BLS LLB 5 Years Sem 7 Transfer of Property Act and Easement Act 2022-23 - ATKT Question Paper with Solutions

Section 9: a transfer of property may be made without writing in every case in which a writing is not expressly required by law. Such a transfer is an oral transfer.

The Transfer of Property Act does not define moveable property. The definition is in section 3(36) of the General Clauses Act, 1897: "moveable property" shall mean property of every description, except immoveable property.

The Registration Act, 1908, section 2(9), is fuller: it includes standing timber, growing crops and grass, fruit upon and juice in trees, and property of every other description except immoveable property.

Two of the modes in Chapter V of the Indian Easements Act, 1882:

1. Unity of ownership, section 46. An easement is extinguished when the same person becomes entitled, in the same right, to the whole of both the dominant and the servient heritages. An easement is by definition a right over land not one's own, so it cannot survive the union.
2. Non-enjoyment, section 47. A continuous easement is extinguished when it totally ceases to be enjoyed for twenty years, and a discontinuous easement when it is not enjoyed for twenty years, the period being counted backwards from the suit in which the easement is questioned.

Others include release (section 38), revocation under a reserved power (section 39), expiry of the period or the happening of a dissolving condition (section 40), the end of the necessity (section 41), the easement becoming useless (section 42), and the destruction of either heritage (section 45).

Section 92: a person who redeems a mortgage acquires, so far as regards redemption, foreclosure or sale, the same rights as the mortgagee whose mortgage he redeems had against the mortgagor or any other mortgagee. He is said to be subrogated to that mortgagee's rights.

It is available to the persons in section 91, but not to the mortgagor.

Section 52, expressing ut lite pendente nihil innovetur: during the pendency of a non-collusive suit in a competent Court in which a right to immoveable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party so as to affect the rights of any other party under the decree, except under the authority of the Court.

The maxim. Quod approbo non reprobo: a person who takes a benefit under an instrument must accept the whole of it, and cannot approbate and reprobate.

Section 35. 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; if he dissents he must relinquish the benefit, which then reverts to the transferor or his representative.

Three conditions

1. The transferor professed to transfer property he had no right to transfer, whether or not he believed it his own.
2. He conferred a benefit on the owner of that property, as owner. A person taking only an indirect benefit need not elect, and a person taking in one capacity may dissent in another.
3. Both formed one and the same transaction.

The illustrations. The farm of Sultanpur, worth Rs. 800, is C's; A by an instrument of gift professes to transfer it to B and by the same instrument gives Rs. 1,000 to C. C keeps the farm and forfeits the Rs. 1,000; and if A dies before the election, his representative pays Rs. 800 out of the Rs. 1,000 to B. The implied election illustration: C, given a coal-mine, takes possession and exhausts it, and has thereby confirmed the transfer.

Key propositions

1. The transfer is voidable, not void, and only at the instance of the protected person. Until avoided it is good, and it always binds the transferor.
2. Under sub-section (1) the transfer may be with or without consideration; the vice is the intent. Under sub-section (2) it must be without consideration.
3. Intent is inferred from the badges of fraud: transfer of the whole estate, a grossly inadequate price, retention of possession by the transferor, secrecy and haste, a close relationship between the parties, and the transfer being made when a suit or demand is imminent.
4. Preferring one creditor over another is not fraudulent: a debtor may lawfully pay whom he chooses.
5. The section applies only to immoveable property.

1. It is a present, existing right, though enjoyment may be future.
2. It is transferable and heritable.
3. It is not defeated by the death of the holder before possession.
4. It does not depend on a contingency; the event, if any, must be certain to happen.
5. It is attachable in execution and passes on insolvency.

Vested and contingent interests compared

Section 15 of the Indian Easements Act, 1882 provides for acquisition by prescription, that is by long enjoyment.

What may be acquired. Where access and use of light or air to and for any building have been peaceably enjoyed as an easement, and as of right, without interruption, and for twenty years; and where a right of way or any other easement has been peaceably and openly enjoyed by any person claiming title thereto as an easement and as of right, without interruption, and for twenty years; and where a right to the support of one's building from another's land or building has been so enjoyed; the right is absolute.

