created in the same transaction and intended to take effect or upon failure of such prior intersts also fail.

For example, property is transferred to A for life then to his unborn son B for life and then to C, who is living at the date of transfer, absolutely. Here B is given only a life interest. So the transfer to B is invalid under Section 13. The subsequent transfer to C absolutely is also invalid, because according to Section 16, if a prior transfer fails, the subsequent transfer will also fail.

CONDITIONAL TRANSFER

When an interest is created on the transfer of property but is made to depend on the fulfillment of a condition by the transferee, the transfer is known as a conditional transfer.

Condition precedent

  • If the interest is made to accrue on the fulfilment of a condition, the condition is said to be condition precedent.
    • For instance, A agrees to sell his land to B if B marries C.
    • Where A transfers, Rs. 5,000 to B on condition that he shall marry with the consent of C, D and E. B marries with the consent of C and D only as E has died earlier. B is deemed to have fulfilled the condition.

According to Section 25, condition precedent is valid if

  1. Such condition must not be impossible to fulfill
    • For example, A lets a farm to B on condition that he shall walk a hundred miles in an hour. The lease is void.
  2. Such condition must not be forbidden by law and it should not be of such a nature that if permitted it would defeat the provisions of any law
    • For instance, A transfers Rs. 500 to B on condition that he shall murder C. The transfer is void.
  3. It should not be fraudulent
    • For example, X gives a false receipt to Y on behalf of his principal in consideration of transfer of land. The transfer would be void.
  4. The condition should not be such as to cause injury to the person or property of another
  5. The condition should not be immoral or opposed to public policy.
    • an agreement to give a son or daughter in adoption for a consideration is opposed to public policy as trafficking in children is forbidden by law.

Condition subsequent
A transfer may also be made subject to a contingency which may or may not occur. Thus, an interest may be created with the condition superadded that it shall cease to exist in case a specified uncertain event shall happen, or in case a specified uncertain event shall not happen. This is known as condition subsequent. For example

  • A transfers a farm to B for his life with a proviso that in case B cuts down a certain wood, the transfer shall cease to have any effect. B cuts down the wood. He loses his life interest in the farm.
  • If A transfers a farm to B provided that B shall not go to England within three years after the date of transfer, the interest in the farm shall cease. B does not go to England within the term prescribed. His interest in the farm ceases.

Distinction b/w condition precedent and condition subsequent

  • In condition precedent, the condition comes before the interest; whereas in condition subsequent, the interest is created before the condition.
  • The condition precedent precedes the vesting of right and the condition subsequent follows the vesting.
  • In condition precedent, the vesting of right is delayed until the happening of an event. In condition subsequent, there is no postponement of vesting of right though it is to be destroyed or divested by reason of non-fulfilment of condition.

June 2010 (4 marks)/Dec 2013 (4 marks)
Distinguish between: Condition precedent’ and ‘condition subsequent’.

DOCTRINE OF ELECTION (Section 35)

Election may be defined as “the choosing between two rights where there is a clear intention that both were not intended to be enjoyed”.

Suppose, a property is given to you and in the same deed of gift you are asked to transfer something belonging to you to another person. If you want to take the property you should transfer your property to someone else, otherwise you cannot take the property which is transferred to you by someone.

The foundation of doctrine of election is that a person taking the benefit of an instrument must also bear the burden, and he must not take under and against the same instrument. It is, therefore, a branch of a general rule that no one may approbate and reprobate.

However doctrine of election could not be applied to deprive a person of his statutory right to appear invoking extraordinary jurisdiction of the Supreme Court under Article 136.

Illustration
A transfers to you his paddy field and in the same deed of transfer asks you to transfer your house to C. Now, if you want to have the paddy field you must transfer your house to C, because the transferor is transferring to you his paddy field on the condition that you give your house to C. Thus, either you take the paddy field and part with your house or do not take it at all.

Explanation of the above principle
If the transferor gives two benefits to a person and one particular benefit is in lieu of an item of property belonging to that person which the transferor has asked to transfer to a third-party then if the person elects to retain his property, he can retain the other benefit.

