The Transfer of Property Act came into existence in 1882. Before that the transfer of immovable property were governed by principles of English law and equity. Preamble of Act sets out the objectives of legislation. The purpose if Act is to defined and ‘certain’ parts of the Law of transfer of property. Scope of this Act is limited. It applies only to transfer by the act of parties not by operation of law. Also this Act deals with a transfer of property inter vivos, i.e., a transfer between living persons. It contains transfer of both movable and immovable property but a major portion of the enactment is applicable to the transfers of immovable properties only. The Act is not exhaustive.
Statutory Definitions (Section 3)
Definition in Section 3 is not exhaustive. It says only that ‘immovable property’ does not include standing timber growing crops or grass. Definition of immovable property in Section 3(26) of General Clauses Act, 1897, is also not exhaustive. It defines immovable property as it shall include land, benefits to arises out of land, and things attached to earth. Thus we find that while Transfer of property excludes certain things. General Clauses Act, includes certain things under the head ‘immovable property’. By combing both definitions, we may say that, the term includes land, benefits to arises out of lands, and things attached to the earth, except standing timber, growing crops and grass.
(A)Land: It means a determinate portion of the earths surface, which may be covered by water, the column of surface above the surface, the ground beneath the surface. All the objects which are on or under the surface in its natural State are included in the term land. Also all objects placed by human agency on or under the surface with the intention of permanent annexation are immovable property, e.g., Building, wall, fences.
(B) Benefits to arise out of land: Apart from physical point of view, every benefits arise out of land is also regarded as immovable property. Registration Act also includes as immovable property benefits to arise out of land, hereditary allowances, right of way, lights, ferries and fisheries. In Anand Behera v. State of Orissa, AIR 1956 SC 17, the right to catch away fish from chilka lake, over a number of years, was held to be an equivalent of profits a pendre in England and a benfits to arise out of land in India. Similarly, a right to collect a rent and profits of immovable property, right to collect dues from a fair or heat or market on a land are immovable property.
(C)Things attached to earth: Section 3 of transfer of property defines the expression ‘attached to earth’ as including (1) things rooted in the earth, (2) things embedded in the earth, (3) things attached to what is so embedded, and (4) chattel attached to earth or building.
(1) Things rooted in earth include trees and shrubs, except standing timber, growing crops and grasses (Section 3, TPA). Whether tress regarded as movable or immovable depends upon the circumstances of the case. If the intention is that trees should continue to have the benefit of further sustenance or nutriment by the soil (land), e.g., enjoining their fruits, then such tree is immovable property. But if the intention is to out them down sooner or later for the purpose utilising the wood for building or other industrial purpose, they would be timber and of accordingly be regarded as movable property (Shantabai v. State of Bombay, AIR 1958 SC 532) determining whether the tree is movable or immovable, the intention if party is important if the parties intend that the tree should continue to have the benefit of further nutriment to be afforded by soil, the tree is immovable property. But if intention is to withdraw the tree from land, and the land is providing it only as a warehouse, it is to be treated as movable property.
(2)Things embedded in earth: It includes such things as house, buildings, etc., however certain things like an anchor imbedded in the land to hold a ship is not a immovable property’ to determine whether such things are movable or immovable property, depends upon circumstances of each case and there are two main conditions to indicate intention:
- the degree or mode of annexation, e.g. tie-up seats fastened to the floor of cinema halls are immovable property on brick-work and timber and tepestries;
- the object of annexation, for, e.g., Blocks of stone placed one on the top of other without any mater or cement for the purpose of forming a dry wall, will become part of land, so immovable property, but not the stones deposited in the builder’s yard.
(3) Things attached to what is so embedded must be for the permanent beneficial enjoyment of the to which it is attached, as section says for, e.g., door and windows of a house are immovable property to be permanent, like electric fans or widow blinds, they are movable property.
(4)Chattel attached to earth or building if a chattel, i.e., movable property is attached to earth or building, if is immovable property. The degree, manner, extent and strength of attachment are the main features to be regarded in determining the question. Standing timber, growing crops and grasses are regarded as severable from land and they are regarded as movable property. However if they and the land on which they stand is sold, such standing timber, growing crops or grasses will pass to purchases.
