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Property & Transfer

Transfer of Property means an act by which a living person can conveys property, in present or in
future, to one or more other living persons, or to himself, or to himself and one or more or other living
persons, and to transfer property is to perform such act.
The object of the Transfer of Property Act is to define and amend law relating to Transfer of Property by
act of parties and not to transfer by operation of law. A Transfer of Property is a contract hence all
necessary requirements to constitute valid contract are to be fulfilled.
Essentials of valid transfer
There are 8 essentials of Transfer of Property, which are as follows -

A) Transfer must be between two or more living Persons (Section.5) -


The Transfer must be inter vivos. Therefore, there cannot be a transfer to person not in existence at
the time of transfer. The living person including company or Association or body of individuals whether
incorporated or not.

B) The property must be transferable (Section. 6) -


Property of any kind of may be transferred, excepts as otherwise mentioned in S.6(a) to (I) cannot be
transferred. Therefore, those properties described in the clauses (a) to(I) of Section.6 cannot be
transferred. These are restrictions on the Transfer of Property and any transfer in contravention of any
of the clauses given in Section 6(a) to (I) is null and void.

C. The Transfer must not be –


1) opposed to the nature of interest affected thereby Section.6 (h);

2) for unlawful object and consideration as per provision of Section 23 of the Indian Contract Act
1872, which provides a consideration or object is unlawful if -?

a) It is Forbidden by law, or

b) It is of such a nature that it defeats the provision of any law, or

c) is fraudulent, or

d) it involves or implies injury to the person or property of another or

e) the court regards it as immoral or opposed to public policy.

3) To a person legally disqualified to be a transferee. As per Section 136. of Transfer of Property Act, a
Judge, a legal practitioner is an office are connected with Court of Justice are disqualified from
purchasing in actionable claim. This prohibition is only with respect to actionable claim. It does not apply
to any other kind of property.

D) Persons competent to transfer (Section.7) –


Every person is competent to contract and entitle to transferable property, or authorised to dispose off
Transferable property not his own, is competent to transfer such a 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.

Who is competent to transfer? The transfer your must be –

1) Competent to contract –
According to Section 11 of the Indian Contract Act, every person is competent to contract who is the age
of majority. under section.3 of the Indian majority Act,1875 a person attains majority at the age of 18
years and if a Guardian is appointed, he would attend majority at the age of 21.

2) Sound mind –

Under section 12 of the Indian Contract Act, a person is of sound mind of the purpose of making
contract if he is capable of understandings it and of forming a rational judgement as to its effect upon
his interest. A contract made by a person of unsound mind is void

2) Disqualified person –
An insolvent and alien enemy are disqualified from contracting. A transfer by a defacto Guardian of
minor’s property is invalid and will be hit by section 11 of Hindu minority and guardianship Act, 1956.

3) Transferor must be entitled to transferable property - or authorised to dispose off Transferable


property not his own. One who is absolute owner of the property and property is free from
encumbrances is capable to transfer the same. An owner of the property May authorise his power of
attorney holder to transfer the property for him and on his behalf.

The Transfer must be made in the mode prescribed by the Act, under section 9. –

Section 9 of Transfer of property provides that for oral transfer, A Transfer of Property may be made
without writing in every case in which a writing is not expressly required by law. Writing is necessary in
case of following instruments –

1) sale of immovable property of the value of rupees hundred or upwards (S.54),

2) leases of immovable property from year to year for a term exceeding one year or reserving a yearly
rent (Section 107)

3) simple mortgage irrespective of amount secured (Section 59),

4) All other mortgages securing Rs100 or upwards (section 59)

5) Exchange (section 108)

6) Gift of immovable property (section 123)

7) Transfer of actionable claim (section 130)

F) If on transfer an interest in created in favour of an Unborn person - under section 13,


a) limited interest to be created in favour of living person,
b) Unborn person shall be born before expiry of Limited interest,
c) Once the Unborn person is born, he shall be given absolute interest on attending the age of majority.
G) The Transfer must not be contrary to the rule against perpetuity (section 14) -S.14 provides
that vesting cannot be postponed beyond the life of living person or minority of unborn person. Such
transfer if made is void.

H) Conditional transfer –

If transfer is conditional, the condition must not be illegal, impossible, immoral or opposed to public
policies

Relevant Case Law

1) Sadiq Ali Khan Vs. Jai kishore,1928.


Privy Council observed that a deed executed by a minor was nullity. Principle of estoppel cannot be
applied to a minor. A minor is not competent to transfer yet a transfer to a minor is valid.

2) Amina Bibi vs Saiyid Yousuf 1922.All. 449.


A contract made by lunatic is void under section 11 of the Indian Contract Act, and so also, transfer by
him of his property is void.

3) K Kamama Vs. Appana


U/s. 11 of Hindu minority and guardianship Act, 1956 a defacto guardian is merely a manager and
cannot dispose off minor's property. In this case a defacto guardian sold property of a minor, the court
declared the sale invalid.
Rule Against Perpetuity
Perpetuity is an interest, which will not vest till a remote period. One cannot
postpone the vesting of the property in the transferee beyond a certain limit. the
period for which vesting may be lawfully postponed is called perpetuity period
Annotation
It is basic rule ofTransfer of Propertythat one must enjoy the property absolutely during
his lifetime. One cannot be deprivedof his right of enjoyment in respect of the property as
he like in his lifetime. The policy of the law has been to prevent property from being tied
up forever. Perpetuity is an interest, which will not vest tilla remote period. One cannot
postpone the vesting of the property in the transferee beyond a certain limit. The period
for which vesting may be lawfully postponed is called: "perpetuity period".

Abstract
The rule against perpetuities limits the duration of certain restrictions on the use and
transfer of property. The Rule is to the effect that no legal interest in property is valid
unless it is certain, at the time when the disposition (e.g., a trust) takes effect, that the
interest must vest within a life or lives in being plus twenty-one years. In other words,
property may not be tied up in trust, subject to restricted use, or otherwise held subject
to any contingency, for longer than twenty-one years after the death of a person who is
alive at the time of the disposition and identifiable by the terms of the instrument of
disposition. The Rule applies to all sorts of property interests - e.g., options to purchase,
conditional easements, remainder estates, etc. - but today arises most commonly in
connection with trusts.

The Rule is generally understood to serve the purpose of balancing the rights of property
owners to impose conditions on the use and exchange of their property with the
importance of having property under the control of living persons, so that it may be put to
its best contemporary use. The common complaint is that the Rule is simply too complex
and abstract in its application, resulting in a substantial risk that beneficiaries or grantees
will be deprived of their interests through inadvertent errors in drafting. In the estate
planning context, a great number of vesting conditions may offend the Rule, most often
unintentionally, and often only hypothetically in any event. The consequence of a breach
is very real, however; the intended gift or transfer will generally be entirely invalid.

This report firmly evaluates an established general examination of the Rule against
perpetuity as it currently correlates to the law of property and attempts to make
considerable recommendations that consider policy issues underlying this rule.

