This article on ‘Understanding Interpretation Clauses of Transfer of Property Act, 1882’ has been written by Nishant Vimal, a 3rd-year student of Symbiosis Law School, Hyderabad. The author discusses Section 3 i.e. Interpretation Clause of the Transfer of Property Act.
The Transfer of Property Act was enacted in 1882. Prior to this, Common law principles have governed the dealings and transfers of property. This act was formulated to govern the transfers of property. This act however only governs transfers between two living parties commonly known as an intervivous transaction. Also, the major focus of this act has been on the transfer of immovable property though it is not exhaustive. Section 3 of The Transfer of Property Act, 1882 has been called ‘interpretation clause’. It lays down the statutory definitions of seven terms which have been frequently used in the act. Through this article, the reader will be able to understand these terms in a simple manner with different illustrations and some judicial pronouncements that will further clarify the statute.
There are 7 definitions that are given in this statute.
The definition given in The Transfer of Property Act says that it does not include standing timber, growing crops or grass. All these three items come under the scope of movable property. The basic meaning that can be understood as immovable property is a property which is not a movable property.
A fruit-bearing tree will not come under the ambit of standing timber and therefore be stated as immovable property. Any tree which can be cut in a short period of time either for the purpose of construction or anything else will be a standing timber. In the case of Jagdish v. Mangal Pandey (1), the court held that to check whether a tree is a standing timber or not, two things are to be ensured. First, the nature of the tree is to be taken into account and then the intention, whether the owner has the intention to cut that property in a short period of time or not.
There is another definition of immovable property that is given in the General Clauses Act which can be used to understand the concept of immovable property.
Section 3 (26) of this act defines an immovable property, it says that this property consists of:
- Any land, building or etc.,
- Benefits arising out of land and
- Things attached to Earth.
One of the leading cases where the immovable property was defined in the case of Sukry Kurdepa v. Goondakull (2), where Justice Holloway opined that if a thing is not changed or altered from its initial place without causing any harm to the property, it is called an immovable property.
Registration Act lays down that immovable property includes all benefits arising out of lands, like hereditary allowances, right of way and etc.
In the case of Shantabai v. State of Bombay (3), where a female was having a forest land given to her by her husband. She had the right of cutting trees there, but an act criminalised the cutting of trees. She approached the court and contended that she has the right of movable property as she is cutting the standing timber which comes under the ambit of movable property. The court, however, decided to follow a principle that has been adopted by many courts and held that the time duration of the lady’s contract was of a period that she is entitled to not only the standing timber but any benefits from that property, and hence it is an immovable property.
As defined in the act, it is a non-testamentary document. A testamentary document is a will, so the definition of instrument suggests that any document which is not the same as the nature of will is called an instrument. The instrument is not proof of any transaction but instead is one transaction.
Attestation is in respect to an instrument. It is done for the purpose of validating that the deed was executed properly by the proper person. This definition was included through the Transfer of Property (Amendment) Act, 1926.
Following are the requirements of a valid attestation-
- There must be two or more competent witness to attest.
- Each witness must see the executant sign the instrument;
- Each witness must receive a personal acknowledgement from the executant that he has signed.
- Each witness must sign the instrument in the presence of executant.
- Not necessary for both witnesses to be present at the same time.
- No particular form of attestation is necessary.
- A witness cannot be a party to transfer.
This definition provides that if any property is to be deemed registered it means that it is under the law and any such registration of a property needs to be valid. And the requirements for the registration to be valid are as follows:
- If the description of the property is not sufficient to identify property itself,
- In case of fraud in registering,
- If the property is not in the same territory,
- Deed not presented by the competent person.
All immovable property needs to be registered and even a vehicle i.e. either two wheelers or four wheelers also need registration despite it being a movable property.
Things attached to land
Section 3 defines ‘things attached to Earth’ as consisting of three things. Things rooted in Earth, things embedded in Earth and things attached to what is so embedded in the Earth.
- Things Rooted in Earth: This includes trees, shrubs and everything of such kind except standing timber, growing crops and grasses. The debate of whether tree comes into this or not is answered in the above-mentioned case of Jagdish v. Mangal Pandey, where the court held that nature and intention are to be seen to determine whether it is movable or immovable. If the intention is to maintain the tree for a long period of time without cutting it down for any other purpose, then it will come under things rooted into the earth and hence in immovable property.
