As the transfer of property means conveying of property i.e., creation of new title or interest in the favour of the transferee, if new title or interest has not created in favour of the transferee, the property cannot be said to be conveyed, thus no transfer of property.

Partition:

Partition is not considered as a transfer of property because nothing new is obtained by a co-sharer on the partition, it is not a transfer of property. His specific share, which vested in him earlier, is simply separated. Courts in India have given different views in this regard.

In Soniram v. Dwarkabai 53 BLR 325 case the Bombay High Court held that the partition amounts to a transfer, inasmuch as it involves a conveyance by co-sharers of their respective right, title, and interest in the property. The same view was reiterated by the Bombay High Court in Jagannath Puri v. Godabai AIR 1966 Bom 25 and Dahyabhai v. State of Bombay 62 BLR 348 cases. The same view was taken by Lahore High Court in Sadhu Ram v. Priti Singh, AIR 1936 Lah 220 case.

However, in Panchali v. Panniyodan Manni Air 1963 Ker 66 case, the full bench of the Court overruled previous decisions and held that the partition does not amount to a transfer as defined in S. 5 of the T. P. Act.

In Radhakrishnayya v. Sarasamma ILR 1951 Mad 607 case, the Court held that the partition does not amount to a transfer as defined in S. 5 of the T. P. Act. For the purpose of S. 53(A) of the T. P. Act.

In Stremann v. Commissioner of Income Tax, AIR 1962Mad 26 case, the Court held that the partition does not amount to a transfer for the purpose of S. 16(3)(a)(iv) of the Income Tax Act.

In Commissioner of Income Tax v. Keshavlal, AIR 1965 SC 866 case, the Supreme Court approved the view of Madras High Court and from this decision henceforth the partition does not amount to a transfer as defined in S. 5 of the T. P. Act as there is no transfer of asset.

In Aralappa v. Jagannath AIR 2007 Kar 91 case, the Court held that partition is not a transfer, the reason being that no conveyance is involved because everyone has the antecedent title.

In Amb Singh and Anr. vs. Sub-Divisional Officer and Ors., 1996 (3) WLC 431  case, the Court has differentiated between partition and transfer. The Court in its judgment says that “’Partition’ is a division of the property between coparceners/co-tenants resulting in individual ownership/tenancy of interest of each co-parceners/co-tenants; while ‘transfer’ is an act of a party by which the title of the property is conveyed from one person to another. ‘Partition’ under the Hindu Law, puts an end to the unity of the title, ownership, and possession of the property between the co-parceners. In the partition, there is a severance of joint status and of the unity of possession between the co-owners/co-tenants. Partition neither creates any new title in a co-owner/co-tenant in the property nor is there any fresh acquisition of the property. It only enables the parties to know which particular property or portion thereof is their individual exclusive-share in the property. By partition, the subsisting joint title of the co-owner/co-tenant in the joint property transforms into their separate title in respect of the property which came to their share. In a transfer, the transferee acquires the right and title in the property which did not vest in him earlier. Thus, ‘partition’ of the joint property cannot be treated as a ‘transfer of the property’ between individual co-parceners or co-tenants. Partition of co-parcenary property, therefore, cannot be regarded as a ‘transfer of the property’ because the co-parceners have an antecedent right in the entire co-parcenary property”.

Relinquishment:

Relinquishment of right is referred to as the surrender of one’s ownership rights and claims in a property in favor of another person. Relinquishment is a Release Deed and shows extinguishment of a right, hence it cannot be considered as a transfer. It is not defined under the Transfer of Property Act but is an established practice. 

In Provident Investment Co. v. Commissioner of Income Tax AIR 1954 Bom 95 case, the Court held that a relinquishment or a Release Deed necessarily involves extinguishment of right, and therefore, it cannot amount to a transfer within the meaning of S. 5 of the T. P. act, as there is nothing left to transfer.

In Muniappa Pillai v. Periasami, (1975) IMLJ 236 case, the Court held that if the person in whose favour the release is executed, gets certain rights by virtue of such a release, the transaction may amount to a transfer. A similar view was expressed by the Court in Hassina Banu v. Shiv Narayan, Air 1968 MP 307 case.

In Gangabai Bapasa Hadapad v. Mahagundappa Shankarappa Hadapad, AIR 2006 NOC 142 Kar case, it was shown in a partition suit that one of the members has relinquished his right by way of waiver. It was held that this did not amount to transfer and the deed of relinquishment was compulsorily registrable. The failure to implead such member did not affect the suit. The suit was not to be treated as bad for non-joinder of a necessary party.