The rule against perpetuities is a legal rule which limits the duration of certain restrictions
on the transfer of property. By various means of estate planning - particularly trusts - and
other forms of property disposition, a settler or testator or grantor may postpone the time
when property may be possessed and used freely by a beneficiary or grantee. The Rule
insists that such inheritances - and indeed, many other sorts of postponed, restricted or
contingent transfers of property - can only be postponed for so long. At some definite
point the property must be fully transferred to its beneficial owner, free of restrictions. A
transfer of property subject to a delay, restriction or contingency that might result in the
full transfer occurring later than the allowable perpetuities period is void from the
beginning. The postponed, restricted or contingent transfer simply fails at the outset, and
the property will be received by someone other than the intended recipient, as though
the offending transfer had not been made at all.

The common law rule against perpetuities is to the effect that no legal interest in
property is valid unless it is certain, at the time when the disposition (e.g., a trust) takes
effect, that the interest must vest within a life or lives in being plus twenty-one years.

In other words, property may not be tied up in trust, subject to restricted use, or
otherwise held subject to any contingency, for longer than twenty-one years after the
death of a person who is alive at the time of the disposition and identifiable by the terms
of the instrument of disposition. If there is no such identifiable life or lives in being, the
period is twenty-one years from the disposition.

The Rule applies to all sorts of contingent future interest in property, real or personal,
whether by trust, power, estate, option to purchase, easement or otherwise. In the typical
scenario of a will, which may gift certain property to be held in trust until the happening
of a certain event, it must be certain that the property will absolutely vest in the entitled
person or persons before twenty-one years has passed since the death of a person who
is identifiable by the terms of the will, and who was alive at the time of the testator's
death. If not, with limited exceptions, the entire gift is declared invalid.

2.1 Definition of Rule against perpetuity


The classic statement of the Rule iterates that - "No interest is good unless it must vest,
if at all, not later than twenty-one years after some life in being at the creation of the
interest." 1
The Rule operates against remoteness of vesting of interests, i.e., against contingent
interests where the removal of the contingency could occur beyond the period set forth
in the Rule. Such interests are void from the outset. Central to the application of the Rule
is its focus on whether it is possible the interest could fail to vest within the stated time.
The Rule is not stated in terms of either probabilities or actualities. That it is probable,
but not certain, the interest will vest in time, is irrelevant. Nor does it matter that at the
time an interest is challenged it has in fact vested, if at the time the instrument takes
effect it is possible that it could have remained contingent longer than the "twenty-one
years after some life in being at the creation of the interest."

Interests Subject to the Rule


The Rule against Perpetuities is the most important restriction on the power of a present
holder of property to create future interests in that property. The range of the Rule is
wide: It applies to both real and personal property, to both legal and equitable. The
interests to which the Rule is most commonly applied are contingent remainders and
executory interests.

The Rule also applies to interests which are not normally regarded as "future interests."
For example, in most states it applies to options to purchase property when the optionee
has no other interest in the land, a fact that a number of recent draftsmen seem to have
forgotten.

The Period of the Rule –


"Lives in Being"
The Rule requires proof that an interest must vest within 21 years after some "life in
being," i.e., a natural person living when the interest is created. Corporations, for
obvious reasons, may not be used. You must then be able to point to a living person
about whom you can say that the interest must vest within 21 years of that person's
death. This is the so-called "measuring life" (sometimes referred to as the "validating
life"). If no such person can be identified, the interest is invalid.2
"Plus Twenty-one Years"
It is settled that the twenty-one year period is a period in gross and need not be the
minority of any actual person, much less of a beneficiary.3

Periods of Gestation
The gestation of an actual child (as opposed to a nine-month term in gross) may extend
the period of the Rule at the beginning of "lives in being," at the end of "lives in being"
and at the end of the twenty-one year period.

"Vesting" Under the Rule


An interest is vested under the Rule when any conditions precedent (including
ascertaining the taker or takers) are satisfied. Thus, a remainder which is vested at the
outset always satisfies the Rule (and is therefore often said to be "not subject" to it).

A remainder may become vested even though it has not become a present possessory
interest. On the other hand, when does an executory interest is vested? Since executory
interests were indestructible, and thus the contingent-vested distinction was not made
with respect to such interests. It was eventually decided that executory interests would
not be considered to have "vested" for the purposes of the Rule until they became
present possessory interests.

2.2 Rule against perpetuity in the transfer of property act


Section 13 of TOPA provides that:
"Where, on a transfer of property, an interest therein is created for the benefit of a
person not in existence at the date of the transfer, subject to a prior interest created by
the same transfer, the interest created for the benefit of such person shall not take effect,
unless it extends to the whole of the remaining interest of the transferor in the property."
Section 14 of TOPA provides that:

"No transfer of property can operate to create an interest which is to take effect after the
life time of one or more persons living at the date of such transfer, and the minority of
some person who shall be in existence at the expiration of that period, and to whom, if
he attains full age, the interest created is to belong."

Analysis of the provisions


# Section 13 and 14 of the TOPA go hand in hand, in as much as, section 13 and 14 are
to be read together in order to understand the provisions governing the Rules.
# The TOPA does not permit transfer of property directlyin favour ofan unborn person.
Thus, in order to transfer a property for the benefit of a person unbornon the date of the
transfer, it is imperative that the property must first be transferred in favour of some other
personliving on the date of transfer. In other words, the property must vest in some
person between the date of the transfer and the coming into existence of the unborn
person since property cannot be transferred directly in favour of an unborn person. In
other words, the interest of the unborn person must, in every case, be preceded by a
prior interest.
# Further, where an interest is created in favour of an unborn person on a transfer of
property, such interest in favour of the unborn person shall take effect only if it extends to
the whole of the remaining interest of the transferor in the property, thereby making it
impossible to confer an estate for life on an unborn person. In other words, the interest in
favour of the unborn person shall constitute the entire remaining interest. The underlying
principle in section 13 is that a person disposing of property to another shall not fetter
the free disposition of that property in the hands of more than one generation.
# Section 13 doesnotprohibit successive interests (limited by time or otherwise) being
created in favour of several personslivingat the time of the transfer. What is prohibited
under section 13 is the grant of interest, limited by time or otherwise, to an unborn
person.

# Further, Section 14 of TOPA provides that where an interest is created for the benefit
of an unborn person (in accordance with the provisions of section 13), such interest shall
not take effect if the interest is to vest in such unborn personafterthe life time of one or
more persons living on the date of the transfer (i.e. the person in whose favour the prior
interest is created as required under section 13)and the minority of such unborn person.
In otherwords, the interest created for the benefit of an unborn person shall take effect
only if the interest is to vest in such unborn person before he attains the age of eighteen
years.

# Section 14 further provides that the unborn person, in whose favour the interest is
created, must have come into existence on or before the expiry of the life or lives of the
person(s) in whose favour the prior interest is created as required under section 13.

