Poonam Pradhan Saxena: Property Law, 3Rd Ed Poonam Pradhan Saxena: Property Law, 3Rd Ed Dr Poonam Pradhan Saxena

Date and Time: 27 July 2020 19:39:00 IST Job Number: 121984425

Documents (100)

1. General Introduction Client/Matter: -None- 2. SCOPE OF THE ACT Client/Matter: -None- 3. BASIC OBJECTIVES OF THE ACT Client/Matter: -None- 4. LEGISLATIVE COMPETENCE Client/Matter: -None- 5. APPLICATION OF THE ACT Client/Matter: -None- 6. [S 2.1] HINDU LAW Client/Matter: -None- 7. [S 2.2] TERRITORIAL APPLICATION Client/Matter: -None- 8. [S 2.3] SUBSEQUENT EXTENSION OF THE ACT Client/Matter: -None- 9. [S 2.4] SPECIAL LAWS TO OUST THE APPLICATION OF THE TRANSFER OF PROPERTY ACT, 1882 Client/Matter: -None- 10. Chapter 1 Movable and Immovable Properties Client/Matter: -None- 11. RELEVANCE OF STUDYING THE DISTINCTION BETWEEN MOVABLE AND IMMOVABLE PROPERTY Client/Matter: -None- 12. PROPERTY Client/Matter: -None- 13. INTERPRETATION CLAUSE Client/Matter: -None- 14. DOCTRINE OF FIXTURES Client/Matter: -None- 15. ATTESTATION Client/Matter: -None- 16. GENERAL PRINCIPLE Client/Matter: -None- 17. NOTICE Client/Matter: -None- 18. GENERAL PRINCIPLE Client/Matter: -None- 19. KINDS OF NOTICE

Client/Matter: -None- 20. REGISTRATION AS CONSTRUCTIVE NOTICE Client/Matter: -None- 21. GENERAL PRINCIPLE Client/Matter: -None- 22. LEGISLATIVE HISTORY Client/Matter: -None- 23. ACTUAL POSSESSION AS CONSTRUCTIVE NOTICE Client/Matter: -None- 24. GENERAL PRINCIPLE Client/Matter: -None- 25. NOTICE TO THE AGENT Client/Matter: -None- 26. LEGISLATIVE HISTORY Client/Matter: -None- 27. MEANING OF TRANSFER OF PROPERTY Client/Matter: -None- 28. PROPERTY Client/Matter: -None- 29. WHAT MAY BE TRANSFERRED Client/Matter: -None- 30. EASEMENT Client/Matter: -None- 31. PERSONS COMPETENT TO TRANSFER Client/Matter: -None- 32. CAPACITY TO TRANSFER PROPERTY Client/Matter: -None- 33. OPERATION OF TRANSFER Client/Matter: -None- 34. ORAL TRANSFER Client/Matter: -None- 35. CONDITIONS RESTRAINING ALIENATION Client/Matter: -None- 36. RESTRICTIONS REPUGNANT TO THE INTEREST CREATED Client/Matter: -None- 37. CONDITION MAKING INTEREST DETERMINABLE ON INSOLVENCY OR ATTEMPTED ALIENATION Client/Matter: -None- 38. CONDITION FOR THE BENEFIT OF THE LESSOR Client/Matter: -None- 39. TRANSFER FOR THE BENEFIT OF UNBORN PERSONS Client/Matter: -None- 40. DIFFERENCE BETWEEN ENGLISH LAW AND INDIAN LAW Client/Matter: -None- 41. RULE UNDER HINDU LAW (SECTION 113)

Client/Matter: -None- 42. RULE AGAINST PERPETUITY Client/Matter: -None- 43. MEANING OF PERPETUITY Client/Matter: -None- 44. INALIENABILITY OF PROPERTY TO ITS DETRIMENT Client/Matter: -None- 45. TRANSFER TO A CLASS Client/Matter: -None- 46. LEGISLATIVE HISTORY Client/Matter: -None- 47. TRANSFER TO TAKE EFFECT ON FAILURE OF PRIOR INTEREST Client/Matter: -None- 48. DIRECTION FOR ACCUMULATION OF INCOME Client/Matter: -None- 49. ACCUMULATIONS FOR THE BENEFIT TO PUBLIC Client/Matter: -None- 50. VESTED AND CONTINGENT INTERESTS Client/Matter: -None- 51. WHEN UNBORN PERSON ACQUIRES VESTED INTEREST ON TRANSFER FOR HIS BENEFIT Client/Matter: -None- 52. VESTED INTEREST LIABLE TO BE DIVESTED SUBSEQUENTLY Client/Matter: -None- 53. CASE LAWS RELATING TO CONTINGENT INTEREST Client/Matter: -None- 54. TRANSFER TO MEMBERS OF A CLASS WHO ATTAIN A PARTICULAR AGE Client/Matter: -None- 55. TRANSFER CONTINGENT ON HAPPENING OF SPECIFIED UNCERTAIN EVENT Client/Matter: -None- 56. TRANSFER TO SUCH OF CERTAIN PERSONS AS SURVIVE AT SOME PERIOD NOT SPECIFIED Client/Matter: -None- 57. CONDITIONAL TRANSFER Client/Matter: -None- 58. GENERAL PRINCIPLE OF CONDITIONAL TRANSFERS Client/Matter: -None- 59. VOID CONDITIONS Client/Matter: -None- 60. TRANSFERS WITH FULFILMENT OF CONDITION PRECEDENT Client/Matter: -None- 61. CONDITIONAL TRANSFER TO ONE PERSON COUPLED WITH TRANSFER TO ANOTHER ON FAILURE OF PRIOR DISPOSITION Client/Matter: -None- 62. ULTERIOR TRANSFER CONDITIONAL ON HAPPENING OR NOT HAPPENING OF SPECIFIED EVENT Client/Matter: -None-

63. REPUGNANCY Client/Matter: -None- 64. FULFILMENT OF CONDITION SUBSEQUENT Client/Matter: -None- 65. IGNORANCE OF THE CONDITION NOT AN EXCUSE FOR ITS NON-FULFILMENT Client/Matter: -None- 66. PRIOR DISPOSITION NOT AFFECTED BY INVALIDITY OF ULTERIOR DISPOSITION Client/Matter: -None- 67. CONDITION THAT TRANSFER SHALL CEASE TO HAVE EFFECT IN CASE SPECIFIED UNCERTAIN EVENT HAPPENS OR DOES NOT HAPPEN Client/Matter: -None- 68. SUCH CONDITION MUST NOT BE INVALID Client/Matter: -None- 69. TRANSFER CONDITIONAL ON PERFORMANCE OF ACT, NO TIME BEING SPECIFIED FOR PERFORMANCE Client/Matter: -None- 70. TRANSFER CONDITIONAL ON PERFORMANCE OF ACT TIME BEING SPECIFIED Client/Matter: -None- 71. ELECTION Client/Matter: -None- 72. APPORTIONMENT Client/Matter: -None- 73. APPORTIONMENT OF BENEFIT OF OBLIGATION ON SEVERANCE Client/Matter: -None- 74. TRANSFER AUTHORISED ONLY UNDER CERTAIN CIRCUMSTANCES TO TRANSFER Client/Matter: -None- 75. RECITALS IN THE SALE DEED Client/Matter: -None- 76. PARTIAL NECESSITY Client/Matter: -None- 77. TRANSFER WHERE THE THIRD PARTY IS ENTITLED TO MAINTENANCE Client/Matter: -None- 78. MAINTENANCE Client/Matter: -None- 79. BURDEN OF OBLIGATION IMPOSING RESTRICTION ON USE OF LAND Client/Matter: -None- 80. OBLIGATIONS ANNEXED TO OWNERSHIP BUT NOT AMOUNTING TO INTEREST OR EASEMENTS Client/Matter: -None- 81. NOTICE Client/Matter: -None- 82. TRANSFER BY OSTENSIBLE OWNER Client/Matter: -None- 83. OSTENSIBLE OWNER Client/Matter: -None-

84. TRANSFER BY PERSON HAVING AUTHORITY TO REVOKE FORMER TRANSFER Client/Matter: -None- 85. UNAUTHORISED PERSON SUBSEQUENTLY ACQUIRING INTEREST IN THE TRANSFERRED PROPERTY Client/Matter: -None- 86. ANALYSIS OF SECTION 43 Client/Matter: -None- 87. APPLICATION OF THE DOCTRINE Client/Matter: -None- 88. TRANSFERS Client/Matter: -None- 89. TRANSFER BY ONE CO-OWNER Client/Matter: -None- 90. JOINT TRANSFER FOR CONSIDERATION Client/Matter: -None- 91. TRANSFER FOR CONSIDERATION BY PERSONS HAVING DISTINCT INTERESTS Client/Matter: -None- 92. TRANSFER BY CO-OWNERS OF SHARE IN COMMON PROPERTY Client/Matter: -None- 93. PRIORITY OF RIGHTS CREATED BY TRANSFER Client/Matter: -None- 94. TRANSFEREE’S RIGHTS UNDER POLICY Client/Matter: -None- 95. RENT BONA FIDE PAID TO THE HOLDER UNDER DEFECTIVE TITLE Client/Matter: -None- 96. IMPROVEMENTS MADE BY BONA FIDE HOLDERS UNDER DEFECTIVE TITLE Client/Matter: -None- 97. ABSOLUTE TRANSFER Client/Matter: -None- 98. IMPROVEMENTS Client/Matter: -None- 99. JOINT HINDU FAMILY Client/Matter: -None- 100. TRANSFER OF PROPERTY PENDING SUIT RELATING THERETO Client/Matter: -None-

Poonam Pradhan Saxena: Property Law, 3rd ed Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > General Introduction

General Introduction

The classical law relating to transfer of property was purely customary. Before the advent of the British and their active intervention in the Indian legal system, Hindus and Muslims were governed by their respective laws in relation to transfer of property. This arrangement worked adequately in the informal and traditional judicial system of panchayats because those who decided the matter were not only familiar with the nature of the dispute but also with the law and the litigants as well. However, the same scenario proved to be very confusing and uncertain with the establishment of the informal courts in India by the British. In this adversarial litigation system, the disputes were decided by impartial judges who were unfamiliar with the litigants and the distinctive social system of India. Realising the absence of a concrete and ascertainable law of property comparable to what they had in England, these courts applied English rules governing transfer of property with modifications to suit the Indian conditions. However, such application of the British principles even with modifications, at times, was grossly inappropriate due to the social and cultural differences between England and India. Thus, the desirability of enacting the law relating to transfer of property was perceived soon after the consolidation of British authority in India. In addition, various high courts in the absence of clear rules made a very liberal use of their own notions of the principles of equity, justice and good conscience, and laid down diametrically opposite principles further compounding the confusion and uncertainty. Even the Privy Council noted this uncertainty with concern, and attributed this undesirable scenario to a lack of codification of the law of property in India calling upon the authorities to take urgent steps in this direction.1

The first Law Commission2 was appointed by the British Queen primarily to codify the civil law in India including the one relating to transfer of property. This commission prepared the draft Bill in 1870, which was introduced in the Legislative Assembly in 1877.3 It was then referred to the select committee, was revised by it and was circulated for public opinion. In light of the suggestions, it was redrafted and referred to the second Law Commission.4 After several drafts, it was passed on 17 February 1882 and came into force on 1 July 1882.

The Bill was based primarily on the English law of real property. Therefore, the basic substantive content was the English law, but as it was meant for India, it dropped what was primarily local and historical in context of English law and the rest of the provisions were modified and re-moulded to suit the Indian conditions.

Soon after the coming into force of the Act, a bulk of conflicting case laws developed. This conflict made it apparent that there was an urgent need of further exposition of law and legislative intervention. The Act was, thus, consistently amended by not less than twelve amending Acts, yet despite these amendments, conflicting decisions continued to pour in from various high courts and the resulting confusions necessitated further exposition of the law. It became clear that in certain areas, the provisions of the Act were defective both in substance as well as in drafting, and needed amendment. The legislative department of the government of India, therefore, prepared the Bill incorporating the necessary changes and the same was referred to a special select committee.5 The amending Act passed in 1929, amended not only several provisions of the Transfer of Property Act, 1882 (TP Act, 1882) but involved amendments in several other enactments that became necessary to avoid confusion and co-existence of conflicting provisions through the Transfer of Property (Amendment) Supplementary Act, Act (21 of 1929). The principal Act was last amended on 2 May 2011.

1 See Solil Paul (ed.), Mulla, The Transfer of Property, 9th Edn, p xi.

Page 2 of 2 Poonam Pradhan Saxena: Property Law, 3rd ed

2 The first Law Commission consisted of Lord Romilly MR; Sir Edward Ryan, Chief Justice of Bengal; Lord Sherbrooke; Sir Robert Lush and Sir John Macleod. Besides the Transfer of Property Act, this committee also drafted the Indian Evidence Act, the Indian Contract Act, the Indian Succession Act, and the Negotiable Instruments Act. 3 The then Secretary General of State for India, the Duke of Argyll, sent the draft to India, which after some modifications was presented in the Legislative Assembly. 4 The second Law Commission consisted of Charles Turner, Chief Justice of Madras; Sir Raymond West and Mr Whitley Stokes, law member of the Governor General. 5 This special select committee comprised of Mr SR Das, Law member of the council of the Governor General; Mr BR Mitter, the then Advocate General of Bengal, Dr SN Sen and Mr Dinshaw Mulla.

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SCOPE OF THE ACT Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > General Introduction

General Introduction

SCOPE OF THE ACT

The Act defines and amends certain parts of the law relating to transfer of property by act of parties.6 The important words used in the Act are ‘by act of parties’7, and therefore, it applies and governs the transfers by act of parties only and does not govern transfers that take place due to operation of law. Accordingly, it does not govern transfers of property through court auction,8 forfeiture, acquisition or due to insolvency proceedings or government grants.9 It also does not govern transfers of property through intestate10 or testamentary11 succession.

6 See the Preamble, The Transfer of Property Act, 1882. 7 In some cases the Act has been applied to transfers by operation of law as well. For details see the discussion, infra. 8 The Act does not apply to a sale in execution, see Dinendronath Sanyal v Ramcoomar Ghose, (1881) ILR 7 Cal 107. 9 Dwarkaprasad v Kathlen, (1955) ILR 1955 Nag 538. 10 Kishori Lal v Krishna Kamini, (1910) ILR Cal 377. 11 Rajaparthasarthi v Raja Venkatadasi, AIR 1922 Mad 457.

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BASIC OBJECTIVES OF THE ACT Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > General Introduction

General Introduction

BASIC OBJECTIVES OF THE ACT

The Act defines certain expressions used in relation to transfer of property and amends the (then) prevailing rules governing the same. It does not purport to introduce any new principle of law.12 One of the basic objectives of the Act was to bring in harmony the rules relating to transfer of property between living persons and those applicable in case of the devolution of the same in the event of the death of a person through intestate and testamentary succession. The Act also seeks to complete the law of contract, as most of the transfers primarily arise out of a contract between the parties. The Act has also, by providing for the compulsory registration of the transfers,13 changed the nature of a transfer of property from a private to a public affair.

Act not Exhaustive

The Act is not exhaustive nor is it a complete code.14 This means that it does not cover the entire law relating to transfer of property but deals with certain aspects only. The fact that it is not exhaustive is also apparent from the language that is used in the Preamble. Unlike the Indian Evidence Act, 1872, that uses the term ‘consolidate’ hinting at the completeness of the subject dealt with under the Act,15 the present Act seeks to define and amend only certain parts of the law relating to transfer of property and not all areas or all parts of this branch of law. One of the consequences of the Act not being exhaustive is that if a particular situation is not covered by any provision of the Act, the courts in India are empowered to settle the same by applying the rules of equity, justice and good conscience or even with the help of English cases16 on the relevant aspects, but only when the same is not prohibited by any statutory provision of India.17 However, where the issue is expressly covered by the TP Act, 1882 or by any other Indian statute,18 the Indian courts have no such power.

12 Tajjo Bibi v Bhagwan, (1899) 16 All 295. 13 Except when the property is of a nominal value, or where it is let out for a short time period. 14 Jatendra v Rangpur Tobacco Co, AIR 1924 Cal 990; Venkatalingam v Parthasarthy, AIR 1942 Mad 558; HV Low & Co Ltd v Pulin Bihari Lal Sinha, AIR 1933 Cal 154. 15 Collector of Gorakhpur v Palakdhari, (1890) ILR 12 All 1. 16 Kalyan Das v Jan Bibi, (1929) ILR 51 All 454; Maharaja of Jeypore v Rukmini, AIR 1919 PC 1. 17 Sabratan v Dhanpat, AIR 1933 All 70. 18 Venkatacharyulu v Venkatasubba, AIR 1926 Mad 55 [LNIND 1925 MAD 23].

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LEGISLATIVE COMPETENCE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > General Introduction

General Introduction

LEGISLATIVE COMPETENCE

Transfer of property other than of agricultural land is a subject specified in the concurrent list. The Constitution of India under its seventh schedule, by virtue of entry 6 of list III, empowers both the states as well as the Parliament to frame laws on this topic.19 As far as agricultural land is concerned, the states alone are empowered to legislate on the same by virtue of entry 18 list III of the seventh schedule of the Constitution of India, and in cases where there is a conflict, a state law relating to transfer of agricultural land can override a parallel conflicting provision of the Transfer of Property Act, 1882. 20 The state, therefore, has the power to make special provisions or rules with respect to the transfer of agricultural property which may include registration, or prohibiting persons from alienating such land, including a power to frame rules with respect to reopening of such transfers or alienations.21

19 This also includes legislation on the landlord and the tenant relations with respect to non-agricultural property in India; see Bapalal v Thakurdas, AIR 1982 Mad 399 [LNIND 1982 MAD 156]. 20 Megh Raj v Allah Rakhia, (1947) FCR 77 (PC). 21 Lingappa Pochanna v State of Maharashtra, AIR 1985 SC 389 [LNIND 1984 SC 331].

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APPLICATION OF THE ACT Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > General Introduction

General Introduction

APPLICATION OF THE ACT

[s 2] Repeal of Acts—Saving of certain enactments, incidents, rights, liabilities, etc.—In the territories to which this Act extends for the time being the enactments specified in the Schedule hereto annexed shall be repealed to the extent therein mentioned. But nothing herein contained be deemed to affect—

(a) the provisions of any enactment not hereby expressly repealed; (b) any terms or incidents of any contract or constitution of property which are consistent with the provisions of this Act, and are allowed by the law for the time being in force; (c) any right or liability arising out of a legal relation constituted before this Act comes into force, or any relief in respect of any such right or liability; or (d) save as provided by section 57 and Chapter IV of this Act, any transfer by operation of law or by, or in execution of, a decree or order of a Court of competent jurisdiction; and nothing in the second chapter of this Act shall be deemed to affect any rule of Muhammadan law.

The Act expressly repeals the enactments specified in the schedule but saves the provisions of any enactment that have not been so repealed.22

Chapter II of the Act does not apply to transfer of property among Muslims, in so far as there is a contrary provision under Muslim law. The rule is not that the TP Act, 1882 does not apply to Muslims, but the rule is that if there is a rule of Muslim law at variance or different from that specified under the TP Act, 1882, it is the Muslim Law that would prevail, but if there is no contrary or inconsistent rule under Muslim Law, Muslims would be subject to the provisions of this chapter as well. Notable in this part are the rules with respect to gifts and settlement of property in perpetuity. Under the general rules specified under the TP Act, 1882, a gift of immovable property must be executed with the help of a written, attested and registered gift deed.23 The delivery of possession of the property is not an essential requirement to the validity of the gift, and will depend upon the contract between the parties. Under Muslim law, however, a gift of immovable property can be effected orally, and generally, the gift is not valid unless it is followed by immediate delivery of possession of the property.24 The latter rule will be applicable only in case of gifts made between Muslims. Similarly, sections 13 and 14 of the TP Act, 1882 prohibit transfer of property in favour of unborn persons and are against the rule of perpetuity. However, under Muslim law, property can be tied up and transferred for the benefit of one’s descendants not yet in existence if the ultimate benefit goes to charity.25

22 See The Transfer of Property Act, 1882, section 2(a). 23 The Transfer of Property Act, 1882, section 123. 24 See Poonam Pradhan Saxena, Family Law Lectures: Family Law–II, pp 527-528. 25 Wakf Validating Act, 1913.

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[S 2.1] HINDU LAW Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > General Introduction

General Introduction

[S 2.1] HINDU LAW

Till 1929, the Act also saved expressly the rules of Hindu Law in their application to Hindus. However, the amending Act of 1929 omitted the word Hindus from section 2 and brought them under the purview of the TP Act, 1882.26

26 The classical rules of Hindu law that made bequests and transfers in favour of unborn persons, wholly void were abrogated by the Hindu Disposition of Property Act, 1916 (15 of 1916) and the Madras Act of 1914 and Act of 1921, and such transfers were validated to some extent. The rules with respect to transfers to a class of persons where with respect to some of them the transfer is valid, and for some it is void, were also modified. The earlier rule of Hindu law, i.e., making the whole of the transfer void, has also been modified. Presently, the complete transfer does not fail and it is valid with respect to those who are capable to take the transfer in their favour and void with respect to those who are incapable to do so.

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[S 2.2] TERRITORIAL APPLICATION Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > General Introduction

General Introduction

[S 2.2] TERRITORIAL APPLICATION

To begin with, the application of the Act was extended to the whole of British India.27 This expression, ‘British India’, after independence, was replaced by ‘all the provinces of India’ and soon, further replaced by ‘whole of India’.

27 See The Transfer of Property Act, 1882. The term ‘British India’ did not include the native states of India, Land ceded by native princes to the British government for limited purposes such as for railway administration; cantonment areas and civil areas, etc, and those territories that were specifically excluded by legislative enactments.

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[S 2.3] SUBSEQUENT EXTENSION OF THE ACT Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > General Introduction

General Introduction

[S 2.3] SUBSEQUENT EXTENSION OF THE ACT

Section 1 of the TP Act, 1882 provides:

…

Extent.—It extends in the first instance to the whole of India except the territories which, immediately before the 1 November 1956, were comprised in Part B States or in the States of Bombay, Punjab and Delhi.

But this Act or any part thereof may by notification in the Official Gazette be extended to the whole or any part of the said territories by the State Government concerned.

And any State Government may from time to time, by notification in the Official Gazette, exempt, either retrospectively or prospectively, any part of the territories administered by such State Government from all or any of the following provisions, namely: —

Section 54, paragraph 2 and sections 3, 59, 107 and 123.

Notwithstanding anything in the foregoing part of this section, section 54, paragraphs 2 and 3, and sections 59, 107 and 123 shall not extend or be extended to any district or tract of country for the time being excluded from the operation of the Indian Registration Act, 1908, (16 of 1908) under the power conferred by the first section of that Act or otherwise.

The state governments are empowered under the Act to extend the operation of the Act to the territories where earlier the Act did not apply. However specifically, four provisions mentioned under the Act that deal with the execution and registration of specific transfers of immovable property—namely, sale, mortgage, lease and gifts cannot be so extended to those areas which have been expressly excluded by the Registration Act, 1908. 28 The application of the Act has been extended to Bombay,29 Sind,30 Burma,31 Panth Piploda,32 all Part B states,33 the merged states,34 Tripura, Vindhya Pradesh,35 Madhya Pradesh,36 Madras,37 Mysore,38 Rajasthan,39 Kerala,40 Manipur,41 Saurashtra, and Hyderabad, areas of Bombay,42 Delhi,43 Goa, Daman and Diu,44 Punjab,45 and agricultural lands of Travancore.46 By virtue of Pondicherry (Extension of Laws) Act, 1968 and Pondicherry (Laws) Regulation, 1963, the application of the Indian Contract Act, 1872 and the Transfer of Property Act, 1882 were extended to Pondicherry.47

28 Via the Transfer of Property Act, 2011, 2 May 2011 for the state of Punjab. 29 W.e.f. 1-1-1893, see the Bombay Rules and Orders, Vol II, p 195; see also the Central Act 30 of 1950. 30 W.e.f. 1-1-1915, see the Bombay Rules and Orders, Vol II, p 195. 31 W.e.f. 22-12-1924, see Burman Gazette, 1924, Pt. I, p 1082. 32 Panth Pithoda Laws Regulations, 1929, 1 of 1929.

Page 2 of 2 [S 2.3] SUBSEQUENT EXTENSION OF THE ACT

33 Part B States Laws Act, 1951. 34 The Merged States Laws Act, 1950. 35 By the Central Act, 1950, 30 of 1950. 36 By Madhya Pradesh Act 12 of 1950. 37 By the Madras Act 35 of 1949. 38 Except Bellary District, see the Mysore Act 32 of 1951. 39 By notification. See Rajasthan Gazette 1952, Pt. IV-A, p 185 see also Champa Lal v Rameshwar, AIR 1967 Raj 233. 40 W.e.f. 1955, by the Travancore Cochin Act 11 of 1955. 41 Manipur Law Regulation 1929, 2 of 1929; see also the Central Act 68 of 1956. 42 By the Bombay Act 57 of 1959. 43 The whole of the Act except section 129, has been extended to Delhi, see Gazette of India, Pt. II, dated 17 November 1962, p 1852. 44 W.e.f. 1-11-1965, see Sazro Govind Gadi v Malba Madeva Suria Rao Desai, AIR 1969 Goa 42. 45 For its application to Punjab, see Gian Chand Shamchand v Rattan Lala Krishan Kumar, AIR 1964 Punj 210. 46 From 1 July 1955, see Lakshmi Pillai Subhadra Amma v Easwara Pillai Velayudhan Pillai. AIR 1977 Ker 148 [ LNIND 1977 KER 85], 1977 Ker LT 464. 47 Gothamchand Jain v Arumugam alias Tamilarasan, (2013) 10 SCC 472 [LNIND 2013 SC 832] : (2013) 7 Mad LJ 199 (SC).

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[S 2.4] SPECIAL LAWS TO OUST THE APPLICATION OF THE TRANSFER OF PROPERTY ACT, 1882 Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > General Introduction

General Introduction

[S 2.4] SPECIAL LAWS TO OUST THE APPLICATION OF THE TRANSFER OF PROPERTY ACT, 1882

If the Parliament has enacted special laws to deal with certain kinds of transfers, the Transfer of Property Act, 1882, would not apply to such situations. For instance, the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002, to secure bank loans from companies;48 the Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfers of Certain Lands) Act, 1978, to protect exploitation of Tribal’s against unscrupulous non–tribals, prohibiting transfer of tribal land in favour of non tribals,49 the Burma Shell (Acquisition of Undertaking in India ) Act, 1976,50 the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952,51 the Tamil Nadu Buildings (Lease and Rent Control) Act (Act 18 of 1960),52 the Displaced Persons (Compensation and Rehabilitation) Act, 1954 (Act 44 of 1954)),53 the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986),54 are some of the enactments that would oust the application of the Transfer of Property Act, 1882 in specific cases. Similarly, the registration of the instrument made under the Ranchi Regional Development Authority Act shall be sufficient to vest the property with the applicant, notwithstanding the Transfer of Property Act.55 The Transfer of Property Act is also made inapplicable to the Government and section 3 of the Government Grants Act, 1895 makes it clear that the Government grants is to take effect according to their tenor, notwithstanding any rule of law, statute or enactment of the legislature to the contrary to the same.56

The transaction of lease is subject to levy of stamp duty under the Indian Stamp Act 1899 and is governed by Transfer of Property Act, 1882, but the subject matter of property and leasing are covered by field assigned to State legislature and thus, outside the purview of the General Legislature.57

[s 2.4.1] Meaning of ‘Real Property’ and ‘Chattels Real’

The term ‘property’ is used to denote either rights in the nature of ownership or the corporeal things, whether lands or goods, which are the subjects of such rights.58 ‘Real’ denotes that the thing itself, or a particular right in the thing, may be specifically recovered;59 and, since originally specific recovery was only allowed in cases where the claimant was entitled to a freehold interest, that is, an estate for life or a greater estate,60 ‘real property’ denotes (1) land and things attached to land so as to become part of it; and (2) rights in the land which endure for a life or are inheritable, whether these involve full ownership or only some partial enjoyment of the land or the profits. On the other hand, rights in land which endured for a term of years only, were not originally specifically recoverable and were described as ‘chattels real’ under English law.

[s 2.4.2] Meaning of ‘Personal Property’

Personal property or personalty may be roughly described as comprising all forms of property, movable or immovable, corporeal or incorporeal, other than freehold estates and interests in land (which may include chattels affixed to land)61 and its appurtenances.62 Moreover, by the equitable doctrine of conversion, equitable interests in freehold property are sometimes treated as personal property, as, for instance, where the freehold is held by trustees upon trust for sale,63 or on the exercise of an option to purchase.64

Personal property is divisible into two classes: chattels personal, and chattels real. Chattels personal have retained

Page 2 of 4 [S 2.4] SPECIAL LAWS TO OUST THE APPLICATION OF THE TRANSFER OF PROPERTY ACT, 1882 much of their former individuality; in particular, the rules which govern the acquisition and alienation inter vivos of chattels personal, different from those applicable to real property.

Chattels Real

Chattels real are interests concerning or savouring of realty, such as a term of years in land,65 an annuity issuing out of a term of years,66 which have the quality of immobility which makes them akin to realty, but lack indeterminate duration. In some respects they are subject, like other chattels, to the law of personal property, but in others, they are subject to the law of real property.67

Chattels Personal

Chattels personal are, strictly speaking, things movable, but in modern times the expression is used to denote any kind of property other than real property and chattels real.68

‘Personalty’ or ‘personal property’ includes bills of exchange, debentures,69 government annuities and stock in the public funds,70 but does not include title deeds relating to real estate,71 heirlooms in the strict sense72 or fixtures,73 and it does not always include growing crops or trees.74

Some kinds of property are declared by statute to be personalty, capable of being dealt with as personalty.75 Certain things are not the subjects of property.76 An option to purchase land is, however, property and presumably, is personal property.77

48 Mardia Chemicals Ltd v UOI, (2004) 4 SCC 311 [LNIND 2004 SC 458]. 49 Harish Chandra Hegde v State of Karnataka, (2004) 9 SCC 780. 50 Bharat Petroleum Corp v P Kesavan, (2004) 9 SCC 772 [LNIND 2004 SC 434]. 51 Maharashtra State Co-op Bank Ltd v Assistant Provident Fund Commissioner, (2010) 2 Bom CR 724 [LNIND 2010 AUG 94] : (2010) 5 AIR Bom R 380. 52 Indian Bank v Nippon Enterprises South, Chennai, AIR 2011 Mad 238 [LNIND 2011 MAD 1180]: 2011 (2) Mad LW 521. 53 Niranjan Kaur v The Financial Commissioner, Revenue and Secretary to Government, Punjab, AIR 2011 P&H 1 (FB) : 2010 (4) Ren CR (Civil) 610. 54 Raheja Universal Ltd v NRC Ltd, (2012) 4 SCC 148 [LNINDORD 2012 SC 397] : AIR 2012 SC 1440 [LNINDORD 2012 SC 397]. 55 Nand Kishore Sahu v State of Jharkhand, (2011) 1 AIR Jhar. R 771 : AIR 2011 Jhar 65 [LNIND 2010 JHAR 467]. 56 UOI v Dinshaw Shapoorji Anklesari, (2014) 14 SCC 204 [LNINDU 2014 SC 51]. 57 Shubh Timb Steels Ltd v UOI, ILR (2011) 1 P&H 1008 : (2011) 45 VST 413. 58 This dual meaning of ‘property’ arises from a tendency to identify the corporeal thing with the aggregate of rights which make up the entire right of ownership, including the right of exclusive possession or enjoyment; and it is confined to cases where the right involves possession. Thus, where a person is entitled to land in fee simple in possession, ‘property’ is appropriate to describe both the land itself and his interest in the land; but, where the right does not involve possession of a corporeal thing, where e.g. it is an easement or a rentcharge, ‘property’ denotes a right only. See Austin’s Jurisprudence, fifth edn., pp 361, 777; Williams on the Law of Real Property, twenty-fourth edn., p 4. This identification of the right of ownership with the land itself accounts, also, for the dual meaning of ‘corporeal hereditament’. All rights in land which formerly were heritable, whether involving full ownership with possession or only a partial right, such as a rentcharge, unaccompanied by possession, are, strictly speaking, incorporeal hereditaments (see Challis’s Law of Real Property, third edn., p 49), but the right of ownership with possession is identified with the land itself and is called a ‘corporeal hereditament’, and the term ‘incorporeal hereditament’ is reserved for partial rights in the land. 59 In the Transfer of Property Act, 1882, unless the context otherwise requires, ‘property’ includes any thing in action and any interest in real or personal property: Here, ‘property’ is used to mean an incorporeal right, and, also, in the case of land, the corporeal thing. In the case of personal property it may be either a corporeal thing, such as a vehicle, or an

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incorporeal thing, such as a share in a company. This follows from the division of actions into real and personal, a division which is quite distinct from that between actions in rem and actions in personam. 60 This incident of specific recovery has no actual connection with the nature of the right of property, see Pollock and Maitland’s History of English Law, second edn., p 181 et seq; A more substantial distinction is that ‘things real are such as are permanent, fixed, and immovable, which cannot be carried out of their place; as lands and tenements: things personal are goods, money, and all other movables; which may attend the owner’s person wherever he thinks proper to go’. However, this only suits tangible forms of personal property, and not the most important modern forms such as shares and other choses in action. As to the specific recovery of interests in land which were of a freehold nature and based on ‘seisin’, see 3 Holdsworth’s History of English Law, third edn., p 5 et seq; 7 Holdsworth’s History of English Law, p 23 et seq; Cheshire and Burn’s Modern Law of Real Property, fifteenth edn., p 30. 61 As to the general rule of law that anything affixed to the freehold becomes part of it, and the exceptions to the rule, see Bain v Brand, (1876) 1 App Cas 762 at 767 (HL); Simmons v Midford, (1969) 2 Ch 415, [1969] 2 All ER 1269 (drains); HE Dibble Ltd v Moore, (1970) 2 QB 181, (1969) 3 All ER 1465 (CA). 62 There are certain interests which partake of the nature of real estate which may not be completely covered by the above definition For all practical purposes, however, the definition is believed to be sufficient. Examples of such interests are peerages and dignities; see Nevil’s Case, (1604) 7 Co. Rep 33a; Lord Advocate v Walker Trustees, (1912) AC 95 at 104 (HL); and deeds of real estate (as to the common law rule by which these ordinarily pass with the realty to which they relate, and as to the exceptions to the rule, see Co. Litt 6a; Harrington v Price, (1832) 3 B&Ad 170; Re Williams and Duchess of Newcastle’s Contract, (1897) 2 Ch 144 at 148; Beaumont v Jeffery, (1925) Ch 1. As to the distinction between property and a power over property, see Re Armstrong, ex p Gilchrist, (1886) 17 QBD 521 (CA). 63 An agreement for the sale of an interest in the proceeds of sale of land under a trust for sale may, however, constitute an agreement for the sale of an interest in land; see Cooper v Critchley, (1955) Ch 431, (1955) 1 All ER 520 (CA); however see also, Stevens v Hutchinson, (1953) Ch 299, (1953) 1 All ER 699; Irani Finance Ltd v Singh, (1971) Ch 59, (1970) 3 All ER 199 (CA); Elias v Mitchell, (1972) Ch 652, (1972) 2 All ER 153; Cedar Holdings Ltd v Green, (1981) Ch 129, (1979) 3 All ER 117 (CA); Williams and Glyn’s Bank Ltd v Boland, (1981) AC 487, (1980) 2 All ER 408 (HL); Gray (surviving executor of Lady Fox deceased) v IRC, (1994) STC 360 (CA). 64 In relation to a right of pre-emption; see Pritchard v Briggs, (1980) Ch 338, (1980) 1 All ER 294 (CA). 65 Countess of Bridgewater v Duke of Bolton, (1704) 6 Mod Rep 106 at 107; Freke v Lord Carbery, (1873) LR 16 Eq 461 at 466; Re Watson, Carlton v Carlton, (1887) 35 WR 711; Tomkins v Jones, (1889) 22 QBD 599 at 602 (CA); Re Grassi, Stubberfield v Grassi, (1905) 1 Ch 584; Crago v Julian, (1992) 1 All ER 744, (1992) 1 WLR 372 (CA). As to options in leases to purchase the fee simple; see Woodall v Clifton, (1905) 2 Ch 257 at 279 (CA). 66 Re Fraser, Lowther v Fraser, (1904) 1 Ch 111 (affd (1904) 1 Ch 726, CA; Re Ramadge’s Settlement, Hamilton v Ramadge, (1919) 1 IR 205. 67 Whitaker v Ambler, (1758) 1 Eden 151 at 152; Prescott v Barker, (1874) 9 Ch App 174 at 190. 68 Thus in its wider sense ‘chattels personal’ includes choses in action: ‘Chattel’ is derived from the Latin ‘catalla’, which primarily signified beasts of husbandry or cattle, but in its secondary sense it was applied to all kinds of movables; 2 Bl Com, 14th Edn., 385; as to whether a prehistoric boat embedded on the soil below the surface is a chattel; see Elwes v Brigg Gas Co, (1886) 33 Ch D 562. As to shares being chattels for the purpose of Supreme Court fees; see Re Givan, Rees v Green, (1966) 3 All ER 393, (1966) 1 WLR 1378; Bain v Brand, (1876) 1 App Cas 762 at 767 (HL). 69 Attree v Hawe, (1878) 9 ChD 337, 351 CA. 70 Dundas v Dutens, (1790) 1 Ves 196 at 198; Wildman v Wildman, (1803) 9 Ves 174 at 177; R v Capper, (1817) 5 Price 217 at 263, 264. 71 As to title deeds see Harrington v Price, (1832) 3 B&Ad 170 at 173. 72 These were heirlooms, which, by virtue of a special custom, descended with the inheritance of the land; Viscount Hill v Dowager Viscountess Hill, (1897) 1 QB 483 at 494 (CA). 73 See Bain v Brand, (1876) 1 App Cas 762 at 767. 74 Re Ainsli.e., Swinburn v Ainslie, (1885) 30 Ch D 485 (CA), where growing timber was held to be real estate until severed. 75 Re Lyne’s Settlement Trusts, Re Gibbs, Lyne v Gibbs, (1919) 1 Ch 80 (CA). 76 Benefits which are entirely at the discretion of trustees did not constitute property for estate duty purposes, Re J Bibby & Sons Ltd, Pensions Trust Deed, Davies v IRC, (1952) 2 All ER 483. As to pews in a church see Re St. Mary’s, Banbury, (1986) Fam 24, (1985) 2 All ER 611, Oxford Consistory Ct; affd (1987) Fam 136, (1987) 1 All ER 247. As to church monuments and their accoutrements; Re St. Andrew’s, Thornhaugh, (1976) Fam 230, (1976) 1 All ER 154, Peterborough Consistory Ct; Re St. Bartholomew’s, Aldbrough, (1990) 3 All ER 440, York Consistory Ct. 77 George Wimpey & Co Ltd v IRC, (1975) 2 All ER 45 at 49, (1975) 1 WLR 995 at 1000 (CA).

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End of Document

Chapter 1 Movable and Immovable Properties Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 1 Movable and Immovable Properties

Chapter 1 Movable and Immovable Properties

Property can be classified into several categories such as tangible and intangible, real and personal, corporeal and incorporeal, movable and immovable. For the purpose of the TP Act, 1882, it is the last categorisation, i.e., the distinction between movable and immovable property that is relevant. The Act does not define the term property, but only gives a definition of immovable property.

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RELEVANCE OF STUDYING THE DISTINCTION BETWEEN MOVABLE AND IMMOVABLE PROPERTY Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 1 Movable and Immovable Properties

Chapter 1 Movable and Immovable Properties

RELEVANCE OF STUDYING THE DISTINCTION BETWEEN MOVABLE AND IMMOVABLE PROPERTY

The primary reasons why the study of the character of property, i.e., whether it is movable or immovable is relevant, is due to the difference in procedural formalities in the transfer, and the different time stipulated in the law of limitation in having recourse to the litigative system in case of disputes. Thus, four predominant reasons necessitate a study of the distinction between movable and immovable property.

(i) Though the TP Act, 1882 lays down general rules relating to the transfer of both movable as well as immovable property, it governs and lays down rules for the specific transfers of immovable property only. (ii) The TP Act, 1882 provides a specific procedure for the transfer of immovable property that is distinct from the one followed in the case of movable property. The transfer of immovable property must take place with the help of a written document that is properly executed by the transferor and the execution should be properly attested and registered. Unless the transfer complies with all the three requirements, it will not convey any right from the transferor to the transferee. In contrast, the transfer of movable property in several cases will be complete by simple delivery of possession of the property coupled with an intention to convey the title by the owner to the recipient. For conferment of rights in the property through a transfer, the knowledge of the character of the property and the correct procedure for its transfer is a must. (iii) Transfer of immovable property attracts the provisions of the Stamp Duty Act. For this, the property has to be correctly valued and the duty is to be paid accordingly. The registrar is empowered to take suitable action to realise the deficit in the stamp duty in case of inappropriate payment and may also impose penalty.1 (iv) The law of limitation specifies different time periods within which a civil suit can be filed with respect to movable and immovable property. In case of immovable property it is generally 12 years from the date the cause of action arises, but in case of movable property, the suit must ordinarily be filed within a period of three years from the date of the cause of action, otherwise it will be dismissed as time barred. Thus it is extremely relevant to know the character of the property that is the subject matter of dispute, before a suit can be filed with respect to it in a court of law.2 In a suit relating to movable property, where it is filed after the expiration of three years from the date the cause of action arises, the first question that the court will decide, will be the character of the property. If the court comes to the conclusion that it is immovable property, it will decide the case on merits, but if the court concludes that the character of the property is movable, the case will not be heard on merits, but would be held barred by limitation and will be thus dismissed.

1 Duncan Industries v State of Uttar Pradesh, (2000) 1 SCC 633 [LNIND 1999 SC 1096] : AIR 2000 SC 355 [LNIND 1999 SC 1096]. 2 Except when property is of nominal value or is let out for a short duration.

Page 2 of 2 RELEVANCE OF STUDYING THE DISTINCTION BETWEEN MOVABLE AND IMMOVABLE PROPERTY

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PROPERTY Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 1 Movable and Immovable Properties

Chapter 1 Movable and Immovable Properties

PROPERTY

The term property has nowhere been defined in the Act,3 but it is used in the widest and most generic sense.4 Property is the most comprehensive of all terms which can be used, as much as it is indicative and prescriptive of every possible interest which any person can have.5 Thus, it means not only the physical objects, but includes rights and interests existing in or derived out of the actual physical object as well.6 For instance, the beneficial interest of the head of a religious endowment such as a mutt, 7 an actionable claim,8 a right to a reconveyance of land, a right to obtain shares in a company,9 is property.

Interests in Property

An owner has three basic rights in the property, i.e.—a right of ownership, of having the title to the property, secondly, an exclusive right to possess and enjoy the property and thirdly, an exclusive right to alienate the property in any manner that he likes. Absolute ownership is therefore an aggregate of component rights, including a right to enjoying the usufruct of the land.10 These rights are called ‘interests’ in the property under Indian law, and are referred to as ‘real rights’ under English law. Where only some rights in property are transferred, it would be a transfer of an interest in the property.11 A vested remainder,12 a contingent interest,13 a lease14 or a mortgage of an immovable property is the transfer of an interest in the property. Where all the interests in the property are transferred, it is called an absolute transfer of property. Property can be transferred absolutely by sale, gift, exchange, relinquishment, dedication etc.

Concept of Immovable Property

The literal meaning of the term ‘immovable’ is incapable of being moved, motionless, steadfast, or firmly fixed. In contrast, movable is explained as something that can be moved in relation to a place. Thus a layman’s distinction of movable and immovable property can be—what can be moved is movable, and what cannot be moved is immovable. It may appear simple but there may be some complications. For instance, fans and tube lights, window panes, tapestries on the wall, though fixed, may still retain the character of movables. For understanding the concept of immovable property, let us take a look at the definition of ‘immovable property’ under different enactments.

The TP Act, 1882 does not define immovable property but section 3 states as under.

3 See The Transfer of Property Act, 1882. 4 Mata Din v Kazim Husain, (1891) ILR 14 Cal 241; Bans Gopal v Banerji, AIR 1949 All 433. 5 Jones v Skinner, (1835) 5 LJ Ch 87, 90. 6 Ramshankerlal v Ganesh Proshad, (1907) ILR 29 All 385. 7 Commr. v Lakshindra, AIR 1954 SC 282 [LNIND 1954 SC 69]. 8 Muchiram v Ishan Chander, (1894) ILR 21 Cal 568; Rudra Prakash v Krishna, (1887) ILR 14 Cal 241.

Page 2 of 2 PROPERTY

9 Narasingerji v Panaganti, AIR 1924 PC 226. 10 Indar Sen v Naubat Sen, (1885) ILR 7 All 553. 11 Sunil Sidharthbai v Commr of Income Tax, AIR 1986 SC 368 [LNIND 1985 SC 303]. 12 Gulam Husein v Fakir Mahomed, AIR 1947 Bom 185; Umesh Chander v Jahoor Fatima, 17 IA 201. 13 Ma Yait v Official Assignee, AIR 1930 PC 17. 14 Indraloke Studio Ltd v Santi Debi, AIR 1960 Cal 609.

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INTERPRETATION CLAUSE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 1 Movable and Immovable Properties

Chapter 1 Movable and Immovable Properties

INTERPRETATION CLAUSE

[s 3] Interpretation clause.—In this Act, unless there is something repugnant in the subject or context,—

“immoveable property” does not include standing timber, growing crops or grass;

…

The General Clauses Act, 1897 explains it as follows.

…

“Immoveable property” shall include land, benefits to arise out of land, and things attached to the earth, as permanently fastened to anything attached to the earth.15

…

The Registration Act, 1908,16 defines it as under.

…

“Immovable Property” includes land, buildings, hereditary allowances, right to ways, lights, ferries, fisheries or any other benefit to arise out of land, and things attached to the earth, or permanently fastened to anything which is attached to the earth, but not standing timber, growing crops, or grass.

…

The expression ‘things attached to earth’ has again been explained in section 3 of the TP Act, 1882 as things which are rooted in earth, such as trees and shrubs, things that are embedded in earth such as walls and buildings and things that are permanently attached to what is embedded in the earth for the permanent beneficial enjoyment of to which it is attached.

Thus, immovable property includes land, benefits arising out of land, things rooted in earth, things embedded in earth, and attached to what is embedded in the earth for its permanent beneficial enjoyment, but does not include standing timber, growing crops and grass. It comprehends all that would be real property according to English Law, and possibly more.17

Things Rooted in Earth and Standing Timber, Growing Crops and Grass

The term ‘things attached to earth’ includes things rooted in earth such as trees and shrubs, but excludes standing timber, growing crops and grass.18 These three specific exclusions are rooted in earth, yet are covered under the term ‘moveable’ property. It signifies that standing timber, growing crops and grass are legally perceived as distinct from ‘things rooted in earth as in case of trees and shrubs’.

Trees

Page 2 of 8 INTERPRETATION CLAUSE

Trees are immovable property as they are rooted in earth and by virtue of section 3 of TP Act, 1882, Registration Act, 1908 and the General Clauses Act, 1897, they are specifically included in the expression ‘immovable property’. Trees can be of various types and can be put to several uses. The Act does not classify them on the basis of their use generally, but simply excludes standing timber. It signifies that those trees which do not fall in the category of standing timber would invariably be covered under immovable property. Thus, fruit-bearing trees,19 mahua tree,20 a date tree,21 mango and jackfruit trees22 are immovable property. An agreement to sell standing and fallen mango and jackfruit trees on the estate is an agreement to sell immovable property.23 A mortgage with possession of a fruit-bearing tree with the intention that the mortgagee is to enjoy the fruit of the tree, would be a mortgage of immovable property.24 Similarly, a right created in favour of a party to cut the trees for four years is a right in immovable property.25 It, therefore, means that every tree that bears fruit cannot be called a fruit tree and that where a tree is not grown for its fruits to be used as such or where it was not a usual crop on the land, it cannot be treated as a fruit tree.26

Timber Trees and Standing Timber

Timber is wood that is or can be used as construction material, as distinguished from wood that is used for other purposes such as firewood, etc. Timber is associated with and is used for making tools, utensils, furniture, carriages, fences, and the like,27 or for other structural purposes.28 Timber is defined in Webster’s Collegiate Dictionary as a wood suitable for building houses, bridges, ships, etc., whether on the trees or cut and seasoned. In India, the popular timber trees are shishum,29 babul,30 teak,31 bamboo,32 deodar, kail, rai, etc. Neem is used both as a medicinal plant as well as for its timber. Similarly, a mango tree, though grown for its fruit; it would be regarded as standing timber in provinces where the wood of mango trees is used as timber and is generally used for building and repairing houses.33

Since the main purpose for growing timber trees is to use their wood for construction or building purposes, ‘standing timber’ must be a timber tree that is in a state fit for these purposes, and further, a tree that is meant to be converted into timber so shortly that it can already be looked upon as timber for all practical purposes even though it is still rooted in earth. If not, it is still to be categorised as an ordinary tree covered under the expression, ‘things rooted in earth’ because unlike timber, it continues to draw sustenance from the soil for its further growth. Let us understand it like this: a timber plant or sapling needs to grow to a particular height or/and age when the wood becomes suitable to be used as timber. Thus, the moment they are planted till the time they are immature, they would be covered under the expression, ‘things rooted in earth’, and hence would be ‘immovable property’. When they reach a particular maturity level, when the wood can be used as timber then, what is important to be seen is, whether they are intended to be cut within a short period of time or not. If yes, then they would be called standing timber, and if not, they would still be categorised as timber trees, and hence would be immovable property. Thus, before a tree can be regarded as standing timber, it must be in such a state that if cut, it could be used as timber, and when in the state, it must be cut reasonably early.

The test is whether the intention is to take the benefit from the further growth of the plant i.e., whether the tree/plant is drawing nourishment from the land for its sustenance, or uses the earth merely as a warehouse or a godown for their conveniences’ sake. For instance:

(i)A, the owner of a forest enters into a contract with B, and grants to him a right to enter his forest and cut all kinds of plants and trees above the height of 10 feet, for a period of five years. The nature of right granted in his favour will be a right in immovable property. (ii)A, the owner of an estate enters into a contract with B, and grants to him a right to enter his estate and cut only timber trees that are in various stages of growth. The right again is a right in immovable property, as the contract is for timber trees and not standing timber. (iii)A, the owner of an estate enters into a contract with B, and grants to him a right to enter his estate and to cut standing timber, and the right is spread over a period of twenty years. The right is in immovable property as timber trees that are immature presently would become mature during the tenure period, and the grantee will be benefited from the further growth of the trees. The right is in immovable property even though the intention is to cut them away within a short span of time, when their wood becomes ready to be used as timber. (iv)A, the owner of an estate enters into a contract with B, and grants to him a right to enter his estate and to cut only timber trees for a period of ten years. All timber trees in his forest are fully grown mature trees.

Page 3 of 8 INTERPRETATION CLAUSE

The right is still in immovable property as the intention is not to cut them within a short reasonable time period but is spread over a period of ten years; (v)A, the owner of an estate enters into a contract with B, and grants to him a right to enter his estate and to cut only standing timber for a period of six months. The right would be in movable property.

Thus the term standing timber connotes that in order to be regarded as movable property:

(a) It must be a timber tree, (b) It has reached a particular stage where its wood is ready to be used as timber and (c) It is intended to be cut reasonably early.

Since standing timber is not included in the expression immovable property, a document relating to transfer of standing timber does not require registration.34

Case Laws Relating to Property

In Shantabai v State of Bombay,35 A, the owner of a forest, executed an unregistered document styled as a lease in favour of his wife W, for a consideration of Rs 26,000, for a period of 12 and a half years. As per the deed, the right was conferred upon her to enter the estate for cutting and taking out bamboo, fuel wood and teak. At the same time, she was prohibited from cutting teak plants that were under the height of one and a half feet, but the moment the teak trees reached that girth, they could be felled by her, but within 12 years. She enjoyed this right for two years, when the Madhya Pradesh Abolition of Proprietary Rights (Estate, Mahals, Alienated Lands) Act, 1950 was passed, under which all proprietary rights in the land vested in the state and W was stopped from cutting any more trees. W claimed compensation from the government for being ousted from the forest from 1951 to 1955, but gave up the claim initially on the understanding that she would be allowed to work the forests for the remaining period. Though she applied to the Divisional Forest Officer and asked for permission to work the forests, it was not granted to her, and when she started cutting the trees on her own, she was stopped by the Forest Officer from doing so. She filed a petition in the court under Article 32 of the Constitution. W contended that as the right granted to her was a right in standing timber, she was entitled to compensation. The issue before the court was: what was the nature of right created in her favour, a right in movable or immovable property?

The relevance of this question as to whether the right granted in her favour was a right in movable or immovable property was that if the right was in immovable property, then irrespective of the fact of the change in ownership, she would still be entitled to realise the right but provided it was conferred in her favour with the help of a document capable of taking effect in law, i.e., where it was a lease for a period of 12 years it should have been executed in her favour with the help of a written, attested and registered document. If it is not, then it will not pass the right or title in her favour with respect to the property for 12 years. Secondly, if it was a right in movable property, then if the ownership changes hands, then, though the right to take the benefit as per the original contract will come to an end, but the grantee would be entitled to compensation for the rest of the time period for which she was not able to realise the right. Here, W could never have succeeded in pleading that the right was in immovable property as the document on which she relied was in writing, but was neither attested nor registered. Thus, she tried to prove that the grant was in standing timber, and therefore in movable property.

The court held that a right to enter upon the land of another and carry a part of the produce is an instance of profits à prendre, i.e., benefit arising out of land, and therefore a grant in immovable property. Pointing out the distinction between timber trees and standing timber, the court held that the grant here was not merely of standing timber, but the grantee here was empowered to take the benefit of the soil. The court said:

…the duration of the grant is 12 years. It is evident that trees that will be fit for cutting 12 years hence will not be fit for felling now. Therefore it is not a mere sale of the trees as wood. It is more. It is not just a right to cut a tree, but also to derive a profit from the soil itself, in the shape of nourishment in the soil that goes into the tree and make it grow till it is of a size and age fit for felling as timber and if already of that size in order to enable it to continue to live till the petitioner choose to fell it.

The right created in her favour, the court held was a right in immovable property as it was spread over a period of 12 years and the intention was not to cut the trees at a reasonably early time period. As the right was in immovable property but was created with the help of an unregistered lease deed, W could not be granted any remedy.

Page 4 of 8 INTERPRETATION CLAUSE

On a question whether a contract to cut standing timber would require registration or not, the court in State of Himachal Pradesh v Motilal Pratap Singh & Co,36 held that where deodar, kail and rai trees that are used for building purposes are earmarked after ascertaining the required growth, silviculturally and some of them were felled and other to be cut within a short period of time, the contract is for standing timber and not timber trees and therefore of movable property. Hence, the documents for sale of these trees do not require registration, but where the contract is with respect to land having bamboo clumps and trees and the intention was not to cut them within a short period of time, rather they stood on the land for a period of ten years, it was held, that it is immovable property.

In Jagdish v Mangal Pandey,37 the issue was whether the trees were movable or immovable property. The disputed trees were in the nature of five bamboo clumps, 39 mango trees and one sheesham tree. With respect to bamboo trees, whether they would be called immovable property or not, as the primary objective was to use them for construction purposes, the court said:

…it is true that bamboos are also used for building purposes but they cannot be regarded as such until it is intended to cut them for such use…one thing would be obvious that in the larger definition of immovable property any thing attached to the earth would normally be treated as immovable property and a tree which is attached to the earth and seeks its nourishment and sustenance from the soil in which it stands will be deemed to be attached to the earth with the only distinction that if it was tree of a kind which is usually used as timber and was of sufficient size so as it could be used as such and is intended to be severed from the soil reasonably thereafter, it may be treated to be movable property.

Therefore, apart from the size of the trees, the relevant consideration would be the intention to cut the tree or to let it remain attached to the earth. In the former case, it will be termed as ‘standing timber’ while in the latter it must remain immoveable property. Similarly in Banaras v Ghuhi Rai,38 the court said that the real test for judging whether a tree is immovable or movable property is not the nature of the tree alone, but the way in which it is intended to be dealt with. If the intention of the parties in respect of a particular transaction is that tree, whether that be a neem tree or mango tree, is to be cut by the purchaser and removed, it will become timber, but if the intention is that it will after the purchase, continue to grow and to yield fruit or shade, it may not be timber. In the matter of Raj Balamgir,39 a person had contracted to purchase standing timber in the forest of B, and had agreed that the wood of the forest will be cut and removed within a year. The court held that the contract related to movable property. In Chhotabhai Jethabai Patel & Co v State of Madhya Pradesh,40 the petitioners had entered into contract with the proprietors of certain estates, under which they acquired the right to pluck, collect and carry away tendu leaves, to cultivate, culture and acquire lac, and to cut and carry away teak and timber and miscellaneous species of trees called hardwood and bamboos. The court held that these contracts did not create any interest either in the land or in trees or in plants. In Nanhe Lal v Ram Bharosey,41 it was held that a grove consisting of shisham and neem trees will be covered under the expression ‘standing timber’ and does not constitute immovable property. In Bharat Sebaigrass Ltd v State of Madhya Pradesh, 42 bamboos were held to be immovable property and when they were sold as so attached, the transaction was treated as a sale of interest in land.

In State of Orissa v Titaghur Paper Mills Co Ltd,43 one of the contracts related to an agreement of the petitioners company with state of Orissa for the purpose of felling, cutting and obtaining and removing bamboos from forest areas for converting the bamboo into paper pulp, or for purposes connected with the manufacture of paper, or in any connection incidental therewith. Thus, the company had the right to use all lands, roads and streams within, as well as outside the contract areas for the purposes of free ingress to, and egress from, the contract areas. It was also given the right to make dams across streams, cut canals, make water courses, irrigation works, roads, bridges, buildings tramways and other work useful or necessary for the purpose of its business of felling, cutting and removing bamboos for the purpose of converting the same into paper pulp or for purposes connected with the manufacture of paper. For this purpose, they also had a right to use other forest produce. The agreement extended to 14, 13 and 11 years with respect to different contract areas with an option to the company to renew the contract for a further term of twelve years and it embraced not only bamboos which were in existence at the date of the contract but also bamboos that were to grow and even come in existence thereafter. The court held that the bamboo contract related to immovable property as a benefit to arise out of land and did not relate to a contract of movable property. It was a single integral and indivisible contract which was not to be severed.

Growing Crops and Grass

The term “growing crops” refers to all vegetable growths that are in existence and practically have no existence apart from their produce. A growing crop, therefore, will be a crop which may be in existence and in process of or

Page 5 of 8 INTERPRETATION CLAUSE coming to fruition.44 The mere fact that it is not yet in existence would not take it out of the character of the growing crop.45 It includes paan leaves,46 sugarcane,47 tendu leaves, or timber,48 but does not include adjat, tendu plants, 49 or a right to rear lac.50 The hypothecation of a sugarcane field is treated as referring to a sugarcane crop and would not be an interest in immovable property.51 A transfer of a right to rear and pluck or take away fruit from trees relates to the sale of growing crops,52 but the right of sowing, cultivating and harvesting crops is a lease of the trees themselves and a right in immovable property.53

Grass again is movable property. However, the term ‘grass’ alone is not the determining criteria. It would be movable property, but only when the intention is to sever it within a short time period and an agreement for the sale and purchase of growing grass, not made with a view to their immediate severance and removal from the soil and delivery as chattels to the purchaser is an agreement for the sale of an interest in immovable property i.e., land.54 For example, where A, the owner of a piece of land confers a right to B, to enter his land and cut grass for a period of five years, the nature of right created in favour of B is a right in immovable property as B will take the benefit from A’s land and will not take what is already ripe and ready.

Land

Land is immovable property. The term ‘land’, in its legal signification, includes any ground, soil or earth, such as meadows, pastures, woods, moors, waters, marshes and heath; houses and other buildings upon it, the air space above it;55 and all mines and minerals beneath it.56 It also includes anything fixed to the land, as well as growing trees and crops, except those which, broadly speaking, are produced in the year by the labour of the year. A grant of all the profits of land passes the whole land, herbiage, trees, mines and whatever is parcel of the land, but a grant of a particular profit of or right in the land does not extend beyond such profit or right. For the purposes of ownership, land may be divided horizontally, vertically or otherwise,57 and either below or above the ground. Thus, separate ownership may exist in strata of minerals, in the space occupied by a tunnel,58 or in different storeys of a building.59

‘Land’ is usually extended to include not only land in the physical sense, with all that is above it or underneath it, but also all rights in the land and a right to share in the proceeds of sale of land under a trust for sale.60

For instance, sale of a fertilizer factory would include not only the land but also the plant and the machinery of the factory.61 A house is immovable property, even where it is transferred to the other with an option to pull it down.62 Thus, where the donor made a gift of ‘my land’ to the donee, the land would also include the house that stood on it.63 However, the owner of the land may not necessarily be the owner of its superstructure.64 In a decree for partition of land belonging to joint family, a party cannot claim as of right a share in extracted minerals stored by the other parties, as subsoil rights do not form a part of surficial rights of land.65

Benefits Arising out of Land

Benefits arising out of land or profits à prendre is immovable property. 66 Where a person using his land makes a profit, the right will be a right in immovable property. For example, a person has a vacant piece of land. Every year, during the festival season, he uses the land for holding a fair, and for this purposes he charges Rs 1000 from each stall-holder. This right to collect the charge from the stall-holders is profits a prendre, i.e., profits that he makes using his land, and therefore a right in immovable property. Similarly, a right to take out by digging manure and rubbish accumulated in specific trenches and drains and carry away is a benefit arising out of land.67 An agreement to remove soil and earth from the land and to level the plot after removal of the soil is an agreement relating to immovable property.68 A right to enter the lake and catch fish for a period of five years,69 or a right to catch fish from the tank for a period of more than a year is a right in immovable property.70 A right to maliknama,71 a right to hold a fair on one’s own land,72 a haat,73 an equity of redemption,74 an interest of mortgage in an immovable property,75 a debt secured by a mortgage,76 a right to receive future rent and profits of land,77 and a vested remainder,78 are all instances of rights in immovable property.

Things Attached to Earth

Things that are attached to earth become part of the earth and are hence called immovable property. This category, under section 3 of the TP Act, 1882 is divided into three sub-parts. The first relates to things rooted in earth except standing timber, growing crops and grass. The second relates to things that are embedded in earth as in the case of walls and buildings, and the third relates to ‘attached to what is so imbedded in the earth for the permanent beneficial enjoyment of that to which is attached’. It is the last category which needs detailed explanation, as it relates to certain objects that were movable to begin with, but after attachment to something that is imbedded in

Page 6 of 8 INTERPRETATION CLAUSE earth, change their own character and become immovable or fixtures. For instance, if for convenience’s sake, bricks are put on top of each other in a builder’s yard and form a wall, the bottom of this wall is attached to earth, yet at the same time, this makeshift wall will not get the character of immovable property. However, if the same bricks were used to construct a wall with cement or other construction material, it would be categorised as immovable property as something embedded in earth.

15 The General Clauses Act, 1897, section 3(26). 16 The Registration Act, 1908, section 2(6). 17 Jagannath Minerals v State of Orissa, 2010 SCC Online Ori 253 : (2010) 109 CLT 782. 18 See Transfer of Property Act, 1882, section 3. 19 TA Sankuni v BJ Philips, AIR 1972 Mad 272 [LNIND 1971 MAD 292]; Moti Singh v Deoki Singh, AIR 1936 Pat 46. 20 Chandi v Sat Narain, AIR 1925 Oudh 108. 21 Sheikh Jan Mohammad v Umanath Mishra, AIR 1962 Pat 440; Moti Singh v Deoki Singh, AIR 1936 Pat 46. 22 TA Sankunni v BJ Philips, AIR 1972 Mad 272 [LNIND 1971 MAD 292]. 23 Suresh Chand v Kundan, 2000 (7) Scale 620. 24 Shiv Dayal v Pattu Lal, AIR 1933 All 50. 25 Rajendra v Malhoo Khan, AIR 1929 Oudh 93. 26 Vellayappa Chetti v Subramania Chetti, AIR 1927 Mad 137 [LNIND 1926 MAD 316]. 27 Ram Kumar v Krishna Gopal, AIR 1946 Oudh 106, 107. 28 Baijnath v Ramadhar, AIR 1963 All 214 [LNIND 1962 ALL 179]. 29 Baijnath v Ramadhar, AIR 1963 All 214 [LNIND 1962 ALL 179]. 30 Ram Kumar v Krishan Gopal, AIR 1946 Oudh 106. 31 Kunhikoya v Ahmed Kutty, AIR 1952 Mad 39 [LNIND 1951 MAD 177]. 32 Pirthidin v Ramlal, AIR 1926 Oudh 136; see also Krishna Rao v Babaji, (1900) ILR 24 Bom 31. 33 TA Sankuni v BJ Philips, AIR 1972 Mad 272 [LNIND 1971 MAD 292]. 34 State of Himachal Pradesh v Motilal Pratap Singh, AIR 1981 HP 8 [LNIND 1980 HP 27]. 35 AIR 1958 SC 532 [LNIND 1958 SC 28]: (1959) SCR 265 [LNIND 1958 SC 28]. 36 AIR 1981 HP 8 [LNIND 1980 HP 27]. 37 AIR 1986 All 182 [LNIND 1985 ALL 285]. 38 AIR 1956 All 680 [LNIND 1956 ALL 46]. 39 AIR 1931 All 392. 40 AIR 1953 SC 108 [LNIND 1952 SC 100]. 41 AIR 1955 NUC 5612 (Cal). 42 AIR 1985 SC 1293 [LNIND 1985 SC 400]: (1985) Supp SCC 280. 43 AIR 1938 All 115. 44 Imamali v Rani Priyabati, AIR 1937 Ngp 250. 45 Raja Devi v Mohd Yaqub, AIR 1925 All 411. 46 Atma Ram v Dama, (1897) 11 CPLR 87. 47 Kalka v Chandan, (1888) 10 IA 20. 48 Chhotabhai v Madhya Pradesh, AIR 1953 SC 108 [LNIND 1952 SC 100]; see also Mohanlal v CIT, AIR 1949 PC 311, wherein it was held that a right to cut pick and carry away leaves is a right in movable property and does not create any interest in the land. 49 Mahadeo v State of Bombay, AIR 1959 SC 735 [LNIND 1959 SC 29].

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50 Kamal Singh v Kali Mahton, AIR 1955 Pat 402. 51 Kalka v Chandan, (1888) 10 IA 20. 52 Manoharlal Rameshwardas v State of Madhya Pradesh, AIR 1959 MP 120. 53 Ibid. 54 Mahabir Prasad v Enayat Elahi, AIR 1951 All 608 [LNIND 1950 ALL 362]. 55 As to invasion of air space above the land, a distinction is drawn between structures standing on the land of a neighbour and overflying aircraft, balloons, bullets or missiles: Anchor Brewhouse Developments Ltd v Berkley House (Docklands Developments) Ltd, (1987) 2 EGLR 173 at 175–176. Despite earlier controversy as to whether invasion of air space gives rise to a cause of action in trespass or only in nuisance, in which case damage is required to be proved, it now appears that any invasion by a structure standing on the land of a neighbour is a trespass; Anchor Brewhouse Developments Ltd v Berkley House (Docklands Developments) Ltd, supra; Wandsworth District Board of Works v United Telephone Co, (1884) 13 QBD 904 (CA); Gifford v Dent, (1926) WN 336; Kelsen v Imperial Tobacco Co (of Great Britain and Ireland) Ltd, (1957) 2 QB 334, (1957) 2 All ER 343; Ward v Gold, (1969) 211 Estates Gazette 155. See also Pickering v Rudd, (1815) 4 Camp 219, but see Kenyon v Hart, (1865) 6 B&S 249 at 252 per Blackburn J arguendo. Otherwise, the rights of an owner in the air space above his land are restricted to such a height as is necessary for the ordinary use and enjoyment of that land; Berstein of Leigh (Baron) v Skyviews & General Ltd, (1978) QB 479, (1977) 2 All ER 902. It would seem that the cause of action for infringement of those rights would also be in trespass; Berstein of Leigh (Baron) v Skyviews & General Ltd, supra, but see also Clifton v Viscount Bury, (1887) 4 TLR 8. 56 The extent of its legal signification has usually been expressed in the maxim cujus est solum, ejus est usque ad coelum et ad inferos (to whom belongs the soil, his it is, even to heaven and to the middle of the earth). A conveyance of land prima facie includes everything directly beneath the surface of the land conveyed and the space directly above; Laybourn v Gridley (1892) 2 Ch 53; Corbett v Hill, (1870) LR 9 Eq 671; Wandsworth District Board of Works v United Telephone Co, (1884) 13 QBD 904, 915 (CA); Kelsen v Imperial Tobacco Co (of Great Britain and Ireland) Ltd, (1957) 2 QB 334 : (1957) 2 All ER 343 (air space above); Grigsby v Melville, (1973) 3 All ER 455 : (1974) 1 WLR 80 (CA); Straudley Investments Ltd v Barpress Ltd, (1987) 1 EGLR 69, 70 (CA) (air space above); Davies v Yadegar, (1990) 1 EGLR 71 (CA) (air space above); Haines v Florensa, (1990) 1 EGLR 73 (CA) (air space above). For a critique of the cujus est solum maxim; see Railways Commr v Valuer-General, (1974) AC 328, 351, (1973) 3 All ER 268, 277 (PC). 57 Railways Commr v Valuer-General, (1974) AC 328 : (1973) 3 All ER 268 (PC). See also Re Metropolitan District Rly. Co and Cosh, (1880) 13 ChD 607, CA. 58 See Bevan v London Portland Cement Co Ltd, (1892) 67 LT 615; Metropolitan Rly Co v Fowler, (1893) AC 416 (HL). The grant of the exclusive use of pipes or wires is, however, an easement (see e.g. Simmons v Midford, (1969) 2 Ch 415 : (1969) 2 All ER 1269) as, apparently, is the grant of the exclusive use of a burial vault (see e.g. Bryan v Whistler, (1828) 8 B&C 88). 59 Corbett v Hill, (1870) LR 9 Eq 671. Whether a room projecting over neighbouring premises carries ownership of the column of air above, depends on the circumstances, Corbett v Hill, supra. The conveyance of a dwelling house may pass the footings and eaves, where they extend beyond the surface boundary, but not the column of air between them, Truckell v Stock, (1957) 1 All ER 74 : (1957) 1 WLR 161 (CA). 60 Stevens v Hutchinson, (1953) 1 All ER 699; Perry v Phoenix Assurance plc, (1988) 3 All ER 60 : (1988) 1 WLR 940; see also Harman v Glencross, (1985) Fam 49, (1986) 1 All ER 545 (CA) (Charging Orders Act, 1979 section 3(5)). However, in many cases the phrase ‘interest in land’ was held to include a share in the proceeds of sale of land held on trust for sale; Cooper v Critchley, (1955) Ch 431 (1955) 1 All ER 520 (CA); Elias v Mitchell, (1972) Ch 652 : (1972) 2 All ER 153; Williams and Glyn’s Bank Ltd v Boland, (1981) AC 487, (1980) 2 All ER 408 (HL). Similar interests have been held to be interests in land for the purposes of other enactments; see Kirkland v Peatfield, (1903) 1 KB 756; Re Hazeldine’s Trusts, (1908) 1 Ch 34 (CA); Re Fox, Brooks v Marston, (1913) 2 Ch 75; Re Witham, Chadburn v Winfield, (1922) 2 Ch 413; Re Jauncey, Bird v Arnold, (1926) Ch 471. An option to purchase a leasehold interest is an interest in land (Stromdale and Ball Ltd v Burden, (1952) Ch 223, (1952) 1 All ER 59); but a right of pre-emption is not an interest in land for the purposes of the general law (Pritchard v Briggs, (1980) Ch 338 : (1980) 1 All ER 294 (CA)). For the meaning of ‘agricultural land’ under the Inheritance Tax Act, 1984 see Starke v IRC, (1996) 1 All ER 622, (1995) 1 WLR 1439 (CA). Growing crops may be an interest in land as are agreements for leases. 61 Duncans Industries v State of Uttar Pradesh, AIR 2000 SC 355 [LNIND 1999 SC 1096]: (2000) 1 SCC 633 [LNIND 1999 SC 1096]. 62 Punnayya v Venkatappa, AIR 1926 Mad 343. 63 Commr. of Gift Tax v IP Soni, ILR 1981 Delhi 5630 : [1982] 136 ITR 838 (Delhi). 64 Shivashakti Builders and Financial Co Ltd, Re (2010) 158 Comp Cas 237 Pat. 65 K Thippanna v Varalakshmi, (2012) 3 SCC 576 [LNIND 2012 SC 1512] : 2012 (3) Scale 34 [LNIND 2012 SC 142]. 66 See the Registration Act, 1908, section 2(6) and the General Clauses Act, 1882 section 3(26).

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67 Haji Sukhan Beg v Board of Revenue, AIR 1979 All 310. 68 Kanjee and Mooljee v Shanmugam, AIR 1932 Mad 734 [LNIND 1932 MAD 119]. 69 Anand Behara v State of Orissa, AIR 1956 SC 17 [LNIND 1955 SC 84]; see also DS D’Souza v MR Wagle Trust, AIR 1979 Goa 19. 70 Santosh Jayaswal v State of Madhya Pradesh, AIR 1996 SC 207 [LNIND 1995 SC 895]: 1995 (6) SCC 520 [LNIND 1995 SC 895]. 71 Chauraman v Bali, (1887) ILR 9 All 591. 72 Ganpati v Ajmer, (1955) 1 SCR 1065 [LNIND 1954 SC 168]. 73 Surendra Narain v Bhailal, (1895) ILR 22 Cal 752. 74 Umesh Chunder v Zahur Fatima, (1891) ILR 18 Cal 164. 75 Prahlad Dalsukhrai v Maganlal Muljibhai Tewar, AIR 1952 Bom 454 [LNIND 1952 BOM 7]; Jang Bahadur v Bhagat Ram, AIR 1930 All 110; Paresh v Nabogopal, (1902) ILR 29 Cal 1. 76 Sakhiuddin v Sonaullah, 22 Cal WN 641; see also Anandilal v Keshaodeo, (1945) ILR 2 Cal 526; Shiv Rao v Offcial Liquidator, AIR 1940 Mad 140 [LNIND 1939 MAD 221]; wherein it was held that a mortgage decree is immovable property. See also Lalumrao v Lal Singh, AIR 1924 All 796. A debt secured for the purposes of attachment and setting aside of the sale is a movable property. 77 ME Moola Sons v Official Assignee, AIR 1936 PC 230. 78 Budhiraju v Vullipalam, AIR 1939 Mad 802 [LNIND 1939 MAD 122].

End of Document

DOCTRINE OF FIXTURES Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 1 Movable and Immovable Properties

Chapter 1 Movable and Immovable Properties

DOCTRINE OF FIXTURES

To understand under what circumstances a chattel (movable) becomes a fixture (immovable), we have to understand the doctrine of fixtures. Under English law, the doctrine of fixtures is explained and understood with the help of two maxims. These maxims clarify the ownership issues of the attachment. The two maxims are:

(i) Quicquid plantatur solo, solo cedit, which means whatever is planted in the earth, becomes part of the earth, and consequently whosoever owns that piece of earth will also own the thing planted. (ii) Quicquid inaedificatur solo, solo cedit, which means whatsoever is built into or embedded into or attached to soil becomes part of the earth and consequently, whosoever is the owner of that piece of land will also become the owner of the thing attached/built in or embedded.

The application of these doctrines is subject to two exceptions.

(i) The first is that they apply only when there is no contract to the contrary. For example, on the land belonging to A, B installs a pump and machinery to draw water. These are fixed to the earth with the help of construction of cement foundation. The contract between A and B stipulates that the ownership of the pump and machinery will continue to be with B. The doctrine will have no application here. (ii) The second exception relates to the trade fixtures fixed by a tenant. The term ‘trade fixtures’ refers to all those things attached or affixed by a tenant on the land of the other, which are necessary for him for the purpose of carrying on his trade. For example, A, the owner of a piece of land gives it to B, who is in the banking business. Along the cabin of the cashier, he installs heavy iron gates that are imbedded in earth. Even if there is no contract to the contrary, the ownership of the iron gates will continue to vest in B.

Indian Law Relating to Fixtures

The English Law of fixtures does apply in India but with serious modifications. The maxim of English law, quicquid plantatur solo, solo cedit i.e., ‘whatever is affixed to the soil belongs thereto’ does not generally apply in India.79 Here, there are two rules that determine the entitlement issues, with respect to the things attached to or embedded in land by a person other than the owner. These rules apply only when this person was in lawful occupation of the property and was not a trespasser.

(i) The first rule is that he is entitled to remove the attachment if he vacates the premises provided he leaves the land in the same state as it was previous to the attachment. (ii) The second rule is, that if he allows the attachment or improvement to remain on the land of the owner, so that the owner derives a benefit from it, he is entitled to compensation for the value of the attachment or improvement.80 This rule was laid down in Thakoor Chunder v Ramdhone81 and was subsequently also approved by the Privy Council in the Narayan Das82 case.

Though there is a significant departure from the English law of fixtures, yet, the Indian judiciary often takes the help of English cases to decide the question of when a chattel becomes a fixture. The issue may not appear difficult at a glance, for example, what is fixed to earth can be called immovable or a fixture but problem or confusion may arise in some cases. An anchor of a big ship is firmly embedded in earth, but it can hardly be called a fixture. Similarly, tapestries hung on the walls that can be removed easily, though attached to the walls, will be termed chattels. This

Page 2 of 7 DOCTRINE OF FIXTURES question, that what is that sufficient attachment that will convert the character of a thing to make it a fixture from a chattel, has tremendous practical importance. For example A, the owner of a house professes to sell it to B and invites him for inspecting it. At the time of inspection, the house has an iron gate in the front, show cases made of wood that were fixed in the walls, electrical fittings etc. After the contract is concluded, whatever are the fixtures they will pass along with the house to B, and A is not empowered to remove them. He can remove only chattels.

There are three tests to ascertain whether a chattel after attachment has become a fixture or not.

(i) Mode of attachment and consequences of its detachment: The first test is the mode of attachment of the thing and consequences of its detachment. If a thing or machinery because of its sheer weight goes down in earth; the presumption will be that it is still movable. On the other hand if in attaching it some external aid is required such as construction of foundation, or it is fixed to the floor with the help of nuts and bolts, the presumption will be that it has become part of earth. How easily the object can be removed, has also to be taken into account. If in trying to remove it, no damage is caused to the thing and also to something to which it was attached in other words, the attachment can be removed easily without causing sufficient damage to which it was attached, the presumption will be that it is movable, but if in trying to remove it, the attachment is destroyed or loses its value or the support is sufficiently damaged, the presumption will be that the attachment had become part and parcel of that to which it was attached. The rule is that you cannot destroy the principal thing by taking away the accessory to it.83 (ii) Object or intention of attachment: The second test is the object or intention of attachment. Though the consequences will depend upon the facts and circumstances of each case, but where the object is to fix the attachment permanently or for a sufficiently long time period, the presumption will be that it has become a fixture, but if the intention was to enjoy the attachment for a specific short duration and then to remove it, the presumption will be that it is still a chattel. (iii) By whom attached: The third and the last test is ‘by whom attached’. The basic presumption is that nobody would want to make a permanent improvement of the land belonging to some other person. Thus, if the attachment is by the owner of the land, the presumption would be very strong that the attachment has become a fixture, but if it is attached by somebody else other than the owner, such as a tenant, a licencee or a mortgagee, the presumption would be that it is still a chattel.

Attached to what is Embedded

The question whether any attachment embedded in the earth or permanently fastened to any thing attached to earth is movable or immovable property is therefore, a mixed question of law and fact, depending upon the facts and circumstances of each case.84 The tests are as aforesaid, to see what is the intendment, object, and purpose of attachment; whether it is for the beneficial enjoyment of the building, land or structure, or the enjoyment of the very attachment, and the degree or manner of attachment or annexation or the enjoyment of it to the earth.85 If the mode of attachment is that it is embedding in the earth as in the case of walls and buildings, or if the object of the attachment is for the permanent beneficial enjoyment of the land to which it is attached, the property would be an immovable property.86 Thus, where a person erects machinery of his own on a land belonging to another, there is a presumption that the machinery is erected by him either as a licensee or as a temporary tenant, and the machinery does not form part and parcel of the immovable property to which it is attached for the time being.87 If the degree of annexation is such that the fixture cannot be taken away without destroying the principal, it would be regarded as immovable property,88 e.g., copper stills placed upon two iron rails in a distillery which could be removed by pulling down the brick and mud wall put up on one side for the purpose of keeping them in position,89 equipment of a touring cinema, being collapsible and easily removed, are movables90 but a petrol engine mounted and fastened to a cement base is immovable property, as its fixation on earth is for the beneficial enjoyment of the property during its lease.91 A boiler, an engine and a decorticator fixed and embedded in a ginning and decorticating factory building are immovable property, as they were fixed for the beneficial use of the building as a factory.92 Where the main machine of the mill is installed on a small platform, and held in position by being attached to iron pillars fixed to the ground to a depth of nearly six to seven feet, the plant and the machinery are immovable properties, the main consideration being the object of annexation.93 Where the tenant is running an ice factory in the premises of another, it will be presumed that he installs the same with the intention of removing it at the determination of the tenancy and it would therefore not be an immovable property.94 In considering whether a chattel in a particular case is imbedded in the earth so as to become immovable property, the test of mode of annexation and degree of annexation has been applied in India.95

Case Laws

Page 3 of 7 DOCTRINE OF FIXTURES

In Holland v Hodgson,96 while holding that looms attached to earth and floor of a worsted mill were fixtures Blackburn J held:

…the general maxim of the law is that what is annexed to land becomes part of the land; but it is very difficult if not impossible to say with precision what constitutes an annexation sufficient for this purpose. It is a question which must depend on the circumstances of each case and mainly on two circumstances indicating the intention viz the degree of annexation and the object of annexation.

In Leigh v Taylor, 97 the House of Lords held that certain valuable tapestries affixed by a tenant to the walls of a house for the purpose of ornament and for better enjoyment of them as chattels had not become part of the house, and therefore retained their character as chattels.

In Duncan Industries Ltd v State of Uttar Pradesh,98 a transfer was effected of “freehold land and residential building, comprising a guest house, residential flats; and plant and machinery relating to the fertilizer business including the ammonia manufacturing plants, the captive power plant and all other movable capital assets including vehicles, furniture, air-conditioners, stand-by systems, pipelines, railway siding etc., all of which relate exclusively to the fertilizer business”. The facts of the case were as follows:

1. The entire fertilizer business was sought to be transferred by the transferor, to the transferee through a conveyance deed; 2. The deed however mentioned that the possession of related plant and machinery of this business was already completed through delivery of possession of the property as they were movables and therefore they were excluded from the written conveyance deed. Further, while calculating the stamp duty payable to the authorities on this transfer, the transferor did not include the value of said plant and machinery. Accordingly, the stamp duty was calculated on the value of only the land and not the value of the related plant and machinery. 3. The collector on a complaint by the sub-Registrar about the improper valuation of the property for calculation of levy of stamp duty, conducted an enquiry and levied around Rs 37 crores as duty and another Rs 30 lakhs as penalty. The collector had also included the value of the related plant and machinery as in their opinion the same being fixed permanently to the land and being also an integral part of the entire business were part of immovable properties themselves and their value needed to be included while calculating the stamp duty. Further, as they were immovable properties, their transfer could not be completed through mere delivery of possession of property and had to be effected through the conveyance deed in a proper manner.

The court, therefore, had to deliberate on the character of the plant and machinery related to the fertilizer business. If the same were movables, they were not required to be included in the conveyance deed for the purposes of valuation and their transfer could validly be effected through delivery of possession of the property but if the same were immovable properties, not only their value had to be included in the value of the property conveyed through the conveyance deed, their transfer could only be effected through the transfer deed and a transfer sought to be effected by mere delivery of possession of the property would not convey any title in favour of the transferee.

The High Court concluded that the machineries which formed the fertilizer plant, were permanently embedded in the earth with an intention of running the fertilizer factory and while embedding these machineries the intention of the party was not to remove the same for the purpose of any sale of the same either as a part of a machinery or scrap and in the very nature of the user of these machineries, it was necessary that these machineries be permanently fixed to the ground. Therefore, these machineries were immovable properties which were permanently attached to the land in question. The Supreme Court upheld the view of the High Court and observed that the question whether machinery which is embedded in the earth is movable property or an immovable property, depends upon the facts and circumstances of each case. Primarily, the court will have to take into consideration the intention of the parties when it decided to embed the machinery whether such embedment was intended to be temporary or permanent. On a careful perusal of the agreement of sale and the conveyance deed along with the attendant circumstances and taking into consideration the nature of machineries involved, the court said that the machineries which have been embedded in the earth to constitute a fertilizer plant, are definitely embedded permanently with a view to utilise the same as a fertilizer plant. Their description shows that they were set up permanently in the land with a view to operate a fertilizer plant and the same was not embedded to be dismantled/ removed for the purpose of sale as machinery at any point of time. The purpose for which these machines were

Page 4 of 7 DOCTRINE OF FIXTURES embedded was to use the plant as a factory for the manufacture of fertilizer at various stages of its production. Hence, the contention that the machines should be treated as movables was not accepted. The court also rejected the claim of the party that the plant and machinery being immovable property could have been transferred by delivery of possession on any date prior to the date of conveyance of the title to the land.

Specifically on the question as to whether the transferor did transfer the title of the plant and machinery by the conveyance deed, the court said, that what was agreed to be sold was the entire business of fertilizer on an “as is where is” basis including the land, building thereon, plant and machinery relating to fertilizer business and the possession of plant and machinery was not handed over separately to them by the vendor. These machineries were neither actually dismantled and handed over, nor was it possible to visualise from the nature of the plant that was involved that such a possession de hors the land could be given by the vendor to the appellant. The court did observe that the document in question was attempted to be drafted as a Conveyance Deed regarding the land only so as to reduce the market value of the property. The land with standing fertilizer factory was conveyed under the deed, and an unsuccessful attempt to camouflage this part of the property was made in the recitals. The court also noted that the transferor in an earlier application filed before the Income-Tax Department had himself disclosed the market value of the land as Rs 70 crores which is the figure found in the agreement of sale which includes the sale of plant and machinery along with the land. It included plant and machinery, railway sliding and other immovable properties as part of the fertilizer business undertaking. It, therefore, concluded that no title was so transferred by delivery of possession of the property and since the property in question was immovable property, the same was transferred through the conveyance deed and since it was not valued, the action of the Registrar was proper.

However, it does not mean that in all cases where the machinery is attached to or embedded in earth, it would be categorised as immovable property. It would depend upon the facts and circumstances of each case where the machinery is attached to the earth only because of its operational efficiency, and removed from the base easily, it would continue to be called movable property.99

In Bamdev Panigrahi v Monorama Raj,100 a person, A, was conducting a business under the name of ‘Kumar Touring Talkies’. He obtained land under possessory mortgage from the Raja of Mandasa in 1957, and built a temporary cinema structure and erected a temporary pandal over it. For the purposes of exhibiting cinema shows, he purchased a cinema projector and a diesel oil engine. This equipment was embedded and installed in earth by construction of foundation. For the purpose of running the cinema shows, A, applied and got a license that was purely temporary for a period of one year from the concerned authorities. He allegedly entrusted the management of this business to his friend B, out of trust and confidence in him. However, B colluded with the Rajah and obtained the mortgage in his name. A issued a notice in May 1961, calling upon B to render correct account of the management of the entire cinema concern including the machinery, equipments, records, etc. B denied his liability to account for the management of Kumar Touring Talkies by a written reply in June 1961. A became sick in 1963, and continued to be so till Aug 1965, when he died. Thereupon, A’s widow W filed a suit in July 1966, praying for a declaration that she was the owner of Kumar Touring Talkies, and a direction that the equipment including the cinema projector and the diesel oil engine be returned to her. This case illustrates the importance of understanding the distinction between movable and immovable property. The court, in such cases, even before going into the merits of the case, has to decide the character of the property. If it comes to the conclusion that the disputed property is immovable, it will go ahead and decide the case on merits, and if it concludes that such property is movable, then the case will be dismissed as time barred, it having been filed after more than three years from the date the right or claim was denied, i.e., B had denied the claim of A in June 1961 while the suit was filed in this respect in July 1966 after more than five years. The law of limitation prescribes a limitation period of three years in case of movables. The court here noted that the operation of the business by its very name, ‘Kumar Touring Talkies’ showed that exhibiting cinema shows at a specific place was purely temporary. Therefore, even if the two items of disputed property were attached and embedded in earth, the intention can only be to have them affixed to earth temporarily. The license to exhibit the shows was only for a period of one year, and there was no guarantee that the owner would have applied for its renewal or the authorities would have renewed it. Thirdly, the person who fixed them to the land was not the owner of the land. These items were in fact removed from the land subsequently. The court held that these were movable properties and the suit being time barred was dismissed.

Things Permanently Attached to what is Embedded in the Earth, for the Permanent Beneficial Enjoyment of that to which it is Attached

With respect to the last category, i.e., things permanently attached to what is embedded in the earth, for the permanent beneficial enjoyment of that to which it is attached, the requisite factors here are that:

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(i) Firstly, it must be a permanent attachment, i.e., intended to be used in perpetuity or till the life of the attachment. (ii) Secondly, its attachment constitutes a permanent improvement to the thing to which it is attached.

For instance, fans and tube lights holders are permanently attached to the walls/ceilings of a room, the later being immovable property. These attachments are permanent, and are for the better enjoyment of the room, i.e., to which they are attached, and therefore would be termed immovable property. Similarly, take the case of a well in a field. On the top of the well is a two feet wall and a pulley is attached to it with nuts and bolts. If the character of the pulley attached to the well has to be ascertained, factors to be considered would be; first that it is permanently attached to what is embedded in the earth—in this case, the wall of the well, the well-being immovable property and secondly, the attachment helps us to enjoy which property in a beneficial manner. Do we enjoy the pulley (chattel) with the help of the wall and the well (immovable property) or do we enjoy the well, with the help of the pulley, i.e., is the pulley a permanent improvement on the well? If it is, then this in itself, becomes a part of well and therefore would be categorised as immovable property.

Other Instances of Immovable Property

In a nutshell, immovable property includes land, benefits arising out of land and things attached to earth,1 or permanently fastened to any thing attached to earth.2 It also includes buildings,3 hereditary allowances and offices,4 right of way,5 lights,6 a right to ferry,7 fisheries.8 A fruit bearing tree, a rubber tree,9 standing trees,10 or a timber tree which is in the process of growth and is taking nourishment from the soil for its sustenance,11 will be immovable property. Trees which are merely saplings at the time of the agreement, are part of the land and would vest in the transferee.12 Where, at the time of the agreement to sell land there are only plants and saplings on the land but later due to denial by the owner to execute the sale deed the buyer institutes a suit for specific performance, and the plants grow into full fledged trees during 25 years of litigation, unless there is an express agreement to exclude these trees, they form part of the land and pass with the land to the buyer.13 In a sale for land, the fact that the well, tube well, room and trees are standing on the land are not specifically mentioned in the agreement, is not relevant as they formed part of land.14 Immovable property does not include standing timber, growing crops and grass.15

Movable Property

Standing timber,16 growing crops,17 grass,18 fruits upon trees19 are illustrations of movable property.20 Sugar stored in a godown,21 a pala or turn of worship,22 a right to recover maintenance though charged on land,23 a royalty,24 a decree for the sale of immovable property,25 a decree for arrears of rent,26 are movable property. Where the plaintiff assigned the copyright of all his works, of literary, dramatic or musical nature of the film, it was held that what he assigned was a right in movable property.27

Copper stills placed upon two iron rails in a distillery building, which could be removed by pulling down the brick and mud wall put up on one side for the purpose of keeping them in position,28 machinery owned by one person but attached to the land belonging to another person with the intention of removing it,29 machinery fixed in a house for baling cotton,30 and a cinema projector and a diesel oil engine fixed on earth for the purposes of exhibiting shows in a touring cinema, are movable properties.31

Under Indian law there can be a valid mortgage of movable property.32 Transfer of possession of goods is not a mandatory requirement in mortgage of movable property.33

Water and Sludge

Water is movable property, and therefore, an agreement to pay a specific sum of money for the maximum water drawn at any time will be a right in movable property.34 ‘Sludge in a tank, and just when it is taken out of the sedimentation tank is again movable property as though very much akin to earth or land, it is not a part of the land. If a large quantity of sludge is taken out of the land and is stored on land it does not lose the character of sludge and become a part of the land, unless it is allowed to remain there for a long time as to become a part of the land. When stored in a lagoon, it retains the character of sludge, and cannot be treated as immovable property.’35

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79 Commissioner for Central Excise, Ahmedabad v Solid and Correct Engineering Works, (2010) 5 SCC 122 : 2010 (252) ELT 481 (SC); Mammunhi v Kunhibi, AIR 1961 Ker 147; Jnan Chand v Jugal Kishore, AIR 1960 Cal 331 [LNIND 1959 CAL 186]. 80 See Narayan Das Khettry v Jatindranath, AIR 1927 PC 135 : (1927) ILR 54 Cal 669; Kochunni Kartha v Raman, AIR 1967 Ker 22; (1966) 2 Ker 211 : (1866) 6 WR 228 in 1866. 81 (1868) 6 WR 228. 82 Narayan Das Khettry v Jatindranath, AIR 1927 PC 135 : (1927) 54 Cal 669. 83 The mere attachment to earth does not qualify a plant to be treated as immovable property and to qualify as immovable property, the attachment has to be for the permanent beneficial enjoyment of the land and should not have separate existence devoid of the land; See Commissioner for Central Excise, Ahmedabad v Solid and Correct Engineering Works, (2010) 5 SCC 122 : 2010 (252) ELT 481 (SC). 84 Bamadev Panigrahi v Monorama Raj, AIR 1974 AP 226 [LNIND 1973 AP 66]. 85 Ibid. 86 Jnan Chand v Jugal Kishore, AIR 1960 Cal 331 [LNIND 1959 CAL 186]. 87 Subramanian v Chidambaram, AIR 1940 Mad 527; Subbiah v Govindrao, AIR 1953 Ngp 224; Addu Achiar v Custodian Evacuee Property, AIR 1952 Hyd 14. 88 Addu Achiar v Custodian Evacuee Property, AIR 1952 Hyd 14; Md Ibrahim v Northern Circars Fibre Trading Co Coconada, AIR 1944 Mad 492 [LNIND 1944 MAD 117]. 89 Narayana Sa v Balaguruswami, AIR 1924 Mad 187 [LNIND 1923 MAD 125]. 90 Bamadev Panigrahi v Monorama Raj, AIR 1974 AP 226 [LNIND 1973 AP 66]; Board of Revenue v Venkataswamy Naidu, AIR 1955 Mad 620 [LNIND 1955 MAD 59]. 91 Perumal Naichker v Ramaswami Kone, AIR 1969 Mad 346 [LNIND 1967 MAD 177]. 92 J Kuppanna Chetty & Co v Collector of Anantpur, AIR 1965 AP 457 [LNIND 1964 AP 141]. 93 Ibid. 94 Addu Achiar v Custodian Evacuee Property, AIR 1952 Hyd 14. 95 Chatturbhuj v Bennet, (1905) ILR 29 Bom 323; Addu Achiar v Custodian Evacuee Property, AIR 1952 Hyd 14. 96 (1872) 7 CP 328, 334. 97 (1902) AC 157 at 161. 98 (2000) SCC 633. 99 Sirpur Paper Mills Ltd v CCE, (1998) 1 SCC 400 [LNIND 1997 SC 2083]. 100 AIR 1974 AP 226 [LNIND 1973 AP 66]. 1 Shantabai v State of Bombay, (1959) SCR 265 [LNIND 1958 SC 28]; see The Transfer of Property Act, 1882, section 3; see the General Clauses Act, 1882, section 3(26); Indian Registration Act, 1908, section 2(6). 2 See the General Clauses Act, 1882, section 3(26). 3 See Indian Registration Act, 1908 section 2(6). 4 Balwant v Parshottam, 9 BHRC 99; Raghoo v Kassy, 10 IC 73. 5 Bejoy v Banku, (1908) 13 Cal WN 451, 9 Cal LJ 336. 6 See the Registration Act, 1908, section 2(6). 7 Krishna v Akilanda, (1885) 13 Mad 54. 8 Braja v Mani, (1951) SCR 431 [LNIND 1951 SC 23]; Shibu v Gopi, (1897) ILR 24 Cal 449. 9 Joseph v Joseph Annama, AIR 1979 Ker 219 [LNIND 1979 KER 9]. 10 Divisional Forest Officer Himachal Pradesh v Daut, (1968) 2 SCR 112 [LNIND 1967 SC 311]. 11 Shantabai v State of Bombay, (1959) SCR 265 [LNIND 1958 SC 28]. 12 Suresh Chand v Kundan, (2000) 7 Scale 620. 13 Ibid. 14 Joseph v Joseph Annama, AIR 1979 Ker 219 [LNIND 1979 KER 9].

