TRANSFER OF PROPERTY ACT, 1882

Comprehensive Examination Notes

Topics Covered:
A. Definition of Transfer of Property (Section 5)
B. Transferable and Non-Transferable Property (Section 6)
C. Conditions Restraining Transfer (Sections 10, 11, 12)
D. Transfer to an Unborn Person (Section 13)
E. Rule Against Perpetuity (Section 14)
F. Vested and Contingent Interest (Sections 19, 20, 21)
G. Rule of Election (Section 35)
H. Gifts (Sections 122–129)
I. Sale — Meaning, Essentials, Rights & Liabilities (Sections 54, 55)

Based on Avtar Singh & Poonam Pradhan | Case Laws Current up to 2024
A. Definition of Transfer of Property (Section 5, TPA
1882)
STATUTORY TEXT — Section 5: "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.

1. Historical Background & Object

Before the Transfer of Property Act, 1882 came into existence, transfers of immovable properties in
India were governed largely by principles of English law and equity. The absence of any statutory
code led to confused and conflicting case laws. To remedy these deficiencies, a Law Commission
was appointed in England and the Bill was prepared not less than seven times before the final
version was passed, coming into force on 17 February 1882 as Transfer of Property Act, 1882 (Act
4 of 1882).
The Preamble states: 'Whereas it is expedient to define and amend certain parts of the law relating
to the transfer of property by act of parties.' The word 'define and amend' — NOT 'consolidate' —
indicates that the Act is NOT exhaustive. English law principles not inconsistent with the Act may
still be applied on the grounds of justice, equity and good conscience.
The Act deals ONLY with transfer by act of parties (inter vivos transfers), NOT with transfers by
operation of law such as inheritance, devolution on death, court decrees in execution, forfeiture, or
insolvency.

2. Meaning and Analysis of Section 5

Section 5 defines 'Transfer of Property' analytically. An analysis reveals four key elements:

(i) Act of Conveyance

A transfer requires a conveyance — handing over of property from one to another. The Act does
not require the transferor to literally hand over property; what is required is a change of ownership
or some rights therein. All rights need not be conveyed; partial interest (e.g., a lease) is also a
transfer. Under the Act, conveyance of property can be effected in five ways: Sale, Mortgage,
Lease, Exchange, or Gift.
KEY PRINCIPLE: The document of transfer must show change of ownership or interest.
Where the transferee already had some pre-existing interest in the property, there is NO
conveyance and hence NO transfer.

(ii) Conveyance by a Living Person

Both transferor and transferee must be living persons at the time of transfer since the Act deals only
with inter vivos transfers. The term 'living person' includes:
• Natural human beings
• Companies or associations or bodies of individuals, whether incorporated or not (added by
Act 20 of 1929)
• Registered societies, corporations, firms — all recognized as legal persons
However, the following are NOT considered 'living persons' under Section 5:
• An idol or deity — though recognized as a juristic person, not a living person (dedication to
deity does not fall under Section 122)
 • A court — not a living person; court orders for sale are NOT transfer of property within
section 5
• An unregistered society or club (held by Calcutta High Court in Usha Rani Kundu v Agradut
Sangha)

(iii) Conveyance to Himself or Other Living Persons

Pre-1929, the transferor could transfer property to other living persons or to himself and others, but
NOT to himself alone. This created difficulties for those wanting to settle property on themselves as
sole trustees. The Amendment Act of 1929 added the words 'to himself' so that today a person can
create a trust and be the sole trustee, with property conveyed to himself in his trustee capacity.

(iv) Transfer in Present or in Future

The property may be transferred either with immediate effect (in present) or from a future date.
Where the transfer has immediate effect, the property stands transferred on compliance of all
formalities. Where vesting is postponed to a future date, the interest passes only on that date.
However, the period of postponement cannot exceed the rule against perpetuity (Section 14).

3. Concept of 'Property' Under Section 5

The word 'property' is used in the most comprehensive sense. It includes:
• Movable and immovable property
• Tangible and intangible property
• Partial as well as full interests ('bundle of rights')
A transfer of FUTURE PROPERTY is not valid in India, but a contract/conveyance regarding such
property may be valid as a contract to assign. When the property comes into existence, equity
fastens upon it and the contract becomes a complete assignment (Holroyd v Marshall, 1862, 10
HLC 191).

4. What Does NOT Constitute Transfer of Property?

(a) Partition
Partition of joint family property is NOT a transfer. The Supreme Court in Mohar Singh v Devi
Charan (AIR 1988 SC 1365) held that partition is not actually a transfer but only signifies surrender
or division of a joint right. Since every co-sharer has an antecedent title in all portions of the
property, there is no conveyance. The Karnataka HC in Aralappa v Jagannath (AIR 2007 Kant 91)
followed this line.

(b) Surrender
Surrender involves the merging of a lesser interest in a greater interest without the greater being
enlarged. It is NOT a transfer. Surrender of a lease (Makhanlal Laha v Nagendranath, AIR 1933 Cal
467) and surrender of a life estate by a Hindu widow (Natvarlal Punjabhai v Dadubhai Manubhai,
AIR 1954 SC 61) are NOT transfers.

(c) Family Settlement

A family arrangement between members of a family to divide and hold family property is NOT a
transfer. In Sahu Madho Das v Mukand Ram (AIR 1955 SC 481), the Supreme Court held that
family settlement is based on antecedent title; each person recognizes the rights previously
asserted by others. No conveyance is required.
(d) Relinquishment
Relinquishment is extinguishment of a right and does not amount to a transfer (Muniappa Pillai v
Periasami, (1975) 1 Mad LJ 236).

(e) Easement, Charge, Compromise

An easement does not involve conveyance. Creation of a charge does not convey any interest — it
only secures payment out of certain properties. Compromise is not a transfer unless it involves
actual conveyance of title.

5. Transfer Must Be in Prescribed Manner

A valid transfer must meet all formal requirements:
• Property must be transferable (Section 6)
• Object and consideration must be lawful
• Transferee must be competent (not legally disqualified)
• Transfer must not be opposed to the nature of the interest
• Transferor must be competent to transfer
• Transfer must be made in prescribed form

6. Key Case Laws

Umabai v Nilkanth Dhandiba Chavan (2005) 6 SCC 243 — The true nature of a document must
be determined by having regard to the intention of the parties, the circumstances surrounding
the transaction, and the wording of the document.
Jai Narain Parasampuria v Pushpa Devi Saraf (2006) 7 SCC 756 — Transfer of property in
favour of an unincorporated company is NOT barred under Section 5. The section includes
companies and associations whether incorporated or not.
Har Narain v Bank of Upper India AIR 1938 Oudh 84 — A court is not a living person. A court
order for sale does not constitute a 'transfer of property' within the meaning of Section 5.
Subbegowda v Thimmegowda AIR 2004 SC 2428 — A conditional transfer or settlement
accompanied by transfer is permissible. Conditions precedent or subsequent, covenants or
restraints are valid. However, a mere entrustment of property with power of revocation is NOT a
transfer.
Kale v Deputy Director of Consolidation (1976) 3 SCC 119 — Family arrangements are
governed by special equities. Courts should give effect to bona fide family arrangements made
to resolve disputes.
SK Sattar Mohd. Choudhari v Gundappa Amabadas Bukate (1996) 6 SCC 373 — Section 5
contemplates transfer by a person who has title to another who has no title. If partition takes
place by act of parties, it is not a transfer.
Holroyd v Marshall (1862) 10 HLC 191 — If a vendor agrees to sell property of which he is not
possessed at the time and afterwards becomes possessed of property answering the
description, equity transfers the beneficial interest to the purchaser immediately on acquisition.
B. Transferable and Non-Transferable Property (Section
6, TPA 1882)
GOLDEN RULE: Transferability of property is the RULE; non-transferability is the
EXCEPTION. The maxim: 'alienatio rei praefertur juri accrescendi' — alienation is
favoured over accumulation.

1. Section 6 — General Rule

Section 6 declares that 'Property of any kind may be transferred, except as otherwise provided by
this Act or by any other law for the time being in force.' The general policy of law is to promote free
alienation and circulation of property.
For a valid transfer, the following essentials must be met (Summary):
• The property must be transferable (Section 6)
• The object or consideration must be lawful
• The transferee must not be legally disqualified
• Transfer must not be opposed to the nature of the interest
• Transferor must be competent
• It must be in the prescribed form

2. Non-Transferable Properties — Exceptions Under Section 6

Clause (a) — Spes Successionis (Expectation of Succession)
The following are non-transferable:
• Chance of an heir apparent succeeding to an estate
• Chance of a relation obtaining a legacy on the death of a kinsman
• Any other mere possibility of a like nature
SPES SUCCESSIONIS literally means 'hope of succession.' It is a mere expectation — not
a present legal right. Based on maxim: 'nemo est heres viventis' — no one is the heir of a
living person.
Under Hindu law, a reversioner's right is spes successionis. The reversioner (who inherits after a
widow's death) has NO present right during the widow's lifetime. A legacy is also spes successionis
because: the testator may change the will; the legatee may predecease the testator; or the legatee
may not even survive to claim. Therefore, all such expectations are non-transferable.
EXCEPTION VIA ESTOPPEL: An heir apparent who receives advantage for giving up
future rights to property is estopped from later claiming the inheritance. The doctrine of
estoppel operates even in cases of spes successionis.

