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Transfer of Property

January 17, 2023 | Real Estate Property Transfer is how the title of the property can be transferred under Section 5 of the Transfer of Property Act 1882, and change of ownership from one person to another person can be done.

Property Transfer is how the title of the property can be transferred under Section 5 of the Transfer of Property Act 1882, and change of ownership from one person to another person can be done.

Meaning of  Transfer of Property:

The  transfer of  property in India is subject to the provisions of the Transfer of Property Act 1882 and it is this law that regulates the assignment of property within India. This Act has specific conditions attached for the transfer of property and came into force on 1 July 1882.

As we all know property is classified into 2 kinds:

• Immovable property : - This concept includes the Land, houses and all the structures that are constructed on the land.
• Movable p roperty : - This includes the properties like jewellery, FDs, Bank accounts and cash. 

Under the 1882 Act, 'transfer of property' means an act by which a person conveys the property to one or more persons, or himself, either in the present or in the future.

Transfer of Property with the  Available  Modes of Transfer:

Property  transfer is how the title of the property can be transferred under Section 5 of the Transfer of Property Act 1882, and change of ownership from one person to another person can be done. However, to be able to contract and sign a transfer document the ability to contract is important and to understand the ability to contract, we have to refer to section 11 of the Indian Contract Act, 1872. Section 11 says that every person is competent to contract

• Who is of the age of majority according to the law to which he is subject,
• Who is of sound mind, and
• Is not disqualified from contracting by any law to which he is subject.

Process amounting to the transfer of property:-

We can transfer properties using certain instruments as listed below: -

(1)    Gift Deed : - As we are all familiar, transferring property ownership by ‘gifting’ the property using a gift deed is used quite commonly in India. Under, Section 122 of the Transfer of Property Act, 1882, gifting a property must be done voluntarily and without consideration of any kind. An acceptance is made by the recipient during the lifetime of the donor. If the acceptance is not made in the lifetime of the donor, the gift becomes void.

(2)    Sale Deed : - The most commonly used method of property transfer is through a Sale Deed. A sale deed is executed between the two parties i.e. the  seller and buyer, for monetary consideration. The  sale is completed once the ownership gets transferred to the new owner, after registration at the office of the  Sub-Registrar of Assurances.  

Acts  Not  Amounting to  Transfer

(3)    Relinquishment Deed : - Under this mode of conveyance, an owner or relinquisher can release all his rights in favour of the other member without consideration. Stamp duty in these cases will be applicable only on the relinquished property and not the property, as a whole. The basic principle here is that no other person apart from the co-owners can create this Deed, hence there is no actual conveyance of title to any third party but among the co-owners themselves.

(4)    Will : - Will is also an effective medium through which the family property can be secured. However, this happens only after the death of the testator and does not qualify the condition of a living or a juristic person to be present. After the death of the testator, the legal heirs need to apply to the concerned civil authorities with a copy of the will, death certificate and Succession Certificate for completing the allocation process.

(5)    Partition Deed : - This method helps transfer property ownership from one person to another by a Partition Deed when there are jointly-owned properties. This helps to divide the property so that each person’s share is determined and partitioned. However, again this is between the co-owners and only the shares get  bifurcated, hence, it’s not a transfer.

(6)    Lease or Leave licence:  Although it transfers possession for some time to the lessee or licensee, it’s not transferring the title of the property and the same devolves back on the owner after the expiry of the  lease/licence period.

Principles  Guiding the  Transfer of Property:

The conditions and principles guiding the transfer of property are as under:

• Transfer to be effected to a living or juristic person : The main criterion for an effective transfer is that there must be a transfer of the property between living or juristic persons. It could be an individual, firm, corporate or  association but not  partnerships.
• Transfer through Conveyance : A property can be conveyed in the present or the future.
• The  property must be transferable : Section 6 of Transfer of Property Act, 1882 lists properties that cannot be transferred and if any of the properties fall in that category they cannot be transferred.
• Transfer of property must be done by a competent person : The property transferred must be effected by a person of sound mind, the person must be a major or he is not a person disqualified by contract law.
• The transfer should be made in a prescribed form : The sale of intangible property should be in a written format with requisite government fees paid.
• The rule against perpetuity : Property must be transferred during the lifetime of an individual, as the perpetuity rule cannot be followed.  A property cannot be transferred to an unborn child and it is necessary to consider that while transferring the interest of the property, the person should be above the age of 18 years.
• Conditional transfer of property : As we know under Section 25 of the transfer of property Act, 1882, the property may be transferred complying with the condition elaborated. However, if the condition becomes impossible, forbidden by law, opposed to public policy, or is immoral the transfer would be held void.

Conclusion:

The Transfer of Property Act was enacted to create an all-inclusive Act that can provide information about the transfer in a very simple language. Hence, as envisaged above,  we can effect the transfer of property through various sections of the Transfer of Property Act