Illustration

  • Under A’s marriage settlement, his wife is entitled, if she survives him to the enjoyment of the estate of during her life.
    • A by his will bequeaths to his wife an annuity of Rs. 200 p.m. during her life, in lieu of her interest in the estate of Sultanpur, which estates he bequeaths to his son.
    • A also gives his wife a legacy of Rs. 1,000.
    • After the death of A, his widow elects to take what she is entitled to take under the marriage settlement (i.e., the enjoyment of estate of Sultanpur).
      In this case, the wife has to forfeit the claim of Rs. 200 which her husband has given to her. But she can claim other benefit i.e., Rs. 1,000.
  • A transfers his property worth Rs. 1,000 and by the same instrument asks B to transfer his property worth Rs. 500 to C.
    • Here, if B does not accept, he will not take A’s property and the property will revert to A.
    • If A is alive, it is for him to give some property to C.
    • But if A dies before B has made his election then the heirs of A have to compensate C from A’s property to the extent of Rs. 500. (You will note that B’s property worth Rs. 500 was intended by A to be transferred to C).

Note:

  • The question of Election arises only when a transfer is made by the same document. If the transferor makes a gift of property by one deed and by another asks the donee to part with his own property then there is no question of election.
    Illustration
    1. A transfers his land to B by a document. A by another document transfers B’s property to C. In this case B can retain the property given to him and refuse to transfer his property to C as the two transfers do not form part of the same document.
      Solution- The doctrine of election is applicable if the benefit is given directly. A person taking no benefit directly under a transaction but deriving a benefit under it indirectly need not elect.
    2. A transfers his property to B’s son and by the same instrument transfer B’s property to C. In this case B need not to elect and can keep his property. His son can have his gift.
      Solution-Election may be express or implied by conduct.
    3. A transfers to B an estate to which C is entitled, and as part of the same transaction gives C a coal mine. C takes possession of the mine and exhausts it. He has thereby confirmed the transfer.

June 2010 (5 marks)
Kamal transfers his property worth Rs.10,000 to Shyam and by the same instrument asked Shyam to transfer his property worth Rs.5,000 to Manoj. Kamal dies before Shyam made his election. Can Manoj get compensation? If so, from whom and how much?

TRANSFER BY OSTENSIBLE OWNER OR DOCTRINE OF HOLDING OUT (Section 41)

Where, with the consent, express or implied, of the persons interested in immoveable property,

  • a person is the ostensible owner of such property and transfers the same for consideration,

the transfer shall not be voidable on the ground that the transferor was not authorised to make it,

  • provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith.

The following conditions are necessary for the application of Section 41:

  1. the transferor is the ostensible owner;
  2. he is so by the consent, express or implied, of the real owner;
  3. the transfer is for consideration, and
  4. the transferee has acted in good faith taking reasonable care to ascertain that the transferor had power to transfer.

Note:

  • The section makes an exception to the rule that a person cannot confer a better title than he has.
  • An ostensible owner is one who has all the indicia of ownership without being the real owner.

Illustrations

  • A made a gift of property to B but continued in possession of the gifted property. He purported to exercise a power of revocation and then transferred the property to the defendant. The gift, however, was not revocable as it was an unconditional gift. B seeks to recover possession from the defendant. The defendant invoked protection under Section 41.
  • The manager of a joint Hindu family consisting of some minor members alienated the ancestral house to P without any necessity and the alienee transferred it to the defendants. The minors challenged the alienation. The defendants sought protection under Section 41.

DOCTRINE OF FEEDING THE GRANT BY ESTOPPEL (Section 43)

Where a person fraudulently or erroneously represents that he is authorised to transfer certain immoveable property and professes to transfer such property for consideration, such transfer shall,

  • at the option of the transferee,

operate/work/executable on any interest

  • which the transferor may acquire in such property at any time during which the contract of transfer subsists.

Note:

  • The right of transferees
    • in good faith
    • for consideration
      shall not be impaired.

Essentials under this Doctrine are

  1. there was a representation, fraudulent or erroneous;
  2. it was to the effect that the transferor is entitled to transfer the immoveable property;
  3. the transferor is found to have subsequently acquired the interest which he professed to transfer;
  4. the transfer of property was for consideration;
  5. the transferee has not rescinded the contract;
  6. the transferee acted in good-faith for consideration and without notice of the rights under the prior transfer.

Illustration

  • A, a Hindu, who has separated from his father B, sells to C three fields, X, Y and Z, representing that A is authorised to transfer the same.
    • Of these fields, Z does not belong to A (as it was retained by B on the partition).
    • But on B’s dying, A as legal heir may obtains Z.
    • Here C, not having rescinded the contract of sale, may require A to deliver Z to him after he will get Z.

