HISTORICAL PERSPECTIVE OF TRANSFER OF PROPERTY IN INDIA

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INTRODUCTION

Importance and relevance of property in today‘s materialistic world is undeniable. Property

related disputes dominate the courts among strangers, former friends and relations who fight
tooth and nail with fret and flume wasting several precious years. It is also true that relevance of
property in the socio–economic life of an individual is relatable more with respect to its
disposition rather than its abstract content which indicates the inherent necessity of awareness of
the basic concepts with respect to transfer of property. Fighting immense battles and losing
precious lives and time can be avoided to a large extent with right guidance at the initial level of
its transfer.

Property can be transferred in several ways, and conveyance of title in India is not subject to one
single piece of legislative enactment. Thus different legislations exist that govern the transfer of
title from one person to another with respect to the property depending upon the mode of
conveyance. One of the basic features of the Transfer of Property Act, 1882 is that it governs
transfer of property inter vivos or between living persons only. It does not apply to acquisition of
title through inheritance and succession which are subject to distinct religious specific personal
laws, including the Indian Succession Act, 1925. It is also inapplicable to dedication of property
to God or where the transfer is subject to the relevant religious and Charitable Endowment Acts.

The Transfer of Property Act primarily deals with transfer of immovable property and interests
in immovable property. However, some of its provisions also apply and govern transfer of
movable property. It provides a specific method of transfer of immovable property and one of the
very important feature of the Act is that barring few exceptions, transfer of immovable property
is no longer a private affair as it requires compulsory registration of the transfer document. Prior
to the Transfer of Property Act, 1882, there was practically no law as to real estate in India.

A few points were covered by the Regulations and Acts which were repealed either wholly, or in
part by section 2 of the Act. But for the rest of the law, the courts, in the absence of any statutory
provisions, adopted the English law as the rule of justice, equity and good conscience. This was
not satisfactory, for the rules of English law were not always applicable to social conditions in
India, and the case law became confused and conflicting. To remedy this state of affairs,
Commission was appointed in England to prepare a code of substantive law of India.

CUSTOMARY LAW AND TRANSFER OF PROPERTY

The classical law relating to transfer of property was purely customary. Before the advent of the
British and their active intervention in the Indian legal system, Hindus and Muslims were
governed by their respective law in relation to transfer of property.

This arrangement worked adequately in the informal and traditional judicial system of
panchayats because, those who decided the matter were not only familiar with the nature of the
dispute but also with the law and the litigants as well. However, the same scenario proved to be
very confusing and uncertain with the establishment of the informal courts in India by the British
Govt. In this adversarial litigation system, the disputes were decided by impartial judges who
were unfamiliar with the litigants and the distinctive social system of India.

Realizing the absence of a concrete and ascertainable law of property comparable to what they
had in England, these courts applied English rules governing transfer of property with
modifications, to suit the Indian conditions. However, such application of the British principles
even with modifications, at times, was grossly inappropriate due to the social and cultural
differences between England and India.

Thus, the desirability of enacting the law relating to transfer of property, was perceived soon
after the consolidation of British authority in India. In addition, various High Courts in the
absence of clear rules made a very liberal use of their own notions of the principles of equity,
justice and good conscience, and laid down diametrically opposite principles further
compounding the confusion and uncertainty. Even the Privy Council noted this uncertainty with
concern, and attributed this undesirable scenario to a lack of codification of the law of property
in India calling upon the authorities to take urgent steps in this direction.
THE INITIATIVEOF BRITISH GOVERNMENT—REGULATION OF TRANSFER OF
PROPERTY

The first Law Commission was appointed by the British Queen primarily to codify the civil law
in India including the one relating to transfer of property. The Transfer of Property Act, though
drafted in 1870, was the last of these drafts to become law. The draft was sent to India by the
Duke of Argyll who was then Secretary of State for India, and after some amendments, it was
first introduced as a Bill in the Legislative Council in 1877.

The Bill was then referred to a Select Committee, by whom it was revised and circulated for
public criticism. In deference to this criticism, all matters not directly referring to transfers inter
vivos were omitted, some clauses, referring to trusts, powers and settlements were dropped and
other clauses were added with a view to save the provisions of local law and usage.

