Transfer of Immovable Property by Act of Parties

NATIONAL LAW INSTITUTE UNIVERSITY,

BHOPAL

EIGHTH TRIMESTER

PROPERTY LAW II

PROJECT ON

TRANSFER OF IMMOVABLE PROPERTY

BY THE ACT OF PARTIES

SUBMITTED TO:

SUBMITTED BY:

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Prof. (Mrs.) SUSHMA SHARMA

NIMISHA JHA

2009BALLB01

ENROLMENT NO.: A-0863

TABLE OF CONTENTS

INTRODUCTION..................................................

..............................................................

..03

OPERATION OF

LAW...........................................................

..............................................04

ACT OF

PARTIES.......................................................

..........................................................05

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SECTION 3: IMMOVABLE

PROPERTY......................................................

....................06

SECTION 5: TRANSFER OF PROPERTY

DEFINED....................................................08

SECTION 54: SALE

DEFINED.......................................................

....................................09

SECTION 58: MORTGAGE

DEFINED.......................................................

......................12

SECTION 108: LEASE

DEFINED.......................................................

...............................16

SECTION 118: EXCHANGE

DEFINED.......................................................

.....................18

SECTION 122: GIFT

DEFINED.......................................................

...................................20

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SECTION 130: TRANSFER OF ACTIONABLE

CLAIMS.............................................22

BIBLIOGRAPHY..................................................

..............................................................

..24

INTRODUCTION

The Transfer of Property Act, 1882 defines and amends the law

relating to transfer of property by act of parties. The Act

does not cover transfer of property by operation of law.

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Further, transfer of property by act of parties again may be

inter vivos or testamentary.

Inter vivos means transfer between two living person whereas

testamentary transfer relates to transfer by will, etc. the

Act covers only inter vivos transfers. Testamentary transfers

are governed by the Indian Succession Act.

This Act applies only to transfers by living persons. It does

not regulate transfers by operation of law. In case of

transfer by living persons both the transferor and the

transferee are living at the time of transfer.

In a transfer by operation of law, the property is transferred

even though the transferor is not alive on the date of

transfer. In this mode of transfer, the property is

transferred automatically by the process of law.

The Act mainly deals with the transfer of immovable property.

There are two types of transfers:

1. By act of parties

2. By operation of law

The transfer by act of parties can be further divided into:

1. Inter vivos transfer

2. Testamentary transfer

The inter vivos transfer is further of two types:

1. Transfer of property whether movable or immovable

2. Transfer of immovable property

Transfer of immovable property may take place through the

following modes:

1. Sale

2. Mortgage

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3. Lease

4. Exchange

5. Gift

6. Transfer of actionable claims

TRANSFER OF PROPERTY BY OPERATION OF LAWThe phrase "by operation of law" is a legal term that

indicates that a right or liability has been created for a

party, irrespective of the intent of that party, because it is

dictated by existing legal principles.

For example, if a person dies without a will, his heirs are

determined by operation of law. Similarly, if a person marries

or has a child after his or her will has been executed, the

law writes this pretermitted spouse or pretermitted heir into

the will if no provision for this situation was specifically

included.

Adverse possession, in which title to land passes because non-

owners have occupied it for a certain period of time, is

another important right that vests by operation of law.

Events that occur by operation of law do so because courts

have determined over time that the rights thus created or

transferred represent what the intent of the party would have

been, had they thought about the situation in advance; or

because the results fulfilled the settled expectations of

parties with respect to their property; or because legal

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instruments of title provide for these transfers to occur

automatically on certain named contingencies.

Rights that arise by operation of law often arise by design of

certain contingencies set forth in a legal instrument.

If a life estate is created in a tract of land, and the person

by whose life the estate is measured dies, title to the

property reverts to the original grantor — or, possibly, to

the grantor's legal heirs — by operation of law. Nothing needs

to be put in writing to affirm that this will happen.