# The effect of these Rules is that a transfer/ gift can be made to an unborn person
subject to the following conditions:
1. that the transfer/ gift shall be of the whole of the remaining interest of the transferor/
testator in the thing transferred/ bequeathed and not of a limited interest; and
2. that the vesting is not postponed beyond the life in being and the minority of the
unborn person.

In simple terms, while section 13 of TOPA lays down the mechanism for transfer of
property for the benefit of unborn person and"what property"is required to be ultimately
transferred in favour of an unborn person in order to validate such transfer, section 14 of
TOPA provides the" maximum period as to when"such property can be vested upon such
unborn person.

Section 14 of TOPA supplements section 13 of TOPA and thus, it is pertinent to note that
when an interest in any property is intended to be transferred in favour of an unborn
person, sections 13 and 14 of TOPA are required to be read together and the provisions
contained there under are required to be duly complied with, in order to give effect to the
intended transfer in favour of such unborn person.

2.4 Rationale behind the imposition of such rule


The general rule is that disfavour perpetuity and it is based on the following
grounds:
Jurisprudential aspect - Sir D. Mulla "Liberty of alienation shall not be exercised or used
for its own destruction. This is because if the owner having inherent power to transfer the
property uses the right to the extreme and he thereby destructs the further right of
alienation of future transferee.

Social aspect - If perpetuities are allowed the property which is the subject matter of the
transfer will become ex-commercial, for example put out of Commerce. Though the
transferee receives the property, he has no power to alienate it .

Logical aspect - Sir D. Mulla , "It is illogical to imagine at dead person below his Grave
controlling properties above his grave".
If the property is taken away from the free and active circulation for the purposes of
commerce and improvement, it will fall to decay and the property becomes inalienable
(non- transferable). Therefore, to save the property from decay, non use, being looked
up, this rule is enacted in the larger interest and on public policy.

Origin of Rule Against Perpetuity


The rule as regards the transfer of property for the benefit of unborn person and the rule
against perpetuity (collectively, the "Rules"), which are mainly governed by sections 13
and 14, respectively, of the Transfer of Property Act, 1882 ("TOPA"), have, since
decades, troubled lawyers of all ages across the country. These Rules are often
described as one of the most complicated legal rules ever.

Where property is desired to be transferred/ bequeathed by any person, to more


generations than one, it is imperative that these Rules are conformed to.

Though the courts have long had an interest in limiting the restrictions that may be
imposed on the free use and exchange of property, the Rule in its modern form derives
from the late seventeenth century, in the Duke of Norfolk's case4. The classic statement
of the rule in that case is Gray's: "No interest is good unless it must vest, if at all, not
later than 21 years after some life in being at the creation of the instrument."

An older version of the Rule, which came to be known as the rule in Whitby v Mitchell5
that no gift may be made to the unborn child of an unborn person - may be considered a
variation on the general theme and is now generally subsumed within the Rule as stated
in Duke of Norfolk's case.

Indeed, the Rule arose in its present, general form largely because of the continuing
efforts of wealthy landowners to control the future use of their land - in effect to create or
continue so-called ‘family estates' against the potential imprudence of future offspring.
As a succession of specific legal and equitable strategies were undone by legislation
and the courts, new ones arose.

The origin of rule against perpetuity stems from the days of feudal England as far back
as in 1682 from the case of Duke of Norfolk's, wherein, Henry (the 22nd Earl of Arundel),
tried to create a shifting executory limitation in a way that one of his titles would pass to
his eldest son (who was mentally deficient) and thereafter to his second son, and
another title would pass to his second son and thereafter, to his fourth son. The estate
plan also included provisions for shifting the titles many generations later, if certain
conditions were to occur. It was held by the House of Lords that such a shifting condition
could not exist indefinitely and that the tying up of property too long beyond the lives of
people living at the time was wrong. The concept of trying to control the use and
disposition of property beyond the grave was often referred to as control by the "dead
hand". The rule against perpetuity, in England, was later codified in the form of the
Perpetuities and Accumulations Act, 1964.

Ingredients constitutingRule against perpetuity


Following conditions must be satisfied to attract Section 14:
1. There must be a transfer of property.
2. The transfer should be to create an interest in favour of an unborn person.
3. Interest created must take effect after the lifetime of one or more persons living at the
date of such a transfer and during the minority of the unborn person.
4. The unborn person must be in existence at the expiration of the interest of the living
persons.
5. The vesting of the interest in favour of the ultimate beneficiary may be postponed only
up to the life or lives of living persons plus the minority of the ultimate beneficiary but not
beyond that.

Section 14 can be summarized thus:


1. You cannot perpetually create life interests OR there cannot be life interest after life
interest perpetually.
2. After the last life interest property must rest in someone and it (resting) cannot be
perpetually delayed.
3. Ultimate legatee must come in existence (either by birth, conception or adoption)
when the life interest comes to an end.
4. On attaining "full age", the ultimate legatee must become the full owner vesting of
property in him and it should be no more delayed, otherwise it will become void.
5. The Bequest will not be valid, if vesting of property is delayed beyond the use time of
one or more persons living at the time of Testator's death and the minority of same
person.
6. Perpetuity is a device tending to take the property out of commerce, for a longer
period than a life (lives) (18 years and beyond).
7. Its distribution is made between charitable and non charitable objects (property).
Although, it is true that charitable or religious trusts are made in perpetuity but they are
not within the scope of Section 114 provided that vesting is not beyond the statutory
period.
8. Section 114 of the Indian Succession Act corresponds to section 14 of the Transfer of
Property Act, 1882 and it differs from the English law on the subject.
9. It is the settlement of an interest descendible from heir to heir so that it shall not be in
the power of him in whom it is vested to dispose if off.

Purpose of the Rule against perpetuity


The purpose of the Rule has shifted somewhat, and cannot simply be attributed to the
need to limit the duration of restrictions on the free use and exchange of property. The
purpose of the Rule as it is now understood is to balance the law's general concern to
respect the intentions of property owners, on one hand, with the competing concern to
ensure that living persons may freely use and enjoy the property they possess. The rule
has two central purposes.

The first is to bring about the availability of land, and possibly some forms of personality,
within regular and sufficiently frequent periods of time.

The second is to strike a fair balance between the desires of present absolute owners to
regulate beyond their own mortality the enjoyment of their property in the years to come,
and the wishes of those living tomorrow to have the same, or at least effective control
over the enjoyment of property which they have inherited. It is the second of these two
purposes which has probably the widest acceptance in terms of why we have, and need,
the rule today, though both are forcefully argued to be relevant to today's scene.

"The liberty to make fresh rearrangements of assets is necessary not only in order to be
rid of irksome conditions attached by earlier donors to the enjoyment of income but also
in order to be able to manoeuvre in the light of new tax laws, changes in the nature of
the property and in the personal circumstances of the beneficiaries, unforeseeable by
the best intentioned and most perspicacious of donors."
Concluding, it is important to ensure free and active circulation of property both for trade
and commerce as well as for the betterment of the property that ultimately is good for the
society. Thus, the object of section 14 of TOPA is to see that the property is not tied- up
and to prevent creation of perpetuity.