The Bill thus redrafted and was referred to the Second Law Commission, but no less than seven
Bills were prepared before the first Bill was introduced in the Legislative Council by Mr Whitley
Stokes and passed into law on 17 February 1882. The Second Law Commission in their Report
of 1879 said that ‘The function of the Bill was to strip the English law of all that was local did
historical, and mould the residue into a shape in which it would be suitable for an Indian
population and could easily be administered by non-professional judges. Some of the provisions
of the Bill were borrowed from the enactments which it repealed and superseded, but the Bill
was based mainly on the English law of real property. The Law of Conveyancing and Property
Act, 1881 had been enacted in England before the Bill was passed into law, and some of the
provisions of the Act, notably sections 57,61 and 69, are borrowed from that statute.

SUBJECT MATTER :

The term property has nowhere been defined in the Act, but it is used in the widest and most
generic sense. Property is the most comprehensive of all terms which can be be used, as much as
it is indicative and prescriptive of every possible interest which any person can have.43 Thus, it
means not only the physical objects, but includes rights and interests existing in or derived out of
the actual physical object as well. For instance, the beneficial interest of the head of a religious
endowment such as a mutt, an actionable claim, a right to a re-conveyance of land, a right to
obtain shares in a company, is property. An owner has three basic rights in the property, i.e.—a
right of ownership, of having the title to the property, secondly, an exclusive right to possess and
enjoy the property and thirdly, an exclusive right to alienate the property in any manner that he
likes. Absolute ownership is therefore an aggregate of component rights, including a right to
enjoying the usufruct of the land.48 These rights are called ‗interests‘ in the property under
Indian law, and are referred to as ‗real rights‘ under English law. Where only some rights in
property are transferred, it would be a right of transfer of an interest in the property. A vested
remainder, a contingent interest, a lease or a mortgage of an immovable property is the transfer
of an interest in the property. Where all the interests in the property are transferred, it is called an
absolute transfer of property. Property can be transferred absolutely by sale, gift, exchange,
relinquishment, dedication etc

CLASSIFICATION OF PROPERTY

Property can be classified into several categories such as tangible and intangible, corporeal and
incorporeal, movable and immovable. For the purpose of the Transfer of Property Act, it is the
last categorization, i.e., the distinction between movable and immovable property that is relevant.
The primary reasons why the study of the character of property, i.e., whether it is movable or
immovable, is relevant, is .due to the difference in procedural formalities in the transfer, and the
different time stipulated in the law of limitation in having recourse to the litigative system in case
of disputes. Thus, three predominant reasons necessitate a study of the distinction between
movable and immovable property.

(i) Though the Transfer of Property Act lays down general rules relating to the transfer of
both movable as well as immovable property, it governs and lays down rules for the
specific transfers of immovable property only.
(ii) The Transfer of Property Act provides a specific procedure for the transfer of
immovable property that is distinct from the one followed in the case of movable
property. The transfer of immovable property must take place with the help of a written
document that is properly executed by the transferor and the execution should be
properly attested and registered, Unless the transfer complies with all the three
requirements, it will not convey any right from the transferor to the transferee. In
contrast, the transfer of movable property in several cases will be complete by simple
delivery of possession of the property, coupled with an intention to convey the title by
 the owner to the recipient. For conferment of rights ‗in the ‗property through a transfer,
the knowledge of the character of the property and the correct procedure for its transfer is
a must.
(iii) The law of limitation specifies different time periods within which a civil suit can be
filed with respect to movable and immovable property. In case of immovable property‘ it
is generally 12 years from the date the cause of action arises, ‗but in case of movable
property, the suit must ordinarily be filed within a period of three years from the date of
the cause of action, otherwise it will be dismissed as time barred. Thus it is extremely
relevant to know the character of the property that is the subject matter of dispute, before
a suit can be filed with respect to it in a court of law. In a suit relating to movable
property, where it is filed after the expiration of three years from the date the cause of
action arises, the first question that the court will decide, will be the character of the
property. If the court comes to the conclusion that it is immovable property, it will decide
the case on merits, but if the court concludes that the character of the property is
movable, the case will not be heard on merits, but would be held barred by limitation and
will be thus dismissed.

