Transferability of Property
Transfer of any non-transferable property is void. It may be stated, therefore, that transferability of property is the general rule, its non-transferability is an exception. According to Section 6, property of any kind may be transferred except:
a. Properties which cannot be transferred by any law, for the time being, in force in India, and
b. The properties which cannot be transferred otherwise as given in this Act.
Non-transferable under any other law
Section 6 recognises the non-transferability of any property also under other laws in force in India. For example, under Hindu Law coparcenary property is regarded as non-transferable and there is restriction on the transfer of such property. Similarly, a property dedicated to God, being of religious use, is also non-transferable under Hindu Law.
Non-transferable under Section 6 –
Section 6 lays down ten kinds of specific properties or interests which cannot be transferred. These non-transferable properties are given in the following clauses:
(1) Clause (a) : Spes-Successionis—Spes- Successionis means expectation of succession. Expectation of succession is expecting or having a chance of getting a property through succession (inheritance or will). It is merely a possibility of getting certain property in future. Spes-successionis under this clause includes:-
(1) Chance of an heir-apparent succeeding to an estate,
(2) Chance of a relation obtaining a legacy on the death of a kinsman or,
(3) Any other mere possibility of a like nature.
Chance of an heir-apparent – Father and son are entitled to inherit the property of each other. If father dies first, the son becomes father’s heir and inherits the properties of his father. But if son dies first i.e., while the father is still alive, he cannot inherit father’s property. Who would die first, i.e. who survives whom, is not known because it is uncertain future event. Accordingly, during the life of father, the son cannot be called as his heir; he is simply heir-apparent of his father. An heir-apparent has only a chance of inheriting the property subject of two possibilities (1) he survives the properties and (2) the propositus dies intestate i.e without making any will. It is a bare or naked right which does not create any interest in favour of the heir-apparent. Law cannot treat it as a present fixed right in the property. Therefore, chance of an heir-apparent is a non-transferable property.
(i) A has a wife W and a daughter D. During the life of A, D released her share in A’s property in consideration of Rs. 1000 which was paid to her by her father A. A dies and D claims her 1/3 share under Muslim law of inheritance.
W (her mother) resists her claim on the ground that since D had already transferred her share by a release-deed on consideration of Rs. 1000, she is not entitled to get 1/3 share. Held: the release is no defence because it is a transfer of Spes-successionis. Before A’s death D was merely an heir-apparent and had no right in her 1/3 share. The release-deed executed by her. However she is bound to bring into account Rs. 1000 which she received from her father.
Rights of reversioners under old Hindu Law – Under old Hindu Law, the rights of a reversioner i.e. ‘reversionary right’ was merely a chance of getting properties and as such it was Spes-successionis. Reversioner was a person who used to inherit the properties of a widow held by her for life. Such persons were called reversioners because during the life of the widow, their rights of inheritance were suspended but it reverted to them after widow’s death provided they survived her. Being a Spes-successionis the agreement to transfer the properties by a reversioner was not valid.
Chance of a legacy – Further, it is the last will which prevails and if two or more wills have been executed in favour of different persons, only the legatee under the last will is entitled to get the property. Accordingly, where a person executes any will, before the death of that testator, the legatee has simply a chance of getting property because (1) the legatee may not survive the testator and (2) the will in his favour might not be the last will.
Any other possibility of a like nature – Other possibilities of a like nature must be interpreted to mean possibilities belonging to the same category as the chance of n heir-apparent or the chance of a relation obtaining legacy. Thus, future wages of a servant before they are actually earned by him, are mere possible interest and as such cannot be sold, attached or otherwise transferred. Where a fisherman contracts to transfer the fish which he would get in his next catch before throwing his net, the transfer would be a transfer of mere possible interest of the same kind as that of a chance of an heir-apparent receiving property in future.
Right to receive future offerings—Right to receive offerings of a temple or shrine is a proprietary right or beneficial interest. It is, therefore, property. Offerings which have actually been made in the temple are present property. Thus, share of a priest in the net-balance of the offerings already made to an idol may be attached.
The Supreme Court has now settled the law. In Badrinath v. Punna, held that the right to receive the offerings being coupled with duties other than those involving personal qualifications, therefore, transferable and could be inherited. The Apex Court observed that it did not depend on any possibility of the nature referred to in Section 6(a) of the T.P. Act. In this case the right to receive the future offerings at the sacred temple of Shri Vaishno Devi Ji was held to be heritable right (interest).