The conditions

1. Peaceably: without force, nec vi.
2. Openly: without secrecy, nec clam.
3. As of right: not by permission, nec precario. This is the condition most claims fail on, because enjoyment by the servient owner's permission can never ripen into a right. Light and air are the exception: the section does not require "as of right" for them.

Section 17, rights which cannot be acquired by prescription. An easement that would tend to the total destruction of the servient heritage or of the property of which it is part; a right to the free passage of light or air to an open space; a right to surface water not flowing in a stream and not permanently collected in a pool or tank; a right to underground water not passing in a defined channel.

(i) Is this gift valid?

Yes, the gift is valid, provided the formalities of section 123 have been observed. The pending government dues do not make it invalid; they make Shankar liable.

The conditions of a valid gift, section 122: a transfer of certain existing moveable or immoveable property, made voluntarily and without consideration, by a donor to a donee, and accepted by or on behalf of the donee during the lifetime of the donor and while he is still capable of giving. Nothing in the facts offends any of these: the property is existing, the transfer is voluntary and gratuitous.

• Section 53(1), fraudulent transfer. If Atul made the gift with intent to defeat or delay his creditors, it is voidable at the option of any creditor so defeated, and such a suit must be brought on behalf of all the creditors. A gift of the entire estate while dues are outstanding is one of the classic badges of that intent, though intent must still be proved. The proviso saving a transferee in good faith and for consideration cannot help Shankar, since a donee gives no consideration.

(ii) What are Shankar's rights and responsibilities?

Shankar is a UNIVERSAL DONEE, because the gift is of Atul's whole property, moveable and immoveable. Section 128 therefore applies.

Responsibilities

1. Personal liability for Atul's debts and liabilities, including the government dues, existing at the time of the gift, to the extent of the property comprised in the gift. This is a personal liability: the creditor may sue Shankar himself, and the decree may be executed against him, not merely against the property.

4. A right of recourse against Atul for whatever he is compelled to pay beyond what he took subject to, on ordinary principles of indemnity, since the primary debtor remains Atul.
5. If he pays a charge on the property, he stands in the position of the person paid off as against the property.

• No personal liability of the mortgagor, so Raj cannot sue Shree for the mortgage-money under section 68 in the ordinary way;
• No time is fixed for repayment;
• No right of foreclosure and no right of sale under section 67. Raj's security is his possession, and he remains in possession until he is paid out of the usufruct.

Formalities. The mortgage-money being Rs. 100 or more, section 59 requires a registered instrument signed by Shree and attested by at least two witnesses.

Raj's duties while in possession, section 76. He must manage the property as a person of ordinary prudence would manage his own; pay government dues out of the income; make necessary repairs; not commit any act destructive or permanently injurious; apply the receipts first to interest and then to principal as the deed directs; and keep clear, full and accurate accounts, which Shree may inspect. If he fails, he may be made to account for what he might have received but for his default.

(2) What is Shree's right once the loan amount is repaid?

Shree's right is the right of redemption, and in this kind of mortgage it has a special form in section 62.

And the protection that matters. By the proviso to section 60 the right to redeem is extinguished only by the act of the parties or by a decree of a Court. Any term of this mortgage that would keep Shree out permanently, or hand the property to Raj on default, is void as a clog on the equity of redemption: "once a mortgage, always a mortgage".

The formalities are the real issue, and this is where the marks are. By the second limb of section 118, a transfer of property in completion of an exchange can be made only in the manner provided for the transfer of such property by sale. So, applying section 54, a flat being tangible immoveable property worth Rs. 100 or more, the exchange must be effected by a registered instrument. An oral exchange of flats, or a mere agreement to exchange, transfers nothing: an agreement to exchange stands in the same position as a contract for sale, and creates no interest in the property.

Two practical conditions on these facts. Each must be competent to transfer under section 7 and must actually own what he purports to give: a person who is only a tenant or a licensee of a flat has nothing to exchange. And if Sky Apartments is a co-operative housing society, the transfer of the flats will also require compliance with the society's bye-laws and the Maharashtra Co-operative Societies Act, 1960, since what the member holds includes shares in the society. Non-compliance is a matter between the members and the society; it does not make the exchange a nullity under this Act.

