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Some important provisions of the Transper of Property Act, 1882

[In this article some of the important provisions of the Transfer of Property Act, 1882 which are part of the syllabi for Departmental Examination for Inspector of Income Tax and Income Tax Officer are discussed. As the syllabi containing the provisions of the Act is about 9000 words, to achieve simplicity some finer aspects are removed to give a firsthand account of the provisions of the Act which are important part of the said syllabi. In case of any doubt please refer to the Act]

Transfer of property defined
"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 one or more other living persons. Living person includes a company/association/body of individuals. [Refer section 5]

What may be transferred and what cannot 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. Following cannot be transferred:
(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. (b) A mere right of re-entry for breach of a condition subsequent except the owner of the property affected thereby.(c) An easement apart from the dominant heritage (d) An interest in property restricted in its enjoyment to the owner personally (dd) A right to future maintenance, in whatsoever manner arising, secured or determined, (e) A mere right to sue (f) A public office , 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 the government and political pensions (h) No transfer can be made (1) insofar 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. [Refer section 6]

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. [Refer section 7]

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

Improvements made by bona fide holders under defective titles
When the transferee of immovable 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 (i) to have the value, at the time of the eviction, of the improvement estimated and paid or secured to the transferee, or (ii) to sell interest in the property to the transferee at the then market value thereof, irrespective of the value of such improvement. When 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. [Refer section 51]

Part performance
Where any person contracts to transfer for consideration any immovable property by writing signed by him and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract and the transferee has performed or is willing to perform his part of the contract  then the contract though required to be registered has not been registered, or, where there is an instrument of transfer, that the transfer has not been completed the transferor shall be debarred from enforcing against the transferee any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract. [Refer section 53A]

Sale defined
Sale is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.
Sale how made: Such transfer, in the case of tangible immovable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument. In the case of tangible immovable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property. Delivery of tangible immovable property takes place when the seller places the buyer in possession of the property.

Contract for sale: A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property. [Refer section 54]

Mortgage, mortgagor, mortgagee, mortgage-money and mortgaged defined.
(a) A mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured for the time being are called the mortgage-money, and the instrument (if any) by which the transfer is effected is called a mortgage-deed.

(b) Simple mortgage- Where, without delivering possession of the mortgaged property, the mortgagor binds himself personally to pay the mortgage-money, and agrees that, in the event of his failing to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property to be sold and the proceeds of sale to be applied in payment of the mortgage-money, the transaction is called a simple mortgage and the mortgagee a simple mortgagee.

(c) Mortgage by conditional sale- Where, the mortgagor ostensibly sells the mortgaged property- on condition that:
(i) on default of payment of the mortgage-money on a certain date the sale shall become absolute, or
(ii) on such payment being made the sale shall become void, or
(iii) on such payment being made the buyer shall transfer the property to the seller,
the transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale. However the transaction shall not be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale.


(d) Usufructuary mortgage-Where the mortgagor delivers possession or binds himself to deliver possession of the mortgaged property to the mortgagee, and authorises him to retain such possession until payment of the mortgage-money, and to receive the rents and profits accruing from the property or any part of such rents and profits and to appropriate the same in lieu of interest or in payment of the mortgage-money, or partly in lieu of interest or partly in payment of the mortgage-money, the transaction is called a usufructuary mortgage and the mortgagee a usufructuary mortgagee.

(e) English mortgage-Where the mortgagor binds himself to repay the mortgage-money on a certain date, and transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso that he will re-transfer it to the mortgagor upon payment of the mortgage-money as agreed, the transaction is called an English mortgage.

(f) Mortgage by deposit of title-deeds-Where a person in any of the following towns, namely, the towns of Calcutta, Madras, and Bombay, and in any other specified town delivers to a creditor, documents of title to immovable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title-deeds.

(g) Anomalous mortgage-A mortgage which is not a simple mortgage, a mortgage by conditional sale, a usufructuary mortgage, an English mortgage or a mortgage by deposit of title-deeds within the meaning of this section is called an anomalous mortgage. . [Refer section 58]

Charges
Where immovable property of one person is by act of parties or operation of law made security for the payment of money to another and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property and all the provisions which apply to a simple mortgage shall apply to such charge. However this section shall not apply to the charge of a trustee on the trust-property for expenses properly incurred in the execution of his trust, and, no charge shall be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of the charge. [Refer section 100]

 Lease defined
A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent . [Refer section 105]

Gift defined
"Gift" is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee. Such acceptance must be made during the lifetime of the donor and while he is still capable of giving.If the donee dies before acceptance, the gift is void. . [Refer section 122]

Transfer how effected
If gift relates to immovable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses. If gift relates to movable property the transfer may be effected either by a registered instrument signed as aforesaid or by delivery same as goods sold are delivered. Where a gift comprises both existing and future property then future property is void. [Refer sections 123 and 124]

Gift to several of whom one does not accept
A gift of a thing to two or more donees, of whom one does not accept it, is void as to the interest which he would have taken had he accepted. [Refer section 125]

When gift may be suspended or revoked
The donor and donee may agree that on the happening of any specified event which does not depend on the will of the donor a gift shall be suspended or revoked; but a gift which the parties agree shall be revocable wholly or in part, at the mere will of the donor, is void wholly or in part. A gift may also be revoked in any of the cases in which, if it were a contract, it might be rescinded. Save as aforesaid, a gift cannot be revoked. [Refer section 126]

Onerous gifts
Where a gift in the form of a single transfer to the same person of several things of which one is, and the others are not burdened by an obligation, the donee can take nothing by the gift unless he accepts it fully. Where a gift is in the form of two or more separate and independent transfers to the same person of several things, the donee is at liberty to accept one of them and refuse the others, although the former may be beneficial and the latter onerous. A donee not competent to contract but accepting property burdened by any obligation is not bound by his acceptance. Where after becoming competent to contract and being aware of the obligation, he retains the property given, he becomes so bound. . [Refer section 127]


Universal donee
Where a gift consists of the donor's whole property, the donee is personally liable for all the debts due by and liabilities of the donor at the time of the gift to the extent of the property comprised therein. [Refer section 128]

Saving of donations mortis causa and Mohammedan Law
Chapter VII (of Gifts) shall not apply to gifts of moveable property made in contemplation of death, or to any rule of Mohammedan law. [Refer section 129]

Transfer of actionable claim
(1) The transfer of an actionable claim shall be effected only by the execution of an instrument in writing signed by the transferor shall be complete and effectual upon the execution of such instruments, and thereupon all the rights and remedies of the transferor shall vest in the transferee, whether such notice of the transfer as is hereinafter provided be given or not. Provided that every dealing with the debtor have been entitled to recover or enforce such debt or other actionable claim, shall be valid as against such transfer.
(2) The transferee of an actionable claim may, upon the execution of such instrument of transfer, sue in his own name without obtaining the transferor's consent to such suit or proceeding and without making him a party thereto. This section shall not apply to the transfer of a marine or fire policy of insurance or affects the provisions of section 38 of the Insurance Act, 1938 (4 of 1938). [Refer section 130]

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