In this article, Kshitij Asthana discusses Oral Transfer of Property under the Transfer of Property Act.

History and development of Transfer of Property Act

Going back in time before passing of the Transfer of Property Act, writing was not an essential ingredient for Transfer of Property from one entity to another.[1] After the passing of the Act, now certain specified transactions are required to be in writing.[2] For example, if the statute requires a deed for transfer of Title of the land, then the same cannot be passed by mere admission. Transfer of Property Act contains specific provisions regarding what constitutes a transfer and discusses different conditions attached to it. The Act, came into force on 1^st July, 1882.

Understanding the provisions of Transfer of Property Act

Before coming to oral transfer of property, the researcher would like to throw some light on what transfer of property means. Section 5 of T.P. Act[3] defines Transfer of Property and by bare reading of the section it can be understood that the same means an act by which a living person conveys property in present or in future to one or more living persons, (including/excluding) himself. Here living person according to Section 5 includes any person or a company or an association or a body of individuals, which may or may not be incorporated. Now, the question that arises in that what kind of properties can or cannot be transferred. [4] The Act does not specify or has no exhaustive list to answer the same but section 6 of T.P. Act[5] states that property of any kind may be transferred, except if states otherwise in the act which essentially makes an exhaustive list of things which cannot be called property and which cannot be transferred.

Oral transfer of Property under the Transfer of Property Act

Definition
Section 9 of the Act[6] talks about oral transfer of property. It states that,

“A transfer of property may be made without writing in every case in which a writing is not expressly required by law.”[7]

Illustration of the definitions and case laws

This section essentially mandates that a transfer of property may be made without writing in every case in which writing in not expressly mentioned/required by law but it is also essential to note here that the act is not exhaustive of such kinds of transfers.[8]

In a very famous case of Sarandaya Pillay v Sankarlinga Pillai[9], Ramaswami J., of Madras High Court observed “the test, therefore in this country to determine whether a transaction (be it a transfer or not) can be made without writing is to see if it is expressly required by law to be in writing. If the transaction is a transfer of property and there is no express provisions of law requiring it to be in writing, section 9 will enable it to be made without writing and vice versa” through which an essential inference can be drawn and it can be said that if the transaction is a transfer of property and there is no express provision of law requiring it to be in writing then the general principle referred above will enable it to be validly made without writing.

The reasoning of Section 9 underlines the general principles that everything is to be taken permissible unless there is a prohibition against it and has been inserted in the statute ex abdundanti cautela.[10]

An Important Observation here is that a promoter of a company though fulfils some fiduciary duties, he cannot be described as a trustee. He occupies a peculiar position of a quasi-trustee. Also the declaration of promoter that the property held by him for the company before its incorporation doesn’t constitute either mortgage, sale, lease, exchange or deed. The company before its incorporation is not a living person and hence the provisions of Section 5 of the T.P. Act are not attracted.

An analysis of Oral Transfer of Property (Section 9 of the Transfer of Property Act)

Interpretation of Statutes

As already mentioned in the introduction, this section talks about oral transfer of property and has mentioned that transfer of property can be made without writing in every case where writing is not expressly required by the statute.  Now, the next question that arises is that when does the statute mandate the transactions to be in writing. Transfer of Property under section 54, 58 (except mortgage by deposit of title-deeds), 105,118, 122 and 130 are required to be in writing. Also under Section 5 of the Indian Trusts Act, II of 1882, transfers which parties desire to register must be in writing. Gift of immovable property at the time of marriage must also be registered and be in writing.

Provision of Oral Transfer of property at the time of the marriage.

It is also necessary to note here that Section 9 of T.P. Act would not apply to a case of transfer of immovable property made at the time of marriage by a Hindu.[11] It is essential to note here that Transfer of Property Act clearly recognizes oral transfers. Hence a simple deduction can be done here that an oral transfer of property is a rule unless there is a law which expressly requires that the transfer should be in writing. Now, movable property is not defined under Transfer of Property Act but according to the interpretation clause that is section 3 of the Transfer of Property Act, 1882, immovable property does not include standing timber, growing crops or grass. Now the General Clauses Act, 1897 defines the term movable property as property of every description, except immovable property. Immovable property has been defined to include land, benefits arising out of land or things attached to the earth or permanently fastened to anything attached to the earth. Hence anything it can easily be inferred because the exhaustiveness of the definition of immovable property that anything which is not covered under the definition of it is a movable property including computer programs[12] and other intellectual property.

