This article is written by Darshit Vora, from Narsee Monjee Institute of Management Studies. The article covers various important elements mentioned in the Transfer of Property Act, 1882.
A transfer refers to a conversion of a thing from one person to another person. Property may be defined as anything physical or a virtual entity owned by an individual or a group of people. A property can be transferred from one person to another person by transferring rights, or interest, or ownership, or possession the party can satisfy either or all the ingredients.
The transfer of property can be made in the two following ways:
First: act of the parties;
Second: by law.
Transfer of property is defined under Section 5 of the Transfer of Property Act, 1882. It refers to an act done by a living person conveying property to one or more person or by himself or by one or more living persons in the present or the future. Living people include a company, an association, or body of individuals whether incorporated or not.
A is the grandson of G and A owns three estates of which he wanted to transfer one estate to his grandpa D but he died two years ago the transfer won’t be held valid because the transfer of property should happen between two living persons.
Living to living
Living to living
Immovable property and Movable property
Dead to living
Background of the Transfer of Property Act, 1882
Before the advent of the British Raj system in India, Hindus, and Muslims were governed by their personal laws for the transfer of property. When Britishers were actively involved in the Indian Legal system they established informal Courts in which clear and concrete law was absent as compared to the law that was prevailing in England. Various High Court expressed the need for creating specific acts related to the transfer of property. As the principle of a good conscience, equity, and justice was confusing and created various uncertainties, the privy council noted the uncertainties and also told the authorities to take immediate action.
So, the first commission was appointed by the British Queen Elizabeth II to remove uncertainties. On matters related to the transfer of property. The draft was sent in India after certain amendments were introduced in the legislative Council in 1877. It was then sent to the selection committee but it was reversed due to the public criticism. The Bill was redrafted by the Second law commission. Some of the provisions were borrowed from English law on real property, the Law of Conveyancing and Property Act, 1881. Mostly the law was shaped in such a manner that suits the Indian population and can be easily understood by a non-professional judge.
Despite various amendments made by the Second Commission, there was an expansion of the law. Therefore a special committee was appointed to make the amendments in the prevailing act. So various amendments were made in the act to expand its scope and correct the existing errors.
Important concepts highlighted in the Act
- Immovable property: According to the General Clauses Act, 1897 immovable property includes land, benefits arising out of the land, things that are attached to the land. Under transfer of property, the immovable property can be defined as all property are immovable property other than standing timber, growing crops, or grass.
In this case, large artillery was fixed for blowing liquor. The Court held that it would be considered as movable property if it was fixed in the land, not with an intention for beneficial enjoyment.
- Mortgage debt: After the amendment of 1900 mortgage debt was excluded from actionable claims. In Peruma animal vs. Peruma Naicker, Wallis C.J.held that before 1900 mortgage debts could be transferred as actionable claims, it was excluded from the actionable claims, the legislature intended that the mortgage debt must be transferred in mortgagee’s interest through a registered instrument.
- Instrument: According to the transfer of property Act, 1882 instrument refers to a non-testamentary instrument. It acts as evidence of the transfer of property between living parties. According to the legal dictionary, an instrument refers to a formal legal document.
- Attested: It refers to a formal document signed by a witness. The transferors of the property are known as the executant. The amendment act was introduced in 1926 which mentioned that there must be two or more witnesses who must sign the document in presence of the executant not necessarily at the same time but they shouldn’t be the party to the transfer.
- Registered: According to the transfer of property Act, 1882 registered refers to any property registered where the act is operative. One must comply with various procedures of registration.
- The description of the property should be mentioned.
- Avoid fraud.
- Deeds should be presented by a competent person.
- The property must be registered in the same territory where the registered office is situated.
- Actionable claims: A claim to any debt, other than the debt secured by mortgage of immovable property or by hypothecation or pledge of movable property or to any beneficial interest in a movable property or to any beneficial interest in movable property not in the possession, either actual, or constructive possession of the claimant which the civil courts recognize as affording grounded of relief, whether such debt or beneficial interest be existent, accusing, conditional or contingent.
Illustration: A has given his house to B for rent but B hasn’t paid the rent because this would amount to an actionable claim.
- Notice: Notice refers to knowledge of the fact. The person has knowledge of facts about various circumstances. According to the Transfer of Property Act, 1882 it prescribed two kinds of notices
Actual or implied notice: The person having actual knowledge about a particular fact.
Constructive notice: The knowledge of the fact is obtained through circumstances.
