The Transfer of Property Act 1882, is a legislation that came into force on 1st July 1882 and it regulates the transfer of property in India. It has incorporated specific provisions relating to valid transfers and conditions attached to it.
According to the Act, “transfer of property” is defined as an act in which a person conveys the property to one or more living persons or himself and one or more other persons. The transfer may be done in the present or for the future.
According to the Act the term “living person” includes companies, body corporate, an association of persons whether incorporated in India or not. The property transferred can be of any type either movable or immovable.
The object of the Transfer of Property Act is to regulate the law relating to the transfer of properties by act of parties and not by operation of law. A transfer of property is a contract and therefore it is important that all necessary requirements of a valid contract must be fulfilled in the transfer of property.
Section 5 of the Transfer of Property Act defines “transfer of property.” It states that “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; and to transfer property is to perform such act”
The word property has not been defined in the Act but it has a broad meaning and incorporates properties of all descriptions. It includes both movable and immovable properties. It also incorporates intangible properties such as tenancy, ownership, intellectual property rights etc.
In case of Prethi Singh v. Ganesh, 1951, the Allahabad High Court held that the term “property” includes property situated outside India or the territories where the Act does not apply. If the transfer is given effect at a place where the Act is in force, the rights and liabilities of the parties will be determined by the Act and the location of the property will be irrelevant.
Essentials of a Valid Transfer of Property
The transfer of property must take place between two or more living persons.
The transfer of property must take place inter vivos, meaning property must be transferred between two or more persons who are living. Both the transferor and transferee must be living entities on the date of transfer. There should be an act of conveyance by some living person to constitute a transfer.
In case of Harish Chandra v. Chandrashekhar, 1977, it was held by the court that a release deed is a conveyance and hence it is a transfer of property.
The property transferred must be transferable
Section 6 lays down the types of properties that cannot be transferred, other than those enumerated in the section all kinds of property can be transferred. The property that cannot be transferred are enumerated below:
- The chance of heir- apparent succeeding to an estate called as spes successionis, or chance of a relation obtaining the legacy on the death of a kinsman, or any other probability of similar nature is not a property and therefore not transferable.
- Right of re-entry cannot be transferred to anyone except the owner of the property affected thereby.
- An easement cannot be transferred apart from the dominant heritage.
- A right to future maintenance in any manner arising, secured or determined, cannot be transferred.
- An interest which is restricted in its enjoyment to the owner for his personal use, for example, religious offices, tenure of services etc. cannot be transferred.
- A mere right to sue cannot be transferred.
- A public office or the salary of a public officer, before or after it becomes payable cannot be transferred.
- Stipends allowed to military or defence personnel, and civil pensioners of the government and political pensions cannot be transferred.
- No transfer can be made which is opposed to the nature of interest affected thereby. Therefore an attempted transfer of a service inam by the inamdar or purported transfer of res nullius like air or water from a river will be void.
- No transfer can be made to a person who is disqualified to be a transferee.
In R. Rajegowda v. H. R. Shankar Gowda (2006), it was held that a person having life interest in property cannot bequeath it by executing a will.
In Sundariya Bai Chaudhary v. Union of India, 2008 the court held that the family pension of the deceased was not in the nature of an estate and it was not transferable so it could not be bequeathed by a will. The court observed that other benefits like provident fund, gratuity, and extra remunerations would be included in the category of an estate.
The transfer must not be opposed to the nature of the interest affected thereby or for an unlawful object or consideration.
Res communes means things which have no particular owner and which belong to each and everyone. Such things cannot be transferred by people. For example, air, water, sunlight etc. are the things which do not belong to anybody and they are incapable of being apportioned. Res extra commercium means the things throughout of commerce, such as a property dedicated to a deity cannot be transferred.
Under Section 23 of Indian Contract Act, 1872, unlawful object and consideration is one which is forbidden by law and is of such a nature that would defeat the provisions of law or is fraudulent or involves injury to another person or his property and the court regards such transfer as immoral or opposed to public policy.