Clause (b) — Right of Re-Entry

A mere right of re-entry for breach of a condition subsequent CANNOT be transferred to anyone
EXCEPT the owner of the property affected thereby. The right of re-entry is a landlord's right to re-
enter upon breach of lease conditions. This right is personal and non-transferable because it is
essentially a remedy attached to the property interest of the lessor.
EXCEPTION: The lessor may transfer the right of re-entry AFTER the lease expires or TOGETHER
WITH the whole reversion (remaining ownership interest). For example, A leases land to B for 5
years with a condition against well-digging. If B digs a well, A's right of re-entry CANNOT be
assigned to C — only A himself can exercise it.
Clause (c) — Easement
An easement cannot be transferred apart from the dominant heritage. An easement is a right
enjoyed by the owner of dominant land over the servient land (e.g., right of way). Since easement is
an incident of ownership of dominant land, it cannot be detached and transferred separately. If A,
the owner of House X, transfers the house to C, the easement automatically passes to C as it is
attached to the house.

Clause (d) — Restricted Personal Enjoyment

An interest in property restricted in its enjoyment to the owner personally cannot be transferred.
Examples include:
• Religious offices such as Mutawalli of a Waqf, Mahant of a Mutt
• Right of pre-emption (right to purchase before others)
• Service tenure — rights given for personal service
• Office of trusteeship — based on personal confidence
EXCEPTION: Where the right to receive offerings at a temple is coupled with a duty that does NOT
require personal qualifications, it is transferable. The Supreme Court settled this in Anand Behara v
State of Orissa (AIR 1956 SC 17).
IMPORTANT NOTE: It is open to a donor to transfer ownership/title of a property while
RESERVING its possession and enjoyment to herself during her lifetime. This is permissible and
does NOT attract Section 6(d) (K Balakrishnan v K Kamalam, AIR 2004 SC 1257).

Clause (dd) — Right to Future Maintenance

A right to future maintenance, in whatsoever manner arising, secured or determined, CANNOT be
transferred (inserted by Amendment Act of 1929). This is a personal right for the benefit of the
person to whom it is granted. However, ARREARS OF MAINTENANCE (i.e., past maintenance
already due and unpaid) CAN be transferred as an actionable claim because they have already
crystallized into a debt.

Clause (e) — Mere Right to Sue

A mere right to sue CANNOT be transferred. This is based on the policy against trafficking in
litigation (maintenance and champerty). Examples of non-transferable rights to sue:
• Right to sue for mesne profits (unliquidated damages) — Durga Chunder v Kailas Chunder
(Calcutta HC)
• Right to sue for damages in tort or breach of contract
• Right to sue for accounts against an agent
IMPORTANT DISTINCTIONS:
• Right to sue for a liquidated/definite sum of money IS an actionable claim and CAN be
transferred
• Where the right to sue has merged in a court decree, the right under the decree is
assignable
• Where a right to sue is connected with a business and the whole business is transferred, the
right to sue passes with the business (Amiratham Kadumbah v Sarnam Kadumbah, SC)

Clause (f) — Public Office and Salary

A public office CANNOT be transferred, nor can the salary of a public officer, whether before or
after it has become payable. The rationale is that public offices are based on personal fitness and
trust in the incumbent. Salary of a military or civil servant cannot be attached or transferred.
Clause (g) — Military, Naval, Air-Force and Civil Pensions
Stipends allowed to military, naval, air-force, and civil pensioners of the Government, and political
pensions, CANNOT be transferred. These are personal benefits granted by the State.

Clause (h) — Unlawful Transfers

No transfer can be made: (1) insofar as it is opposed to the nature of the interest affected, (2) for an
unlawful object or consideration within the meaning of Section 23 of the Indian Contract Act, 1872,
or (3) to a person legally disqualified to be a transferee. Examples of legally disqualified transferees
include judges, legal practitioners, or officials of court in respect of actionable claims (Section 136).

Clause (i) — Tenants with Untransferable Occupancy Rights

A tenant having an untransferable right of occupancy, the farmer of an estate in default of revenue
payment, or the lessee of an estate under the management of a Court of Wards, CANNOT assign
their interest as such.

3. Relationship with Section 43 (Fraudulent/Erroneous Representation)

Section 6(a) says spes successionis cannot be transferred. However, Section 43 provides that
where a person FRAUDULENTLY OR ERRONEOUSLY represents that he has authority to transfer
certain immovable property and professes to transfer it for CONSIDERATION, such transfer, at the
OPTION of the transferee, shall operate on any interest which the transferor may subsequently
acquire. This creates an estoppel-based exception to the general rule of non-transferability of
expectant interests.

4. Key Case Laws

Amrit Narayan v Gaya Singh Privy Council — A Hindu reversioner has NO right or interest in
praesenti in the property held by a widow. His right becomes concrete only on her death. Until
then, it is a mere spes successionis and cannot be transferred.
Anand Behera v State of Orissa AIR 1956 SC 17 — The right to receive fish from a lake was
held to be a 'profit a prendre' and not a mere spes successionis. It is an actionable property right
and transferable.
Raghuram Rao v Eric P Mathias AIR 2002 SC 797 — The condition restraining a lessee from
alienating leasehold property is NOT illegal or void under Section 6 read with Section 10.
Section 10's exception for leases validates such clauses.
Amiratham Kadumbah v Sarnam Kadumbah Supreme Court — When a minor son transferred
property on attaining majority, his right to defeat existing adverse claims was also transferred
along with the property. The right to sue is not a 'mere' right to sue when connected to the
property itself.
C. Condition Restraining Transfer (Sections 10, 11, 12,
TPA 1882)
SECTION 10: Where property is transferred subject to a condition or limitation
ABSOLUTELY restraining the transferee from parting with or disposing of his interest in
the property, the condition or limitation is VOID. The transfer itself remains valid; only
the restraining condition is void.

1. Policy Underlying Section 10

Section 10 is based on the principle of public policy that there should be free transferability of
property. Lord Justice Fry observed: 'From the earliest times, the courts have always leant against
any device to render an estate inalienable.' The provision relieves a transferee of immovable
property from an absolute restraint placed on his right to deal with the property as owner.

2. Absolute Restraint — Void

Restraint on alienation is ABSOLUTE when it totally takes away the right of disposal. The test (per
Sir George Jesel): 'whether the condition takes away the whole power of alienation substantially —
it is a question of substance and not of mere form.'
Examples of VOID conditions:
• A makes a gift to B with condition 'he will not sell it.' This is absolute restraint — VOID. If B
sells, the sale is VALID.
• A gifts a house to B with condition that if B sells during A's wife's lifetime, she gets an option
at Rs 10,000 when the house is worth Rs 10,00,000. Held: This is effectively absolute
restraint — VOID. (Rosher v Kosher, 1884, 26 Ch D 801)
• A transfer for construction of a college with a condition that if the college is not built, the
property shall not be alienated — VOID (Bhavani Amma Kanakadevi v C.S.I Dekshina
Kerala Maha Idavaka, AIR 2008 Ker 38)
CRITICAL: If the restraining condition is void, the TRANSFER itself is still VALID. The
transferee gets the property FREE from the void condition. In Kannammal v Rajeshwari
(AIR 2004 (NOC) 8 Mad), where a life estate was given with an absolute perpetual
restraint on alienation, the restraint was void and the heirs of the life-estate holder could
deal with the property as absolute owners.

3. Partial Restraint — Valid

A partial restraint on alienation is VALID and enforceable. A restraint is partial when it does not take
away the WHOLE power of alienation but only restricts it to some extent. The following are valid
partial restraints:
• Restraint for a limited/particular time (e.g., 'you shall not sell for 10 years')
• Restraint to a particular class of persons (e.g., 'you shall not sell to a stranger outside the
family') — Mohomed Raza v Mt Abbas Bandi Bibi, (1932) 59 IA 236
• Restraint in favour of the transferor's right of repurchase within a specified period
Mata Prasad v Nagesher Sahai (1927) 47 All 484 — A compromise where a widow retained
possession for life and the nephew was admitted to title but could not alienate during the
widow's lifetime was held VALID. This was a prudent family arrangement and only a partial
restraint.
4. Exceptions to Section 10 — Valid Absolute Restraints
Exception 1: Lease
Conditions restraining alienation ARE VALID in the case of LEASES where the condition is for the
benefit of the lessor or those claiming under him. A lessor can impose a condition that the lessee
will not assign his interest or sub-let to any other person. This exception applies to
permanent/perpetual leases as well (Raghuram Rao v Eric P Mathias, AIR 2002 SC 797). The
rationale is that a lease is only a limited transfer of enjoyment rights — the lessor retains ownership
and legitimate interest in controlling who occupies the property.

