Essentials of Transfer under Transfer of Property Act 1882

transfer

Transfer of Property Act 1882 governs the provisions relating to the transfer of property by the act of parties as opposed to transferring by operation of law. It relates to the transfer of property inter vivos that is between living persons. The term transfer includes transfer through sale, mortgage, lease, actionable claim, gift or exchange. This Act specifically deals with the transfer of immovable property. Transfer of property is defined to mean any act by which living persons convey property in present or in future to one or more living persons or to himself or to himself and one or more living persons. There term person includes companies, body corporate, an association of persons whether incorporated in India or not.

In the case of Prethi Singh v. Ganesh[i], it was held that the term property includes property situated outside India or in territories where the Act does not apply. If the transfer is effected 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 immaterial.

Essentials of a Valid Transfer of Property

The below stated are the eights 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, which means that the property must be transferred between two or more persons who are living. The transferor and transferee must be living entities on the date of transfer. Therefore there shall be an act of conveyance by some living person to constitute a transfer. [ii]

The property transferred must be transferable

Section 6 lays down 13 kinds of property which cannot be transferred, other than those enumerated below all kinds of property can be transferred.

  • The chance of heir-apparent succeeding to an estate called as spes successionis. Such a chance is not property as contemplated by that Act. It implies to a mere hope of succession.
  • The chance of a relation obtaining legacy on the death of a kinsman cannot likewise be transferred
  • Any other mere possibility of a like nature that is of a nature similar to those mentioned above cannot be transferred.
  • A right of re-entry cannot be transferred to anyone except the owner of the property affected thereby.
  • An easement apart from the dominant heritage cannot be transferred.
  • An interest in the property restricted in its enjoyment to the owner personally, for example, religious offices, services tenures, an inalienable raj, etc. cannot be transferred.
  • A right to future maintenance in whatsoever manner arising secured or determined cannot be transferred.
  • A mere right to sue is not capable of being transferred. Claims for past mesne profits, for damages for breach of contract, for suing an agent for accounts and for pre-emption are all mere rights to sue which cannot be transferred.
  • A public office or the salary of a public officer whether before or after it has become payable cannot be transferred.
  • Stipends allowed to the military, naval, air force and civil pensioners of Government as well as political pensions cannot be transferred.
  • No transfer can be made which is opposed to the nature of interest affected thereby. Thus an attempted ‘transfer’ of a service inam by the Inamdar or a purported ‘transfer’ of res nullius like air or water from a river, will be void.
  • No transfer can be made of an unlawful object or consideration.
  • Lastly, no transfer can be made to a person who is legally disqualified to be a transferee.[iii]

The transfer of property cannot be restricted by judgment or on any direction given, it can only be done so by the provisions of law [iv]

The transfer must not be opposed to the nature of the interest affected thereby or for an unlawful object or consideration or to a person legally disqualified to be a transferee.

Res communes which means things of which no one, in particular, is the owner, and which all men may use. Such things cannot be transferred by people. These are things which belong to nobody, for example, air, water, sunlight, etc. These things are incapable of being apportioned. Res extra commercium which means things throughout of commerce, such as property dedicated to a deity cannot be transferred. Under section 23 of The Indian Contract Act 1872, unlawful object and consideration is one which is forbidden by law or is of such nature that would defeat the provisions of law, is fraudulent, involves or implies injury to another person or his property and the Court regards it as immoral or opposed to public policy.[v]

The transferor must be competent to contract and entitled to transfer property or authorized to dispose of transferable property which is not his own.

Under section 7 of the Act, a person will be competent to transfer property if he fulfills the necessary criteria under section 11 of the Indian Contract Act 1872. Under section 11 a person will be competent to contract when he fulfills the criteria of being a major that is one who has attained 18 years of age, of sound mind- who is capable of understanding the terms of the contract and its implications and can formulate a rational judgment and one who is not disqualified by law. Thus the following will be competent to transfer a property or authorized to dispose of transferable property which is not his own either wholly or partly and either absolutely or conditionally. A minor is a person who has not completed the age of 18 years. He cannot be a competent transferor but there is no provision in law disqualifying a minor to be a transferee.[vi]

The transfer must be made in the mode prescribed by the Act. Thus all necessary attestation and registration must be complied with.

