Transfer by a Person Authorised Only in Certain Circumstances, and Property Charged with Maintenance

Two features of the section are worth marking. It creates a deemed fact, not merely a defence: the necessity is treated as having existed. And it binds not only the transferor but the "other persons affected by the transfer", which is what makes it useful, since those persons, the reversioners or the minor, are the ones who would otherwise attack the sale.

Reasonable care is the working test and it means real enquiry, not a recital in the deed. A buyer who accepts the seller's word without asking anything has not used reasonable care, and a clause in the sale deed saying that necessity exists proves nothing by itself.

Section 39: property charged with maintenance

The provision. Where a third person has a right to receive maintenance, or a provision for advancement or marriage, from the profits of immovable property, and that property is transferred, the right may be enforced against the transferee if he has notice of it or if the transfer is gratuitous; but not against a transferee for consideration and without notice of the right, nor against the property in his hands.

Advancement here means a provision made to set a child up in life, and the section groups it with maintenance and marriage expenses because all three are provisions for a dependant.

The 1929 amendment matters and is examinable. As originally enacted the section applied where the property was transferred "with the intention of defeating such right". Those words were omitted in 1929. So the transferor's intention is now irrelevant: the question is only whether the transferee had notice or took gratuitously. That change turned a section about fraud into a section about notice, and it made the right far easier to enforce.

Who is protected and who is not. The transferee is safe only if he is both a transferee for consideration and without notice. A donee takes subject to the right however innocent he is, because he has parted with nothing. A purchaser who knew, or who is fixed with constructive or imputed notice under section 3, takes subject to it.

That is where this chapter connects to [The Interpretation Clause: Attestation, Notice and the Words the Act Runs On]. A buyer will often be fixed with notice by Explanation II to section 3, because the person entitled to maintenance is frequently living in the very house.

The limit of the right. Section 39 does not give the dependant an interest in the property. It gives a right enforceable against the property in the hands of the wrong kind of transferee. And section 6(dd) makes the right to future maintenance itself untransferable, so the dependant cannot sell it.

A worked example

Kamala, a widow, holds her late husband's land at Latur as a limited owner, her husband having left collateral heirs. Her mother-in-law Sarojini has a decree entitling her to maintenance of Rs. 10,000 a month out of the profits of that land, and lives in the house on it.

Kamala sells a field to Ravi, telling him that the income is not enough to maintain her. Ravi examines the revenue records, asks the neighbours and the village officer about the income, satisfies himself that the sale is necessary, pays the price and takes the deed. Years later the collateral heirs sue to set the sale aside, proving that Kamala had other income she had concealed.

Section 38 answers them. Ravi is a transferee for consideration; Kamala alleged the circumstances; Ravi used reasonable care and acted in good faith. As between Ravi on one side and Kamala and the collateral heirs on the other, the necessity is deemed to have existed, and the sale stands.

Change the facts: Ravi asked nothing at all and simply relied on a recital in the deed. He has not used reasonable care, section 38 does not protect him, and the heirs may have the sale set aside.

Now Sarojini's maintenance. If Ravi bought for consideration and genuinely knew nothing of the decree, the maintenance cannot be enforced against him or against the field in his hands. But Sarojini was living in the house. Under Explanation II to section 3, Ravi is deemed to have notice of the title of a person in actual possession, so in practice he will be fixed with notice and takes subject to her right.

If Kamala had gifted the field to her nephew instead of selling it, the nephew takes subject to Sarojini's right whether or not he knew of it, because the transfer is gratuitous.

What it does NOT mean

Section 38 does not validate every sale by a limited owner. It protects only a transferee for consideration who made real enquiry and acted honestly.

A recital of necessity is not reasonable care. The enquiry must actually be made.

Section 38 does not apply to movable property. The words are "immoveable property".

Section 39 no longer requires an intent to defeat the right. Those words were omitted in 1929, and citing them is a dated answer.

Section 39 does not create an interest in the property. It creates a right enforceable against certain transferees.

Being a purchaser is not enough under section 39. The transferee must be for consideration and without notice, and notice includes constructive and imputed notice under section 3.

Distinctions

Quick revision

• Section 38 protects a purchaser from a person authorised to sell only in circumstances of a variable nature, for example legal necessity.
• Conditions: immovable property; transfer for consideration; the circumstances alleged; reasonable care used to ascertain them; good faith.
• Effect: the circumstances are deemed to have existed as between the transferee and the transferor and other persons affected.
• The Act's illustration is the Hindu widow selling a field for maintenance, with B making reasonable enquiry.
• Section 39: a right to maintenance, advancement or marriage out of the profits of immovable property is enforceable against a transferee with notice or a gratuitous transferee, and not against a transferee for consideration without notice.
• The words "with the intention of defeating such right" were omitted in 1929, so intention is irrelevant.
• Notice includes constructive and imputed notice, and Explanation II to section 3 often fixes a buyer with it where the dependant is in possession.
• Section 6(dd) makes the right to future maintenance itself untransferable.

Test yourself

1. What are "circumstances in their nature variable"? Circumstances on which a limited authority to sell depends and which come and go, such as the legal necessity that permits a Hindu widow holding a limited estate, or a guardian, or a family manager, to sell.

2. State the conditions a transferee must satisfy under section 38. The property must be immovable; the transfer must be for consideration; the transferor must have alleged the existence of the circumstances; and the transferee must have used reasonable care to ascertain their existence and acted in good faith.

3. Is a recital of legal necessity in the sale deed enough? No. Section 38 requires the transferee to have used reasonable care to ascertain that the circumstances existed, which means actual enquiry. A recital is the seller's own assertion.

4. Why was the phrase "with the intention of defeating such right" removed from section 39? Because it made the dependant prove the transferor's state of mind, which was often impossible. Since 1929 the section turns on the transferee's notice or the gratuitous character of the transfer.

5. A widow entitled to maintenance out of a house lives in it. The house is sold to a buyer who says he never heard of her claim. Is he bound? In practice yes. Explanation II to section 3 deems a person acquiring immovable property to have notice of the title of anyone in actual possession, so he is fixed with notice and section 39 lets the right be enforced against him.

6. Does a donee take free of a maintenance right if he knew nothing about it? No. Section 39 protects only a transferee for consideration without notice. A gratuitous transferee is bound whatever he knew.