• Definition of Resolution plan will now include provisions for corporate restructuring: The amendment act has inserted an explanation in the definition of resolution plan to clarify that a resolution plan that proposes the insolvency resolution of a corporate debtor may include the provisions for corporate restructuring, including by way of merger, amalgamation and demerger.
• NCLT will have to record reasons for delay in discarding an application for initiation of CIRP: As per the Code, the NCLT must dispose of an application for initiation of CIRP within a period of 14 days from the receipt of application. However, there have been cases when the NCLT has taken more than 14 days to make a decision on the application. Therefore, to ensure speedy disposal and value maximization of the corporate debtor's assets, a proviso has been added which requires that NCLT to record its reasons in writing in case an application is not disposed within 14 days.
• Corporate Insolvency Resolution Process to be concluded within 330 days: Earlier, the IBC demanded completion of CIRP within 180 days including a one-time extension of 90 days. However, many a times the Courts have allowed removal of certain periods, for instance, time consumed in litigation, from the compulsory completion period resulting in a lot of unresolved CIRPs well beyond the time duration allowed in the IBC. The Amendment act makes it compulsory for a CIRP to be completed within 330 days including any extension of time granted and time taken under legal proceedings. It further states that any pending CIRPs that have been going on for over 330 days should be completed within 90 days from the date of commencement of the Amendment Act.
• Voting by authorised representative representing a class of financial creditors: To avoid any confusion and facilitate decision making in the Committee of Creditors, especially in cases where financial creditors are a large group, the Amendment Act provides that an authorized representative representing a class of financial creditors shall vote on behalf of all the financial creditors he/she represents in accordance with the decision approved by more than 50% of such financial creditors. This principle however would not be applicable in case of voting for withdrawal of CIRP.
• Amount payable to functional creditors and disagreeing financial creditors: The Amendment Act provides that payment of debts of operational creditors shall be the higher of
• the amount to be paid to these creditors at the time of liquidation of the corporate debtor u/s 53 or
• the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance of priority as mentioned u/s 53 (1)
• NCLT has not approved or rejected a resolution plan
• an appeal is pending at the Supreme Court or at the NCLAT (National Company Law Appellate Tribunal)
• a lawsuit has been launched in a court challenging the decision of NCLT in relation to a resolution plan
• Committee of Creditors (COC) to contemplate way of distribution submitted in the resolution plan: Besides the current need of approval of resolution plan after keeping in mind the practicality and acceptability of the resolution plan, the amendment act requires that the CoC consider the manner of distribution proposed in the resolution plan by taking into account the order of priority amongst creditors, as prescribed u/s 53 (1) relating to liquidation waterfall, including the priority and value of security interest of a secured creditor.
• NCLT approved resolution plan will be binding on the Central Government, State Government or any local authority to whom corporate debtor owes a statutory debt: As per the Code, the approved resolution plan was only binding on the corporate debtor and its employees, creditors, members, guarantors and other stakeholders included in the resolution plan resulting in instances where the Government used to follow up for the balance dues after the said approval of resolution plan. The Amendment Act has now modified Section 31(1) to illuminate that any NCLT approved resolution plan will be binding on the Central Government, State Government and any local authority to whom a corporate debtor owes a debt in respect of payment of dues arising under any law.
• Liquidation after setting up the Committee of Creditors (COC): The Amendment Act simplifies by way of an explanation, u/s 33(2) which covers liquidation, that the COC may decide to liquidate the corporate debtor any time after the setting-up of the COC until the confirmation of the resolution plan, including at any time before the development of the information memorandum. This change is pertinent as there have been cases where NCLTs have demanded that a liquidation order may be passed only after failure of the CIRP even though an early liquidation would have resulted in value maximization.

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The Law of Assignment (3rd Edition)

Marcus smith, nico leslie.

This book is the leading text on the law relating to intangible property or choses in action. Its clear and approachable structure covers all forms of intangible property (debts, rights under contract, securities, intellectual property, leases, rights/causes of action, and equitable rights), considering the nature of intangible property, how it comes into being, and how it is transferred or assigned. The first part of the book analyses the general principles regarding intangibles and their transfer, and the second examines the practical considerations relating to particular types of intangibles, securities, insurance contracts, leases, and intellectual property under the law. This new edition includes new chapters on powers of attorney and factoring, areas particularly important to legal practice. Other significant developments include the expansion of the chapter on leases to include leasing of chattels, and more material on securities, especially regarding the operation of settlement systems.

Bibliographic Information

Affiliations are at time of print publication..

Marcus Smith, author

Nico Leslie, author

• Share This Facebook LinkedIn Twitter
• Foreword to The Third Edition
• Foreword to the Second Edition
• Foreword to the First Edition
• Preface to The Third Edition
• Preface to the First Edition
• Summary Contents
• Detailed Contents
• Table of Cases
• Statutory Instruments
• Netherlands
• United States
• Conventions
• Regulations
• International Conventions
• List of References
• List of Authority Abbreviations
• Preliminary Material
• Part III.01
• [66.249.64.20|185.80.149.115]
• 185.80.149.115

31 U.S. Code § 3727 - Assignments of claims

In subsection (a)(1), the words “or share thereof” and “whether absolute or conditional, and whatever may be the consideration therefor” are omitted as surplus. In clause (2), the word “authorization” is substituted for “powers of attorney, orders, or other authorities” to eliminate unnecessary words.

In subsections (b) and (c), the word “official” is substituted for “officer” for consistency in the revised title and with other titles of the United States Code.

In subsection (b), the words “Except as hereinafter provided” are omitted as unnecessary. The words “read and” are omitted as surplus. The words “to the person acknowledging the same” are omitted as unnecessary. The text of 31:203(1st par. last sentence) is omitted as superseded by 39:410. The words “Notwithstanding any law to the contrary governing the validity of assignments ” and the text of 31:203(last par.) are omitted as unnecessary.