The ‘possibilities’ as referred to in this clause are in the nature of uncertain future interest subject to several possibilities. Law cannot take the risk of recognising any interests subject to several possibilities. It may be noted that contingent interest as provided in Section 21 of this Act is also a possible interest depending on uncertain future event. But contingent interests are transferable interests because here the possibilities are couples with some interest, they are not bare possibilities.
The Supreme Court has also endorsed this line of decisions. The heir apparent received advantage for giving up his future right to property. It was held that he could not be allowed to claim the benefit of the doctrine of spes successionis as embodied in Section 6. He was to be estopped from claiming share in the inheritance (Shetammal v. Hasan Khani Rawther, AIR 2011 SC 3609, (2011) 9 SCC 223).
(English Law) – If the transfer of spec-successionis is supported by some consideration, the transfer is not void ab initio under the English equity. In other words, transfer of expectancy for value has been protected by equity. The result is that if an heir-apparent transfers the property and the transfer is for valuable consideration then, when that heir-apparent becomes legal heir and gets interest in that property, the equity shall compel him to pass on the title to the transferee.
(2) Clause (b): Mere Right of Re-entry – Section 6(b) provides that mere right of re-entry cannot be transferred. Where a person gives the possession of his property to another for a certain period and is afterwards entitled to get it back, his right of entering into the possession of that property once again, is technically called as his right of re-entry. The right referred to in this clause is similar to be the right of a lessor under Section 111(g) of this Act where a lessor is entitled to terminate the lease if lessee commits breach of any condition imposed by him (lessor). For example, a landlord lets out his house and imposes a condition that the tenant must not make any alteration in the house. Upon the breach of this condition by he Tenant, the landlord has right to terminate the tenancy whereby he would resume the possession before expiry of the term of tenancy. This right of the landlord is his right of re-entry.
Section 6(a) prohibits the ‘mere’ right of re-entry because personal licence cannot be transferred unde the law. But right of re-entry coupled with any other interest in the land is transferable together with that interest.
(i) A lets out his house to B for five years subject to a condition that B shall not sub let it to any other person. B sub lets the house in violation of the express prohibition. A has right to terminate the tenancy, i.e. has right of re-entry. But during tenancy (before expiry of the term of five years) A sells the house to C, C has a right to terminate the tenancy of B because A transfers to C not only right of re-entry but also other interest, namely, ownership to C.
(3) Clause (c): Easement Apart from Dominant Heritage — Easement is a right which exists for the beneficial enjoyment of a land and is exercised upon the land of another person. The land or tenement (house) for whose beneficial enjoyment this right exists is called dominant heritage and the land or tenement upon which the right is exercised is called servient heritage. For example, A who is owner of a house has a right of way upon the land owned by B so that he may reach the main road. A’s house is dominant heritage and the land of B is servient heritage. A’s right of way is easementary right. Although this right is exercised by A but it exists for beneficials enjoyment of A’s house; therefore, technically, the right is not of A i.e., it is not his personal right but a right attached to the house. Since this right is part an parcel of this house i.e. the dominant heritage, it cannot be severed or detached from it.
Clause (c) provides that an easement cannot be transferred apart from the dominant heritage. But, when the dominant heritage itself is transferred, the easementary right appurtenant (attached) to it is by itself transferred together with the dominant heritage.
(4) Clause (d) : Restricted Interest – Under this clause an interest in property restricted in its enjoyment to the owner personally has been made non-transferablel. Beneficial interests or an interest by virtue of which a person derives certain benefit is the property of that person. It is restricted to his own enjoyment. As a matter of fact, such interests are created in favour of a person only due to his (her) personal qualifications. Such interests are, therefore, purely personal in nature and may be called personal rights which are non-transferable. For example, a teacher’s right to teach is his beneficial interest but this right is given to him only due to his personal qualifications. Although it is his beneficial interest, he cannot transfer it because only he, on the basis of his qualifications; has been given this right by the institution. He can transfer his watch but he cannot transfer his beneficial interestof teaching. The reason behind making personal interests (and thereby making it non-transferable) is that the transferee may not have that personal qualification which the holder of such interest has. Such interests are, therefore, res extra commercium (things beyond any trade or transaction).
Religious offices, such as the office of Shebait or Pujari who performs religious services in a temple, or Mahant of a Mulla or Mutawali of a wakj are all restricted interests because these offices are held by the persons concerned only on the ground of their personal qualifications.
