Prachurya Sahu | Symbiosis Law School, Pune.

Introduction

The Transfer of Property Act of 1882 is the overarching legislation which governs the transfer of property, both movable and immovable. Chapter II of the Act, from Sections 5 to 37 apply generally to movable and immovable properties. The rest of the Act focuses on transactions between only immovable property, detailing various procedures, methods, approval of transfers etc.

The Act governs only those transactions which result from the mutual conduct of the parties. It doesn’t cover transfers via inheritance, insolvency or forfeiture.

The Act defines a transfer as an “act by which a living person conveys property, in present or in future, to one or more living person or to himself and one or more other living persons”[1] “Transferor” refers to the one who transfers the property while the person who receives such property is called the “transferee.” A “living person” has been meant to include within its purview not only individuals but juristic persons such as a company or association or body of individuals[2], whether incorporated or not, without affecting any law made specifically for transfer of property within these groups.[3] Competency is the next important essential for a valid transfer. The Act provides that a person can transfer property only if he is competent to contract and has a valid title to the property or authority to transfer.[4] Competency to contract manifests with a person who is of majority in age, has a sound mind and is not otherwise disqualified under any law.[5]

Types of Transfer

The Act governs five types of transfers:

• Sale
• Mortgage
• Lease
• Exchange
• Gift

Sale

Section 54 of the Transfer of Property Act defines sale as “is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.”

A transfer of ownership refers to the transfer of all rights and interests in the properties which are possessed by the transferor to the transferee with free consent.[6] Furthermore, the subject matter of a sale must always be immovable property which is identifiable. This means the identity of the property must be undisputed.[7] All sale of movable property is under the purview of the Sale of Goods Act, 1930.[8]

Price here only refers to the consideration of money[9], not of other things in value. Any other type of consideration would characterise that transaction as an exchange.[10] The words “price paid or promised or part-paid and part-promised” indicate the importance of price as an ingredient in the transaction of a sale. It lays down that the payment of the whole price is not necessary for the execution of valid sale deed i.e. part payment is also recognized for a sale to be complete.[11]

As stipulated in the Transfer of Property Act, the two recognized mode of transfer is- (1) Registered instrument, the process of which is mentioned in the Registration Act, 1908; and (2) Delivery of possession. No other way is legally recognized. [12]Any transfer that takes place by operation of law such as a judgment or order of the court are beyond the scope of Section 52.

Mortgage

Section 58 of the TPA defines mortgage as “the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.”

There are various kinds of mortgages available where the basic element is the transfer of some partial interest of the transferor as opposed to the transfer of all interests in cases of sale.[13] However what changes with different mortgages is the nature of this interest. In cases of simple mortgage, the power of sale is transferred. In an usufructuary mortgage, the right of possession and enjoyment of the property is transferred.[14] A conditional mortgage, the right of ownership subject to a condition is transferred.

Another important element of a mortgage is that the right of interest created in the property can be attached to the right to recover the debt.[15] When such a debt is completely paid, the property can revert back to the actual owner.

The main purpose behind such a transaction is to secure a debt. This way if the mortgager forfeits on his debt, the interest so transferred can be used by the mortgagee to recover such debt.

Lease

Section 105 of the TPA defines lease as “is a transfer of a right to enjoy immovable property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.”

Essentially it is a transfer of right of enjoyment of an immovable property to someone who so accepts in return for prior payment or periodic flow of valuable consideration. The person who transfers such a right is called the lessor and the person. The price already paid is called the premium and the periodic payment of consideration is called rent.