June 2009 (4 Marks)
Write short notes on any four of the following:
1.Doctrine of feeding the grant by estoppel

June 2009 (4 Marks)/Dec 2009 (5 marks)/Dec 2012 (5 marks)
Ajit, a Hindu, who has separated from his father Baljit, sells to Charanjt three fields X, Y and Z representing that Ajit is authorised to transfer the same. Of these fields, Field-Z does not belong to Ajit, it having been retained by Baljit on the partition of property. But subsequently on Baljit’s death, Ajit, as a heir obtains Field-Z. Decide the validity of the sale of the above said fields in a circumstance where Charanjit does not rescind the contract of sale.

June 2014 (5 marks)
What is meant by the doctrine of feeding the grant by estoppel ?

DOCTRINE OF FRAUDULENT TRANSFER (Section 53)

Where a person transfers his property so that his creditors shall not have anything out of the property, the transfer is called a fraudulent transfer.

According to Section 53

  • Every transfer of immoveable property made with intent to defeat or delay the creditors of the transferor shall be voidable at the option of any creditor so defeated or delayed.

The transfer is valid so long as the creditor does not challenge it in a Court of law and gets a declaration that the transfer is invalid. Once the creditor sues the debtor and says that the debtor has the intention to deceive him, the transfer can be declared invalid by the Court.

When debtors has many creditors
Suppose the debtor has several creditors and he transfers his property to one of his creditors in satisfaction of his whole debt to him. Is this also a fraudulent transfer? The answer is No.

Note:

  • For a mere preference of one creditor over the others is not fraudulent under the Section, even if the whole property is so transferred and nothing is left for the other creditors. But the other creditors may file a petition in the Court within 3 months of the transfer praying that the debtor be declared insolvent.
    • If the debtor is adjudicated an insolvent, their interest will be protected and the transfer will be declared as fraudulent preference. The transfer will be set aside and the property will be distributed among all the creditors.

Transferee in good-faith and for consideration
Under Section 53(2) the rights of a transferee in good-faith and for consideration are protected. It says nothing shall affect or impair the rights of a transferee in good-faith and for consideration.

DOCTRINE OF PART-PERFORMANCE (Section 53A)

A contract for the sale of land has been entered into between A and B. The transferee has paid the price entering into possession and is willing to carry out his contractual obligations. As registration has not been effected A, the transferor, seeks to force to leave B from the land. Can he do so?

  • No, B will not be allowed to suffer simply because the formality of registration has not been through.

This is known as doctrine of part-performance.

Essential conditions for the operation of the doctrine of part-performance according to Section 53A:

  1. There must be a contract to transfer immoveable property.
  2. It must be for consideration.
  3. The contract should be in writing and signed by the transferor himself or on his behalf.
  4. The terms necessary to constitute the transfer must be ascertainable with reasonable certainty from the contract itself.
  5. The transferee should have taken the possession of the property in part performance of the contract. In case he is already in possession, he must have continued in possession in part performance of the contract and must have done something in furtherance of the contract.
  6. The transferee must have fulfilled or ready to fulfill his part of the obligation under the contract.

Note:

  • The doctrine of part-performance will not affect the right of a subsequent transferee for consideration without notice of the earlier contract and of its being partly performed.
  • This section does not create a title on the defendant. It merely operates as a bar to the plaintiff asserting his title.

Dec 2009 (6 marks)
Discuss briefly the doctrine of part-performance embodied in section 53A of the Transfer of Property Act, 1882.

June 2010 (6 marks)
Ashok sells a house to Vinay by a written document and delivers possession to Vinay, but the document is not registered. After one year, Ashok sues Vinay to take back the possession of the property on the ground that non-registration of a document has no validity. Will Ashok succeed ? Which doctrine of law can be invoked by Vinay in his defence?

Dec 2010 (2 marks)
State, with reasons in brief, whether the following statement is true or false:

The doctrine of part-performance is applicable only where the transferee has taken possession of the immovable property.

Dec 2018 (4 marks)
A contract for the sale of land has been entered into between A and B. The transferee has paid the price entering into possession and is willing to carry out his contractual obligations. As registration has not been effected, A the transferor, seeks to evict B from the land. Can he do so? Explain.

