Q.1. What is Meaning of Property.

Write down some Definitions

and Kinds of Property.

Introduction
The word property is used in numerous senses in general. If one looks around in the
surroundings, everything available may be categorized as Property. Every object, whether
tangible or intangible having some value to human beings, may be termed as Property. The
essential characteristic of Property is the value attached to it. In one way or the other, it is a
source of wealth. The value, although may be either monetary or personal. In a general sense,
therefore Property consists of land, shares, buildings and debts due to another person.
However, the term when used in the legal sense has a definite connotation. It is the right to
enjoy and to dispose of certain things in an absolute manner as one thinks it fit.

Origin

The word “property” is derived from the Latin word proprietary and the French equivalent
properties, which means a thing owned. The concept of property and ownership are very
similar to each other. However, there is a fine line that distinguishes the two terms. It will not
be incorrect to state that humans have been aware of their rights to possess what they
rightfully own for long. The term property has been widely interpreted by various jurists such
as Salmond, Bentham and Austin. Close observation of the definitions given by them will
help us understand the concept in a better manner.

Definition of Property

Eminent jurist Salmond while defining the term property, observed that the term might be
understood in one of the three senses mentioned below:

(i) The term property includes all the legal rights of a person. That is to say that it includes
complete ownership of a man on material as well as incorporeal things.

(ii) The term includes not a man’s personal rights, but only his proprietary rights.

(iii) The term includes the rights of ownership in material things such as building etc.

According to another jurist, Bentham, the term property includes ownership of material
objects alone. He has, in a way, interpreted the term in a narrow sense.

According to Austin, Property denotes the greatest right of enjoyment known to the law,
including servitudes. The Property includes both proprietaries as well as the personal rights of
a man.

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Section 2(c) of the Benami Transactions (Prohibition) Act, 1988 defines property as:

“Property” means property of any kind, whether movable or immovable, tangible or

intangible, and includes any right or interest in such property.

Section 2 (11) of the Sale of Good Act, 1930 defines property as:

“Property” means the general property in goods, and not merely a special property.

Right to Property
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.
There are some Traditional principles related to property rights which includes include:
1. Control over the use of the property.
2. Right to take any benefit from the property.
3. Right to transfer or sell the property.
4. Right to exclude others from the property.

Kinds of properties
1. Existence
 Corporeal Property and Incorporeal Property.
Corporeal Property is visible and tangible, whereas incorporeal Property is not.
Moreover, corporeal Property is the right of ownership in material things, whereas
incorporeal Property is an incorporeal right in rem.

Corporeal Property is further categorized into

 Movable and Immovable Property.

A. Movable Property:
Movable property can be moved from one place to another without causing
any damage. These are the legislations which define movable property.

Section 2(9) of the Registration Act, 1908:

"Movable property" includes standing timber, growing crops and grass, fruit
upon and juice in trees, and property of every other description, except
immovable property."

Section 22 of India Penal Code,1860:

"Movable property" are intended to include corporeal property of every
description, except land and things attached to the earth or permanently
fastened to anything which is attached to the earth."
Section 3(36) of the General Clause Act,1897- "Movable property" shall
mean the property of every description, except immovable property."

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 B. Immovable Property
Immovable property is one that cannot be moved from one place to another
place. This is the property which is attached to the earth or ground.

Section 2(6) of the Registration act, 1908 states that an "Immovable property
means and includes land, buildings, hereditary allowances, rights to ways,
lights, ferries, fisheries, or any other benefit to arise out of the land, and things
attached to the earth or permanently fastened to anything which is attached to
the earth, but not standing timber, growing crops nor grass."
This property of a value of more than Rs. 100/- is needed to be registered for
which a registration fee and stamp duty are to be paid. This property can be
considered an ancestral joint property.

According to the Definition given under S.2(26) of General Clauses

Act,1897, Immovable Property includes
Land, Benefits arise out of land, Things attached to the earth i.e.
(a)Things embedded in the earth
(b)Things attached to what is so embedded in the earth
(c)Things rooted in the earth except, standing timber, growing crops and grass.

Incorporeal Property is classified into two categories :

 Rights in Re propria and Rights in Re aliena

A. Right in re aliena
Right in re aliena are also sometimes referred to as encumbrances. These are the
rights of a specific user. These prevent the owner from exercising some definite right
in reference to his Intellectual Property. Lease, security and trust may be included
under this category.

B. Right in re propria
Right in re propria are immaterial forms of Property. These are a product of human
skill and labour. Patents, copyrights and commercial goodwill may be included under
this category.

2. Nature
A. Tangible Property
Tangible property has a physical existence and can be touched. This type of property can be
moved from one place to another, without causing any damage. From this, we can say that
this property is movable in nature. Examples: cars or other vehicles, books, timber, electronic
devices, furniture, etc.
B. Intangible Property
Intangible property does not have any physical existence. These are properties with current or
potential value, but no intrinsic value of their own & cannot be touched or felt but holds
value. Examples include intellectual property like copyright, patent or GI, stock and bond
certificates. Franchises, securities, software & many more.

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 3. Ownership
A. Public Property
Public property, as we can easily predict, means the property owned by the State for the
Indian citizens. It belongs to the public with no claim from an individual. The government or
any assigned community generally manages these properties for public utility.

A few common examples can be Government hospitals, parks, public toilets, etc.

B. Private Property

As the name suggests, private property permits a non-government body to own the property.
It is property owned by a juristic person for their personal use or benefit which can be of any
nature tangible or intangible, movable or immovable.

Common Examples include apartments, securities, trademarks, private wells, etc.

Some Other Kinds of Property

Personal Property

The personal property acts like an umbrella which includes all types of property. Individuals
own this kind of property, be it either tangible or intangible.

Real Property

Real property, also called real estate property, includes land and any development made on
such land. This kind of property is covered in immovable property. But why is this covered in
immovable property? See, for example, roads, mines, buildings, factory, crops, etc, which is
created by development, are all fixed with the land. This is immovable property, + any
development on it, a further deliberation of immovable property is a real property.

Other examples: Building (attached to the earth) using materials like cement, steel, mines,
crops, etc.

Q.2. What is Transfer of Property. What are the Manners, Modes

of Transfer. What kinds of Property can not be transferred
according to TPA,1908.
Meaning of Transfer of Property – Sec.5

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.

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What may be Transferred – Sec.6

Section 6 of the Transfer of Property Act, 1882 discusses the property which may be
transferred. The section states that property of any kind may be transferred except

I. Properties which cannot be transferred by any law, for the time being in force in
India
II. Properties which cannot br transferred otherwise as given under TPA.However,
Clauses (a) to (i) of section 6 mention the properties which cannot be transferred.

Clause (a) describes spes successionis cannot be transferred. This clause states that the
transfer of a bare chance of a person to get a property is prohibited under this section. For
example, Arun expecting that Chandini, his aunt, who had no issues, would bequeath her
house worth Rs. 50,000 transfers it to Bhushan. The transfer is invalid as it is a mere matter
of chance of receiving the property on the part of Arun. Thus, it is invalid.

Clause (b) mentions that the right of re-entry cannot be transferred. The right to re-entry
implies a right to resume possession of the land which has been given to someone else for a
certain time. The section mentions that the right of re-entry cannot be transferred by itself
apart from the land. For example, A grants a lease of a plot of land to B with the condition
that if shall build upon it, he would re-enter — transfers to C his right of re-entering in case
of breach of the covenant not to build. The transfer is invalid.

Clause (c) mentions that easement cannot be transferred. An easement is a right to use or
restrict the use of land of another in some way. For example, the right of way or right of light
cannot be transferred.

Clause (d) mentions that an interest restricted in its enjoyment of himself cannot be
transferred. For instance, if a house is lent to a man for his personal use, he cannot transfer
his right of enjoyment to another.

