TRANSFER OF PROPERTYTRANSFER OF PROPERTY

Introduction

The Preamble to the Act lays down that it is an Act to define and amend the law relating to transfer of property by act of parties. This Act came into force on 1st July, 1882. The Act applies to whole of India.

The chief object of transfer of property act are two:

  1. To bring the rules which regulate the transmission of property between living person into harmony with the rules affecting its devolution upon death, and thus to furnish the compliment to the work commenced in framing the law of intestate and testamentary succession;
  2. to complete the code of contract law, so far as it relates to immovable property.”

The Act is not, and does not purport to be, an exhaustive enactment In other words, it does not cover the entire dimension of transfer of property.

           The Act is limited to the transfer of property by act of parties, as distinguished from a transfer by operation of law e.g. in case of inheritance (succession), insolvency, forfeiture, or sale in execution of a decree. It relates to transfers of property inter vivos, i.e., voluntary transfers between living persons, and has no application to the disposal of property by will If X sells or mortgages or gifts away his house, it is a case of voluntary transfer by act of parties. But, if X becomes an insolvent, his property vests in the Official Assignee or Receiver. So also, if X’s property is sold in execution of a decree against him, it would be a case of a transfer much against the will or desire of X. This is, therefore, known as transfer by operation of law. Some of the general provisions of the T.P. Act may be applied even to transfer by operation of law, on principles of justice, equity and good conscience.

          If the property is movable, the Sale of Goods Act will apply, and if it is immovable, the Transfer of Property Act will govern the case.    

          The Transfer of Property Act, being pre-eminently a codification of substantive rights, and not merely of procedural law has no retrospective effect.

Property

The word “property” has not been defined in the Transfer of Property Act, 1882 but has been used in its widest and most generic sense. Property is a legal term to denote every kind of interest or right which has an economic content. Thus, it includes an actionable claim and a right to a reconveyance of land, but not a power of appointment. Property is broadly classified into movable and immovable property. The transfer of the two entails different forms and procedures.

Immovable Property

The T.P. Act, 1882 has not defined this term. Sec. 3 merely lays down that “immovable property” does not include standing timber, growing crops or grass.

          According to Sec. 3 (26) of the General Clauses Act, 1897, the “immovable propertyshall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything to the earth.

A definition of immovable property is also to be found in the Indian Registration Act, where it is provided as follows: “Immovable property includes land, building, hereditary allowances, right to ways, lights, ferries, fisheries, or any other benefits to arise out of land and things attached to earth, but not standing timber, growing crops or grass.”

  1. Land – The land includes earth’s surface (may be covered by water), the column of space above the surface and the ground beneath the surface. Thus, all objects which are on or under the surface in its natural state (e.g. minerals) are included. And, so are the objects placed by human agency with the intention of permanent annexation (e.g. buildings, walls and fences).
  2. Benefits to arise out of land (Profits a prendre) – Every benefit arising out of immovable property and every interest in such property is also regarded as immovable property. The Registration Act expressly includes as immovable property – benefits to arise out of land such as hereditary allowances, rights of ways, lights, ferries, and fisheries. In Ananda 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 prendre in England and a benefit to arise out of land in India. It was thus held to be an immovable property. Similarly in Shanta Bai v State of Bombay (AIR 1959 SC 532), right to enter land, cut and carry away wood over a period of twelve years was held to be immovable property. The right to collect lac from trees is also immovable property.

            The term ‘profits a prendre’ thus implies that if X sells a forest to Y, the trees, rivers, minerals, etc. all forming part of the land or the benefit to arise out of land, will go with it.

            Likewise, right to collect rent and profits of immovable property, right to collect dues from a fair or ‘hat’ or market on a piece of land; a debt secured by mortgage of immovable property and a corresponding equity of redemption in mortgagor, reversion in property leased; office of a hereditary priest of a temple; Hindu widow’s life-interest of the income of the husband’s property, etc., are the instances of immovable property.

  • Things attached to earth (Doctrine of fixtures) – Sec. 3, T.P.Α., defines the expression “attached to the earth” as including – (1) things rooted in the earth, (ii) things imbedded in the earth, (iii) things attached to what is so imbedded, and (iv) chattel attached to earth or building. A similar expression ‘fixture’ is used in England.

The question arises as to how to determine whether any movable property attached to the earth or permanently fastened to anything so attached, has become immovable property. If it has become, it is called a fixture. For this there are two well established tests in English law which are also applied in India by the courts. The two tests are:

  1. Degree/mode of annexation [rule in Holland v Hodgson (1872) LR7CP 328] – If the chattel (movable property) is resting on the land merely on its own weight, the presumption is that it is movable property, unless contrary is proved However, if it is fixed to the land even slightly or it is caused to go deeper in the earth by external agency, then it is deemed to be immovable property (i.e. part of the land), unless contrary is proved. For example, looms attached to the floor, beams of a mill or tied up seats of cinema hall are immovable, but not screws resting on brick-work and timber and tapestries.
  2. Object/purpose of annexation – i.e., whether the purpose was to enjoy the chattel itself, or to permanently benefit other immovable property. To become a fixture, a chattel should be attached to immovable property for the “permanent beneficial enjoyment” of that to which it is attached (In the case of an owner, this is presumed to be the purpose, but in the case of a tenant, this presumption is not there). The doctrine of fixture thus stands modified to this extent, in England the law as to fixture is based on the maxim quic quid plantatur solo, solo cedit (whatever is planted on the soil belongs to the soil).