(d) Standing timber: The word standing timber includes Babool Tree, Shisham, Nimb, Papal Banyan, Teak, Bamboo, etc. The fruit berating tree like Mango, Mahua, Jackfruit, Jamun, etc., are not standing timber, and they are immovable properties ( Fatimabibi v. Arrfana Begum, AIR 1980 All 394). But if intention is to cut them down sooner or later for the purpose utilising them as timber, and not to use them for the purpose of enjoying their fruits, they are regarded as movable property. (T.A. Sankunni v. B.J. Philips, AIR 1972 Mad 272).
(e) Growing crops: Growing crops includes creepers like pan, angoor, etc., millets (Wheat, Sugarcane, etc.), Veg like Lauki, Kaddo, etc. These crops don’t have any own independent existence beyond their final produce.
(f) Grasses: It can only be used as fodder, and no other use is possible. Therefore it is movable. But a contract to cut grass will be an interest in chattel, so is immovable property. The following has been judicially recognised as immovable property:
(1) Right to collect rent of immovable property.
(2) Right to dues from a fair on a piece of land.
(3) A right of fisheries.
(4) A right of terry.
(5) A right of way.
(6) Hereditary offices.
(7) The interest of a mortgagee in immovable property.
Minerals: Upon transfer of immovable property, things not only rooted to it, but also anything found deep down below the property goes along with the transfer. All minerals below the land sole are immovable property.
Transfer of property does not define movable property. In General Clauses Act, it is defined as “Property of every description except immovable property”. Some examples are right of worship, royalty, machinery not attached to earth which can be shifted, a decree for arrear of rent, etc.
Attestation has been defined in Section 3 of Transfer of Property Act as under:—”attested”, in relation to an instrument, means and shall be deemed always to have meant attested by two or more witnesses each of whom has seen the executant sign or affix his mark to the instrument, or has seen some other person’s sign the instrument in the presence and by the direction of the executant a personal acknowledgment of his signature or mark, or of the signature of such other person, and each of whom has signed the instrument in the presence of the executant, but it shall not be necessary that more that one of such witnesses shall have been present at the same time, and no particular form of attestation shall be necessary.
To ‘attest’ means to sign and witness any fact of execution by the executant. It means that a person has signed the document by way of testimony of the fact that he saw it executed.
Following are the essential requisites of a valid attestation-
- There must be two or more attesting witness.
- Each witness must see—(a) the executant sign or affix his mark (thumb impression) to the instrument; (b) or, see some other person sign the instrument in the presence, and by the direction, of the executant; (c) or, receive from the executant a personal acknowledgment of his signature or mark or of the signature of such other person.
- Each witness must sign the instrument in the presence of executant.
- Each witness must sign only after the executant is complete.
- It is not necessary that more than one of such witnesses should be present at the same time.
- No particular form of attestation is necessary.
- Attestor Should be sui generis, i.e., capable of entering into contract.
- The witness should have put his signature animo attestandi (intention to attest).
- A. person who is a party to transfer cannot attest it as a witness. The object of attestation is to protect the executant form being required to execute a document by other party thereto by force, fraud, or undue influence, a party to the transaction cannot laid down in Kumar Harish Chandra v Banshidhar Mahanty, AIR 1965 SC 1738
Effect of invalid attestation it makes the deed of transfer of property involved, and therefore no property invalid and therefore no property passes under it. The document cannot be enforced in the court of law.
A person is said to have a notice of a fact when he actually knows that fact, or when, but for willful abstention from an inquiry or search which he ought to have made, or gross negligence, he would have known it (Section 3).
Section 3 of Transfer of Property Act enumerates three kinds of notices—
(a) Actual or express notice
(b) Constructive or implies notice
(c) Imputed notice.
Actual notice: A person is said to have actual notice/express notice of a fact if he actually knows it. It must be definite information given in the course of negotiations by person interested in the property. A person is not bound to attend vague rumors.