Clause (dd) restricts the transfer of the right to maintenance. Such a right cannot be
transferred as such right is for the personal benefit of the concerned person.

Clause (e) provides that mere right to sue cannot be transferred. The prohibition has been
imposed as the right to sue is a right which is personal and exclusive to the aggrieved party.
For example, a person cannot transfer his right to sue for the damages suffered by him due to
breach of contract by the other party.

Clause (f) forbids the transfer of public offices. The philosophy behind the prohibition is
that such a transfer may be opposed to public policy in general. A person is eligible to hold a
public office on the grounds of his personal qualities, and such qualities cannot be
transferred. Thus, the transfer of public offices is prohibited under this section.

Clause (g) provides that pensions cannot be transferred. Pensions allowed to military and
civil pensioners of government and political pensions cannot be transferred. In simpler terms,

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a pension may be understood as any periodical allowance which may be granted in regard to
any right of office but only on account of the past services offered by the pensioner.

Clause (h) of this section is titled as nature of interest. This clause prohibits transfer which
will oppose the interest affected thereby. The transfer is also forbidden if the object or
consideration of the transfer is unlawful. Moreover, a transfer by a person who is legally
disqualified from being a transferee is also forbidden.

Clause (i) was inserted by the Amendment Act of 1885. The clause declares that certain
interests are not transferable and inalienable. For example, a farmer of an estate, in respect of
which default has been made in paying the revenue, cannot assign his interest in the holding.

Thus, section 6 containing clauses (a) to (i) specifically mention that certain things cannot be
transferred. Such a transfer if undertaken would be invalid in the eyes of the law in India.

Person competent to Transfer – Sec.7

Section 7 enumerates the concept of competency of persons who may be allowed to transfer
property. According to this section, a person is allowed to transfer property if he satisfies two
conditions.

I. The first condition is that the person must be competent to enter into contracts with
other persons.
II. The second condition is that the person who is willing to transfer property must have
title to the property or authority to transfer it if he is not the real owner of the
property.

An important point to be noted in this regard is the conditions mentioned in section 11 of the
Indian Contract Act, which specifies the category of persons who may be competent to
transfer. In the section, it is stated that the person must have attained majority, he must be of
sound mind, and he must not be disqualified to enter into contracts by any other law
applicable in India.

Operation of Transfer – Sec.8

Section 8 of the Transfer of Property Act expresses the concept of operation of the transfer.
The first paragraph states that, in the absence of a contrary intention, in a transfer of property
all the interests, which the transferor is capable of passing at the time, passes to the transferee
with all the legal incidents. Where the property transferred, all the legal incidents such as
easements, rents and profits and things attached to earth shall be transferred.

Where the property to be transferred is a house, easements, the rents accruing after the
transfer, locks, keys, bars, doors etc. shall also be transferred.

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Where the property to be transferred is machinery attached to the earth, in such a case,
movable parts of the machinery shall also be transferred. In cases where the debt is
transferred, the legal incident that is securities shall also be transferred.

Where the property is money or other property which may yield some kind of income, then
the interest or income accruing after the transfer takes effect shall also be transferred. In other
words, the property and the legal incidents attached to the property shall be transferred as part
of the same transaction.

Oral Transfer – Sec.9

Section 9 of the transfer of property act, 1882 elaborates the concept of oral transfer. It
mentions that property may be transferred orally in cases wherein it has not been expressly
mentioned that the property must be by law transferred in writing. Writing is necessary in the
following cases:

(i) Sale of immovable property having a value of more than rupees hundred. (Provided under
section 54 of the Transfer of Property Act, 1882)

(ii) Sale or reversion of other intangible things. (Provided under section 54 of the Transfer of
Property Act, 1882)

(iii) Simple mortgage. (Provided under section 59 of the Transfer of Property Act, 1882)

(iv) All other mortgages are securing rupees hundred or more. (Provided under section 59 of
the Transfer of Property Act, 1882)

(v) Leases of immovable property from year to year or for a term exceeding one year or
reserving a yearly rent. (Provided under section 107 of the Transfer of Property Act, 1882 )

(vi) Exchange. (Provided under section 108 of the Transfer of Property Act, 1882)

(vii) Gift of immovable property. (Provided under section 123 of the Transfer of Property
Act, 1882)

(viii) Transfer of actionable claim.(Provided under section 130 of the Transfer of Property
Act, 1882)

Q.3. What are the Conditions Restraining Alienation under TPA,

1882.

What is alienation

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Alienation means transferring of property. This transfer of property can be through gifts,
sales and mortgages etc. Section 10, 11 and 12 contain certain conditions under which
restraining of alienation of the property by the transferee is void. It also has exceptions
where these conditions may be valid. Primarily, under Section 10, conditions of restraint can
be classified into two categories: absolute and partial. Whether a condition is absolute or
partial is determined by the substance of that condition, not merely the words. There are also
other conditions such as positive and negative and insolvency, along with their exceptions.

Rule against Alienability – Sec.10

Section 10 of the Transfer of Property Act, 1882 state the rules for alienation of property-

Section 10 lays down that where the transferee is absolutely restrained from transferring his
interest in his property to another person because of a condition which came along when the
property was transferred to the transferee, then this condition will be made void. The transfer,
from the transferor to the transferee would remain valid.

For example, A transfers some property to B as a gift but with the condition that while A is
alive, B must not transfer the property to any other person. This condition will be held void as
it absolutely restrains B from transferring his interest in the property to another person.

This is commonly known as the ‘rule against alienability’. The Transfer of Property Act is
based on the principle that there can be a free transfer of property and has been specifically
made with regard to free transfer. If conditions restraining transfer are imposed, then the free
transfer would be restricted and there would be no use for the Transfer of Property Act.

However, only conditions mandating ‘absolute restriction’ are void. There are conditions
which call for partial restraint to be observed with regard to the transfer of property. If we are
to determine whether a condition is absolute or partial, then one must look at the substance of
the condition, and not merely the words. Therefore, restraints can be classified into two
categories.

 Types of restraints

A. Absolute Restraints

An absolute restraint is such a restraint which completely takes away the right of the
transferee to alienate or dispose of the property. The transferee can now no longer transfer his
interest in the property to another person and he has no freedom to do what he wants with the
property in his capacity as the owner of the property. Section 10 stipulates that any condition
imposed on the transferee which would amount to an absolute restraint on the right of the
transferee to dispose of his interest in the property shall be void. The property must be
transferred to the transferee subject to the condition.

In Rosher v. Rosher (1884) 26 Ch D 801, A made a gift of a house to B, and gave a

condition that if B decides to sell the house during the lifetime of A’s wife, she should have

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the option of purchasing it for Rs 10000, while the market value of the house was set at Rs
10,00,000. This condition was held to be an absolute restraint and was declared void.

In Kannamal v. Rajeshwari, AIR 2004 NOC 8 (Mad), a life estate was to be created in
favour of ‘M’, but the transferor gave an absolute restriction along with the property transfer
to M, whilst divesting himself of all his interests in the property. This restraint was held to be
void as there was an absolute transfer.

In Mohd Raza v. Abbas BandiBibi,(1932) 59 IA 236, a condition imposing restriction for a

particular time or transfer to a specific person has been held to be void.

B. Partial Restraints

A partial restraint is a condition which partially takes away the right of the transferee to
dispose of his interest in the property. Here, the right is not taken away substantially. Section
10 does not explicitly talk about partial restraints. A condition imposing partial restriction is
valid.

In Mata Prasad v. Nageshwar Sahai (1927) 47 All 484, there was a dispute regarding
succession between nephew and widow. A compromise was formed that the widow had
possession of the property while the title for the same was given to the nephew with the
condition that he was restricted from alienating the property during the widow’s lifetime. It
was held that the compromise and the condition were valid and prudent in the present case.