THE COMMAN MAN PERCEPTION IN THE SOCIETY

In Holland v. Hodgson, while holding that looms attached to earth and floor of a worsted mill
were fixtures BLACKBURN J held: ...the general maxim of the law is that what is annexed to
land becomes part of the land; but it is very difficult if not impossible to say with precision what
constitutes an annexation sufficient for this purpose. It is a question which must depend on the
circumstances of each case and mainly on two circumstances indicating the intention viz. the
degree of annexation and the object of annexation. In Leigh v. Taylor, the House of Lords held
that certain valuable tapestries affixed by tenant to the walls of a house for the purpose of
ornament, and for better enjoyment of them as chattels had not become part of the house, and
therefore retained their character as chattels In Duncan Industries Ltd. v. State of Uttar Pradesh,
a company agreed to transfer its fertilizer business including the plant and machinery. The issue
before the court was with respect to the character of plant and ‗machinery. The parties had
treated them as movables and had delivered possession of the said plant and machinery as
movables. This plant and machinery related to the fertilizer business of manufacturing,
marketing distribution and sale of urea fertilizer, and included ammonia manufacturing plants,
captive power plants, vehicles, furniture, air conditioners, standby systems, pipelines, railway
siding, etc. The machineries which formed the fertilizer plant were permanently embedded in the
earth, for running the fertilizer factory and at the time, when these machineries were embedded
in earth, they were done so by the owner with an intention, to use them permanently. Further, in
the very nature of the user of these machineries, it was necessary that they be permanently
attached to the ground. The court held that these were immovable properties. Therefore, physical
delivery of possession, without a written, attested and registered document could not convey soy
tide to the other party in these properties. However, it does not mean that in all cases where the
machinery is attached to or embedded in earth, it would be categorized as immovable property. It
would depend upon the facts and circumstances of each case where the machinery is attached to
the earth only because of its operational efficiency, and removed from the base easily, it would
continue to be called movable property. In Bamdev Panigrahi v. Monorama Raj, a person, A,
was conducting a business under the name of ‗Kumar Touring Talkies‘. He obtained land under
possessory mortgage from .the Raja or Mandasa in 1957, and built a temporary cinema structure
and erected a temporary pandal over it. For the purposes of exhibiting cinema shows, he
purchased a cinema projector and a diesel oil engine. This equipment was embedded and
installed in earth by construction of foundation. For the purpose of running the cinema shows; A,
applied and got a license that was purely temporary for a period of one year from the concerned
authorities. He allegedly entrusted the management of this business to his friend B, out of trust
and confidence in him. However, B colluded with the Rajah and obtained the mortgage in his
name. A issued a notice in May ‗1961, calling upon B to render correct account of the
management of the entire cinema concern including the machinery, equipments, records, etc. B
denied his liability to account for the management of Kumar Touring Talkies by a Written reply
in June 1961. A became sick in 1963, and continued to be so till Aug 1965, when he died.
Thereupon, A‘s widow W filed a suit in July 1966, praying for a declaration that she was the
owner of Kumar Touring Talkies, and a direction that the equipment including the cinema
projector and the diesel oil engine be returned to her. This case illustrates the importance of
understanding the distinction between movable and immovable property. The court, in such
cases, even before going into the merits of the case, has to decide the character of the property. If
it comes to the conclusion that the disputed property is immovable, it will go ahead and decide
the case on merits, and if it concludes that such property is movable, then the case will be
dismissed as time barred, it having been filed after more than three years from the date the right
or claim was denied, i.e., B had denied the claim of A in June 1961 while the suit was filed in
this respect in July 1966 after more than five years. The law of limitation prescribes a limitation
period of three years in case of movables. The court here noted that the operation of the business
by its very name, ‗Kumar Touring Talkies‘ showed that exhibiting cinema shows at a specific
place was purely temporary. Therefore, even if the two items of disputed property were attached
and embedded in earth, the intention can only be to have them affixed to earth temporarily. The
license to exhibit the shows was only for a period of one year, and there was no guarantee that
the owner would have applied for its renewal or the authorities would have renewed it. Thirdly,
the person who fixed them to the land was not the owner of the land. These items were in fact
been removed from the land subsequently. The court held that these were movable properties and
the suit being time barred was dismissed.