PROPERTIES WHICH CANNOT BE TRANSFERRED (Section 6)

Following properties cannot be transferred, namely:

(a) the chance of an heir apparent succeeding to an estate cannot be transferred (Spes Successionis)
Here the property is neither in existence nor is the person (heir) the owner of the property. Therefore it cannot be transferred.

Suppose A is the owner of the property and B is his son. B is the heir of A. During the life time of his father A, B has only a hope that he will inherit the property of his father. This type of property which B hopes to get after the death of the father cannot be transferred, during the life time of A.

Note:

  • if a person obtains certain consideration and agrees to sell the property of which he is not the owner, then on becoming the actual owner of the property he has to transfer the property.
  • a gift of future property is void

Dec 2010 (4 marks)
Write notes on any four of the following: Spes successionis

(b) A mere right of re-entry in case of breach of a condition subsequent cannot be transferred
Here the right is of personal nature and therefore cannot be transferred.

For example, A grants his land by way of lease to B, a limited liability company on condition that the land should revert to A from B if the company goes into liquidation. This is a mere right in favour of A and this right A cannot transfer to anyone as this is a personal right which can be exercised by A only. But if A transfers the whole of his interest in the land including the right of re-entry to C, there the right to re-entry is a legal incident of property and can be validly transferred along with the property.

(c) An easement cannot be transferred apart from the dominant heritage
As an easement confers no proprietory right on its owner, it cannot be transferred apart from the land itself.

An easement is a right enjoyed by the owner of land over the land of another: such as, right of way, right of light, right of support, right to a flow of air or water.

The land owned by the possessor of the land is known as dominant tenement and the land over which the right is enjoyed is known as the servient tenement.

For example,

  • The right of certain villagers to bath in another’s tank cannot be transferred.
  • If A, the owner of a house X, has a right of way over an adjoining plot of land belonging to B, he cannot transfer this right of way to C. But if he transfers the house itself to C, the easement is also transferred to C.

(d) An interest in property restricted in its enjoyment to the owner personally cannot be transferred by him.
Being the personal right in the property, it cannot be transferred.

Examples

  • Emoluments attached to a priestly office.
  • Service tenures
  • Right to future maintenance

(e) A right to future maintenance in whatsoever manner arising, secured or determined, cannot be transferred.
It should be noted that arrears of past maintenance can be transferred.

(f) A mere right to sue and actionable claim cannot be transferred
A “mere right to sue”, apart from the interest from which such right accrues, cannot be assigned.

A commits an assault on B, B can file a suit to obtain damages; but B cannot assign the right to C and allow him to obtain damages.

(g) A public office cannot be transferred nor can the salary of a public officer, whether before or after it has become payable.

(h) Stipends allowed to military, naval, air force and civil pensioners of the Government and political pensions cannot be transferred.

ACCUMULATION OF INCOME (Section 17)

This section does not allow accumulation of income from the land for an unlimited period without the income-being enjoyed by owner of the property. The law allows accumulation of income for a certain period only. The period for which such accumulation is valid is:

(a) the life of the transferor, or
(b) 18 years from the date of transfer.
whichever is latter.

Any direction to accumulate the income beyond the period mentioned above is void except where it is for:

  1. the payment of the debts of the transferor or any other person taking any interest under the transferor,
  2. portions for children or any other person taking any interest in the property under the transfer, and
  3. for the preservation and maintenance of the property transferred.

DOCTRINE OF LIS PENDENS (Section 52)

Lis means dispute, Lis pendens means a pending suit, action, petition or the like.

Section 52 states that during the pendency of a suit in a Court of Law, property which is subject to a litigation cannot be transferred.

Note:

  • Property may be transferred but this transfer is subject to the rights that are created by a Court’s decree.
    For example, A and B are litigating in a Court of law over property X and during the pendency of the suit A transfers the property X to C. The suit ends in B’s favour. Here C who obtained the property during the time of litigation cannot claim the property. He is bound by the decree of the Court wherein B has been given the property.

Lis pendens is based on the Maxim- “ut lite pendente nihil innovetur” means “During litigation nothing new should be introduced”.