Under section 9 of the Act, it is material to sufficient register, stamp and attests the instruments to avoid future disputes. The property must be transferred by a valid instrument that is executed by the transferor in writing and is attested and registered. A transfer of property can be executed without a written instrument where writing is not expressly necessary under the law. There are some instruments under the Act which are required to be in writing though they may not be registered like, sale of immovable property of the value of rupees 100 and above, exchange, gift, etc. Also, there are some which must be in writing and registered with the relevant authority like, sale of tangible immovable property of rupees 100 or more, charges, a gift of immovable property, etc.[vii]

The transfer must not offend the rule against perpetuity

Section 14 of the Act highlights the rule of perpetuity. Perpetuity literally means eternity or infinity. It refers to the creation of an interest in the present but which is to take effect after an infinitely long time. No transfer of property can take place or operate to create an interest which is to take place after the lifetime of one or more persons living at the date of such transfer and the minority of some person who should be in existence at the expiry of that period and to whom the interest created is to belong if he attains the age of majority. The rule of perpetuity ensures that one cannot postpone the vesting of property in a transferee beyond a certain limit. [viii]

Illustration

A gives a piece of land to his friend B for life, and afterward to his friend C for life, then to his friend D for life and then to the son that may be born to B for his life. B cannot alienate the property because B has only a life interest. Further, neither C nor D can alienate the property. The property legally vests with the only B for his life.

If on transfer interest is created in favor of an unborn child subject to the prior interest created by the same transfer, it must exhaust the whole of the remaining interest of the transferor.

Under section 13 of the Act, a transfer cannot be executed directly in favor of an unborn child. One of the essential conditions of a valid transfer is that the transferee must be a living person. The interest of the unborn child must be preceded by a prior interest to one or more living persons, 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.[ix]

If the transfer is conditional, the condition must not be illegal, impossible, immoral or opposed to public policy.

Under section 25 when the condition imposed becomes impossible or unlawful or immoral to be complied with, the interest accruing in the transfer of such property dependent on the condition fails. That is, where the condition is void the transfer becomes void too. [x]

1. Unlawful – when the condition imposed is unlawful or forbidden by the law or defeat the provisions of law or fraudulent or opposed the public policy and is immoral or injures any person or property the transfer becomes void.

2. Impossible to be performed– a condition which no longer can be fulfilled in any circumstance is said to be impossible. A condition precedent may become impossible to be performed when the subject matter is destroyed or there is no means to fulfill such a condition etc.

Frequently Asked Question 

What are the essentials of the transfer of property?

  • The transfer of property must take place between two or more living persons
  • The property transferred must be transferable
  • The transfer must not be opposed to the nature of the interest affected thereby or for an unlawful object or consideration or to a person legally disqualified to be a transferee.
  • The transferor must be competent to contract and entitled to transfer property or authorized to dispose of transferable property which is not his own.
  • The transfer must be made in the mode prescribed by the Act. Thus all necessary attestation and registration must be complied with.
  • The transfer must not offend the rule against perpetuity
  • If on transfer interest is created in favor of an unborn child subject to the prior interest created by the same transfer, it must exhaust the whole of the remaining interest of the transferor.
  • If the transfer is conditional, the condition must not be illegal, impossible, immoral or opposed to public policy.

Edited by Sakshi Agarwal

Approved & Published – Sakshi Raje

Reference

[i] AIR 1951 All. 462 

[ii] Ruth Diya, Transferable and Non Transferable Property, Legal Service India, http://www.legalserviceindia.com/legal/article-522-transferable-and-non-transferable-property.html

[iii]Transfer of Property Act, section 6

[iv]KansingKalusingThakore And Ors vs RabariMaganbhaiVashrambhai AIR 2006

[v] Indian Contract Act 1872, section 23

[vi]Raja Balwant Singh vs The Rev. Rockwell Clancy And Rao (1912) 14 BOMLR 42

[vii]Transfer of Property Act, section 9

[viii]Transfer of Property Act, section 14

[ix]Transfer of Property Act, section 13

[x] Transfer of Property Act, section 25

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I am Dhruvi Dharia from University of Mumbai Law Academy (UMLA), pursuing B.B.A.-LL.B.(Hons.) I have a penchant for studying Corporate laws like Companies Act, Securities Law, Insolvency and Bankruptcy Code, mergers and acquisitions etc. and strong inclination towards numbers. I am also a budding Company Secretary and one level away from becoming one. I aspire to become a Corporate Lawyer in the future. I have always enjoyed reading and working on various legal matters whenever given a chance to. I constantly try to better myself by reading various Acts, articles, interviews of eminent lawyers and professionals and researching on various topics. I like reading on various contemporary legal issues and articles and I sometimes attempt writing on the same. Apart from academics in my free time I like drawing, painting and travelling to new destinations.