Transfer of Property Act, 1882 (powerpoint presentation)

TRANSFER OF
PROPERTY ACT,
1882
C O N C E P T O F S A L E

SALE OF
IMMOVABLE
PROPERTY
S E C T I O N 5 4

TRANSFER OF PROPERTY ACT, 1882 Section 54 - "Sale"
Defined
"Sale" is a transfer of ownership in exchange for a price paid or promised or part-paid and part-
promised.
Sale how made.- Such transfer, in the case of tangible immoveable property of the value of
one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be
made only by a registered instrument.
In the case of tangible immoveable property of a value less than one hundred rupees, such
transfer may be made either by a registered instrument or by delivery of the property.
Delivery of tangible immoveable property takes place when the seller places the buyer, or such
person as he directs, in possession of the property.
Contract for sale.-A contract for the sale of immovable property is a contract that a sale of
such property shall take place on terms settled between the parties. It does not, of itself, create
any interest in or charge on such property.

Dahiben vs.Arvindbhai Kalyanji Bhanusali (D) thr. L.Rs. and Ors. (09.07.2020 - SC) :
MANU/SC/0508/2020
The definition of "sale" indicates that there must be a transfer of ownership from one person to
another i.e. transfer of all rights and interest in the property, which was possessed by the
transferor to the transferee. The transferor cannot retain any part of the interest or right in the
property, or else it would not be a sale.
The definition further indicates that the transfer of ownership has to be made for a "price paid
or promised or part paid and part promised". Price thus constitutes an essential ingredient of
the transaction of sale.

Paragraph one of the section defines ‘sale’. The definition itself alone, being couched
in general terms, covers, prima facie, in some respects, all kinds of sales, including
those by operation of law.
To constitute a valid sale, the following ingredients must be present:
(1) there must be at least two parties, the seller and the buyer;
(2) the seller must be competent to transfer, within the meaning of Section 7 of this
Act;
(3) the buyer must be a person who is not disqualified to be a transferee within the
meaning of Section 6(h)(3) of the Act;
(4) the subject-matter of the sale must be transferable immovable property;
(5) there must be a price in money, paid or promised;
(6) the sale must conform to the requisite form;
(7) the sale must result in a transfer of ownership of the property sold from the seller
to the buyer.

THE ESSENTIAL ELEMENTS OF A SALE
1. The Parties;
2. The Subject-Matter;
3. The transfer or conveyance;
4. The price or consideration;

1. PARTIES
• Section 7. Persons competent to transfer.
Every person competent to contract and entitled to transferable property, or authorised to
dispose of transferable property not his own, is competent to transfer such property either
wholly or in part, and either absolutely or conditionally, in the circumstances, to the extent and
in the manner, allowed and prescribed by any law for the time being in force.

EUREKA BUILDERS V. GULABCHAND, (2018) 8
SCC 67
Nemo dat quod non habet.— ("no one gives what they don't have“)
• Person is competent to transfer any property only if he has subsisting right, title or interest in
it. If on date of transfer, right, title or interest of transferor stood extinguished (in this case
under Section 27 of Limitation Act, 1963 by operation of law of adverse possession) transfer
would be illegal and void. Right once extinguished by operation of law cannot be revived unless
law itself provides therefor, .

SONA BALA BORA V. JYOTIRINDRA
BHATACHARJEE, (2005) 4 SCC 501.
• Who can transfer property
A person who is incapable of judging consequences of his act is and of unsound mind, he need not
be a lunatic.
Unsoundness of mind, need not be proved only by medical evidence, can be proved by conduct also.
Burden of proof lies on the party who sets up the plea of unsoundness of mind. Burden is
discharged by proving at least by balance of probabilities that the action of executing the deed of
transfer was the outcome of an unsound mind. Once that burden is discharged, onus then shifts on
the transferee to show that the ostensibly irrational conduct of the transferor had a rational
explanation,

• With regard to persons under disability like pardanashin or illiterate lady, the court must be
satisfied that the deed had been explained to and understood by the party, under disability,
either before execution or after it under circumstances showing that the deed had been
executed with full knowledge and comprehension.