Exception 2: Married Women (Non-Hindu, Non-Muslim, Non-Buddhist)

Property may be transferred to or for the benefit of a woman (NOT being a Hindu, Muhammadan, or
Buddhist), so that she shall not have power during her MARRIAGE to transfer or charge the same
or her beneficial interest therein. This was meant to protect married women's property from their
husbands' control during coverture. Similar protection exists in the Married Women's Property Act,
1874 (Section 8): even a court decree cannot be executed by sale of such property.

5. Section 11 — Restriction Repugnant to Interest Created

SECTION 11: Where property is transferred absolutely, a condition restraining the
transferee from enjoying it in a particular manner is VOID if it is repugnant to the
absolute interest transferred. The RULE: if an absolute interest has been created, any
condition which curtails that absolute interest in a manner repugnant to it is void.
Distinction from Section 10: Section 10 deals with conditions restraining alienation; Section 11 deals
with conditions restricting enjoyment. For example, where an absolute gift is made to B with a
condition that B must live in the house himself, such a condition is VOID under Section 11 because
it is repugnant to the absolute interest transferred. B can use the property as he wishes including
renting it out.
EXCEPTION to Section 11: A condition that property is to be enjoyed in a particular manner is
VALID if it is imposed for the benefit of an adjoining property belonging to the transferor (e.g., a
condition that a transferred piece of land must not be built upon, to protect the light and air of an
adjacent property retained by the transferor).

6. Section 12 — Condition Making Interest Determinable on

Insolvency/Attempted Alienation
SECTION 12: Where property is transferred to or for the benefit of a person, a condition
or limitation making such interest determinable on his insolvency, or in the event of his
attempting to transfer or charge it, is VOID.
This section protects transferees from forfeiture of their vested interest merely because they
become insolvent or try to deal with the property. Such conditions defeat the whole purpose of the
transfer and are against public policy. If A transfers property to B with a condition that 'if B becomes
insolvent, the property will revert to A,' that condition is VOID.
EXCEPTION: The protection of Section 12 does NOT apply to a condition for the benefit of the
transferor and not for the benefit of the transferee. In a lease, the lessor may lawfully include a
condition that the lease shall determine if the lessee becomes insolvent (as this protects the lessor
and is for the benefit of the lessor, not the lessee-transferee).
7. Hindu and Muslim Law on Restraints
Under HINDU LAW, a condition in absolute restraint on alienation either in a gift inter vivos or in a
will is VOID. Under MUSLIM LAW, such a condition in restraint of alienation attached to a gift is
also VOID.
If there is an absolute statutory bar on alienation under the provisions of an Act (e.g., tenancy
legislation), it will PREVAIL over Sections 10 and 7 of the TPA (Dipak Babaria v State of Gujarat,
AIR 2014 SC 1792).

8. Key Case Laws

Zoroastrian Co-op Housing Society v District Registrar AIR 2005 SC 2306 — From the
earliest times, courts have leant against devices rendering estates inalienable. A condition for
absolute restraint on alienation violates public policy.
Canbank Financial Services Ltd v Custodian (2004) 8 SCC 355 — Taking away the whole or
substantially the whole power of alienation is a question of fact and of substance, not form. A
beneficial interest in shares was created in favour of a person; such interest was held
transferable, otherwise it would be hit by Section 10.
Rosher v Kosher (1884) 26 Ch D 801 — A condition giving an option to purchase at a grossly
inadequate price is effectively an absolute restraint and therefore void.
Dipak Babaria v State of Gujarat AIR 2014 SC 1792 — Where there is an absolute statutory bar
on alienation under any Act, it prevails over Section 10 of TPA.
D. Transfer to an Unborn Person (Section 13, TPA 1882)
SECTION 13: Where, on a transfer of property, an interest therein is created for the
benefit of a person NOT IN EXISTENCE at the date of the transfer, subject to a PRIOR
INTEREST created by the same transfer, the interest created for the benefit of such
person shall not take effect, unless it extends to the WHOLE OF THE REMAINING
INTEREST of the transferor in the property.

1. General Principle
The Transfer of Property Act deals only with transfers between living persons. An UNBORN
PERSON means a person not yet in existence even in the mother's womb. A child in the mother's
womb (child en ventre sa mere) is considered a competent transferee — the child exists in
contemplation of law.
The problem with direct transfer to an unborn person is that no interest can VEST in a non-existent
entity. For vesting of interest, the transferee must be in existence. Section 13 provides a solution:
property CANNOT be transferred DIRECTLY to an unborn person, but it CAN be transferred FOR
THE BENEFIT of an unborn person — subject to strict conditions.

2. Two Mandatory Conditions (Both Must Be Satisfied)

Condition 1: Prior Life Interest in Favour of a Living Person
Before the unborn person's interest can vest, a PRIOR LIFE INTEREST must be created in favour
of a living person who exists at the date of transfer. The unborn person's interest is subject to this
prior interest. The prior interest is always a LIMITED interest (life estate). It is permissible to have
multiple successive life interests — the property may be given to more than one living person
successively for life before it vests in the unborn child.
Example: A transfers property → to X for life → then to Y for life → then to Z (unborn). This is valid.
The interest of the unborn Z is subject to the prior life interests of X and Y.

Condition 2: Absolute Interest Must Be Transferred to the Unborn Person

The interest given to the unborn person must be the WHOLE OF THE REMAINING
INTEREST of the transferor — it must be an ABSOLUTE interest, not a limited or life
interest. If only a limited/life interest is given to the unborn person, the transfer fails.
This condition prevents 'chains of future interests' that would keep property inalienable for multiple
generations. The ENTIRE balance of ownership (after carving out the prior life interests) must pass
to the unborn person absolutely.
Example from Section 13 Illustration: A transfers property to B in trust for A and his intended wife
successively for their lives, and after the survivor's death, for the eldest son of the intended
marriage for life, and after his death to A's second son. The interest for the ELDEST SON (unborn)
does NOT take effect because it gives only a LIFE INTEREST to the son, not the whole of A's
remaining interest. The transfer is VOID as to the eldest son.

3. What Happens to the Unborn Person's Interest Until Birth?

The unborn person's interest is held in abeyance (suspended) until the person is born. It is a form of
future contingent interest. Once born alive, the person acquires a VESTED INTEREST (Section
20). If the unborn person is never born or is born dead, the interest reverts to the transferor or his
heirs.
4. Comparison with Section 113 of Indian Succession Act, 1925
Section 113 of the Indian Succession Act, 1925 contains an analogous rule for TESTAMENTARY
transfers (wills). The condition is the same: the bequest to an unborn person must comprise the
WHOLE OF THE REMAINING INTEREST in the thing bequeathed. If only a limited interest is
given, the bequest is void.
Key case under Section 113: Sopher v Administrator General of Bengal (AIR 1944 PC 67) — A
testator directed that income of each share be paid to each child for life, then to grandchildren until
age 18, after which absolutely. The Privy Council held this valid because it was cumulative: the
grandchildren received the entire remainder.

5. Position Under English Law

In English law (before 1925), transfer to an unborn person was governed by the Rule in Whitby v
Mitchell (1890, 44 Ch D 85) — the 'Rule of Double Possibilities': if interest is given to an unborn
person, any remainder to his issue is VOID along with all subsequent limitations. This strict rule
prevented the creation of 'double contingencies.' The Rule was abolished by the Law of Property
Act, 1925, after which English law was governed by the rule against perpetuity.

6. Hindu and Muslim Law

Previously, under Hindu law, a gift or bequest in favour of an unborn child was VOID. The TPA
(Section 13) made such transfers VALID subject to its conditions. Section 13 does NOT apply to
Muslims. Under Muslim law, a gift in favour of an unborn person is VOID (Abdul Cadur v Turner,
1884, 9 Bom 158).

7. Key Case Laws

Sopher v Administrator General of Bengal AIR 1944 PC 67 — If under a bequest in Section
113 circumstances, there was a possibility of the interest being defeated by a contingency, the
beneficiary under the later bequest did not receive the interest in the same unfettered form. The
bequest to grandchildren was held valid because the gift to them comprised the whole of the
remaining interest.
Girish Dutt v Datadin (1934) 9 Luck 329 — A gift to B for life, then to B's male descendants
absolutely, and in case no male descendants then to B's daughters without power of alienation
— the gift to unborn daughters being of LIMITED interest and subject to a prior interest was
INVALID under Section 13.
Raj Bajrang Bahadur Singh v Thakurain Bakhtraj Kuer (1953) SCR 232 — Although no
interest could be created in favour of an unborn person, if a gift was made to a class of persons,
some of whom were in existence and some were not, it was valid for those in existence and
invalid for those not in existence.
Sridhar v N Revanna AIR 2012 Kant 79 — A gift deed created interest in favour of the grandson
and absolute right in favour of unborn sons. The condition restraining alienation was NOT void.
Alienation by the donee after birth of his sons was improper; the sons were entitled to the sale
consideration.
E. Rule Against Perpetuity (Section 14, TPA 1882)
SECTION 14: No transfer of property can operate to create an interest which is to take
effect after the LIFE-TIME OF ONE OR MORE PERSONS LIVING at the date of such
transfer, and the MINORITY OF SOME PERSON who shall be in existence at the
expiration of that period, and to whom, if he attains full age, the interest created is to
belong.