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15 Hakim Singh v Ram Sanehi, AIR 2001 All 231 [LNIND 2001 ALL 243], 233. 16 Shantabai v State of Bombay, AIR 1958 SC 532 [LNIND 1958 SC 28]; Ram Kumar v Krishna Gopal, AIR 1946 Oudh 106; Baijnath v Ramdhar, AIR 1963 All 214 [LNIND 1962 ALL 179]. 17 Imamali v Rani Priyabati, AIR 1937 Ngp 250, (1938) ILR Nag 31; Atma Ram v Dama, (1897) 11 CPLR 87; Kalka v Chandan, 10 IA 20; Raja Devi v Mohd Yaqub, AIR 1925 All 411; Manohar Lal v State of Madhya Pradesh, AIR 1959 MP 120. 18 See the Transfer of Property Act, 1882, section 3. 19 See the Registration Act, 1908, section 2(9). 20 See the General Clauses Act, 1897, section 3(36), wherein it has been defined as property of every description except immovable property. See The Transfer of Property Act, 1882, section 3; Shantabai v State of Bombay, AIR 1958 SC 532 [LNIND 1958 SC 28]; Ram Kumar v Krishna Gopal, AIR 1946 Oudh 106, 107; Baijnath v Ramdhar, AIR 1963 All 214 [LNIND 1962 ALL 179]; Kalka v Chandan, 10 IA 20; Raja Devi v Mohd Yaqub, AIR 1925 All 411; Manohar Lal v State of Madhya Pradesh, AIR 1959 MP 120. 21 Jatikar v Mukunda, 16 Cal WN 122, 14 Cal LJ 369. 22 Altaf Begam v Brij Narain, (1929) ILR 51 All 612 : AIR 1929 All 281. 23 Ibid. 24 Gous Mohammad v Khwas Ali, AIR 1923 Cal 450. 25 Sheogovinda v Gouriprashad, AIR 1925 Pat 310. 26 Venkatachalam v Venkatarami, AIR 1940 Mad 929 [LNIND 1940 MAD 163]. 27 Gramophone Co of India Ltd v Shanti Films Corpn., AIR 1997 Cal 63 [LNIND 1996 CAL 125]. 28 Narayana Sa v Balaguruswami, AIR 1924 Mad 187 [LNIND 1923 MAD 125]. 29 JH Subbiah v Govindrao, AIR 1953 Ngp 224. 30 Meghraj v Krishna Chandra, AIR 1924 All 365. 31 Bamadev v Monorma Raj, AIR 1974 AP 226 [LNIND 1973 AP 66]. 32 State Bank of India v SB Shah Ali, AIR 1995 AP 134 [LNIND 1994 AP 101]. 33 Tehil Ram v Langin D’Mello, AIR 1916 Bom77. 34 Chief Controlling Revenue Authority v AB Project, AIR 1979 All 355. 35 Jnanchand v Jugal Kishore, AIR 1960 Cal 331 [LNIND 1959 CAL 186].

End of Document

ATTESTATION Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 1 Movable and Immovable Properties

Chapter 1 Movable and Immovable Properties

ATTESTATION

The Transfer of Property Act, 1882, S. 3

…

“attested”, in relation to an instrument, means and shall be deemed always to have meant attested by two or more witnesses each of whom has seen the executant sign or affix his mark to the instrument, or has seen some other person sign the instrument in the presence and by the direction of the executant, or has received from the executant a personal acknowledgment of his signature or mark, or of the signature of such other person, and each of whom has signed the instrument in the presence of the executant; but it shall not be necessary that more than one of such witnesses shall have been present at the same time, and no particular form of attestation shall be necessary;

…

End of Document

GENERAL PRINCIPLE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 1 Movable and Immovable Properties

Chapter 1 Movable and Immovable Properties

GENERAL PRINCIPLE

For the transfer of immovable property, the owner has to comply with three basic formalities. The execution of a proper written transfer deed is the first requirement. It has to be executed, i.e., signed by the transferor. The second is that it has to be properly attested and the third, that it should be duly registered. Till all three requisites are met with, no title or right would pass from the transferor to the transferee. Thus, proper attestation is an important element in the transfer of property. The purpose sought to be achieved by making attestation a mandatory requirement is the verification of voluntary execution of the transfer deed in case of doubts or express denial by the transferor with respect to transfer of property. It also protects the executant from being required to execute a document by the other party thereto by force, fraud or undue influence.36

Legislative and Judicial Developments with respect to the Concept of Attestation

According to section 3 of the TP Act, 1882, for a valid attestation a minimum of two competent witnesses must testify the proper execution of the transfer deed. It is important to note that when the Act was passed in 1882, it did not contain the definition of ‘attestation’. However, this term as explained in the Indian Succession Act, 1865, implied that for a valid attestation, the attesting witness could either be present at the time of execution of the deed, or if not present at the time when transferor signed, could receive a personal acknowledgement from him, and then attest it. Under English law on the other hand, attesting after receiving a personal acknowledgement was not permissible, and the witnesses must have actually seen or witnessed the execution of the document for the attestation to be valid. In absence of a concrete definition of ‘attested’ under the TP Act, 1882, a conflict of judicial opinion emerged. Calcutta and Madras High Courts followed the English law,37 but Bombay and Allahabad High Courts38 permitted personal acknowledgement based attestation as well. These twin rules continued till the Privy Council in Shamu Patter v Abdul Kader,39 adopted the approach followed under English common law and held that for a valid attestation, the competent witnesses must have seen the executant putting his signatures or mark. It, therefore, expressly overruled the earlier decisions of the Bombay and Allahabad High Courts, which meant that documents executed in pursuance of these courts’ decisions, where attestation was based on personal acknowledgement, were invalidated. In order to avoid confusion and to validate such documents, an Act was passed, namely, the Transfer of Property (Validating) Act, 1917 (26 of 1917). In 1926, the definition of “attested”, i.e., what constitutes a valid attestation under the TP Act, 1882, was inserted in the Act and to make the application of this definition retrospective, it was amended in 1927, by the insertion of the words ‘and shall be deemed always to have meant’.

Meaning of Attestation under the Present Act

The present definition makes a significant departure from Shamu Patter’s case40 and the English law as well.

The basic ingredients for a valid attestation are:

(i) That the document must be attested by at least two or more witnesses; (ii) They should have either seen the executant putting his signatures or mark, or some other person doing the same in the presence of, and under the direction of the executant; (iii) If the document has already been executed or signed by the executant, the witnesses must receive a personal acknowledgement from none other than the executant himself, of his signatures;

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(iv) Witnesses must sign in presence of the executant; (v) It is not necessary that both witnesses should be present at the same time; and (vi) There is no specific form of attestation.

Due to the permissibility of attestation on personal acknowledgement, it is now no longer necessary that both or even any of the witnesses must be present at the time of the execution of the document. Both, or any one of them can come later, get an acknowledgement from the executant with respect to his signature or mark, and then attest. Thus, at the time when the executant signs, the witnesses need not be present, but it is mandatory, that when the witnesses attest the document, the transferor executant, must be present, because if the witnesses are witnessing the execution of the document, both they and the executant would be present, and if they come later and then attest, even then the executant has to be present as it is he/she only who should give a personal acknowledgement. If the attesting witnesses are neither present at the time of execution of the sale deed nor have even seen the executant, the deed would not be validly executed41 Similarly, where one of the witnesses testified that the other witness had signed in his presence, but did not establish that he signed in presence of the executant of the document, the gift is not validly attested.42

Distinction between Indian and English Law

Indian law differs from English law in three significant aspects.

(i) Under English law, both the attesting witnesses are required to actually see the execution of the document. This means that the witnesses must be present together, and the document must be executed in their actual physical presence by the executant. Under Indian law on the other hand, witnesses may come later to the execution, receive a personal acknowledgement, and then attest. (ii) Under English law, both the witnesses should be present together, but under Indian law they need not be present at the same time. Under English law, at the time of the execution of the document witnesses must be present but under Indian law, they may or may not be present at the time of execution of the document. (iii) Under English law, attestation based on personal acknowledgement is not valid, but under Indian law, attestation based on personal acknowledgement is perfectly valid.

Competency of attesting witnesses

Although attestation is extremely important for the valid execution of a transfer deed, yet it is surprising to note that the TP Act, 1882 does not stipulate any qualification for the competency of a witness.43 An attesting witness must be a person who is competent to contract, i.e., he must have attained majority and be of sound mind. Religion, sex, caste, social and financial status are totally irrelevant considerations. A relative, a neighbour, a business partner, an office colleague or a friend can be a competent witness. Even an illiterate person can be a competent witness. However, a party to the deed,44 a person who executes a deed as a power of attorney, or as an agent of the other,45 are not competent attesting witnesses.

Scribe

A scribe is a person who may sign on behalf of the executant. A scribe who signs on behalf of an illiterate mortgagor46 is not a competent attesting witness, but where the mark was put by the mortgagor but the scribe merely wrote a description of it, he is competent to attest.47 A scribe may be an attesting witness as well as the writer, but it is essential to prove that he signed as an attesting witness.48 Thus, where the scribe signs as an attesting witness and also as an identifying witness before the registrar and his signature appears at three different places on the registered document,49 or where the scribe wrote the document, read it over to the parties and then put his signature as an attesting witness as well, the document is validly attested50.

Party interested in the transaction

A party who is interested in the transaction can be a competent witness. For instance, where the money is advanced by a third party but not by the mortgagee who also attested the deed, the attestation is proper.51 Similarly a person who advances money for a mortgage in favour of his benamidar is competent to attest.52 In Kumar Harish Chandra Singh Das v Bansidhar Mohanty,53 A and B were friends. A was in need of money, B had the money and wanted to help A, but the relations between them were such, that B felt embarrassed in asking for some security from A, for the repayment of the money advanced, for fear that it may spoil their relations. He took the help of C,

Page 3 of 8 GENERAL PRINCIPLE whom he had taken into confidence. Though the money was B’s it was lent to A by C, who also obtained a mortgage of A’s property in his (C’s) name as a security for repayment of the money. This mortgage deed was duly executed by A as the mortgagor in favour of C the mortgagee, and was attested by two witnesses, one of whom was B. B, who had lent the money, was a person who was a party to the whole transaction, but it was only A and C who were parties to the deed. The Supreme Court held that no provision of law debars a money-lender from attesting a deed which evidences the transaction where under the money was lent. The Court drew a distinction between a person who is a party to a deed and a person who, though not a party to the deed, is a party to the transaction and held that while the former is incompetent to be an attesting witness, the latter can validly attest the deed and therefore in the present case, the deed was validly attested.

Registrar as Attesting Witness

A registrar can be a competent witness provided he has animus to attest.54 The Sub-registrar or registering officer who registers the document may act as attesting witness, but it must be shown that :

(i) He has intention to attest; and (ii) He has either personally seen the executant signing the document, or the executant accepts the execution before him.55

In ML Abdul Jabbar Sahib v MV Venkata Sastri,56 the issue was, whether the deed signed by the Sub-registrar and identifying witnesses is validly attested, if only one or more person has signed it as attesting witnesses. Here, A instituted a suit against B, claiming a sum of approximately Rs 49,000 allegedly loaned to him on the strength of two promissory notes executed by B, in his favour. B obtained a leave to defend this suit on a condition that he executes a security bond in favour of Registrar, high court, for Rs 50,000. B executed this bond, charging several of his properties. This bond was signed by one attesting witness X, and an advocate Y, who had prepared and explained the document to B, and had identified him, as well as two other persons who had identified B before the Registrar. The bond was also signed by the Sub-registrar. The court decided the dispute in favour of A, and directed that the charged properties be sold, and the claim amount be paid out of the sale proceeds. What is pertinent to note here is that B, from three more persons, O, P and Q, had borrowed some amounts, and had failed to repay them as well. These three persons had also gone to court and had obtained simple money decrees against B, which they wanted to execute against the same properties that were charged under the security bond in favour of the Registrar of the high court, and with respect to which, A claimed the status of a secured creditor or priority of claim. The claim of A was, that as he was a secured creditor, due to the security bond, out of the sale proceeds of the charged properties, first he should be paid, and if some amount is left over after satisfying his claim, it should be distributed among O, P and Q.. On the other hand, O, P and Q claimed that all four of them i.e., A, O, P and Q had equality of status as unsecured creditors, and therefore the sale proceeds should be rateably distributed amongst them. They based their claim on the argument that the security bond does not create a charge, as it was not validly attested by two competent witnesses. Rather, it was attested by only one witness and the rest of the persons, whose signatures appeared on the bond, had signed in different capacities. This case also highlights the importance of valid attestation in matters of transfer of property, and deciding disputed claims. Here, if the bond is validly attested, then only it will create a charge on the properties, with the result that A’s claim will be satisfied first, and the remaining amount will pass to the simple money decree holders. On the other hand, if the bond is not validly attested, no charge will be created for the benefit of A, and he will not have any priority with respect to satisfaction of his claim, as he will be at par with the other unsecured creditors. The primary issue before the court was, whether the bond was validly attested? The court, here, explained the meaning of the term ‘attested’ and observed that it is essential that the witnesses should have put their signatures animo attestandi, that is, for the purpose of attesting or testifying that they had seen the executant sign or had received from him a personal acknowledgement of his signatures. If a person puts his signature on the document for some other purpose, e.g., to certify that he is a scribe or an identifier or a registering officer, he is not an attesting witness. The Registering Officer, the court said, is required to affix the date and his signatures to the endorsements. Prima facie, the Registering Officer puts his signatures on the document in discharge of his statutory duty, and not for the purpose of attesting it, or certifying that he has received from executant a personal acknowledgement of his signatures. Likewise, the two identifying witnesses had put their signatures on the document to authenticate the fact that they had identified the executant, and as it was not shown that they had put their signatures for the purpose of attesting the document, they could not be regarded as attesting witnesses. The court held that as the document was attested by one attesting witness only, it did not create a charge, and so A’s status was that of an unsecured creditor, whose claim was at par with the claim of the other three simple money decree holders.

Animo Attestandi

Page 4 of 8 GENERAL PRINCIPLE

To attest is to bear witness to a fact.57 The attesting witnesses must put their signatures on the document with animo attestandi, i.e., with intention to attest, which means that the physical act of putting their signature/mark must coincide with the mental act (intention) to authenticate the execution of the document.58 A person merely indicating his consent to the transaction,59 or an identifying witness,60 is not an attesting witness, but such a person can be an attesting witness if he witnesses the execution of the document, and puts his signature by describing himself as an attesting witness. If a person puts his signatures for any other purpose, e.g., to certify that he is a scribe61 or a registering officer, or a solicitor,62 or for identifying the testator,63 he is not an attesting witness.64 Legatees who put their signatures on the will in token of their consent to its execution are not disqualified from taking as legatees.65

It is necessary that the person relying upon a document must establish that the executant has signed or put his thumb impression before the attesting witness, and the attesting witness must sign in his presence.66

Where the executor of a mortgage accompanied by the mortgagee came to the house of the witness, acknowledged the execution and made a request for attesting the document and thereupon he attested it, it was held that attestation is valid.67 Where the deed was written in the English language and the executant as well as the attesting witnesses were unfamiliar with this language, and the contents of the deed were not explained to the executant, the court held that the document was not properly attested.68

Mode of attestation

There is no particular form of attestation,69 and a mere signature is sufficient.70 The Act does not specify that it should be at any particular place in the deed.71 Rather, the definition of attestation specifically mentions that ‘no particular form of attestation shall be necessary’. However, the fact that witnesses are signing as attesting witnesses should be clearly discernible from the document. Law does not require people besides the transferor and transferee to merely sign the document at any time and call themselves attesting witnesses. The main purpose of attestation is to testify to the voluntary execution of the document by the transferor. In Sant Ram v Kamala Prasad,72 on a transfer deed prepared by a lawyer, before the transferor could sign, four persons from the side of the transferor and two from the side of the transferee, who called themselves attesting witnesses signed on the document. This document was then presented for registration, while the transferor was yet to sign it. On the Registrar pointing out at the discrepancy, the transferor signed in presence of the Registrar but none of the six ‘witnesses’ were present. It was held that the deed was not validly attested, as, the time when these six persons had signed the document it was not even executed. Attestation means testifying the voluntary execution of the transfer deed, and therefore attestation can never be prior to the execution of the document, and must always be subsequent to it.

It is not necessary that more than one witness be present at the same time.73 Attestation must take place in presence of the executant,74 but even an actual witness to the executant would not validate putting of signatures of the attesting witnesses before the execution of the document.75 Where the executant was a pardanashin lady, and put her hand out from behind a curtain and made her thumb impression on the deed in sight of the witness and then her husband signed, followed by the attesting witnesses, it was held that the witnesses signed ‘in the presence of the executant even though he saw only her hand and not her face, and the document is duly attested.76 However, where one out of two witnesses to a mortgage bond signs his name as an attesting witness for himself and on behalf of the other witness in the latter’s presence, the attestation is valid though the other witness does not make his mark.77 Where two deeds are prepared and executed as a part of one transaction but the marginal witnesses are not common, merely from the circumstance that the disputed agreement has another set of marginal witnesses, it cannot be inferred that the document is forged or fictitious.78

Attestation of a Document Executed by a Pardanashin Woman

In case of a pardanashin woman,79 the rules are slightly relaxed. Here, the witnesses may not be able to see the woman, as she may remain behind purdah (veil), due to social customs. In such cases, applying the rules rigidly may make transfer of property by pardanashin women extremely difficult, thus in such cases, if the witnesses are well versed with the voice of the pardanashin woman, see the deed being executed through curtains and then attest it, it is validly attested. In Padarath Halwai v Ram Narain,80 the mortgagors were two pardanashin ladies who did not appear before the attesting witnesses, and consequently, their faces were not seen by the witnesses. The two witnesses were however well acquainted with the voices of the ladies. Between them and the women was a chik that was not lined with cloth. The two witnesses recognised them by their voices, and saw each of them execute the deed with their own hand, and then put their signatures on the document as attesting witnesses. The Privy Council held that the deed was validly attested. Similarly, in a case, the lady sat behind a curtain, but the scribe along with

Page 5 of 8 GENERAL PRINCIPLE her family members, including her husband and a nephew, sat outside the curtain, and the scribe read out the deed to her. The lady accepted the deed, put out her hand and put her thumb impression on the document in sight of the witnesses. Thereupon, the husband and another person signed as attesting witnesses. The attestation was held to be valid.81 However, where the son of the pardanashin lady takes the document inside the purdah; gets it executed, and brings it outside and then the attesting witnesses put their signatures after receiving the acknowledgement from the son and not from the lady, the document is not validly executed.82

Attestation as proof of consent

Attestation does not of itself imply consent,83 though there may be circumstances which show that the attesting witness had knowledge of contents of the document he attested and consented to.84

Attesting Witness not a Party to the Execution of the Document

Mere attestation of a document would not make an attesting witness a party to the execution of the document. Nor would it make an otherwise invalid document valid simply because the person competent to execute it was an attesting witness.85 Where the mother of a minor child executes a gift of the former’s property without obtaining the required permission from the court and the father signs as an attesting witness, the same is void. The significance of attestation in law is to stop the attester of the document from denying the contents of the document, that too if the contents of the same and the legal implications of the attestation are shown to have been well within the knowledge of the attester at the time of the making of such attestation and not help to make the attester the real executant of the document itself.86

Proof of Valid Attestation in Court

In order to prove the validity of a deed, the party relying on it must prove that it was attested by two witnesses.87 Where the mortgagee sues to enforce his mortgage and the execution and attestation of the deed are not admitted, the mortgagee need only prove that the mortgagor signed the document in the presence of an attesting witness, and one man attested the document, provided that the document, on the face of it, bears the attestation of more than one person. However, if the validity of the mortgage be specifically denied in the sense that the document did not effect a mortgage in law, then it must be proved by the mortgagee that the mortgage deed was attested by at least two witnesses.88 Where the mortgagors do not question the execution of the mortgage but the fact of possession, the mortgage is not specifically denied, and is sufficiently proved.89 A document requiring attestation can be used as evidence, and one attesting witness, at least, should be called for the purposes of proving its execution. Where one attesting witness is called and he testifies that the mortgage is executed, the validity of the execution of the deed is established.90

Similarly, if the execution of gift deed is specifically denied, then an attesting witness may be called to prove it. If, however, such execution is not specifically denied, then it would not be necessary to call an attesting witness to prove the same. But the document, all the same, has to be proved.91 Due execution and attestation of the gift deed has to be proved92 although it may be proved by calling a person other than an attesting witness.93 Thus, where the document is duly attested by two attesting witnesses and one of them is examined to prove the deed, nothing more is required to satisfy the execution in absence of specific denial in the written statement, or even subsequently, before the court.94 Where the attesting witness is produced but he denies or does not recollect the execution of the document, its execution may be proved by other evidence.95 Where one of the attesting witnesses is dead and the other unable to say if the deed in question is the one he attested, evidence of the scribe would be sufficient.96 Where the handwriting of the attesting witnesses who are dead has been proved, the presumption in the absence of rebutting evidence is that they actually witnessed the execution.97

Where the evidence of one of the attesting witness is shaky with respect to the execution of the gift deed and no evidence is there to show that the document is signed by the donor in presence of the other witnesses and the execution of the document is suspicious, the document is not validly executed.98

The law does not require that the same witnesses before whom the deed has been executed should appear before the Sub-registrar.99

Page 6 of 8 GENERAL PRINCIPLE

36 Kumar Harish Chandra Singh Deo v Bansidhar Mohanty, AIR 1965 SC 1738 [LNIND 1965 SC 159]; Indu Paintal v General Public, (2011) 1 Ren CR (Civil) 126 : (2011) 97 AIC 761. 37 Abdul v Saliman, (1900) ILR 27 Cal 190; Surur Jigar Begum v Barada Kanta, (1910) ILR 37 Cal 526 where an exception was created for a pardanashin woman; See also Harmongal Narain v Ganaur Singh, (1907) 13 Cal WN 40; see also Girindra v Bejoy, (1899) ILR 26 Cal 246; Shamu Patter v Abdul, (1908) ILR 31 Mad 215. 38 Ramji v Bai Parvati, (1903) ILR 27 Bom 91; Ganga v Shiam Sundar, (1904) ILR 26 All 69. 39 16 IC 250 (1912) ILR 35 Mad 607. 40 Ibid. 41 B Rajegowda v HB Shankaregowda, AIR 2006 Kant 48 [LNIND 2005 KANT 496]. 42 Subramanian v Karuppayee Ammal, 1998 (1) CTC 79 [LNIND 1997 MAD 544]. 43 Peddavandla Narayanamma v Peddasant Venkata Reddy, AIR 2007 AP 137 [LNIND 2006 AP 1359]; B Rajegowda v HB Shankergowda, AIR 2006 Kant 48 [LNIND 2005 KANT 496]. 44 Harish Chandra Singh Das v Bansidhar Mohanty, AIR 1965 SC 1738 [LNIND 1965 SC 159]; Seal v Claridge, (1881) 7 QBD 516, 519; Pearey Mohan v Sreenat, 7 IC 735 : (1909) 14 Cal WN 1046; Saurur Jigar Begum v Barada Kanta Mitter, 5 IC 539 : (1910) ILR 37 Cal 526; Debendra v Bihari, 15 IC 666 : (1911) 16 Cal WN 1075. 45 Gomathi Ammal v Krishna Iyer, AIR 1954 Mad 126 [LNIND 1953 MAD 37]. 46 Peddavandla Narayanama v Peddasant Venkata Reddy, AIR 2007 AP 137 [LNIND 2006 AP 1359]; Rajani Kanta v Panchananda, 48 IC 820 : (1918) 46 Cal 522; Rajani Kanta v Panchananda, 48 IC 820 : (1918) 46 Cal 522; Sristidhar v Rakshakali AIR 1922 Cal 168; Paban v Badal, AIR 1921 Cal 276; Ram Samujh v Mainath, AIR 1925 Oudh 737. 47 Muhammad Ali v Jaffar Khan, (1897) All WN 146; Dinamoyee v Bon Behari, (1902) 7 Cal WN 160; Paramasiva v Krishna, 43 IC 983; Nageshwar Prasad v Bachu Singh, 53 IC 79, (1919) 4 Pat LJR 511; Dharamdas v Ramoomal, AIR 1927 Sau 118; Jogendranath Nath v Nitai Churn, (1903) 7 Cal WN 384; VRMRM Firm v Muhammad Kasim, AIR 1926 Rang 145; Alagappa Chettirir v Ko Kala Pai, AIR 1940 Rang 134; Venkata Sastri v Rahilna Bi, AIR 1962 Mad 111 [LNIND 1960 MAD 174]. 48 Govind Bhikaji v Bhau Gopal, 39 IC 61 : (1917) ILR 41 Bom 384; Dinamoyee v Bori Behari, (1902) 7 Cal WN 160; Alagapa Chettiar v Ko Kala Pai, AIR 1940 Rang 134; Jagdeo Chaudhary v Deo Chaudhary, AIR 1958 Pat 566. 49 Brij Raj Singh v Sewak Ram, AIR 1999 SC 2203 [LNIND 1999 SC 444]: (1999) 4 SCC 331 [LNIND 1999 SC 444] : (1999) 2 SCJ 272 [LNIND 1999 SC 444]. 50 Peddavandla Narayanamma v Peddasant Venkata Reddy, AIR 2007 AP 137 [LNIND 2006 AP 1359]. 51 Kumar Harish Chandra Singh Das v Bansidhar Mohanty, AIR 1965 SC 1738 [LNIND 1965 SC 159]. 52 Durga Din v Suraj Bakhsh, AIR 1931 Oudh 285. 53 AIR 1965 SC 1738 [LNIND 1965 SC 159]: (1966) 1 SCR 153 [LNIND 1965 SC 159]. 54 ML Abdul Jabbar v MV Venkata Sastri, AIR 1969 SC 1147 [LNIND 1969 SC 37]; prior to this decision there was a conflict of judicial opinion; see, Ram Gharan v Bhairon, (1931) 43 All 1; Sarada Prasad Tej v Triguna Charan Ray, AIR 1922 Pat 402; Ramanath v Delhi Batcha, AIR 1931 Mad 335 [LNIND 1930 MAD 26]; Venkataramayya v Nagamma, AIR 1932 Mad 272 [LNIND 1931 MAD 170]; Neelima Basu v Johannal Sarkar, AIR 1934 Cal 772; Kanchedilal v Jabbarsha, AIR 1936 Ngp 171; Parshotam Ram v Keshodas, (1943) ILR 25 Lah 495; wherein it was held that he is a competent witness. For a contrary opinion, see Tafaluddin Peada v Mahar Ali, (1899) ILR 26 Cal 78; Chandrani v Lala Sheo Nath, AIR 1931 Oudh 146; Lachman Singh v Surendra Bahadur Singh, AIR 1932 All 527; Timmavva v Channavva, AIR 1948 Bom 322. 55 ML Abdul Jabbar Sahib v MV Venkata Sastri, AIR 1969 SC 1147 [LNIND 1969 SC 37]. 56 AIR 1969 SC 1147 [LNIND 1969 SC 37]: (1969) 1 SCC 573 [LNIND 1969 SC 37]. 57 Ku. Chandan v Longa Bai, AIR 1998 MP 1 [LNIND 1997 MP 172]. 58 Subramanian v Karuppayee Ammal, 1998 (1) CTC 79 [LNIND 1997 MAD 544]. 59 Sarkar Barnard v Alak Manjary, AIR 1925 PC 89. 60 Dharmadas Mondal v Kashi Nath, AIR 1959 Cal 243 [LNIND 1958 CAL 76]. 61 Kunji Kuttiamma v Kunji Kuttiamma, (2001) 1 KLT 797; Brij Raj Singh v Sewak Ram, AIR 1999 SC 2203 [LNIND 1999 SC 444]: [1999] 2 SCR 779 [LNIND 1999 SC 444]. 62 ML Abdul Jabbar v Venkata Shastri, AIR 1969 SC 1147 [LNIND 1969 SC 37]; see also Har Kaur v Gura Singh, AIR 1988 P&H 41, 42, with respect to the signature and the manner of its authentication; Subramanian v Karuppayee Ammal, 1998 (1) CTC 79 [LNIND 1997 MAD 544].

Page 7 of 8 GENERAL PRINCIPLE

63 ML Abdul Jabbar v MV Venkata Shastri, AIR 1969 SC 1147 [LNIND 1969 SC 37]. 64 Girja Dutt v Gangotri, AIR 1955 SC 346; Kunwar Surendra Bahadur v Thakur Behari Singh, AIR 1939 PC 117. 65 Abinash Chandra v Dasrath Malo, ILR 56 Cal 598. 66 Dharmadas Mondal v Kashi Nath, AIR 1959 Cal 243 [LNIND 1958 CAL 76]. 67 Shiam Sundar Singh v Jaganath Singh, AIR 1927 PC 248. 68 ML Abdul Jabbar v Venkata Shastri, AIR 1969 SC 1147 [LNIND 1969 SC 37]. 69 See The Transfer of Property Act, 1882, section 3. 70 See The Transfer of Property Act, 1882, section 3. 71 See The Transfer of Property Act, 1882, section 3. 72 AIR 1951 SC 477 [LNIND 1951 SC 57]. 73 See The Transfer of Property Act, 1882, section 3. 74 Nila Dei v Bidyadhar Sahan, AIR 1999 Ori 69; Abinash Chandra v Dasarath, AIR 1929 Cal 123, criticising Radha Mohan v Nripendra Nath, AIR 1928 Cal 154; Veerappa v Subramania, AIR 1929 Mad 1 [LNIND 1928 MAD 202](FB); Zamindar of Pollavaram v Maharaja of Pittapuram AIR 1931 Mad 140 [LNIND 1930 MAD 103]; Ramanathan v Delhi Batcha, AIR 1931 Mad 335 [LNIND 1930 MAD 26]; Venkataramayya, v Nagamuru, AIR 1932 Mad 272 [ LNIND 1931 MAD 170]; Bhikari Charan v Sudhir Chandra, AIR 1938 Cal 702; Mayurbhanj State Bank v Bhabatosh Das, AIR 1961 Ori 178. 75 Pran Nath v Jadu Nath, (1905) ILR 32 Cal 729; Sant Lal v Kamla Prasad, AIR 1951 SC 477 [LNIND 1951 SC 57]; Dhiren Bailung v Bhutuki, AIR 1972 Gau 44; ST Singh v SK Singh, AIR 1973 Gau 64; Tarachand v Kesrimal, AIR 1973 Raj 123. 76 Kundan Lal v Mt. Musharrafi Begam, AIR 1936 PC 207. 77 Dahu v Janardan, AIR 1950 Pat 368. 78 Tribhuwan Dutt Tripathi v Ramji Tiwari, AIR 1991 All 268 [LNIND 1991 ALL 272], 271. 79 The term pardanashin woman refers to a woman who remains behind purdah or veil in public places. 80 Padanath v Ram Narain Upadhia, 19 Cal WN 991 : AIR 1915 PC 21. 81 Kundan Lal v Mt. Musharrafi Begam, AIR 1936 PC 207. 82 Ganga Prashad v Ishari Prashad, 22 Cal WN 697 PC. 83 Pandurang v Markandeya, AIR 1922 PC 20; see also Sunder Kuer v Shah Udey Ram, AIR 1944 All 42 wherein it was held that by attesting a document the attesting witnesses do not conform that they have no knowledge of the contents of that document. 84 Tarabag Khan v Nanak Chand, AIR 1932 Lah 566; Rai v Gorakh Rai, AIR 1934 Pat 93. See also Abbao Alikhan v Mahomed Shah, AIR 1951 MP 92. 85 TM Krishnamoorthy Pillai v Mangalam, 1998 (1) CTC 306 : (1998) II Mad LJ 173. 86 Ibid. 87 Lachman Singh v Surendra Bahadur, AIR 1932 All 527. 88 Ibid. 89 Jhillar v Rajnarian Rai, AIR 1935 All 781 : 54 All 1051 : (1932) All LJ 635. 90 Dhiren Bailung v Bhutuki, AIR 1972 Gau 44. 91 Bindeshwari v Panchayati, AIR 1936 All 169. 92 See the Indian Evidence Act, 1882, section 68. 93 Balappa Tippanna v Asangappa Mallappa, AIR 1960 Mys 234. 94 Brij Raj Singh v Sewak Ram, AIR 1999 SC 2203 [LNIND 1999 SC 444]. See also Surendra Kumar v Nathulal, AIR 2001 SC 2040 [LNIND 2001 SC 1151]; Kishore Chandur v Babu Ganesh Prosad, AIR 1954 SC 316 [LNIND 1954 SC 32]. 95 Sashimukhi v Monmohini, 67 IC 87; Hason v Gurudas, AIR 1929 Cal 188; Manki v Hansraj, AIR 1938 Pat 30. 96 Dhirajjudin v Baharullah, 90 IC 680.

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97 Raja Venkatarmayya v Kamisetti Gattayya v Gatayya, AIR 1927 Mad 662 [LNIND 1926 MAD 466]; Uttam Singh v Hukum Chand, (1917) ILR 39 All 112 : 15 All LJ 167. 98 Nila Dei v Bidyadhar Sahani, AIR 1999 Ori 69. 99 Hakim Singh v Ram Sanehi, AIR 2001 All 231 [LNIND 2001 ALL 243], 233.

End of Document

NOTICE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 1 Movable and Immovable Properties

Chapter 1 Movable and Immovable Properties

NOTICE

The Transfer of Property Act, 1882, S. 3

…

“a person is said to have notice” of a fact when he actually knows that fact, or when, but for wilful abstention from an enquiry or search which he ought to have made, or gross negligence, he would have known it.

…

End of Document

GENERAL PRINCIPLE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 1 Movable and Immovable Properties

Chapter 1 Movable and Immovable Properties

GENERAL PRINCIPLE

Notice literally means knowledge, and this doctrine under the TP Act, 1882 is used to determine the rights and claims of two or more persons vis-à-vis each other, who are involved in an unconscionable transaction. The person responsible for creating such a condition is not a part of the situation any more, and the other persons fight with each other for a claim or a piece of property. In such a scenario, the court determines their rights with the help of doctrine of notice.

For instance, a family comprises of a father F, son S and a daughter D. The father leaves his property to the son under a will, and in it, provides that Rs 5,000 per month will be paid by the son, out of this property, to the daughter for her maintenance and till he makes an alternative arrangement of an equivalent amount for her, he should not sell the property. Here, it would be unconscionable for the son to sell the property without making such an arrangement. The son sells the property to X, without making any provision for D. D wants to proceed against X, who has paid full consideration for the property, but he denies any liability to pay her. Here due to an unconscionable stand of S, two seemingly innocent persons, D who is currently deprived of her maintenance, and X, on whom a liability is sought to be imposed by D, are forced to go to court. In this scenario, the rights and claims of D and X can be determined using the doctrine of ‘notice’. The court will examine the question whether X, who claims to be a bona fide purchaser, had ‘notice’ or knowledge of D’s rights over the property at the time of the conclusion of the contract between him and S. If he knew that D had a right over it, he purchases the property burdened with this right and thus it will become his responsibility to honour that right. But if he had no knowledge or notice of her rights over the property, then he will take the label of ‘bona fide purchaser without notice’ and D will not be able to enforce her claim against the property in hands of X.

Similarly, A, an owner of a house, contracts to sell it to B. A transfer deed is executed in favour of B, and B pays an advance amount as part of the consideration. A promises to have the transfer deed registered in B’s name after ten days. However, instead of getting it registered in the name of B, A, the very next day, sells the same house to C, through a written, attested and registered deed. The earlier contract in favor of B remains merely an agreement to sell, as without registered document, no right in the house will pass from A to B. When B comes to know that the property he had contracted to buy has been sold to C without his knowledge, he has two remedies in the alternative, First, to sue A for the breach of contract and damages and a refund of the amount that he had advanced and secondly, he can proceed against C, and ask him with the help of the court to execute a transfer of the property in his favour. In the latter case, again, the doctrine of ‘notice’ is used to decide the conflicting claims of B and C, who, it appears have been duped or defrauded by A, who now is no more a part of the situation. B and C, both, appear to be innocent parties and as it is, it would be difficult for the court to grant or deny the claim of B, but if it is proved before the court, that C bought the property with notice or knowledge that B had a prior claim over it, it would become his responsibility to honour B’s claim. In both these examples, one fact is apparent, that if it is proved that X in the earlier example and C in the present instance, admit that they knew of the claims of the respective litigants, X would incur a liability in the first case, and C would stand to lose the property in the second case. In other words, admittance of actual notice/ knowledge on their part would be to their disadvantage, and this is the reason why an admittance of notice is highly unlikely.

End of Document

KINDS OF NOTICE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 1 Movable and Immovable Properties

Chapter 1 Movable and Immovable Properties

KINDS OF NOTICE

Notice can be of three types namely:

(i) Actual notice;1 (ii) Constructive or implied notice; and (iii) Notice to agent.2

Actual Notice

‘Actual notice’ means actual knowledge, where it can be shown that a person actually knew about it. It is definite information given to, or obtained by a person, as against vague rumours, statements or casual comments given by strangers.3 For instance, a person attesting the execution of a deed cannot say that he did not know that the deed was being executed. The knowledge or notice must be definite. As mentioned, it should not be hearsay or rumours4 and should be of such a nature that it would be expected that a normal man would take it seriously.5 Only the knowledge of the parties interested in the transaction is actual notice regarding the transaction, and knowledge of strangers to the transaction is no notice of the transaction. Knowledge must be in relation to the transfer in question, and not general or irrelevant to the transaction.6

Constructive Notice

‘Constructive notice’ means knowledge that the court imputes on a person. A person may claim that he did not know a fact, but if the circumstances surrounding him are such, that as a reasonable prudent person, he ought to have known a fact, he will be deemed to know it. It is pertinent to note that the consequences of actual or constructive notice are identical. Constructive notices can be applied by the court in five cases:

(i) When there is a willful abstention from making an inquiry;7 (ii) Gross negligence; (iii) Registration of the document/transaction; (iv) Actual possession; and (v) Notice to agent.

Thus, a person is said to have notice of the fact when he actually knows the fact, or, when but for the wilful abstention from an enquiry or search which he ought to have made, or gross negligence, he would have known it8.

Rule of Caveat Emptor

Constructive notice is the equity which treats a man who ought to have known a fact, as if he actually does know it. It presupposes, that in property transactions, a transferee ought to ascertain and verify certain facts for safeguarding his own interest. These facts may relate to the property and the transferor. The basic objective behind these inquiries and verification is to find whether the property sought to be obtained is free from charges or encumbrances, and whether the transferor is competent to convey a valid title to the transferee. The presumption

Page 2 of 7 KINDS OF NOTICE is, that when a reasonable, prudent man enters the market to purchase property, or otherwise obtains an interest in immovable property in his favour, to obtain full value for his money, he would like to take the property free from charges or claims of other people over it. If the property is encumbered, the exact nature of encumbrances should be made clear to him. As the chances of deceit or misrepresentation on the part of the transferor cannot be ruled out, the duty is put on the transferee to be vigilant and to ascertain these facts himself, by making inquiries from concerned persons; by inspecting all the relevant documents relating to the property in possession of the transferor or even with the relevant statutory authorities. A failure to do that would result in the imposition of constructive notice of any fact that is ascertainable, by making inquiries or/and verification and content of the relevant documents relating to this property. Thus, the rule of ‘caveat emptor’ or ‘buyer beware’ applies here. According to section 3, a person is said to have notice of a fact when he actually knows that fact or when but for willful abstention from an enquiry or search which he ought to have made, or gross negligence, he would have known it. The section therefore imposes a duty on the transferee to make relevant enquiries or search. What the transferee has to ascertain is:

(i) Whether the transferor is competent to transfer the property; (ii) Whether there is a charge due over the property; and (iii) Whether any other person has a temporary or permanent claim, right or title over the property.

The rule is that the transferee must inspect or read carefully all relevant documents relating to the property. He cannot afford to be negligent or careless, as law would not listen to his plea that he forgot to read the documents or presumed that the papers would in order.

Gross negligence

Gross negligence refers not to an ordinary negligence, but negligence so grave, that it cannot be relatable to the conduct of an ordinary reasonable prudent man. In these cases, even though a person claims that he had no knowledge of a fact, the court will attribute knowledge or notice to him. For instance, if the transferee fails to read a noting on the paper that the property is subject to a charge, while the papers are in his possession, the court will not entertain his plea that no notice of the same can be attributed to him.

Before purchasing the immovable property, the omission to search the registers kept in the registrar’s office may amount to gross negligence so as to attract the consequences which result from notice.9 But omission to inspect the title deeds of an adjoining property which the seller is under no obligation to produce for selling the present property, is not gross negligence.10 Omission of the purchaser to inquire about the arrears of taxes or other dues of the property, where it is situated in the municipal area may not amount to gross negligence in each and every case.11 Where the property is purchased at a court auction and was in the charge of an official receiver for the past five years, for which the taxes were not paid to the municipality, the purchaser cannot be imputed with constructive notice of the arrears of taxes.12

Where the bank returns the title deeds, which are the only security it has against the loan advanced by it, and the owner mortgages the same title deeds with another bank to secure an overdraft, the first bank is guilty of gross negligence in parting with the title deeds.13 Notice cannot be imputed on bona fide purchasers who purchase the property after due inquiries and have acted in good faith. If the owner agrees to sell the property to the plaintiff, but sells half of it to the first defendant and the other half to the second defendant, and the plaintiff comes to know about it only when an application is filed for mutation of names, the defendants are purchasers with value and without notice of the right of the tenant.14 Reasonable care taken by the purchaser is a question of fact depending on the circumstances of the case.15 Where the name of the transferor is recorded in the revenue records, no further inquiry is required to be made with respect to his title.16

Wilful abstention from making an enquiry

In case of wilful abstention from making an enquiry, there should be some starting point of enquiry, some hint, some suspicion that there is, or may be, something wrong somewhere and the transaction or situation demands some probe or investigation that may reveal the truth. If, in such cases, the transferee fails to investigate, the law will presume that he had an inkling of the fact, that something was wrong, but he had a fraudulent determination not to know the truth. Wilful abstention therefore hints at want of bona fide as distinguished from mere omission to make enquiries.17 A person refusing to take a registered letter is imputed with constructive notice of its content and is not allowed to plead that he did not know about them.18 If a person omits to inspect the title deeds, the court shall presume he knows all the facts given therein. Thus, where the purchaser is shown the title deeds that mention that

Page 3 of 7 KINDS OF NOTICE the property is partitioned property with certain conditions, the purchaser is imputed with the fact of the partition and its conditions and cannot be allowed to plead the ignorance of such conditions.19

For instance, a person, A, sells his property to B, and delivers possession to him for a consideration of ten lakh rupees. B pays a sum of five lakhs and promises to pay the balance five lakhs after six months. The fact that a balance of five lakhs has to be paid to A by B, is written on the title deeds. B fails to pay A, and mortgages this property by deposit of title deeds in favour of C. C fails to read the noting that B has to pay five lakhs to A, and pays the loan amount of five lakhs to B. B fails to repay the loan amount to C as well, and this property that is subject to the mortgage is brought up for sale. Suppose, the total amount fetched after sale is five lakhs. At this point of time, A puts up his claim of five lakhs rupees. The issue is—who would get this amount, A or C. C would get it as a bona fide transferee without notice of A’s claim over the property if he can show, that he had no actual or constructive notice of A’s claim over the property. However, the title deeds on which a noting was made with respect to the balance of money to be paid by B to A, was in possession of C. In fact, it was on the basis of the title deeds that he had advanced the loan to B. As a reasonable prudent person, he ought to have read or examined the title deeds carefully, and if he fails to do that, he would be guilty of gross negligence. Secondly, if he indeed examines the title deeds, and finds the noting, this is the starting point of inquiry, which needs further investigation. If he does not probe into the matter, he would be guilty of willful abstention from making an enquiry. Here, even if he is satisfied by making enquiries from only B, and getting an incorrect answer from him, that would be insufficient, because as a reasonable prudent person, he should direct his enquires against a person, who was to be paid that amount, i.e., A in this case, and not against a person who was under an obligation to pay him, i.e., B. Here it was unconscionable on B’s part, not to disclose to C the fact that the balance amount was not paid, which omission led to the dispute between A and C. Here, C would be imputed with constructive notice of A’s claim over the property, as he is guilty of both gross negligence as well as willful abstention from making an inquiry, and A’s claim will be upheld.20

Similarly, A, the owner of ten bigas of land mortgages the land to B, by deposit of title deeds of the land and raises a loan of Rs twenty lakh. Ten months later, he professes to sell two bigas of the mortgaged land to C; for a consideration of ten lakhs. C asks him for the papers relating to the property, and A shows him a photocopy of the title deeds. C asks for the original papers and A promises to show him by a week stating that they are kept in a locker for safe custody. C, satisfied with A’s answer, does not press for the originals, pays consideration and purchases the land. Later, B whose loan amount remains unpaid, causes the property to be sold, including the two bigas that were in possession of C. At this time C raises an objection, stating that he is the owner of these two bigas, as he had purchased them after payment of full consideration, and therefore, they cannot be sold in execution proceedings. To decide the claims of B and C, it has to be seen whether it can be shown that C knew about B’s rights over the property. Can constructive knowledge or notice be imputed on him? He purchased the property on the strength of a photocopy of the title deeds, without even looking at the originals and therefore was guilty of gross negligence. Further, where even after his asking for the original title deeds, the transferor did not produce them, as a reasonable prudent man, he should have ascertained or verified, whether the title deeds were indeed with the transferor or not, and in not doing that, he was guilty of willful abstention from making an enquiry. Therefore, if he had probed further and insisted on entering the transaction only on the strength of the complete original papers, he could have discovered the truth. As he had failed to do that, he would be imputed with constructive notice of the rights of the mortgagee, B, and will take the property subject to his rights. B’s rights therefore will be upheld here. However, if A had procured the title deeds from B and C had purchased the property after inspecting the title deeds, the situation would have been different.21

In Lloyd’s Bank v PF Guzdar & Co,22 the conflicting claims were of two banks, Bank A and Bank B, who were defrauded by X. The facts were as follows. X was a regular customer of Bank A. He deposited the title deeds of his house with them and secured an overdraft. He thereafter told the bank that in order to clear the overdraft, he wanted to sell the house, and for this purpose, he needed to show the title deeds to the prospective purchaser. At the same time, he also requested the bank, not to disclose the fact of loan, as he apprehended that it would adversely affect the price he was hoping to fetch upon the sale of the house. The bank gave back the title deeds to X, and he returned them to the bank after a week, as the sale could not be finalised. A month later, X repeated his request to the bank, and the latter again gave him the title deeds of the house. This time X took the title deeds of the house to Bank B, and secured a loan after depositing the same with Bank B. The loan was not paid and Bank B wanted to sell the property. Now Bank A claimed priority on the ground that the property was subject to an earlier mortgage with them. The question before the court was whether Bank B could be imputed with constructive notice of the right of Bank A over the property. This issue has to be examined in light of the duty of Bank B as a reasonable, prudent transferee. Can it be said that Bank B was guilty of willful abstention from making an enquiry or gross negligence? The answer to both these questions will be in the negative. If the title deeds of the house were in order, and deposited with the bank, and the bank, after securitisation of the same grants a loan, it cannot be said that they acted negligently, or that there was any starting point of inquiry that they needed to probe further. Rather,

Page 4 of 7 KINDS OF NOTICE they had been vigilant and had taken care of their interests in a reasonable manner. On the other hand, it was Bank A, whose conduct was tainted with gross negligence, as they had parted with the very papers which were the security for the loan. In not looking after their own interests, they could not look upon the court for protection, as even the court cannot protect the interests of those who fail to do it themselves by being grossly negligent.

Similarly, where the property is mortgaged to a bank by deposit of title deeds and the mortgagor later sells the property to a lady without disclosing the fact of the mortgage, and she does not insist on inspecting the title deed, the buyer wilfully abstains from making an inquiry and will be imputed with constructive notice of the mortgage.23 Abstention from inquiry for title deeds at a place where one knows that mortgages by deposit of title deeds are legal and usual, amount to notice of mortgage.24 The presumption of the court in such cases would be that the person imputed with notice has designedly or purposely abstained from making an inquiry into the contents of the deed with the intention of avoiding taking its notice.25

Constructive notice is imputed only in situations where a person has means of knowing a particular fact, but has failed to gather its knowledge. There exist circumstances which ought to put him on an inquiry, which, if prosecuted, would have led to a discovery of it.26 However, if a person has no means or opportunities to obtain information about something, notice cannot be imputed on him about that thing. Thus, where the purchaser does not have the slightest idea or suspicion about any earlier agreement entered into, far away from the place where the property is situated, it cannot be said that there was any willful abstention on the part of the purchaser.27

Duties of the transferee

The law demands a careful and vigilant conduct on the part of the transferee to verify the correctness of the title, and the possibility of existence of a charge over the property. For this, certain rules have to be kept in mind, which are as follows:

(i) The transferee must satisfy himself with respect to the competency of the transferor to transfer the property; as the rule is, no one can pass a better title than what he has. If the transferor is not competent to transfer the property, the transferee will not get a good title. (ii) The transferee must examine all the relevant documents relating to the property and the transaction. Each and every relevant paper is to be inspected, as the rule is ‘Actual notice to the existence of a deed is constructive notice of its contents’. If the transferee has in his possession a document relating to the property, he will be deemed to know about its contents, and if a liability on the property is ascertainable from a particular document, he will be imputed with constructive notice of the same. (iii) The transferee must satisfy himself, as to whether there is a charge due over the property. One way of doing this is to go beyond the present transaction and find out how and from whom the present transferor had acquired the property. If he had purchased the property, and that person is available, he can enquire from him about the possibility of a charge. He can also inspect those documents with the help of which the property was acquired. For example, if the transferee knows that the transferor had acquired the property through a will; he must examine the will to find out the possibility of the existence of a charge.

In Bank of Bombay v Suleman,28 a person died and in his will, left his house and land to his sons from his first wife. He also left behind four sons from his second wife, who had not attained majority. In his will, he had provided that the sons from the first wife were to get the land and the house, but they were also under an obligation to pay Rs 30,000 to the sons from the second wife within a period of six months from the date of operation of the will, and this sum was a charge on the land and the house. The sons from the first wife did not pay this amount, and in the course of their business, mortgaged the land and the house to the bank by deposit of title deeds. The bank advanced a loan of Rs 52,000 and when the sons failed to pay the loan amount, brought the property up for sale. The sons from the second wife now contended that their claim, over the land and the house had precedence over the bank’s claim, as the later would be deemed to have constructive notice of the same. The bank pleaded ignorance of the knowledge of the existence of this charge as a copy of the will, was not amongst the documents deposited with the bank. The court held that if the bank had made enquiries as to how the sons had derived the title to the property, it would have known about the will and an inspection of the will could have brought them the knowledge of the charge. In not doing so, they were guilty of wilful abstention from making an enquiry, and therefore were imputed with constructive notice of the charge in favour of the sons from the second wife, who, it was held, had priority of claim.

Actual Notice to a Deed is Constructive Notice of its Contents

Page 5 of 7 KINDS OF NOTICE

Actual notice of a deed is constructive notice of all the material facts affecting the property, which appear on the face of the deed or can be reasonably inferred from its contents.29 It is also notice of all documents recited in the deed, and which an examination of the deed would have disclosed, provided the deed formed part of the chain of title and so necessarily affects the property.30 It means that where a person has actual knowledge of the existence of a document relating to the property in question, he would be imputed with constructive notice of not only the contents of this document, but also of all the relevant papers that can be ascertained after reading the main document as well. Thus, where, on a partition of the family property the deed contains a mutual covenant of a right of pre-emption in favour of either of the brothers, should any one of them want to sell the property in the future, and one of them sells his share by a deed which describes as his share as acquired under a deed of partition, the purchaser has constructive notice of the right of pre-emption.31

Status of Municipal Taxes

On the question of the liability of a subsequent purchaser to pay past or arrears of municipal taxes, the judicial opinion was divided till it was settled by the apex court in Ahmedabad Municipal Corp v Haji Abdul Gafur Haji Hussenbhai.32 An earlier full bench decision of Allahabad High Court in Nawal Kishore v The Municipal Board, Agra33 held that the general principal is that all intending purchasers of the property in municipal areas where the property is subject to a municipal tax, which has been made a charge over the property by statute, should have a constructive knowledge of the tax and of the possibility of some arrears being due, with the result that it becomes their duty before acquiring the property to make enquiries as to the amount of tax which is due or which may be due, and if they fail to make such enquiry, such failure amounts to a wilful abstention or gross negligence within the meaning of section 3 of the TP Act, 1882. Similarly, in Municipal Board, Lucknow v Lal Ramji Lal, 34 the same court reiterated that it must be presumed that a person who buys a house situated in a municipal area is acquainted with the law by which a charge is imposed by the municipal Act upon the property for payment of municipal taxes. The charge having been expressly imposed by the municipal Act upon the property for payment of municipal taxes, the municipality was entitled to follow the property in the hands of a transferee who had not cared to make any enquiry as to whether the payment of taxes was in arrears, and realise the amount from the sale of the property.

However, the same court in Municipal Board, Cawnpore v Roop Chand Jain,35 observed that when a bona fide purchaser buys property he takes it free of all charges of which he has no notice actual or constructive. He is said to have constructive notice when ordinary prudence and care would have impelled him to undertake an inquiry which would have disclosed the charge. Here, the court took note of the fact that the municipality does not maintain a public register with the record of arrears of taxes that is available for public inspection. Further, here the Kanpur Municipality had allowed the arrears to accumulate for around eleven years and the court therefore observed that no intending purchaser could have presumed, in absence of special intimation by the municipality, that taxes might be due on the property. The court, therefore, concluded that no constructive notice of arrears of municipal taxes could be imposed.

In Haji Abdul’s case,36 a person A, who was the owner of certain properties ran into financial difficulties in 1949, and was adjudged insolvent in 1950, whereupon his property vested in the Office Receiver appointed by the court. This property was subject to a mortgage, and was sold at a court auction to B, in 1954. Meanwhile in 1951, the Official Receiver received a bill for approximately Rs 630 pertaining to taxes, from the municipality. He sought the court’s permission to sell the property to pay the taxes, which was granted to him by the insolvency court. However, after that neither the official receiver took any action with respect to payment of taxes, nor did the municipality press for the same. It is interesting to note, that during all this time the property in question was in occupation of tenants and they were paying rent to the Official Receiver. At the time of the auction of the property, B, the purchaser, made inquiries from the Official Receiver about the charges due over the property, but was not given any information about the tax arrears. Soon after he purchased the property he received a notice from the municipality for the payment of arrears of taxes amounting to around Rs 540, and thereupon, this property was attached and Municipal Corporation threatened to sell the property. B filed a suit in the court for a declaration that he was the owner of the property, and that the arrears of municipal taxes due before he purchased the property were not recoverable by attachment of the property in his hands. He also sought a permanent injunction against the corporation from attachment of the property, and a declaration that the warrant of attachment was illegal. His main contention was that he was a bona fide purchaser without any notice, actual or constructive, of the fact of existence of tax arrears and therefore, could not be made liable to pay the same. The municipality, on the other hand contended, first, that in auction sales, there is no warranty of title and the purchaser takes the property subject to all the defects of the title and the doctrine of caveat emptor applies to him. This however was not applicable to the present case, as this was a case involving a judgment debtor. The second contention was that as per section 14(1) of the Bombay Provincial Municipal Corporation Act, 1919, the taxes constitute a charge over the property and are recoverable, if

Page 6 of 7 KINDS OF NOTICE need be, from the sale of the property. However, a charge can be enforceable against a person only when he has actual or constructive notice of the same, therefore the municipality contended, that where a person purchases property in a municipal area, and knows that taxes are to be paid to the municipality he will be deemed to have constructive notice of the fact, that arrears might be due, and therefore it becomes his liability to pay them. The Supreme Court, after analysing a bulk of conflicting judicial decisions of several high courts and the facts of this case, held that constructive notice could not be imputed on B. He could have no reasonable ground for assuming that there might be arrears, as he had made general inquiries from the person (Official Receiver) who had charge of the property, but was not given any information about the same. Secondly, the property was in occupation of the tenants, and he could reasonably assume that dues if any might have been paid out of the rent. Thirdly, accordingly to the court, the conduct of the municipality itself was surprising. They did not pursue the matter after sending a notice to the official receiver. This case that took sixteen years, was decided in favour of B, with the court holding that he was not liable to pay the arrears of taxes amounting to Rs 543. The court, comparing the conduct of both the parties before it, commented that the municipal corporation was far more negligent and blameworthy than the purchaser.

1 See The Transfer of Property Act, 1882, section 3. 2 Ashram v Bhanwarlal, AIR 1974 Raj 188. 3 Ashiq Husain v Chaturbhuj, AIR 1928 All 159. 4 Lloyd v Banks, (1868) LR 3 Ch 488, 490. 5 Ibid. 6 Ibid. 7 N Kasinath v Arun R Rawwli, AIR 2008 (NOC) 1620; Mohideen Sahib v A Ameena Bi, AIR 2007 Mad 133 [LNIND 2006 MAD 3061]; Peddavandla Narayanamma v Peddasani Venkata Reddy, AIR 2007 AP 137 [LNIND 2006 AP 1359]; B Rajamani v Azhar Sultana, AIR 2005 AP 260 [LNIND 2004 AP 1466]. 8 Motilal Jain v Prakash Bhartiya, AIR 2007 (NOC) 377 (MP). 9 Tilakdhari v Khedan Lal, AIR 1921 PC 112. 10 Chaturbhuj v Mansukhram, AIR 1925 Bom 183. 11 Ahmedabad Municipality Corp. v Haji Abdul, AIR 1971 SC 1201 [LNIND 1971 SC 183]; Municipal Board Cawnpore v Roop Chand Jain, AIR 1940 All 459. 12 Ahmedabad Municipality Corp. v Haji Abdul, AIR 1971 SC 1201 [LNIND 1971 SC 183]; Akshay Kumar Banerjee v Corpn of Calcutta, AIR 1915 Cal 178 [LNIND 1914 CAL 201], wherein it was held that statutory charges cannot be enforced against property in the hands of bona fide purchaser for value without notice. See also Chandu Ram v Municipal Commissioner of Kurseong Municipality, AIR 1951 Cal 398; Nawal Kishore v Agra Municipality, AIR 1943 All 115; in which the Allahabad High court held that as a general rule omissions to inspect the records of municipality was gross negligence and if taxes are in arrears the purchaser shall be imputed with constructive notice; see also MC v Ramjilal, AIR 1941 Oudh 305. 13 Lloyd Banks v PF Guzdar & Co, AIR 1930 Cal 22. 14 Fateh Bahadur Singh v Jang Bahadur Gupta, 2000 4 AWC 2891. 15 Chandni v Anant Bali, AIR 1943 Oudh 398; Nainsukhdas v Gowardhan Das, AIR 1949 Ngp 11. 16 Mathura Prashad v Anandi Kunwar, AIR 1924 All 63. 17 Kausalai Ammal v Sankara Muthiah, AIR 1941 Mad 707 [LNIND 1940 MAD 429]. 18 AEK Kaliappa Nadar v SVKR Amrithavala Vandammal, AIR 1973 Mad 255 [LNIND 1972 MAD 269]. 19 Mahomed Yunus Khan v Courts of Wards, AIR 1937 Oudh 301. 20 Alwar Chetty v Jagannath, (1928) 54 Mad LJ 109. 21 Kshetra Nath v Harsukhdas, AIR 1927 Cal 538. 22 (1929) ILR 56 Cal 868. 23 Kori Gowramma v The Vyasa Bank Ltd, Kampli, 2001 (2) KarLJ 524 [LNIND 2000 KANT 138] : 2000 (3) KCCR 1841 [LNIND 2000 KANT 138].

Page 7 of 7 KINDS OF NOTICE

24 Imperial Bank of India v U Rai Gyaw Thu & Co, AIR 1923 PC 211; Kshetra Nath Sikdar v Harsukdas Bal Kissen Das, AIR 1927 Cal 538. 25 Manji v Hoorbai, (1910) ILR 35 Bom 342. 26 Ram Coomar Coondoo v Macqueen, (1872) 11 Beng LR 46. 27 Harak Chand v Sohan Raj, AIR 1990 Raj 109. 28 (1909) ILR 33 Bom 1. 29 Rajaram v Krishnaswami, (1893) 16 Mad 301. 30 Bepin Krishna v Jogeshwar Ray, AIR 1921 Cal 730. 31 Rajaram v Krishnaswami, (1893) ILR 16 Mad 301. 32 AIR 1971 SC 1201 [LNIND 1971 SC 183]: (1971) 1 SCC 757 [LNIND 1971 SC 183]. 33 AIR 1943 All 115 (FB). 34 AIR 1941 Oudh 305. 35 AIR 1940 All 456. 36 AIR 1971 SC 1201 [LNIND 1971 SC 183].

End of Document

REGISTRATION AS CONSTRUCTIVE NOTICE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 1 Movable and Immovable Properties

Chapter 1 Movable and Immovable Properties

REGISTRATION AS CONSTRUCTIVE NOTICE

The Transfer of Property Act, 1882, S. 3

…

Explanation I.—Where any transaction relating to immoveable property is required by law to be and has been effected by a registered instrument, any person acquiring such property or any part of, or share or interest in, such property shall be deemed to have notice of such instrument as from the date of registration or, where the property is not all situated in one sub-district, or where the registered instrument has been registered under sub-section (2) of s. 30 of the Indian Registration Act, 1908 (16 of 1908), from the earliest date on which any memorandum of such registered instrument has been filed by any Sub-Registrar within whose sub-district any part of the property which is being acquired, or of the property wherein a share or interest is being acquired, is situated:

Provided that—

(1) the instrument has been registered and its registration completed in the manner prescribed by the Indian Registration Act, 1908 (16 of 1908), and the rules made thereunder, (2) the instrument or memorandum has been duly entered or filed, as the case may be, in books kept under section 51 of that Act, and (3) the particulars regarding the transaction to which the instrument relates have been correctly entered in the indexes kept under section 55 of that Act.

…

End of Document

GENERAL PRINCIPLE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 1 Movable and Immovable Properties

Chapter 1 Movable and Immovable Properties

GENERAL PRINCIPLE

As has already been mentioned, in matters relating to transfer of immovable property, the parties have to generally observe three mandatory formalities. The transfer must take place with a written document that is signed by the transferor, is properly attested and is registered. These formalities must be observed, unless the property is of nominal value (less than Rs 100) or is let out for less than a year, or is mortgaged either by an equitable mortgage or for a loan of less than Rs 100. Unless all the formalities are complied with, no right will pass from the transferor to the transferee. It must be noted here that all the formalities except registration are treated as private affair, and registration is the only formality that makes a transfer from a purely private to a public affair. In transfers of property, as registration by and large is a mandatory requirement, more so when it is transfer inter vivos, the duty of a prospective transferee is to search the registers and ascertain the registered transactions that had taken place in the past, relating to this particular property. A failure to inspect the registers will result in the imputation of constructive notice with respect to all the transactions that are required, by law, to be compulsorily registered.37

In view of explanation (1) to section 3 of the Transfer of Property Act, 1882, the parties shall be deemed to have notice of the registered sale deeds, which are effected in favour of the purchasers.38 All purchasers, therefore, are under a legal obligation to exercise diligence in examining the title recorded in the register to avoid uncertainties and the risk of perjury in taking parole evidence as to whether the omission to search the register should in any particular case be attributed to gross negligence.39 For instance, A sells the house by a registered document to B. He later enters into a contract with C to sell him the same house. Law imposes a duty upon C to inspect the registers at the Registrar’s office, and if he does that, he would come to know about the sale in favour of B. A failure to inspect the register will be detrimental to the interests of C, as he would be imputed with constructive notice of the registered transaction.

37 The Transfer of Property Act, 1882, section 3; see also Rajo Kuer v Brij Bihari Prasad, AIR 1962 Pat 236; Alliance Bank of Simla v Bhai Kahan, 25 IC 856. 38 G Raju v Govt of Andhra Pradesh (2011) 1 Andh LD 310. 39 Tilakhdari Lal v Khedan Lal, AIR 1921 PC 112; Monindra v Troyluko Nath, (1899) 2 Cal WN 750.

End of Document

LEGISLATIVE HISTORY Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 1 Movable and Immovable Properties

Chapter 1 Movable and Immovable Properties

LEGISLATIVE HISTORY

The statutory provision providing that registration of a compulsorily registrable document operates as constructive notice was introduced in the Act by the amending Act of 1929. Though the Registration Act was promulgated in 1908, and provided for compulsory registration for transfer of immovable property (except as aforesaid when it is of a nominal value or is to let out for a period of less than a year), yet whether registration of a transaction would or would not amount to notice continued to be a subject of judicial controversy till the Privy Council in Tilakdhari Lal v Kundan Lal,40 held that as the TP Act, 1882 did not specifically provide it as a principle, registration would not, per se, amount to constructive notice and this issue would vary depending upon the facts and circumstances of each case. The view accordingly to Bombay and Allahabad High Courts was that it would amount to notice.41 The Calcutta High Court, on the other hand, took the view42 that this issue has to be decided keeping in view the facts and circumstances of each case. Thus, in some cases they held that it amounted to constructive notice, while in others it was held that there was no duty on part of the prospective transferees to inspect the registers. The Madras High Court held that it would not amount to notice.43 In 1929, by an express amendment, Explanation I was added to the definition of notice in section 3. The effect of such inclusion was that the decision of the Privy Council is no longer good law.

Conditions for Application

The principle that registration of a document would amount to constructive notice of the transaction is subject to the following conditions.

(1) The instrument has been registered and registration completed in the manner provided in the Registration Act, 1908;44 (2) The instrument or memorandum has been duly entered or filled in, as the case may be, in books kept under section 51 of the Registration Act, 1908 and; (3) The particulars relating to transactions to which the instruments relate have been correctly entered in the index(s) kept under section 55 of the Registration Act, 1908.45

Constructive notice will not be imputed unless the document is registered, in accordance with the manner provided under the Registration Act, 1908 and the instrument or memorandum has been duly entered in the books/registers and particulars are correctly entered in the index(s).

Where the instrument has been registered in accordance with the provisions of the Registration Act, 1908, a party cannot say he searched the register and could not find the relevant portion; he would take the consequences of his want of diligence.46 Thus, registration of a mortgaged deed itself is sufficient notice to the persons dealing subsequently47 with the mortgaged property, particularly where the debtor is a notorious man and his dealings with the mortgagee were very well known in that locality.48 Thus, where the mortgagee effects a sub-mortgage of the property with a registered instrument, the registration of the sub mortgage would not amount to constructive notice to the original mortgagor, who, in ignorance of the sub mortgage, makes the payment to the mortgagee.49 However, the mere fact that a person resides at a place where the deed is registered is insufficient to fix him with notice of the deed. Thus, where an agreement provides that movable and immovable properties of A will be subject to a charge of the money due to B, and he subsequently mortgages them to C, B has no right to contend that he cannot do so. C would be allowed to plead that he is a bona fide purchaser having no notice.50

Page 2 of 4 LEGISLATIVE HISTORY

The purchaser would not be affected with constructive notice of the registered agreement restricting the use of the property, if it is shown that the agreement was not indexed in relation to the property sold.51 A mere defect in the procedure would not invalidate registration,52 but misplaced entries will not operate as constructive notice.53

No Notice where Registration is not Compulsory

Where the registration of a document is not compulsory under the Registration Act, 1908,54 its registration would not amount to constructive notice.55 Documents that are compulsorily required to be registered are,56 in case of sale of tangible immovable property of the value of Rs 100 or more. Similarly, in case of a reversion of intangible thing, it can be made only by a registered instrument. A transfer of tangible immovable property of a value less than Rs 100 can be made by either a registered instrument, of by delivery of property. Thus, if property of less than Rs 100 were sold by a registered document, its registration would not amount to constructive notice, as it is not mandatory in law but an assignment deed that conveys title in property for more than Rs 100/- must be registered.57 According to section 59, where the principal money secured (loan) in a mortgage is Rs 100 or more, a mortgage other than a mortgage by deposit of title deeds, can be effected only by a registered instrument signed by the mortgager, and attested by at least two competent witnesses. Similarly, for a transfer of immovable property by way of a lease under section 107, it is specified that a lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent can be made only by a registered instrument. In case of all transfers of immovable property by gift, transfer, according to section 123, must be affected by a registered instrument signed by or on behalf of the donor (transferor), and attested by at least two witnesses. In case of gifts of movables, there is an option to execute it either by way of a written attested and registered document or by a simple delivery of possession. Where registration of a document is not mandatory but only an option, in such cases registration would not operate as a constructive notice. For instance, a partition deed is not required to be registered, in fact, it is not required by law to be in writing, as is shown in the following example. A joint family comprises of a father and his son. They together own a land and a house that the father manages, as the karta. A partition is effected and the land goes to the son while the father keeps the house. The partition deed is registered. Later, the father sells the land to B. B is supposed to be vigilant as a prospective transferee, and though the elements of gross negligence and willful abstention from an inquiry have to be looked into independently, mere registration of partition deed would not amount to constructive notice. Thus, registration of testamentary instruments;58 document pertaining to transfer of movable property;59 equitable mortgages;60 or gift of property given to the daughter by way of pasupu kumkuma61 would not amount to constructive notice.

In Harendra Nath Dutta Roy v Rajendar,62 a partition took place between four brothers, by a written, attested and registered deed. The terms of partition gave preferential right to purchase property to the former co-owners (called a right of pre-emption), if any one of them decided to sell his respective share. These terms could have been ascertained by inspecting the partition deed. One of the brothers, without consulting the other co-owners, sold his share to a stranger, A. A suit of pre-emption was filed by a former co-owner B, who also claimed that A should be deemed to have constructive notice of the pre-emption clause, on the ground that since the partition deed was registered its mere registration would amount to a constructive notice of its contents as far as A was concerned. The court negativated his contention on the ground that a partition may be entered even orally, and there is no provision in any law requiring the transaction of partition to be registered. The fact is that if it is reduced to writing and registered, its registration would not amount to constructive notice, as its registration is not a mandatory requirement in law. Hence, the court held, that registration of partition deed would not amount to constructive notice on A. Similarly, A, mortgages her jewellery to B, with the help of a written and registered deed but retains possession of it, with an understanding that if within 10 years she fails to repay the amount, B would have a right to recover the loan amount by the sale of this jewellery. A sells the jewellery to C, for full consideration. Though the mortgage deed is registered, its registration would not amount to constructive notice, as mortgage of movables is not required by law to be compulsorily registered.63 An unregistered document is unenforceable in the eyes of law for the transfer of property.64 As the registration of a document which is compulsorily registrable under law amounts to constructive notice on a person aggrieved by the title or interest created by such document, the registration of the perpetual sub-lease produced is deemed to act as a constructive notice to the world at large.65

Registration as Constructive Notice only for Subsequent Transferees

Registration as constructive notice operates only for subsequent transferees and not for former transferees. It is implicit from the use of the words ‘any person acquiring such property or any part of or share or interest in such property is deemed to have notice of such instrument as from the date of registration’. For example, A contracts to sell a house to B for a sum of Rs 10 lakh, accepts an advance of two lakhs from him but then sells it to C with a written, attested and registered document. In a litigation between B and C for this property, C cannot take the plea

Page 3 of 4 LEGISLATIVE HISTORY that as the transaction in his favour is through a registered document, B ought to have constructive notice of the same, because B is a prior transferee and registration as constructive notice would not operate on prior transferees. However, in the same case, if after the conclusion of the contract between A and C, A sells the same house to D, then C would be entitled to plead registration of the transaction as constructive notice as against D as D is a subsequent transferee.

Time from when Registration would Operate as Constructive Notice

The time from when registration of a document that is required by law to be compulsorily registrable, depends on the location of the property. If the property is situated in the same district where the document is also registered, it operates as constructive notice from the same date. However, if it is situated in several sub-districts or it has been registered in another sub-district, then its registration would operate as constructive notice from the date when the memorandum was received in the district where it is situated and filed by the sub-registrar of the sub-district where the property is situated.66

40 47 IA 239 : AIR 1921 PC 112. 41 See Nand Kishore v Anwar, (1908) ILR 30 All 82; Chunilal v Ramchandra, (1898) ILR 22 Bom 213; Dina v Nathu, (1902) ILR 26 Bom 538; Churaman v Balli, (1887) 9 ILR All 591; Janki Prasad v Kishen Dat, (1894) ILR 16 All 478; Dundaya v Chenbasapa, (1885) ILR 9 Bom 427. 42 See Nanda Lal v Abdul Aziz, (1916) ILR 43 Cal 1052; Preonath v Ashutosh, (1900) ILR 27 Cal 358; Inderdawan v Gobind, (1896) ILR 23 Cal 790; Bunwari v Ramjee, (1902) 7 Cal WN 11; Monindra v Troylucko Nath, (1899) 2 Cal WN 750; Atul Kristo v Mutty Lal, (1899) 3 Cal WN 30. 43 See Damodara v Somasundara, (1889) ILR 12 Mad 429; Madras Building Co v Rowlandson, (1889) ILR 12 Mad 383; Rangasami v Annamalai, (1908) ILR 31 Mad 7; Shan Maun Mull v Madras Building Co, (1892) ILR 15 Mad 268. 44 See The Transfer of Property Act, 1882, section 3. 45 Gordhandas v Mohanlal, AIR 1921 Bom 161. 46 Srimatty Akshay Kumari v Kanai Lal, 16 IC 618 : (1912) 17 Cal WN 224; Renukabai v Bhavan, AIR 1939 Ngp 132 : 185 IC 33. 47 Alliance Bank of Simla v Kahan Singh, AIR 1914 Lah 204. 48 Ram Narain v Bandi Prashad, (1904) ILR 31 Cal 737; Ashiq Hussain v Chatturbhuj, AIR 1928 All 159; Sahadev v Shekh Papa, (1905) ILR 29 Bom 199. 49 Hira lal v Chanan Khan, AIR 1914 Lah 326; see also Sahadev v Shekh Papa, (1905) ILR 29 Bom 199. 50 Sahadev v Shekh Papa, (1905) ILR 29 Bom 199; Prabhu Lal v Chattar, AIR 1925 All 557. 51 Gordhandas v Mohanlal, AIR 1921 Bom 161. 52 Ma Pwa May v SRMMA Chettyar Firm, AIR 1929 PC 279; Sah Mukkum Lal v Sah Koondum Lall, 2 IA 210. 53 KV Galliara v U Thet, AIR 1929 Rang 117; Sita Ram v Ram Narain, AIR 1934 Oudh 283. 54 The Act is not in force in Punjab and therefore, whether or not registration would amount to constructive notice would depend upon the facts and circumstances of each case. See Gopal Singh v Thakur Singh, AIR 1935 Lah 313; Ghulam Fatma v Kachore Singh, AIR 1940 Lah 269; DAV College Registered Society v Umrao Singh, AIR 1935 Lah 410. 55 Hirachand v Kashi Nath, AIR 1942 Bom 339; Asharfi Devi v Prem Chand, AIR 1971 All 457. 56 As per section 54; paras 2 and 3. 57 Durga Matha Building Constructions Co-op Housing Society Ltd v Sada Yellaiah, AIR 2010 AP 231 [LNIND 2010 AP 503]. 58 Baba Ramchandra v Kondeo Jogna, AIR 1940 Ngp 7. 59 Backer Khorasanee v Ahmed Ismail, AIR 1928 Rang 28; Ludlao Hiraman v Kashinath, AIR 1942 Bom 339. 60 Gokul Das v Eastern Mortgage and Agency Co, (1906) ILR 33 Cal 410. 61 P Buchi Reddy v A Sudhakar, AIR 1999 Andh Pra 188. 62 AIR 1974 Gau 43. 63 See Backer Khoransanee v Ahmed Ismail, AIR 1928 Rang 28; Heeraman v Kashinath, AIR 1942 Bom 342.

Page 4 of 4 LEGISLATIVE HISTORY

64 Pravinbhai Becharbhai Viroja v Bhikhabhai Jethabhai Bagda, 2010 SCC OnLine Guj 5607. 65 Lata Chauhan v L S Bisht, (2010) 117 DRJ 715 : (2011) 181 DLT 101(Delhi); G Raju v Govt of Andhra Pradesh, (2011) 1 Andh LD 310. 66 See the Registration Act, 1804, sections 30(2) and 66.

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ACTUAL POSSESSION AS CONSTRUCTIVE NOTICE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 1 Movable and Immovable Properties

Chapter 1 Movable and Immovable Properties

ACTUAL POSSESSION AS CONSTRUCTIVE NOTICE

The Transfer of Property Act, 1882, S. 3

…

Explanation II.—Any person acquiring any immovable property or any share or interest in any such property shall be deemed to have notice of the title, if any, of any person who is for the time being in actual possession thereof.

…

End of Document

GENERAL PRINCIPLE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 1 Movable and Immovable Properties

Chapter 1 Movable and Immovable Properties

GENERAL PRINCIPLE

Where a person other than the transferor is in actual possession of the property, it behoves a prospective purchaser to ascertain what all rights the person in actual possession really has in respect of the property, and if he omits to do so and if equities exists in favour of the person in possession, the prospective purchaser would be bound by them.67 When a person purchases property from the owner knowing that it is in possession of another, he is under a duty to inquire into the nature of that possession and in the absence of such inquiry, knowledge of the title under which the possession is held should be attributed to the purchaser.68 Thus, it is the duty of the subsequent purchaser to inquire from the person in possession as to the precise character in which he was in possession at the time when the subsequent sale transaction was entered into.69

For instance, A owns a house and gives it to B for a period of five years on rent, with the help of a written, attested and registered lease deed. A short time before the lease is due to expire, a situation arises where A, the landlord is in need of money and asks for help from B. They reach an understanding whereby B gives A the required money, and A agrees to allow B to occupy the house for another period of five years. This second agreement is within the knowledge of only A and B, and is not recorded anywhere by way of a public document. However, soon after the completion of the initial lease, A sells the property to C, for consideration. C, as a prudent purchaser, inspects the registers at the registrar’s office, but fails to inquire from the tenant, in what capacity and for how long would he occupy the premises. He would be imputed with constructive notice of the right of B to stay in the premises for another period of five years, as he is deemed to direct his inquiries to the actual possessor of the property and not be satisfied by the answers given by the owner (transferor). Similarly, A, the owner of a house rents it to B by a registered lease deed for 10 years. By the end of the term of the lease, A enters into another contract with B, whereby he agrees to sell it to B for a consideration that is agreed upon as between the parties. This contract is not registered. Soon thereafter, A sells the house to C. C inquires about the tenant, and A assures him by showing the original registered lease deed that his tenancy is going to expire within 10 days. C, who knows that the property is in occupation of a tenant, does not inquire from the tenant, his rights/title over the property, pays consideration to A, and purchases it. C will be deemed to have constructive notice of the title of B as the future owner of the property and in a litigation involving B and C, B’s rights will be upheld. This rule is based on the principle of an English case Daniels v Davison,70 and followed by the Privy Council in National Bank v Paul Hamilton Joseph, 71 wherein Lord Eldson said, ‘where there is a tenant in possession under a lease or an agreement, a person purchasing part of the estate must be bound to inquire on what terms that person is in possession’.

If there is a tenant in possession, the purchaser is bound by all the equities which the tenant could enforce against the vendor and such equities extend not only to the interest connected with the tenancy but also to the interests under the actual agreement.72 In order to operate as constructive notice, possession must be actual possession,73 and not constructive possession.74 A purchaser,75 or a permanent lessee76 of a village is effected with constructive notice of the right of the cultivating tenants, when they fail to make inquiries about their rights over the land.

The occupation of the property by the tenant ordinarily affects one who would take a transfer of the property with notice of that tenant’s rights, and if such person chooses to make no inquiry from the tenant, he cannot claim to be a transferee without notice77 and the suit for possession from original tenant would fail.78 Thus, notice of a tenant in possession is constructive notice of his right to claim possession under doctrine of part performance in absence of due inquiries.79 In Shobha Sadanand v Vasantibai,80 the tenant occupied a portion of the property and the subsequent purchaser lived in the same building. The tenant, on the basis of the oral agreement of sale made with the owner of the house, made substantial improvements in his portion, which the purchaser of the property could

Page 2 of 4 GENERAL PRINCIPLE not have failed to observe. The Karnataka High Court held that in such circumstances, the purchaser could not claim to be a purchaser without notice of the title of the tenant over the property.

Again, in Ram Niwas v Bano,81 a person A, took a shop on rent from B, and subsequently entered into a contract for the purchase of this shop for a consideration. He paid part of the consideration on the date of the agreement, and undertook to pay the remaining amount on the date of the execution of the sale deed. Six months later, however, B sold the shop to C, for a sum of Rs 20,000. A filed a suit for specific performance of the contract, and C resisted it on the ground that they were bona fide purchasers for value and without any notice of the claim of A and therefore, the registered sale deed in their favour cannot be cancelled and relief of specific performance could not be granted in favour of the tenant. On the question of whether C had notice of the rights of A over the property or not, the court observed that A, at the relevant time was in actual possession of the property, and therefore C should have made inquiries from A about his title over the property. The court observed that a person may not have actual knowledge of a fact but he may have notice of it. If the purchasers (C) have relied upon the assertion of the vendor (B) or on their own knowledge and abstained from making inquiry into the real nature of the possession of the tenant, they cannot escape from the consequences of the deemed notice under Explanation II of section 3 of TP Act, 1882. C’s right over the property thus were held as subordinate to A’s rights.

In HN Narayanaswamy Naidu v Deveeramma,82 a son and his mother sold the house to B. It was a conditional sale, with a stipulation that if within a period of six and a half years, the seller would pay the entire consideration to B; B would reconvey the property back to them. A little later, however, for a consideration, the seller agreed to release this right of conveyance in favour of B, with the help of an unregistered agreement. B took possession of the properties and after the execution of release deed, carried major repairs at his costs. The sellers (mother and son) however, sold the right of reconveyance stipulated under the original sale deed to a person D, without disclosing to him, that it has already been released in favour of the buyer B. D, claiming to be a bona fide purchaser of the reconveyance rights without notice wanted to enforce the same. Since B was in actual possession of the property, the court held that D had a duty to direct his inquiries to B with respect to B’s rights over the property and having failed to do that, he would be imputed with constructive notice of the release deed executed by the sellers in favour of B.

Thus, in the case of unregistered sale deeds, the priority between buyers under interest, if any created by the unregistered sale deed is that the effect of possession under the first unregistered sale deed would terminate and prejudice the second buyer.83

Possession of a Small Portion of the Property

The principle of constructive notice does not apply in cases where the person who claims a right or a title over the property on basis of prior agreement is in possession of a small portion of the property,84 as there is a limit to which the rule laid down in Daniels v Davision 85 can be extended.86 In Kesharmull Agarwala v Rajendra Prasad, 87 there were three persons in occupation of a house. The front portion, called the shop portion was occupied by the first tenant. The middle portion was occupied by the owner and his family, and the rear portion was occupied by the second tenant, a doctor. The owner sold the entire house to C, and one of these tenants who claimed a prior contract with the owner, sought priority of rights on the ground that his actual possession would amount to constructive notice of his rights on part of the transferee. The court rejected his contention and held that the purchaser was not bound to make inquiries from every tenant in occupation of a portion of a house, especially when the owner himself was occupying a portion and inquiry had been made from him. In Md Mustafa v Haji Md Isa,88 A, was the owner of a building that comprised seven smaller more or less identical portions. Each one of them was occupied by a different tenant, one of whom was B. According to B, A had contracted to sell him his portion of the property in lieu of the loan that he had advanced to A. However, instead of selling it to B, A sold the entire building to C and directed all the tenants, including B, to start paying rent to C. B claimed that as he was in actual occupation of his portion, C as a prospective purchaser was bound to make inquiries from him about his rights and a failure to do so would result in the imputation of constructive notice on him. The court held that C, as a bona fide purchaser, after having made inquiries from the owner, was not duty bound to inquire from each and every tenant in occupation of a fraction of the property. Hence, no constructive notice can be imputed on him of his rights. In a matter before a full bench of the Patna High Court in Hari Charan Kuar v Kaula Rai,89 the claimant was in possession of a little more than one-third of the total property. The total property was sold, including the portion of the claimant, to the transferee, after entering into a contract with him. The claimant contended constructive notice on part of the transferee. The court held that since the claimant was in occupation of a small portion of the property, there was no duty on part of the transferee to inquire from him about his rights.

Bona Fide Purchasers Making due Inquiries

Page 3 of 4 GENERAL PRINCIPLE

Notice cannot be imputed on bona fide purchasers who purchase the property after due inquiries and have acted in good faith. Where the tenant is not in actual possession of the property on the day of execution of the sale deed in favour of the purchasers, and the contract to sell is kept a well guarded secret; the owner agrees to sell the property to the plaintiff but sells half of it to the first defendant and the other half to the second defendant, the defendants are purchasers with value and without notice of the right of the tenant.90

Thus, actual possession, in order to operate as constructive notice, must satisfy the following conditions.

(i) First, the property should be in possession of a person other than the owner/transferor. Constructive notice would be imputed only with respect to the title of the actual possessor of the property. For instance, where the owner of the house sells it to the tenant through an unregistered sale deed, but remains in possession of the house as the tenant of the new owner, and later sells the same house to another person, C through a registered sale deed, C cannot be imputed with the constructive notice of the title of owner over the property as he is not in actual possession of the property.91 (ii) Secondly, the possession must be actual and not constructive.92 For example, A grants a lease of his premises to B, and later contracts to sell the same to him. B has sub-let premises to C. A then sells it to D. Here D would not be imputed with constructive notice of the right of B, as he is not in actual possession of the premises. (iii) Thirdly, the actual possessor should be in lawful occupation, and should be in occupation of the whole of the property or a substantial portion of it. If he is in occupation of a small portion of the property, then there is no duty on the prospective purchaser to inquire from him, his rights and title over the property.93 The rule also takes into account practical convenience. It may not be feasible for the purchaser to inquire from each and every tenant, howsoever small his portion may be, and therefore when a person is in occupation of a small portion of the property, his possession would not operate as a constructive notice of his rights over the property.

67 Parvathathammal v Sivasankara Bhattar, AIR 1952 Mad 265 [LNIND 1951 MAD 20], (1951) 2 Mad LJ 191. 68 Munimmidi Reddi Papannagari Yella Reddy v Salla Subbi Reddy, AIR 1954 Andh Pra 20. 69 Veeramalal Vanniar v Thadikara Vanniar, AIR 1969 Mad 383. 70 (1809) 16 Ves 249. 71 AIR 1920 PC 274. 72 Veeramalal Vanniar v Thadikara Vanniar, AIR 1969 Mad 383. 73 Gunnamoni v Bussunt, (1890) 16 Cal 414; Birabaro Rout v Dullabh Rout, (1972) 38 Cut LT 161; Bisheshar v Muirhead, (1892) ILR 14 All 362. 74 Gunnamoni v Bussunt, (1890) 16 Cal 414. 75 Vinayakrao v Gyanoha, AIR 1923 Bom 13. 76 Ahmedbhoy v Balkrishna, (1895) ILR 19 Bom 391. 77 Basruddin Khan v Gurcharan Das, AIR 1970 Pat 304; Ramakrishna Singh v Mahadei Halwai, AIR 1965 Pat 467; Balchand Mahton v Bulaki Singh, AIR 1929 Pat 284. All these decisions are based on the rule in Daniel v Davision, (1809) 16 Ves 249; Faki Inrahim v Faki Ghulam Mohidin, AIR 1921 Bom 459; MK Lingarkar v SB Kesarkar, AIR 1972 Bom 100 [LNIND 1970 BOM 55]; Tiloke Chand v JB Beattle & Co, AIR 1926 Cal 204; Parthasaradhi Iyer v Subbaraya Gramani, AIR 1924 Mad 67 [LNIND 1923 MAD 13]; Munimmidi Reddi Papannagari Yella Reddy v Salla Subbi Reddy, AIR 1954 Andh Pra 20; Babu Ram Bag v Madhav Chandra, (1913) ILR 40 Cal 565; see also HR Narayanaswamy Naidu v Daveramma, AIR 1981 Kant 93 [LNIND 1980 KANT 238]. 78 Kalyani v Krishnan Nambiar, AIR 1932 Mad 305 [LNIND 1931 MAD 283]; Babu Ram Bag v Madhav Chandra, (1913) ILR 40 Cal 565. 79 MK Lingarkar v SB Kesarkar, AIR 1972 Bom 100 [LNIND 1970 BOM 55]; See also Ram Krishna v Mahadei, AIR 1965 Pat 467; Tiloke Chand v JB Beattle & Co, AIR 1926 Cal 204. 80 1998 (1) KarLJ 107 [LNIND 1997 KANT 337] : ILR 1998 KAR 485 [LNIND 1997 KANT 337].

Page 4 of 4 GENERAL PRINCIPLE

81 AIR 2000 SC 2921 [LNIND 2000 SC 1033]: (2000) 6 SCC 685 [LNIND 2000 SC 1033]. 82 AIR 1981 Kant 93 [LNIND 1980 KANT 238]. 83 Ramesh Vajabhai Rabari v Pratiksha Real Estate, (2014) 12 SCC 190 : AIR 2014 SC 2962 [LNIND 2014 SC 579]. 84 Mohd Mustaffa v Haji Md. Isa, AIR 1987 Patna 5. See also Manji v Hoorbai, (1910) 35 Bom 342 wherein it was held that possession of a small portion of the land is constructive notice only with respect to that portion and cannot operate as notice for the whole land. 85 (1809) 16 Ves 249. 86 Hari Charan Kaur v Kaula Rai, AIR 1971 Pat 478 (FB). 87 1968 BLJR 28. 88 AIR 1987 Pat 5. 89 AIR 1971 Pat 478. 90 Fateh Bahadur Singh v Jang Bahadur Gupta, 2000 4 AWC 2891. 91 Moreswar v Dattu, (1888) ILR 12 Bom 569; See also Pindee v U Hpa, AIR 1928 Rang 237. 92 Gunnamoni v Bussunt, (1890) 16 Cal 414; Birabaro Rout v Dullabh Rout, (1972) 38 Cut LT 161. 93 Mohd Mustaffa v Haji Md. Isa, AIR 1987 Patna 5.

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NOTICE TO THE AGENT Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 1 Movable and Immovable Properties

Chapter 1 Movable and Immovable Properties

NOTICE TO THE AGENT

The Transfer of Property Act, 1882, S. 3

…

Explanation III.—A person shall be deemed to have had notice of any fact if his agent acquires notice thereof whilst acting on his behalf in the course of business to which that fact is material:

Provided that, if the agent fraudulently conceals the fact, the principal shall not be charged with notice thereof as against any person who was a party to or otherwise cognizant of the fraud.

He who acts through another is deemed to act in person, and the agent stands in the place of his principal with reference to the business for which he is agent, so that his acts and knowledge are the acts and knowledge of his principal.94 It is a rule of law that imputes the knowledge of agent to the principal, for the agency extends to receiving notice on behalf of the principal of whatever is material.95 However, for a purchaser to be affected with constructive notice through his solicitor, the latter must have actual notice.96

94 Mohori Bibi v Dharamdas Ghosh, (1903) ILR 30 Cal 539; Renulabai v Bhavan, AIR 1939 Ngp 132. 95 Rampal Singh v Bal Baddar Singh, (1904) 25 All 1. 96 Greender Chander v Mackintosh, (1879) ILR 4 Cal 897, 910.

End of Document

LEGISLATIVE HISTORY Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 1 Movable and Immovable Properties

Chapter 1 Movable and Immovable Properties

LEGISLATIVE HISTORY

The language of this provision was worded differently prior to 1929. It said that a person is said to have notice of a fact, when information of the fact is given or obtained by his agent under the circumstances mentioned in the Indian Contract Act, 1872. The term ‘given to or obtained by’ signified a definite information on part of the agent or actual notice. It therefore did not include a constructive notice on part of the agent. Thus, the circumstances under which an agent could have been imputed with constructive notice were not sufficient to have the same imputed on the principal. In other words, negligence on part of the agent or willful abstention from making an inquiry would not make the principal liable, and it was only in those cases where the agent was given or he himself had received information, that notice of it was imputed on the principal. Explanation III of the present Act amended the definition. It deleted both, the term ‘given or obtained’, as well as the reference to the Indian Contract Act, 1872.

Scope of Imputation of Notice

The rule that notice to agent amounts to notice to principal, applies provided the following conditions are satisfied.

(1) Notice should have been obtained by the agent during the course of agency. Where the knowledge was acquired by him prior to his acting as an agent of another, such knowledge cannot be imputed on the principal, (2) It must have been received by him in his capacity as an agent, (3) It must have been received by him in the course of agency business, (4) It should have been a matter that is material to the agency business; and (5) It should not have been fraudulently concealed by the agent, from the principal.

In PT Roy Babu v PT Rajan Babu97 A executed a registered power of attorney in favour of his father and authorised him to do certain acts including the acts of alienation, transfer of right, title and interest over his immovable property. In exercise of such powers the father alienated the property to B. Six years later the father died, and A challenged the sale executed by the father.

The issue was: what would be the effect of the act done by the power holder in furtherance to and in pursuant to the power under power of attorney, whether it would be binding on the principal, and what is the effect of notice of fact of execution of a document or act done by the power holder on the principal, the title holder. A contended that he never came to know about the execution of document till the death of the power holder, his father. The High Court of Kerala observed that it is settled that the notice of agent would be the notice of principal unless the agent exceeds his power or conceals the notice of fact from the notice of the principal. What was pleaded in the present case was the negligence on part of A in making an enquiry with respect to the acts and deeds made by the power holder during the course of power of attorney. The court noted that the interpretation clause to section 3,while interpreting the expression “when a person is said to have notice” assumes importance and is sufficient enough to bring any gross negligence in making an enquiry which ought to have been done by a party within the sphere of “when a person said to have notice” of the Act. Here A had executed a power of attorney in favour of his father as early as in the year 1981 and kept mum for a long period without making any enquiry regarding what are the deeds done by him over his property and came with a suit after his death stating that he did not have any notice of the execution of the acts done by his father, the power holder. The matter, the court held, would squarely come under

Page 2 of 2 LEGISLATIVE HISTORY the expression “when a person said to have notice” as interpreted under section 3of the Transfer of Property Act, 1882 and he would be deemed to have notice of the acts and transactions executed by his agent.