Exceptions to the Rule against perpetuity


The Rule is also marked by a series of exceptions that depend in many cases on very
subtle distinctions in language; e.g., the distinction between conditions subsequent
(bound by the Rule) and determinable fees (not bound). These aspects of the Rule lead
to a series of traps for the drafter of a postponed, restricted or conditional property
transfer. Only with a complete grasp of the Rule, including all of its exceptions and partial
exceptions, and a thorough canvasing of all remote and unlikely possibilities of lifespan
and life events of all possible ‘lives in being' and their offspring, can the drafter have
confidence that perpetuities problems have been avoided.

Following are the nine exceptions to the rule against perpetuity:


1) Vested interest is not affected by the rule because once the interest are vested it
cannot be bad for remoteness.
2) The rule is not applicable to land purchased or held by Corporation.
3) Gift to charities, the rule does not apply to transfer for the benefit of public for
religious, pious, or charitable purposes.
4) Properties settled upon individuals for memorable Public Service.
5) The rule against perpetuity does not apply to Personal agreement, for example,
agreement which do not create any interest in the property.
6) A covenant of redemption in mortgage does not affect by the rules the rule.
7) The does not apply to contacts for Perpetual renewal of lease.
8) The rule also does not apply where only charges is created which does not amount to
a transfer of an interest.
9) Contract ofpre-emption also not affected by rule against perpetuity.

Pattern of application of this rule


The common complaint is that the Rule is simply too complex and abstract in its
application, resulting in a substantial risk that beneficiaries or grantees will be deprived
of their interests through inadvertent errors in drafting. In the estate planning context, a
great number of vesting conditions may offend the Rule, most often unintentionally, and
often only hypothetically in any event. The consequence of a breach is very real,
however; the intended gift or transfer will generally be entirely invalid.

Perpetuity may arise in two ways-


(a) By taking away the power of alienation from the transferor
(b) By creating a remote interest in the future property.

Acondition restraining the transferee's power of alienation is void as per S.1O of the Act.
And a disposition to create a future remote interest is prohibited under S.14 of the Act.

The Rule applies to all sorts of contingent future interest in property, real or personal,
whether by trust, power, estate, option to purchase, easement or otherwise. In the typical
scenario of a will, which may gift certain property to be held in trust until the happening
of a certain event, it must be certain that the property will absolutely vest in the entitled
person or persons before twenty-one years has passed since the death of a person who
is identifiable by the terms of the will, and who was alive at the time of the testator's
death.
In practice, the difficulty arises largely from the Rule's preoccupation with remote
hypotheticals. The question of whether a disposition offends the rule is decided at the
time that the disposition takes effect (e.g., in the case of a will, upon the death of the
testator). At that point, it must be certain that there is no possible contingency upon
which the legal interest in the property may not vest within the perpetuity period. Even if
it can be anticipated that later events will likely foreclose the possibility of the interest
failing to vest, the gift will nonetheless be invalid at the outset. In order to be certain, at
the time when the disposition is effective, that the interests it creates are valid, all
contingencies possible as of that time must be canvassed. If one of them results in an
interest vesting beyond the perpetuity period, or not at all, the disposition is void at the
outset.

Given these difficulties, the Rule has been subject to significant reform in most
jurisdictions. The most common sort of reform - referred to generally as ‘wait and see' -
maintains the substance of the Rule, but allows the disposition to run its course for the
perpetuity period, rather than declaring it to be invalid at the outset.

Some important case laws which explain the application of this rule are as
follows:
1) Anand Rao Vinayak Vs Administrator general of Bombay, 1896 6
In this case Bombay High Court declared that thegiftvoid as offering against perpetuity
when a gift was made of movable property to a son with gift of shares in the property to
son's sons son when they should attend the age of 21.

2) Abdul fata Mahomed VS Rasamaya, 18947


The privy Council held thar agiftto an Unborn generations is Forbidden by Mohammedan
law except in the case of Wakf.

3) Rambaran vs Ram Mohit AIR 1967 S.C. 744 8


Supreme Court held that the rule against perpetuity does not apply to Personal
agreements, for example....agreements which do not create an interest in the property.

Retrospectivity of this rule


It is a well established fact that one gains and another loses whenever rules change. But
we take the starting point to be that property owners should have the right to dispose of
their property as they see fit, subject only to such limits as are justified by public policy
reasons. With that as a given, it is fair to say that rather than confiscating a pre-existing
entitlement, retrospective abolition in this case only preserves an entitlement which
would otherwise be wiped out by operation of law.

To the question of whether prospective application would be a better solution than


retrospectively with a saving clause, the Irish Commission answered succinctly:
"It seems to us that the greater justice lies in applying the change of law retrospectively.
The choice seems to be between, on the one hand, honouring the settler's intention and
allowing the beneficiary (on whom s/he was intended to bestow the gift; and on the other
hand, fulfilling, at most, the expectation of a windfall, which, on the basis of a law which
to most lay people and many lawyers would seem antiquated and irrational) entertained.
We prefer the first alternative."

If the unvested interest is objectionable or working some hardship let it be dealt with as
such, under the variation powers we have proposed, or the other rules the courts have
developed to deal with such circumstances. If a party has taken an interest, or acted to
her detriment in reliance on invalidity under the Rule, then the invalidity must stand.
Otherwise, there ought not to be a magic date upon which the saving of a transferor's
manifest intention from an obscure, complex and arbitrary rule ought to be effective. For
discussion purposes we therefore propose retrospective abolition, subject to saving
provisions for interests vested in possession as of the effective date of the legislation, as
well as judicial decisions and acts taken in reliance on the Rule - such as a purchase for
value in reliance on a solicitor's opinion as to the invalidity of some interest or other -
prior to the coming into force of the legislation.

Doctrine of Election

INTRODUCTION
The doctrine of election is stated in Sec. 35 of the Transfer of Property Act alongside
Section 180 to 190 of the Indian Succession Act.

It states that when a party transfers a property over which he does not hold any right
of transfer and entailed in that transaction is the benefit conferred upon the original
owner of the property, such title-holder must elect his option to either validate such
transfer of property or reject it; upon rejection, the benefit shall be relinquished back
to the transferor subject nevertheless :

 “Where the transfer has been through gratuitous means and the transferor has
become incapable of making a new transfer.
 In all cases where the transfer is for consideration”.[i]

An illustration to further explain :

A owns a property that is worth Rs 800. B professes to transfer the same to C through
the Rs1000 instrument to A. But the A, the owner opts/elects to retain his property and
thus, forfeits the gift of Rs 1000.[ii]

EXCEPTIONS
When the owner who is considering the election between retaining the property and
accepting a particular benefit, chooses the former, he is not bound to relinquish any
extraneous benefit that he gains through the transaction.[iii]

The acceptance of the benefit by the original owner shall be deemed to be as


election by him to validate the transfer, if he is aware of his responsibilities and the
circumstances that might influence a prudent man into making an election. [iv]
This knowledge of the circumstances can be assumed if the person who gains the
benefit enjoys it for a period of more than two years. Further discussion over this has
been made under the heading of “Modes of Election”.