The transferor must be competent to contract and entitled to transfer property or authorised to dispose of transferable property which does not belong to him.
Section 7 of the Act provides that a person will be competent to transfer the property if he fulfils the criteria under Section 11 of the Indian Contract Act 1872. Section 11 of the Indian Contract Act states that a person is eligible to contract when he is a major i.e. he has attained 18 years of age and is of sound mind, meaning thereby he is capable of understanding the terms of the contract and its implications and consequences and can form a rational judgement, and should not be disqualified by law. A minor i.e. person who has not attained 18 years of age is not competent to be a transferor but he is not disqualified to be a transferee.
In case of Mallikarjun v. Mareppa 2008, a person brought a property in the name of his minor son and later sold it again while the son was still a minor. Court’s permission under Section 8 of the Hindu Minority and Guardianship Act 1956 was necessary in this case but was not taken. The provision was mandatory so the sale was held to be void.
Sadiq Ali Khan v. Jaikishore 1928– In this case the Privy Council observed that a deed executed by a minor was null and void. Principle of estoppel cannot be applied to a minor. A minor is not competent to transfer but transfer made to a minor is valid and legal.
Amina Bibi v. Syed Yousuf, 1922- The Allahabad High Court held that a contract made by a lunatic is void under section 11 of the Indian Contract Act. The transfer of his own property by him is also void.
K. Kamama v. Appana- In this case it was held that under section 11 of Hindu Minority and Guardianship Act, a de facto guardian is merely a manager and cannot dispose of the property of a minor. Such sale would be invalid.
Chittu Singh v. Chatan Singh, 1923- It was held that a person who has no right at all to have possession has no right to make any valid transfer. The power of such person cannot exceed the power of the person who has appointed him.
The transfer should be made in accordance with the mode prescribed by the Act.
Section 9 of the Act states that a transfer of property can be executed without a written instrument where writing is not expressly necessary under the law. It provides for the oral transfer.
Transfer must not offend the rule against perpetuity.
Section 14 of the Act lays down the rule of perpetuity. Perpetuity means eternity or infinity. It refers to the creation of an interest in the present time which is to take effect after an entirely long period. No transfer of property can be effected to create an interest which is to take place after the lifetime of one or more persons living at the date of such transfer. The rule of perpetuity ensures that one cannot postpone the vesting of property in a transferee beyond a certain limit.
Transfer for benefit of unborn person
Section 13 of the act states that transfer cannot be executed directly in favour of an unborn child. One of the prerequisites of a valid transfer is that a transferee must be a living person. The interest of the unborn child must be backed by prior interest to one or more living persons, and the unborn person must be in existence when the prior interest comes to an end and he must have the interest at the latest when he attains majority.
If the transfer is conditional, such condition should not be impossible or forbidden by law or against public policy.
Section 25 of the Act states that when the condition imposed on the transfer becomes impossible to be performed or unlawful or immoral, the interest accruing in the transfer of the property which is dependent on such condition fails. Therefore when the condition becomes void the transfer becomes void too.
Nathu Lal v s Durga Prasad, 1954- A lady obtained the property under the will of her father. When she died, the plaintiff, who was her sister’s son, claimed the property as reversioner on the ground that she had only a limited estate. Another claimant was the deceased woman’s husband who claimed to succeed the property as heir to her stridhan. The Rajasthan High Court held that the woman had only limited estate and gave a decree in favour of the plaintiff. The Supreme Court set aside the decision and held that an absolute estate had passed to the legatee. It was held that there is no difference between the case of a female and a male and the fact that the donor is a woman does not make the gifts less absolute where the words are sufficient to convey an absolute estate to a female.
The Transfer of Property Act is a piece of legislation that lays down clear and detailed provisions as to what would constitute a valid transfer. The Act deals with the transfers made by the act of the parties and not by operation of law. All the above mentioned essential requirements must be fulfilled in order to constitute a valid transfer and avoid any dispute in the future.