Table of Contents
Table of Contents
Meaning of Transfer of Property
Section 5 of the Transfer of Property Act, 1882 defines the term transfer of property. According to this section, 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 other living persons. The phrase “living person” includes a company or association or body of individuals, whether incorporated or not, but nothing in this section shall affect any law for the time being in force relating to or by companies, associations or bodies of individuals.
The word property in the Act has been used in one of the following senses:
(i) Tangible material things like house.
(ii) Rights which are exercised over material things like the right to sell or make a gift of things.
(iii) Rights which are not exercised over any material such as the right to repayment of a debt.
The expression transfer of property implies various meanings. One sense maybe transfers of things such as the sale of a house. Another sense maybe transfer of one or more of the rights in a thing such as mortgage of a house or transfer of a debt.
Thus, if a new title has not been created or some interest has not been transferred in favour of the Transferee, then the transfer of property cannot take effect.
An analysis of section 5 helps us understand the meaning of the phrase, “transfer of property”. Thus, transfer of property means an act which may take effect in the present or future. The property in question must be in existence at the time the transfer takes place. Moreover, the conveyance of the property must be from one living person to another.
What may be Transferred
Section 6 of the Transfer of Property Act, 1882 discusses the property which may be transferred. The section states that property of any kind may be transferred. However, Clauses (a) to (i) of section 6 mention the properties which cannot be transferred.
Clause (a) describes spes successionis cannot be transferred. This clause states that the transfer of a bare chance of a person to get a property is prohibited under this section. For example, Arun expecting that Chandini, his aunt, who had no issues, would bequeath her house worth Rs. 50,000 transfers it to Bhushan. The transfer is invalid as it is a mere matter of chance of receiving the property on the part of Arun. Thus, it is invalid.
Clause (b) mentions that the right of re-entry cannot be transferred. The right to re-entry implies a right to resume possession of the land which has been given to someone else for a certain time. The section mentions that the right of re-entry cannot be transferred by itself apart from the land. For example, A grants a lease of a plot of land to B with the condition that if shall build upon it, he would re-enter — transfers to C his right of re-entering in case of breach of the covenant not to build. The transfer is invalid.
Clause (c) mentions that easement cannot be transferred. An easement is a right to use or restrict the use of land of another in some way. For example, the right of way or right of light cannot be transferred.
Clause (d) mentions that an interest restricted in its enjoyment of himself cannot be transferred. For instance, if a house is lent to a man for his personal use, he cannot transfer his right of enjoyment to another.
Clause (dd) restricts the transfer of the right to maintenance. Such a right cannot be transferred as such right is for the personal benefit of the concerned person.
Clause (e) provides that mere right to sue cannot be transferred. The prohibition has been imposed as the right to sue is a right which is personal and exclusive to the aggrieved party. For example, a person cannot transfer his right to sue for the damages suffered by him due to breach of contract by the other party.
Clause (f) forbids the transfer of public offices. The philosophy behind the prohibition is that such a transfer may be opposed to public policy in general. A person is eligible to hold a public office on the grounds of his personal qualities, and such qualities cannot be transferred. Thus, the transfer of public offices is prohibited under this section.
Clause (g) of section 6 provides that pensions cannot be transferred. Pensions allowed to military and civil pensioners of government and political pensions cannot be transferred. In simpler terms, a pension may be understood as any periodical allowance which may be granted in regard to any right of office but only on account of the past services offered by the pensioner.
Clause (h) of this section is titled as nature of nature. This clause prohibits transfer which will oppose the interest affected thereby. The transfer is also forbidden if the object or consideration of the transfer is unlawful. Moreover, a transfer by a person who is legally disqualified from being a transferee is also forbidden.
Clause (i) of section 6 was inserted by the Amendment Act of 1885. The clause declares that certain interests are untransferable and inalienable. For example, a farmer of an estate, in respect of which default has been made in paying the revenue, cannot assign his interest in the holding.
Thus, section 6 containing clauses (a) to (i) specifically mention that certain things cannot be transferred. Such a transfer if undertaken would be invalid in the eyes of the law in India.
Person competent to Transfer
Section 7 enumerates the concept of competency of persons who may be allowed to transfer property. According to this section, a person is allowed to transfer property if he satisfies two conditions. The first condition is that the person must be competent to enter into contracts with other persons. The second condition is that the person who is willing to transfer property must have title to the property or authority to transfer it if he is not the real owner of the property.