For example, fixtures like wiring, lighting system, ceiling fans, etc. are fixed not for the enjoyment of thing themselves (e.g. one cannot enjoy a window by itself), but for the permanent beneficial enjoyment of that to which it is attached (i.e. room/house). Thus, if A transfers a house to B, such fixtures also goes with the house. However, if a tenant fixes such fixtures (e.g. a fan), it will be treated as movable property as tenant is presumed not to have the intention to permanently benefit the immovable property. The object could only have been to enjoy the machinery (fan).

          Everything therefore depends upon the circumstances of each case. If the intention is to make the articles as part of the land, they do become part of the land. Thus, blocks of stones placed one on the top of another (without any mortar or cement) for the purpose of forming a dry-stone wall would become part of the land, but not the stones deposited in a builder’s yard and for convenience sake stacked in the form of a wall. Anchor of a ship will not be part of land howsoever deeper it may have gone in the earth, but if it is used to support the strain of suspension bridge it will become part of the land.

  1. Things rooted in the earth – It includes such things as trees and shrubs, except standing timber, growing crops and grass. If the parties intend that the tree should continue to have the benefit of further sustenance or nutriment by the soil (land), then such tree is immovable property. But if the intention is to withdraw or cut tree from the land, then it is movable property.
  2. Things imbedded in the earth – It includes such things as houses and buildings. However, an anchor imbedded in the land to hold a ship is not immovable property.
  3. Things attached to what is so imbedded – The doors and windows of a house are attached to the house for the permanent enjoyment of the house. But if the attachment is not intended to be permanent, the things attached are not immovable property e.g. electric fans or window blinds.
  4. Chattel attached to earth or building– The degree, manner, extent and strength of attachment of the chattel to the earth or building, are the main features to be regarded. For a chattel to become part of immovable property and to be immovable as permanently as a building or tree is attached to the earth.

CASE LAWS

Shanta Bai vs. State of Bombay

(AIR 1958 SC 532)

The case revolved around petitioner A whose husband B, the owner of a forest, has executed an unregistered document in the form of a lease in favour of A. Due to this, A got the right to cut and make use of bamboo, teak, and fuelwood for consideration of Rs. 26,000 for 12.5 years.

In 1950, the Madhya Pradesh Abolition of Proprietary Rights Act was passed making A lose her right to cut any more trees. A filed a petition under Article 32 that her contractual right is denied and A further claimed compensation. The issue was whether the nature of the right was a right regarding movable property or immovable property.

The 5-judge bench pronounced a judgment in which 1 judge gave a separate judgment. The 4 judges in their judgment explained that the document cannot be taken as a lease but it does allow A to enter the land to cut the trees aforementioned. It was told to be profit-a-prendre, i.e., the right to take soil or minerals or any produce from a land. It was included in the judgment that such trees are considered as standing timber as on the date of the document but since the size is minimal and can fall earlier, are regarded as movable property.

The deed was an unregistered document that confirms that there was no violation of any fundamental right in the first place and A cannot enforce it as A has not acquired any right in the eyes of the law. Therefore, the petition was dismissed.

One judge, Justice Bose pronounced a separate judgment that in case of a lease, one can enjoy the property but that does not give them the right to remove it or take it away from its original location. He added that trees are immovable and in case of a lease, registration is a necessary requirement and for the lease of immovable property form more than a period of one year, registration is a must. The remaining trees covered by the grant would be immovable property, and the deed required registration because the total value was Rs. 26,000.

The major conclusions arrived from this case were that trees are regarded as immovable property. In the case of a lease, the person who enjoys the property has no right to take it away. In a profit-a-prendre, one has permission to enter the land, not to enjoy it, but to remove something. In the event that registration is required, a deed is used to transfer the right. There is a distinction between lease and profit-a-prendre. The lease enjoys movable property, whereas a person has only the right to take the goods (such as soil, or minerals from land) in profit-a-prendre.

Movable Property

The TPA does not define movable property which has been defined in the General Clause Act as meaning “property of every description except immovable property”.

          Some of the examples of movable property are: Rights of worship, Royalty, A machinery which is not attached to the earth and which can be shifted from one place to another, A decree for sale of immovable property, A decree for arrears of rent, A right to recover maintenance allowance (even though charged on immovable property), Government promissory notes, standing timber, Growing crops and Grass.

