Transferable Property under Transfer of Property Act

The present article, ‘Transferable Property Under Transfer of Property Act’ shall discuss Section 6 of Transfer of Property Act, 1882 (‘TOPA’, ‘the Act’), valid conditions of transfer, instances of non-transferable property, with reference to statutory provision and case-law.

Generally speaking, property of any kind may be transferred. However, for a transfer of property to be legally valid, it must be transferable by law.[1] Transfer of property that is non-transferable is not legally valid, and the list of non-transferable properties are provided under the Transfer of Property Act, 1882, which is the primary legislation governing the transfer of movable and immovable property in India. Section 6 of TOPA deals with properties that may be transferred and also states exceptions to the general rule of transferability of property.

Apart from the transferable nature of the property, the valid transfer of property also requires the transferor to be competent. Section 7 provides the conditions for the competency of the transferor, which must be adhered to for a valid transfer of property.

Introduction

The TOPA is the primary legislation dealing with most aspects of legal transfer of both movable and immovable property in India, although it largely applies to immovable properties. While the TOPA is not exhaustive in that it does not contain the complete law for all types of transfers, it does incorporate basic rules of transfer that hold true regardless of the type of property they pertain to.[2] These fundamental principles relate to the nature of transfers in general, and the range of provisions that contain such principles are Chapter II, Sections 5 to 37 of TOPA.[3]

The transferability of property is an essential component of any valid transfer, and as mentioned above, transferability of property is regarded as the rule while the non-transferability of property is the exception.[4] The exceptional situations, which are listed as sub-sections are provided in Section 6 of TOPA. This section discusses the two categories of non-transferable properties, the first of which are those properties that cannot be validly transferred under any enforceable law in India, barring TOPA; and the second, properties which cannot be transferred as per TOPA.[5]

In addition to the transferability of property, the competence of the transferor is also required for a valid transfer. Section 7 of TOPA deals with the competence of a transferor and states the conditions for such competence.

The provisions of Section 6 and 7 may be read together to establish the essentials of a valid transfer of property.

Meaning And Definition

What is meant by transfer of property according to TOPA? (Section 3)

Prior to a discussion on transferable property, it is pertinent to define the term ‘transfer of property’ as mentioned in TOPA.

While the word property has not been defined in the TOPA, immovable property has been defined in the interpretation clause, to exclude standing timber, growing grass or crops.[6] Movable property has been defined as that which is not immovable property.[7] However, while the excluded properties in the scope of immovable properties has been provided, there is no inclusive list of immovable properties per the TOPA.[8]

The collective term ‘transfer of property’ has been defined in Section 5 as an act of conveyance by a living person, in present or future, to one or more living persons, (or to himself) transfer property.[9] Thus, the term ‘transfer of property’ refers to a contract plus conveyance.[10]

What may be transferred? (Section 6)

Section 6 of TOPA lays out the exceptions to the general rule of transferability, and the various categories of exceptions are mentioned under it.

Who may transfer the transferable property? (Section 7)

The capacity of a person to transfer property and what that entails, is provided under Section 7 of the TOPA. Section 6 read with Section 7 tell us the essential conditions for a valid transfer.

Section 6: What May Be Transferred

Section 6 of the TOPA deals with what may be transferred as per the Act. Thus, according to this section, property of any kind may be transferred except:

1. Properties which cannot be transferred by law, for the time being, in force in India, and
2. The properties which cannot be transferred otherwise as given in this Act[11]

a. Properties which cannot be transferred by law, for the time being, in force in India

The non-transferable properties have been divided into two categories. The first kind refer to those properties that cannot be transferred by any other law (barring TOPA) which is enforced in India. These may include provisions prohibiting transfer of certain property as mentioned under the Code of Civil Procedure, 1908, Hindu personal law or Muslim personal law. Section 6 recognises the non-transferability of property under other law in force in India, and thus such properties are also non-transferable under Section 6 of the Act. For example, under Muslim law, Waqf property have been regarded as properties which cannot be transferred and thus, will be included under Section 6.[12]

b. The properties which cannot be transferred otherwise as given in this Act

The second kind refer to the properties that have been specifically detailed in clauses (a) to (i) of Section 6 of the Act. There are approximately ten categories of non-transferable properties provided in Section 6. However, as the two categories imply, non-transferable properties are not only those properties which have been stated specifically under Section 6, but may be contained in other legislation in force in India.