In subsection (c), before clause (1), the words “bank, trust company, or other . . . including any Federal lending agency” are omitted as surplus. The words “of money due or to become due under a contract providing for payments totaling at least $1,000” are substituted for “in any case in which the moneys due or to become due from the United States or from any agency or department thereof, under a contract providing for payments aggregating $1,000 or more” to eliminate unnecessary words. The text of 31:203(2d par. proviso cl. 1) is omitted as executed. In clause (1), the words “in the case of any contract entered into after October 9, 1940 ” are omitted as executed. In clause (2)(A), the words “payable under such contract” are omitted as surplus. In clause (3), the words “true” and “instrument of” are omitted as surplus. The words “department or” are omitted because of the restatement. The words “if any” and “to make payment” are omitted as surplus.

In subsection (d), before clause (1), the words “During a war or national emergency proclaimed by the President or declared by law and ended by proclamation or law” are substituted for “in time of war or national emergency proclaimed by the President (including the national emergency proclaimed December 16, 1950 ) or by Act or joint resolution of the Congress and until such war or national emergency has been terminated in such manner” to eliminate unnecessary words. The words “ Department of Energy (when carrying out duties and powers formerly carried out by the Atomic Energy Commission)” are substituted for “Atomic Energy Commission” (which was reconstituted as the Energy Research and Development Administration by 42:5813 and 5814) because of 42:7151(a) and 7293. The words “other department or . . . of the United States . . . except any such contract under which full payment has been made” and “of any moneys due or to become due under such contract” before “shall not be subject” are omitted as surplus. The words “A payment subsequently due under the contract (even after the war or emergency is ended) shall be paid to the assignee without” are substituted for “and if such provision or one to the same general effect has been at any time heretofore or is hereafter included or inserted in any such contract, payments to be made thereafter to an assignee of any moneys due or to become due under such contract, whether during or after such war or emergency . . . hereafter” to eliminate unnecessary words. The words “of any nature” are omitted as surplus. In clause (1), the words “or any department or agency thereof” are omitted as unnecessary. In clause (2), the words “under any renegotiation statute or under any statutory renegotiation article in the contract” are omitted as surplus.

Subsection (e)(1) is substituted for 31:203(4th par.) to eliminate unnecessary words.

In subsection (e)(2), the words “person receiving an amount under an assignment or allotment” are substituted for “assignees, transferees, or allottees” for clarity and consistency. The words “or to others for them” and “with respect to such assignments , transfers, or allotments or the use of such moneys” are omitted as surplus. The words “person making the assignment or allotment” are substituted for “assignors, transferors, or allotters” for clarity and consistency.

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Home » Must Knows » Legal » Transfer of Property Act, 1882

Transfer of Property Act, 1882

In this article, we discuss the Transfer of Property Act (ToPA), which primarily sets the path for property transfer from one owner to another in India.

Table of Contents

What is Transfer of Property Act?

Under the Indian legal system, properties are divided into two categories – movable and immovable. The Transfer of Property Act (ToPA), 1882, which came into force on July 1, 1882, deals with the aspects of transfer of properties between living beings. One of the oldest laws in the Indian legal system, the Transfer of Property Act is an extension of the law of contracts and runs parallel to the succession laws. For those planning to transfer their immovable property, knowing the key aspects of the Transfer of Property Act is quite important.

What is transfer of property?

The law defines transfer of property 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 to himself and one or more other living persons”. Living person also includes a company or association or body of individuals.

What are movable and immovable properties?

The difference between movable property and immovable properties lies in the stats of their physical movability. While movable properties can be carried from one place to another, the same is not true of immovable property. This state of immovability makes land and homes immovable property while cash, gold, share, etc. quality as movable property.

See also: Role of Karta in Hindu Undivided Family

Scope of Transfer of Property Act

Ways in which property transfer can take place.

Parties: Under the Transfer of Property Act, a transfer of property can be effectuated by an act of two or more parties or an act by the operation of the law.

Type of property: The Transfer of Property Act is applicable primarily on transfer of immovable property from one living being (inter vivos) to another. Also, the Act is applicable on property transfer by individuals, as well as by companies. However, the Transfer of Property Act is applicable to acts of parties and not on transfers applicable by the law.

What does ‘transfer’ mean under Transfer of Property Act ?

The term transfer includes transfer through sale, mortgage , lease, actionable claim, gift or exchange. The Act does not cover transfers by the operation of law, in the form of inheritance, forfeiture, insolvency, or sale through the execution of a decree. The Act is also not applicable on the disposal of properties through wills and does not deal with cases of succession of property.

Types of property transfer under Transfer of Property Act

The Transfer of Property Act talks about six types of property transfers:

• Actionable claim

See also: Everything you need to know about gift deed

Who is eligible to t ransfer property ?

Section 7 of the Transfer of Property Act lays down the rules, vis-à-vis people who are legally eligible to transfer their property.

‘Every person competent to contract and entitled to transferable property, or authorised to dispose of transferable property not his own, is competent to transfer such property, either wholly or in part and either absolutely or conditionally, in the circumstances, to the extent and in the manner, allowed and prescribed by any law for the time being in force,’ the section reads.

Under the Indian Contract Act, 1872, a person must be at least 18 years of age and have a sound mind, to be eligible to enter into a contract.

Properties that cannot be transferred under Transfer of Property Act

In terms of immovable property, one cannot transfer a property that one expects to inherit in future, states the Transfer of Property Act.

Example: Ram expects that his maternal uncle, who had no children of his own, would bequeath his property to him and he transfers his right in the property to his son, the transaction would be held invalid.

A lessor can also not transfer his right to re-entry into a leased property, under the Transfer of Property Act.

