How the Act Is Arranged, and What It Does Not Cover

(d) save as provided by section 57 and Chapter IV of the Act, any transfer by operation of law or by, or in execution of, a decree or order of a Court of competent jurisdiction;

and nothing in Chapter II of the Act is to be deemed to affect any rule of Muhammadan law.

Clause (d) is the one that decides questions. A transfer by operation of law is one the law brings about without the parties choosing it: succession on death, insolvency, forfeiture, and the vesting that follows a court decree. A sale held by a court in execution of a decree is in the same category. None of these is a transfer by act of parties, so the Act's machinery does not apply to them, except as section 57 and Chapter IV, which is the law of mortgages, provide.

The saving of Muhammadan law is limited to Chapter II, meaning the general principles in sections 5 to 53A. It is the reason a hiba, a gift under Muhammadan law, does not have to satisfy section 123, which requires a registered and attested instrument. A hiba is valid on declaration, acceptance and delivery of possession. Chapter VII of the Act, which contains section 123, is not within the saving in terms, but the courts have read the saving as protecting the Muhammadan law of gifts, and the practical position is that a hiba is governed by that law.

Transfer and transmission

The Act uses the word transfer. Examiners also use its counterpart, transmission, and the pair is worth naming because the distinction is the one section 2(d) draws.

Transfer is the passing of property by the act of the parties: somebody conveys, and this Act governs it.

Transmission is the passing of property by operation of law, without any act of the parties: succession on death, devolution on an heir, vesting in an official assignee on insolvency, forfeiture, or the vesting that follows a court sale.

Three consequences follow, and they are the substance of an answer.

Transmission needs no instrument. Nothing is executed, so no question of registration or attestation arises, and the Stamp Act has no instrument to tax.

This Act does not govern it. Section 2(d) saves transfers by operation of law and in execution of a decree, save as provided by section 57 and Chapter IV.

The transmittee takes subject to what burdened the property. He steps into the previous owner's position rather than taking a fresh title, which is why a mortgage or a charge survives an inheritance.

Section 4: how this Act sits with two others

Section 4 provides that the chapters and sections of the Act which relate to contracts are to be taken as part of the Indian Contract Act 1872, and that sections 54 paragraphs 2 and 3, 59, 107 and 123 are to be read as supplemental to the Registration Act 1908.

The first half is why the Contract Act's rules on competence, free consent, lawful object and coercion apply to a transfer under this Act without being repeated in it. When section 7 says "every person competent to contract", it is pointing at sections 11 and 12 of the Contract Act.

The second half is why this subject has a Module IV at all. The four registration provisions of this Act are not free-standing; they are read together with the Registration Act, and a question about whether a sale deed had to be registered is answered from both statutes at once.

A worked example

Ramesh dies intestate, that is, without leaving a will. His flat at Dombivli passes to his two daughters as his heirs. One daughter, Sunita, later borrows money and her creditor obtains a decree, in execution of which the court sells her half share at auction to Bhavesh. Bhavesh then agrees to sell that half share to Kiran by a registered deed.

Three transfers, and only one of them is governed by this Act.

Ramesh to his daughters is succession. It happens by operation of law on his death, nobody executed anything, and it is saved by section 2(d). The Act does not apply, and neither does section 54.

Sunita to Bhavesh is a sale in execution of a decree of a competent court. It is saved by section 2(d) in terms, so the Act does not govern it either. Its validity is a question for the Code of Civil Procedure 1908 and the rules on execution sales.

Bhavesh to Kiran is a transfer by act of parties between two living persons. Section 5 is satisfied, and the Act applies in full: section 54 governs how the sale is made, section 55 sets the rights and liabilities of the two of them, and the Registration Act 1908 requires the deed to be registered.

What it does NOT mean

It does not mean the Act is confined to immovable property. Chapter II, sections 5 to 53A, applies to property of any kind, movable or immovable. The heading above section 5 says so: "Transfer of Property, whether moveable or immoveable". It is Chapters III to VII, sale, mortgage, lease, exchange and gift, that are largely about immovable property.

It does not mean the Act is exhaustive. Section 2(a) preserves other enactments, and section 2(b) preserves consistent contractual terms. The Act is a set of rules about transfers, not a code of property law.

It does not mean partition is a transfer. A partition among co-owners is generally not a transfer at all, because each co-owner already had an interest in every part and partition merely works out what belongs to whom. Nothing new is conveyed.

It does not mean a court sale can never touch the Act. Section 2(d) itself excepts section 57 and Chapter IV, and the doctrine of lis pendens in section 52, taught in [Lis Pendens], applies to transfers made while a suit is pending.

Distinctions

Quick revision

• The Act came into force on 1 July 1882 and is Act 4 of 1882.
• It applies to the whole of Maharashtra; the exemption power in section 1 targets sections 54 paragraphs 2 and 3, 59, 107 and 123, the four registration provisions.
• Section 2 saves: other unrepealed enactments; consistent contractual terms; rights under pre-Act legal relations; and, save as provided by section 57 and Chapter IV, transfers by operation of law or in execution of a decree.
• Chapter II does not affect any rule of Muhammadan law, which is why a hiba need not meet section 123.
• Section 4: the contract provisions of this Act are part of the Contract Act 1872; sections 54 paragraphs 2 and 3, 59, 107 and 123 are supplemental to the Registration Act 1908.
• Chapter II applies to movable and immovable property alike.

Test yourself

1. A house is auctioned by a court in execution of a money decree. Does the Transfer of Property Act govern the sale? No. Section 2(d) saves any transfer by, or in execution of, a decree or order of a competent court, save as provided by section 57 and Chapter IV. The sale is governed by the Code of Civil Procedure 1908.

2. Does the Act apply to movable property? Yes, in Chapter II. Sections 5 to 53A apply to property of any kind, and the heading above section 5 says "whether moveable or immoveable". The chapters on sale, mortgage, lease, exchange and gift are mainly concerned with immovable property.

3. Why does a Muslim gift not need a registered instrument under section 123? Because section 2 provides that nothing in Chapter II is to be deemed to affect any rule of Muhammadan law, and the courts have applied that saving to the law of gifts. A hiba is complete on declaration, acceptance and delivery of possession.

4. What does section 4 do? Two things. It makes the provisions of this Act which relate to contracts part of the Indian Contract Act 1872, so that Act's rules on competence and consent apply here. And it makes sections 54 paragraphs 2 and 3, 59, 107 and 123 supplemental to the Registration Act 1908.

5. Is a partition between two brothers a transfer under this Act? Generally no. Each co-owner already holds an interest in the whole, and partition adjusts possession and title between them rather than conveying anything new, so there is no transfer within section 5.