Real Estate Project Prithvi.docx

REAL ESTATE LAW PROJECT TOPIC:

Section : 5

MADE BY: Prithvi Yadav COURSE : B.A.LLB(H) 2015-2020 ENROLLNENT NUMBER : A11911115068

The Transfer of Property Act, 1882 Bare Provision of the Act Chapter II

Of Transfers of Property by Act of Parties (A) Transfer of Property whether moveable or immovable 5. “Transfer of property” Defined. – In the following sections “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, or to himself1 and one or more living persons; and “to transfer property” is to perform such act. In this section “living person” includes a company or association or body of individuals, whether incorporated or not, but nothing herein contained shall affect any law for the time being in force relating to transfer of property to or by companies, associations or bodies of individuals2.

Transfer of Property: An Introduction The word “transfer” is defined with the reference to the word “convey”. This word in English Law in its narrower and more usual sense refers to the transfer of an estate in land; but it is sometimes used in a much wider sense to include any form of assurance inter vivos. The word „conveys‟ in Section 5 of the Indian Act is used in the wider sense referred to above. Transferor must have an interest in the property. He cannot sever himself from it and yet convey it.3 A lease comes within the meaning of the word „transfer‟.4 The words „living person‟ exclude transfers by Wills and the Will only operates after the death of the testator.5 In Ma Kyin Hone v. Ong Boon Hock,6 a single Judge of the Rangoon High Court said that the word „transfer‟ is a word of very wide meaning and includes every transaction whereby a party divests himself or is divested of a portion of his interest, that portion 5subsequently vesting or being vested in another party. This meaning of „transfer‟ is supported by the aforesaid definition in the Act. The Legislature has not attempted to define the word „property‟, but it is used in this Act in its widest and most generic legal sense.6 Section 6 says that „property of any kind may be transferred‟,

1 2 3

Ins. by Act 20 of 1929, sec. 6. Ibid. See Mulla, The Transfer of Property Act, 9th Ed., LexisNexis Butterworths, 2004, p. 73.

4

Krishna Kumar Khemka v. Grindlays Bank PLC, AIR 1991 SC 899. See topic Living Persons at p. 3. 5 AIR 1937 Rang. 47. 5

6

Bansigopal v. V.K. Banerji, AIR 1949 All. 433.

etc. Thus an actionable claim is property;7 and so is a right to a reconveyance of land.8 Property is not only the thing which is the subject matter of ownership, but includes the dominium or the right or ownership or of partial ownership, and as Lord Langdale said it is the most comprehensive of all terms which can be used inasmuch as it is indicative and descriptive of every possible interest which the party can have.9 It may be noted that property is essentially a bundle of rights and interests. When a property is transferred, there may be transfer of all the rights in that property or only some of it. All the rights in the property signify ownership or absolute interest. Only some rights or interests in a property would mean partial or limited interest. In Sunil Sidharthbai v. Commissioner of Income Tax,10 the Supreme Court rightly observed that in general, transfer of property means passing of a right in the property from one person to another. In one case there may be passing of entire bundle of rights from transferor to transferee, but in another case there may be transfer only some of such rights. This, if A makes a gift of his house to B, there is transfer of absolute interest of the house. It is a transfer of „property‟. On the other hand, if A transfers the right of enjoyment of his house to B for a certain period it is called a „lease‟. It is transfer of only partial interest in the house but it is also a transfer of „property‟.11

Living Persons The words “living person” can only mean a human being, who is alive and conveys his property to another person. A person, who disposes of his property by will, does not convey it as a living person because the transfer takes effect after his death. There is no present transfer.12 The words are use d as the transfer under the Act must be a deed intra vivos and not by will. According to the Section, both the transferor and the transferee must be living, which includes under Section 13 a person not in existence at the date of the transfer13. The explanation to the section further includes in the phrase a company or association or body or individuals whether incorporated or not. So does also “person” according to the General Clauses Act, 1897.14 The expression „inter vivos‟ refers to transfer or conveyance of the property from one living person to another. Thus it is an act between two living persons who are parties to such transaction, which takes place between two. That also is the trust of Section 5 of the Transfer of Property Act. It is