• production of the title deeds for examination, and answers to relevant questions on title, section 55(1)(b) and (c);
• execution of a proper conveyance on tender of his own, section 55(1)(d);
• delivery of possession, section 55(1)(f);
• the benefit of the implied covenant for title, that Vijay's interest subsists and that he has power to transfer it, section 55(2);
• the benefit of any improvement in, or increase in the value of, the tenth floor flat from the date the ownership passes, section 55(6)(a); and
• a charge on that flat for any consideration prepaid and properly returnable, section 55(6)(b).

The special right in an exchange, section 119. If Rishi, or anyone claiming through him, is deprived of the tenth floor flat, or any part of it, by reason of a defect in Vijay's title, then, unless a contrary intention appears from the terms of the exchange, Rishi is at his option entitled either to

• compensation for the loss caused, or
• the return of his own first floor flat, if it is still in the possession of Vijay, his legal representative, or a transferee from him without consideration.

(i) Is the transfer made by Kiran valid?

Read the disposition first. Kiran has created three successive interests: to A (the eldest) and after his life to B, and then to the unborn child of C. A and B are living persons; C's child is not yet born.

The interests of A and B are valid. Both are living persons at the date of the transfer, both take limited interests, and by section 19 with its Explanation their interests are vested, even though B's enjoyment is postponed until A's death. Nothing in sections 13 or 14 touches a transfer to a living person.

The interest of C's unborn child is valid only if two conditions are satisfied.

Conclusion. The transfer is valid if the unborn child of C is given the whole of the remaining interest and is in existence when B's interest ends. It is invalid as to the child if he is given anything less than the whole remaining interest, and it fails if no child of C is then in existence, in which case the property reverts to Kiran or her estate on the death of the survivor of A and B. By section 30, the failure of the ulterior disposition does not affect the prior interests of A and B, which stand.

One further point peculiar to a gift. This is a gift, so section 122 requires acceptance by or on behalf of the donee during the lifetime of the donor, and an unborn person cannot accept. In practice a gift for the benefit of an unborn person is made through a trust, the trustees accepting and holding for him; and by section 20 the unborn person acquires a vested interest upon his birth, though not the right to immediate enjoyment. The gift must also satisfy section 123: a registered instrument, signed by Kiran and attested by two witnesses.

(ii) The rules relating to transfer of property to an unborn child

7. Failure of a prior interest, section 16. Where an interest fails under section 13 or 14, any interest created in the same transaction and intended to take effect after or on the failure of it also fails.
8. Prior dispositions are safe, section 30. The invalidity of an ulterior disposition does not affect the prior one.
9. Accumulation, section 17. A direction to accumulate the income for longer than the transferor's life or 18 years from the transfer is void as to the excess.
10. Public benefit, section 18. Sections 14, 16 and 17 do not apply to transfers for the benefit of the public in the advancement of religion, knowledge, commerce, health, safety or any other object beneficial to mankind.

The Act's illustration to section 13 shows rule 3 at work: a transfer to B in trust for A and his intended wife successively for their lives, and after the survivor's death to the eldest son of the intended marriage for life, and after his death to A's second son. The eldest son's interest does not take effect, because it is only a life interest.

For full marks, cover: section 105 with the four defined terms, the essentials, sections 106 and 107, the lessor's and lessee's rights and liabilities from section 108 with clause letters, section 111, and the lease against licence contrast.

Definition, section 105. A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on those terms.

The transferor is the lessor, the transferee the lessee, the price the premium, and the money, share, service or other thing to be so rendered the rent.

Essentials

1. Competent parties: a lessor entitled to the property and competent under section 7, and a lessee competent to receive.

LESSOR: liabilities, section 108(a) to (c)

• (a) Disclose material defects in the property, as to its intended use, of which he is aware and the lessee is not, and which the lessee could not with ordinary care discover.
• (b) Put the lessee in possession on request.
• (c) Covenant for quiet enjoyment: the lessee, paying rent and performing his contracts, may hold the property without interruption during the term. The covenant runs with the land.