If the original owner does not elect his option within a year of the transfer of
property, the transferor would require him to elect his choice. Even after the
reasonable time, if he still does not also still elect, the original owner shall be
assumed to have elected the validation of the property transfer as his choice.[v]

In context of a minor, the period of election shall be stalled till the individual attains
majority unless he is represented by a guardian[vi].

UNDERSTANDING THE PRINCIPLE


In simple words, a person utilizing the benefits of an instrument also has to carry the
burden attached. This doctrine is founded upon a model wherein a person persuades
another to act in a manner to his prejudice and derives any advantage from that, then
he cannot turn around and claim that he was not liable to perform his part as it was
void.[vii] This doctrine is universal and is applicable to Hindus, Muslims as well as
Christians.

So, this doctrine contains the principle that the exercise of a choice by a person left
to himself of his own free will to do one thing or another binds him to the choice
which he has voluntarily made, and is founded on the equitable doctrine that he who
accepts benefit under an instrument or transaction of his choice must adopt the
whole of it or renounce everything inconsistent with it.[viii] Thus, it is a general rule
that a person cannot approbate and reprobate[ix]. Also, the election is confined to
the case of a gift or Will[x] and does not apply in case of a legal remedy[xi].

Conditions precedent for equity of election[xii]:

 A transfer of property by a person who has no right to transfer;


 As a part of the same transaction, he must confer some benefit on the owner of the
property and

 Such owner must elect either to confirm such transfer or to dissent from it.

OTHER IMPORTANT CONDITIONS


Proprietary Interest

Election over a property is not asked to made by a person unless he holds a


proprietary interest which are disposed off in derogation of the person’s rights.[xiii]
So, election cannot take place if the property that is decided by the transferor to be
disposed does not happen to be owned by any individual to whom an interest is
being provided through the transfer. Also, it cannot take place if the transferor does
not provide any benefit on the individual who is the original owner of the
property. [xiv]

“As part of the same transaction”[xv]

One cardinal condition for the doctrine of election to be executed is that the benefit
conferred upon the original owner should be as part of the same contract by which
he transfers the property over which he holds no right to transfer.

In the landmark case of Ramayyar v. Mahalaxmi[xvi], a widow had given a gift in


excess of her powers and had then provided a will which stated that “ excluding the
properties which I have already given away, I will make the following dispositions”.
The Court ordered that the plaintiff under the will was not excluded from the election
doctrine from contesting the previous gift which wasn’t the issue of the will at all.

It is to be noted that different nature of two properties is not a bar to election by the
owner like in the case of Ammalu v. Ponnammal[xvii] where a person who was
managing the properties of the daughter of his deceased brother, died leaving a will
bequeathing a portion of it to B. It was held that the doctrine of election did apply for
the niece.

Donor’s Intention

In order to create a situation of election, it is important that the intention of the


testator should be clear with regard to disposing of the property which he does not
own. [xviii] Parol evidence is not acceptable and thus the intention must be prima
facie clear. [xix] [xx]

Indirect Benefit

The benefit that the original owner is conferred with has to be direct in nature and if
indirect, he does not need to elect.[xxi] This principle is explained in Section 184 of
Indian Succession Act, 1925 and states that “when the devisee who claims
derivatively through another does not take under the deed, and is not bound by the
equity attaching thereto.”[xxii]

Difference in Capacity

An individual can in one capacity utilize a benefit while can dissent or reject that
benefit in another capacity[xxiii]. It means to explain that it is possible to facilitate
two roles of an individual wherein he can for example, accept legacy for an estate
while in his personal competence, he could retain the property.[xxiv]
Modes of Election

The election by the owner can either be direct or indirect. In direct election, it is
simply through communication about the elected choice or option. Though, in case
of an indirect election, “the acceptance of the benefit by the original owner is subject
to two conditions:

1. He has to be aware of his duty to elect, and


2. There must be proof of knowledge of circumstances which would influence the
judgment of a reasonable man in making an election : [xxv]

Enjoyment for two years of the benefit by the person on whom it is conferred with
any dissent.[xxvi]”

The election shall be presumed when the donee acts in such a manner with the
property gifted to him that it becomes impossible to return it to the original owner in
its original state.[xxvii]

Difference between English Law and the Indian Law Perspective

The English law depends upon the principle of compensation which means that if the
original owner does not choose to validate the transfer, he can keep the property and
also the benefit accrued, subject to compensation provided to the donee, to the
extent of the property he had suffered a loss for.

But in the Indian law context, this doctrine is influenced by the principle of forfeiture
which states that if the original owner does not choose to validate the transfer, the
donee incurs a forfeiture of the conferred benefit which goes back to the transferor.
[xxviii]

COMPENSATION
Estimated cost of the property which is attempted to be transferred towards the
transferee is the approximation of the compensation that he shall receive. However,
in context of immovable properties, there arises the issue of changing value of the
property according to the lapse of time. Thus, this valuation is to take place at the
date of the instrument becoming operational rather than at the time of election[xxix].

Doctrine of Lis Pendens


The meaning of lis pendens is - ‘a pending legal action’, wherein Lis means the ‘suit’
and Pendens means ‘continuing or pending’. The doctrine has been derived from a
latin maxim “Ut pendent nihil innovetur” which means that during litigation nothing
should be changed.
The principle embodying the said doctrine is that the subject matter of a suit should
not be transferred to a third party during the pendency of the suit. In case of transfer
of such immovable property, the transferee becomes bound by the result of the suit.

The doctrine of Lis Pendens esstentially aims at (i) avoiding endless litigation, (ii)
protecting either party to the litigation against the act of the other, (iii) avoiding
abuse of legal process.

Lis Pendens is captured under Section 52 of the Transfer of Property Act, 1882 (the
“Act”). The Section essentially prohibits alienation of immovable property when a
dispute relating to the same is pending in a competent court of law. It is based on
the principle that the person purchasing an immovable property from the judgment
debtor during the pendency of the suit has no independent right to property to
resist, obstruct or object execution of a decree.[1]

APPLICATION OF SECTION 52 OF TRANSFER OF PROPERTY ACT – CONDITIONS


TO BE SATISFIED

The Supreme Court in a three Judge Bench in Dev Raj Dogra and others v. Gyan
Chand Jain and others[2] construed the meaning of Section 52 of the Transfer of
Property Act and laid down following conditions:

1. A suit or a proceeding in which any right to immovable property is directly


and specifically in question must be pending;
2. The suit or proceeding should be pending in a Court of competent
jurisdiction;
3. The suit or the proceeding should not be a collusive one;

4. Litigation must be one in which right to immovable property is directly and


specifically in question;

5. Any transfer of such immovable property or any dealing with such property
during the pendency of the suit is prohibited except under the authority of
Court, if such transfer or otherwise dealing with the property by any party to
the suit or proceeding affects the right of any other party to the suit or
proceeding under any order or decree which may be passed in the said suit or
proceeding.

