AMITY LAW SCHOOL, NOIDA

Exceptions:-
The rule of
apportionment by
estate does not
apply in the
following cases:-
(a) Transfer by
operation of law.
(b) Agricultural
tenancies.
Problem:-
A sells property to B
with a covenant that
B should construct a
road across the
property for the
convenience of A’s
neighbours. B
transfers the
property to C who
is aware of the
covenant. C
refuses to construct
the road. Can A
enforce the
covenant against C?
Solution:-
No, A cannot enforce
the covenant against
C.
Covenant means
written agreement or
contract with respect
to a property.
Section 40 of the
Transfer of
Property Act deals
with restrictive
covenant.
Restrictive covenant
are such contracts
which restricts the
use or enjoyment of
the
property. In this
restrictive
covenants are
conditions imposed
by transferor
restraining the use
or enjoyment of
property by the
transferee. Section
11 validates
such directions or
conditions imposed
by transferor
provided they are for
beneficial
enjoyment of
transferor’s own
land. Under section
11 the conditions
restraining the
use or enjoyment of
the property
transferred may
either be affirmative
or negative.
Where the
transferee is
required to do
something on the
transferred land,
the
covenant or
conditions are
affirmative. Where it
restraints the
transferee not to do
certain things, it
is negative.
Section 11 deals
with both kinds
of covenants
enforceable against
the transferee. But it
does not refer to the
enforcement of a
covenant against the
subsequent
transferees. Section
40 deals only with
negative
covenants and
provides also for its
enforcement against
subsequent
transferees.
In the above
mentioned problem
A has imposed
the condition on
B to
construct road for
the benefit of his
nieghbours not for
his own benefit, it is
an
affirmative covenant
i.e., performance of
some act and it is
binding on B but th
AMITY LAW SCHOOL , NOIDA

PROJECT
REPORT
ON
SALE OF IMMOVABLE PROPERTY
 SUBJECT – PROPERTY LAW
SUBMITTED BY – NEHA SACHDEVA
ENROLLMENT NO. – A3256119078
Course – LLB(3YEARS)
SEMESTER – 2nd
SECTION – B

TRANSFER OF PROPERTY ACT

The Transfer of Property Act 1882 is an Indian legislation which

regulates the transfer of property in India. It contains specific
provisions regarding what constitutes a transfer and the conditions
attached to it. It came into force on 1 July 1882.
According to the Act, 'transfer of property' means an act by which a
person conveys the property to one or more persons, or himself and
one or more other persons. The act of transfer may be done in the
present or for the future. The person may include an individual,
company or association or body of individuals, and any kind of
property may be transferred, including the transfer of immovable
property.

Interpretation of "property"
Property is broadly classified into the following categories:
 1. Immovable Property (excluding standing timber, growing crops,
and grass)
2. Movable Property

According to Section 6 of the Transfer of Property Act, the property

of any kind may be transferred. The person insisting non-
transferability must prove the existence of some law or custom which
restricts the right of transfer. Unless there is some legal restriction
preventing the transfer, the owner of the property may transfer it.
However, in some cases, there may be a transfer of property by an
unauthorized person who subsequently acquires an interest in such
property.

Introduction
Transfer of a property can be made in two ways, firstly by an act of
parties and secondly by law. Under the act of parties, Transfer of
Property Act (TOPA) exists, which gives us further divisions that is
whether the property is movable or immovable, transfer for movable
property and immovable property. In my research paper, I am going
to focus on immovable property. Immovable property is divided into
six parts- sale, mortgage, actionable claims, lease, exchange, and
gifts, charge.

Transfer of property has been defined under Section 5 of

the Transfer of Property Act. According to the act immovable
property does not include standing timber, growing crops, or grass.
Interpretation of the section also allows us to construe the fact that
things that are attached to the land and which cannot be detached from
the earth and things which are permanently fixed to the earth also
come within the definition of immovable property. For example,
timber, since it is of no use until one takes it out of the land or
detaches it, it is useless therefore it is movable property.

There are six elements, which make a property transferable. The

requirements to be met as per Section 5 are four in number.

There are six elements, which make a property transferable. The

requirements to be met as per Section 5 are four in number.