1. Meaning of Perpetuity
PERPETUITY means 'continuous or unending.' A perpetuity, in its primary sense, is a disposition
which makes property inalienable for an indefinite period — tying up property from generation to
generation (pidhi dar pidhi). Jarman defined it as: 'A perpetuity is a future limitation which is not to
vest until after expiration of, or will not necessarily vest within, the period fixed and prescribed by
law for the creation of future interest.'
The rule against perpetuity is based on broad principles of public policy. Jekyll MR in Stanley v
Leigh (1932) noted: 'A great mischief would arise from estates remaining forever inalienable or
untransferable — being a damp to industry and a prejudice to trade, bringing inconvenience and
distress to families whose estates are so fettered.'

2. Analysis of Section 14
The rule against perpetuity applies when:
• There is a transfer of property
• The transfer creates an interest in favour of an unborn person
• The interest is to take effect AFTER the lifetime of one or more persons living at the date of
transfer AND during the MINORITY of the unborn person
• The unborn person must be in existence AT THE EXPIRATION of the prior living person's
interest

3. The Perpetuity Period

PERPETUITY PERIOD = Life of last preceding living person + Minority (18 years) of the
ultimate beneficiary. The maximum period for which vesting of interest can be postponed
is: life of the living person(s) holding prior life interest + minority period (18 years, or 21
years where the court has appointed a guardian).
The Privy Council in Soundararajan v Natarajan (AIR 1925 PC 244) held that since it is not known
at the date of transfer whether a guardian will be appointed for the minor in future, for the purposes
of Section 14, the NORMAL period of minority is 18 years.

Period of Gestation
If the unborn person is NOT born yet but is in the mother's womb at the expiry of the prior life
interest, a period of GESTATION (normally 9 months/280 days) is also added as a period of grace.
Therefore:
• If unborn person is BORN at or before expiry of prior interest: Perpetuity period = Life of last
person + Minority (18 years)
• If unborn person is IN WOMB at expiry of prior interest: Perpetuity period = Life of last
person + Period of Gestation + Minority (18 years)
4. Test of Possible Events, Not Actual Events
CRUCIAL RULE: In deciding questions of remoteness of vesting, regard must be had to
ALL POSSIBLE EVENTS at the time the instrument takes effect, not merely the actual
events. If there is even the slightest possibility that the interest might vest beyond the
perpetuity period, the disposition is VOID — even if in actual fact the vesting occurred
within the period.
Ram Nawaz v Nandoo (1926) 92 IC 401 — A condition for lineal descendants to hold land
without right to transfer, with reversion to buyer if no descendants alive — the transfer of 2
bighas was held VOID because there was a POSSIBILITY (even if not actual) that the transfer
might be postponed indefinitely.

5. Contingent Interest During Perpetuity Period

During the period between the last life interest holder's death and the unborn person attaining
majority, the ultimate beneficiary has only a CONTINGENT INTEREST. This contingent interest
becomes vested when the beneficiary attains majority. If the beneficiary dies before attaining
majority, the interest does NOT vest and reverts to the transferor or his heirs.

6. Comparison: Indian Law vs English Law

Under ENGLISH LAW: Vesting may be postponed for ANY NUMBER of lives in being plus 21
years, irrespective of whether the ultimate beneficiary is a minor. Section 163 of the English Law of
Property Act, 1925 even saves void gifts by reading in the permitted age (21) for any impermissible
higher age.
Under INDIAN LAW (Section 14): Vesting can be postponed to the life/lives of living persons plus
the MINORITY of the ultimate beneficiary (18 years, or 21 years under court guardianship). India
does NOT have a saving provision like English Section 163 — if the vesting exceeds the perpetuity
period, the interest is simply VOID.

7. Exceptions to the Rule Against Perpetuity

(i) Accumulation for Payment of Debts (Section 17)
Accumulation of income from transferred property for the payment of debts of the transferor or any
person taking interest under the transfer is NOT affected by the perpetuity rule.

(ii) Charities (Section 18)

Where property is transferred for benefit of the PUBLIC for advancement of religion, knowledge,
commerce, health, safety, etc., the restriction of Section 14 does NOT apply. A transfer to a charity
cannot create a perpetuity objection.

(iii) Creation of Charge

A charge does not amount to a transfer of interest in land and therefore is NOT affected by Section
14.

(iv) Personal Agreements

The rule does not apply to personal agreements or obligations. In Nafar Chand v Kailash Chand
(1921), an agreement to appoint a family as pujaris from generation to generation was held valid —
not hit by the rule against perpetuity.
(v) Agreement of Sale
An agreement for the sale of land does NOT of itself create any interest in land (Section 54, para 3).
Therefore, the rule against perpetuity does NOT apply to mere contracts for sale. Similarly,
agreements for pre-emption do not create interest in property and are therefore not hit by the rule.
(Ram Baran v Ram Mohit, (1967) 1 SCR 293)

(vi) Mortgages
The rule against perpetuity applies only when a NEW interest is to be CREATED after expiry of the
prescribed period. In mortgages, no such new interest is contemplated — the mortgagor's equity of
redemption pre-exists. Therefore, the rule does NOT apply to mortgages.

(vii) Right of Entry, Re-entry, Covenant Running with Land, Power of Appointment
Covenants running with land, rights of re-entry upon breach of covenant, covenants for renewal of
lease, and general powers of appointment are also exempt from the rule.

8. Hindu and Muslim Law on Perpetuity

The Amendment Act of 1929 made the rule against perpetuity applicable to Hindus. Before this
amendment, local enactments like the Hindu Disposition of Property Act, 1916 applied. Chapter II of
TPA does NOT apply to Muslims. A Muslim may settle property in perpetuity for the benefit of his
descendants provided there is an ultimate gift in favour of charity (Waqf) — this is validated by the
Wakf Validating Act, 1913.

9. Section 114 of Indian Succession Act, 1925

Section 114 of the Indian Succession Act contains an analogous rule for testamentary dispositions.
The illustrations to Section 114 are instructive: a bequest to B for life, then to C for life, then to 'such
of B's sons as shall first attain age 25' — this would be void because a son of B born after the
testator's death might not attain 25 until more than 18 years after B's death.

10. Key Case Laws

Soundararajan v Natarajan AIR 1925 PC 244 — For purposes of Section 14, the normal period
of minority is 18 years since it cannot be known at the date of transfer whether the court will
appoint a guardian for the minor in future.
Brij Nath v SM Anandmayi 8 Bengal LR 208 — A Hindu testator bequeathed property to great-
grandsons in trust till majority; if no great-grandson, to daughter's son when coming of age. The
bequest was held VALID for remoteness since vesting was within the perpetuity period.
Ram Baran v Ram Mohit (1967) 1 SCR 293 — An agreement for sale of land does not create
any interest in the land and is therefore not hit by the rule against perpetuity.
F. Vested and Contingent Interest (Sections 19, 20, 21,
TPA 1882)
1. Vested Interest — Section 19
SECTION 19: Where on a transfer of property, an interest therein is created in favour of a
person WITHOUT SPECIFYING THE TIME when it is to take effect, OR IN TERMS
SPECIFYING that it is to take effect FORTHWITH or ON THE HAPPENING OF AN EVENT
WHICH MUST HAPPEN, such interest is VESTED, unless a contrary intention appears. A
vested interest is NOT defeated by the death of the transferee before he obtains
possession.

Essential Features of Vested Interest

• Creates an immediate right though enjoyment may be postponed
• Does NOT depend on the fulfillment of any condition
• Is both TRANSFERABLE and HERITABLE
• Is NOT defeated by the death of the transferee before obtaining possession — the interest
passes to his legal heirs
• The interest VESTS as soon as the transfer is complete

Three Ways a Vested Interest Arises

(a) Where NO TIME is mentioned: The interest takes effect immediately. Example: A sells his
house to B. B gets vested interest from the date of sale, though possession may not be given
immediately.
(b) Where it is to take effect FORTHWITH (immediately): The deed expressly says the interest
takes effect immediately. This creates vested interest from the moment the deed is executed.
(c) Where the operating event is CERTAIN TO HAPPEN: For example, 'to B on the death of A' —
death of A is CERTAIN (though the time of death is uncertain), so B's interest is vested from the
date of transfer. The vesting is complete; only the enjoyment awaits A's death.