Essentials
In order to constitute a Lis pendens, the following elements must be present:

  1. There must be a suit or proceeding in a Court of competent jurisdiction.
  2. The suit or proceeding must not be collusive.
  3. The litigation must be one in which right to immoveable property is directly and specifically in question.
  4. There must be transfer of or otherwise dealing with the property in dispute by any party to the litigation.
  5. Such transfer must effect the rights of the other party that may ultimately accrue under the terms of the decree or order.

Note:

  • A suit in foreign Court cannot operate as lis pendens.
  • The doctrine of lis pendens does not apply to moveables.

Effect
If the parties to the litigation, are completely prevented from transferring the property in litigation, it would cause unnecessary delay and hardship, as they would have to wait till the final disposal of the case. So, Section 53 creates a limitation over the transfer by making it subject to the result of the litigation. The effect of this doctrine is not to invalidate or avoid the transfer, or to prevent the vesting of title in the transfer, but to make it subject to the decision of the case, and the rule would operate even if the transferee pendente lite had no notice of the pending suit or proceeding at the time of the transfer.

June 2009 (4 Marks)
Write short notes on: Doctrine of lis pendens

June 2010 (4 Marks)/June 2013 (4 marks)/June 2014 (4 marks)
Explain the rule of lis pendens as provided in the Transfer of Property Act, 1882.

June 2013 (4 marks)
What do you mean by the rule of lis pendens? Write down the essentials of rule of lis pendens as provided in the Transfer of Property Act, 1882.

Dec 2019 (4 marks)
A and B are litigating in a count of law over property X and during the pendency of the suit, A transfers the property X to C. The suit ends in B’s favour. Decide, who shall be entitled for property X under the provisions of the Transfer of Property Act, 1882?

LEASE AND LICENCE

Definition and Meaning of Lease
The term lease has been defined under Section 105 of the Transfer of Property Act, 1882. As per this, lease is a transaction whereby one person (i.e., lessor) transfers the right to enjoy in an immovable property to another person (i.e., lessee) either for a certain time or in perpetuity, in return of a consideration.

Following are the essential elements of a lease transaction:

  • There must be a transferor (lessor) and a transferee (lessee), both of whom have agreed for the construction.
  • The lease must be for a certain time or in perpetuity.
  • There must be transfer of the right to enjoy immovable property.
  • The transaction must be in consideration of a price paid or promised.
  • The transaction must be in consideration of money.

Definition and Meaning of License
The term “license’ has been defined under section 52 of the Indian Easement Act, 1882 as follows:
Where one person grants to another, or to a definite number of other persons, a right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a license.

Thus, if a document gives only a right to another to come on the land or premises and use that in some way or the other, while it remains in the possession and control of the owner, it will be a license.

A license is a personal right between the licensor and the licensee, and therefore, a transferee form the licensor is not bound by the license.

Difference between Lease and License
The question whether a particular grant/document amounts to a lease or license depends upon the intention of the parties and it is the substance of the agreement which is the decisive consideration.

Following are the important points of distinction between lease and licence;

  1. In a lease, there is a transfer of interest in land while in the case of a license, there is no such transfer, although the licensee acquires a right to occupy the land.
  2. Leases are generally heritable while licences are not so.
  3. Leases are generally transferable while the licences are not so.
  4. Generally the leases are not revocable at the will of the lessor but bare licenses can be revoiced at the will of the licenser.
  5. The transferee of the lessor is bound by the lease but the transferee of the licensor is not bound by the licensee
  6. Death of the licenser terminates the licence whereas the death of the lessor does not terminate the lease.
  7. In the case of breach of lease deed, the aggrieved party can claim, for the specific performance whereas in the case of breach of licence deed the aggrieved party can only claim the compensation.

Dec 2009 (4 marks)/June 2014 (4 marks)
Distinguish between any four of the following:
‘Lease’ and ‘licence’.

Dec 2012 (5 marks)
Amrit (lessor) grants his immovable property (premises) on lease for 4 years to Sukant (lessee) commencing from 1st June, 2001. The lessor gives a notice to the lessee on 1st February, 2008 for vacating the premises on 1st March, 2008:

(i) Is this notice a valid notice?

(ii) If the lease is continued after 4 years, will the tenancy be on monthly basis or yearly basis ? Decide. (5 marks)

MORTGAGE

Definition and Meaning of Mortgage
The term mortgage has been defined under Section 58 of the Transfer of Property Act, 1882. As per this, a mortgage is the transfer of an interest in specific immovable property for the purpose of securing any of the following:

  1. The payment of money advanced or to be advance by way of loan, or
  2. An existing future debt, or
  3. The performance of an engagement which may give rise to pecuniary liabilities.