It may be noted that transferability is the general rule, and this is derived from the maxim, alienation rei prae fertur juri accrescendi, which is to say that alienation is more favoured by the law rather than accumulation.[13] So circulation of property is encouraged by the law rather than accumulation for its own sake, according to this rule. Properties should not be seen as non-transferable unless it is indicated by statutory provisions. In the case Kansing Kalusing Thakore v. Rabari Maganbhai Vashrambhai,[14]it was held that transfer of property can only be prohibited by statutory provisions and not by a mere judgment or direction alone.

The appellants, in this case, were challenging part of an order for land acquisition by the government in Maharashtra for setting up an educational institution, because it affected their absolute right over the land given in compensation for the acquired land. When the appellants in the case approached the Bombay High Court, it laid out certain strict conditions upon the appellants for a period of 15 years. Aggrieved, the case finally went up in appeal to the Supreme Court, which took issue with the Bombay High Court’s approach, and inter alia other observations, noted that:

“…the High Court also failed to appreciate the legal provision of Section 6 of the T.P. Act when the transfer of the property can be prohibited only by provision of the law and not by the judgment or direction referred in the writ petition under Article 226 of the Constitution of India.”[15]

Thus, the view of the Supreme Court as to Section 6 is clearly laid out in the above case.

Non-Transferable Under Section 6

1. Clause (A): Spes-Successionis

Spes-successionis means the expectation of succession. The expectation of succession implies having a chance of getting a property through succession (inheritance or will). Thus, spes- successionis is not any present property. Under this clause, spes succession include:-

(i) Chance of an heir-apparent succeeding to an estate,
(ii) Chance of a relation obtaining a legacy on the death of a kinsman, or
(iii) Any other mere possibility of a like nature.

(i) Chance of an heir-apparent is a person who would be heir in future if he survives the propositus (the deceased whose property he would inherit) and if the propositus dies intestate. Since the chance of a share in the property is seen to not create any interest in favour of the heir-apparent, the law cannot treat it as a present right fixed in the property. Thus, the chance of an heir-apparent is not a transferable property.

Illustration: R has two sons D and F. R being very old and infirm, expects to die soon since he suffering from a terminal form of cancer. However, he is still alive. Expecting his father to die soon and because he is in need of money, D sells half of his share in R’s property to Y. However, this transfer is void because B is not the legal heir and will only be so after his father’s death- as of now, he is the only heir-apparent. Moreover, D would be entitled to his half-share in property only after A’s death and if A dies intestate.

(ii) Legacy

The chance of a person obtaining a legacy due to the death of a kinsman is also not transferable as per the Act. Now, the settled law of wills is that a will operates only after the death of the testator, and only a legatee under the last (and final) will receive the legacy. Thus, as this is an uncertain event, and the legatee in question may not survive beyond death of the testator or the legatee might be excluded from the final will, the chance of a legacy is also made non-transferable.

(iii) Any Other Possibility of a Like Nature

Any other mere possibility of an interest of a like nature, cannot be transferred, for example the possibility of winning a prize in the future would fall under this category.

2. Clause (B): Mere Right of Re-Entry

The right of re-entry means a right to resume possession without any other interest in land. Where a person gives possession of his property to another for a certain period, and is entitled to get it back after that period elapses, his right of entering into possession of that property again is known as his right of re-entry.[16] Under this sub-section, the right of re-entry refers to the right of a lessor or landlord to resume possession of property from the lessee or tenant upon the breach of condition subsequent.[17] However, the right of re-entry apart from or without any interest in the land is simply a personal license, it cannot be transferred under law. [18]

Illustration:

X has leased his land to Y for a period of 5 years with an express condition that Y shall not dig any well on the land. Y digs a well on the land. X asks Z to take possession of the said land from Y. That is to say, X transfer his right of re-entry upon the breach of condition by Y. However Z cannot take possession from Y because A has transferred the mere right of re-entry.