97 AS. Nos. 488 and 665 of 2001, decided on 12 January 2017.

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MEANING OF TRANSFER OF PROPERTY Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

MEANING OF TRANSFER OF PROPERTY

[s 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 himself and one or more other 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 individuals.

Property from one person to another can be transferred in several ways, such as by way of private or a court sale, gift, Will, inheritance, relinquishment, dedication, etc., yet, all these kinds of transfers are not subject to the application of TP Act, 1882. Under section 5 of the Act, the term ‘transfer’ has been defined as an act of a living person whereby he conveys existing property to one or more living persons, and only those transactions that are covered under the term ‘transfer’ are subject to the application of this Act. Transfers of title that take place in other ways are governed by different enactments. For example, testamentary succession is regulated primarily by the Indian Succession Act, 1925 and for Muslims by their Quranic law; and intestate succession is subject to the rules laid down by the respective personal laws to which the deceased was subject to. Similarly, dedication of property for religious and charitable purposes is governed by several religious and charitable endowment Acts passed for this very purpose.

Living Person

One of the basic features of the Act as is evident from the definition is that it governs transfers only between living persons,1 or transfers inter vivos. The term ‘living person’ includes a juristic person,2 a company,3 or association or body of individuals, whether incorporated or not, but does not include an idol of God4 or a temple,5 or even a court. It does not mean that the property cannot be transferred to God or an idol, but it means that if a person dedicates property to God, this transfer would not be subject to the rules of the TP Act, 1882, but instead, would be governed by the relevant religious or charitable endowment Acts. As Company or association or body of individuals, whether incorporated or not, have been included in the term ‘living person’ in this section, it clearly brings out that a company can effect transfer of property,6 but the same would not be regulated by the provisions of this section. As a Will operates from the death of a testator and not during his lifetime, it is also not a transfer within the meaning of the Act,7 but is subject to the rules provided under the Indian Succession Act, 1925. For instance, if A gifts land to B, the transfer is subject to the rules of TP Act, 1882, as both of them were living on the day of the transfer. However, if A leaves his property to B under a Will, this conveyance would not be subject to the rules contained in the TP Act, 1882. Similarly, the court is not a living person and transfers made by the order of the court are also outside the application of the Act.8 For instance, if A purchases property from B, it would be subject to the rules under the TP Act, 1882, but if the property belongs to B, but under a decree/award, his property is sold through court and A purchases it, this transfer would not be subject to the rules of TP Act, 1882.

Page 2 of 4 MEANING OF TRANSFER OF PROPERTY

The provisions of the Transfer of Property Act, 1882 shall not be applicable to any grant or other transfer of land or of any interest therein to be made by or on behalf of the Government.9

Conveyance of Property

Conveying of property involves creation of new title or interest in favour of the transferee.10 In conveyance, through this instrument of transfer, the title or rights are conveyed to the transferee, for the first time. The transferor is divested of the right conveyed and the transferee acquires it for the first time under this instrument. For example, a person A is the owner of a house, and permits B to stay in it. Such permission does not convey any right in favour of B with respect to the house, as it can be withdrawn at any time. After a month, B agrees to pay a rent of Rs 5000 per month, and A executes a lease deed in his favour. This lease is a transfer of an interest in his favour i.e., a right of owner to possess and enjoy his property. This right through this lease deed (an instrument of transfer) is conveyed in favour of B. The right that B acquires is a right in immovable property and he does that with the help of this instrument. It is now a right and not a mere permission, and his stay in the house will be governed by the terms of the lease agreement and not by A’s directions. Through this conveyance, B is vested now with a legal right to possess and enjoy A’s house and during his lawful occupation, A is divested of the right to possession and enjoyment of his own house. If, after a month, A executes a sale deed in favour of B, B now becomes the owner and through this sale deed, all the remaining rights in the house are also conveyed to him. The right to possess and enjoy was already conveyed, but what are now conveyed are the rights of title and of alienation. At the same time, A is deprived of these rights.

A partition,11 a charge,12 a relinquishment of the reversionary rights by the reversioners,13 a surrender,14 a compromise,15 creation of an easement,16 razinama and kabuliyat in the collector’s books,17 a right under a licence,18 or recitals in the deed of mortgages or petition books,19 A deed of dissolution of partnership and receipt of assets,20 are not transfers as they do not convey the property or an interest in the property. A release deed can be a form of conveyance by a person having some rights or interests to another having a limited estate, i.e., by a remainderman to a tenant for life and then the release operates as an enlargement of the limited estate.21 A registered instrument styled as a release deed releasing the right, title and interest of the executant in any property, in favour of the release for valuable consideration, operates as a conveyance if the document discloses an intention to operate as a transfer.22 In absence of any prescribed terms and conditions barring transfer, securities concerned (OFCDs) are transferable and hence marketable.23

The mere expectation as to or likelihood of conveyance of title, however well founded does not create any interest in the property.24 The occupancy rights of a tribal cannot be transferred or even bequeathed by any tribal to a non tribal in view of the restriction under section 73 AA of the Bombay Land Revenue Code or section 63 of Bombay Tenancy Act.25

A deed of appointment is a transfer.26 Thus, where the donee of power of appointment exercises that power, it would amount to a transfer.27

If the deed shows a change of title or interest from transferor to transferee, without actually using the words convey or conveyance, it would be sufficient to constitute a valid transfer.28 Where a registered sale deed is executed in favour of the transferee for the mining lease with full consent of the owner, the Mines Commissioner is not empowered to pass orders negating the same.29

A power of attorney does not constitute an instrument of transfer of an immovable property.

A General Power of Attorney (GPA)/Will or Special Power of Attorney (SA) does not ipso facto constitute an instrument of transfer of an immovable property even where some clauses are introduced in it holding it to be irrevocable or authorizing the attorney holder to effect sale of the immovable property on behalf of the grantor. It would not ipso facto change the character of the document transforming it into a conveyance deed. As immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance, GPA Sales or Sale Agreement or Will transfers’ cannot be used to transfer immovable property. Both the descriptions are misnomers as there cannot be a sale by execution of a power of attorney nor can there be a transfer by execution of an agreement of sale and a Power of Attorney and Will. Consequently, a Power of Attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. It is creation of an agency whereby the grantor authorizes the grantee to do the acts specified therein, on behalf of grantor, which when executed will be

Page 3 of 4 MEANING OF TRANSFER OF PROPERTY binding on the grantor as if done by him. It is revocable or terminable at any time unless it is made irrevocable in a manner known to law. Even an irrevocable attorney does not have the effect of transferring title to the grantee.30 A Power of Attorney given by a fisherman co-operative society to another to manage fishery does not create an interest in the property and therefore would not amount to transfer.31 The fixing of different rates of stamp duty when a Power of Attorney is executed in favour of blood relative as against in favour of outsider as agent is not unconstitutional. It is to curb tendency of transferring immovable properties through Power of Attorney and inappropriate documentation and levy of stamp duty on such ostensible documents, whose real intention is to transfer immovable property.32 s

1 Naranbhai v Suleman, (1975) 16 Guj LR 289. 2 Such as a corporation, see The Transfer of Property Act, 1882, section 5. 3 See Hindustan Levers v State of Maharashtra, wherein it was held that the term inter vivos in context of section 394 of Companies Act, 1956, would also include within its meaning, a transfer between two juristic persons and a company can, therefore, transfer property. AIR 2004 SC 326 [LNIND 2003 SC 999]: (2004) 9 SCC 438 [LNIND 2003 SC 999]. 4 Shyamal Ranjan Mukherjee v Nirmal Ranjan Mukherjee, AIR 2008 (NOC) 568 (All); Jagran Shakya v Gokul Prasad, AIR 2008 (NOC) 359 (MP); Harihar v Gurugranth Saheb, AIR 1930 Pat 610; Narsimhaswami v Venkatalingam, AIR 1927 Mad 636 [LNIND 1927 MAD 26]; Ramchandra v Lalji, AIR 1959 Pat 305; Ram Kumar v CIT, AIR 1966 All 100; Ramalinga v Shivchidambara. (1919) ILR 42 Mad 440; see also Bhupathi Nath v Ram Lal. (1910) ILR 37 Cal 128, wherein it was held that an idol is a symbol of deity and it is against Hindu religion that a deity should accept any property or worldly goods. See also Ahmad Hussain v Kallu, AIR 1929 All 277; wherein it was held that dedication of property to God by a Wakf is subject to the application of section 53 if the Wakf was created with an intent to defraud the creditors. 5 Ragendra v C Gounder, AIR 2007 (NOC) 1325 (Mad); Biopat Rao v Ram Chandra, AIR 1926 Nag 469. 6 Essar Steel Ltd v Superintendent of Stamps, (2010) 51 (1) GLR 744, (2010) 1 GLH 758; Amar Jyoti Pictures v Himadri Das, 2010 SCC OnLine Cal 948; Shamjibhai Keshavjibhai Kansagra (Patel) v Principal Secretary, Revenue Department, AIR 2011 Guj 55 [LNIND 2010 GUJ 66]; Mardia Chemicals Ltd v UOI, (2004) 4 SCC 311 [LNIND 2004 SC 458]: 2004 (2) MhLJ (SC) 1090; Harish Chandra Hegde v State of Karnataka, (2004) 9 SCC 780: 2004 AIR SCW 315; Bharat Petroleum Corp v P Kesavan, (2004) 9 SCC 772 [LNIND 2004 SC 434]: AIR 2004 SC 2206 [LNIND 2004 SC 434]. 7 N Ramaiah v Nagaraj S, AIR 2001 Kant 395 [LNIND 2001 KANT 175]; Lala Devi Das v Panna Lal, AIR 1959 J&K 62; Surendra Vikram Singh v Munia Kunwar, AIR 1944 Oudh 65; Jamindar of Badrachaan v Venkatdri Appa Rao, AIR 1922 Mad 457. 8 Raghubar v Joy Indra Bahadur Singh, AIR 1919 PC 55. 9 Essar Steel Ltd v Superintendent of Stamps, (2010) 51 (1) GLR 744, (2010) 1 GLH 758; Amar Jyoti Pictures v Himadri Das, 2010 SCC OnLine Cal 948; Bank of Baroda v Mumbai Metropolitan Regional Development Authority, (2010) 3 Mah LJ 819, (2010) 2 Bom CR 509 [LNIND 2010 BOM 166], (2010) 4 AIR Bom R 194. 10 Official Assignee Madras v Tehmina Dinshaw Tehrani, AIR 1972 Mad 187 [LNIND 1971 MAD 192]. 11 Indoji Jethaji v Kothapalli, 54 IC 146. 12 Govind Chandra v Dwarka Nath, (1908) ILR 35 Cal 837; Jawahir Mal v Indomati, (1914) ILR 36 All 201. See also the Presidency Towns Insolvency Act, 1909, section 2(i) and Provincial Insolvency Act, 1920, section 2(f) where transfer of property is defined as including a charge. 13 Provident Investment Co v CIT, AIR 1954 Bom 95 [LNIND 1953 BOM 42]. 14 Makkan Lal Saha v Nagendra Nath Adhikari, (1933) ILR 60 Cal 379; Morati v Krishna, AIR 1925 Nag 455; Samrathi Devi v Parasuram, AIR 1975 Pat 140; see also Kalka v Jaswant, AIR 1926 Oudh 69. 15 Hanuman Sahu v Abbas Bandi, AIR 1929 Oudh 193; Khunni Lal v Gobind Krishna, (1911) ILR 33 All 356; PC Basangowda v Irgowdatti, AIR 1923 Bom 276; Balkrishna v Ranganath, AIR 1951 Nag 171. 16 Sital Chandra v Delanney, (1916) 20 Cal WN 1158; Bhagwan Sahai v Narsingh Sahai, (1909) ILR 31 All 612; Konadayya v Veeranna, AIR 1926 Mad 543; Satyanarayana v Lakshmayya, AIR 1929 Mad 79. 17 Rachappa v Ninagappa, AIR 1926 Bom 40; see also Imam Valod Ibrahim v B Appaji, (1917) ILR 41 Bom 510. There has been a conflict of judicial opinion on this issue. 18 Joyden Sen v State of West Bengal, AIR 2010 (NOC) 256 (Cal).

Page 4 of 4 MEANING OF TRANSFER OF PROPERTY

19 Pankajini v Sudhir Datta, AIR 1956 Cal 669 [LNIND 1956 CAL 27]; Immudipattam Thirugnana v Periya Dorasami, 28 IA 46; see also Sunil Sidharta Bhai v CIT, AIR 1986 SC 368 [LNIND 1985 SC 303], wherein it was held that if exclusive interest is reduced to a shared interest it would amount to a transfer. 20 Balbir Singh v State of UP, AIR 2012 All 113 [LNIND 2012 ALL 12]. 21 Kuppuswami v Arumugam, AIR 1967 SC 1395 [LNIND 1966 SC 176]. 22 T Mammonn v K Ramunni, AIR 1966 SC 337; see also Harish Chandra v Chandra Shekhar, AIR 1977 All 44. 23 Sahara India Real Estate Corp Ltd v SEBI, (2013) 1 SCC 1 [LNIND 2012 SC 517]. 24 Mumbai International Airport Pvt Ltd v Regency Convention Centre and Hotels Pvt Ltd, (2010) 7 SCC 417 [LNIND 2010 SC 552] : 2010 AIR (SCW) 4222 25 Shamjibhai Keshavjibhai Kansagra v Principal Secretary, Revenue Dept, AIR 2011 Guj 55 [LNIND 2010 GUJ 66]. 26 Joshua v Alliance Bank, (1895) ILR 22 Cal 185, 202. 27 U Theta v U Aresena, AIR 1939 Rang 76. 28 A Nadalwan v N Malvarayan, AIR 1936 Mad 918 [LNIND 1936 MAD 165]. 29 Shankar Yadav v State of Jharkhand through Secretary-cum-Commissioner, Department of Mines and Geology, Government of Jharkhand, AIR 2012 Jhar 21 [LNIND 2011 JHAR 992]. 30 Joginder Kumar Goyal v Government of NCT Delhi, 2016 (158) DRJ 241 (Delhi High Court); Suraj Lamp and Industries (P) v State of Haryana, AIR 2009 SC 3077 [LNINDORD 2009 SC 574]: 2009 (76) ALR 792 : 2010(6) All LT 11 (SC) : 2010 (3) Bom CR 808 : 2011 (6) KarLJ 62 : 2009 (6) MhLJ 11(SC) : 2009 MPLJ 315(SC) : 2009 (9) Scale 36 [LNINDORD 2009 SC 574] : (2009) 7 SCC 363 [LNINDORD 2009 SC 574] : [2009] 10SCR 1048. 31 Jayanta Ghosh v State of West Bengal, AIR 2008 NOC 303 (Cal). 32 State of MP v Rakesh Kohli, (2012) 6 SCC 312 [LNIND 2012 SC 326] : 2012 AIR 2351.

End of Document

PROPERTY Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

PROPERTY

The term property has nowhere been defined in the Act. It is used in the widest and most generic sense.33 Property is the most comprehensive of all terms which can be used, in as much as it is indicative and prescriptive of every possible interest which any person can have,34 and it is generally understood as anything that is capable of being owned. Thus, it means not only physical objects, but also includes rights and interests existing in, or derived out of, the actual physical object.35 The beneficial interest of the head of a religious endowment such as a mutt,36 an actionable claim,37 a right to a reconveyance of land,38 a right to obtain shares in a company,39 is property, but a stamp vendor licence is not property and thus cannot be inherited40.

Interests in Property

The term property includes an interest in property. An owner has three basic rights in the property, i.e., a right of ownership, of having the title to the property, secondly, an exclusive right to possess and enjoy the property and thirdly, an exclusive right to alienate the property in any manner that he likes. These rights are called interests in the property under Indian law, and are referred to as ‘real rights’ under English law. Where, either the complete rights in the property are transferred, or even one or two of these basic rights are transferred as between living persons, the transfer would be subject to the provisions of the Act. Transfer under the Act may refer to transfer of possession as well as transfer of ownership.41 Where all the rights in the property are transferred, it would be a transfer of property, but where only some rights are transferred, it would be a transfer of an interest in the property.42 Absolute ownership is therefore, an aggregate of component rights such as the right to possession, the right to enjoying the usufruct of a land,43 a vested remainder,44 a contingent interest,45 and a lease46 of an immovable property.

In Present or in Future

The term ‘in present or in future’ qualifies the word ‘conveys’ and not the term ‘property’.47 It means that a transfer is a conveyance of such property that must be in existence at present, but whose conveyance may take place depending upon the terms of the contract concluded between the parties not only at present, but also in the future.48 It does not, therefore, refer to the conveyance of future property, but may include conveyance of an existing property in future.49

An assignment of an estate or interest which has no existence on the date of transfer, can, neither in law nor in equity operate according to its tenor.50 Such a purported transfer can only operate as an agreement to transfer and when the future assets come into existence it is seized on in equity by reason of such agreement.51 If there is an attempted conveyance of non-existent property, it cannot operate as an immediate alienation. Made for consideration, it may be valid as a contract, and when the object to which it refers to comes into existence, equity taking as done that which ought to be done, fastens upon that property and the contract to assign thus becomes a complete assignment.52 A transfer of future property as opposed to transfer in the future may operate as a contract which may be specifically enforced as soon as the property comes into being, provided that the property is

Page 2 of 7 PROPERTY sufficiently specified.53

Transferor and Transferee the Same Person

Though normally the transferor and the transferee would be two separate individuals or group of individuals, the expression ‘or to himself’ in section 5 indicates that there may be a situation where the transferor and the transferee can be the same person. No person can transfer property to himself in the same capacity, but if he transfers property in one capacity to himself and receives it in some other capacity, then, such transfer is permissible. A person may thus convey land to, or vest land in, himself,54 in some other capacity.55 An apt illustration of it is that a person creating a trust can transfer the property from his individual capacity to himself as a trustee.56 Ordinarily, the trustee is the owner of the trust and has the title to the property, but where the trust specifies a category of beneficiaries or a specific purpose for which it was set up, the trustee cannot deviate from the purpose, or use the property for his own benefit. He does not possess a right to enjoy the property for his personal benefit, unlike an ordinary owner having the title to the property. So long as the purpose of the trust remains unfulfilled, the trustee does not acquire the power to sell the property at his pleasure. Similarly, if the beneficiaries, under the trust, create a separate class, till any one of them is alive, the property can be used only for their benefit and not at the pleasure of the trustee. It is only when either the purpose for which the trust was set up is fulfilled, or the class of beneficiaries for whose benefit it was created comes to an end by death, that the trustee in accordance, with the terms of the trust, may acquire the power to sell it. Only when the trustee becomes competent to sell the trust property can he sell it to either any one or even to himself. In such a case, he sells it as the trustee to himself in his individual capacity. These limited powers of sale vested in a trustee are conveyed to himself, and as an ordinary person he acquires a right to possess and sell it at his pleasure.

Partition of Joint Family Property

In a Hindu joint family, the coparceners collectively have the ownership of the coparcenary property. Each coparcener has an antecedent title to the property, but community of interest and unity of possession being the essential features of a coparcenary, all coparceners jointly possess the title to the property, a right to possess and enjoy it and a collective right to alienate it. After partition, the share of each coparcener is specified and instead of collective rights, they acquire individual rights over the property. Partition, therefore, involves a division of the property as also of the rights in the property and does not involve any divesting or vesting of rights in favour of or against the owner. It is not as if through this instrument of transfer, a member of a joint family acquires the rights in the property for the first time. He was vested with these rights previously also, but enjoyed it collectively with other coparceners. After partition, these antecedent rights are demarcated specifically. The process of partition therefore involves the transfer of joint enjoyment of the properties by all the coparceners into an enjoyment in severalty by them of the respective properties allotted to their shares. It does not amount to a transfer within the meaning of section 5 of the Act.57 It can neither be called an exchange nor a conveyance between one co-owner and another,58 as it is in the nature of only a process of mutual renunciation by which common unspecified rights in larger extents are converted into exclusive rights over specific property.59 It can only signify surrender of portion of joint rights in exchange for similar rights from co-sharer to other co-sharers.60 There is no acquisition of property in another by independent right.61 Each one has an antecedent title, a right to enjoy, and also a right to alienation, but these could be exercised only collectively by them. After partition, no new rights are conveyed in their favour, but these antecedent rights are specified or divided. As there is no vesting or divesting of rights or conveyance of the same for the first time through this partition, it does not amount to a transfer.

Case Laws relating to Hindu Joint Family Property

In VN Sarin v Ajit Kumar Poplai, 62 a joint family comprised of father and his two sons. The coparcenary property included a bungalow that was partitioned, and each of the coparcener got one-third of it. The portion, that came to one of the sons, A, was in occupation of a tenant, previously inducted into the premises by the father, who was the karta. A filed a suit for eviction against the tenant T, on the ground of bona fide necessity for personal use. The tenant resisted his claim and contended, amongst other grounds, that A had acquired the premises through a transfer. The implication of this contention is that under section 14(6) of the Delhi Rent Control Act, 1958, where a landlord/person acquires the tenanted premises by a transfer, no application for the recovery of possession of such premises shall lie on ground of bona fide possession, unless a period of five years has elapsed from the date of acquisition. In other words, if it is held that the property here was acquired by A through a transfer, then he has to wait for a period of five years before he can institute a suit for eviction against him. Thus, the present suit would become premature and would be dismissed. On the other hand, if the mode of acquisition, i.e., the partition does

Page 3 of 7 PROPERTY not amount to a transfer within section 5 of the TP Act, 1882, then the suit would not be premature, and can be decided on merits. The question before the court therefore was; whether partition of coparcenary property; or acquisition of property through partition amounts to a ‘transfer’ within the meaning of section 5 of the TP Act, 1882. What was unique in this case was the fact, that right from the court at the initial level i.e., Rent Controller, to Rent Control tribunal, the Court of Delhi and even the Supreme Court on this issue, gave concurrent findings. Their view was that the partition of the coparcenary property does not amount to transfer within the meaning of section 5 of the TP Act, 1882. The court held that the joint family property is owned, enjoyed and can even be sold by all of them jointly. When the property is partitioned, there is a division of all these rights that they possessed, collectively into individual or specific rights. Thus, the court ruled that partition of joint family property does not amount to a transfer within the meaning of the Act and observed:

It is true that a partition is not actually a transfer of property but would only signify the surrender of a portion of a joint right in exchange for a similar right from the other co-sharer or co-sharers.

Similarly in Girja Bai v Sadashiv Dhundiraj,63 the Privy Council observed that ‘partition does not give him (a coparcener) a title or create a title in him; it only enables him to obtain what is his own in a definite and specific form for purposes of disposition independent of the wishes of his former co-sharers’. In CIT v Keshavlal Lallubhai Patel,64 the father had thrown all his self-acquired properties into the joint family common hotch pot. The family comprised of the father, his wife and two sons, one of whom had attained majority. Pursuant to an oral partition, this property was divided and now stood in the exclusive names of the members of the family. The question before the court was whether this oral partition was, in fact, an indirect transfer of the properties allotted to the wife and the minor son. The apex court held that this oral partition was not a transfer in its strict sense so as to attract the provisions of section 16(3)(a)(iii) and (iv) of the Indian Income Tax Act, 1922. Again, in Mohar Singh v Devi Charan,65 the property was jointly owned by two co-owners, part of which was in occupation of a tenant. This property was partitioned between them, and A, in whose share fell the tenanted premises, filed a suit for eviction of the same.

As partition of joint family property is not a transfer within the meaning of section 5 of the Act, the doctrine of part performance is not applicable to an unregistered deed of partition.66 Even if a partition involves release it cannot be called a release,67 but where a deed indicates no elements of partition and its operative terms and tenor decide its nature, the deed would be a release.68

Family Arrangements/settlements

A family settlement is different from a formal partition. It is an informal arrangement where the members of the family agree to divide the property amongst themselves, not necessarily in accordance with the quantum as specified in law or according to their entitlement. It can take into its fold non-family members as well69. Once effected, it is binding on all the members who were parties to it and is enforceable in a court of law. Even though there may be a conferment of rights with respect to property in favour of members, it is not a transfer of property, as it simply acknowledges and defines the title of each member70 and does not create new title.71 It may be oral or in writing. A deed of family settlement is not required to be compulsorily registered even where it has been reduced to writing and would be admissible in evidence where it was already acted upon by the parties, who acknowledged the antecedent title.72 Where no right in praesenti is created such family settlement cannot be treated as inadmissible on grounds that it is not registered73. However, a deed of family arrangement is valid, and a subsequent sale of property cannot be challenged, more so where the parties enjoyed the shares after payment of taxes on the strength of the family arrangement executed by the parties in presence of panchayatdars.74 A deed of Family Settlement to partition joint family properties cannot be relied upon unless signed by all co-sharers and where the validity of a family agreement was challenged on the ground that it was signed by using coercion and that in presence of a Will the parties are not competent to enter into a family arrangement, the family arrangement would be valid in absence of conduct of the parties that is contrary to their assertions of consent being taken by coercion.75

Will

There is a difference between a transfer of property and a bequest under Will. TP Act, 1882 deals with transfers inter vivos, that is, by a living person who conveys the property to one or more living persons. While a transfer is a conveyance of an existing property by one living person to another, a Will is a legal expression of a wish and intention of a person with respect to his properties. Since a Will takes effect from the death of the testator, it is not a

Page 4 of 7 PROPERTY transfer inter vivos, or between living persons, but is from a person, who is dead to the legatee and therefore, it will not be subject to the provisions of the TP Act, 1882. It would be governed by the rules provided under the Indian Succession Act, 1925. A deed executed by the husband and wife jointly providing that on the death of any of them the surviving executant shall possess the same with absolute rights of alienation and upon the death of such surviving executant, the property would go to their children, the deed would be a Will and consequently not a transfer as there was no transfer of right in praesenti in favour of the surviving executant or the children.76 The question whether the acquisition of property or title through a testamentary disposition amounts to transfer of property has come up in several cases.

In N Ramaiah v Nagaraj S, 77 a person died leaving behind his wife W, and his nephew Br S (brother’s son). The nephew applied to the court for grant of letters of administration claiming that the deceased had left his total properties in his favour under a Will. This claim was contested by the widow W, on the ground that the Will was a forged document, and she, as the legally wedded wife of the deceased was entitled to the total properties. The nephew sought and obtained a temporary injunction from the court, preventing or restraining the widow from transferring or alienating the suit properties till the case was decided by the court on merits. The widow was therefore asked to maintain the status quo with respect to these properties. Six months later, the widow executed a Will of these properties in favour of her brother and died three months later, while the suit relating to the title dispute was pending in the court. Her brother applied for substitution of his name in the place of the testatrix. Br S, objected to this substitution on the ground, that as the widow was specifically directed by the court not to transfer or alienate the property and was to maintain the status quo, a transfer of property, under a Will, so as to create rights in a third party would be against the order of the court and hence void, and such a transferee would have no locus standi to be substituted in place of the deceased testatrix. The main issue before the court was whether execution of a Will amounts to a ‘transfer’ or alienation within the meaning of the TP Act, 1882? If it does, then the execution of will was against the express directions of the court, and would be void. Consequently, the legatee under a void Will would have no right to substitution. But, if a Will is not included as a mode of transfer within the meaning of section 5, then the legatee under this valid Will, would be entitled to step into the shoes of the testatrix, and continue the litigation. The court held that by making a Will, a testator neither changes title or possession in regard to a property. Neither is the nature or situation of the property altered, nor is anything removed or added to the property, by such Will. Pointing out the distinction between a transfer and a Will, the court said:

…the difference between a transfer and a Will are well recognised. A transfer is a conveyance of an existing property by one living person to another (that is transfer inter vivos). On the other hand, a Will does not involve any transfer, nor effects any transfer inter vivos, but is a legal expression of the wishes and intention of a person in regard to his properties which he desires to be carried into effect after his death. In other words, a Will regulates succession and provides for succession as declared by it (testamentary succession) instead of succession as per personal law (non testamentary succession). The concept of transfer by a living person is wholly alien to a Will. When a person makes a Will, he provides for testamentary succession and does not transfer any property. While a transfer is irrevocable and comes into effect either immediately or on the happening of a specified contingency, a Will is revocable and comes into operation only after the death of the testator. Thus, to treat a devise under a Will, as a transfer of an existing property in future is contrary to all known principles relating to transfer of property and succession.

The court therefore, held that a Will does not amount to a ‘transfer’ within the meaning of section 5 of the TP Act, 1882, and allowed the legatee to pursue the litigation on behalf of the testatrix.

In Kenneth Solomon v Dan Singh Bawa,78 the issue again was, whether devolution of interests in property through inheritance or testamentary succession (Will) would amount to ‘transfer’ of an interest in the immovable property within the meaning of section 5 of the TP Act, 1882. The dispute related to the tenancy rights of the tenant, which he had bequeathed in favour of his heirs. On his death, the beneficiaries under his Will took possession of the tenanted premises as the contract of lease was still subsisting. The landlord filed a suit for eviction on the ground, that this transfer of the premises amounted to a violation of the provisions of the Delhi Rent Control Act, 1958, as the tenant had ‘parted with possession’ of the premises in dispute without the permission of the landlord.

The Delhi High Court here differed with the Karnataka High Court’s judgment and observed:

Will is the legal declaration of the intention of the testator with respect to his property which he desires to be carried into effect after his death. One characteristic of the Will as distinguished from other kinds of instruments disposing of property is its revocable nature as it is ambulatory until the death of the testator. Till the death of the testator, it is barely an expression

Page 5 of 7 PROPERTY

of intention to deal with the property in a specific manner, but the moment the testator dies, it has the effect of vesting the property, that is the subject matter of the bequest on the beneficiary. At that point of time, it would have the same effect as a transfer of possession by sale or mortgage. The process of parting with possession thus starts on the execution of the Will, but matures only on the death of the testator. The tenancy rights disposed under a Will would vest in the devisee immediately on the death of the testator.

Holding here that a violation of the lease agreement had taken place by bequeathing tenancy rights, the legatee under the Will was directed to vacate the premises.

What is pertinent to note here is the fact that the two cases, though related to testamentary succession, differed fundamentally with each other. The main issue in Ramaiah’s case was whether bequeathing of rights under a will amounted to transfer/alienation of rights under the TP Act, 1882, which the court answered in negative. In the present case, the issue was whether a person ‘parts with possession’ of the property through a devise of Will, and not whether such parting of possession amounts to a transfer within the meaning of section 5 of the TP Act, 1882.

The court itself explained it in the following words:

The transfer of property according to the definition given in S. 5, of the Transfer of Property Act, means an act by which a living person conveys property in present or future to one or more other living persons or to himself and one or more other living persons. True, these words exclude transfer by Will, for a Will operates after the death of the testator.

In relation to the violation of the tenancy contract, the court said that the act of making a Will, by itself, would not amount to parting with possession of the premises, as a Will by its very nature is revocable, and does not vest possession, or for that matter, any right in the legatee. Through a Will, a person parts with possession only after his death, and therefore, though vesting and divesting of the rights in the property take place, the moment the testator dies, the whole transaction would be governed by the relevant succession laws and not by the provisions of the TP Act, 1882.

33 Matadin v Karim, (1891) ILR 13 All 432; Banssi Gopal v Banerjee, AIR 1949 All 433. 34 Jones v Skinner, (1835) 5LJ Ch 90. 35 Ramshankerlal v Ganesh Proshad, (1907) ILR 29 All 385. 36 Commr. v Lakshmindra, AIR 1954 SC 282 [LNIND 1954 SC 69]. 37 Muchiram v Ishan Chander, (1894) ILR 21 Cal 568; Rudra Prakash v Krishna, (1887) ILR 14 Cal 241. 38 Narasingerji v Panaganti, AIR 1924 PC 226. 39 Vasudev Ram Chandra Shelat v PJ Thakkar, (1974) 2 SCC 323 [LNIND 1974 SC 195]; VB Rangaraj v VB Gopalakrishnan, AIR 1992 SC 453 [LNIND 1991 SC 637]; SP Jain v Kalinga Tube, AIR 1965 SC 1535 [LNIND 1965 SC 6]. 40 Joydev Sen v State of West Bengal, AIR 2010 (NOC) 256 (Cal). 41 BSE v S Kandalgaon, (2015) 2 SCC 1 [LNIND 2014 SC 855]. 42 Sunil Sidharthbai v CIT, AIR 1986 SC 368 [LNIND 1985 SC 303]. 43 Indar Sen v Naubat Sen, (1885) ILR 7 All 553. 44 Gulam Husein v Fakir Mahomed, AIR 1947 Bom 185; Umesh Chander v Jahoor Fatima, 17 IA 201. 45 Ma Yait v Official Assignee, AIR 1930 PC 17. 46 Inderloke Studio Ltd v Santi Debi, AIR 1960 Cal 609. 47 Jugal Kishore v Raw Cotton Co, AIR 1955 SC 376 [LNIND 1955 SC 21]: (1955) 1 SCR 1369 [LNIND 1955 SC 21] : (1956) 58 Bom LR 517; Abdul v Goolam, (1906) ILR 30 Bom 304. 48 Sumsuddin v Abdul Husein, (1909) 31 Bom 172; Harnam v Akbar, AIR 1937 Pesh 76.

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49 See The Transfer of Property Act, 1882, section 5. 50 Ditcham v Miller, AIR 1931 PC 203; per Jessel MR in Collyer v Isaacs, (1882) 19 ChD 342. 51 Per Martin J in Re Md Hasham & Co, AIR 1923 Bom 107. 52 Annadamohan v Gourmohan, 25 Cal WN 496, 508. See also Prem Sukh v Habibullah, AIR 1945 Cal 355, 358; Collyer v Isaacs, (1882) 19 ChD 342, 351. 53 Holroyd v Marshall, (1862) 10 HLC 191; Tailby v Official Receiver, 13 App Cas 543; see also Purnachandra v Barnakumari, AIR 1939 Cal 715. 54 However, it does not enable a person to grant a lease to himself, and does not enable two or more persons to grant a lease to all of themselves; see Rye v Rye, [1962] AC 496, [1962] 1 All ER 146 (HL). Nor can a nominee grant a lease to his principal, at any rate one which is not a bare term containing no covenants by either party: Ingram v IRC, [1997] 4 All ER 395 (CA). 55 The Transfer of Property Act, 1882, section 5. 56 Naranbhai v Suleman, (1976) 16 Guj LR 289. 57 Aratappa v Jagannath, AIR 2007 Ker 91 [LNIND 2006 KER 855]; VN Sarin v Ajit Kumar Poplai, AIR 1966 SC 432 [LNIND 1965 SC 184]; see also Reddiar P v K Reddi, AIR 1966 Mad 419 [LNIND 1965 MAD 203]; Panchali v Panniyodan Manni, AIR 1963 Ker 66 [LNIND 1962 KER 174]; Ganu Santu v Shankar Tukaram, (1968) 71 Bom LR 165; Muthuveeran Chetty v Govindan Chetty, AIR 1961 Mad 518 [LNIND 1961 MAD 30]; Kisansingh Mohan Singh v Vishnu Balkrishna, AIR 1951 Bom 4 [LNIND 1950 BOM 55]; Khirode Sundari v Chunilal, (1945) 49 Cal WN 779; Suhasini Poddar v Sreenath Chakravarty, (1945) 49 Cal WN 769; Indoji Jethaji v Kothapalli, 54 IC 146; Satya Kumar v Satya Kirpal, 3 IC 247; Gyanessa v Mubarakanessa, (1917) 25 Cal 210. For a contrary opinion, see also Jagannathpuri Guru v Gocabai, AIR 1968 Bom 25 [LNIND 1966 BOM 87]; Raman Pillai v Madhavan Pillai, AIR 1959 Ker 235 [LNIND 1958 KER 137]; Daya Bhai v State of Bombay, (1960) 62 Bom LR 348; Banarasilal v Bhagwan, AIR 1955 Raj 167 [LNIND 1954 RAJ 40]; Kartar Singh v Rameela, AIR 1950 J&K 18; Sadhu Ram v Pirthi Singh, AIR 1936 Lah 220; Waman Ram Krishna v Ganapat Mahadeo, (1935) 37 Bom LR 925; Rasa Goundan v Arunachala, AIR 1923 Mad 577 [LNIND 1923 MAD 41]. 58 VD Deshpande v Kusum Kulkarni, AIR 1978 SC 1791 [LNIND 1978 SC 267]; see also Atrabanessa Bibi v Safutullah Mia, 31 IC 189, wherein it was held that partition is analogous to an exchange; Rasa Goundan v Arunachala, AIR 1923 Mad 577 [LNIND 1923 MAD 41]. For another opinion, see Muthuveeran Chetty v Govindan Chetty, AIR 1961 Mad 518 [LNIND 1961 MAD 30]; Suhasini Poddar v Sreenath Chakravarty, (1945) 49 Cal WN 769. See also Sohni v Raj Kumar Singh, AIR 1932 All 678, wherein it was held that under the partition act, it means a change of ownership. 59 Venkiteswara Prabhu Ravindranatha Prabhu v Surendranath Prabhu, AIR 1985 Ker 265. 60 Gouranga Chandra Roy v Gobinda Ballabh Roy, AIR 2014 Tri 26. 61 Revenue Authority v BA Mallaya, AIR 1971 Mad 210 [LNIND 1970 MAD 80]. 62 AIR 1966 SC 432 [LNIND 1965 SC 184]: [1966] SCR 349. 63 AIR 1916 PC 104. 64 AIR 1965 SC 866 [LNIND 1964 SC 309]. 65 AIR 1988 SC 1365 [LNIND 1988 SC 598]: (1988) 3 SCC 63 [LNIND 1988 SC 598]. 66 Chandrawati v Lakshmi Chand, AIR 1988 Del 13 [LNIND 1987 DEL 103]. However, see also Soni Ram v Dwarkabai, AIR 1951 Bom 94 [LNIND 1951 BOM 7], wherein it was held that the partition amounts to transfer within the meaning of section 53. 67 Revenue Board v BA Mallaya, AIR 1971 Mad 210 [LNIND 1970 MAD 80]. 68 Chief Controlling Revenue v SK Krishnamurthy, (1989) TNLJ 133; see also P Balakrishnan v District Registrar, AIR 1989 Mad 257 [LNIND 1988 MAD 292]. 69 Zaheda Begum v Lal Ahmed Khan, AIR 2010 AP 1 [LNIND 2009 AP 582]. 70 Anup Kumar Debabarma v Abindra Kumar Debbarma, AIR 2009 (NOC) 588 (Gau); Jagdish v Rajwanti AIR 2008 P&H 27; Gurchanran Ram v Tejwant Singh, AIR 2008 (NOC) 1650 (P&H); Vincent Lourdbenathan Dominiquev Josephine Syla Dominique, AIR 2008 (NOC) 1173 (Mad). See also Jagran Shakya v Gokul Prasad AIR 2008 (NOC) 359 (MP) wherein, it was held that a family arrangement is not synonymous to partition; Hasan Khani Rawther v Muhammad Rawther AIR 2008 (NOC) 1126 (Ker); Ramdev Food Products Pvt Ltd v Arviondbhai Rambhai Patel, AIR 2006 SC 3304 [LNIND 2006 SC 1102]; Hari Shanker Singhania v Gaur Hari Singhania AIR 2006 SC 2488 [LNIND 2006 SC 237];, Amteshwar Anand v Virendra Mohun Singh, AIR 2006 SC 151 [LNIND 2005 SC 812], For family arrangements see also, Subbegowda v Thimmegowda, (2004) 9 SCC 734 [LNIND 2004 SC 503]; Tek Bahadur v Debi Singh, AIR 1966 SC 292.

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71 Sahu Madho Das v Mukund Ram, AIR 1955 SC 481 [LNIND 1955 SC 25]. 72 Vikram Singh v Ajit Inder Singh, AIR 2014 Del 173 [LNIND 2014 DEL 482]. 73 Zaheda Begum v Lal Ahmed Khan, AIR 2010 AP 1 [LNIND 2009 AP 582]. 74 K Jagannathan v AM Vasudevan Chetiar, AIR 2000 Mad 184. 75 Narendra Kante v Anuradha Kante, AIR 2010 SCC (Supp) 278 : AIR (2010) 2 SCC 7; Vikram Singh v Ajit Inder Singh, AIR 2014 Del 173 [LNIND 2014 DEL 482]. 76 Narayani v Sreedharan, AIR 2012 Ker 72 [LNIND 2011 KER 754]; Shamjibhai Keshavjibhai Kansagra (Patel) v Principal Secretary, Revenue Department, AIR 2011 Guj 55 [LNIND 2010 GUJ 66]. 77 AIR 2001 Kant 395 [LNIND 2001 KANT 175]. 78 AIR 1986 Del 1 [LNIND 1985 DEL 181]: 28 (1985) DLT 229.

End of Document

WHAT MAY BE TRANSFERRED Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

WHAT MAY BE TRANSFERRED

[s 6] What may be transferred.—Property of any kind may be transferred, except as otherwise provided by this Act or by any other law for the time being in force,—

(a) The chance of an heir-apparent succeeding to an estate, the chance of a relation obtaining a legacy on the death of a kinsman, or any other mere possibility of a like nature, cannot be transferred; (b) A mere right of re-entry for breach of a condition subsequent cannot be transferred to any one except the owner of the property affected thereby; (c) An easement cannot be transferred apart from the dominant heritage; (d) All interest in property restricted in its enjoyment to the owner personally cannot be transferred by him; (dd) A right to future maintenance, in whatsoever manner arising, secured or determined, cannot be transferred; (e) A mere right to sue cannot be transferred; (f) A public office cannot be transferred, nor can the salary of a public officer, whether before or after it has become payable; (g) Stipends allowed to military naval, air-force and civil pensioners of Government and political pensions cannot be transferred; (h) No transfer can be made (1) in so far as it is opposed to the nature of the interest affected thereby, or (2) for an unlawful object or consideration within the meaning of section 23 of the Indian Contract Act, 1872 (9 of 1872), or (3) to a person legally disqualified to be transferee; (i) Nothing in this section shall be deemed to authorise a tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the lessee of an estate, under the management of a Court of Wards, to assign his interest as such tenant, farmer or lessee.

Property and interests in property as a general rule are transferable. This rule of transferability is based on the maxim alienation rei prefertur juri accrescendi, which means law favours alienation to accumulation. Therefore, any attempt to interfere with the power of the owner to alienate his interest in the property is frowned upon by the law. At the same time, where either the transferor does not possess a valid title to the property and is merely hoping to acquire one in future, or has an interest in property that is solely by its very nature created for his personal enjoyment, or as a rule of public policy, transfer of such interests in property should not be allowed to be transferred, a transfer of property in such cases by him, is prohibited. It is only when the transferor has a present subsisting title or interest in the property and is capable of delivering the same to another, that he is permitted to transfer it. The transferor may get the physical possession of the property in future, but if he has a subsisting title to it in present, the restriction on his power to alienate the same cannot be applied.

For instance, A hopes to succeed to his father’s property on his death. His acquisition of this interest is based on a hope or expectancy that may or may not materialise. If he is permitted to transfer the same, it may create confusion

Page 2 of 8 WHAT MAY BE TRANSFERRED and conflict of claims later on, and therefore he is not permitted to do so. However, if the father dies, and through his Will bequeaths his property to his wife for her life and after her, the son will take the possession of it as an absolute owner, the son has a present subsisting title to the property the moment the father dies. It is only the possession of the property that is delayed till the mother dies, and he can validly transfer the property and convey a good title to the transferee. Similarly, a person in the capacity of an employee is drawing a salary for the work that he does for an organisation. This salary is for his personal services rendered and cannot be transferred. But once the salary is paid to him, it can be transferred validly. Therefore, under the Act, ten exceptions have been provided to the general rule of alienability of the property.

Assignment of After-Acquired Property under Common Law

Property which, at the date of the assignment, is either not in existence, or not the grantor’s property, is not transferable at common law,79 unless the grantor already has a potential property in it as its present owner or possessor of that which is expected to produce it.80 Thus, it has been held that a transfer or assignment purporting to convey goods which will afterwards be in the grantor’s house, does not pass the interest in it which the grantor acquires subsequently.81 Such an assignment is ineffective at law as an assignment82 as regards future acquired goods, unless followed by delivery or ratified by some act done by the grantor with that view after he has acquired the property, but the mere bringing of goods onto the grantor’s premises is not necessarily such an action.83

Heir Apparent

The term ‘heir apparent’ is an English term and is based on the maxim nemo est heres viventis which means that a living person does not have any heir. An heir is a person who succeeds to the property of another on his death if such person Wills the property to him, or dies intestate. Intestate refers to a person who dies leaving behind property but no specific instructions, capable of taking effect in law with respect to its disposal, i.e., he does not leave behind a valid Will, and his property goes in accordance with the laws of inheritance that are provided under the law that he is subject to at the time of his death. Therefore, who the heir will be can be determined only at the time of the death of a person, and not beforehand.

Chance

In case a person hopes to succeed to the property of an intestate, what and how much, if at all would be the property available for inheritance can again be ascertained at the time when the owner dies. These two things, i.e., who the heir will be and whether the property would be available can never be postulated with concrete certainty before the death of the owner. There may be a possibility that no property is left at the time of the death of a person, as it may have been disposed of by him during his lifetime or might have been made the subject of a testamentary disposition. It may also be possible that the heir apparent may die before the very person whose property he was hoping to succeed to. Thus, there is a hope, expectancy or a chance that he may succeed to the property, but no certainty, no definite concrete reality that such an eventuality must happen. This is the reason why the Act uses the expressions, ‘chance’ and ‘heir apparent’, and not heir. The term ‘apparent’ indicates a probability or possibility, and transfers that are based on bare chances or possibilities are not permissible.

Chance of an Heir Apparent

The chance of an heir apparent succeeding to the property of an intestate; the chance of a relation obtaining a legacy on the death of a kinsman, or any other possibility of a like nature cannot be transferred.84

Transfer of Spes Successionis is void ab initio

The chance of an heir apparent to succeed to the property of an intestate therefore cannot be transferred. This chance is also referred to as spes successionis. If a person transfers this chance, the status of this transfer in law is void ab initio. It does not convey any right in favour of the transferee, even if the transferor who transfers a chance may, in fact, become the owner of the same property in future.

For example, a family consists of father F and a son S. F is the owner of certain properties. As the ownership is with F, during his lifetime, no one else including the son can ordinarily sell the property without his consent. The son is the heir apparent, i.e., if F dies intestate, S would inherit this property. As S is the heir apparent, his succession to the properties in the future is a chance due to two main reasons, first, since F is the owner, he may sell it, or dispose it of in any other manner or may make a will in favour of any one, and nothing may be left for S. Secondly, the son may die during the lifetime of the father. Thus, if the son, during the lifetime of the father, transfers this

Page 3 of 8 WHAT MAY BE TRANSFERRED property without the consent of the father, the transfer would be void as it is expressly prohibited by the Act. For instance, in the same example, let us take a situation, where the son professes to transfer the property of the father to X, with a conviction that he is the future owner of the property, and assures X, that on F’s death, he would deliver the possession of the property. The next day F dies and S in fact becomes the owner, but now fails to or refuses to deliver the possession of the property. X cannot press for delivery of possession of the property, as this transfer was void in its inception and cannot be enforced. However, he would be entitled to have his amount back, if he had paid consideration.

Similarly, a family consists of the father F, his wife W, and a daughter D. F wants to secure the property he owns in favour of W, but instead of making a Will, he asks D to sign a release deed to the effect, that she would not claim her share of inheritance out of the property of F, when he dies. D signs the release deed in favour of W. When the father dies, she claims half of his property by way of his heir. She can do so, as what she had transferred by way of the release deed was her chance to succeed to the property of the father, and as that is expressly prohibited under the Act, the same was void, and she will not be bound by it.85 In Official Assignee, Madras v Sampath Naidu,86 a mortgage executed by an heir apparent was held as void by the court even though he subsequently acquired the property as an heir.

The Chance of a Relation obtaining a Legacy on the Death of a Kinsman

The chance of a relation obtaining a legacy on the death of a kinsman cannot be transferred.87 A legacy is money or property given under a Will. If a person expects to receive property under a legacy, the same cannot be transferred by him before the death of the testator. For instance, X bequeathes his house under a Will in favour of Y. Till X is alive, Y has a bare chance of obtaining this legacy. It is a chance, as Y can become the owner of this property only if:

(i)X dies before Y; (ii)X does not revoke this Will or bequeathes the property in favour of anybody else; and (iii) The property bequeathed to Y is available at the time of the operation of the Will, i.e., it has not been disposed of by X during his life time.

Therefore, Y is prohibited from transferring the property which is bequeathed to him before the operation of the Will.

Likewise, let us take the case of a reversioner, who hopes to get the property on the death of another relation. He does not have a vested interest in the property, but has only a contingent interest in it. If he dies before the relation on whose death he was hoping to succeed to the property, his heirs do not get the property and it reverts back to the original owner. For example, A and B were two brothers constituting a Hindu joint family. In 1944, A died leaving behind a widow, W. His interest in the joint family property will be taken by his widow, and his brother B would be called a reversioner. The chance of B to take the property on the death of W is a mere expectancy and cannot be transferred. It is an expectancy or probability as B may die during W’s lifetime. It is only if he survives her, that he would become the owner of the property on her death. Therefore, if the reversioner during the lifetime of the widow transfers the property that is at that time in possession of the widow, such transfer will be void even if the next day of the transfer the widow dies, and the reversioner, in fact, becomes the owner of the property.

Similarly, on the death of an undivided Hindu coparcener, his widow took possession of the property. She sets up an adoption deed allegedly executed by her husband, authorising her to take a child in adoption. The deed of adoption is challenged by the reversioner who is the brother of the deceased husband. In order to meet the litigation expenses, the reversioner transfers the property that was in the possession of the widow. The court holds that the deed of adoption is a forged document, and the case is decided in favour of the reversioner, cancelling the adoption. The next month the widow dies, and the reversioner takes possession of the property as its owner. The transferee presses for delivery of possession of the property. This transfer that is void cannot be acted upon by the transferee, nor can be enforced in the court.

Thus, a mere possibility cannot pass by succession, bequest or transfer, so long as the right has not actually come into existence by the death of the present owner.88 The chance of a Hindu reversioner is an interest expectant on the death of a qualified owner and not a vested interest, and as such, its transfer89 or relinquishment90 or a contract to transfer the expectancy when the reversioners enter into possession91 is a nullity, and has no effect in law. However, a reversioner may, under certain circumstances, by being a party to a compromise in the nature of a family settlement and by taking the benefit of compromise, be debarred from claiming as a reversioner.92 Similarly,

Page 4 of 8 WHAT MAY BE TRANSFERRED the transfer or relinquishment of a prospective right as part of a family settlement or of a compromise by rival claimants to property stands on an entirely different category from the bare transfer of a spes successionis.93

Where some of the reversioners of a male proprietor executed a deed of relinquishment of their shares in favour of the other reversioners, in consideration of the latter having undergone much trouble and expense in connection with a declaratory suit, and which had been successfully fought in respect of an alienation by the widow of the said proprietor, it was held that the deed was in effect and must be treated as a deed of assignment of reversionary rights and since the assignment was made by some of the reversioners in favour of the remaining reversioners it was a perfectly valid assignment.94

In Ananda Mohan Roy v Gaur Mohun Mullick,95 the issue before the Privy Council was, whether a contract by the nearest reversioner to sell the property which was in the possession of a widow as an heir, was valid and enforceable, and it was held that the prohibition under section 6(a) would become futile, if agreements to transfer property, where acquisition of title was based on possibilities, could be enforced. Hence, the Privy Council held that such a contract was void and unenforceable in a court of law.

The position under Mohammedan law is also the same.96 Thus, a Muslim daughter cannot validly agree to relinquish her share in her father’s property which might devolve on her at his death.97

Agreement to transfer an expectancy is also void. Under English law, though the transfer of an expectancy is void, however, in equity the assignment of an expectancy for consideration is valid,98 but is subject to the rules of estoppel.99

Renunciation of Expectations for a Consideration

According to the literal interpretation of section 6(a), a person can neither transfer nor renounce either a chance of inheriting the property in future or the chance of obtaining a legacy on the death of a kinsman and even if he does that, he would not be bound by such transfer/renunciation as the same is expressly prohibited. However, judicial interpretation of this section favours imposition of a rule of estoppel as against such transferors who without having any present interest, agree to transfer the property based on future possibilities for a consideration and later try to avoid the same under this legal rule. In Gulam Abbas v Haji Kayyam Ali1, a man ran into financial difficulties almost to the point of insolvency. He had four sons, A, B, C and D. A and B paid his debts and C and D executed deeds in favour of A and B acknowledging that in lieu of the such payment of debts of the father, the rights of inheritance at the time of the death of the father from his property would also be available only to A and B, and C and D would not raise any objections to that effect. Upon the death of the father, however, both C and D wanted to enforce their inheritance rights on the ground, that the actual implication of the deed was a renunciation of future rights of inheritance in favour of the brothers, and as such renunciation is void in terms of section 6(a), they would not be bound by the same. TheApex Court held that a bare renunciation of an expectation to inherit cannot bind the expectant heir’s conduct in future, but if the expectant heir goes further and receives a consideration and so conducts himself as to mislead an owner into not making dispositions of his property inter-vivos, the expectant heir could be debarred from setting up his rights when it does unquestionably vest in him. In other words, the principle of estoppel remains untouched by this statement. Here, the two brothers who executed the deeds relinquishing their claims for consideration could not, when rights of inheritance vested in them at the time of their father’s death claim these; as such claim would be barred by estoppel. It was irrespective of the question whether the deed could operate as valid legally and effective surrender of their spes successionis. Similarly, in Hameeda v Jameela 2, for a consideration and assignment of some property, the daughter relinquished her chance to obtain a share in her father’s property. Both she and her husband purchased property with this amount. Upon the death of the father she claimed inheritance on the ground that since the earlier renunciation was of spes successionis, she was not bound by it. The court held that it was not a bare renunciation but was followed by the daughter receiving money from her father that was sufficient for her to purchase land. She having enjoyed the benefit could not claim that she was not bound by her relinquishment. It was possible that the father after having entered into this arrangement did not make a testamentary disposition of the property that he might have done had it not been for the relinquishment arrangement. The court said that the receipt of money by an heir apparent in lieu of his/her share in the property of his/her father during his life time would estop the heir apparent from claiming the share of the property of the father on the later dying intestate.

In Latafat Husain v Hidayat Husain,3 a Muslim man, H had children from his two wives. A gift was executed by his mother in favour of his son from his first wife. Pursuant to that, the second wife, W insisted that he should execute a wakf of his property making her children the beneficiaries and appointing her as the Muttawali of the same. In 1920, two documents were executed: one was a deed of wakf by H under which he appointed W as the mutawalli, and

Page 5 of 8 WHAT MAY BE TRANSFERRED constituted her children as the beneficiaries; and the second was a deed of release executed by W under which she relinquished her claim to her dower against the property of her husband, and also relinquished her claim to any inheritance in the estate reserved by him. H died in 1928. Thereupon, contrary to the release made by her, W brought a suit to recover her 1/8th share in the inheritance of H, though she did not press her claim for her dower. The main issue for consideration was whether W could obtain a decree for possession of the 1/8th share in the estate left by H when she had in his lifetime renounced her claim to such inheritance. Both the Courts below dismissed the claim. In appeal, she contended that a relinquishment of the right of succession made by an heir is prohibited under Muslim Law and is null and void, and cannot stand in her way when seeking to recover her share of inheritance.

The court observed that a contract made by an heir for consideration not to claim a certain property cannot be said to be in any way illegal or forbidden by any law. If the consideration is received in cash and the contract is subsequently sought to be enforced it would be a matter of discretion for the Court to refuse specific performance and to make the plaintiff pay compensation when he is not carrying out his contract. But in cases where the agreement has been effected in a form which makes it impossible for the Court to grant adequate compensation to the aggrieved party the agreement may well be enforced, and the plaintiff be held bound by it.

In the present case, the facts revealed that it was W only who had herself been insisting that her husband should execute the deed of gift in her favour in lieu of her desisting from her claim to dower and enforcing her prospective rights as a heiress of her husband’s estate. The two deeds were executed at the same time, and formed part and parcel of the same transaction. The court noted that the husband would not have executed the deed of wakf, if W had not been willing to forego her claim to the inheritance and willing to abandon her claim to the dower. After the death of H and acceptance of the deed of wakf and taking possession of the wakf property by her as the mutawalli, she cannot be allowed to resile from her previous position and claim a share in the inheritance which she had abandoned. This would be allowing her to commit a fraud on the deceased who would not execute the deed of wakf if she had not been agreeable to relinquish her claim. The learned Judge came to the conclusion that the arrangement between the husband and the wife was in the nature of a family settlement which is binding on her. The court said:

We think that on this finding the plaintiff cannot be allowed to go back upon her renunciation as it is not possible to grant her relief for possession by making her pay compensation to the defendants.

Here, W and her children were not entitled to obtain immediate possession of the wakf property without the wakf which they succeeded in obtaining, and had remained in possession of the same for about eight years before the husband died. The court held that she cannot be allowed now to go back upon the family settlement which, if not enforced, would cause injustice to the defendants, who would suffer.

The law as interpreted by the judiciary is that if the heir apparent renounces/transfers his or her share in the property, he would not be bound by such renunciation/transfer, but if for renunciation some benefit in the form of consideration or property has been received, such benefit would operate as an estoppel against the heir apparent and he would be prevented from claiming the property if and when the succession opens.

Future Possibilities of a Like Nature

Any other possibility of a like nature cannot be transferred.4 The term ‘of a like nature’ indicates that those possibilities that are similar to the one explained above cannot be transferred, i.e., those based on hope or expectancy. For instance, a person cannot transfer the prize money that he may win in a lottery or the monetary consideration that he hopes to get after the completion of a sale, as there is a possibility that the sale may never materialise or he never wins a lottery. Similarly, a fisherman going out to sea to catch fish cannot transfer the possible catch that he may make, as it may be possible that he may not be able to catch any fish. Thus, the mortgage of income derivable in future from scavenging work is invalid.5 The chance of receiving a gratuitous payment at the discretion of an employer for services being or about to be rendered,6 or the chance that future worshippers will give offerings to the temple,7 or an agreement for the sale of otkarnam lands,8 are mere possibilities and cannot be transferred. A right to pala or turn of worship is not transferable.9 Neither the temple, nor the deities nor the shebaiti right can be transferred by sale for pecuniary conditions, and such transfer is void ab initio.10 However, the right of a Mahabrahmin to receive offerings made by pious Hindus11 is a valuable, definite and tangible right; is not merely a possibility,12 and is therefore, capable of being transferred.13

Future Property

Page 6 of 8 WHAT MAY BE TRANSFERRED

Property of any kind may be transferred,14 but interest in property arising in future cannot be transferred.15 A transfer of future property only amounts to a contract, which may be enforced when the property comes into existence.16 In a suit for partition as between the passing of the preliminary and the final decree, an assignment of the property is not valid as more property can be added and the principle that each shareholder has a right over every inch of the property17. Where through a settlement deed a large portion of property was settled absolutely in favour of the other while a portion of property by way of life interest was retained by himself, an absolute settlement made with respect to the retained property later would be void.18

A Right of Re-entry

A mere right of re-entry for breach of a condition subsequent cannot be transferred to anyone except the owner of the property.19 For instance, where the transferor transfers the property subject to a condition that upon the transferee committing a breach of condition of the agreement, the transferor would have a right to enter the premises, this right of entry that is not coupled with any other right and is conditional upon the transferee committing a breach of a condition, is not transferable. For example, A purchased goods from B, on a hire purchase agreement. The agreement contained a clause that after purchase, A would take the property and would pay the installments on time. If he fails to pay the installments, B would have a right to enter A’s premises and take possession of the property. This right of re-entry is a personal right of B and cannot be transferred by him. If he transfers this right of entry, say, to his creditors, the same would be void.20

79 Robinson v Macdonnell, (1816) 5 M & section 228; Re Mudge (1914) 1 Ch 115 (CA); Re Bowden, Hulbert v Bowden, (1936) Ch 71, 74, 14 Vin Abr 50. 80 ‘The law doth not allow of grants except there be a foundation of an interest in the grantor’. Thus, a tenant of land may assign all his interest in the future crops of that land, or a parson may grant all the tithe wool that he is to have in such a year, but a man cannot grant all the wool that is to grow on the sheep he may subsequently buy; See Grantham v Hawley, (1615) Hob 132; Petch v Tutin, (1846) 15 M & W 110; a deed of gift disposing only potential property is effective without delivery see Thomas v Kelly, (1888) 13 App Cas 506,519 (HL). 81 See Lunn v Thornton, (1845) 1 CB 379; Tapfield v Hillman, (1843) 6 Man&G 245 (where, however, on a question of construction of the instrument, it was held that future chattels were not included). 82 Thomas v Kelly, (1888) 13 App Cas 506, 515 (HL). 83 Lunn v Thornton, (1845) 1 CB 379. 84 See The Transfer of Property Act, 1882, section 6(a). A voluntary assignment of an expectancy does not create an enforceable contract, even if by deed, Meek v Kettlewell, (1843) 1 Ph 342; Re Ellenborough, Towry Law v Burne, (1903) 1 Ch 697. 85 Samsuddin v Abdul Husein, (1906) 31 Bom 165. 86 AIR 1933 Mad 795 [LNIND 1933 MAD 166]. 87 See The Transfer of Property Act, 1882, section 6(a). 88 Abdul Wahid v Nurabibi, (1885) 11 Cal 597 (PC). 89 Sham Sunder v Achhankunwar, 25 IA 183; Harnath Kaur v Inder Bahadur, AIR 1922 PC 403; Annanda Mohan v Gour Mohan, AIR 1923 PC 189; Amritnarayan v Gaya Singh, 45 IA 35, (1918) ILR 45 Cal 590; Annanda Mohan v Gour Mohan, AIR 1923 PC 189 : 48 Cal 536, 25 Cal WN 496; Jatilal v Benimado, AIR 1937 Pun 280; Bhagwati v Jagdam, AIR 1921 Pat 260; Gurbhuj v Lachhman, AIR 1925 Lah 341; Mahadeo Prashad v Mathura, AIR 1931 All 589; Karusinga v Narsinha, AIR 1938 Bom 121; Shah Nawaz v Ghulam Murtaza, AIR 1942 Lah 138. 90 Amrit Narayan v Gaya Singh, (1918) ILR 45 Cal 590. 91 Jaganadav Raju v Rajah Prasada Rao, 39 Mad 554; Annanda Mohan v Gour Mohan, 48 Cal 536. 92 Khunnilal v Govinda, 15 Cal WN 545; Hardei v Bhagwan, 24 Cal WN 105 PC; Ramgouda v Bhausaheb, AIR 1927 PC 227, 54 IA 396; Hiran Bibi v Sohan Bibi, AIR 1914 PC 144; Annanda Mohan v Gour Mohan, 25 Cal WN 496; Subbu Chetty v Raghava, AIR 1961 SC 797 [LNIND 1961 SC 33]: [1961] 3 SCR 624 [LNIND 1961 SC 33]. 93 Umashanker v Ramcharan, AIR 1939 All 689; Sahu Madhodas v Mukund Ram, AIR 1955 SC 481 [LNIND 1955 SC 25]; Pannommal v Srinivasarangan, AIR 1956 SC 162; Ramcharan v Girja Nandini Devi, AIR 1966 SC 323 [LNIND 1965 SC 141]; Ramgouda v Bhausaheb, AIR 1927 PC 227. 94 Gujar v Auliya, AIR 1914 Lah 460.

Page 7 of 8 WHAT MAY BE TRANSFERRED

95 AIR 1923 PC 189. 96 Asabeevi v S. Kuruppan, (1918) ILR 41 Mad 365. 97 Abdul v Abdul, AIR 1959 Mad 131 [LNIND 1958 MAD 44]; Samsuddin v Abdul Husein, (1906) 31 Bom 304. 98 Tailby v Official Receiver, (1883) 13 App Cas 523 (HL). 99 An assignment of after-acquired property under English law, when made for valuable consideration, operates in equity as a contract which is enforceable against the assignor, and which, as soon as he acquires property which can be identified as that comprised in the assignment, becomes an equitable charge upon that property. See Holroyd v Marshall, (1862) 10 HL Cas 191; Tailby v Official Receiver, (1888) 13 App Cas 523, HL; Re Ellenborough, Towry Law v Burne, (1903) 1 Ch 697 at 699; Re Dallas (1904) 2 Ch 385, 393 (CA); Re Reis, ex p Clough (1904) 2 KB 769 (CA) (affd sub nom Clough v Samuel, (1905) AC 442 (HL); Re Lind, Industrials Finance Syndicate Ltd v Lind, (1915) 1 Ch 744 (affd (1915) 2 Ch 345 (CA); Re Wait [1927] 1 Ch 606 (CA). As soon as the assignor acquires the legal interest, the equitable interest passes to the assignee, equity treating as done that which ought to be done. See Collyer v Isaacs, (1881) 19 Ch D 342 at 351 (CA), explained and distinguished in Re Lind, Industrials Finance Syndicate Ltd v Lind, (1915) 2 Ch 345 (CA), and the assignor then becomes trustee of the chattels for the assignee. See Holroyd v Marshall, (1862) 10 HL Cas 191. If the assignee lawfully acquires possession of the property when it comes into existence, the legal title vests in him. See Holroyd v Marshallk (1862) 10 HL Cas 191, 220. See also Hope v Hayley, (1856) 5 E&B 830; Morris v Delobbel-Flipo, [1892] 2 Ch 352 at 360, whether the assignment was for value or not. See Re Bowden, Hulbert v Bowden, (1936) Ch 71. It is, however, uncertain whether a person can effectively charge or assign his whole estate. See Barker v Barker, (1952) P 184, (1952) 1 All ER 1128 (CA); Syrett v Egerton, (1957) 3 All ER 331, (1957) 1 WLR 1130, DC. 1 AIR 1973 SC 554 [LNIND 1972 SC 442]. 2 AIR 2010 Ker 44 [LNIND 2009 KER 796]. 3 AIR 1936 All 573; see also Mahadeo Prasad v Mata Prasad, 1922 19 All LJ 799 : AIR 1922 All 297; and Fateh Singh v Rukmini Ravanji Maharaj,1923 21 All LJ 235; It was pointed out in Moti Shah v Gandharp Singh, 1926 24 All LJ 873, at pp 876-7 : AIR 1926 All 715, Kanhai Lal v Brij Lal, 1918 40 All 487 : AIR 1918 PC 70 (V 5), where a reversioner was held bound by a compromise to which he was a party. 4 See The Transfer of Property Act, 1882, section 6(a). 5 P Raghudu v N Erraiya, AIR 1938 Mad 881 [LNIND 1938 MAD 325]. 6 Soloman v Official Assignee, AIR 1939 Rang 8. 7 Puncha v Bindeshwari, 19 Cal WN 580; Nitya Gopal v Nani Lal, (1920) ILR 47 Cal 990; Paragi v Gauri Shanker, 51 IC 86; Shoilojanund v Peary Charon, (1902) ILR 29 Cal 470. For a contrary opinion see Balmukund v Tulari Ram, AIR 1928 All 21; Zaharia Mal v Parmeshri Das, AIR 1942 Lah 284; Subh Ram v Ram Kishan, AIR 1943 Lah 265. 8 Auryaprabhakara v Gummudu, AIR 1926 Mad 885. 9 Mallika v Ratanmani, 1 Cal WN 493. 10 Kali Kinkor Ganguli v Panna Banerjee, (1974) 2 SCC 563 [LNIND 1974 SC 239]. 11 Sukhlal v Bishambhar, (1917) ILR 39 All 196. See also Balmukund v Tularam, AIR 1928 All 21; Bhagwandeen v Billeshwur, AIR 1937 Oudh 15, wherein it was held that the right to receive offerings made at a temple which dissociated from priestly office is transferable. See also Zuharia Mal v Parmeshri, AIR 1942 Lah 284; Nandkumar v Ganesh, AIR 1936 All 131. 12 Badri Nath v Punam, AIR 1973 J&K 7. 13 For distinction between spes successionis and the rule of feeding the grant by estoppel, see notes under section 43, infra at p 210. 14 Except as otherwise provided by the TP Act, 1882 or any other law for the time being in force. See The Transfer of Property Act, 1882, section 6. 15 Samsuddin v Abdul Husein, (1909) 31 Bom 165. 16 Rajah Sahib Perhlad v Brudhoo, (1869) 12 Moo Ind App 275. 17 Durga Matha Building Constructions Co-op Housing Society Ltd v Sada Yellaiah, AIR 2010 AP 231 [LNIND 2010 AP 503]. 18 Sri Siddaraju v Sri Gangadhara, AIR 2012 Karn 143. 19 See The Transfer of Property Act, 1882, section 6(b). 20 Re Davis & Co, 22 QBD 194.

Page 8 of 8 WHAT MAY BE TRANSFERRED

End of Document

EASEMENT Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

EASEMENT

An easement is a right which the owner or occupier of certain land21 possesses for the beneficial enjoyment22 of that land, to do and continue to do something,23 or to prevent and continue to prevent something from being done, in or upon, or in respect, of certain other land that is not his own.24 It is a privilege without profit that the owner of one tenement has a right to enjoy in respect of that tenement, in or over the tenement of another person, where the owner of the latter is obliged to suffer or refrain from doing something on his own tenement for the advantage of the former.25 It includes profits à pendre, i.e., a right to enjoy the benefits arising out of land. It also includes a right to enjoy the land under the water of another,26 the right to dry clothes over flat masonry and roofs of shops,27 the right to open and shut the windows of a person’s house,28 the right of way for municipal employees over the land of other.29 Where A, as the owner of a house has a right of way over the land of another for the purposes connected with the beneficial enjoyment of his own house, it is an easement. Similarly, if A has a right to go to his neighbour’s house for the purpose of taking water for his household, it would be an easement. Other examples of easements are the right to erect scaffolding upon the neighbour’s property to build or paint one’s own wall;30 or to stock manure in another’s field.31

The land for the beneficial enjoyment over which a right of easement exists is called the dominant heritage; and the owner or occupier of that the dominant owner, and land on which the liability is imposed, is called the servient heritage and the owner or occupier of it is called the servient owner.

An easement cannot be transferred apart from the dominant heritage32 to which, by the nature of the right, it is attached.33 This prohibition does not touch the creation of new easements.34

Interest Restricted to Personal Enjoyment

An interest in property restricted in its enjoyment to the owner personally cannot be transferred by him.35 As the right is personal in character, it is untransferable. For instance, two brothers partition a property and give a right of pre-emption to each other, i.e., if any one of them wants to sell his portion, he must first offer it to the other brother, who would have a preferential right to buy it. This right is personal to the brothers and cannot be transferred by them to a third party, and if they do so, such transfer would be void. A right to receive voluntary and uncertain offerings at a worship;36or as a co-sharer;37 priestly offices or emoluments attached to it,38 office of a mutwali of a wakf;39 or of shebait of a temple,40 or service tenures, e.g., ghatwali tenure in Bengal;41 personal imams;42 a right of pre-emption;43 kharkrobi right are interests restricted to personal enjoyment and cannot be transferred.44

The right to receive offerings as a co-sharer is dependent upon the right of performance of pooja which right is non alienable and as such cannot be transferred by a sale deed. A person gets no right to perform pooja on the basis of a sale deed but he would have a right to share the offerings nevertheless.45 A right under a licence is not a property that can be transferred or inherited and therefore a person cannot obtain a licence for being a stamp vendor only on the ground that his father held such a licence.46

Right to Future Maintenance

Page 2 of 8 EASEMENT

A right to future maintenance in whatsoever manner arising, secured or determined, cannot be transferred.47 This term ‘whatsoever manner arising secured or determined’ is very exhaustive and covers cases where this right has been created either under a will, deed or compromise. Thus, the right of a woman to either receive maintenance under a decree or award of the court from her husband, or her ex-husband, or from his property on his demise, or under a will is a personal right. It is neither transferable nor can it be attached by a court’s decree.48 If a right to receive maintenance were made transferable, then it would go against the very purpose for which maintenance laws are passed. The very objective of maintenance is that a person unable to maintain himself or herself should not be left destitute, and should be prevented from being in a state of vagrancy. If it is allowed to be transferred, it will defeat this very purpose. It is need based, and the liability on the provider cannot be extended to a transferee of future maintenance. But where property is given to a Hindu widow for her maintenance, the transfer of the property during her life is not transfer of the right to maintenance, and is valid and effective during her lifetime.49 A bare corporeal and personal right of future maintenance is inalienable.50 Where the owner of certain property, transferred it to a trustee upon trust to pay him certain allowances per month from the trust property explaining in the deed of settlement that it was for the purposes of maintenance, it was held that it was not a restricted right.51

Mere Right to Sue

A mere right to sue cannot be transferred.52 ‘Mere’ means that the transferee has acquired no interest than a bare right to sue. A right to sue is again a personal right that only an aggrieved party can exercise to seek a remedy in a court of law. Therefore, it is not assignable. For instance, A and B enter into a contract for sale of property. The contract contains a clause that if A fails to execute the transfer deed within a month, he would have to pay double the amount of advance paid to him by B at the time of the agreement. This claim of damages is personal to B and is unassignable. Similarly the clause also contains a condition that if B fails to pay the entire amount by a particular date, he would have to pay a certain amount as damages. This right to claim damages again is personal and unassignable. However, in the same case, if B fails to pay this part of the money and A sells the property to C along with a right to recover damages from B, this right is assignable and a suit filed by C to recover damages from B would be valid. Where an advocate assigned his right to petitioner to sue the defendant and claim compensation for defamation, it was held that right to sue for damages concerning defamation cannot be transferred by one person in favour of another and a pauper application filed at the instance of this other person would not be maintainable.53

There is a distinction between property, an interest in property and a right to sue. A transfer of a right to recover profits which arise out of land along with a transfer of land, is assignable.54 Similarly, where the property is transferred along with a right to recover damages or compensation in respect of the property, the assignment is valid.55 A right to sue for damages resulting from a breach of contract,56 a right arising out of torts,57 a claim to recover damages from an agent for negligence in failing to collect rent58 or a right to sue him for accounts and to recover such sums of money,59 a claim to damages for use and occupation from a tenant,60 a bare claim for past mense profits,61 a right of indemnity of an agent against the principal,62 is unassignable. A sale by an official assignee of land in possession of alienee from an insolvent is a right to litigate, and therefore invalid.63 However, a transfer of arrears of rent with immovable property,64 an assignment of property in the hands of an agent,65 the assignment of a share in the assets of a partnership,66 a partner’s right to call upon the other partners to account,67 a right to be indemnified,68 a right to contribution,69 a claim for the recovery of the earnest money upon failure of the other party to perform his part of the contract,70 a transfer of a right to receive from the lessee an installment of revenue together with an interest which the lessee was bound to pay under the terms of a lease,71 is not a mere right to sue and is assignable. Similarly, in an actionable claim, a letter of subrogation not being an assignment of a mere right to sue, is valid and enforceable.72

Where a person purchases a tank and brings a suit by virtue of a covenant running with the land, it was held that it cannot be said that what was transferred was a mere right to sue. The right here was incidental to the enjoyment of the property.73

Where there is no right vested in the plaintiff of user, permissive or otherwise, merely confirming the right to institute an action cannot be recognized by Court as it “savours of maintenance of champerty” and section 6(e) of the Transfer of Property Act, 1882 bars transfer of a mere right to sue.74

In Rishi Raj v Harish Gulati, 75 one W owned the land that was later acquired and possessed by the Government. She left two legal heirs, a son and her husband. As a result, both the two heirs received compensation in lieu of the land in dispute, but did not find the said compensation sufficient. After the demise of father, the son being aggrieved by the quantum of compensation received, filed a reference petition under section 18 of the Land Acquisition Act, 1894.While the application stood lodged, he executed two separate assignment deeds, for a valuable consideration,

Page 3 of 8 EASEMENT in favour of B and C. The son transferred/alienated, assigned all his rights of compensation in the aforesaid land. The issue before the court was whether the assignment of right to sue to receive enhanced compensation is permissible under section 6(e) of the Transfer of Property Act, 1882? The court holding it to be permissible observed that:

“..Right to receive compensation is statutory, which crystallized on acquisition of property. Right to claim enhancement in compensation is also statutorily conferred. It is this right, which has been assigned. No doubt that enhancement in compensation is a mere possibility but that possibility is coupled with an interest to receive and realize the compensation. Clause (e) of S. 6 of the Act refers to a mere right to sue, transfer of which is also prohibited. But what has been transferred is not a bare right to sue but right to receive and realize the enhanced compensation.”

Decree

A decree is transferable. An order passed by the Railway Claims Tribunal has all the incidents of decree of Civil Court, so where a decree was passed in favour of the claimants awarding compensation passed prior to death of claimant, their legal heirs would be entitled to claim execution.76 Even an eviction decree/order may be an asset and the continuation of existence may lie with the transferee landlord company.77

Offices and Salary

A public office cannot be transferred. Similarly, the salary of a public officer cannot be transferred whether before or after it has become payable.78 The term public office or public officer has not been defined in the TP Act, 1882. By ‘public officer’ it is meant a person who is appointed to discharge a public duty, and receives a monetary return for it in the form of a salary. As the salary is a return for his personal services, it is neither transferable nor attachable. A lien connotes a civil right of the government servant to hold post to which he is appointed substantively i.e, in accordance with law and cannot be transferred.79

The occupant of a Gavawali gaddi does not hold a priestly office or an office of a religious nature and transfer of such gaddi would be a transfer of a business with its assets and goodwill and is therefore valid.80 A gratuity payable to the legal representative of a public officer can be transferred.81 A railway servant cannot agree to the attachment of part of his salary.82 However, an agreement by which a person agreed to pay a certain proportion of his income to his brother in consideration for his having been maintained and educated by the latter, does not attract this provision merely because that person subsequently becomes a government servant. The amount agreed to be paid can be paid from his savings or any other source, and therefore it does not amount to transfer of a public office.83

Pension like a salary, is a sum of money periodically payable by the government to an ex-serviceman, or a person who has ceased to be in employment. A pension is untransferable,84 so long as it is unpaid and in the hands of the government, but the moment it is paid to the pensioner or his legal representative it can be attached. Pension must be distinguished from a bonus or rewards that are transferable.

Stipends, etc.

Stipends allowed to military, naval air force and civil pensioners of the government and political pensions cannot be transferred.1 Political pension refers to pensions and allowances paid to political prisoners, or pension granted under a treaty entered into by the Government of India with another sovereign country.

What is made non-transferable is the stipend paid to civil pensioner and not the pension of that civil pensioner.2 Pension means periodical payments of money by the government to the pensioner,3 or allowance or any other stipend granted not in respect of any right, privilege perquisite or office but on account of past services or particular merits or as compensation to the dethroned princes, their families or dependents.4 A bonus given by the government,5 or an allowance made in lieu of a presumed grant of lands,6 or grant of land in lieu of pension is not pension;7 and therefore, is transferable. There is no presumption that jagir is a political pension. 8 As aforesaid, a pension retains its character as long as it is unpaid and in the hands of government, but as soon as it is paid to the pensioner or his legal representatives or agent it can be attached or transferred.9

Transfer Opposed to the Nature of Interest

No transfer can be made insofar as it is opposed to the nature of the interest affected thereby.10 Thus, things dedicated to public or religious uses,11 regalia, heirlooms and debutter property,12 or service inam,13 cannot be

Page 4 of 8 EASEMENT transferred.

Transfer for Unlawful Object or Consideration

No transfer which is for an unlawful object or consideration is permissible.14 The object behind this provision is to prohibit transfers where the object is unlawful or the consideration behind the transfer is for a purpose opposed to public policy. For instance, a transfer of property so that it could be used as a brothel, a gambling den or for illicit cohabitation, by way of payment of a bribe,15 to stifle a prosecution,16 or to seek adoption of a child,17 or marriage of a daughter,18 would be opposed to public policy and therefore void. It is also in consonance with section 23 of the Indian Contract Act, 1872 which provides that a consideration or object is unlawful if :

(i) It is forbidden by law; or (ii) Is of such a nature that it defeats the provisions of any law; or (iii) Is fraudulent; or (iv) Involves or implies injury to the person or property of another; or (v) The court regards it as immoral, or; (vi) Is opposed to public policy.

A sale of the property to defeat the rights of the creditors, an assignment of money to defeat the provisions of insolvency Act,19 a sub-lease of a farm for sale of opium,20 a transfer of occupancy land where prohibited by law,21 a lease of property for the use of it as a brothel,22 would therefore be unlawful, unless the transferor did not know of the intended use23. Transfer of property to a sex worker for future cohabitation,24 or a bequest in a Will conditional on the continuation of immoral relations25 is for unlawful consideration as it is for immoral purpose, and the case would be covered by this provision. However, a mortgage26 or a gift27 in consideration of past cohabitation would be valid.

Transfer to a Person Legally Disqualified

A transfer to a person legally disqualified to be a transferee is not permitted.28 Under section 7, the transferee must be competent to contract and should not have been disqualified legally. While competency to contract involves the twin elements of attainment of the age of majority and soundness of mind, legal disqualification refers to certain disabilities that have been imposed specifically by the statutes preventing certain category of persons to be transferees in certain cases and in specific capacity. For instance, if an officer or any person is assigned officially a duty in connection with the sale of property, he cannot purchase the same himself and in such cases, he would be legally disqualified to be a transferee.29 Similarly, the TP Act, 1882 prohibits a judge, a legal practitioner or an officer connected with a court from purchasing an actionable claim.30 Though a transfer to a minor is void,31 yet, a minor is not disqualified to be a transferee,32 and can be a purchaser.33 A mortgage in favour of a minor who has advanced the whole of the mortgage money is enforceable by him or on his behalf.34 Similarly, a minor in whose favour a valid sale deed is executed, is competent to sue for the possession of the property conveyed thereby.35 However, a lease executed by a minor would be void.36

Statutory Prohibitions on Transfer of Interest

A tenant having an untransferable right of occupancy37 cannot transfer his interest.38 This clause contains an exception to the general rule that all tenancies or leaseholds are transferable, and gives effect to the rules provided under different enactments, whereby certain categories of leasehold interests or tenancies are made untransferable. For instance, under the Bengal Tenancy Act, 1885,39 a land in the possession of a ryot is untransferable, and if transferred even by a mortgage, the landlord is empowered to re-enter on the ground that the ryot has abandoned his holdings.

Non-permanent tenures created before the passing of the Act40 are untransferable,41 but permanent tenures can be transferred.42 The mortgagee of an untransferable holding,43 a co-sharer landlord taking possession of an untransferable holding after purchase of the share,44 or a stranger who makes a purchase and afterwards acquires a share in the landlord’s right,45 is a trespasser and liable to be evicted.

A farmer of an estate in respect of which default has been made in the payment of revenue or the lessee of an estate under the management of the court of wards cannot assign his interest as such tenant, farmer or lessee.46 A

Page 5 of 8 EASEMENT promoter can charge cost of open parking space and stilt parking space in proportion to carpet area from each flat purchaser but cannot sell the same at all.47

21 ‘Land’ includes things permanently attached to earth: See The Indian Easements Act, 1882, section 4, Explanation. It also includes land under water: Chandee Churn Roy v Shib Chunder Mundul, (1880) ILR 5 Cal 945, see also Ramessur Persad Narain Singh v Koonj Behary Pathuk, (1879) ILR 4 Cal 633. Easements are attached to land for the beneficial enjoyment of which is created and run with it, see Chinnasami Goundan v AS Balasundora Mudaliar, AIR 1934 Mad 575 [LNIND 1934 MAD 105]; Ganesh Prasad v Khuda Baksh, AIR 1918 Oudh 296; Madan Mohun Chakravorty v Sashi Bhushan Mukherji, AIR 1915 Cal 403. 22 Beneficial enjoyment includes possible convenience, remote advantage and even a mere amenity, See the Indian Easements Act, 1882, section 4 Explanation. 23 To do something includes removal and appropriation by the dominant owner, for the beneficial enjoyment of the dominant heritage of any part of the soil of the servient heritage, or anything growing or subsisting upon it. See the Indian Easements Act, 1882, Explanation. 24 See the Indian Easements Act, 1882, section 4 para 1. 25 See Mohammed v Ananthachari, AIR 1988 Ker 298 [LNIND 1987 KER 544]. 26 Dukhi Mullab v Halway, Proprietor of Manjhaul Factory through his manager R Crowdy (1896) ILR 23 Cal 55. 27 Ganesh Prasad v Khuda Baksh, AIR 1918 Oudh 296. 28 Ranga Row v Ramathilakamma, 45 IC 435. 29 Ramachandra Vasudev Vijapure v Anant Laxman Thakur, AIR 1926 Bom 282. 30 Official Trustee of Bombay v Salebhai Sarafally Bhagat, AIR 1926 Bom 328. 31 Dhaneshwar Tewari v Antu Tewari, AIR 1927 All 115; see also Ladha v Mabi, AIR 1947 Lah 79. 32 See The Transfer of Property Act, 1882, section 6(c). 33 Sital v Delanney, (1916) 20 Cal WN 1158, 34 IC 450. 34 Bagwan v Narasingh, AIR 1931 All 612. 35 See Transfer of Property Act, 1882, section 6(d); Basangowda v Iragowda, AIR 1923 Bom 276. See also Juggarnath v Kishen Pershed, 7 WR 266, wherein it was held that if such transfers were allowed then it would have the effect of defeating the presumed intention of its creation. 36 Shoilojanund v Peary Charon, (1902) ILR 29 Cal 470; Nirya Gopal v Provash, (1920) ILR 47 Cal 990. 37 Dani Ram v Jamuna Das, 2010 (1) All LJ 706 : AIR 2010 (NOC) 524 (All). 38 Rajah Vurma v Ravi Vurma, 4 IA 76; Mallika v Ratnamani, (1897) 1 Cal WN 493; Prayag Das v Kriparam, 8 Cal LJ 499; Panchanan v Surendra, AIR 1930 Cal 180. 39 Munshi Sahed Baksh v Golam Nabi, (1918) 22 Cal WN 996. 40 Juggernath v Kishen, 7 WR 266. 41 Satya v Satya, AIR 1942 PC 5. But where the services can no longer be enforced and the tenure consequently ceases to be a service tenure the land can be alienated, see Bhagwant v Sheo Pershad, 18 Cal WN 297; Appasami v MZ Co, AIR 1922 PC 154; Bangshi v T Ashutosh, AIR 1925 Pat 366. 42 Arjaneyalu v Venugopal, AIR 1922 Mad 197 [LNIND 1922 MAD 12]. 43 Rajjo v Lalmon, (1883) ILR 5 All 180. 44 Raghudu v Erraiya, AIR 1938 Mad 881 [LNIND 1938 MAD 325]; Dhandu v Girdharilal, AIR 1961 All 518 [LNIND 1960 ALL 172]. 45 Dani Ram v Jamuna Das, AIR 2010 (NOC) 524 (All). 46 Joydev Sen v State of West Bengal, AIR 2010 (NOC) 256 (Cal). 47 See The Transfer of Property Act, 1882, section 6(dd); see also Haliman v Umadatunnissa, AIR 1939 Pat 506. 48 See the Code of Civil Procedure, 1908, section 60. 49 Dhupnath v Ramcharit, AIR 1932 All 662; Kamalchunder v Sushila Bala, AIR 1938 Cal 405. 50 Ramprasad v Motiram, AIR 1947 Pat 404.

Page 6 of 8 EASEMENT

51 Sethupathi v Chidambaram, AIR 1938 PC 126. 52 See The Transfer of Property Act, 1882, section 6(e); Venkataram v Venkataswami, AIR 1921 Mad 56 [ LNIND 1920 MAD 129]; Manmatha v Moti Lal, AIR 1929 Cal 719; Jagannath v Kalidas, AIR 1929 Pat 245; Susai v. Ramaswami, AIR 1933 Mad 710 [LNIND 1933 MAD 144]. See also Venkata v Kesava, AIR 1926 Mad 417, wherein it was held that if the right to sue relates to a definite amount due it would be assignable as a debt. 53 Sundar v Ramdass, AIR 2013 Mad 133 [LNIND 2012 BMM 1074]. 54 Gangaraju v Gopala, AIR 1957 AP 190. 55 Murlidhar v Rupendra, AIR 1953 Cal 231 [LNIND 1951 CAL 110]. 56 Abu Muhammad v SC Cundur, 13 Cal WN 384; Jewan Ram v Ratan Chand, 26 Cal WN 285; Gopala Iyer v Ramaswami, 22 Mad LJ 207; Hirachand v Nemchand, AIR 1923 Bom 403; Jai Chand v Naraindas, AIR 1925 Lah 548; Mohanlal v Motilal, AIR 1935 Nag 135. 57 Sri Gopal v Theatres, AIR 1947 Cal 200. 58 Venkataswami v Ramchandra, 38 Mad 138. 59 Khettramohan v Bishwanath, AIR 1924 Cal 1047; Prohalad v Vishwanath, AIR 1953 Nag 335; Baba Hakam Singh v Naranjin Singh, AIR 1937 Lah 934. 60 Govindaswami v Ramaswami, 30 Mad LJ 492. 61 Kocharala v Pillala, 38 Mad 308; Jai Narayan v Kishun Datta, AIR 1924 Pat 551. See also Prasanna Kumar v Ashutosh, 18 Cal WN 450, wherein it was held that where a claim for mense profits merges with the decree before assignment the right under the decree is assignable. 62 Ghisulal v Gambhirmal, (1938) ILR 62 Cal 510 : 39 Cal WN 646 : 82 IC 411. 63 Chokalingam v Seethai, AIR 1927 PC 254. 64 Kowtha Suryanarayana v Yarudala, AIR 1923 Mad 177. 65 Maracait v Bathumal, AIR 1948 Mad 458 [LNIND 1947 MAD 222]. 66 Seth Veshindas v Thawardas, AIR 1925 Sind 18. 67 Thawardas v Nishindas, AIR 1925 Sind 72. 68 Radha Govinda v KD Colliery, AIR 1963 Pat 160. 69 G Ramaswami v Deivasigamani, AIR 1922 Mad 397 [LNIND 1922 MAD 54]. 70 Chimanmlal v Ganesh, AIR 1952 Raj 187 [LNIND 1952 RAJ 201], where what is assigned is not a mere right to sue but property with an incidental remedy for its recovery and consequential benefits, the assignment is valid. See also Manmatia v Matilal, AIR 1929 Cal 719; Shankararappa v Khatumbi, AIR 1938 Bom 478; S.L Villavaraya v M Ramaswami, AIR 1933 Mad 710 [LNIND 1933 MAD 144]. 71 Manmatha v Sheikh Hedait, AIR 1932 PC 32; Tikamsingh v Bholanath, AIR 1937 All 470. 72 Economic Transport Organization, Delhi v Charan Spinning Mills Pvt Ltd, AIR 2010 SC (Supp) 720 : (2010) 4 SCC 114 [LNIND 2010 SC 183]. 73 Jagannath v Kalidas, AIR 1929 Pat 245. 74 Ansul Industries v Vineet Kumar, (2010) 118 DRJ 400 (DB) : (2010) 171 DLT 147 (DB). 75 Decided on 7 December 2015. 76 Krishnakumar G v UOI, AIR 2011 Ker 166 [LNIND 2011 KER 648]. 77 Speedline Agencies v T Stanes & Co Ltd, (2010) 6 SCC 257 [LNIND 2010 SC 513] : (2010) 160 Comp Cas 33 (SC). 78 See The Transfer of Property Act, 1882, section 6(f). 79 State of MP v Sandhya Tomar, (2013) 11 SCC 357 [LNIND 2012 SC 835] : 2013 (9) SC 139. 80 Murarilal v Narayanlal, AIR 1956 Pat 345. 81 Arbuthnot v Norton, 3 Moo Ind App 435. 82 MSM Railways v Rupchand, AIR 1950 Bom 155 [LNIND 1947 BOM 74]. 83 Ananthayya v Subba Rao, AIR 1960 Mad 188 [LNIND 1959 MAD 103]. 84 Saundariya Bai v UOI, AIR 2008 MP 227 [LNIND 2008 MP 193]. 1 See The Transfer of Property Act, 1882, section 6(g).

Page 7 of 8 EASEMENT

2 Suraj Devi v Sita Devi, AIR 1996 Raj 6. 3 Wasif v KI Bank, AIR 1931 PC 160. 4 Secretary of State v Khemchand, (1880) ILR 4 Bom 432. 5 Kasim v Carlier, (1882) ILR 5 Mad 273. 6 Shah Muhammad Habibul v Abdul, AIR 1926 All 521. 7 Ganpat Rao v Anant Rao, (1910) ILR 32 All 148. See also Atma Ram v Kehar Singh, AIR 1930 Lah 904, where in it was held that a pension may take the form of an assignment of land revenue. 8 Duni Chand v Gurmukh Singh, AIR 1930 Lah 816. 9 Valia v Anujani, (1903) ILR 26 Mad 69. 10 See The Transfer of Property Act, 1882, section 6(h). 11 Raja Verma Valia v Kettayath, (1875) 7 Mad HC 210. 12 Kanwar Doorganath v Ramchunder, (1877) ILR 2 Cal 341; Narayan v Chintaman, (1881) ILR 5 Bom 393; Shama v Abdul, (1898) 3 Cal WN 158. 13 Anjaneyalu v Devabrata, AIR 1949 Cal 278. 14 See The Transfer of Property Act, 1882, section 6(h). 15 Gogun v Janokee, (1873) 20 WR 235; Protina v Dookhia, (1872) 18 WR 450. 16 However, see also Abdul Rehman v Ghulam Mohammad, AIR 1927 Lah 18. 17 Narayan v Gopalrao, AIR 1922 Bom 382. 18 Bakshi Das v Nadu Das, (1905) 1 Cal LJ 261; Dholidas v Fulchand, (1898) ILR 22 Bom 658. 19 Jaffer Mehar Ali v Budge Budge Jute Co, (1906) ILR 33 Cal 702; Re Nripendra Kumar Bose, AIR 1930 Cal 171. 20 Raghunath v Nathu, (1895) ILR 19 Bom 626. 21 Jhinguri v Durga, (1885) ILR 7 All 878; Har Prashad v Sheo Govind, AIR 1922 All 134; Dayaram v Thakuri, AIR 1924 All 668. For a contrary opinion, see also Dip Narain Singh v Nageshwar, AIR 1930 All 1. 22 Ghoga Lal v Pujari, (1909) ILR 31 All 58. For a contrary opinion, see Pranballav Shah v Tulshi Bala, AIR 1958 Cal 713 [LNIND 1958 CAL 139]. 23 Putimal v Bhagwan, AIR 1892 Rang 2. 24 Ghumna v Ramchandra, AIR 1925 All 437; Deivanayaga v Muthu Reddi, AIR 1921 Mad 326; Istak Kamu Musalman v Ranchod Zipru Bhate, AIR 1947 Bom 198; Sabava v Yamanappa, AIR 1933 Bom 209; Brahmayya Lingam v Kamisetti Mallamma alias Kanakamma, AIR 1924 Mad 849 [LNIND 1924 MAD 69]. 25 Tayaramma v Sitaramasami Naidu, (1900) ILR 23 Mad 613. 26 Belo v Parbati, (1940) All 371; Godfrey v Parbati, (1938) ILR 17 Pat 308. 27 Nagaratnamba v Ramayya, AIR 1968 SC 253 [LNIND 1967 SC 207]. 28 See The Transfer of Property Act, 1882, section 6(h). 29 See the Code of Civil Procedure, 1908, O XXI rule 73. 30 The Transfer of Property Act, 1882, section 136. 31 Mohiri Bibi v Dhurmodas Ghose, (1903) ILR 30 Cal 539. 32 Munni Kunwar v Madan Gopal, (1916) ILR 38 All 62. 33 Ulfat Rai v Gauri Shanker, (1911) ILR 33 All 657; Narain Das v Dhania, (1916) ILR 38 All 154. 34 Raghava v Srinivasa, (1917) ILR 40 Mad 308; Zafar v Zubaida, AIR 1929 All 604; Thakar v Putli, AIR 1924 Lah 611. 35 Munni Kunwar v Madan Gopal, (1916) ILR 38 All 62. 36 Govinda Kurup v Bekku, AIR 1931 Mad 147; Promila v Jogeshwar, (1918) Pat LJR 518; see also Jaykant v Durgashanker, AIR 1970 Guj 106 [LNIND 1968 GUJ 65]. 37 See The Transfer of Property Act, 1882, section 6(i). 38 Shanti Prasad v Bachchi Devi, AIR 1948 Oudh 349; Banmali v Bisheshar, (1907) ILR 29 All 129; Kedar Nath v Naipal, (1912) ILR 34 All 155; Motichand v Ikram Ullah, (1916) 39 All 173.

