SECTION 5

C
 Understanding Property
• The term 'property' is derived from the Latin term 'Properietat’ and the French
equivalent term is 'Proprius' which means a thing owned/possessed.
• The concept of property and ownership are very similar to each other. However,
there is a fine line that distinguishes the two terms. It will not be incorrect to state that
humans have been aware of their rights to possess what they rightfully own for long.
• Property- Transfer of Property Act 1882 does not define the term ‘property’ but it has
been used in its widest and most comprehensive sense. Property is a legal term to
denote every kind of a interest or right which has an economic content. When a
property is transferred, the rights along with the property are also transferred.
Property is divided into two broad category i.e. Movable and immovable property
• Property includes all the legal rights of a Person of whatever description The property
of a man is all that is his in law. In the narrower sense, the property includes the
proprietary rights of a person and not his personal rights. Proprietary rights constitute
his estate or property and personal rights constitute his Status or personal and
condition.
• In another sense, the term property includes only those rights which are both
proprietary and real.
 Definition of Property:
There are different definitions are given in different act as per there uses and needs. But in the
most important act which exclusively talks about the property and rights related to property
Transfer of Property Act, 1882 has no definite definition of the term property.

Section 2(c) of the Benami Transactions (Prohibition) Act, 1988 defines property as:

“Property” means property of any kind, whether movable or immovable, tangible or intangible,
and includes any right or interest in such property.

Section 2 (11) of the Sale of Good Act, 1930 defines property as:

“Property” means the general property in goods, and not merely a special property.
 SECTION 4:
• Enactments relating to contracts to be taken as part of Contract Act and supplemental to the Registration
Act. — The chapters and sections of this Act which relate to contracts shall be taken as part of the Indian Contract
Act, 1872 (9 of 1872).
• 4 [And sections 54, paragraphs 2 and 3, 59, 107 and 123 shall be read as supplemental to the Indian Registration
Act, [1908 (16 of 1908)].]
SECTION 5. “Transfer of property” defined.—

(A) Transfer of Property, whether moveable or immoveable

• In the following sections “transfer of property” means an act by which a living person conveys property,
in present or in future, to one or more other living persons, or to himself, 2 [or to himself] and one or
more other living persons; and “to transfer property” is to perform such act.
• [In this section “living person” includes a company or association or body of individuals, whether
incorporated or not, but nothing herein contained shall affect any law for the time being in force relating
to transfer of property to or by companies, associations or bodies of individuals.]

• Section 3(42) of the The General Clauses Act, 1897 defines a “person” shall include any company or
association or body of individuals, whether incorporated or not;
 Transfer of property means-

i) An act ii) Act inter-vivos (iii) Act convey

(living persons) existing property

(iv) To himself (v) To another vi) Transfer of

living person property may be
made effective in
“Present or in Future”
Transfers of Property is “an act” -
• "Transfer of property” " defined.-
In the following sections "transfer of property means an act by which a living
person conveys property, in present or in future /to one or more other full living
persons, or to himself, or [to himself] and one or more other living persons, and
"to transfer of property" is to perform such act.
• Transfer of property is an activity or process. Under this activity something is
done by the person who wants to transfer his property; it is not transferred
automatically without transferors’ act as is the case in wills or inheritance..
Transfers of Property is “an act” -
• Transferring property would mean doing of this "act or performing such act the legal
effect of this act is passing of property from one person to another
• This word in English Law in its narrower and more usual sense refers to the transfer of an
estate in land
• Used in a wider sense to include any form of assurance inter vivos.
• Transferor must have an interest in the property.
• Transfers exclude Wills; Wills operate only after the death of the testator.
• The word “transfer” has a wide meaning, including every transaction where a party
divests or is divested of a portion of their interest.