Analyzing different sections with relation to section 9 of the Transfer of Property Act.

• Under section 54, a sale of tangible immovable property of value more than hundred Rupees (Rs 100/-) is required to be made, only by a registered instrument.
• In Section 59 of the T.P. Act, a writing is necessary in the case of simple mortgage or in case of all other mortgages except a mortgage by title-deed deposit where the principal amount or sum secured in more than hundred rupees (Rs 100/-).
• Also, in section 107, a lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, is required to be made in writing.
• Section 130 mandates that all transfers of actionable claims have to be made by writing and u/s 118, all exchanges are subject to the same rules as are applicable to sales.

Hence it can be deducted that when the law requires that there should be an instrument in writing and the said instrument should be registered then the ownership can only be transferred by that method. But, where no writing is required by the Transfer of Property Act or any other law, the transfer may be made orally.[13]

Illustration and few landmark judicial pronouncements

Writing necessary

The section provides for oral transfer. Transactions which are not required by law to be in writing can be made orally under this section without any writing. Writing is necessary for the following transactions:

1. Sale of immovable property of value of Rs. 100 or upwards.
2. Simple mortgage of specific immovable property of any value.
3. Lease from year to year or for any term exceeding one year or reserving a yearly rental.
4. Exchange of the value of Rs. 100 or upwards.
5. Transfer of actionable claim.
6. Notice of transfer of actionable claim.

In the famous case of Narsinghdas v. Radhakisan[14] it was held that a test to find out whether a transaction can be made without writing is to see whether it is expressly required by law to be in writing, which further substantiates our hypothesis and our illustration of Section 9 of Transfer of Property Act, 1882.

Coming to oral gifts

In the case of Keshri Mull v Sukan Ram,[15] it was held that oral gift though permissible under the section is not valid without delivery of possession. Validity of oral partition was challenged in the case of Peddu Reddiar v. Kothanda Reddi[16] and the judgment finally upheld the validity of oral partition of property. Subsequently, there have been various cases which established the fact that when writing is not required by Act, transfer can be made orally.[17]

Oral Family settlements

It has also been established by a three judge’s bench of the Supreme Court in a case of allegations of fraud and undue influence, that family settlements can be oral and there is no need to keep it in writing.[18]

Oral Family arrangements

The high court of Jammu & Kashmir has already substantiated that a family arrangement need not be written and it can be oral too.[19] A relinquishment by the mother of her interest in the joint family property, even when the property consists of immovable property and the value of the share therein exceeds Rs. 100/-, can be made without writing, and registered instrument is not required.[20]

A skimmed reading of the judgment in the case of Bhuta Singh v Mangu and Ram Sarupv. Ram Dei[21] also suggests that alienation needs no written instrument. It is sufficient if the person entitled to the property does an act which necessarily results in its transfer.[22] All that the act provides for is that certain specified transfers shall only be made in writing duly registered. An award relating to immovable property need not be in writing.[23]

Conclusion

The Transfer of property Act, 1882 is an Indian legislation which regulates the transfer of Property in India. Through numerous case laws and illustrations, the researcher has consolidated the fact that Section 9 of the said Act deals with oral transfer of property and has also discussed what can or cannot be transferred orally. It is further notified to the readers that there is no law which says that the seller must sell the property at market rate. He can always sell at any rate of his choice. The only constraint that is imposed on him would be to pay the stamp duty required to be paid on the prices fixed by the Ready Reckon of the Government so that there could be no loss of Government Revenue. The sale deed cannot become void for inadequacy of prices after the parties have mutually accepted the prices as the correct price.[24]

Property in itself can be classified into 2 components namely movable and immovable property. Both the terms are not completely defined in the Act[25] hence the definition given in Section 3 of General Clauses Act, 1897 has to be read along with the interpretation clause in The Transfer of Property Act, 1882. It should also be taken note of that there are 18 other statutes that are primarily concerned with Property Law, or significantly matter to Property Law, as listed below:[26]