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39 The Transfer of Property Act, 1882, section 87. 40 The Transfer of Property Act, 1882. 41 Hiramoti v Annoda Prasad, (1906) 7 Cal LJ 553; Kailash Chandra Pal v Hari Mohan Das, (1909) 13 Cal WN 541. 42 Bhagban Das v Bisweswar, AIR 1927 Cal 220. 43 Rasik Lal v Bidumuki, (1906) ILR 33 Cal 1094; Bhairabendra Narian Roy v Rajendra Narian Roy, AIR 1924 Cal 45. 44 Sarat Chandra Saha v Bepin Behari Chakerbutty, AIR 1933 Cal 687. 45 Amarnath Singh v Har Prashad Singh, AIR 1932 Oudh 79; Jang Bahadur v Rai Raja, 7 OC 235. 46 See The Transfer of Property Act, 1882, section 6(i). 47 Nahalchand Laloochand Pvt Ltd v Panchali Cooperative Housing Society, (2010) 9 SCC 536 [LNIND 2010 SC 819] : AIR 2010 SC 3607 [LNIND 2010 SC 819].

End of Document

PERSONS COMPETENT TO TRANSFER Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

PERSONS COMPETENT TO TRANSFER

[s 7] Persons competent to transfer.—Every person competent to contract and entitled to transferable property, or authorised to dispose of transferable property not his own, is competent to transfer such property either wholly or in part, and either absolutely or conditionally, in the circumstances, to the extent and in the manner, allowed and prescribed by any law for the time being in force.

End of Document

CAPACITY TO TRANSFER PROPERTY Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

CAPACITY TO TRANSFER PROPERTY

For a person to be competent to contract, two things are necessary, i.e., he should have attained majority and be of sound mind, and should not be disqualified to transfer property under the law to which he is subject to. Thus, a person who is competent to contract can validly transfer the property if:

(i) He is the owner; (ii) If he is not the owner, then he must possess authority sustainable in law to transfer the same.

The term ‘authority’ can be personal, under an agency or acquired under a law or statute or under the direction or permission of the court. It can be in the shape of a power of attorney or in the capacity of an agent. A vendor cannot transfer a title or right better than what he has over that piece of land.48 As the conditions of validity of a mortgage must entail both parties, mortgagor and mortgagee must be competent to enter into a contract therefore, a minor, being incompetent to contract cannot be a mortgagor or mortgagee.49 The essence of nemo dat quod non habet is the transactional exigibility i.e, the binding effect of prior property rights of subsequent transferee irrespective of notice or knowledge of prior property rights on part of subsequent transferees.50

The karta of a joint Hindu family, though not the sole owner of the property, is authorised to transfer the same. His authorisation is specifically limited by terms like legal necessity, benefit to the estate, or for performance of indispensable duties. Similarly, a minor’s guardian is authorised to alienate the property of the minor with the permission of the court. An executor or administrator can dispose of the property of a deceased.51 A receiver has the authority to transfer property under the directions of the court. Therefore, a contract or transfer by a minor,52 or of a person of unsound mind,53 or where the property is under the management of Courts of Wards,54 or a judgement debtor whose property is being sold in execution by the collector,55 is void.

In absence of title, a person should have authority to transfer the property.56 An agent managing the property of the principal,57 or a de facto guardian of a minor,58 is not competent to sell the property. Where the duties of a person extended only to collect the rent and manage the estate, he would not be empowered to sell the estate.59 Similarly, where the guardian of a minor sells his property without obtaining permission from the court, such a sale would be by a person not competent to transfer the same, and can be set aside.60 If a person of unsound mind secretively and without informing his wife and children sells all his property to a stranger depriving his wife and child of the same, the transfer would be invalid as he being a person of unsound mind was not competent to transfer his property.61 Where the vendors did not have a complete title over suit property and the agreement was not executed by all co-sharers of the partly owned property, the same cannot be enforced by the vendee.62 However, if property is transferred for a consideration in good faith without misrepresentation of fraud and transferee had taken reasonable steps to ascertain title of transferor, then such transfer would not be void.63 Where before a mortgage is created in respect of immovable property, and borrower had already leased out the same in favour of a lessee either as the owner or as a person competent or authorised to transfer the immovable property, the lessee will have the right to enjoy the leased property in accordance with terms and conditions of lease irrespective of whether a subsequent mortgagee has knowledge of such a lease or not.64 It has been held in Shakuntala Devi v State of Jharkhand,65 that despite this statutory prohibition to execute a sale deed, the Registrar has no authority to refuse

Page 2 of 2 CAPACITY TO TRANSFER PROPERTY registration on the ground that the vendor had no title to the property. He is under a duty to only see whether the document is duly stamped or not? Similarly, if a court of competent jurisdiction has declared a gift deed to be valid, a party cannot be said to be lawfully in possession of land or be a deemed tenant.66

48 UOI v Kamla Verma, (2010) 13 SCC 511 [LNIND 2010 SC 755]. 49 Mathai v Joseph Mary, (2015) 5 SCC 622 [LNIND 2014 SC 604]. 50 Harshad Govardhan Sondagar v International Assets Reconstruction Co Ltd, (2014) 6 SCC 1: 2014 (3) KLT 357. See also Shree Ram Urban Infrastructure Ltd v Court Receiver, High Court of Bombay, (2015) 5 SCC 539 [LNIND 2014 SC 94] : 2014 AIR SC 2286, wherein it was held that a receiver appointed must act to safeguard the interest of trustees to preserve the suit property. 51 See Mohiri Bibi v Dharumdas Ghose, (1903) ILR 30 Cal 539 : 7 Cal WN 411 (PC). There are conflicting decisions as to whether a minor can be estopped by a false representation that he is of age. See Bromoho v Dharmo, (1898) 26 Cal 381; Mohamed Syedol Ariffin v Yeoh, AIR 1916 PC 242; Khan Gul v Lakha Singh, AIR 1928 Lah 609; Sadiq v Jai Kishore, AIR 1928 PC 152; Balangowda v Bhiman Gowda, AIR 1929 Bom 201. 52 See The Indian Succession Act, 1925, section 307. 53 Amina Bibi v Saiyid Yusuf, AIR 1922 All 449. 54 Jivan Lal v Gokul Das, (1904) 17 CPLR 13. 55 Gauri Shanker v Chinnumaya, (1918) 46 Cal 183. 56 Chittu v Charan Singh, AIR 1923 All 563. 57 BC Mondal v Indurekha Devi, AIR 1973 SC 782. 58 K Kamamma v Appanna, AIR 1973 AP 20. 59 BC Mondal v Indurekha Devi, AIR 1973 SC 782. 60 Amirtham Kudumban v Sarnam Kudumban, AIR 1991 SC 1256 [LNIND 1991 SC 214]. 61 Sona Bala Bora v Jyotindra Bhattacharjee, (2005) 4 SCC 501 [LNIND 2005 SC 359]. 62 Pemmada Prabhakar v Youngmen’s Vyasa Association, (2015) 5 SCC 355 [LNIND 2014 SC 778]. 63 V Chandrashekharan v Administrative Officer, (2012) 12 SCC 133 [LNIND 2012 SC 552]: (2012) 10 SCR 603 [LNIND 2012 SC 552]. 64 Harshad Govardhan Sondagar v International Assets Reconstruction Co Ltd, (2014) 6 SCC 1 : 2014 (3) KLT 357. 65 AIR 2010 Jhar 56 [LNIND 2009 JHAR 33]. 66 Bhimappa ChannappaKapali v Bhimappa SatyappaKamagouda, (2012) 13 SCC 759.

End of Document

OPERATION OF TRANSFER Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

OPERATION OF TRANSFER

[s 8] Operation of transfer.—Unless a different intention is expressed or necessarily implied, a transfer of property passes forthwith to the transferee all the interest which the transferor is then capable of passing in the property and in the legal incidents thereof.

Such incidents include, when the property is land, the easements annexed thereto, the rents and profits thereof accruing after the transfer, and all things attached to the earth; and, where the property is machinery attached to the earth, the moveable parts thereof; and, where the property is a house, the easements annexed thereto, the rent thereof accruing after the transfer, and the locks, keys, bars, doors, windows, and all other things provided for the permanent use therewith; and, where the property is a debt or other actionable claim, the securities therefor (except where they are also for other debts or claims not transferred to the transferee), but not arrears of interest accrued before the transfer; and, where the property is money or other property yielding income, the interest or income thereof accruing after the transfer takes effect.

The clause ‘unless a different intention is expressed or necessarily implied’ shows that this section operates in absence of an express or implied contract between the parties. If the contract provides otherwise, the provisions of this section would not have any application. The rule enunciated here is designed to avoid confusion or speculations with respect to ‘what, if any’ in the property passes with its transfer. Thus, the first thing would be to read the instrument as a whole to find the intention of the parties.67 If the transferor transfers all the interest that he possesses in the property that he possesses on that date, the entire interest that he had, will pass. For example, A transfers a land on which there are trees or a well.68 If nothing to the contrary is specified, the trees or the well69 would pass along with the land to the buyer. Where the intention of the transferor was to transfer the land within the well-defined boundaries, any erroneous statement of survey number or omission to state it would be rejected as false demonstration.70 In case of mis-description with respect to plot numbers and boundaries, the description as to boundaries would prevail to ascertain the real intention of the parties.71 Thus, where in grant of mining lease, a map was annexed to the grant, which showed an area less than what was stated in the grant, it was held that the terms of grant would prevail.72 However, where the schedule is annexed to the main document, the description of the property in the schedule cannot be given any overriding importance over actual area specified in the document as to the extent of the land determined upon measurement.73

What property is actually conveyed depends on the terms74 and agreements of the contract but if the language is plain and unambiguous, the same must be adhered to.75 For instance, the use of the words ‘Malik’ indicates an intention to confer an absolute estate,76 unless the context indicates a different meaning,77 or if a life interest is

Page 2 of 5 OPERATION OF TRANSFER granted.78 In absence of reservation or exceptions, interests in zamindari conveyed through the deed would include the land, houses on it, the bazaar on the land and all the rents and profits derived from it,79 or the Sarabarakari interests subordinate to it,80 sale of grove would include the right to the land.81 Conversely, a sale of land, it would also include the interest in the mango trees82 growing on it. Use of unqualified conveyance would later deprive the transferor to claim any rights in the property.83 In the absence of actual possession, a symbolic possession can be transferred to complete the grant.84

With regard to operation of transfer of property, the term of exemption provided in the special law shall apply as it is clear and unambiguous.85 A registered settlement deed cannot be subsequently cancelled by executing a cancellation deed. The deed can be cancelled only by the court upon proof that it was executed through fraud, undue influence mistake or any other ground accepted by the court and not by the settler unilaterally.86 In Vitthal Maharu Patil v Fakira Bhavsing Patil,87 a registered sale deed was executed in favour of the transferee and possession was handed over to him. After around a gap of 12 years, the transferor alleged that along with the sale deed a deed of reconveyance was also executed in his favour. It was held that the claim would be negated in absence of any endorsement of reconveyance or a registered sale receipt.

Hindu Law Prior to the Enactment of The Hindu Succession Act, 1956

Under Hindu law as it stood prior to the enactment of The Hindu Succession Act, 1956, a Hindu woman generally took a limited interest in the property conferred on her. The Privy Council had ruled that courts could rightly presume in such cases, that the immovable property conferred on the widow in absence of a specific mention with respect to her interest in it, would be taken by her as a limited owner. It was only when the deed specifically declared that she was to be an absolute owner that she took the property absolutely.88

Court Sales

This section applies to a contract between the parties only and does not apply to court sales,89 as the title, interest, etc, in the property that is sold at a court auction is determined by what the court intended to sell, and may vary with the facts and circumstances of each case.90

Different Intention

The general rule, therefore, is that whatever interest the transferor had in the property, passes to the transferee with this transfer, unless a different intention is expressed. In such cases, only that interest will pass which has been specifically mentioned. For instance, a man, A, Wills his property in favour of his father and wife, giving to each, one-fourth of his property. The wife, on the death of A, transfers this property to B stating in the deed that she is transferring to B what she had received under the Will from her husband. This Will later was held invalid by the court, and the widow in the capacity of a class I heir, of the husband inherited his total property to the exclusion of the father. Here, what she had transferred or conveyed in the property was only the one-fourth share due to the use of the words ‘her entitlement under the Will’ and not her total property that she later inherited from her husband.

In interpretation of agreements, redundant and inapplicable clauses should be ignored in standardized forms adopted by insurance companies, statutory corporations and banks.91 In construing the terms of the contract of insurance, the words expressed by the parties must be given paramount importance.92

The construction of the document must emphasise its substance and not merely its form. Where the deed contains the words that ‘the property is given to you so that you can perform religious ceremonies and festival and provide for the poor as well for your own support’, it would indicate that what was conveyed was a limited estate,93 and not an absolute ownership over it.

Easements and Rents and Profits

Where the property is land, the easements annexed thereto, the land and the minerals beneath it also pass with the transfer.1 For instance, in a sale of land, the purchaser acquires use of water from the well2 on the land or a right of way,3 which the seller has, but the same does not include a right to use a staircase when it is not an easement of necessity.4

Page 3 of 5 OPERATION OF TRANSFER

If the property purchased is in occupation of the tenants who were paying rent to the owner, these rents and profits accruing from the property after the transfer5 but not before it,6 also pass with the transfer.

Things Attached to Earth

All things attached to the earth,7 like upon a transfer of the land, all structures upon it, including the house,8 buildings,9 trees,10 including fruit trees,11 pass by necessary implication, and it is not necessary to mention them.12 However, the contrary may not be true, thus, transfer of trees will not, by itself, justify the inference that the land was also transferred.13

Things embedded in earth such as shells14 and minerals also pass with the sale of the land.15 However, in case of lease, the passing of rights with respect to minerals would depend upon the terms of the grant.16 The owner of the land may not necessarily be the owner of its superstructure,17 nor would the subsoil rights form a part of surficial rights of land, if the contract so says.18 In Ashok Kumar v Chief Controlling Revenue Authority,19 the owner of the land executed a lease of the land in favour of B for 30 years. B constructed a hotel on it. The ownership rights of this Hotel were not with the owner of the land, but vested in B. At the time when the owner of the land sells the land and not the building with the hotel, the authorities would not be competent to add the value of the building/hotel in value of land for assessing the market value of the property as the sale here would be of exclusively the land and not the hotel over it which stands specifically excluded by virtue of section 8 of the Transfer of Property Act, 1882. Similarly, a property given on lease would confer in favour of the lessee a right to enjoy the property in accordance with terms and conditions of lease and a subsequent mortgage would have no effect on his enjoyment irrespective of whether a subsequent mortgagee has knowledge of such a lease or not.20

Other Annexations

Where the property is machinery attached to the earth the movable parts thereto,21 and where the property is a house, the easements annexed thereto, the rent thereof accruing after the transfer and the locks, keys, bars, doors,22 windows, and all other things provided for permanent use therewith, will also pass.

Debts and Securities

The mortgaged debt is not an actionable claim,23 but a debt secured by charge may be assigned, and with its assignment, the charge annexed to it also passes on to the transferee.24

Auction Sales

In cases of a land sold in an auction, everything attached with the said land passes to the transferee.25 Auction sale of parti land where there is no mention of any structure or house on land in the auction sale or sale certificate or dakhalnama, the purchaser cannot be said to have acquired right, title or interest or structure on land as the title of auction purchaser is derived from sale certificate and not from the dakhalnama as ‘dakhalnama is not a title deed’.26

67 Ram Chandra v Kalyan Singh, AIR 2006 All 184; Bishwanath Prasad Singh v Rajendra Prasad AIR 2006 SC 2965 [LNIND 2006 SC 146]; Union of Inida v Millenium, Mumbai Broadcasting Ltd, AIR 2006 SC 2751 [LNIND 2006 SC 320]; Harbans Singh v Takamani Devi, AIR 1990 Pat 26; see The Transfer of Property Act, 1882, section 8. 68 Arkkani v Subramaniam, AIR 2007 (NOC) 2118 (Mad). 69 Arkkani v Subramaniam, AIR 2007 (NOC) 2118 (Mad). 70 Kalidas v Kanhaiyalal, (1884) 11 Cal 121. 71 Chumar v Naraynan Nair, AIR 1986 Ker 236 [LNIND 1985 KER 294]. 72 Sheodhyan Singh v Sanichara Kuer, AIR 1963 SC 1879 [LNIND 1961 SC 233]; Babaji Dehuri v Biranchi Ananta, AIR 1996 Ori 183 [LNIND 1996 ORI 155]. 73 Narain Prashad Singh v State of Bihar, AIR 1983 Pat 244.

Page 4 of 5 OPERATION OF TRANSFER

74 Sumathy Amma v Sankara, AIR 1987 Ker 84. 75 Ram Narian v Peary, (1883) ILR 9 Cal 830; Jyoti Prasad Singh v Seddon, AIR 1940 Pat 516; Bisheshwar Singh v Achhaibar Din, AIR 1941 Oudh 507. See also Decota Din v Gur Prasad, AIR 1955 All 292 [ LNIND 1954 ALL 231]; Umrao Singh v Kacheru Singh, AIR 1939 All 415. 76 Shyan Sunder Ganeriwala v Delta International Ltd, AIR 1998 Cal 233 [LNIND 1997 CAL 289]. 77 Lalit Mohun v Chukkun Lal, (1897) ILR 24 Cal 834; Surajmani v Rabina, (1908) ILR 30 All 84; Bhaidas v Bai Gulab, AIR 1922 PC 193; Jagmohan Singh v Srinath, AIR 1930 PC 253; Saraju Bala v Jyotirmoyee, AIR 1931 PC 179. 78 Mahomed Sahmsool v Shewukram, (1875) 14 Beng LR 226; Motilal v Advocate General of Bombay, (1911) ILR 35 Bom 279; Mithibai v Meharbai, AIR 1922 Bom 179; Ashurfi Singh v Biseswar, AIR 1922 Pat 362. See also Shalig Ram v Charanjit, AIR 1930 PC 239; Jagmahun Singh v Srinath, AIR 1930 PC 253, wherein it was held that a Hindu wife enjoyed the absolute rights in the property conferred unless the circumstances in the context were sufficient to show a contrary intention; see also Hitendra Singh v Maharaja of Dharbhanga, AIR 1928 PC 112. 79 A Sreenivasa Pai v Saraswathi Anmal, AIR 1985 SC 1359 [LNIND 1985 SC 220]. 80 Syed Ashgar v Syed Mahomed, 30 Cal 556; Sheoraj v Gangu Prasad Rai, AIR 1941 Oudh 395; Leon Gan Kyu v Maung Gyi, AIR 1933 Rang 24. 81 Raja Gour Chandra v Raja Makunda, (1904) 9 Cal WN 710. 82 Mahmood Hasan v Bhikari Lal, AIR 1953 All 705 [LNIND 1953 ALL 93]. 83 Pandurang v Bhimrav, (1898) ILR 22 Bom 610. 84 Tarachand v Lakshman, (1876) ILR 1 Bom 91. 85 Delhi Development Authority v Jitender Pal Bhardwaj, AIR 2010 SC 497 [LNINDORD 2009 SC 103]: (2010) 1 SCC 146 [LNIND 2009 SC 1899]. 86 V Ethiraj v S Sridevi, AIR 2014 Karn 58. 87 AIR 2011 (NOC) 292 (Bom). 88 Rajkumar Rajinder Singh v State of Himachal Padesh, (1990) 4 SCC 320. 89 Mahomed Shumsool v Shewukram, 2 IA 7; see also Hitendra Singh v Maharaja of Darabhanga, AIR 1928 PC 112; Jagmohan v Sheoraj, AIR 1928 Oudh 49. 90 Nand Lal v Sunder, AIR 1944 All 17, however, see Sambasiva v Venkatarama, AIR 1926 Mad 903 [LNIND 1926 MAD 24]. 91 Shanti Budhiya Vesta Patel v Nirmala Jayprakash Tiwari, (2010) 5 SCC 104 [LNIND 2010 SC 379] : AIR 2010 SC2132 [LNIND 2010 SC 379]. 92 Suraj Mal Ram Niwas Oil Mills P Ltd v United India Insurance Co Ltd, AIR 2010 SC (Supp) 23(2) : (2010) 10 SCC 567 [LNIND 2010 SC 983]. 93 Abdul Aziz v Appayasami, (1904) ILR 27 Mad 131; Hawa Bi v Sein Ko., AIR 1928 Rang 67; see also Kalidas Mullick v Kanhya Lal, 11 IA 218 (PC). 1 Raja Anand v State of Uttar Pradesh, AIR 1967 SC 1081 [LNIND 1966 SC 190]; see The Transfer of Property Act, 1882, section 8. 2 Venkata v Secretary of State, (1902) 12 Mad LJ 432. 3 Nubeen Chunder v Bhoobun, (1871) 15 WR 526. 4 Ahmad Ali v Dhondba, AIR 1937 Nag 179; see also Hamida Khatoon v Panchayat of Mohalla Daryopore, AIR 1947 Pat 122. 5 Kota Narayana v P Suryanarayan, AIR 1973 AP 94 [LNIND 1972 AP 102]; Hariharan v Narayan, AIR 1933 Mad 482 [LNIND 1932 MAD 286]. 6 Bhogilal v Jethal Lal, AIR 1929 Bom 51. See The Transfer of Property Act, 1882, section 8; Ganesh v Sham Narain, (1879) 6 Cal 213; Muthu v Natravarathi, 58 IC 383; Chandrasekaralingam v. Nagabushanam, AIR 1927 Mad 817; Poongavanam v Subramanya, AIR 1951 Mad 601 [LNIND 1950 MAD 141]. 7 See The Transfer of Property Act, 1882, section 8. 8 Nathu Mian v Nand Rani, (1872) 8 Beng LR 508; Dinonath Adhor, (1899) 4 Cal WN 470. 9 Asgar v Mahomed Medhi Hossein, (1903) ILR 30 Cal 566; Macleod v Kisan, (1906) ILR 30 Bom 250; Balram v Ganga Singh, AIR 1926 Oudh 358; Krishna Kumari v Rajendra, AIR 1927 Oudh 240.

Page 5 of 5 OPERATION OF TRANSFER

10 Ram Chandra v Kalyan Singh, AIR 2006 All 184; Faqueer Soonra v Khuderson, (1870) 2 NWP 251; Fitrat Husain v Liaqat Ali, AIR 1939 All 291; see, however, Kundan v Addl District Judge Bulandshahr, AIR 1990 All 121 [LNIND 1990 ALL 106], wherein it was held that non-mention of saplings in the agreement to sell the land would indicate that they were not intended to be sold. 11 Badam v Ganga, (1897) 29 All 484. 12 Divisional Forest Officer v Daut, AIR 1968 SC 612 [LNIND 1967 SC 311]. 13 Vishwa Nath v Ram Raj, AIR 1991 All 193 [LNIND 1990 ALL 107]. 14 Chaladom v Kakkath Kunhambu, (1902) ILR 25 Mad 669. 15 Raja Anand v State of Uttar Pradesh, AIR 1967 SC 1081 [LNIND 1966 SC 190]; Bageshwari Charan v Kumar Kamakya Narian Singh, AIR 1931 PC 30. 16 Girdhari Singh v Megh Lal Pandey, (1918) ILR 45 Cal 87, wherein it was held that a permanent lease granted by a Bengal zamindar would not imply the grant of mineral rights; see also Ali Quadar v Jogendra (1912) 16 Cal LJ 7, wherein it was held that a grant of patni taluka transferred mineral rights. See also Satya Niranjan Chakravarti v Ram Lal Kaviraj, AIR 1925 PC 42; Rajeshwar Prosad v Bhupendra Naryan, AIR 1927 Cal 956; Bhupendra v Rajeshwar, AIR 1931 PC 162; Jagat Mohan v Pratab Udai Nath, AIR 1931 PC 302; Gobinda Narayan v Sham Lal, AIR 1931 PC 89; HV Low & Co Ltd v Jyoti Prashad Singh Deo, AIR 1931 PC 299. 17 Shivashakti Builders and Financial Co Ltd, In Re (2010) 158 Comp Cas 237 Pat : 2011 (1) Pat LJR 943. 18 K Thippanna v Varalakshmi, (2012) 3 SCC 576 [LNIND 2012 SC 1512] : 2012 (3) Scale 34 [LNIND 2012 SC 142]. 19 AIR 2011 All 142 [LNIND 2011 ALL 61]. 20 Harshad Govardhan Sondagar v International Assets Reconstruction Company Ltd, (2014) 6 SCC 1 : 2014 (3) KLT 357. 21 See The Transfer of Property Act, 1882, section 8. 22 Peru Bipari v Ronuo, (1884) 11 Cal 164; Purshotama v Municipal Council, (1891) ILR 14 Mad 467; Queen Empress v Sheikh Ibrahim, (1890) ILR 13 Mad 518. 23 Arunachellam v Subramania, (1907) ILR 30 Mad 235. 24 Sheo Nandan v Zainul, (1915) ILR 42 Cal 849. 25 Commr of Income Tax v Bhurangya Coal Co, AIR 1959 SC 254; Divisional Forest Officer Sarahan Forset Division of Simla v Daut, AIR 1968 SC 612 [LNIND 1967 SC 311]; Christine Pais v K Ugappa Shetty, AIR 1966 Mys 299; MS Boda Narayana Murhty and Sons v Valluri Venkata Suguna, AIR 1978 AP 257 [LNIND 1977 AP 52]; Ram Dayal v L Mishri Lal, 1972 All LJ 333; Bhoop Singh v Sri Ram, AIR 1940 All 427. 26 Krishna Mohan v Bal Krishna Chaturvedi, AIR 2001 All 334 [LNIND 2001 ALL 624].

End of Document

ORAL TRANSFER Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

ORAL TRANSFER

[s 9] Oral transfer.—A transfer of property may be made without writing in every case in which a writing is not expressly required by law.

Prior to the enactment of the TP Act, 1882, the primary condition for the transfer of property was the delivery of possession of the property. However, under the TP Act, 1882, the transfer of every tangible property, reversion or other intangible thing where its value is more than Rs 100; by mortgage (other than a mortgage by deposit of title deeds) where the principal money secured by way of loan is more than Rs 100, by gifts irrespective of the value of the property, or lease for more than a year or where rent for more than 12 months has been taken in advance, must be made in writing.27

Where the law requires a transfer to be made in writing, an oral transfer will not convey any right from the transferor to the transferee.28 For example, A sells his house to B for Rs 50,000 on the basis of an oral agreement, by delivery of keys of the same. B does not acquire a title as the consideration being more than Rs 100, the transfer must take place with the help of a written, attested, and registered document. Similarly, A, an old man of 80 years, gives to his friend’s son B, the keys of all the rooms in his house in which both of them were living, as the latter had looked after him when he was sick. While handing over the keys, A expressly told him to retain the possession of the same, as the owner in presence of all his relatives. This desire expressed by the owner, coupled with the delivery of keys as well as the property papers, would not make B the owner of the property, as the gift of immovable property has to be executed with a written, attested and registered document.29 Even if A, in this case, goes to the office of the relevant authorities for mutation of names and testifies the gift in presence of the officials, no right will pass from A to B with respect to this property, as the transfer has failed to meet the requirement of law.

Even though an oral agreement to sell is possible, the onus is on the person who pleads such oral sale agreement. As an unregistered document is unenforceable in the eyes of law for the transfer of property,30 an assignment deed that conveys title in property for more than Rs 100/ must be registered.31 Conveyances that are not required to be compulsorily written can be transferred orally. Thus, a transfer of property may be made without writing in every case in which writing is not required by law.32

A partition of joint family,33 a surrender of lease,34 a release by a mother of her interest in joint family property,35 a grant of land for life in discharge of a claim for maintenance,36 a contract to settle property in consideration of marriage,37 the relinquishment of a right by a joint family member38 or generally to recover a share of immovable property,39 or assignment of immovable property under a court’s decree passed on the basis of a family settlement contained in a composite deed,40 or a grant of a guzara,41 do not require writing. As the concept of joint family property or coparceners under Hindu Law is not applicable to Christians, a Christian who is an absolute owner of the property is entitled to divide and distribute his property as he considers fit.42

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27 Where the value of property is of Rs 100 or more. See The Transfer of Property Act, 1882, sections 54 and 118. See also Keshrimull v Sukan Ram, AIR 1933 Pat 264 : 12 Pat. 616; Rajeshwar Prosad v Bhupendra Naryan, AIR 1927 Cal 956; Where the lease is for more than a year or where the rent for more than a year has been taken in advance. See The Transfer of Property Act, 1882, section 107; Where the amount of loan is more than Rs 100 or more. See The Transfer of Property Act, 1882, section 59; See The Transfer of Property Act, 1882, section 123; Hiralal v Gavrishankar, AIR 1928 Bom 250. 28 Munnalal v Atmaram, AIR 2008 (NOC) 843 (MP); Kantaben Chandulal Shah v Gagiben, AIR 2005 Guj 49 [LNIND 2004 GUJ 411]; Bishun Mahato v Raho Khalifa, AIR 2005 Jhar 85 [LNIND 2004 JHAR 60]. 29 A Rosaline v The Church of South India, S.A Nos. 157 to 159 of 2007 and CMP No. 17640 of 2016; decided On: 07.02.2017; High Court of Madras; Rajeshwar Prosad v Bhupender Narayan, AIR 1927 Cal 956; Keshrimal v Sukan Ram, AIR 1933 Pat 264. 30 See Pravinbhai Becharbhai Viroja v 2010 SCC OnLine Guj 5607. 31 Durga Matha Building Constructions Co-op Housing Society Ltd v Sada Yellaiah, AIR 2010 AP 231 [LNIND 2010 AP 503]. 32 Weavers Mills Ltd v Balkis Ammal, AIR 1969 Mad 462 [LNIND 1967 MAD 164]; Imperial Bank of India v Bengal National Bank, AIR 1931 Cal 223. See The Transfer of Property Act, 1882, section 9. 33 Satya Kumar v Satya Kirpal, (1909) 10 Cal LJ 503. 34 Fowler v Secretary of State, AIR 1921 Mad 363; Brojo Nath v Maheshwar, (1918) 28 Cal LJ 220; Gyanessa v Mobarakanessa, (1898) ILR 25 Cal 210. 35 Ramdas v Pahlad, AIR 1965 Bom 74 [LNIND 1964 BOM 11]. 36 Madam Pillai v Badra Kali, AIR 1922 Mad 311 [LNIND 1922 MAD 5]. 37 Serandaya Pillai v Sankarlingam Pillai, (1959) Mad LJ 502. 38 Gangubai v Mahagundappa, AIR 2006 (NOC) 142 (Kant). 39 Lal Singh v Chotey Beti, AIR 1933 All 854. 40 Amteshwar Anand v Virendra Mohun Singh, AIR 2006 SC 151 [LNIND 2005 SC 812]. 41 Lal Singh v Chotey Beti, AIR 1933 All 854; Gajraj v Indarpal, (1918) 49 IC 406. 42 Lalitha Theresa Sequeria v Dolfy A Pias, (2014) 10 SCC 731; see also Shanmugam v Hema, AIR 2011 Mad 177 [LNIND 2011 MAD 243].

End of Document

CONDITIONS RESTRAINING ALIENATION Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

CONDITIONS RESTRAINING ALIENATION

[s 10] Condition restraining alienation.—Where property is transferred subject to a condition or limitation absolutely restraining the transferee or any person claiming under him from parting with or disposing off his interest in the property, the condition or limitation is void except in the case of a lease where the condition is for the benefit of the lessor or those claiming under him:

Provided that property may be transferred to or for the benefit of a woman (not being Hindu, Muhammedan or Buddhist), so that she shall not have power during her marriage to transfer or charge the same or her beneficial interest therein.

Ownership of the property carries with it certain basic rights, such as a right to have the title to the property, a right to possess and enjoy it to the exclusion of everyone else, and a right to alienate it without being dictated to, save in accordance with a provision of law. An absolute right to dispose of the property indicates that the owner can sell it for consideration or can donate it for religious or charitable purposes he may gift it, mortgage it or put it up for lease. As aforesaid, save with the help of law, no other person can interfere with this power or right of the owner or dictate to him, what should be the manner of alienation, should he alienate or not, or even what kind of use it should be put to. In short, this right of alienation that is one of the basic rights of the owner cannot be unreasonably encroached upon by anyone through a private agreement. This general rule is applicable despite there being an express contract to the contrary, and prevents the transferor from controlling the power of alienation of the transferee once the interest in the property is transferred.

For example, a person A, who is the owner of a house X, transfers it for consideration to B. In the transfer deed, A puts a condition that B would not sell it to anyone, but would keep the possession of the property to himself. B agrees to abide by this condition and pays consideration. After the title passes and the property vests in B, B sells it to C. A files a suit claiming possession of the property on the ground that B has committed a breach of a condition of the contract, and therefore, the sale in favour of C is void. Here, the suit of A would fail, as he was attempting to restraint B absolutely from transferring the property even when the interest has vested in B. Here, even if the transferee had expressly consented to abide by the terms of the contract, this condition being void under section 10 of the Act, he is entitled to ignore it as if it did not exist on paper. At the same time, a contravention of this condition would not affect the validity of the original transfer through which the property was acquired by the transferee.

Conditional Transfers

Conditional transfers can be of two types, first, where the condition has to be complied with or fulfilled before a transfer could be effected and secondly, where condition is to be fulfilled after the transfer is complete. In former cases, the conditions are called conditions precedent. In fact, in such cases, it is only if the condition is fulfilled that the transfer would take place, and if it is a condition that is either opposed to public policy or is unlawful or immoral, the transfers subject to such conditions would also become void. If the condition is such which is impossible to perform, then again this conditional transfer would be void. If the prospective transferee fails to fulfill this condition upon which the transfer depends the transfer cannot take place.43 In other words, if the prospective transferee ignores the condition, no transfer would take place.

Page 2 of 14 CONDITIONS RESTRAINING ALIENATION

For instance, A agrees to transfer his house to B, on the condition that B must marry his daughter D, within two years. D dies within a month of this agreement without marrying B. The condition becomes impossible to perform, and the transfer would not take place. If the condition precedent is void under law, the transfer dependent on the fulfillment of this void condition would in itself be void. For instance, A transfers property to B subject to a condition that B must murder C. This condition is void and the transfer would also be void.

The other category of conditional transfers is where the condition is subsequent to the transfer. The time for compliance with this condition is after the transfer takes place and the property or an interest in the property vests in the transferee. Section 10 speaks about a condition that is subsequent to the vesting of the interest in the transferor. Here, if the transfer is subject to a condition that prevents the transferee from disposing of or parting with his interest in the property that vested in him through this transfer, the condition would be void, but the transfer would remain perfectly valid. This means that even if the condition is incorporated with mutual agreement, the fulfillment of it is not binding on the transferee. He can ignore it, and the original transferor would be without any remedy. He cannot sue for cancellation of the transfer or for claiming damages for breach of contract.

For example, a person A, settled property on his wife W and provided in the settlement deed that W would have no power to sell the property without his consent. W took the property and sold it without his consent. A would have no remedy and the sale effected by W would be perfectly valid. The condition incorporated in the deed, namely that W had to obtain her husband’s consent for selling the property, was in the nature of a restraint on her power to alienate the property as an owner, and is therefore void. This condition could legally be ignored by W. The underlying principles behind this rule are that of equity, justice and good conscience, that prevent the transferors from incorporating conditions in the transfer deeds that are repugnant to the nature of interest that is created. Power of alienation is one of the basic rights of the owner and an attempt to encroach upon this right or to control it even after the property has been vested in the transferee, is statutorily prohibited.

Repugnant Conditions

Conditions repugnant to the estate previously given are void,44 and for this reason the courts have always leaned against a restraint on alienation.45 According to section 10, therefore, a condition incorporated in the transfer deed which absolutely restraints the transferee from transferring his interest in the property is void.

Absolute and Partial Restraint on Alienation

Restraint means preventing or stopping or disabling a person from doing something. Absolute restraint, therefore, refers to a condition that attempts to takes away either totally or substantially this power of alienation.46 The use of the term ‘absolutely’ also suggests, that where the restriction is partial, or little, it will be permitted. This means that some or little control over the power of alienation, of the present owner by the previous owner is allowed. This control is in the shape of imposition of ‘partial restraint’. The logic is that ordinarily in a contract, when two people agree to abide by some conditions and incorporate them in the contract, such conditions are binding on them. These conditions may be in the nature of restraints, but unless they extend to being an absolute deprival of the basic incident of ownership at the behest of parties and not by law, they will be binding on the parties, and a violation of the same would amount to a breach of the contract, and would result in the consequences, also agreed upon by the parties. Thus, what has to be seen is the nature of restraint imposed in the contract. If it takes away the power of alienation of the transferee absolutely, it is void, as it will attract the provisions of section 10 and the transferee, if he so wishes, can ignore this condition without being guilty of committing a breach of contract. However, if the condition does not take away the power of alienation absolutely, but restricts it partially, it would be binding on the transferee and he cannot avoid it. If he does, he would be guilty of committing a breach of a condition of the contract. Whether a restriction would or would not amount to an absolute restraint would depend on the substance and effect of the condition, and not merely on the terminology used in the contract.

For example, A transfers a field to B, and incorporates a condition in the transfer deed, that B can sell it to anyone, but will have to pay 90% of the consideration to A’s son. The terminology used does not indicate an attempt to curtail the power of sale, but the practical effect would be that B would be substantially deprived of the power to transfer it according to terms that are beneficial to him. This condition therefore would be repugnant to his power of alienation, and is therefore, void.47 Similarly, A settles some property absolutely in favour of B. B starts paying revenue to the government after the patta was transferred in his name. A condition in the Will that B is prohibited from alienating the property would be void and B would be empowered to ignore the condition and sell the property to whomsoever he likes.48 There is no restriction even on assignment or transfer of rights under a sale/purchase agreement by purchaser to a third party before execution of a conveyance deed in respect of any immovable

Page 3 of 14 CONDITIONS RESTRAINING ALIENATION property.49

Categorisation of Restraints

Since alienation of property is the sole prerogative of the owner of the property, he is empowered to sell it at any point of time, for any consideration, to any person, and for any purpose. There are certain integral components of the very term “alienation” and include selection purely at the discretion of the transferor of the transferee; the time or the consideration for the transfer. A restraint on alienation, thus would include a condition that dictates to him when to sell it, to sell at how much consideration, or how to utilise the consideration; to whom to sell or for what purpose he should sell. Therefore, restraints on alienations can appear in the following ways:

(i) Restraints on transfer for a particular time; (ii) Restraints directing control over consideration/money; (iii) Restraints with respect to persons/transferee; and (iv) Restraints with respect to sale for particular purposes or use of property.

Restraints for a Particular Time

Restrictions with respect to time, i.e., the condition that the transferee would not sell it for five years or ten years or for any time period whatsoever would be void, unless it is for a short time period and is coupled with a benefit to the transferor, such as an option of re-purchase, at a consideration stipulated in the contract. This option of repurchase is personal to the transferor and cannot extend to anybody else.

For example, A sells his house to B for five lakh rupees, with a condition that B should not sell it for five years. Within this period of five years, A would arrange the money and would have an option to repurchase it for 6 lakh rupees. If he is unable to exercise this option of repurchase within five years, B would be at liberty to sell it to anyone. This condition is with respect to both the time as well as a person, but would be valid as it is in the nature of a partial restraint and is for the personal benefit of the transferor,50 but if in accordance with the condition the direction is simply that B should not sell the property for five years without any right of pre-emption or during the lifetime of A, or that of his wife, such conditions would be void.

Restraints with Respect to Money

Where the transferor stipulates that the property can be sold by the transferee only at a fixed price specified by him beforehand, or where he directs that the property should be transferred for no consideration, or at market price only, or at any consideration deemed appropriate by the owner, but out of sale proceeds, either something has to be paid to a specific person or persons, or for a specific purpose, all these conditions would be restraints on alienation through control over money and would be void. The previous owner/holder of the interest cannot dictate such conditions. These conditions would amount to an absolute restraint on the transferee’s power of alienation and would be void.

For example:

(i)A sells a house to B for Rs 10,000 with a condition, that if in future B wants to sell it, he would sell it only for Rs 10,000. This condition would be void, and B may sell it for any consideration. (ii)A sells a house to B for Rs 10,000 with a condition, that if in future B wants to sell it, he would sell it at only the market price. This condition would be void and B can sell it either below or higher than the market price. (iii)A sells a house to B for Rs 10,000 with a condition, that if in future B wants to sell it, 50% of the consideration, should be given to charity, or should be given to the transferor’s sister or any other relative. This condition is void. B may sell it to anyone and keep the entire consideration.

Restrictions with Respect to Persons

Restrictions directing the owner that the property or an interest in the property should be transferred only after obtaining the prior permission or consent of specific persons would be totally void but a condition that it can be transferred to specific persons can be either partial or absolute, depending upon the facts and circumstances of the

Page 4 of 14 CONDITIONS RESTRAINING ALIENATION case. Where the transferor puts a condition directing the transferee that should he want to sell the property, he must sell only to a specific person named by the transferor in the deed or to a group of persons, such a condition would be void. But if the condition is that he should not sell it outside his family or even community, then it will be valid as partial restraint, provided both transferor and transferee are members of the same family or community. Such a condition may stem from a desire to conserve the property within a specific family or community, of which both the parties are members.

Therefore, the transferor himself selling the property to an outsider, cannot put a condition that binds the later to sell the property only to members of the transferor’s family.51 Thus a restriction on alienation of property to strangers aimed at ensuring that property bequeathed did not go into hands of third party is valid and does not violate the rule of perpetuity.52

For example:

(i)A sells a house to B for Rs 20 lakh with a condition, that if in future B wants to sell it, he would sell it only to A’s wife, W This condition would be void, and B may sell it to anyone. (ii)A sells a house to B for Rs 20 lakh with a condition, that if in future B wants to sell it, he would sell it only to A’s sons or his brothers. A has four sons and two brothers. This condition would be void and B can sell it to anyone. (iii)A sells a house to B for Rs 20 lakhs with a condition, that if in future B wants to sell it, he must obtain his written permission /consent for effecting such sale. This condition is void. B may sell it without seeking anyone’s permission.

Restraints with Respect to Purposes or Use of Property

Where the transferor does not apparently say anything with respect to the power of the sale of property of the transferee, but provides clearly that the property can be transferred only for a specific purpose, this would also be an absolute restraint on the power of the transferee to transfer his interest according to his option and his convenience. To whom and for what purpose he should sell, is for him to decide and he is entitled to ignore the condition if at all it is put in the contract at the behest of the transferor. Therefore, conditions that the property should be sold for a religious purpose,53 or for any other specific purpose such as construction of educational institution only would be void as being repugnant to the right of alienation. A provision in the sale deed that in the event of failure to construct a private college in the property sold thereunder, the property should be reconveyed by the transferee to the transferor for the same sale consideration would amount to an absolute restraint on alienation.54

In terms of section 10 any condition in respect of use of the land is void. Mere change of purpose does not entitle the land owners to dispute the sale deeds. Thus, where land was sold to the state government subject to the condition that it would be used only for the purpose of establishing a university, but the alienee transferred the land to PUDA for development of a residential complex, the erstwhile landowner who had parted with their land and accepted compensation more than a decade earlier could not be permitted to dispute the transfer of land.55

Section 10 not to Apply to Court Sales

Section 10 applies only to transfers made by the act of the parties and does not apply to a sale under the Companies Act, 1956, nor to transfers by operation of law taking effect in invitum at a sale in execution of a decree.56 Similarly, section 10, does not apply to partition and family arrangements, but restraints clearly offending the rule are void.57

Statutory Prohibitions

Transfer of property is not always impermissible but subject to conditions prescribed by Government,58 and the statutory bar on alienation will override the provisions of the Transfer of Property Act, 1882.59 Thus, there may be a statutory restriction on transfer of land by a member of Scheduled Caste to a person other than Scheduled Caste. Such notification would not be hit by section 10.60 However, when a right of transfer has been provided by provisions of a statute and bar contemplated does not apply to the case at hand, no clause or a condition in original patta granted by zamindar can restrict such a right of transfer.61

Partition and Restraints on Alienation

Page 5 of 14 CONDITIONS RESTRAINING ALIENATION

Partition of a joint family property or family settlements do not amount to transfer of property, and as stated above, section 10 of the TP Act, 1882 would not be applicable to partition or family settlement. However, any total restraint on right of alienation is void. This rule is based on sound public policy of free circulation of property. The principle has universal application and there is nothing in the Hindu law which is inconsistent with it.62 Therefore, if in a partition a condition is imposed preventing a party from alienating his share, such condition would be void, e.g., four brothers A, B, C and D, effected a partition of the joint family property and incorporated a condition in the partition deed, that if anyone of them remained childless he would not sell his share to anyone but would leave the property for the surviving brothers. A, who was childless, sold his share and then died. The surviving brothers filed a suit against the alienee on the ground, that as A was prohibited from selling his share in case he was issueless, this being a condition to which he had agreed, a sale in contravention of this condition was void and not binding on them. They pleaded that the alienee should deliver the possession of the property back to them. The court held, that as this condition amounted to an absolute restraint on A’s power of alienation it was void and was not binding on him. The sale in favour of the alienee was perfectly valid.63

The creation of the absolute ownership in each one of the sharers in the properties allotted to him in the partition is a legal incident of partition. Thus, where it was provided in the partition deed that after the death of the owner of the properties, his three sons would get the properties and divide it among themselves, it would mean that they take their respective shares with full incidents of ownership including a right to alienate it. It does not mean that a limited estate was created in favour of the owner.64

In Muthuraman Chettiar v Ponnusami,65 in a partition by a separate agreement, it was stipulated that if any one of the parties to the agreement or the heir remained childless, he should not sell or transfer his share by a gift but the same should, on his death be divided among the rest of the shareholders. The Madras High Court held that the obvious purpose of these stipulations were to frustrate indefinitely the right of the alienation which was the legal incident of an absolute estate, in severally created by the partition in effect to convert the estate in the case of each son-less or issue less possessor into a mere life enjoyment and would be against the law. This stipulation was struck down as void. Similarly, life tenancy co-terminus with extinction of the business is void and inequitable.66 The entire transaction would not be vitiated only because some clauses in the deed are repugnant to the free transfer and circulation of the property.67 In Malayalandiyil Kayakool Edakozhi Subair v Kayyalakkakath Kunhamina Umma,68 the issue was whether a clause in the partition deed restricting the right of the party, A in alienating the plaint schedule properties is invalid under section 10 of the Transfer of Property Act, 1882? The court held that even though section 10 is not applicable to the case of partition, but, the principle underlined is applicable in the case of partition also depending on the nature of the estate obtained. If the case is of absolute ownership, power of alienation must go along with it and any restraint of that power will be against the public policy and will be deemed void. Therefore, A was entitled to the right of alienation taking into account her absolute ownership over the property in dispute, thus, validating the deed of assignment.

Partial restraints on power of alienation, even in a partition, are valid. Thus, where the parents got the property under a partition with a stipulation to enjoy it during their lifetime and sold it to the respondent, it was held that the sale was valid despite the clause that they had no absolute right of alienation.69

Family Arrangements and Restraint on Alienation

Even though no transfer of right is contemplated in case of partition or family settlement, and section 10 of the TP Act, 1882 does not apply,70 yet any total restraint on right of alienation is void.71 A condition imposing a partial restraint is not void.72 Whether the restraint is absolute or partial has to be gathered from the intention of the transferor and from the contents of the document.73 Thus, where the property was given by father to the son under a family arrangement with a condition that with respect of a portion of it, the son was prohibited from making any alienation during the life time of the father, it was held to be not an absolute restraint and therefore was valid and binding on the son.74 Similarly, where in case of a compromise in a family arrangement, the widow was given the property with a condition that she would not alienate the property outside the family it was held that the restraint was only partial and such a partial restraint was neither repugnant to law nor to justice, equity and good conscience.75 A family settlement between the reversionary heirs and two Hindu widows by which the reversioners are restrained from alienating during the lifetime of the widows is valid.76 Likewise, in a compromise between the reversioners and the widow, the widow taking a limited interest without power of alienation, would be valid.77 Thus, where in a dispute a compromise was arrived at between the widow and her adopted son whereby she was allotted certain properties for her maintenance but without power of alienation, it was held that the compromise was valid.78

A condition in restraint of alienation is void. Thus where the person gets the property under a Will with absolute

Page 6 of 14 CONDITIONS RESTRAINING ALIENATION powers to enjoy it, any condition restraining alienation would be void.79

Instances of Restrictions on Alienation under English Law

An absolute interest in personality no less than in reality, once given, cannot be fettered by a gift over on alienation,80 for the right of alienation is incidental to the beneficial ownership of property.81 Accordingly, any restriction which substantially takes away the power of alienation, is void as being repugnant to the very conception of ownership. A partial restraint which does not deprive the owner of his power of alienation, is valid.82 Thus, a condition that the donee is not to alienate a reversionary interest before it falls into possession,83 or is not to alienate to a particular person or class of persons,84 may be valid.

A gift over on alienation affecting a life interest with a power of disposition by will or deed is invalid as the gift is equivalent to absolute ownership.85 Similarly, if an annuity is to be bought in the name of an annuitant, a direction that it is to cease on alienation is inconsistent with the absolute ownership previously conferred, and the annuitant is entitled to demand payment of the sum required to purchase that annuity.86 The rule preventing the fettering of absolute interests applies equally to equitable and to legal interests.87 Trusts, therefore, cannot be created with a proviso preventing the beneficiary from alienating his interest,88 or with a proviso that that interest is not to be made subject to the claims of creditors.89

Instances of Absolute Restraints under Indian Law

A co-sharer is not bound by an agreement not to sell his share without the consent of the settlor,90 or of other co- sharers,91 or in the event of not getting an issue,92 or to sell it only for religious purposes,93 or only to testator’s wife at one-fifth the value of the estate,94 or to pay specific sums to the settlor’s brother and sister in the event of sale.95 An unregistered agreement following a registered sale not to alienate, dissipate or fritter away the land would be void.96

A condition not to sell during the lifetime of the transferee is void.97 Where a deed of gift provided that the donee or his successors would have no right to transfer the property and that if they did transfer, the same would be invalid and the donor or his successors would have a right to revoke the gift, the condition is invalid.1

A restraint on mode of alienation is not a restraint.2 A condition in the gift to Brahmins restrictive of alienations is invalid.3

Partial restraints

According to section 10, it is only an absolute restraint on alienation that is void, and restraints short of an absolute curtailment of the power of the interest holder to transfer his interest will be valid and binding on him.4 Whether a condition totally or partially prohibits alienation depends on the substance or the effect of the condition and not the form.

Instances of partial restraints

A condition to sell only to specific persons5 is void, but a condition not to sell outside the family would be a partial restraint.6 Similarly, a condition that if any coparcener wanted to sell his share the other coparceners would have a right to buy it is valid.7

A condition imposed in the byelaws that the property cannot be sold to a non-Parsi is valid.8 Similarly, a condition in the kharposh grant made by a zamindar in favour of a junior member that the subject matter of the grant was not liable to be attached and sold in execution, is only a partial restraint, and valid.9 A clause in the lease deed that the interests of the leaseholder cannot be transferred without the written permission of the deputy commissioner is not an absolute restraint on transfer.10

Agreement in Restraint of Alienations

A separate unregistered agreement by way of a personal covenant not to sell, or to sell subject to the conditions imposed is valid,11 but a registered agreement in restraint of alienation would be considered part of the sale agreement and would be void.12 Where the donor makes a gift to the donee with a condition that the donor would be at liberty to revoke the gift if the donee transferred the property without his consent, it was held that the condition

Page 7 of 14 CONDITIONS RESTRAINING ALIENATION is valid.13

Exceptions to the Rule of Restraint on Alienation

There are two exceptions to the general rule that absolute restraint on power of the holder to dispose of or transfer his interest in the property is void. The first exception is in the case of a lease where the condition is for the benefit of the lessor or those claiming under him, and the second is where property is transferred for the benefit of a married woman (not being Hindu, Mohammedan or Buddhist) so that she shall not have power during her marriage to transfer or charge the same or her beneficial interest therein.14

(1) Lease and Restraint on Alienation

A condition in the lease that the lessee shall not sublet or assign his interest to anyone during the tenure of the lease is valid.15 Similarly, a stipulation in the contract of lease that the lessee would not sublet the premises and if he does, he would have to pay a fourth of the consideration as nazar to the lessor, 16 is valid and enforceable. A condition in the lease deed that the lessee would compulsorily have to surrender the lease in the event the lessor needs to sell the property17 is again valid. A condition in the perpetual lease that the lease, though heritable, is not assignable is also valid.18

A condition can be stipulated in the rent-free grant restraining the grantee from transferring his right.19 Similarly, a condition in the darpatni lease that if the darpatni is sold for arrears of rent, derivative tenures created by the darpatnidar would be extinguished is valid and would not amount to a restraint on alienation.20 An alienation of the leasehold of the Khasmahal land without the permission of the collector would be void as the rights in the same are heritable.21

(2) Married Women and Restraint on Alienation

The second exception provided under section 10 relates to a non-Hindu, Mohammedan or Buddhist married women. The section provides that property may be either transferred to or for the benefit of such a woman, with a condition that she would not have power during her marriage to transfer or even charge the same or her beneficial interest therein. Thus, two conditions must be satisfied:

(i) First, that the woman should be married. If she is a widow or unmarried, no restraint can be imposed on her power of alienation, and (ii) Secondly, she should not be a Hindu, Mohammedan or Buddhist. The restriction can therefore be applied to a woman who is a Christian, Parsi or a Jew.

Under English common law, a woman’s property, on marriage, automatically became the property of her husband. This rule was expressly abolished in India under section 4 of the Indian Succession Act, 1865, but only where the marriage was solemnised after 1 January 1866. At the same time, a married woman (irrespective of her religion) could be prevented from alienating the property settled on her, under two distinct rules—section 10 of the TP Act, 1882, and sections 56 and 58 of The Indian Trusts Act, 1882. Such interests in property that the woman is prevented from alienating herself cannot be the subject of involuntary sales as well. This means that if a creditor obtains a decree against a married woman, it can be executed against her general separate property, but not against her property that she herself is prevented from alienating.

Limitation Until Attempted Alienation

Although provisions in restraint of alienation, or excluding creditor’s rights, are invalid when applied to an absolute interest, yet at the same time there is nothing to prevent property from being settled for life estates determinable on alienation, bankruptcy or insolvency, with a limitation over upon the happening of any of those events.22 This may be effected by merely directing that the income of the property be held on protective trusts for the benefit of any person for the period of his life or for any less period. The owner of property cannot, however, qualify his own interest in it by a condition determining that interest on his bankruptcy.23

Conditional Gifts

What is specifically prohibited under the Act is any attempt to restraint a transferable interest from alienation. Conditions or limitations can be put on the interests of a transferee in case, of gifts or Wills. Thus, a condition can

Page 8 of 14 CONDITIONS RESTRAINING ALIENATION be imposed in a gift to the effect that the donee would maintain either the donor or a relation of his. These kinds of gifts are called conditional gifts and are binding on the donee. If he accepts the deed of gift, it is accepted with the benefits and also with the liabilities that can be sustained in law. It is not open to the donee to accept the benefits and refuse to accept the liabilities under it. Gift being a gratuitous transfer, the donor is empowered to transfer property with obligations on the donee that he has to fulfill.

In Panna Lal Hazra v Fulmoni Hazra,24 a Hindu father made a gift of his property to his son, which the latter accepted. Under the gift deed, the son was expressly enjoined to maintain his stepmother. Upon his refusal to do so, after the properties were transferred in his name, the stepmother brought a suit claiming maintenance from him both under Hindu Adoption and Maintenance Act, 1956, and also under the terms of the gift deed. The stepson denied his liability to maintain her, on the ground that he had obtained the property through a transfer that created an absolute interest in his favour. This condition that he is under an obligation to maintain his stepmother was in the nature of a limitation or condition which was repugnant to the interest created in the gift and therefore void. He contended that since this condition was hit by sections 10 and 11, he was entitled to ignore it without effecting the validity of the transfer by way of gift. The concurrent findings of all the courts, the trial court, the district court and the High Court of Calcutta were that under the express terms of the deed of gift whereby properties were conveyed to the son by the deceased father, the son was obliged to maintain the stepmother. According to the court, this condition in the instrument to provide maintenance to the donor himself and/or to any of his dependents was not in any way repugnant to the interest created by the instrument. This was a valid and enforceable condition and therefore, the son was bound to maintain his stepmother. This condition was, thus, not hit by either section 10 or section 11.

Case Laws

In Rosher v Rosher,25 a person A died leaving behind his wife W and a son S. He left his entire property to S, under his Will. The Will also provided, that if S wanted to sell the property, or if any of his heirs wanted to do so, they must offer it to W first and she would have an option to purchase it at one-fifth of the value of the same, as it was assessed at the time of the testator’s death. The price was specified as £ 3000 while the value of the house (Manor) at the time of the operation of the Will was £ 15000. The Will further provided that if the son or any of his heirs wanted to let this manor on rent, they could do so freely only for a period of three years. If the tenancy exceeded the three years time period, W would have the option to occupy the premises, for the period in excess of three years, at a fixed rent. The rent was fixed as £ 25 for the whole year. If the tenancy exceeded a period of seven years, again W was entitled to occupy the same for an annual rent of £ 35. The son or his heirs were under an obligation therefore to offer the premises to W first, and only when she declined to take it, could they let it out to other persons. Upon W bringing an action against S, the question before the court was; what was the nature of the conditions incorporated under the Will; and whether it constituted an absolute or partial restraint on the power of alienation of this property by the son or his heirs.

The character of restraint was, first, with respect to persons, i.e., the testator’s wife. If S wanted to sell the property, he had to first offer it to W, a person specifically named under the Will. The second type of restraint was with respect to money or price, as it was provided in the Will, that W could purchase the property at a specific price, i.e., £ 3000, irrespective of whatever might have been its market value. The beneficiaries, under the Will, were not free to even give it on lease, as a lease for above the time period of three years, could again entitle W to take the property at a very small rent, at her option. The court held that these restrictions amounted to an absolute restraint on S’s and his heir’s power of alienation and were therefore void. They were entitled to ignore them, as if these conditions did not exist on paper, and could sell it or let it out to anyone for any time period, without any cause of action arising in favour of W. The court said, ‘to compel the son, if he chose to sell, at one fifth of the value of the estate, is really a prohibition of alienation during the widow’s life time’.

In Gayashi Ram v Shahabuddin,26 the sale deed contained a clause that the transferee would not transfer the property to any person either by way of sale, gift or even mortgage except the transferor or his heirs. It further provided that if the transferee violated this condition, they would have a right to take back the property by paying Rs 175 instead of Rs 150, that was the price paid originally. While holding that these conditions amounted to an absolute restraint over the owner’s power of alienation and were therefore void, the court observed:

…in order to see whether there is absolute restraint or not, one has to examine the effect of all the conditions and find whether for all practical purposes alienation is prohibited. The mere fact that there may be some remote contingency in which there may be a possibility of an alienation taking place would not necessarily take the case out of the prohibition contained in s. 10.

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In Syed Mohammad Raza v Abbas Bandi Bibi,27 one H had two wives and the property was settled upon both the wives in equal shares as a result of a compromise that was drawn up and given effect to as per which, the management of this property was with the husband during his lifetime but the property was to be inherited by the respective wives’ heirs. Further, the wives were not empowered to sell the property to a stranger, i.e., to a person outside the family. Upon the demise of the husband, one of the wives, W sold the property to A, who took possession of the property and remained in its undisturbed possession for more than 12 years. W died and upon her death, her heir claimed 2/3rd share in the property now with A, claiming that since W was not empowered to sell the property to a stranger which she did in clear violation of the terms of the compromise and settlement, the alienation was void, and A did not acquire any title to it. They further contended that the restriction on her right of alienation was merely a partial restraint and was binding on her. The court held that even though she was the owner of the property, she took the property with a restraint on her powers of alienation. The restraint however was not an absolute restraint which is prohibited both under the Act as also under English law but was a partial restraint which was valid, enforceable and binding on her. As she was not competent to sell the property to a stranger in light of this partial restraint, the sale was invalid. What is to be noted here is that a restraint on the power of alienation “not to sell it to a stranger or out of family’’ was considered as a partial restraint and not an absolute restraint.

In Manohar Shivram Swami v Mahadeo Guruling Swami, 28 A and B were first cousins, (sons of two brothers). A made a Will of his property in favour of B. On A’s death, B acquired the title to the property and sold it to C, who was also the brother of A.

However, the sale deed contained a condition that if C wanted to sell the property, he would sell it only to the seller’s Jangam family and not to anybody else. The parties were Jangam by caste. The deed further stated that the property was sold on this condition. C sold the property to D, ignoring the condition incorporated in the sale deed. B took back the possession of the property, on the ground that as C had committed a breach of the condition, the transfer became void. He also filed a suit against C, D and others seeking a perpetual injunction restraining them from interfering with his possession of the property. His main contention was that by selling the property to D, C had committed a breach of covenant that was included in the contract of sale. C took the defence that this condition violated section 10, and therefore was not binding on him. The trial court rejected this defence, and held that the sale deed executed by C was void and not binding on B, and directed that property be restored to B. In appeal, the district court differed with the view of the trial court and held that as the restriction incorporated in the transfer deed was repugnant to section 10 it was void, and C was entitled to validly ignore it, without affecting the validity of the transfer. The court therefore upheld the validity of the sale. The matter went in appeal to the High Court. The issue before the court was; whether the condition put in the sale deed, that C would not sell the property, except to a person in the Jangam family, was hit by section 10? Did it restrain C absolutely from alienating the property or was it only a partial restraint? If it is an absolute restraint, the condition would be void, and C could ignore it. But if it were only a partial restraint, then it would be binding on C and if he commits a breach of this condition and sells the property, the sale would be void. The court held that the condition incorporated in the sale deed, absolutely restrained C, from parting with his interest in the property and therefore was void. The court thus upheld the validity of the sale affected by B. This decision of the Bombay High Court comes as a surprise as the condition here in fact was not to sell out of the family, which in a number of cases has been held to be a partial restraint, and binding on the parties.

In Zoroastrian Co-operative Housing Society Ltd v District Registrar Co-operative Societies,29 a society was registered under the Bombay Co-operative Societies Act, with the object of constructing houses for residential purposes, and according to the byelaws, the membership was restricted only to Parsis. The byelaws also contained a condition that no member could alienate the house to non-Parsis. The High Court of Bombay stated that a restriction based on religion, race or caste contained in a byelaw on the member’s right in a co-operative housing society to transfer his membership coupled with his right to alienate his interest in the immovable property would be bad in the eyes of law. Restriction on the member’s right to transfer membership and/or his interest in the property, to a non-Parsi was held violative of section 10, and therefore void. The matter went to the Supreme Court in appeal. TheApex Court allowed the appeal and held that when a person accepts the membership of a co-operative society by submitting himself to its byelaws and places on himself a qualified restriction on his right to transfer property by stipulating that same would be transferred with prior consent of society to a person qualified to be a member of the society, it could not be held to be an absolute restraint on alienation offending section 10 of the TP Act, 1882. Hence, it set aside the finding of the High Court that the restriction placed on rights of members of a society not to sell the property allotted to non Parsis was an absolute restraint on alienation as unsustainable. The Supreme Court held that this clause in the byelaws that a person could sell it only to Parsis and not to a non-Parsi was a partial restraint and not an absolute one.

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In K Muniswamy v K Venkataswamy,30 a family consisted of father F, mother M and two sons S1 and S2. Pursuant to a partition, the joint family properties were divided, with one half of them taken by M and F, and one-fourth each to S1 and S2. The partition deed incorporated a condition that each of these persons were to enjoy the property according to their wishes in any manner they liked and were specifically adjoined to effect mutation of name, so that taxes could be paid by the respective parties. The properties were ancestral as well as self-acquired. However, one condition in the partition deed provided that the mother and the father were to enjoy the properties only during their lifetime and after their deaths, this property was to be partitioned equally between S1 and S2. No similar condition was appended to the shares of S1 and S2. This creation of life interest meant that the parents had no power to alienate the property during their lifetime. The parents after partition took possession of the property and then later sold it through a registered sale deed to S1. S2 challenged the validity of the sale on the ground that since the parents had no power of alienation, the sale affected by them was invalid. He also claimed a half share in the property, as per the terms of the partition deed. The court here first explored the nature of estate that vested in the parents. They observed that the character of the estate, whether limited or absolute, did not depend purely on the terms or expressions used to describe it but has to be taken in totality, looking at the substance, and the intention of the parties. This has to be gathered by looking to the entire document as a whole. Here, the court concluded, that the use of the expressions, ‘each of them should get their khatka of the property in their names; should enjoy the properties in the manner they like’, shows clearly, that what was granted to them was an absolute estate and not a limited interest in the property. In such an event, the court held that a restriction, prohibiting them absolutely from transferring the property, amounted to an absolute restraint on alienation and was therefore, bad in the eyes of law. This shows that had it been a creation of a limited estate in the first place, only then could this condition have been operative.

A similar question, i.e., whether a life interest be created by a deed of conveyance, or of transfer of property by sale, if the property is transferred absolutely, also arose in Manjusha Debi v Sunil Chandra.31 A life interest can be created by gift, Will, partition or even family arrangements, but life interests created by sale or conveyance, are impossible to conceive. Such attempted life interests in a deed of sale would be covered under section 10 of the Act. However, a transferee is capable and competent to impose upon himself a restriction on his own proprietary rights. This can be done by executing a proper deed himself and no one else can by a collateral agreement annex a condition to an absolute grant. In this case, a Hindu father made a gift of Rs 30,000 to his widowed daughter D. D, with this money, purchased a property X. A clause in the sale deed stated that:

…tenements or dwelling houses, land, hereditaments and premises hereby granted are free from all encumbrances for use of said purchaser, Sreemati Kailashidevi (D) to be held by her for the term of her natural life as the estate of a Hindu widow, and from and after her death to her three sons… to be held by them as tenants in common, without power of alienation and after their death, unto, and to the use of their respective heirs absolutely and forever.

D, on purchasing the property, held it as the owner, and then executed a Will of the same dedicating the entire property to the deity ‘Shree Durgajee’. By this Will itself, she appointed her daughter DD as the shebait of the temple. The Will further provided that on the death of DD, her daughter DDD (granddaughter of D) would become the shebait. Another property, acquired through the same purchase, was dedicated to another God Baraha Kalijee and her son’s son (SS) was appointed the shebait. On D’s death, DDD, applied for letters of administration of the estate left by D, on the basis of the Will. Three days later, two sons of D filed a partition suit claiming one-third share each, on the ground that the estate purchased by D was a life estate, and on her death came to the three sons in equal shares. They contended that as it was only a life estate, she had no power to alienate the same, and a Will executed by a life holder cannot be given effect to. On the other hand, DDD, contended that since D acquired the property through a purchase, and not through a gift, Will, partition or family arrangement or even a compromise, the creation of a limited estate in a conveyance executed by the previous owner (transferor) was in the nature of an absolute restraint over the transferee’s power of alienation and is therefore void as repugnant to section 10 of the TP Act, 1882. The transferor, according to her, was not competent to abridge the interest of the transferee through the conveyance deed.

The court held that a purchaser cannot limit her own interest in a conveyance executed by her vendor. She can do so by executing a deed by herself. They observed:

…when a property is transferred absolutely it must be transferred with all its legal incidents. The vendor is not competent to sever from the rights of property, incidents which the law inseparably annexes to it, and thereby to abrogate the law by private arrangements creating a life estate in favour of the vendee in a deed of conveyance. A sale, is a transfer of

Page 11 of 14 CONDITIONS RESTRAINING ALIENATION

ownership of property. By a transfer a transferor divests himself of his interest in the property to the transferee. Thereafter he has got no right to create a life estate in favour of the transferee. If at all a life estate is to be created, it can be done by the transferee herself/himself, as the owner. If any condition or limitation is imposed in the deed of conveyance by the seller, that will be repugnant to s. 10, of the Transfer of Property Act, 1882.

The court accordingly held that the conditions creating life interest in the sale deed were void, and could be legally ignored by the transferee (D). As an absolute owner of the property, she could validly execute a Will of the same. The court declared DDD as the shebait in terms of the Will of D. The court also said that in case of a life interest, section 10 has no application, because life interest does not create a transferable interest in favour of the life holders.

A life estate can validly be created under a settlement. In Solomon vEdward Alexander,32 A executed a settlement creating a life estate in favour of B and his wife and upon their death, the property was to vest absolutely in C. B’s wife released her right in favour of B and B sold the total property to D. It was held that as they had a life estate, neither his wife was competent to release her life interest to her husband nor was B competent to execute a sale deed of his life estate. Their contention that a restraint on their power of alienation was void in light of section 10 was rejected as what was created in their favour was a life estate and not an absolute estate with restraint on power of alienation.

43 A contract stipulating the fulfilment of a condition precedent may be a contingent contract under section 26, see Gian Chand v York Exports Ltd, (2015) 5 SCC 609 [LNINDU 2014 SC 17] : AIR 2014 SC 3584 [LNINDU 2014 SC 17]. 44 It is impossible to give the ownership of property to a person in possession, and at the same time to direct that he is not to have the ordinary rights and incidents of ownership: Re Forder, Forder v Forder, (1927) 2 Ch 291 311 (CA). See also Re Dugdale, Dugdale v Dugdale, (1888) 38 ChD 176. 45 Stogdon v Lee, (1891) 1 QB 661, 670 (CA). As to the validity of partial restraints on alienation, see Re Rosher, Rosher v Rosher, (1884) 26 ChD 801; Re Elliot, Kelly v Elliot, (1896) 2 Ch 353. As to the recognition paid by the courts to restraints on alienation valid according to the law of other countries, see Re Fitzgerald, Surman v Fitzgerald, (1904) 1 Ch 573 (CA). 46 Bhavani Amma Kanakadevi v CSI Dekshina Kerela Maha Idavaka, AIR 2008 Ker 38 [LNIND 2007 KER 622]. 47 Re Elliot Kelly v Elliot, (1896) 2 Ch 353; Re Cockerill Mackaness v Percival, (1929) 2 Ch 131. 48 Achammal v Rajamanickam Karthikeyan, AIR 2010 Mad 34 [LNIND 2009 MAD 3158]. 49 DLF Universal Ltd v Director, Town and Country Planning Department, Haryana, (2010) 14 SCC 1 [LNIND 2010 SC 1119]. 50 Loknath Khound v Gunaram Kalita, AIR 1986 Gau 52. 51 See Mahamud Ali Majumdar v Brikodar Nath, AIR 1960 Assam 178. 52 K Naina Mohamed v AM Vasudevan Chettiar, (2010) 7 SCC 603 [LNIND 2010 SC 573] : JT 2010 (6) SC 546 [LNIND 2010 SC 573]. 53 Saraju Bala v Jyotirmoyee, AIR 1931 PC 179; Lalit Mohun v Chukkun Lal, (1897) ILR 24 Cal 834. 54 Bhawani Amma Kanakadevi v C S I Dekshina Kerela Maha Idevaka, AIR 2008 Ker 38 [LNIND 2007 KER 622]. 55 Achammal v Rajamanickam Karthikeyan, AIR 2010 Mad 34 [LNIND 2009 MAD 3158]: (2010) 2 Mad LJ 1210. 56 Gomti Singh v Anari Kaur, AIR 1929 All 492. 57 Rani Mewa Kuwar v R Rani Hukas Kuwar, 1 IA 157 PC; AIR 1939 Mad 769 [LNIND 1939 MAD 120]. 58 Laxman Tatyaba Kankate v Taramati Harishchandra Dhatrak, (2010) 7 SCC 717 [LNIND 2010 SC 586] : JT 2010 (8) SC 310. 59 Goa Foundation v UOI, (2014) 6 SCC 590 [LNIND 2014 SC 260]; Gohil Jesangbhai Rayasangbhai v State of Gujarat, (2014) 5 SCC 199 [LNIND 2006 SC 1221]; Gwalior Sugar Co Ltd v Anil Gupta, (2012) 12 SCC 19 [LNIND 2012 SC 1027] and would also prevail over sections 10 and 7; Dipak Babaria v State of Gujarat, (2014) 3 SCC 502 [LNIND 2014 SC 49]. 60 State of Rajasthan v Aanjaney Organic Herbal Pvt Ltd, (2012) 10 SCC 283 [LNIND 2012 SC 561]. 61 Gwalior Sugar Co Ltd v Anil Gupta, (2012) 12 SCC 19 [LNIND 2012 SC 1027].

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62 Venkatachallum v Kabaamurthy, AIR 1955 Mad 350 [LNIND 1954 MAD 133]. 63 Venkatarammanna v Brammanna, (1869) 4 Mad 1. 64 Khunnilal v Gobinda, (1911) ILR 33 All 356, PC; Kapura v Madsodan Das, AIR 1934 Lah 168. As aforesaid, section 10 does not applies to partition of joint Hindu family property as it has repeatedly been held, that partition does not amount to a transfer of property. However, the rule, that after creating an absolute estate in contrast with a limited estate, a restriction imposed on the basic incidents of ownership would be opposed to rules of public policy and general principles, see Prithmi Chand Chandu Mal v Sundar Das Sital Mal, AIR 1946 Pesh 12; Channabassappa v Sharkaraiah, 1961 Mys LJ 443; Mohammed Raza v Abbas Bandi Bibi, AIR 1932 PC 158. 65 AIR 1915 Mad 1191 [LNIND 1915 MAD 158]; see also TV Sangam Ltd v Shanmugha Sundaram Muddegowda Bakkappa v Mallikarjuna, (1980) ILR 1 Kant 767. 66 Muniswamy v K Venkataswamy, AIR 2001 Kant 246 [LNIND 2000 KANT 310]. 67 K Venkatarammanna v K Brammanna Sastrulu, (1868–1869) 4 Mad HCR 345. 68 2015 (4) KHC 870 [LNIND 2015 KER 15606]. 69 Pritmi Chand v Sunder Das, AIR 1946 Pesh 12. 70 Took Chand v Radha Kishan, AIR 1935 Lah 503. 71 Shyamal Ranjan Mukherjee v Nirmal Ranjan Mukherjee, AIR 2008 (NOC) 568 (All);Nil Madhab v Narottam Sikdar, (1890) ILR 17 Cal 876; Re West Hope Town Tea Co Ltd, (1890) ILR 12 All 192; Goluknath v Mathura, (1893) ILR 20 Cal 273. 72 Visharam v Gangaram, AIR 1935 Sind 235; Venkatachallum v Kabaamurthy, AIR 1955 Mad 350 [LNIND 1954 MAD 133]. 73 Raja Chandra v Gobind Nath, (1873) 11 Beng LR 86, PC; Pudmanund Singh v Hayes, (1901) ILR 28 Cal 720 PC; Bhairon v Parmeshwari, (1885) ILR 7 All 510; Maharam v Ajudha, (1886) ILR 8 All 452; Anantha v Nagamuthir, (1882) ILR 4 Mad 200; Amiruddaula v Nateri Srinivasa Charlu, (1871) 6 Mad HCR 356; Kuldip v Khetrani, (1898) ILR 25 Cal 869; Muthu Kumara Chetty v Anthony Udayar, AIR 1915 Mad 296 [LNIND 1914 MAD 30]. 74 Ratanlal v Ramanuj Das, AIR 1944 Nag 187. 75 Mohomed Raza v Abbas Bandi Bibi, AIR 1932 PC 158. 76 Chhamaru Sahu v Sona Kuer, (1911) 14 Cal LJ 303. 77 Basanowda v Irgodatti, AIR 1923 Bom 276. 78 Diwali v Apaji, (1886) ILR 10 Bom 342. 79 Jagtar Singh v State of Punjab, AIR 2012 P&H 145. 80 Bradley v Peixoto, (1797) 3 Ves 324; Re Jones’ Will, (1870) 23 LT 211; Metcalfe v Metcalfe (1889) 43 ChD 633, 639 (CA); Re Bourke’s Trusts, (1891) 27 LR IR 573; Re Brown, District Bank Ltd v Brown, (1954) Ch 39, (1953) 2 All ER 1342. 81 Corbett v Corbett, (1888) 14 PD 7 (CA); Re Hollis’ Hospital Trustees and Hague’s Contract, (1899) 2 Ch 540; Re Forder, Forder v Forder, (1927) 2 Ch 291, 311 (CA). See Lampet’s Case (1612) 10 Co Rep 46b, 48b. 82 Re Rosher, Rosher v Rosher, (1884) 26 ChD 801; Re Dugdale, Dugdale v Dugdale, (1888) 38 ChD 176; Corbett v Corbett, (1888) 14 PD 7 (CA); Re Cockerill, Mackaness v Percival, (1929) 2 Ch 131; Re Brown, District Bank Ltd v Brown, (1954) Ch 39, (1953) 2 All ER 1342. 83 Churchill v Marks, (1844) 1 Coll 441; Re Payne (1858) 25 Beav 556; Re Porter, Coulson v Capper, (1892) 3 Ch 481; Re Smith, Smith v Smith, (1916) 1 Ch 369; Re Forder, Forder v Forder, (1927) 2 Ch 291 (CA). 84 Co. Litt 223a; Re Macleay, (1875) LR 20 Eq 186; Re Rosher, Rosher v Rosher, (1884) 26 ChD 801. 85 Re Wolstenholme, Marshall v Aizlewood, (1881) 43 LT 752. See further Bird v Johnson, (1854) 18 Jur 976; Rochford v Hackman, (1852) 9 Hare 475; Corbett v Corbett, (1888) 14 PD 7 (CA). 86 Hunt-Foulston v Furber, (1876) 3 ChD 285; Re Mabbett, Pitman v Holborrow, (1891) 1 Ch 707; see also Re Dempster, Borthwick v Lovell, (1915) 1 Ch 795. 87 Brandon v Robinson, (1811) 18 Ves 429; Graves v Dolphin, (1826) 1 Sim 66; Snowdon v Dales, (1834) 6 Sim 524; Corbett v Corbett, (1888) 14 PD 7 (CA); Re Fitzgerald, Surman v Fitzgerald, (1904) 1 Ch 573. 88 Re Dugdale, Dugdale v Dugdale, (1888) 38 ChD 176; Re Mabbett, Pitman v Holborrow, (1891) 1 Ch 707; Re Ross, Ashton v Ross, (1900) 1 Ch 162. 89 Re Fitzgerald, Surman v Fitzgerald, (1904) 1 Ch 573, 593 (CA).

Page 13 of 14 CONDITIONS RESTRAINING ALIENATION

90 Gomti Singh v Anari Kuar, AIR 1929 All 492. 91 Mudara v Muthu Hengsu, AIR 1935 Mad 33 [LNIND 1934 MAD 68]; TV Sangham ltd v Shanmugha Sundaram, AIR 1939 Mad 709 [LNIND 1938 MAD 182]. 92 Venkatarammanna v Brammanna, (1869) 4 Mad 1. 93 Saraju Bala v Jyotirmoyee, AIR 1931 PC 179; Lalit Mohan v Chukkun Lal, 24 IA 76. 94 Re Kosher v Kosher, (1884) 20 ChD 801 . See also Ratan lal v Rammijadas, AIR 1944 Nag 187, wherein it was held to be a partial restraint. 95 Elliot v Elliot, (1896) 2 Ch 353. 96 Brahma Nand v Roshani Devi, AIR 1989 HP 21. 97 Kosher v Kosher, (1884) 20 ChD 801 . 1 Ramaswamy v Wilson Machine Works, AIR 1994 NOC 222 (Mad); Giani Ram v Balmakand, AIR 1956 Punj 255; Brij Devi v Shiva Nandan Prasad, AIR 1939 All 221. 2 Mata Prasah v Nageshar Sahai, AIR 1925 PC 272. 3 Anantha v Nagamuthu, (1882) ILR 4 Mad 200; Rukminilal v Lakshmibai, (1920) ILR 44 Bom 304; Saraju Bala v Jyotirmoyee, AIR 1931 PC 179. 4 Thomas v A Henry, AIR 2008 (NOC) 1414 (Ker). 5 Attwater v Attwater, (1853) 18 Beav 330. 6 Manohar Shivram Swami v Mahadeo Guruling Swami, AIR 1988 Bom 116 [LNIND 1987 BOM 434]; Mohomed Raza v Abbas Bandi Bibi, AIR 1932 PC 158. 7 Aulad Ali v Ali Athar, AIR 1927 All 170. 8 Zoroastrian Co-op Housing Society Ltd v Dist Registrar, Co-op Societies, (2005) 5 SCC 632 [LNIND 2005 SC 384] : AIR 2005 SC 2306 [LNIND 2005 SC 384]. 9 Shiba Prosad v Lekhraj, AIR 1945 PC 162. 10 Bhola Ram Chaudhary v State of Bihar, AIR 1990 Pat 20. 11 Devi Dayal v Ghasita, AIR 1929 All 607; see also Gayasi Ram v Shahabuddin, AIR 1935 All 493, wherein it was held that if this condition was part of the sale it would have been invalid as in restraint on alienation; see also Dol Singh v Khub Chand, AIR 1921 All 97, wherein the vendee had executed a separate agreement that he would not transfer the property purchased to any one except the vendor and it was held that the agreement was void as it amounted to restraint on alienation. 12 Allibhai v Dada, AIR 1931 Rang 578. 13 Ma Yin Hu v Ma Chit May, AIR 1929 Rang 226. 14 See The Transfer of Property Act, 1882, section 10. 15 Raja Jagat Ranvir v Bagriden, AIR 1973 All 1 [LNIND 1972 SC 411]. 16 Sardakripa v Bepin Chandra, AIR 1923 Cal 679; Kumar Chandra v Narendra Nath, AIR 1930 Cal 357; Nabjan Sardar v Neburali Molla, AIR 1933 Cal 506. 17 Rama Rao v Thimappa, AIR 1925 Mad 732 [LNIND 1924 MAD 328]. 18 Bhairo Singh v Ambika Baksha, (1942) Cal WN 374. 19 Har Dayal v Lal Nauratan, AIR 1934 All 358. 20 Madhusudan v Midnapore Zemindary Co, (1918) ILR 45 Cal 940. 21 Dinesh Chhapolia v State of Orissa, AIR 2008 (NOC) 844 (Ori). 22 Montefiore v Behrens, (1865) LR 1 Eq 171; Oldham v Oldham, (1867) LR 3 Eq 404; Hatton v May, (1876) 3 ChD 148; Metcalfe v Metcalfe, (1891) 3 Ch 1 (CA). 23 Mackintosh v Pogose, (1895) 1 Ch 505, 511–514; Re Brewer’s Settlement, Morton v Blackmore, (1896) 2 Ch 503. 24 AIR 1987 Cal 368 [LNIND 1986 CAL 191]: 1987(1) CHN 385 [LNIND 1986 CAL 193]. 25 (1889) 26 ChD 801. 26 AIR 1935 All 493. 27 (1932) 34 Bom LR 1048.

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28 AIR 1988 Bom 116 [LNIND 1987 BOM 434]. 29 (2005) 5 SCC 632 [LNIND 2005 SC 384]. 30 AIR 2001 Kant 246 [LNIND 2000 KANT 310]. 31 AIR 1972 Cal 310 [LNIND 1972 CAL 77]. 32 SA (MD) No. 559 of 2014, decided on 16 February 2017, High Court of Madras (Madurai Bench).

End of Document

RESTRICTIONS REPUGNANT TO THE INTEREST CREATED Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

RESTRICTIONS REPUGNANT TO THE INTEREST CREATED

[s 11] Restriction repugnant to interest created.—Where, on a transfer of property an interest therein is created absolutely in favour of any person, but the terms of the transfer direct that such interest shall be applied or enjoyed by him in a particular manner, he shall be entitled to receive and dispose of such interest as if there were no such direction.

Where any such direction has been made in respect of one piece of immovable property for the purpose of securing the beneficial enjoyment of another piece of such property, nothing in this section shall be deemed to affect any right which the transferor may have to enforce such direction or any remedy which he may have in respect of a breach thereof.

Once the property is transferred absolutely, the owner acquires certain basic rights in the property. A right to possess and enjoy the property is an inherent right of the owner, one that is inseparable from the incidents of ownership. Therefore, save with the help of law, no private agreement between the previous owner and the present owner can be enforced, whereby the former can dictate to the current owner, how he should use the property. If he does, the owner is entitled to ignore it and use it in a manner consistent with his wishes and convenience, without being liable for breach of contract. The right to possess and enjoy the property, therefore, cannot be unreasonably encroached upon by a person, who is already divested of all the rights over it, by transferring the same to the transferee. For instance:

(i)A sells B a piece of land with a condition that B will not build upon it. B takes the land, and attempts to build a house on it. A cannot prevent him from doing so, as B, as the owner has the right to enjoy it in any manner that he likes, subject to the rights of others and also the provisions of law. Here, B can rightfully ignore this condition, without affecting the validity of the transfer. (ii)A transfers his house to B with the condition that B would not demolish it. After purchasing the property, B may retain or demolish it, and A cannot stop him from doing so. (iii)A sells a field to B with the condition that B must grow vegetables/crops on it. After the transfer has been effected, B may put it to any use he wants.

Absolute Interest

Absolute interest indicates that the transferor vested through a specific conveyance all the rights that he had in the property in favour of the transferee, without retaining any right in his own favour such as, a transfer by way of sale, exchange or an unconditional gift. Section 11, therefore, does not apply to those transfers, through which, the transferor conveys, one or some rights in the property to the transferee, while retaining some rights in his own favour, such as a lease or a mortgage.

In case of a lease, what the transferor conveys is only a right to possess and enjoy the property in favour of the transferee but retains the title, and the right to sell the property to himself. Similarly, in a simple mortgage, the

Page 2 of 6 RESTRICTIONS REPUGNANT TO THE INTEREST CREATED transferor transfers a right to cause the property to be sold in the event, he is unable to repay the loan to the mortgagee, but retains the other rights in the property to himself. Section 11, therefore, does not apply to a lease and a mortgage.

For example, A executes a lease of his house to B, with a condition that he would live in it, and would not use it for commercial purposes. B takes the house, and opens a shop in the premises. A can, depending upon the terms stipulated in the lease deed, for its violation, sue B for violation of the lease deed and stop him from using the same for commercial purposes. On the other hand, if instead of a lease, A had executed a sale deed in favour of B, and had incorporated a condition in the sale deed that B would live in this house, and not use it for any other purpose, then B can ignore this condition and use it either for residential purposes or for any other purpose that suits him.

Similarly, A is the owner of a house, which is occupied by two tenants, T1 and T2. He sells it to B, under the condition that B would not collect rent from the tenants, or evict them, or partition the property or that out of the rent, he would pay a specific sum to A.

None of these conditions will be binding on B, as they would be repugnant to the interest that is created in his favour by this absolute transfer and a condition repugnant to the interest created is void when the property is transferred absolutely.33

Where B has been conferred an absolute interest in the property, he alone is competent to decide what to do with his property.

The instrument of transfer should evidence that an absolute interest in favour of transferee has been created.34 Thus, this provision is not applicable in case of a usufruct,35 or where the land is given for use and cultivation only36 or where the grant is made for life,37 or where the vendor reserves the subordinate interest to himself.38 Where in a contract of sale by one co-sharer to another, a condition was incorporated that the vendee will not be entitled to collect the rent or demand partition or encumber the land or alienate it, it was held that the condition was void.39

Distinction Between Section 10 and Section 11

(1) The primary difference between section 10 and section 11 is that under section 10, it can be a transfer of either all the rights in the property or even only some rights. It is a conveyance of a transferable interest in the property that can be an absolute or even a partial transfer, but section 11 applies only to those cases where there is an absolute transfer, such as by way of sale or gift. No right in the property is retained by the transferor in the property, as the same is transferred absolutely to the transferee. (2) The second distinguishing feature is that section 10 relates to the power of the owner to alienate the property, and makes total restraints on it void, while section 11 protects the power of the owner to enjoy the property in any manner whatsoever, without there being any dictation from anyone.

Section 11, like section 10, seeks to restraint the previous holder/owner of the property to unduly interfere with the rights of the owner of the property, once the property has passed to him along with all the rights.

Illustration of Restrictions Repugnant to the Interest

As the transferor is neither competent to dictate the manner of enjoyment of the property in the hands of the transferee nor can control it, therefore after selling the property absolutely, he cannot provide that after the death of the transferee, a specific person will become the owner.

For example, A sells the property to B, and also provides that when B dies C would become the owner of the property. Such a condition is void, and the ownership of the property after B’s death would be decided in accordance with B’s Will, or in absence of any Will, by the relevant laws of inheritance that B would be subject to at the time of his death.

Thus, no life interest can be created in favour of a vendee in a contract of sale.40 A gift restraining enjoyment is void.41 Payment of certain amount to the vendor out of the profits of property by way of rent after sale is illegal.42 A direction in restraint of partition in a gift43 or a Will44 is void even though the restriction is limited in time to the sons attaining majority.45 An agreement not to seek partition may be binding on the immediate parties46 though not for an indefinite time,47 and does not bind the successors at all.48 However, a stipulation in the gift deed that properties are

Page 3 of 6 RESTRICTIONS REPUGNANT TO THE INTEREST CREATED transferred on condition that the donee would maintain the dependants of the donor is valid.49

Exception for the Enjoyment of Another Property of the Transferor

An exception has been carved out for the benefit of the transferor in a specific situation in the Act itself. Despite conveying an absolute interest, the transferor is competent to not only impose, but also enforce a condition directing the transferee/present owner, to enjoy his interest or transfer in a specific manner if the same is necessary, for the enjoyment of another property of the transferor, that is retained by him. Section 11 provides50…

For instance, A owns a house, X, and the land Y, adjoining X. He sells this Y to B, with a condition that B would leave a vacant space of six feet adjoining X, whenever he builds over Y, so that the air and light of his house X is not obstructed. Here the condition that is imposed on B would help A to enjoy his property and if B tries to violate it, A can prevent him from doing so. B, therefore cannot ignore this condition, as the condition is valid and he would be bound by it.

Similarly, A is the owner of a big plot of land, adjoining the road. He constructs a house on half of the plot, and the other half, that is adjoining the road, is left open. On this plot he makes a four feet wide path to reach the road. He uses this path to access the road. A, later sells this vacant plot of land to B with the condition that B would not build on this path and will also not prevent A from accessing the road through this path. This condition is incorporated in the sale deed. B would be legally bound to follow this condition. He can neither build on this path nor obstruct A from using it. These conditions that the transferor imposes as part of the contract of transfer on the transferee can be imposed by him only when the imposition is necessary for the enjoyment of his own property.

It means, that in order the exception can apply, to begin with:

(i) The transferor should be the owner of both, i.e., the property that he professes to sell to the transferee as well as the one for whose beneficial enjoyment he is seeking to impose the direction for specific enjoyment. (ii) Secondly, the conditions can be imposed on the transferee only when it enables him and his family members to seek the enjoyment of his own property, and not of somebody else. He cannot impose conditions on the transferee, directing him to enjoy his property in a specific manner so as to benefit third parties.

Positive and Negative Conditions or Covenants

Conditions or directions that the transferor may impose upon the transferee to secure better enjoyment of his own property can be of two types: positive or affirmative conditions, i.e., they direct the transferor to do something and negative conditions, i.e., they restrain the transferee from doing a particular thing. These conditions are also called covenants.

For example, A transfers a land to B, and puts a condition, that he would leave open a four feet wide space adjoining A’s own land, and would not built upon it. On this land there is also a one-foot open drain, and the second condition in the transfer deed directs the transferee to maintain this drain by carrying necessary repairs from time to time. The first covenant, that requires the transferee not to build upon four feet wide land, is a negative covenant as it is in nature of ‘not to do a particular thing’, while the second condition or covenant is a positive covenant, as it requires the transferee to ‘do a particular thing’, i.e., to maintain the drain in proper shape and to carry necessary repairs.

Use of Negative words not essential

While describing the covenant, the absence of negative words cannot by itself always indicate that the covenant is of positive character51. Thus, the absence of negative form of expression in a covenant is immaterial when from the substance of the agreement a negative agreement can be implied52. A covenant to keep pillars of 12 cubits in dimension in the land is a negative covenant though positive in form53. Similarly the covenant to leave a space

Page 4 of 6 RESTRICTIONS REPUGNANT TO THE INTEREST CREATED having the width of 12 fingers to the respective sides from a common wall in case of future reconstruction of respective portions of building though positive in form is truly negative in its essence and character54.

The basic distinction between negative and positive covenants is that in case of positive covenants, the transferee incurs a financial burden, so that the transferor can enjoy his property, while in the negative covenants he abides by, not to do something, and while not doing it, he would not be incurring a liability. For example, A owns a land adjoining his house that he sells to B with four conditions:

(i) That while building upon the land, B would leave four feet space so as not to obstruct his light and air; (ii) That on his wall, adjoining A’s own house, he would not construct open windows, so that his privacy may be protected; (iii) That the wall adjoining A’s house would always be properly cemented and painted, so that the transferor is not accosted with the ugly sight; and (iv) That he would maintain the front lawn as a garden, as A himself had in his own house, so that both the houses do not appear dissimilar.

The transferee agreed to abide by all the four conditions. Here, the first two conditions are in the nature of negative covenants, and do not impose a burden on the transferee; while the later two are positive covenants, that require the transferee to use money. As transfer of property is primarily a contract between two parties, both are bound by the conditions that are stipulated in the contract, that are not opposed to law. So, in this case, the transferee would be bound by all four conditions that he agreed to abide by, in the first place. As these covenants or conditions are part of the contractual obligations of the parties to the contract, they cannot be assigned to anyone, and remain enforceable only between the parties who had expressly agreed to abide by them. While positive covenants are called ‘burden on land’, the negative covenants imposed for beneficial enjoyment of transferor’s own land are called ‘benefits of a covenant’. They attach themselves to the land and run with the land55. If the transferee sells the property to a third party for value, the positive covenants would not bind the bona fide purchaser, but the negative covenants, because they run with the land, can be enforced even against the subsequent purchasers not only by the original transferor, but also by the assigns.