AUTHORITY TO DISPOSE
THE TRANSFEROR
• The transferor should either be the owner of the property or should have an authority to
dispose of it.
• The karta of a joint family property is authorized to transfer the property under certain
specified circumstances.
• The guardian of the property of minor is empowered to sell it with the permission of the
court and without such permission the sale would be invalid.
• An agent having a power of attorney to sell executed after getting a general power of attorney,
without obtaining the requisite permission of the court, the sale deed is invalid and would not
confer any title on the transferee., but if the power of attorney executed in favour of the
holder expressly authorizes him to transfer the property he would be a competent seller.

THE BUYER
• The transferee must be a person competent to receive a transfer in his favour.
• He should not be subject to a legal disqualification. For example: an actionable claim under
section 136 cannot be purchased by a judge, legal practitioner or an officer connected with
the court.
• Similarly, an officer performing an official duty in connection with the sale of the property
cannot purchase the same.
• A minor is a competent transferee in a transaction of a sale.
• Similarly, mortagage or a gift can be executed in favour of a minor, but a minor cannot take a
lease in his favour, as a lease has to be executed by both the parties.A lease in favour of a
minor is therefore, void.

2. SUBJECT-MATTER;
GENERAL RULE
The subject-matter of sale must be transferable property, that is—
• (1) immovable property, as defined in Section , and
• (2) property which ‘may be transferred’ within the meaning of Section 6 of the Act.

• Section 6.What may be transferred.—Property of any kind may be transferred, except as
otherwise provided by this Act or by any other law for the time being in force.
• (a) The chance of an heir-apparent succeeding to an estate, the chance of a relation obtaining a
legacy on the death of a kinsman, or any other mere possibility of a like nature, cannot be
transferred.
• (b) A mere right of re-entry for breach of a condition subsequent cannot be transferred to any
one except the owner of the property affected thereby.
• (c) An easement cannot be transferred apart from the dominant heritage.
• (d) An interest in property restricted in its enjoyment to the owner personally cannot be
transferred by him.
• [(dd) A right to future maintenance, in whatsoever manner arising, secured or determined,
cannot be transferred.]

• (e) A mere right to sue cannot be transferred.
• (f) A public office cannot be transferred, nor can the salary of a public officer, whether before
or after it has become payable.
• (g) Stipends allowed to military, naval air-force and civil pensioners of the Government and
political pensions cannot be transferred.
• (h) No transfer can be made (1) insofar as it is opposed to the nature of the interest affected
thereby, or (2) [for an unlawful object, or consideration within the meaning of Section 23 of
the Indian Contract Act, 1872 (IX of 1872)], or (3) to a person legally disqualified to be
transferee.
• [(i) Nothing in this section shall be deemed to authorize a tenant having an untransferable
right of occupancy, the farmer of an estate in respect of which default has been made in paying
revenue, or the lessee of an estate under the management of a Court of Wards, to assign his
interest as such tenant, farmer or lessee.]

Tangible And Intangible Immovable Property.—
• (For purposes of sale, the section draws a distinction between—
– (1) tangible immovable property (this is capable of possession and of delivery of possession); and
– (2) intangible immovable-property (this is incapable of possession).
• Property is the object of rights and duties.The legal science recognises property only so far as
it is capable of standing in relation to the human will. It may be classified as—
– (1) physical, or corporeal or tangible, or material which is capable of being perceived by external
organs of senses;
– (2) non-physical or incorporeal or intangible, or artificial, which cannot be perceived by the senses,
but is recognized as property in the eye of the law.

• The following have been held not ‘intangible things’ within the meaning of this section, as not
being rights in immovable property,—
• (a) a debt already become due,
• (b) a simple money decree, or a decree for possession of immovable property;
• (c) a final decree for sale under Order XXXIV, Rule 5 of the Code of Civil Procedure;
• (d) a turn of worship;;
• (e) the right of a mortgagee in movable property;
• (f) a right of re-purchase under an agreement for the re-purchase of immovable property;
• (g) a copyright in books;;
• (h) a licence to sell electricity.

RIGHT OF REDEMPTION
• The right of redemption as to mortgagor’s interest in—
– (1) a simple mortgage is tangible immovable property, as the mortgagor is in possession of the
mortgaged property, but in
– (2) a usufructuary mortgage is intangible immovable property, because the mortgagor is not in
possession. Conversely, with respect to the mortgagee’s interest, it is intangible if the mortgage is a
simple mortgage, but tangible if the mortgage is usufructuary mortgage.
A mortgagor can sell the mortgaged property to his mortgagee and put the mortgagee’s estate
to an end. Such sale is valid and the character of possession, as mortgagee, is converted into
possession as absolute owner.