Trusts Act, 1882, Specific Relief Act, 1963, Easements Act, 1882, Registration Act, 1908, Stamp Act, 1899, State Stamp Act, 2008, Limitation Act, 1963, General Clauses Act, 1897, Evidence Act, 1872, Succession Act, 1925, Partition Act, 1893, Presidency-Towns Insolvency Act, 1909, Provincial Insolvency Act, 1920, Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, Contract Act, 1872, Sale of Goods Act, 1930, Negotiable Instruments Act, 1881.[27]

Also it is important to note here that every person, who is competent to contract[28], is competent to transfer the property either in whole or in part. The right of the person can be absolute or conditional[29] or can be immovable or movable[30] depending upon the nature of the property. But, there are certain conditions that must be satisfied for a transfer of Property. There must be a representation by the one who is transferring (the Transferor) that he has the applied authority to transfer the immovable property. The representation should not either be fraudulent or erroneous. The transferee must act in good faith and the property should be transferred with some consideration which is valid in the eyes of law which essentially will vest the transferee’s interest in the property and the transferor should have interest in the property which he had agreed to transfer.[31]

Bibliography

• JUDGEMENTS AND BOOKS REFERRED

1. Mohamed Musa v Aghore Kumar Ganguli, (1915) 42 Cal 801: 42 IA 1. Justice was quoted saying “A transfer can be made orally unless expressly required by the law to be in writing. Prior to passing of the Act, no writing was necessary for such transfer.
2. Immudiapattam v. Periya Dorasami (1901) 24 Mad 377; Bishan Dial v Ghazi-ud-din. (1901) 23 All 175.
3. Section 5, The Transfer of Property Act, 1882
4. Section 6, The Transfer of Property Act, 1882 (Bare Act)
5. Section 9, The Transfer of Property Act, 1882 (Bare Act)
6. Section 9, The Transfer of Property Act, 1882 (Bare Act)
7. Weavers Mills v Balkis Ammal, AIR 1969 Mad 462 (469,470): (1969) 2 Mad LJ 509
8. Sarandaya Pillay v Sankarlinga Pillai Sarandaya Pillay v Sankarlinga Pillai
9. Gangadhara Rao v G. Gangarao, AIR 1968 AP 291
10. Centre for Internet and Society, available at https://cis-india.org/internet-governance/bitcoin-legal-regulation-india. (extracted on 11th July, 2017)
11. Ramdas v. Pahlad, AIR 1965 Bom 74 (75,76): 66 Bom LR 499; Subramniyan v. Venkatachalam Pillai (2011) 6 MLJ 743 (752) (Mad)
12. Narsinghdas v. Radhakisan, 1952 Bom 425
13. Keshri Mull v. Sukan Ram, 1933 Pat. 264
14. Peddu Reddiar v. Kothanda Reddi, 1966 Mad 419
15. Weavers Mills Ltd. v. Balkis Ammal, 1969 Mad 463: (1969) 2 MLJ 509: (1969)  2 MLJ 509: (1969) 1 Mad 433
16. Kale v Director of Consolidation, 1976 SC 807: (1976) 3 SCC 119: (1976) 3 SCR 202.
17. 1972 J&K 472
18. Ramdas v. Pahlad, AIR 1965 Bom 74 (75,76) : 66 Bom LR 499
19. Bhuta Singh v Mangu, AIR 1930 Lah 9; Ram Sarup v. Ram dei, (1907) 29 ALL 239; Sheo Singh v. Jeoni, (1897) 19 ALL 524
20. Bhagwatibai v. Bhagwandas, AIR 1927 Sind 206
21. Dashrath Narayan Shinde v. Gangaram Ghag Laxman, 2010 (4) Mah LJ 392 (394) (Bom) : (2010) 3 Bom CR 641
22. Section 3 of The Tranfer of Property Act, 1882 has to be read along with the definition of immovable property given in Section 3 of General clause Act, 1897. Available at http://alappuzha.nic.in/resources-file/acts-rules/GeneralClausesAct.pdf.
23. Sumeet Malik, Property Law Manual (Hard Bound) (2014 edition). Eastern Book Company. p. 1-968. ISBN number- 9789351451150.
    • ONLINE REFERENCES
24. scconline.com/Articles/on/oral/transfer/section/9/
25. http://www.manupatrafast.com/articles/PopOpenArticle.aspx?ID=797c51f7-0615-4fa8-b92e-7d7d24d03689&txtsearch=Subject:%20Property%20Law/Oral%20Tranfer%20of%20Property
26. http://www.merriam-webster.com/dictionary/Oral%20Transfer