Example: Ram leases his plot to Mohan and puts in a clause in the lease agreement that he would have the right to re-enter, if the rent is not paid for over three months, then, he alone will have the right to do so. He cannot pass on his right to re-enter to, say, Ganesh, his associate.

A real estate developer who has entered into a joint development agreement (JDA) with a land owner, to build a project on the latter’s land, is also not allowed to transfer the ownership of the project thus created under the provisions of the ToP Act. The implications of the JDA are restricted only to the development part of the project. The builder will have to get a general power of attorney to sell the project on behalf of the owner. Even in this scenario, the land owner will be the one providing the conveyance deed to the prospective buyers of the project.

The Act also prohibits the transfer of easement rights – a right to use someone else’s land or property in some way. These include the rights of way (passage), the rights of light, the right of water, etc. Example: Ram has a right of passage over the land belonging to Mohan. Ram decides to transfer this right of way to Ganesh. As this is a transfer of an easement right, it is invalid.

One can also not transfer one’s interest in a property, restricted in its enjoyment.

Example: If a house is lent to Ram for his personal use, he cannot transfer his right of enjoyment to Mohan.

A right to future maintenance is only for the personal benefit of the person to whom it is granted. Hence, this right cannot be transferred. A tenant having a non-transferable right of occupancy, cannot alienate or assign his interests in the occupancy. Similarly, a farmer of an estate that has defaulted in paying revenue, cannot assign his interest in the holding. The same is true of a lessee of an estate under the management of a court of wards.

Transfer of property through verbal/oral agreement under Transfer of Property Act 

Section 9 of the Transfer of Property Act says that property transfers could be affected though an oral agreement, unless the law explicitly states that a written agreement must be prepared to conclude the transaction.

In the case of immovable property of value less than Rs 100, such transfers may be made either through a registered instrument or by delivery of possession the property. In a recent ruling, the Karnataka High Court has clarified that the first provision of property transfer overlaps the second– this means property transfer can be made by a registered instrument in all cases. The high court has also stated that possession is enough to prove the ownership of a property that does not require registration under the rules prescribed under the Transfer of property Act.

This means that practically no immovable property can be transferred in the name of another individual without executing a written document.

However, oral arrangements do not typically work, except for partition of property among family members , where the family members can enter into a verbal agreement and divide the property for practical purposes. Exchange of property often requires written agreements for the transaction to be legally valid. This is true for sale, gifts, leases, etc.

Transfer of property to an unborn child under Transfer of Property Act 

A person who is planning to bequeath his property to more generations than one, will have to keep the provisions of the Transfer of Property Act in mind, while doing so. This becomes imperative to avoid legal complications at a later stage.

Under the provisions made in Section 13 and Section 14 of the Transfer of Property Act, the transfer of a property directly in favour of an unborn child is prohibited. For this to happen, the person intending to make the transfer will first have to transfer it in favour of a person who is alive on the date of transfer. The property will have to vest in the name of this person, till the time that the unborn child comes into existence. Basically, the interest of the unborn child in a property must be preceded by a prior interest.

Example: Suppose Ram transfers his property to his son Mohan and thereafter, to his unborn grandchild. In case he was not born before the death of Ram, the transfer would not be valid. The transfer would be valid, if the child is born before Ram passes away and the interest of the property vests in Mohan, till the child is born.

Responsibilities of seller during transfer of property under  

Section 54 of the Act talks about the responsibilities of the seller of a property:

To disclose to the buyer any material defect in the property. To provide to the buyer on his request for examination, all documents of title relating to the property. To answer to the best of his information, all relevant questions put to him by the buyer with respect to the property or the title. To execute a proper conveyance of the property , when the buyer tenders it to him for execution at a proper time and place, on payment or tender of the amount due in respect of the price. To take as much care of the property and all documents, which are in his possession, as an owner of ordinary prudence would take of such property, between the date of the contract of sale and the delivery of the property. To give the buyer possession of the property. To pay all public charges and rent accrued with respect to the property, up to the date of the sale. To discharge all encumbrances on the property then existing.

Duties of the buyer during transfer of property under Transfer of Property Act 

• To disclose to the seller any fact about the property, of which the buyer is aware of but has reason to believe that the seller is not aware of and which materially increases the value of such interest.
• To pay the purchase money to the seller at the time and place of completing the sale.
• To bear any loss arising from the destruction, injury or decrease in value of the property not caused by the seller, where the ownership of the property has passed on to the buyer.
• To pay all public charges and rent, which may become payable on the property, the principal monies due on any encumbrances subject to which the property is sold and the interest thereon afterwards accruing due, where the ownership of the property has passed on to the buyer.

Tenancy agreements governed under Transfer of Property Act arbitrable: SC

The Supreme Court, on December 14, 2020, ruled that landlord-tenant disputes can be resolved through arbitration, except when they are covered by specific forum created by the rent control laws. In a landmark verdict in the Vidya Drolia and others versus Durga Trading Corporation case, the SC has ruled that arbitral tribunals have the power to decide such cases under the Transfer of Property Act.

However, for these disputes to be resolved through arbitration, the rent agreement must have an arbitration clause – this means the decision to include a clause to this effect in a landlord-tenant agreement lies with the parties concerned.

See also: Landlord-tenant disputes arbitrable when not covered by rent control: SC

Latest update

Sale agreement, lawful possession of property protect buyers’ right: sc.

Read full coverage here .