Surrender:

A deed of surrender is a legal document that transfers property ownership for a given time period provided certain conditions are met. A deed of surrender lets one party, such as a renter, relinquish his or her claims on a particular piece of property to a landlord or other party that holds the underlying title. Once the deed of surrender has been signed, any outstanding claims on the property can be resolved. Surrender is merging of lesser interest into greater interest in such a manner that the greater interest is not enlarged.

In Natwarlal v. Dadubhai, 56 BLR 447 case, The surrender of a life estate by a Hindu widow is not a transfer since it amounts to an act of self-effacement by the widow and accelerates the succession to her husband’s estate.

In Makhanlal v. Nagendranath, 60 Cal 379 case the Court held that the surrender of leases is not a transfer within the meaning of S. 5 of the T. P. Act, as it is a merger of a leases estate with a greater one.

Easement:

According to the Indian Easements Act, 1882 an easement is a right which the owner or occupier of certain land possesses, as such, for the beneficial enjoyment of that land, to do and continue to do something, or to prevent and continue to prevent something being done, in or upon, or in respect of, certain other land not his own.

No conveyance can be done in an easement, hence easement is not a transfer of property.

In Sital Chandra v. Delanney, 20 C W.N. 1158 case, the Court held that the creation of easement does not amount to a transfer. A similar view was taken in Traders Miners Limited v. Dhirendra 23 Pat 115 case.

Will:

Under the Indian Succession Act, 1925, a will means the legal declaration of the intention of a person with respect to his property, which he desires to take effect after his death. It is a unilateral document and takes effect after the death of the person making it.

A will does not fall within the definition of transfer within the meaning of S. 5 because a will operates from the death of the person making it, whereas the definition given in S. 5 of the T. P. Act contemplates a transfer by a living person.

Compromise:

Compromise means an agreement of settlement of doubtful claims between the parties with respect to some Property. It is also not a transfer.

In Sonepallii Mutyaly v. Virayya AIR 1946 Mad 452case, the Court held that when one of the parties to the settlement had given up a claim to receive a sum of money from the other, in consideration of latter’s giving up the right to certain property claimed by him, it would amount to transfer.

In Barati Lal v. Salik Ram 38 All 107 case, the Court held that the compromise arrangement between the parties amounted to transfer. However, it is a question of the fact to be answered on the basis of facts and circumstances of each case. A similar view was given in Hussina Banu v. Shivnarayan, AIR 1968 M.P. 307 case by the Court.

In Kalia Barik v. Tikeswar Deo, AIR 2007 NOC 1049 (Ori) case, the Court held that a suit for specific performance cannot be refused only on the ground that it was not registered. It could be directed in decree that it be registered in compliance of the requirement of registration.

Family Settlement:

A family arrangement is a settlement between members of the same family. The family arrangement is an agreement by members of the family to divide and hold family property separately in accordance with the agreement.

The Family arrangement is a settlement between members of the same family intended to be generally and reasonably for the benefit of the family either by compromising doubtful or disputed rights or preserving family property or peace and security of family by avoiding litigation or by saving its right.

In Sahu Madho Das v. pt. Mukund Ram (1955) 2 SCR 22 case, the Court observed that in case of family arrangement, there is an antecedent title of some sort in the parties and the agreement acknowledges and defines what that title is, each party relinquishing all claims to property other than that falling to his share and recognizing the right of the others as they have previously asserted it, to the portions allotted to them respectively. Therefore family arrangement is not a transfer.

Charge:

A charge means an interest or right which a lender or creditor obtains in an asset. A charge on the property is not a transfer.

In Gobinda v. Dwarkanath, 35 Cal 837 case, the Court held that a charge on a property is not a transfer within the meaning of S. 5 of the T. P. Act, as the only right created by such a charge is right to payment out of the property subject to the charge.

Previous Topic: Transfer of Property Defined (S. 5)

Law > Civil Laws > Transfer of Property Act > Acts Amounting to No Transfer of Property

The post Acts Amounting to No Transfer of Property appeared first on The Fact Factor.

Property is a very wide term and would include anything which carries some value and over which the right of ownership may be exercised. The word property in its most comprehensive sense includes all legal rights of a
person except for his personal rights, which constitute his status or personal condition. The term ‘property’ does not include the power of appointment. The provisions of the T. P. Act, 1882 are not applicable to testamentary succession. For testamentary succession, the Indian Succession Act, 1925 is applicable. A conveyance is a transfer of the property from one living person to another.