1. The transfer must be by a living or juristic person.

A juristic person was defined in the case Shiromanigurudwara

Prabhakar committee, Amritsar v. Sri Somnath Dass. In this case,
the court said that a juristic person can be an individual, firm,
corporate company, association, society, not including partnership
firm. Any individual who can sue or be sued under law would satisfy
this requirement.

2. The transfer must be through a conveyance.

Conveyance can be present or future. However conveyance can take

place only if there is a creation of a new title. Therefore, there should
have been nothing with the transferee before the title. In addition to
this, the term future is used to define the future interest in the property
and not the future property itself. Therefore, the word future property
itself must be transferred. Therefore, the word future is for the
conveyance.

3. Thirdly, the property itself must be transferred.

4. Fourthly, it must be made to a living or a juristic person.

Any kind immovable property can be transferred. Any kind of

immovable property can be transferred other than that which are given
in Section 6 of the TOPA. In the case Samsudden v. Abdul Husen it
was held that the chance to transfer couldn’t be transferred. The right
to re-entry, easement can’t be transferred. Specific rights cannot be
transferred, as there are only certain people who should enjoy the
right. The right to sue, public office, unlawful objects cannot be
transferred.

The third element is competency as under Section 7 of TOPA. The

individual must not be a minor or an insane person. The person must
have the title of property or the person must have the authority to
transfer; in part or in whole, as held in the case Krishna Khurhai v.
Grindlays bank, if transfer is made ultra virus to the authority vested
in the agent, the transfer will be void.

The fourth element being that under Section 6(h)(3) the person must

not be a legally disqualified transferee. For example under Section
136 of TOPA judges, legal practitioners and officers connected to the
court are disqualified from purchasing actionable claims.

The fifth element being that a valid transfer can also happen
under Section 9 of TOPA as an oral transfer.

Transfer of immovable property may happen only in certain ways.

They can either be through sale, mortgagee, lease, and gifts or
through actionable claims. These are modes of transfer.

1. Sale-
Contract of sale of immovable property is basically a contract,
which states terms for the permanent transfer of property. The
sale takes place in accordance to the terms, which are settled by
both the parties in the contract itself. Such contract of sale does
not create any interest in or charge on such immovable property.
A kind of obligation is created in respect of the ownership of the
property. Essentials of a contract of sale are several. The parties
to the transfer or the vendor should be competent enough to
contract under Section 2 of the Indian Contract Act. Price is
another essential ingredient for all transactions of sale and in the
absence of thisprice, which constitutes consideration, the
transfer will not be regarded as a contract of sale.
Delivery of property is necessary for a transfer by way of sale.
 In case of tangible property worth less than Rupees one
hundred, the transfer can be made by a registered instrument or
putting the purchaser in possession of the property. If it is more
than rupees one hundred then the instrument has to be registered
under Registration Act, 1908. There are certain rights and
duties of the buyer and the seller, which are subject to the
contract. These rights and duties are governed under Section
55 of the Transfer of Property Act.

2. Mortgage-
Transfer of immovable property can also take place through
mortgage. Section 58(a) of the TOPA says, a mortgage i the
transfer of an interest in specific immovable property for the
purpose of securing the payment of money advanced or to be
advanced by way of loan, an existing or future deist, or the
performance of an engagement which may give rise to a
pecuniary liability. Ingredients of mortgage; in a mortgage, the
mortgagor transfers any one of his interests in specified
immovable property to the mortgagee. Money to be advanced by
way of loan arises in the case of a running account between the
parties. Future debt is a contingent liability, which arises on the
happening of some contingency. If the promise is not
completed, an obligation to pay arises. These may be a
pecuniary liability.
An undertaking i.e., a person borrowing money not to alienate
his property until the money is repaid is not a mortgage, because
there is no transfer of interest in the property.

3. Charge-
Transfer of immovable property can also take place through
charge.  According to Section 100 when a person by the act of
parties or operation of law creates security for the payment of
money to another, and the transaction should not be a
mortgagee, the latter is said to have a charge on the property.
The charge is created by operation of law, this distinguishes
mortgage, which is created by act of parties.
 4. Lease-
Transfer of immovable property can also take place though
lease. Section 105 defines lease. According to it, lease of
immovable 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, 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 such terms.
5. Transfer can also take place through exchange, gifts and
actionable claims.
6. Other ways-

Immovable property can also be transferred by way of law that is if

there is insolvency, succession or the absence of a will. In the
situation of the absence of a will, the court shall declare the transfer of
property by way of interstate.