Encroacher cannot claim benefit under Section 51 of Tranfer of Property Act: SC

An encroacher cannot be termed a transferee to seek benefit of Section 51 of the Transfer of Property Act, the Supreme Court has said. For Section 51 to apply, “the occupant of the land must have held possession under colour of title, his possession must not have been by mere of another but adverse to the title of the true owner, and he must be under the bone fide belief that he has secured good title to the property in question. Section 51 gives only statutory recognition to the above three things”, the apex court ruled.

What can be transferred under the Transfer of Property Act?

Any immovable property can be transferred under the Transfer of Property Act.

What are the modes of transfer of property?

According to the Transfer of Property Act, a property can be transferred through sale, exchange, gift, mortgage, lease and by creating an actionable claim.

How many sections are there in the Transfer of Property Act?

There are 137 sections in the Transfer of Property Act.

• 😃   ( 37 )
• 😐   ( 12 )
• 😔   ( 4 )

An alumna of the Indian Institute of Mass Communication, Dhenkanal, Sunita Mishra brings over 16 years of expertise to the fields of legal matters, financial insights, and property market trends. Recognised for her ability to elucidate complex topics, her articles serve as a go-to resource for home buyers navigating intricate subjects. Through her extensive career, she has been associated with esteemed organisations like the Financial Express, Hindustan Times, Network18, All India Radio, and Business Standard.

In addition to her professional accomplishments, Sunita holds an MA degree in Sanskrit, with a specialisation in Indian Philosophy, from Delhi University. Outside of her work schedule, she likes to unwind by practising Yoga, and pursues her passion for travel. [email protected]

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Transfer of Property Act: Notes, Case Laws and Reading Materials

• Subject-wise Law Notes Transfer of Property Act
• December 9, 2023

Section 5 of the Transfer of Property Act, 1882 defines the term transfer of property. According to this section, 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 and other living persons.

Hello Readers!

This article provides Transfer of Property Act notes with case laws . The Act provides provisions for transfer of movable or immovable property. As a learner, you can consider it as a free, online, and self-placed course. As a competitive exams aspirant, you will find it perfect for Judicial Service Exams, UPSC CSE Law Optional, etc. And as a reader, this article on Transfer of Property Act notes is sufficient for you to learn or research on Transfer of Property Act!

For books on Transfer of Property Act, click here .

Happy Learning!

Meaning and Definition of Property

General rules and doctrines regarding transfer of property, sale under transfer of property act, mortgage under transfer of property act, lease under transfer of property act, gifts under transfer of property act.

For notes on other subjects, click here .

For case briefs and analysis, click here .

We hope you found Transfer of Property Act notes’ on every topic related to Transfer of Property Act . If you think we missed anything, help us by mentioning the details in this form .

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Moveable and Immovable Property under The TPA,1882

The Transfer of Property Act, 1882 is a civil legislation of immense significance owing to the vast number of properties related transactions taking place throughout the country. A uniform legislation was the need of the hour considering this factor, and this Act was drafted to serve the selfsame purpose. The Act came into existence on 1 st July, 1882 which gives for the regulations of transmission of property inter vivos i.e., among living things. Therefore, the Act does not cover the dimension of transfer of property in totality. Erstwhile, the transfer of immovable property was governed by the English laws. The Act of 1882, sets out the objectives and governs only the transfer which is made by the parties and not by the operation of law. However, the Act contains the provisions of transfer of both moveable and immoveable property but the major portion of the Act talks about the transfer of immovable property which is visible from the below mentioned paper. [1]

It is crucial to understand the meaning of the term “property” as applied in the Act. Property has been given a wider aspect covering both tangible material things, e.g., land and houses as well as rights which are not exercised over any material, e.g., a right to repayment of a debt. The word ‘transfer’ in the Act has also been used in a wider sense. It may mean either transfer of all the rights and interests in the property or transfer of one or more of subordinate rights in the property. [2]

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Property in its wider sense may include anything which has some value and over which the right of ownership may be exercised. In general terms, the property can be defined as the virtual or physical entity which is owned by a person jointly or severally. The definition of the property can be seen under the Benami Transactions (Prohibition) Act, 1988 which says:

“Property of any kind, moveable or immoveable, tangible or intangible and is inclusive of any right or interest in such property”. [3]

The very concept of property plays a crucial role in a human’s life, because a human cannot live without the use of material objects which are covered under the purview of property. The 1882 Act plays a crucial role in the statute book with the ultimate objective to render the system of transfer of immovable property a system of public transfer legislation. It is one of the legislation made in the 19th century to govern the property rights of individuals. [4]

The concept of moveable and immoveable property under the Indian laws is parallel to the concept of English law under which property is divided into two categories, real property and personal property. The real property means the property pertaining to specific recovery and freehold interests in land whereas the personal property means the property which involves a personal action and includes everything other than real property. Therefore, ‘property’ in its most comprehensive sense includes all legal rights of a person except his personal rights, which constitute his status or personal condition. [5]

Immoveable Property 

The transfer under the TPA, 1882 deals with specific transfer pertaining to immoveable and moveable property. However, it is said that anything which excludes immoveable property is regarded as moveable property. Section 3 (2) of the Act states:-

“Immoveable property does not include standing timber, growing crops or grass’. [6]

Therefore, the Act does not have a comprehensive definition of immovable property and hence it can be concluded that it’s an unsatisfactory definition. Therefore, for the purpose of definition of immovable property we will refer to various other Acts where such definitions are defined.

