PROPERTY LAW –DETAILED TOPICS

1) Concept of property

2) Movables Property v. Immovable Property, Things attached to the earth, Doctrine of

Fixture
Smt. Shantabai v. State of Bombay AIR 1958 SC 532
Duncans Industries Ltd. v. State of U.P. (2000) 1 SCC 633

3) Attestation
Kumar Harish Chandra Singh Deo v. Bansidhar Mohanty AIR 1965 SC 1738.
M.L. Abdul Jabbar Sahib v. H. Venkata Sastri AIR 1969 SC 1147.

4) Notice
Lloyds Bank Ltd. v. P. E. Guzder and Co. Ltd.
Ahmedabad Municipal Corporation v. Haji Abdul Gafur Haji Hussenbhai AIR 1971 SC 1201
Ram Niwas v. Bano (2000) 6 SCC 685

5) Meaning of Transfer, who is Competent to transfer? what is the mode of transfer?

V.N. Sarin v. Ajit Kumar Poplai AIR 1966 SC 432

6) Comparative analysis of Section(s) 6(a) and 43, Concept of spes-successionis, Feeding the
grant by estoppel
Jumma Masjid, Mercara v. Kodimaniandra Deviah
Hardev Singh v. Gurmail Singh (Dead) through LRs
Kartar Singh (Dead) by LRs. & Ors. v. Harbans Kaur

7) Condition restraining transfer – Section 10,11 and 12

Zoroastrian Coop. Housing Society Ltd. v. District Registrar, Coop. Societies (Urban) (2005) 5
SCC 632
Tulk v. Moxhay (1843-60) All ER Rep. 9.

8) Transfer to Unborn Person

Girish Dutt v Dutta Din AIR 1934 Oudh 35

9) Rule against Perpetuity

Ram Newaz v. Nankoo AIR 1926 All 283
Ram Baran Prasad v. Ram Mohit Hazra AIR 1967 SC 744
R. Kempraj v. Burton Son and Co. AIR 1970 SC 1872
10) Vested Interest and Contingent Interest
Rajes Kanta Roy v. Shanti Debi AIR 1957 SC 255.
Smt. Rukhamanbai v. Shivram & Ors. AIR 1981 SC 1881.

11) Transfer by ostensible owner, Section 40, Section 41

Benami Transactions (Prohibition) Act, 1988
Exceptions
Ram Baran Prasad v. Ram Mohit Hazra & Ors. AIR 1967 SC 744
State of Punjab v. Surjit Kaur (Dead) Through LRs
Ram Coomar v. Macqueen (1872) 11 Beng LR 46.

12) Rule of Election; Mode of Election; Presumption of Election – Section 22-34

Nagubai Ammal & Ors. v. B. Shama Rao & Ors
Cauvery Coffee Traders, Mangalore v. Hornor Resources (International) Company Ltd.

12) Concept of Lis-Pendens; Lis Pendens between co-defendant; When does the suit
commence?
Bellamy v. Sabine
Faiyaz Hussain Khan v. Prag Narain

14) Whether Section 52 makes the transaction void? Involuntary Alienations and the
applicability of Section 52
T. G. Ashok Kumar v. Govindammal & Anr.
Jayaram Mudaliar v. Ayyaswami and Ors. 1973 SCR139
Supreme General Films Exchange Ltd. v. Brijnath Singh AIR 1975 SC 1810

18) Fraudulent Transfer

Voidable at the option of the creditor Section 53(1) & subsequent transferee Section 53 (2)
Musahar Sahu v. Hakim Lal
Ramaswami Chettiar v. Malappa Reddiar
Chogmal Bhandari v. Deputy Commercial Tax Officer AIR 1976 SC 656

19) Section 53-A

Nature of right and the concept that this section can be used as a shield only but not as a sword
Suraj Lamps P. Ltd. v. State of Haryana (2012) 1 SCC 656
Raheja Universal v. NRC Ltd. & Ors. AIR 2012 SC 1440
Sardar Govind Rao v. Devi Sahai & Ors. AIR 1982 SC 989
20)

21) Actionable claim

22) Types of Mortgages; Right of Redemption; Clog on Redemption

Seth Ganga Dhar v. Shankar Lal (1959) SCR 509)
Pomal Kanji Govinji v. Vrajlal (1989) 1 SCC 458
Allokam Peddabbayya v. Allahabad (2017 SCC Online SC 671)

