GENERAL

PRINCIPLES OF
TRANSFER
Unit 2
Concept of Property
● In general sense, property is any physical or virtual entity that is owned by an individual or
jointly by a group of individuals. An owner of the property has the right.
● Human life is not possible without property. It has economic, socio-political, sometimes religious
and legal implications. It is the legal domain, which institutes the idea of ownership.
● The basic postulate of the idea is the exclusive control of an individual over some ‘thing’. Here
the most important aspect of the concept of ownership and property is the word ‘thing’, on
which a person has control for use.
● To consume, sell, rent, mortgage, transfer and exchange his property. Property is any physical
or intangible entity that is owned by a person or jointly by a group of people.
● Depending on the nature of the property, an owner of property has the right to consume, sell,
rent, mortgage, transfer, exchange or destroy their property, and/or to exclude others from
doing these things.
 Definition of transfer of property
● 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.
● The phrase “living person” includes a company or association or body of individuals, whether
incorporated or not, but nothing in this section shall affect any law for the time being in force
relating to or by companies, associations or bodies of individuals.
The word property in the Act has been used in one of the following senses:
● (i) Tangible material things like house.
● (ii) Rights which are exercised over material things like the right to sell or make a gift of things.
● (iii) Rights which are not exercised over any material such as the right to repayment of a debt.
 Kinds of interest
● There are two kinds of interest in the Transfer of Property Act. first vested and second contingent.
Vested interest is to be distinguished from contingent interest. When any interest is vested the
transfer is complete, but where the interest is contingent , the transfer depends upon a condition
precedent. when the condition is fulfilled, the transfer takes effect and that the interest becomes
vested.
● A) Vested interest
● Definition of vested interest
● The definition of vested interest is defined u/s.19 of Transfer of Property Act which provides -
● "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 from the terms of the transfer."
● A vested interest is not defeated by the death of the transferee before he obtains possession.
 Kinds of interest
S.21 Contingent interest
● 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 thereby acquires a contingent interest in the property. Such interest
becomes a vested interest, in the former case, on the happening of the event, in the latter, when
the happening of the event becomes impossible.
Exception :
● Where, under a transfer of property, a person becomes entitled to an interest therein upon
attaining a particular age, and the transferor also gives to him absolutely the income to arise from
such interest before he reaches that age, or directs the income or so much thereof as may be
necessary to be applied for his benefit, such interest is not contingent.
 Conditional transfer
● Section 25 of the Transfer of Property Act, 1882 provides for Conditional Transfer. It means that
any transfer that happens on the fulfilment of a condition that is imposed on the other party for
the transfer of property. For example, A agrees to transfer his property to B if he gets selected for
a job. The requirement of A for B to get a job is called a condition.
For any kind of a conditional transfer to be valid, the condition that is imposed should not be:
● Prohibited by law,
● Should not be an act that involves fraudulent acts,
● Should not be any act that is impossible,
● Should not be an act that is termed as violative of public policy,
● Should not be immoral,
● Any act that incurs any harm to any person or his property.
● For example, X transfers a property ‘B’ to Y stating that he shall murder Z as a condition for the
transfer. Such transfer is void as the condition is prohibited by law.
 Conditional transfer
Types of Conditions on Transfer
● There are three specific types of conditions that are imposed in a transfer of property and there
are some more types provided. All these conditions should also satisfy all the requirements of a
condition as mentioned in Section 25 of the Transfer of Property Act, 1882.
1. Condition Precedent
● It is given in Section 26 of the Transfer of Property Act, 1882. Any condition that is required to be
fulfilled before the transfer of any property is called a condition precedent. This condition is not to
be strictly followed and the transfer can take place even when there has been substantial
compliance of the condition.
● In the landmark case of Wilkinson v. Wilkinson, the condition where one party was required to
desert her husband for the transfer to go through, this was held by the court as invalid as it was
against public policy.
 Conditional transfer
Types of Conditions on Transfer
2. Condition Subsequent
● It is given in Section 29 of the Transfer of Property Act, 1882. Any condition that is required to be fulfilled
after the transfer of any property is called condition subsequent. This condition is to be strictly complied
with and the transfer will happen only after the completion of such condition.
● Although it is an essential requirement that the condition needs to lawful and if it is not then the
condition will be held as void and the transfer will not break down and will be finalized. For example, A
transfers the property to B on the condition that he shall murder C. This condition is void and hence
transfer will go through and the property will be kept by B.