(5) Clause (dd) : Right to Future Maintenance – Where a person is entitled to receive maintenance allowance, it is his personal right because it is given or is promised to be given in future solely for his own benefit. As such, the right to future maintenance is a restricted which is non-transferable under Section 6(d) discussed earlier.
Maintenance may be granted to a person either by personal contract or under a decree of the Court of Law. According to Madras High Court, right to future maintenance, when granted under a decree of Court was a secured right and was transferable. The amending Act, 1929 has inserted clause (dd) to resolve this judicial conflict. Under Clause (dd) the right to future maintenance is now non-transferable right even if it has been granted under any decree of the Court of Law.
It may be noted that under this clause there is prohibition on the transfer of future maintenance granted under a decree. The assignment of the decree for maintenance which has already accrued due shall be a valid assignment because arrears become debt and as such, can be attached or sold.
(6) Clause (e) : Mere Right to Sue – Right to sue for a certain sum of money is actionable claim. Actionable claim is a claim for a certain amount of money and can be transferred. But right to sue for uncertain or indefinite sum of money is not transferable. Under Section 6(e) right to sue means right to sue for the claim of any uncertain sum of money. Claim for an uncertain sum of money arises where the claim is for unliquidated damages either in tort or in contract or where the claim is for any amount which is not fixed.
(i) A publishes defamatory statements against B. Under the law of tort B has a right to claim damages from A. B thinks that he must sue A claiming Rs. 50,000/- as damages. But, instead of filing the suit himself B assigns this right to C. C sues A claiming Rs. 50,000/- from him for the defamation of B. The assignment (transfer) of right to sue for damages by B to C is invalid because it is non-transferable right under Section 6(e). C has, therefore, no right to claim damages from A and his suit is not maintainable.
Claims of mesne profits is also a claim for an indefinite sum of money like damages: therefore, mere right to claim mesne profits is non-transferable under Section 6(e ). Mesne Profits means profits or produce of a property which is in the unlawful or adverse possession of a person who is not entitled to possess it. When the property comes in the possession of the person who is legally entitled to it, he may claim mesne profits from the possessor holding property adversely to him.
(i) The social policy underlying the non-transferability of mere right to sue for unliquidated damages is to prohibit the practice of gambling out of litigation.
Use of the word ‘mere’ is significant. Under this clause, it is the ‘mere’ right to sue’ which is non-transferable. If the right to sue is not a bare or ‘the only right’ but involves also an interest in the property, the right to sue is assignable.
In Jaffer Meher Ali v. Budge Budge Jute Mills, under a contract A agrees to sell certain quantity of gunny bags to B. The gunny bags were agreed to be delivered by A to B on a future date. But before the expiry of the due date B assigns his beneficial interest in the said gunny bags to C. Thus, instead of B, the beneficial interest in the gunny bags was now with C. Thereafter A fails to deliver the bags before expiry of the due date and thereby committed a breach of contract (between A and B). C was entitled to sue A for damages because B had assigned to C not only the right to sue for breach of contract but also the beneficial interest in the gunny bags.
Where the right to sue is connected with a business and the whole business is transferred, the right to sue is automatically transferred.
The property of a minor was sold by his father as natural guardian but the sale was neither with the permission of the court nor for legal necessity, therefore, it was voidable at the instance of his son who was the real owner. Any person purchasing from the natural guardian obtains only defeasible title. The Supreme Court held that a purchaser of the property form the son (after his attaining majority) would be entitled to file a suit for setting aside the sale by guardian (father) within three years after the minor attained majority.
Transfer of a decree – Decree is property of the decree holder but it is neither an actionable claim nor a ‘mere right to sue’. For example, assignment of decree for mesne profits is a valid transfer.
(7) Clause (f) : Public Office & Salary of Public Officer – The reason why these interests are non-transferable is, to ensure the dignity to the office held by a person appointed for qualities personal to him and getting salary for due discharge of his public duties.
Right to hold an office by virtue of which a person derives certain pecuniary gain is his beneficial interest whether that office is public or private. In both the cases a person is entitled to hold an office only because of his personal qualifications. As such, this right is a restricted interest. Right to hold a private office would come under clause (d) whereas right to hold public office comes under clause (f).
The salary of a public officer whether before or after it has become due, is also non-transferable. However, leaving apart a minimum amount for bare subsistence (exempted from attachment) the remaining salary can be attached in execution of a decree under Section 60 of the Civil Procedure Code.