As the benefits of a covenant attach themselves to the land and run with it, irrespective of the owner, they can be enforced not only against the transferee who was party to the contract, but also against all subsequent transferees, for value if they had notice of it, and irrespective of notice against gratuitous transferees. For example, A, the owner of a house sells the adjoining land to B with a condition that B would leave open some area for the benefit of the seller. A died and his successors sued the assigns of B to enforce the covenant, when he attempted to build upon it. They can do so as this covenant would run with the land.56

Thus, the transferor is competent to issue such direction if it has been made in respect of one piece of immovable property for the purpose of securing the beneficial enjoyment of another piece of property, and he is also competent to enforce such direction or any remedy which he may have in respect of a breach thereof.57 Such conditions as aforesaid can be enforced only by the transferor and not by the transferee of the other portion of the property.58 Thus, a covenant to pull down when required by the vendor, rooms over a passage between the house of the vendor and the house sold can be enforced against the vendee, but being an affirmative covenant cannot be enforced against a stranger59 unless such right can be specifically transferred to him.60

Case Laws

In Austerberry v The Corp of Oldham,61 A conveyed land adjoining his own land to B, with a condition that he would maintain and repair a road on it, to which B agreed. B later sold the land to C, and A sold his land to D. D sued C to enforce the covenant. The court held that he could not do so as, a covenant that is a burden on land, can be enforced only if it amounts to either a grant of an easement, or a rent charge or an estate or interest in land.

In Umashankar Agarwal v Daulatram Sahu, 62 a shop was sold subject to a condition that purchaser shall not be entitled to construct any basement or any pakka construction but there was nothing to show that this direction was made for the purpose of securing the beneficial enjoyment of vendor’s another property. His only plea was that subject construction is adversely affecting him. The condition stipulated was held contrary to the mandate of section 11 and hence void.

In Tulk v Moxhay,63 A was the owner of a vacant piece of ground, and several houses forming a square. The

Page 5 of 6 RESTRICTIONS REPUGNANT TO THE INTEREST CREATED garden had an equestrian statue standing in its centre and around it, stonework and iron railings. A sold this garden to B with a condition that B, his heirs/assignees would at all times at their own costs and charges, keep and maintain the garden and the statue in its same form, as a square garden in an open state without any building, in neat and ornamental order carry out sufficient and proper repairs. The contract further provided that B would allow the other inhabitants of the square, access to the garden on payment of a reasonable rent. A at the same time retained several houses in the square. B sold the garden to C, and it passed several hands till X bought it. It is noteworthy that the conveyance deed through which X got the garden contained no conditions, positive or negative. However, X was aware, that while initially selling the garden to B, A had inserted these conditions. He however, manifested an intention to alter the character of the garden and built upon it. He contended that these conditions were positive covenants and a burden on the land, and were enforceable only as between the parties to the contract and not against the subsequent purchasers for value. An injunction was granted to A, restraining X from converting, using or building upon this garden or changing its character. On appeal filed by X, Lord Cottenham LC, observed, that the issue here was not merely whether the covenant that does not run with the land can be enforced but also, whether a party shall be permitted to use the land in a manner inconsistent with the contract entered into by his seller with notice of which he purchased. The court observed:

It is now contended, not that the vendee could violate that contract, but that he might sell that piece of land, and that the purchaser from him may violate it without this court having any power to interfere. If that were so, it would be impossible for an owner of land to sell part of it without incurring the risk of rendering what he retains worthless.

The court noted that the price would be affected by the covenant but then nothing would be more inequitable than that the original purchaser should be able to sell the property the next day for a greater price, in consideration of the assignee being allowed to escape from the liability which he had himself undertaken. The court held that no one purchasing with notice of equity can stand in a different situation from that of the party from whom he purchased; and therefore X, who was aware of the conditions in the contract, irrespective of their character, was bound by it. In Santhakumaran v Vivekanandan,64 the parents of two sons, S1 and S2 assigned a part of property in the north of the property owned by them and rice mill therein to S2. Since they retained a portion of the property with them, the assignment imposed a few covenants on S2, to prevent the possible nuisance on account of the functioning of the rice mill. By virtue of the covenants, S2, among others, was to construct a compound wall at a height of 8 feet separating the properties given to him and retained by the parents; to keep a gate opening to the property in dispute for entry to the rice mill on the compound wall directed to be constructed; to construct a compound wall on the western boundary of the property and to maintain the gate at the southern boundary of the property for the use of S2 as also the parents by keeping one of its key with him and giving one key to the parents. Later, S1 purchased the residential property retained by the parents. After the parents’ death, both the parties obtained rights in the remaining one half of the property in dispute. Thereafter, S2 demolished the compound wall on the western boundary and the gate installed on the southern boundary of the property. The issue was whether a transferee of the covenantee is entitled to enforce the covenants imposed for the beneficial enjoyment of the property acquired by him. The court held that the second part of section 11 saves the restrictions made for the purpose of securing the beneficial enjoyment of the remaining property of the transferor and when the benefit has been once clearly annexed to one piece of land, it passes by assignment of that land and said to run with it. Further, the benefit annexed to the land is available even to an assignee who is not aware of the benefit at the time of assignment. Therefore S2 had to abide by the covenants.

33 Achammal v Rajamanickam Karthikeyan, AIR 2010 Mad 34 [LNIND 2009 MAD 3158]: (2010) 2 Mad LJ 1210. 34 Indu Kakkar v Haryana State Industrial Development Corpn. Ltd, AIR 1999 SC 296 [LNIND 1998 SC 1066]. 35 Jagdeo Baksh v Jwala Prasad, 15 IC 244. 36 Kateswar Estate v Muhammad Amir, 46 IC 73. 37 Sooramma v Venkataraman, AIR 1952 Mad 116. 38 Bejoy Krishna v Ishwar Damodar, AIR 1954 Cal 400 [LNIND 1954 CAL 10]. 39 Mahram Das v Ajudhia, (1886) ILR 8 All 452; Official Receiver v Samudravijayan, AIR 1939 Mad 509 [LNIND 1938 MAD 305]. 40 Manjusha Devi v Sunil Chandra, AIR 1972 Cal 310 [LNIND 1972 CAL 77]. 41 N Maneklal v Bai Savita, CA No 959 of 1963 decided on Oct 1(SC) (unreported).

Page 6 of 6 RESTRICTIONS REPUGNANT TO THE INTEREST CREATED

42 State of Rajasthan v Jeo Raj, AIR 1990 Raj 90; Lilawati v Ramdhari, AIR 1971 P&H 87; Shiv Nath v Lachhmi Narain, AIR 1938 Oudh 17. 43 Narayana v Kannan, (1884) ILR 7 Mad 315. 44 Raikishori v Debendranath, (1888) ILR 15 Cal 409. 45 Umrao Singh v Baldeo Singh, AIR 1933 Lah 201. 46 Rup Singh v Bhabhuti, (1920) ILR 42 All 30; see also Ramalinga v Virupakshi, (1883) 7 Bom 538, wherein it was held that such an agreement would not bind even the parties themselves. 47 Chander Shekhar v Kundan Lal, (1909) ILR 31 All 3. 48 Jafri Begum v Syed Ali, (1901) ILR 23 All 383. 49 Panna Lal Hazra v Fulmoni Hazra, AIR 1987 Cal 368 [LNIND 1986 CAL 191]. 50 See The Transfer of Property Act, 1882, section 11. 51 Princy v Jose, AIR 2010 Ker 1 [LNIND 2009 KER 225]. 52 Kumar Chandra v Narendra Nath, AIR 1930 Cal 357. 53 Moti Lal Doga v Iswar Radha Damodar, AIR 1936 Cal 727. 54 Princy v Jose, AIR 2010 Ker 1 [LNIND 2009 KER 225]. 55 Ibid. 56 Rogers v Hosegood, (1900) 2 Ch 288 . 57 See The Transfer of Property Act, 1882, section 11. 58 Leela v Ambujakshy, AIR 1989 Ker 308 [LNIND 1989 KER 169]. 59 Nand Gopal v Batuk Prasad Gupta, AIR 1932 All 78. 60 BD Bamable v Michale K Lal, AIR 1951 Ajmer 75. 61 (1885) 29 ChD 750. 62 AIR 2011 Chh 73. 63 (1843–60) All ER 9. 64 R.S.A. No. 1172 of 2013, decided on 23 November 2015.

End of Document

CONDITION MAKING INTEREST DETERMINABLE ON INSOLVENCY OR ATTEMPTED ALIENATION Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

CONDITION MAKING INTEREST DETERMINABLE ON INSOLVENCY OR ATTEMPTED ALIENATION

[s 12] Condition making interest determinable on insolvency or attempted alienation.—Where property is transferred subject to a condition or limitation making any interest therein, reserved or given to or for the benefit of any person, to cease on his becoming insolvent or endeavouring to transfer or dispose of the same, such condition or limitation is void.

Nothing in this section applies to a condition in a lease for the benefit of the lessor or those claiming under him.

Section 12 provides that if the transferor includes a condition in the deed that the interest created in the transfer will be defeated if the transferee becomes insolvent, such condition would be void. The term ‘defeated’ implies that if the transferee becomes insolvent, the transfer would be treated as cancelled and the property would revert back to the transferor. Such a condition may deprive not only an owner a right of alienation, but also defeat, at the same time, the rights of his creditors, who may want to enforce their claim against this property on his attaining insolvency. Where a person becomes insolvent, his property vests in the official receiver, and a condition that his interest in it will cease, will prevent it from vesting it in the official receiver. It must be noted that this section applies only when there is an absolute transfer; and is in consonance with the general principle that the transferor should not be allowed to put conditions that unreasonably interfere with the interest created in favour of the transferee or encroach upon his right to alienate the property. The first part refers to determination of the interest of the transferee in a specific situation, i.e., when the transferee becomes insolvent.

For example, A transfers the property absolutely to B, with a condition that if B becomes insolvent or attempts to transfer it, his interest in the property will come to an end, B is entitled to ignore this condition without affecting the validity of the transfer. This property can be attached by the court or he himself may alienate it according to his wishes. Thus, a condition in the grant that if such property is sold in auction for the grantee’s debt the grant will come to an end, is void.65

65 Shiba Prosad v Lekhraj, AIR 1945 Pat 162.

End of Document

CONDITION FOR THE BENEFIT OF THE LESSOR Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

CONDITION FOR THE BENEFIT OF THE LESSOR

The rule does not apply to a condition in a lease for the benefit of the lessor or those claiming under him.66 Thus, a covenant determining a lease in the event of the insolvency of the lessee is valid,67 but if the lessee assigns the lease and then becomes insolvent, the condition does not apply.68

66 See The Transfer of Property Act, 1882, section 12. 67 Vyankatraya v Shivrambhat, (1883) ILR 7 Bom 256. 68 Smith v Gronow, (1891) 2 QB 394.

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TRANSFER FOR THE BENEFIT OF UNBORN PERSONS Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

TRANSFER FOR THE BENEFIT OF UNBORN PERSONS

[s 13] Transfer for benefit of unborn person.—Where, on a 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.

Illustration

A transfers property of which he is the owner to B in trust for A and his intended wife successively for their lives, and, after the death of the survivor, for the eldest son of the intended marriage for life, and after his death for A’s second son. The interest so created for the benefit of the eldest son does not take effect, because it does not extend to the whole of A’s remaining interest in the property.

Section 13 gives effect to the general rule that a transfer can be effected only between living persons. There cannot be a direct transfer to a person who is not in existence or is unborn. This is the reason why section 13 uses the expression transfer ‘for the benefit of’ and not transfer ‘to’ an unborn person.

Law contemplates transfers for the benefit of unborn persons in two ways, one is by the creation of a trust, where the property is transferred to the trustees, who, though possess the title to the property, hold the property in trust for the benefit of the class of beneficiaries who can be ‘unborn persons’. A trust may thus be created in favour of an unborn person if it satisfies the condition laid down in section 13 even though coming into existence of such a person is uncertain.69 The second method is explained under this section.

Unborn Person

A person not in existence has a specific reference to one who may be born in the future but does not have a current existence. Even though a child in womb is literally not a person in existence, but has been so treated under both Hindu law and English law. Thus, it should be noted that the term ‘unborn’ here, refers to not only those, who might have been conceived but are not yet born, i.e., a child in womb, but also includes those who are not even conceived. Whether they will be born at all or not is also a possibility, but a transfer of property is permissible to be effected for their benefit.

Transfer for the Benefit of Unborn Persons

Section 13 provides for a specific mechanism for transferring property validly for the benefit of unborn persons. The procedure is as follows.

(i) The person intending to transfer the property for the benefit of an unborn person, should first create a life estate70 in favour of a living person and after it, an absolute estate in favour of the unborn person.

Page 2 of 4 TRANSFER FOR THE BENEFIT OF UNBORN PERSONS

(ii) Till the person, in whose favour a life interest is created is alive, he would hold the possession of the property, enjoy its usufruct i.e. enjoy the property. (iii) During his lifetime if the person, (who on the day of creation of the life estate was unborn) is born, the title of the property would immediately vest in him,71 but he will get the possession of the property only on the death of the life holder.

Illustrations

(i)A, on 1 January 1980 executes a deed by which he creates a life interest in his property in favour of his brother Br and further provides that this property is to vest absolutely in favour of his brother’s first child UB. Br, on the date of the transfer, was unmarried. He took the possession of the property, got married and a child was born to him in 1985. The moment the child was born, the child took a vested interest in the property. The possession continues with Br, till his death in 2000, upon which the life estate will come to an end and UB would take the possession of the property. (ii) In the same example, take a situation, where UB is born in 1985 but dies in 1987, i.e., during the lifetime of Br. Here, since UB takes a vested interest in the property, he becomes the owner at the time of the birth. The possession of the property will continue with Br, till 2000 and on his death, upon which the property will go to the heirs of UB. (iii) Similarly, if UB was never born and Br dies in 2000, the property would revert back to A, if he is alive or if he is dead, it would go to A’s heirs, as if A died in 2000, leaving behind this property.

Creation of a Prior or a Life Interest

As far as the creation of a prior interest is concerned, first, the property is given for life to a living person. It is not necessary that life interest should be created in favour of only one living person. The transferor is competent to create successive life interests in favour of several living persons at the same time.

For instance, A transfers property to B for life, and after him, to C, and then to D again for their lives and then absolutely to B’s unborn child UB.

On B’s death, the possession would be taken by C and on C’s death, by D. On D’s death, the possession would go to B’s child, who should have come in existence by this time. If he is not there, the property would revert back to A, if he is alive, else, to his heirs.

No Life Interest for an Unborn Person

As far as the unborn person is concerned, no life interest can be created for his or her benefit. Section 13, specifically prohibits that, by the use of the expression, ‘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. It means that the transferor must convey to the unborn person, whatever interest they had in the property, without retaining anything with them. Thus, no limited estate can be conferred for the benefit of the unborn person. If a limited interest in the property is settled for him or her, the same would be void.

For example, A creates a life estate in favour of his friend B, and a life estate for the benefit of B’s unborn first child UB1 and then absolutely to B’s second child UB2.

The second transfer is of a limited interest in the property for the benefit of an unborn person and would therefore be void and incapable of taking effect in law. After the death of B, here, the property would revert back to A or his heirs as the case may be, as even though the transfer for the benefit of UB2 appears to be proper, as it is dependent on a void transfer that cannot take effect in law; a transfer subsequent to, or dependent on a void transfer can also not take effect.

A transfer in favour of an unborn person is therefore valid, provided it is effected through a living person.72 Where property was gifted by the owner to his grandson without any power of alienation and after the death of such

Page 3 of 4 TRANSFER FOR THE BENEFIT OF UNBORN PERSONS grandson, the property was to vest in his male children absolutely, such gift would be valid, and the condition restraining alienation by the grandson is valid and therefore alienation by him during his life would be void.73 Likewise, a father can create a valid and enforceable settlement of his properties by giving a life interest in his properties to his son and then to his unborn children absolutely.74 But where the interest in favour of the unborn child was a life interest, the settlement would be void, and a subsequent interest would also fail.75 Similarly, where there is a possibility of the interest in favour of the unborn child being defeated either by a contingency76 or by a clause of defeasance,77 it would not be a bequest of the whole of the interest, and would therefore, be void. In R Sakunthala v P Renganathan,78 a testator created a life interest for his sons without right of alienation and after their lifetime it was to devolve upon their male descendants for life and thereafter their descendants for generations. The recital, it was held, fell under the mischief of both section 13 and the rule against perpetuity, which is against public policy hence, the later part of the Will would have no effect.

Validity of Transfer to be Assessed by the Language of the Deed and not by Actual Events

In the example cited above, in figure (ii), suppose UB1 dies before B and UB2 is alive when the life estate in favour of B comes to an end. Even then, the transfer for the benefit of UB2 will not take effect as the validity of the transfer has to be assessed from the language of the document and not with respect to probable or actual events that may take place in future. It is the substance of the transfer that will determine whether it is permissible under the law or not and not how the situation may emerge in future.

In Girjish Dutt v Data Din,79 A made a gift of her property to B for her life and then to her sons absolutely. B had no child on the date of execution of the gift. The deed further provided that in case B had only daughters, then the property would go to such daughters but only for their life. In case B had no child then after the death of B, the property was to go absolutely to X

The deed on paper provided a life estate in favour of B’s unborn daughters, which is contrary to the rule of section 13. However, B died without any child, and X claimed the property under the gift deed. The court held that where a transfer in favour of a person or for his benefit is void under section 13, any transfer contained in the same deed and intended to take effect or upon failure of such prior transfer is also void. In determining whether the transfer is in violation of section 13, regard has to be made with respect to the contents of the deed and not to what happened actually. Here, as the transfer in favour of X was to take effect on failure of the third transfer stipulated in the contract that was void, the transfer in favour of X also became void. Hence, X’s claim was defeated. Where A transferred the property in favour of B with a stipulation that the property is to be shared by B with his other siblings not in existence on the date of the transfer, the transfer in favour of unborn persons is valid and B would have to share the property with them.80

Subsequent Conduct of Limited Owner Irrelevant

The original deed granting both a life interest in favour of a living person and an absolute interest for an unborn person cannot subsequently be tampered with by a limited beneficiary to the detriment of the unborn person. Such an attempt will not be valid and cannot create any right in favour of a third party so as to defeat the rights of a person not in existence at the time of the transfer but to whom the interest is ultimately to belong.

In JV Satyanarayana v Pyboyina Manikyan,81 a person A created a life estate in favour of S, and an absolute interest in favour of the unborn sons of S. Before the birth of the sons, S executed a relinquishment deed with respect to his life interest in the property in favour of his father. With regard to the validity of the transfer in favour of the sons of S, the court held that the transfer in their favour was valid and unaffected by the relinquishment deed executed by S, as its validity would be guided by the terms of the original transfer deed and not by the subsequent events including this act of relinquishment. When S relinquished his life interest in favour of F, the absolute transfer in favour of his sons was unaffected, as the validity was dependent on the terms of the original grant, and that could not be altered by any other person. S and his sons, both were the beneficiaries under the original deed executed by A. Though the interest created in their favour varied vis-à-vis each other, yet at the same time, an intermediary or a beneficiary who took what was granted under the transfer by A could not validly or legally defeat the conferment of the interest in favour of the subsequent and ultimate beneficiary either before or after their birth, by any action of theirs. Even if they created a life interest in favour of another person, by such relinquishment, they cannot prevent the vesting of the property absolutely in favour of their sons the moment they were born.

Page 4 of 4 TRANSFER FOR THE BENEFIT OF UNBORN PERSONS

69 Madras Bar Association v UOI, (2014) 10 SCC 1 [LNIND 2014 SC 853]. 70 A life holder enjoys the property for his life only. He cannot transfer it to anyone. On his death, the property goes back to the settler or to anyone else that the settler may direct. 71 Unless otherwise provided, see The Transfer of Property Act, 1882, section 20. 72 P Rajamani Rurukul v Rama, (2010) 4 Mad LJ 47 : AIR 2010 Mad 197 [LNIND 2010 MAD 1246]. 73 Sridhar v N Revanna, AIR 2012 Karn 79. 74 JV Satyanarayana v Pyboyina Manikyan, AIR 1983 AP 139 [LNIND 1982 AP 274]. 75 Girjish Dutt v Data Din, AIR 1934 Oudh 35; see also Putibai v Sorabji Naoroji, AIR 1923 PC 122; a case decided under the Indian Succession Act, 1925, section 113 which is identically worded as the Transfer of Property Act, 1882, section 13. 76 Ardeshir v Dadabhoy, AIR 1945 Bom 395. 77 Sopher v Administrator General of Bengal, AIR 1944 PC 67; see also Dadabhoy Madon v Tehmina, (1947) 49 Bom LR 882, wherein it was held that this principle is inapplicable to trusts of a settlement inter vivos; see also Issac Nissim v Official Trustee, AIR 1957 Cal 118 [LNIND 1956 CAL 81]. 78 S.A. No. 857 of 1999, R.S.A. 199/2014, decided on 28 February 2017, High Court of Madras. 79 AIR 1934 Oudh 35. 80 Devaru Ganapathi Bhai v Prabhakar Ganapathi Bhai, (2004) 2 SCC 504. 81 AIR 1983 AP 139 [LNIND 1982 AP 274].

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DIFFERENCE BETWEEN ENGLISH LAW AND INDIAN LAW Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

DIFFERENCE BETWEEN ENGLISH LAW AND INDIAN LAW

Under Indian law, the estate created for the benefit of the unborn child cannot take effect unless it extends to the whole of the interest in the properties, subject to the creation of a prior interest in favour of a living person. Only an absolute interest can be granted to an unborn child. If a limited interest is created, the transfer for the unborn would be void. Under English law, however, a limited interest can be created for the benefit of an unborn child, but not subsequent to that.

For instance, A creates a life interest in favour of his friend B and on his death, to his unborn son UB1 for life, and then to B’s unborn grandson UB2 absolutely.

This transfer would be valid under English law but would fail under Indian law in favour of unborn son UB1, due to section 13 and in favour of unborn grandson UB2, due to s. 16.

End of Document

RULE UNDER HINDU LAW (SECTION 113) Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

RULE UNDER HINDU LAW (SECTION 113)

Prior to the enactment of the TP Act, 1882, the rule under Hindu and Muslim law was that a gift to a person who was not in existence, was void. The position under Muslim law continues to be the same. However, for Hindus, the rule was modified by a series of enactments to bring it in conformity with section 13 of the TP Act, 1882.82 Parallel provisions have also been provided under the Indian Succession Act, 1925,83 which permits bequests for the benefit of an unborn person.

Section 113 of the Indian Succession Act, 1925 (IS Act), applies to legacies created for the persons not in existence and contain a provision almost identical to section 13 of the TP Act, 1882. The illustrations given under section 113 of the IS Act below can also be used to understand section 13 of the TP Act, 1882. Section 113 controls section 13 and therefore both have to be read together.84

Section 113 of the Indian Succession Act, 1925, is as follows:

Section 113. Bequest to person not in existence at testator’s death subject to prior bequest.—Where a bequest is made to a person not in existence at the time of the testator’s death, subject to a prior bequest contained in the Will, the later bequest shall be void, unless it comprises the whole of the remaining interest of the testator in the thing bequeathed.

Illustrations

(i) Property is bequeathed to A for his life, and after his death to his eldest son for life, and after the death of the latter to his eldest son. At the time of the testator’s death, A has no son. Here the bequest to A’s eldest son is a bequest to a person not in existence at the testator’s death. It is not a bequest of the whole interest that remains to the testator. The bequest to A’s eldest son for his life is void. (ii) A fund is bequeathed to A for his life, and after his death to his daughters. A survives the testator. A has daughters some of whom were not in existence at the testator’s death. The bequest to A’s daughters comprises the whole interest that remains to the testator in the thing bequeathed. The bequest to A’s daughters is valid. (iii) A fund is bequeathed to A for his life, and after his death to his daughters, with a direction that, if any of them marries under the age of eighteen, her portion shall be settled so that it may belong to herself for life and may be divisible among her children after her death. A has no daughter living at the time of the testator’s death, but has daughters born afterwards who survive him. Here, the direction for a settlement has the effect in the case of each daughter who marries under eighteen of substituting for the absolute bequest to her a bequest to her merely for her life; that is to say, a bequest to a person not in existence at the time of the testator’s death of something which is less than the whole interest that remains to the testator in the thing bequeathed. The direction to settle the fund is void. (iv)A bequeaths a sum of money to B for life, and directs that upon the death of B the fund shall be settled upon his daughters, so that the portion of each daughter may belong to herself for life, and may be divided

Page 2 of 2 RULE UNDER HINDU LAW (SECTION 113)

among her children after death. B has no daughter living at the time of the testator’s death. In this case the only bequest to the daughters of B is contained in the direction to settle the fund, and this direction amounts to a bequest to persons not yet born, of a life-interest in the fund, that is to say, of something which is less than the whole interest that remains to the testator in the thing bequeathed. The direction to settle the fund upon the daughters of B is void.

82 The Hindu Disposition of Property Act, 1916: the Madras Act of 1914. Both these Acts were amended by the Act of 1929. 83 See the Indian Succession Act, 1925, sections 113, 114, 115 and 116. 84 T Subramania Nadar v T Varadharajan, AIR 2003 Mad 364 [LNIND 2003 MAD 693].

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RULE AGAINST PERPETUITY Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

RULE AGAINST PERPETUITY

Section 14. Rule against perpetuity.—No transfer of property can operate to create an interest which is to take effect after the life-time of one or more persons living at the date of such transfer, and the minority of some other person who shall be in existence at the expiration of that period, and to whom, if he attains full age, the interest created is to belong.

End of Document

MEANING OF PERPETUITY Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

MEANING OF PERPETUITY

Perpetuity literally means eternity or infinity, and is also generally understood as an indefinite, long time period, and in relation to transfer of property, it means creation of an interest in present, but which is to take effect after perpetuity. Though the term perpetuity is not explained anywhere with reference to specific number of years, it is understood under section 14 as equivalent to the lifetime of one or more living persons plus the minority (till attainment of eighteen years) of an unborn person, who would take the absolute interest in the property.

Minority

Minority, in India, terminates at the attainment of 18 years and the term ‘minority’ in section 14 is to be understood as only 18 years and not any other age, i.e., legal minority, where the age of minority is extended to 21 years,85 because, the validity of creation of an interest for the benefit of a person not in existence is to be judged by the transfer deed. This transfer deed is executed even before the person in whom the property is to vest absolutely was born and therefore, whether, the minority of such a person would terminate at 18 years or 21 years cannot be foreseen in advance. It is something that may happen actually and in determining the validity of the transfer, regard cannot be had to actual events.

Where the bequest was in favour of the daughters of the testator for life and after that the interest was to go to her children at the age of 21 years, and a guardian was appointed for them so that their minority terminated at the age of 21 years, it was held that the bequest failed as offending the rule against perpetuity because on the date of the testator’s death, it was not certain whether any guardians would be appointed for the children.86

Rule Against Perpetuity

In continuation of the rule explained under section 13, rule against perpetuity can be understood in this manner. Under section 20, it has been provided that unless a contrary intention appears from the terms of a transfer, where, on a transfer, an interest is created for the benefit of a person not in existence, the moment he is born he acquires a vested interest in it, although he may not immediately be entitled to enjoy it, as the property may be in possession of the life estate holder. But the vesting of property takes place at his birth.

The term, ‘unless a contrary intention shows’, means that this rule of vesting of property at birth can be changed by the transferor, and he can stipulate the specific time of vesting of property in favour of the beneficiary. However, he cannot stipulate a time of vesting which goes beyond the period of perpetuity i.e., life time of a living person or more than one living persons and the attainment of 18 years of the person not in existence on the date of the transfer, but who would be born at the time when the life estate comes to an end and would be the ultimate beneficiary. For instance,

(i)A transfers property for life to B, and then to B’s first unborn child without any specification as to the time of vesting of property. The transfer is perfectly valid and the property would vest in his favour, the moment he is born.

Page 2 of 2 MEANING OF PERPETUITY

(ii)A transfers property for life to B, and then to B’s first child when he attains the age of 18 years absolutely. B is living on the date of the transfer but has no child. In this case, when B’s first child would be born, the property would not vest in him till he attains the age of 18 years. If he dies without attaining the age of 18 years, it would revert back to the transferor or his heirs as the case may be. (iii)A transfers property for life to B, and then to B’s first child when he attains the age of 25 years. The transfer is void, as the vesting of the property is postponed beyond the minority of B. (iv)A transfers property for life to B, and then to B’s first child when he attains the age of 10 years. The transfer is perfectly valid and the property would vest in his favour, on his attaining the age of 10 years.

85 The Indian Majority Act, 1875 has been amended and the age of majority is now the attainment of eighteen years only. 86 Soundara Rajan v Natarajan, AIR 1925 Pat 244.

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INALIENABILITY OF PROPERTY TO ITS DETRIMENT Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

INALIENABILITY OF PROPERTY TO ITS DETRIMENT

The rule against perpetuity is based on the general principle that the liberty or right of the owner of a property to alienate or transfer his property at his pleasure, should not be so exercised that it is detrimental to the property itself. If by any mechanism, the property is made inalienable it would be detrimental to the property. Since the conferment of the life-estate, till attainment of majority of the ultimate beneficiary, the property would be inalienable, and that is the maximum period with respect to inalienability of the property that is allowed under law. The transferor cannot stipulate a period over and above this, and if he does so, the transfer for the benefit of an unborn where vesting extends beyond his minority is void.

For example, A transfers his property to B, who is 30 years old and then to his unborn child UB, when he attains the age of 18 years. UB is born when B is 50 years old and the property vests in him 18 years later. Therefore, for 20+18, i.e., 38 years, the property is rendered inalienable. The possession of it is further postponed depending upon when B dies.

If the transferees are living person, any number of successive life interests can be created in their favour, but as aforesaid, no life interest can be created for the benefit of a person not in existence on the date of the execution of the transfer.

For example, A transfers his property in 1970 to B for life, then to C for life, then to D for life then to E for life and then to B’s such son UB who should first attain the age of 18 years. B, C, D and E were all living on the date of the transfer. B dies in 1990, C in 1985, D in 1992 and E in 2002. B’s son UB is born in 1980.

On the death of B, in 1990, the possession of the property would be taken by D as C died during B’s lifetime. E will get the property in 1992, on the death of D. UB attains the age of 18 years in 1998, so while the possession is still with E, the property will vest (ownership) in UB in 1998, while he will get the possession when the last life estate holder dies in 2002.

Rule Applicable to Both Movable and Immovable Property

Rule against perpetuity is applicable to both movable and immovable property. Thus, a gift of property or of a fund to the living son, and after him to his unborn sons, when they attain the qage of 21 years would be hit by rule against perpetuity and would be void.87

Regard to be had to the Language of the Deed and not Actual Events

As has already been explained under the notes to section 13, in determining whether there is a violation of the rule against perpetuity or not, the language of the transfer will be the determining factor, and not how the facts present themselves in reality in future. In other words regard must be had to the possible and not actual events.

Page 2 of 5 INALIENABILITY OF PROPERTY TO ITS DETRIMENT

Examples:

(i)A transfers his property in 1950 to B for life and then to B’s first (unborn) child when he would attain the age of 25 years. B’s child is born in 1951, and B dies in 1977. (ii)A transfers his property in 1950 to B for life and then to B’s first (unborn) child when he would attain the age of 18 years. B dies in 2000 and his child is born in 1975.

The first transfer violates the rule against perpetuity and would be void, while the second would be valid. In the second illustration, though the property would vest in the child after 43 years of its initial transfer it would be valid. However, in the first illustration, it could have become alienable after 26 years of the original transfer, yet this practical situation would be totally irrelevant.

In Ram Newaz v Nankoo,88 a person A, executed a sale deed of his land, (minus two bighas of it) in 1884 in favour of B. With respect to two bighas of his land, in the document he provided as follows:

The 2 bighas of land which I have excluded from the sale shall remain in my possession for life and after my death in the possession of my aulad - khas (descendants). I or my lineal descendants have no right to transfer the property excluded either permanently or temporarily. If none of my lineal descendants is alive in my family, then the said land shall be declared to be the own property of the vendee and his heirs and the persons of my family shall have no claim to the same.

With this deed, in effect he had created a life estate in favour of himself and his son, and also their unborn descendants. This was in violation of section 13, as only absolute interest in the property can be transferred for the benefit of the unborn person(s) Secondly, here, according to the terms of the document, the property was sought to be made inalienable by creation of life estates for the benefit of unlimited number of generations. In real sense, the property could have been tied up for unspecific and a very long time period. However, what actually happened was that A died a little later after the execution of this deed and his son died childless in 1918. As per the transfer deed, the vendee (B) took possession of the property, i.e., the two bighas of land. The heirs (reversioners) of A filed a suit to recover possession of this property on the ground that since this transfer of two bighas in favour of lineal descendants of A was void, a transfer intended to take effect after this void transfer would also fail. Accepting the contention, the court noted:

Having regard to what actually happened here, these two bighas of land could have become the property of the vendee within a life or lives in being and twenty one years after that (if there was no law to the contrary), but the fact that it happened to fall in within the legal limitation is not the test which is to be applied to these cases. What has to be seen is whether the event can be postponed to beyond the period of a life or lives in being and 21 years after and not what in fact happened. Applying that test to the facts of this case, it is perfectly evident that these two bighas of land might have remained with the lineal descendants of A for 100 or 200 years.

The court held that this was a condition repugnant to the law, and the vendees (B), could not set up this document as entitling them to possession of the property. The court decided in favour of the reversioners/heirs. Therefore, whether there is a violation of the rule against perpetuity or not is to be seen from the terms and conditions as they appear on paper and not what actually had happened, i.e., in deciding the question of remoteness regard must be had to the possible and not to actual events.89

Illustrations of Transfers Hit by Rule Against Perpetuity

A gift of share to the son when he would attain the age of 21 years,1 or a son who might be adopted by the life tenant at any time in future,2 is void. But where the bequest provided that the house was to be possessed by the sons and after them the grandsons without any power of alienations and then to the unborn great-grandsons absolutely, it was held that the bequest did not offend the rule against perpetuity as the sons and the grandsons were alive on the date of the bequest.3 Similarly, a life interest created in favour of the wife by the husband before the interest goes absolutely to the children, does not offend the rule against perpetuity.4 Where through a settlement deed a large portion of property was settled absolutely in favour of the other while a portion of property by way of life interest was retained by himself and his descendants, an absolute settlement made with respect to the retained property later would be void.5

Page 3 of 5 INALIENABILITY OF PROPERTY TO ITS DETRIMENT

A disposition of shebaitship by creating successive life interests is invalid.6 But perpetuity is not repugnant in cases of religious or charitable endowments7 or a wakf.8

Rule against Perpetuity not to Apply to Personal Agreements

Rule against perpetuity does not apply to personal agreements.9 It is not concerned with contracts as such, or with contractual rights and obligations as such. A contract to pay money to a person, his heirs or legal representatives upon a future contingency, which may happen beyond the period prescribed would be perfectly valid. It is therefore well established that the rule of perpetuities concerns rights of property only and does not affect the making of contracts which do not create rights of property.10

Rule against perpetuity does not apply to a charge11 or exercise of equity of redemption by the mortgagor,12 but, in the absence of a charge payment of income to a payee from generation to generation is void as offending the rule against perpetuity,13 but where the shebaits of a temple agreed to appoint the family of one person as pujaris from generation to generation to perform the services of the temple and make provision for their expenses and remuneration of the office, it was held that the agreement is valid and not affected by rule against perpetuity.14 Similarly, an agreement in a lease granting a perpetual option to renew from time to time,15 or to surrender the permanent lease whenever the land is required by the landlord,16 is not hit by rule against perpetuity.

Rule Against Perpetuity and a Right of Pre-emption

Rule against perpetuity as aforesaid does not apply to a covenant of pre-emption.17 In Ram Baran Prasad v Ram Mohit Hazra,18 the main issue was whether a pre-emption clause executed by the parties would be hit by the rule against perpetuities. Here, the property was partitioned between two brothers, A and B, with a pre-emption clause in each other’s favour, i.e., if any one of them wanted to sell his share, he had to first offer it to the other brother. Only upon his refusal to buy it could it be sold to others. A offered to sell his portion to B, which he refused and therefore, he sold it to C. Similarly, B sold his portion to D. Further, C sold his property to X and D sold it to Y.

X filed a suit against Y and D, for pre-empting the purchase, contending that as Y had notice of this clause of pre- emption the same can be enforced against them. Y and D on the other hand argued that the pre-emption clause was hit by rule against perpetuity and was therefore void. They maintained that the same could not be invoked against them. The trial court held that the covenant of pre-emption was binding on Y and D as they had notice of it, and X was entitled to enforce the right of pre-emption. They further held that the covenant of pre-emption was not hit by the rule against perpetuity and was enforceable against the assignees of the original parties to the contract. Accordingly, they granted a decree in favour of X, asking them to deposit the requisite money for pre-empting the suit property, and Y was directed to execute the transfer deed in favour of X within 15 days. The High Court as well as the Supreme Court upheld this decision. Explaining the object of the rule against perpetuity under TP Act, 1882, the court said that the rule, as formulated, falls within the branch of the law of property and its true object is to restrain the creation of future conditional interests in property.

Rule against Perpetuity and Lease

A lease is not a mere contract. It is a transfer of a right to possess and enjoy the property, and can be created for a specific number of years or even in perpetuity. However, rule against perpetuity is applicable only in those cases where there is a transfer of property, and the vesting of it is postponed beyond the period of perpetuity. It, therefore, does not apply in cases of lease.

In R Kempraj v Burton Son and Co,19 the main issue was, whether an option given to a lessee (tenant) to get the lease, which is initially for a period of 10 years, renewed after every 10 years is hit by the rule of perpetuity and is void. Here, a lease was executed by A in favour of B, with a renewal option given to B after every 10 years in perpetuity. After 10 years B exercised the option for renewal and upon A’s failure to execute the same, sought the court’s help in issuing a direction to A to execute a registered lease deed in his favour. A contended that the condition relating to renewal was hit by rule against perpetuity and therefore, was not binding on him. The court said:

…it is well known that the rule against perpetuity is founded on the principle that the liberty of alienation shall not be exercised to its own destruction and that all contrivances shall be void which tend to create a perpetuity or place property for ever out of the reach of the exercise of the power of alienation.

Page 4 of 5 INALIENABILITY OF PROPERTY TO ITS DETRIMENT

It was held that section 14 is applicable only when there is a transfer of property and the clause containing renewal after every 10 years can by no means be regarded as creating an interest in property of the nature that would fall within the ambit of section 14.

Relation with Indian Succession Act (Section 114)

Section 114 of the Indian Succession Act corresponds to section 14 of the TP Act, 1882 and provides as follows:

Section 114. Rule against perpetuity.—No bequest is valid whereby the vesting of the thing bequeathed may be delayed beyond the life-time of one or more persons living at the testator’s death and the minority of some person who shall be existence at the expiration of that period, and to whom, if he attains full age, the thing bequeathed is to belong.

Illustrations

(i) A fund is bequeathed to A for his life and after his death to B for his life; and after B’s death to such of the sons of B as shall first attain the age of 25. A and B survive the testator. Here the son of B who shall first attain the age of 25 may be a son born after the death of the testator; such son may not attain 25 until more than 18 years have elapsed from the death of the longer lives of A and B; and the vesting of the fund may thus be delayed beyond the lifetime of A and B and the minority of the sons of B. The bequest after B’s death is void. (ii) A fund is bequeathed to A for his life, and after his death to B for his life, and after B’s death to such of B’s sons as shall first attain the age of 25. B dies in the lifetime of the testator, leaving one or more sons. In this case the sons of B are persons living at the time of the testator’s decease, and the time when either of them will attain 25 necessarily falls within his own lifetime. The bequest is valid. (iii) A fund is bequeathed to A for his life, and after his death to B for his life, with a direction that after B’s death it shall be divided amongst such of B’s children as shall attain the age of 18, but that, if no child of B shall attain that age, the fund shall go to C. Here the time for the division of the fund must arrive at the latest at the expiration of 18 years from the death of B, a person living at the testator’s decease. All the bequests are valid. (iv) A fund is bequeathed to trustees for the benefit of the testator’s daughters, with a direction that, if any of them marry under age, her share of the fund shall be settled so as to devolve after her death upon such of her children as shall attain the age of 18. Any daughter of the testator to whom the direction applies must be in existence at his decease, and any portion of the fund which may eventually be settled as directed must vest not later than 18 years from the death of the daughters whose share it was. All these provisions are valid.

In Veerattalingam v Ramesh, 20 A executed a Will giving the possession of her properties to her sons without any power of alienation, and after that, a life interest was created in favour of her son’s sons, who were also alive at the time of executing the bequest. The testament further provided that after the death of such grandson, the property was to vest in the great grandsons (who were unborn on the date of execution of the Will) absolutely. The apex court held that the bequest was not hit by the rule against perpetuity as successive life interests could be created in favour of any number of living persons and both sons and grandsons in whose favour the life interest was created were living on the date the bequest was created.

87 Anand Rao Vinayak v Administrator-General of Bombay, (1896) ILR 20 Bom 450. 88 AIR 1926 All 283. 89 Ram Newaz v Nankoo, AIR 1926 All 283; Nabin Chandra Sarma v Rajani Chandra Chakrabarti, AIR 1921 Cal 162; Kala Chand Mukherjee v Jatindra Mohan Banerjee, AIR 1929 Cal 263; Maharaj Rajaramji v Ramnath Upasni, AIR 1927 Pat 412; Pan Kuer v Ram Narain Chowdhary, AIR 1929 Pat 353. 1 Anandrao Vinayak v Administrator General of Bombay, (1896) ILR 20 Bom 450. 2 Kashinath v Chimnaji, (1906) ILR 30 Bom 477. 3 Veerattalingam v Ramesh, (1991) 1 SCC 489 [LNIND 1990 SC 549].

Page 5 of 5 INALIENABILITY OF PROPERTY TO ITS DETRIMENT

4 United India Insurance Co Ltd v Katukari Raghavareddy, AIR 1989 AP 33 [LNIND 1986 AP 333]. 5 Sri Siddaraju v Sri Gangadhara, AIR 2012 Karn 143. 6 Sitesh Kishor Pandey v Kishore Pandey, AIR 1982 Pat 339. 7 Sookhmoy Chunder v Monoharri Dassi, (1885) ILR 11 Cal 684. 8 Trustees of Sahebzadi Oalia Kulsum Trust v Controller of Estate Duty, AIR 1998 SC 2986 [LNIND 1998 SC 690]. 9 Ram Baran v Ram Mohit, AIR 1967 SC 744 [LNIND 1966 SC 173]; Nafar Chandra v Kailash, AIR 1921 Cal 328; see also Maharaj Bahadur v Balchand, AIR 1922 PC 165, wherein it was held that a covenant of pre-emption is hit by rule against perpetuity. 10 Walsh v Secretary of State for India, (1863) 10 HLS 367; South Eastern Railway Co v Associated Portland Cement Manufacturers Ltd, (1910–1) Ch 12. 11 Matlub Hasan v Kalawati, AIR 1933 All 934; K Appu v Mary, AIR 1965 Ker 27 [LNIND 1964 KER 86]. 12 Padmanabha v Sitarama, AIR 1928 Mad 28 [LNIND 1927 MAD 262]. 13 Wahajuddin v Ali Ahmad, AIR 1934 All 983. 14 Nafar Chandra v Kailash, AIR 1921 Cal 328. 15R. Kempraj v Burton Son & Co, AIR 1970 SC 1872 [ LNIND 1969 SC 302]. 16 Rama Rao v Thimmappa, AIR 1925 Mad 732 [LNIND 1924 MAD 328]. 17 Ali Hossain Mian v Raj Kumar Haldar, AIR 1943 Cal 417; Aulad Ali v Ali Athar, AIR 1927 All 170; Chinna Manuswami Nayudu v Sagalaguna, AIR 1926 Mad 699 [LNIND 1925 MAD 93]. 18 AIR 1967 SC 744 [LNIND 1966 SC 173]. 19 AIR 1970 SC 1872 [LNIND 1969 SC 302]. 20 (1991) 1 SCC 489 [LNIND 1990 SC 549].

End of Document

TRANSFER TO A CLASS Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

TRANSFER TO A CLASS

[s 15] Transfer to class some of whom come under sections 13 and 14.—If, on a transfer of property, an interest therein is created for the benefit of a class of persons with regard to some of whom such interest fails by reason of any of the rules contained in sections 13 and 14, such interest fails in regard to those persons only and not in regard to the whole class.

The principle under section 15 is that as far as possible the transfer should be given effect to.

End of Document

LEGISLATIVE HISTORY Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

LEGISLATIVE HISTORY

Prior to 1929, the rule was that if by the same transfer an interest was created in favour of a class of persons, with respect to some of which it was void, and for some valid, the interest failed with respect to all of them. It said:

If, on a transfer of property, an interest therein is created for the benefit of a class of persons with regard to some of whom such interest fails by reason of any of the rules contained in S. 13 and 14, such interest fails as regards the whole class.

The law presently makes the transfer valid and effective for those, for whom it is capable of taking effect.

For example, A transfers his property to his son S, for his life and then to his grandsons, when they attain the age of 18 years and to his daughters when they reach the age of 21 years. S had no child at the time of the transfer. This transfer created a life interest in favour of a living person (son), which is permissible in law, but with respect to the children of son, who were not in existence at the time of transfer, the transfer for the benefit of the unborn sons of S was valid but for unborn daughters, it is void as violative of rule against perpetuity. As it stood before 1929, section 15 would have made the transfer in favour of both the unborn sons and daughters’ void. However, after the amendment, and under the present law, the transfer in favour of only the granddaughters will fail, but the same in favour of grandsons would be valid and will be given effect to.

A life interest thus created by a bequest in favour of the widow who was in existence at the time of the testator’s death is valid, but it is invalid for the rest who were not in existence.21 However, where an interest created for the benefit of a class of persons fails in regard to such persons or the whole of such class, any interest created in the same transaction and intended to take effect after or upon failure of such prior interest also fails.22 For instance, A made a gift of her property to her nephew’s daughter for life and then to her male descendants if she should have any, absolutely but in case she had no male descendants, then to her daughters without power of alienation, and if there were no descendants of the nephew’s daughter then the property was to go to her nephew. When the nephew’s daughter died without leaving any issue and the nephew claimed the property, the interest created in favour of the unborn daughters was held as void and the subsequent gift to the nephew also failed due to failure of prior interest.23 An alternative or independent gift capable of taking effect independently of the void limitation is valid.24

Thus, where the testator bequeathed his properties to his three nephews and their descendants in the male line without power of alienation with a gift over stating that if any of the nephews died without a male child his interest was to be taken by the surviving nephews and their male descendants, the estate entail failed but the gift was valid.25 Invalidity of some of the gifts to relatives would not be fatal to other dispositions apparently separable, and similarly, non-charitable dispositions bad for perpetuity would not be validated by the presence of a charitable trust.26

In Raji Bajrang Bahadur Singh v Thakurian Bakhtraj Kaur,27 a person A, died in 1930 leaving behind a son S1 and a

Page 2 of 3 LEGISLATIVE HISTORY widow of another son S2W. Shortly before his and his son’s death, he executed a Will in favour of S2 and after him a life interest in favour of his widow, and unborn heirs, by provision of their maintenance.

S2 died and then A died. S1 claimed property on the ground that the Will is invalid and he is the rightful heir of A. He contended that as the will created a life interest in favour of S2’s widow and his unborn heirs, this not being permitted under section 13 of TP Act, 1882 and section 113 of IS Act, the Will was void.

The court held:

…it is quite true that no interest could be created in favour of an unborn person but when the gift is made to a class or series of persons, some of whom are in existence and some are not, it does not fail in its entirely. It is valid with regard to the persons who are in existence at the time of the testator’s death and is invalid as to the rest.

The widow who was the next heir of S2 was in existence when the testator died and the life interest created in her favour would certainly take effect. Her acquired interest in the Will was commensurate with the period of her life, and till she was alive, S1 had no right to claim possession of the property.

Relation with Indian Succession Act, 1925 (Section 115)

Under the Indian Succession Act, 1925, section 115 corresponds to section 15 of the TP Act, 1882 and provides as follows:

Section 115. Bequest to a class some of whom may come under rules in s. 113 and 114.—If a bequest is made to a class of persons with regard to some of whom it is inoperative by reason of the provisions of section 113 or section 114, such bequest shall be void in regard to those persons only, and not in regard to the whole class.

Illustrations

(i) A fund is bequeathed to A for life, and after his death to all his children who shall attain the age of 25. A survives the testator, and has some children living at the testator’s death. Each child of A’s living at the testator’s death must attain the age of 25 (if at all) within the limits allowed for a bequest. But A may have children after the testator’s decease, some of whom may not attain the age of 25 until more than 18 years have elapsed after the decease of A. The bequest to A’s children, therefore, is inoperative as to any child born after the testator’s death; and in regard to those who do not attain the age of 25 within 18 years after A’s death, but is operative in regard to the other children of A. (ii) A fund is bequeathed to A for his life, and after his death to B, C, D and all other children of A, who shall attain the age of 25. B, C, D are children of A, living at the testator’s decease. In all other respects the case is the same as that supposed in Illustration (i). [Although the mention of B, C and D does not prevent the bequest from being regarded as a bequest to a class, it is not wholly void. It is operative as regards any of the children B, C or D, who attains the age of 25 within 18 years after A’s death.]

21 Raj Bajrang Bahadur Singh v Thakurian Bakhraj Kaur, AIR 1953 SC 7 [LNIND 1952 SC 66]. 22 See The Transfer of Property Act, 1882, section 16. 23 Girjish Dutt v Data Din, AIR 1934 Oudh 35. 24 Re Davy (1915) 1 Ch 837. 25 Kumar Tarakeswar Roy v Kumar Shoshi Shikhareswar, (1883) ILR 9 Cal 952. 26 Kayastha Pathshala v Musst Bhagwati Devi, AIR 1937 PC 4. 27 AIR 1953 SC 7 [LNIND 1952 SC 66].

Page 3 of 3 LEGISLATIVE HISTORY

End of Document

TRANSFER TO TAKE EFFECT ON FAILURE OF PRIOR INTEREST Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

TRANSFER TO TAKE EFFECT ON FAILURE OF PRIOR INTEREST

Section 16. Transfer to take effect on failure of prior interest.—Where, by reason of any of the rules contained in sections 13 and 14, an interest created for the benefit of a person or of a class of persons fails in regard to such person or the whole of such class, any interest created in the same transaction and intended to take effect after or upon failure of such prior interest also fails.

According to section 16, if, due to violation of the rules specified in sections 13 and 14, a specific transfer fails and any transfer that is intended to take effect after or upon failure of such transfer also fails. For example, A transfers property to B for life and then to B’s sons on their attaining the age of 25 years. The deed further provides, that if B dies without any son, the property would vest absolutely in C. B and C were living on the date of the execution of the transfer, but B had no child on the same day. Here, the transfer for the benefit of B’s unborn children was void as it violated the rule against perpetuity. Thus the transfer in favour of C that was intended to take effect upon failure of this prior transfer, that is void would also fail and cannot take effect.

Prior Transfer Valid

It must be noted that section 16, uses the term transfer intended to take effect after or upon failure of ‘prior interest’, which means that the transfer subsequent to or after the void transfer fails and the transfer prior to or before this void transfer would take effect. In the above example, the transfer in favour of B for life is a transfer that is prior to this void transfer, and would be valid, and the benefit of the transfer would stop with the death of B, i.e., B would be entitled to possess and enjoy the property for his life and after his death, the property would revert back to A, if he is alive or, would go to his legal heirs. This rule is based on the principle that a condition following a void condition or a transfer dependent upon a void transfer is in itself void, even though if seen independently, it may be valid. Here, the transfer in favour of C, who was living on the day of the transfer, if seen independently, is valid. But because it was intended to take effect upon failure of a transfer not permitted in law, this would in itself become inoperative. This void transfer therefore operates not as non-existent, but as a wall or block that would not permit the benefit to pass through it to the next person in line.

Alternative Transfer Valid

A transfer intended to take effect after or upon failure of a void transfer must be distinguished from an alternative transfer, which would be valid if otherwise capable of taking effect in law. For example, A makes a transfer of his property to B, and then to B’s children on their attaining the age of 21 years. He further provides in the same deed, that if B has no child then he may make the gift in favour of anyone he likes. The transfer for the benefit of B’s unborn child was void as offending the rule of perpetuity, but the transfer at the pleasure of B is an alternative and independent transfer that would commence from B, and not A, and therefore would be valid.28

Relation with Indian Succession Act, 1925 (Section 116)

Under the Indian Succession Act, 1925, section 116 corresponds to section 16 of the TP Act, 1882 and provides as follows.

Page 2 of 2 TRANSFER TO TAKE EFFECT ON FAILURE OF PRIOR INTEREST

Section 116. Bequest to take effect on failure of prior bequest.—Where by reason of any of the rules contained in sections 113 and 114, any bequest in favour of a person or of a class of persons is void in regard to such person or the whole of such class, any bequest contained in the same will and intended to take effect after or upon failure of such prior bequest is also void.

Illustrations

(i) A fund is bequeathed to A for his life, and after his death to such of his sons as shall first attain the age of 25, for his life, and after the decease of such son to B. A and B survive the testator. The bequest to B is intended to take effect after the bequest to such of the sons of A as shall first attain the age of 25, which bequest is void under s. 114. The bequest to B is void. (ii) A fund is bequeathed to A for his life, and after his death to such of his sons as shall first attain the age of 25, and if no son of A shall attain that age, to B. A and B survive the testator. The bequest to B is intended to take effect upon failure of the bequest to such of A’s sons as shall first attain the age of 25, which bequest is void under s. 114. The bequest to B is void.

28 Javerbai v Kablibai, (1891) 16 Bom 492, for a similar case; see also Kumar Tarakeswar Roy v Kumar Shoshi Shikhareswar, (1883) ILR 9 Cal 952.

End of Document

DIRECTION FOR ACCUMULATION OF INCOME Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

DIRECTION FOR ACCUMULATION OF INCOME

[s 17] Direction for accumulation.—(1) Where the terms of a transfer of property direct that the income arising from the property shall be accumulated either wholly or in part during a period longer than—

(a) the life of the transferor, or (b) a period of eighteen years from the date of the transfer, such direction shall, save as hereinafter provided, be void to the extent to which the period during which the accumulation is directed exceeds the longer of the aforesaid periods, and at the end of such last-mentioned period the property and the income thereof shall be disposed of as if the period during which the accumulation has been directed to be made had elapsed.

(2) This section shall not affect any direction for accumulation for the purpose of—

(i) the payment of the debts of the transferor or any other person taking any interest under the transfer; or (ii) the provision of portions for children or remoter issue of the transferor or of any other person taking any interest under the transfer; or (iii) the preservation or maintenance of the property transferred, and such direction may be made accordingly.

Section 17, that was again inserted by the amending Act of 1929, applies to transfers where the property and the income arising from property are separated by the transferor while effecting a transfer, and the transferee is directed not to spend the income but accumulate it for a specific or a non-specific period. Where the period, for which the transferee cannot enjoy the income but must accumulate it, exceeds the life of the transferor or a period of 18 years, such direction for accumulation would be void and can be validly ignored by the transferee for the period. Law favours free alienation of property and spending of the income arising from it except only where the tying up of property or storage or accumulation of income is reasonably desired. The first part of section 17 specifies the time period beyond which the direction for accumulation of income would be void. The prescribed time period is the life of the transferor, or from the date of the transfer, a period of 18 years. These limitations are in the alternative, and not in combination of the two, such as the life of the transferor and 18 years. For example, A transfers his property to B in 1960 with a direction, that the income coming out of this property be accumulated for a period of 50 years. A dies in 1962, the maximum period for which the income can be accumulated would be 1960+18, i.e., 1978, after which B is free to use the income as he wishes. Similarly, A transfers a property to B in 1960, with a direction for accumulation of income for a period of 20 years. A dies in 1990, i.e., 30 years after the execution of the deed. After his death, the direction for accumulation would become void. This direction of accumulation would be valid only till the life of the transferor. This computation of period is a matter of construction, and has to be gathered from the intention of the transferor.29

Page 2 of 3 DIRECTION FOR ACCUMULATION OF INCOME

Validity of the Transfer not Effected

Where the direction for accumulation exceeds the specified period but merely empowers the transferee to ignore it for excess time period, without affecting the validity of the transfer, in such a case, section 17 does not make the transfer void. Where the time limit is specified which is different from what has been given under section 17, then the actual events subsequent to the transfer would determine the maximum permissible time. It would be either the life of transferor, or 18 years, whichever is longer. If after execution of the transfer, the transferor dies within 18 years, income would have to be accumulated till 18 years, i.e., whichever period is longer.

Exceptions

There are three exceptions to the general rule of limitations or directions for accumulations.

(1) Payment of debts

Where the direction for accumulation of income is for the payment of debts of the transferor or any other person taking an interest under the transferor, then irrespective of the time period, section 17(1) would not apply. The debt may be existing or may arise in future. But the direction for payment of debt must come from the transferor and should not be at the instance of a third party. It must also be for the payment of the debts of the transferor or of any one taking an interest under him. This direction is treated as constituting a kind of charge on the property in favour of the creditors, that they may realise in case an eventuality arises.

For example, A executes a lease of his property and then assigns this lease to B for 99 years with a direction that half of the rent that he would receive would be accumulated for this entire period, so that the debts of A could be paid out of this accumulated income. This term, though exceeds the stipulated 18 years, and irrespective of the time of the death of the transferor would be valid.

For the exception to apply the direction for accumulation must be bona fide, and the debts must be paid out of the income and not out of any other fund. The accumulated income must also be used for payment of debts and not for any other purpose such as creating a reserve for business. The utilisation cannot be at the discretion of a third party, as it is mandatory that the debts for the satisfaction of which the fund is created must actually be discharged out of it.

Difference Between English and Indian Law.—Under English law, under section 164, the exception is also comparatively wider that the one provided under the Indian law. Here, the directions for accumulation for the income can be for any time period, for the repayment of the debts of not only the transferor (that includes a settler, or a testator) or a person claiming an interest under him, but even that of a stranger.

(2) Provision of portions for children or remoter issue

The second exception, which permits accumulation of income for a period longer than the one specified under section 17(1) is, if it is for making a provision of portions for children or remoter issue of the transferor or of any other person taking any interest under the transfer. The beneficiaries here can be the children or descendants of the transferor or even the transferee.

For example, A gifts a land to his son B, with a direction that the income coming out of the land should be accumulated for 50 years and the same should be used for the benefit of B’s children. The direction would be valid.

(3) Preservations and maintenance of the property

Directions for accumulation of income arising from property or a portion of it can be validly imposed, if such direction is for the preservation and maintenance of the property that is the subject matter of the transfer. Thus, where it is directed that income be accumulated for carrying out the necessary repairs to the house transferred, it would be valid.

Similarly, A transfers immovable property to B, that was in the occupation of tenants with a condition that one-fourth of the rent must be accumulated for a period of 100 years, so that the property be maintained and kept in good shape to preserve its market value. Such direction would be valid. The direction for accumulation under this exception would be valid only where it is intended that it be used for the maintenance and preservation of the property that is the subject matter of transfer and not of a third property or any other property.30 Thus, where A

Page 3 of 3 DIRECTION FOR ACCUMULATION OF INCOME settles property, and provides that the income be accumulated for the benefit of a son to be adopted,31 or for providing the marriage expenses of the descendants,32 or for the benefit of a minor disciple till he attained the age of 30 years, it would be valid,33 but if the direction not merely provides that the accumulated income is to be used for the benefit of the children or other descendants, but is actually meant for distribution of the corpus of the property also, it would be hit by rule against perpetuity and would be void.34

A direction for the accumulation of the surplus income for the payment of the debts, for the benefit of the minor donee,35 for marriage expenses of the testator’s son,36 or for providing tuition fees of four deserving students37 is valid. But where the direction stipulated that every time the accumulations reached Rs 3 lakh they were to be divided equally among the sons and the grandsons per stripes it was held that the accumulations amounted to part and parcel of perpetuity and were bad in law.38 In a case where a devise to a minor disciple provided that income was to be accumulated till he attains the age of 30 years it was held that he was entitled to all the income on attaining majority.39

Registration is mandatory for documents mentioned in section 17.40

Relation with Indian Succession Act, 1925 (Section 117)

Under the Indian Succession Act, 1925, section 117, corresponds to section 17 of the TP Act, 1882 and provides as follows:

Section 117. Effect of direction for accumulation.—(1) Where the terms of a will direct that the income arising from any property shall be accumulated either wholly or in part during any period longer than a period of eighteen years from the death of the testator, such direction shall, save as hereinafter provided, be void to the extent to which the period during which the accumulation is directed exceeds the aforesaid period, and at the end of such period of eighteen years the property and the income thereof shall be disposed of as if the period during which the accumulation has been directed to be made had elapsed.

(2) This section shall not effect any direction for accumulation for the purpose of—

(i) the payment of the debts of the testator or any other person taking any interest under the will, or (ii) the provision of portions for children or remoter issue of the testator or of any other person taking any interest under the will, or (iii) the preservation or maintenance of any property bequeathed, and such direction may be made accordingly.

29 Re Errington, Errington–Turbutt v Errington, (1897) 76 LT 716. 30 See The Transfer of Property Act, 1882, section 17, Ex. II. 31 Amrito Lall v Surnomoye, (1897) ILR 24 Cal 589. 32 Nafar Chandra v Ratan, (1910) 15 Cal WN 66. 33 Gosavi Shivga v Rivett-Carnac, (1889) ILR 13 Bom 463. 34 Krishnaramani v Ananda Krisha, (1872) 4 Beng LR 231. 35 Amrito Lall v Surnomoyee, (1898) 25 Cal 662; Ramlalsen v Bidhumukhi, (1920) ILR 47 Cal 76. 36 Nafar Chandra v Ratan, (1910) 15 Cal WN 66. 37 M Kesva Gounder v DC Rajan, AIR 1976 Mad 102 [LNIND 1974 MAD 226]. 38 Krishnaramani v Ananda Krishna, (1872) 4 Bengal LR 231 OC. 39 Gosavi Shivgar v Rivett Carnac, (1889) ILR 13 Bom 463. 40 Ashwatthamma v Ramakka, (2011) 1 AIR Kant R 829 : (2011) 3 ICC 323.

End of Document

ACCUMULATIONS FOR THE BENEFIT TO PUBLIC Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

ACCUMULATIONS FOR THE BENEFIT TO PUBLIC

[s 18] Transfer in perpetuity for benefit of public.—The restrictions in ss. 14, 16 and 17 shall not apply in the case of a transfer of property for the benefit of the public in the advancement of religion, knowledge, commerce, health, safety or any other object beneficial to mankind.

The rules regarding remoteness and perpetuity and against accumulations of income do not apply if the same is for the benefit of the public.

The principle underlying section 18 is to create a distinction between transfers that are purely commercial or personal in character and those which are intended to benefit the public. Where the transfer is for public welfare or public benefit, it is usually not subject to rigorous limitations or restrictions, rather, it is considered necessary to keep it intact so that public welfare can be taken care of. Therefore, restrictions imposed on general transfers such as rule against perpetuity, subsequent transfers failing to take effect if prior transfer is void, and directions for accumulation are not applicable here.

Religious and Charitable Objects

Section 18 specifies transfer of property for the benefit of the public in the advancement of religion, knowledge, commerce, health, safety or any other object beneficial to mankind. These objects are religious and charitable in nature and make the scope of application of the Act very wide in nature as is apparent by the inclusion of the term ‘any other object beneficial to mankind’. The term mankind shows that the beneficiaries under the transfer must be unspecified classes of persons generally and cannot be specific individuals, related or unrelated to the transferor. It means community as a whole, with reasonable classifications. For instance, a settlement where funds are to be accumulated even in perpetuity for feeding poor pilgrims,41 for buying a public hall, for creating a welfare fund for the advancement of a members of a particular disadvantaged class or caste, for the visually, physically or mentally challenged, orphans or the underprivileged, would be valid. But, a settlement when money is to be accumulated for the benefit of persons X, Y and Z, it would be void if it violates section 17(1). A gift of land for the purposes of providing for playing fields for children or for parks and gymnasiums to promote health and welfare of people would be a gift for public purposes. Settlement of property so that the income can be used to maintain old homes, a prayer hall, or a community center would be for public purposes and would be covered under section 18. Section 18 recognises that the rule against perpetuity under the Act does not apply to transfer of property for the benefit of public and such exclusion is in-built in Hindu Law itself.42

Advancement of Religion

As far as religion or its advancement is concerned, gifts or settlements for establishment of an idol43 and its worship,44 for performance of religious ceremonies,45 for celebrating religious festivals, or for creation of wakfs46 are valid even if they offend the rule against perpetuity. However, a gift for dharma is void as it is vague and uncertain,47 as also a gift for spreading Hindu religion.48 A settlement by way of Will for the performance of certain ceremonies

Page 2 of 3 ACCUMULATIONS FOR THE BENEFIT TO PUBLIC by a Parsi testator that included ceremonies for the spiritual welfare of Zoroastrians is valid as one for the advancement of religion.49 A partial dedication is hit by rule of perpetuity and reverts back to the donor.50

In Controller of Estate Duty, West Bengal v Usha Kumar,51 Venkataramiah J, dealing with a gift that was partly for the benefit of certain specific individuals and partly for religious purposes but which offended the rule against perpetuity; held that if the gift in favour of individuals is bad for offending the rule against perpetuity, the amount meant for such individual would become part of the property endowed for religious purpose. The result would be that the total settlement would be deemed to be for religious purposes.

Health and Education

The term health would cover gifts or bequests for the purposes of betterment of public health such as gift or settlement of property under bequests, for charitable dispensaries, trauma centers, eye care centers, hospitals,52 institutions offering various medicare facilities, establishment of yoga and nature care centers, would be exempt from the rule against perpetuity. Establishment of educational institutions such as schools, colleges and universities, establishment or creation of trusts of promoting the knowledge would also enjoy similar protection.

In M Kesava Gounder v DC Rajan,53 A created a trust, settled some properties and appointed himself as one of the four trustees. The object of the trust were two-fold, one to erect a statue of A’s father and secondly, a provision was made in the trust deed for payment of the school fees of four students of the community. A scheme was laid down for the perpetual maintenance of the statue and to celebrate his birth anniversary. The remaining income coming from these properties were to be divided equally amongst the four trustees. After their death, their respective shares were to be enjoyed by their respective male heirs and in absence of male heirs, the female heirs. On the issue as to whether the trust was hit by rule against perpetuity the Madras High Court held, that it did offend the rule against perpetuity as the dedication of the property was not real, but was in fact a devise for settling the property in perpetuity on the descendants of the donor in certain specified lines, and at all material times the income was to be divided amongst the trustees. The court held that as far as the trust provided for payment of school fees of four students of the community, it was not only covered under section 18, but was, in fact, a laudable purpose, and to that extent, the accumulation was saved. However, neither the erection of the statue of the father nor provision for celebrating his birth anniversary were purposes meant to benefit the public.

Therefore, a gift for feeding poor pilgrims, distributing oil among them and saying prayers,54 for performance of religious ceremonies,55 for endowment of a hospital,56 or of a University,57 or a permanent endowment for maintaining a sadavrat for giving food to travelers58 is to the benefit to the public; but a gift merely for encouragement of sports is not a charity.59

41 RMS Firm v Muthuswami Odayar, AIR 1941 Mad 188 [LNIND 1940 MAD 33]. 42 Gopal Singh Visharad v Zahoor Ahmed, 2011 (5) ADJ 281 : 2011 (86) ALR 646 [LNIND 2011 ALL 1718] : (2011) ILR 1 All 387 : 2011 (4) JCR 397 (All) : (2011) 2 UPLBEC 1311 [LNIND 2011 ALL 1718]. 43 Khusal Chand v Mahadevgiri, (1875) 12 Bom HC 214. 44 Bhupati Nath v Ramlal, (1909) 37 Cal 128. 45 Prafulla v Jogendra Nath, (1905) 9 Cal WN 528. 46 Mutu Ramanandan v Vavaa, (1914) 40 Mad 116; see also Fazlul Rabbi v State of West Bengal, AIR 1965 SC 1722 [LNIND 1965 SC 489]. 47 Runchordas v Parvatibai, (1899) ILR 23 Bom 725. 48 Venkatanarasimha v Subba Rao, AIR 1923 Mad 376. 49 Jamsed v Soonabai, (1911) 33 Bom 122. 50 Controller of Estate Duty v Usha Kumar, (1980) 1 SCC 315 [LNIND 1979 SC 466]. 51 (1980) 1 SCC 315 [LNIND 1979 SC 466]. 52 Broughton v Mercer, (1875) 14 Beng LR 422. 53 AIR 1976 Mad 102 [LNIND 1974 MAD 226].

Page 3 of 3 ACCUMULATIONS FOR THE BENEFIT TO PUBLIC

54 RMS Firm v Muthuswami, AIR 1941 Mad 188 [LNIND 1940 MAD 33]. 55 Profulla v Jogendra Nath, (1905) 9 Cal WN 528. 56 Manorama v Kalicharan, (1903) 31 Cal 166. 57 Fanindra v Administrator General, (1901) 6 Cal WN 321. 58 Jamnabai v Khimji, (1890) ILR 14 Bom 1. 59 Re Nottage Jones v Palmer, (1895–9) All ER 1203.

End of Document

VESTED AND CONTINGENT INTERESTS Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

VESTED AND CONTINGENT INTERESTS

[s 19] Vested interest.—Where, on a transfer of property, an interest therein is created in favour of a person without specifying the time when it is to take effect, or in terms specifying that it is to take effect forthwith or on the happening of an event which must happen, such interest is vested, unless a contrary intention appears from the terms of the transfer.

A vested interest is not defeated by the death of the transferee before he obtains possession.

Explanation.—An intention that an interest shall not be vested is not to be inferred merely from a provision whereby the enjoyment thereof is postponed, or whereby a prior interest in the same property is given or reserved to some other person, or whereby income arising from the property is directed to be accumulated until the time of enjoyment arrives, or from a provision that if a particular event shall happen the interest shall pass to another person.

End of Document

WHEN UNBORN PERSON ACQUIRES VESTED INTEREST ON TRANSFER FOR HIS BENEFIT Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

WHEN UNBORN PERSON ACQUIRES VESTED INTEREST ON TRANSFER FOR HIS BENEFIT

[s 20] When unborn person acquires vested interest on transfer for his benefit.—Where, on a transfer of property, an interest therein is created for the benefit of a person not then living, he acquires upon his birth, unless a contrary intention appears from the terms of the transfer, a vested interest, although he may not be entitled to the enjoyment thereof immediately on his birth.

This section has to be read along with sections 13 and 14. It postulates that where an interest is created for the benefit of an unborn child, the moment the child is born, he takes a vested interest in it but only if a contrary intention does not appear from the language of the transfer. It signifies that the transferor is competent to specify the time of the vesting. In accordance with section 14, the time of vesting can be only between the time of birth of the child and till he attains 18 years. If it is beyond 18 years, the transfer would be void as violative of section 14. With respect to the enjoyment of the property, a child, on birth, can enjoy the property through its parents and guardians but vesting of property would take place either at the time of the birth or at any time subsequent to it, but, before the attainment of eighteen years.

The term ‘if a contrary intention appears’ means, therefore, that the granter can specify the time of vesting,60 as the transfer can be effected in the future.61 Unborn children who are beneficiaries under a trust can claim vested interest only after the death of the life estate holder.62

[s 21] Contingent interest.—Where, on a transfer of property, an interest therein is created in favour of a person to take effect only on the happening of a specified uncertain event, or if a specified uncertain event shall not happen, such person thereby acquires a contingent interest in the property.63 Such interest becomes a vested interest, in the former case, on the happening of the event,64 in the latter, when the happening of the event becomes impossible.

Exception.—Where, under a transfer of property, a person becomes entitled to an interest therein upon attaining a particular age, and the transferor also gives to him absolutely the income to arise from such interest before he reaches that age, or directs the income or so much thereof as may be necessary to be applied for his benefit, such interest is not contingent.

If the transfer is dependent upon the happening of an event that is bound to happen, the transferee takes a vested interest in the property. ‘Vested interest’ means that the transfer is complete, even though possession might not have been delivered. The ownership is with the transferee, and if he dies, he is empowered to transmit the property to his heirs. In contingent interest, the transfer is not complete and is dependent on a condition precedent the happening and fulfillment of which is not certain. It would be converted into a vested interest only when the condition happens. If the transfer is dependent on the happening of an uncertain event, it remains contingent till the happening of that event, but on its happening, it becomes a vested interest. For example, a gift to B, on the death of

Page 2 of 3 WHEN UNBORN PERSON ACQUIRES VESTED INTEREST ON TRANSFER FOR HIS BENEFIT

A’s father is a vested interest, but a gift to B on the birth of A’s son is a contingent gift, as whether a son will be born to A or not is uncertain, but the death of a human being is a certain event. If son was born, it would become a vested interest.

For instance, a trust is created, and the trustees are directed to pay to A, a specific amount from the trust property, and the balance amount is to be utilised for the discharge of a mortgage debt. On A’s death, the property is to be given to B. B, with the creation of the trust, takes a vested interest in the property, as he is to get the property on A’s death. Death is a certainty, and irrespective of whether B survives A, a vested interest is created in his favour.65

In Usha Subbarao v BN Vishveswaraiah,66 the Apex Court had observed:

An interest is said to be a vested interest when there is immediate right of present enjoyment or a present right for future enjoyment. An interest is said to be contingent if the right of enjoyment is made dependent upon some event or condition which may or may not happen. On the happening of the event or condition a contingent interest becomes a vested interest… Although the question whether the interest created is a vested or a contingent interest is dependent upon the intention to be gathered from a comprehensive view of all the terms of the document creating the interest, the court while construing the document has to approach the task of construction in such cases with a bias in favour of vested interest unless the intention to the contrary is definite and clear.

A condition postponing enjoyment does not prevent the interest vesting immediately,67 but may, in certain cases, be itself void for repugnancy after the transferee has attained majority.1 No particular form or words are necessary to effect vesting.2 The appointment of an executor or guardian during the minority of the devisee, with a direction to hand over the property on his attaining majority, does not postpone the vesting of the bequest.3 Where, pursuant to an agreement, the adopted son was denied the right to enjoy the property during the lifetime of the adoptive mother, it was held that he had a disposable vested interest in the property.4 A vested interest is not defeated by the death of a transferee before he obtains possession5 or by creation of a prior interest.6 Thus, where, life interest is created in favour of one7 or two persons,8 and then the property is to go absolutely to the beneficiary, the beneficiary takes a vested interest. An unequivocal and irrevocable settlement conferring enjoyment rights over the property in present and each getting a specific share in it upon the death of the settlor would create a vested interest in favour of each of the beneficiary.9 Where the property was settled in trust for the beneficiary for a specific sum of money and the rest of the money was to be utilised for repayment of the debts of the mortgagor, and after the death of the beneficiary the property was to go absolutely to the grantee, the grantee takes a vested interest in the beneficiary’s lifetime.10 A trust created for the repayment of the debt of the settlor and giving an absolute interest to the sons after such repayment would create a vested interest in favour of the sons, capable of being disposed of.11

60 Glanville v Glanville, (1816) 2 Mer 38. 61 Samsuddin v Abdul Hussein, (1906) 31 Bom 165. 62 Rukhamanbai v Shivram, AIR 1981 SC 1881 [LNIND 1981 SC 371]. 63 Shashi Kantha v Promode Chandra, AIR 1932 Cal 600. See The Transfer of Property Act, 1882, section 21. 64 China Reddy v Keshanna, AIR 1954 Hyd 185. 65 U Zoe v Ma Mya May, AIR 1930 Rang 184. 66 AIR 1996 SC 2260 : (1996) 5 SCC 201. 67 Chebrolu Thayaramma v South India Educational Trust, AIR 2008 (NOC) 481 (Mad); Devaru Ganapathi Bhai v Prabhakar Ganapathi Bhai, (2004) 2 SCC 504; Lachman v Baldeo, (1919) 21 OC 312. 1 Sew Dayal v Official Trustee, AIR 1931 Cal 651. 2 Hurris v Brown, (1901) ILR 28 Cal 621. 3 Tarachurn Chatterji v Suresh Chunder, (1890) ILR 17 Cal 122. 4 Balwant Singh v Joti Prasad, (1918) ILR 40 All 692. 5 See The Transfer of Property Act, 1882, section 19.

Page 3 of 3 WHEN UNBORN PERSON ACQUIRES VESTED INTEREST ON TRANSFER FOR HIS BENEFIT

6 Rewan Persad v Radha Beeby, (1846) 4 Moo Ind App 137. 7 Chunilal v Bai Muli, (1900) ILR 24 Bom 420; Lallu v Jagmohan, (1898) ILR 22 Bom 409. 8 Bhagabati v Kali Charan, (1911) ILR 38 Cal 468. 9 PK Mohan Ram v BN Ananthachary, AIR 2010 SC 1725 [LNIND 2010 SC 241]. 10 U Zoe v Ma Mya May, AIR 1930 Rang 184. 11 Rajesh Kanta Roy v Shanti Debi, AIR 1957 SC 255 [LNIND 1956 SC 100].

End of Document

VESTED INTEREST LIABLE TO BE DIVESTED SUBSEQUENTLY Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

VESTED INTEREST LIABLE TO BE DIVESTED SUBSEQUENTLY

Vested interest may come to an end subsequently, if it is subject to a condition, which is to be performed or would happen subsequent to the transfer. These are distinct from contingent interests as in contingent transfers, whether the transfer would take place, will depend on the happening of an uncertain event. Till that event happens there is no transfer. But in the case of subsequent divesting of vested interests, the transfers take place first, it is complete, but at a later time, the transferee can be divested of the interest created in his favour.

For example, a gift to B, if he gets married before attaining the age of 35 years is a contingent transfer, but a gift to B with a condition that it will be forfeited if he remained unmarried till the age of 35 years creates a vested interest in his favour and he would be divested of this interest if he remains unmarried beyond the age of 35 years. Where, under the terms of a compromise, a person took an interest subject to a prior interest and also a condition that he must survive the prior grantee failing which his heirs would take the property according to the rule of primogeniture, it was held that he took a vested interest liable to be divested if he did not survive.12

Difference between Vested and Contingent Interests

The primary differences between vested and contingent interests are as under.

(i) In a vested interest, there is an immediate right of present enjoyment or a present right for future enjoyment and in a contingent interest, the right of enjoyment is made dependent upon some event or condition, which may or may not happen. It is only on the happening of that event or condition that the interest becomes vested. (ii) Vested interest is heritable and transferable even if the enjoyment is postponed, but contingent interest is transferable, but not heritable.13 Where contingent interest is transferred, the transferee simply stands in the shoes of the transferor and would be able to take the contingency or condition specified in the original deed. (iii) Vested interest can be attached by a decree of the court, i.e., a court decree can be executed against it. However, a contingent interest is not attachable14 because of the uncertainty involved. A contingent interest is distinguishable from a mere spes successionis.15

Substance to be Preferred to Form

In deciding whether a document creates a vested or a contingent interest the substance of the document is to be taken and assessed as a whole.16 The Apex Court in Namburi Basava Subrahmanyam v Alapati Hymavathi,17 observed:

The recitals in the document as a whole and the intention of the executant and acknowledgment thereof by the parties are conclusive. The Court has to find whether the document confers any interest in the property in praesenti so as to take effect intra vivos and whether an irrevocable interest thereby, is created in favour of the recipient under the document, or whether

Page 2 of 2 VESTED INTEREST LIABLE TO BE DIVESTED SUBSEQUENTLY

the executant intended to transfer the interest in the property only on the demise of the settlor. Those could be gathered from the recitals in the document as a whole.

12 Sunder Bibi v Rajendra Narain, AIR 1925 All 389; Raja Lal Bahadur v Rajendra Narain, AIR 1934 Oudh 454. 13 Rajes Kanta Roy v Shanti Debi, AIR 1957 SC 255 [LNIND 1956 SC 100]. 14 Ma Yait v Official Assignee, AIR 1930 PC 17. 15 Pestonjee Bhicajee v PH Anderson, AIR 1939 PC 6. 16 PK Mohan Ram v BN Ananthachary, AIR 2010 SC 1725 [LNIND 2010 SC 241]. 17 AIR 1996 SC 2220 [LNIND 1996 SC 709]: (1996) 9 SCC 388 [LNIND 1996 SC 709].

End of Document

CASE LAWS RELATING TO CONTINGENT INTEREST Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

CASE LAWS RELATING TO CONTINGENT INTEREST

In Rajesh Kanta Roy v Shanti Debi,18 a trust was created by A for the payment of debts and the surplus was to be used for the benefit of A and his two sons. The trust was to come to an end with the total payment of debts and the death of the settlor and then the property was to vest in the two sons or to their legal heirs as the case may be. The trust deed also provided that if any of the sons died before the trust came to an end, his heirs would represent him and were to be entitled to the benefits under the trust. The issue before the court was regarding the nature of interest created in favour of the sons, whether it was vested or contingent.

Here the widow of another son of A, (who had died before the creation of the trust) wanted to execute the decree passed in her favour, against the interest that the sons had in the trust property. The decree could be executed against these interests only if the sons had a vested interest in it and not a contingent interest, as contingent interests are not attachable. The court held that the interest of the sons was a vested interest, as whether the sons took a vested or a contingent interest would depend upon the intention of the settlor which was to be gathered from the language of the trust. The emphasis of the settlor in this case was not as much on the repayment of the debts as it was on the benefits coming under it to the sons and his heirs. The court noted that the interest which either of these was to get in the properties allotted to each was expressed to be one which each would get after the trust comes to an end. The trust was to come to an end on the happening of two events viz.—(i) the discharge of all debts specified in the schedules and (ii) the death of the settlor himself. Out of these two events that were specified, death of the settlor was a certain event; but the same could not be said about the discharge of debts. The court held that the interest of the sons was a vested interest and therefore could be attached by the court and observed:

…it appears to us reasonable clear that the intention of the settlor is that as regards the interest of the son with respect to all the properties comprised therein, is vested in title but restricted in enjoyment so long as the settlor is alive and the debts are not discharged.

In Kokilambal v N Raman,19 A settled properties that she had inherited from her husband, in favour of her husband’s sister’s son B. A was childless and wanted to adopt him. According to the terms of the settlement, the property was to be enjoyed by her and B during her lifetime, and B was authorised to collect rents of the house, carry necessary repairs and also pay tax of the same to the relevant authorities. The remaining amount was to be divided between her and B jointly.

She relinquished her individual right to alienate the property but the deed provided that both of them had the right to alienate the same jointly. B died during A’s lifetime, whereupon A revoked this settlement and executed a fresh settlement in favour of her brother’s daughter D, and her husband DH. Meanwhile, B’s brother as his legal heir

Page 2 of 2 CASE LAWS RELATING TO CONTINGENT INTEREST instituted a suit claiming the property settled on B on the ground that under the settlement, B had taken a vested interest in the property, and therefore it devolved on his legal heir, i.e., on him. Further, as A had, by herself, created a life interest in the settled property, she had no right to revoke the settlement and execute a fresh one. The issue before the apex court was whether the nature of interest created in B’s favour was vested or contingent. If it was a vested interest then upon his death, it would be inherited by his brother and A would have no right to either revoke the earlier settlement or to execute a fresh one. But if the interest was contingent, and was to vest in him only after the death of A, A retained the right to revoke the settlement and execute a fresh one. Both the trial court and the high court held that a vested right was created in favour of B, and therefore A could not, subsequently revoke the settlement and execute a fresh one. The Supreme Court, however, held that as A had retained some rights in the property herself, and had not completely relinquished all her rights over it, it meant that no absolute ownership was created in favour of B during her life. The same was therefore, not heritable and the claim of B’s brother was dismissed.

18 AIR 1957 SC 255 [LNIND 1956 SC 100]. 19 AIR 2005 SC 2468 [LNIND 2005 SC 412]: (2005) 11 SCC 234 [LNIND 2005 SC 412].

End of Document

TRANSFER TO MEMBERS OF A CLASS WHO ATTAIN A PARTICULAR AGE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

TRANSFER TO MEMBERS OF A CLASS WHO ATTAIN A PARTICULAR AGE

[s 22] Transfer to members of a class who attain a particular age.—Where, on a transfer of property, an interest therein is created in favour of such members only of a class as shall attain a particular age, such interest does not vest in any member of the class who has not attained that age.

End of Document

TRANSFER CONTINGENT ON HAPPENING OF SPECIFIED UNCERTAIN EVENT Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

TRANSFER CONTINGENT ON HAPPENING OF SPECIFIED UNCERTAIN EVENT

[s 23] Transfer contingent on happening of specified uncertain event.—Where, on a transfer of property, an interest therein is to accrue to a specified person if a specified uncertain event shall happen, and no time is mentioned for the occurrence of that event, the interest fails unless such event happens before, or at the same time as, the intermediate or precedent interest ceases to exist.

If in the same transfer, a prior interest is followed by a subsequent contingent interest, the contingent interest would not take effect unless the contingency happens, but if the prior interest comes to an end and by that time the contingency does not happen, the subsequent interest also fails because the vesting of the property cannot be kept in abeyance. In between the two, i.e., the determination of the prior transfer and the happening of the contingency, there should not be any gap. For instance, A makes a gift to B and after him to C, if C attains the age of 15 years on the date of B’s death. The transfer to B takes place, but the one in favour of C is a contingent transfer and is dependent upon C attaining the age of 15 years on the day of B’s death. If on the day B dies, C is two years old, then there would be a gap of 13 years in between the first transfer coming to an end and the second to take place. During this period of 13 years, the vesting of the property would be in suspense, and therefore, the second transfer would fail.

Similarly, where a testator who had a son, made a bequest and left everything in favour of his unborn grandsons, who might be born within ten years from the date of his death, the court held the disposition as void; as between the death of the testator and the birth of such grandsons, there could be a gap of ten years. During this time the vesting of the property again would be in a state of suspense, and this interval of ten years after the termination of the last interest and the birth of the beneficiaries would make the disposition void.20

Relation with Indian Succession Act, 1925 (Section 124)

This section corresponds to section 124 of the Indian Succession Act, 1925, which provides as follows:

[s 124] Bequest contingent upon specified uncertain event, no time being mentioned for its occurrence.— Where a legacy is given if a specified uncertain event shall happen and no time is mentioned in the will for the occurrence of that event, the legacy cannot take effect, unless such event happens before the period when the fund bequeathed is payable or distributable.

Illustrations

(i) A legacy is bequeathed to A, and, in case of his death, to B. If A survives the testator, the legacy to B does not take effect.

Page 2 of 2 TRANSFER CONTINGENT ON HAPPENING OF SPECIFIED UNCERTAIN EVENT

(ii) A legacy is bequeathed to A and in case of his death without children, to B. If A survives the testator or dies in his lifetime leaving a child, the legacy to B does not take effect. (iii) A legacy is bequeathed to A when and if he attains the age of 18, and, in case of his death, to B. A attains the age of 18. The legacy to B does not take effect. (iv) A legacy is bequeathed to A for life, and, after his death to B, and, “in case of B’s death without children”, to C. The words “in case of B’s death without children” are to be understood as meaning in case B dies without children during the lifetime of A. (v) A legacy is bequeathed to A for life, and, after his death to B, and, “in case of B’s death” to C. The words “in case of B’s death” are to be considered as meaning “in case B dies in the lifetime of A”.

In a case before the Privy Council, a testator made a bequest under which he gave his property to both of his sons but with a condition that if any of the sons died without leaving a male issue, his interest would be taken by the surviving son. One of the sons died after two years of the death of the testator. The court held that even though the gift was a contingent one, contingent upon the death of the son without a male issue, yet it was valid.21

20 Official Assignee v Vedavalli, AIR 1926 Mad 936 [LNIND 1925 MAD 254]. 21 Chuni Lal v Bai Samarath, AIR 1930 PC 270 [LNIND 1930 PC 62].

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TRANSFER TO SUCH OF CERTAIN PERSONS AS SURVIVE AT SOME PERIOD NOT SPECIFIED Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

TRANSFER TO SUCH OF CERTAIN PERSONS AS SURVIVE AT SOME PERIOD NOT SPECIFIED

[s 24] Transfer to such of certain persons as survive at some period not specified.—Where, on a transfer of property, an interest therein is to accrue to such of certain persons as shall be surviving at some period, but the exact period is not specified, the interest shall go to such of them as shall be alive when the intermediate or precedent interest ceases to exist, unless a contrary intention appears from the terms of the transfer.

Illustration

A transfers property to B for life, and after his death to C and D, equally to be divided between them, or to the survivor of them. C dies during the life of B. D survives B. At B’s death the property passes to D.

Relation with Indian Succession Act, 1925 (Section 125)

This section corresponds to section 125 of the Indian Succession Act, 1925, and incorporates a rule of construction. Under the Indian Succession Act, 1925, unless a contrary intention appears from a testament, the period of survivorship is the time of payment or distribution

The Indian Succession Act, 1925, section 125 states:

[s 125] Bequest to such of certain persons as shall be surviving at some period not specified.—Where a bequest is made to such of certain persons as shall be surviving at some period, but the exact period is not specified, the legacy shall go to such of them as are alive at the time of payment or distribution, unless a contrary intention appears by the will.

Illustrations

(i) Property is bequeathed to A and B to be equally divided between them, or to the survivor of them. If both A and B survive the testator, the legacy is equally divided between them. If A dies before the testator, and B survives the testator, it goes to B. (ii) Property is bequeathed to A for life, and, after his death, to B and C, to be equally divided between them, or to the survivor of them. B dies during the life of A; C survives A. At A’s death the legacy goes to C. (iii) Property is bequeathed to A for life, and after his death to B and C, or the survivor, with a direction that, if B should not survive the testator, his children are to stand in his place. C dies during the life of the testator; B survives the testator, but dies in the lifetime of A. The legacy goes to the representative of B.

Page 2 of 2 TRANSFER TO SUCH OF CERTAIN PERSONS AS SURVIVE AT SOME PERIOD NOT SPECIFIED

(iv) Property is bequeathed to A for life, and, after his death, to B and C, with a direction that, in case either of them dies in the lifetime of A, the whole shall go to the survivor. B dies in the lifetime of A. Afterwards C dies in the lifetime of A. The legacy goes to the representative of C.

End of Document

CONDITIONAL TRANSFER Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

CONDITIONAL TRANSFER

[s 25] Conditional transfer.—An interest created on a transfer of property and dependent upon a condition fails if the fulfilment of the condition is impossible, or is forbidden by law, or is of such a nature that, if permitted, it would defeat the provisions of any law, or is fraudulent, or involves or implies injury to the person or property of another, or the Court regards it as immoral or opposed to public policy.

Illustrations

(a)A lets a farm to B on condition that he shall walk a hundred miles in an hour. The lease is void. (b)A gives Rs. 500 to B on condition that he shall marry A’s daughter C. At the date of the transfer C was dead. The transfer is void. (c)A transfers Rs. 500 to B on condition that she shall murder C. The transfer is void. (d)A transfers Rs. 500 to his niece C, if she will desert her husband. The transfer is void.

End of Document

GENERAL PRINCIPLE OF CONDITIONAL TRANSFERS Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

GENERAL PRINCIPLE OF CONDITIONAL TRANSFERS

The transferor, as the owner of the property, can transfer it in accordance with his wishes and conditions. It is up to the transferee to either accept the transfer, or to reject it, as ordinarily no transfer can be imposed on the transferee; transfer of property primarily being a contract, but in certain cases, even if the transferee accepts the transfer saddled with conditions, he is entitled to ignore these conditions later without affecting the validity of the transfer as is the case under sections 10, 11 and 12. This is because sometimes the law offers him a way out. However, by and large, if the conditions are not against the law, the transferee is bound to follow them and if he refuses or fails to perform them, the transfer in itself fails to take effect, as it becomes void. Where the transferor imposes conditions that are either impossible to perform, or illegal or opposed to public policy, these void conditions make the transfer in itself void. These conditions can be of two types, conditions precedent, i.e., they have to be observed first and then only the transfer would take place, and conditions subsequent, i.e., the transfer takes place first and the conditions have to be observed by the transferee at a later stage and if he does not comply with the conditions, then the transfer becomes void. section 25 deals with conditions that are void.

End of Document

VOID CONDITIONS Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

VOID CONDITIONS

Section 25 refers to six categories of conditions and terms them as void conditions. These conditions can be described as follows:

(i) Conditions impossible to perform; (ii) Conditions forbidden by law; (iii) Conditions if permitted would defeat the provisions of any law; (iv) Fraudulent conditions; (v) Conditions involving or implying injury to person and property of another; (vi) Conditions that are regarded as immoral or opposed to public policy by the court.

What has to be seen here is that if these conditions are conditions precedent, not only are the conditions void, they make the transfer also void. However, if the condition is a condition subsequent, the condition is void but the transfer may continue to be valid, i.e., a subsequent void condition cannot affect the validity of the transfer, but a void condition precedent renders the transfer itself void.

For example, excavation of a tank when the testator already did it during his lifetime is an impossible condition to perform.22 A gift to which an immoral condition is attached is a good gift but the condition is void,23 but transfer in consideration of future immoral relations is void.24 Where a person advanced money to enable a woman to divorce her husband and marry him later, and then sued her for return of money as she failed to do so, it was held that the agreement was against public policy and void.25 Similarly, a gift to a woman on the condition that she stays apart from her husband, would be opposed to public policy and void.26

Relation with Indian Succession Act, 1925 (Sections 126 and 127)

Sections 126 and 127 of the Indian Succession Act, 1925, deal with bequests upon impossible, immoral and illegal conditions and render them void.

[s 126] Bequest upon impossible condition.—A bequest upon an impossible condition is void.

Illustrations

(i) An estate is bequeathed to A on condition that he shall walk 100 miles in an hour. The bequest is void. (ii)A bequeaths 500 rupees to B on condition that he shall marry A’s daughter. A’s daughter was dead at the date of the will. The bequest is void.

Page 2 of 2 VOID CONDITIONS

[s 127] Bequest upon illegal or immoral condition.—A bequest upon a condition, the fulfilment of which would be contrary to law or to morality is void.

Illustrations

(i)A bequeaths 500 rupees to B on condition that he shall murder C. The bequest is void. (ii)A bequeaths 5,000 rupees to his niece if she will desert her husband. The bequest is void.

22 Rajendra Lal v Mrinalini Dassi, AIR 1922 Cal 116. 23 Ram Sarup v Bela, (1884) ILR 6 All 313. 24 Thais Muthukannu v Shanmugavela, (1905) ILR 28 Mad 413; Ghumna v Ramchandra, AIR 1925 All 437. 25 Wilkinson v Wilkinson, (1871) 12 Eq 604. 26 Bai Vijli v Nansa Nagar, (1886) ILR 10 Bom 152.

End of Document

TRANSFERS WITH FULFILMENT OF CONDITION PRECEDENT Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

TRANSFERS WITH FULFILMENT OF CONDITION PRECEDENT

[s 26] Fulfilment of condition precedent.—Where the terms of a transfer of property impose a condition to be fulfilled before a person can take an interest in the property, the condition shall be deemed to have been fulfilled if it has been substantially complied with.

Illustrations

(a)A transfers Rs. 5,000 to B on condition that he shall marry with the consent of C, D, and E. E dies. B marries with the consent of C and D. B is deemed to have fulfilled the condition. (b)A transfers Rs. 5,000 to B on condition that he shall marry with the consent of C, D and E. B marries without the consent of C, D and E, but obtains their consent after the marriage. B has not fulfilled the condition.