Explanation to Section 19 — When Vested Interest Shall NOT Be Inferred to Be Non-

Vested
The Explanation to Section 19 provides four circumstances where POSTPONEMENT
does NOT make interest contingent:
• Postponement of ENJOYMENT: 'Interest shall not be vested' is NOT to be inferred merely
because enjoyment is postponed
• Prior interest: Not inferred merely because a PRIOR INTEREST is given to another person
• Accumulation of income: Not inferred merely because income is directed to be
ACCUMULATED until enjoyment
• Conditional limitation (gift over): Not inferred merely from a provision that if a particular event
happens the interest shall PASS TO ANOTHER PERSON
CONDITIONAL LIMITATION distinguished from Contingent Interest: A conditional limitation divests
an already vested interest and vests it in another. Example (Sunder Bibi v Rajendra Narain, AIR
1925 All 389): 'Estate to L for life, after L's death to R if R survives L; if R doesn't survive, to R's
lineal male descendants.' The further provision (gift over) was a CONDITIONAL LIMITATION — the
condition affected the RETENTION, not the ACQUISITION of the interest. Therefore, R took a
VESTED interest, though liable to be divested if he died before L.
2. Section 20 — When Unborn Person Acquires Vested Interest
SECTION 20: Where on a transfer of property, an interest therein is created for the benefit
of a person not then living, he acquires upon his BIRTH (unless contrary intention), a
VESTED INTEREST, although he may not be entitled to enjoyment thereof immediately
on his birth.
As soon as the unborn person (for whose benefit the transfer was made under Section 13) is BORN
ALIVE, he acquires a VESTED INTEREST in the property. Possession may be given later —
perhaps after the death of the prior life-interest holder — but the vesting of interest occurs at birth. If
the unborn person dies in the womb and is not born alive, Section 20 does not apply.
FM Devaru Ganapathi Bhat v Prabhakar Ganpathi Bhat (2004) 2 SCC 504 — A woman
donated property to her brother's only son, with a stipulation that if other male children were
later born to her brother, they would be joint-holders. Held: a younger brother born subsequently
became entitled to joint ownership of the whole property including the property retained by the
donor for her lifetime. Section 20 validated this.

3. Contingent Interest — Section 21

SECTION 21: Where on a transfer of property, an interest therein is created in favour of a
person to take effect ONLY ON THE HAPPENING OF A SPECIFIED UNCERTAIN EVENT,
or IF A SPECIFIED UNCERTAIN EVENT SHALL NOT HAPPEN, such person acquires a
CONTINGENT INTEREST in the property.

Essential Features of Contingent Interest

• Created upon the happening/non-happening of a SPECIFIED UNCERTAIN EVENT
• Does NOT vest unless and until the specified condition is fulfilled
• Is TRANSFERABLE but NOT HERITABLE — if the transferee dies before the condition is
fulfilled, the interest fails and does NOT pass to heirs
• There is NO present right — only a promise to give a right upon fulfillment of condition
• If the condition is fulfilled, the contingent interest becomes VESTED

Types of Specified Uncertain Events

(a) Events depending on WILL of parties: marriage, payment of money — the condition may or may
not happen based on what the parties choose to do.
(b) Events NOT depending on will of parties: death of a person before or after a certain age —
these are external/natural events.
DEATH as an event: Death itself is NOT uncertain (death is certain to happen), but SURVIVAL of
another person at someone's death IS uncertain. Example: 'A transfers to B on condition that B
survives A' — B's interest is contingent because it is uncertain whether B will survive A.

Exception to Section 21 (Important!)

EXCEPTION: Where a person becomes entitled to an interest upon attaining a particular
age, AND the transferor ALSO GIVES ABSOLUTELY THE INCOME to arise from such
interest before he attains that age OR DIRECTS THE INCOME to be applied for his benefit
— such interest is NOT contingent but VESTED. The rationale: 'Where the principal is
given at a distant epoch, and the whole income is given in the meantime, the court,
leaning in favour of vesting, says the whole thing is given.'
4. Distinction between Vested and Contingent Interest (Section 21
Comments)
1. Definition
Vested — Without specifying time OR forthwith OR on a certain event. Contingent — On a specified
UNCERTAIN event happening or not happening.

2. Fulfilment of Condition
Vested — Does NOT depend on condition; creates immediate right. Contingent — DEPENDS on
condition; if condition fails, interest fails.

3. Effect of Death of Transferee

Vested — NOT defeated by death; passes to legal heirs. Contingent — FAILS on death before
fulfillment of condition; does NOT pass to heirs.

4. Transferable/Heritable
Vested — BOTH transferable AND heritable. Contingent — TRANSFERABLE but NOT heritable.

5. Present Right of Enjoyment

Vested — Present immediate right even if enjoyment is postponed. Contingent — No present right;
only a promise to give right upon condition.

5. Contingent Interest vs Spes Successionis

Both are future possible interests. However, the degree of possibility differs:
• SPES SUCCESSIONIS — Bare hope of succession with NO promise at all. The 'transferor'
(ancestor) owes no obligation and can dispose of the property as desired.
• CONTINGENT INTEREST — There IS a transfer; property has been committed; the interest
will vest on fulfillment of the condition. There is a definite promise, only the condition
remains to be fulfilled.
MA Yait v Official Assignee AIR 1930 PC 17 — The Privy Council distinguished contingent
interest from spes successionis: 'The contingent interest children took was something different
from a mere possibility of an heir apparent succeeding — it is a well-ascertained form of
property quite possible to raise money on and dispose of in any way the beneficiary chooses.'

6. Section 22 — Transfer to Class on Attaining Age

SECTION 22: Where an interest is created in favour of such members ONLY of a class as
shall attain a PARTICULAR AGE, such interest does NOT vest in any member of the class
who has NOT attained that age.
Example: 'To such of A's children as shall attain the age of 18.' No child of A who is less than 18
years of age has a vested interest. The interest is contingent upon attaining the specified age.

7. Section 23 and 24 — Subsequent Contingent Interest and Transfer to

Survivors
SECTION 23: Where a contingent interest is to accrue on a specified uncertain event and NO TIME
is mentioned for that event, the interest FAILS unless the event happens BEFORE or AT THE
SAME TIME as the intermediate/precedent interest ceases to exist. This prevents property from
remaining in abeyance without an owner.
SECTION 24: Where an interest is to accrue to such persons as shall be SURVIVING at some
period (not exactly specified), the interest goes to those alive when the PRECEDENT INTEREST
CEASES TO EXIST, unless contrary intention appears.

8. Key Case Laws

Sunder Bibi v Rajendra Narain AIR 1925 All 389 — The provision of a 'gift over' to another
person on non-survival was a CONDITIONAL LIMITATION — it divested a vested estate. The
condition affected retention, not acquisition. Therefore, R took a VESTED interest liable to be
divested.
Sewdayal v Official Trustee AIR 1931 Cal 651 — A condition postponing enjoyment does NOT
prevent interest vesting immediately; such a condition is itself void for repugnancy after the
transferee has attained majority.
Mahitai v Sundaram Aiyar 1936 PC 11 — Until the death of the last surviving widow, the
interest of the daughter was only CONTINGENT on her surviving the last widow. The interest
was therefore contingent, not vested.
G. Rule of Election (Section 35, TPA 1882)
SECTION 35: Where a person PROFESSES TO TRANSFER PROPERTY WHICH HE HAS
NO RIGHT TO TRANSFER, and as part of the SAME TRANSACTION confers any BENEFIT
on the owner of the property, such OWNER MUST ELECT either to CONFIRM such
transfer or to DISSENT from it. If he dissents, he shall RELINQUISH the benefit conferred,
and the benefit so relinquished shall revert to the transferor/representative.

1. Meaning and Basis of the Doctrine

ELECTION means choosing between two inconsistent or alternative rights or claims. The doctrine
is based on the maxim: 'He who accepts a benefit under a deed or will must adopt the whole
contents of the instrument, conforming to all its provisions and renouncing every right inconsistent
with it.' One cannot 'approbate and reprobate' at the same time — take what is beneficial and
disown what is adverse.
The doctrine is also expressed as: 'A person cannot take under and against the same instrument.' It
is based on principles of equity — one cannot take the benefit of an instrument without also bearing
its burdens (Codrington v Lindsay, 1873).

2. Conditions for Application of the Doctrine (Section 35 Analysis)

Condition 1: Transfer of Property WITHOUT Right
The person must PROFESS to transfer property which he has NO RIGHT to transfer. The word
'professes' means purports or acknowledges. The transferor does not need to know he has no right
— it does not matter whether the transferor does or does not believe that the property he professes
to transfer is his own. The rule applies equally to a bona fide mistaken transferor.

Condition 2: Benefit Conferred on the Owner as Part of Same Transaction

As part of the SAME transaction, the transferor must confer a BENEFIT on the OWNER of the
property. The benefit must be given DIRECTLY to the owner. A benefit given indirectly (e.g., to the
wife of the owner) does NOT put the owner under a duty to elect.
The benefit and the burden must come from the SAME TRANSACTION — not necessarily
the same instrument, but they must be parts of the same transaction (inseparable and
interdependent).
Muhammad Afzal v Gulam Kasim (1903) 30 Cal 843 — After the death of Nawab of Tank, the
government while transferring chiefship to the eldest son, transferred cash allowance to the
second son. The Nawab had already (in his lifetime) transferred villages to the second son.
These grants (cash and villages) came from TWO DIFFERENT SOURCES — NOT part of the
same transaction. Therefore, the second son was NOT put to election.