Joint tenants with rights of survivorship create a similar

situation. Joint tenants with rights of survivorship deeds are

always taken in equal shares, and when one joint tenant dies,

the other tenants equally acquire title by virtue of the terms

of the conveyance itself, by operation of law.

TRANSFER OF PROPERTY BY ACT OF PARTIES

All properties either movable or immovable constantly remain

in the state of transfer and no society exists without such

activity. A transfer may be by way of sale, exchange, gift,

lease, mortgage or actionable claim.

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Prior to the year 1882 no law existed which really governed

activities of transfer of properties in India and in the

absence of statutory enactments English Law was adopted which

was not satisfactory due to entirely different social

conditions prevailing in India from that of England.

Since the year 1882 the law relating to the transfer of

properties by the act of the parties is codified in the

Transfer of Property Act, 1882.

The Act contains provisions defining as to what is transfer of

the property, what may be the transfer, person competent to

transfer, conditions restraining the transfer, transfer for

the benefit of unborn person, transfer in perpetuity for the

benefit of public, vested interest, contingent interest,

conditional transfer, etc.

It provides for sales, mortgages, charges and leases of

immovable properties, exchanges, gifts, and transfer of

actionable claim. Though not exhaustive, this act encompasses

important transactions of properties.

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IMMOVABLE PROPERTY: MEANINGSection 3. Interpretation clause. - In this Act, unless there is something

repugnant in the subject or context,

-"immoveable property" does not include standing timber, growing crops or

grass:"

"Immovable property" shall include land, benefits to arise out of land, and

things attached to the earth, or permanently fastened to anything attached to

the earth.1

The Transfer of Property Act, 1882 does not clearly defines

the term ‘immovable property’, but it is an inevitable task to

distinguish, which though not possible practically, between

the two, so as to ascertain the liability of the parties under

a particular statute.

The primary reason as to why the study of the character of

property, i.e., whether it is movable and immovable, is

relevant, is due to the difference in procedural formalities

in the transfer, and the different time stipulated in the law

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of limitation in having recourse to the litigative system in

case of disputes.

The provision of Section 3 of the Transfer of Property Act,

1882 does not provide for a comprehensive definition of

‘immovable property’, however, it only mentions that

‘immovable property’ does not include standing timber, growing

crops, or grass.

Thus the definition only points out certain kinds of property

to be not considered as an immovable property and further

classifies certain kind of properties which can be considered

to be immovable property.

As per the provision of Section 3, the immovable property

includes the things attached to the earth, which has been sub-

divided into three categories:

1. Things rooted in the earth, as in the case of

trees and shrubsThe term ‘things attached to earth’ include things rooted in

earth such as trees and shrubs, but excludes standing timber,

growing crops and grass. These three specific items that have

been excluded are rooted in earth, yet are covered under the

term ‘movable’ property. It signifies that standing timber,

growing crops and grass are distinct from ‘things rooted in

earth as in case of trees and shrubs’.

The Act simply excludes standing timber, which signifies that

those trees that do not fall in the category of standing

timber would invariably be covered under immovable property.

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2.Imbedded in the earth, as in the case of walls or

buildingsIt implies that things attached to earth are immovable

property, therefore, machineries fixed to earth by being set

into the soil is immovable property, but the expression

‘immovable property’ does not include things retaining their

own position merely by their own weight unless the intention

is apparent to make the articles part of the land.

3.Attached to what is so embedded for the permanent

beneficial enjoyment of that to which it is

attachedThe question whether any attachment embedded in the earth or

permanently fastened to anything attached to earth is movable

or immovable, is a mixed question of law and fact, depending

upon the facts and circumstances of each case.

If the mode of attachment is that it is imbedding in the earth

as in the case of walls and buildings, or if the object of the

attachment is for the permanent beneficial enjoyment of the

land to which it is attached, the property would be an

immovable property.