• Krishna Kumar Khemka v. Grindlays Bank PLC (AIR 1991 SC 899): A lease comes within
the meaning of the word ‘transfer’.
Transfers of Property is “an act” -
• Types of Property:
• Actionable claims.(Section 6 says that, property of any kind may be transferred‟, etc.)
• Rights to reconveyance of land.
• Property includes ownership or partial ownership rights.
• It may be noted that property is essentially a bundle of rights and interests. When a property is
transferred, there may be transfer of all the rights in that property or only some of it. All the rights in the
property signify ownership or absolute interest
• Absolute Transfer: A gifts his house to B (entire ownership rights).
• Partial Transfer: A leases his house to B for a certain period (partial interest).
 Transfers of Property is “an act” -
• In Sunil Sidharthbai v. Commissioner of Income Tax, AIR 1986 SC 368, the Supreme Court rightly
observed that in general, transfer of property means passing of a right in the property from one
person to another. In one case there may be passing of entire bundle of rights from transferor to
transferee, but in another case there may be transfer only some of such rights.
• Transfer of property means passing of a right from one person to another, either entirely or
partially
• Illustration: This, if A makes a gift of his house to B, there is transfer of absolute interest of the
house. It is a transfer of „property‟. On the other hand, if A transfers the right of enjoyment of his
house to B for a certain period it is called a „lease‟. It is transfer of only partial interest in the house
but it is also a transfer of property‟.
 Transfers of Property is “an act” -
• Sale of Property: If A sells his car to B, there is a transfer of absolute interest in the car. A
transfers all his rights in the car to B, and B becomes the new owner. This is a transfer of
property where the entire bundle of rights is passed on to B.
• Mortgage: If A mortgages his house to a bank to secure a loan, there is a transfer of an
interest in the property. The bank gets a right to sell the house if A fails to repay the loan.
However, A still retains ownership and the right to use the house until such default occurs. This
is a transfer of a limited interest in the property.
• License: If A allows B to park his car in A's garage for a monthly fee, B gets a license to use
the garage. A retains ownership and control over the garage, but B has a right to use it as
specified. This is a temporary and revocable transfer of a limited interest.
 Act inter-vivos (living persons)

• Transfer of property is to be made by a 'living person. The person who makes the transfer is called the
transferor. The transferor may be human person or a juristic person.
• Inter Vivos Transfers: Transfers or conveyances of property from one living person to another.
• The living person i.e. the transferor must be in existence at the time of making of the transfer. The
transferor must also be competent i.e. of the age of majority, of sound mind and not otherwise
disqualified to transfer a property. The term "living person" refers to a human being who is alive and
conveys property to another.
• Juristic persons are Companies, Firms, Corporation, University etc. which although are not human
beings but law incorporates personality to them. Includes companies, associations, or bodies of
individuals, whether incorporated or not.
• According to the General Clauses Act, 1897, the term “person” encompasses these entities.
• Section 5: Emphasizes that "transfer of property" means an act by which a living person conveys
property to one or more other living persons.
 Act inter-vivos (living persons)

• Second paragraph of Section 5 makes it clear that transferor may be one person or a class or
group of persons. It may also be association of persons or corporations i.e juristic persons. Court
has not been regarded as 'living person' therefore, transfer made by the order to the Court
(e.g. Court-sale) is not a transfer of property within the meaning of Section 5 of the Transfer of
Property Act.
• The transferor must be a living person means that the transfer or properties by operation of law
under wills, inheritance or by court’s order are excluded from this definition and are not to be
regulated by the Transfer of Property Act. Transfers under the Act must be deeds intra vivos
(between living persons), not by will.
• Transfers by will are excluded as they take effect after the transferor’s death.
• Both transferor and transferee must be living at the time of transfer.
• Section 13: Includes persons not in existence at the date of the transfer.
living persons
Incorporates

Body Of
Company Associations
Individuals

whether incorporated or not

 Act inter-vivos (living persons)
• Usha Rani Kundu v. Agradut Sangha: In cases where property was acquired by or transferred in favour
of the Secretary of an unregistered society or club, the Secretary does not have the legal standing to
hold or acquire the property. This is because the Secretary of such an unregistered entity does not fall
under the definition of a "living person" as per Section 5 of the Transfer of Property Act. The Act
requires both the transferor and transferee to be recognized as living persons, which includes
individual humans, companies, associations, or bodies of individuals. Since an unregistered society or
club lacks legal recognition and the Secretary cannot represent it as a living person, any transfer of
property to the Secretary is legally invalid.