7

Rudra Perkash v. Krishna, (1887) 14 Cal. 241, 244. Narasingarji v. Panaganti, AIR 1921 Mad. 498. 9 Jones v. Skinner, (1835) 5 LJ Ch. 87, 90. 10 AIR 1986 SC 368. 11 Sinha, Dr.R.K., The Transfer of Property Act, 11th Ed., Central Law Agency, Allahabad, 2010, p. 53. 12 Row, Sanjiva, The Transfer of Property Act, 4th Ed., Vol. 1, The Law Book Company (P) Ltd., Allahabad, 1989. p. 113. 13 Section 13 reads “Transfer for benefit of unborn person. – Where, on transfer of property, an interest therein is created for the benefit of a person not in existence at the date of the transfer, subject to a prior interest created by the same transfer, the interest created for the benefit of such person shall not take effect, unless it extends to the whole of the remaining interest of the transferor in the property.” 14 Vakil, Darashaw J., Commentaries on the Transfer of Property Act, 2 nd Ed., Wadhwa and Company Nagpur, New Delhi, 2004. p. 93. 8

significantly more clear and explicit when it says that “transfer of property” means „an act by which is living person conveys property to one or more other living persons.‟ Where property was acquired by or transferred in favor of Secretary of unregistered Society or Club, Secretary of unregistered Club or Society has no legal status to hold or acquire the property in question because Secretary of unregistered Society or Club cannot come within the definition of “living person” within the meaning of Section 5 of the Act.15 As such the application by members of club claiming right of pre-emption on ground of transfer of adjoining land was not maintainable.16 A deity is not included in the definition of person in Section 5 of the Act.17 If a deity is not a person, the provisions of the Act including Section 3 do not govern a transfer of property made in favor of a deity.18 An idol is a juristic person capable of holding property,20 but it is not a „living person.‟ An idol not being a living person, a dedication of land to an idol does not fall within the terms of Section 12219 and need not be made in writing or by a registered instrument under Section 12320 of the Act.21 It has also been said that an idol is only the symbol of the deity and that it would be contrary to the Hindu religion that a deity make an acceptance of worldly goods22 as discussed in the case below. In Bhupati Nath v. Ram Lal,23 a full bench of the Calcutta High Court dealing with a Hindu will, held that the principle of Hindu Law which invalidates a gift other than to a sentiment being capable of accepting it does not apply to a bequest to the trustees for the establishment of an image and the worship of a Hindu deity after the ancestor‟s death nor does it make such a bequest void. The Full Bench, after examining the Hindu texts and authorities observed that according to the strict Hindu juridical notion there can be no gift in favor of the Gods for in the case of deities there cannot be any acceptance and therefore necessarily any gift. Court has not been regarded as „living person‟ therefore; transfer made by the order to the Court is not a transfer of property within the meaning of Section 5 of the Transfer of Property Act.24

15

Usha Rani Kundu v. Agradut Sangha and other, AIR 2006 (NOC) 911 Cal. Sohoni, Vishwas Shridhar, Transfer of Property Act, Premier Publishing Company, Allahabad, 2008. p. 66. 17 Ashrafi Devi v. Prem Chand, AIR 1971 All. 457 (464). 16

18

Ibid. 20

Pramatha Nath v. Jai Indra Bahadur Singh, (1919) 46 IA 228; 42 All. 158; AIR 1919 PC 55. Section 122 reads “Gift Defined. – Gift is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, and accepted by or on the behalf of the done.” “Acceptance when to be made. – Such acceptance must be made during the lifetime of the donor and while he is still capable of giving. If the done dies before acceptance, the gift is void.” 20 Section 123 reads “Transfer how effected. – For the purpose of making a gift of immovable property, the transfer must be effected by registered instrument signed by or on behalf of the donor, and attested by at least two witnesses. For the purpose of making a gift of movable property, the transfer may be effected either by a registered instrument signed as aforesaid or by delivery. Such delivery may be made in the same way as goods sold may be delivered.” 21 Narasimha v. Venkatalingum, (1927) Mad. 687. 19

22

th

See Mulla, The Transfer of Property Act, 9 Ed., LexisNexis Butterworths, 2004, p. 81. (1910) 37 Cal. 128. 24 Raghubar Singh v. Jai Indira Bahadur Singh, AIR 1919 PC 55. 23