In a mortgage, out of the bundle of right which constitutes ownership, some are transferred to the mortgagee and the other rights remain vested in the mortgagor.

The word ’specific’ shows that the description of the immovable property should not only be free from ambiguity and uncertainty, but that it should be specific as distinguished from general. A proper description of the property is necessary to create a mortgage and for its registration.

It may be noted that in order to constitute a mortgage, the transfer of interest in immovable property must be for one of the aforesaid purposes. The word ‘engagement’ means a contract and the qualification “as may give rise to pecuniary liability” means a contract the non-fulfillment of which may result in a liability to pay money.

Kinds of Mortgages

  1. Simple Mortgage
    • The mortgagor undertook personal liability for repayment.
    • The mortgaged properly is not required to be delivered to the mortgages.
    • On mortgagors default in making payment, mortgagee is entitled mortgaged property to be sold, after obtaining a decree from the Court.
    • There is no foreclosure of the mortgaged property.
  2. Mortgage by Conditional Sale
    • The mortgagor ostensibly sells the mortgaged property.
    • Here the condition being that the sale shall be absolute in default of payment by particular date or that the sale shall be void on payment by a particular date and the property retransferred.
    • The possession of the mortgaged property is required to be delivered.
    • The remedy to the mortgaged is by way of foreclosure and not by way of sale.
  3. English Mortgage (It is a combination of Simple Mortgage and Mortgage by Conditional Sale)
    • The mortgaged property is transferred absolutely by the mortgagor to the mortgagee
    • There is a personal covenant to repay on a certain date.
    • The remedy to the mortgaged is by way of sale and not by way of foreclosure.
  4. Usufructuary Mortgage
    • The profit of the property is appropriated by the mortgagee toward discharge of the advance.
    • There is delivery of possession of the mortgaged property to the mortgagee.
    • The property is returned when the amount due is personally paid or is discharged by rents and profits received.
    • There is no remedy to the mortgagee either by way of sale or by way of foreclosure.
  5. Mortgage by deposit of Title Deeds /Equitable Mortgage
    • It is created by delivery of the material Title Deeds in respect of the Mortgaged property to the mortgagee.
    • All the provisions relating to Simple Mortgage shall apply to this kind of mortgage.
  6. Anomalous Mortgage
    •  This mortgage is the combination of two or more other kinds of mortgages.
    • The remedy to the mortgagee may be by way of sale or by way of foreclosure, depending on the terms of the Deed.

June 2014 (4 Marks)/June 2012 (4 marks)/Dec 2012 (4 Marks)
Distinguish between
‘English mortgage’ and ‘mortgage by conditional sale’.

Right of Redemption [Section 60]

Right of redemption means the right to resume those rights which the mortgagor has parted with. The right of redemption is exercised after the payment of the mortgaged money to the mortgagee at the proper time and at the proper place.

Any provision or condition which prevents this right of redemption is called ‘clog (obstruction) on redemption and is such void. For example, a stipulation in a usufructuary mortgage that if the mortgage is not redeemed within a certain period from the date of mortgage, the mortgagee would become the absolute owner. This is a clog on right of redemption of the mortgage of and hence, is void.

Marshalling [Section 56]

Where the owner of two or more mortgaged properties sells one of them to another, the purchaser has the statutory right to insist on the mortgage debt being satisfied out of the property or properties not sold to him. This right is called the right or marshalling by a subsequent purchaser.

It may be noted this right of the purchaser cannot prejudice, the rights of the mortgagee or persons claiming under him/Nor this right can be enforced, if there is a contract to the contrary.

For example, A, the owner of three properties X, Y and Z, mortgages them to B. subsequently A sells the property X to C has the right of marshalling, i.e. he can compel B to satisfy his mortgage-debt out of the properties Y and Z, not sold to him.

Dec 2009 (4 marks)
Explain either of the following:
(i) Doctrine of marshalling

Subrogation [Section 92]

Subrogation means substitution. When a subsequent mortgagee pays off a prior mortgagee, he is subrogated to the right of the prior mortgagee i.e., he steps into the shoes of the prior mortgagee.