However, there are some things that cannot be transferred. Section

6 of the Transfer of Property Act discusses the immovable properties,
which cannot be transferred. Spec successions cannot be transferred.
According to Section 6 (a), it is void. In the case Annada Mohan
Roy v. Gom Mohan Mullick, the appellant purchased the rights
expectant upon the termination of the surviving widow’s rights from
the respondents and further on there was a compromise between the
widow and the respondents as a result of which the respondents got
certain properties. Thus it was held in the case that compromise is
void and cannot be transferred.

In the case Karpagathachi v. Nagarathinathachi, two-widows had

divided the husband’s property into two shares and took possession of
respective shares. Under the partition deed, each widow gave up her
life interest. When one of the widows died her daughter took over the
possession. The other widow filed a suit against the daughter claiming
for the share, which is in possession of the daughter of the other
widow. The court held that each widow transfers her right of
survivorship according to Section 6(a) of Transfer of Property Act.
Charge cannot be transferred because it is a right, which is a part of
the property. Compromise cannot be transferred. Easement cannot be
transferred because these are the rights or interest arising of land,
which is a part of the property but cannot be transferred. Family
arrangement may be transferred. A will cannot be transferred because
it does not operate by the act of parties. Auction sale cannot be
transferred because property is in possession of another.

 Are benefits arising out of land immovable? Yes, benefits like crops
from your land, fish and the lake and anything 12nm from the
mainland are immovable and can be transferred. In the case Anand
Bahera v. State of Orissa, it was held that profit arising out of land is
immovable property. The right to walk on the land and to draw fish
from the lake and taking it away is immovable property as it is the
profit arising of the land. Grazing of cattle on the land is also
immovable property as it is profit arising of the land.

Conclusion

Therefore for a property to be transferable several conditions need to

be satisfied. These include that of constituting a transfer; it to come
within the definition of immovable property and it should not be
amongst those items, which may not be transferred under Section 6 of
the Transfer of Property Act. In addition to this, it is clear that there
are several kinds of transfer that may take place. Each kind of transfer
as has been explained has different procedures and conditions, which
need to be satisfied. These are hence the various elements that are
required to be transferred for a property to be transferable.
Section 54 of the price Transfer of Property Act defines “Sale” as
“sale is a transfer of ownership in exchange for a price paid or
promised or part-paid and part-promised.

Sale how made – Such transfer, in case of tangible immovable

property of the value of one hundred rupees and upwards or in the
case of revision or other intangible things, can be made only by
registered instrument.
In the case of tangible immovable property of a value less than one
hundred rupees, such transfer may be made either by a registered
instrument of by delivery of the property.
Delivery of tangible immovable property takes place when the seller
place the buyer or such person as he directs, in possession of the
property.”
 Essentials of a Valid Sale
According to Section 54, following are the essentials of a valid sale—
i. the parties, i.e., the seller and the purchase, must be competent.
They are also called vendor and vendee, respectively. They must be
competent to contract, i.e., must of sound mind and have attained the
age of majority. The seller must also have right to sell the property
and purchase may be any person not disqualified to purchase a
property under any law enforced in India.
ii. There must be a subject-matter of sale. Transfer of Property Act
deals with sale of immovable property. The transfer of ownership of
immovable property is dealt with  under this Act while sale of
movable are dealt with under the Sale of Goods Act, 1930.
Immovable property may be either tangible, such as land, house,
things attaches to earth, etc., or it may be intangible immovable
property, such as right of ferry or fisheries, or right to a mortgage debt
etc. But the immovable property must be in existence on the date of
execution of sale.
iii. Price or money consideration—Price is an essential ingredient of a
sale. A sale is a transfer of ownership in exchange of money. Payment
of price is not necessary for    completion of the transfer but its
reference is necessary. It may be paid at the time of   execution or
promised to pay or same part of it may paid at the time of execution
and rest may be promised to be paid in future.
iv. Conveyance—In sale, property must be transferred from seller to
purchaser. According to Section 54 there must be a registered
conveyance in the case of—
(a) tangible immovable property of the value of Rs. 100 and upwards;
or
(b) a reversion of an intangible thing of any value.
In case of tangible immovable property of a value less than Rs. 100,
there must either be,
(a) a registered conveyance, or
(b) delivery of property.
Sale and Contract for Sale