• In Bhupati Nath v. Ram Lal, a full bench of the Calcutta High Court dealing with a Hindu will, held that
the principle of Hindu Law which invalidates a gift other than to a sentiment being capable of
accepting it does not apply to a bequest to the trustees for the establishment of an image and the
worship of a Hindu deity after the ancestor‟s death nor does it make such a bequest void. The Full
Bench, after examining the Hindu texts and authorities observed that according to the strict Hindu
juridical notion there can be no gift in favour of the Gods for in the case of deities there cannot be
any acceptance and therefore necessarily any gift.
 Act inter-vivos (living persons)
• Exclusions:
• Secretary of an unregistered Society or Club cannot be considered a "living person" for
holding or acquiring property.
• A deity is not considered a "living person," hence not governed by the Act for property
transfers.
• An idol, although a juristic person, is not a "living person" and thus does not require written
or registered instruments for property dedication.
Partition
• Nature of Partition: Partition involves separating the parts of co-owned property among
co-owners, allowing each to enjoy their respective portions individually rather than
jointly.
• No Transfer Involved: Partition is not considered a transfer of property because it does
not involve conveying property from one person to another. Instead, it changes how
the property is enjoyed among the co-owners.
• In Mohar Singh v. Devi Charan 1988, the Supreme Court explained the legal nature of a
partition in the following words: “Partition is not actually a transfer of property, but
would only signify the surrender of a partition of a joint right, in exchange for a similar
right from the other co-sharer or co sharers.”
• Legal Implications: The process of partition does not require the conferment of a new
title or involve a conveyance. It merely transforms joint enjoyment into several
enjoyment without creating new ownership rights
Partition
• In Mookharjee, J., in Atrabanessa Bibi v. Safutullaah Mia (1916), said that partition
signifies the surrender of a portion of a joint in exchange for a similar right from the co-
sharer.
• In Sarin v. Poplai, Gajendragadkar,(1966) has observed that the true effect of partition
is that each coparcener gets specific property in lieu of his undivided right in respect of
the totality of the property of the family.‟
• In Gurcharan Ram v. Tejwant Singh, AIR 2008, A father partitioned his property among
his three sons. The agricultural land was given to one of them, the plaintiff in the case.
The pucca house was given to the two others. They were already in possession of the
property respectively as distributed under the partition and had been making
improvement in their respective shares. Thus they had been acting on the family
settlement. They became bound by it. The Court said that it was immaterial that the
mutation of the agricultural land was in the name of all the three sons.
 Family Settlement
In a joint family property, all members have specific shares that are held conjointly. A family settlement involves
defining and separating these shares to avoid disputes, without creating new titles or interests.
Mutual Agreement:
A family settlement is a mutual agreement among family members to acknowledge and hold their respective
shares separately. It defines and recognizes existing titles rather than transferring property.
• In Sadhu Madho Das v. Pandit Mukund Ram, 1955 the Supreme Court observed that family arrangement is
based on the assumption that there is an antecedent title of some sort in the parties and the agreement
acknowledges and defines what that title is
• In Ramdeo Foods Products Pvt. Ltd. v. Arvindbhai Rambhai Patel 2006, a memorandum of understanding was
executed to resolve the dispute between the members of a family. The Supreme Court held that such
memorandum agreed between the family members can be treated as „family settlement‟ and the Court
cannot interfere with this. The Court will not “easily disturb it.” Accordingly it was held as family settlement and
not as a transfer of property.
Legal Recognition:
Courts typically uphold family settlements, as they are based on pre-existing rights and titles. The Supreme Court
has ruled that such settlements are not considered transfers of property since they do not involve the
conveyance of new interests.
Relinquishment of Right
• Nature of Relinquishment: Relinquishment involves giving up one's rights or interests in a
property, leading to the extinction of those rights.
• Not a Transfer of Property: There is no intention to transfer the relinquished interest to
another person. Therefore, relinquishment does not constitute a transfer of property as
defined in Section 5 of the Transfer of Property Act.
• Potential for Conveyance: If a registered instrument, such as a release deed, explicitly
releases rights, title, and interest in favour of someone else for valuable consideration, it
may operate as a conveyance, indicating an intention to transfer.
Surrender
• Nature:
• Surrender involves merging a lesser interest (e.g., tenant’s right of residence) with a
greater interest (e.g., landlord’s ownership) without enlarging the greater interest.
• Not a Transfer of Property:
• Surrender is not considered a transfer of property as it does not create any new title or
interest; it simply returns the lesser interest to the holder of the greater interest.
• Examples:
• When a tenant vacates a property before the tenancy term ends, their right of
residence (lesser interest) merges back with the landlord’s ownership (greater interest).
Similarly, a widow surrendering her rights to reversioners is not a transfer of property.
 Compromise