References

[1] Mohamed Musa v Aghore Kumar Ganguli, (1915) 42 Cal 801: 42 IA 1. Justice was quoted saying “A transfer can be made orally unless expressly required by the law to be in writing. Prior to passing of the Act, no writing was necessary for such transfer.

[2] Immudiapattam v. Periya Dorasami (1901) 24 Mad 377; Bishan Dial v Ghazi-ud-din. (1901) 23 All 175.

[3] Section 5, The Transfer of Property Act, 1882

[4] Id.

[5] Section 6, The Transfer of Property Act, 1882 (Bare Act)

[6] Section 9, The Transfer of Property Act, 1882 (Bare Act)

[7] Section 9, The Transfer of Property Act, 1882 (Bare Act)

[8] Weavers Mills v Balkis Ammal, AIR 1969 Mad 462 (469,470): (1969) 2 Mad LJ 509

[9] Sarandaya Pillay v Sankarlinga Pillai Sarandaya Pillay v Sankarlinga Pillai

[10] ex abundanti cautela. out of an abundance of caution. In law, describes someone taking precautions against a very remote contingency. “One might wear a belt in addition to braces ex abundanti cautela”.

[11] Gangadhara Rao v G. Gangarao, AIR 1968 AP 291

[12] Centre for Internet and Society, available at https://cis-india.org/internet-governance/bitcoin-legal-regulation-india. (extracted on 11^th July, 2017)

[13] Ramdas v. Pahlad, AIR 1965 Bom 74 (75,76): 66 Bom LR 499; Subramniyan v. Venkatachalam Pillai (2011) 6 MLJ 743 (752) (Mad)

[14] Narsinghdas v. Radhakisan, 1952 Bom 425

[15] Keshri Mull v. Sukan Ram, 1933 Pat. 264

[16] Peddu Reddiar v. Kothanda Reddi, 1966 Mad 419

[17] Weavers Mills Ltd. v. Balkis Ammal, 1969 Mad 463: (1969) 2 MLJ 509: (1969)  2 MLJ 509: (1969) 1 Mad 433

[18] Kale v Director of Consolidation, 1976 SC 807: (1976) 3 SCC 119: (1976) 3 SCR 202.

[19] 1972 J&K 472

[20] Ramdas v. Pahlad, AIR 1965 Bom 74 (75,76) : 66 Bom LR 499

[21] Bhuta Singh v Mangu, AIR 1930 Lah 9; Ram Sarup v. Ram dei, (1907) 29 ALL 239; Sheo Singh v. Jeoni, (1897) 19 ALL 524

[22] Id.

[23] Bhagwatibai v. Bhagwandas, AIR 1927 Sind 206

[24] Dashrath Narayan Shinde v. Gangaram Ghag Laxman, 2010 (4) Mah LJ 392 (394) (Bom) : (2010) 3 Bom CR 641

[25] Section 3 of The Tranfer of Property Act, 1882 has to be read along with the definition of immovable property given in Section 3 of General clause Act, 1897. Available at http://alappuzha.nic.in/resources-file/acts-rules/GeneralClausesAct.pdf.

[26] Sumeet Malik, Property Law Manual (Hard Bound) (2014 edition). Eastern Book Company. p. 1-968. ISBN number- 9789351451150.

[27] Id. (Sumeet Malik)

[28] Not expressly barred by any national or international statute

[29] Section 10, The Transfer of Property Act, 1882 ( Bare Act)

[30] See Section 3, Interpretation Clause of Transfer of Property Act, 1882, (read along with) General Clause Act 1897 for definition of Immovable Property.

[31] After bare reading of the The Transfer of Property Act, these points came out as an analysis.