3. Condition Collateral
● Any condition that is required to be fulfilled simultaneously after the transfer of any property is called
condition collateral. It needs to be strictly followed otherwise the transfer will break down.
 Doctrine of Election ostensible owner
● Election means a choice between two alternative or conflicting rights. Granting two rights in such a way that
one is higher than the other, you can choose either of them. You cannot have both.
● The applicant cannot use both, the recipient must choose between two inconsistencies or alternative rights.
Basically it means that the person taking the benefit should also bear the burden. (C. Beepathuma V.
Viduri Shankar Narayana Kadambolithya AIR 1965SC 241). It is an important part of the transfer of
property act 1882 to resolve property conflicts among people.
Election when necessary (section 35)
● Concede to transfer property on which he has no rights.
● In the same transaction, they must elect either to accept it or not, in case he doesn’t.
● He must release the benefits till then.
● The benefits he had till then goes back to the transferor as if not given.
● Although when benefit is transferred back, he must make some good to the transferee at least it can be
done in the following cases:
● Where the transfer is voluntary and the Transferor had died or had become incapable of doing a fresh
transfer.
● Transfer is for consideration.
 Doctrine of Election ostensible owner
When does a person elect to dissent?
● According to section 35 If the owner decides not to approve the transfer, he will surrender the transferred
service to him and this service will be returned to the transferor or his representative as if he had not been
released. Following could take place:
● The transfer is voluntary and the Transferor had died or had become incapable of doing a fresh transfer.
● In all cases where the transfer must be checked, it is the responsibility of the transferor or his representative
to compensate disappointed buyers. The compensation amount is the amount or value of the property that
will be transferred if the option.
Exceptions to this doctrine as stated by section 35
● Section 35 states that if the property owner is transferred by the seller, a particular service is started and
that the service is pressed to apply to that property if the owner claims the property. Which must release the
performance of certain properties. He is not obliged to release the compensation given to him by the same
transaction if you receive such compensation for two years, you must assume that you have chosen the
transfer.
Doctrine of feeding the grant by
Estoppel
● The doctrine of feeding the grant by estoppel is based on the maxim ‘nemo dat quod nonhabet which
implies that no one can give to another, which he himself does not possess’.
● Section 43 of the Transfer of Property Act lays down “where a person fraudulently or erroneously
represents that he is authorized to transfer certain immovable property and professes to transfer such
property for consideration, such transfer shall at the option of the transferee, operate on any interest
which the transferor may acquire in such property at any time during which the contract of transfer
subsists”.
● For example, A claims himself an owner of a house to be when we asked to purchase it actually a
misrepresented himself to be and concealed the fact that X was the real owner. But A has made an
agreement although the claimed property was not in his possession. During next six months a received
payment for the house from and hence B incurred loss. As A made prior represented him so, now B is
entitled to obtain house from A's possession. He has to feed his grant by estoppel.
● If we have made a grant for any property, even if we don’t have it right now and in future if we may
acquire any interest in that house, we have to give that person to whom we promised. We have to fulfil
that estoppel.
Doctrine of feeding the grant by
Estoppel
Essential Requisites
A fraudulent or erroneous representation of ownership
● The representation(express or implied) made by the transferor that he is authorized to transfer, must be
turned out erroneous or made by with malice. Further, it is immaterial whether the transferor acts bona
fide or fraudulently in making the representation. What is material is that he did make a representation
and the transferee believed and acted on it and hence has been misled is what matters to this doctrine.
The doctrine also applies in cases where the transferor has a duty to speak and he does not performed
so. Narayan Chandra Saha vs. Dipali Mukherjee, 2002 where son of owner of the property made
representation and the other party purchased it. It was held that the transferee cannot avail benefit under
section 43 because the representation was not made fraudulently.
A transfer for consideration
● This doctrine is applicable only to the transfers of properties for value. If the transfer is gratuitous such as
gifts which are without consideration. Thus, such transfer would make it a void transaction.
Doctrine of feeding the grant by
Estoppel
Essential Requisites
At the option of the transferee
● The transfer becomes valid when the transferee exercises the option and the title of the transferor
becomes perfect. When a partner sells the property of a firm in his right and subsequently on the
dissolution of the firm is allotted the same property, the transferee gets the benefit of (Syed Nurul
Hossein v Sheosahai, 1991). Further, the interest acquired by the transferor does not automatically pass
on to the transferee but only when he such allotment (claims his interest in such property.