LESSOR: rights

• To receive the rent at the agreed time and place.
• To recover possession on determination, clause (q).
• To sue for compensation for waste and for breach of clauses (m) to (p).
• To forfeit and re-enter under section 111(g), on breach of an express condition with a re-entry clause, on the lessee's denial of title, or on his insolvency where the lease so provides, in each case after notice in writing.
• To recover arrears of rent and mesne profits for wrongful holding over.

LESSEE: rights, section 108(d) to (j)

LESSEE: liabilities, section 108(k) to (q)

• (k) Disclose facts materially increasing the value of the lessor's interest.
• (l) Pay the premium or rent at the proper time and place.
• (m) Keep the property in as good condition as when he took it, wear and tear and irresistible force excepted, and permit entry and inspection.
• (n) Give notice of encroachments and of proceedings to recover the property.
• (o) Use it as a prudent owner would; no felling of trees, pulling down or damaging buildings, or working mines or quarries not open at the grant, and no act destructive or permanently injurious.
• (p) Erect no permanent structure except for agricultural purposes without consent.
• (q) Restore possession on determination.

For full marks, cover: section 25 and what makes a condition bad, conditions precedent and subsequent with sections 26 and 29, the different consequence of a void condition under sections 25 and 32, sections 27, 28, 30, 31, 33 and 34, and the neighbouring restraints in sections 10, 11 and 12.

What a conditional transfer is. A transfer is conditional when the interest created is made to depend on the happening or not happening of an event. The Act deals with such transfers in sections 25 to 34, and the scheme is: first ask whether the condition is lawful (section 25), then whether it is a condition precedent or subsequent, and then apply the rules of compliance and of failure that go with each.

Section 25, conditional transfer. An interest created on a transfer of property and dependent upon a condition fails if the fulfilment of the condition is:

• impossible;
• forbidden by law;
• of such a nature that, if permitted, it would defeat the provisions of any law;

Section 26, fulfilment of a condition precedent. Where the terms of a transfer impose a condition to be fulfilled before a person can take an interest, the condition shall be deemed to have been fulfilled if it has been substantially complied with. Illustration (a): the consent of C, D and E is required; E dies; B marries with the consent of C and D; the condition is fulfilled. Illustration (b): B marries without their consent and obtains it afterwards; the condition is not fulfilled.

Section 29, fulfilment of a condition subsequent. An ulterior disposition of the kind contemplated by section 28 cannot take effect unless the condition is strictly fulfilled. Illustration: a transfer to A with a provision that if he does not go to England within three years the interest shall pass to B; A does not go within three years; the transfer to B takes effect.

• Section 31, condition that the transfer shall cease to have effect in case a specified uncertain event happens or does not happen. This creates a vested but defeasible interest.
• Section 32, such condition must not be invalid. The condition under section 31 must be a valid one; if it is not, the interest simply stands absolute.
• Section 33, no time specified for performance of an act. Where a condition requires an act to be performed and no time is specified, the condition is broken when the person renders its performance impossible, permanently or for an indefinite period.
• Section 34, time specified. Where a time is specified and performance within it is prevented by the fraud of a person who would benefit by non-fulfilment, further time is allowed to make up for the delay; and where no time was specified and performance is rendered impossible or indefinitely postponed by such fraud, the condition is deemed to have been fulfilled as against him.

The neighbouring restraints, which are not the same thing

For full marks, cover: who may impose and who may acquire (sections 8 to 12), then each mode in turn, grant express and implied, necessity and quasi easement under section 13 with section 14, prescription under section 15 with sections 16 and 17, and custom under section 18, with a table at the end.

First, the two capacity sections.