Where the transfer is subject to a condition precedent, this condition has to be fulfilled first and then only can the transfer take place. Till it is complied with, the transfer cannot take place in law. Early vesting of property is always favoured and recommended, and therefore, in keeping with this rule, the transfer would take place if the conditions that the transferor/testator has laid down for the transferee to comply with are substantially complied with. Illustration (a) to section 26 makes it clear that if the condition becomes impossible to perform, a substantial compliance will make the transfer possible. If E dies before B could seek his consent, getting his consent becomes impossible due to an event for which the transferee cannot be held responsible. Therefore, if E marries with the consent of C and D, the condition is substantially complied with. It is done primarily so that the transfer is not defeated in its entirety if facts and circumstances change later to the execution of a transfer and make part of the compliance difficult. Thus, whatever is possible is permissible but this does not mean that the transferee on his own, can deviate and partly fulfil the condition when its complete fulfilment is possible. Transfer of property as aforesaid, is primarily a contract and if the transferee had agreed to abide by some conditions, he has to comply with them. If the conditions are clearly spelt out in the document and their compliance is also possible, then for the vesting of the property, the transferee has to fulfil these conditions.

In the same illustration, if E is living and if B marries without taking his consent, the transfer would not be validly effected even if the consent of both C and D is obtained.

As per the second illustration, if the consent for marriage has to be obtained prior to the marriage and this condition is clearly spelt out in the document, the transfer will not be effected if instead of before, the consent is obtained after marriage. Here the condition is not impossible to perform and therefore, has to be complied with strictly and not substantially.

A contract stipulating the fulfilment of a condition precedent may be a contingent contract under section 26.27

Relation with Indian Succession Act, 1925 (Section 128)

Page 2 of 3 TRANSFERS WITH FULFILMENT OF CONDITION PRECEDENT

Section 128 of The Indian Succession Act, 1925 contains parallel provisions and is supplemented with several illustrations that are equally applicable to understand the cases under section 26.

[s 128] Fulfilment of condition precedent to vesting of legacy.—Where a Will imposes a condition to be fulfilled before the legatee can take a vested interest in the thing bequeathed, the condition shall be considered to have been fulfilled if it has been substantially complied with.

Illustrations

(i) A legacy is bequeathed to A on condition that he shall marry with the consent of B, C, D and E. A marries with the written consent of B, C is present at the marriage. D sends a present to A previous to the marriage. E has been personally informed by A of his intentions, and has made no objection. A has fulfilled the condition. (ii) A legacy is bequeathed to A on condition that he shall marry with the consent of B, C and D. D dies. A marries with the consent of B and C. A has fulfilled the condition. (iii) A legacy is bequeathed to A on condition that he shall marry with the consent of B, C and D. A marries in the lifetime of B, C and D, with the consent of B and C only. A has not fulfilled the condition. (iv) A legacy is bequeathed to A on condition that he shall marry with the consent of B, C and D. A obtains the unconditional assent of B, C and D to his marriage with E. Afterwards B, C and D capriciously retract their consent. A marries E. A has fulfilled the condition. (v) A legacy is bequeathed to A on condition that he shall marry with the consent of B, C and D. A marries without the consent of B, C and D, but obtains their consent after the marriage. A has not fulfilled the condition. (vi)A makes his will whereby he bequeaths a sum of money to B if B shall marry with the consent of A’s executors. B marries during the lifetime of A, and A afterwards expresses his approbation of the marriage. A dies. The bequest to B takes effect. (vii)A legacy is bequeathed to A if he executes a certain document within a time specified in the will. The document is executed by A within a reasonable time, but not within the time specified in the will. A has not performed the condition, and is not entitled to receive the legacy.

Illustration (i) shows that for the fulfilment of the condition, no specific or formal method is necessary. Where the conduct is apparent and the intention is clear, then whichever method is adopted by either the transferee or the persons mentioned in the transfer deed, the compliance would be valid. Seeking consent here can be in writing, by personal information or presence, or approval conveyed through a specific method. Illustration (ii) is identical to illustration (b) under section 26 of the TP Act. Illustration (iii) shows that the transferor cannot partly fulfil the conditions, where complete fulfilment is possible in nature of things. If he has to take the consent of three persons, and all are alive, taking consent of two out of three could be literally called a partial compliance, but as the condition can be fulfilled by him in its entirety, according to this section it would be concluded that he has not fulfilled the condition. Substantial compliance will be recognised as conferring a benefit on him only when a complete fulfilment is impossible to perform.

Similarly, illustration (v) shows that where the time is stipulated for the compliance with the condition, it must be so fulfilled within the specified time. If the marriage has to be performed with the prior approval, the condition is not complied with by the subsequent approval.

Illustration (vii) clarifies that a person would not be entitled to the legacy, if in accordance with the conditions laid down by the testator he has to comply with the condition with in a specified time, if he performs the condition within a reasonable time period but not within the stipulated time period.28 If the condition is complied with by the beneficiary in accordance with the terms of the legacy, a subsequent act of the third party would not make any difference to his compliance and he would be entitled to the legacy.

For example, in illustration (iv), if once A obtains the consent of the persons that have been mentioned in the Will, and subsequent to their approval, they withdraw their consent, this act would be of no consequence. It would not adversely affect A’s compliance with the terms of the Will. If at all a subsequent act can affect the compliance, it can be of the testator himself. For instance, in illustration (vi), it is the testator himself, who expresses approbation to the marriage of B and therefore, the bequest would take effect.

Page 3 of 3 TRANSFERS WITH FULFILMENT OF CONDITION PRECEDENT

A condition of residence in absence of any specific manner prescribed is fulfilled by occasional residence.29

27 Gian Chand v York Exports Ltd, (2015) 5 SCC 609 [LNINDU 2014 SC 17] : AIR 2014 SC 3584 [LNINDU 2014 SC 17]. 28 See for instance Veerbhadra v Chiranjeevi, (1905) ILR 28 Mad 173 : 32 IA 105, where on parallel facts the condition was held as not performed and the contract was declared as void. 29 Ganendra Mohan Tagore v Rajah Juttendro Mohun Tagore, (1874) 1 IA 387.

End of Document

CONDITIONAL TRANSFER TO ONE PERSON COUPLED WITH TRANSFER TO ANOTHER ON FAILURE OF PRIOR DISPOSITION Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

CONDITIONAL TRANSFER TO ONE PERSON COUPLED WITH TRANSFER TO ANOTHER ON FAILURE OF PRIOR DISPOSITION

[s 27] Conditional transfer to one person coupled with transfer to another on failure of prior disposition.— Where, on a transfer of property, an interest therein is created in favour of one person, and by the same transaction an ulterior disposition of the same interest is made in favour of another, if the prior disposition under the transfer shall fail, the ulterior disposition shall take effect upon the failure of the prior disposition,30 although the failure may not have occurred in the manner contemplated by the transferor.

But, where the intention of the parties to the transaction is that the ulterior disposition shall take effect only in the event of the prior disposition failing in a particular manner, the ulterior disposition shall not take effect unless the prior disposition fails in that manner.

Illustrations

(a)A transfers Rs. 500 to B on condition that he shall execute a certain lease within three months after A’s death, and, if he should neglect to do so, to C. B dies in A’s life-time. The disposition in favour of C takes effect. (b)A transfers property to his wife; but, in case she should die in his life-time, transfers to B that which he had transferred to her. A and his wife perish together, under circumstances which make it impossible to prove that she died before him. The disposition in favour of B does not take effect.

This section has to be contrasted with section 16 of the Act which specifies that if the prior transfer fails due to violation of sections 13 and 14, then a transfer that was to take effect upon the prior transfer would also fail. Similarly, if the prior interest fails under section 25, then also, the subsequent interest fails.

What should be noted is that the prior transfer’s failure, here, is not due to the violation of section 13 or section 14, but due to some other reason, and therefore, even if the prior transfer fails for a reason that was not contemplated by the transfer or could not have been foreseen by him, then the subsequent transfer would take effect. Therefore, it is only when the prior interest is perfectly valid to begin with and its failure is not due to its conflict with the legal provisions but due to some reasons that happen actually subsequent to the transfer and could not have reasonably been foreseen by the transferor initially, that the subsequent transfer would be valid. In such cases, it would be assumed as if the prior transfer was not in the way, consequently, the subsequent interest would be accelerated.

For example, in illustration (a), the prior transfer fails due to the death of B, which might not have been contemplated by the transferor beforehand and therefore, the transfer in favour of C takes effect. It is not the violation of any legal principle that makes the transfer void or inoperative, but it becomes inoperative due to an act of nature. Similarly, A makes a gift to his wife W and then to the children. The gift to W was invalid as it was unregistered and law required it to be by a registered instrument only. Therefore, the gift over in favour of the

Page 2 of 3 CONDITIONAL TRANSFER TO ONE PERSON COUPLED WITH TRANSFER TO ANOTHER ON FAILURE OF PRIOR DISPOSITION children would accelerate and would take effect immediately. Failure of the prior gift does not accelerate a subsequent gift unless the two gifts are dependant on each other.31 Where an interest is given to A, B, C and D for successive periods of 21 years and B and C die, the interest in favour of D would accelerate and take effect. 32 Similarly, in Radha Prasad v Rani Mani,33 a Hindu man made a gift to a boy who was intended to be adopted by his wife and provided that if the adoption could not be completed and he died without any son, the property was to go to his daughters. This power of adoption with W was invalid and therefore, the gift to daughters could take place with immediate effect. In Narandas v Bai Saraswati,34 A bequeathed his property to his wife, W, for life and then to his daughter’s sons. In case the daughter (D) had no sons, then to D, for life and then to a cousin C. In between the date of the W’s death, and the birth of D’s son, there was a gap of eight months. As the vesting of the property would have been in suspense for this period of eight months, the bequest to D’s son failed. With its failure the court said that in keeping with the intention of the testator to keep the property in the family, the bequest to C would take effect. This case was later, rightly criticised in Official Assignee of Madras v Vedavalli Thayarammal,35 where there was a gap of 10 years between the death of the owner and the vesting of the property in case of a prior interest with a gift over provision it was held that the gift over also failed, as for 10 years, the vesting of the property would have been in a state of suspense. In Okhoymoney Dasee v Nilmoney,36 A made a bequest in favour of his child in womb in the following manner: “if the child born would be a son he would take the property absolutely and if it was a female child a provision for her maintenance was to be made out of the property. In case the would-be son died during minority the property would go to C “. The child born was a female child. It was held that even though the gift over to C was on a special condition, i.e., in case of son dying during minority, it would take effect.

Relation with Indian Succession Act, 1925 (Section 129)

Section 129 of the Indian Succession Act, 1925, provides for the rule of acceleration in case of bequests.

[s 129] Bequest to A and on failure of prior bequest to B.—Where there is a bequest to one person and a bequest of the same thing to another, if the prior bequest shall fail, the second bequest shall take effect upon the failure of the prior bequest although the failure may not have occurred in the manner contemplated by the testator.

Illustrations

(i)A bequeaths a sum of money to his own children surviving him, and, if they all die under 18, to B. A dies without having ever had a child. The bequest to B takes effect. (ii)A bequeaths a sum of money to B, on condition that he shall execute a certain document within three months after A’s death and, if he should neglect to do so, to C. B dies in the testator’s life-time. The bequest to C takes effect.

Where the prior bequest fails either because the one in whose favour it was, dies, and is therefore unable to take it, or if it was a conditional bequest in favour of a person who failed to fulfil the condition and it does not take effect, in such cases the bequest in favour of the subsequent beneficiary takes effect.

In Govindraju v Mangalam Pillai, 37 A bequeathed his property to B and C. The direction under the Will stipulated that his property was to be sold and the sale proceeds were to be equally divided between B and C. It further provided that if B or C died during A’s lifetime or before the estate could be so divided, leaving any issue, the issue would take the property. On A’s death, both B and C took a vested interest. The condition for divesting was: if any one of them died before the division and distribution of the property, their respective share was to vest in their lawful issue. C died five months after A and before the sale and distribution of property could be materialised. The court held that he was divested of the share and the same vested in his issue.

30 Ismail Haji v Umar Abdulla, AIR 1942 Bom 155; Debi Shanker v Nand Kishore, AIR 1932 Oudh 161. 31 Gopaldas v Hemandas, AIR 1942 Sindh 145. 32 Debi Shanker v Nand Kishore, AIR 1932 Oudh 161. 33 (1906) 33 Cal 947. 34 (1914) 38 Bom 697. 35 AIR 1926 Mad 936 [LNIND 1925 MAD 254].

Page 3 of 3 CONDITIONAL TRANSFER TO ONE PERSON COUPLED WITH TRANSFER TO ANOTHER ON FAILURE OF PRIOR DISPOSITION

36 (1888) ILR 15 Cal 282. 37 AIR 1933 Mad 80 [LNIND 1932 MAD 143].

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ULTERIOR TRANSFER CONDITIONAL ON HAPPENING OR NOT HAPPENING OF SPECIFIED EVENT Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

ULTERIOR TRANSFER CONDITIONAL ON HAPPENING OR NOT HAPPENING OF SPECIFIED EVENT

[s 28] Ulterior transfer conditional on happening or not happening of specified event.—On a transfer of property an interest therein may be created to accrue to any person with the condition superadded that in case a specified uncertain event shall happen such interest shall pass to another person, or that in case a specified uncertain event shall not happen such interest shall pass to another person. In each case the dispositions are subject to the rules contained in sections 10, 12, 21, 22, 23, 24, 25 and 27.

Section 28 specifies a situation where, upon a transfer, the property or an interest in it has already been vested in a particular person. This person can be divested of the estate subsequently on the happening of an uncertain event, and then the same estate would vest in another person. That is, it terminates the interest of one person and vests the same in another person. For the person in whom the estate initially vested, a condition subsequent would divest him of the already vested interest and for the person in whose favour it will then be vested, this condition would be a condition precedent.

Relation with Indian Succession Act, 1925 (Section 130)

Section 130 of the Indian Succession Act corresponds to section 28 of the TP Act states as under:

[s 130] When second bequest not to take effect on failure of first.—Where the Will shows an intention that the second bequest shall take effect only in the event of the first bequest failing in a particular manner, the second bequest shall not take effect, unless the prior bequest fails in that particular manner.

Illustration

A makes a bequest to his wife, but in case she should die in his lifetime, bequeaths to B that which he had bequeathed to her. A and his wife perish together, under circumstances which make it impossible to prove that she died before him, the bequest to B does not take effect.

End of Document

REPUGNANCY Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

REPUGNANCY

The section does not apply when a gift over clause is after the vesting of an absolute estate in favour of a specific person, described by name or description or a relation, e.g., A makes an absolute gift38 to his son with full power of alienation, yet at the same time provides that upon the grandson attaining the age of 21 years, the property should be equally divided between the sons and the grandsons. The gift over to the grandson was void and therefore, son could not be divested of this estate. It was an absolute gift that was vested in his favour in the first place. Similarly, in Suresh Chandra v Lalit Mohan,39 A bequeathed his property to his wife absolutely, and then provided that if on her death there was no son (adopted) or his legal representative, then the remainders of the property was to go to A’s heirs. Here the gift over was held to be void, as an absolute estate on her death was to go to her heirs and not in accordance with A’s wishes.

38 Anand Rao Vinayak v Administrator General of Bombay, (1896) ILR 20 Bom 450. 39 (1916) 20 Cal WN 463; see also Karan Singh v Rupawanti, AIR 1925 Lah 122.

End of Document

FULFILMENT OF CONDITION SUBSEQUENT Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

FULFILMENT OF CONDITION SUBSEQUENT

[s 29] Fulfilment of condition subsequent.—An ulterior disposition of the kind contemplated by the last preceding section cannot, take effect unless the condition is strictly fulfilled.

Illustration

A transfers Rs. 500 to B, to be paid to him on his attaining his majority or marrying, with a proviso that, if B dies a minor or marries without C’s consent, then Rs. 500 shall go to D. B marries when only 17 years of age, without C’s consent. The transfer to D takes effect.

End of Document

IGNORANCE OF THE CONDITION NOT AN EXCUSE FOR ITS NON- FULFILMENT Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

IGNORANCE OF THE CONDITION NOT AN EXCUSE FOR ITS NON- FULFILMENT

Ignorance of a condition or stipulation in the document or legacy is no excuse for its non-fulfilment, as a person would be deemed to have knowledge of a condition in the document with the help of which he is seeking either a transfer or a benefit under the legacy. Where a person has actual notice of a document which incorporates a condition that he is supposed to fulfil, an excuse that he failed to read the condition, though the document was in his possession will not be admitted by any court. However, if he was prevented from performing the condition by force, this would be a valid ground.

Relation with Indian Succession Act, 1925 (Section 132)

The corresponding provision under the Indian Succession Act is section 132, which provides as follows:

[s 132] Condition must be strictly fulfilled.—An ulterior bequest of the kind contemplated by section 131 cannot take effect, unless the condition is strictly fulfilled.

Illustrations

(i) A legacy is bequeathed to A, with a proviso that, if he marries without the consent of B, C and D, the legacy shall go to E. D dies. Even if A marries without the consent of B and C, the gift of E does not take effect. (ii) A legacy is bequeathed to A, with a proviso that, if he marries without the consent of B, the legacy shall go to C. A marries with the consent of B. He afterwards becomes a widower and marries again without the consent of B. The bequest to C does not take effect. (iii) A legacy is bequeathed to A, to be paid at 18, or marriage, with a proviso that, if A dies under 18 or marries without the consent of B, the legacy shall go to C. A marries under 18, without the consent of B. The bequest to C takes effect.

End of Document

PRIOR DISPOSITION NOT AFFECTED BY INVALIDITY OF ULTERIOR DISPOSITION Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

PRIOR DISPOSITION NOT AFFECTED BY INVALIDITY OF ULTERIOR DISPOSITION

[s 30] Prior disposition not affected by invalidity of ulterior disposition.—If the ulterior disposition is not valid, the prior disposition is not affected by it.

Illustration

A transfers a farm to B for her life, and, if she does not desert her husband to C. B is entitled to the farm during her life as if no condition had been inserted.

Relation with Indian Succession Act, 1925 (Section 133)

The corresponding section under Indian Succession Act is section 133, which provides as follows:

[s 133] Original bequest not affected by invalidity of second.—If the ulterior bequest be not valid the original bequest is not affected by it.

Illustrations

(i) An estate is bequeathed to A for his life with condition super-added that, if he shall not on a given day walk 100 miles in an hour, the estate shall go to B. The condition being void, A retains his estate as if no condition had been inserted in the Will. (ii) An estate is bequeathed to A for her life and, if she does not desert her husband, to B. A is entitled to the estate during her life as if no condition had been inserted in the Will. (iii) An estate is bequeathed to A for life, and, if he marries, to the eldest son of B for life. B at the date of the testator’s death, has not had a son. The bequest over is void under s. 105, and A is entitled to the estate during his life.

A prior interest may render the subsequent interest invalid, if sections 13, 14 and 25 are attracted but the invalidity of the subsequent interest can never cast its shadow on the prior interest. If the subsequent interest is invalid and the prior is valid, the prior interest would not be adversely affected. In the illustration, the condition on which C is to get the property is void as it is opposed to the rule of public policy, and therefore, this too, would fail. However the prior transfer in favour of B is valid as B is entitled to ignore this condition. Therefore, the fact that a void transfer and a valid transfer are part of the same deed, would not affect the validity of the valid transfer, if it is prior to the void transfer. Had it been subsequent, the rules would have been different.

Conditions divesting in Wills are in case of death without issues,40 or before a specified event,41 or non-residence42

Page 2 of 2 PRIOR DISPOSITION NOT AFFECTED BY INVALIDITY OF ULTERIOR DISPOSITION or on adoption of a son.43 Where a person settles property for life on his second wife and then to her son and provides that if she had no son then the property would go to the son of his first wife, the son of the first wife takes a vested interest liable to be divested by the birth of the son of the second wife.44 Similarly, where under a compromise it is provided that A would have a life interest and after her death the property is to go to B absolutely if B survived A, and if this did not happen, the property is to pass to B’s lineal male descendants according to the rule of primogeniture, B takes a vested interest liable to be divested, if he does not survive A.45

A condition of defeasance does not apply to an interest that is already vested,46 except by clear words.47 An ambiguity in the condition subsequent will be read in the sense most favourable to the vested interest.48 Where a widow was granted a power to take another child in adoption on the death of the first adopted child to replace him, and the adopted son was to take an absolute estate on the death of the widow, it was held that the implication of a gift over to the second adopted son would not prevent the estate from vesting in the first adopted son’s widow.49

An absolute estate that is liable to pass to the heirs of the settler if the grantee dies without any descendants,50 or a son,51 or a son and his wife,52 the gift over would be void. Similarly, a clause in the absolute gift to the wife with a condition of defeasance should she have a grandson is void.53

40 Chunilal v Bai Samarath, AIR 1914 PC 60; Ram Lal Mukerjee v Secretary of State, (1881) ILR 7 Cal 304; Kumar Tarakeshwar Roy v Kumar Shoshi Shikhareswar, (1883) ILR 9 Cal 952; Soorjemoney Dossey v Denobundoo Mullick, (1862) 9 Moo Ind App 123. 41 Bachman v Bachman, (1884) ILR 6 All 583. 42 Ganendro Mohun Tagore v Rajah Juttendro Mohun Tagore, (1874) 1 IA 387; Shyama Charan v Naba Charan, (1912) 17 Cal WN 39. 43 Gooroo Das v Sarat Chunder, (1902) ILR 29 Cal 699. 44 Umes Chunder v Zahoor Fatin, (1891) ILR 18 Cal 164. 45 Sundar Bibi v Lal Rajendra, AIR 1925 All 389; see also Jitendra Nath v Banku, AIR 1926 Cal 496. 46 Adams v Gray, AIR 1925 Mad 599 [LNIND 1924 MAD 425]. 47 Govindraju v Mangalam Pillai, AIR 1933 Mad 80 [LNIND 1932 MAD 143]. 48 Maitland v Chalie, (1882) Mad & G 243. 49 Amulya v Kalidas, (1905) ILR 32 Cal 861. 50 Saraju Bala v Jyotirmoyee, AIR 1931 PC 179. 51 Bai Dhanlaxmi v Hari Prasad, AIR 1921 Bom 262. 52 Sures Chandra v Lalit Mohun, (1916) 20 Cal WN 463; see also Karan Singh v Mussammat Rupwanti, AIR 1925 Lah 122; Jagmohan v Sheoraj, AIR 1928 Oudh 49. 53 Narasingh Rao v Mahalakshmi, AIR 1928 PC 156.

End of Document

CONDITION THAT TRANSFER SHALL CEASE TO HAVE EFFECT IN CASE SPECIFIED UNCERTAIN EVENT HAPPENS OR DOES NOT HAPPEN Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

CONDITION THAT TRANSFER SHALL CEASE TO HAVE EFFECT IN CASE SPECIFIED UNCERTAIN EVENT HAPPENS OR DOES NOT HAPPEN

[s 31] Condition that transfer shall cease to have effect in case specified uncertain event happens or does not happen.—Subject to the provisions of s. 12, on a transfer of property an interest therein may be created with the condition superadded that it shall cease to exist in case a specified uncertain event shall happen, or in case a specified uncertain event shall not happen.

Illustrations

(a)A transfers a farm to B for his life, with a proviso that, in case B cuts down a certain wood; the transfer shall cease to have any effect. B cuts down the wood. He loses his life-interest in the farm. (b)A transfers a farm to B, provided that, if B shall not go to England within three years after the date of the transfer, his interest in the farm shall cease. B does not go to England within the term prescribed. His interest in the farm ceases.

Subject to the provisions of section 12, on a transfer of property, an interest may be created with the condition superadded that it shall cease to exist in case a specified uncertain event shall happen or in case a specified uncertain event shall not happen. For such conditions to be valid it is necessary that the event to which it relates be one which could legally constitute the condition of the creation of an interest.54 This section speaks about those types of conditional transfers where the transfer would come to an end if a specific uncertain event happens or does not happen. In illustration (b), the divesting of property would take place if B does not perform a particular condition, i.e., if he does not go to England within three years, he will be divested of the property.

Relation with Indian Succession Act, 1925 (Section 134)

It should be compared to section 134 of the Indian Succession Act, which provides as follows:

[s 134] Bequest conditioned that it shall cease to have effect in case a specified uncertain event shall happen, or not happen.—A bequest may be made with the condition super-added that it shall cease to have effect in case a specified uncertain event shall happen, or in case a specified uncertain event shall not happen.

Illustrations

(i) An estate is bequeathed to A for his life, with a proviso that, in case he shall cut down a certain wood, the bequest shall cease to have any effect. A cuts down the wood. He loses his life-interest in the estate.

Page 2 of 2 CONDITION THAT TRANSFER SHALL CEASE TO HAVE EFFECT IN CASE SPECIFIED UNCERTAIN EVENT HAPPENS OR DOES NOT HAPPEN

(ii) An estate is bequeathed to A, provided that, if he marries under the age of 25 without the consent of the executors named in the Will, the estate shall cease to belong to him. A marries under 25 without the consent of the executors. The estate ceases to belong to him. (iii) An estate is bequeathed to A, provided that, if he shall not go to England within three years after the testator’s death, his interest in the estate shall cease. A does not go to England within the time prescribed. His interest in the estate ceases. (iv) An estate is bequeathed to A, with a proviso that, if she becomes a nun, she shall cease to have any interest in the estate. A becomes a nun. She loses her interest under the Will. (v) A fund is bequeathed to A for life, and, after his death, to B, if B shall be then living, with a proviso that, if B shall become a nun, the bequest to her shall cease to have any effect. B becomes a nun in the lifetime of A. She thereby loses her contingent interest in the fund.

Illustrations (i) and (iii) are identical to the one provided in section 31 of the TP Act. In illustration (i), the divesting would take place if the grantee fails to fulfil a particular condition i.e., not to cut down a specific wood. The condition, if not valid, must be fulfilled by the grantee and if it is not, then the transfer fails.

A condition that the industrial unit shall be established within a specified period failing which the interest shall cease is a valid condition.55 Similarly, where a prisoner sentenced for life transfers his property to another with a condition that the interest created in the transferee would cease if the transferor returns from the prison; once he returned from prison, the transfer in favour of the transferee ceases.56 A condition subsequent requiring residence is valid,57 and would not be defeated where the devisee was required to stay in a holy place but was forcibly detained in another place.58

The event contemplated should be clear and not general or vague.59 The above principles do not apply to a transfer with a condition superadded to it.60

54 Indu Kakkar v Haryana State Industrial Development Corp Ltd, AIR 1999 SC 296 [LNIND 1998 SC 1066]; see The Transfer of Property Act, 1882, section 32. 55 Indu Kakkar v Haryana State Industrial Development Corp Ltd, AIR 1999 SC 296 [LNIND 1998 SC 1066]. 56 Venkatarama v Aiyasami Aiyar, AIR 1923 Mad 67. 57 Ambika Charan v Sasitara, (1915) 22 Cal LJ 61. 58 Tin Cowri Dassi v Krishna, (1893) ILR 20 Cal 15. 59 Krishna Chandra v National Chemical and Salt Works, AIR 1957 Ori 35 [LNIND 1956 ORI 19]. 60 Devendra Prasad Sukul v Surendra Prasad Sukul, AIR 1936 PC 24.

End of Document

SUCH CONDITION MUST NOT BE INVALID Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

SUCH CONDITION MUST NOT BE INVALID

[s 32] Such condition must not be invalid.—In order that a condition that an interest shall cease to exist may be valid, it is necessary that the event to which it relates be one which could legally constitute the condition of the creation of an interest.

Relation with Indian Succession Act, 1925 (Section 135)

The parallel provision under the Indian Succession Act is section 135.

[s 135] Such condition must not be invalid under section 120.—In order that a condition that a bequest shall cease to have effect may be valid, it is necessary that the event to which it relates be one which could legally constitute the condition of a bequest as contemplated by s. 120.

The condition, therefore, must be valid. If the condition is void, then it would not divest a person of the estate. A condition that is void as a condition precedent is also void as a condition subsequent, and cannot affect the validity of the transfer and if the condition is void, a failure to comply with it would not result in the forfeiture of the estate. In Satish Chandra v Sarat Subdari,61 A bequeathed a house to W on the condition that if she failed to live in it, the bequest would be forfeited. He intended to build this house that was the subject matter of the bequest, during his lifetime but died before he could do so. The condition was impossible and therefore void and even if she lived elsewhere, she was entitled to the interest.

61 38 IC 103.

End of Document

TRANSFER CONDITIONAL ON PERFORMANCE OF ACT, NO TIME BEING SPECIFIED FOR PERFORMANCE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

TRANSFER CONDITIONAL ON PERFORMANCE OF ACT, NO TIME BEING SPECIFIED FOR PERFORMANCE

[s 33] Transfer conditional on performance of act, no time being specified for performance.—Where, on a transfer of property, an interest therein is created subject to a condition that the person taking it shall perform a certain act, but no time is specified for the performance of the act, the condition is broken when he renders impossible, permanently or for an indefinite period, the performance of the act.

Relation with Indian Succession Act, 1925 (Section 136)

The parallel provision under the Indian Succession Act is section 136.

[s 136] Result of legatee rendering impossible or indefinitely postponing act for which no time specified, and on non-performance of which subject-matter to go over.—Where a bequest is made with a condition super-added that, unless the legatee shall perform a certain act, the subject-matter of the bequest shall go to another person, or the bequest shall cease to have effect but no time is specified for the performance of the act; if the legatee takes any step which renders impossible or indefinitely postpones the performance of the act required, the legacy shall go as if the legatee had died without performing such act.

Illustrations

(i) A bequest is made to A, with a proviso that, unless he enters the Army, the legacy shall go over to B. A takes Holy Orders, and thereby renders it impossible that he should fulfill the condition. B is entitled to receive the legacy. (ii) A bequest is made to A, with a proviso that it shall cease to have any effect if he does not marry B’s daughter. A marries a stranger and thereby indefinitely postpones the fulfilment of the conditions. The bequest ceases to have effect.

If a person takes an interest in property but subject to his fulfilling a condition he is not permitted to create conditions by his conduct, whereby he tries to evade the fulfilment of conditions, yet attempts to take a benefit under the very transfer; his conduct is not in consonance with the condition that the transfer is subject to. Thus, where a person bequeaths certain properties to his daughter’s son in the event of his widow dying without adopting a son, and the interest given to the son is conditional on him living in the family house, but the son joins the widow in selling the house, it would be a breach of condition, and he will be deprived of the interest given to him by the bequest.62

62 Shyama Charan v Naba Chandra, (1912) 17 Cal WN 39.

Page 2 of 2 TRANSFER CONDITIONAL ON PERFORMANCE OF ACT, NO TIME BEING SPECIFIED FOR PERFORMANCE

End of Document

TRANSFER CONDITIONAL ON PERFORMANCE OF ACT TIME BEING SPECIFIED Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

TRANSFER CONDITIONAL ON PERFORMANCE OF ACT TIME BEING SPECIFIED

[s 34] Transfer conditional on performance of act, time being specified.—Where an act is to be performed by a person either as a condition to be fulfilled before an interest created on a transfer of property is enjoyed by him, or as a condition on the non-fulfilment of which the interest is to pass from him to another person, and a time is specified for the performance of the act, if such performance within the specified time is prevented by the fraud of a person who would be directly benefited by non-fulfilment of the condition, such further time shall as against him be allowed for performing the act as shall be requisite to make up for the delay caused by such fraud. But if no time is specified for the performance of the act, then, if its performance is by the fraud of a person interested in the non- fulfilment of the condition rendered impossible or indefinitely postponed, the condition shall as against him be deemed to have been fulfilled.

In continuation of the provisions enacted under section 33, this section incorporates a rule that prevents a person from taking advantage of his own fraud.

Relation with Indian Succession Act, 1925 (Section 126 & 127)

Under the Indian Succession Act, the parallel provision is section 137.

[s 137] Performance of condition, precedent or subsequent, within specified time. Further time in case of fraud.—Where the Will requires an act to be performed by the legatee within a specified time, either as a condition to be fulfilled before the legacy is enjoyed, or as a condition upon the non-fulfillment of which the subject-matter of the bequest is to go over to another person or the bequest is to cease to have effect, the act must be performed within the time specified, unless the performance of it be prevented by fraud, in which case such further time shall be allowed as shall be requisite to make up for the delay caused by such fraud.

Where a person granted an interest to the female members of his family but provided that if any of them would live at any other place than a holy place for more than three months the interest would be forfeited, and the female members were forcibly removed from the place by their relations, it was held that the forfeiture would not be effected as they were held against their Will.63

63 Tin Cowri Dassi v Krishna, (1893) ILR 20 Cal 15.

Page 2 of 2 TRANSFER CONDITIONAL ON PERFORMANCE OF ACT TIME BEING SPECIFIED

End of Document

ELECTION Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

ELECTION

[s 35] Election when necessary.—Where a person professes to transfer property which he has no right to transfer, and as part of the same transaction confers any benefit on the owner of the property, such owner must elect either to confirm such transfer or to dissent from it; and in the latter case he shall relinquish the benefit so conferred, and the benefit so relinquished shall revert to the transferor or his representative as if it had not been disposed of, subject nevertheless, where the transfer is gratuitous, and the transferor has, before the election, died or otherwise become incapable of making a fresh transfer, and in all cases where the transfer is for consideration, to the charge of making good to the disappointed transferee the amount or value of the property attempted to be transferred to him.

Illustrations

The farm of Sultanpur is the property of C and worth Rs. 800. A by an instrument of gift professes to transfer it to B, giving by the same instrument Rs. 1,000 to C. C elects to retain the farm. He forfeits the gift of Rs. 1,000.

In the same case, A dies before the election. His representative must out of the Rs. 1,000 pay Rs. 800 to B.

The rule in the first paragraph of this section applies whether the transferor does or does not believe that which he professes to transfer to be his own.

A person taking no benefit directly under a transaction, but deriving a benefit under it indirectly, need not elect.

A person who in his one capacity takes a benefit under the transaction may in another dissent therefrom.

Exception to the last preceding four rules.—Where a particular benefit is expressed to be conferred on the owner of the property which the transferor professes to transfer, and such benefit is expressed to be in lieu of that property, if such owner claim the property, he must relinquish the particular benefit, but he is not bound to relinquish any other benefit conferred upon him by the same transaction.

Acceptance of the benefit by the person on whom it is conferred constitutes an election by him to confirm the

Page 2 of 5 ELECTION transfer, if he is aware of his duty to elect and of those circumstances which would influence the judgment of a reasonable man in making an election, or if he waives enquiry into the circumstances.

Such knowledge or waiver shall, in the absence of evidence to the contrary, be presumed, if the person on whom the benefit has been conferred has enjoyed it for two years without doing any act to express dissent.

Such knowledge of waiver may be inferred from any act of his which renders it impossible to place the persons interested in the property professed to be transferred in the same condition as if such act had not been done.

Illustration

A transfers to B an estate to which C is entitled, and as part of the same transaction gives C a coal-mine. C takes possession of the mine and exhausts it. He has thereby confirmed the transfer of the estate to B.

If he does not within one year after the date of the transfer signify to the transferor or his representatives his intention to confirm or to dissent from the transfer, the transferor or his representative may, upon the expiration of that period, require him to make his election; and, if he does not comply with such requisition within a reasonable time after he has received it, he shall be deemed to have elected to confirm the transfer.

In case of disability, the election shall be postponed until the disability ceases, or until the election is made by some competent authority.

The principle underlying the doctrine of election is that benefit and burden must co-exist. A person while accepting a benefit under one deed cannot reject or go against the burden expressed in the same.

This can be explained in the following way. The transferor transfers two properties; one that he owns, to the transferee, and the second property that he professes to transfer with the help of the same transaction, which belongs to the transferee. The second property he transfers without the consent of the owner, i.e., the transferee, in favour of a third party. So one transfer is in favour of transferee while the second transfer is of the property belonging to transferee, without his consent, in favour of a third person. The validation of both these transfers would now be in the hands of the transferee. He has to signify the validation by electing to either confirm the transfer in his favour or rejecting it. If he accepts the transfer in his favour executed by the transferor, the other transfer, that is, of his own property in favour of the third party, will also be confirmed. In a way the consent of the transferee is to be obtained after the transferor has transferred his property without seeking it in the first place. Yet at the same time if he accepts the transfer in his favour, he is not permitted to reject the second transfer in favour of the third party on the ground that his consent was not obtained or he does not want to go ahead with that transfer.

For instance, A is the owner of a property X and B is the owner of the property Y. S is the son of A, and a friend of B. A professes to transfer property X to B and property Y to S. Here, B has to elect to confirm the transfer in his favour or reject it. If he confirms it, he would accept property X, but then he would have to forgo property Y in favour of S. If he rejects the transfer he has to do it in totality. He cannot accept property X and reject the later portion of the transfer whereby his own property Y is transferred to S.

As the basic presumption under the law is that the transferor intended to give effect to each and every part of the deed that he executes, the transferee is not permitted to approbate and reprobate at the same time. He has to accept either the deed and its contents in totality or reject it in totality. He cannot accept only benefits and reject or ignore the part that imposes a liability on him.

Knowledge on Part of the Transferor Immaterial

The rule applies whether the transferor does or does not believe that what he professes to transfer is not his own. The transferor may genuinely believe that he is authorised to execute what he is transferring, or he may deliberately transfer property belonging to another, while giving him a benefit in the shape of executing another transfer in his favour. He may even be ignorant of the principle of election. Here, irrespective of the knowledge on part of the transferor, the transferee must exercise election to confirm or reject both the transfers. This part of section 35 corresponds to section 182 of the Indian Succession Act, 1925.

Page 3 of 5 ELECTION

No one can take under and against the same instrument. In Beepathuma v VS Kadambolithaya,64 a testator bequeathed a land belonging to his niece, to his grandson, and left his niece a legacy of Rs 800, it was held by the apex court that she must elect between the land and the legacy. If she chooses to accept the legacy, she cannot vitiate the transfer in favour of the nephew of her own property. While accepting the legacy, she confirms the transfer in favour of the nephew also.The court observed:

That he who accepts a benefit under a deed or will or other instrument must adopt the whole contents of that instrument, must conform to all its provisions and renounce all rights that are inconsistent with it...... Election is the obligation imposed upon a party by Courts of equity to choose between two inconsistent or alternative rights or claims in cases where there is clear intention of the person from whom he derives one that he should not enjoy both...... That he who accepts a benefit under a deed or will must adopt the whole contents of the instrument.

Transferee to have a Proprietary Interest

The transferee can be permitted to elect only when he has a proprietary interest in the property that has been transferred by the transferor in favour of a third party. Equity of election does not apply unless the donee has a proprietary interest in the property disposed of, in derogation of his rights.65 For instance, the transferor, transfers two properties to A and B as part of the same transaction. Both the properties belong to the transferor. No question of election would arise here either on part of A or B as none of them had a proprietary interest in any of the properties before the transfer.

Same Transactions

The transferee is not permitted to exercise election if the two transfers are independent of each other and are not part of the same transaction.66 A beneficiary under a prior gift and a later Will is not precluded by doctrine of election. For instance, A executes a transfer of his son’s property in favour of his second wife. Upon his son’s protest, he executes another deed after a week by which he gifts his land to his son. Here the validity of the first transfer does not depend on the doctrine of election, as both the transfers are not part of the same transaction but are independent of each other. Here the son can take the benefit under the second transfer and at the same time refuse to go ahead with the first one, as both transfers are separate and are not part of the same transaction.

Similarly, a person A was the nawab of a place T. He executed a deed whereby he gave two villages to his son for securing his maintenance. Upon his death, the government transferred a portion of the cash allowance to the son. Out of the two benefits that came to the son, he is capable to accept both, and need not elect to accept only one as the sources from where he acquired the benefits were different. One was directly from his father and the other was on the death of the father from the government.67

Direct Benefit

A person taking no benefit directly under a transaction but deriving a benefit under it indirectly need not elect.68 For instance, A gives a house X to B for life, and after his death, to B’s son S absolutely. He subsequently, makes a Will by which he gives X to C and another property Y to B. Shortly thereafter A dies and then B dies without making the election to either confirm or reject the benefit under the bequest. His son S would now take X as per the original transfer executed by A and would take the land Y under intestacy on the death of his father B. As he is an indirect beneficiary, he would not be required to put to election.69

Similarly, a person, who in one capacity takes a benefit under the transaction, may in other dissent there from.

The doctrine of election does not apply where the transfer is gratuitous and the transferor has before the election died or otherwise become incapable of making a fresh transfer and in all other cases where the transfer is for consideration.70

Acceptance with Full Knowledge Implies Final Election

Acceptance of a benefit implies an election.71 A party should not at the same time affirm and disaffirm the same

Page 4 of 5 ELECTION transaction.72 So when he accepts the benefit under the transaction, the other transfer by which his own property goes to another person, is automatically confirmed. Where a person accepts the benefit with full knowledge of the circumstances, the election made by him is final and cannot be revoked by him subsequently, but if the election is made without any or incomplete knowledge of the full circumstances, it can be revoked by the representatives of the party. For that, it must be shown that he had no actual or even constructive knowledge of the full situation. If there was a duty cast on him as a reasonable man to inquire into the circumstances, and he does not inquire, constructive notice would be imputed on him of the same and it will be presumed that he knew the full circumstances. Special care has to be taken in case the election is by a pardanashin woman, as to whether she was fully informed of the circumstances or not. The courts have held that unless a pardanashin woman has been fully informed about the circumstances and the consequences of election, any election made by her will not be irrevocable.73

Time for Election

Ordinarily, the time for election may be fixed by the transferor himself. In case it is so fixed and the transferee does not elect, it will be presumed that he does not want to confirm the transfer.74 In case of a person having a disability, election can be made either by his guardian of property or by him personally, when the disability is removed. According to section 35, if the transferee does not, within one year after the date of the transfer, signify to the transferor or his representatives his intention to confirm or to dissent from the transfer, the transferor or his representative may, upon the expiration of that period, require him to make his election; and, if he does not comply with such requisition within a reasonable time after he has received it, he shall be deemed to have elected to confirm the transfer.

Election under Hindu Law

The doctrine of election was recognised under the classical Hindu law. Presently, it applies to Hindus expressly under the Act. Where a Hindu widow devised to a person the immovable property of her husband and gave to the reversioner a legacy of Rs 2000, and the reversioner claimed the property as the heir and also claimed the devise of Rs. 2000 under the Will, the doctrine of election applied and it was required for him to elect one or the other.75 Similarly, where a widow who had a life estate for maintenance granted a permanent lease, the reversioner could elect either to ratify it or to set it aside; but he was not bound by the lease when he accepted the rent for three years in ignorance of the circumstances under which the lease was granted or the terms on which it was held.76

64 AIR 1965 SC 241 : 19645SCR 836. 65 Ammalu Achi v Ponammal, (1919) Mad WN 144. 66 Dahnpatti v Devi Prasad, (1970) 3 SCC 779; Mohammad Ali v Nisar Ali, AIR 1928 Oudh 67; see also Kamal Kumari v Narendra Nath, (1909) 9 Cal LJ 19, wherein it was held that if the property did not belong to the other legatee no question of election would arise. 67 Muhammad Afzal v Ghulam Kasim, (1903) ILR 30 Cal 843. 68 Ramayyar v Mahalakshmi, AIR 1922 Mad 357. 69 See also the illustration to section 171 of the Indian Succession Act, 1925. 70 See the Transfer of Property Act, 1882, section 34. 71 Beepathuma v VS Kadambolithaya, AIR 1965 SC 241: 19645 SCR 836. 72 Rungam v Atchama, (1858) 4 Mad IA 1; Shah Mukhun Lal v Kishen Singh, (1869) 12 Mad IA 157. 73 Sadik Husain v Hashim Ali, (1916) 43 IA 212; Triguna Sundari v Radharani, (1923) 37 Cal LJ 20; Indu Bala v Manmatha, AIR 1925 Cal 724. 74 See the Indian Succession Act, 1925, section 189. 75 Mangal Das v Runchhoddas, (1890) ILR 14 Bom 438. 76 Gopi Koeri v Raj Roop, AIR 1925 All 190.

Page 5 of 5 ELECTION

End of Document

APPORTIONMENT Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

APPORTIONMENT

[s 36] Apportionment of periodical payments on determination of interest of person entitled.—In the absence of a contract or local usage to the contrary, all rents, annuities, pensions, dividends and other periodical payments in the nature of income shall, upon the transfer of the interest of the person entitled to receive such payments, be deemed, as between the transferor and the transferee, to accrue due from day to day, and to be apportionable accordingly, but to be payable on the days appointed for the payment thereof.

Apportionment literally means distribution in accordance with proportion. The present section relates to apportionment by time, and provides rules for distribution of the amount of periodical payments coming out of the property as between the transferor and the transferee, after the transfer has been effected. It says that rents, annuities, pensions, dividends and other periodical payments in the nature of income after the transfer shall be deemed to accrue from day to day. The rule is incorporated to avoid confusion and uncertainties. For instance, where property that is yielding income is transferred, this property vests in the transferee from the date of the transfer ordinarily, unless a contrary intention is specified by the instrument effecting the transfer. If the time for realisation of the income is different from the date of the transfer, a confusion may arise as to from which date is the transferee entitled to realise the income and for which period.

For instance, A has a house that he has given on rent. As per the agreement with the tenant, the tenant pays Rs 3000 as rent to A on the last day of each month. A sells this house to B on the tenth day of the month. On the thirtieth day when the tenant pays the rent, A would be entitled to the rent of the first ten days and the transferee would take the rent for the rest of 20 days, i.e., the transferor would take Rs 1000, and the transferee Rs 2000. The apportionment contemplated here is applicable only as between the transferor and the transferee,77 and follows the transfer of interest of a person entitled to receive rents and not the transfer of an interest of a person bound to pay it.78 A lessor transferring his interest to the assignee of the lessee is entitled to an apportionment of rent up to the date of the merger.79 When a decree is passed for the redemption of a mortgage, the apportionment of the rents of the mortgaged property is made as from the date when money is paid for redemption and not from the date of the decree.80 A Hindu widow’s right to maintenance accrues from day to day, and on her death her heirs are entitled to recover maintenance allowance up to the date of her death.81

Apportionment Applies to Transfers Subject to the Act

The rule of apportionment applies only to the transfers within the meaning of section 5 of the Act and therefore does not apply to court sales82 or the partition of Hindu joint family property.83

Contract to the Contrary

Since transfer of property is primarily a contract, a contrary condition in the deed would exclude the rule of apportionment.84 The parties to the contract may specify a certain date or a specific mechanism as the determining factor. For instance, A transfers a house, that is in occupation of tenants, to B on 10 January 2000. The parties

Page 2 of 2 APPORTIONMENT agree that the rent of the month of January will be taken by A, while B would be entitled to collect the rent from February. This is an agreement that deviates from the rule of apportionment as specified in section 36, yet it will be valid; and in case of a dispute, the claims of the parties will be decided in accordance with this agreement and not by the rule enunciated in section 36. Where a managing agent assigned his interest in the agency, the court inferred a contract to the contrary and held that the transferor had no right to the commission for the period prior to the date of the transfer.85

Local Usage Contrary to the Rule of Apportionment

Rule of apportionment can also be excluded by a local usage to the contrary.86 With respect to agricultural rents, the courts have held that apportionment is not available, as rents accrue only at the time when crops are reaped; or, if applicable, would be not for the whole of the year but for the season in which they are reaped.87 A’s co-sharers right under the Agra Tenancy Act, 1936 accrues from day to day and his suit filed before the fixed date can be ascertained by apportionment.88

77 Satyabhamadevi v Ram, Kishore AIR 1975 MP 115 [LNIND 1974 MP 59]; see also Lakshminarappa v Melothraman, (1903) ILR 26 Mad 540, where on the death of a life interest holder a month before the rent for half an year was due his assignee was held entitled to apportionment of rent up to the date of the death of the lessor. See also Kunhi Sou v Mulloli Chathu, (1915) ILR 38 Mad 86, where liability to pay rent was apportioned between the lessee and his assignee. 78 Satyendra Nath v Nilkantha, (1894) ILR 21 Cal 383. 79 Mikram Mumar v Mohit Krishna, (1921) 64 IC 178. 80 Lala Ganga Ram v Mewa Ram, AIR 1922 All 275. 81 Rangappaya v Shiva Aithala, AIR 1933 Mad 699 [LNIND 1933 MAD 134]. 82 Subbaraju v Seetharamaraju, (1916) ILR 39 Mad 283. However, see Rangiah Chetty v Vajravelu, (1918) ILR 41 Mad 370, where the rule of apportionment was applied between a lessor and the purchaser of his interest at an execution sale. See also Poongavanam v Subramanya, AIR 1951 Mad 601 [LNIND 1950 MAD 141]; YS David v Bangarth Rangaraju, AIR 1944 Mad 568 [LNIND 1944 MAD 119]. 83 Manmad Kunhi v Ibrayami Hazi, AIR 1959 Ker 208 [LNIND 1958 KER 48]: 1958 KLJ 472. 84 See The Transfer of Property Act, 1882, section 36. 85 ED Sassoon v CIT, AIR 1954 SC 470 [LNIND 1954 SC 94]. 86 See The Transfer of Property Act, 1882, section 36. 87 Ma Hawa Bi v Sein Kho., AIR 1928 Rang 67. See also Satya Bhupal v Rajnandini, AIR 1924 Cal 1069. 88 Mahommad Abdul Jalil Khan v Mahommad Abdul Salam Khan, AIR 1932 All 178.

End of Document

APPORTIONMENT OF BENEFIT OF OBLIGATION ON SEVERANCE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Chapter 2 Of Transfers of Property by Act of Parties

(A) TRANSFER OF PROPERTY, WHETHER MOVABLE OR IMMOVABLE

APPORTIONMENT OF BENEFIT OF OBLIGATION ON SEVERANCE

[s 37] Apportionment of benefit of obligation on severance.—When, in consequence of a transfer, property is divided and held in several shares, and thereupon the benefit of any obligation relating to the property as a whole passes from one to several owners of the property, the corresponding duty shall, in the absence of a contract to the contrary amongst the owners, be performed in favour of each of such owners in proportion to the value of his share in the property, provided that the duty can be severed and that the severance does not substantially increase the burden of the obligation; but if the duty cannot be severed, or if the severance would substantially increase the burden of the obligation the duty shall be performed for the benefit of such one of the several owners as they shall jointly designate for that purpose:

Provided that no person on whom the burden of the obligation lies shall be answerable for failure to discharge it in manner provided by this section, unless and until he has had reasonable notice of the severance.

Nothing in this section applies to leases for agricultural purposes unless and until the State Government by notification in the Official Gazette so directs.

Illustrations

(a)A sells to B, C and D a house situated in a village and leased to E at an annual rent of Rs. 30 and delivery of one fat sheep, B having provided half the purchase-money and C and D one quarter each. E, having notice of this, must pay Rs. 15 to B, Rs. 7.50 to C, and Rs. 7.50 to D, and must deliver the sheep according to the joint direction of B, C and D. (b) In the same case, each house in the village being bound to provide ten days’ labour each year on a dyke to prevent inundation. E had agreed as a term of his lease to perform this work for A. B, C and D severally require E to perform the ten days’ work due on account of the house of each. E is not bound to do more than ten days’ work in all, according to such directions as B, C and D may join in giving.

The present section relates to apportionment by estate. It provides that if the tenant knows that property is bought by several co-sharers, he should not pay the rent to just one of them or to all of them in equal shares, but must pay rent to each of them in proportion to their contribution. A tenant is therefore, under an obligation to pay rent to each sharer, his proportionate portion of the rent.89

For instance, four brothers, A, B, C and D jointly purchase a house that is in occupation of the tenants for a consideration of Rs 12 lakhs. A and B give two lakhs each, while C and D contribute Rs 4 lakhs each. The tenant pays a rent of Rs 6000. He is to pay to A and B Rs 1000 each and to C and D Rs 2000 each.

Where the estate comprising of several villages is apportioned, the existing rents will guide the division90 and not the rents at the time of the original tenure. Land revenue payable to the zamindar can be apportioned between co- sharers in the zamindari.91 In the absence of an apportionment, the lessor is incapable of splitting the tenancy by recovering the rent of a part only.92 Similarly, the purchaser of a part of the property cannot insist on the payment of

Page 2 of 2 APPORTIONMENT OF BENEFIT OF OBLIGATION ON SEVERANCE the rent of his part only.93

Apportionment when Severance not Practical

The rules laid down here are for the convenience of the parties and for peaceful settlement of disputes. They are not intended to put heavy or impossible duties on the parties to the contract, and therefore, if the duty cannot be severed or if the severance would substantially increase the burden of the obligation, the duty shall be performed for the benefit of such one of the several owners, as they shall jointly designate for that purpose.94 Where an agriculture holding came to be divided so that the fields were allotted to one co-owner and the appurtenant farmhouse in the abadi to another, it was held that the tenant was entitled to continue to have the occupation of the farmhouse rent-free.95

Notice of Severance

A person will be liable under this section only when he has notice or knowledge of the respective contribution of the transferees. This person on whom the burden of the obligation lies is not answerable for failure to discharge it unless and until he has had reasonable notice of the severance.96 Notice can be given by the transferor or by the transferee.97

Apportionment not to Apply in Cases of Involuntary Transfers

The rule of apportionment does not apply to court sales, other involuntary transfers, or succession,98 or to leases for agricultural purposes,99 unless and until the state government by notification in the Official Gazette so directs.

89 Raja Simhadri v Prattipati Ramayya, (1908) 29 Mad 29. 90 Hari Chand v Tuluk Dhari, (1903) 7 Cal WN 453. 91 Gour Gopal v Gosta Behari, (1917) 21 Cal WN 214. 92 Satyesh v Jillar Rahman, (1918) 27 Cal LJ 438. 93 Maharaja Keshava Prasad v Mathura Kuar, AIR 1922 Pat 608. 94 See The Transfer of Property Act, 1882, section 37. 95 Sadhu v Bihari, (1908) 30 All 282. 96 See The Transfer of Property Act, 1882, section 36. 97 Peary Lal v Madhoji, (1913) 17 Cal LJ 372. 98 Kanhaiya Lal v Chandar, (1885) ILR 7 All 313; Godai Mahto v Debu, AIR 1933 Pat 248. 99 Alimuddin v Hira Lal, (1896) ILR 23 Cal 87.

End of Document

TRANSFER AUTHORISED ONLY UNDER CERTAIN CIRCUMSTANCES TO TRANSFER Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

TRANSFER AUTHORISED ONLY UNDER CERTAIN CIRCUMSTANCES TO TRANSFER

[s 38] Transfer by person authorised only under certain circumstances to transfer.—Where any person, authorised only under circumstances in their nature variable to dispose off immoveable property, transfers such property for consideration, alleging the existence of such circumstances, they shall, as between the transferee on the one part and the transferor and other persons (if any) affected by the transfer on the other part, be deemed to have existed, if the transferee, after using reasonable care to ascertain the existence of such circumstances, has acted in good faith.

Illustration

A, a Hindu widow, whose husband has left collateral heirs, alleging that the property held by her as such is insufficient for her maintenance, agrees, for purposes neither religious nor charitable, to sell a field, part of such property, to B. B satisfies himself by reasonable enquiry that the income of the property is insufficient for A’s maintenance, and that the sale of the field is necessary, and acting in good faith, buys the field from A. As between B on the one part and A and the collateral heirs on the other part, a necessity for the sale shall be deemed to have existed.

This section relates to transfer by a specific category of transferors having qualified powers of alienation, i.e., who can transfer property not generally like an owner, but can do it only in certain variable circumstances. They have limited powers of alienation over the property and if they exceed their powers, the transfer can be challenged and may be declared void. The section seeks to protect bona fide transferees acting in good faith, who enter into transactions with transferors who do not have an absolute, but, only a qualified power of alienation of the property. In such a situation if the transfer were declared void, it would cause gross injustice to the bona fide transferees.

Limited Power of Alienation

The principle applies largely to cases arising under personal laws or family laws. For instance it applies to the case of a Hindu father transferring the joint family property for his own benefit, manager for an infant,1 guardian of property of a ward, alienations by a Hindu widow who took the property as a limited owner,2 other limited heirs3 alienations by a mohunt or shebait of debutter property, 4 or an unauthorised alienation made by the karta of the coparcenary property,5 or by an executor of a minor’s estate.6

Circumstances Variable in Nature

The transferor is empowered to sell the property, but only under certain specific circumstances that may vary from case to case. This is the reason why they are called variable in nature. The circumstances are specific, but when they would exist in a particular case, or whether they exist or not, is not certain. For instance, under Hindu law, in

Page 2 of 3 TRANSFER AUTHORISED ONLY UNDER CERTAIN CIRCUMSTANCES TO TRANSFER case of alienations of joint Hindu family property by the karta, the permission to sell is available not generally, but only when there is a legal necessity,7 or the transaction would amount to benefit of estate or if it is for the performance of indispensable religious and charitable duties and that is variable in nature as it may vary from each and every case depending upon the fact and the status of the transferor. The father can sell the property for continuation of the family business in case of trading families, but not for starting a new business. Similarly, a guardian of the property of a minor cannot sell the property without the permission of the court even for the benefit of the minor. A Hindu father can sell the joint family property for the satisfaction of his antecedent debts. Likewise, a Hindu son was permitted to sell the property for the satisfaction of his father’s debts.8 A stepmother purporting to act on behalf of the minor stepson is a person authorised only under circumstances in their nature variable to dispose off immovable property.9

Where any person authorised only under circumstances in their nature variable to dispose of immovable property, transfers such property for consideration alleging the existence of such circumstances, they shall, as between the transferee on the one part and the transferor and other persons affected by transfer on the other part, be deemed to have existed if the transferee after using reasonable care to ascertain the existence of such circumstance has acted in good faith.10

Reasonable Care

Since the transfer affected in favour of the transferee can be challenged and has the potentiality of being declared void in certain situations, the transferee has to be extra vigilant and must show that he had taken reasonable care to ascertain the competency of the transferor in the given situation. It is he who has to show that either the need existed, or he had made proper and reasonable inquiries as to the competency of the transferor and had also acted honestly. In case the transferor is the karta of a joint Hindu family, and the sale is for a legal necessity, it is the transferee who has to make inquires from the transferor (karta) about whether the need actually exists. Similarly, in case of alienation by a Hindu father for an antecedent debt, the existence of a debt must be shown by the transferee.11 Where the sale deed executed by a Hindu widow recites the payment of family debts as the necessity justifying the sale, but the purchaser makes no enquiry of the creditors named in the deed, his rights will not be protected.12

1 Hanooman Persad v Babooe, (1856) 6 Mad IA 393, 423. 2 Prior to the passing of the Hindu Succession Act, 1956. The act has granted absolute powers of alienation to a Hindu woman. See Hindu Succession Act, 1956, section 14. The statutory in competency to hold an absolute estate was removed by this enactment. 3 Debi Pershad v Gopal Bhagat, (1913) ILR 40 Cal 721; Rangaswami v Nachiappa, (1919) ILR 42 Mad 523. 4 Niladri Sahu v Mahant Chaturbhuj Das, AIR 1926 PC 112; Prasunno Kumari v Golab Chand, (1875) 14 Beng LR 450; Doorganath v Ram Chunder Sen, (1876) ILR 2 Cal 341. 5 Kameshwar Prasad v Run Bahadur, (1881) ILR 6 Cal 843; Sahu Ram v Bhup Singh, (1917) ILR 39 All 437. 6 Jugmohundas v Pallonjee, (1898) ILR 22 Bom 1; Kherodemoney v Doorgamoney, (1879) ILR 4 Cal 455; Sarat Chandra v Bhupendra Nath, (1898) ILR 25 Cal 103; Amulya v Kalidas, (1905) ILR 32 Cal 861. 7 Rani v Santa Bala Debnath, AIR 1971 SC 1028 [LNIND 1970 SC 419]; Nagammal v Varada Kandar, (1950) 1 Mad LJ 505; Lakhmi Singh v Mahendra, AIR 1949 All 501; Vembu Iyer v Srinivasa Iyengar, (1912) 23 Mad LJ 638; Vijay Ramraj v Vijay Ananda, AIR 1952 All 568; Makundi v Sarabsukh, (1884) ILR 6 All 417; Onkar v Babu Ram, AIR 1981 All 128; Janardhan v Gangadharan, AIR 1983 Ker 178 [LNIND 1982 KER 268]. 8 Pious obligations of the son to pay father’s debts have been abolished via the Hindu Succession (Amendment) Act, 2005. 9 See Balappa v Chenvasappa, (1915) 17 Bom LR 1134 [LNIND 1915 BOM 131]. 10 See The Transfer of Property Act, 1882, section 38; Hanooman Persad v Babooe, (1856) 6 Mad IA 393, 423. 11 Karunakar v Durgabati, AIR 1981 Ori 223; Dhana v Pandav, AIR 1974 Ori 218 [LNIND 1974 ORI 18]; Ralia v Jagdish, AIR 1973 P&H 335; Ramdayal v Bhanwarlal, AIR 1973 Raj 173 [LNIND 1971 RAJ 24]; Kirtan v Madan, (1962) 2 CWR 1298; Meenakshi Achi v Manikkam Chettiar, AIR 1960 Mad 99 [LNIND 1959 MAD 77]. 12 Junhabi v Balbhadra, (1910) 15 Cal WN 793.

Page 3 of 3 TRANSFER AUTHORISED ONLY UNDER CERTAIN CIRCUMSTANCES TO TRANSFER

End of Document

RECITALS IN THE SALE DEED Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

RECITALS IN THE SALE DEED

Existence of recitals in the transfer deed that circumstances justifying the sale exist in a particular situation are not sufficient,13 and proof that the transferee made reasonable enquiries and acted honestly must be supplemented by evidence,14 unless the original parties and others who could have given evidence are dead due to passage of time and the circumstances are such as to justify a reasonable belief that such an inquiry would have confirmed the truth,15 and presumptions are admissible to fill in the details.16 A transferee must show that he made reasonable inquiries, took care and acted honestly.

13 Maharaja of Bobbili v Zamindar of Chundi, (1912) ILR 35 Mad 108. 14 Brij Lal v Inda Kunwar, (1914) 36 ILR All 187. See also Muhamad v Brij Bihari, AIR 1924 All 939, wherein it was held that recitals can be Ins. in the deed at the instance of the transferee also and therefore it would not be appropriate to rely on them. 15 Banga Chandra v Jagat Kishore, (1916) 44 Cal 186. 16 Chintamani Bhatala v Rani of Wadhwan, (1920) ILR 43 Mad 541; Ravaneshwar v Chandi Prasad, AIR 1915 PC 57.

End of Document

PARTIAL NECESSITY Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

PARTIAL NECESSITY

The joint family may be confronted with a need for a specific amount of money. However, it may not be possible to raise an exact amount of money by the sale of a property. If the amount fetched is more than what is actually needed, the alienation can be justified by partial necessity because the whole of the amount may not be utilised for the necessity.17 It is irrespective of whether the amount utilised is considerable or small.18 As an exact amount can be raised by a mortgage, in case a karta raises money by mortgage of the family property for a loan, in excess of the amount required, the coparceners will not be bound by the excess amount raised,19 and the transfer could be declared partly valid and partly void at their instance.

Guardian’s Powers over Minor’s Property

In case of property belonging to a minor, the guardian of the property again has qualified powers of alienating the same. The natural,20 testamentary,21 or a guardian appointed by a court, has the power to alienate minor’s properties for legal necessity and benefit of estate,22 but a natural guardian cannot, without the prior permission of the court, mortgage or charge or transfer by way of sale,23 gift or exchange,24 or lease out his property for more than five years or for more than one year beyond the date on which the minor would attain majority.25

A guardian can alienate and bind the property of the minor26 only in cases of the minor’s necessity,27 and has no power to bind the minor personally.28

When the guardian obtains prior permission of the court to alienate minor’s property and enters into a contract of sale, the contract can be specifically enforced.

Actual Application of Money not Required to be Seen

For the validation of the transfer, the alienee is not bound to see as to the actual application of money as that would be subsequent to alienation.29 It is neither practical nor feasible, as after the money passes in the hands of the transferor having qualified powers of alienation, the alienee can never control the utilisation of money.

Burden of Proof

The burden of proving the justifying circumstances and proper inquiries is on the transferee.30 So, whenever an alienation is challenged, the alienee has to prove that there was legal necessity.31 If the alienation is by a father for payment of antecedent debt, the burden is on the transferee to prove that the debt existed or that after proper inquiry he believed that it existed,32 but where the son contends that it was contacted for immoral purpose and the transferee had notice of it, the burden would shift on the son to prove the same.33 A mortgagee from a Hindu widow seeking to enforce his mortgage,34 or a person claiming title under a conveyance from a woman as against the reversioners,35 have to prove not only the genuineness of the conveyance but the full comprehension by the limited owner of the nature of the alienation she makes, and also if the alienation is justified and the alienee satisfied

Page 2 of 3 PARTIAL NECESSITY himself reasonably about the existence of such necessity.

Alienation by Karta or Guardian Only Voidable

When a person having qualified powers of alienation alienates the property, such alienation is not void but voidable, i.e., alienation by karta of the joint family without necessary justification or that of minor’s property by a guardian is merely voidable at the option of the coparceners36 or the minor37 and not void; and may be set aside only to the extent of their share in the family property.38 A transferee of a minor’s share can also avoid an improper alienation made by the guardian.39 When the alienee has the possession of the property the coparcener cannot sue for a mere declaration that alienation is void, but must also sue for the consequential relief of possession.40 In case of a minor, no suit is necessary to repudiate an improper alienation but if he wants recovery of possession, then a suit needs to be filed.41

17 Krishna Das v Nathu Ram, AIR 1927 PC 37. 18 Radhakrishnadas v Kaluram, AIR 1967 SC 574 [LNIND 1962 SC 156]; Niamat Rai v Din Dayal, AIR 1927 PC 121, wherein the Privy Council said that if the purchaser makes due inquiries and acts in good faith as to the necessity of the sale, the mere fact that part of the sale money has not been utilised for the necessity would not invalidate the sale. The Privy Council overruled the earlier decisions of (Lal) Bahadur Lal v Kamleshar, AIR 1925 All 624 (FB); Daulat v Sankhata, AIR 1925 All 324; Ghansham v. Badiya, (1902) ILR 24 All 547, wherein it was held that when the unaccounted part was considerable and the amount utilised is very small the alienation would be invalid. 19 Benaras Bank v Hariram, 59 IA 300. 20 See the Hindu Minority and Guardianship Act, 1856, section 8(1); the Guardians and Wards Act, 1890, section 17. 21 For testamentary guardians see the Guardians and Wards Act, 1890, section 28. 22 Pavitar Singh v Bachittar Singh, 69 PLR 293, where the sale of minor’s property was for his benefit. See also Manik Chand v Ram Chandra, AIR 1981 SC 519 [LNIND 1980 SC 241]. 23 A testamentary guardian has no power to alienate minor’s property by way of sale. See Duraiswamy v Balasubramaniam, AIR 1977 Mad 304 [LNIND 1976 MAD 254]. 24 Shivamurthi v Vijaysingh Vinayakrao, AIR 1972 Bom 152 [LNIND 1971 BOM 5]. 25 G Annumalai v Revenue Officer, AIR 1985 Mad 35. 26 Sriramulu v Pundarikakshalayya, AIR 1949 PC 218. 27 Waghala v Masludin, (1877) 11 Bom 551; Sarwarjan v Fakruddin, (1912) 39 IA 1; Darbara v Karmindar, AIR 1979 P&H 215. 28 Chater Bhuj v Gurpreet Singh, AIR 1983 P&H 406; Surya Prakashan v Gangaraju, AIR 1956 AP 33; Amir Ahmed v Mir Nizam, AIR 1952 Hyd 120 (FB); Than Singh v Barela, AIR 1974 MP 24 [LNIND 1973 MP 56]. 29 Hanooman Prasad v Babooe, (1856) 6 Moo Ind App 393; the case related to the guardian’s power to alienate but since then has been applied to the karta’s (of joint family) power of alienation. See also Radhakrishan Das v Kaluram, AIR 1967 SC 574 [LNIND 1962 SC 156]. But see A Subramaniam v Jayadevan, AIR 1985 Mad 372 [LNIND 1984 MAD 76], wherein it was held that in exceptional cases, he may be required to see actual application of money. 30 Bansilal v Kuldeep, AIR 1981 J&K 35; Banga Chandra v Jagat Kishore, (1916) 44 Cal 186; Maharaj Singh v Balwant Singh, (1906) ILR 28 All 508. 31 Faqir chand v Sardarni Harnam Kaur, AIR 1967 SC 727 [LNIND 1966 SC 147]; Bhagwan v Bhishan Chand, AIR 1974 P&H 7; Rani v Santa, AIR 1971 SC 1028 [LNIND 1970 SC 419]; Jwala v Lachman, AIR 1974 P&H 188; Ram v Bhalla, AIR 1986 SC 193; Nisamani v Laxman, AIR 1980 Ori 181 [LNIND 1980 ORI 7]. 32 Chandra Deo v Mata Prasad, (1909) ILR 31 All 176; Sahib Singh v Girdhari Lal, AIR 1924 All 24; Jamna v Nain Sukh, (1887) ILR 9 All 493; Subramanya v Sadusiva, (1884) 8 Mad 75. 33 Girdhari Lal v Kantoo Lal, (1874) 14 Rang LR 187; Johar Mal v Eknath, (1899) 24 Bom 343; Suraj Bunsi Koer v Sheo Prasad, (1878) 5 Cal 148. 34 Maheshwar v Ratan Singh, (1896) ILR 23 Cal 766. 35 Bhagwat Dayal v Debi Dayal Sahu, (1908) ILR 35 Cal 420. 36 Raghubanchmani v Ambika Prasad, AIR 1971 SC 776.

Page 3 of 3 PARTIAL NECESSITY

37 Chaniram v Samaru, AIR 1988 Ori 136 [LNIND 1987 ORI 37]. 38 Morappa v Rangaswami, (1900) ILR 23 Mad 89. 39 Amritha v Sornam, AIR 1977 Mad 427 (FB). 40 Gain Chand v Kishen Singh, AIR 1978 J&K 16. 41 Than Singh v Barelal, AIR 1974 MP 24 [LNIND 1973 MP 56].

End of Document

TRANSFER WHERE THE THIRD PARTY IS ENTITLED TO MAINTENANCE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

TRANSFER WHERE THE THIRD PARTY IS ENTITLED TO MAINTENANCE

[s 39] Transfer where third person is entitled to maintenance.—Where a third person has a right to receive maintenance, or a provision for advancement or marriage, from the profits of immoveable property, and such property is transferred, the right may be enforced against the transferee, if he has notice thereof or if the transfer is gratuitous; but not against a transferee for consideration and without notice of the right, nor against such property in his hands.

This section aims to protect persons who have a right to maintain themselves out of the property which is owned or controlled by some other person. Where such property is sold without making any alternative arrangement for those dependent upon it for their maintenance, they would be left without any monetary support. The rule here stipulates, that as the right is in property, if the property is sold, the persons entitled to claim maintenance are entitled to follow the property in whomsoever hands it may be and realise their maintenance amount from it.

For example, a Hindu father having a son and a daughter leaves the property in favour of the son through a Will and provides that out of the income coming from the property, the son would pay Rs 5000 per month to the daughter for her maintenance. The son sells the property to X, without making any alternative arrangements for the daughter. Here, the daughter is entitled to realise her maintenance not from her brother, but from X, in whose hands the property is. However, it is essential that the transferee, against whom the right of maintenance is enforced, should either be a gratuitous transferee or a transferee who had notice of the claim/right of the party seeking maintenance. It cannot be enforced against a transferee for consideration who had no actual or constructive notice of the claim of maintenance.

Where a third person has a right to receive maintenance, or a provision for advancement,42 or marriage, from the profits of immovable property and such property is transferred, the right may be enforced against the transferee if he has notice thereof or if the transfer is gratuitous; but not against a transferee for consideration and without notice of the right, nor against such property in his hands. Where the claimants to maintenance are party to such transaction of immovable property or have knowledge of the transfer they would be stopped from claiming maintenance from the transferee. For example, if the husband transfers his property with the knowledge/consent of his wife and children, the latter as such would have no claim of maintenance against the transferee.43

Third Party

The expression “third party” refers to a person who is not a party to the transfer yet has an enforceable right in the property that is the subject matter of the transfer. It would include a wife,44 including a widow,45 children,46 mother,47 a daughter,48 and even male members such as minors, and disqualified coparceners in a Mitakshara joint family,49 who are unable to maintain themselves and are otherwise also entitled to maintenance.

Page 2 of 2 TRANSFER WHERE THE THIRD PARTY IS ENTITLED TO MAINTENANCE

42 Provisions for advancement are unknown to Indians. See Kerwick v Kerwick, AIR 1921 PC 56; Guran Ditto v Ram Ditto, AIR 1928 PC 172; Dharwar Bank v Mahomed Hayat, AIR 1931 Bom 269; Paul v Nathaniel, AIR 1931 All 596; Sura Lakshmiah v Kothandarana, AIR 1925 PC 181; see also Dhanjibhai v Navajbai, (1878) ILR 2 Bom 75, wherein it was held that the English rule by which a child who has received an advancement must bring it to the hotchpot in case of father’s intestacy, is not applicable to Indian Parsis. 43 Vijayan v Sobhana, AIR 2007 Ker 177 [LNIND 2007 KER 119]; Sarwan Singh v Jagir Kaur, AIR 2006 P&H 171. 44 V Tulasamma v V Sesha Reddy, AIR 1977 SC 1944 [LNIND 1977 SC 136]; B Manikayam v B Venkatayamma, AIR 1957 AP 710 [LNIND 1956 AP 138]; Basudev Dey Sarkar v Chhaya Dey Sarkar, AIR 1991 Cal 399 [LNIND 1991 CAL 25]; Chandramma v Maniam Venkatreddi, AIR 1958 AP 396 [LNIND 1957 AP 60]. 45 Ramamurthy v Kanakaratnam, AIR 1948 Mad 205 [LNIND 1947 MAD 163]; B Manikayam v B Venkatayamma, AIR 1957 AP 710 [LNIND 1956 AP 138]; Vellayammal v Srikumara Pillai, AIR 1960 Mad 42 [LNIND 1959 MAD 38]; Kare Mors Sharabanna v Basamma, AIR 1962 Mys 207; Mahesh Prasad v Nunder, AIR 1951 All 141 [LNIND 1950 ALL 153]. 46 Ramankutty Purushothaman v Amminikutty, AIR 1997 Ker 306 [LNIND 1997 KER 49]. 47 S Periasami v Chellamal, (1980) 1 Mad LJ 46. 48 Gopee Krit Gosain v Gunga Prasad, (1854–57) 6 Moo Ind App 53; Kerwick v Kerwick, AIR 1921 PC 56; Paschaud v Paschoud Nixon, AIR 1930 Oudh 441; Johnstone v Gopal Singh, AIR 1931 Lah 419. 49 Debi Lal v Nand Kishore, AIR 1922 Pat 22; Gopal Krishna v Venkatarasa, (1914) ILR 37 Mad 273; Sundarabai v Shivnarayana, (1907) 32 Bom 81; Bhagirathi v Jokhu Ram, (1910) ILR 32 All 575.

End of Document

MAINTENANCE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

MAINTENANCE

The term maintenance has not been defined in the Act, and is understood as an amount of money or property that can take care of the necessities of a person unable to maintain herself. It may include depending upon the facts and circumstances of the case, residence and expenses sufficient for food, clothing, provisions for educational expenses of children, and marriage expenses of unmarried children, more specifically, daughters. It includes a right to receive enhanced maintenance,50 and separate residence51 and maintenance. Claim of maintenance is a pre- existing right of a wife and is enforceable against property in the hands of alienee who takes it with notice of her claim.52

In Adiveppa v Tengawwa,53 by way of settlement of property between husband and the wife, the wife was granted separate residence as part of her maintenance. While she was in possession of the property, the husband sold it to a third party who took it with notice of her residence and claim over it. Dismissing his suit for possession, the court held that till she was alive the alienee would not be entitled to possession of the property. In such cases, a transferee with notice has no option but to wait till she dies and then take possession of the property.

Maintenance not a Charge

Maintenance can be a charge on the property if it is secured through a decree or an agreement,54 or if pursuant to an arrangement, a certain property has been allocated with the specific purpose of securing the maintenance rights from it.55 In case of a Hindu widow, it is in the nature of an indefinite right and falls short of charge.56

Maintenance not Secured by a Decree

A person entitled to realise the maintenance from a specific property that has passed into the hands of the alienee with notice can proceed against him even without a decree in his favour, more so in a gratuitous transfer.57 So, where the husband gifts his properties to his concubine without making any provision for his wife, the wife is entitled to have a charge against the very properties and enforce the same,58 but if a charge is created by a decree, it would be binding on a transferee irrespective of whether he has notice of the charge or not.59

Maintenance of Widow and Debts Due to the Family

As between the maintenance rights of a widow and the debts due to the family, the latter, if contracted for the benefit of the family, takes priority over her claim of maintenance.60 This would be the situation even if the transferee has notice of her right,61 but if the maintenance has been specifically charged, her claim will have priority.62 If the coparceners sell off the coparcenary property to pay their debts without making arrangements for the maintenance of the widow, she has a right to enforce her rights against such property and challenge any unauthorised debts that the coparceners may have contracted.63

Marriage Expenses

Page 2 of 3 MAINTENANCE

Under Hindu law, the right of maintenance specifically includes a right to claim marriage expenses from the joint Hindu family property in case of an unmarried daughter,64 including a daughter’s daughter,65 and even sons,66 but not for the marriage of minors,67 or when they are marrying a second time,68 and a transferee takes the property subject to such liability if he has notice of it at the time of the transfer.

Notice on Part of the Transferee

The essential condition for making maintenance an obligation on part of the transferee is that he must have taken the property with notice of the right of the claimant. Notice can be actual or even constructive. If the circumstances were such that by making reasonable enquires, which he should have made as a normal prudent person, he could have known the claim, he would be imputed with notice of the same. This imputation of notice of the existence of the right is sufficient to bind the transferee,69 but he is not so bound if he is a bona fide purchaser for consideration and without notice.70 A son cannot plead want of notice about the right of mother to claim maintenance from him, and a partition would have no impact on her right.

Intention on Part of the Transferee not Necessary

Though as a reasonable prudent person, normal and specific inquires may have revealed the existence of a right of maintenance over the property that is the subject matter of transfer, yet a failure to do that would merely lead to an imputation of knowledge on part of the transferee. No motives can be attributed on part of the transferee. Even though it would be an unconscionable act on part of the transferor to transfer the property, yet it cannot be said that the transferee was also a party to the deceit. Therefore, it is not necessary to prove that he was a party to the fraud or had an intention to deceive. Thus the claimant need not prove71 that the transferee was aware of an intention to defraud the widow or to defeat her right of maintenance.72

50 Kaveri v Parmeshwari, AIR 1971 Ker 216 [LNIND 1970 KER 103]; see also Vedavathi Williams v Ramabai, AIR 1964 Mys 265. 51 See Hindu Adoptions and Maintenance Act, 1956, section 18. Basudev Dey Sarkar v Chhaya Dey Sarkar, AIR 1991 Cal 399 [LNIND 1991 CAL 25]; V Tulasamma v V Sesha Reddy, AIR 1977 SC 1944 [LNIND 1977 SC 136]. 52 B Manikayam v B Venkatayamma, AIR 1957 AP 710 [LNIND 1956 AP 138]; Basudev Dey Sarkar v Chhaya Dey Sarkar, AIR 1991 Cal 399 [LNIND 1991 CAL 25]; Chandramma v Maniam Venkatareddi, AIR 1958 AP 396 [LNIND 1957 AP 60]. 53 (1974) 2 Kant LJ 45 [LNIND 1974 KANT 38]. 54 Jamnabai v Balakrishna, AIR 1927 Mad 1092 [LNIND 1927 MAD 93]; Jogi v Rajkumar Saheba, AIR 1956 Ngp 138; Prasanno v Barbosa, (1866) 6 WR 253; Sowbhagia v Manicka, (1918) 33 Mad LJ 601. 55 Ram Kanwar v Amarnath, AIR 1932 All 361; Rachwa v Shivayagapa, (1893) 18 Bom 679; Inam v Balamma, (1889) 12 Mad LJ 334. 56 Ghasiram v Kundan Bai, AIR 1940 Ngp 163; Lakshman v Satyabhambai, (1877) 2 Bom 494; Bhatpur State v Gopal, (1901) 24 All 160; Ram Kunwar v Ram Dai, (1900) 22 All 326; Somasundaram v Unnamalai, (1920) ILR 43 Mad 800; Ramanandan v Rangamal, (1889) ILR 12 Mad 260. 57 Ramankutty Purusothaman v Amminikutty, AIR 1997 Ker 306 [LNIND 1997 KER 49]. 58 Raghavan v Nagammal, (1979) 1 Mad LJ 172. 59 Kallappa v Balwant, AIR 1925 Bom 343; Maina v Bachchi, (1906) ILR 28 All 655; Mahadev Prasad v Anandi Lal, AIR 1925 All 60; Chaudhari v Gobardhan, AIR 1929 Oudh 316; Hunter Liquidator of Bank of Upper India v Nisar Ahmed Chaudhary, AIR 1932 Oudh 336. 60 Johurra v Srigopal, (1876) ILR 1 Cal 470; Gur Dayal v Kaunsilla, (1882) 5 All 367; Lakshman v Satyabhambai, (1877) 2 Bom 494; Ramanandan v Rangamal, (1889) ILR 12 Mad 260; Jamnabhai v Balakrishna, AIR 1927 Mad 1092 [ LNIND 1927 MAD 93]; Soorja Kaur v Nath Baksh, (1884) 11 Cal 102; Jayanti v Alamelu, (1904) ILR 27 Mad 45; Brij Raj Kier v Ram Dayal, AIR 1932 Oudh 40. 61 Lakshman v Satyabhambai, (1877) ILR 2 Bom 494; Ramanandan v Rangamal, (1889) ILR 12 Mad 260; Jamnabai v Balkrishna, AIR 1927 Mad 1092 [LNIND 1927 MAD 93].

Page 3 of 3 MAINTENANCE

62 Somasundaram v Unnamalai, (1920) ILR 43 Mad 800. 63 Malkarjun v Sarubai, AIR 1943 Bom 187. 64 Prabhu Dayal v Ralla Ram, AIR 1930 Lah 672; Sellappa v Suppan, AIR 1937 Mad 496 [LNIND 1936 MAD 341]; Vaikuntam v Kallapiram, (1900) ILR 23 Mad 512; Runganaiki v Ramanuja, (1912) ILR 35 Mad 728; Srinivasa v Thiruvengadathaiyangar, (1915) ILR 38 Mad 556. 65 Patel v Lakkireddigari, AIR 1947 Mad 379. 66 Sundrabai v Shivnarayana, (1907) 32 Bom 81; Debi Lal v Nand Kishore, AIR 1922 Pat 22; Gopalkrishna v Venkatarasa, (1914) ILR 37 Mad 273. Debts reasonably incurred for the marriage of a Hindu male are binding on the joint family property; see Bhagirathi v Jokhu Ram Upadhia, (1910) ILR 32 All 575. 67 Dev Kishan v Ram Kishan, AIR 2002 Raj 370; Ramjas Aggarwal v Chand Mandal, (1937) ILR 2 Cal 764. 68 Venkatasubba v Anand Rao, (1933) 57 Mad 722. 69 Radhabai v Gopal, AIR 1944 Bom 50; Vedavathi Williams v Ramabai, AIR 1964 Mys 265. 70 Ramamurthy v Kanakartanam, (1948) ILR Mad 335; Mahesh v Munder, AIR 1951 All 141 [LNIND 1950 ALL 153]; Chandramma v Venketareddi, AIR 1958 AP 396 [LNIND 1957 AP 60]; Kesho Prasad v Upper India Bank Ltd, AIR 1933 Oudh 76; Sheodeni Kuero v Umashanker, AIR 1963 AP 74. 71 Kare More Sharabanna v Basamma, AIR 1962 Mys 207; Mahesh Prasad v Nunder, AIR 1951 All 141 [LNIND 1950 ALL 153]; Vellayammal v Srikumara Pillai, AIR 1960 Mad 42 [LNIND 1959 MAD 38]; Ramamurthy v Kanakaratnam, AIR 1948 Mad 205 [LNIND 1947 MAD 163]; B Manikayam v B Venkatreddi, AIR 1957 AP 710 [LNIND 1956 AP 138]. 72 Pranlal v Chapsey Ghella, AIR 1945 Bom 34; Radhabai v Gopal, AIR 1944 Bom 50; Dattatreya v Tulsabai, AIR 1943 Bom 412.

End of Document

BURDEN OF OBLIGATION IMPOSING RESTRICTION ON USE OF LAND Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

BURDEN OF OBLIGATION IMPOSING RESTRICTION ON USE OF LAND

[s 40] Burden of obligation imposing restriction on use of land.—Where, for the more beneficial enjoyment of his own immoveable property, a third person has, independently of any interest in the immoveable property of another or of any easement thereon, a right to restrain the enjoyment in a particular manner of the latter property, or

Or of obligation annexed to ownership but not amounting to interest or easement.—Where a third person is entitled to the benefit of an obligation arising out of contract and annexed to the ownership of immoveable property, but not amounting to an interest therein or easement thereon, such right or obligation may be enforced against a transferee with notice thereof or a gratuitous transferee of the property affected thereby, but not against a transferee for consideration and without notice of the right or obligation, nor against such property in his hands.

Illustration

A contracts to sell Sultanpur to B. While the contract is still in force he sells Sultanpur to C, who has notice of the contract. B may enforce the contract against C to the same extent as against A.

This section was amended in 1929, and has to be read along with section 11 of the Act.

The first part of section 40 seeks to protect the rights of the original owner of the property in accordance with the terms on which he had sold the portion of his property to the transferee (present owner). For instance, A is the owner of a large plot of land, adjoining a road. He constructs a house on half of the plot, and the other half adjoining the road, is left open. On this plot he makes a four feet wide path to reach the road. This path is used by him and his family to access the road as well as their house. A later sells this vacant plot of land to B with the condition that B would not build on this path and will also not obstruct the access through this path. This condition is incorporated in the sale deed. B would be legally bound to follow this condition. This might have been a contract to begin with between two people. Presently, B is the owner of the property having an absolute right of enjoyment over his property, but as this restriction helps A to enjoy his property in a better manner, the condition would be binding on B. It must be noted here that as A has sold the property he has no right in it of the owner. He would be described in relation to this property as a third party. He neither has any interest in it nor any easement rights, but has a legal right to compel to enjoy his property in a specific manner. The second part of section 40 refers to a situation where B sells this property to a transferee, C. This transferee may be aware of this restriction/condition or may not have any knowledge of it. Secondly, C may be a gratuitous transferee; he might have received the property without consideration say through a gift. As to the binding force of this condition, a gratuitous transferee or a transferee who has notice of this condition would be bound by it in the same manner as B was, but a bona fide transferee without actual or constructive notice would not be bound by it and therefore the same cannot be enforced against him by A. The enforceability of such conditions can be either by A, i.e., the original owner of the property or even a transferee or legal representatives of A.

Page 2 of 4 BURDEN OF OBLIGATION IMPOSING RESTRICTION ON USE OF LAND

If for the beneficial enjoyment of his own immovable property, a third person73 has the right independently of any interest in the immovable property of another to direct the enjoyment in a particular manner of the latter’s property, such right or obligation may be enforced against a transferee with notice thereof or a gratuitous transferee of the property affected thereby, but not against a transferee for consideration and without notice of the right or obligation nor against such property in his hands.74 It is based on the principle that when a man, by gift or purchase, acquires property from another with knowledge of a previous contract lawfully and for valuable consideration made by him with a third person to use and employ property for a particular purpose in a specified manner, the acquirer shall not, to the material damage of the third party in opposition to the contract and inconsistently with it, use and employ the property in a manner not allowable to the giver or seller.75 Since these restrictions are not of the same importance as easements, or covenants running with the land they can be enforced only as against transferee with notice or gratuitous transferees.76

Restrictive Covenants

As has already been explained under notes to section 11, covenants that are imposed by the transferor for the better enjoyment of his own property on the transferee can be of two types. The ones that restrain him from doing a particular act are called negative covenants or negative restraints. Those conditions or covenants that require the transferee to do a particular act are called positive or affirmative covenants.

For instance, A sells a plot of land adjoining his house, to B and inserts two conditions in the transfer deed. The first condition requires the transferee not to open windows overlooking the courtyard of A, as that would disturb his privacy, and the second is, that he must maintain the front lawn so that A is able to enjoy the greenery. The first covenant is a negative covenant, it restraints the transferee from doing an act i.e., not to build windows in the direction of A’s courtyard and the second is an affirmative covenant, because it requires B to spend his own money. Both these conditions would be binding on the transferee as he agreed to abide by the contract. But negative covenant attach themselves to the land and run with the land, i.e., if B transfers the property to a third party, the negative covenants are enforceable against this third party if he takes the property with notice of the covenant or where it is a gratuitous transfer. Positive or affirmative covenant remain in the nature of mutual contract and are not enforceable as against a third party.

Negative Covenants

In equity, a negative covenant or agreement restricting the user of the land as aforesaid, attaches itself to the land and runs with it.77 It is binding on the purchaser who has notice of the covenant.78 Such covenant should be negative and this rule does not apply in case of positive or affirmative covenant.79 A covenant by a purchaser not to use the burdened property for any other purpose other than a single dwelling house,80 or a covenant restricting the nature of building to be erected,81 an injunction for not obstructing the right of way of a person through the backyard of another,82 are illustrations of negative covenants. The covenantee or his assignee cannot sue unless the covenant relates to, or concerns some ascertainable property belonging to him or in which he is interested. If the transferor parts with all his land, there is no land with which the benefit of the covenant can run,83 and the same will not be enforceable. The owner must possess land or property for whose enjoyment the covenant is necessary. If on the date when the covenant is taken, the covenantee has no land to which the benefit of the covenant could be attached, the burden of the restrictive covenant cannot enure against a derivative owner even when he takes with notice,84 though the property for the benefit of which restrictive covenant is entered into, need not be independent of or outside the demised premises.85

A covenantor is also entitled to the benefit of a restrictive covenant when it is for mutual benefit, notwithstanding the absence of mutual covenants.86

Affirmative Covenants

Affirmative covenants are conditions that require the transferee to do a specific act and may involve expenditure of money.87 They are collateral, do not attach themselves to the land and therefore do not run with the land either in law or in equity.88 Since they are in the nature of a personal contract between the transferor and the transferee, they cannot be enforced against the purchaser from the transferee.89 A covenant to pay money,90 lay out money in building or repairs,91 or contribution to the cost of roads and severs,92 to pull down rooms on a passage,93 or a

Page 3 of 4 BURDEN OF OBLIGATION IMPOSING RESTRICTION ON USE OF LAND covenant to a sub-lessee to pay rent to the original lessor,94 are illustrations of positive covenants.

Personal Covenants

Where, under the terms of the contract, the parties agree to abide by certain conditions incorporated under the deed, they remain in the nature of personal obligations or covenants. Generally these personal covenants do not run with the land and therefore are not enforceable as against a third party. A covenant of indemnity,95 of reconveyance of a right of easement,96 paying commission on the extraction and sale of coal from a mine,1 or of not paying the land revenue with respect to the land retained in his possession by the transferor,2 or a covenant to pay a specific sum3 or one fourth of the sale proceeds in the event of sale,4 are illustrations of personal covenants.

Covenants Running with the Land

Agreements which bind not only the parties to the contract but also run with the land and can be enforced are— covenants to pay rent and taxes,5 or of pre-emption,6 or of the lessee to pay the lessor a share of the purchase money if he assigns the lease;7 or granting the use to the lessor the use of roads.8

73 Third person therefore refers to a covenantee or person to whom the benefit of the covenant has been assigned. See Union of London and Smith Bank Miles v Easter, (1933) AER 355, 365–366, (1933) Chapter 611. 74 See The Transfer of Property Act, 1882, section 40. See also the Indian Contract Act, section 108 expl 2; the Specific Relief Act, 1877, sections 27(b), 24(d) and 25(c). The Indian Trusts Act, 1882, sections 91, 98. See also Durga Prasad v Deepchand, (1954) SCR 367, 368. The principle adopted here is the English doctrine of the restrictive covenants illustrated in Tulk v Moxhay, (1848) 2 Ph 774, with the modification introduced by later English decisions of Haywood v Brunswick Building Society, (1881) 8 QBD 403; Austerberry v Corp of Oldham, (1885) 29 ChD 750. 75 D Mattos v Gibson, (1859) 4 De G & J 276. 76 Prabhu v Ramzan, 17 All LJ 469. The decision was disapproved on facts in Abdul Shakur v Nandalal, AIR 1931 All 552. 77 Tulk v Moxhay, (1848) 2 Ph 774; Princy v Jose, AIR 2010 Ker 1 [LNIND 2009 KER 225]. 78 Rajpur Colliery v Purshottam, AIR 1959 Punj 463. 79 Chaturbhuj v Mansukhram, AIR 1925 Bom 183. 80 Porter v Fletcher, (1973) 1 All ER Rep 298. 81 Chambers v Randall, (1923) 1 Ch 149. 82 Ramachandra v Laxmana Rao, AIR 2000 Kant 298 [LNIND 2000 KANT 284]. 83 Formby v Barker, (1903) 2 Ch 539; LCC v Allen, (1914) 3 KB 642; Renal v Cowlishaw, (1878) 9 ChD 125. 84 Millbourne v Lyons, (1914) 1 Ch 34. 85 Motilal v Radha, AIR 1936 Cal 727. 86 Torbay Hotels v Jenkins, (1927) 2 Ch 225. 87 Chaturbhuj v Mansukhram, AIR 1925 Bom 183. 88 Jogesh Chandra v Asaha Khatun, AIR 1927 Cal 41; Rajpur Colliery v Purshottam, AIR 1959 Punj 463. 89 Chaturbhuj v Mansukhram, AIR 1925 Bom 183; Jones v Price, (1965) 2 QB 618; Haywood v Brunswick Permanent Building Society, (1881) 8 QBD 403; Austerberry v Corp of Oldham, (1885) 29 ChD 750. 90 Mohini Mohua v Ramadas, AIR 1924 Cal 487. 91 Jogesh Chandra v Asaha Khatun, AIR 1927 Cal 41; Chaturbhuj v Mansukhram, AIR 1925 Bom 183; Jones v Price, (1965) 2 QB 618; Haywood v Brunswick Permanent Building Society, (1881) 8 QBD 403; Austerberry v Corp of Oldham, (1885) 29 ChD 750. 92 Halsall v Brizell, (1957) 1 All ER 371. 93 Nand Gopal v Batuk Prashad, AIR 1932 All 78. However, this affirmative covenant was enforced against the transferee from the vendee as it was a case before the section was amended in 1929.