Constructive notice: It is a notice which treats a person who ought to have known a fact, as if he actually knows it. A person has constructive notice of all the facts of which he would have acquired actual notice had he made those inquiries which he ought reasonably to have made. Constructive notice has roughly been defined as knowledge which the court imputes to a person upon a presumption so strong that it cannot be rebutted that the knowledge must be obtained.
Legal presumption of knowledge arise when—(1) There is willful abstention from an enquiry or search. It means willful or deliberate abstention to take notice of a fact which a reasonable man would have taken in the normal cause of life. It is such abstention from enquiry or search as would show want of bona fides in respect of a particular transaction.
(i.) A contracts to sell his house to B. The house is on rent and B knows that the tenants have been paying the rents to C. B has constructive notice of the right of C to take rents from the tenants.
(ii) A propose to sell his property to B, who at the same time knows that rents due in respect of the property are paid by the tenants to a third person X. B will be fixed with notice of the right of X. [Hunt v. Lack, (1902) 1 Ch 429.]
(iii) A refuses a registered letter, which contains information relating to property which A propose to purchase. A will be deemed to have notice of the contents of the latter. [Ismail Khan’ v. Kali Krishna, (1901) 6 Cal WN 134]
(2) Gross negligence: Negligence means carelessness or omission to do such act which a man of ordinary prudence would do. Doctrine of constructive notice applies when a person, but his gross negligence would have known the fact. Mere negligence is not penalised. It should be high degree of neglect. In Hudston v. Vincy, (1921) 1 Ch 98, Eve J. said, “Gross negligence does not mean mere carelessness, but means carelessness of so aggravated a nature as to indicate a attitude of mental indifference to obvious risk.” It can be described as ‘a degree of negligence so gross that a court of justice may treat it as evidence of fraud, impute a fraudulent motive to it and visit it with the consequences of fraud’.
In Ltoyds Bank Ltd. v. P.E. Guzders and Co. Ltd., (1929) 56 Cal 868, a person A deposited title deeds of his house in Calcutta with Bank. N to secure the loan he had taken from the bank. Subsequently, A represented the Bank that intending purchases of the house wanted to see the title deeds. The bank returned the deeds to A who deposited the deeds with the plaintiff bank in order to secure a loan. It was held that the Bank N, on account of gross negligence in parting with the deed has lost its prior rights with respect of the house.
In Imperial Bank of India v. U. Raj Gyaw, (1923) 50 IA 283, a purchases was informed that the title deeds were in possession of a bank for safe custody and omitted to make any inquiry from bank It was held that he was guilty of gross negligence and was deemed to have notice of the rights of the bank which had the custody of the deeds.
Registration as notice: Explanation I to Section 3 provides that ‘where any transaction relating to immovable property is required by law to be and has been effected by a registered instrument, any person acquiring such property or any part, or share or interest in such property shall be deemed to have notice of such instrument as from the date of registration, ‘Thus any person interested in the transaction which is registered under the provisions of the Indian Registration Act, 1908 cannot plead that he has no notice of the transfer made under the deed.
In order that, registration may be treated as constructive notice of its content, following conditions must be satisfied:
(i) The instrument must be compulsorily registrable.
(ii) All the formalities prescribed under the Registration Act are duly completed in the manner prescribed.
(3) The instrument and particulars must be correctly entered in the registers.
After registration, document becomes a public document and the title can be confirmed in the Registrar’s office.
(4) Actual possession as notice of Title: Explanation II of Section 3 provides that, “any person acquiring any immovable property or any share or interest in such property shall be deemed to have notice of the title, if any, of any person who is for the time being in actual possession thereof. “Thus in order to operate as constructive notice, possession must be actual, i.e., de facto possession. It amounts to notice of title in another, e.g., A leased a house and garden to B who takes possession of the properties. A then sells the said properties to C. C is deemed to have constructive notice of B’s rights over these properties, i.e., C cannot plead that he had no knowledge (notice) of the fact of B’s possession on the properties [Deniels v. Davison, (1809) 16 Ves 240].