3. Clause (c): Easement Apart from Dominant Heritage

An easement is a right that exists for the beneficial enjoyment of the land of another person. The dominant heritage is the land or house for whose beneficial enjoyment this right exists while the land or house upon which this right is exercised is called the servient heritage. This clause provides that an easement cannot be transferred apart from its dominant heritage- meaning that when the dominant heritage is itself transferred, then the easementary right is also transferred along with it.[19] Thus, this easementary right cannot be so transferred.

4. Clause (d): Restricted Interest

This clause refers to the interest in property that is intended for enjoyment to the owner personally and alone, and thus cannot be transferred by the same.[20] Religious offices such as that of a pujari[21] or mahant of a mutt[22] come under this clause because these offices are held by persons concerned on the ground of their personal qualifications.

5. Clause (dd): Right to Future Maintenance

The right to future maintenance if a restricted interest that is non-transferable. Maintenance may be granted to a person either by personal contract or by a court decree.[23] This clause was added by a 1929 amendment after there was judicial controversy as to the transferabiliuty of maintained granted by decree of court.

6. Clause (e): Mere Right to Sue

The right to sue for liquidated damages is an actionable claim. However, the right to sue for uncertain or indefinite sums of money is not a transferable interest. Under Section 6(e), ‘right to sue’ refers to the right to sue for unliquidated damages.

Illustration: A publishes defamatory statements against B. Under the law of tort, B has the right to claim damages. However, instead of suing A himself, B transfers the right to sue to C. C then sues A for an unliquidated sum. However, C’s suit is not maintainable as the suit is barred by Section 6(e).

7. Clause (f): Public Office and Salary Of Public Officer

The social policy underlying this prohibition is to ensure the dignity to the office held by a person appointed for qualities personal to him and getting salary for duly discharging his public duties. Thus, the public officer and salary of public officers are non-transferable in nature. However, this refers to the transfer of the salary at its source- not what an officer may choose to do once it is in his hands. In the case of Ananathyya v. Subba Rao, the X court ruled that a younger brother (a government servant) sharing part of his salary with his older brother, as consideration for educating him as a younger person, was not a violation of Section 6(f).[24]

8. Clause (g): Pensions and Stipends

Pensions and stipends are given to persons specifically for their personal contribution or achievement for example for freedom fighters, or government officials. These being restricted interests, are not transferable property under this Section.

9. Clause (h): Transfer Opposed to Nature Of Interest

While other clauses under this Section specified certain species of non-transferable interests, the present clause indicates certain disqualifications against transfer in certain situations. They may be determined by the use of the heuristic as follows:

• • Where the transfer is opposed to the Nature of interest created
  • Where the transfer is for an unlawful object or consideration
  • Where the transfer is made to a person legally disqualified to be a transferee.

10. Clause (i): Untransferable Right of Occupancy

This clause states that a tenant with an untransferable occupancy cannot transfer the same to another person. For example, a farmer of an estate where he is paying revenue to cultivate the land, cannot assign his interest in the agricultural holding under this clause.[25]

Conclusion

The present article has discussed the general rule of transferability in property law, and the categories of non-transferable interest under Section 6 of TOPA.

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[1] R.K. Sinha, The Transfer of Property Act, 21^st ed., 2021.

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] Section 6, Transfer of Property Act, 1882.

[6] Section 3, Transfer of Property Act, 1882.

[7] Ibid.

[8] Supra, at note 1.

[9] Section 5, Transfer of Property Act, 1882.

[10] R.D. Chattopadhyay, Transferable and Non-Transferable Property, Legal Service India, available here

[11] Supra, at note 1.

[12] Ibid.

[13] Supra, at note 10.

[14] Appeal (Civil) 5089 of 2006. (Arising out of SLP (C) Nos. 124-125/2006)

[15] Ibid.

[16] Supra, at note 1.

[17] Ibid.

[18] Ibid.

[19] Supra, at note 1.

[20] Supra, at note 10.

[21] Nagendra v. Rabindra, AIR 1926 Cal. 490.

[22] Prayag Das v. Mahant Kriparam, (1908) CLJ 499.

[23] Supra, at note 1.

[24] AIR 1960 Mad 188.

[25] Supra, at note 1.

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