Page 4 of 4 BURDEN OF OBLIGATION IMPOSING RESTRICTION ON USE OF LAND

94 Ganges Manufactirng Co v Radharani, AIR 1945 Cal 89; Rambirksh v Shyam Sunder, AIR 1962 Pat 193; Madho Prasad v Jwalaeshwari, AIR 1960 All 513 [LNIND 1960 ALL 55]. 95 Banti v Mandu, AIR 1928 Lah 357; Natesa Vanniyan v Gopalaswami, AIR 1928 Mad 894 [LNIND 1927 MAD 472]; Hanwant Rao v Chandi Prasad, AIR 1929 All 293. 96 Zal Rustamjee v Anjuman, AIR 1943 Ngp 4. 1 Manubhai v Cambatta, AIR 1948 Ngp 286. 2 Harihar Singh v Kamla Prasad, AIR 1944 Oudh 35. 3 Mohini Mohan Ray v Ramadas Paramhansa, AIR 1924 Cal 487; Ramadin v Sheoratan, 6 OC 184. 4 Abdus Shakur v Nandlal, AIR 1931 All 552; see also Prabhu Narain Singh v Ramzan, AIR 1919 All 235. 5 South of England Dairies Ltd v Baker, (1906) 2 Ch 631; Ardeshwar v KD Brothers, AIR 1925 Bom 330. 6 Ram Baran v Ram Mohit, AIR 1967 SC 744 [LNIND 1966 SC 173]; Karan Baksh v Phula Bai, (1896) 8 All 102; Bahadur Singh v Ram Singh, (1904) 27 All 12; Ram Jiwan v Raturaj Singh, (1889) All WN 81; Kaur Datt Prasad v Nahar Singh, (1888) 11 All 257. 7 Kumarachandra v Narendra Nath, AIR 1930 Cal 357; Madho Pershad v Jwalaeshwari, AIR 1960 All 513 [LNIND 1960 ALL 55]; Rambirksh v Shyam Sunder, AIR 1962 Pat 193. 8 Rajpur Colliery v Purshottam, AIR 1959 Pat 463 : (1959) 38 Pat 443; see also Hoogly Bank v Mahendranath, AIR 1950 Cal 195 : (1950) 54 Cal WN 327.

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OBLIGATIONS ANNEXED TO OWNERSHIP BUT NOT AMOUNTING TO INTEREST OR EASEMENTS Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

OBLIGATIONS ANNEXED TO OWNERSHIP BUT NOT AMOUNTING TO INTEREST OR EASEMENTS

Where a third person is entitled to the benefit of an obligation arising out of a contract and annexed to the ownership9 of immovable property, but not amounting to an interest therein or easement thereon, such right or obligation may be enforced against a transferee with notice thereof or a gratuitous transferee of the property affected thereby but not against a transferee for consideration, and without notice of the right or obligation, nor against such property in his hands.

Benefit of an Obligation

Similar to the first part of section 40, Pt II also provides that benefits of obligations of the contract arising in favour of a third party can be enforced against a gratuitous transferee, and a transferee who takes the property with notice of the obligation. For this, there must be a right or obligation arising out of a contract and annexed to the ownership of the land for the purpose of its enforcement against a gratuitous transferee or a transferee with notice of the right or obligation.10 For instance, a contract to give rise to a right of pre-emption,11 to pay maintenance out of land,12 to pay an annuity out of a specific property,13 the right of a mortgagee to recover the mortgage amount,14 or a contract of sale15 create no interest in the land. At the same time, they create an obligation that is annexed to the ownership and can be enforced by a suit for specific performance against not only the transferor, but also against a purchaser for consideration with notice.16

Right of the Attaching Creditor

As between a third party who is entitled to the benefit of an obligation attached to the ownership of the land and arising out of a contract and a creditor, the rights of the third party would take priority over that of the creditor. The right of the attaching creditor does not override the contractual obligation arising from an antecedent agreement for sale of the attached property,17 and even if the property is sold in execution, the beneficiary of an antecedent agreement can enforce specific performance of his contract against the auction purchaser.18 In Hamda Ammal v Avadiappa Pathar,19 it was held that a sale deed that was executed prior to the attachment of the property before the judgment, even though registered subsequently, would prevail over this attachment.

Antecedent Rights and Court Sales

The section does not apply to a court sale and therefore, a purchaser at a court auction which is a transfer by operation of law, is not bound by the antecedent agreements.20

Page 2 of 2 OBLIGATIONS ANNEXED TO OWNERSHIP BUT NOT AMOUNTING TO INTEREST OR EASEMENTS

9 The expression does not mean creating a charge in the property but simple ‘relating to the ownership’. See Basdeo v Jhagru, AIR 1924 All 400; Ali Hossein v Rajkumar, AIR 1943 Cal 417; Abulshakur v Nandlal, AIR 1931 All 552; Chand Mohammad v Murtuzokhan, AIR 1958 Bom 194 [LNIND 1957 BOM 99]; Muhammad Ali v Brikodar, AIR 1960 Assam 178; Ram Baran v Ram Mohit, AIR 1967 SC 744 [LNIND 1966 SC 173]. 10 Leela v Ambujakshy, AIR 1989 Ker 308 [LNIND 1989 KER 169]. See The Transfer of Property Act, 1882, section 40. 11 But see Ram Baran v Ram Mohit, AIR 1967 SC 744 [LNIND 1966 SC 173], wherein it was held by the Supreme Court that a right of pre-emption is a covenant that runs with the land. 12 Mohini Devi v Purna Sashi, AIR 1932 Cal 451, wherein it was held that it would be a contractual agreement and cannot be enforced against a purchaser without notice. 13 Bhupati Bhushan v Birendra Mohun, (1948) 1 Cal 492, wherein it was held that it creates a perpetual charge and is binding on the subsequent transferee for value with notice or a volunteer with or without notice. 14 KR Varadarajaiyengar v T Lakshminarayana Setty, AIR 1985 Kant 245 [LNIND 1985 KANT 36]. Here the mortgage deed was registered subsequent to the registration of the sale of the property by the mortgagor to a third party, who took the property without notice of the mortgage. 15 Bai Dasabi v Mathurdas, AIR 1980 SC 1334 [LNIND 1980 SC 201]; Narayana Pillai Chandrasekharan Niar v Kunju Amma Thankamma, AIR 1990 Ker 177 [LNIND 1989 KER 273]; Hajee Abdul Shakur v Nandlal, AIR 1931 All 552; Basdeo v Jhagru, AIR 1942 All 400; Ali Hossein v Rajkumar, AIR 1943 Cal 417; Chand Mohamad v Murtaza, AIR 1958 Bom 194 [LNIND 1957 BOM 99]; Mohammad Ali v Brikodar, AIR 1960 Assam 178; Ram Baran v Ram Mohit, AIR 1967 SC 744 [LNIND 1966 SC 173]. 16 Lalji Jetha v Kalidas Devchand, AIR 1967 SC 978 [LNIND 1966 SC 262]; Chand Mohamad v Murtaza Khan, AIR 1958 Bom 194 [LNIND 1957 BOM 99]. 17 Vennarkkal K Sreedharan v Chandramaath Balkrishnan, (1990) 3 SCC 291 [LNIND 1990 SC 137]; Venkata Reddi v Yellappa Chetty, (1917) 38 IC 107; Paparaju Veeraraghavayya v Killaru Kamladevi, AIR 1935 Mad 193 [LNIND 1934 MAD 387]; Athinarayana v Subramaniya, AIR 1942 Mad 67 [LNIND 1941 MAD 85]; Veerappa Thewar v CS Venkatarama Aiyar, AIR 1935 Mad 872 [LNIND 1935 MAD 222]; Ranga Ramchandra Kulkarni v Gurlingappa Chinnappa Muthal, AIR 1941 Bom 145; Kochuponchi Varughese v Ouseph Lopan, AIR 1952 TC 467; Angu Pillai v MSM Kasiviswanathan Chettiar, AIR 1974 Mad 16 [LNIND 1972 MAD 198]. See also for a contrary opinion Madan Mohun v Rebait Mohun, (1916) 21 Cal WN 158. 18 Purna Chandra Basak v Daulat Ali Mollah, AIR 1973 Cal 432 [LNIND 1973 CAL 168]; Tarak Nath v Sanatkumar, AIR 1929 Cal 494. 19 (1991) 1 SCC 715 [LNIND 1990 SC 679]. 20 Venkatta Reddi v Yellappa Chetty, (1917) 38 IC 107; Nur Mohamad v Dinshaw, AIR 1924 PC 393, wherein Lord Dunedin observed that judicial sales would be robbed of all their sanctity if vague references to antecedent contracts could be held to invalidate the buyer’s title. But see also Nand Gopal v Batuk Prasad, AIR 1932 All 78, wherein it was held that the official receiver in whom the property vested by operation of law is a transferee and subject to the principle contained in The Transfer of Property Act, 1882, section 40.

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NOTICE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

NOTICE

Notice of antecedent agreements or contractual obligations can be actual or constructive.21 If the contract for sale is to a usufructuary mortgagee, i.e., a mortgagee who has the possession of the property, constructive notice of the obligations can be imputed on him.22 Similarly, if the transaction has been recorded in the books of the village, this would be sufficient to impute notice on him,23 and if the transferee claims that he is a bona fide transferee without notice, he would have to prove it.24

21 Jogmaya v Tulsa, AIR 1926 All 70; Kameswaramma v Sitaramanuja, (1906) ILR 29 Mad 177. 22 Puthenpurayil v Kodiyal, (1916) Mad WN 31. 23 Basdeo v Jhagru Rai, AIR 1924 All 400. 24 Valiya v Krishna, AIR 1927 Mad 699.

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TRANSFER BY OSTENSIBLE OWNER Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

TRANSFER BY OSTENSIBLE OWNER

[s 41] Transfer by ostensible owner.—Where, with the consent, express or implied, of the persons interested in immoveable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorised to make it:25

Provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith.26

25 Sonal Singh v Hukum Singh Chauhan, AIR 2007 (NOC) 2054 (Utr); Kashmir Singh v Panchayat Samiti, (2004) 6 SCC 207 [LNIND 2004 SC 487]; see also the Indian Evidence Act, section 115; Sale of Goods Act, 1930, sections 27–29; The Indian Contract Act, 1872, sections 178, 178A, where it is applicable to movable property as well. 26 Layak Ram v Daramvati, AIR 2010 P&H 95; SM Shah v Sayed Abdul Rashid, AIR 1991 Kant 273 [LNIND 1990 KANT 366]; Ramcoomar v MacQueen, (1872) 11 Beng LR 46, wherein the judicial committee held that where one man allows another to hold himself out as the owner of an estate and a third person purchases it for value from the apparent owner in the belief that he is the real owner, the man who so allows the other to hold himself out shall not be permitted to recover upon his secret title, unless he can overthrow the purchaser by showing either that he had direct notice or something which amounts to constructive notice, of the real title; or that there existed circumstances which ought to have put him upon an enquiry that if persecuted would have led to the discovery of it. This section also makes an exception to the rule that ‘no person can pass a better title than what he has’. See also Controller of Estate Duty, Lucknow v Aloke Mitra, (1981) 2 SCC 121 [LNIND 1980 SC 424]; Drigpal Singh v Laldhari Ojha, AIR 1985 Pat 110; Nainsukhdas v Gowardhandas, AIR 1948 Ngp 110; Maung Sin Ba v Mating Kyne, AIR 1934 Rang 90. The question whether the principle applies to the given set of facts is a question of law—see Mul Raj v Fazal Iman, AIR 1923 All 583; but see Jamna Das v Uma Shanker, (1914) ILR 36 All 308. This is on the principle that the proper legal effect of a proved or admitted fact is necessarily a question of law—see Nafar Chandra Pal v Shukur, 45 IA 183.

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OSTENSIBLE OWNER Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

OSTENSIBLE OWNER

“Ostensible” literally means “apparent” or “seeming”. An ostensible owner is a person who apparently or seemingly appears to be the owner, though in reality he is not. He is a person having all indicas of ownership having being real ownership.27 He is different from a mere trespasser or a person in unlawful occupation of the property. His behaviour and conduct appears to be that of the owner of the property with the consent or conduct of the real owner.28 For instance, a woman owns the property and permits her husband to deal with it as if he is the owner. The husband’s name is entered into the revenue records for the purposes of paying the taxes, it is he who finalises whether and who should be inducted as a tenant in the property and the wife does not object to it. He can be called an ostensible owner, while the real owner is the wife. Similarly, on the death of a father, the son and daughter inherit the property. The daughter being married is living away and allows her brother to take all decisions with the property including that of payment of taxes, carrying major repairs, etc. In such a case, the brother would be an ostensible owner of the property, while the sister is the real owner. If there is no ostensible owner and/with a real owner, the principle under this section has no application.29

This section enacts a rule of estoppel as against the real owner of the property who:

(i) by his conduct or consent or otherwise makes the other believe that a particular person has all the powers over the property as that of the owner, including that of alienation; (ii) such person in fact is not authorised to alienate the property; (iii) he alienates it as an ostensible owner; (iv) the transfer is for value or consideration, i.e., it is not a gift; (v) the transferee acts bona fide and has taken reasonable care to ascertain that he is competent to transfer, i.e., the transferee does not have actual or constructive notice of the real facts; and (vi) the real owner would be prevented from disputing the validity of the transfer on the ground that the transferor was not, in fact, competent to do so.

The principle underlying this section is that if two innocent persons are defrauded or cheated by one, who, after transferring the property of one without his consent, to another, is no longer present, and the two persons enter into litigation with respect to the property transferred, then out of these two apparently innocent persons, the one who, by his conduct or consent enabled the fraud to take place, will suffer.

For instance, A and B are two brothers. B allows A to not only manage the property, but A also takes all the decisions relating to the property, even in public dealings with respect to it. A sells the property to C. A, though was not permitted to sell it without the consent of B, who was the real owner of the property, was able to commit this fraud only because B permitted A to do so, through his own conduct. B files a case to vitiate the sale on the ground that it was his property, and A was incompetent to sell it to C. Before the court there are two seemingly innocent parties; B, whose property has been sold without his consent by a person whom he had allowed to control and treat the property as the owner and C, who has paid consideration to purchase the property from a person who was held out as the owner. B will have to make way for C, as it was due to his conduct only that A was able to carry this

Page 2 of 9 OSTENSIBLE OWNER fraud, while C had purchased it after making reasonable inquiries as a prudent person. In Niras Purve v Tetri Pasin,30 a husband was the owner of the land. He effected a mutation in the revenue records of the same in favour of his wife, and shortly thereafter went on a pilgrimage. Meanwhile, the wife sold the land to C as an ostensible owner. C made due inquiries and paid the consideration. As the land was subject to a mortgage, C paid the loan and redeemed the mortgage. The husband on his return could not reclaim the land as he, by his conduct, had held out the wife as an ostensible owner.

Illustrations of Ostensible Owner

In order to apply section 41, the vendor must be the ostensible owner of the property.31 A benamidar,32 a wife when the husband purchases property in her name33 or allows her to control it as an owner,34 a brother in possession of sister’s share as well his own for 25 years with the revenue records showing his name as the owner with respect to the whole property,35 would be illustrations of ostensible owners. Similarly, where a widow was in sole possession of property, the real owners of which lived in another village and allowed her to treat the property as her own;36 a cousin of the widow who though the owner of half share was allowed by the widow to deal with the property as an exclusive owner,37 a mother who, with the implied consent of the son sells for necessity,38 brothers managing the property in which their mother also had a share,39 or father selling a patta which stood in the name of the son, 40 would be ostensible owners.

On the other hand, a menial servant,41 or a manager in possession42 even where the name of the manager appears in the Municipal House Register as the real owner,43 a professed agent,44 manager of an idol,45 a mahant,46 a Hindu widow,47 a manager of a joint family,48 a coparcener,49 or a co-sharer50 in occupation of joint family property, even where the co-sharer permit one of them to manage the property,51 or a donor in possession of the gift deed but without any express reservation of the power of revocation of the gift, are not ostensible owners.52

The term “person” includes Union or State Government. As the term “person” has not been defined in the statute and therefore would need liberal interpretation. Similarly, the term “ostensible owner” would include transferee from State Government or Union Government. An allottee under the Displaced Persons Compensation and Rehabilitation Act (Act 44 of 1954), can be treated to be an ostensible owner and the Government as the real owner.53

Consent

In order to succeed in a plea of bona fide purchaser, it is to be proved that the transferor is the ostensible owner, with the express/implied consent of the real owner. This express or implied consent has to be valid and free consent. Since the possession and ostensible ownership must be with the consent of the real owner of the property, the real owner must also be capable of giving consent54 to the transfer and should have given it with free will.55 It would include a consent given on a mistake of fact56 but not one given on a misapprehension of a legal status.57 The transferor should be shown to have been the ostensible owner with the express or implied consent of the true owner but the transfer itself need not be with the consent of the true owner.58

In case the transfer is procured by fraud and misrepresentation in absence of bona fide, the plea of bona fide purchase is not available since fraud vitiates everything. The section therefore will not apply if the real owner does not give the consent, and had in fact challenged the occupation of the possessor. In Shafiquallah v Samiulah,59 after the death of the owner, the property was in possession of his illegitimate sons, who, in law, were ineligible to inherit his property. The real heir filed a suit for claiming the possession of the property as per his entitlement under the laws of inheritance but, the possessors retained the possession, entered their names in the revenue records and later sold the property to a third party, C. This sale was effected after the rightful heir had already filed the suit claiming possession of the property. The suit was decreed in favour of the heir. The mortgagee claimed the benefit of section 41 but his claim was rejected on two grounds:

(i) the possession of the property was not with the consent of the real owners of the property, rather a suit had already been instituted challenging their possession; (ii) the mortgage was affected while the suit with respect to this property was already pending in a court. Thus, the transferee/mortgagee had become a transferee who took the property subject to the rule of lis pendens, and was bound by the decision of the court.

Page 3 of 9 OSTENSIBLE OWNER

Similarly, where the owner executes a power of attorney authorizing his attorney to sell the property which he did, for consideration through a registered deed, it was held that a suit for injunction was barred by section 41.60

Implied Consent

As aforesaid, the ostensible owner must be in possession of the property and holds himself out as the owner with the consent of the real owner. Consent need not be express or in writing. It includes implied consent as well. Where, by conduct a person allows other to deal with his property as his own,61 it would amount to implied consent, but a mere silence would not amount to implied consent,62 more so when a person is not aware of his rights,63 or unless there is a duty to speak64 or it is to induce a belief that the party keeping silence has no rights.65 Negligence may amount to implied consent.66 Where two pardanashin women having husbands, who knew business, allowed their brother to dissipate their share of the property, the brother is the ostensible owner with the implied consent of the sisters,67 but where pardanashin woman entrust the management of their property to the male members of the family who without their concurrence, deal with it, the consent cannot be presumed.68 Similarly, where the purchaser of a tenure allows his vendor to represent himself to be still the tenant and to continue to pay rent of the landlord, the purchaser is bound by a decree for sale in execution of a decree of rent against the vendor,69 but where the vendor pays rent as the landlord refuses to receive rent from the purchaser, there is no acquiescence and the purchaser is not bound by the landlord’s decree.70

Consent does not Include an Intention to Deceive

It is essential for the application of this principle that the ostensible ownership is with the consent of the real owner of the property, though this consent, express or implied, does not include an intention to deceive the transferee on part of the real owner; nor is it essential to prove the same.71 The real owner may be innocent in allowing the world at large to think that someone else is the owner, but if the transferee has made proper inquiries and has acted in good faith, his interests would be protected.72

“Transfer” does not Include an Involuntary Transfer

The term transfer under section 41 refers to a transfer by the ostensible owner and applies to voluntary transfers by the act of parties. It does not apply to a transfer made by an order of the court,73 such as an auction sale.74 Where under a court auction the property was sold and the vendee was directed to hand over the vacant possession to the recovery officer, his claim to be a bona fide purchaser on the basis of sale deed that was not surrendered would not be accepted and order passed by recovery officer to him to hand over vacant possession of the property would be proper.75

Transfer Includes a Partial Transfer

It is not necessary for the application of the section that there must be a transfer of property by sale or exchange. As the term “transfer” includes the transfer of an interest in the property, therefore it would equally apply to a mortgage;76 and an ostensible mortgagee is treated as an ostensible owner.77 Where a person effects a mortgage by conditional sale with the help of two separate deed; one a sale deed and the other a re-conveyance deed but keeps the latter to himself and the mortgagee, after a lapse of 42 years, sells the property to the transferee, the principle stated herein applies and a suit for redemption by the mortgagor will fail.78

A transferee from a Hindu widow possessing only a life estate79 can take the plea of ostensible ownership only during her/his lifetime,80 but not against the claim of a reversioner.81

Transfer for Consideration

The principle protecting a transferee applies only where the transfer is for consideration. A gratuitous transferee is not protected. The principle does not apply in case of gifts and other transfers effected without any monetary consideration.82

Transferee must take Reasonable Care

What is absolutely essential to show is that the transferee had taken such reasonable care83 as an ordinary man of business would take.84 Even otherwise, there is always a duty imposed on an ordinary prudent person, and hence the transferee is expected to be vigilant and protect his own interests. Here, a duty is imposed on the transferee to make inquiries into the title of the transferor85 unless the title is very clear,86 and he cannot absolve himself by

Page 4 of 9 OSTENSIBLE OWNER stating that he entrusted this duty to his solicitor87 or relied merely on the entries in the revenue88 or khewat89 municipal and police registers.90 For evading the charge of wilful abstention from making an inquiry and consequently the imputation of a constructive notice, there should be some starting point of inquiry which would have led to some result,91 such as a discrepancy in the sale certificate between the description of the property by its name and delineation by boundaries,92 the possession of land by a person other than the owner,93 or where the transferor is the karta of a joint family,94 or where the transferor had acquired the property through a Will and there was a possibility of other sharer being present95 or where the transferor was a Muslim, it should have put the transferee on to the inquiry as to whether there was a female heir also present.96 If there is no starting point of inquiry or clue to suggest that the transferor is not the real owner, there is no duty to inquire further,97 but if he makes inquiries and finds out the defect, yet proceeds to take the transfer in his favour, he will not be protected for want of good faith.98

Where the transferee fails to prove that he acted in good faith taking reasonable care to ascertain that the transferor had the power to transfer the land he is not entitled to protection of section 41.99 Where the property was jointly owned by the three co-owners and the property was undivided, without a partition, and one of them transferred the property but the transferee had neither ascertained from any other person whether the transferor had the capacity to transfer the property, he cannot claim the benefit of being a bona fide transferee without notice and no protection under section 41 would be available to him.1 Similarly, a transferee pendente lite cannot seek the protection of section 41 as he cannot be considered a bona fide transferee without notice.2

In a suit for declaration, a co-sharer with vendor could not be said to be the owner of the share of his sister by way of adverse possession. Where the property was owned by the brother and a sister of their respective shares, and the plaintiff had not ousted the sister from the suit land and the vendor had also not abandoned her share in suit property, the subsequent vendees having made inquiry from revenue records and on satisfying themselves that as per revenue record that vendor was owner of half of the share in the suit property, had purchased the same, in such circumstances the subsequent vendees would be entitled to protection under section 41 being bona fide purchasers for consideration.3

Where the ostensible owner sells the property to the transferee but before it can be registered the real owner sells the same property to another person through a registered deed, the first transferee would not be entitled to the protection and registered deed would take priority.4

Proper Inquiries

The transferee must show that he had made such enquires as a reasonable prudent man would have taken to safeguard his own interests. A finding on a question whether the transferee had made proper inquiries before the purchase is a question of fact,5 but from that finding it can be said that reasonable and sufficient inquiry was made by the transferee as to attract the application of the legal provision is a question of law,6 and unless such plea was taken in the pleadings and put in issue between the parties, the party cannot raise the plea for the first time in second appeal.7 Whether a transferee from an ostensible owner took reasonable care to ascertain that the transferor had power to make the transfer has to be determined with reference to the circumstances of the particular case; the test being whether he acted like a reasonable man of business and with ordinary prudence,8 though the question whether that test has been properly applied in any particular case cannot be regarded as one of pure fact not open to review in second appeal.9 In Ishwar Das v Bir Singh,10 the property in dispute initially belonged to A, who gifted some landed property to W, but pursuant to the suit filed by his sons, it was found that the gifted land also included the ancestral property and W was entitled to only a 1/6 of the same and not 1/3rd. During the pendency of the suit regarding the ancestral property, B purchased the part of property of W; claimed himself as a bona fide purchaser; and prayed for a decree for declaration and protection of his joint possession to the extent of 1/3rd of the ancestral property. The court held that B was not entitled to the protection contemplated under section 41 of the Act for the reasons that section 52 of the Act has an overriding effect on section 41 and the person having purchased property during the pendency of the suit is not entitled to the protection of section 41 of the Act.

Transferee to Act Honestly and in Good Faith

In order to protect his own interests, the transferee should not only act honestly and in good faith but must also establish that he made inquiries11 to confirm his faith.12 He cannot afford to ignore true facts13 such as a defect in title,14 or be guided by misconceptions. In Angammal v Venkata,15 a person purchased property belonging to a woman who was outcaste from the village due to her unchastity; with a belief that her interest in the property was forfeited. It was held that his rights were not protected for failure on his part to probe further. If the purchasers act in good faith, and by the conduct of the other party a belief is induced in the mind of the purchaser that they have

Page 5 of 9 OSTENSIBLE OWNER consented to the sale, the purchasers are entitled to protection.16 It is necessary that the transaction be a genuine one and not a sham transaction.17 Similarly, where the transferee knew it fully well that property belonged to A and the transferor, the grandson of A had no title over the property, a consent letter executed by A would neither convey any title nor create any interest in favour of the transferee in any land as the transferor had no right to sell the land and the transferee had knowledge of it. The transfer of property through sale would thus be not proper.18

The inaccuracy in the recitals describing the property cannot whittle down the effect of clear recitals in the documents about the property to be sold thereby.19

A subsequent transferee acting bona fide with reasonable care is protected even if the immediate purchaser had notice of ostensible ownership.20

Burden of Proof

The burden of proving that the transferee was an ostensible owner is on the transferee who seeks the protection of this section. He has to prove that the transferor is an ostensible owner,21 or that it is a benami transaction.22 Besides this, he must also prove that he took reasonable care to protect his interest23 but the burden shifts on the other person if he alleges the existence of facts leading to a starting point of inquiry, which if pursued or investigated, would have led to the discovery of truth.24 In case there is an allegation by a person that the property conveyed to another person belongs to him, then it is he who has to prove it.25

The basic principle in law is that the rights of the legal owner should prima facie be protected unless he has done something to induce innocent purchasers or pledges into the belief that the immediate possessor is the true owner. Mere bona fide on part of the purchaser or the pledgee is not enough. He will have to prove that by some act or omission, the true owner has forfeited the right to recover back his possession. It is therefore incumbent upon the party resisting the claim of the true owner to adduce strict proof of the equities which have arisen in his favour or of the latches on the part of the owner, which have led him to advance his money.26

Transfer not Voidable

Transfer by ostensible owner is valid under section 41 as this section provides that the transfer shall not be voidable on the ground that the transferor was not authorised to make it; provided that the transferee had acted in good faith after taking reasonable care. Even otherwise, the term “voidable” does not mean voidable in its entirety. The principle applies where the whole transaction is not voidable.27 The purchaser acquires a title, which is voidable at the instance of the real owner, and until his purchase is avoided, he can deal with the property.28 Further, in determining whether the relationship was based on trust or confidence, then the court shall consider the factual context.29

When Section 41 has no Application

In case of failure to mention in the pleadings that the transferor was an ostensible owner with consent of the original owner of the land, the claim of the plaintiff for right, title in land on account of transfer of land by a person other than owner to him would not be accepted. Section 41 has no application where transfer is held invalid under sections 19 and 24 of the Displaced Persons (Compensation and Rehabilitation Act, (Act 44 of 1954)), as no estoppel can be pleaded against provisions of a statute. It would be within right of subsequent purchasers to challenge order of cancellation on merits, but sale in their favour cannot be protected under section 41 of the Transfer of Property Act. The subsequent vendee can only claim refund or damages from his vendor. Section 41 cannot be applied for the benefit of a transferee pendente lite as he would not be a bona fide transferee without notice.30

Limitation in a Suit for Cancellation of the Sale Deed

Where right from the execution of the sale deed and whenever the transferee had tried to get the mutation done in his name the co-owners had been objecting to it and ultimately an order was passed by the court that gave them the cause of action, a suit filed within three years from this order would be within the period of limitation.31

27 Kannashi Vershi v Ratanshi Nenshi, AIR 1952 Kutch 85.

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28 Sonal Singh v Hukum Singh Chauhan, AIR 2007 (NOC) 2054 (Utr); Kashmir Singh v Panchayat Samiti, (2004) 6 SCC 207 [LNIND 2004 SC 487]; Gurcharan Singh v Surjit Kaur, AIR 2006 P&H 18; see also Binapani Paul v Pratima Ghose, AIR 2008 SC 543 [LNIND 2007 SC 560]. 29 Maragathammal v M Kandasamy, Second Appeal No. 21 of 1997, decided on 9 January 2017, High Court of Madras. 30 (1916) 20 Cal WN 103. 31 Kammana Sambamurthy v Kalipatnapu Atchutamma, AIR 2011 SC 103 [LNIND 2010 SC 978]: (2011) 11 SCC 153 [LNIND 2010 SC 978]. 32 Narainrao v Hanumantran, AIR 1930 Ngp 273; Swaminatha v Krishna, AIR 1942 Mad 28 [LNIND 1941 MAD 351]; Ram Sunder v Ram Narain, (1918) 48 IC 936; Brojonath v Koylash, (1868) 9 WR 593; Jokhu v Mehdi, (1881) All WN 67; Bhagwan v Upooch, (1869) 10 WR 185; see also Girindranath Mukherjee v Saumen Mukherjee, AIR 1988 Cal 375 [LNIND 1988 CAL 73]; Bhim Singh v Kan Singh, AIR 1980 SC 727 [LNIND 1979 SC 501]; UOI v Mokesh Builders, AIR 1977 SC 409 [LNIND 1976 SC 394]; Gangadara Ayyar v Subramania Sastrigal, AIR 1949 FC 88. See also Rama Kanta Jain v MS Jain, AIR 1999 Del 281 [LNIND 1999 DEL 238], wherein it was held that the person alleged to be a benami owner was the real owner of the property. For distinction between benami and sham transactions see Rajesh Kumar Agrawal v Virendra Kumar Agarwal, AIR 1994 All 135 [LNIND 1993 ALL 211]. 33 Annanda Mahun v Nilpamaru Loan Office, AIR 1921 Cal 549; Chapalavala v Sarat Kumari, AIR 1941 Cal 318. 34 Niras Purve v Tetri Pasin, (1916) 20 Cal WN 103; Maung Po Sin v Ma Myit, AIR 1933 AP 361. 35 DC Barabanki v Shafiqur Zaman, AIR 1928 PC 202; Karamshi v Ratanshi, AIR 1952 Kutch 55; Mul Raj v Fazal Imam, AIR 1923 All 583. 36 Mohamad Shakur v Shah Jehan, 63 IC 125. 37 Thakuri v Kundan, (1893) 17 All 280. 38 Kuttppa Nair v Kuttisankaran Nair, (1957) Mad LJ 603. 39 Macneill v Saroda Sundari, AIR 1929 Cal 83. 40 Abdul Khadar v Rani Reddy, AIR 1979 SC 553 [LNIND 1978 SC 352]. 41 Chooni Lall Khemani v Nilmadhab Barik, AIR 1925 Cal 1034. 42 Seshumall Shah v Sayed Abdul Rashid, AIR 1991 Kant 273 [LNIND 1990 KANT 366]; Jamnadas v Uma Shankar, (1914) ILR 36 All 308. 43 Mohamad Sulaiman v Sakina Bibi, AIR 1922 All 392. 44 Dambar Singh v Jawitri, (1907) 29 All 292; Abdulla Khan v Bundi, (1912) ILR 34 All 22; Maung Bya v Maun Gsan, 10 IC 779. 45 Thakur Krishna v Kanhayalal, AIR 1961 All 206 [LNIND 1960 ALL 61]; Ratan Sen v Suraj Bhan, AIR 1944 All 1. 46 Basdeo v Jugraj, AIR 1948 Oudh 247; Narsingdas v Sahanlal, AIR 1952 Punj 289; Anjuman Islamia v Latafat Ali, AIR 1950 All 109 [LNIND 1949 ALL 129], a case of wakf. 47 Under the law as it stood prior to the passing of the Hindu Succession Act, 1956, as this Act conferred a right of absolute ownership in her favour, see Abdul Samad v Girdhari Lal, AIR 1942 All 175; Shib Deo Misra v Ram Prasad, AIR 1925 All 79; Pancham Singh v Balak Ram, AIR 1930 All 374; Kapura v Madhu Sudan, AIR 1943 Lah 168. 48 Rangaswami v Sundarappamdia, AIR 1928 Mad 635 [LNIND 1928 MAD 17]; see however, Kuttappa Nair v Kuttisankaran Nair, (1957) 2 Mad LJ 603. 49 Ramchandra v Balla Singh, AIR 1986 All 193 [LNIND 1985 ALL 221]. 50 Lakshmibai v Ravji, AIR 1949 Kutch 34; Savitri v Kurriyakose, AIR 1958 Ker 325 [LNIND 1957 KER 173]; see also Chandi v Anant Bali, AIR 1963 Oudh 398. 51 Suraj Ratan Thirani v Azamabad Tea Co, AIR 1965 SC 295 [LNIND 1964 SC 4]; Kanji Ganesh v Pannanand, AIR 1992 MP 208 [LNIND 1991 MP 172]. 52 Aukamma v Narsaya, AIR 1947 Mad 127 [LNIND 1946 MAD 86]. 53 Niranjan Kaur v The Financial Commissioner, Revenue and Secretary to Govt, Punjab, AIR 2011 P&H 1 (FB) : 2010 (4) Ren CR (Civil) 610. 54 Lickbarrow v Mason, (1787) 5 Term Rep 683, wherein it was held that whenever one of the two innocent person must suffer by the acts of a third he who has enabled such person to occasion the loss must sustain it; see also Sambhu Prasad v Mahadeo Prasad, AIR 1933 All 493; Annondo Mohun v Nilphamari, AIR 1921 Cal 549; Chapalavala v Sarat Kumair, AIR 1941 Cal 318; Niras Purve v Tetri Pasin, (1916) 20 Cal WN 103; Maung Po Sin v Ma Myit, AIR 1933 AP 361.

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55 Gurcharan Singh v Punjab State Electricity Board Patiala, AIR 1989 P&H 127, wherein it was held that a minor is incapable of giving consent and therefore this doctrine would not apply when the owner is a minor; see also Abdulla Khan v Bundi, (1912) ILR 34 All 22; Dalibai v Gopibai, (1902) ILR 26 Bom 433; Sadiq Ali Khan v Jai Kishori, AIR 1928 PC 152; Gadigeppa v Balangauda, AIR 1931 Bom 561; Ram Charan v Joy Ram, (1912) 17 Cal WN 10, wherein it was held that the doctrine of estoppel does not apply to minors and still less will. 56 Ram Prasad v Imratbai, AIR 1922 Ngp 79; Sheorilal v Damodar Das, AIR 1938 Lah 86. 57 Dungariya Nand Lal, (1906) 3 All LJ 534. 58 Fazal Hussain v Mh Kazim, AIR 1934 All 193; Jessa Ram v Ghulaman, AIR 1937 Lah 816; Aria v Bhagawat, AIR 1957 Ori 157; Ramjanam v Beys, AIR 1958 Pat 537; Chattur v Sanjaran (1957) 2 Mad LJ 603; However, see also Shafiqullah v Samiullah, AIR 1929 All 943, wherein it was held that consent should be with respect to the transfer. 59 AIR 1929 All 943. 60 Samay Singh v Hukum Singh Chauhan, AIR 2007 (NOC) 2054 (Utr). 61 Mulchand Hazarimal v Hassomal, AIR 1937 Sau 177; Shamezunissa v Ali Asghar, AIR 1936 Oudh 87; Ananda v Parbati, (1907) 4 Cal LJ 198; Sara Chunder v Gopal Chunder, (1893) ILR 20 Cal 296. 62 P Convent v Subbana, AIR 1948 Mad 320 [LNIND 1947 MAD 270]; Natabar v Nimai, AIR 1952 Ori 75 [LNIND 1951 ORI 55]; see also Sarju Kari v Panchananda Sarna, AIR 1959 Assam15; Jit Singh v Kalapati, AIR 1962 Punj 46; Ghulam Ahmed v Bashir Ahmed, AIR 1960 Mad 99 [LNIND 1959 MAD 77]. 63 Shamshar v Kakshi, AIR 1947 Lah 147; Nagorao v Jogeshwar Murlidhar, AIR 1944 Ngp 20; Tejumal Josumal v Rochalbai, AIR 1940 Sau 212; Kanchidelal v Kanhai, AIR 1932 Ngp 165; Joy Chandra v Shreenath, (1902) 32 Cal 357; Mahamad Sujat v Chandbi, AIR 1927 Ngp 41; Gurbinder Singh v Lal Singh, 60 Punj LR 528, wherein it was held that silence or inactivity can never amount to implied consent even when the owner is aware of his rights and of the transfer; see also Shamsher Chand v Bakshi Meher Chand, AIR 1947 Lah 147, wherein it was held that a person giving consent must be aware of his own rights. 64 Umaram v Purukchand, AIR 1925 Cal 993; Nagarao v Jogeshwar, AIR 1944 Ngp 20. 65 Gurcharan Singh v Punjab State Electricity Board Patiala, AIR 1989 P&H 127 : (1988) 94 (2) PLR 674. 66 KV Galliara v U Thet, AIR 1929 Rang 117; see also for a contrary opinion Sita Ram v Raj Narayan, AIR 1934 Oudh 283. 67 Zarifunnissa v Sahfiquz-zaman Khan, AIR 1928 PC 202; Bhagat Amirchand v Bibi Fatima, AIR 1937 Pesh 58. 68 Azimabibi v Shamalanand, (1913) ILR 40 Cal 378. 69 Mohanta Bhagaban v Bisweswar, AIR 1927 Cal 220. 70 Ali Mohamad v Aftahuddin, (1915) 20 Cal WN 355. 71 Shorilal v Damodar, AIR 1938 Lah 86. 72 Baidya Nath v Alefjan, AIR 1923 Cal 240. 73 Sahar Bano v Raj Bahadur, AIR 1934 Oudh 233 dissenting from Naraprath v Puranbali, 34 IC 494; Dwarka Halwai v Sithprasad, AIR 1940 All 256; Lalit Mohan v Thakurain Luchmi, AIR 1946 Oudh 213. 74 Jote Singh v Ram Das Mahto, AIR 1996 SC 2773 [LNINDORD 1996 SC 189]; Vanan v Tikaram, AIR 1927 Bom 368; Mangat v Ghasikhan, AIR 1929 All 800; Purnmal v Shivalal, AIR 1935 All 234; Nanalal v Sunderlal, AIR 1944 All 79; Venkatarammayya v Sheshayya, AIR 1942 Mad 193 [LNIND 1941 MAD 208]; Ram Chandra v Kandoo, AIR 1940 Ngp 7. 75 Amrit Kaur v Recovery Officer, AIR 2012 (NOC) 418 (P&H). 76 Jogendra v Salamat, AIR 1930 Cal 92; Khwaja Mohamad v Muhamad Ibrahim, (1904) ILR 26 All 490; Ghulam Fatima v Gopal Din, AIR 1943 Lah 113; Baidya Nath v Alef Jan, AIR 1923 Cal 240; Karamat Khan v Samiuddin, (1886) ILR 8 All 409; Fakarrudin Saib v Ramayya Sethi, AIR 1944 Mad 299; Annoda Mohun v Nilphamari, AIR 1921 Cal 549. 77 Jogendra v Salamat Khan, AIR 1930 Cal 92; Parawati Ammal v Anga Muthu, AIR 1942 Mad 730 [LNIND 1942 MAD 197]. 78 Sethumadhava v Bacha, AIR 1928 Mad 778; see however, Sahodra v Badri Prasad, AIR 1929 All 737. 79 Before the Hindu Succession Act, 1956 was passed. 80 Phool Kuar v Prem Kaur, AIR 1952 SC 207 [LNIND 1952 SC 27]. 81 Kapura v Madhusudan, AIR 1943 Lah 168; Khushwagt v Jagannath, AIR 1930 Oudh 184; Shib Deo v Ram Prasad, AIR 1925 All 79; Phool Kaur v Prem Kaur, AIR 1952 SC 207 [LNIND 1952 SC 27].

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82 Padam Chand v Lakshmi Devi, (2010) 173 DLT 604 (Del); Atal Shrivastava v Devprasad, AIR 2012 Chh 117 : 2012 (1) CGBCLJ 411. 83 Gurcharan Singh v Surjit Kaur, AIR 2006 P&H 18; Zungabai v Bhawani, (1907) 9 Bom LR 388 [LNIND 1907 BOM 20]. 84 Kanhu Lal v Palu Sahu, (1920) 5 Pat LJR 521. 85 Chitabalakundu v Sailen Bihari Paul, AIR 1988 NOC 68 (Cal); Jamshedji v Doraji, AIR 1934 Bom 1; Sadha Singh v Mangal Singh, AIR 1933 Oudh 166; U Po Shi v Edward, AIR 1934 Rang 139; Kanchedilal v Kanhai, AIR 1932 Ngp 165; Kasturi Bibi v Balliram, AIR 1923 Ngp 15; Mohamad Shafi v Mohamad Said, AIR 1930 All 807; Mohamad Sulaiman v Sakina Bibi, AIR 1922 All 392; Jagmohun Das v Indar Prasad, AIR 1929 Oudh 160; Rajani Kanta v Bashiram Mistari, AIR 1929 Cal 636; Rahiman Beevi v Khatun Bee, 35 IC 569; Khatun Fatima v Shib Singh, AIR 1933 All 917. 86 Khwaja Mohamad v Mohamad Ibrahim, (1904) ILR 26 All 490. 87 Punendu Nath v Hanut Mull, AIR 1940 Cal 565. 88 Pratap Chand v Saiyida Bibi, (1901) ILR 23 All 443; see also Layak Ram v Dharmavati, AIR 2010 P&H 95, wherein it was held that as the vendees had inspected the revenue records which showed vendor as the owner of half of the share in the property they would be treated as bona fide purchasers. 89 Rasulanbibi v Nandlal, AIR 1930 All 522, wherein it was held that the duty is a strict one, more so when the transferor was a Muslim. See also Harnarian v Ashiq, AIR 1942 Oudh 313; Afzal v Muhamad, AIR 1936 Ngp 214. 90 Ballumal v Ramkissan, AIR 1921 All 311; Mohamad Din v Sardarbai, AIR 1927 Lah 665; Macneill v Sarodasundari, AIR 1929 Cal 83; Chettyar Firm v Kallama, AIR 1935 Rang 423; Maung Po Lu v Bank of Chettinad, AIR 1934 Rang 313; Dwarkadas v Rangill Munnalal, AIR 1953 Punj 28; Ramsaran v Harihar, AIR 1961 Pat 314; Ghulam Siddique v Jogendra Nath, AIR 1926 Cal 916; Jasodar Dusadin v Sukurmani, AIR 1937 Pat 353; Sheotahal v Ramnarain, AIR 1930 All 422; Rajani Kanta v Bashiram Mestari, AIR 1929 Cal 636; Baidya Nath v Alef Jan, AIR 1923 Cal 240; Ramcoomar v Macqueen, 11 Beng LR 46. 91 Ratan v Suraj, AIR 1944 All 1; Beyas v Ramjanam, AIR 1961 Pat 16; Kartar Singh v Mehr Nishan, AIR 1934 Lah 885. 92 Himaprastha Financiers v UOI, AIR 1976 HP 29 [LNIND 1975 HP 30]. 93 Vyankapacharya v Yamanasami, (1911) 35 Bom 269. 94 Kanhu Lal v Ram Singh, (1920) 5 Pat LJR 521. 95 Ballu Mal v Ram Kishan, AIR 1921 All 311; Fazal Hussein v Mohamad Kazim, AIR 1934 All 193. 96 Mohamad Sujat v Chandbi, AIR 1927 Ngp 41. 97 Shiam Lal v Matadin, AIR 1934 Oudh 460; DAV College Society v Umrao, AIR 1935 Lah 410; Mazhir Hassan v Mukhtar Hasan, AIR 1938 All 64; Maung Po Lu v Bank of Chettinad, AIR 1934 Rang 313. 98 Hakiman v Badr-un-Nissa, AIR 1934 Lah 658. 99 Baby Rani Deb v Manik Dey, AIR 2014 Gau 56 [LNIND 2013 GAU 347]: 2014 (1) Gau LT 138. 1 Manjari Devi v Usha Devi, AIR 2014 Chh 22 : 2014 (1) CGLJ 636; Layak Ram v Dharamwati, AIR 2010 P&H 95. 2 Lakhwinder Singh v Dilbagh Singh, AIR 2010 (NOC) 1113 (P&H). 3 Layak Ram v Dharamwati, AIR 2010 P&H 95. 4 Mathura v Ambika, (1914) All LJ 993. 5 Siddappa v Vishwa, AIR 1943 Bom 419; Nanuram v Radhabai, AIR 1940 Ngp 241; Abdul v Nawab, AIR 1949 Assam 17. 6 Khushal Chand v Trimbak, AIR 1947 Bom 47; Chandi Prasad v Gadadhar, AIR 1949 Cal 666; Bhupatrai v Shania, (1949) 2 Sau LJ 203. See also Nafarchandra v Shukur, 45 IA 183, wherein it was held that the proper legal effect of a proved fact is necessarily a question of law. 7 Parbati v Kashmiri Lal, AIR 1956 Cal 69; Karamshi v Ratanshi, AIR 1952 Kutch 55; Gauri Shanker v Jwala Mukhi, AIR 1962 Pat 393. 8 Fazal v Kazim, AIR 1934 All 193. 9 CIT Convent v Subbana, AIR 1948 Mad 320 [LNIND 1947 MAD 270]. 10 R.S.A. No. 439 of 2002, decided on 27 November 2015, High Court of Himachal Pradesh at Shimla. 11 Khwaja Afzal v Saheb, AIR 1936 Ngp 214. 12 Layak Ram v Dharmavati, AIR 2010 P&H 95; Chandrakanta v Bhagjur, 1 IC 525.

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13 Laxman v Balkrishna Balwant Ghatage, AIR 1995 Bom 190 [LNIND 1994 BOM 647]; Hakiman v Badrunnisa, AIR 1934 Lah 658. 14 Jagmohun Das v Indar Prasad, AIR 1929 Oudh 160; Abbas Bandi v Saiyid Muhamad, AIR 1929 Oudh 193; Ragho v Dwarka Das, AIR 1924 Lah 738; Mollaya v Krishnaswami, AIR 1925 Mad 95 [LNIND 1924 MAD 58]. 15 (1903) ILR 26 Mad 509. 16 Qandhara Singh v UOI, AIR 1984 P&H 51. 17 Sunil Kumar v Thakur Singh, AIR 1984 Pat 80 : 1984 Pat LJR 140. 18 Atal Shrivastava v Devprasad, AIR 2012 Chh 117 : 2012 (1) CGBCLJ 411. 19 IA Nalvade v DS Surati, AIR 1995 SC 2486 [LNIND 1995 SC 783]. 20 Punendru Nath v Hanut Mull, AIR 1940 Cal 565; Gholam Siddique v Jogendra Nath, AIR 1926 Cal 916. 21 Abbas Bandi v Syed Mohamad, AIR 1929 Oudh 193; Sundre v Udaya, AIR 1944 All 42; Chandrabagh v Anand, AIR 1938 Ngp 142; Ram v Muktinath, AIR 1956 Assam 154; Mohamad Sahfi v Mohamad Said, AIR 1930 All 847; Puranman v Sahvalal, AIR 1935 All 324; Ramcharitar v Shiva, AIR 1934 Pat 67. 22 Rama Kanta Jain v MS Jain, AIR 1999 Del 281 [LNIND 1999 DEL 238]; Radhey Shyam v Maharaj Bahadur Singh, AIR 1982 Cal 571 [LNIND 1981 CAL 276]; Bhupendra Kumar v MK Lakshmi, AIR 1990 Mad 46 [LNIND 1989 MAD 81]. 23 Suraj Ratan Thirani v Azamabad Tea Co, AIR 1965 SC 295 [LNIND 1964 SC 4]; Hazarkhan v Kesarkan, AIR 1968 Guj 229 [LNIND 1967 GUJ 106]; Gurbaksh Singh v Nikka Singh, AIR 1963 SC 1917 [LNIND 1962 SC 299]; Maung Sin Ba v Maung Kyne, AIR 1934 Rang 90. 24 Dhuruba v Puma, AIR 1973 Ori 192 [LNIND 1973 ORI 23]; Rajani Kanta v Bashiram Mestari, AIR 1929 Cal 636; Ramcoomar v Macqueen, IA Supp Vol 40; Baidya Nath v Alef Jan, AIR 1923 Cal 240; Muhamad Sujat v Chand Bi, AIR 1927 Ngp 41. 25 Krishnanand Agnihotri v State of Madhya Pradesh, AIR 1977 SC 796; Jaydalal Poddar v Bidi Hazra, AIR 1974 SC 171 [LNIND 1973 SC 313]; Maung Po Kun v Maung Poshein, AIR 1926 PC 77; Girindranath Mukherjee v Souman Mukherjee, AIR 1988 Cal 375 [LNIND 1988 CAL 73]. 26 Seshappier v Subramanian Chettiar, AIR 1914 Mad 470. 27 Sethumadhava v Bacha Bibi, AIR 1928 Mad 778. 28 Purnendu v Hannat Mal, AIR 1940 Cal 565. 29 Marcel Martins v M Printer, (2012) 5 SCC 342 [LNIND 2012 SC 262] : (2012) 5 SCC 342 [LNIND 2012 SC 262]. 30 Baby Rani Deb v Manik Dey, AIR 2014 Gau 56 [LNIND 2013 GAU 347]: 2014 (1) Gau LT 138. 31 Manjari Devi v Usha Devi, AIR 2014 Chh 22 : 2014 (1) CGLJ 636.

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TRANSFER BY PERSON HAVING AUTHORITY TO REVOKE FORMER TRANSFER Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

TRANSFER BY PERSON HAVING AUTHORITY TO REVOKE FORMER TRANSFER

[s 42] Transfer by person having authority to revoke former transfer.—Where a person transfers any immoveable property, reserving power to revoke the transfer, and subsequently transfers the property for consideration to another transferee, such transfer operates in favour of such transferee (subject to any condition attached to the exercise of the power) as a revocation of the former transfer to the extent of the power.

Illustration

A lets a house to B, and reserves power to revoke the lease if, in the opinion of a specified surveyor, B should make a use of it detrimental to its value. Afterwards A, thinking that such a use has been made, lets the house to C. This operates as a revocation of B’s lease subject to the opinion of the surveyor as to B’s use of the house having been detrimental to its value.

The principle underlying this section is that where there is a transfer of property under which the transferor reserves to himself a power to revoke the same under certain specified conditions, if after the first transfer, he transfers the same property to another person; the first transfer is automatically revoked. It also specifies that the transfer and the power of revocating the same are inseparable in such cases. If the power of revocation is subject to a condition, the transfer is also subject to the same condition.32

32 Judah v Abdool, 22 WR 60.

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UNAUTHORISED PERSON SUBSEQUENTLY ACQUIRING INTEREST IN THE TRANSFERRED PROPERTY Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

UNAUTHORISED PERSON SUBSEQUENTLY ACQUIRING INTEREST IN THE TRANSFERRED PROPERTY

[s 43] Transfer by unauthorised person who subsequently acquires interest in property transferred.—Where a person fraudulently or erroneously represents that he is authorised to transfer certain immoveable property and professes to transfer such property for consideration, such transfer shall, at the option of the transferee, operate on any interest which the transferor may acquire in such property at any time during which the contract of transfer subsists.

Nothing in this section shall impair the right of transferees in good faith for consideration without notice of the existence of the said option.

Illustration

A, a Hindu who has separated from his father B, sells to C three fields, X, Y and Z, representing that A is authorised to transfer the same. Of these fields Z does not belong to A, it having been retained by B on the partition; but on B’s dying A as heir obtains Z. C, not having rescinded the contract of sale, may require A to deliver Z to him.

The rule incorporated in this section governs transfers where the transferor, to begin with, has no capacity to transfer the property, yet has entered into the transaction with a misrepresentation with respect to his title to the property. He makes the other party act on this representation, and then acquires a good title to the same property in future. In such cases if the contract is subsisting and the property is available, then it gives the transferee the option to either go ahead with the transfer, or to rescind the same.33 If the transferee still wants the transferor to perform his part of the contract, he can exercise his option to validate this transfer that was imperfect to begin with and the transfer shall become valid on the exercise of such option by the transferee.34 Here, the willingness of the transferor to go ahead with transfer is immaterial and it is solely on the wishes of the transferee, which he has to show by exercising the option that the transfer shall become valid. It can also be explained in the following words, i.e., where a person having a limited interest in the property transfers a larger interest to the transferee on a representation, and subsequently acquires the larger interest, the larger interest passes to the transferee35 at the option of the latter.

33 See also the Specific Relief Act, 1963, section 13, where it applies to both movable as well as immovable poperties; see Sinnam v GS Alagiri, AIR 1924 Mad 438 [LNIND 1923 MAD 133]; EA Patra v ER Patra, AIR 1980 Ori 95 [LNIND 1980 ORI 67]. Under English law due to the application of equity which regards as done which ought to be done as soon as the property is afterwards acquired, an equitable interest in it passes to the transferee; see Holroyd v Marshall, (1862) 10 HLC 191; Collyer v Issacs (1881) 19 ChD 342; Tailby v Official Receiver, (1888) 13 App Cas 523. Under the

Page 2 of 2 UNAUTHORISED PERSON SUBSEQUENTLY ACQUIRING INTEREST IN THE TRANSFERRED PROPERTY

Indian law the moment the property is acquired no estate passes to the transferee but an obligation is attached to the property. See Transfer of Property Act, 1882, sections 54, 40. 34 Hardev Singh v Gurmail Singh, AIR 2007 SC 1058 [LNIND 2007 SC 120]; Sachidanand Pandey v Ram Phar Singh, AIR 2004 All 232; Lakhwinder Singh v Paramjit Kaur, AIR 2004 P&H 6. 35 Prem Nath Khanna v State of Orissa, AIR 2009 Ori 166 [LNIND 2009 ORI 59]; Ram Bhawan Singh v Jagdish, (1990) 4 SCC 309 [LNIND 1990 SC 443]; Abdul Kader v Jamebie Khatun, (1951) AP 815.

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ANALYSIS OF SECTION 43 Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

ANALYSIS OF SECTION 43

The essential ingredients of section 43 are as follows:

(i) The transferor makes a representation to the effect that he is competent to transfer a particular piece of immovable property; (ii) This representation may be erroneous or fraudulent; (iii) This representation is not true; (iv) The transferee believes or is made to believe that the representation is correct and the transferor is competent to transfer the property, i.e., he does not know the defect in title or lack of capacity on part of the transferor; (v) The transferor professes to transfer the property for a consideration; (vi) The transferee acts on the representation and enters into the contract; (vii) The transferor subsequently acquires competency to transfer the same property; (viii) The contract is subsisting; (ix) The property is still with the transferor, i.e., he has not transferred it to a bona fide purchaser who takes it without actual or constructive notice of this earlier contract between the transferor and the transferee; (x) The transferee exercises the option to signify his intention to go ahead with the contract;

The transfer shall become valid and enforceable in a court of law.

Rule of Estoppel Under Common Law

This rule of estoppel is based on two common law doctrines—the doctrine of estoppel and the equitable doctrine. Following the doctrine of estoppel by deed, it prevents a person who promises more than what he can perform from claiming his incompetency as a legitimate excuse to avoid his liabilities in a situation when he acquires competency to fulfill his promise, and following the equitable doctrine, such a person is compelled to make good his promise when he becomes competent to perform it. In fact, without any further act of his, the transfer becomes good the moment he acquires competency to do so. This competency feeds the estoppel immediately. Under common law, if a person misrepresents to another that he is competent to convey a good title, professes to do so for consideration, and making the other act on this representation, enters into a contract with him, on the transferor subsequently acquiring a good title to the property, the property instantaneously passes to the transferee. Common law, therefore, does not require the transferee to exercise the option; nor does it give any opportunity to the transferor to later mislead the transferee and introduce in the scenario, a bona fide purchaser for consideration, so as to defeat the rights of the original transferee. The only condition is that the contract should have been subsisting. In such cases, nothing else has to be done by the transferee. The transfer in his favour will be perfected the moment the transferor becomes competent to do so. Indian law on the other hand differs from the common law in several aspects. In India, the doctrine of feeding the grant by estoppel applies only where the transferee has been misled

Page 2 of 10 ANALYSIS OF SECTION 43 by a representation from the transferor and not otherwise. Thus, the sine qua non for application of section 43 is that at the initial stage the person should have fraudulently or erroneously represented that he is authorized to transfer certain immovable property or professes to transfer such property for consideration. Only if this pre- condition is satisfied, the question of option of the transferee arises in case the transferor acquires any interest in the property at any time during which the contract of transfer subsists.36

Representation, Fraudulent or Erroneous

The representation under the Act may be fraudulent or even erroneous. Whether it is erroneous is a question of fact.37 It may involve a case where the transferor genuinely believed that he has the competency to transfer the property. Even in such cases, if due to his representation, for which he is not maliciously responsible, the other party has been made to act on it, section 43 would apply. On the other hand, it can also involve cases where he deliberatively and with full knowledge of his incompetency and with a fraudulent motive, misleads the transferee and convinces him of his competency. What should be noted is that the original enactment applied only to erroneous representation based transfers, and the rule of feeding the grant by estoppel did not apply in case the representation was fraudulent. In 1929, the term “fraudulent or” were inserted by the Amending Act, 1929 (20 of 1929) to extend the application of section 43 to these cases as well.

No Application of Rule in Absence of Representation by the Transferor

Equity requires an erroneous38 or fraudulent39 representation from the transferor that he is competent to transfer the property.40 In absence of representation, the doctrine does not apply,41 but that does not mean that if the transferor is silent about his capacity, when there is a duty to speak, he can escape the applicability of rule of estoppel as against him. What is material is that the transferee must be misled. If there is no representation by the transferee, it means that the transferee was not misled but actually knew about the defect in the title. It is only when the transferee is led to believe of absolute interest or title on part of the transferor and acts42 on that representation, that he is entitled to take advantage43 of the fact that the transferor subsequently gets the full interest44 or becomes the owner of the property.45 It connotes that the transferee is not aware of the facts and acts on the representation46 as there would be no estoppel if the truth is known to both the parties.47 Question of knowledge is very material and the other party must be given the chance of raising its defence if and when the doctrine is pleaded.48 Representation may be express or implied.49 It can be by word of mouth or by a document.50 It is implied when the law makes it an implied term of the transfer.51

Where a person sold the property as an agent of the widow, and later became her heir, the doctrine did not apply, as there was no erroneous representation,52 but where the husband transfers the property of his wife without taking her consent and she challenges its validity in the court but dies during its pendency and the husband inherits the same as her legal heir, the Apex Court held that if a person pretends to be the owner of the property and subsequently becomes the owner, the transfer by him conveys a good title.53

Transfers in Absence of Representations

Though the section speaks of erroneous or fraudulent representations, there may be a case where there is a transfer by a person who is incompetent to transfer the same, but he does that without making a representation, yet the transferee is not aware of his incompetency. In such cases also, the presumption is that when a person says “he will transfer the property”, it means that what he is conveying to the other is that he is authorised to do so. Even in such cases, the rule of estoppel will operate against the transferor, and on attaining competency, he will be stopped from denying his obligations under the contract.54

In Viraya v Hanumanta, 55 three coparceners held the property jointly. One of them, A, sold the property to B, an alienee, but failed to deliver it as the transfer was effected without the consent of the other coparceners. B filed a suit against A for enforcement of the contract. During the pendency of the litigation one of the other coparceners died, and A’s share in the property increased to one half. The court held that B was entitled to half of the property that was the share of A.

In Rustom Ali v Abdul Jabbar,56 a man transferred a field belonging to his sister, S, to his wife in lieu of her dower. It was, therefore, a transfer by a person who neither had the title to the property nor had the authorisation to transfer the same. S, who was the real owner of the property sold it to another person, X. The husband later acquired a good title to the property by purchasing it back from X after some time. The Calcutta High Court held that the wife was entitled to the field under the equity doctrine. In Jameela Beevi v Basheer,57 the property belonged jointly to the vendor’s father and uncle, and she approached her father claiming money in lieu of her share that was paid to her

Page 3 of 10 ANALYSIS OF SECTION 43 in cash by the brother as the father did not have the amount for she wanted to purchase one acre of land. Long thereafter, she preferred a suit making unsubstantiated allegations that the vendee had executed influence and coercion on her. Having taken consideration when she assigned spes successionis even if she had no title at the time of assignment, still she had relinquished all her claims over the property after receiving the consideration for the sale, and therefore, the transfer so made was protected by the rule of estoppel when she succeeded to the share in the property on the death of her father.

Representation by the Joint Family Members

Under Hindu law, the karta is the head of the joint family and represents the family in all matters. Yet he has limited powers of alienating the joint family property. If he exceeds his powers, the other coparceners can challenge the validity of the alienation. Where the head of a joint family mortgages joint family property representing that he has a right to do so, he is bound to make good his representation to the extent of the share which comes to him afterwards on a partition.58 Similarly, where the father of a joint family, which consists of himself and his two sons, sells family property representing it to be his self-acquisition and one son dies when the suit filed by the transferee for possession was pending in the court and he succeeds to the share of the son, the transferee is entitled to the benefit of such succession.59 Where a member of joint family represents that he is a separate member and mortgages his share in the undivided property, the mortgagee’s lien would be protected on a subsequent partition of the property and allotment of his separate share on such share.60

Representation Depicting a Lack of Knowledge on part of Transferee

The phrase “transferor makes a representation” and the transferee acting on that representation’ shows that the transferee does not know the defect in the title of the transferor. Section 43 does not cover cases where the transferee already knows that the transferor does not hold either a good title to the property or is not authorised to transfer the same61. He is expressly made to believe other wise.

The expression “fraudulent or erroneous” shows that lack of knowledge on part of the transferor about his own incompetency is immaterial. Even if the transferor genuinely believes himself to be competent to transfer the property, it would not make any difference; and he cannot ignore such a transfer where he made a representation erroneously, but made the transferee act on the same.

For instance, on A’s death, his son, S, thinking that he had become the owner of the property, professed to transfer this property to X. S did not know that the father had executed a Will in favour of his wife, totally disinheriting him. W later died and S inherited the property in his capacity as the heir of the mother. The transfer now shall be valid at the option of X. Similarly, A’s father owns a property, and A professes to transfer the same to X. X knows that the property belongs to the father, but he also knows that the father is very ill and may die soon. He agrees to purchase the property. Here, X is not misled by A as he knew that A did not possess the title to the property. So, while lack of knowledge about incompetency on part of the transferor is not of any consequence, lack of knowledge on part of the transferee will alter the situation fundamentally. If he knows the defect, he cannot take the benefit of section 43. The time at which lack of knowledge on part of transferee is material, is the time of entering into contract for the transfer of the property. If the transferee subsequently acquires the knowledge, that he was made to act on a false representation, he is still entitled to the protection of section 43.

For instance, A represents to B that he can transfer the house X. X in fact belongs to his father and the father had allowed him to live in it. The permission did not extend to selling of the property. B, who did not know that the property belonged to A’s father enters into the contract and gives consideration. In this case, as B did not possess the knowledge at the time of the contract, he is entitled to take the benefit of section 43, if later, A acquires competency to sell the house. In the same situation, whether A genuinely believed him to be competent to transfer the house and represented to B without any fraudulent motive is immaterial, as section 43 covers both erroneous or fraudulent cases, but if B knew that the house in fact, belonged to the father, and A is merely a resident of the house and incompetent to sell it, then B would not be in a position to save the contract by exercising the option at the time when A acquires competency to perform it. In Tulsa v Sita, 62 S sold the property belonging to his mother under registered deed on her behalf and delivered the possession to B despite the fact that he was not authorised to make the said transfer. The issue before the court was whether transfer by a person having spes successionis in property entitle the transferee to benefit of section 43 of the Transfer of Property Act. As the transferee had acted on the faith of the representation made by S and paid consideration he would be entitled to benefit of section 43, containing the rule of estoppel.

When the transferee had knowledge that the transferor had no right or title or interest in the property and that it

Page 4 of 10 ANALYSIS OF SECTION 43 actually belonged to the grandmother of the transferor, the transfer of the property is not proper, but he cannot invoke section 43 for his benefit.63 Similarly, where the vendor was the cultivating tenant of the land in question and the plaintiff vendee was very much aware of absence of title in vendor vis-a-vis land, once he had chosen to transact with vendor, knowing fully well that latter did not hold title to land, he cannot seek enforcement of agreement to sell and subsequent acquisition of title by vendor would not enure to benefit of plaintiff.64

Knowledge may be Actual or even Constructive

Knowledge on part of the transferee with respect to the defect in title of the transferor need not be actual knowledge. If the circumstances are such that as a reasonable, prudent person, the transferee, to safeguard his own interests had made sufficient inquiries that he ought to have made, or had been vigilant and upon doing so, he could have detected the lack of title, he would be deemed to have constructive notice of the lack of title, and section 43 would not apply. As a prospective purchaser he ought to have made reasonable inquiries that a normal prudent person would have made. If he fails to make such inquires, he would be guilty of either gross negligence or willful abstention from making an inquiry, and constructive knowledge with respect to defect in title would be imputed on him. As the consequences of imputation of constructive notice are identical to the consequences that emanate if a person actually knew about it, he would lose the right to perfect the transfer once the transferor acquires the competency to do so. The Supreme Court in Kartar Singh’s case 65 has overruled a plethora of cases,66 including Lord Halsbury’s famous statement,67 wherein it was held that section 43 does not impose upon the transferee, the duty to take care.

In Kartar Singh v Harbans Kaur,68 a Hindu woman executed a sale deed of the lands belonging to her minor son in 1961. The son on attaining majority in 1975, filed a suit to the effect that this sale was not binding on him, and was void. The court passed a decree that this sale, executed by the mother of the properties belonging/owned by her minor son was void, and directed that the possession of these properties be restored to the son. Before the son could take the possession of the property, he died, and the mother as his class I heir succeeded to the property. The transferee X claimed the benefit of section 43 and when the remedy was refused by the high court, went to the Supreme Court in appeal. The court held that for the application of section 43, two conditions must be satisfied. First, a fraudulent or erroneous representation made by the transferor to the transferee that he is authorised to transfer certain immovable property and in the purported exercise of authority professed to transfer such property for consideration. Secondly, when it is discovered that the transferor acquired an interest in the transferred property, at the option of the transferee he is entitled to get the restitution of interest in property got by the transferor, provided the transferor acquires such interest in the property during which contract of transfer must subsist. As the primary distinguishing factor between the application of section 43 and section 6(a) is knowledge of the lack of title or incompetency on part of the transferee, the court here tried to examine whether the transferee in the present case had knowledge of the fact whether, the mother was competent to transfer the property of her son. The court said:

The material time at which the knowledge has to be proved is the time of the conclusion of the contract. When we analyse the issue as to whether the transferee who is now seeking the beneficial protection of s. 43, had knowledge or notice of the incompetency of transferor or not, we must take note of the fact that even constructive notice on his part would bring the case under s. 6 (a). If by making some inquiries or verifying certain facts, as a normal reasonable prudent person, the transferee could have detected the incompetency of the transferor to transfer the property, but he failed to do that, law would impute constructive notice of the same on him, and as the consequences of actual and constructive notice are identical, in case of imputation of constructive notice also, the plea of misrepresentation, erroneous or fraudulent would not be accepted by the court. In such a case, s. 6(a) would be applicable under which this transfer would be considered void, and s. 43 will not apply.

Here, it is pertinent to note that when the mother transferred the property belonging to her son, the marginal note on the sale deed mentioned that the land had been acquired by her and by her minor son by exercising the right of pre- emption, and that she was executing the sale deed in respect of her own share and acting as the guardian of her minor son in so far as his share is considered. The fact that she was acting as the guardian and the owner was in fact a minor was apparent from a bare reading of the sale deed. In law, a guardian is not competent to transfer the properties of a minor, unless there is an authorisation from the court. The fact that she was a guardian and also acting as one was the starting point of inquiry, and the transferee should have probed further. As a reasonable prudent man, he was expected to enquire whether on her own, the mother, as the guardian, was competent to alienate his share.

Page 5 of 10 ANALYSIS OF SECTION 43

The second requirement is that the contract should be subsisting at the time of the claim but here, the court held that as right at the inception, the contract was void, because the transferee ought to have known about the incompetency of the transferor this void contract cannot be deemed to be subsisting at the time, when the mother due to inheritance acquired competency. According to the court, the transferee here knew the fact that the mother was not competent to effect a valid transfer and section 43 would have not application. The litigation, which took 33 years, culminated later, with the Supreme Court pronouncing the verdict, that the transferee cannot acquire a valid title to the property because he was deemed to have knowledge of the defect in title in the first place.

Transfer must not be Otherwise Prohibited

For the validation of the transfer made by an unauthorised person under a representation, this contract in the first place should not have been against any law in any form whatsoever, i.e., not only the parties should be competent to contract, but the purpose of the contract should be lawful,69 and not opposed to public policy70 or to defeat the rights of creditors or a provision of law,71 etc. If the transferor’s incompetency was owing to his minority72 or insanity,73 section 43 would not confer an option in favour of the transferee to validate the transfer on the minor’s attaining majority or curing of insanity, as this is a statutory incompetency, that was appended to the minor or an insane person, that prohibited him from transferring the property. As no estoppel can be pleaded contrary to the provisions of a statute, this “rule of feeding the estoppel” shall apply only in absence thereof, according to which “where a grantor has purported to grant an interest in land which he did not at the time possess, but subsequently acquires, the benefit of his subsequent acquisition, goes automatically to the earlier grantee, or as it is usually expressed, feeds the estoppel”.74 If a particular piece of land has been declared by a statute to be specifically inalienable, such as Bhumidari land, 75 section 43 cannot apply to such a situation,76 but where the property was requisitioned by the military, and a lessee assigned his interest in this property conditional upon the property being de-requisitioned by the military, the court held that after the property was so derequisitioned and the transferee acquired competency, he was required to perform his part of the contract under the assignment.77

Transfer must be for Consideration

An essential factor to be considered in transfers by unauthorised transferors on misrepresentations, and the option available under section 43 is, that these transfers should be for consideration.78 Though it is not necessary to show that some monetary consideration has already passed from the transferee to the transferor, but the transfer in essence is one involving consideration, and there is a liability on part of the transferee to pay it. Section 43, therefore, does not apply to gratuitous transfers like gifts, etc.79

Subsequent Acquisition of Interest by the Transferor

The transferee is entitled to the benefit of this doctrine only when the transferor subsequently acquires an interest in the property that he originally represented as his.80 If the transferor does not acquire a further interest in the property transferred,81 or if such further interest is acquired not by the transferor but by his successor in interest,82 or where the heirs of the transferor acquire property in their own right and not as heirs of the transferor,83 this section has no application.

For instance, A transferred property belonging to his wife, representing to X that he is competent to transfer the same. His wife made a Will of her property in favour of her son S. A died and then his wife died, and the son took the property under the Will. The transfer would not be valid at the option of X, as the heir had acquired the property in his own right. Where a son fraudulently transferred property owned by his mother but never acquired any interest in it during his life time either by inheritance, succession or otherwise, the doctrine of feeding the grant by estoppel would not be applicable as against his heirs who succeeded stridhan properties of their grandmother. The petitioner in such cases cannot claim any benefit of subsequent acquisition.84

Contract Subsisting

An essential condition for the application of section 43 to the transfers by unauthorised transferors brought about by misrepresentations is that for the validation of such transfers at the option of the transferee the contract must be subsisting. It should not have been rescinded or otherwise brought to an end by the act of the parties.

For instance, A, erroneously makes a representation to B, that he is competent to transfer a house X. The house originally belonged to his father F, but A did not know that F had bequeathed the house to his mother M, and she was the sole owner. B pays consideration, but later discovers that A was not the owner, and therefore not

Page 6 of 10 ANALYSIS OF SECTION 43 competent to transfer it. He rescinds the contract and asks for his money back. A pays him the entire consideration as per the terms of the contract. Two days later, M dies and A, as her sole heir, inherits the house. As the contract has already been brought to an end, it is “not subsisting” and B cannot exercise his option to validate the transfer. On the other hand, in the same example, if after the transferee becomes aware of the defect in title, he chooses to wait, i.e., does not rescind the contract or sue for damages, and the contract is still subsisting when the mother dies, and A becomes the owner of the property, then B can exercise his option for validation of transfer. If he so wants, A would have to transfer the property in his favour and he cannot take the plea that at the time he had entered into the contract with B, he did not possess the title to the property.

For the application of the doctrine, the original contract must be subsisting in order for the transferee to exercise the option. Where the transferee obtains a decree on the contract85 or if the property has been sold,86 or the charge has been assigned87 the doctrine would have no application, though in case of mortgage, a decree alone will not put an end to the contract88 as the mortgagor is entitled to redeem till the ultimate sale.89

Application, Personal in Character

The application of this section is personal in character with respect to the transferor and does not apply as against any other person, who may acquire this property in his own right or against any property that the transferor may acquire in future. The estoppel applies only against the transferor and with respect to the very property that was initially the subject of the contract.

For example:

(i) Representing that he is competent to sell the property, A sells a house belonging to his father to B. B discovers the defect in title but chooses to wait. A dies during his father’s lifetime. On the death of the father, his house that was the subject matter of the contract was inherited by A’s son, in his capacity as F’s heir. B cannot exercise his option to validate the transfer because this option can be exercised only against the transferor, and not against the successor in interest.90 (ii) In the above illustration, if instead of A dying during the lifetime of his father, suppose his father sells the property to his friend X, B will have no remedy. But if later A purchases the same property from X for a consideration, B would be empowered to exercise his option to validate the transfer in his favour as against A. In short, if the transferor acquires the competency or interest, the option can be exercised; if he does not, it cannot be exercised, and if his heirs get the property surpassing him, such as under a will by the owner, or on his death, again the transferee would be without any remedy.91 (iii)A sells his father’s property to B representing that he is authorised to transfer it. When B discovers the defect in title, he prefers to wait as the father was very old and sick. On the death of the father, it was discovered that the house was bequeathed to A’s son S. B cannot exercise the option against S.

The option is not only to be exercised personally with respect to the transferor, it can also be exercised only against that property that was the original subject of the contract.

For example:

(i) A coparcenary consists of father F and a son S, who together owned two fields, X and Y. In addition, F also owned Z as his separate property. S contracts with C to sell Z that belonged to F. Later a partition took place, whereby the S got the property X. C cannot proceed against X, as this was not the subject matter of transfer (ii)A owns three properties X, Y and Z. His son, without his permission, contracts to sell X to B. X is mortgaged during the lifetime of A, by A himself. As he was unable to repay the loan, X is sold through a court auction. Then A dies, and his son inherits all of his properties as his heir. The transferee B cannot exercise his option against his other properties.

Option of the Transferee

The doctrine provides an additional remedy to the transferee besides a claim for damage, and enables him to get the property itself.1 The transfer shall become valid only when the transferee exercises the option to validate it and is capable to do the same. “At the option of the transferee” means that the validation of the transfer depends purely on the transferee’s will and the transferor cannot force a transfer on him, after he acquires competency. If the

Page 7 of 10 ANALYSIS OF SECTION 43 transferee so desires, he can avoid this transfer which in the first place, was brought about by a misrepresentation. However, there is no automatic validation of the transfer,2 as no rights are vested in the transferee from the inception of this transfer.3 The option must be exercised by the transferee. There is no specific form of exercise of option and any indication is sufficient. It can be done verbally, through sending a notice to the transferor to execute a transfer deed in favour of the transferee or even by instituting a suit in a court of law to that effect. It is not necessary that a demand should be made.4 In a nutshell, the law does not provide any specific mode of exercising the option,5 but the intention should be clear.

Transfer Valid at the Option of the Transferee

The transfer becomes valid when the transferee exercises the option and the title of the transferor becomes perfect.6 Where the Official Receiver transfers property before it vests in him, the implied covenant will be treated as erroneous representation, and the title of the purchaser would be complete as soon as the property vests in him.7 Similarly, where a partner sells the property of a firm in his right and subsequently on the dissolution of the firm is allotted the same property, the transferee gets the benefit of such allotment.8 When the holder of sir land transfers land representing that he is authorised to transfer it, before he could obtain the certificate of bhumidari rights without which he was incompetent to transfer the same, but had deposited money to obtain it, and acquired the same later, the transfer is valid at the option of the transferee and the son of the transferor cannot challenge the validity of the sale.9 Similarly, where on the death of the father the land is inherited by two sisters, and one of them having exclusive possession sells the same to the transferee, the transferee is entitled to get the benefit of the doctrine on the death of the other sister.10 Where lease or sale of the property is effected by one of the two owners11 or two of the three owners12 with their subsequent acquisition of full ownership, the transferee on the exercise of the option would be entitled to the interest.

In Bhawari Bai v BC Sudhakar,13 A sold the property to B at the time when he had no title to the property. Later he acquired the property under a settlement. It was held that even if he was not competent to transfer the property initially, the transfer was validated once he acquired it under the later settlement.

Property should be Available with the Transferee

The second condition for validation of such a transfer that is based on a misrepresentation is that not only the contract should be subsisting, and the transferee willing to exercise the option, but the property must be available with the transferor. If the property is transferred by the transferor to another person, even before the transferee can exercise the option to validate the earlier transfer, the remedy of validation of transfer will be lost to the transferee, provided that the second transferee takes the property for consideration and has no notice, actual or constructive about the existence of the first contract.

For instance, A represents to B that he is competent to transfer a land X, which in fact belongs to his father. B acts on that representation and furnishes a consideration of Rs 10 lakhs towards it. B later comes to know about A’s lack of title, but prefers to wait. A became the owner of the property on his father’s death. While B was contemplating the appropriate action to be taken, A sold the land to C, who as a bona fide purchaser, bought it without any notice of B’s claim over it. The only remedy that B has now is to claim compensation, damages or his money back. But he would lose all claims over the property as before he could exercise his option to validate the transfer, the property had already been transferred to a bona fide purchaser for value and without notice. The reason is that till the option is exercised by the first transferee, the validation of the transfer will not take place. Till the ownership of the transferor is not affected at all, he remains competent to transfer the same in favour of anyone. However, once the transferee exercises the option, the transferor has to transfer the property to the original transferee, and if after that, he sells it to somebody else, the new entrant in the scenario will take the property subject to the rights of the transferee. It is only a bona fide transferee for consideration without actual or constructive notice, who takes the transfer in his favour before the option can be exercised by the transferee, who can defeat the rights of such transferee. Therefore, the option must be exercised without any delay by the transferee in order to prevent the property from passing into the hands of a bona fide transferee.

Bona Fide Transferee

As aforesaid, the validation of the transfer depends on the exercise of the option by the transferee and in the situation when the property is available. If the property is transferred before the option can be exercised by the transferee to another person, who takes it for consideration and without actual or constructive notice of the rights of the earlier transferee over it, the rights of the earlier transferee will be defeated. In order to defeat the right of the first transferee, it must be proved that:

Page 8 of 10 ANALYSIS OF SECTION 43

(i) first, that the second transfer was for consideration. If it was a gratuitous transfer, i.e., by way of gift, the right of the second transferee would not be protected. (ii) secondly, the subsequent transferee should not have actual or constructive notice of the first contract. If actual or constructive notice on his part can be proved, then his rights over the property would be subordinate to the first transferee and his interests in it will not be protected.

The doctrine therefore, does not impair the right of transferees in good faith for consideration, without notice of the existence of the said option,14 as the transferee cannot exercise his option with respect to the after acquired property against a bona fide purchaser without notice,15 but if he is aware of the first transaction he would be deemed to have notice of the option.16

If property is transferred for a consideration in good faith without misrepresentation of fraud and transferee had taken reasonable steps to ascertain title of transferor, then such transfer would not be void.17

36 Agricultural Produce Marketing Committee v Bannamma, AIR 2014 SC 3000 [LNIND 2014 SC 727]: (2015) 5 SCC 691 [LNIND 2014 SC 727]. 37 Saradamoyi v Atul Chandra, AIR 1923 Cal 165. 38 Hattikudur v Andur, (1915) 28 Mad LJ 44, wherein it was held that the representation need not be intentionally false. 39 Jamuna Mayee v Koimaindra, AIR 1953 Mad 427. 40 In absence of such a representation the doctrine does not apply; see Kanthimathinatha v Vayyapuri, AIR 1963 Mad 37 [LNIND 1962 MAD 54]; Ram Bharose v Bhagwan Din, AIR 1943 Oudh 196; Krishna Parmada v Dhirendra, AIR 1929 PC 50; Ladu Narain v Gobardhan, AIR 1925 Pat 470; Pandiri Bangaram v Karumoory, (1910) 34 Mad 159; Jagan Nath v Dibbo, (1908) 31 All 53. 41 Sardamoyi v Anil Chandra, AIR 1923 Cal 165; Kanthimathsinatha v Vyyapuri, AIR 1963 Mad 37 [LNIND 1962 MAD 54]; Ram Bharosey v Bhagwan Din, AIR 1943 Oudh 196; Jabedali v Bhagwan Din, AIR 1923 Cal 423; Krishna Paramada v Dhirendra, AIR 1929 PC 50; Lado Narain v Gobardhan, AIR 1925 Pat 470; Jagannath v Dibbo, (1908) 31 All 53. 42 Mulraj v Ider Singh, AIR 1926 All 102; Gopi Nath v Rup Ram, AIR 1930 All 786; Sunder Lal v Ghissa, AIR 1929 All 589; Lado Narain v Gobardhan, AIR 1925 Pat 470; Kodi v Moidin, (1918) 35 Mad LJ 120; Jagenath v Dhanpati, AIR 1934 All 969 overruled by Parmanand v Champalal, AIR 1956 All 225 [LNIND 1955 ALL 238]FB and dissented from in Vyatla v Iwaturi, (1956) AWR 115. 43 Jumma Masjid v K Deviah, AIR 1962 SC 847 [LNIND 1962 SC 4], wherein it was held that when a person transfers property representing that he has a present and transferable interest therein whereas he has only a spes successionis the transferee is entitled to the benefit of the doctrine of feeding the grant by estoppel; Panduri v Karumoory, (1908) 34 Mad 159. 44 Ram Bhawan Singh v Jagdish, (1990) 4 SCC 309 [LNIND 1990 SC 443]; Abdul Kadar v Jamebie Khatun, (1951) AP 815. 45 Lada v Gobardhan, AIR 1925 Pat 470; Mulraj v Indur Singh, AIR 1926 All 102 overruled in AIR 1956 All 225 [LNIND 1955 ALL 238](FB); Adhilakshmi v Nattasivan, AIR 1944 Mad 530. 46 Indroloke Studio v Shanti, AIR 1960 Cal 609; EA Patra v ER Patra, AIR 1980 Ori 95 [LNIND 1980 ORI 67]; see also Dwarka Prasad v Nasir Ahmed, AIR 1925 Oudh 16; Bhagwan Din v Muhamad Yunus Khan, AIR 1934 Oudh 112. 47 Jharu Ram Roy v Kanijet Roy (2009) 4 SCC 60 [LNINDORD 2009 SC 300]; see also Shanti Sports Club v UOI (2009) 15 SCC 705 [LNIND 2009 SC 1724], wherein it was held by the Apex Court that the rule that no one can convey a better title than what he himself possess applies in case the property is transferred after its acquisition. Such transfer would be void and the only remedy available to the transferee would be that he would step into the shoes of the transferor and can claim compensation for such acquisition. See also Maina v Bhagwati, AIR 1936 All 557. 48 Kesau v Seharam, AIR 1951 Ngp 8. 49 Ganeshdas v Kamlabai, AIR 1952 Ngp 29. 50 Jainur v Chafina Bibi, AIR 1951 Assam 20. 51 Parmanand v Champalal, AIR 1956 All 225 [LNIND 1955 ALL 238]. 52 Peyare Lal v Misri, AIR 1940 All 453. 53 Hardev Singh v Gurmail Singh, AIR 2007 SC 1058 [LNIND 2007 SC 120].

Page 9 of 10 ANALYSIS OF SECTION 43

54 Ram Lal v Shiama Lal, AIR 1931 All 275; Goya Din v Kashi, (1907) ILR 29 All 163. 55 (1890) 14 Mad 459; see also Loot Narian v Showkie Lal, (1878) 2 Cal LJ 382; Deb Nath Moral v Sashi Bhusan Moral, AIR 1934 Cal 82. 56 AIR 1923 Cal 535. 57 AIR 2012 Ker 107 [LNIND 2012 KER 347]. 58 Kamla Prashad v Nathuni, AIR 1922 Pat 347; Ram Ratan v Chaudhary, AIR 1923 Oudh 265; Ramaswami Pattamali v Lakshmi, AIR 1962 Ker 313 [LNIND 1961 KER 343]. 59 Mutthuswami Pillai v Sandan Velan, AIR 1927 Mad 649 [LNIND 1926 MAD 497]; see also Sundar Lal v Ghissa, AIR 1929 All 589. 60 Kharag Narayan v Janki Rai, AIR 1937 AP 546. 61 S Kanaka Durga Manikyhamba v Ramapragada Surya Prakash Rao, AIR 2010 AP 99 [LNIND 2009 AP 838]. 62 2015(6) ABR 565 [LNIND 2015 NGP 321]. 63 Atal Shrivastava v Devprasad, AIR 2012 Chh 117 : 2012 (1) CGBCLJ 411. 64 S Kanaka Durga Manikyhamba v Ramapragada Surya Prakasa Rao, AIR 2010 AP 99 [LNIND 2009 AP 838]. 65 Kartar Singh v Harbans Kaur, (1994) 4 SCC 730. 66 Ganga Prasad v Raghubansa, AIR 1937 Oudh 127; Zogu Ram v Venkata Kreshnayya, AIR 1946 Mad 107 [LNIND 1945 MAD 246]; Madirazu v Bommadevara, AIR 1946 Mad 107 [LNIND 1945 MAD 246]; Gopi Nath v Rup Ram, AIR 1930 All 786, wherein it was held that a person making erroneous representation cannot take the defence that the transferee did not make proper inquiries. 67 In Bloomenthal v Ford, (1897) AC 156, 162, Lord Halsbury observed with respect to a person who makes a misrepresentation, that was acted upon by the transferee that he cannot turn back and upon his acquisition of competency to perform his obligations under the contract, say, “I told you so and so you ought not to have believed me. You were too great a fool. I had a right to mislead you because you were too great a fool”. 68 (1994) 4 SCC 730. 69 Ram Bhawan Singh v Jagdish, (1990) 4 SCC 309 [LNIND 1990 SC 443]. 70 Ramayya v Jagannadhan, AIR 1921 Mad 410; Ramasami v Ramasami, (1907) ILR 30 Mad 255; Sannamma v Radhabhayi, (1918) 41 Mad 418. See also Radha Bai v Kamod, (1908) ILR 30 All 38, wherein a mortgage by a proprietor disqualified under the Jhansi Encumbered Estates Act, 1882, could not be enforced even after the disqualification was removed. 71 Veeraswami v Durga Venkata Subbarao, AIR 1957 AP 288 [LNIND 1956 AP 132]. 72 Ajudhia Prasad v Chandan Lal, AIR 1937 All 610. 73 Johri v Mahila Draupati, AIR 1991 MP 340 [LNIND 1990 MP 162]. 74 Jharu Ram Roy v Kamjit Roy, (2009) 4 SCC 60 [LNINDORD 2009 SC 300] : 2010 (3) All LT 15 (SC). 75 Ramkali v State of Uttar Pradesh, AIR 2009 (NOC) 190 (All). 76 Annnada v Gour Mohan, AIR 1921 Cal 501. 77 Indra Lok v Santi Debi, AIR 1960 Cal 609. 78 Sadhu Saran v Sheo Prasad, AIR 1959 Pat 278; Deoman v Atmaram, AIR 1948 Ngp 122. 79 Ganga Baksh v Madho Singh, AIR 1955 All 587. 80 Jumma Masjid v K Deviah, AIR 1962 SC 847 [LNIND 1962 SC 4]. 81 Ramkrishan v Anasuyabai, AIR 1924 Bom 300. 82 Ramdeo v Deputy Director, AIR 1968 All 262 [LNIND 1966 ALL 127]. 83 Anand Padhan v Dhuba Mohanty, AIR 1979 Ori 5. 84 Agricultural Produce Marketing Committee v Bannamma, AIR 2014 SC 3000 [LNIND 2014 SC 727]: (2015) 5 SCC 691 [LNIND 2014 SC 727]. 85 Jadu Bans v Sheojit Singh, 10 IC 443. 86 Cheta Bahira v Purna Chandra, (1914) 19 Cal WN 1272; Arulayi v Jagadeesiah, AIR 1964 Mad 122 [LNIND 1963 MAD 65].

Page 10 of 10 ANALYSIS OF SECTION 43

87 Mohan Singh v Sewa Ram, AIR 1924 Oudh 209. 88 Ajijuddin v Sheikh Budan, (1895) ILR 18 Mad 492. 89 Durga Das v Muhamad, (1908) All WN 155; Arulayi v Jagadeesiah, AIR 1964 Mad 122 [LNIND 1963 MAD 65]; Sinclair v Sitab Khan, (1890) 3 CPLR 72; Ajijuddin v Sheikh Budan, (1895) ILR 18 Mad 492. 90 Ramdeo v Deputy Director, AIR 1968 All 262 [LNIND 1966 ALL 127]. 91 Anand Padhan v Dhuba Mohanty, AIR 1979 Ori 5. 1 Ganesdas v Kamalabai, AIR 1952 Ngp 29. 2 Krishnadhan Chandra v Kanialal Ghose, AIR 1973 Cal 422 [LNIND 1973 CAL 64]. 3 Narayan v Laxmikant, (1955) Ngp 204. 4 Durga Das v Muhamad, (1908) All WN 155; Arulayi v Jagadeesiah, AIR 1964 Mad 122 [LNIND 1963 MAD 65]; Sinclair v Sitab Khan, (1890) 3 CPLR 72; Ajijuddin v Sheikh Budan, (1895) ILR 18 Mad 492. 5 Gomathy Ammal v Rukmini Ammal, AIR 1967 Ker 58 [LNIND 1966 KER 33]. 6 See The Transfer of Property Act, 1882, section 43. 7 Muthiya v Chettiar v Doraswami, AIR 1927 Mad 1091 [LNIND 1927 MAD 489]; Narasimudu v Basava Sankaran Basava; Sanakaran v Anjaneyulu, AIR 1927 Mad 1 [LNIND 1926 MAD 267]FB. 8 Syed Nurul Hossein v Sheosahai, (1893) ILR 20 Cal 1. 9 Rampyari v Ramnarain, AIR 1985 SC 694 [LNIND 1985 SC 55]. 10 Bhrammo Sanathan Dhanna Mahamandal v Prem Kumar, AIR 1985 SC 1102 [LNIND 1985 SC 195]. 11 Sulin Mohan v Rajkrishna, AIR 1921 Cal 582. 12 Bhairab Chandra Mandal v Jiban Krishna Mandal, AIR 1921 Cal 748. 13 (2017) 3 Mad LJ 300 : Civil Suit No. 588 of 2012, decided on 27 February 2017, High Court of Madras. 14 See Durga Das v Muhamad, (1908) All WN 155; Sundariya v Ramashastri, AIR 1955 Mys 8; Bahima v Purna Chandra, 19 Cal WN 1272. 15 Beni Rai v Natabar Sirkar, (1916) 33 IC 975; Hanuman Das v Gurchay Singh, (1913) 18 Cal LJ 181; Cheta Bahira v Purna Chandra, (1914) 19 Cal WN 1272. 16 Girija Shanker v Jagannath, AIR 1952 All 301 [LNIND 1950 ALL 188]; see however Mohan Singh v Sewa Ram, AIR 1924 Oudh 209. 17 V Chandrashekharan v Administrative Officer, (2012) 12 SCC 133 [LNIND 2012 SC 552] : 2012 (95) ALR 884.

End of Document

APPLICATION OF THE DOCTRINE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

APPLICATION OF THE DOCTRINE

The doctrine of feeding the grant by estoppel compels a man to perform when the performance becomes possible.18 Transfer of a non-transferable holding and the subsequent removal of restriction;19 mortgage of a ghatwal land by zuripeshgi lease and the subsequent grant of permanent lease of the land;20 mortgage of a restrictive tenure, the restriction later removed;21 would require the transferor to make good the original transfer.

18 Virya v Hanumanta, (1890) 14 Mad 459; Randhir Singh v Bhagwan Das, (1913) ILR 35 All 541. 19 Deb Nath Moral v Sashi Bhusan Moral, AIR 1934 Cal 82. 20 Loot Narian v Showkie Lal, (1878) 2 Cal LR 382. 21 Surendra v Rajendra, (1918) 27 Ca lLJ 289.

End of Document

TRANSFERS Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

TRANSFERS

The doctrine not only applies to sale but also applies to a mortgage,22 lease,23 charge,24 and exchange,25 but does not apply to a case where the sale was made through the court26 at the instance of an execution creditor, and was therefore compulsory,27 or where the transfer was forbidden by law28 or was contrary to public policy.29 Transfer by a minor,30 or a lunatic,31 or where the transfer could be effected only with the prior permission of the collector and no such permission was obtained,32 or where there is a statutory prohibition on the transfer,33 do not qualify for the application of this doctrine.

The doctrine applies when the transferor interest is enlarged by acquisition of a right of pre-emption,34 or the removal of a restriction on alienation,35 or by discharge of an encumbrance,36 or of a prior mortgage,37 or when a maufi tenure ripens into a proprietary right.38

No Application of the Doctrine in Absence of Transfers

Where no grant or interest in immovable property is involved, the doctrine of feeding the grant by estoppel would not apply.39 Where the DDA auctioned a plot of land holding out it to be a developed plot, which was set aside by the high court on the ground that the plot was situated in a green area, the acceptance of the bid and the deposit amount of 25% will not amount to transfer.40

Since the disability attached to the plot of land ceased to exist on the date of petition, the DDA would not be compelled to finalise the sale and delivery of the plot after 14 years of the initial transaction will have no application to this case.41 The doctrine also does not apply in cases where the transferor has acquired interest not in the property which is the subject matter of the transfer, but in some other property.42

In P Chellamuthu v Abinaya Muthusamy,43 the property owned by A was under a notification to be acquired by the authorities. He challenged the said notification but lost. During the period of challenge, he executed a power of attorney in favour of B, who sold the property on the very same day to C. Next day A revoked the power of attorney issued in favour of B and instead sold the property to D. B, on the other hand petitioned to the authorities to cancel the land acquisition and accepting his case, the authorities re-conveyed the land in favour of B, instead of A, the original owner from whom they had acquired the land. Meanwhile C had also sold the property to three different persons at whose instance the suit was brought to the court. On the issue of application of section 43, the court held that at the time when A had sold the property to D, he did not have any interest as the property was acquired by the government. On its re-conveyance, the title in favour of C was perfected. B on the other hand had no right to have the land re-conveyed in his favour as he was merely a power of attorney holder that was cancelled by the original owner.

Difference between English Law, relating to Feeding the Grant by Estoppel, and Indian Law

English law, with respect to feeding the grant by estoppel, is different from Indian law in three major aspects.

Under English law, if a person professes to transfer an interest in the property that he does not possess, and the party acting on that representation enters into a contract with him at the time, when the transferor subsequently

Page 2 of 6 TRANSFERS acquires the interest, the benefit of his acquired interest automatically passes to the transferee or the grantee. It is based on the doctrine, that where a person promises more than what he can perform, he must deliver the same, when he acquires the capacity to perform. Feeding the grant by estoppel means the grant by an incompetent person, who makes the other believe that he is competent. The estoppel is fed, when that incapacity is removed, and he is estopped from taking the plea of his incompetency at the time of the initial transfer. The differences between Indian and English law with respect to rule of estoppel therefore are as follows.