A subsisting contract of transfer
● The option of the transfer can only be exercised in respect of an interest acquired by the transferee when
the contract of transfer “still subsists”. If the transferee cancelled that transaction, or had recovered his
purchase money, or if the transaction were one of mortgage and the mortgage money had been repaid,
then the relation of the transferor and the transferee comes to end and no claim regarding the property
can be made by the transferor.
Doctrine of feeding the grant by
Estoppel
Important case laws
Jumma Masjid Mercara vs. Kodimaniandra Deviah, 1962, where heir apparent sold their joint property
to M, and became entitled to the property later. M invoked section 43 and contended that the contract was
void ab initio. On observation by Supreme Court, a distinction was drawn between Section 43 and Section 6
(a) of TPA. It held that there is no reason for conflict between them and they both relate to different spheres.
Section 6 (a) enacts a rule of rule of substantive law whereas Section 43 enacts rule of Estoppel, which is one
of evidence. The main difference between the two lies in the fact that the transfer that falls under section 6
(a) is within the knowledge of the transferee as well and there is no misrepresentation. Whereas, under
Section 43, the absence of knowledge on the part of the transferee is one of the main conditions.
In Ram Bhawan Singh v Jagdish, 1990 where the court observed that “when a person having a limited
interest in the property transfers a larger interest to the transferee on a representation, and subsequently
acquires the larger interest, the larger interest passes to the transferee at the latter’s(transferee) option. This
doctrine not only applies to sale but also applies to a mortgage, lease, charge, and exchange. Where no grant
or interest in immovable property is involved, the doctrine would not apply. The doctrine also does not apply
in cases where the transferor has acquired interest not in the property which is the subject matter of the
transfer, but in some other property.
Improvements made by bona fide title
holders under defective titles
● The amount to be paid or secured in respect of such improvement shall be the estimated value thereof at
the time of the eviction.
● When, under the circumstances aforesaid, the transferee has planted or sown on the property crops which
are growing when he is evicted therefrom, he is entitled to such crops and to free ingress and egress to
gather and carry them”.
● Thus, the transferee who if unaware of the rights, in good faith makes any kinds of improvements ought
to be compensated with. For instance X is the owner of an immovable property. He rents it to Y who
continues to pay him rent unaware that X has now mortgaged his house to Z and upon the mortgage, Z
being the mortgagee is now entitled to the rent. Y will not be charged again. Therefore, a tenant paying
rent in advance in good faith to a person who is no longer entitled to receive will not be chargeable with
the rent again, whereas any advance paid as a loan amount will not be protected like the loan amount.
Lis pendens
● The doctrine of lis pendens incorporated under Section 52 of the 1929 Act, means to say that During the
pendency of any suit or proceeding which is not collusive and in which any right to immoveable property
is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any
party to the suit or proceeding so as to affect the rights of any other party thereto under any decree or
order which may be made therein, except under the authority of the Court and on such terms as it may
impose.
● The Supreme Court in Jayaram Mudaliar v. Ayyaswami, and Rajendnr Singh v. Santa Singh,
founded the following definition:
● “lis pendens literally means a pending suit, and the doctrine of lis pendens has been defined as the
jurisdiction, power, or control which a court acquires over property involved in a suit pending the
continuance of the action, and until final judgment therein.”
Lis pendens
Essential conditions:
● The Supreme Court in Amit Kumar Shaw v Farida Khatoon, restated the elements required for the
applicability of rule of lis pendens stimulated from Section 52.
● The essentials are as follows:
i) There must be a suit or proceedings pending in a court of competent jurisdiction;
● For the purposes of this section, the pendency of a suit or proceeding shall be deemed to commence
from the date of the presentation of the plaint or the institution of the proceeding in a Court of competent
jurisdiction, and to continue until the suit or proceeding has been disposed of by a final decree or order
and complete satisfaction or discharge of such decree or order has been obtained, or has become
unobtainable by reason of the expiration of any period of limitation prescribed for the execution thereof
by any law for the time being in force.