23) Section (s) 61, 67-A

Difference between the theory of Consolidation and the theory against consolidation

24) Section(s) 62-67

Bibi Fatima & Ors v. Ahmed Hussain & Ors. Civil Appeal No.7023 of 2012

25) Section(s) 68-69A

26) Section(s) 70-73 and 76

27) Section 77-79

28) Theory of Contribution and Section 83 and 84 (briefly)

29) Persons who may Redeem; Theory of Subrogation; Legal Subrogation; Conventional
Subrogation

30) Prohibition of Tacking

Theory of Redemption up and Foreclosure down
31) Charge
No Merger in case of subsequent encumbrances

32) Section 54
Drafting of the Sale deed
Suraj Lamp & Industries Pvt Ltd. v. State of Haryana & Anr. (2012) 1 SCC 656
Rambaran Prasad v. Ram Mohit Hazra [1967]1SCR293
Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra (Dead) Through LRs 2004 8 SCC 614
33) Right and Liabilities of Buyer and Seller
Marshalling (Section(s) 56 and 81
Aldrich v. Cooper

34) Section 57
J.P Builders v. A Ramadas Roa (2011) 1 SCC 429

35) Lease
Types
Difference between Tenant by Sufferance and Tenant at Will
Difference between Lease and License
Associated Hotels of India v. R. N. Kapoor AIR 1989 SC 1262
Delta Int. Ltd. v. Shyam Sunder Ganeriwalla AIR 1999SC 2607

36) Section 106 and the concept of Tenant by Holding over

37) Section(s) 107-110, Section(s) 111-117

38) Section(s) 122-129

Renikuntla Rajamma (D) by LRs v. K. Sarwanamma (2014) 9 SCC 445
 CONCEPT OF PROPERTY

Transfer of property other than agricultural land 1 has been kept in the Concurrent list. Constitution in
the 7th schedule, entry 6 of List III, empowers both Centre and State to make laws in relation to the
Transfer of Property.

Transfer of Property Act, 1882 aim to amend the law relating to Transfer of Property by an act of
Parties. Transfer of property through other means or by operation of law, such as will, court auction,
forfeiture, acquisition, and due to insolvency proceedings will not fall within the purview of TPA.

The TPA is not consolidated or complete legislation. Hence, whenever TPA is silent at some point,
courts may apply equity, justice and good conscience or may decide a case with the help of English
cases.

The Act consist of 8 chapters as follows:

1) Chapter 1 – Preliminary chapter;

2) Chapter 2 – Transfer of Property by Act of Parties. In case of conflict between Chapter 2

and Muslim Law, Muslim Law will prevail. If there is no conflict, Muslims would be subject
to the provisions of this chapter. Notable in this part are the rules concerning Gifts and
Settlement of Property in perpetuity. E.g., transfer through gifts is not valid unless through
written, registered and attested by two witnesses, but in Muslims, it can be oral, immediate
transfer is not required. Hence latter rule will be applicable in the case of gifts between
Muslims.

3) Chapter 3 – Sale of Immovable Property

4) Chapter 4 – Mortgages of Immovable Property and charges

5) Chapter 5 – Lease of Immovable property

6) Chapter 6 – Exchanges

7) Chapter 7 – Gifts

8) Chapter 8 – Transfer of Actionable Claims

Interests in Property

An owner has three basic rights in property, i.e., a right of ownership, right to possess and enjoy the
property and an exclusive right to alienate the property in any manner that he likes. Absolute
ownership is therefore an aggregate of component rights.

1
State is empowered to make laws in regard to agriculture land under entry 18 of List III of 7 th schedule. State can
make special provisions, registration, prohibiting persons from alienating such land.
Movable Property v. Immovable Property

The distinction between Movable and Immovable property is required because the movable property
in some cases can be transferred by mere delivery of the possession of the goods but transfer of
immovable property requires specific procedure of transfer. The transfer of immovable property must
take place with the help of a written documents that is properly executed by the transferor and the
execution should be property attested and registered. Moreover, the law of limitation specifies
different time periods within which a civil suit can be filed. In case of immovable property, it is
generally 12 years but in case of movable, the suit must ordinarily be filed within a period of 3 years.