Non – Applicability of Doctrine of Lis Pendens

Lis Pendens is not applicable in every case. There are certain instances wherein this
doctrine does not apply[3]:

 A sale made by the mortgagee in the exercise of the power as conferred by


the mortgage deed.
 In matters of review;

 In cases where the transferor is the only party affected;

 In cases of friendly suits;

 In cases where the proceedings are collusive;

 In case of suits involving pending transfers by a person who is not a party to


the suit;

 In cases where the property has not been properly described in the plaint;

 In cases where the subject matter of rights concerned in the suit and that
which are alienated by transfer are different.

Judicial Precedents

1. In Hardev Singh v. Gurmail Singh[4], the Supreme Court observed that Section
52 of the Act does not declare a pendente lite transfer by a party to the suit as
void or illegal, but only makes the pendente lite purchaser bound by the
decision of the pending litigation. Thus, if during the pendency of any suit in a
court of competent jurisdiction which is not collusive, in which any right of an
immovable property is directly and specifically in question, such immovable
property cannot be transferred by any party to the suit so as to affect the
rights of any other party to the suit under any decree that may be made in
such suit.
2. In T.G. Ashok Kumar v. Govindammal & Anr.[5], the Supreme Court observed
that if the title of the pendente lite transferor is upheld in regard to the
transferred property, the transferee’s title will not be affected. On the other
hand, if the title of the pendente lite transferor is recognized or accepted only
in regard to a part of the transferred property, then the transferee’s title will
be saved only in regard to that extent and the transfer in regard to the
remaining portion of the transferred property will be invalid and the
transferee will not get any right, title or interest in that portion. If the property
transferred pendente lite, is entirely allotted to some other party or parties or
if the transferor is held to have no right or title in that property, the transferee
will not have any title to the property.

3. In Jayaram Mudaliar v. Ayyaswami[6], the Supreme Court held that the


purpose of Section 52 of the Act is not to defeat any just and equitable claim,
but only to subject them to the authority of the Court which is dealing with
the property to which claims are put forward. The Supreme Court went on to
further explain the scope of lis pendens as, ‘It is evident that the doctrine, as
stated in section 52, applies not merely to actual transfers of rights which are
subject-matter of litigation but to other dealings with it by any party to the suit
or proceeding, so as to affect the right of any other party thereto. Hence it could
be urged that where it is not a party to the litigation but an outside agency such
as the tax collecting authorities of the Government, which proceeds against the
subject-matter of litigation, without anything done by a litigating party, the
resulting transaction will not be hit by Section 52. Again, where all the parties
which could be affected by a pending litigation are themselves parties to a
transfer or dealings with property in such a way that they cannot resile from or
disown the transaction impugned before the Court dealing with the litigation
the Court may bind them to their own acts. All these are matters which the
Court could have properly considered. The purpose of Section 52 of the Transfer
of Property Act is not to defeat any just and equitable claim but only to subject
them to the authority of the Court which is dealing with the property to which
claims are put forward.’

4. In Rajender Singh and Ors. v. Santa Singh and Ors.[7], it was observed by the
Supreme Court that the doctrine of lis pendens was intended to strike at
attempts by parties to a litigation to circumvent the jurisdiction of a Court, in
which a dispute on rights or interests in immovable property is pending, by
private dealings which may remove the subject matter of litigation from the
ambit of the court's power to decide a pending dispute or frustrate its decree.
Alienees acquiring any immovable property during pending litigation, are held
to be bound by an application of the doctrine, by the decree passed in the suit
even though they may not have been impleaded in it. The whole object of the
doctrine of lis pendens is to subject parties to the litigation as well as others,
who seek to acquire rights in immovable property, which are the subject
matter of litigation, to the power and jurisdiction of the Court so as to prevent
the object of a pending action from being defeated.
5. In Gouri Dutt Maharaj v. Sheikh Sukur Mohammed and Ors.[8], it was held that
broad principle underlying Section 52 of the Transfer of Property Act,1882 is
to maintain status quo, unaffected by act of any party to the pending
litigation.
6. In Ramjidas v. Laxmi Kumar and Ors.[9], the Madhya Pradesh Court observed
that the purpose of Section 52 is not to defeat any just and equitable claim
but only to subject them to the authority of Court which is dealing with the
property to which the claims are put forward.
7. In Lov Raj Kumar v. Dr. Major Daya Shanker and Ors.,[10] the Delhi High Court
observed that the ‘principles contained in Section 52 of Transfer of Property Act
are in accordance with the principle of equity, good conscience or justice,
because they rest upon an equitable and just foundation, that it will be
impossible to bring an action or suit to a successful termination if alienations
are permitted to prevail. Allowing alienations made during pendency of a suit or
an action to defeat rights of a Plaintiff will be paying premium to cleverness of
a Defendant and thus defeat the ends of justice and throw away all principles of
equity’.

Ostensible owner under TPA


Introduction

The Transfer of Property Act, 1882[1], was passed with the purpose of making
transfer of property easier and makes it accessible to the population at large. This
Act lays down certain general principles as to transfer of property which has to be
followed. Transfer of a property by and ostensible owner is such a concept which
was incorporated to protect the rights of innocent third parties vis-à-vis the property
owners. This principle was first used in the much celebrated case of Ramcoomar
Koondoo v. John and Maria McQueen[2] by the Judicial Committee.

Ramcoomar Koondoo v. John and Maria McQueen case

In this case, the plaintiff who had inherited a property by way of a will came to know
that someone else had already purchased this property in her name and
subsequently sold this property to a third person, by making him believe that he had
good title over that property. The whole transaction was a ‘benami’ transaction but
was not known to anyone except the person who sold the property. The plaintiff sued
the third party for recovery of the possession of the land but the committee held that:

“ It is a principle of natural equity, which must be universally applicable, that where one
man allows another to hold himself out as the owner of an estate, and a third person
purchases it for value from the apparent owner in the belief that he is the real owner,
the man who so allows the other to hold himself our shall not be permitted to recover
upon his secret title, unless he can overthrow that of the purchaser by showing, either
that he had direct notice, or something which amounts to constructive notice, of the
real title, or that there existed circumstances which ought to have put him upon an
inquiry that, if prosecuted would have led to discovery of it.”[3]

It was there by held that the plaintiff cannot take back the property form the third
party and that the transfer was a legitimate transfer in the eyes of the law. This
wordings used in this case can be seen in the S. 41 of the Act which deals with
Ostensible owner.

S. 41 of the Act.

Section 41 of the Act deals with ostensible owner and it has been defined as:

“Transfer by Ostensible Owner: Where, with the consent, express or implies, of the
persons interested in immovable property, a person is the ostensible owner of such
property and transfer the same for consideration, the transfer shall not be voidable
on the grounds that the transferor was not authorized to make it: provided that the
transferee, after taking reasonable care to ascertain that the transferor had power to
make the transfer, has acted in good faith.”[4]

The section lays down certain requirements to avail the benefit of this section. They
are:

 The primary condition is that the person who is transferring the property
should be ostensible owner.