SCOPE OF THE ACT :

This Act defines and amends certain parts of the law relating to transfer of property by act of
parties.The important words used in the Act are ‘by act of parties’, and therefore, it applies and
governs the transfers by act of parties only and does not govern transfers that take place due to
operation of law. Accordingly, it does not govern transfers of property through court auction,
forfeiture, acquisition or due to insolvency proceedings or government grants. It also does not
govern transfers of property through intestate or testamentary succession.

BASIC OBJECTIVES OF THE ACT

The Act defines certain expressions used in relation to transfer of property and amends the (then)
prevailing rules governing the same. It does not purport to introduce any new principle of law.
One of the basic objectives of the Act was to bring in harmony the rules relating to transfer of
property between living persons and those applicable in case of the devolution of the same, in the
event of the death of a person, through intestate and testamentary succession. The Act also seeks
to complete the law of contract, as most of the transfers primarily arise out of a contract between
the parties. The Act has also, by providing for the compulsory registration of the transfers,
changed the nature of a transfer of property from a private to a public affair. The Transfer of
Property Act, 1882 was intended to define and amend the existing law, and not to introduce any
new principle. It embodies principles of equity, justice and good conscience. The chief objects
of Transfer of Property Act were first to bring the rules which regulate the transmission of
property between living persons into harmony with the rules affecting its devolution on death
and thus, to furnish and complement the work commenced in framing the law of testamentary
and intestate succession; and secondly, to complete the code of contract law so far as it relates to
immovable property.

The Act is not exhaustive, and it does not profess to be a complete code. This is apparent from
the omission of the word consolidate‘, which occurs, for instance, in the preamble to the Indian
Evidence Act, 1872. The preamble to the Indian Contract Act, 1872 is worded in terms similar to
the preamble of Transfer of Property Act. In Irrawaddi Flotilla Co. v. Bhugwandas, which was
a case under the Contract Act, the Privy Council observed that the said Act did not profess to be
a complete code dealing with the law relating to contracts, that is purported to do no more than to
define and amend certain parts of that law, and that the legislature did not intend to deal
exhaustively with the law relating to contracts.

TERRITORIAL LIMITATION

A territorial law is a lex- loci or the law of a particular place and applies to all persons inhabiting
the territory irrespective of their personal status. It is different from personal law that generally
follows the person. The T P Act, 1882 is a territorial law and its operation extends to the whole
of India except for Punjab. It was not enforced throughout the country in one go. It was made
applicable to different parts of the country on different occasions. When the Act was first
enforced (1st July 1882), it extended to the whole of ‘British India’ except Bombay, Burma and
Punjab. The Act was extended to the territories of Bombay from 1 st January 1893. In Punjab, the
transfer of immovable property by the act of parties is governed by the rules of Justice, Equity
and Good Conscience.

T. P ACT IN COMPARISION WITH MOHAMMADAN AND HINDU LAW:

An exception is made with reference to section 57 and chapter IV as the latter provides for the
transfer and extinction of a mortgagor‘s interest by a decree of the court, and the former provides
for the discharge of encumbrances by order of a court. With reference to these sections, 2(d)
overrides the provisions of section 5.35 Section 2 says that nothing in the Chapter II of this Act
shall be deemed to affect any rule of Mohamedan law The reason for this provision is that some
of the rules of law differ from the general rules as to the transfer of property enacted in chapter
II. Thus, a Mohamedan may settle property in perpetuity for the benefit of his descendants,
provided there is an ultimate gift in favour of charity. This rule is not affected by section 13 and
14 of the Transfer of Property Act. The Mohamedan law of gifts is expressly saved by section
129. Under that law, writing is not essential to the validity of a gift, but delivery of possession or
of such possession as the subject-matter of the gift is susceptible of, is necessary for a transfer by
way of gift. Although section 2 saves rules of Mohamedan law, it does not follow that the
general rules in chapter II cannot apply to Mohamedan transfers. These general rules are
excluded only if there is an inconsistent rule of Mohamedan law. Where there is no inconsistent
rule of Mohamedan law, the sections in chapter II apply proprio vigore, for all that section 2 says
is that nothing in chapter II shall be deemed to affect any rule of Mohamedan law. However, in
any case not covered either by the sections in chapter II or by Mohamedan law, the English law
is applied on the ground of justice, equity and good conscience. The Transfer of Property Act as
it stood before the amending Act 20 of 1929, also saved rules of Hindu law. The word Hindu‘
has been omitted as the differences between that law and the Transfer of Property Act have now
been removed. The rule in Tagore v. Tagore and Chundi Churn v. Sidheswari, that bequests and
transfer in favour of unborn persons are- wholly void, was in conflict with sections 13, 14 and 20
of the Transfer of Property Act. The Hindu law on this subject had been modified by the Hindu
Disposition of Property Act, 1916, Madras Act, 1914, and Act 8 of 1921, which

