What is a valid transfer under the TP act?

Arathi S Nath : A valid transfer under the TP act

INTRODUCTION

First of all, let’s understand what a property is.

Cambridge Dictionary defines the word ‘property’ as an object or objects that belong to someone.

Collins dictionary defines the word in the form of a variable noun as a building and the land belonging to it.

In legal context, property can include anything that belongs to a person which is either tangible or intangible. The owner of the property has an absolute right to dispose of certain things in the manner as he pleases, provided it is not forbidden by law. Hence it is any physical or virtual entity that is possessed and owned by an individual person wherein he excludes all others from prying into it.

According to Section 2(c) of the Benami Transactions (Prohibition) Act, 1988, a property means property of any kind, whether movable or immovable, tangible or intangible, and includes any right or interest in such property.

While section 2(11) of the Sale of Goods Act, 1930 defines property as a general property in goods, and not merely a special property. But the most important act which exclusively deals with the transfer of property does not include any clear-cut definition for the word property. 

Hence a property can be treated as a bundle of rights that is associated with assets which can be movable, immovable, tangible or intangible.

Transfer 

The word transfer can be defined as an act by which something is made over to another or moved to another. Transfer of a property in India is regulated by the Transfer of Property Act, 1882.

It is a legislation that came into force on 1st July 1882. The Section 5 of the Act defines a ‘transfer’ as an act in which a person conveys the property, in present or future, to one or more living persons or to himself and one or more other persons. The word living persons, in this section includes a company or association or body of individuals, whether incorporated or not. 

A transfer can be of four kinds-

  • Sale
  • Mortgage
  • Lease
  • Exchange
  • Gift

A transfer of property happens through enforcing a contract and hence all the necessary requirements of a valid contract must be fulfilled. (For essentials of a valid contract, click here)

Now let’s look into the essentials of a valid transfer.

  • Two or More Living Persons (section 5)

The transfer of a property must take place between two or more living persons. It simply means that both the parties to the transfer must be in existence at the time of transfer.

There should be an act of conveyance by some living person to another to constitute a transfer.

  • Property must be transferable (section 6)

Except the properties mentioned in section 6(a) to (i), all other properties are transferable. A few of the non-transferable properties mentioned in this section are easement right, stipends allowed to military, air force etc, a public office or the salary of a public officer, a right to sue etc.

  • Competency to transfer (section 7)

According to section 7 of the act, Competency to transfer a property means he should be competent to enter into a contract. Hence, he must be competent as per section 11 of the Indian Contract Act i.e. a person must be a major, is of sound mind, and that he should not be disqualified by any law.

  • Mode of transfer must be prescribed by the act (section 9)

The transfer of a property must be made under the mode prescribed by the act under the section 9. A transfer of property may be made without writing but it is not expressly required by law. A transfer can be done orally also.

  • Lawful consideration and object (section 23)

A transfer cannot be made for an unlawful object or consideration.  Under section 23 of contract act, an unlawful object and consideration is one which is forbidden by law or one which involves a fraudulent act or which involves injury to another person.

  • Rule of perpetuity (section 14)

Perpetuity means eternity or infinity. According to the said provision, it is the creation of an interest in the present but which takes effect after a long period. The said rule says that a person cannot postpone the transfer his property to another person beyond a certain limit.

  • Benefit of unborn person (section 13)

This section states that a transfer cannot be executed directly in favor of an unborn child i.e. the transferee must be a living person.

  • Condition should not be forbidden by any law (section 25)

If the transfer is conditional, then such condition should not be impossible or forbidden by law or should not be against any public policy. Such conditions are considered to be void. Hence if the condition becomes void, the transfer also becomes void.

These are the essentials of a valid transfer that is clearly laid down by the act. Since a transfer is usually performed through entering into a contract, few essentials of a valid contract is also required to be adhered to, to constitute a valid transfer.

References

A valid transfer under the TP act

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