Definition of Transfer of Property

What is Transfer of Property?

Definition of Transfer of Property: – Transfer of property is an act by which a living person transfers the property in present or in future to one or more living persons or to himself. The Transfer of Property Act 1882 is an Indian legislation which regulates the transfer of property in India. Transfer of Property is defined under section 5 of the act.

According to this section, 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 and other living persons. The phrase “living person” includes a company or association or body of individuals, whether incorporated or not, but nothing in this section shall affect any law for the time being in force relating to or by companies, associations or bodies of individuals.

Definition of Transfer of Property

What is the purpose of transfer of property act?

The purpose of transfer of property act is to define and amend the law relating to the transfer of property by the act of the parties and not by the operation of law. The transfer of property is a contract, so all requirements have to be met to constitute a valid contract.

Living Person: – In this section ‘ living person’ included “a company or association or body of individuals whether it is incorporated or not”, but nothing should herein contain shall affect any law for the time being in force related to companies act.

Property: – Word ‘Property’ has not been defined in the act, but it has a very broad meaning and it also includes properties of all description. It includes both movable property (books, water bottles, etc.) and immovable property (ownership, copyrights, etc.)

Transfer: – Word ‘Transfer’ also has a very wide meaning. A transfer can be both of all the rights and interests in the property or transfer of one or more right in the property.

What are the essentials of transfer of property?

The essentials of transfer of property are as follows: –

  1. Transfer must be between Two or More Living Persons (Section 5)
    1. The transfer must be inter vivos. Therefore transfer can only be possible between living persons and there is no transfer of property to a person who is not in existence. The living person including company or Association or body of individuals whether incorporated or not.
  1. The Property must be Transferable (Section 6)
    1. Property of any kind may be transferred, except mentioned in Section 6 (a) to (i) cannot be transferred. Therefore those properties described in the clauses (a) to (i) of Section 6 cannot be transferred. For Example: – a public office cannot be transferred, pensioners allowed to government officers and political pension cannot be transferred, etc.
  1. The Transfer must not be: – 
    1. The property cannot be transferred if it is opposed to the nature of interest affected thereby Section 6 (h);
    2. for unlawful object and consideration as per provision of Section 23 of the Indian Contract Act 1872, which provides a consideration or object is unlawful if: –    
      • It is Forbidden by law, or
      • It is of such a nature that it defeats the provision of any law, or
      • is fraudulent,  or
      • it involves or implies injury to the person or property of another or
      • the court regards it as immoral or opposed to public policy.
    3. To a person legally disqualified to be a transferee. As per Section 136 of Transfer of Property Act, a Judge, a legal practitioner or an officer who is connected with Court of Justice are disqualified from purchasing in actionable claim. This prohibition is only with respect to actionable claim. It does not apply to any other kind of property.
  1. Persons Competent to Transfer (Section 7)
    1. “The person who is allowed to sign the contract is also allowed to transfer a property and after that he will be allowed to enjoy the property to the fullest and legally permitted and prescribed for the time being.”
    2. Here are some of the individuals who may be enabled to transfer: – The capable, sound mind of the contract, the transferor should be entitled to the transferable property.

What may be Transferred?

Section 6 of the Transfer of Property Act, 1882 discusses the property which may be transferred. The section states that property of any kind may be transferred. However, Clauses (a) to (i) of section 6 mention the properties which cannot be transferred.

  1. Clause (a) describes spes successionis cannot be transferred. This clause states that the transfer of a bare chance of a person to get a property is prohibited under this section. For example, Arun expecting that Chandini, his aunt, who had no issues, would bequeath her house worth Rs. 50,000 transfers it to Bhushan. The transfer is invalid as it is a mere matter of chance of receiving the property on the part of Arun. Thus, it is invalid.
  1. Clause (b) mentions that the right of re-entry cannot be transferred. The right to re-entry implies a right to resume possession of the land which has been given to someone else for a certain time. The section mentions that the right of re-entry cannot be transferred by itself apart from the land. For example, ‘A’ grants a lease of a plot of land to ‘B’ with the condition that if shall build upon it, he would re-enter — transfers to ‘C’ his right of re-entering in case of breach of the covenant not to build. The transfer is invalid.
  1. Clause (c) mentions that easement cannot be transferred. An easement is a right to use or restrict the use of land of another in some way. For example, the right of way or right of light cannot be transferred.
  1. Clause (d) mentions that an interest restricted in its enjoyment of himself cannot be transferred. For instance, if a house is lent to a man for his personal use, he cannot transfer his right of enjoyment to another. Clause (dd) restricts the transfer of the right to maintenance. Such a right cannot be transferred as such right is for the personal benefit of the concerned person.
  1. Clause (e) provides that mere right to sue cannot be transferred. The prohibition has been imposed as the right to sue is a right which is personal and exclusive to the aggrieved party. For example, a person cannot transfer his right to sue for the damages suffered by him due to breach of contract by the other party.
  1. Clause (f) forbids the transfer of public offices. The philosophy behind the prohibition is that such a transfer may be opposed to public policy in general. A person is eligible to hold a public office on the grounds of his personal qualities, and such qualities cannot be transferred. Thus, the transfer of public offices is prohibited under this section.
  1. Clause (g) of section 6 provides that pensions cannot be transferred. Pensions allowed to military and civil pensioners of government and political pensions cannot be transferred. In simpler terms, a pension may be understood as any periodical allowance which may be granted in regard to any right of office but only on account of the past services offered by the pensioner.
  1. Clause (h) of this section is titled as nature of nature. This clause prohibits transfer which will oppose the interest affected thereby. The transfer is also forbidden if the object or consideration of the transfer is unlawful. Moreover, a transfer by a person who is legally disqualified from being a transferee is also forbidden.
  1. Clause (i) of section 6 was inserted by the Amendment Act of 1885. The clause declares that certain interests are untransferable and inalienable. For example, a farmer of an estate, in respect of which default has been made in paying the revenue, cannot assign his interest in the holding.

Thus, section 6 containing clauses (a) to (i) specifically mention that certain things cannot be transferred. Such a transfer if undertaken would be invalid in the eyes of the law in India.

Person competent to Transfer

Section 7 enumerates the concept of competency of persons who may be allowed to transfer property. According to this section, a person is allowed to transfer property if he satisfies two conditions. The first condition is that the person must be competent to enter into contracts with other persons. The second condition is that the person who is willing to transfer property must have title to the property or authority to transfer it if he is not the real owner of the property.

An important point to be noted in this regard is the conditions mentioned in section 11 of the Indian Contract Act, which specifies the category of persons who may be competent to transfer. In the section, it is stated that the person must have attained majority, he must be of sound mind, and he must not be disqualified to enter into contracts by any other law applicable in India.

What are the kinds of transfer under Transfer of Property Act?

Kinds of transfer under Transfer of Property Act are as follows: –

  1. Sale: – A sale is an out-and-out transfer of property.
  2. Mortgage: – In a mortgage, there is a transfer of a limited interest in the property.
  3. Lease: – A lease is a transfer of a right to enjoy an immovable property for a specified time or in perpetuity.
  4. Exchange: – Exchange is like a sale but there is a difference in both. As in sale, the consideration is money, while in exchange consideration can be any other thing other than money. In gift, there is no consideration.

Case laws under definition of transfer of property

  1. Harish Chandra vs. Chandra Sekhar AIR 1977, All 44

In this case, the court held that if the transfer deed states that the transferor was the owner of the property and it shows the intention to transfer his title and it was adequately conveyed. So, it would amount to transfer.

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