 Exceptions to the restraints

A. Lease

A lease is a transfer of property wherein the lessee only has the right of enjoyment of the
property, while the ownership right is still with the lessor. Conditions imposing restrictions
are valid in the case of a lease, where the condition is for the benefit of the lessor or those
claiming under him.

In Raja JagatRanvir v. Bagriden, AIR 1973 All 1, a condition in the lease that the lessee
shall not sublet or assign was held to be valid.

B. Married Woman
When the property is to be transferred to a married woman, who is not a Hindu,
Mohammedan or Buddhist, then the condition restricting alienation can be valid.

Repugnant conditions – Sec.11

Section 11 of the Transfer of Property Act deals with repugnant conditions. Repugnant
conditions are those that are inconsistent with the nature of the interest transferred. Section 11

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prohibits the imposition of any condition directing the transferee to apply or enjoy in a
particular manner, any interest that is transferred absolutely in a particular manner. Such
conditions or directions are void and the transferee is entitled to receive property as if such a
condition did not exist in the first place. The transfer itself is, however, not invalidated. These
conditions are inconsistent with the nature of the interest transferred. Therefore, they are
called repugnant conditions.

A and B enter into a sale deed for a piece of land. The terms of the sale deed provides that the
piece of land should be used for the purposes of starting a factory for the manufacture of jute
textiles only. This condition is invalid. B can enjoy the land in any manner that he chooses
and the sale deed itself continues to be valid.

The exception to this rule according to the second paragraph of Section 11 is that if the
transferor owns another piece of immovable property, he may, for the benefit of that
property, impose a restriction on the enjoyment of that by him. In such a case, the restriction
on the enjoyment of the interest would be valid and saved by Section 11 of the Transfer of
Property Act.

 Positive and negative conditions or covenants

Conditions or directions that the transferor may impose upon the transferee to secure better
enjoyment of his own property can be of two types:

A. Positive or Affirmative conditions, i.e., they direct the transferor to do something

and
B. Negative conditions, i.e., they restrain the transferee from doing a particular thing.
These conditions are called covenants.

For example, A transfers a land to B, and puts a condition, that he would leave open a four
feet wide space adjoining A’s own land, and would not build upon it. On this land there is
also a one-foot open drain, and the second condition in the transfer deed directs the transferee
to maintain this drain by carrying necessary repairs from time to time. The first covenant, that
requires the transferee not to build upon four feet wide land, is a negative covenant as it is in
nature of ‘not to do a particular thing’, while the second condition or covenant is a positive
one, as it requires the transferee to ‘do a particular thing’, i.e. to maintain the drain in proper
shape and to carry necessary repairs.

 Section 10 and Section 11: Differences

 Section 10 specifies that in a transfer with condition that absolutely restrains the
alienation of the property by the transferee, the condition will be deemed to be
void.
 Section 11 specifies that in a transfer where absolute rights in the property have
also been alienated to the transferee, and where a condition is imposed that the
transferee cannot, in spite of having the absolute right in the property, do an act for
his enjoyment of the property, such condition will be deemed to be void.

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  Thus, the differences in these sections are that in Section 10 the condition is
deemed void due to absolute restrainment and in Section 11, the condition is
deemed void due to the transfer being of absolute nature.

The insolvency exception – Sec.12

Section 12 provides that where property is transferred subject to a condition or limitation

leaking any interest therein, reserved or given to or for the benefit of any person, to cease on
his
 becoming insolvent or
 endeavouring to transfer or dispose of the same, such condition or limitation is void.
Nothing in this section applies to a condition in a lease for the benefit of the lessor or those
claiming under him.

Although this relates to the restrictions on transfer of property, it is actually an exception to

another general rule provided in Section 31 of the Transfer of Property Act.

A transfers property to B with the condition that should B become insolvent, then his interest
in the property would cease. B later becomes insolvent and A seeks to enforce the condition.
In such a case, the condition would be void andB will continue to have interest in the
property.

Q.4. How a Property can be transferred to an Unborn Person. Or

What kind of interest can be created for an unborn person in a
transfer of property.
Transfer for the benefit of unborn person - Sec.13
Sec.13 gives effect to the general rule that a transfer can only take place between living
persons. If at all an interest has to be transferred for the benefit of an unborn person, section
13 lays down the mechanism.
 Unborn Person

The term unborn refers to not only those who might have been conceived but not yet born
i.e. a child in the womb, but also those who have not yet been conceived as well. Whether
they would be born or not is also a possibility but a transfer nevertheless can be effected for
their benefit.

 Mechanism for Transfer

As per section 13 of the Act, for a transfer for benefit of unborn first a life estate has to be
created in favour of living person or persons and then an absolute interest in favour of the
unborn. The person in whose favour a life estate has been created shall possess and enjoy it
till the time he/she is alive. If during such person’s life time the person in whose favour an
absolute interest has been created (i.e. the unborn) is born, the title in the property shall
immediately vest in him/her even though he/she would get possession of the property only

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upon the death of life holder. If the unborn is not born during the life time of the life holder,
the property shall be enjoyed by the life holder during his life time after which it would revert
back to the transferor or his heirs as the case maybe.
Eg: A transfers his property in 1960 to B for life and then to C for life and finally to C’s son
S, who is unborn at this time. Both B and C are alive at this time. the property would be first
possessed by B for his life and then by C. S is born in 1970. At this time, he takes a vested
interest in the property but the possession of it is postponed till the death of C (which say for
instance took place in 1975) If S died in 1974, then because he had a vested interest in the
property since 1970 i.e. when he was born, the property would after the death of C go to the
heirs of S. But if S was not born till 1975 (i.e. when the last life estate in favour of C ended)
then the property would revert back to A or his heirs as the case maybe.
Thus it is important for a valid transfer under section 13, for an absolute interest to be created
in favour of unborn (i.e. a life estate cannot be made in favour of unborn) and for the unborn
to come into existence before the life estate created in favour of someone else comes to an
end.
 Essential Elements of Section 13
The essential elements of section 13 have been discussed below. They are as follows:

1. No Direct Transfer

A transfer cannot be directly made to an unborn person. Such a transfer can only be brought
into existence by the mechanism of trusts. It is a cardinal principle of property law that every
property will have an owner. Accordingly, if a transfer of property is made to an unborn
person, it will lead to a scenario wherein the property will remain without an owner from the
date of transfer of property till the date the unborn person comes into existence.

2. Prior Interest

If the circumstances are such that there is no creation of trust, then in that case the estate must
in some other person between the date of transfer and the date when the unborn person comes
into existence. In simpler words we can say that the interest in favour of an unborn person
must always be preceded by a prior interest created in favour of a living person.

For instance, A transfer property to B for life, and after him, to C, and then to D again for
their lives and then absolutely to B’s unborn child UB.

A ———————————B (life interest)

———————————-C (life interest)

———————————-D (life interest)

———————————-UB (Absolute interest) [fig (i)]

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On B’s death, the possession would be taken by C and on C’s death, by D. On D’s death,
the possession would go to B’s child, who should have come in existence by this time. If
he not there, the property would revert back to A, if he is alive, else to his hiers.

3. Absolute Interest

The entire property must be transferred to the unborn person. The transfer to an unborn
person must be absolute and there should be no further transfer from him to any other person.
An interest which remains only for the lifetime cannot be conferred on an unborn person.
Under the English law, an unborn person can be conferred an estate only for his lifetime. This
concept of English law, however, is subject to a restriction known as the rule of double
possibilities. This rule was recognised in the case of Whitby Mitchell. The rule states that life
interest to an unborn person should not be transferred as doing so will give rise to existence
of two possibilities. The first possibility will be the birth of the unborn person to whom the
life estate was to be transferred and the second possibility will be the coming into existence
of issues of that unborn persons. Thus, the transfer of property to an unborn person can be
permitted only if the absolute interest is transferred and not just the life estate.