Case-Law

S.P.K.N. Subramanian Firm v M. Chidambaram (AIR 1940 Mad 825): In this case, the defendant (tenants)  was running a cinema and had for the purpose of generating electricity, installed an oil engine – fixed with nuts and bolts on a cement platform. The question arose as to whether a security bond pledging an oil engine installed as a part of cinema can be deemed to be a transaction relating to immovable property?

The court observed that regard has to had not merely to the nature of attachment, by which engine was fixed on the ground, but also to the circumstances in which it came to be fixed. If the thing imbedded is for the permanent beneficial enjoyment of the immovable property to which it is attached, then it is immovable property. However, if the thing is fixed for a short period (though fixed for the time being so that it may be enjoyed) and the person using the same for beneficial enjoyment of thing itself (e.g. for the purpose of running other equipment) and not of the land, then it is movable property. In the present case, the intention of the defendants was clear, viz, they did not treat engine as a part of the premises, as they were under a lease and were expecting eviction from premises. Thus, they could not give the plaintiff any right of a valuable nature in the immovable property as such.

In a later case, Perumal v Ramaswami (AIR 1969 Mad 346), the court similarly held. The attachment of oil engine to earth though it is undoubtedly a fixture is for the beneficial enjoyment of the engine itself and in order to use engine, it has to be attached to the earth and the attachment lasts only so long as the engine is used. When it is not used it can be detached and shifted to some other place. The attachment in such a case does not make the engine part of the land and as immovable property. If, in the nature of things, the property is a movable property and for its beneficial use or enjoyment it is necessary to imbed it or fix it on earth, though permanently, that is, when it is in use, it should not be regarded as immovable property for that reason.

Md. Ibrahim Northern C.F. Trading Co. (AIR 1945 Mad 304) – In this case, the owner of a mill installed a machinery on a cement platform held in position by iron pillars imbedded in the ground to a depth of about 6 feet. The plaintiff company invested money and later brought a suit for recovery of money and claimed a charge on machinery on the plea that it was a movable property.

The court held that the plant and machinery installed on a concrete floor had become immovable property (attached to something which is attached to earth). Moreover, the intention of the owner of mill was to use the machinery for the purpose of carrying on business for his own benefit i.e. for the permanent beneficial enjoyment of the mill.

Janam Chand v Jugal Kishore – In this case, the machinery of a factory was fixed with nuts and bolts on the concrete floor of factory. The court held that the nature of structure on which the machinery was fixed shows that the object was to keep machinery intact, to prevent it from vibrating – thus for the enjoyment of machinery itself. The land was a mortgaged property (on monthly rent basis) and the mortgagee’s object was tus not for the permanent enjoyment of the land.

BAMADEV PANIGRAHI vs MONORAMA RAJ

(AIR 1974 A.P. 226)

The case of Bamadev Panigrahi v. Monorama Raj, AIR 1974 AP 226, is a notable judgment in Indian property law, particularly addressing the classification of property as movable or immovable and its implications for legal proceedings.

Background and Facts:

The plaintiff’s husband, Profulla Kumar Raj, and the defendant were friends.

Raj had obtained a possessory mortgage in 1957 to run a touring cinema, for which he built a temporary structure and installed cinema equipment, including a projector and oil engine.

Unable to manage the cinema, Raj entrusted it to the defendant, who later manipulated the situation to transfer the mortgage in his name.

Raj filed a suit, which was decreed ex parte in the trial court but later appealed after his death​​.

Key Issues:

Nature of the property (movable or immovable): This was crucial to determine if the suit was barred by the limitation period.

Ownership entitlement of the cinema equipment and accessories after Raj’s death​​.

Legal Principles:

The Transfer of Property Act, 1882, was pivotal in defining immovable property.

The law differentiated between movable and immovable property based on attachment to the earth and the purpose of such attachment.

The nature of the property (movable or immovable) depended on whether it was embedded in the earth for permanent beneficial enjoyment or merely for the beneficial enjoyment of the chattel itself​​.

Court’s Ratio and Judgment:

The Court referenced English legal principles and Indian precedents to assess the nature of the attachment of machinery to the land.

The primary factors considered were the intention and purpose of installing the machinery, and the degree and manner of attachment.

The Court concluded that the machinery was not attached to the earth nor permanently fastened to anything attached to the earth, making it movable property.

Consequently, the suit for recovery of possession or value of such movable property, filed beyond three years after the defendant’s denial of the plaintiff’s right, was barred by limitation.

The Court did not need to address the second issue regarding the ownership of the property due to the finding on the first issue​​.

Implications:

This case underscores the importance of the character and attachment of property in determining its legal classification and subsequent legal rights and liabilities. It highlights the nuanced approach required in property law, especially when dealing with temporary structures and installations whose nature isn’t straightforward. The judgment serves as a crucial reference for legal practitioners and scholars in property law, emphasizing the significance of intention and attachment in the classification of property.

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