Section 54 of the Act defines ‘sale’ as a transfer of ownership in

exchange for a price Paid or promised or part paid and part promised.
Section 54 also defines ‘contract for sale’ as, “a contract for the sale
of immovable property B a contract that a sale of such property shall
take place on terms settled between the parties,”
Thus a sale may be preceded by a contract for sale. A contract for sale
is merely a document creating a right to obtain another document
namely, a duly executed sale deed. On the Other hand, a sale of
immovable property is a transfer of ownership.
A sale passes an absolute interest in the property to the purchaser, but
a contract for sale does not of itself create any interest in, or charge
upon the property in favour of the buyer. It does not convey any little
to the purchaser.
A sale must be registered, if it deals with the conveyance of tangible
immovable property of the value of Rs. 100 or more, or a reversion or
any intangible things.
A contract for sale need not be registered at all.
Sale and Exchange
According to Section 54 of the Act, a sale is a transfer of ownership in
a property in exchange for a price. On the other hand exchange is a
transfer of ownership in property in exchange of ownership of another
property. Section 118 of the Act defines exchange as, “when two
persons mutually transfer the ownership of one thing for the
ownership of another, neither thing or both thing being money only,
the transaction is called exchange.
Thus in both, there is transfer of absolute interest in the property, but
real difference is that in sale, the consideration is money, whereas in
exchange, it is another property or anything of value.
Sale and Gift

In both sale and gift, there is transfer of ownership of an immovable

property. However the difference between the two is that where in
sale, the ownership is transferred in exchange for a price, in gift, the
immovable property is transferred with any consideration.
In sale, if the valuation of immovable property is Rs. 100 or more,
than it is to be effected only by registered instrument. But in case of a
gift of an immovable property, it must be made only by registered
instrument irrespective of the valuation of the property.
RIGHTS AND DUTIES OF SELLER AND BUYER (SECTION
55)

Sellers Duties and Rights

1. Sellers duties before sale—
(a) the seller is bound to disclose to the buyer any material defect in
the property or     title, of which seller is, and buyer is not aware, and
which buyer could not with ordinary case discover. [Section 55(1)(a)]
(b) The seller is bound to the buyer on his request for examination of
all documents of title relating to the property which are in the seller’s
possession or power. [Section 55(1) (b)]
(c) the seller is bound to answer to the best of his information all
relevant question put it him by him by the buyer in respect to the
property or the title there. [Section 55(1) (2)]
(d) The seller’s next duty is to execute the conveyance. He is bound
on payment or tender of the amount due in respect of the price, to
execute a proper conveyance of the property when the buyer tenders it
to him for execution at proper time of place. [Section 55 (1) (d)]
(e) Seller is bound to take case of the property and documents of title.
Between the date of contract of sale and the delivery of the property,
he is bound to take as much case of the property and all documents of
title relating thereto which are in his possession as an owner of
ordinary prudence would take of such property and documents.
[Section 55(1) (c)]
(f) It is the seller’s duty before the completion of sale to pay all the
outgoings. Before completing of sale, the seller continues to the
owner of the property, thus the Government dues, etc., are to be paid
by him. [Section 55(1)(g)]
2. Seller duty after sale—
(a) After completion of the sale, it is the seller’s duty to gave
possession to the buyer. The seller is bound to give, on being so
required, the buyer or such person as he directs, such possession of
the property as its nature admits. [Section 55(1)(f)1
(b) It is the seller duty to covenant for title. Section 55(2) of the Act
provides that—
“The seller’s be deemed to contract with the buyer that the interest
which the seller professes to transfer to the buyer subsist and that he
has power to transfer the same. (This is also known as implied
covenant for title): Provided that, where the sale is made by a person
in a fiduciary character, he shall be deemed to contract with the buyer
that the seller has done no act whereby the property is encumbered or
whereby he is hindered from transferring it.
The benefit of the contract mentioned in this rule shall be annexed to,
and shall go with, the interest of the transferee as such, and may be
enforced by every person in whom that interest is for the whole or any
part thereof from time to time vested.”
(c) It is the seller duty to deliver title-deeds on receipt of the price.
Section 55(3) of the Act provides that, where the whole of the
purchase-money has been paid to the seller, he is also bound to
deliver to the buyer all documents of title relating to the property
which is in the seller’s possession or power. However, he proviso to
Section 55(3) lays down that:
 Where the seller retains that part of the property with him,
which of greatest value and, such property is included in the
documents, the seller is entitled to retain all the documents with
him.
 Where the whole of such property is sold to several buyers the
persons who purchase the largest part of the property would be
entitled to retain all the documents.
3. Seller’s Right before Sale—Section 55(4)(a) provides that ‘the
seller is entitled to the rents and profits of the property till the
ownership thereof passes to the buyer’. ‘Thus, before completion
of the sale, the seller is entitled to all the rents, profits or another
benefit. interests of the property’.
4. Seller’s Right after Sale—If after completion of sale, the price
or any part of it remain unpaid, the seller acquires a lien or charge
on property. Accordingly to Section 55(4)(b) if price remains
unpaid, the seller cannot refuse delivery of possession for can
claim back the possession if already given to buyer, but he (seller)
is given a right to recover unpaid purchase money from and out of
the property.