Section 5 of Transfer of Property Act, 1882:

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.

From the definition, we can write the following characteristics of a Transfer of a Property.

• It is an act of conveyance
• Conveyance is inter vivos means between living persons.
• Property may be conveyed to one or more other living persons, or to himself, or to himself and one or more other living persons.
• Property may be transferred in the future or in present.
• The term ‘person’ includes company or association or body of individuals, whether incorporated or not

For transfer of property, the property must be conveyed by the transferor to the transferee.

In Lionel Edwards Limited v. State of West Bengal AIR 1967 Cal 191 case, the Court held that the person conveying the property is entitled to the property sought to be conveyed to the person who has no title to it otherwise.

Where transferee already has some interest in the property prior to its conveyance in his favour, it is not conveyance and it is not a transfer of property.  In A. Nadalwari v. N. Malvarayan AIR 1936 Mad 918 case, the Court held that the document of transfer shows the change of ownership.

In Subbegowda v. Thimmegowda AIR 2004 SC 2428 case, the settlement deed was found to be only an entrustment of the property with power of revocation reserved by the executant. The Court held that it is not a transfer of property and opined that it is permissible under Act to make a conditional transfer or settlement accompanied by transfer. There may be condition precedent or subsequent, covenants or restraints.

The transfer of property should be between living persons. But the Act includes company or association or body of individuals, whether incorporated or not. Hence corporations, companies, firms, idols and deity who are juristic persons can hold property. Under Section 122 of this Act, the dedication to a deity or idol does not come within the purview of this Act because of the condition that such gift should be given in the lifetime of donee and deity or idol are not living persons.

In Har Narain v. Bank of Upper India AIR 1938 Oudh 84 case, the Court held that a Court is not a juristic person. It is not a living person either, therefore the Court order for sale is not a transfer of property within the meaning of this Act.

In Usha Rani Kundu v. Agradat Sangha AIR 2008 NOC 911 Cal case, the Court held that an unregistered club or society cannot come within the definition of ‘living persons’ within the meaning of Section 5 of this Act, hence claiming the right to pre-emption on the ground of transfer of adjoining land is not maintainable.  

The transferor may transfer the property with immediate effect or on a future date. When its formalities are completed then the transfer takes place with immediate effect. While if the transfer is in the future, then it is effected from the date mentioned in the sale deed.

In Jugalkishore v. Raw Cotton Co. (!955) SCR 1369 case the Court opined that in present or in future S. 5 qualify the word ‘conveys’ and not the word ‘property’.

In Purna v. Birna, ILR (1939) 2 Cal 341 case, the Court held that the expression property of any kind does not include future, non-existent property. Therefore, a transfer of future property is not, as such valid in India. But a conveyance of such property may be valid as a contract to assign, and when the property comes into existence. equity fastens upon the property, and the contract to assign becomes a complete assignment.

In Holroyd v. Marshall (1862) 10 HLC 191 case, the Court held that if the transfer is for the consideration, equity will allow the specific performance of the agreement. But if the transfer is gratuitous (i.e. a gift) there will be no enforceable contract. Thus the gift of future property is void. This decision is known as Holroyd v. Marshall Rule.

The phrase “to himself”, means the person vests the property in trust and himself becomes the trustee or when a man transfers property in one capacity, to himself in another capacity, as when a man makes a transfer in his capacity as an executor, to himself in his private capacity. Previously, the transferor was able to transfer his property to one or more other living persons, or to himself and one or more other living persons. This created difficulties for those persons who wanted to settle their properties to trust and declare themselves as a trustee to such trust. To overcome this difficulty by Amendment Act, 1929 the phrase “to himself” is added.

General provisions of this Act will not affect the provisions of any special law dealing with the property transferred by companies, or associations or body of individuals.

The property can be transferred to individuals or company or association or body of individuals, whether incorporated or not.

In Jai Narain Parasampuria v. Pushpa Devi Saraf (2006) 7 SCC 756 case the Court held that transfer of property in favour of unincorporated company is not barred.

In Umabai v. Nilkanta Dhondiba Chavan (2007) 6 SCC 243 case, the Supreme Court stated the factors to be taken into account for determining the nature of transaction and held that The true nature of the document must be determined having regard to the intention of the parties as well as the circumstances surrounding the making of the transaction and wording of the document.  

The definition of the term ‘Transfer’ in Section 5 of the Act does not require the person who conveys property should necessarily be the owner of the property being transferred.