Condition 3: Owner Must Elect — Confirm or Dissent

The owner of the property must elect either to:
• CONFIRM the transfer: The owner accepts the instrument with all its contents, becomes
entitled to the benefit, and is bound by the transfer (i.e., the third party transferee gets the
property).
• DISSENT from the transfer: The owner retains the property but MUST RELINQUISH the
benefit conferred on him. The relinquished benefit reverts to the transferor/representative.
The person electing must be the OWNER of the property. 'Owner' is used widely — includes those
with vested, contingent, reversionary, or remote interest.
3. Consequences of Dissent — Compensation
When the owner dissents and relinquishes the benefit:
• The relinquished benefit reverts to the TRANSFEROR or his representative as if it had never
been disposed of
• Subject to the charge of making good to the DISAPPOINTED TRANSFEREE the
amount/value of the property attempted to be transferred
This means the disappointed transferee (the intended recipient of the property) is entitled to
compensation from the reverted benefit. The amount is the value of the property that was attempted
to be transferred.
Illustration: Farm of Sultanpur (property of C, worth Rs 800). A by gift professes to transfer it to B,
giving Rs 1,000 to C in the same instrument. C elects to RETAIN the farm. C forfeits the gift of Rs
1,000 (the benefit). A's representative must pay Rs 800 (value of farm) to B out of the Rs 1,000.

4. Mode of Election — Express or Implied

Express Election
Where the owner states in express words his intention to confirm or dissent, it is an express
election which is final and conclusive.

Implied/Presumed Election
Where the owner accepts the benefit without expressly stating anything, implied election is
presumed when:
• He is AWARE of his duty to elect, AND
• He is aware of circumstances influencing a reasonable person's election, OR waives inquiry
into circumstances
SPECIFIC PRESUMPTIONS of election:
• TWO YEARS ENJOYMENT: If the owner has enjoyed the benefit for 2 years without doing
any act to express dissent — knowledge and waiver are PRESUMED (unless evidence to
contrary)
• IMPOSSIBILITY: If the owner does any act rendering it impossible to restore the situation to
the status quo ante (e.g., exhausting a coal mine given as benefit) — he has thereby
confirmed the transfer to the third party

5. Time Limit for Election

TIME LIMIT: The owner must signify his intention to confirm or dissent within ONE YEAR
after the date of the transfer. If he does not do so within 1 year, the transferor or his
representatives may require him to elect. If he still does not comply within a
REASONABLE TIME after requisition, he shall be DEEMED TO HAVE ELECTED TO
CONFIRM the transfer.
Under ENGLISH LAW: No specific time limit — except where limited by the instrument itself. This is
a distinguishing feature of Indian law.

6. Disability — Postponement of Election

If the person required to elect suffers from some disability (e.g., minority, insanity), the election is
POSTPONED until the disability ceases or until the election is made by some competent authority
on his behalf.
7. Special Rules Under Section 35
(a) Indirect Benefit — No Need to Elect
A person taking NO BENEFIT DIRECTLY under a transaction, but deriving benefit INDIRECTLY,
need NOT elect. Only direct benefits impose the duty to elect.

(b) Different Capacities

A person who in ONE capacity takes a benefit may in ANOTHER CAPACITY dissent. Example: A
person can as administrator of an estate elect against a will (in administrator capacity) and in his
own personal capacity still claim a legacy given to him directly in the will.

(c) Exception — Particular Benefit in Lieu of Property

Where a PARTICULAR BENEFIT is expressed to be conferred ON THE OWNER of the property
AND is expressed to be IN LIEU of that property — if the owner claims the property, he must
relinquish THAT PARTICULAR BENEFIT only. He is not bound to relinquish any OTHER benefit
conferred upon him by the same transaction.

8. Indian Succession Act Connection

Sections 180-190 of the Indian Succession Act, 1925 contain the rule of election as applied to
WILLS. Section 182 provides that if the owner elects to retain the property and relinquishes the
benefit, the relinquished benefit is used to compensate the disappointed devisee/legatee.

9. Hindu and Muslim Law

Rungamma v Atchamma (1858) 4 Moo Ind App 1 — The Privy Council referred to the doctrine
that a party shall not at the same time affirm and disaffirm the same transaction — affirm it as
far as beneficial and disaffirm it as far as prejudicial. This was applied to Hindus.
Mangal Das v Runchhoddas (1890) 14 Bom 438 — A Hindu widow bequeathed immovable
property of her husband (which she had no power to bequeath) to K, and gave a legacy of Rs
2,000 to the plaintiff (reversionary heir). Plaintiff claimed BOTH legacy and immovable property
as heir. Doctrine of election applied: he had to elect one or the other.
Sadik Hussain v Hashim Ali (1916) 38 All 627 — The Privy Council applied the doctrine of
election to Muhammadans as well. The doctrine transcends religious personal laws.
C Beepathuma v Velasari Shankararnarayana AIR 1965 SC 241 — The rule that a person
cannot take under and against the same instrument was reaffirmed. Election is the obligation
imposed by courts of equity to choose between two inconsistent rights.
H. Gifts (Sections 122-129, TPA 1882)
SECTION 122: 'Gift' is the transfer of certain EXISTING moveable or immoveable property
made VOLUNTARILY and WITHOUT CONSIDERATION, by one person, called the donor,
to another, called the donee, and ACCEPTED by or on behalf of the donee. Such
acceptance must be made DURING THE LIFETIME OF THE DONOR and while he is still
capable of giving. If the donee dies before acceptance, the gift is VOID.

1. Nature of Gift
A gift is a GRATUITOUS TRANSFER — without any consideration. It is a bilateral transaction
between two living persons (inter vivos). Testamentary gifts (under a will) are NOT governed by
Chapter VII of TPA — they are governed by the Indian Succession Act, 1925. Gift mortis causa
(made in apprehension of death) also does NOT fall under TPA. The essential character of a gift is
its absolute free will — it must be entirely voluntary, without any expectation of return.

2. Essential Elements of a Valid Gift

Element 1: Transfer of Ownership
A gift necessarily involves transfer of OWNERSHIP. The WHOLE interest of the person is
transferred (unlike mortgage or lease which are partial transfers). The person transferring is the
DONOR and the person receiving is the DONEE.
A conditional gift is permissible but the condition must not be repugnant to Sections 10-34 of the
Act. A donor may RESERVE POSSESSION AND ENJOYMENT of the property during his/her
lifetime while transferring TITLE. There is no prohibition in law against gifting ownership without
simultaneously giving possession (K Balakrishnan v K Kamalam, AIR 2004 SC 1257).

Element 2: Existing Property

The property being gifted MUST BE IN EXISTENCE at the time of making the gift. A gift of
FUTURE PROPERTY is VOID (Section 124). A gift comprising BOTH existing and future property is
void AS TO THE FUTURE PROPERTY ONLY, and remains valid for the existing property.
A mortgaged or leased immovable property MAY be gifted. A share in joint family
property falling to the share of the donor under a preliminary decree of partition can also
be validly gifted because the preliminary decree severs the coparcenary status.

Element 3: Voluntary Transfer Without Consideration

The gift must be made FREELY, with full free will and consent. The following vitiate voluntariness:
• COERCION (Section 15, Contract Act): If the donor is forced to execute a gift deed by
threats, the gift is void. Example: A gift deed executed under threat of suicide by the
husband (held not voluntary).
• UNDUE INFLUENCE (Section 16, Contract Act): Two questions: (i) Are the parties in a
domination relationship? (ii) Was the dominant position used to obtain the gift? If both yes —
presumption of undue influence arises; gift can be set aside.
• FRAUD: Where a donor is in an unfit state of mind and made to execute a document without
understanding its nature.
The gift must be WITHOUT CONSIDERATION — no pecuniary consideration in terms of money.
Even a small sum of money paid in return makes the transaction a sale, not a gift. Transfer due to
'natural love and affection' is without consideration — a valid gift.
 PARDANASHIN / ILLITERATE DONOR: For gifts by pardanashin or illiterate women, the
donee bears the burden of proof to show the deed was read over, explained to, and
understood by the donor. General rule: independent legal advice must be shown.

Element 4: Acceptance by the Donee

Acceptance is ESSENTIAL. Without acceptance, there is no valid gift. Acceptance may be
EXPRESS or IMPLIED from conduct (e.g., taking possession of title deeds, taking possession of
gifted property, getting mutation done in Municipal records).
Acceptance must be made DURING THE LIFETIME OF THE DONOR and while he is still
CAPABLE OF GIVING. If the donee DIES before accepting, the gift is VOID. Donee in possession
of gifted land raises a presumption of acceptance.
For MINOR donees: The gift can be accepted by the natural guardian or legal guardian. Minor is
capable of receiving property (he is disqualified only from contracting). On attaining majority, the
minor may either accept or avoid the gift.
For a JURISTIC PERSON (company, trust): Acceptance must be by a competent authority
representing that legal person.