No Life Interest for an Unborn Person

As far as the unborn is concerned, no life interest can be created for the benefit of an unborn
person. Section 13, specifically prohibits that, by the use of the expression, ‘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. It means that the transfer must convey
to the unborn person, whatever interest he had in the property, without retaining anything
with him. Thus, no limited estate can be conferred for the benefit of the unborn person. If
limited interest in the property is settled for him, the same would be void.

For instance, A creates a life estate in favor of his friends B, and a life estate for the benefit of
B’s unborn first child UB1 and then absolutely to B’s second child UB2.

A ———————– B (Life interest)

———————– UB1 (Life interest)

———————– UB2 (Absolute interest) [fig (ii)]

The second figure is of limited interest in the property for the benefit of an unborn person and
would therefore be void and incapable of taking effect in law. After the death of B, here, the
property would revert back to A or his hiers as the case may be, as even though the transfer
for the benefit of UB2 appears to be proper, as it is dependent on a void transfer that cannot
take effect in law; a transfer subsequent to, or dependent on a void transfer can also not take
effect.

Thus, where a father gave a life interest in his properties to his son and then to his unborn
child absolutely, it was held that the settlement was valid. But where the interest in favour of

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the unborn child was a life interest the settlement would be void, and a subsequent interest
would also fail.
Similarly, where there is a possibility of the interest in favour of the unborn child being
defeated either by a contingency or by a clause of defeasance, it would not be a bequest of
the whole interest, and would be therefore be void.
In the example cited above, in figure (ii), suppose UB1 dies before B and UB2 is alive when
the life estate in favour of B comes to an end. Even then, the transfer of the benefit of UB2
will not take effect as the validity of the transfer has to be assessed from the language of the
document and not with respect to probable or actual events that may take place in future. It is
the substance of the transfer that will determine whether it is permissible under the law or not
and not how the situation may emerge in the future.

 Contingent Interest

The interest created in favour of the unborn is contingent in nature. For vesting of interest the
unborn needs to born alive before the death of the last life interest.

 When an Unborn Person Acquires Vested Interest – Sec.20

The provisions of section 20 of the Transfer of Property Act, 1882 mention the concept that
in what circumstances unborn person acquires vested interest. Unborn person may not be able
to enjoy the possession of property as soon as he is born but he may, however, acquire a
vested interest in the property since his birth. Where, on a transfer of immovable property
interest is created for the benefit of an unborn person, he acquires upon his birth, a vested
interest, although he may not be entitled to the enjoyment thereof immediately on his birth.
The mentioned provision however may be waived off if the terms of the agreement mention a
contrary clause.

The section lays down that an interest created for the benefit of an unborn person vests in that
unborn person as soon as he is born. Such interest remains vested interest even though he
may not be entitled to the enjoyment thereof immediately on his birth.

For example, if “A” transfers an estate to trustees for the benefit of A’s unborn son with a
direction to accumulate the income of such estate for a period of ten years from the date of
the birth of A’s son and then to hand over the funds to him. A’s unborn son acquires a vested
interest upon his birth, although he is not entitled to take and enjoy the income of the property
for a period of ten years.

 Views of the Apex Court in Reference to the Transfer to Unborn Person

The Supreme Court of India in various cases from time to time has interpreted the provisions
of the Transfer of Property Act,1882 in respect of the transfer of property done for the benefit
of unborn persons.

In the famous case of Girjesh Dutt vs. Datadin, the Apex Court made important
observations. Facts of the case enumerate that “A” made a gift of her properties to “B”, who
was her nephew’s daughter. The gift made by A was made for the life of B and then to B’s

14
daughter without power of alienation and if there was no heir of B, whether male or female,
then to A’s nephew. B died without having any children. Thus considering the facts of the
case, the court held that the gift in favour of unborn daughters was invalid under Section
13 as the gift was a limited interest and also subject to the prior interest in favour of B.

Another case related to this concept is of Raja Bajrang Bahadur Singh v. Thakurdin
Bhakhtrey Kuer. In the instant case the Apex Court had observed that no interest can be
created in favour of an unborn person but when the gift is made to a class or series of persons,
some of whom are in existence and some are non existent, it does not fail completely, it is
valid with respect to the persons who exist at the time of testator’s death and is invalid with
respect to the rest.

Q.5. Discuss about Rule against Perpetuity according to Transfer

of Property Act. or
What is the Rule against Remoteness of Vesting according to TPA.
or
What is maximum period permissible for Remoteness of Vesting.
Perpetuity means indefinite period. Rule against Perpetuity is the rule which is against a
transfer making the property inalienable for an indefinite period or forever. Where a property
is transferred in such a way that it becomes non transferable in future for an indefinite period,
the property is tied up forever. This disposition would be a transfer in perpetuity. In any
disposition, perpetuity may arise in two ways ;
(a) By taking away from the transferee his power of alienation
(b) By creating future remote interest

A disposition which tends to create future remote interest has been prohibited under sec.14
which incorporates the “Rule against Perpetuity”. However a better name of the rule the
“Rule against Remoteness of Vesting”.

 Object
As discussed earlier, it is important to ensure free and active circulation of property both for
trade and commerce as well as for the betterment of the property that ultimately is good for
the society. Thus, the object of this section is to see that the property is not tied- up and to
prevent the creation of perpetuity.

 Conditions

Following conditions must be satisfied to attract Section 14:

1. There must be a transfer of property.
2. The transfer should be to create an interest in favour of an unborn person.
3. Interest created must take effect after the lifetime of one or more persons living at the
date of such a transfer and during the minority of the unborn person.

15
 4. The unborn person must be in existence at the expiration of the interest of the living
persons.
5. The vesting of the interest in favour of the ultimate beneficiary may be postponed
only up to the life or lives of living persons plus the minority of the ultimate
beneficiary but not beyond that.

Rule against Perpetuity - Sec.14

The rule against perpetuity under Section 14 states that when an interest is created for an
unborn, the vesting of such interest cannot be postponed beyond the life time of those in
whose favour a life interest is created plus the minority of the unborn i.e. before he turns 18.
As seen under section 13 an interest can be created in favour of an unborn if first a life
interest is created in favour of someone else and then an absolute interest in favour of such
unborn. The moment the unborn comes into existence there is a vested interest created in him
with respect to the property so transferred even though he may get possession of it at a later
date (i.e. upon the death of the life estate holder). However, section 14 stipulates that
devolving of such vested interest can also be postponed such that the unborn does not get a
vested interest upon his coming into existence.
According to section 14 an interest in the unborn cannot be postponed beyond the period of
life of those in whose favour a life interest has been created plus the minority of the unborn.
Thus vesting of interest in favour of ultimate beneficiary may be postponed only up to life or
lives of those in whose favour a life estate has been created plus minority of the unborn.
Eg. 1) A transfers property to B for life and then to his first child (who is presently not in
existence) when he attains the age of 18 yrs. Here the unborn child would not attain a vested
interest in the property upon his birth but would do so only upon his attaining majority. Such
a transfer is a valid transfer as per section 14 of the Act. But if the first child dies before
attaining the age of 18yrs the property would revert back to A or his heirs as the case maybe.
2) A transfers property to B and then to his unborn when he attains the age of 30 yrs. The
vesting is void as it is hot by the rule against perpetuity as laid down under section 14. In
between the period when last person in whose favour a life interest in created, dies and
majority of ultimate beneficiary the unborn has a contingent interest which becomes vested
upon his attaining majority.
 Maximum Remoteness of Vesting

Under Sec.14, the maximum permissible remoteness of vesting is the

Life of the last preceding Life Interest + Minority of the Ultimate Beneficiary.
But, where the ultimate beneficiary is in mother’s womb when the last life interest dies, the
property vests immediately in him while he is still in mother’s womb. Therefore, the exact
period from which the minority begins to run is the date when the ultimate beneficiary is
conceived.
So, the maximum possible remoteness of vesting would, therefore be

16
Life of the last life interest + period of gestation i.e., during which a child remains in
womb after being conceived ( 9 months or 280 days ) + minority of the ultimate
beneficiary.
For example, A transfers certain properties to X for life then to Y for life and then to an
unborn. Here the last preceding life interest is with Y. When Y dies the unborn must be
already in existence either in mother’s womb as a child of 6 months or a born child of 6
years.. In first case the maximum period upto which vesting of property in unborn can be
postponed would be ; Life of Y + 3months(Period of gestation)+ 18years. In second case the
maximum period will be life of Y+12years.