Essential elements of the Transfer of Property Act, 1882
- To be a living or juristic person: For a transfer of property, there must be a transfer between living or a juristic person. In Shiromanigurudwara Prabhakar committee, Amritsar v. Sri Somnath Dass (2000) the court defines a juristic person which can be an individual firm, corporate, company society, association, but not a partnership. Anyone who can sue or can be sued would satisfy this requirement.
- Transfer through Conveyance: Conveyance of property can be either done in the present or in the future. It is necessary to ensure nothing is transferred before the title.
- The Property must be transferable: According to Section 6 of transfer of property Act, 1882 there are properties which cannot be transferred:
- 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.
- The mere right to re-entry for breach of a condition subsequent cannot be transferred to anyone except the owner.
- The easement right cannot be transferred.
- The interest of the property restricted in its enjoyment to the owner cannot be transferred.
- Political pensions, public office, the salary of the public officer cannot be transferred.
- The right to sue cannot be transferred.
- Stipends to military, navy or the airforce, political pensioners, and civil pensioners cannot be transferred.
- No transfer cannot be made as opposed to the natural interest or if the object or the consideration is unlawful then the transfer cannot be held valid.
- The right to future maintenance cannot be transferred.
- Tenants having an untransferable right to occupancy, the farmer of an estate in respect of which default has been made in paying revenue or lessee of an estate under the management of the court of wards, to assign his interest as the tenant, farmer, or lessee.
- Transfer of property must be done by a competent person: For a valid transfer, it is necessary that the property transferred should be of a sound mind, should not be intoxicated, must be a major or he is not a person disqualified by law cannot enter into a contract of transfer of property with another person.
- The transfer should be made in a prescribed form: The transfer of property need not be in be made in writing however certain property to transfer then it must be in writing:
- Sale of movable property value more than a hundred rupees.
- Sale of intangible must be in a written format.
- All mortgages which are more than a hundred rupees should be transferred in a written form.
- The transfer of actionable claims must be in a written form.
- A gift in a form of immovable property.
- Lease of immovable property exceeding more than one year.
- The rule against perpetually: It is necessary that the property must be transferred during the lifetime of an individual perpetuity rule should not be followed during the time of transfer of property.
- Property cannot be transferred to an unborn child: A property cannot be transferred to an unborn child necessary to consider that while transferring the interest of the property person should be above the age of 18 years.
- Conditional transfer of property: Under Section 25 of the transfer of property Act, 1882, the property can be transferred complying to the condition mentioned. If the condition becomes impossible, forbidden by law, opposed to public policy, or is immoral the transfer would be held void.
Illustration: A is interested in purchasing B’s property but B sets a condition that A in order to purchase B’s property has to kill C here the transfer is through unlawful act, therefore, the transfer would be held void.
Kinds of transfer under the Transfer of Property Act, 1882
- Sale of immovable property: There is a transfer of ownership from the buyer to the seller in exchange for the price. Delivery of tangible property from the seller to the buyer.
- Mortgage of immovable property: The property gets transferred from the buyer to the seller in the form of a mortgage where the immovable property is mortgaged to secure a loan. The mortgagor has to pay the principal loan along with the interest to release the immovable property from the mortgage.
- Leases of immovable property: The possession of the property is being transferred from one person to another person for a fixed price in this scenario there is no transfer of ownership.
- Exchange of immovable property: When two persons mutually decide to transfer immovable property it would be referred to as an exchange of property.
- Gift of immovable property: According to the transfer of property Act, 1882, gift refers to a transfer of movable or immovable property violently or without the consideration, by one person that is donee, to donor transfer is accepted by and on behalf of the donee.
Features of Transfer of Property Act, 1882
- The preamble of the transfer of property Act lays down that it is related to the transfer of property by the act of the properties.
- The transfer of property act, 1882 provides a uniform and a clear law concerning the transfer of movable property from one living person to another living person by the act of parties.
- The Transfer of Property Act, 1882 is an extension of the Indian Contract Act,1872 because the contract act was recognized as an inexhaustive code.
- 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.
- The transfer of property Act, 1882 cannot be considered as totally exhaustive; it covers the transfer of immovable property from the act of parties.
- 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.
- 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.
- 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 Act was introduced with an intention to create a comprehensive Act which provides information about the transfer in a very simple language during the time of introduction it was not complete and had various uncertainties. It has gone through various amendment processes and the act has proved it time and again about its effectiveness. In India, many more such acts like transfer of property Act, 1882 are still in need to be implemented.
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