In Present or in Future The words “In Present of in Future” mean that the conveyance may be one which takes effect immediately on execution or at some distant date, that is to say, the interest of the transferee arises immediately on the execution of the document of at the date fixed by the parties. In Re Mahomed Hasham & Co.,25Martin, J., in holding that Section 5 did not apply to the Presidency Town Insolvency Act, observed: “I am not absolutely sure what the words „in presenter in future‟ refer to. I should have thought grammatically they refer to property. In Shumsuddin v. Abdul Husein,26 Jenkins, CJ., remarked, “there is no definition in the Act of „convey‟ or of „property,‟ but It is to be noticed that a transfer means a conveyance of property not only in present but also in future.27 A transfer of property may take place not only in present, but also in the future,28 but the property must be in existence. The words „in present or in future‟ qualify the word „conveys‟, and not the word „property.‟29 A transfer of property that is not in existence operates as a contract to be performed in the future which may be specifically enforced as soon as the property comes into existence.30 To sum it up a transfer of a property may be made so as to take place with immediate effect or to take place on a future date. The transferor can make arrangement that the property is vested or accrues to the transferee immediately after the completion of the transfer. He may also make such arrangements in which the vesting of the interest of the property is postponed to a future date. He is free to transfer a property also upon the fulfillment of certain conditions.31 Some illustrations are given below:34

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A makes a gift of his property to B. He does not mention to when B shall get the property and also does not law down any condition. The transfer is present and B gets the property with immediate effect.

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A transfers his property to B for life and then to C. The transfer in favor of B is present (although he gets only life-interest) but the transfer in favor of C is future transfer.

25 26 27

(1922) 24 Bom. LR 861. (1907) 31 Bom. 165. nd

Vakil, Darashaw J., Commentaries on the Transfer of Property Act, 2 Ed., Wadhwa and Company Nagpur, New Delhi, 2004. p. 95. 28 Sumsuddin v. Abdul Husein, (1907) 31 Bom. 165, 172. 29 Jugalkishore v. Rao Cotton Co, AIR 1955 SC 376. 30 Mohendra v. Kali, (1903) Cal. 265, 274. 31

th

Sinha, Dr.R.K., The Transfer of Property Act, 11 Ed., Central Law Agency, Allahabad, 2010, p. 52. 34 Ibid.

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A makes a gift of his watch to B provided that B gets first division in the next examination. Here, although the gift has been declared today but it shall take effect only if B gets first division. Such transfers are called conditional transfers.

The conveyance may, therefore, be present, future or conditional.

To Himself A transfer of property under Section 5 of the Act requires two „living persons‟, the transferor and the transferee. One cannot transfer a property to himself. But, one can transfer a property to himself in some other capacity. The words „to himself‟ were added to this section by the Amending Act, 1929 to include in the transfer of property also a case where a person makes any settlement of his property in a trust and appoints himself as the sole trustee.32 Here, the transferor and the transferee are physically the same person but as transferor he has the legal status of settlor whereas as transferee his legal status is that of trustee. Transfer of property as contemplated under this Act carries the same meaning throughout this enactment as it has been defined in Section 5. This definition has limited the scope of the term „transfer of property‟. Unless the above mentioned essential elements are present in transaction, it cannot be regarded as a transfer of property.33

Family Settlement Family settlement or family arrangement is not a transfer of property. In a joint family property all the members have their specific shares but they are not separated and are held conjointly by all of them. When a family settlement takes place, the already existing specific shares of the members of the family are defined and separated in order to avoid any possible disputes. Thus, in a family settlement there is a mutual agreement between the members of a family to hold their respective shares separately. It simply acknowledges and defines the title for each member.34 In Sadhu Madho Das v. Pandit Mukund Ram,35 the Supreme Court observed that family arrangement is based on the assumption that there is an antecedent title of some sort in the parties and the agreement acknowledges and defines what that title is.36 In Ramdeo Foods Products Pvt. Ltd. v. Arvindbhai Rambhai Patel,37 a memorandum of understanding was executed to resolve the dispute between the members of a family. The Supreme Court held that such memorandum agreed between the family members can be treated as „family settlement‟ and the Court cannot interfere with this. The Court will not “easily disturb it.” Accordingly it was held as family settlement and not as a transfer of property.

32

Naranbhai v. Suleman, (1975) 16 Guj. LR 289. Sinha, Dr.R.K., The Transfer of Property Act, 11th Ed., Central Law Agency, Allahabad, 2010, p. 54. 34 Tek Bahadur v. Devi Singh, AIR 1966 SC 292. 35 AIR 1955 SC 481 33

36

Sinha, Dr.R.K., The Transfer of Property Act, 11th Ed., Central Law Agency, Allahabad, 2010, p. 55. 37 AIR 2006 SC 3304.