 Exceptions

1. Transfer for public benefit. Where property is transferred for the benefit of the
people in general, then it is not void under this rule. e.g. for the advancement of
knowledge, religion, health, commerce or anything beneficial to mankind.
2. Covenants of Redemption. This rule does not offend the covenants of redemption in
the mortgage.
3. Personal Agreements. Agreements that do not create any interest in the property are
not affected by this rule. This rule applies only to transfers where there i transfer of
interest.
4. Pre-emption. In this, there is an option of purchasing a land and there’s no question of
any kind of interest in the property, so this rule does not apply.
5. Perpetual Lease. It is not applicable to the contracts of perpetual renewal of leases.
6. This rule is not applicable to mortgages because there is no creation of the future
interest.

Transfer to Class – Sec.15

Property may be transferred for the benefit of single unborn person or for the benefit of a
class of such persons. In both situations the transfer must be in accordance with section 13
and 14.
Section 15 states that if on transfer of property an interest is created for benefit of a class of
persons with regard to some of whom the interest fails by reason of rules contained in section
13 and 14, such interest fails in regard to such persons only and not in regard to the whole
class. Thus as per section 15, the transfer should be given effect to as far as possible.
Eg. A transfers his property to his son S for his life and then to his grandsons when they attain
the age of 18years and to his granddaughters when they attain the age of 21 years. While the
transfer in favour of the grandsons is valid, the one in favour of granddaughter is void as it is
hit by the rule of perpetuity under section 14. As per section 15, the transfer in favour of
grandsons would also not become void just because that in favour of granddaughters is void.

Transfer to take effect on failure of prior interest – Sec.16

As per this section, if due to violation of section 13 and 14 a specific transfer fails, any
transfer that is intended to take effect after or upon failure of such transfer also fails.

17
Eg. A transfers property to B for life and then to B’s sons on attaining age of 25 years. The
deed further provides that if B, dies without any son, the property would vest absolutely in C.
B and C were alive on date of transaction but there was no son of B at that time. Here transfer
for unborn is hit by section 14 and so is void. As per section 16 and considering the present
example, transfer in favour of C which was to take effect upon failure of this prior transfer
that is void, would also fail and cannot take effect. The use of term “after or upon failure of
prior interest” means that a transfer subsequent to or after void transfer fails and that the prior
one would take effect. Thus in the above example transfer in favour of B because is before
the void transfer would be valid and would take effect.

Direction for Accumulation - Sec.17

This section applies to those transfers where the property and the income arising from the
property are separated by the transferor. The transferee is directed not to spend the income
arising from the property but to accumulate it for a specific or non-specific purpose. If the
period for which the transferee must accumulate the income exceeds the life of the transferor
or 18 years, the direction is considered to be void and can be ignored by the transferee for the
exceeding period.
Section 17 therefore specifies the time period beyond which the direction for accumulation of
income would be void. The prescribed time period is life of transferor or from the date of
transfer a period of 18 years. These limitations are alternative and cumulative.
Eg. A transfers his property to B in 1970 with a direction that the income arising from it has
to be accumulated till 30 years. A dies in 1975, the maximum period for which the income
can be accumulated would be 1970+18 years i.e. 1988 after which B is free to use the
property as he likes. Where the time limit so specified is different from what has been given
under section 17, then the actual events subsequent to the transfer would determine the
maximum period for which the income is to be accumulated. It would be life of transferor or
18 years from transfer whichever is longer.
 Exceptions
1) Accumulation for payment of debt- where accumulation is for payment of debt of
transferor section 17 does not apply i.e. the accumulation can be directed for a longer
period than as specified under the said provision.
2) Provision for children- where accumulation is for benefit of children it is not hit
by section 17.
3) Preservation and maintenance of property- if accumulation of income is for the
maintenance of the property so transferred it is not hit by section 17.

Transfer in perpetuity for benefit of public – Sec.18

As per this section the rules regarding perpetuity and accumulation do not apply if the
transfer is made for the benefit of public. It makes a distinction between transfers that are
purely personal or commercial in nature and those that are for the benefit of public. It
includes transfers that are for the benefit of public in advancement of religion, knowledge,
commerce, health, safety or any other object beneficial to mankind. If transfer includes both
charitable and non-charitable objects, it would remain valid for charitable ones and not for
the non-charitable ones.

18
Q.6. What is Vested and Contingent Interest. What are the
difference between the two. Discuss its provisions according to
TPA1882.
Concept of Vested Interest
Section 19 of the Transfer of Property Act, 1882 states about Vested Interest. 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.

For example, A promises to transfer his property to B on him attaining the age of 22. B will
have vested interest in A’s property till the time he does not get the possession of it.

Death of the person who is having this interest will not have any effect over that interest as
after the deceased, the interest will vest in his legal heirs.

For example, in the above example, if B dies at the age of 21, then the interest vested in B
will pass on to the legal heirs of B and they will be entitled to the property in the prescribed
time period.

There are the important aspects of a vested interest as stated above, all these are discussed in
detail below:

1. Interest should be vested: This is the basic meaning of the provision that lays
down that interest should be created in favour of a person where time is not
specified or a condition of the happening of a specified certain event. A person
should profess to transfer a particular property in order for this interest to be
created.

2. Right to enjoy property is postponed: When interest is vested in a person, he

does not immediately get the possession of that property and hence cannot enjoy
that property.
But any person who is not a major and has a guardian is only entitled to the vested interest
after he attains majority.

For example, X agrees to transfer the property ‘O’ to Y and directs his guardian Z to give him
the property when he attains the age of 22. Y gets vested interest once he attains the age of
18.

19
Time of vesting: The interest is vested right after the transfer is initiated. Nothing can stop
the interest from vesting in the person in favour of whom the transfer is to be made.

Contrary Intention: The transferor can specify a particular time as to when the interest will
be vested in the person who will receive the property.

Death of the transferee: If the transferee dies before getting the property in his possession,
the interest vested in him will now vest in his legal heirs and they will get the possession of
that property once the condition is fulfilled.

In the case of Lachman v. Baldeo, a person transferred a deed of gift in favour of another
person but directed him that he will not get the possession of that property until the transferor
himself dies. The transferee will have a vested interest even though his right of enjoyment is
postponed.

 Characteristics of Vested Interest

1) Vested interest creates a present right that is in effect immediately, although the enjoyment
is postponed to the time prescribed in the transfer. It does not entirely depend on the
condition as the condition involves a certain event.

2) Death of transferee will not render the transfer invalid as the interest will pass on to his
legal heirs.

3) Vested interest is a Transferable and heritable right.

Section 20 of the Transfer of Property Act, 1882 states about vested interest to an unborn
child. The interest in the property will be vested in him once he is born. The unborn child
may not get the right of enjoyment of the property immediately after having vested interest.