AMMENDMENT AND ASSOCIATED CHANGES

The Act was afterwards amended on 12 separate occasions by the Amending Acts which follows
: 1. Act No. 3 of 1885—amending sections 1,4,6(i), and 69. It abolishes exemptions from the Act
on the ground of race, and reconciles the provisions of the Registration Act with those of the
Transfer of Property Act.

2. Act No. 15 of 1895—which exempts government grants from the operation of the Transfer of
Property Act.
3. Act No. 2 of 1990—amending sections 3,6(e), and 6(h), and remodelling chapter VIII which
deals with transfers of actionable claims.

4. Act No. 6 of 1904—amending sections 1, 59, 69, 107 and 117. It enables a local government
to exte

nd part of the Act of specified territories, and to apply the provisions of the Act relating to leases
to particular classes of agricultural leases. It provides for the registration of certain mortgages
and leases, and for equitable mortgages in moulmein, bassein and akyab.

5. Act No. 5 of 1908—transferring the adjective law of mortgages to the Code of Civil
Procedure

. 6. Act No. 11 of 1915—amending section 69.

7. Act No. 26 of 1917 - validating mortgages and gifts in Agra and Oudh executed before 1
January 1915, and attested on acknowledgement of execution.

8. Act No. 38 of 1920—omitting the words ‗with the previous sanction of the Governor-General
in council‘ from sections 1 and 117.

9. Act No. 38 of 1925—amending section 130.

10. Act No. 27 of 1926—amending section 3 by inserting a definition of the word 'attested'.

11. Act No. 10 of 1927—amending section 3 by making the definition of the word 'attested'
retrospective.

12. Madras Act No. 3 of 1922—modifying the provisions of the Act to give effect to the
provisions of the Madras City Tenants Protection Act, 1922. Despite these amendments, here
were conflicting decisions on nearly every section of the Act, and a further exposition of the law
became necessary.

Accordingly in 1927, a Special Committee, was appointed to examine the provisions of a Bill
prepared by the Legislative Department of the Government of the India for the purpose of
making a general amendment of the Act. The Bill which, was the result of their labour was, after
a slight amendment in Select Committee, enacted in the Transfer of Property (Amendment) Act
No. 20 of 1929.

The Act as amended sets at rest points on which decisions have been conflicting, and makes
several changes in the law, of which the most important are:

 Registration amounts to notice, (Section 3).

 Constructive notice to an agent is notice to his principal, (Section 3).
 Validation of transfers to a class of some members as regards which fails, (Section 15).
 Statutory recognition of the doctrine of part performance, (Section 53A).
 In a mortgage by conditional sale, the condition must be embodied in the same deed,
(Section 58).
 A mortgagor entitled to redeem may require the mortgagees to transfer the mortgage
debt to a third party, (Section 60A).
 Statutory recognition of the mortgagor‘s right of inspection of title deeds, (Section 60B).
 Mortgagor‘s right to redeem several mortgages to the same mortgagee separately, or
simultaneously, (Section 61).
 Statutory recognition of the mortgagee‘s right to compensation for necessary
improvements, (Section 63A).
 Statutory recognition of the mortgagor‘s power to lease, (Section 65A).
 Abolition of the remedy of foreclosure in certain mortgages, (Section 67).
 Mortgagee‘s obligation to enforce several mortgages by the same mortgagor
simultaneously, (Section 67A).
 Provision for appointment of a Abolition of the remedy of foreclosure in certain
mortgages, (Section 67).
 Mortgagee‘s obligation to enforce several mortgages by the same mortgagor
simultaneously, (Section 67A).
 Provision for appointment of a receiver by a mortgagee exercising power of sale without
the intervention of the court, (Section 69A).
 An extension of the principle of subrogation, (Section 92).
 A modification of the law of merger, (Section 101).
 Provision requiring registered leases to be executed by both parties, (Section 107).