IMPORTANT TERMS

Sale of Immovable Property
Sale of Immovable Property is defined in Section 54 of the Transfer of Property Act, 1882 as a transfer of ownership in exchange for a price paid or promised or part paid and part promised.

Essentials

  • The seller must be a person competent to transfer. The buyer must be any person who is not disqualified to be the transferee under Section 6(h)(3).
  • The subject matter is transferable property.
  • There is a transfer of ownership. This feature distinguishes a sale from mortgage, lease etc., where there is no such transfer of ownership.
  • It must be an exchange for a price paid or promised or part paid and part promised.
  • There must be present a money consideration. If the consideration is not money but some other valuable consideration it may be an exchange or barter but not a sale.

Exchange
When two persons mutually transfer the ownership of one thing for the ownership of another, neither things or both things being money only, the transaction is called an “exchange”.

Essentials

  • The person making the exchange must be competent to contract.
  • There must be mutual consent.
  • There is a mutual transfer of ownership though things and interests may not be identical.
  • Neither party must have paid money only.

An exchange of immovable property is governed by the provisions Transfer of Property Act, 1882 whereas an exchange of movable property is called barter and it is governed by the provisions of Indian Contract Act, 1872.

For example exchange of a car for two scooters or exchange of a house for 10 hectares of land.

Dec 2011 (4 marks)
Distinguish b/w ‘Sale’ and ‘exchange’

Gift
Gift is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another called the donee, and accepted by or on behalf of the done.

Such acceptance must be made during the life time of the donor and while he is still capable of giving. If the donee dies before acceptance, the gift is void.

Thus, the essentials of a valid gift are:

  1. There must be a transfer of ownership.
  2. Gift must be an existing property and not of future property;
  3. Gift must be made voluntarily i.e, it should not be induced by coercion, undue influence, fraud or misrepresentation;
  4. It should be without consideration i.e., it can be for natural love and affection or for past consideration barred by law of limitation but it cannot be for present or future consideration;
  5. It must be accepted by the done, and such acceptance must be made during the lifetime of the donor and while he is capable of giving.

According to Section 123, a gift of immoveable property must be made by a registered instrument signed by or on behalf of the donor and attested by at least two witnesses. A gift of moveable property may be made by a registered instrument or by delivery of property.

Case Law
Suppose, a document is executed by the donor who makes a gift of immoveable property and the deeds are delivered to donee, and the donee accepts the gifts but the document is not registered. Will the gift be valid?

It has been held by the Courts that the gift is valid. While registration is a necessary formality for the enforcement of a gift of immoveable property, it does not suspend the gift until registration actually takes place. The donee in such a case can ask the donor to complete the gift by registration. Thus, the most essential thing for the validity of a gift is its acceptance. If the gift is accepted but not registered it is a valid gift.

Note:

  • If the deed of gift is executed but never communicated to the intended donee and remains in the possession of the donor undelivered, it cannot be compulsory registered at the instance of the donee. The reason is that the donee did not accept the gift, the donor can at any time before such acceptance revoke the gift.

Revocable Gift
A revocable gift is one which may be revoked by the donor at any time. Its revocation would depend upon the mere will or pleasure of the donor. Such a gift is void. But on the other hand, if the condition is one which does not depend on the will or pleasure of the donor, the gift can be revoked on the happening of such condition.

Illustrations

  • A gives a field to B, reserving to himself, with B’s assent, the rights to take back the field in case B and his descendants die before A, B dies without descendants during A’s lifetime. A may take back the field.
  • A gives a lakh of rupees to B, reserving to himself with B’s assent the right to take back at leisure Rs. 10,000 out of one lakh. The gift holds goods as to Rs. 90,000 but is void as to Rs. 10,000 which continues to belong to A.

Onerous gift
Onerous gift means where several things are transferred as a gift by single transaction. Whereas some of them are really beneficial the others convey burdensome obligations.

The rule is that in case of onerous gift the donee either takes nothing or accepts it fully.

June 2013 (2 marks)
Delay in registration of a deed of gift under the Transfer of Property Act, 1882 postpones its operation. Comment.

Dec 2010 (6 marks)/June 2019 (4 marks)
Sachin made an unconditional gift of property to Amit but continued in possession of gifted property. Sachin revoked the gift deed transferred it to Naresh. Amit wants to recover possession from Naresh. Discuss it in the light of provisions of Transfer of Property Act, 1882 whether Naresh can withhold the gifted property?

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