 There should be consent form the real owner, which can be implied or express
form.[5]

 The ostensible owner should get some consideration in return of the property.

 Reasonable care has to be taken by the transferee about the authority of


transferor to the property and the transferee had acted in good faith.[6]

 It goes without saying that this section is applicable only to transfer of


immovable property and not in case of movable property.

‘Ostensible owner’

Ostensible owner is not the real owner but who can represent himself as the real
owner to the 3rd party for such dealings.[7] He has acquired that right by the willful
neglect or acquiesces by the real owner of the property thereby making him an
ostensible owner. A person who has gone abroad for some years has given his
property to his family relative for making use of it for agricultural purpose and for all
other purposes as he may deem fit. In this case the family relative is the ostensible
owner and if during that period he sells the property to a third party, then the real
owner after coming back cannot claim his property and say that the person was not
authorized to transfer his property. An alternative case can be when the property is in
wife’s name but husband used to take care of it and the other dealings related to the
property. If the husband thereby sells this property, the wife cannot claim her
property back. Or as in the Mohamad Shakur v Shah Jehan[8], in which the real
owners lived in a different village, and had authorized a widow to use the property as
she liked and afterwards she sold it. The real owner lost the case and the transfer
was a valid one.

Consent from the real owner

The main purpose of this section is to protect the rights of the innocent third party
who had purchased the property, when the real owner was himself at fault by not
protesting the transfer.[9] But a necessary requirement is that the real owner should
have the capacity to give the consent[10] and that consent should not be obtained
from any unlawful act. In the case of minors, even if the ostensible owner claims that
he has the consent of the minor, it will be held to be no consent as minors do not
have any capacity to give the required consent.[11] And it was laid down in the case
of Satyanarayana Murthi vs. Pydayya[12], that consent need not be taken from the
true owner and it might also be the case that the true owner had no knowledge of the
transfer.

The consent in such transactions can be express or implied.

Implied Consent

Implied consent can be made out from the conduct of the real owner. It is not
required that the real owner has to give express consent or give his consent in
writing.[13] Therefore, where another person is dealing with the property of the real
owner, as if the property was his own, and the real owner knows about it, then it will
said to be implied consent on the part of the real owner.[14] In the case of Shamsher
Chand v Bakshi Meher Chand[15], it was held that if a party is not aware of his rights
or is silent about them, then in such case it cannot be said that the real owner had
consented to the transfer of the property. It is required that a person who is not
aware of his rights could never have consented to that and such a transaction will
not be valid.[16] It is not stated in the section that the real owner must have actually
consented to the transfer, because if that was the case, then the real owner could
never have made any objection to such transfer. It is just that the real owner is
unaware of this transaction or is negligent. Silence may amount to consent if the
silence on the part of real owner leads the third party to believe that the ostensible
owner is the real owner of the property. But in the case of Gurucharan Singh v. Punjab
State Electricity Board Patiala[17] , where the land in contention was transferred to
someone else and such person had perfected his right to the property by paying the
money. The new owner which is the real owner had not taken the possession of the
land and the previous owner after having waited for 12 years, sold the land to third
party. The real owner then comes forward and claim his right over the land and the
court said that the real owner was a minor at the time of transfer of land and
therefore could not take the possession of the land and therefore it would not
amount to silence on the part of the real owner as he could never have consented to
the transfer. Therefore the subsequent transfer was held to be invalid.

Consideration

Consideration is a must if there is a transfer by ostensible owner. He cannot give


away the property as a gift. As it has also been provided in the Indian Contract Act,
1872 that consideration is necessary component of any contract and transfer of
property by an ostensible owner is done by way of contract only. Also it has been
provided in S. 4 of the Act that anything not expressly defined in this act shall be
deduced form the general definitions given under the Indian Contract Act, 1872.

Reasonable Care

Reasonable care can be understood as the care which a reasonable and ordinary
man would have taken.[18] He has a duty to check the title of the transferor.[19] Like
in the case of Nageshar Prasad v. Raja Pateshri[20] where there was an error in the
revenue records regarding the name of the owner. The name written was of some
other person and the real owner had already made a complaint about this error. The
person whose name was in the revenue records subsequently sold it to a third
person and the third person without making proper inquiries took the property and
the real owner afterwards objects to it. The court held that the third party has not
taken reasonable care which was required of him and therefore he will not be
protected by this section. The advice of solicitor will not be enough to prove that the
third party has taken reasonable care in determining the title of the property.[21] The
third party is required all the available documents which can possibly give some
more information regarding the title of the property and these documents may
include police registers, municipal registers apart from other documents.

There is also a safeguard for the real owner. In the case of Mathura v. Ambika[22],
where the real owner had sold the property to another person and got it registered
before the transfer by the ostensible owner could be registered, then it was held that
the transfer by the real owner would be held valid as he has a greater title over the
property than the ostensible owner and the rights of third person who had purchased
this property from the ostensible would not be protected under this section.

Proper Inquiry

As a person is required to make reasonable inquiries, sometimes it is difficult to


make out what will amount to proper inquiry. The courts in India have held that this
being subjective, it will depend on the facts[23] and circumstances of each case and
it can also be the case that what amounts to proper inquiry in one case may not
called proper inquiry in another case with completely different facts. If the transfer is
by Mahmomedans, it is a required of the purchaser to inquire if there is any female
heir also. In many cases it is such that only males transfer the property without
taking the consent of the females and this will not be a valid transfer because they
also have a share in the property and therefore the third person has to inquire about
such things.[24] The ultimate test that is that the “transferee should show that he
acted like a reasonable man of business and with ordinary prudence.”[25]

Good Faith

Good faith simply means that the transferee should have honestly believed that the
ostensible owner is the true owner after all the proper inquiries conducted by him.
[26] But where after proper inquiries the transferee has knowledge that the person
selling him the property is not the real owner but only the ostensible owner, the
transferee cannot neglect true facts.[27] This is because of the fact that a person
cannot take advantage of his own negligence and then claim protection of this act.
The rights of real owner also need to be safeguarded against such persons.

Burden of Proof

The burden of proof is on the transferee to prove that the transferor was actually the
ostensible owner and had the consent to sell the property.[28] Also he has to prove
that he actually acted in good faith and had taken all reasonable care that was
required from him while taking the property.[29] This is because he has to prove that
he was not at fault while taking the property and to shift the burden on the real
owner. Alternatively, to shift his burden, he can also prove that the transferor did not
allow the transferee to know the real facts and tried everything to suppress the facts.