MORTGAGE-DEBT.—
• A mortgage-debt or mortgagee’s interest can only be transferred in all cases as immovable
property and, consequently only by a registered instrument.

• Section 8. Operation of transfer.—Unless a different intention is expressed or necessarily
implied, a transfer of property passes forthwith to the transferee all the interest which the
transferor is then capable of passing in the property, and in the legal incidents thereof.
• Such incidents include, where the property is land, the easements annexed thereto, the rents
and profits thereof accruing after the transfer, and all things attached to the earth;
• and, where the property is machinery attached to the earth, the movable parts thereof;
• and, where the property is a house, the easements annexed thereto, the rent thereof accruing
after the transfer, and the locks, keys, bars, doors, windows and all other things provided for
permanent use therewith;
• and, where the property is a debt or other actionable claim, the securities therefor (except
where they are also for other debts or claims not transferred to the transferee), but not
arrears of interest accrued before the transfer;
• and, where the property is money or other property yielding income, the interest or income
thereof accruing after the transfer takes effect.

Vidyadhar v. Manikrao and Anr. MANU/SC/0172/1999 : (1999) 3 SCC 573
The Supreme Court held that the words "price paid or promised or part paid and part promised"
indicates that actual payment of the whole of the price at the time of the execution of the Sale
Deed is not a sine qua non for completion of the sale.
Even if the whole of the price is not paid, but the document is executed, and thereafter registered,
the sale would be complete, and the title would pass on to the transferee under the transaction.
The non-payment of a part of the sale price would not affect the validity of the sale. Once the
title in the property has already passed, even if the balance sale consideration is not paid, the sale
could not be invalidated on this ground.
In order to constitute a "sale", the parties must intend to transfer the ownership of the property,
on the agreement to pay the price either in present, or in future.The intention is to be gathered
from the recitals of the sale deed, the conduct of the parties, and the evidence on record.

MODE OF TRANSFER BY SALE
• There are only two modes of transfer by sale, and these are
– 1) registered instrument; and
– 2) delivery of possession:

Marshalling By
Subsequent
Purchaser.

SECTION 56 - MARSHALLING BY SUBSEQUENT PURCHASER.
If the owner of two or more properties mortgages them to one person and
then sells one or more of the properties to another person, the buyer is, in the
absence of a contract to the contrary, entitled to have the mortgaged debt
satisfied out of the property or properties not sold to him, so far as the
same will extend, but not so as to prejudice the rights of the mortgage or
persons claiming under him or of any other person who has for consideration
acquired an interest in any of the properties.

Section 48 - Priority Of Rights Created By
Transfer
Where a person purports to create by transfer at different times rights in or
over the same immoveable property, and such rights cannot all exist or be
exercised to their full extent together, each later created right shall, in the
absence of a special contract or reservation binding the earlier transferees, be
subject to the rights previously created.

Conditions For The Applicability Of
The Section 56.
• The right of marshalling can arise under this section provided—
• (a) the owner of two or more properties mortgages them to one person;
• (b) the owner then sells one or more of the properties, but not all, to another person;
• (c) there is no contract to the contrary, that is, against the right to obtain
marshalling;
• (d) the marshalling does not prejudice the rights of the mortgagee, or of persons
claiming under him, or of any other person who has, for consideration, acquired an
interest in any of the properties.
• If the above four conditions are fulfilled, the purchaser will have the right to have the
mortgage-debt satisfied out of the property, or properties, not sold to him, so far as the
same will extend.

EXCEPTION:
• Any other person who has for consideration acquired an interest in any of the
properties’—
• The section provides two exceptions to the subsequent transferees rights of obtaining
marshalling, namely, the transferee cannot, in the absence of a contract to the
contrary, have the mortgage debt satisfied, out of the property or properties not
transferred to him, if—
• (1) it will prejudice the rights of the mortgagee, or persons claiming under him; or
• (2) it will prejudice the rights of any other person who has, for consideration,
acquired an interest in any of the properties.
• Marshalling cannot be allowed, if it will prejudice the right of another person who has,
for consideration, acquired an interest in any of the properties from the mortgagor.

Transfer of Property Act, 1882 (powerpoint presentation)

Transfer of Property Act, 1882 (powerpoint presentation)

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