Concept of Contingent Interest

Section 21 of the Transfer of Property Act, 1882 states about Contingent Interest. 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. Contingent interest
is entirely dependent on the condition imposed on the transfer.

20
For example, A agrees to transfer the property ‘X’ to B on the condition that he shall secure
90 % in his exams. This condition is uncertain and the happening of the event or not
happening is in doubt and therefore B here acquires a contingent interest in the property ‘X’.
He shall get the property only if he gets 90 % and when the condition is fulfilled.

In the case of Leake v. Robinson, the court held that whenever a condition involves a bequest
that is to be given ‘at’ a particular age or ‘upon attaining’ a particular age or ‘after’ attaining
this particular age, then it can be derived that the transfer involves a contingent interest.

 Characteristics of Contingent Interest

1. This interest is entirely dependent upon the condition. It only happens when the
condition is fulfilled.

2. Death of the transferee before getting the possession of the property will result
in the failure of continent interest and the property will remain with the
transferor.

3. Contingent interest is a Transferable right, but whether it is heritable or not, it

depends upon the nature of such any transfer and the condition.
There are some important aspects surrounding contingent interest which are explained in
detail below:

1. Interest: In a transfer if a condition is such that the transfer will take effect only
upon the fulfilment of that condition and till that time, the interest is contingent.

2. Contingent Interest exists in wills: Any bequest to a wife, son or daughter can
be a contingent interest if the condition provides so.

3. Exception: When a person who has an expectancy in the rights of ownership of

a particular property, and he for the time being till the happening of the event,
gets any sort of income that arises from that property. This interest in the
property does not come under the aspect of contingent interest.

Section 22 states about the transfer to a group or class of members with a contingent interest.
For example, there is a transfer to a group of 5 people, and the condition is that the property
will be vested in persons who attain the age of 40 years on this particular date. The persons
who have attained this age will get an interest in the property and people who have not, will
not get an interest in that property.

21
 Section 23 states about a transfer that happens after happening of an event that was
mentioned in the transfer involving contingent interest. This provision simply lays down one
of the two branches of Section 21 that laws down about contingent interest. The two branches
are happening of an event and non-happening of an event. This Section states about what
happens after the happening of the specified uncertain event.

Section 24 states about a transfer to a group or class of members who will get the property on
a condition that they shall be living at the specified date. This is also a contingent interest as
the event mentioned here is an uncertain event. The transfer will only take place for those
people who satisfy the condition of surviving at a particular date. The legal heirs of the
deceased cannot claim an interest in that property as a transfer involving a contingent interest
solely depends upon the fulfilment of the condition.

Difference between Vested & Contingent Interest

Sign Ground of
Vested Interest Contingent interest
number Difference

Vested interest is provided in Section Contingent interest is provided

1. Section 19 of the Transfer of Property Act, in Section 21 of the Transfer of
1882. Property Act, 1882.

It is an interest which is created

in favour of a person on a
It is an interest which is created in
condition of the happening of a
favour of a person where time is not
specified uncertain event. The
specified or a condition of the
person having the contingent
happening of a specified certain
interest does not get the
event. The person having the vested
2. Definition possession of that property but
interest does not get the possession
has the expectancy to receive it
of that property but has the
upon happening of that event
expectancy to receive it upon
but will not receive the
happening of a specified certain
property if the event does not
event.
happen as the condition is not
fulfilled.

The condition involves

The condition involves a specified a specified uncertain event.
3. Condition certain event. A certain event means There is a chance of the
an event that will eventually happen. happening or non-happening of
that particular event.

4. Fulfilment of Vested Interest does not entirely Contingent interest is entirely

depend on the condition as the dependent on the

22
 condition involves a certain event. It condition imposed on the
creates a present right that is in effect transfer. Interest is only
conditions immediately, although the enjoyment transferred to the transferee on
is postponed to the time prescribed in the fulfilment of the condition
the transfer. imposed.

This right is created as soon as There is mere chance to be

5. Right of Ownership
the interest is vested. having the ownership rights.

Death of the transferee before

Death of the person who is having
getting the possession of the
this interest will not have any
property will result in the
6. Death of transferee effect over that interest as after the
failure of continent interest and
deceased, the interest will vest in his
the property will remain with
legal heirs.
the transferor.

Contingent interest is
a Transferable right, but
Transferable and Vested interest is a Transferable and whether it is heritable or not,
7.
heritable? heritable right. it depends upon the nature of
such any transfer and the
condition.

There is no present right of

There is present, immediate
The present right of enjoyment, there is a mere
8. right even when its enjoyment is
enjoyment. expectancy of having such a
postponed.
right.

X professes to transfer the

property ‘O’ to Y on the
X professes to transfer the property condition that he shall
‘O’ to Y when he attains the age of construct a well in his property.
9. Examples
20. There is a vested interest with Y If he constructs, Y shall get
for the property ‘O’. contingent interest in the
property until the condition is
not fulfilled.

Q.7. Write a Note on Notice.

The concept of Notice for the purpose of The Transfer of Property is given under Section
3 of Transfer of Property Act, 1882 (TPA). Notice means to have knowledge of something
i.e. to know something. In law, it means knowledge of a fact. It is used to decide on
conflicting claims of two parties. In law, the Notice or Knowledge of a fact affects one’s legal
rights and liabilities.

23
Under Section 3 of TPA Notice can be; “Actual or express Notice” or “Constructive Notice”,
or it may be imputed to the transferee when information of the fact has been obtained by his
Agent.

Express or Actual Notice - Actual notice means when a person actually knows about the
existence of a fact. The fact must be definite information given in the course of negotiations
by a person interested in the property. The information of fact should not be a rumour or
hearsay and thus is not bound by such information.In other words, actual notice takes place
when the information is such that it would operate upon the mind of a rational man and
would make him act based on the knowledge so acquired.

Constructive Notice - According to Section 3, a person is said to have notice of a fact, which
he would have known, but for his “gross negligence” or “willful abstention from making an
enquiry or search” does not know. However, it is such knowledge which a person with
ordinary prudence ought to have known. In other words, constructive notice of facts are those
facts which a person ought to have known, but because of gross negligence or wilful
abstention does not know it. Thus in Constructive notice, there is a legal presumption, that a
person should have known a fact as if he actually knows it.

Therefore Constructive notice is knowledge of those facts which a court imputes on a person.
If the circumstances indicate that a reasonably prudent person ought to have known a
particular fact related to the transaction of transfer, then he will be deemed to know it.

Illustration: A sells the house by a registered document to B. He later enters into a contract
with C to sell him the same house. Law imposes a duty upon C to inspect the registers at the
Registrar’s office, and if he does that, he would come to know about the sale in favour of B.
A failure to inspect the register will be detrimental to the interests of C, as he would be
imputed with constructive notice of the registered transaction.

The legal presumption of constructive notice is made by the Court on following

circumstances;

1. Wilful abstention from enquiry or search

For wilful abstention, there has to be some starting point, some hint or suspicion which would
require some investigation to reveal the truth about a transaction. If in such cases the
transferee fails to investigate, with a fraudulent intention to not know the real truth, then the
court will assume that the transferee had some idea of that fact.

For instance, if a property is mortgaged to a bank by deposit the title deeds and the mortgagor
later sells the property to a lady without disclosing the fact of the mortgage, and she does not
insist on inspecting the title deed, then it will be presumed that the buyer willfully abstained
from inquiring and will be imputed with constructive notice of the mortgage.

24
 2. Gross Negligence

Constructive notice also applies where the transferee ought to have known some fact, but
because of gross negligence, he is unaware of it. Gross Negligence was explained in Hudston
v. Viney as gross negligence “does not mean mere carelessness”. It means carelessness of
such an “aggravated nature”, that indicates an attitude of “mental indifference to obvious
risks”.