English meaning of movable property is what can be moved and what cannot be moved is immovable
property. Indian legislature has accorded the term with a multitude of elements. It has been used in
an array of senses. Hence the legislative meaning of the term is different from what has been
understood in the general sense. Unlike any other legislation, the consolidated definition of the term
‘movable property’ and ‘immovable property’ has not been given under the Act. Section 3 of the TPA
only provides that ‘immovable property does not include standing timber, growing crops, or grass’.

The General Clauses Act, 1897 u/s 3 (26) explains it as follows:

“Immovable property” to include land, benefits to arise out of the land, and things attached
to the earth, or permanently fastened to anything attached to the earth.”

Neither the TPA nor the General Clauses Act provides an exhaustive definition. These definitions
just denote what is to be included or excluded from the purview of immovable property.

Clubbing the definitions, the immovable property can be defined as permanently affixed to the earth,
like land, trees that do not include standing timber, growing crops, or grass. It also includes things
permanently fastened to anything attached to the earth.

Moreover, section 2(6) of the Registration Act, 1908 also provides for the definition of the term
immovable property as follows:

“Immoveable Property includes lands, buildings, hereditary allowances, rights to ways,

lights, ferries, fisheries, any profit that arises out of the land, and any other thing that is
attached to the earth, or permanently fastened to anything which is attached to the earth, but
not standing timber, growing crops, nor grass.”

The last expression ‘things attached to earth’ has again been explained in section 3 of TPA as things
which are rooted in the earth, such as trees and shrubs, things that are embedded in the 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, the immovable property includes lands, benefits arising out of the land, things rooted in the
earth, things embedded in the 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.

Standing Timber v. Timber Tree

Fruit-bearing trees, such as a mahua tree, a date tree, a mango tree and a jack fruit tree may fall under
both the category depending upon the intention of the parties. If the purpose is to keep it for a long
duration for fruits, this would be a Timber tree. Although, if it's in a perfect state to cut and this has
been decided that this will be cut soon, this will become standing timber.

Wood suitable for building houses, bridges, ships etc. e.g., shishum, babul, bamboo, kail tree etc.
usually considered as standing timber, if it has grown to a perfect state to cut and this has been decided
that this will be cut in a short time. The document relating to the transfer of standing timber does not
require registration, even if at the time of sale, it was rooted to the earth. But if a wooden tree such as
shishum, babul, bamboo, or kail tree has not grown to a perfect state and was transferred to the
transferee for 12 years long time, this would be considered a transfer of immovable property and
hence registration is required.
Also read SPKN Subramanium Firm v. M. Chidambaram AIR 1940 Mad. 527.
 ATTESTATION

At the time of enacting TPA, definition of the term attested was not given under the Act. Indian
Succession Act, 1865 definition was taken into consideration for deciding any dispute relating to
attestation. It implies that for a valid attention, the attesting witness could either be present at the time
of executing the deed, or if not present at the time when transferor signed could receive a personal
acknowledgement. In absence of a concrete definition, a conflict of judicial opinion emerged.
Calcutta and Madras High Courts followed the English Law, but Bombay, and Allahabad High Courts
permitted personal acknowledgement-based attestation also. The provisions relating to attestation
were inserted under the Act in 1926.

The TPA, 1882 under section 3 provides that:

“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”

Proper attestation is an important element in the transfer of property.

English v. Indian position

1) Under English Law witness must be present at the time of the executive the documents, in India
personal acknowledgement is sufficient.

2) Under English Law both witnesses should be present together, in India they need not be present at
the same time.

No qualification of attestator, but he must be a person capable to contract, even illiterates of any
religion can attest but should not be the same person as an executant. Even the executant is not
allowed to sign in two capacities. Hence, where an agent signed on behalf of the principal as executant
and the as a witness in his individual capacity, was found to be not a valid attestation.

The scribe/ writer cannot attest on behalf of the witness.

 NOTICE

Transfer of Property Act, 1882, Section 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.

Notice literally means knowledge, and this doctrine under the TP Act 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 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.
Kinds of Notice
The rule of ‘caveat emptor’ 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. 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.