Section 8, who may impose. An easement may be imposed by any one in the circumstances, and to the extent, in and to which he may transfer his interest in the heritage on which the liability is to be imposed. A lessee with a transferable term may impose one for the term or less; a life tenant cannot, without the remainderman's consent, impose one that outlasts his interest; one co-owner cannot impose one without the others' consent. Section 9 allows a servient owner to impose further easements not lessening the utility of an existing one; section 10 allows a lessor or mortgagor to impose easements that do not derogate from the lessee's rights or render the security insufficient; section 11 forbids a lessee or other derivative holder to impose an easement to the prejudice of another's interest.

3. Easement of necessity, section 13(a), (c) and (e). Where one person transfers or bequeaths immoveable property to another, or a partition is made of joint property, and an easement in other land is necessary for enjoying the subject of the transfer (clause (a)) or the property retained (clause (c)), the person entitled may claim it. The test is absolute necessity, not convenience; the standard case is a landlocked plot.

Section 14 provides how the way is fixed: the person bound to grant it is entitled to fix a convenient way, and if he refuses or neglects, the person entitled may fix it, subject to the requirement that it be reasonably convenient for the dominant owner and least onerous to the servient owner.

Section 41: an easement of necessity is extinguished when the necessity ends.

4. Quasi easement, section 13(b), (d) and (f). Where, on a transfer or partition, an easement is apparent and continuous and necessary for enjoying the subject of the transfer as it was enjoyed when the transfer took effect, the transferee is entitled to it. Its conditions are that there was one owner of the whole, the right was apparent, continuous, necessary for enjoyment as then enjoyed, and in actual use at the time.

Section 16 allows the period of a lease or life interest in the servient heritage to be excluded as against the reversioner in the circumstances it states. Section 17 lists what cannot be acquired by prescription: an easement tending to the total destruction of the servient heritage; a right to the free passage of light or air to an open space; a right to surface water not flowing in a stream and not permanently collected; and a right to underground water not passing in a defined channel.

6. By custom, section 18. An easement may be acquired in virtue of a local custom, called a customary easement. The custom must be ancient, certain, reasonable and continuous. The Act's illustration is the villager's right to graze cattle on the common pasture, which the tenant of a plot acquires when he breaks up and cultivates it.

7. By transfer of the dominant heritage, section 19. Where the dominant heritage is transferred or devolves, the easement passes with it, together with the incidents of the easement, unless a different intention appears.

Summary table

For full marks, cover: who an ostensible owner is, the Jayadayal Poddar tests, section 41 in full, the five conditions expanded, Ramcoomar Koondoo and the equity behind the section, what reasonable care and good faith require, the effect on the real owner, and the reach of the Benami Act.

Who is an ostensible owner. An ostensible owner is a person who, with the express or implied consent of the real owner, is held out to the world as the owner of property and has all the outward marks of ownership, though the beneficial ownership is in another. The property stands in his name, he deals with it as owner, and a stranger dealing with him has no reason to look behind the appearance.

He is not a mere agent, manager, servant or caretaker in charge of property, because such a person is not held out as owner. The real owner must have clothed him with the appearance of ownership.

The five conditions, all of which the transferee must prove

1. The transferor was the ostensible owner of the property, judged by the Jayadayal Poddar tests.
2. He was so with the consent, express or implied, of the real owner. The consent must be free and given with knowledge. Silence may amount to implied consent where the real owner knew of the holding out and did nothing. It cannot where the real owner was ignorant, a minor, or otherwise under a disability, since a person under disability cannot give the consent the section requires.
3. The transfer must be for consideration. A gift is entirely outside the section: the protection exists for a person who has parted with value on the faith of the appearance, not for a volunteer.

Effect where the section applies. The transfer is not voidable at the instance of the real owner. He is left to his personal remedies against the ostensible owner, for the price received or for damages. The purchaser keeps the property.

Effect where it does not. If any one of the five conditions fails, the section gives no protection, and the transfer is voidable at the real owner's instance. He may sue to recover the property, subject to limitation.

Other exceptions to nemo dat in this Act, worth naming for contrast: section 43, feeding the grant by estoppel, where the transferor afterwards acquires the interest he purported to transfer; section 38, transfer by a person authorised only in certain circumstances; section 39, transfer where a third person is entitled to maintenance; and section 53A, part performance, which protects possession rather than title.