For instance, If the transferee fails to read a note on the paper that the property is subject to a
charge, while the papers are in his possessions, then the court will not entertain the plea of no
Notice and will impute knowledge or notice of charge. Thus Constructive notice demands
due diligence with respect to transactions related to the transfer by the transferee.

Illustration: A sold his property to B for 10lakhs and delivered possession of it to B. B pays
5 lakh immediately, at the time of conclusion of the contract and promises to pay the balance
5 lakh after 6 months. The fact that the balance of 5 lakh has to be paid by B to A is written in
the title deed. B eventually fails to pay A the remaining amount and mortgages this property
by depositing the title deed to C and gets a loan of 5 lakh from C on the basis of the title
deed. B fails to pay C also and this property which was mortgaged to C is sold by C.Now A
files a suit against C to recover his 5 lakh. The question whether C is liable or not will be
decided by imputing Constructive Notice to C. It must be noted that it was already written in
the title deed that B has to pay A the balance amount and these title deeds were in possession
of C and on the basis of these title deeds the loan was advanced to B. Thus it can be said that
C “would have known” about the nature of the title deed. Moreover, C as a reasonably
prudent person ought to have examined the title deed carefully to get notice of the fact that B
is supposed to pay A 5 lakh. If he fails to do that he has committed “gross negligence” under
Section 3 of TPA. Further, if he had examined the deeds and discovered the fact of payment
to A, then he ought to have investigated further. If he does not do it then he is guilty of
“willful abstention from making an enquiry or search” under section 3 of TPA.Thus, whether
the transferee is to be imputed with constructive notice or not has to be determined by the
circumstances, surrounding a transaction. Thus it is a question of fact and not of law.

Registration of Document as Constructive Notice – Exp I

According to Explanation 1 to Section 3, if a transaction relating to the immovable property

needs to be effected by a registered instrument, under law, then the registration of the
document will be deemed as Constructive Notice. The notice of such instrument will be
deemed from the date of registration of such instrument. It must be noted that registration
amounts to notice only when it is required by law. If registration is not compulsory under
law, then the fact of registration does not amount to notice under TPA.

Eg.A sells the house by a registered document to B. He later enters into a contract with C to
sell him the same house. Law imposes a duty upon C to inspect the registers at the Registrar’s
office, and if he does that, he would come to know about the sale in favour of B. A failure to
inspect the register will be detrimental to the interests of C, as he would be imputed with
constructive notice of the registered transaction. All purchasers are thus under a legal
25
obligation to exercise diligence in examining the title recorded in the register to avoid
uncertainties and the risk of any sort.

Further Explanation 1 to Section 3 states that Constructive notice of registration will take
place only if 3 conditions are satisfied:

1. That the document was registered in accordance with the Registration Act, 1908.
2. That the instrument or memorandum has been duly entered in the book or
registers kept under Section 51 of the Registration Act, 1908.
3. And that the particulars of the transaction have been correctly entered in the index
under Section 55 of the Registration Act.

Actual Possession as Notice – Exp II

According to Explanation 2 of Section 3, a person acquiring an immovable property shall be
deemed to have notice of the title of any other person, who for the time being actually
possesses the property. It means that when a person, other than the transferor/owner, is in
actual possession of the property, then it is necessary for a prospective buyer of that property,
to ascertain all the rights, which the person in actual possession really has related to the
property. Thus it is the duty of the subsequent purchaser to inquire, about the precise
character of possession, from the person, who for the time being actually possesses the
property.

For instance, A lets out his property to B by a registered lease deed for 10 years. Before the
expiry of the said period, A enters into another contract with C, by which he agrees to sell it
to C for a consideration. Now C must inquire from the tenant (B), about the nature of
possession by B, because C nevertheless will be bound by the constructive notice of B’s title.

However, for constructive notice of possession, the possession must be actual possession and
not constructive possession. For instance, A contracts to sell land to B, and B puts another
person in possession of the land. A further sells land to C. In this case C is not affected by the
notice of B’s interest.

Notice of Agent – Exp III

The general principle of the law of agency is that an agent stands in the place of the principle
thus notice of fact by the agent will be deemed to be noticed by principle as well. This is
based on the legal maxim qui facit per alium facit per se i.e. He who does by another does by
himself.

The notice of a fact will be imposed on the principal irrespective of whether his agent did
actually communicate the fact to the plaintiff or not. The principle behind this is that no

26
person would be allowed to get rid of the doctrine of notice by simply employing an agent.
This is to protect the innocent party.

However, the agent’s knowledge will not operate as knowledge of the principal, where the
agent fraudulently conceals the fact from the principal. But mere concealment of fact will not
amount to this aspect as a defence. For this to act as a defence, the party imputing
Constructive notice to the principal must act in collusion with the agent or is aware of agents’
fraud.

Q.8. Write a Note on Doctrine of Election.

Introduction to Doctrine of Election

Election means the right of choosing between presumptive alternatives. The doctrine of
election is applicable to both movable and immovable properties. It states that, when one
professes to transfer the property over which he has no right, without having informed the
owner, he must approach the owner to seek its disposal. The owner must decide whether or
not to allow it. Henceforth, it can be inferred that he has the right to exercise the doctrine of
election to either confirm or dissent during a transaction.

Let’s understand this with the help of an illustration: Raj transfers his house to Mr. Rahul, by
a gift and in the same gift deed asks Me Rahul to transfer his shop to Anuj. Rahul may elect
to accept the transfer or reject the transfer. If Rahul accepts the transfer, he will get the house,
but in that case, he will also have to transfer the shop to Anuj.
Understanding the Doctrine of Election

Section 35 of the Transfer of property act deals with the Doctrine of election. It provided
that where a property is transferred to a person, then the transferee can make a choice
between whether to accept the transferee or reject it. The burden of the transfer is
complimentary along with the benefits of the transfer. In other words, enshrined in legal
maxim qui approbat non reprobate i.e Aman cannot approbate and reprobate.
In case the person upon whom a benefit us conferred rejects it, the property which was
attempted to be transferred to him will revert to the transferor and it is the transferor who will
compensate the disappointed transferee. If the transferor dies, before the transferee makes
the election, then the legal heirs of the transferor will compensate the disappointed
transferee out if the inherited assets.
The doctrine of election is universally applicable.3 In reference to the mode of elections, the
election by the owner can either be direct, through communication or indirect, “the
acceptance of the benefit by the original owner is subject to conditions:
1. He has a duty to elect which he must have the awareness, and
2. There must be proof of knowledge of circumstances which would influence the
judgment of a reasonable man in making an election.
3. Acceptance for two years (Section 188(1) of the Indian Succession Act)
4. Status quo cannot be restored

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The doctrine of election stated by Maitlandas is that- “He who accepts a benefit under a
deed or will or other instruments, must adopt the whole contents of that instrument; Contort
to all its provisions; and Renounce all right that is inconsistent with it.”

The Necessary ingredients for the Doctrine of Election:

 The person transferring the property should transferor should not be the owner of the
property.
 The person transferring must at the same time and in the same instrument, grant some
of his own property to the owner of the property.
 Both the transfers must be made in the same transaction i.e Transfer of the property of
the owner to the transferee and conferring the benefit on the owner of the property.
The doctrine of election is not applicable if the transfers are made by virtue of two
separate instruments.
 It is required that the owner has a proprietary interest in the property. A person being a
creditor is uncommitted in the election as he merely has a personal right to be paid by
the debtor.
 The owner is not put to election who does not receive direct benefit under the
transaction, but gets some benefit under it indirectly.
 The question of election does not arise when the benefit is received by a person in a
different capacity. For example, a person can accept legacy for an estate, at the same
time in his personal competence, he could retain the property.

