TPA Section.5

Download PDF

"Transfer of property" defined.-

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.

Sections 5 to 37 of this chapter are applicable to transfers of movable and immovable, both kinds of properties. These provisions deal with basic principles and concepts involved in any transfer.

Part (B) of this chapter contains provisions for the transfer of only immovable properties because the provisions laid down in Sections 38 to 53-A necessarily suggest that they can be applicable where the property is immovable.

Further, Chapter II contains provisions for the transfers generally i.e. irrespective of the kind of transfer of property.

Chapters III to VIII of the Transfers of Property Act deal with ‘specific transfers’.

Definition of Transfer of Property.— Section 5 defines transfers of property. The analysis of this definition, makes it clear that transfer of property is :—

i. an act by which,

ii. a living person,

iii. conveys,

iv. in present or future,

v. property,

vi. to another living person or to himself.

1. Transfers of Property is an act.—

Transfer of property is an activity or process. Under this activity something is done by the person who wants to transfer his property; it is not transferred automatically without transferors ‘act’ as is the case in wills or inheritance. Transferring property would mean doing of this ‘act’ or performing such act. The legal effect of this act is passing of property from one person to another.

2. Living Person.—

Transfer of property is to be made by a ‘living person’. The person who makes the transfer is called the transferor. The transferor may be human person or a juristic person.

Juristic persons are Companies, Firms, Corporation, University etc. which although are not human beings but law incorporates personality to them.

The living person i.e. the transferor must be in existence at the tim of making of the transfer.

The transferor must also be competent i.e. of the age of majority, of sound mind and not otherwise disqualified to transfer a property.

Second paragraph of Section 5 makes it clear that transferor may be one person or a class or group of persons. It may also be association of persons or corporations i.e. juristic persons.

Court has not been regarded as ‘living person’ therefore, transfer made by the order to the Court (e.g. Court-sale) is not a transfer of property within the meaning of Section 5 of the Transfer of Property Act.

The transferor must be a living person means that the transfer of properties by operation of law i.e. under wills, inheritance or by court’s order are excluded from this definition and shall not be regulated by the Transfer of Property Act.

3. Conveys

Conveyance means any act of the transferor by which certain new titles or interests are created in favour of the transferee (to whom the property is being transferred).

Anything done or any form of assurance by virtue of which transferee gets new title or interest which he did not have before the transfer, is called conveyance.

The test as to whether a transaction is a transfer of property or not is whether that transaction passes on certain new rights or interests to the transferee or not? If no new interest is created in favour of the transferee, there cannot be transfer of property.

Conveyance necessarily implies that the transferor has the title or interest which he is transferring. He cannot convey an interest which he himself does not have at the time of conveyance.

Shah states that: “In fact, the essence of the word ‘transfer’ is ‘to convey’, and therefore, a transfer of property would include any transaction which has the effect of conveying any property or any interest therein from one living person to another”

In a transfer of property the ‘living person’ i.e. the transferor conveys the property. His conveying is doing of the ‘act’ which is called transfer. There must be conveyance in every transfer of property.

However, it is not necessary that the word convey or conveyance is specially be used in the deed of transfer. It is sufficient if the deed shows that there is change of title or interest from transferor to transferee.

4. In Present or in Future—

The transferor can make arrangement that the property is vested or accrues to the transferee immediately after the completion of the transfer.

He may also make such arrangements in which the vesting of the interest of the property is postponed to a future date. He is free to transfer a property also upon the fulfilment of certain conditions.

The conveyance may, therefore, be present, future or conditional.

5. Property.—

The word ‘property’ has been used in a comprehensive sense it includes properties of all descriptions. It means movable properties, immovable properties, intangible properties such as right to catch fish or an actionable claims or other beneficial interests in a property.

It may be noted that property is essentially a bundle of rights or interests. When a property is transferred, there may be transfer of all the rights in that property or only of some of it.

All the rights in a property signifies ownership or absolute interest. Only some of the rights or interests in a property would mean partial or limited interest. In Sunil Sidharthbai v. Commissioner of Income Tax the Supreme Court has rightly observed that in general, transfer of property means passing of a right in the property from one person to another.

In one case there may be passing of entire bundle of rights (i.e. ownership) from transferor to transferee, but in another case there may be transfer of only some of such rights (i.e. partial interest).

Transfer of any non-existent property is void.

In Jugalkishore v. Raw Cotton Co. Ltd. the Supreme Court hel that the words in ‘present or in future’ qualify the word ‘Conveys’ and not the word ‘property’.

When a future property is transferred, the transferee does not get that property or interest therein.

Transfer of any non-existent or future property operates only as a contract which may be performed in future and can be enforce as soon as the property comes into existence.

6. To another living person.—

There must also be another person to whom the property may be transferred. Such other person is called transferee.

Since, transfer of property as defined under Section 5 is an act between two living persons, the transferee must also be a living person.