Element 5: Transfer in Prescribed Manner

Section 123 prescribes HOW a gift must be effected:
• Gift of IMMOVABLE property: Must be by a REGISTERED instrument, signed by the donor,
and attested by at least TWO WITNESSES
• Gift of MOVABLE property: May be effected by DELIVERY alone (no registration required)
DELIVERY OF POSSESSION is NOT an essential prerequisite for a valid gift of
immovable property. Section 123 supersedes Hindu personal law rules requiring delivery
of possession (Renikuntla Rajamma v K Sarwanamma, AIR 2014 SC 2906). However, if
the gift deed is registered and the donee is in possession, that amounts to valid
acceptance.

3. Onerous Gift (Section 127)

If a gift is made in the form of a single transfer comprising multiple properties, the donee who
accepts the gift TAKES ALL THE PROPERTIES — including those subject to liabilities (onerous).
The donee cannot accept beneficial properties and reject onerous ones. HOWEVER, a legatee
under a will who is NOT competent to contract (e.g., a minor) MAY repudiate the onerous gift upon
attaining majority.

4. Universal Donee (Section 128)

Where a donor makes a GIFT OF ALL his property, the donee is personally liable to ALL the debts
and liabilities of the donor at the time of making the gift — to the extent of the property comprised in
the gift.

5. Gifts by Muslims (Section 129)

The provisions of Chapter VII (Sections 122-127 of TPA) relating to gifts do NOT apply to gifts
made by MUSLIMS. Muslim gifts are governed by the Muslim Law of HIBA. Under Muslim law, a
gift requires: (1) declaration of gift (ijab) by the donor; (2) acceptance (qubul) by the donee; (3)
delivery of possession (qabza) — which IS mandatory unlike TPA.
6. Revocation of Gift (Section 126)
A gift is generally IRREVOCABLE once accepted. Under Section 126, a gift MAY be revoked under
the following circumstances:
• If the gift was made subject to a CONDITION which has not been fulfilled by the donee
• If both the donor and donee agree that the gift shall be revocable at the donor's will (but
such a gift which is entirely at the donor's will is VOID — Section 126 allows revocability on
agreed specific conditions, not blanket revocability)
A gift cannot be revoked merely because the donor changes his mind, becomes unhappy, or the
parties disagree. The Madras HC held that a registered and acted-upon settlement deed could not
be cancelled merely because the grantor expressed desire to revoke — the cancellation was set
aside (Dhanalakshmi v S Thangavelu, AIR 2006 Mad 1).

7. Key Case Laws

K Balakrishnan v K Kamalam AIR 2004 SC 1257 — It is open to the donor to transfer by gift title
and ownership while retaining possession and right of enjoyment for herself during lifetime. This
does not render the gift deed ineffective.
Renikuntla Rajamma v K Sarwanamma AIR 2014 SC 2906 — Section 123 supersedes rules of
Hindu personal law requiring delivery of possession. Delivery of possession is NOT an essential
prerequisite for a valid gift of immovable property — registration is sufficient.
Pratima Choudhury v Kalpana Mukherjee (2014) 4 SCC 196 — Parameters for examining
validity of a gift: the court must consider the nature of the transaction and whether the person in
dominating position has proved the fair nature of the transaction.
Renu Devi v Mahendra Singh AIR 2003 SC 1608 — Once a preliminary decree in a suit for
partition is passed, it amounts to severance of status of joint family. Each coparcener is free to
gift his share though not yet physically divided.
FM Devaru Ganapati Bhat v Prabhakar Ganpati Bhat (2004) 2 SCC 504 — A gift deed which
said 'this property will be yours alone' but was immediately qualified by 'if other male children
are born to your parents, you shall enjoy it jointly with them' — reading the deed as a whole, the
intention was joint ownership. Section 20 applied to unborn siblings.
Karsanbhai Dayabhai Parmar v Dahiben (2018) 14 SCC 526 — Gift of
hypothetical/undetermined share of property before partition or determination of the widow's
share was held invalid as the widow could not gift a share not yet identified.
I. Sale: Meaning, Essentials, Rights and Liabilities
(Sections 54, 55, TPA 1882)
SECTION 54: 'Sale' is a transfer of OWNERSHIP in exchange for a PRICE PAID OR
PROMISED OR PART-PAID AND PART-PROMISED. For tangible immovable property of
value Rs 100 and upwards, or any reversion/intangible property — transfer can be made
ONLY by a REGISTERED INSTRUMENT. For tangible immovable property of value less
than Rs 100 — transfer may be by registered instrument OR delivery of possession.

1. Meaning of Sale
Sale is the transfer of ABSOLUTE OWNERSHIP in immovable property for a money consideration.
It implies a complete and total transfer of ALL rights in the property sold — nothing remains in the
seller. Sale is distinguished from:
• MORTGAGE: Only an interest (security) in property is transferred; ownership remains with
mortgagor
• LEASE: Only right to enjoy is transferred for a period; ownership remains with lessor
• EXCHANGE: Ownership transferred for ownership of another property (not money)
• GIFT: Ownership transferred without any consideration
• HIRE-PURCHASE: Transferee has right to terminate agreement; in sale, buyer must pay full
price

2. Essentials of a Valid Sale — Section 54

(i) Parties — Seller and Buyer
There must be at least TWO parties. The seller (transferor/vendor) must:
• Be competent to contract (sound mind, majority age)
• Be the OWNER of the property (have legal title)
• Not be legally disqualified from selling
A TENANT does not have power to sell tenanted property. Under Section 136, judges, legal
practitioners, and court officials are DISQUALIFIED from purchasing actionable claims.
Power of Attorney: Documents like agreement to sell, general power of attorney, and special power
of attorney do NOT amount to a sale. Transfer of immovable property can ONLY be effected by a
registered document (Suraj Lamp & Industries Pvt Ltd v State of Haryana, (2012) 1 SCC 656).

(ii) Subject Matter — Immovable Property

Under TPA, Section 54 deals only with IMMOVABLE property. Movable property is governed by the
Sale of Goods Act, 1930. Immovable property includes land, benefits arising out of land, and things
attached to earth (EXCEPT standing timber, growing crops, and grass).

(iii) Money Consideration (Price)

PRICE (money consideration) is an ESSENTIAL ingredient of a sale. Without a price, a
transaction is either a gift (if gratuitous) or an exchange (if ownership is swapped for
ownership). The price may be: (a) Paid at the time of sale; (b) Promised to be paid; (c)
Part-paid and part-promised.
NON-PAYMENT of consideration does NOT vitiate a sale if the price is promised to be paid.
However, if the deed says price was paid but in fact was NEVER received, the transaction does not
amount to a sale (there was no genuine consideration).
ADEQUACY: Inadequacy of consideration is NOT a ground for invalidating a sale. Even where the
price is less than market value, the sale is valid. However, if the consideration is ILLUSORY
(nominal in a way that suggests fraud), the court may infer fraud, coercion, or mistake and
invalidate the sale.
TIME as essence: Generally, time is NOT the essence of the contract for sale of immovable
property, UNLESS specifically stipulated. Courts expect specific performance if the vendor is ready
and the vendee is willing to pay.

(iv) Conveyance — Mode of Transfer

Method A: Delivery of Possession
For tangible immovable property of value LESS THAN Rs 100: Transfer may be effected by
DELIVERY OF POSSESSION (physical handing over) OR by registered instrument. Delivery =
putting the buyer in physical possession. Handing over keys of a house is sufficient delivery of
possession.

Method B: Registration of Sale Deed

For tangible immovable property of value RS 100 AND ABOVE, or intangible immovable property of
ANY value — transfer can ONLY be by a REGISTERED INSTRUMENT. Registration must comply
with the Registration Act, 1908. An unregistered sale deed for property worth Rs 100+ does not
transfer any title.
WHEN DOES TITLE PASS? Where registration is compulsory, the sale is complete only
upon REGISTRATION — but once registered, it RELATES BACK to the date of
EXECUTION. The intention of the parties governs whether title passes unconditionally on
registration or is subject to conditions (e.g., payment of full price).

Contract for Sale (Section 54 — Third Paragraph)

A CONTRACT FOR SALE is a contract that a sale shall take place on terms settled between the
parties. It does NOT OF ITSELF create any interest in or charge on such property. This is a
fundamental difference from English law where a contract for sale transfers an equitable estate to
the purchaser.
In India, the purchaser under a contract of sale:
• May sue for specific performance of the contract
• Has a charge on the property for any pre-paid purchase money under Section 55(6)(b)
• Does NOT get title until the actual registered sale deed is executed and registered

3. Rights and Liabilities of Buyer and Seller — Section 55

Section 55 lays down detailed rights and liabilities of both parties 'in the absence of a contract to the
contrary.' These are statutory obligations in the nature of implied covenants.

4. Liabilities (Duties) of the SELLER — Section 55(1)

(a) Duty of Disclosure — Section 55(1)(a)
The seller is BOUND to disclose to the buyer any MATERIAL DEFECT in the property OR
in the seller's title of which: (i) the seller IS aware; (ii) the buyer is NOT aware; and (iii) the
buyer could NOT discover with ORDINARY CARE.
Defects include physical defects in the property AND defects in title (encumbrances, easements,
restrictive covenants). OMISSION to disclose is FRAUDULENT. Example: If land is subject to a
right of way in favour of a neighbour, the seller must disclose this.
Flight v Booth (1834) 1 Bing NC 370 — 'The material defect must be of such a nature that it
might be reasonably supposed that if the buyer had been aware of it he might not have entered
into the contract at all, for he would be getting something different from what he contracted to
buy.'