What the transferee has to ascertain is

i) Whether the transferor is competent to transfer the property; Nemo dat quod non habet
principle literally means 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) 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.
iv) The transferee must examine all the relevant documents relating to the property and the
transaction. 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.
Constructive notice is imputed only in situations where a person has means of knowing a particular
fact, but has failed to know it. There exist circumstances which ought to put him an inquiry, which,
if prosecuted, would have led to a discovery of it.
Explanation 1. — Where any transaction relating to immovable property is required by law to be
and has been effected by a registered instrument, any person acquiring such property 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 section 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.

As has already been mentioned, in matters relating to transfer of property, the parties have to observe
three mandatory formalities. The transfer must take place with a written documents 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 ₹100.00) or is let out for less than a year, or is mortgaged
wither by an equitable mortgage or for loan of less than ₹100.00. Unless all the formalities are
complied with, no right will pass from the transferor to the transferee.

As per explanation 1, constructive notice will not be imputed unless the document is registered, in
accordance with the manner provided under the Registration Act. 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. However, no constructive notice shall
be imputed where registration is not compulsory.

Explanation II. — Any person acquiring any immoveable 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.

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 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. Thus, it is the duty of the subsequent
purchaser to inquire from the persons in possession as to the precise character in which he was in
possession at the time when the subsequent sale transaction was entered into.
 Definition of Transfer of Property

Section 5 in The Transfer of Property Act, 1882

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.

Analysis

Property from one person to another can be transferred in several ways, such as by way of private or
a court sale, will, inheritance, relinquishment, dedication, etc., yet, all these kinds of transfers
are not subject to the application of the Act. U/s 5 of the Act, the term transfer has been defined as
an act 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 the Act.

The term living person includes a juristic person, a company, or association or body of individuals,
whether incorporated or not but does not include an idol of God or a temple. It does not mean that the
property cannot be transferred to God or an idol, but only that if a person dedicates property to God,
this transfer would not be subject to TP Act, but instead would be governed by the relevant religious
or charitable endowment Acts.

Conveying of property involves creation of new title or interest in favour of the transferee. The
transferor is divested of the right conveyed and the transferee acquires it for the first time under this
instrument. A partition, a charge, a relinquishment of the reversionary rights by the reversioners, a
surrender, a compromise, creation of an easement is not transfer as they do not convey the property
or an interest in the property.

The term property has nowhere been defined in the Act. However, when an absolute interest in the
property is transferred, an owner gets three basic rights in the property, i.e., a right of ownership of
having the title to the property, right to possess and enjoy the property, and an exclusive right to
alienate the property in any manner that he likes. 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.

The property must be in existence at present, but its conveyance may take place in present or on a
future date. It does not therefore, refer to the conveyance of future property, but may include
conveyance of an existing property in future. An agreement to sale is different from a transfer.
Generally, transferor and the transferee would be two separate persons but if the transferor transfers
property in one capacity to himself and receives it in some other capacity, then, such transfer is
permissible. An opt illustration of it is that a person creating a trust can transfers the property from
his individual capacity to himself as a trustee.

Partition of Joint Family Property – The coparceners collectively have the ownership of the
coparcenary property. After partition, the share of each coparcener is specified and instead of
collective rights, they acquire individual rights over the property. 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 o right or conveyance of the same for the first time through partition, it does not amount
transfer.

Family arrangements 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 specified in law or according to their entitlements. It can take into its fold non-
family members as well. It is not a transfer of property, as it simply acknowledges and defines the
title of each member.
Will takes effect from the death of the testator, it is not a transfer inter vivos, or between living person,
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.
 WHAT MAY BE TRANSFERRED

Section 6 of The Transfer of Property Act, 1882 - 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

anyone 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 the 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) 6[for an unlawful object or consideration within the meaning of section 23 of
the Indian Contract Act, 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 alienate property is frowned upon
by the law. At the same time, transfer of uncertain rights in the property should not be allowed to be
transferred. 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.
 UNAUTHORISED PERSON SUBSEQUENTLY ACQUIRING INTERST IN THE
TRANSFERRED PROPERTY

Section 43 in The Transfer of Property Act, 1882

43. Transfer by unauthorised person who subsequently acquires interest in property transferred. —
Where a person 1[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.

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 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. If the transferee
still wants the transferor to perform his part of the contract 2, he can exercise his option to validate this
transfer that was imperfect to begin with the transfer shall become valid on the exercise of such option
by the transferee.