The General Clauses Act of 1897 under Section 3(26) states that: “immoveable property shall include land any benefits arising out of land and also the things attached to the earth, or permanently attached to the earth”. Thus, the definition of immovable property is also not exhaustive. However, the definition has clarified on things “ attached to earth” which includes: [7]

a) “anything rooted in earth, it can be trees and shrubs”;

b) “imbedded in earth, things like walls or buildings”; or

c) “attached to what is so imbedded for the permanent beneficial enjoyment of that to which is attached”

This very definition of the General Clauses Act is applicable to the Transfer of Property Act as well and same was held in Babul Lal v. Bhawani [8]. Therefore, together they give a wider ambit to the definition of the term “immoveable property”. The benefit arising out of land would mean ‘right to catch fish, right to collect rent, any interest thereof, any income derived from that land will be considered as a part of immovable property.

Things rooted to the earth

Things rooted to the earth, means standing timber, growing crops or grass are not immoveable property, meaning that trees are excluded from the definition of immovable property. The main reason of the exclusion is that they are useful as timber only after their severance from land. The main thing is to determine the intention to cut down the tree from the middle and remove the tree permanently which is firmly attached to earth. In such case the latter one will be treated as ‘immoveable property’ and former as ‘moveable property’. [9]

Things imbedded in earth

Things embedded in earth herein, this would essentially include things made up by man or any non-natural objects embedded to earth. The property is treated as fixtures when it is firmly attached to the land. Buildings are the most appropriate example of the things imbedded to the earth.[10]

Further, the Registration Act, 1908 under Section 2(6) defines “Immovable Property” as the property which includes “land, building, hereditary allowances, rights to ways, lights, ferries, fisheries or any other benefit arising out of land, and things attached to the earth or permanently fastened to anything which is attached to the earth but not standing timber, growing crops nor grass”. Therefore, it is implied that buildings are also covered under the definition of immovable property. [11]

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Moveable Property

The term moveable property has not been defined under the Act, in general parlance, it means anything which is easily moveable from one place to another without changing its structure or anything and without giving any harm to its surroundings can be said as moveable property. It is noted that moveable properties do not mandatorily require registration under the Act for the purpose of transfer. [12]

The definition stipulated under the Transfer of Property Act, 1882 for immovable property under Section 3 by excluding standing timber, growing crops and grass implies that these all are considered as moveable property, no specific definition of moveable property has been written under the act.[13] However, the General Clauses Act of 1897 under Section 3 clause 36 defines moveable property as “property of every description, except immoveable property” . [14]

Further adding to the definition under the Sale of Goods Act, which has defined moveable property as “moveable property includes every kind of property excluding actionable claims and money, it includes stock, shares, growing crops, grass, things attached to or forming a part of the land which are agreed to sale or under contract pertaining to sale.” [15]

The definitions together give a strong meaning to what is moveable property. Therefore, the framework of what constitutes a moveable property was necessary to determine the rights and duties in respect of transactions and also the tax liability of the individual under the tax provisions whenever the transactions is made in relation to property.

Stocks and Shares

Stocks and shares are considered as moveable property, they are the part of the company which is held by the person known as shareholder. The shareholder will have certain rights over the company which includes the right to vote in a general meeting of a company. These are transferable and come under the purview of moveable property. [16]

Further, standing timber, growing crops and grass are the exception to immovable property and are moveable property. These are segregated because of the benefits which arise when they are cut down and can be used for building material, for food and grass. Therefore, the property which is cut down the intention cutting down of that property has to be seen. Because, if such standing timber, tree or grass is fixed firmly and not removed then this property will be treated as immovable property and is removed (not from the grass root) then this property will be considered as moveable property. [17]

Actionable Claims and money

Actionable claims are excluded from the ambit of moveable property. The Transfer of Property Act, 1882 recognizes actionable claims as “claim to any debt, which is recognized by the Civil Court as a ground of relief to the aggrieved party in the court of law.” Other than debts which include mortgage or hypothecation or pledge of such property or any beneficial interest a person has to such property or any beneficial interest of the claimant into the respective property. Actionable claim can never be a moveable property because it’s a claim ascertainable in the court of law for the right to recover and not for the enjoyment purpose. The claimant can have the right to recover in the court of law by suit or through an action. [18]

For the purpose of money, money is not considered as good but a legal tender and it is understood that a legal tender cannot be exchanged for any other legal goods and that’s why it lacks transferability and hence cannot be covered under the Transfer of Property Act. [19]

The Transfer of Property Act, 1882 intended to amend the existing laws not to introduce new principles. It only transfers voluntarily. Transfer of property means transfer inter vivos i.e., transfer among living things, a property whether moveable or immoveable is transferred between two persons in different facts and circumstances and at different values.  There are different laws and ways to determine it for the purpose of moveable property. The Sales of Goods Act is applicable for the purpose of immovable property, the Transfer of Property Act is applicable. The paper has provided the categorization of movable and immovable, the with the intention judiciary and the provisions enshrined in the statutes have clarified on what is considered to be moveable property and immovable property.

[1] N Pradhan, “Transfer of Property Act (TPA)”, Legal Service India, available at: http://www.legalserviceindia.com/legal/article-2117-transfer-of-property-act-topa-tpa-.html (last visited on Dec 1, 2020).

[2] Dhruvi Dharia, “Rules relating to transfer of property”, Law Times Journal , March 29, 2020.

[3] The Benami Transactions (Prohibition) Act, 1988, s.2(c).

[4] Jaya V.S (ed.), Property Law 594-595, available at: http://14.139.60.114:8080/jspui/bitstream/123456789/738/21/Property%20Law.pdf (last visited on Dec, 1, 2020).