The transferee need not be a competent person. Transferee may be minor, insane or even a child enventresa mere (child in mothers womb).But, the transferee must be in existence when the transfer is being made.

Property cannot be transferred to a person who is not in existence on the date of the transfer.

The transferee too may either be a human person or a juristic person such as firms, societies, companies, corporations etc. and property may be transferred to them. An idol is a juristic person capable of holding property but it is not a ‘living person within the meaning of Section 5 of the Act. It has been held that an idol is a symbol of deity and it is against the Hindu religion that a deity should accept any property or worldly goods [Bhupati Nath v. Ram Lal, (1910) 37 Cal. 128; Ramalinga v. Sivachidambara., (1919) 42 Mad. 440: 49 I.C. 742. Dedication of property to a temple is not a transfer of property:

In may be noted that only these two living persons would be the parties to a conveyance inter-vivos, not a person who is stranger to the conveyance or transfer.

To himself,—

A transfer of property under Section 5 of the Act requires two living persons, the transferor and the transferee.

One cannot transfer a property to himself. But, one can transfer a property to himself in some other capacity.

The words ‘to himself were added to this section by the Amending Act, 1929 to include in the transfer of property also a case where a person makes any settlement of his property in a trust and appoints himself as the sole trustee. Here, the transferor and the transferee are physically the same person but as tra sferor he has the legal status of settlor whereas as transferee his legal status is that of a trustee.

We may now examine certain transactions as to whether they are transfer of property or not within the meaning of this Act.

Family settlement or family arrangement is not a transfer of property.

In a joint-family property all the members have their specific shares but they are not separated and are held co-jointly by all of them.

When a family settlement takes place, the already existing specific shares of the members of the family are defined and separated in order to avoid any possible dispute.

In Sadhu Madho Das v. Pandit Mukund Ram,… the Supreme Court In Ramdeo Foods Products Pvt. Ltd. v. Arvindbhai Rambhai Patel,.. The Supreme Court

In a family settlement since there is no creation of any new title or interest in favour of any member, there is no conveyance; therefore, it is not a transfer of property.

Compromise.—Compromise is also not a transfer of properCompromise means agreement for the settlement of doubtful claims between the parties in respect of some property.

Like family settlement here too the titles or interests of the parties are antecedent or already existing; the compromise deed simply defines them. Since there is no conveyance, a compromise deed is not a deed of transfer.

Partition.—Partition is not a transfer of property.

Partition means separating the parts of co-owned property.

§ It has been held that partition is really a process by which a joint enjoyment is transformed into an enjoyment severally, and no conveyance is involved in the process as the conferment of a new title is not necessary.

o In Mohar Singh v. Devi Charan,²¹ the Supreme Court has laid down the legal nature of a partition in the following words: “Partition is not actually a transfer of property, but would only signify the surrender of a partition of a joint right, in exchange for a similar right from the other co-sharer or co-sharers”.

Surrender.—A surrender is also not a transfer of property within the meaning of Section 5 of this Act.

Technically, surrender means merging of a lesser (or smaller) interest with a greater interest in such a manner that the greater interest is not enlarged. Surrender is therefore falling of a lesser estate into a greater

Release.—Release is a transfer of property.

If a larger interest falls into a small interest in such a way that smaller interest is enlarged then, for the holder of smaller interest there is creation of new titles or interest.

Since some new titles or interest are added to his already existing interest, there is conveyance hence it amounts to transfer of property.

In Muniappa Pillai v. Periasami,

Since Coparcener property is a joint-property of all the Coparceners therefore, a release in favour of only one or some Coparcener would be deemed to be a transfer in favour of all the Coparceners.

In M. Krishna Rao v. M. L. Narasikha Rao,

Relinquishment.— Relinquishment means giving up one’s rights or interests.

Its effect is extinction of one’s rights in a property; there is no intention that the person relinquishing his interest is conveying that interest in favour of another person.

Relinquishment is therefore, not a transfer of property.

Moreover, since relinquishment connotes the extinction of a right therefore, there is nothing left to transfer so that it may amount to a transfer of property as defined under Section 5 of the Act.

Charge.—Charge is not a transfer of property.

Charge is created on a property for securing a payment out of that property. When the property of a person is charged for securing certain payments e.g. maintenance, it is simply securing ‘personal obligation’ out of his property.

A charge is, therefore, not a transfer because the only right created under it is a right to payment out of the property subjected to the charge.

Property situated outside India.—

The definition of transfer of property given under Section 5 is applicable also to properties situated outside India or the territories to which the Act is not applicable.

It may be noted that because of its very nature, transfer of immovable property is governed by the law of the land where the property is situated. But, this does not mean that a person cannot claim rights under the transfer of that property under this Act.

However, his claim is subject to contrary claims or rights of the affected party under the law of the land where property is situated.

But it is for the affected party to prove that the transfer is defective or invalid under the law of the land where property situates.

Download PDF