Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place. ~ Frederic Bastiat
By its very existence, society mandates interaction, exchange or transfer. A property, movable or immovable, is transferred from one person to another under various different situations and circumstances and for different values. The transfer may be a gift, an inheritance or an asset acquired by paying full value.
When a movable property is transferred inter-vivos (between two living persons), Sales of Goods Act, 1930 comes into play. When an immovable property is transferred from living person to living person(s), the Transfer of Property Act, 1882 comes into play. In case, the property is transferred from a dead person to a living person(s), the law applied will be the Law of succession. Should a person die without leaving a will (intestate), the law of intestate succession is applicable and in cases where a person dies leaving a will, the law of testamentary succession is applicable.
In India, the personal laws governed the transfer of property assisted by orders of Courts under Civil Procedure Code before the Transfer of Property Act, 1882 came into existence. Transfer of movable goods was regulated to an extent by the Indian Contract Act, 1872. For transfer of immovable property, the Anglo-Indian courts often turned to principles of Justice, Equity and Good Conscience as it prevailed in England at the time. This rarely did any good due to the vast differences in customs and society of the two countries. Of course the rapidly growing commerce and infrastructure in the late nineteenth century lead to more conflicts even in business. Thus, an immediate need was felt for a clear and pragmatic law regarding property and transfers suited to India and its peculiar problems as well as to take care of the potential economic problems. The task of drafting such legislation fell upon the First Law Commission and was later referred to the Second Law Commission.
A Bill, finally presented to the Legislative Council, became a law on the 17th of February 1882 and came into force from 1st July of the same year. The Transfer of Property Act, 1882 mainly deals with transfer of immovable property. It does not apply to transfers by the operation of law such as transfer of immovable property necessitated by Order of Court for insolvency or forfeiture among others. The 137 sections contained within have been divided into 8 chapters.
Interestingly, nowhere does the Act define ‘What is a transfer of property’. But it does define ‘transfer’ as a standalone in Section 5.
The Transfer of Property Act, 1882 (hereinafter referred to as the ‘T P Act, 1882’) was intended to define and amend the existing laws and not to introduce any new principle. It applies only to voluntary transfers. The following may be enumerated as the objectives of the Act:
a) As per the preamble of the Act, the T P Act, 1882 is to amend or regulate the law relating to transfer of property by the acts of the parties.
b) The Act provides a clear, systematic and uniform law for the transfer of immovable property.
c) The Act completes the Code of Contract since it is an enacted law for transfers that take place in furtherance of a contract.
d) With provision for inter-vivos transfers, the T P Act, 1882 provides a law parallel to the existing laws of testamentary and intestate transfers.
e) The Act is not exhaustive and provides scope to apply the principles of Justice, Equity and Good Conscience if a particular case is not governed by any provision of law.
Since the T P Act, 1882 is not a complete code of transfer of property; we can say its scope is limited. The Act does not apply to all the transfers taking place in India.
a) Limitation on Transfer: The Act applies to transfer by the act of parties and not by application of law. Thus, its operations are limited to transfers by act of parties only except in a few cases saved by Section 2 of the Act.
b) Not Exhaustive: There are various kinds of property and various modes of transfer of property. The Act does not incorporate rules for all modes of transfer in existence. The Act does not even claim to be a complete code as apparent from omission of the term ‘consolidate’ from its Preamble.
c) Transfer of Immovable Property: The Act mainly deals with transfer of immovable properties only.
d) Exemption of Muslim Law: In case of a conflict between the T P Act, 1882 and rules of Muslim Law, the latter will prevail. Section 2 of the Act does not affect inconsistent rules of Muslim Law. Thus, a settlement made in perpetuity for the benefit of descendants of the settler is a valid wakf (charitable gift) wherein there is an ultimate gift in favor of a charity.
e) Exemption of Rights and Incidents: Certain incidents of a contract or the essential nature of property are exemption from the operation of the Act by Section 2. The Act also saves certain property rights. For example, the right to partition of immovable property is an incident of property but this right is not affected by the provisions of the T P Act, 1882.
A territorial law is a lex- loci or the law of a particular place and applies to all persons inhabiting the territory irrespective of their personal status. It is different from personal law that generally follows the person. The T P Act, 1882 is a territorial law and its operation extends to the whole of India except for Punjab. It was not enforced throughout the country in one go. It was made applicable to different parts of the country on different occasions. When the Act was first enforced (1st July 1882), it extended to the whole of ‘British India’ except Bombay, Burma and Punjab. The Act was extended to the territories of Bombay from 1st January 1893. In Punjab, the transfer of immovable property by the act of parties is governed by the rules of Justice, Equity and Good Conscience.
CHANGES MADE BY AMENDMENT ACT OF 1929
a) The ‘Doctrine of Part Performance’ has been statutorily recognized and embodied in Section 53A.
b) After amendments, the T P Act, 1882 is in conformity with provisions of Indian Registration Act.
c) The Act was amended to exclude government grants from its purview.
d) It provided that the procedural rules regarding mortgages were to be governed by Civil Procedure Code.
e) Sections 60A, 63A, 65A and 67A were included and the stand on mortgages was made clearer. A mortgagor now had the power to make leases while a mortgagee’s right to compensation for necessary improvements was recognized.
Hindus and Buddhist had been formally excluded from the operation of the second Chapter of the Act relating to transfer of property, whether movable or immovable. By the Amending Act, 1929, the chapter has been made applicable to Hindus and Buddhists.
As decided in Radhakishan vs. Shridhar AIR 1960 SC 1368, the Muslim law of pre-emption does not over-ride the provisions of the T P Act, 1882. The transfer of property where this Act applies has to be under the T P Act, 1882 only and the Muslim Law of transfer of property can not over-ride the statute.
Transfer of property is a ‘Concurrent Subject’ (Entry 6 of List III (Concurrent List) of Seventh Schedule to Constitution). Both Central and State Government can take legislative action in respect of transfer of property except that relating to agricultural land which is a state subject.
‘Transfer of Property’ means an act by which a living person conveys property, in present or future, to one or more living persons, or to himself or to himself and one or more other living persons. The property may be movable or immovable, present or future and the transfer can be made orally, unless transfer in writing is specifically required under any law. Any person competent to contract and entitled to transferable property, or authorized to dispose of transferable property on his own, can transfer such property whether in part or whole, absolutely or conditionally.
The Act outlines transfers of property by act of parties like sales of immovable property, mortgages and charges, leases of immovable property, exchanges, gifts and actionable claims.