• Nature:
A compromise is an agreement to settle doubtful claims between parties regarding some
property, acknowledging and defining their pre-existing or antecedent titles and interests.
• Not a Transfer of Property:
Compromise is not considered a transfer of property since it does not involve the conveyance
of new titles or interests; it merely recognizes and clarifies existing ones.
• Exceptions:
If a compromise transfers property to someone without a pre-existing title or claim, it may be
treated differently and could potentially be considered a transfer.
Charge
• Charge is not a transfer of property. Charge is created on a property for securing a
payment out of that property. When the property of a person is charged for securing
certain payments e.g. maintenance, it is simply securing personal obligation‟ out of the
property. A charge is, not transfer because the only right created under it is a right to
payment out of the property subjected to the charge.
Act convey existing property

• Conveys. In a transfer of property the 'living person' i.e. the transferor conveys the property. His
conveying is doing of the ‘act which is called transfer.
• There must be conveyance in every transfer of property.
• Conveyance means any act of the transferor by which certain new titles or interests are
created in favour of the transferee (to whom the property is being transferred).
• Definition and Necessity: Conveyance in a transfer of property involves the transferor
performing an act that creates new titles or interests in favour of the transferee. It is essential in
every property transfer, ensuring that the transferee gains a specific interest or title previously
held by the transferor.
• Creation of New Interests: For a transaction to be considered a transfer of property, it must pass
on new rights or interests to the transferee. Conveyance includes actions like making a gift or
sale, resulting in the transferee acquiring new ownership or interests.
• Legal Requirements: Conveyance requires the transferor to have the title or interest being
transferred, and it must be documented through a registered sale deed to be legally effective.
Mere agreements to sell or possession do not constitute a transfer of property
To Himself

• Requirement of Two Living Persons:

• A transfer of property under Section 5 requires two living persons: the transferor and the
transferee. One can transfer property to oneself, (e.g., as a settlor and trustee).
• Amendment of 1929:
• The 1929 amendment allows a person to transfer property to himself in a different
capacity, such as creating a trust where the person is both settlor and trustee, thus
recognizing the legal distinction between these roles.
• The definition of "transfer of property" in Section 5 applies uniformly throughout the Act,
limiting the scope of the term to transactions involving the essential elements of two
distinct legal entities or capacities
To another living person
• Existence and Nature of Transferee:
• The transferee in a property transfer must be a living person at the time of the transfer.
This can include minors, the insane, or even a child in the womb. Juridical persons like
firms, societies, companies, and corporations are also recognized as transferees.
• Competency and Existence:
• The transferee does not need to be a competent person (e.g., can be a minor or
insane) but must be in existence when the transfer occurs. Property cannot be
transferred to someone not yet born at the time of transfer.
• Juridical Persons and Religious Entities:
• Juridical persons such as companies and corporations qualify as transferees under the
Act. However, idols, despite being juristic persons capable of holding property, are not
considered 'living persons' under Section 5, making the dedication of property to a
temple not a transfer of property.
To another living person
• Living person does not include idol of God or Temple

• It does not mean that the property cannot be transferred to the idol of God or temple
• It means that if the person property to the idol of God or will not be governed by the
provisions of this Act rather the relevant religions or charitable endowments Act will be
applicable.
In present or in Future
• Immediate or Future Effect:
• The words “in present or in future” indicate that a conveyance can take effect either
immediately upon execution or at a specified future date, meaning the transferee’s
interest can arise immediately or be deferred.
• Qualification of Conveyance:
• These words qualify the action of conveying property, not the property itself. Therefore,
a transfer can pertain to property currently in existence or property that will come into
existence in the future.
• Conditions and Timing:
• A transfer can be arranged to vest property immediately or upon the fulfillment of
certain conditions, allowing flexibility in when the transferee's interest becomes
effective.