DOCTRINE OF PART PERFORMANCE


The Doctrine of Past Performance, based on principle of equity, developed in England and
was subsequently added to the Transfer of Property Act, 1882 via the Amendment Act of
1929. In law of contracts (for e.g., a contract for sale), no rights pass to another till the sale is
complete But if a person after entering into a contract performs his part or does any act in
furtherance of the contract, he is entitled to reimbursement or performance in case the other
party drags its feet.
Section 53A says that if a person makes an agreement with another and lets the other person
act on the behalf of the contract; such a person creates an equity himself that cannot be
resisted on the mere grounds of absence of formality in the evidence or contract of such a
transfer. Thus, if the contract has not been registered or completed in the prescribed manner,
the transferor can still not go against the transferee or anyone claiming under him. However,
the deed should not be unsigned or unstamped. Nothing in this section affects the rights of a
transferee for consideration even if he had no notice of contract of part performance.
Illustration: A contracts with B to sell his plot for X amount of money. A accepts the advance
from B towards the sale of the plot and hands over the possession of the said plot to B. After
some time, B is ready to pay the remaining sale amount but A refuses to accept the same.
Further A asks B to hand over the plot back to him.
Here B is ready to perform his part of the contract but A is not. In such a case, B can bring a
case requiring specific performance from A. It does not matter that the sale was not
registered.
As per law, a transfer of immovable property valued over Rs. 100 has to be registered. But it
was believed that strict compliance may lead to extreme hardships especially where one party
has already performed his part in the confidence that the other party will honor the
agreement. If such registration or other formalities have not taken place, the doctrine of part
performance will be applicable. If such a transferee takes possession of the property, he can
not be evicted due to an unregistered contract.
The section is a defense as well as a right that helps protect the possession against any
challenge. It tries to prevent fraud on the mere basis of ineffective evidence of the transfer.
The section does not confer a title upon the transferee in possession but it imposes a statutory
bar on the transferor.
Equity looks to the intent rather than to the form

ESSENTIALS OF THE DOCTRINE OF PART PERFORMANCE


a) There must be a written contract for transfer of an immovable property signed by or on
behalf of the transferor. The doctrine can not be applied if there is a void agreement or no
agreement.
b) There must be consideration;
c) The contracts should give out the terms of the transfer with reasonable certainty;
d) The transferee must have taken possession as a result of this contract or continued in
possession if he was already in possession of the property;
e) The transferee must have done some act in furtherance of the contract. Acts done prior to
the agreement or independent of it can not be deemed to be part performance of the contract;
and
f) The transferee should have performed his part of the deal or be willing to perform it.
WALSH vs. LONGSDALE and MADDISON vs. ALDERSON are two of the major cases
that have helped develop the doctrine of part performance in England. In India, this doctrine
has been enacted with a few modifications.
MADDISON vs. ALDERSON 1888
B was A’s servant. A had promised B a certain property as life estate, meaning B could enjoy
the property during his life time. B served A for years upon this promised life estate. The will
bequeathing such interest and property to B failed due to want for proper attestation. After A
died, one of his heirs brought action to recover the property from B.
It was held that the act of part performance could not be proof of the contract since the
performance was a condition precedent to the contract. The heir of A was able to recover the
said property.
WALSH vs. LONGSDALE 1882 21 Ch d 9
Walsh took a cotton mill on lease for 7 years from Longsdale, the owner of the mill. The
agreement was prepared but not signed. In the meantime, rent arrears started to accumulate as
Walsh could not keep up with the quarterly payments of rent. An advance of one year’s rent
could be demanded by Longsdale as per the contract. Lonsdale demanded the advance rent
for one year and seized some goods of Walsh when he defaulted. Walsh sued for damages.
The House of Lords decided in favor of Lonsdale stating that by running the mill, Walsh had
admitted he was a lessee and evidence of his consent to the unsigned lease deed.
The rule laid down in Walsh vs. Longsdale is not applicable in India – as it did not constitute
the doctrine of part performance.
Prior to the enactment of the Transfer of Property Act, 1882, the English law of Part
Performance was applied. Before Section 53A was inserted in the Transfer of Property Act,
1882, there were different views upon such application. After the Transfer of Property Act,
1882 came into force, some thought that Sections 54 and 59 which required registered
documents were necessary for sale of immovable property or regarding mortgage
respectively. While others argued that requiring strict compliance would be detrimental to the
rights of the impoverished masses of India who could be duped by scrupulous individuals
taking advantage of the law.
The Privy Council in MOHD MUSA vs. AGHOR KUMAR GANGULI AIR 1914 PC 27
(30) held that doctrine of part performance is applicable in India. There were divergent views
a few years later stating that doctrine can not be used to override statutory provisions. Finally
in 1929, the Transfer of Property Act was amended and the English law of part performance
became a part of Indian Laws though a little modified.

Equity on that as done as which ought to have been done.


Section 53A of the Transfer of Property Act, 1882
Part Performance – Where any person contracts to transfer for consideration any immoveable
property by writing signed by him or on his behalf from which the terms necessary to
constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in
part performance of the contract, taken possession of the property or any part thereof, or the
transferee, being already in possession, continues in possession in part performance of the
contract and has done some Act in furtherance of the contract, and the transferee has
performed or is willing to perform his part of the contract, then, notwithstanding that where
there is an instrument of transfer, that the transfer has not been completed in the manner
prescribed therefore by the law for the time being in force, the transferor or any person
claiming under him shall be debarred from enforcing against the transferee and persons
claiming under him any right in respect of the property of which the transferee has taken or
continued in possession, other than a right expressly provided by the terms of the contract.
The proviso is an exception of sorts stating that the interests and rights of a subsequent
transferee for consideration will be protected as long as he had no notice of the contract
leading to the part performance due or the part performance thereof.
In India, the doctrine is used only as a shield and not to enforce rights as laid down by the
Supreme Court in Delhi Motors case. But it must be noted that the aggrieved party can either
be the plaintiff or the defendant in a suit as the case maybe.

ENGLISH AND INDIAN LAW


The English Law of Part Performance
1) The contract need not be written or signed by the transferor
2 The right under the doctrine is an equitable right
3) It can be used for enforcing the right as well as defending the right; and
4) It creates a title in the transferee.
The Indian Law of Part Performance
1) Section 53A deals with the Doctrine and state that the contract has to be written as well as
signed by the transferor
2) It is a statutory right;
3) It can only be used to defend the possession of the transferee; and
4) It does not create a title in the transferee.

After 2001 amendment to Section 53A, the application of the section has seen dilution – it no
longer serves as a ‘substitute’ for registration. It should still hold good for defects other than
registration. But, registration of sale of immovable property is compulsory and Section 53A
has been amended to incorporate the same.

Fraudulent transfer means the illegal transfer of property with the intention to
defraud the creditors. To constitute a fraudulent transfer their must be an intention to
handicap the creditor from his just and lawful entitlements. Thus a fraudulent transfer arises
in a creditor debtor relationship. In a fraudulent transfer the property is put out of reach of the
creditor so that a creditor is delayed from satisfying his debt. For example, when A transfers
his property to B without relinquishing his/her ownership over the property with an intention
to put the property out of reach of his/her creditor, then such transfer is called a fraudulent
transfer. A fraudulent transfer gives rise to a civil cause of action. The court can set aside a
fraudulent transfer at the request of the defrauded creditor. Fraudulent transfer is also known
as fraudulent conveyance.

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