Buyer’s Duties and Rights

1. Buyers duties before sale—
(a) Before completion of sale, it is the duty of the buyer to disclose,
facts which materially increases the value of property, Section 55(5)
(a) of the Act provides that, “the buyer is bound to disclose to the
seller any fact as to the nature or extent of the seller’s interest in the
property of which the buyer is aware, but of which he has reason to
believe that the seller is not aware, and which materially increases the
value of such interest.
(b) The buyer is bound to pay or tender the purchase money to seller
[Section 55(5)(b)].
2. Buyer’s Duties after Sale—(a) where the ownership of the
property has passed to the buyer, the buyer is bound to bear any
loss arising from the destruction, injury or decrease in value of
the property not caused by the seller. [Section 55(5) (c)].
(b) According to Section 55(5) (d) after the completion of sale, the
buyer is liable to pay the outgoings, e.g., Government dues, rents,
revenue or taxes, as the buyer becomes the owner of the property.
3. Buyer’s Right before Sale—
Section 55(6)(a) of Act provides that the buyer is entitled to (unless
he has improperly declined to accept delivery of property):
 A charge on the property for the purchase money properly paid
by him in anticipation not the delivery.
 (ii) Interest on such purchase money.
 The earnest, and cost awarded to him in a suit to compel specific
performance of the contract or to obtain a decree for its recession
in case he properly declines to accept delivery.
4. Buyer’s Right after sale—After sale, the buyer is entitled to
the benefits of any improvement in, or increase in value of, the
property, and to the rents and profits thereof, [Section 55(6)(a)].

same is not binding on subsequent transferee C, according to section

11 of
Exceptions:-
The rule of apportionment by estate does not apply in the following
cases:-
(a) Transfer by operation of law.
(b) Agricultural tenancies.
Problem:-
A sells property to B with a covenant that B should construct a road
across the
property for the convenience of A’s neighbours. B transfers the
property to C who
is aware of the covenant. C refuses to construct the road.
Can A enforce the
covenant against C?
Solution:-
No, A cannot enforce the covenant against C.
Covenant means written agreement or contract with respect to a
property.
Section 40 of the Transfer of Property Act deals with
restrictive covenant.
Restrictive covenant are such contracts which restricts the use or
enjoyment of the
property. In this restrictive covenants are conditions imposed
by transferor
restraining the use or enjoyment of property by the transferee. Section
11 validates
such directions or conditions imposed by transferor provided they are
for beneficial
enjoyment of transferor’s own land. Under section 11 the conditions
restraining the
use or enjoyment of the property transferred may either be affirmative
or negative.
Where the transferee is required to do something on the
transferred land, the
covenant or conditions are affirmative. Where it restraints the
transferee not to do
certain things, it is negative. Section 11 deals with both
kinds of covenants
enforceable against the transferee. But it does not refer to the
enforcement of a
covenant against the subsequent transferees. Section 40 deals only
with negative
covenants and provides also for its enforcement against subsequent
transferees.
In the above mentioned problem A has imposed the
condition on B to
construct road for the benefit of his nieghbours not for his own
benefit, it is an
affirmative covenant i.e., performance of some act and it is binding on
B but the
23

same is not binding

on subsequent
transferee C,