(b) Duty to Produce Title Deeds — Section 55(1)(b)

The seller is bound to produce ALL documents of title relating to the property in his possession or
power for examination by the buyer on request. The buyer should examine title deeds for his own
protection. Failure to inspect means the buyer is fixed with CONSTRUCTIVE NOTICE of any
defects in the seller's title that would have been discoverable on inspection.

(c) Duty to Answer Questions — Section 55(1)(c)

The seller is bound to answer to the BEST OF HIS INFORMATION all relevant questions put to him
by the buyer regarding the property or its title. The buyer has the right to be fully satisfied about the
seller's authority.

(d) Duty to Execute Proper Conveyance — Section 55(1)(d)

On payment or tender of the price, the seller must execute a proper conveyance when the buyer
tenders it at a proper time and place. The duties of both parties are reciprocal — buyer pays, seller
signs the deed. If the seller delays unreasonably, the buyer should give a notice making time the
essence of contract.

(e) Duty to Take Care of Property Between Contract and Delivery — Section 55(1)(e)
Between the date of the contract of sale and delivery of property, the seller must take care of the
property and all title documents as an owner of ordinary prudence would take of his own property.
During this period, the seller holds the property effectively as a TRUSTEE for the buyer.

(f) Duty to Give Possession — Section 55(1)(f)

After completion of sale, the seller must give possession of the property to the buyer or his
authorized person when required. The nature of possession depends on the type of property. This
duty arises after the sale is complete (i.e., after ownership passes to the buyer).

(g) Duty to Pay Public Charges and Discharge Encumbrances — Section 55(1)(g)
Before sale: The seller must pay all public charges and rent ACCRUED DUE up to the date of sale,
interest on encumbrances due on that date, and (unless property is sold subject to encumbrances)
discharge all encumbrances. Where the buyer subsequently pays these charges, he is entitled to
reimbursement from the seller.

5. Liabilities of the SELLER After Sale

(h) Implied Covenant for Title — Section 55(2)
The seller is DEEMED TO CONTRACT with the buyer that: (i) the interest which the seller
professes to transfer SUBSISTS; and (ii) he HAS POWER TO TRANSFER the same. This
is an IMPLIED WARRANTY OF TITLE in every sale of immovable property — no need to
expressly mention it in the deed.
If the seller's title is defective and the buyer is dispossessed, the buyer can sue for damages and
return of purchase money. This covenant RUNS WITH THE LAND — it passes with the property
and can be enforced by subsequent transferees.
EXCEPTION (Fiduciary Seller): Where the sale is made by a person in a FIDUCIARY
CHARACTER (guardian, trustee), he only covenants that he has done NO ACT whereby the
property is encumbered or he is hindered from transferring it — a narrower implied warranty.

(i) Duty to Deliver Title Deeds — Section 55(3)

Where the WHOLE of the purchase money has been paid, the seller must deliver ALL documents
of title to the buyer. Where the seller retains part of the property comprised in those documents, he
may retain the documents but must produce them on request and furnish copies.

6. Rights of the SELLER

(j) Right to Rents and Profits — Section 55(4)(a)
The seller is entitled to rents and profits of the property UNTIL THE OWNERSHIP PASSES to the
buyer. Until ownership transfers, the seller remains the owner and is entitled to all profits and
income.

(k) Seller's Charge for Unpaid Price — Section 55(4)(b)

Where ownership has passed to the buyer BEFORE payment of the whole purchase
money, the seller has a STATUTORY CHARGE upon the property — in the hands of the
buyer, any transferee without consideration, or any transferee WITH NOTICE of non-
payment — for the unpaid purchase money and interest from the date of possession
delivery.
This is a NON-POSSESSORY LIEN (seller cannot retain possession under this charge). The seller
can enforce it by a suit for sale of the property. This statutory charge can be WAIVED by an
express or implied contrary contract. It is an ACTIONABLE CLAIM and therefore TRANSFERABLE
by the seller.

7. Liabilities (Duties) of the BUYER — Section 55(5)

(l) Duty to Disclose Facts Increasing Value — Section 55(5)(a)
The buyer is bound to disclose to the seller any fact as to the NATURE OR EXTENT OF
THE SELLER'S INTEREST of which the buyer is aware but has reason to believe the
seller is NOT aware, and which MATERIALLY INCREASES the value of such interest.
OMISSION is FRAUDULENT.
Summers v Griffiths (1866) 35 Beav 27 — An old lady contracted to sell at low price believing
her rights were not absolute. The buyer knew her interest was perfect but did not disclose. Held
liable for fraud — sale set aside.

(m) Duty to Pay the Price — Section 55(5)(b)

The buyer must pay or tender the purchase money at the time and place of completing the sale to
the seller or person directed by him. The buyer is NOT bound to pay the full amount BEFORE
transfer of ownership — he may promise to pay. Where property is sold FREE from encumbrances,
the buyer may retain the encumbrance amount from the price to discharge it directly.

(n) Duty to Bear Loss — Section 55(5)(c)

Once ownership has passed to the buyer, he must bear any LOSS from destruction, injury, or
decrease in value of the property NOT CAUSED BY THE SELLER. The rule 'res perit domino' (the
thing perishes for its owner) applies — once you are owner, you bear the risk.
(o) Duty to Pay Outgoings — Section 55(5)(d)
Once ownership has passed to the buyer, he is liable to pay all PUBLIC CHARGES, rents, principal
money on encumbrances subject to which the property was sold, and interest accruing thereafter.

8. Rights of the BUYER

(p) Benefit of Increment — Section 55(6)(a)
Where ownership has passed to the buyer, he is entitled to the BENEFIT OF ANY IMPROVEMENT
or increase in value of the property and to rents and profits thereof. Once he is owner, all accretions
and benefits belong to him.

(q) Buyer's Charge for Price Pre-paid — Section 55(6)(b)

The buyer is entitled to a STATUTORY CHARGE on the property (against the seller and
all persons claiming under him) to the extent of the seller's interest in the property, for:
(i) any purchase money PROPERLY PAID in anticipation of delivery; (ii) interest on such
amount; (iii) if he PROPERLY DECLINES to accept delivery — also the earnest money
and costs of suit.
This is the CONVERSE of the seller's charge under Section 55(4)(b). The buyer's charge is
enforceable not only against the seller but also against all persons claiming under him. The charge
is available even when property is compulsorily acquired (Asgar S Patel v UOI, AIR 2000 SC 2222).
Videocon Properties Ltd v Dr Balchandra Laboratories AIR 2004 SC 1787 — The buyer's
charge for price pre-paid exists until conveyance is executed AND possession is also given. The
charge will not be lost by merely accepting delivery of possession alone.
DDA v Skipper Construction Pvt Ltd AIR 2000 SC 573 — If an immovable property that is
charged is converted into another property or money, the charge fastens on that converted
property or money.

9. Key Principles — Summary of Section 55

• All duties under Section 55 apply 'in the absence of a contract to the contrary' — parties may
agree to different terms
• Section 55(2) implied covenant for title is not required to be expressly mentioned — it is
implied by law in EVERY sale
• Both the seller's charge (55(4)(b)) and buyer's charge (55(6)(b)) are STATUTORY
CHARGES created by operation of law
• Time of performance is generally NOT of the essence for immovable property sales unless
specifically stipulated
• A registered sale deed is prima facie proof of transfer of title but the court must ascertain the
INTENTION of the parties

10. Additional Key Case Laws on Sale

Suraj Lamp & Industries Pvt Ltd v State of Haryana (2012) 1 SCC 656 — Documents like
agreement to sell, general power of attorney and special power of attorney do NOT amount to
sale. Transfer of immovable property can only be effected by executing a registered document.
Bishundeo Narain Rai v Anmol Devi Supreme Court — A combined reading of Sections 8 and
54 suggests that through execution and registration of a sale deed, ownership and all interests
pass to the transferee — on terms and conditions in the deed indicating the intention of the
parties.
 Janak Dulari Devi v Kapildeo Rai AIR 2011 SC 2521 — Where sale consideration was not paid
and possession was not delivered despite a recital in the sale deed claiming both — no sale had
taken effect. The transferor's subsequent transfer to another person was valid.
Rogers v Hosegood (1900) 2 Ch 388 — A purchaser's covenant not to erect more than one
dwelling house on the plot runs with the land and can be enforced by an assignee of the
covenantee.
Central Bank of India v CL Vimla AIR 2015 SC 2280 — After completion of sale and registration
in favour of auction purchaser, eight years having passed, the sale could not be set aside at that
stage. Principles of equity and good conscience must apply.

— END OF NOTES —
Sources: Avtar Singh & Harpreet Kaur — Textbook on Transfer of Property Act (6th Ed., 2020, LexisNexis) | Poonam
Pradhan — Property Law | Case laws verified and current as of 2024