- Things embedded in Earth: This includes buildings, wells and etc. But there are other things that are embedded but not permanently like an anchor from a ship or a shovel that is inserted into the mud for a short period of time, all these are not immovable property.
There are two tests to determine whether any property is embedded in earth or not. They are:
- Degree of annexation
It means that when the removal of any property annexed or embedded will not cause any harm to the land. If it does cause, then it will come under the ambit of immovable but if it does not and can easily be detached, it will come under a movable property.
- Object of annexation
If the object of annexing or embedding the property is for usage for a long period of time. For example. If a tenant for life attaches bolts to tighten any object in the home, it will come under immovable because the intention of it is to use it for a long period of time.
3. Things attached to what is so embedded: This includes doors, water tanker, etc. All the properties that are attached to any property which is embedded in the earth for the beneficial enjoyment of that property. It is required that only property that gives a permanent advantage come under things attached to what is so embedded, and things like electric fans or coolers are movable properties.
In the case of Duncun Industries v. State of U.P. (4), where the company had to pay stamp duty on their property. They gave stamp duty on the value of the land without including the value of the plant and machinery on the property to produce goods. Court held that they were liable to pay stamp duty on the value of their land and which included the value of their plant and machinery as it would come under the ambit of things attached to what is so embedded in the earth. Any property of which, the intention is to maintain it for a long period of time and in this case, it was being used by the industry to produce different goods, this will come under an immovable property.
The actionable claim is given under Section 130 of the Transfer of Property Act, 1882. It is a claim against any debt. In an actionable claim, there will be an unsecured debt, as secured debts are excluded from the definition of actionable claim given under Section 3. For example, X owes 500 rupees to Y. The claim of Y for the debt of X is an actionable claim.
This debt shall not be:
- A debt secured by mortgage of immovable property or
- A debt by hypothecation or
- pledge of movable property or to any beneficial interest in movable property
Some examples of such actionable claims can be as such:
- Actionable Claim for arrears of rent.
- Actionable Claim for proceeds of the business.
- Actionable Claim for any maintenance due and etc.
When a person actually knows any fact, it is understood as he has notice of that fact.
Section 3 of Transfer of Property Act enumerates three kinds of notices—
(a) Actual or expressed notice: If a person actually knows a particular fact it is considered he has actual notice. The knowledge of fact must be received in the course of negotiations of the property.
(b) Constructive or implied notice: If it can be assumed if a person ‘may know a particular fact’ due to the circumstances, so it will be presumed that he knows the fact. It is said that the person could have had actual notice if he would have inquired reasonably. In this, the court also presumes that the person shall have knowledge of a fact and it cannot be proved that it was not obtained.
For example, X agrees to sell his property to Y. There are tenants of that property that pay rent to Z. It is presumed that Y will have notice of the fact that the tenants pay the rent to Z and hence he cannot claim that he was devoid of knowledge of this fact.
Legal presumption of knowledge is considered when it is prima facie understood that a fact can come to the notice of a prudent person but because of wilful abstention from an inquiry or search, a person does not have the knowledge of that fact.
Gross negligence is a concept that is used in the constructive notice. It is different from negligence which means mere carelessness or omission to do an act. The doctrine of constructive notice applies when there has been gross negligence which means a high degree of carelessness or neglect. Mere negligence is not punished as seen in the case of Hudson v. Vincy (5), where the court defined gross negligence as a degree of negligence so gross that a court may presume it to be some kind of fraud. Hence it can be understood, that only gross negligence is punishable.
Before starting to understand any statute, it is important to know the keywords surrounding the law. Section 3 of the Transfer of Property Act, 1882 as it reads ‘Interpretation Clause’ states the interpretation of a few keywords that are used all throughout the Act. The definitions of Immovable property, Attested, Registered, things attached to Earth, Notice and Actionable claims are basic for the understanding of further provisions given in this act and hence, this article has been called an introduction to Transfer of Property Act, 1882. The reader will be able to know about the basics of property law through this article and will be able to interpret these 7 definitions given in the act in an easier way. The author has included illustrations where it is required and has provided judicial pronouncements to widen the scope of concepts.
(1) AIR 1986 All 182
(2) (1872) 6 Mad HC 71
(3) 1958 AIR 532
(4) AIR 1998 All 72
(5) (1921) 1 Ch 98