Explanation III to Section 3 provides that, “A person shall be deemed to have had notice of any fact if his agent acquires notice thereof whilst acting on his behalf in the course of business to Which that fact is material:
Provided that, if the agent fraudulently conceals the fact, the principal shall not be charged with notice thereof as against any person who was a party to or otherwise cognizant of the fraud”
This is based on the maxim Qui facit per alium facit per se, i.e., he who does by another, does by himself. In Mohori Bibee v. D. Gliosh, (1903) 30 Cal 539, held that although the principle was absent from Calcutta and did not take part in the transaction personally, his agent in Calcutta stood in his place for the purposes of the transaction and the acts and knowledge of the latter were the acts and knowledge of the principal.
Section 3 of the Transfer of Property Act, 1882 defines actionable claim as, “it means a claim Actionable Claim to any debt, another then a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property or to any beneficial interest in movable property , not in the possession, either actual or constructive, of the claimant, which the civil courts recognise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.”
Thus according to Section 3, actionable claim means—
- a claim to unsecured debt, or
- a claim to beneficial interest in movable property not in possession of the claimant.
Debt: A debt is an obligation to pay a liquidated sum of money. The amount of money must be certain, otherwise it is not debt. For an actionable claim, a debt must be unsecured debt, for secured debts are excluded from the definition of actionable claim, e.g., A owes Rs. 10.00 to B. B’s claim is an actionable claim.
Debits secured by a mortgage of immovable property or by a pledge of movable property are excluded from the definition of actionable claim, because they are secured debt.
Claim to beneficial interest not in possession of the claimant: Actionable claim includes a claim to any beneficial interest in movable property, not in the possession of the claimant, interest or the right of possession of claimant is recognised by the court. (However a claim for demands, i.e., for an unascertained. sum of money or a claim for mesne profits does not come within the definition if actionable claim), e.g., A agrees to sell to B bales of cotton deliverable on a future day B has a beneficial interest in the goods and it is an actionable claim.
Some instance of actionable claim:
(a) Claim for arrears of rent.
(b) Claim for the money due under insurance policy (Shamdas v. Savitri, AIR 1937 Sind 24)
(c) Claim for the return of earnest money.
(d) A share in partnership.
(e) maintenance allowance payable in future.
(f) fixed deposit in a bank.
(g) right to the proceeds of business.
(h) Hire-Purchase agreement.
Instances of claims which are not actionable:
(a) A copyright,
(b) Claim for mesne profits,
(c) Secured debt,
(d) Right to get damages,
(e) A debt which has passed into a decree.
Transfer of Actionable Claims
Actionable claims are transferable properties, thus it can be transferred by way of sale, mortgage, gift or exchange. Section 130 of Transfer of Property Act provides the mode of effecting the transfer of actionable claims, and its effect. It provides—
- The transfer of an actionable claim whether with or without consideration shall be effected only by the execution of an instrument m writing signed by the transferor or his duty unauthorized agent, shall be complete and effectual upon the execution of such instruments, and thereupon all the rights and remedies of the transferor, whether by way of damages or otherwise, shall rest in the transferee, whether such notice of the transfer as is hereinafter provided be given or not:
Provided that every dealing with debt or other actionable claim by the debtor or other person from or against whom the transferors would, but for such instrument of transfer as aforesaid, have been entitled to recover or enforce such debt or other actionable claim, shall (save where the debtor or other person is a party to the transfer or has received express notice thereof as hereinafter provided) be valid as against such transfer.
(2) The transferee of an actionable claim may, upon the execution of such instrument of transfer as aforesaid, sue or institute proceedings for the same in his own name without obtaining the transferor’s consent to such suit or proceeding and without making him a party thereto.” Section 131 of the Act provides that the notice should be in writing signed. It provides:
“Every notice of transfer of an actionable claim shall be in writing signed by the transferor or his agent duly authorised in this behalf, or in case the transferor refuses to sign, by the transferee or his agent, and shall state the name and address of the transferee.”
Section 132 of the Act provides the liability of transferee of actionable claim. It reads, “The transferee of an actionable claim shall take it subject to all the liabilities and equities to which the transferor was subject in respect thereof at the date of the transfer”. ,
E.g., A transfers to C a debt due to him by B, A being then indebted to B. C sues B for the debt due by B to A. In such suit it is entitled to set off the debt due by A to him; although C was unaware of it at the date of such transfer.