Election
Chapter Fourteen
Syllabus topic 1.2, "Election"
Pages 72 to 77 of 378
In one line
You cannot keep a gift from a document and at the same time reject the part of the document that takes something of yours away.
In exam wording: section 35 provides that where a person professes to transfer property which he has no right to transfer, and as part of the same transaction confers a benefit on the owner of that property, the owner must elect either to confirm the transfer or to dissent from it, and if he dissents he must relinquish the benefit conferred.
Why the doctrine exists
The principle is older than the Act and is usually put in one sentence: he who takes a benefit under an instrument must give full effect to that instrument. It is sometimes called the doctrine of approbate and reprobate, meaning you cannot approve and disapprove of the same thing.
The mischief is easy to picture. A person makes a deed which gives away something belonging to somebody else and, in the same breath, gives that somebody else a benefit out of his own property. The obvious intention is a swap. If the owner could pocket the benefit and also keep his own property, he would take twice and the transferor's plan would be defeated at the expense of the innocent transferee.
Election is the law's answer. The owner is not compelled to give up his property; his ownership is untouched. He is simply put to a choice: take under the instrument, or take against it, but not both.
Broken down: when the duty to elect arises
Three conditions must be present, and they are all in the opening words.
One, the transferor must profess to transfer property which he has no right to transfer. "Professes" is important: he holds himself out as transferring it. He need not own it, and the section adds expressly that the rule applies whether or not the transferor believes the property to be his own. So an honest mistake produces the same duty to elect as a deliberate over-reach.
Two, he must, as part of the same transaction, confer a benefit on the owner of that property. One transaction, two limbs. If the benefit comes from a different document or a different occasion, there is nothing to elect between.
Three, the benefit must be conferred on the owner of the property professed to be transferred. A benefit conferred on somebody else raises no election.
The consequences of the choice
If the owner confirms, the transfer takes effect and he keeps the benefit. Both limbs of the instrument operate.
If the owner dissents, he keeps his own property and must relinquish the benefit, and the relinquished benefit reverts to the transferor or his representative as if it had not been disposed of.
Election
But the section attaches a charge to the reverting benefit in two situations, and this is the part most often missed:
- where the transfer was gratuitous and the transferor has, before the election, died or otherwise become incapable of making a fresh transfer; and
- in all cases where the transfer is for consideration.
In those cases the reverting benefit carries the charge of making good to the disappointed transferee the amount or value of the property attempted to be transferred to him.
The Act's illustration shows both halves:
The farm of Sultanpur is the property of C and worth Rs. 800. A by an instrument of gift professes to transfer it to B, giving by the same instrument Rs. 1,000 to C. C elects to retain the farm. He forfeits the gift of Rs. 1,000.
In the same case, A dies before the election. His representative must out of the Rs. 1,000 pay Rs. 800 to B.
So while A is alive and the transfer is gratuitous, the whole Rs. 1,000 simply goes back to A; A can make fresh arrangements for B if he wishes. Once A is dead and cannot, the law compensates the disappointed transferee B out of the returning fund, to the value of the property attempted to be transferred, which is Rs. 800, and the balance of Rs. 200 stays with A's estate.
Four supplementary rules
The section then adds four rules, and they are examined as a set.
The transferor's belief is irrelevant. The rule applies whether or not he believes the property to be his own.
An indirect benefit does not require election. A person taking no benefit directly under the transaction, but deriving a benefit under it indirectly, need not elect.
Different capacities are treated separately. A person who in one capacity takes a benefit under the transaction may in another capacity dissent from it. So a man who takes a legacy personally and is also a trustee of the property professed to be transferred is not fixed in both roles by one choice.
The exception: a benefit expressed to be in lieu. Where a particular benefit is expressed to be conferred on the owner in lieu of the property the transferor professes to transfer, then if the owner claims his property he must relinquish that particular benefit, but he is not bound to relinquish any other benefit conferred on him by the same transaction.
This exception rewards precise drafting. If the deed says plainly "and in place of the farm I give C Rs. 1,000", C loses only the Rs. 1,000 if he keeps the farm, and any separate legacy in the same deed is safe. Where nothing is expressed to be in lieu, the general rule bites and everything taken under the instrument is at risk.
Election
How an election is made
By acceptance, with knowledge. Acceptance of the benefit constitutes an election to confirm the transfer, if the person is aware of his duty to elect and of the circumstances which would influence the judgment of a reasonable man in making an election, or if he waives enquiry into those circumstances.
A presumption after two years. Such knowledge or waiver is presumed, in the absence of evidence to the contrary, if the person has enjoyed the benefit for two years without doing any act to express dissent.
By an act that cannot be undone. Knowledge or waiver may be inferred from any act of his which renders it impossible to place the persons interested in the property in the same condition as if the act had not been done. The Act's illustration: A transfers to B an estate to which C is entitled, and as part of the same transaction gives C a coal-mine; C takes possession of the mine and exhausts it; he has thereby confirmed the transfer of the estate to B.
A requisition after one year. If the owner does not, within one year after the date of the transfer, signify to the transferor or his representatives his intention to confirm or dissent, they may require him to elect. If he does not comply within a reasonable time after receiving the requisition, he is deemed to have elected to confirm the transfer.
Disability postpones election. In case of disability, the election is postponed until the disability ceases, or until an election is made by some competent authority.
Note the shape of those rules. Silence alone never amounts to election; what converts silence into a choice is either two years of enjoyment, an irreversible act, or a failure to answer a requisition.