2
The validation of the transfers depends purely on the transferees’ will and the transferor cannot force a transfer on his,
after he acquires competency.
Representation depicting a lack of knowledge on part of transferee. Thus, section 43 does not cover
cases where the transferee already knows that the transferor does not hold either a good title or is
not authorised to transfer the same.
 Conditions Restraining Alienation

Section, 10-12

Section 10 in The Transfer of Property Act, 1882

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 of 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 women (not being a Hindu, Muhammadan or
Buddhist), so that she shall not have power during her marriage to transfer or charge the same or her
beneficial interest therein.
Section 10 does not apply to court sales. Partition of a joint family settlements do not amount to
transfer of property, and section 10 would not be applicable to partition or family settlement.
However, any total restraint on right of alienation is void. This rule is based on public policy that
property should be alienable. The principle has universal application and there is nothing in the Hindu
Law which is inconsistent with it. E.g. where 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 any one of them
remained childless he would not sell his share to anyone but would leave the property for the surviving
brother. 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.
Exceptions to the Rule of Restraint on Alienation

In 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.
Section 11 in The Transfer of Property Act, 1882

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 immoveable 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.
 TRANSFER FOR THE BENEFIT OF UNBORN PERSONS

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.

The general rule is that the transfer can be made only between living persons. There cannot be a direct
transfer to a person who is not in existence or is unborn. Section 13 provides for an arrangement so
the transfers can be made for the benefit of an unborn child, however, section 13 uses the expression
transfer ‘for the benefit of’ and not transfer ‘to’ an unborn person. 3 Whether they will be born or not
is a possibility, a contingency, or an uncertain event, but a transfer of property is permissible to be
made for their benefit.

The procedure is as follows:

3
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. Unborn child here in the TP Act means the child may be in the womb of the mother or who are not even
conceived.
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 appear from the terms of the transfer, a vested interest, although he
may not be entitled to the enjoyment thereof immediately on his birth.
 RULE AGAINST PERPETUITY

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 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.

The English meaning of the term perpetuity is eternity or infinity. In relation to TP Act, it means the
creation of an interest in the present, but which is to take effect after long time period. Although TP
Act does not provide any number of years as a long time period, however, 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.

18 years of age may not be extended up to 21 years of age, because at the time of creating the interest,
the person intended to keep it 18 years, hence making it 21 years would be a rule against perpetuity.

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 the vesting of property in favour
of the beneficiary. However, he cannot stipulate a time which goes beyond the period of perpetuity
i.e., lifetime 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.
It is the terms of the deed and not the actual events that will govern the transfer.
Section 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 s.15 is that as far as possible the transfer should be given effect. The law makes
the transfer valid and effective for those for whom it is capable of taking effect.

Section 16

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.

Section 16 provides that due to violation of the rules specified in ss.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.

Section 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 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
transferor; 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.

Inserted by the Amending Act of 1929, applies to transfers where the property and the income arising
from the property are separated by the transferor, and the transferee is directed not to spend the income
but accumulate it for a specific or non-specific period. Law favours free alienation of properly and
spending of the income arising from it except only where the tying up of property is reasonably
desired. The first part of section 17 specifies the period beyond which the direction for accumulation
of income would be void. These limitations are in the alternative, and not in combination of the two,
such as the life of the transferor and 18 years.

E.g., A transferred his property to B in 1960 with a direction, that the income coming out of this
property

Section 18 - Transfer in perpetuity for benefit of public. —The restrictions in sections 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.
 VESTED AND CONTINGENT INTERESTS

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 merelyfrom 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.

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.
Such interest becomes a vested interest, in the former case, on the happening of the event, 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 in contingent interest, he is empowered to transmit the property to his heir. In contingent
interest, the transfer is not complete and is dependent on a condition precedent the happening and
fulfilment of which is not certain. It would be converted into a vested interest only when the condition
happens.

Interest is said to be a vested interest when there is an immediate right of present enjoyment or a
present right for future enjoyment. The question of whether the interest created is a vested or a
continent 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 vested interest, which has not been vested yet is liable to be divested subsequently. But this has
been vested or the transfer is complete, it can not be divested. 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.

Difference between Vested and Contingent Interest