It is not necessary that a family settlement should be restricted to the members of the family upon a particular degree. Such settlements can take place not only among the heirs of a particular class, they can include persons outside the preview of succession.38 In a family settlement since there is no „creation of new title or interest in favor of any member, there is no conveyance, therefore, it is not a transfer of property.

Compromise A compromise of doubtful rights is not a transfer but is based on the assumption that there was an antecedent title of some kind in the parties which the agreement acknowledged and defined.39 The position would be different if such a compromise also transferred properties to a person who has neither a pre-existing title nor a claim to such a title.40 In other words compromise is not a transfer of property. Compromise means agreement for the settlement of doubtful claims between the parties in respect of some property. Like family settlement, here too the titles or interests of the parties are antecedent or already existing; the compromise deed simply defines them.41 Since there is no conveyance in compromise it is not a transfer of property.

Partition A partition of property is not a transfer of property, but is analogous to an exchange42. In other words partition means separating the parts of co-owned property. If in a property there are several co-owners having, under the law, their respective interests but the whole property is neither used nor enjoyed by them separately then, after the partition each member gets merely the separate right of enjoyment43. Accordingly it has been held that partition is not really a process by which a joint enjoyment is transformed into an enjoyment severally, and no conveyance is involved in the process as the conferment of a new title is not necessary.44 It simply effects a change in the mode of enjoyment of property but it is not an act of conveying property from one living person to another.45 In Mohar Singh v. Devi Charan,46 the Supreme Court explained the legal nature of a partition in the following words: “Partition is not actually a transfer of property, but would only signify the surrender of a partition of a joint right, in exchange for a similar right from the other co-sharer or cosharers.”

38 39

Zaheda Begum v. Lal Ahmed Khan, AIR 2010 AP 1. Balkrishna v. Raghunath, AIR 1951 Nag. 171.

40

Reddiar, MP v. A. Ammal, AIR 1971 Nag. 182. Abbas Bandi Bibi v. Muhammad Raza, AIR 1929 Oudh 193. 42 Mulla, The Transfer of Property Act, 9th Ed., LexisNexis Butterworths, 2004, p. 76. 43 Sinha, Dr.R.K., The Transfer of Property Act, 11th Ed., Central Law Agency, Allahabad, 2010, p. 56. 41

44

Chanaderwati v. Lakhmi Chand, AIR 1988 Delhi 13. Indoji Jethaji v. Kothapalli, (1919) 54 IC 146. 46 AIR 1988 SC 1365. 45

Mookharjee, J., in Atrabanessa Bibi v. Safutullaah Mia,47 said that partition signifies the surrender of a portion of a joint in exchange for a similar right from the co-sharer. In Sarin v. Poplai,48 Gajendragadkar, CJ., has observed that „the true effect of partition is that each coparcener gets specific property in lieu of his undivided right in respect of the totality of the property of the family.‟ For the purpose of determining whether the document is a partition deed, it is the contents of the document that are to be taken in to consideration and not the nomenclature alone. There is no recital in the whole order agreement to the effect that it was recording the agreement of an earlier partition which had already taken place. The agreement in question purported to create, declare, assign, limit and extinguish right and interest over immovable properties. It was held that the document required to be duly stamped and properly registered.49 A father partitioned his property among his three sons. The agricultural land was given to one of them, the plaintiff in the case. The pucca house was given to the two others. They were already in possession of the property respectively as distributed under the partition and had been making improvement in their respective shares. Thus they had been acting on the family settlement. They had become bound by it. The Court said that it was immaterial that the mutation of the agricultural land was in the name of all the three sons.50

Surrender Surrender is not a transfer of property as defined in the section.51 Surrender means merging of a lesser interest with a greater interest in such a manner that the greater interest is not enlarged. Surrender is therefore falling of lesser estate into greater. For example, A is landlord and B is his tenant. A as landlord has ownership of the house. Ownership or absolute interest is a greater interest. B as a tenant has also an interest in A‟s house but B‟s interest is lesser interest because it is limited only to the right of enjoyment. Now, if B vacates the house before expiry of the term of tenancy, it would amount surrendering of his right of residence. Here, the lesser interest, namely the right of residence, which was away from the absolute interest of the landlord during tenancy, comes back to ownership. There is no creation of any new title or interest in favor of the landlord. Thus surrender by a tenant to the landlord52 or by a widow to the reversioners56 has not been regarded as a transfer of property.