A younger brother agreed to pay a certain part of his earnings to his elder brother in consideration of the latter (elder brother)providing him (younger brother) maintenance and education in the past The Madras High Court held that this agreement was not hit by clause (f) merely because the younger brother become a Government servant. The court observed that the agreement was not an agreement for the transfer of salary: the amount agreed to be paid could be paid from any other source. It is significant to note that the prohibition under this clause is regarding direct transfer of salary i.e. transfer or assignment from its source. Once the salary comes into the hands of a public servant, it becomes his property and is not subject to any restriction on its disposal.
(8) Clause (g) : Pensions and Stipends – Under clause (g) the stipends allowed to military, naval, air force and civil pensioners of the Government and the political pensions, cannot be transferred. Pensions, stipends etc. of the Government servants or the political pensions (to the freedom fighters) are given to the person concerned only because of his past services or personal merits, therefore, these interest are personal to the recipient. Transferability of such interests would defeat the very purpose for which these interests exist.
Pension means a periodical allowance or stipend granted not in respect of any right or privilege or because of an offence but on account of past services or particular merits or as compensation to the families and dependents.
Under Section 60 of the Civil Procedure Code, the pension of a pension-holder has been exempted from attachment. However, the prohibition under clause (g) does not apply to private pensions and such pensions can be attached or sold.
(9) Clause (h) : Transfer Opposed to Nature of Interest etc. –
Clause (h) provides that no transfer can be made in the following cases –
i. Where the transfer is opposed to the nature of interest created thereby
ii. Where the transfer is for an unlawful object or consideration
iii. Where the transfer is made to a person who is legally disqualified to be transferee.
(i) Transfer opposed to Nature of interest – There are certain properties which by their very nature can neither be owned nor transferred. For example, air, light, space, sea are such properties which in their natural form are nobody’s property. Such properties are called res communes i.e. property of the whole community of the world. Thus, A who is owner of a piece of land, cannot sell only 100 sq. meters of light, air or space above his land to B without selling him the land.
(ii) Transfer where its object or consideration is unlawful – Any property which is otherwise transferable shall become non-transferable if the object or consideration of the transfer is unlawful within the meaning of Section 23 of the Indian Contract Act, 1872.
Under the sub-clause, the object or consideration of a transfer of property is unlawful in the following situations:
(a) It is forbidden by law
(b) It is of such nature that if permitted it would defeat the provision of any law or,
(c) It is fraudulent or,
(d) It involves injury to a person or property of the other or,
(e) It is immoral or opposed to public policy.
Right to grow opium without a licence is forbidden under the opium Act. Therefore, sale of a farm for growing opium is unlawful and the transfer is void.
Where the object (purpose) of a transfer is to defeat or negative the effect of any provision of law, the object is unlawful because law is made for being followed not for being violated or exploited. Thus, transfer of property by an insolvent would defeat the provisions of the Insolvency.
Where a property is transferred or is agreed to be transferred in order to cause injury to a person or his property, the property is for an unlawful object. If A gives to B Rs. 1000 so that B assaults C or commits his murder or, destroys C’s house by burning it, the transfer of Rs. 1000 is void being unlawful. Transfer of property is void if its purpose is immoral or against public policy. Lease of house to be used as gambling den or as a brothel is void if the lessor (landlord) has knowledge that it is to be used for such immoral purposes. But, transfer of property for past illicit relationship has been held valid as being a gift motivated for past services (cohabitation) not with object of an unlawful purpose.
Property transferred as consideration for withdrawal of a prosecution or money or property given to an official as bribe is illegal being opposed to public policy.
(iii) Transfer made to a disqualified transferee – As discussed in Section 5 of the Act, any living person in existence can be a competent transferee. But, the transferee must not be legally disqualified to be a transferee. Under Section 136 of this Act, Judges, legal practitioners or officers connected with any Court or justice are incompetent transferee in any dealings of actionable claims. Thus, an actionable claim is otherwise transferable but when it is transferred to a Judge or an officer of the Court, it becomes a non-transferable property.
(10) Clause (i): Untransferable Right of Occupancy – As a general rule occupancy rights or the leasehold properties are transferable interests. But this clause makes an exception to this general rule. Similar exception has been made in the proviso to Section 108(i) of this Act dealing with the transferability of leases in general. Under Section 6(i), a tenant having transferable right of occupancy cannot transfer his right to another person.
When India became independent, the States of this country enacted their own land laws to regulate their respective agricultural lands etc. U.P.Z.A. & L.R. Act in Uttar Pradesh, Madhya Pradesh L.R.C. or Rajasthan Z.L.R. etc. Therefore, Section 6(i) of the Transfer of Property Act has now become almost irrelevant.