Similarly, the definition of the term ‘Transfer’ in Section 5 of the Act does not mean conveyance of all interest of the transferor in the property. e.g. in a mortgage or a lease, there is no transfer of all interest in the property.

Similarly, the definition of the term ‘Transfer’ in Section 5 of the Act does not exclude property situated outside India or the territories where the Act does not apply. It is important where the transfer is effected.

In Prethi Singh v. Ganesh AIR 1951 All 462 case the Court held that if the transfer is effected where the Act is applicable, then irrespective of the location of the property, the rights, and liabilities of parties are determined according to the Act.

Effects of Transfer of Property:

• Transfer of Right: All the rights which a person (transferor) possesses in property, are transferred to another person (transferee).
• Transfer of Ownership: In some cases like sale of the property, the ownership of property is transferred from one person (transferor) to another person (Transferee).
• Transfer of Interest: Unless a different intention is expressed or necessarily implied in the contract, transfer of property possesses all those interests to the transferee in legal incidents when the transfer is capable of passing such interests in property and legal incidents can include easement rights, rents, and benefits.

Modes of Transfer:

Under T. P. Act, 1882, there are 6 modes of transfer of property which are Sale, Mortgage, Lease, Exchange, Gift, and Actionable claim.

The acts which are not included:

Under T. P. Act, 1882, Partition, Relinquishment, Surrender, Easement, Will, Compromise, Family Settlements, are not considered as a transfer of property.

Previous Topic: Meaning of Immovable Property

Next Topic: Acts Amounting No Transfer of Immovable Property

Law > Civil Laws > Transfer of Property Act > Transfer of Property

The post Transfer of Property (S. 5 of the T. P. Act) appeared first on The Fact Factor.

 Exceptions to the Doctrine of Privity of Contract

• The doctrine of Privity has exceptions which allow a stranger to enforce a Contract through an agent

Trust:

• This is the most common exception to the doctrine of privity of contract. If a contract is made between the trustee of a trust and another party, then the beneficiary of the trust can sue by enforcing his right under the trust, even if he is a stranger to the contract.
• The intention to benefit the third party must be irrevocable and a mere intention to confer a benefit is not enough, there must be an intention to create a trust. An intention to create a trust is clearly distinguishable from a mere intention to make a gift.
• In Rana Uma Nath Baksh Singh v. Jang Bahadur A.I.R. (1938) P.C. 245 case, Uma Nath Baksh Singh was appointed by his father as his successor and was put in possession of his entire estate. In consideration, thereof Uma Nath Baksh Singh agreed with his father to pay a certain sum on money and to give a village to Jang Bahadur, the illegitimate son of his father, on his attaining majority. On attaining majority Jang Bahadur asked for the proceedings of contract. Uma Nath Baksh Singh rejected the same and contend that Jang Bahadur is not the party to the contract. The Court held that in the circumstances mentioned above a trust was created between Uma Nath Baksh Singh and his father in favour of Jang Bahadur for the specified amount and the village, Hence Uma Nath Baksh Singh was entitled to maintain the suit.
• In Khwaja Muhammad Khan v Hussaini Begum (1910) 37 IA 152 case, there was an agreement between the father and father-in-law of ‘A’ that in consideration of her marriage with his son, he would pay to her Rs.500 per month for the betel-leaf expenses and some immovable property was charged for the payment of these expenses. A filed a suit for recovery of arrears. The Court held that although she was not a party to the agreement, she was entitled to enforce her claim being the beneficiary.

Family Settlement (Marriage/Partition):

• If a contract is made under a family arrangement to benefit a stranger (person not a party to the contract), then the stranger can sue in his own right as a beneficiary of the contract.
• In Rose Fernandez v. Joseph Gonsalves (1924) ILR 48 Bom 673 case, The girl’s (plaintiff’s) father entered into an agreement for her marriage with the defendant. The defendant married someone else. The plaintiff sued the defendant on attaining maturity. The court held that the girl after attaining majority could sue the defendant for damages for breach of the promise of marriage and the defendant could not take the plea that she was not a party to the agreement because she was beneficiary to the contract.
• In Daropti v. Jaspat Rai (1905) PR 171. 2, case, the defendant’s wife left him because of his ill-treatment. He then executed an agreement with her father, promising him to treat her properly, and if he failed to do so, to pay her monthly maintenance and to provide her with a dwelling. Subsequently, she was again ill-treated by the defendant and also driven out of the house. She sued her husband. The Court Held that she was entitled to enforce the promise made by the defendant to her father as she is beneficiary of the contract between the two.
• In Shuppu Ammal Vs. Subramaniyam 4 Ind Cas 1083 case, At the time of partition of HUF the brothers, agreed to invest a certain sum of money in equal shares for maintenance of their mother. But subsequently refused to do so. Mother sued them in the court of law. The court held that the mother is beneficiary to the contract between the brothers and hence entitled to require her sons to make the investment.