Release Release is a transfer of property. Is a larger interest falls into a smaller interest in such a way that smaller interest is enlarged then, for the holder of the smaller interest there is creation of a new title or interest. Since some new titles or interest are added to transfer of

47

(1916) 43 Cal. 504, 509. (1966) SCR 349; AIR 1966 SC 432. 49 Vincent Lourdhenathan v. Josphine Syla Dominque, AIR 2008 NOC 1173 Mad. 50 Gurcharan Ram v. Tejwant Singh, AIR 2008 NOC 1650 P&H. 51 Makkan Lal Saha v. Nagendranath Adhikari, (1933) 60 Cal. 379; AIR 1933 Cal. 467. 52 Morati v. Krishna, (1925) Nag. 455. 56 Kalka v. Jaswant, (1926) Oudh 69. 48

property.53 Where a person in whose favor the “release” is executed gets rights by virtue of the release, the deed amounts to “transfer.”54 In Muniappa Pillai v. Periasami,55 after taking some money A executed a deed transferring his right, title and interest in his half share of the property absolutely in favor of B. the document, thus gave B absolute rights in the share which belonged to A and to which B was not entitled. The Madras High Court held that this document clearly came under the definition of deed of transfer within the meaning of Section 5. Since coparcenary property is a joint property of all the coparceners therefore, a release in favor of only one or some of the coparcener would be deemed to be a transfer in favor of all the coparceners. In M. Krishna Rao v. M.L. Narasikha Rao,56 a release deed was executed in favor of some out of several coparceners. The Andhra Pradesh High Court held that the release made in favor of some coparceners would operate to the benefit of all the coparceners and not only in favor of those coparceners in whose favor release was executed. The release in all the cases may be with or without consideration.

Relinquishment Relinquishment is not alienation,57 unless intention to transfer is found to exist, as when it is in favor of a person having no interest.58 A registered instrument styled as a release deed releasing the right, title and interest of the executant in the proprietary in favor of the release for valuable consideration may operate as a conveyance.59 In other words, relinquishment means giving up of one‟s rights or interests. Its effect is extinction of one‟s rights in a property; there is no intention that the person relinquishing his interest is conveying that interest in favor of another person. Relinquishment is therefore, not a transfer so that it may amount to a transfer of property as defined in Section 5 of the Act.64

Charge Charge is not a transfer of property. Charge is created on a property for securing a payment out of that property. When the property of a person is charged for securing certain payments e.g. maintenance, it is simply securing „personal obligation‟ out of the property. A charge is, not transfer

53

Official Assignee, Madras v. Tehmina Dinshaw Tehrani, AIR 1972 Mad. 187. Mulla, Transfer of Property, 5th Ed., p. 51. Cited in Sinha, Dr. R.K., The Transfer of Property Act, 11 th Ed., Central Law Agency, Allahabad, 2010, p. 57. 55 (1975) 1 MLJ 236. 56 AIR 2003 AP 498. 54

57

Provident Investment Co. v. Income Tax Commissioner, AIR 1951 Bom. 95. Kuppuswami Chettiar v. Arumugam, (1967) 1 SCR 275, AIR 1967 SC 1395. 59 Thayyil Mammo & Another v. Ramunniram & Another, AIR 1966 SC 337. 64 See supra 62. 58

because the only right created under it is a right to payment out of the property subjected to the charge.60

60

Gobinf v. Dwarkanath, (1908) 35 Cal. 837.

Bibliography •

Mulla, The Transfer of Property Act, 9th Ed., LexisNexis Butterworths, 2004.

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Nandi, N., The Transfer of Property Act, 1882, 2nd Ed., Dwivedi Law Agency, Allahabad, 2010.

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Row, Sanjiva, The Transfer of Property Act, 4th Ed., Vol. 1, The Law Book Company (P) Ltd., Allahabad, 1989.

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Sinha, Dr.R.K., The Transfer of Property Act, 11th Ed., Central Law Agency, Allahabad, 2010.

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Sohoni, Vishwas Shridhar, Transfer of Property Act, Premier Publishing Company, Allahabad, 2008.

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The Transfer of Property Act, 1882, Bare Act, Universal Law Publishing Co. Pvt. Ltd., New Delhi, 2010.

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Vakil, Darashaw J., Commentaries on the Transfer of Property Act, 2nd Ed., Wadhwa and Company Nagpur, New Delhi, 2004.