[5] Raichand vs. Dattatrya, AIR 1964 Bom. 344.

[6] The Transfer of property Act, 1882, s. 3(2).

[7] The General Clauses Act of 1897, s.3(26).

[8] ALL 1912 LJ 776.

[9] Jagdish vs. Mangal Pandey, AIR 1986 All. 182.

[10] Punnayya vs. Venkatappa, AIR 1926 Mad. 343.

[11] The Registration Act, 1908, s.2(6).

[12] Lexforti, “Categorization of Immovable and Moveable Property”, June 27, 2020 available at: https://lexforti.com/legal-news/categorization-of-immovable-and-moveable-property/ (last visited on 2 Dec, 2020).

[13] The Transfer of property Act, 1882, s.3.

[14] The General Clauses Act of 1897, s. 3(36).

[15] The Sale of Goods Act, s. 2(7).

[16] Supra note 12.

[17] Shantabai vs. State of Bombay, 1959 1 SCR 265.

[18] Supra note 12.

[19] Re Mathur Lalbhai, 1901 25 Bom. 702.

BY SURABHI SHARMA | UPES, DEHRADUN

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Actionable claim under Transfer of Property Act

Table of Contents

DEFINITION OF ACTIONABLE CLAIM

According to Section 3 of the Transfer of Property Act, 1882  actionable claim means :

Unsecured money debt

A debt may be secured or unsecured. Where the creditor takes security from the debtor for repayment of his money, the debt is secured debt. If debtor gives the security of his immovable property, the debt is secured by way of mortgage. Where security is some movable property, it is pledge or hypothecation. On the other hand, if there is no security of any movable or immovable property, the debt is unsecured. According to Section 3 only unsecured debt is an actionable claim. Debt secured by way of mortgage, pledge or hypothecation is not an actionable claim. ‘Debt’ in this Section does not mean only ‘loan’. Any obligation to pay a certain or definite sum of money may be called a ‘debt’. For example, claim of ‘arrears of rent’ is an actionable claim. ‘Debt’ may be existent, accruing or conditional:  

• Existent Debt – Where a debt or sum of money has already become due and is payable at present, the debt is existent.
• Accruing Debt – Where a debt or sum of money is at present due but it is payable not now but on a future date, the debt is accruing. Accruing debt is due at present but becomes payable only on a future date. It was held in Poothekka v. Annamalai [1] that a claim for salary to fall due in the next month is an accruing debt and as such an actionable claim
• Conditional or Contingent Debt. – Where the claim for a sum of money exists but the payment depends upon the fulfillment of any condition, the debt is conditional. Where the claim of money is subject to some uncertain future event which may or may not happen, the claim is contingent.

Claim to beneficial interest not in possession of the claimant

Right of a person to take the possession of a movable property from the possession of another, is the actionable claim of that person provided that the claimant has beneficial interest, that is, the right of possession in that property. Following requirements are necessary for consulting an actionable claim –

• The claim is to some movable property.
• The movable property is in possession of another person.
• The beneficial interest or the right of possession of the claimant is recognized by the Court.

A person can claim possession of a movable property of which he has right to possess but it is not in his possession. Moreover, the claimant must also have right of possession, if he has no legal right of possession, the claim is not actionable claim.

INSTANCES OF ACTIONABLE CLAIMS

Some of the claims recognized as actionable claims are:

• Claim for arrears of rent.
• Claim for money due under insurance policy.
• Claim for return of earnest money.
• Right to get back the purchase-money when the sale is set aside.
• Right of a partner to sue for an account of the dissolved partnership firm.
• Muslim woman’s claim for her unpaid dower/
• Right to claim benefit under a contract for the purchase of goods.
• Right to get the proceeds of a business.

In Sunrise Associates vs. Govt. of NCT of Delhi & Ors [2] , the Supreme Court held that the lottery ticket has no value in itself as it is mere piece of paper. Its value lies in fact that it represents chance or right to conditional benefit of winning prize of greater value than consideration paid for transfer of that chance. It is nothing more than token or evidence of this right. Three ingredients in the sale of lottery tickets, namely, (i) prize; (ii) chance; and (iii) consideration. The bench held that the sale of lottery tickets is an actionable claim.

TRANSFER OF ACTIONABLE CLAIMS

Section 130 makes it clear that actionable claims are transferable properties. Any kind of transfer, that is, sale, gift, exchange or mortgage of an actionable claim is possible.

MODE AND EFFECT OF ASSIGNMENT

According to Section 130, transfer of actionable claims, whether with or without consideration, must be made by an instrument in writing. The instrument must be either signed by the transferor or by his duly authorized agent. There cannot be oral assignment of any actionable claim. However, registration of the same is not necessary to effect the transfer. It is also not compulsory that there is a separate deed for transfer. If there is an endorsement transferring the right under a promissory note, the actionable claim is deemed to be transferred and the transferee is in position to recover money due under the promissory note without obtaining a decree on the debt itself.

Transfer of actionable claims takes effect after execution of the instrument. The execution is complete when the transferor puts his signature or thumb impression. After execution, all the rights and remedies of the transferor passes on to the transferee. The assignee himself becomes entitled to recover the claims and sue in his own name. As the assignee becomes ‘owner’ of all the rights and liabilities of the actionable claim transferred to him, he is subject to also the liabilities present.