A worked example
Gopal owns a shop at Nagpur worth Rs. 20 lakh. His uncle Harish, by a single registered gift deed, purports to give that shop to his friend Ishaan and, by the same deed, gives Gopal a plot at Wardha worth Rs. 30 lakh.
Harish had no right to give Gopal's shop. He confers a benefit on Gopal, the owner of that shop, by the same transaction. Gopal must elect.
If Gopal confirms, Ishaan takes the shop and Gopal keeps the Wardha plot.
If Gopal dissents, he keeps his shop and must relinquish the Wardha plot, which reverts to Harish as if it had never been given.
If Harish has died before Gopal elects, and Gopal dissents, the reverting plot carries a charge to make good to Ishaan the value of the shop, Rs. 20 lakh, and the balance of Rs. 10 lakh goes to Harish's estate. Gopal keeps his shop; Ishaan is compensated; nobody takes twice.
Election
If the deed had said "and in lieu of the shop I give Gopal the Wardha plot", and had also separately given Gopal a car, the exception applies. Gopal keeping the shop loses the plot only, and keeps the car.
If Gopal takes the Wardha plot, builds on it and sells it, he has done an act which makes it impossible to restore the parties to their former position, and he is taken to have confirmed the transfer of the shop to Ishaan.
If Gopal says nothing for eighteen months but has been drawing rent from the plot, no presumption arises yet; two years have not passed. Harish may serve a requisition, and if Gopal does not answer within a reasonable time he is deemed to have confirmed.
What it does NOT mean
It does not divest the owner of his property. Election never takes the property away. It only forces a choice between keeping it and keeping the benefit.
It does not depend on the transferor's honesty. The section applies whether or not he believed the property was his.
It does not apply to an indirect benefit. Only a benefit taken directly under the transaction raises the duty.
Dissent does not always mean the disappointed transferee goes uncompensated. The charge applies wherever the transfer was for consideration, and also where it was gratuitous but the transferor has died or become incapable before the election.
Two years is a presumption, not a rule of law. It operates "in the absence of evidence to the contrary".
The one-year period is not a deadline for electing. It is the point at which the transferor may require an election. What forfeits the choice is failing to answer the requisition in a reasonable time.
Distinctions
| Owner confirms | Owner dissents | |
|---|---|---|
| His own property | Passes to the transferee | He keeps it |
| The benefit | He keeps it | He relinquishes it; it reverts to the transferor |
| Disappointed transferee | Takes the property | Compensated out of the reverting benefit where the transfer was for consideration, or was gratuitous and the transferor has died or become incapable |
| General rule | Exception, benefit expressed to be in lieu | |
|---|---|---|
| What the owner forfeits on claiming his property | Every benefit taken under the transaction | Only the particular benefit expressed to be in lieu |
| Other benefits in the same deed | At risk | Safe |
| Way an election is made | Trigger |
|---|---|
| Acceptance | With knowledge of the duty and the circumstances, or waiver of enquiry |
| Presumption | Two years' enjoyment without an act of dissent |
| Inference | An act making restoration impossible, such as exhausting a mine |
| Deemed confirmation | Failure to comply with a requisition within a reasonable time, the requisition being available after one year |
Election
Quick revision
- The maxim: he who takes a benefit under an instrument must give full effect to it.
- Three conditions: the transferor professes to transfer property he has no right to transfer; he confers a benefit on the owner of that property; both in the same transaction.
- It applies whether or not the transferor believed the property was his.
- Dissent means relinquishing the benefit, which reverts to the transferor.
- The reverting benefit bears a charge to compensate the disappointed transferee to the value of the property attempted to be transferred, where the transfer was for consideration, or was gratuitous and the transferor has died or become incapable before the election.
- Illustration: Sultanpur farm worth Rs. 800, gift of Rs. 1,000 to C. C keeps the farm and forfeits Rs. 1,000. If A has died, Rs. 800 of it goes to B.
- Indirect benefit, no election. Different capacities, separate choices.
- Exception: a benefit expressed to be in lieu costs the owner only that benefit.
- Election by acceptance with knowledge; presumed after two years' enjoyment; inferred from an irreversible act; deemed on failure to answer a requisition, available after one year. Disability postpones it.
Test yourself
1. State the three conditions for election under section 35. The transferor professes to transfer property which he has no right to transfer; as part of the same transaction he confers a benefit on the owner of that property; and the person put to election is that owner.
2. Does it matter that the transferor honestly thought the property was his? No. Section 35 provides that the rule applies whether or not the transferor believes that which he professes to transfer to be his own.
3. A, by gift, purports to give C's farm worth Rs. 800 to B, and gives C Rs. 1,000 by the same deed. C keeps the farm and A is alive. What happens to the Rs. 1,000? C forfeits it and it reverts to A as if it had not been disposed of. Because the transfer was gratuitous and A is alive and able to make a fresh transfer, no charge arises in B's favour.
4. Same facts, but A dies before C elects. What does B get? A's representative must pay B Rs. 800 out of the Rs. 1,000, that being the value of the property attempted to be transferred to B. The remaining Rs. 200 stays with A's estate.
5. When is a person presumed to have elected to confirm merely by enjoying the benefit? Where he has enjoyed it for two years without doing any act to express dissent, in the absence of evidence to the contrary.
Election
6. What is the effect of a benefit being expressed to be "in lieu of" the property? The owner who claims his property must relinquish that particular benefit only, and is not bound to relinquish any other benefit conferred by the same transaction.
7. Does a person who benefits only indirectly have to elect? No. The section provides that a person taking no benefit directly under a transaction, but deriving a benefit under it indirectly, need not elect.
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself, or the past papers, for the same subject.