In contracts of leases, the nature of relationship between the lessor and lessee imply the right of possession of land to lie with the lessee.[16] Such lessee/tenant is entitled to remain in possession of the property till the lease is lawfully terminated as long as the rent is being paid timely.[17]

The contract also allows for a lessee to further sub-let the leased property in return for rent. While the term sub-let is not exactly defined within the TPA but the definition of “lease” can be adopted for it. The fact that the lessor is itself a lessee to another person and therefore does not have the complete interest of the property does not invalidate or change the transfer between the lessee and sub-lessee.[18]

Exchange

Section 118 of the TPA defines exchange as “When two persons mutually transfer the ownership of one thing for the ownership of another neither thing or both things being money only, the transaction is called an “exchange.” Further it also states, “A transfer of property in completion of an exchange can be made only in manner provided for the transfer of such property by sale”

In general parlance, the word “exchange” refers to give or transfer for an equivalent[19] In law, an exchange is effected in the same way as a sale.[20] This means that the exchange of goods are subject to the manner laid down in Section 54 of the TPA with regards to the registration or delivery of possession.[21] Therefore, for an exchange to be valid, there must be physical delivery of the property to the parties and such parties to the exchange are vested with the same rights and duties as between a seller and a buyer.[22]

An exchange is a barter of goods, therefore either property to be exchanged cannot be money as it would simply denote a sale.[23]

Gift

Section 122 of the TPA deals with gift and defines it as “…the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee. Such acceptance must be made during the lifetime of the donor and while he is still capable of giving, If the donee dies before acceptance, the gift is void.”

Gift, essentially is the transfer of existing property in the favour of another person without any consideration or expectation of the same. The words “during the lifetime of the donor” shows that gift, as envisioned by the TPA deal with inter vivos gift i.e. a gift between people who are alive.

The main tenets that make a gift valid is that it is voluntarily made by the transferor, made without consideration or apprehension of the same and it is accepted by the donor within his lifetime. Conditional gifts are also permitted as long as the condition is not prohibited by law.

In cases of gifts, the maxim “qui sentit commodum, debetet et sentire onus” is of prominence which lays the principle for onerous gifts. Onerous gifts are those within which subsists a burden or obligation. The maxim as well as Section 127 of the TPA lay down that a gift can be accepted in its entirety, and not to the exclusion of the obligation.

[1] Section 5, The Transfer of Property Act, 1882.

[2] Hindustan Lever v State of Maharashtra, (2004) 9 SCC 438, Shriomani Gurudwara Prabandhak Committee, Amritsar v. Som Nath Dass and Ors. (2000) 4 SCC 146.

[3] Ibid.

[4] Section 7, The Transfer of Property Act, 1882.

[5] Section 11, The Indian Contract Act, 1872.

[6] Iqbal Singh v State of Haryana, (2011) 3 RCR (Civil) 365 

[7] Ram Jiwan Rai v Deoki Nandan Rai, AIR 2005 Pat. 23 

[8] Sahebram Surajmal v Purushottamlal, (1950) ILR Nag 355

[9] Ramlal v Phagua, (2006) AIR 2006 SC 623 

[10] State of Madras v Gannon Dunkerley and Co (Madras) Ltd, AIR 1958 SC 560

[11] Vidhyadhar v Manikrao, (1999) AIR 1999 SC 1441

[12] Narayan Swami v Lakshmi, (1939) 48 Mad LW 959

[13] Raja Shiba Prasad Singh, AIR 1941 PC 36 

[14] Prahlad v Maganlal, (1952) AIR 1952 Bom 454 

[15] Rajkumari Kaushalya Devi v Bawa Pritam Singh, [1960] 3 SCR 570

[16] Saddashiv Shyama Sawant v Anita Anant Sawant, AIR 2010 SC (Supp) 798

[17] Jaswantsinh Mathurasinh v Ahmedabad Municipal Corpn, (1992) 1 SCC 5, p 12 (Supp).

[18] Mineral Development Ltd v UOI, AIR 1960 SC 1373 

[19] Ram Badan v Kunwar, AIR 1938 All 229

[20] Ram Kristo v Dhankisto, AIR 1969 SC 204

[21] Debi Prasad v Jaldhar Chaube, (1945) All LJ 537 

[22] Mohammadin v Asibun Nissa, AIR 2005 Jhar. 1

[23] CIT v Motor & General Stores Pvt Ltd, AIR 1968 SC 200