Prachuya Sahu | Symbiosis Law School, Pune | 27th June, 2020.
In law, property ascribing to a wide variety of things. Not only does it include within its purview land and objects but also intangible rights which can be considered to be a source of income. Properties like the global commons such as the sea, the air etc. are properties which are open to everyone to enjoy, without prescribing any exclusive right to any single person. However, movable or immovable properties refer to those properties which can be owned by people singularly or jointly, to the exclusion of others. This right of possession and ownership of property, to the exclusion of others manifests as the right to enjoy and dispose of things in an absolute manner, as long as it is in accordance to the law of the land.
Generally, property is defined as any physical or virtual entity that is owned by an individual or jointly by a group of individuals. An adequate definition of property in law is found in the Benami Transactions (Prohibition) Act, 1988 which defines it as “property of any kind, whether movable or immovable, tangible or intangible, and includes any right or interest in such property.”
Due to difference in laws, procedural and substantive, which are applicable to different properties and their transfers, a distinct categorisation of property based on standard parameters is extremely important and necessary. One of the most important distinctions in property is classification of property into moveable and immovable property. This classification is the result of a number of legislations which together give a comprehensive definition of what constitutes as moveable or immovable property.
Immovable Property
In general parlance, immovable property is designated as such on the basis of movability. The most succinct, though not exhaustive[1] definitions of immovable property is contained in the General Clauses Act, 1897. It defines it as “Immovable property shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth.”[2]
The main document that deals with the Immovable Property is the Transfer of Property Act, 1882. It does not lend the most conclusive definition of what an immovable property essentially is. The Act provides a negative definition i.e. of what does not constitute as immovable property: “Immovable property does not include standing timber, growing crops or grass.”[3] However, it provides clarity to the phrase “attached to the earth” used in the General Clauses Act to include:
“(a) rooted in the earth, as in the case of trees and shrubs;
(b) imbedded in the earth, as in the case of walls or buildings; or
(c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached”[4]
The definition contained in the General Clauses Act is applicable to the Transfer of Property Act[5] as modified by the negative definition contained in the later.[6] This combination of both these definitions provides the most comprehensive definition to govern immovable property— the property which includes land, benefits arising out of lands as well as things attached to the earth except standing timber, growing crops and grass.
Land
Land refers to a deterministic portion of earth’s surface. It not only includes simple soil and ground but also the objects which are on or under the natural surface. Such objects may be naturally occurring or placed by human agency with the intention of permanent annexation to the earth are within the definition of land, and therefore immovable property. It includes buildings[7], walls, fences etc.
Benefits Arising Out of Land
Benefit arising out of land implies an interest in the land. It refers to the profits one can derive out of a land without exercising substantial control over such a land and is recognized as “profit a prendre” It recognizes the various rights which are associated with such profits to be within the purview of immovable property. Some such rights which have been deemed to be “benefits arising out of a land” and therefore immovable property are the right to carry away fish from a lake,[8] right to enter upon land and cut trees,[9] right to hold a bazaar (market)[10] as well as the right of enjoyment of land under a lease[11] and more.
Things attached to Earth
As laid down in the TPA, “attached to the earth” refers to three items— things rooted in the earth, things embedded in the earth, things attached to that which is embedded for beneficial purposes.
Things rooted in the earth
This sub-category involves trees and shrubs with the exception of standing timber, growing crops and grasses.[12] That being said, whether trees can be accorded the status of movable or immovable property is a question to be decided on the circumstances and intention of the parties[13] of such cases. If the intent behind any transfer such trees is to derive continued benefit such as reaping the fruits, then such trees are considered immovable property. However, if the intention is to cut them down eventually for the purpose of using it as wood for industrial purposes, then they would be considered standing timber and regarded as movable property.[14]
Things embedded in the Earth
These essentially include man-made or non-natural objects which are embedded on the hand for decided period of time ranging for short time of a couple of hours to years together. This may include things like houses,[15] buildings, wells, anchors etc. To determine whether a property is movable or immovable, two tests have been devised- (1) the degree or mode of annexation; and (2) the object of annexation.
- The degree or mode of annexation– This is an important element for consideration; a chattel when so annexed that its removal will cause great damage to the land, it contributes to a strong ground for the assumption that such a structure was annexed to the land in perpetuity.[16] Other items such as anchors which are easily removable lend to the idea that they were intended to be annexed for a short period of time.
- The object of annexation– The nature of the interest in the land possessed by the person who initiates such annexation is also an important consideration while determining whether a property is movable or immovable.[17] This too is inferred from the circumstances of the cases. For example, oil and flour mills and the machinery used in them, are considered fixtures, intended to be there for a long time and therefore considered immovable property.[18]
Things Attached to What is Embedded
In Indian Property Law, at times property which are generally movable undertake the character of immovable property for legal purposes. The attachment must be for the purposes of permanent beneficial enjoyment of the thing to which it is so attached, which is an immovable property. Therefore, for example, the doors and windows of a house, as attached to said house which is then embedded on land, are for the purposes of beneficial enjoyment of the house. They therefore are considered immovable property[19] even though in practicality, they can be detached and removed without much damage caused. However, in cases where the chattel attached is simply for the enjoyment of the said property, without any benefit to the immovable property to which it is attached, it is considered to be movable property.