Contract through an Agent:

• If a person enters into a contract through an agent, where the agent acts within the scope of his authority and in the name of the person (principal). In this case, the Principal gets rights and obligations under contracts entered through agent provided agent acts within the authority and on behalf of the principal.
• In Wakefield v Duckworth [1915] 1 KB 218 case, Mr Wakefield was a professional photographer. Mr Duckworth, a solicitor, attended his studio to purchase photographs for use in defending his client on manslaughter charges. Mr Wakefield knew the photographs were required for use in the litigation, and Mr Duckworth requested as low a price as possible for the photographs because his client was not a wealthy man. Mr Wakefield sought to recover the cost of the photographs from the solicitor. The Court held that Mr Wakefield was unsuccessful in his claim. The solicitor was acting on behalf of his client and the photographer knew he was, therefore, an agent of his client, the principal. Mr Wakefield, therefore, had recourse only against the principal. The transaction did not amount to a cash transaction and there was no custom under which a solicitor should incur personal liabilities in this context.

Acknowledgment or Estoppel:

• If a contract requires that a party pays a certain amount to a third-party and he/she acknowledges it, then it becomes a binding obligation for the party to pay the third-party. The acknowledgment can also be implied
• Example: A gives Rs 1,000 to B to pay C. B acknowledges the receipt of funds to be paid to C. However, B fails to pay C. Now C can sue B for recovery of the amount.
• Example: A sold his house to B. A real estate broker, C, facilitated the deal. Out of the sale price, C was to be paid Rs 25,000 as his professional charges. B promised to pay C the amount before taking possession of the property. B made three payments of Rs 5,000 each and then stopped paying him. C filed a suit against B which was held by the Court because B had acknowledged her liability by conduct.
• In N. devaraja urs v. Ramkrishnah AIR 1952 Mys 109 case, A sold his house to B under a registered sale deed and left part of the sale price in his hands desiring him to pay this amount to C, his creditor. Subsequently, B made part payments to C informing that they were out of the sale price left with him and that balance would be remitted immediately. Subsequently, B failed to remit the balance amount and C sued him for the same. The court held that the sit is maintainable in the Court. Actually, there is no privity contract between B and C initially, but by paying some amount and explaining it to C, B has acknowledged his liability towards C. Hence C is entitled to sue B for the recovery of the amount.
• In similar case Kshirodebihari Datta V. Mangobinda Panda (1934) I.L.R. 61 Cal. 841, The court held that B has acknowledged his liability towards C by his conduct. C is entitled to sue B for the recovery of the amount.

A Covenant running with the Land

• When a person purchases a piece of land with the notice that the owner of the land will be bound by all duties and liabilities affecting the land, then he can sue upon a contract between the previous land-owner and a settler even if he was not a party to the contract.
• In Tulk v Moxhay [1848] 41 ER 1143 case, A owned a piece of land which he sold to B under a covenant that a certain part of the land will be maintained as a public park. B abided by the covenant and eventually sold the land to C. Though C was aware of the covenant, he built a house in the specific plot. When A came to know of it, he filed a suit against C. Although C denied liability since he was not a party to the contract, the Court held him responsible for violating the covenant.
• In Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board [1949] 2 KB 500  Case, The defendant was a catchment board and covenanted with the owner of the land on the banks of river Douglas, which was subject to flooding. The defendant agreed to replace the outfall and to enlarge the banks of the river as well as maintain this once the work was complete. Two years later, one of the covenantees under the agreement transferred her land to the first plaintiff. The second plaintiff was a company that rented the land from the first plaintiff. Subsequently, the banks of the river burst and caused significant flooding to the plaintiff’s land. The plaintiffs subsequently claimed against the defendant for damages for breach of contract and in tort. The court held that the defendant board had breached the contract and this breach had caused the damage to the plaintiff’s land that had been complained of. The court looked to the language of the agreement between the original landowner and the catchment board and found intention that the obligation to maintain the land would pass to all future owners. On this basis, the plaintiffs could enforce their rights under the original covenant.

The post Doctrine of Privity of Contract appeared first on The Fact Factor.