What is "conditional transfer"? Under what circumstances a conditional transfer becomes void? Discuss.

Question: What is "conditional transfer"? Under what circumstances a conditional transfer becomes void? Discuss. [JJS 2018]

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Answer

Section 5 of the Transfer of Property Act defines transfer as:

"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 it himself] and one or more other living persons; and "to transfer property" is to perform such act."

Transfer of properties can be broadly divided into two types – a) Absolute transfer and b) Conditional Transfer.

Absolute transfer means the process of transfer wherein the transferee acquires complete, immediate, and unconditional title to the transferred property, without any limitations or encumbrances.

On the other hand, a Conditional transfer refers to a process of transfer wherein the transferee acquires interest/ownership in the property subject to the fulfilment or non-fulfilment of a condition attached to the transfer of property.

Section 25 of the Transfer of Property Act, 1882 lays down the provision for Conditional Transfer. The statutory provision runs down as under:-

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.”

Conditional transfer means that the transfer will be complete on the fulfilment of a condition or its non-fulfilment that is imposed on the transferee for the transfer of ownership of the property. For example, A agrees to transfer his property to B if he marries C. The requirement of A for B to get married to C is called a condition and subject to its fulfilment, the property gets transferred to B.

Following are the circumstances when the conditional transfer becomes void because the condition that is imposed is not valid in eyes of law:-

(a) Prohibited by law,

(b) Should not be an act that involves fraudulent acts,

(c) Should not be any act that is impossible,

(d) Should not be an act that is termed as violative of public policy,

(e) Should not be immoral,

(f) Any act that incurs any harm to any person or his property.

For instance, if A lets a farm to B on condition that he shall walk a hundred miles in an hour. The lease is void because the condition is impossible to be fulfilled by B, hence the transfer is void.