NOTICE OF ASSIGNMENT

According to Section 131, notice is not necessary to perfect the title of the assignee of a debt. However, until the debtor receives notice of the assignment in accordance with law, his dealings with the original creditor will be protected. Accordingly, notice is necessary to protect the interest of the assignee. In the absence of notice, the transferee shall lose his claim which is paid to the transferor. This Section provides following two requirements for a valid notice:

• The notice must be in writing and state the name and address of the transferee.
• It must also be signed by the transferor or his duly authorized agent or, where transferor refuses to sign, it must be signed by the transferee or his agent.

LIABILITY OF TRANSFEREE OF ACTIONABLE CLAIM

According to Section 132, after execution of the instrument assigning actionable claim, all the rights and liabilities in respect of the claim will pass on from transferor to the transferee. The liabilities and equities, to which the transferor was subject to at the date of transfer, become the liabilities and equities of the transferee. Transferor can get no better title than the transferor. The assignee is bound by the liabilities of the assignor being transferred even if the assignee had no notice of such liabilities.

WARRANTY OF SOLVENCY OF DEBTOR

When a debt is transferred the transferee may run the risk of losing the claim in such circumstances when the debtor is an insolvent. As a precautionary measure, the transferee should assure the transferor that debtor is solvent. Section 133 provides that when the transferor of a debt gives warranty as to solvency of the debtor, in the absence of any contract to contrary, the warranty applies to his solvency only at the date of transfer. When the transfer is for consideration, any such warranty extends only to the amount or value of such consideration. However, this rule is applicable only where the transferor actually gives such warranty. It is open to the parties to contract any contrary stipulation.

MORTGAGED DEBT

Actionable claim is a property and transfer of this property by way of mortgage is possible. Actionable claim is unsecured money debt. This debt may be secured by another debt (actionable claim). So, where a debt is transferred for securing another existing or, future debt it is considered to be a transfer of an actionable claim by way of mortgage. Section 134 provides the following rules under which the money realized out of such debt is to be appropriated:

• The debt received by the transferor or recovered by transferee is to be applied in payment of the cost of such recovery.
• It is to be applied towards satisfaction of the amount secured by the transfer.
• If any residue remains after the above mentioned payments, the remainder is to be given to the transferor.

ASSIGNMENT OF RIGHTS UNDER POLICY OF INSURANCE AGAINST FIRE

The general rules for assignment of actionable claims are unsuitable to the assignment of rights under the insurance policies of fire or marine. This is because of the fact that such rights cannot be assigned without transfer of the property insured. Mere transfer of such policy cannot entitle the assignee to get ownership of the property insured.

INCAPACITY OF OFFICERS CONNECTED WITH COURTS OF JUSTICE

Section 136 states that the persons specified in the Section cannot be assignees of actionable claims. Both the transferor and transferee must be competent persons and the property must also be transferable within the meaning of Section 6 of this Act. This Section specifies the persons who are legally disqualified to a be a transferee for the transfer of actionable claims. According to this section no Judge, legal practitioner or officer connected with any Court of Justice shall buy or traffic in or, stipulate for or agree to receive any share or interest in any actionable claim. It further provides that no Court of Justice shall enforce at his instance or at the instance of any person claiming by or through him, any actionable claim, so dealt with by him. The object of such prohibition is to ensure the impartiality of judiciary. In Kerakoose v. Serle [3] , the privy Council has stated the following: “It is of great importance that no officer of a Court of Justice should be even exposed to the suspicion that in the discharge of his official duties his conduct may be influenced by any personal consideration.

However, the above mentioned persons cannot buy or deal with another person’s actionable claim privately, but they can sell their own actionable claims.

SAVING OF NEGOTIABLE INSTRUMENTS, ETC.

The expression “mercantile document of title to goods” includes railway receipt, warrant or order for the delivery of goods, and any other document used in the ordinary course of business as proof of the possession or control of goods, or authorizing or declaring to authorize, either by endorsement or by delivery, the possessor of the document to transfer or receive goods hereby represented.

Under Section 137 documents which are in the nature of negotiable instruments are exempt from the operation of the provisions of this Chapter. Negotiable instruments are regulated by the Negotiable Instruments Act. Normally, negotiable instruments are assigned by endorsement and delivery of possession or, if payable to bearer, by delivery alone. So, the assignment of stocks, shares or debentures or instruments which are for the time being, by law or custom, negotiable, or any mercantile document of title to goods, has been exempted from the operation of this Chapter. ‘Mercantile document of title to goods’ have been enumerated in the Explanation to this section. Their transfer is governed by the law or custom of the merchants. A Railway Receipt is a document of title to goods. In Commissioner of Income Tax v. Bhopal Textiles Ltd [4] ., the Supreme Court held that when it is handed over to the consignee on payment, the property in the goods is transferred.

A negotiable instrument may be transferred also like any actionable claim under this Act. Section 137, while giving an additional privilege to mercantile documents, does not restrict the transfer of negotiable instruments otherwise than by way of an endorsement.

[1] AIR 1926 Mad. 1173

[2] 2006 (5) SCC 603

[3] (1846) 3 MIA 329

[4] AIR 1961 SC 426

Dr. R.K.Sinha, The Transfer of Property Act (Central Law Agency, Allahabad, 20 th edn., 2019).

• S. Rama Rao, Transfer of Property Act (MSR Law Books)

G.C. Venkatasubharao, The Transfer of Property Act, 1882 (C.Subbiah Chetty & Co., Chennai, 16 th edn., 2019).

Author: Aditi Shanmugam, Chettinad School of Law, 2nd year/ Student

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