(i) Under Indian law, the grant is not automatically validated. For its validation, the option must be exercised by the transferee, for which again three conditions should be fulfilled, (a) The contract should be subsisting, (b) The property should be available and (c) The transferee should be willing to go ahead with the transfer. (ii) Under English law, the only condition for validation is that the contract should be subsisting, and the moment the transferor acquires competency, the transfer is automatically validated, without the need for any other action on part of either the transferor or the transferee. (iii) Under English law, the right to exercise the option cannot be defeated by a bona fide purchaser without notice. Under English law, as the original transfer is perfected the moment transferor acquires competency to transfer the property, and the transfer is validated instantaneously, the scope of property not being available due to the chances of the entry of a bona fide transferee for consideration does not arise.44

The Rule of Feeding the Grant by Estoppel under Section 43 and Spes Successions under Section 6(a)

The rule of feeding the grant by estoppel has to be compared and contrasted with the rule of spes successionis provided under section 6(a) of the Act. They appear to relate to similar kinds of situations but with different consequences. In fact not only do they relate to different situations, they are also inherently different.

The illustration to section 43 says:

A, a Hindu who has separated from his father B, sells to C three fields, X, Y, and Z, representing that A is authorised to transfer the same. Of these fields Z does not belong to A, it having been retained by B on the partition; but on B’s dying, A as heir obtains Z. C, not having rescinded the contract of sale, may require A to deliver Z to him.

This case,45 to begin with, apparently resembles a transfer of spes successionis. When A sold Z to C, he had only a spes successionis in it, i.e., a bare chance of inheritance. But he having subsequently inherited it; C became entitled to it. Both sections 43 and 6(a) are fundamentally different, as the former relates to a situation where a person transfers a hope and expectancy, and the fact that it is a hope and expectancy is within the knowledge of the transferee as well. He has not been misled into believing something else. He knows that the transferor does not have a present or subsisting title to the property, but under section 43, there is a misrepresentation by the transferor to the transferee about his competency to transfer the property. This representation may be erroneous or even fraudulent, but the fact remains that there is not only a misrepresentation but the transferee acts on that representation. He is made to believe that the transferor is capable to convey a good title. Further, as the transfer is for consideration, it also means that this transferor, who has misled the transferee, has taken a monetary benefit under this transfer. Therefore, if during the subsistence of the contract this transferor, who had initially misled the transferee into believing that he has a good title to the property and he is capable of conveying the same, infact acquires a competency to do the same, the transfer shall be valid at the option of the transferee. The transferee, therefore, is given a chance to either go ahead with the transfer by exercising an option to that effect, or to rescind the same. If he chooses to go ahead with the transfer, he has to indicate his willingness to do so and the transfer shall become valid and enforceable in a court of law.

For example, in the above illustration when A becomes the owner of the property, C may indicate to A about his willingness to go ahead with the transfer and if A refuses or fails to do so, C may file a suit for specific performance of the contract, and with the help of the court require A to deliver Z to him. But in the same illustration, if C knew that A is not competent to transfer Z in the first place, then upon A’s refusal to perform the contract, he would have no remedy, as this transfer would have been covered under section 6(a) and would have been void.

Distinction between Spes Successionis and the Rule of Estoppel under Section 43

Page 3 of 6 TRANSFERS

The primary differences between section 6(a) and section 43 are as follows:

(i) Section 6(a) enacts a rule of substantive law, while section 43 incorporates a rule of estoppel. (ii) The doctrine of spes successionis applies both to movable and immovable properties, while the rule of estoppel under section 43 applies only in case of transfer of immovable property. (iii) Section 43 applies only in those cases, where the transfer is for consideration. It does not apply to gratuitous transfers. It applies in cases where despite a misrepresentation, the transferor, either takes or seeks to take a monetary benefit from the transferee. It, therefore, would not apply to cases where a person transfers the property by way of gift. On the other hand, the prohibition under section 6 (a) applies to all kinds of transfers, irrespective of whether they are for consideration or gratuitous transfers. A gift of property that a person hopes to inherit is also void. (iv) Under section 6(a), the fact that it is a transfer of spes successions is within the knowledge of both the transferor as well as the transferee. There is no misrepresentation from the side of the transferor about his competency to pass a good title in present to the transferee. Under section 43, due to an express representation, fraudulent or even erroneous, the transferee, at the behest of the transferor, is assured of a good title. section 43 is very clear of the fact that its application will cover only those cases, where due to the making of a representation by the transferor, that he is competent to transfer a piece of property, the transferee has been expressly misled. The transferee had no knowledge about the defect or lack of title on part of the transferor, and due to the express representation coming from the transferor, he is made to believe in the competency of the transferor to transfer the property. (v) The status of a transfer under section 6(a) is void in its inception, i.e., void ab initio, However, under section 43, the transfer is voidable at the option of the transferee provided two conditions are satisfied. First, that the contract should be subsisting at the time the transferor attains competency to transfer the property, i.e., it should not have been rescinded or brought to an end and secondly the property should be available with the transferor. It should not be in the hands of a bona fide transferee for value.

Cases Laws

In Jumma Masjid Mercara v Kodimaniandra Deviah,46 a Hindu joint family consisted of three brothers Br1, Br2 and Br3. In the year 1900, they collectively executed a usufructuary mortgage of the joint family property in favour of X. There was litigation and a compromise was arrived at with respect to it, according to the terms of which for a period of 20 years, i.e., till August 1920, the mortgagee was entitled to retain its possession, and after that the property was to revert back to the family. The family chart was as follows. Out of the three brothers one died unmarried, and the other two died one after another, leaving behind their widows W2 and W3, but no children.

They had a sister, who had three grandsons A, B and C, who were the reversioners to their property. A was to get one-half of the property and B and C, one-fourth each, but on the death of the two widows. Till the death of the widows, the interest that they had in the property was a mere spes successionis, that according to section 6(a) is untransferable. They represented to the transferee that this property belonged to the joint family and after the death of W2, it devolved on them as reversioners, and hence they were competent to transfer the same. They did not disclose the fact that W3 was still alive, and her very presence prevented them from getting a title to the property. The transferee on such representation of the reversioners gave consideration, and filed a suit for possession of property, when the same was not delivered to them. W3 resisted this suit on the ground that till she was alive, no one else had a right to possess the property, as these were her husband’s self-acquisitions and she, as his legal heir was the owner of the same. The subordinate courts, the district court and even the judicial commissioner accepted her arguments. But before the second appeal at the level of the judicial commissioner could be finally disposed of W3 died and the transferee applied before the revenue authorities for transferring the patta for the property standing in the name of W3 to his name on the strength of the sale deed executed by the reversioners. At this time, Jumma Masjid intervened and contended that first, the whole of the properties vested in them on the strength of a gift deed executed by W3 in their favour, and secondly, they alleged that one of the reversioners, A, had relinquished his share in the property in their favour for a consideration of Rs 300. The revenue authorities rejected the claim of Jumma Masjid, and the possession of the transferee was upheld. Jumma Masjid filed a case

Page 4 of 6 TRANSFERS for recovery of possession that went ultimately to the Supreme Court. The decision that came in favour of transferee was pronounced 42 years after the sale deed was executed in his favour by the reversioners.

The primary issue before the court was whether a transfer of property for consideration made by a person who represents that he has a present and transferable interest therein, while he possesses in fact only a spes successionis, is within the protection of section 43 of the Act. The contention of Jumma Masjid was that section 43 must be read as subject to the provisions of section 6(a), that specifically prohibits the transfer of spes successions and therefore section 43 should apply only in cases other than those covered under section 6(a). The court rejected this argument, and drew a distinction between section 6(a) and section 43, pointing out that they do relate to different spheres, and that there is no conflict between them. section 43 clearly applies whenever a person transfers property to which he has no title on the representation that he has a present and transferable interest therein, and acting on that representation, the transferee takes a transfer for consideration. When these conditions are satisfied the section enacts that if the transferor subsequently acquires the property, the transferee becomes entitled to it, if the transfer has not meantime been thrown up or cancelled and is subsisting. There is an exception in favour of transferees for consideration in good faith and without notice of the rights under the prior transfer. Apart from this, the section is absolute and unqualified in its operation. It applies to all transfers which fulfill the conditions prescribed therein, and it makes no difference in its application whether the defect of title in the transferor arises by reason of his having no interest whatsoever in the property or of his interest therein being that of an expectant heir. Pointing out that there is no controversy on this issue, the court said:

Section 6(a) and S. 43 relate to two different subjects, and there is no necessary conflict between them. Section 6(a) deals with certain kinds of interests in property mentioned therein and prohibits a transfer simpliciter of those interests. Section 43 deals with representations as to title made by a transferor who had no title at the time of transfer and provides that the transfer shall fasten itself on the title which the transferor subsequently acquires. Section 6(a) enacts a rule of substantive law, while s. 43 enacts a rule of estoppel, which is one of evidence. The two provisions operate on different fields and under different conditions and there is no ground for reading a conflict between them, or cutting down the ambit of the one by reference to the other.

The court said that in its opinion, both of them can be given full effect on their own terms in their respective spheres, but to hold that transfers by persons who have only a spes successionis at the date of the transfer are not within the protection afforded by section 43, would destroy its utility to a large extent. As section 43 enacts a rule of estoppel, it virtually enacts a special provision for the protection of transferees for consideration from persons who represent that they have a present title, which in fact they have not. While it is true that rules of estoppel cannot be resorted to for defeating or circumventing prohibitions enacted by statutes on grounds of public policy, but here, it is not a ground of public policy alone by means of a specific provision in specific enactment. The court therefore held that the transferee here entered into the transaction acting on the representation made by the reversioners that they were entitled to the property in present. He therefore acquired title to the properties under section 43 of the Act, when the reversioners became in titulo on the death of W3, and the subsequent dealing by way of release did not operate to vest any title in Jumma Masjid.

In Official Assignee, Madras v Sampath Naidu,47 a person A executed two mortgages over properties, that he hoped to succeed to on the death of his relative, i.e., in respect of which he had only spes successionis. On the death of the relative, he succeeded to those properties as the heir and sold them to B. A mortgagee claiming under B filed a suit for a declaration that the initial mortgage effected by A himself at the time when he had no title in the property was void in light of section 6(a). The court accepted this contention and held that as the initial mortgage was effected by A when he had only a spes successionis, and this fact was within the knowledge of the mortgagee, the same was void and section 43 would not apply. Consequently, the transfer in favour of B was valid.

In Alamanaya Kunigari Nabi Seb v Murukuti Papiah,48 a son executed a mortgage of the properties belonging to his father. The mortgagee filed a suit to enforce the mortgage. During the pendency of this suit, the father died and the son, as his heir, inherited the property. The issue before the court was whether the mortgagee could claim protection of section 43. The son contended that such an interpretation to section 43, would nullify section 6(a). The court rejected this argument and held:

This argument neglects the distinction between purporting to transfer the chance of an heir apparent and ‘erroneously representing that the transferor is authorised to transfer certain immovable properties. It is the latter course that was followed in the present case. It was represented to the transferee that the transferor was in presenti entitled to and thus

Page 5 of 6 TRANSFERS

authorised to transfer the property.

The court ruled in favour of the mortgagee as against the son.

In Shyam Narain v Mangal Prasad,49 the property belonged to a person A. On his death, it vested in his daughter D, as A had no son. D had a son DS, who sold these properties to X in 1910 when his mother D was alive. D died in 1926, and DS became the owner of the properties as her heir. In 1927 he sold the same properties to Y, who claimed the estate on the ground that the sale in 1910, conferred no title on X, as DS had only a spes successionis, and in contrast, the transfer in their favour had taken place when DS had a vested transferable title.

The court rejected their argument and held that X had acquired a good title, as they were entitled to the benefit of section 43 and observed:

Section 6(a) would therefore apply to cases where professedly there is a transfer of a mere spes successionis, the parties knowing that the transferor has no more right than that of a mere expectant heir. The result of course would be the same where the parties knowing the full facts fraudulently clothe the transaction in the garb of an out and out sale of the property and there is no erroneous representation made by the transferor to the transferee as to his ownership. But where an erroneous representation is made by the transferor to the transferee that he is the full owner of the property transferred and is authorized to transfer it and the transferee acts upon such erroneous representation, then if the transferor happens later, before the contract of transfer comes to an end, to acquire an interest in that property, no matter whether by private purchase, gift, legacy or by inheritance or otherwise, the previous transfer can at the option of the transferee operate on the interest which has been subsequently acquired, although it did not exist at the time of the transfer.

In Mahadeo v Har Baksh,50 the husband of a Hindu woman disappeared. After five years of his disappearance, she executed a mortgage of his property as the owner of the same. Since the title was in the name of the husband, whose whereabouts were not known, the presumption of death in such cases arises after a period of seven years of unexplained absence under the Indian Evidence Act, 1872. It is only after seven years that he would be presumed to be dead and then only can the wife, in the capacity of a widow, inherit his property. The mortgagee filed a suit after she had acquired the estate as a limited owner. The court ruled in his favour.

22 Zollikofer v Official Assignee, AIR 1927 Rang 100; Ramnarain v Mohanian, 26 All 82 FB; Sarju v Bindeshari, (1911) ILR 33 All 382; Hemamoye v Akbar, 41 Cal WN 1124; Eshaqlal v Dulla, AIR 1930 All 115; Gopinath v Roopram, AIR 1930 All 760; Sundar v Ghitsa, AIR 1929 All 589. 23 Autar Singh v Lal Singh, AIR 1934 Lah 996; Sulin v Raj Krishna, AIR 1921 Cal 582; Protap v Judhistir, (1914) 19 Cal LJ 408. 24 Mohan Singh v Sewa Ram, AIR 1924 Oudh 209. 25 Bhairab v Jiban, AIR 1921 Cal 748. 26 Jote Singh v Ram Das Mahto, AIR 1996 SC 2773 [LNINDORD 1996 SC 189]; Kama Rai v Nona Keshore, AIR 1952 All 287 [LNIND 1950 ALL 301]. 27 Alukmonee Dabe v Banee Madhub, (1877) 4 Cal 677; Nanak v Gandu Ram, AIR 1938 Lah 360. 28 Ananda v Gour Mohan, AIR 1923 PC 189. 29 Ramasami v Ramasami, (1907) ILR 30 Mad 255; Gopala Dasu v Rami, AIR 1921 Mad 410; Ramaya v Dara Satchi, (1913) 25 Mad LJ 635; Ramayya v V Jaganadhan, (1916) ILR 39 Mad 930; Sanamma v Radhabhayi, (1918) ILR 41 Mad 418. 30 Ajudhia Prasad v Chandan Lal, AIR 1937 All 610 FB. 31 Johri v Mahila Draupati, AIR 1991 MP 340 [LNIND 1990 MP 162]. 32 Deoman v Atma Ram, AIR 1948 Ngp 122. 33 MC Lakshminarasappa v Assistant Commissioner Chikkaballapur, AIR 1993 Kant 326 [LNIND 1992 KANT 304]. 34 Goya Din v Kashi, (1907) ILR 29 All 163. 35 Makoda Devi v Umesh Chandra, (1907) 7 Cal LJ 381.

Page 6 of 6 TRANSFERS

36 Shyama v Ananda, (1880) 3 Cal WN 323. 37 Manjappa v Krishnayya, (1908) ILR 29 Mad 113. 38 Balbhaddar v Kusehar Das, AIR 1928 Oudh 344. 39 Panchanon v Nirode, AIR 1962 Cal 12 [LNIND 1960 CAL 153]. 40 Delhi Development Authority v RM Agarwal, AIR 1999 SC 1256 [LNIND 1999 SC 276]. 41 Ibid. 42 Babulal v Noor Mohamad, AIR 1934 All 731. 43 Second Appeal Nos. 549, 1004, 1005 of 2006 and C.M.P. Nos. 6827 of 2006, 204 of 2009, 63 of 2009 and 1 of 2006, decided on 17 February 2017, High Court of Madras. 44 Sankari Ammal v Ramachandra, AIR 1954 Mad 861 [LNIND 1953 MAD 223]. 45 With respect to the illustrations appended to a section the Judicial Committee in Mahomed Syedol Ariffin v Yeoh Ooi Cark, had made the following observation, ‘it is the duty of a court of law to accept, if that can be done, the illustration given as being both of relevance and value in the construction of the text. The illustration should in no case be rejected because they do not square with ideas possible derived from another system of jurisprudence as to the law with which they or the sections deal. And it would require a very special case to warrant their rejection on the ground of their assumed repugnancy to the sections themselves…the illustrations although not part of the sections, been expressly furnished by the legislature as helpful in the working and application of the stature, should not be thus impaired’. 46 AIR 1962 SC 847 [LNIND 1962 SC 4]: (1962) Supp 1 SCR 554. 47 AIR 1933 Mad 795 [LNIND 1933 MAD 166]. 48 AIR 1915 Mad 972. 49 AIR 1935 All 244. 50 AIR 1928 Oudh 13.

End of Document

TRANSFER BY ONE CO-OWNER Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

TRANSFER BY ONE CO-OWNER

[s 44] Transfer by one co-owner.—Where one of two or more co-owners of immoveable property legally competent in that behalf transfers his share of such property or any interest therein, the transferee acquires as to such share or interest, and so far as is necessary to give, effect to the transfer, the transferor’s right to joint possession or other common or part enjoyment of the property, and to enforce a partition of the same, but subject to the conditions and liabilities affecting, at the date of the transfer, the share or interest so transferred.

Where the transferee of a share of a dwelling-house belonging to an undivided family is not a member of the family, nothing in this section shall be deemed to entitle him to joint possession or other common or part enjoyment of the house.

This section incorporates a rule of substitution and applies to a case where the property is owned by more than one person in specific shares and one of the co-owners sells his share. The transferee in such a case steps into the shoes of the transferor and he is entitled to all the rights that the transferee had in the property and would also be accountable for any liabilities that the transferor was accountable for.

The second part seeks to protect the integrity of a family house and prevents the entry of strangers into the privacy of the family. Therefore, if the property sold is a share in the dwelling house, then, if the transferee is a stranger to the family, he can only seek partition and specification of his share but cannot claim a right of joint residence as was available to the transferor. Hence, in such cases the rule of substitution will not apply and the right acquired by the transferee would be limited to enforce partition.

For instance, two brothers jointly inherit a house and a land from their father in identical shares. One of the brothers sells his share to a friend X. Since X is a stranger to the family, he cannot claim a joint residence in the house. His remedy would be to seek partition and demarcation of the house, but with respect to the land, he would step into the shoes of the transferor and will have the same rights and liabilities that the transferor had. Where after entering into an agreement for sale of property jointly owned by several persons, with some of them, the transferee paid a sum of money to avoid a distress sale of the property by the bank, it was held that alienation of such undivided interest was valid and the transferee would get a good title to it.51

Transfer, Explained

The term “transfer” here, includes both an absolute transfer as well as transfer of an interest in immovable property. The rule specified herein applies therefore to a mortgage,52 lease,53 sale54 and also involuntary sales, as a rule of equity justice and good conscience.55 The purchaser, even through court, of an undivided interest of the coparcener in a Hindu Joint family does not have a right to joint possession, and he can only sue for partition;56 and once a partition is effected, he can get an exclusive possession of the same.

Right to Joint Possession

Co-owners of a property have a right to its joint possession, which can be enforced without bringing a partition suit. Every co-owner is entitled to a reasonable enjoyment of the joint property, provided he does not interfere with the

Page 2 of 5 TRANSFER BY ONE CO-OWNER similar user by the other co sharers57 or cause inconvenience to any other joint owner.58 Where a person spends money upon the joint property and a time comes to partition it, he will be given an allotment so far it is possible that may enable him to keep the advantage of his improvements including repairs and electric installations.59

A co-sharer cannot maintain a claim for a specific plot and the dispossessed co-sharer’s remedy lies in a suit for partition.60 In the absence of a binding partition between co-sharers, a person purchasing a share in the tenancy rights is a co-sharer tenant and is not entitled to declaration of title to and khas possession of a specified plot which forms part of the tenancy.61

Transferee of an Undivided Share

The transferee of a co-sharer acquires the right of transferor when the transferor was in exclusive possession of the share and cannot be disturbed by other co-owners till partition.62 A co-owner not in actual physical possession or exclusive occupation cannot transfer a valid title to that portion but the transferee is entitled to get a share out of the property to be allotted to the transferor at partition or get a decree of joint possession or sue him for compensation.63

Transferee not Entitled to Joint Possession of Coparcenary Property

Even though the present section confines the ineligibility of the transferee to have a joint possession of the property in case of a dwelling house, the transferee is not entitled to joint possession where the classical rule of Hindu law forbids it,64 or where he has purchased an undivided interest of the coparcenor65 even where the coparcener is permitted to alienate it.66 He is only entitled to enforce a partition67 of the share that he has acquired,68 subject to any charge or encumbrances affecting the coparcenary property69 or interest at the time of the transfer. Where the purchaser was a relative and had been in possession of the property for a long time, the court may pass an order for joint possession rather than an eviction order.70

Right to Enforce Partition

The right to enforce partition is generally available to all co-owners even in case of a dwelling house.71 For enforcing a partition there must be unity of possession, title and community of interest,72 but one of the co-owners cannot claim a specific piece of property as coming to his share, and the property would be partitioned generally.

For instance, in a coparcenary, three coparceners collectively own a house and four pieces of land A, B, C, and D. One of the coparceners, X, sells to D a land whose value is to the extent of one third of the total property to the purchaser. Since the entire interest is undivided, in a suit for partition and handing over of the share to the purchaser, he cannot insist on obtaining only the land D, as which property would go to the share of which coparcener, can be ascertained only after a partition had been affected. The rule of partition is available even in case of a lease,73 including a monthly lease74 or a lease liable to forfeiture in case of certain contingencies,75 except when it causes inconvenience to the rest of the family members.76 In case of usufructuary mortgage, where the possession is with mortgagee, it is the mortgagee and not the mortgagor77 who has a right to enforce partition and to claim possession.78

A purchaser of a share is not liable to the damage caused to the property after the transfer by the transferor.79

Dwelling House belonging to the Undivided Family

The section provides an exception to the general rule of the transferor stepping into the shoes of the transferee, but only where the property purchased is a share in a dwelling house. In such cases the right of the transferee would be to ask for partition of the house and not a right of joint residence in it with the other members.80 For the application of the exception, it is necessary to show that:

(i) The property is a dwelling house belonging to a family; (ii) The purchaser of the share is not a member of the family, but can be described as a stranger in terms of relations to the family members; (iii) They have not let out the dwelling house completely, or abandoned it.

The rule has been incorporated in the Act to prevent the entry of strangers into the privacy of the dwelling house.81 The applicability of this proviso for specific performance of agreement of sale of house would not be applicable

Page 3 of 5 TRANSFER BY ONE CO-OWNER where the vendor’s wife had half-share in undivided property.82 As the primary object of it is to keep a stranger away from possession of residential/dwelling-house of an undivided family, hence, no stranger to the family can claim a right to joint residence83 with the family members and his only remedy would be to ask for a partition.

Where one co-sharer in the dwelling house sells his share to a stranger, the transferee cannot force his way into dwelling house but has to seek partition and obtain an order from court or make a settlement with co-owners who have not transferred their shares.84 It is irrespective of how many members are there in the family or what is the character of the family. It may be an undivided85 family86 or even a nuclear family. It is not necessary that the family must have lived in the house constantly,87 permanently, or even temporarily,88 unless they have abandoned all idea of occupying it as a house89 or have let it out completely.90 A partial letting at the instance of a stranger who owns a portion of the undivided house would not alter its character,91 but if he occupies it after effecting a partition of the house then the situation would be different.92 In all other cases, the only remedy available to him would be to seek partition and he shall not be entitled to joint possession or other common or part enjoyment of the house93 but is entitled only to a partition of the house.94 Where they are induced into possession in a hurried and clandestine manner, the members of the undivided house are entitled to restoration of possession.95 Section 4 of the Partition Act gives a right to a member of the family who has not transferred his share to purchase the transferee’s share when the transferee files a suit for partition.96

Where the property is in the nature of a dwelling unit, and is inherited by two brothers, the sale by one brother without a partition would be improper even if the boundaries of the property are clearly mentioned or the question of possession was mentioned in the sale deed.97 Where the property lost the character of a typical dwelling-house as per section 44, as once a stranger comes in, section does not apply, the purchaser cannot be ousted from the second floor of the property and the registered sale deed would be final as regards the transfer of title and related rights.1 In a right of exercise of pre-emption suit against the stranger purchaser, where a stranger purchaser was put in possession of his vendor’s flat since purchase, the other co-sharers of the said dwelling house complex had a right to resist the possession under section 44 of the Transfer of Property Act, however the co-sharers cannot exercise their right of pre-emption in absence of the claim of partition by stranger purchaser.2

51 Syscon Consultants Pvt Ltd v Primella Sanitary Prod. Pvt Ltd, 2016 (9) Scale 26 : AIR 2016 SC 4564 [LNIND 2016 SC 382]. 52 Hari Harayyar v Ahmmadunni, AIR 1040 Mad 491; Balwant Rai v Gurdas Rai, AIR 1974 P & H 160; Haranandan Das v Muhamad Kalim, AIR 1944 Pat 341. 53 Rajani Mohan v Sahmbhunath, AIR 1929 Cal 710; Mohamad Jafar v Mazhar-ul-ashan, (1906) 3 All LJ 474; Bhagwat Sahai v Bipin Bihari, (1910) ILR 37 Cal 918; Hemadri Nath Khan v. Ramani Kanta Roy, (1897) ILR 24 Cal 575. 54 KS Krishna v Krishan, AIR 1993 Ker 134 [LNIND 1992 KER 329]. 55 Pudipaddy Lakshmi Narasamma v Gadi Ranganaya Kamma, AIR 1962 Ori 147 [LNIND 1961 ORI 60]; Jagatbandhu Biswas v Iswar Chandra, AIR 1948 Cal 61. 56 Krishanji v Sitaram, (1881) ILR 5 Bom 496; Ishrappa v Krishna, AIR 1922 Bom 413. 57 Mohesh Narayan v Nawabat Pathak, 32 Cal 837. 58 Shrilal v Babu Vasudeo, (1960) ILR 1 Raj 948. 59 Abdul v Mohamad Zahoor, AIR 1962 Pat 300. 60 Unless it is proved that the co-sharers are in possession of separate portion by mutual arrangement for the sake of convenience, see Shiam Lal Saha v Mt Fulla, AIR 1922 Cal 147; Ekkabar v Kon Ali, AIR 1925 Cal 272. 61 Boloram v Dandiram, AIR 1950 Assam 1. 62 Chanda Singh v Santa Singh, AIR 1954 Pepsu 6; Baldev Singh v Darshani Devi, AIR 1993 HP 141 [LNIND 1993 HP 20]. 63 A co-owner cannot appropriate to his exclusive use any portion of the joint property see Muthu v Ammal, AIR 1993 Ker 272; I Gouri v CH Ibrahim, AIR 1980 Ker 94 [LNIND 1979 KER 128]. For inter se rights and liabilities of co-owners, see Om Prakash v Chhaju Ram, AIR 1992 P&H 219; Sant Ram Nagina Ram v Daya Ram, AIR 1961 Punj 528; Bhartu v Ram Sarup, (1981) PLJ 204. 64 The principle stated here does not override the Mitakshara law, see Premanayakam v Sivaraman, AIR 1952 Mad 419 [LNIND 1951 MAD 94]; Kota Balabhadra v Khetra Das, (1916) 31 Mad LJ 275.

Page 4 of 5 TRANSFER BY ONE CO-OWNER

65 Sheo Nath Seth v Krishna Kumari Devi, AIR 1973 All 496; see also Ramdas v Sitabai, AIR 2009 SC 2735 [LNIND 2009 SC 1367], where the suit of the alienee for partition and possession of the undivided coparcenary property was dismissed by the court on the ground that a coparcener is incompetent to alienate his undivided share in the Mitakshara coparcenary without the consent of the other coparceners. 66 Ram Dayal v Manaulal, AIR 1973 MP 222 [LNIND 1973 MP 44], wherein it was held that though a coparcenor can alienate his undivided interest in the property, he has no right to alienate a specific property belonging to coparcenary. In case of such alienation it would be valid only to the extent of his share; see also Maharu v Dhansai, AIR 1992 MP 220 [LNIND 1991 MP 322]. 67 Lalita James v Ajit Kumar, AIR 1991 MP; Ramdayal v Manik Lal, AIR 1973 MP 22. Such a partition suit need not be general in character but can be with respect to a specific property. See Ram Mohun v Mul Chand, (1906) ILR 28 All 39. 68 Ramdas v Sitabai, AIR 2009 SC 2735 [LNIND 2009 SC 1367]; Ishrappa v Krishna, AIR 1922 Bom 413; Manjawa v Shanmuggu, (1915) ILR 38 Mad 684; Shivmurteppa v Virappa, (1900) ILR 24 Bom 128. 69 Such charge or encumbrance may also include a Hindu son’s liability attaching to that interest of paying his father’s personal debts untainted with immorality, see Venkureddi v Venku Reddi, AIR 1927 Mad 471 [LNIND 1926 MAD 417]. 70 Babaji v Vasudev, (1876) ILR 1 Bom 95; Achut Sitaram v Shivaji Rao, AIR 1937 Bom 244; Kallappa v Venkatesh, (1878) ILR 2 Bom 676. 71 The classical Hindu law rule that a dwelling house cannot be partitioned at the instance of female members was incorporated in section 23 of the Hindu Succession Act, 1956. This rule is now abrogated by the amendment to the Act, in September 2005. 72 Maung Ba Tu v Ma Thet Su, AIR 1928 Rang 73; Durga Charan v Khundkar, (1918) 27 Cal LJ 441. 73 Rajani Mohan v Sahmbhunath, AIR 1929 Cal 710. 74 Mohamad Jafar v Mazharulashan, (1906) 3 All LJ 474. 75 Bhagwat Sahai v Bipin Bihari, (1910) ILR 37 Cal 918. 76 Hemadri Nath Khan v Ramani Kanta Roy, (1897) ILR 24 Cal 575; Rajani Mohan v Sahmbhunath, AIR 1929 Cal 710. 77 Haranandan Das v Muhamad Kalim, AIR 1944 Pat 341. 78 Balwant Rai v Gurdas Rai, AIR 1974 P&H 160. 79 Chandra Shekar v Abidalli, AIR 1925 Ngp 68. 80 Ram v Ram Kishan, AIR 2010 All 125 [LNIND 2010 ALL 356]. 81 ‘Dwelling house’ includes the structure or the building and also adjacent buildings, curtilage, courtyard, garden or orchard and every thing that is for convenient occupation of the house; see Nilkamal v Kamakshya, AIR 1928 Cal 539. But the mere fact of the undivided character of any house due to nature of construction and the land underneath would not make it undivided for the application of this rule; see St Catherine College v Poring, (1979) 3 All ER 250, 255. 82 Kammana Sambamurthy v Kalipatnapu Atchutamma, (2011) 11 SCC 213 : AIR 2011 SC 103 [LNIND 2010 SC 978]. 83 See The Transfer of Property Act, 1882, section 44. The object is to avoid the inequity of permitting a stranger to intrude upon the privacy of a joint Hindu or Mohammedan family residence; see Dulal Chandra Chatterjee v Gosthabehari Mitra, AIR 1953 Cal 259 [LNIND 1952 CAL 97]. See also Balaji v Gonesh, (1881) ILR 5 Bom 504, wherein Westropp CJ made the following remarks, ‘we also deem it a far safer practice and less likely to lead to serious breaches of the peace to leave a purchaser to a suit for partition than to place him by force in joint possession with members of a Hindu family which may be not only of a different caste from his own but also different in race and religion’. 84 Sunil Gupta v Nargis Khanna, 2012 IAD (Del) 277 : 185 (2011) DLT 760 : 2011(126) DRJ 97 [LNIND 2011 DEL 1009] : ILR (2011) Supp (5) Del 59. 85 Lal Behari Samanta v Gourhari Dawn, AIR 1952 Cal 253. 86 The term undivided is not restricted to only the Hindu families but applies to Muslim families as well, see Sultan Begum v Deviprasad, 30 All 327 FB and also includes any group of persons related to each other by blood who live in one house under one head and are undivided qua the house they own; see Pakhija Bibi v Adhar Chandra, AIR 1929 Cal 231; Kshirode Chunder v Saroda Prosad, (1911) 12 Cal LJ 525; Nilkamal v Kmakshya, AIR 1928 Cal 539; Pran Kishan v Surath Chandra, (1918) ILR 45 Cal 873. 87 Pakhija Bibi v Adhar Chandra, AIR 1929 Cal 231. 88 SS Subramania Sastri v Shaikh Ghannu, AIR 1935 Mad 628 [LNIND 1934 MAD 331]. 89 Janaki Ammal v PAK Natarajan, AIR 1989 Mad 88 [LNIND 1987 MAD 237]; Bhagirath v Afag Rasul, AIR 1952 All 207 [LNIND 1951 ALL 199]; Ramanath Chettiar v Nataraja Chettiar, (1955) 1 Mad LJ 118.

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90 Janaki Ammal v PAK Natarajan, AIR 1989 Mad 88 [LNIND 1987 MAD 237]. 91 Nirupma Basak v Baidyanath Paramanik, AIR 1985 Cal 406 [LNIND 1984 CAL 356]. 92 Bhim Singh v Ratnakar, AIR 1971 Ori 198 [LNIND 1970 ORI 70]. 93 Where the house does not belong to the joint family this principle does not apply; see Ram Bilas Tiwari v Shiv Rani, AIR 1977 All 437. 94 Sultan Begum v Devi Prasad, 30 All 327 FB; Girijakanta v Mohim, 20 Cal WN 675; Lalbehari v Gourhari, AIR 1952 Cal 253; Paresh Nath v Kamall Krishna, AIR 1958 Cal 614 [LNIND 1957 CAL 140]; Uma Shankar v Dhaneshwari, AIR 1958 Pat 550; Lal Bihari Samanta v Gauri Charan, AIR 1952 Cal 253. 95 Dorab Cowasiji Warden v Coomi Sorab Warden, AIR 1990 SC 867 [LNIND 1990 SC 77]; Uday Nath Sahu v Ratnakar, AIR 1967 Ori 139 [LNIND 1967 ORI 1]; Ashim Ranjan Das v Bimla Ghose, AIR 1992 Cal 44 [LNIND 1991 CAL 82]. 96 Ram v Ram Kishan, AIR 2010 All 125 [LNIND 2010 ALL 356]: 2010 5 AWC 4634 All. 97 Anjan Barman Choudhury v Ranjan Barman Choudhury, AIR 2013 Gau 42 [LNIND 2012 GAU 94]: 2012 (5) Gau LT 340. 1 Sunil Gupta v Nargis Khanna, 2012 IAD (Del) 277 : 185 (2011) DLT 760 : 2011(126) DRJ 97 [LNIND 2011 DEL 1009] : ILR (2011) Supp (5) Del 59. 2 Bulu Sarkhel v Kali Prasad Basu, AIR 2012 Cal 67 [LNIND 2011 CAL 1081].

End of Document

JOINT TRANSFER FOR CONSIDERATION Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

JOINT TRANSFER FOR CONSIDERATION

[s 45] Joint transfer for consideration.—Where immoveable property is transferred for consideration to two or more persons and such consideration is paid out of a fund belonging to them in common, they are, in the absence of a contract to the contrary, respectively entitled to interests in such property identical, as nearly as may be, with the interests to which they were respectively entitled in the fund; and, where such consideration is paid out of separate funds belonging to them respectively, they are, in the absence of a contract to the contrary, respectively entitled to interests in such property in proportion to the shares of the consideration which they respectively advanced.

In the absence of evidence as to the interests in the fund to which they were respectively entitled, or as to the shares which they respectively advanced, such persons shall be presumed to be equally interested in the property.

Section 45 enacts a rule where property is transferred for consideration,3 and is purchased by two or more persons jointly. To determine the quantum of their respective interest in this property, the Act provides that in absence of a contract to the contrary4 their interest in the property would be in proportion to their contribution5 towards the consideration.6

For instance, a person A owns a plot of land and sells it to B and C for a consideration of Rs 10 lakh. In this transaction, the contribution of B was Rs two lakh and C pays Rs eight lakh. The extent of interest that both B and C would acquire in the property would be two-tenths, i.e., one-fifth and eight-tenths, i.e., four-fifths respectively. B and C would be co-owners but they would not have equal shares in the property.

Joint transfer for consideration rules as embodied in this section applies when payment (consideration) is made out of one fund.7 In such cases where ownership is admitted, the concerned parties would be entitled to shares in the property in accordance with the proportion of payment (of consideration) made by them for acquiring it.8

“Transfer” Includes the Transfer of “An Interest in the Property”

The principle applies when two or more persons jointly purchase a property in the property by paying considerations that are different vis-à-vis each other, such as in a sale. It is also applicable in case of transfer of an interest in the property such as by way of a lease and a mortgage. For instance, where four mortgagees advance money in equal shares and the fourth mortgagor consents to the mortgagor redeeming the other three mortgages, he can recover only one-fourth of the loan amount by the sale of one-fourth of the property mortgaged.9 It is also applicable to the case of a lease, but is not used to determine conflicting claims of possessory rights when the payment is by one person and residence is by him and his family members. For instance, the government granted a licence in favour of one person of a house and subsequently executed a lease in his favour only, and he occupied the house with his mother and younger brother. These relations do not become co-owners with him of this property and he alone is the legal purchaser, having paid the required price. It is irrespective of the fact that some of the portions of the house were occupied by his relations, but that does not mean that he was out of its possession at any stage. The lessee is therefore the exclusive holder of the premises and entitled to the possession of the same.10 The main purpose of

Page 2 of 3 JOINT TRANSFER FOR CONSIDERATION the section therefore is to determine the distinct interest the transferees acquire on the basis of their contribution and is of no assistance in ascertaining the position when one person purchases property partly from ancestral and partly from self acquired funds.11

Contract to the Contrary

The section has no application if there is a contract to the contrary. Transfer of property is primarily a contract and by mutual agreement, conditions can be incorporated in the deed which would be binding on them, unless they are expressly forbidden by law. The present section expressly says that the rule contained herein is applicable only in absence of a contract to the contrary. If the property is transferred jointly to two or more persons and if they, as between themselves, agree with respect to the respective share that would be their entitlement, the rule enacted hereunder would have no application even if out of the two purchasers, one may not have contributed anything towards acquisition of the property or their contribution may be totally different from each other. For instance, A sells his property to B and C, for a consideration of Rs 70,000. B and C pay the funds in the ratio of 5:2, i.e., 50,000 and 20,000 respectively, but both B and C agree to take equal interest in the property. The agreement would be valid, and the rule under the present section would not apply.

Presumption of Equal Interest in the Property

Where the terms of the contract are silent about the extent of the contribution of the transferees towards acquisition of the property or if there is no evidence12 as to the quantum of interests in the fund to which they are respectively entitled, the co-sharers shall be presumed to have an equal interest in the property.13 Thus, where property is acquired in the name of several members of the joint family and there is no evidence as to the proportion in which they contributed for the acquisition or no specific mention of the same,14 the presumption is that each one of them contributed equally.15 Where the recital in the sale deed indicates that one co-purchaser has contributed half, but his share is shown as 1/21, it will be presumed that his share is one half.16 Where a common share was forfeited and later brought in by the collector out of a fund contributed by the co-sharers it is presumed that the collector debited an equal amount to each co-sharer and that co-sharer have an equal interest in the share when it is recovered.17

Nature of Interest Taken

With respect to the nature of the joint acquisition taken by the transferees, the courts in India lean against holding a grant to be a joint grant, and presumption will always be in favour of a tenancy in common.18 The rule applies equally in case the grantees are coparceners. Therefore, unless there is an intention to the contrary,19 they would also take the property as tenants in common.20

3 The above principle applies where transfer is for consideration and therefore does not apply to gifts, Arakal v Domingo, (1911) 34 Mad 80. 4 CV Ramaswami Naidu v CS Shyamala Devi, (1978) 1 Mad LJ 505, wherein it was held that an intention to the contrary would negate the application of this rule. 5 See The Transfer of Property Act, 1882, section 45; see Parshottam v Janki, 4 All LJ 257, wherein it was held that the property acquired by three brothers out of common fund would be held by them in proportion of their interest in the common fund. 6 The principle stated herein helps to determine the quantum of the interest of co-purchasers and its determination, see Guruswami Asari v Raju Asari, AIR 1973 Mad 473 [LNIND 1973 MAD 10]. 7 Kalpanaben Hasmukhbhai Patel v Urvashiben Rajnikant Patel, 2010 SCC OnLine Guj 6730. 8 Dinesh Kumari Mishra v Ranjana Mishra, (2011) 177 DLT 577 (Del) : 2011 (2) Ren CR (Civil) 301. 9 Pertab v Nihal Singh, AIR 1926 All 676. 10 Hari Singh v Madan Lal, AIR 2001 Del 231 [LNIND 2001 DEL 91]. 11 Mangal Singh v Harkesh, AIR 1958 All 42.

Page 3 of 3 JOINT TRANSFER FOR CONSIDERATION

12 Where a person can produce evidence of the amount of his share but fails to do so he cannot avail himself of the presumption of equality, see Ram Pher v Ajudhia Singh, AIR 1925 Oudh 369. 13 Shokhi v Gaibi, 107 IC 149; Abdullah v Ahmad, AIR 1929 All 817; Nankoo v Ahmad Ali, AIR 1946 Lah 399 FB. 14 Durlabhji D Patel v Competent Authority and Deputy Collector Surat, AIR 1996 Guj 197 [LNIND 2007 GUJ 244]. 15 Devraj v Ghanshyam, AIR 1979 Ori 162. 16 Mohan Lal v Board of Revenue, AIR 1982 All 273. 17 Debi Prasad v Aklio, (1899) 4 Cal WN 465. 18 Mahomad Jusali v Fatima Bai, AIR 1929 Bom 33. The principle of joint tenancy appears to be unknown to Hindu law except in case of coparcenary between members of the joint family, see Jogeshwar Narain v Ram Charan Dutt, (1896) 23 Cal 670, PC. 19 Yethirajaulu v Mukuntha, (1905) ILR 28 Mad 303; Narpad Singh v Muhamad Ali, (1884) 11 Cal 1(PC). 20 Bhai Diwali v Patel Bichardas, (1902) ILR 26 Bom 445; see also the case of two widows; Kishori Dubain v Mundra Dubain, (1911) ILR 33 All 665; Ram Piari v Krishna, AIR 1921 All 50; Jankiram v Nagamony, AIR 1926 Mad 273 [LNIND 1925 MAD 162].

End of Document

TRANSFER FOR CONSIDERATION BY PERSONS HAVING DISTINCT INTERESTS Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

TRANSFER FOR CONSIDERATION BY PERSONS HAVING DISTINCT INTERESTS

[s 46] Transfer for consideration by persons having distinct interests.—Where immoveable property is transferred for consideration by persons having distinct interests therein, the transferors are, in the absence of a contract to the contrary, entitled to share in the consideration equally, where their interests in the property were of equal value, and, where such interests were of unequal value, proportionately to the value of their respective interests.

Illustrations

(a)A, owing a moiety, and B and C, each a quarter share, of mauza Sultanpur, exchange an eighth share of that mauza for a quarter share of mauza Lalpura. There being no agreement to the contrary, A is entitled to an eighth share in Lalpura, and B and C each to a sixteenth share in that mauza. (b)A, being entitled to a life-interest in mauza Atrali and B and C to the reversion, sell the mauza for Rs. 1,000. A’s life-interest is ascertained to be worth Rs. 600, the reversion Rs. 400. A is entitled to receive Rs. 600 out of the purchase-money. B and C to receive Rs. 400.

This section applies where one piece of property is owned by two or more persons or where two or more persons collectively possess an interest in the property and they jointly effect a transfer of the same. Further, their shares in the property or extent of ownership may be equal or may be different vis-à-vis each other. It lays down the rules to determine the respective entitlement of each of the transferor in the consideration that is paid by the transferee.21 Like section 45, this rule would also apply in absence of a contract to the contrary and provides that where their interests in the property were of equal value, they would also be entitled to share in the consideration equally and where such interests were of unequal value, their entitlement would be in proportion to the value of their respective interests. The section applies both in case of absolute transfers and also in case of transfer of an interest in the property.

For instance:

(i)A and B are the owners of a land in equal shares. They jointly sell the land to C for a consideration of Rs 50,000. Their entitlement with respect to the consideration would be equal, i.e., they would be entitled to Rs, 25,000 each. (ii)A and B own a piece of land. A owns one-third of it and B’s ownership extends to two-third. They sell the land to C for a consideration of Rs 90,000. A will get Rs 30,000, and B would take Rs 60,000.

Page 2 of 2 TRANSFER FOR CONSIDERATION BY PERSONS HAVING DISTINCT INTERESTS

21 A tenant for life and a remainder man; a mortgagee and a mortgagor; and a lessee and a lessor have distinct interests; see Morrs v Debenham, (1876) 2 ChD 540.

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TRANSFER BY CO-OWNERS OF SHARE IN COMMON PROPERTY Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

TRANSFER BY CO-OWNERS OF SHARE IN COMMON PROPERTY

[s 47] Transfer by co-owners of share in common property.—Where several co-owners of immoveable property transfer a share therein without specifying that the transfer is to take effect on any particular share or shares of the transferors, the transfer, as among such transferors, takes effect on such shares equally where the shares were equal, and, where they were unequal, proportionately to the extent of such shares.

Illustration

A, the owner of an eight-anna share, and B and C, each the owner of a four-anna share, in mauza Sultanpur, transfer a two-anna share in the mauza to D, without specifying from which of their several shares the transfer is made. To give effect to the transfer one-anna share is taken from the share of A, and half-an-anna share from each of the shares of B and C.

The section enacts a rule to avoid confusion in case of transfer by more than one co-owner of the property who hold the shares as tenants in common, without specifying, how much out of each transferor’s share is transferred. In such a case, the share transferred would be proportionate to the extent of their ownership in the property.22

For example:

(i)A, B and C are the co-owners of a piece of land, each of them equally having one-third share in it. They collectively sell half of the total property to D, without specifying the specific share with respect to which the transfer is to take effect. D would take half out of each owner’s property. Consequently, each of them would now hold one-sixth of the total property owned by them. (ii)A, B and C are the co-owners of a piece of land, each of them having half, one-fourth and one-fourth share in it respectively. They collectively sell half of the total property to D without specifying the specific share on which the transfer is to take effect. D would take one-fourth out of A’s share, one-eighth from B’s share and one-eighth out of C’s share.

22 Mir Ali Newaz v Mir Ali Ashar, AIR 1927 Sau 62; For the rights and obligations of the co-owners see Sant Ram v Daya Ram, AIR 1961 Punj 528.

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PRIORITY OF RIGHTS CREATED BY TRANSFER Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

PRIORITY OF RIGHTS CREATED BY TRANSFER

[s 48] Priority of rights created by transfer.—Where a person purports to create by transfer at different times rights in or over the same immoveable property, and such rights cannot all exist or be exercised to their full extent together, each later created right shall, in the absence of a special contract or reservation binding the earlier transferees, be subject to the rights previously created.

The rule contained herein is based on the maxim qui prior est tempore potior est jure which means that subsequent dealings by the transferor of the same property cannot be to the prejudice to the rights of the transferee over the same property. It visualises a situation where the transferor carries out multiple transactions with respect to the same property in favour of several transferee. In such a situation each subsequent transferee will take the property with the rights of a former transferee.23 This maxim qui prior est tempore potior est jure: he who is prior in time is better in law, also indicates that the transfer affected later must submit to the earlier, it embodies the rule of priority and as such all such rights cannot co-exist or be exercised to their full extent together, the latter transfer shall be subject to rights previously created.24 The essence of nemo dat quod non habet is the transactional exigibility i.e, the binding effect of prior property rights of subsequent transferee irrespective of notice or knowledge of prior property rights on part of subsequent transferees.25 For example:

(i)A grants a lease of his house to B for a period of five years. After one year of execution of this lease deed, he sells the property to C. Here the transferor has transferred the property two times to two different transferees. One is a lease, i.e., transfer of a right to possess and enjoy in favour of B, and the second is a transfer of all the rights in the property in favour of C. According to the rule expressed in section 48, the subsequent transferee will take the property with the rights of the former transferee. It means that in the present example, C who has become the owner of the property with a subsequent transfer will take it subject to the rights of the former transferee, i.e., B, who is the lessee. In other words, B would have a priority of claim over the property with the result that C would not be able to take the possession of the property with immediate effect, even though he has become the owner. He would have to wait for a period of four years, till the completion of the lease and then only he can claim the possession. (ii)A mortgages his property in favour of B to secure a loan of Rs 80,000. He subsequently sells the same property to C for a consideration. Here again there are two transfers effected by the transferor, the prior in favour of B and the subsequent in favour of C. The law says that in case of successive transfers of the same property by the transferor, the latter transfer is subject to the prior transfer. Here, C has become the owner of the property but the property is still subject to a mortgage and in the event of non payment of loan, the mortgagee can cause the property to be sold. So in effect, the complete rights over the property will be vested in C if he redeems the property by the payment of loan. B’s rights over the property are not affected by the sale in favour of a third party.

Therefore, where a person mortgages a property and then sells it,26 or mortgages it a second time,27 the subsequent transferee will merely get an equity of redemption and if he sues for sale on his mortgage it will be sold subject to the prior mortgage.28 The rule applies equally to mortgages by deposit of title deeds which take priority over a later registered sale of the same property,29 but does not apply to a charge.30

Page 2 of 3 PRIORITY OF RIGHTS CREATED BY TRANSFER

For determination of priority of rights when two sale deeds were registered on the same day but there was no pleadings as to which one was executed first or earlier, the determination of rule of priority with respect to two documents and refixing boundary lines by applying the principles under section 48 would be improper.31 Where loan was taken by borrower from the bank creating first charge over the bank, whereupon one time settlement offer was made to borrower by the bank for settlement of entire debt due to it, and the property was sold for higher amount, in determining the extent of claim of the charge holder in a property, the first charge would be entitled to recover the entire amount due to it and any amount remaining after recovery of amount by the first charge holder can be realised by the second charge holder.32 In SFL Industries Ltd v Reliance Capital Ltd,33 SFL Industries Ltd. the Company (in liquidation) was ordered to be wound up by a court order and an official liquidator was appointed to complete the winding up process. A and B were the first and the second charge holders respectively in the fixed assets of the company. B contended that they were not called by the officials of the company for determination of claim, but A argued that a lot of attempts were made to communicate with B that were never reciprocated. The issue before the court was with respect to the rights of priorities over the mortgaged assets. The court held that since special statute is silent qua dealing with the contractual and other statutory rights between the different kinds of secured creditors then in that eventuality the specific provisions contained in the statute shall prevail. The first charge holders will have the right to recover first along with claims of the other workmen and borrowers if some amount is left with, the second charge holder would be entitled to their statutory claims.

Where a person grants a village to another as maintenance for life and later gave a putni to another, the putni will take effect only on the death of the grantee.34

Exceptions to the Rule of Priority

The rule of priority is subject to the following exceptions:

(i) In case the instruments of transfers are required by law to be compulsorily registered, and the former transfer is unregistered and the latter in accordance with the procedure of law, the latter will have priority over the former and the rule continued herein would not apply. For example, A executes a lease in favour of B with the help of a written deed that is not registered. The lease is for a period of five years and according to section 107 of the Act, can be validly effected only with the help of a written, attested and register deed. The property is subsequently sold to C for a consideration. Here, instead of B, it is C who would have priority over the rights of B over the property. B would have to vacate, as the lease in his favour is not executed with the help of a document capable to take effect in law. (ii) The rule contained in section 48 is subject to the doctrine of notice.35 (iii) Where the second transfer is by virtue of an order of the court that also says that this transfer will have precedence over all the previous charges.36

Other Instances of Reversal of the Rule of Priority

Where in a lien, money is advanced for the purpose of saving the property from destruction of forfeiture, the rule of priority is reversed and a person having a lien is entitled to priority in the reverse order to their dates.37 Where the suit property is mortgaged by the receiver under the directions of the court for the purposes of preserving it, the mortgagee is entitled to priority in a suit for partition over an execution creditor by whom property is attached,38 or over all other prior charges.39 Reversal is also permissible in case of statutory restrictions40 but only when the deeds are antagonistic and cannot be given effect to simultaneously.41

23 P Chellamuthu v Abinaya Muthusamy, Second Appeal Nos. 549, 1004, 1005 of 2006 and C.M.P. Nos. 6827 of 2006, 204 of 2009, 63 of 2009 and 1 of 2006, decided on 17 February 2017, High Court of Madras. 24 Xavier v John, AIR 2011 Ker 103 [LNIND 2010 KER 767]: 2011 (1) KLJ 604. 25 Harshad Govardhan Sondagar v International Assets Reconstruction Co Ltd, (2014) 6 SCC 1 : 2014 (4) Scale 484. 26 Sobhag Chand v Bhaichand, (1882) ILR 6 Bom 193. 27 Where both the mortgages are usufructuary mortgages, the earlier mortgage only gets the possession; see Sukhdeo Misra v Sheodial, (1901) All WN 52.

Page 3 of 3 PRIORITY OF RIGHTS CREATED BY TRANSFER

28 Kanti Ram v Kutubuddin, (1895) ILR 22 Cal 33. 29 Bisseswar Poddar v Nabadwib Chandra, AIR 1961 Cal 300 [LNIND 1960 CAL 133]. See also Dayal v Jivraj, (1877) ILR 1 Bom 237, wherein it was held that a registered mortgage would have priority over an oral equitable mortgage. 30 Chhagan Lal v Chunni Lal, AIR 1934 Bom 189. 31 Xavier v John, AIR 2011 Ker 103 [LNIND 2010 KER 767]: 2011 (1) KLJ 604. 32 Karnataka State Financial Corp, Bangalore v State Bank of India, AIR 2011 Kar 130. 33 AIR 2015 P&H 116. 34 Cheta Bahira v Purna Chandra, (1915) 19 Cal WN 1272. 35 Harnandun Singh v Jawad Ali, (1900) ILR 27 Cal 468; Hathi Singh v Kuvarji, (1886) ILR 10 Bom 105. 36 Girdhari Lal v Dhirendre, (1906) 34 Cal 427; see also Hari Mohan v Girish Chandra, (1877) 1 Cal LJ 152. 37 Girdhari Lal v Dhirendra, (1906) 34 Cal 427; see however Baldeo v Miller, (1903) 31 Cal 667; Moran v Mitter Bibee, (1877) ILR 2 Cal 58, wherein priority was claimed for the advance claimed for the purposes of carrying on an indigo factory, and Hari Mohan v Girish Chandra, (1877) 1 Cal LJ 152, where advance made by a mortgagee to enable the mortgagor to pay the rent of the premises mortgaged. In both cases claim of reversal of priority was rejected. 38 Herumbo Nath v Satish Chandra, (1906) ILR 33 Cal 1175. 39 Girdhari Lal v Dhirendra, (1906) 34 Cal 427. 40 See the Registration Act, 1908, section 50 according to which a subsequent registered transfer takes priority over an earlier unregistered transfer, registration of which is optional; see also the Bengal Tenancy Act, 1885, section 98, according to which a pervious mortgage by a co-owner of his share is subject to a subsequent charge created by the a manager over the whole estate; see Amarchunder Kundu v Sohi Bhusan Ray, (1904) ILR 31 Cal 305. 41 Ishri Prasad v Gopi Nath, (1912) ILR 34 All 631; Sobhagchand v Bhaichand, (1882) ILR 6 Bom 193.

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TRANSFEREE’S RIGHTS UNDER POLICY Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

TRANSFEREE’S RIGHTS UNDER POLICY

[s 49] Transferee’s right under policy.—Where immoveable property is transferred42 for consideration, and such property or any part thereof is at the date of the transfer insured against loss or damage by fire, the transferee, in case of such loss or damage, may, in the absence of a contract to the contrary, require43 any money which the transferor actually receives under the policy, or so much thereof as may be necessary, to be applied in reinstating the property.

The rule is applicable to all kinds of transfers of property. For instance, if the property is subject to a usufructuary mortgage, where the possession of property is with the mortgagee, and the property is destroyed or damaged by fire, the insurance amount, if the property is insured, would be received by the owner, i.e., the mortgagor, but the mortgagee would have a right to require him to either apply the total amount, or whatever is necessary in the given situation, for restoration of the property to its original condition. If the transferor fails to do so, the mortgagee would have an option to revoke the mortgage and demand his money back. Similarly, in case of lease, where the property is in possession of the lessee and is destroyed or damaged by fire, a similar right is available to the lessee. If the lessor fails to apply the insurance money for the restoration of the property, and the property is unfit for occupation, the lessee would also have an option to cancel the lease.44 The purpose envisaged here is to direct the money for the benefit of the property, so that the purpose of the transfer is not frustrated.

42 A contract to purchase confers upon the purchaser an insurable interest, see Gnana Sundaram v Vulcan Insurance Co, AIR 1931 Rang 210. 43 The purchaser himself cannot claim the insurance money form the insurance company, see Kaveriamma v Lingappa, (1909) ILR 33 Bom 96; Chatri Bahadur Singh, (1888) All WN 45. 44 See The Transfer of Property Act, 1882, section 108(e).

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RENT BONA FIDE PAID TO THE HOLDER UNDER DEFECTIVE TITLE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

RENT BONA FIDE PAID TO THE HOLDER UNDER DEFECTIVE TITLE

[s 50] Rent bona fide paid to holder under defective title.—No person shall be chargeable with any rents or profits of any immoveable property, which he has in good faith paid or delivered to any person of whom he in good faith held such property, notwithstanding it may afterwards appear that the person to whom such payment or delivery was made had no right to receive such rents or profits.

Illustration

A lets a field to B at a rent of Rs. 50, and then transfers the field to C. B, having no notice of the transfer, in good faith pays the rent to A. B, is not chargeable with the rent so paid.

The rule contained herein is aimed at protecting the interests of a lessee, who in good faith pays rent to a person, who possesses a defective title and is not competent to accept it. It provides that such a lessee would not be under any obligation to pay rent a second time to the person competent to accept it.

For instance, A is the owner of a house and lives in it along with his wife. He gives the first floor of this house on rent to B. B pays the rent periodically to A. A dies, and B continues paying rent to A’s widow in good faith believing her to be the owner. The widow was not competent to accept the rent as A had bequeathed his house to his brother’s son, but because B had paid the rent in good faith and without notice of the right of the nephew of the lessor over the property he cannot be chargeable again by him.

Similarly, A is the owner of a house and mortgages the same to B by a usufructuary mortgage. The house was in possession of a tenant who was paying rent to A. Upon the mortgage, the mortgagee became entitled to possession of the property and also the rent. The tenant in ignorance of the fact of mortgage continued paying rent to A. He will not be chargeable for the rent again. 45 Though the person paying rent bona fide will not be charged again, the person not entitled to receive the rent does not get to keep it, and the person entitled to the rent can proceed against him.46

Rent

A tenant paying rent in advance bona fide to a person no longer entitled to receive will not be chargeable with the rent again,47 but where the money is paid in advance not as rent but as an advance, it would be treated as a loan instead of rent and hence its payment will not be protected.48

Notice

For the application of this section, it is necessary that the rent be paid without any notice that the person receiving it is not competent to accept it. If the tenant knows the defect in title or could have known it as a reasonable prudent person, the protection cannot be accorded to him. Where the tenant has notice49 of the assignment,50 and yet pays

Page 2 of 2 RENT BONA FIDE PAID TO THE HOLDER UNDER DEFECTIVE TITLE rent to the original lessor, he will be asked to pay the rent again.

Good Faith

A tenant’s action must be in good faith. Only the tenant who acts bona fide and in good faith,51 is protected under this principle.52 Where there is a dispute with respect to the title of the tenanted premises and the tenant, though aware of the dispute, at his discretion pays rent to one of them, he cannot later seek protection under this principle.53 Where an Official Receiver executes a lease of the property in his charge under insolvency proceedings erroneously ignoring its sale, and the tenant pays rent to the Official Receiver, he will not be charged with the rent again by the auction purchaser.54

45 Kiran Chandra v Dutt, AIR 1925 Cal 251; Tiloke Chandra Surana v JB Beatie, AIR 1926 Cal 204, see also Kaveriamma v Lingappa, (1909) ILR 33 Bom 96; Chatri v Bahadur Singh, (1888) All WN 45. 46 Alimuddin v Hiralal, (1896) 23 Cal 87. 47 Toon Chan v PC Sen, 24 IC 693. 48 Kanta Bhat v Chotey Lal, AIR 1960 Raj 19; Rameshwar Lal v Butto Kristo Rai, (1934) 13 Pat 396; Pale Zabaing Rural Co-op Society v Maung Thu Daw, AIR 1931 Rang 292; Official Assignee v Abdul Hussein, AIR 1928 Sau 95; Tiloke Chandra Sorana v JB Beatie, AIR 1926 Cal 204. 49 Notice can be either actual or constructive notice, See notes under ch 1; see also Lachman Das Bansilal Rathod v Sumberlal Surajmal Gandhi, (1973) 75 Bom LR 678. 50 Puran lal v Madhoji, (1913) 17 Cal LJ 372; Nabin v Surendra, (1905) 7 Cal WN 454; Azim v Pateshwari, AIR 1943 Oudh 105; Nabakumar v Hosimuddin, 58 Cal WN 319. 51 Good faith is required at two places, one with regard to the payment and the other with respect to the title of the person to who the payment is made; see Sottulal v Kritanta, 67 Cal LJ 527, 42 Cal WN 378. 52 Kaveriamma v Lingappa, (1909) ILR 33 Bom 96. 53 Gambhiraya v Sakharam, AIR 1927 Ngp 237. 54 Sivaswami v Subramania, AIR 1932 Mad 95 [LNIND 1931 MAD 162].

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IMPROVEMENTS MADE BY BONA FIDE HOLDERS UNDER DEFECTIVE TITLE Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

IMPROVEMENTS MADE BY BONA FIDE HOLDERS UNDER DEFECTIVE TITLE

[s 51] Improvements made by bona fide holders under defective title.—When the transferee of immoveable property makes any improvement on the property, believing in good faith that he is absolutely entitled thereto, and he is subsequently evicted therefrom by any person having a better title, the transferee has a right to require the person causing the eviction either to have the value of the improvement estimated and paid or secured to the transferee, or to sell his interest in the property to the transferee at the then market value thereof, irrespective of the value of such improvement.

The amount to be paid or secured in respect of such improvement shall be the estimated value thereof at the time of the eviction.

When, under the circumstances aforesaid, the transferee has planted or sown on the property crops which are growing when he is evicted therefrom, he is entitled to such crops and to free ingress and egress to gather and carry them.

The section applies to a transferee, who, in good faith, believes that he is the owner of the property. He makes improvements under this belief over the property but is subsequently evicted by the real owner. In such a case, the law provides him with two options in the alternative generally. First, he can require the owner to pay him the value of the improvements effected by him on the property and in the alternative; he can require the real owner to transfer the interest in the property to him at the market value. In case the transferee has planted or sown crops on the property that are growing at the time when he is evicted, he is, in law also entitled to free ingress and egress to gather and carry them.55

The fundamental principle on which this section is based is the maxim—“he who seeks equity must do equity”. Under this section, law imposes an obligation upon the evictor to compensate a person acting honestly and making improvements on the evictor’s property. While evicting such person, the real owner cannot appropriate or take benefit of the improvements made by this person without compensating him. What is absolutely essential is that the transferee was under a conviction that he holds the title and was competent to improve the property. If he knew that he does not have the title to the property, he would not be entitled to the protection under this section and the benefit of the improvements would pass to the real owner.56

For instance, a person having a life interest in the property is not competent to sell it and if he transfers this property, the transferee will not acquire a good title. A, having a life interest in the property, sells the same to B for consideration. B pays the consideration, and in good faith, thinking himself to be the owner, makes substantial improvements on the property. The sale is challenged by C who has a vested interest in the property and to whom the property is to belong after the death of A. The sale is set aside, yet C must compensate B for the improvements. In the same example, if B knew that A had only a life interest in the property and knowing this, he enters into the transaction, and is evicted from the property after he carries substantial improvements, he would not be entitled to seek the protection under this section and the improvements would pass on to C.

Page 2 of 4 IMPROVEMENTS MADE BY BONA FIDE HOLDERS UNDER DEFECTIVE TITLE

In Harilal Ranchhod v Gordhan Keshav,57 the property belonging to the minor was sold by his guardian to a person X without seeking the permission of the court. X paid the consideration and under the sincere belief that he was the absolute owner of the property demolished the existing structure on the land and built a new house. The minor, on attaining majority, evicted X. The court held that the minor had a better title and he was entitled to the property, but at the same time he was under a legal obligation to compensate X. Similarly, where a person takes the possession of the property under an oral agreement of sale, but never attempted to get it enforced through any judicial proceedings and did not pay the money to the owner despite enjoying the property for a long time, he cannot claim relief under this section, but would be entitled to remove the improvements made by him in the property. Here, it was held that silence by the owner for a period of 12 years after the possession was taken by the defendants under an oral agreement will not extinguish the rights of the owner in his property but the defendants would be liable to remove all improvements made by them in property.58

A person cannot be held to be a bona fide purchaser for valuable consideration on the basis of defective title to attract the provisions of section 51 of the Transfer of Property Act, 1882, and therefore, where the property is mortgaged to third party for valuable consideration through a registered deed, in absence of enquiry as regards to a valid transfer of title, subsequent purchaser of such property cannot be held to be a bona fide purchaser for valuable consideration and would not be entitled to demand protection under this section.59

Essential Ingredients of the Section

In order for the section to apply, the following conditions must be satisfied:

(i) The property transferred must be immovable property; (ii) The property is transferred absolutely to the transferee; (iii) The transferee in good faith believes himself to be absolutely entitled to this property; (iv) He makes improvements on the property under such belief; or (v) Has sown plants or crops on the property; and (vi) He is evicted by a person who holds a better title to the property.

Rights arising in favour of the bona fide transferee:

(i) A right to require evictor to pay him the value of improvements, or; (ii) To sell interest in the property to the transferee at the then market value thereof irrespective of the value of improvements; (iii) If the transferee has sown crops on the property, he has a right to free ingress and egress for the purpose of gathering and carrying them.

Transferee

The person claiming the benefit of improvements must be a transferee60 and not a person whose induction into the premises was not through lawful means.61 He should not be a person fraudulently in possession,62 or merely in permissive possession as the licencee of the property.63 A purchaser in good faith of a life estate,64 or under a covenant to reconvey property,65 or a lesser estate than he was actually given66 of an estate in ignorance of a mortgage,67 or of a property which is worth more than Rs 100 under an oral sale,68 or a grantee of land from a tehsildar who was later evicted by the collector,69 all, would be transferees entitled to the protection of improvements.

An allottee of a plot by the government who erroneously enters and improves another land,70 or a person who does not improve the property himself but purchases the property from the improver, cannot avail the benefit of improvements in case of eviction.71 The principle applies even if the transferor is the evictor.72

Improvements by Trespasser

As has been explained above, a person claming the protection of this section must be a transferee who is under a belief of his absolute entitlement of the property. In other words, he is in lawful possession of the property, but

Page 3 of 4 IMPROVEMENTS MADE BY BONA FIDE HOLDERS UNDER DEFECTIVE TITLE under a defective title. If he is in unlawful possession of the property, he cannot claim the protection accorded under the Act. A trespasser cannot claim any compensation for improvements after a wrongful invasion73 of somebody else’s property and can be asked to remove the improvements74 within a time fixed by the court,75 failing which the plaintiff should be put in possession of land76 with or without the buildings, which he may pull down at his pleasure77 unless the trespasser can show an acquiescence on part of the owner,78 or an encroachment with a genuine mistake.79 Where the trespasser in good faith plants trees, he is entitled to its usufruct thereof.80

55 See also Mense Profits and Improvements Act, 1855, section 2; The rule enunciated here is much wider than under English law which requires that the person spending money supposes himself to be building on his own land and the real owner at that time knows that the land belonged to him, see Ramsden v Dyson, (1865) 1 HL 129; Russell v Watts, (1883) 25 ChD 559; However, under Indian law the mere belief of the person making improvements that he is absolutely entitled to the property is sufficient and he need not prove the knowledge on part of the real owner, see Shajahbuddin v Vahidbuk, (1920) 14 Serv LR 12; KalyanDas v Jan Bibi, AIR 1929 All 12, (1929) 51 All 454. 56 See also Ismail Hajee Essa Trust v Muslim Educational Society (Registered), R.F.A. No. 329 of 2008, decided on 21 February 2017, High Court Of Kerala : 2017 (1) KHC 916. 57 AIR 1927 Bom 611; see also Durgozi Row v Fakeer Sahib, (1907) ILR 30 Mad 197; Chennapragada v Secretary of State, AIR 1925 Mad 963 [LNIND 1924 MAD 423]. 58 Brijgopal Lumani v Mothey Anja Ratna Rajkumar, AIR 2010 (NOC) 570 (AP). 59 Vasanthamma v Siddaveerappa, AIR 2011 Kar 54 : 2010 (3) KCCR 2047 [LNIND 2010 KANT 360]. 60 See Emerald Valley Estate Ltd v State of Kerela, (2000) 3 Ker LT SN 16. 61 Mudhoo v Juddooputty, (1869) 9 WR 115; Thakur Chunder v Ramdhone, (1868) 6 WR 228; Ganga Din v Jagat, (1914) 12 All LJ 1026; Secretary of State v Dungappa, AIR 1929 Mad 921; LA Creet v Firm Gangaraj-Gulraj, AIR 1937 Cal 129. 62 Musadee Mhamad v Meerza Ally, (1854) 6 Moo Ind App 27; Sadashi v Dhakubai, (1881) ILR 5 Bom 451; Murlidhar v Parmanand, AIR 1932 Bom 190. 63 Durga Devi v Beni Prasad, AIR 2008 (NOC) 1619 (HP); Lucy George v Nagpur Roman Catholic Diocesan Corp Pvt Ltd, AIR 1986 MP 27 [LNIND 1984 MP 43]. 64 Nanjamma v Nacharammal, (1907) 17 Mad LJ 622. 65 Chinakkal v Chinnathambi, AIR 1934 Mad 703 [LNIND 1934 MAD 84]. 66 Natesa Thevan v District Board of Tanjore, AIR 1926 Mad 921 [LNIND 1925 MAD 312]. 67 Narayana Rao v Basarayappa, AIR 1956 SC 727; see also Kalyan Das v Jan Bibi, AIR 1929 All 12, where the principle was applied even though there was no direct eviction and no better title. 68 Brijgopal Lumani v Mothey Anja Ratna Rajkumar, AIR 2010 (NOC) 570 (AP); Topanmal v Chanchalmal, AIR 1940 Sau 77. 69 Chennapragada v Secretary of State, AIR 1925 Mad 963 [LNIND 1924 MAD 423]. 70 Ijjabba v Ijjnabha, AIR 1964 Mys 24. 71 Nagendranath Dasse v Punchanan Mourie, AIR 1934 Cal 290. See however Mahomad Naziruddin v Govindarajalu, AIR 1971 Mad 44 [LNIND 1970 MAD 14], where a contrary view is taken by the court. 72 See Harilal Ranchhod v Gordhan Keshav, AIR 1927 Bom 611. 73 Daya Ram v Shyam Sundari, AIR 1965 SC 1049 [LNIND 1964 SC 221]; see Secretary of State v Dungappa, AIR 1929 Mad 921 wherein it was observed, ‘One who has gone on a wrongful invasion of the plaintiff’s right in real estate has no equity to set up against the plaintiff’s claim to have the property restored to him as it was before the wrong was done’, see also Ganga Din v Jagat, AIR 1914 All 90; Jetha Lal v Lal Bhai, (1904) ILR 28 Bom 298. 74 Krishna Prasad v Adyanath Ghatak, AIR 1944 Pat 77; Abdul v Nand Lal, AIR 1938 Ngp 506; Dhairyawan v JR Thakur, AIR 1958 SC 792; see also Gobind v Gooroo Charan, 3 Suth WR 71, wherein it was held that a trespasser is at liberty to remove the bricks of his house. See also Mammunhi v Kunhibi, AIR 1961 Ker 147. Where a trespasser in bona fide faith erects a building he can be asked to remove the material see Krishna Prasad v Adyanath Ghatak, AIR 1944 Pat 77. ‘No one can by merely trespassing upon the land of another and constructing costly buildings upon it claim a right to retain its possession. He has no right to compel the plaintiff to receive compensation for his land instead of the land itself’; see Ganga Din v Jagat, AIR 1914 All 90. 75 Maddanappa v Chandramma, AIR 1965 SC 1812 [LNIND 1965 SC 71].

Page 4 of 4 IMPROVEMENTS MADE BY BONA FIDE HOLDERS UNDER DEFECTIVE TITLE

76 Where there is no evidence that the plaintiff encouraged the defendant to trespass and incur expenditure he must be evicted see Arjun Lal Gupta v Mriganka Mohan Sur, AIR 1975 SC 207. 77 Mahadeo v Narayan, AIR 1927 Ngp 348; Narayan v Raja Lakshman, AIR 1927 Ngp 400; Krishna v Adyanath, AIR 1944 Pat 77. 78 Madanappa v Chandramma, AIR 1956 SC 283; Lala Beni Ram v Kundn Lal, (1899) ILR 21 All 496; RS Muthuswami v A Annamalai, (1981) 1 Mad LJ 258; S Palanvelu v K Veradammal, AIR 1977 Mad 342 [LNIND 1977 MAD 47]. 79 Bhupendra v Pyari, (1907) 40 IC 464. 80 Pannalal v Gokarna Das, (1949) All 757.

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ABSOLUTE TRANSFER Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

ABSOLUTE TRANSFER

The words “absolutely entitled thereto” indicate that the transferee must acquire a property under an absolute transfer. It should be a transfer of all the rights in the property and not transfer of an interest in it. A transferee under a partial transfer like a mortgagee81 or a lessee,82 including a permanent lessee,83 cannot take the benefit of the improvements they have made as they are not absolutely entitled to the land.84 Where a mortgagee honestly believes himself to be so entitled,85 such as in a mortgage by conditional sale,86 or where he is misled by an erroneous order of the court87 or by a term of forfeiture of property after five years in the deed,88 he would be entitled to protection.

Belief of Absolute Entitlement

The transferee must have made improvements, believing in good faith, i.e., honestly believing,89 that he is entitled to the immovable property.90 Failure to prove that would disentitle him to the benefit of the improvements.1 It is essential not only to plead that the transferor thought that he was absolutely entitled to the property but also that the transferee knew that the transferor so thought, and was led by the transferee’s inaction, to think thus.2 What is necessary is the belief of the transferee’s absolute entitlement and not that the property is free from all encumbrances.3

Where the transferee knows or has reason to believe that he is not absolutely entitled to the property and yet makes improvements, he cannot seek the protection of this section. A purchaser making improvements with knowledge that the property does not belong to him,4 or is pending litigation,5 or is the mortgaged property,6 or with notice of a prior sale,7 or in anticipation of a grant,8 or with knowledge of a terminable interest9 cannot claim the benefit of this principle.

Purchaser at a Court Sale

The rule contained herein applies to a transfer inter vivos by parties to a transfer and does not apply when the transferee purchases the property at a court auction. If a person purchases the property at a court sale and then makes improvements, and subsequently the sale is set aside, he would be entitled to compensation irrespective of his belief as to whether he is not entitled absolutely to the property.10

81 Santhankumar v Indian Bank, AIR 1967 SC 1296 [LNIND 1967 SC 35]; Gopi Lal v Abdul Hamid, AIR 1928 All 381; Bechu v Bhabhuti Prasad, AIR 1931 All 201; Ramappa v Yellappa, AIR 1928 Bom 140; Vribhukandas v Dayaram, (1908) ILR 32 Bom 32; Parshar v Ganu, (1903) 5 Bom LR 643. 82 The rule does not apply as between a landlord and a tenant, see Raja of Venkatagiri v Mukku Narasaya, AIR 1914 Mad 564; Darbari v Raneeganj Coal Association, AIR 1944 Pat 30; Madan Goapl v Sundaram, AIR 1940 Rang 172; Bastocella v Bandhu Beldar, AIR 1960 Pat 344; Gokulpathy v KRV Sarma, AIR 1972 Mad 54 [LNIND 1971 MAD 122];

Page 2 of 2 ABSOLUTE TRANSFER

Nundo Kumar v Banomali Gayan, (1902) ILR 29 Cal 871; Rajrup v Gopi, AIR 1925 All 261; Naina Pillai v Ramanathan, (1917) 33 Mad LJ 84; Buneshwar v Lal Bahadur, 51 IC 380. 83 Pandarasannadhi v Anantha Krishnaswami, AIR 1939 Mad 247 [LNIND 1938 MAD 397]; Perumal Gramani v Mahomad Kasim, 28 IC 840; Venkatappier v Ramaswami, (1919) Mad WN 548; Sidha Nath v Har Narian, AIR 1937 Oudh 446. See also Subba Rao v Veeranjaneyaswami, AIR 1930 Mad 298 [LNIND 1929 MAD 21]. 84 Sidha Nath v Har Narain, AIR 1937 Oudh 446. 85 Pandulal v G Daniel, AIR 1951 Ajm 16; Sidde Gowda v Nadakala, AIR 1952 Mys 117. 86 Pandiyan v Vellayappa, (1917) 33 Mad LJ 316. 87 Narayan Nanajee Gayadhani v Ganesh Trimbak Gayadhani, AIR 1926 Bom 599. 88 Mussamat Ram Kaur v Pratab Singh, (1919) PR 58; Ludha Mal v Jagan Nath, (1888) PR 123. 89 Chennapagada v Secretary of State, AIR 1925 Mad 963 [LNIND 1924 MAD 423]. Good faith required here does not mean more than an honest belief in the validity of the title; Even negligent belief will amount to honest belief, see Narayana Aiyar v Shankaranarayana Aiyar, 24 IC 940. Honest belief is not compatible with negligence or with a mistake of law, see Nanjappa v Peruma, (1909) Mad 530; 4 IC; Rama Aiyar v Narayanaswami Aiyar, AIR 1926 Mad 609 [LNIND 1925 MAD 446]; Shahabuddin v Wahid Bux, (1920) 14 Serv LR 12; Harilal Ranchhod v Gordhan Keshav, AIR 1927 Bom 611. 90 Durga Devi v Beni Prasad, AIR 2008 (NOC) 1619 (HP); Emerald Valley Estate Ltd v State of Kerala, (2000) 3 Ker LT 16. 1 Govardhan v Mukharai, AIR 1949 Ngp 465. 2 Nannu v Ramchunder, AIR 1931 All 277 FB. 3 Ponnia Pillai v Pannai, AIR 1947 Mad 282 [LNIND 1946 MAD 201]. 4 State of J&K v Ghulam Rasool, (1978) Kash LJ 260. 5 Raman Ittiyathiv Pappy Bhaskaran, AIR 1990 Ker 112; Veluswami v Bommachi, (1913) 25 Mad LJ 324. 6 Vasanthamma v Siddaverrappa, AIR 2011 Kar 54. 7 Ramaji v Manohar, AIR 1961 Bom 169 [LNIND 1959 BOM 127]; Haradhan v Bhagabati, (1914) ILR 41 Cal 852. 8 Davaramani v Pudda Bhinaka, (1915) Mad WN 148. 9 Onkar Mal v Secretary of State, (1920) 56 IC 813; see also Harnaman v Dasondi, (1920) 1 Lah 210. 10 Lalta Prasad v Bramhanand, AIR 1950 All 449 [LNIND 1950 ALL 15].

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IMPROVEMENTS Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

IMPROVEMENTS

Improvement means any work which adds to the market value of the property consistent with the purpose for which it was let out, which enhances the value of the property as a marketable subject. Improvement is not ascertained merely by the amount of money spent on the property, but on the enhancement of the value of the property. Therefore, the amount of expenditure incurred by the transferee11 alone is not the deciding factor. Mere repairs,12 putting a new staircase into an old house,13 manuring and levelling of agricultural lands,14 are not improvements but ordinary operations.

11 Kidarnath v Mathumal, (1913) 40 Cal 555 PC. 12 Bimal Chandra Nath v Manmatha Nath, AIR 1954 Cal 345 [LNIND 1954 CAL 28]; Meenatchi v Manicka, 24 IC 918. 13 Sidramappa v Sidappa, AIR 1929 Rang 230. 14 Mariappa Thevar v Kaliammal, AIR 1971 Mad 198 [LNIND 1970 MAD 267]; Sudala Muthu v Sankara, 24 IC 879.

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JOINT HINDU FAMILY Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

JOINT HINDU FAMILY

Due to the unique character of the Hindu joint family, the power of alienation of the property belonging to the joint family are vested with the karta, but he is empowered to alienate the same under certain specified circumstances only. If he exceeds his powers and sells the property for a purpose other than for what he is authorised, such alienation can be challenged by the coparceners. An alienee from the father and manager/karta of a joint Hindu family is entitled to the value of the improvements made by him, if the transfer is avoided later by the son.15 Similarly, where the guardian of a minor makes an unauthorised alienation of the property belonging to the minor, and the minor later avoids it and evicts the alienee, he would be under a legal obligation to either compensate the alienee for the improvements or may be required by him to sell the property to him at the market value.16 Where the successor–in–title of the last surviving coparceners of a Hindu joint family are divested by reason of a subsequent adoption, they are transferees who are entitled to get the benefit of this principle.17 The benefit is not available to a son governed by Dayabhaga family who makes improvements on the ancestral property,18 as no rights by birth are conferred in favour of the son under the Dayabhaga law. A purchaser from a Hindu widow,19 who is evicted by the reversioner,20 is also not entitled to the protection of this section, unless her estate is afterwards divested by an adoption,21 or the transfer is for a permitted purpose such as for the religious benefit of her husband.22

Value of Improvements

The evictor of a bona fide person in possession under an honest belief of his entitlement is under a legal obligation to compensate him for the improvements effected on the property but the value of improvements has to be assessed at the time of the eviction. While calculating the saleable value of the improved property, the amount actually spent on improvements is not decisive of the question.23

The remedies available with the person against the real owner, when he is evicted, are two in the alternative, first, he would be entitled to the costs of his improvements or he will be entitled to have the property sold to him at the then market price, thereof irrespective of the value of the improvements. But the choice of the alternatives is with the person entitled to be evicted.24 Valuation has to be made as on the date of the actual eviction and not on the date of the exercise of the option by the real owner.25 Valuation would not be the amount actually spent in making the improvements, but the extent to which the value of the property has been enhanced as a marketable subject,26 taking into account also the general rise in prices.27 In special circumstances a third remedy can be to allow him to remove all improvements made by him in the property.28

Crops

When, under the circumstances aforesaid, the transferee has planted or sown on property crops which are growing when he is evicted therefrom, he is entitled to such crops and to free ingress and egress to gather and carry them.29 It does not mean that till the crops are fully grown or carried away, the possessor of the property cannot be evicted. He would be evicted, but this rule grants him an access for a specified purpose, and he may be allowed by the real owner to look after the crops till they are fit for cutting and carrying away.

Page 2 of 2 JOINT HINDU FAMILY

The rule is necessary in view of the general principle that the right to natural vegetation passes with the transfer of the property in favour of the transferee, though growing crops are even otherwise in light of section 3, movable property and the property in them does not necessarily pass with the land. The very purpose for which they are grown would be frustrated if the person evicted is asked to carry them away, whatever their stage of growth may be. Crops need regular care and a particular time to grow and reach a stage when they need to be cut. Therefore, the evicted person is allowed free ingress and egress to look after the crops and to cut them when they are ready and carry them away.

15 Lachmiprosad v Lachminarayan, AIR 1928 All 41. 16 Kasim v Ratnamanika, AIR 1938 Mad 677; Durgozi v Fakir Sahib, (1907) ILR 30 Mad 197, a case of guardian appointed under Muslim law; Harilal Ranchhod v Gordhan Keshav, AIR 1927 Bom 611. 17 Mahadeo v Rameshwar, AIR 1968 Bom 323 [LNIND 1967 BOM 47]. 18 Dhanna Das v Amulyadhan, (1906) 33 All 1119. 19 Prior to the passing of the Hindu Succession Act, 1956. 20 Meenatchi v Manicka, 24 IC 918. 21 American Baptist Mission v Amalanadhuni, 48 IC 859; Gangadhar v Rachappa, AIR 1929 Bom 246. 22 Panachand v Manohar Lal, (1917) 42 Bom 136. 23 Narayan v Basavarappa, AIR 1956 SC 727; Kedarnath v Mathumal, 40 Cal 555 PC. 24 Narayan v Ganesh, 28 Bom LR 993; Nagaratanama v Ramayya, AIR 1963 AP 177 [LNIND 1962 AP 25]. 25 Narayana Rao v Basarayappa, AIR 1956 SC 727. 26 Kidar Nath v Mathmal, (1913) ILR 40 Cal 555; Kunhi v Kunkan, (1896) ILR 19 Mad 384; Gangadhar v Rachappa, AIR 1929 Bom 246. 27 Shripati Raoji v Vishwanath, AIR 1955 Bom 457. 28 Brijgopal Lumani v Mothey Anja Ratna Rajkumar, AIR 2010 (NOC) 570 (AP). 29 The transferee has a right to carry away the crops after eviction, see Deo Dai v Ram Autar, (1886) ILR 8 All 502. This is in contrast to the ordinary rule that the right to the growing crops pass with the sale of the land and when a mortgagee in possession brings the land to sale, he cannot recover the value of the crops he has grown from the purchaser, see Ramalinga v Samiappa, (1890) ILR 13 Mad 15.

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TRANSFER OF PROPERTY PENDING SUIT RELATING THERETO Poonam Pradhan Saxena: Property Law, 3rd ed Dr Poonam Pradhan Saxena

Poonam Pradhan Saxena: Property Law, 3rd ed > Poonam Pradhan Saxena: Property Law, 3rd ed > Chapter 2 Of Transfers of Property by Act of Parties > (B) Transfer of Immovable Property

Chapter 2 Of Transfers of Property by Act of Parties

(B) Transfer of Immovable Property

TRANSFER OF PROPERTY PENDING SUIT RELATING THERETO

[s 52] Transfer of property pending suit relating thereto.—During the pendency in any Court having authority within the limits of India excluding the State of Jammu and Kashmir or established beyond such limits by the Central Government of any suit or proceeding which is not collusive and in which any right to immoveable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any other party thereto under any decree or order which may be made therein, except under the authority of the Court and on such terms as it may impose.

Explanation.—For the purposes of this section, the pendency of a suit or proceeding shall be deemed to commence from the date of the presentation of the plaint or the institution of the proceeding in a Court of competent jurisdiction, and to continue until the suit or proceeding has been disposed of by a final decree or order and complete satisfaction or discharge of such decree or order has been obtained, or has become unobtainable by reason of the expiration of any period of limitation prescribed for the execution thereof by any law for the time being in force.

In dispute between parties with respect to a specific immovable property, usually the decision of the court binds only the specific parties involved, and is not of a general binding nature. For instance, a person A is in peaceful possession of the property for a period of 10 years. B encroaches upon this land by constructing a temporary hut and starts living on it. A files a suit against him in a court of law and gets a verdict in his favour that directs B to remove the encroachments declaring him to be a trespasser. This decision is binding on B but not on any other person who may encroach upon the property in future. In such a case A would have to file a fresh petition for evicting him. This primary rule of applicability of the decision of the court only on the parties, may, in certain cases, frustrate the very purpose of justice.

Similarly, A is the owner of a house and permits B to stay in it. B without the consent of A sells it to C. A files a suit against B for reclaiming the possession and a declaration of title. Soon after the institution of the suit, B delivers the property to C. A fails to implicate C as a party. The suit is decided in favour of A, but if it is binding on only B, then A would have to file a fresh suit against C, who currently had the possession of the property for reclaiming the possession. Soon after the institution of suit against C, C sells it further to D. A again wins the case but as the possession is with D, he would have to file a fresh case against D for taking back the possession. If during the pendency of this third litigation, D also sells the property to E, then after the completion of this case, A would have to proceed against E. This chain may go on indefinitely and the very purpose of justice to be accorded peacefully through the medium of the courts will be frustrated. This is why the present section incorporates a rule that makes all alienation of the property that is the subject matter of a dispute, pending in a court, awaiting disposal, subject to the decision of this court. In other words, whosoever takes the property by a transfer during the pendency of the litigation, would be automatically bound by the decision of the court and it would be enforceable as against him, irrespective of whether he was formally joined in the litigation as a party or not.30

Taking another example, A is the owner of a house and permits B to stay in it. B starts treating the property as if it belongs to him, and refuses to allow A to enter the premises. A files a suit against B for recovering the possession and a declaration of title. Soon after the institution of suit B sells the property to C. A fails to implicate C as a party. The suit is decided in favour of A, but due to the application of section 52, it is binding on not only B but on C as

Page 2 of 3 TRANSFER OF PROPERTY PENDING SUIT RELATING THERETO well, as the transfer of property at the instance of B was during the pendency of this litigation. A would not have to file a fresh suit against C as the decision of the court would be enforceable as against C also.

The section provides adequate protection to the parties from a transfer pendente lite. The transferee is neither required to be impleaded nor claim impleadment. He cannot even resist execution proceedings. In light of such protective provisions there is no need for a party to the litigation to seek an injunction against the other party restraining him from alienating the property. Such injunction would in fact be superfluous and would normally be denied by the court unless the plaintiff demonstrates that the rule of lis pendens is inadequate to protect his interests.31

Lis Pendens

“Lis” means an action or a suit. “Pendens” is the present participle of Pendo, meaning continuing or pending, and the doctrine of lis pendens may be defined as the jurisdiction, power, or control that courts have, during the pendency of an action over the property involved therein.32

The principle contained in this section is based on the English common law maxim ut lite pendente nihil innovator i.e., during litigation no new rights should be introduced.33 The maxim is a rule based on expediency i.e., the necessity for final adjudication,34 and rests upon an equitable and just foundation that it will be impossible to bring an action or suit to a successful culmination if alienations are permitted to prevail.35 It is intended to protect the parties to litigation against alienations by their opponent during the pendency of the suit and for that it is necessary as also for the administration of justice that the decision of a court in a suit should be binding not only on the litigating parties but on those who derive title pendente lite. The provision does not annul the conveyance or the transfer otherwise, but renders it subservient to the rights of the parties to litigation,36 and subject to the decree/judgment that may be passed in the suit. Any suit property while suit (not a collusive suit) is pending in a Court of law cannot be transferred therefore unless the court concerned has permitted the transfer pendente lite7. The Court while granting permission may authorize transfer pending the suit upon such terms as it may deem just.37

The rule contained in section 52 is also called the rule of lis pendens and makes transfers pendente lite, subject to the decision of the court. As a principle of equity, justice and good conscience, this rule applies even where the Act does not apply.38 The importance of this rule was explained by Turner LJ as follows:39

It is…a doctrine common to the courts both at law and Equity, and rests…upon this foundation that it would plainly be impossible that any action or suit could be brought to a successful termination, if alienation pendente lite were permitted to prevail. The plaintiff would be liable in every case to be defeated by the defendant’s alienating before the judgment or decree, and would be driven to commence his proceedings de novo subject again to be defeated by the same course of proceedings.

Section 52 protects the right of suitor to any immovable property, which is subject matter of issue in the court. It forewarns the creation of third party’s interest in the said property, which has the effect of defeating the right of a person in whose favour decree or order is passed by the court of competent jurisdiction. It in essence forbids transferring rights in third party during the pendency of litigation. If any decree or order is passed in such proceedings, any transfer of right during inter regnum shall be determined as non est in the eyes of law.40It is based on the principle that the person purchasing property from the judgment debtor during the pendency of the suit has no independent right to property to resist, obstruct or object execution of a decree.41

The basis of this doctrine can be explained in the following words:42

According to some authorities, a pending suit must be regarded as notice to the entire world and pursuant to this view it is argued that any person who deals with property involved therein, having presumably known what he was doing, must have acted in bad faith and is therefore properly bound by the judgment rendered. Other authorities however, take the position that the doctrine is not founded on any theory of notice at all, but is based upon the necessity, as a matter of public policy, of preventing litigant from disposing of property in controversy in such a manner as to interfere with execution of the court’s decree. Without this principle, it has been judicially declared, all suits for specific property might be rendered abortive by successive alienations of the property in suit so that at the end of it another suit would have to be commenced and after that another, making it almost impractical for a man ever to make his rights available by a resort to the courts of justice.

Page 3 of 3 TRANSFER OF PROPERTY PENDING SUIT RELATING THERETO

Ingredients of Doctrine of Lis Pendens

The basic ingredients of the doctrine of lis pendens are:43

(i) A litigation should be pending in a court of competent jurisdiction; (ii) The suit must be relating to a specific immovable property; (iii) The suit should not be collusive; (iv) The suit should relate to a right in this specific property; (v) Property should not be transferred or otherwise dealt with; (vi) By any party to the suit; (vii) So as to affect the rights of any party thereto; (viii) Till the final disposal of the case.

30 Haji Abdul Mateen v Sheikh Haji Firozuddin, AIR 2014 Del 111 [LNIND 2014 DEL 960]. 31 Kachhi Properties, Satara v Ganpatrao Shankarao Kadam, AIR 2011 (NOC) 185 (Bom). 32 Quoted in Govinda Pillai Gopala Pillai v Aiyyappan Krishnan, AIR 1975 Ker 10. 33 Amit Kumar Shah v Farida Khatoon, AIR 2005 SC 2209 [LNIND 2005 SC 369]; (2005) 11 SCC 403 [LNIND 2005 SC 369]; Bellamy v Sabine, (1857) 1 De G & J 566, 578. 34 Haji Abdul Mateen v Sheikh Haji Firozuddin, AIR 2014 Del 111 [LNIND 2014 DEL 960]; M T Kempegowda v GK Ramesh Kumar, (2011) 3 Kant LJ 59 : (2011) 1 AIR Kant R 786. 35 KN Aswathnarayana Setty v State of Karnataka, AIR 2014 SC 27 [LNINDU 2013 SC 56]: 2013 (14) Scale 565 [LNIND 2013 SC 1032]. 36 Thomson Press (India) Ltd v Nanak Builders & Investors Pvt Ltd (2013) 5 SCC 397 [LNIND 2013 SC 1232]: AIR 2013 SC 2389 [LNIND 2013 SC 1232]. 37 Harsh Vardhan Singh v Ranveer Singh, 2010 SCC OnLine Raj 2303; Sarita Gopalkumar Chand v Madgy, (2010) 5 AIR Bom R (NOC 489) 139; Sanjay Passi v Iqbal Chand Khurana, (2010) 117 DRJ 209 (Del). 38 Lov Raj Kumar v Daya Shanker, AIR 1986 Del 364 [LNIND 1985 DEL 374]. 39 Bellamy v Sabine, (1857) 1 De G & J 566, 584. 40 Sunder Lal Bhatia v Charan Lal Bhatia, AIR 2010 J&K 16 at 18. 41 Praveen Kumar v Baljinder Kaur, AIR 2010 P&H 40; Usha Sinha v Dina Ram, AIR 2008 SC 1997 [LNIND 2008 SC 704]; (2008) 7 SCC 144 [LNIND 2008 SC 704]. 42 Quoted in Govinda Pillai v Aiyyapan, AIR 1957 Ker 10 [LNIND 1956 KER 120], para 6; see also Bhup Narain v Nawab Singh, AIR 1957 Pat 729; see also Basappa v Bhimangowda, AIR 1928 Bom 65. 43 For necessary ingredients for the application of the doctrine, see Hiranyabhusan v Gouri Dutt, AIR 1943 Cal 227.

End of Document