An important point to be noted in this regard is the conditions mentioned in section 11 of the Indian Contract Act, which specifies the category of persons who may be competent to transfer. In the section, it is stated that the person must have attained majority, he must be of sound mind, and he must not be disqualified to enter into contracts by any other law applicable in India.
Operation of Transfer
Section 8 of the Transfer of Property Act expresses the concept of operation of the transfer. The first paragraph states that the courts must, in the absence of a contrary intention, hold that the transferor indented to transfer all his interests and legal incidents in the property. Where the property transferred island, all the legal incidents such as easements, rents and profits and things attached to earth shall be transferred. Where the property to be transferred is a house, easements, the rents accruing after the transfer, locks, keys, bars, doors etc. shall also be transferred. Where the property to be transferred is machinery attached to the earth, in such a case, movable parts of the machinery shall also be transferred. In cases where the debt is transferred, the legal incident that is securities shall also be transferred. Where the property is money or other property which may yield some kind of income, then the interest or income accruing after the transfer takes effect shall also be transferred. In other words, the property and the legal incidents attached to the property shall be transferred as part of the same transaction.
Section 9 of the transfer of property act, 1882 elaborates the concept of oral transfer. It mentions that property may be transferred orally in cases wherein it has not been expressly mentioned that the property must be by law transferred in writing. Writing is necessary in the following cases:
(i) Sale of immovable property having a value of more than rupees hundred. (Provided under section 54 of the Transfer of Property Act, 1882)
(ii) Sale or reversion of other intangible things. (Provided under section 54 of the Transfer of Property Act, 1882)
(iii) Simple mortgage. (Provided under section 59 of the Transfer of Property Act, 1882)
(iv) All other mortgages are securing rupees hundred or more. (Provided under section 59 of the Transfer of Property Act, 1882)
(v) Leases of immovable property from year to year or for a term exceeding one year or reserving a yearly rent. (Provided under section 107 of the Transfer of Property Act, 1882 )
(vi) Exchange. (Provided under section 108 of the Transfer of Property Act, 1882)
(vii) Gift of immovable property. (Provided under section 123 of the Transfer of Property Act, 1882)
(viii) Transfer of actionable claim.(Provided under section 130 of the Transfer of Property Act, 1882)
Condition Restraining Alienation
The section 10 of the Transfer of Property Act states that where a property is transferred subject to a condition absolutely restraining the Transferee from parting with his interest in the property, the condition is void. For instance, if A transfers his property to B with the condition that B shall never resell it. The condition imposed is void and B may sell or not sell as he wishes to do. The philosophy behind this section is that a right of transfer cannot be separated from the ownership of the property. The rule that a condition of absolute restraint is void is based on the principle of a public policy allowing free circulation and disposal of property.
A transferred a field to B with the condition that if B sold it, he must sell it to C and to nobody else. The condition was held to be void as the name of the person who alone was permitted to purchase might be so selected as to render it reasonably certain that he would not buy the property at all.
Restrictions Repugnant to Interest Created
Section 11 of the Transfer of Property Act, 1882 is titled as restriction repugnant to interest created. The section states that any condition restraining the lawful enjoyment of the property which is transferred absolutely is void. Any such condition if imposed shall be considered non-existent and any such transfer will operate as if no such condition was imposed in the first place. In other words, if a man makes a transfer of property absolutely, he shall not be allowed to impose upon the Transferee any condition which imposes a restriction on the right of the Transferee to dispose or enjoy the property as per his own will. The section refers to absolute interest only. Absolute interest implies that:
(i) There should be a transfer of property.
(ii) An interest in the property in favour of Transferee should be created.
(iii) The term of transfer should direct that such interest shall be applied for enjoyment in a particular manner only.
A careful reading of section 11 helps us understand that the second paragraph of the section states the exception that has been provided by the Act. The second paragraph states that,
“Where any such direction has been made in respect of one piece of immovable property for the purpose of securing the beneficial enjoyment of another piece of such property, nothing in this section shall be deemed to affect any right which the transferor may have to enforce such direction or any remedy which he may have in respect of a breach thereof.”
Thus the general rule provided under section 11 is subject to the above-mentioned exception. In simpler words, the transferor may impose condition restraining the enjoyment of land if such restriction is for the benefit of the adjoining land.
A makes a gift of the house to B on a condition that the gift will be forfeited if B does not reside in it. The Condition is valid for the gift is not an absolute gift. The condition would have been void if the gift was an absolute gift.
Hence, it can now be clearly understood that the transfer of property is a multi dimensional concept. The person transferring the property and the person receiving the property become a part of the transaction owing to their rights and legal obligations enshrined in the Transfer of Property Act, 1882.