Lis pendens
Essential conditions:
ii) Suit or proceedings must not be collusive
● In Nagubai v. B. Sham Rao, Venkatarama Aiyyar, J., while explaining the distinction between a collusive
and a fraudulent proceeding, observed: In such (collusive) proceeding a claim put forward is fictitious, the
contest over it is unreal, and the decree passed therein is a mere mask having the similitude of a judicial
determination and worn by the parties with the object of confounding third parties. But when a proceeding is
alleged to be fraudulent, what is meant that the claim made therein is untrue, but the claimant has
managed to obtain the verdict of the court in his favor and against his opponent by practicing fraud on the
court.
● While in a collusive proceeding the contest is a mere sham, in a fraudulent suit it is real and earnest.
Moreover, The rule of lis pendens does not apply to a collusive suit or a suit in which the decree is obtained
by fraud or collusion, as held in the case of Awadesh Prasad v. Belarani.
iii) The litigation must be one in which right to immovable property is directly and specifically in
question;
iv) There must be a transfer of property in dispute by any party to litigation;
v) Such transfer must affect the rights of other party that may ultimately accrue under the terms
Fraudulent transfer
The Supreme Court, in Dr. Vimla v. Delhi Administration has observed that the term “defraud” involves
two elements namely, deceit and injury to the person deceived. This injury is not limited to economic loss.
It can also be construed as deprivation of property or money as well as harm caused to any person in body,
mind or reputation. Fraudulent Transfers in general parlance, therefore, refer to transfers which are made
with an intention to defraud.
SECTION 53 OF THE TRANSFER OF PROPERTY ACT, 1882
The TPA Act deals with fraudulent transfers under Section 53: –
“Fraudulent Transfers– (1) Every transfer of immoveable property made with intent to defeat or delay the
creditors of the transferor shall be voidable at the option of any creditor so defeated or delayed. Nothing in
this sub-section shall impair the rights of a transferee in good faith and for consideration.
(2) Every transfer of immoveable property made without consideration with intent to defraud a subsequent
transferee shall be voidable at the option of such transferee.”
Fraudulent transfer
The essential requirements of Section 53 of TPA are as mentioned below:
● Transfer of property
● The property must be immovable in nature
● Transfer in question must have been done with the plan or scheme in mind to delay or defeat
● Such delay or defeat must be suffered by the creditor(s)
● The transfer would be voidable
● Transfer must be for consideration
Exceptions to Doctrine of Fraudulent Transfer
The Transfer of Property Act, 1882, by way of Section 53 has recognized two exceptions in totem.
The doctrine of fraudulent transfer is not applicable to:
● The person to whom the transfer is made does the whole deed in good faith and for consideration.
● Application of any law which relates to insolvency which is being enforced at such time.
The person to whom the transfer is made does the whole deed in good faith and for consideration.
Doctrine of part performance
The Doctrine of Part Performance is applicable to only written and valid contract. It is not applicable to oral
or void agreement. The contract must be in writing and signed by the transferor. The transferee has taken
possession of the property as a part performance of a contract and transferee must be ready and willing to
perform his part of promise. This section is applicable not only to the contract of sale but it is applicable to
all such contracts of transfer for consideration. It has been held in (Jacobs Private Limited vs. Thomas
Jacob) that the doctrine is intended to be used as a shield, not a sword.
Illustration :
A contract to transfer his immovable property to B by way of sale and put B in possession of the property
before a regular Sale-Deed is executed. The contract is said to be partly performed and if later on A refuses
to execute regular document of sale and files a suit for eviction against B treating B as trespasser. Then B
can resists claim on the ground that the contract of transfer in his favour has partly been performed and
that A should not be allowed to go back upon his own word.
Doctrine of part performance
Ingredients of Section 53-A
Bombay High Court in Kamalabai Laxman Pathak v. Onkar Parsharam Patil, has given emphasis on
the ingredients of the Section 53-A which are as follows:
1. Contract for Transfer of immovable property:
For the application of this section, the first condition is that there must be a contract and the contract must
be transfer of immovable property for value.
a) Written contract:
The contract must be written. Section 53 A is not applicable if the contract for transfer is oral. In V.R.
Sudhakara Rao v. T.V. Kameswari, it was held that the benefit of section 53-A is not available to a
person who is in possession of property based on oral agreement of sale. Writing alone is not sufficient. The
contract must also be duly executed. That is to say, it should be signed by the transferor or by any other
person on his behalf.
Doctrine of part performance
b) Valid Contract:
It may be noted that Section 53-A is applicable only where contract for the transfer is valid in all respects. It
must be an agreement enforceable by law under the Indian Contract Act, 1872.
c) Immovable property:
This section is applicable only in case of transfer of immovable property. It does not apply to an agreement
for the transfer of movable property even though supported with consideration. The defense of Part
Performance is not available in respect of possession of movables (Hameed v. Jayabharat Credit &
Investment Co. Ltd and Ors.)