Exceptions—Standing Timber, Crops and Grass
Some of the items which have been categorically been decided not to constitute “immovable property” by legislation are standing timber, crops and grass.
- Standing Timber- All trees are not considered standing timber. Standing timber refer to those trees which are to be used for industrial purposes such as building or repairing houses.[20] This would include trees such as oak, ash elm,[21] neem, shesham[22] or teak trees.[23] The main point of distinction is that the standing timber are those trees which are planted to be usually cut down and used for other purposes and do not draw nutrition and sustenance out of the soil as its main purpose.[24] For this reason, fruit bearing trees are not considered standing timber and come within the ambit of immovable property.
- Growing Crops- Growing crops include millets like wheat, rice etc, vegetables like bottle gourd, pumpkin and more such crops. The main element of consideration is that these crops do not have any independent existence beyond their final product, with use only as fodder or produce. It, therefore, is movable property.
- Grass- While the right to cut grass would constitute a interest in land, making such a right immovable property, but grass itself is considered movable property.
Movable Property
Movable property is defined in The General Clauses Act, 1897, in simple words as “property of every description, except immovable property.”[25] Adding to that definition, the Sale of Goods Act, has defined goods to mean “every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale”[26]
The reason it is necessary to use the definition of laid down by the Sale of Goods Act, is because it provides a solid framework of what exactly constitutes goods or movable property. Such framework is necessary to adequately impose taxes and clarify the position of rights and duties in relation to any transaction involving them.
Stocks and Shares
Shares essentially refer to a bundle of rights which are derived from contributing to a company’s capital. Rights conferred by ownership of such shares include the right to elect directors, vote on resolutions, enjoy profits and to share surplus.[27] Such shares and stocks, due to their transferability are considered movable property.
Standing timber, growing crops and grass.
As has been explained previously, standing timber, growing crops and grass are all considered an exception to the purview of immovable property and are therefore, considered very much a part of movable property. The ground for this distinction is the use profile of these items. These goods are the most profitable when cut down and used as building material (timber), food (crops) and fodder (grass). Its purpose is served when it is cut down, therefore making it movable property.
Exceptions-Actionable Claims and Money
Items which have been laid down to be beyond the purview of Movable Property or Goods are Actionable claims and Money.
- Actionable claims- Transfer of Property Act, 1882 defines actionable claim as a claim to any debt which the Civil Courts recognise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.[28] These don’t include debts secured by mortgage of immoveable property or by hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in the possession, either actual or constructive, of the claimant. An actionable claim allows a person not to enjoy the benefit of something but to have a right to recover it by a suit or action. For example, the right to participate in a lottery draw is a composite right of a chance to win, it is therefore an actionable claim and not a “good.”[29]
- Money- Here, “money” refers to current money. It is not considered “goods”, but it is a legal tender. Since legal tender cannot be exchanged for any other legal tender, this lack of transferability is why it is not included within the definition of “goods.” One exception is rare or antique coins, which have ceased to be current money or legal tender.[30]
[1] Mulla, The Registration Act, 13th ed
[2] Section 3(26), The General Clauses Act, 1897
[3] Section 3, The Transfer of Property Act, 1882.
[4] Ibid.
[5] Babu Lal v Bhawani, (1912) 9 All LJ 776.
[6] Tarkeshwar Sia Thakurji v Dar Das Dey Co, (1979) 3 SCC 106
[7][7] Section 2(6), The Registration Act, 1908
[8] Anand Behera v State of Orissa, [1955] 2 SCR 919
[9] Shantabai v State of Bombay, [1959] 1 SCR 265
[10] Mosammat Bibi Sayyeda v. State of Bihar, (1996) 9 SCC 516
[11] Kenneth Solomon v Dan Singh Bawa, AIR 1986 Del 1
[12] As stipulated by the Section 3 of The TPA.
[13] Suresh Chand v Kundan, (2001) 10 SCC 221
[14] Shantabai v. State of Bombay, AIR 1958 SC 532
[15] Punnayya v Venkatappa, AIR 1926 Mad. 343
[16] Wake v Halt, (1883) 8 App Cas 195 , p 204.
[17] Spyer v Phillipson, (1931) 2 ChD 183
[18] Amritalal v Keshavlal, (1926) AIR 1926 Bom 495
[19] Purshotama v Municipal Council, (1891) ILR 14 Mad 467.
[20] Joseph Annamma, (1979) Ker LT 322.
[21] Halsbury’s Laws of England, 3rd Edn vol 17, p 624
[22] Baijnath v Ramdhar, AIR 1963 All 214
[23] Kunhikoya v Ahmed Kutty, AIR 1952 Mad. 39
[24] Shantabai v State of Bombay, AIR 1958 SC 532
[25] Section 3(36), The General Clauses Act, 1897
[26] Section 2(7), The Sale of Goods Act,1930
[27] Hindustan Lever Employees’ Union v Hindustan Lever Ltd, AIR 1995 SC 470
[28] Section 3, Transfer of Property Act, 1882.
[29] Sunrise Associates v Govt of NCT Delhi, AIR 2006 SC 1908
[30] Re Mathur Lalbhai, (1901) 25 Bom 702.
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