The exceptions to the doctrine of election:

As explained through the sec.35 of TP Act that if any person in the time of transfer the
property to another person and make a beneficiary clause for transferee after accepting the
transfer. Than the transferee can deny the transferor can accept the transfer and enjoy the
beneficiary clause. But there is a certain exception regarding this rule that if the transferee
does not give his or her express consent or conclusive decision than in the certain situation is
will be introduced as he or she is accepted the transfer, those are:
1. If the transferee completely enjoy the beneficiary clause mention in the transfer or
where transferee enjoyed the full benefit, then it will be considered as an acceptance
by the transferee.
2. If the transferee after one year did not give any consent regarding the transfer of
property than transferee is bound to give his or her reply. If he or she did not do that
then it will consider that he give the assent for the transfer.
3. The duty of election will be suspended in disability cases like minority, lunacy. Unless
the transfer is made by their guardian.
4. If the transferor at the time of making transfer makes a beneficiary clause and an
independent beneficiary clause. So, if the transferee did not give assent for the
transaction then also he or she will get the independent beneficiary clause.

Section 35 of the Transfer of Property Act, 1882 explains the concept of the Doctrine of
Election. The doctrine of election may be a common-law rule of equity that needs that if a
testator attempts to eliminate property belonging to somebody else and also makes a device
thereto person, the beneficiary must choose from either keeping the property or accepting the
device. Thus, Section 35 provides that, a person taking no benefit directly under a transaction,

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but deriving a benefit under it indirectly, need not elect. Moreover, an individual who in his
one capacity takes a benefit under the transaction may in another dissent therefrom.

Q.9. Short Notes

(a) Attestation
According to the Section 3 of Transfer of Property Act, Attestation means that a person has
signed the document by way of testimony of the fact that he saw it executed. It does not
import anything more, and therefore it must be distinguished from cases where a person signs
a document merely as a witness to the execution but also with a view to giving consent to the
transaction. A person who is a party to the deed cannot under any circumstances be allowed
to sign the instrument as an attesting witness.

Essential Elements

The essential conditions are-

1. There must be two attesting witnesses.
2. Each witness must:
3. See that the executant sign or affix his mark, or
4. See some other people sign the instrument in the presence and under the direct of the
executant, or
5. Receive from the executant a personal acknowledgement of his signature or mark or
the signature of such other person.
6. Each of the two attesting witnesses must have signed the instrument in the presence of
the executant.
The mentioned three ingredients must be present for a valid attestation. However, it is not
necessary that all the attesting witnesses should be present and sign at the same time, nor
need any of them be present when the executant executes the instrument. In case the attesting
witnesses are not present when the executant executes the instrument, it is essential that each
one of them must receive from the executant a personal acknowledgement of its signature or
mark.

Attesting Witness

For the purpose of attesting, the signature put by the witness should essentially be ‘animus
attestandi’, that he has seen the executant sign or has received from him a personal
acknowledgement of his signature. If a person has put his signature on the document for some
other purpose, e.g., to clarify that he is a scribe or an identifier or a registering officer, he is
not an attesting witness. ‘Animus attestandi’ must be there for a valid attestation.

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Effect Of Invalid Attestation

If a document is not validly attested, as required by the section, it is ineffective. For example,
under Section 59 of the Act if the mortgage deed is not duly attested, it cannot be enforced in
a Court and it will also cut out to operate as a charge.

(b)Registration
According to the transfer of property Act, 1882 registered refers to any property registered
where the act is operative. One must comply with various procedures of registration.

1. The description of the property should be mentioned.

2. Avoid fraud.
3. Deeds should be presented by a competent person.
4. The property must be registered in the same territory where the registered office is
situated.

(c)Actionable Claim

Actionable claim is defined in Section 3 of the Transfer of Property Act, which was included
in the Act by the Amending Act II of 1990. Actionable claim is an intangible movable
property, and its transfer is dealt with in Chapter VIII of the Act.

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

1. Claim to an unsecured debt

2. Beneficial interest in a movable property
These are both claims that are recognized in the Courts of law as affording relief. There are
other types of claims also that afford relief and are actionable in the Courts of law, such as
secured debts and tortuous suits like defamation or nuisance. But those are not categorized
under the meaning of actionable claim. The term actionable claim only covers the above
mentioned two types of claims.

Unsecured Debt

Unsecured debt refers to all monetary obligations of a certain amount, and that is not covered
by any security in the form of mortgage, pledge or hypothecation. This is not just limited to
the concept of loans forwarded by a creditor to a principal debtor. It extends to all kinds of
monetary obligations, such as rent or payment on sale of property etc.

The three requirements for a transaction to qualify as unsecured debt are:

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 1. Monetary obligation
2. No security
3. Certainty of amount of money obligated

So, the three types of unsecured debt are:

1. Existent Debt
2. Accruing Debt
3. Conditional or Contingent Debt

 Existent Debt

This is the kind of debt that has already become due, and is payable and enforceable in the
present. For instance, if Mr. A sells a house to Mr. B in present, and the monetary
consideration has to be paid then and there, then the consideration becomes payable right
then, and this is existent debt.

 Accruing Debt

If a monetary obligation is due in present, but becomes payable on a future date, then that is
accruing debt. For example, if Mr. A is the employee of Mr. B and he gets his salary on the
last day of every month, then his salary is accruing debt during that month, as it is due
throughout the month, but it becomes payable only on the last day of the month. So, if Mr. B
fails to pay the salary, then Mr. A can approach the Court to claim it only after the last date of
the month, when it becomes payable.

 Conditional or Contingent Debt

A debt is conditional or contingent if it becomes payable on the fulfillment of a condition or

contingency.

It is called conditional debt when the stipulation is in control of the parties. For example, an
agreement between A and B that A will pay Rs. 1000 if B buys C’s house, then this is a
conditional debt. Here, Rs. 1000 becomes payable and B can claim it only after he fulfills the
condition.

On the other hand, when the stipulation is beyond human control, then it is called a
contingent debt. For instance, if A promises to pay a particular amount to B if C’s ship sinks,
then since the sinking of the ship is beyond the control of the parties, so it is a contingent
debt.

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Beneficial Interest in Movable Property

If a person has the right to possess a movable property, then it is said that he has beneficial
interest in that movable property. But if that property is not in his possession, then he has an
actionable claim. So, the requirements to constitute this type of actionable claim are:

1. Movable property;
2. The movable property is not in the possession of the claimant;
3. The claimant has the right to possess that movable property.

For example, if A sells his car to B and B has completed his obligation, that is, B has
forwarded the consideration from his side, then B has the right to possess the car; but if B is
unable to acquire possession, then B can approach the Court to claim this possession.

But if the movable property is already in the possession of the claimant, either actual or
constructive, then he cannot claim possession. So, if in the previous example, A had given the
car keys to B, then it can be said that B has constructive possession, and hence, B cannot
approach the Court to claim possession.

Moreover, the right to possess of the Claimant must be a legal right, which is recognized by
the law. For instance, if a person of unsound mind or a minor, A sells 100 bags of wheat (or
any other movable property) to Mr. B, and Mr. B also forwards the consideration from his
side, that is Mr. B fulfills his obligations, then also Mr. B cannot claim possession. This is so
because Mr. B does not have a legal right to possess, as A does not have the capacity to
contract, and the agreement between A and Mr. B is void ab initio. Now, since the right to
possess of Mr. B is not recognized legally, so this is not covered under the heading of
actionable claim.

Instances of Actionable Claims

Some examples of actionable claims are:

1. Claim for arrears of rent.

2. Claim for money due under insurance policy.
3. Claim for return of earnest money.
4. Right to get back the purchase money when the sale is set aside.

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