2. Transfer for consideration:
The written contract must be for the transfer of an immovable property for consideration. The written
contract on the basis of which the property has been possessed, must clearly suggest the transfer of
property. If the document is ambiguous or confusing, this section cannot be made applicable. It is one of
the necessary ingredients of section 53-A that the terms of written contract must be ascertainable with
reasonable certainty (Hamida v. Humer and Ors.)
Doctrine of part performance
3. Possession in furtherance of Contract:
The Transferee has taken possession or continues possession in part performance of the contract or, has
done some act in furtherance of the contract (A.M.A Sultan (deceased by LRs) and Ors. v. Seydu
Zohra Beevi).
4. Some Act in furtherance of the contract:
Taking possession is not only the method of part performance of contract. If the transferee is already in
possession of the property then, after the contract of transfer, he has to do some further act in part
performance of the contract (Nathulal v. Phoolchand)
5. Transferee is willing to perform his part of contract:
Section 53-A is based on the principle of Equity. Equity says that one who seeks equity must do equity.
Therefore, where a person claims protection of his possession over a land under section 53-A, his own
conduct must be equitable and just. It is an essential condition for the applicability of this section that the
transferee must be willing to perform his part of contract (Sardar Govindrao Mahadik and Anr. vs. Devi
Sahai and Ors Govind)
General Principles of Transfer of
Property :
[Link] property must be transferable. (Section 6):
It specifically speaks about, what may be transferred. Property of any kind may be transferred, except as
otherwise provided by this act or even by any other law for time being in force.
[Link] on Alienation of Property. (Section 10):
Section 10 of the Act states that any restriction or limitation that ‘absolutely’ restrains the buyer or
transferee from alienating the property is a void condition. But there exist two exceptions to this rule which
are:
● a. In cases of lease where a restraint is for the benefit of the lesser or the estate leased out.
● b. Where the property is transferred for the benefit of a woman who is not a Hindu, Muslim or a Buddhist,
with a condition that she doesn’t. Have the power during her marriage to transfer or create any
encumbrance in the sale of property transferred to [Link], it must be taken into consideration that
Section 10 only bars an absolute restraint on alienation whereas a partial restraint is permissible.
[Link] to an Unborn Person (Section 13):
Section 13 of the Transfer of Property Act, 1882 says that a transfer cannot be directly made to an unborn
person. The interest in favour of an unborn person must always be preceded by a prior interest created in
favour of a living person. The transfer to an unborn person must be absolute and there should be no further
General Principles of Transfer of
Property :
[Link] against Perpetuity (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.
[Link] and Contingent Interest (Section 19 & 21) :
Section 19 of the Transfer of Property Act, 1882 states that it is an interest which is created in favour of a
person where time is not specified or a condition of the happening of a specified certain event. The person
having the vested interest does not get the possession of that property but has the expectancy to receive it
upon happening of a specified certain event.
Section 21 of the Transfer of Property Act, 1882 states that it is an interest which is created in favour of a
person on a condition of the happening of a specified uncertain event. The person having the contingent
interest does not get the possession of that property but has the expectancy to receive it upon happening
of that event but will not receive the property if the event does not happen as the condition is not fulfilled.
 General Principles of Transfer of
Property :
[Link] Transfer (Section 25) :
It means that any transfer that happens on the fulfillment of a condition that is imposed on the other party for
the transfer of property.
[Link] of Priority (Section 48) :
This rule is based on the maxim “Qui prior est tempore potior est jure” which means that “he who is prior in
time is better in law, meaning that the subsequent dealings by the transferor of the same property cannot
prejudice the rights of the transferee of the same property (prior transferee)”.
When a transferor transfers the same property in favour of several transferees, each transferee will take the
property with the rights of the former transferee. It is also based upon the principle that no man can transfer the
title other than which he is entitled to.
[Link] by Ostensible owner (Section 41):
Transfer by ostensible owner : “Where, with the consent, express or implied, of the persons interested in
immoveable property, a person is the ostensible owner of such property and transfers the same for
consideration, the transfer shall not be voidable on the ground that the transferor was not authorised to make
it: provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make
the transfer, has acted in good faith.”