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SECTION 5: “TRANSFER OF PROPERTY”

DEFINED:In the following sections" transfer of property" means an act by which a living

person conveys property, in present or in future, to one or more other living

persons, or to himself, or to himself and one or more other living persons; and"

to transfer property" is to perform such act. In this section" living person"

includes a company or association or body of individuals, whether incorporated

or not, but nothing herein contained shall affect any law for the time being in

force relating to transfer of property to or by companies, associations or

bodies of individuals.

The term "transfer" has been defined in Section 5 of the

Transfer of Property Act, 1882 as forming part of the total

definition of the expression "transfer of property".

This constitutes the definition of transfer under the general

law and the points to be highlighted are as follows:

1. It is an act of a "living person".

2. A "living person" in this context includes the following:

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(i) Any living human being.

(ii) A company.

(iii) An association of persons, whether incorporated or

not.

(iv) A body of individuals, whether incorporated or not.

3. A living person conveys property to another living person

through such an Act. Such other living person can be one

or more in number.

4. When such an act is carried out, it constitutes "transfer

of property".

This definition is general and it also specifies that there

can be transfer of property through separate definitions under

different laws dealing with companies, association of persons,

body of individuals etc.

SECTION 54: SALE DEFINED"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 the case of tangible immovable property of

the value of one hundred rupees and upwards, or in the case of a reversion or

other intangible thing, can be made only by a registered instrument.

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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 or by

delivery of the property.

Delivery of tangible immovable property takes place when the seller places the

buyer or such person as he directs, in possession of the property.

Contract for sale: A contract for the sale of immovable property is a contract

that a sale of such property shall take place on terms settled between the

parties.

It does not, of itself, create any interest in or charge on such property.

Section 54 says that “sale” is a transfer of ownership in

exchange for a price paid or promised or part-promised.

Therefore, sale is transfer of ownership for money

consideration. It implies an absolute transfer of all rights

in the property sold. No rights in the property sold are left

in the transferor.

The two elements that are necessary to constitute a sale are:

1. Transfer of ownership

2. Money consideration

Ownership means a bundle of rights and liabilities in a

property. When there is a transfer of ownership all these

rights and liabilities are transferred to the transferee and

nothing is left for the transferor. The ownership of property

must be transferred in exchange of money.

The money in exchange of property is called “price”.

Transfer of ownership only for money is known as “sale”.

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ESSENTIALS OF SALEEssentials of a valid sale are as under:

1. The parties i.e., the seller and the buyer are competent.

2. The subject matter i.e., the property is in existence.

3. The money consideration i.e., the price has been fixed or

referred.

4. The conveyance i.e., transfer has been made as prescribed

under the law.

1.THE PARTIES:There are two parties in a sale. The transferor is called the

seller and the transferee is called the buyer. Seller and

buyer both must be competent on the date when the sale is

being made. The seller must be competent to contract.

Competency alone is not sufficient. The seller must also have

the right to sell the property. Since only ownership may be

transferred in a sale, therefore, the seller must be the owner

of the property at the time of affecting the sale.

The buyer may be any person provided he is not disqualified to

purchase a property under any law enforced in India. Although

a minor is not competent to contract but, he is a competent

purchaser. Sale in favour of a minor is valid.

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Seller and buyer both may either be human persons or juristic

persons. Thus, property may be sold by a corporation or a

registered firm or any other legal person. Similarly, buyer

can also be a juristic person.

2.SUBJECT MATTER: IMMOVABLE PROPERTY:Sale is the transfer of ownership in some property. This Act

deals with sale of only immovable property. An immovable

property is either tangible or intangible. However, the

immovable property whether it is tangible or intangible must

be in existence on the date of the execution of sale. It must

also be transferable within the meaning of section 6 of the

Act.

3.MONEY CONSIDERATION: THE PRICE:Price is an essential element in transfer by way of sale. The

money consideration which is called “price” is an essential

element of sale. The price must be fixed or referred in the

sale-deed. It may be paid in advance or after execution of the

deed. Some part of it may also be paid at the time of

execution and the rest may be promised to be paid in future.

If no price has been mentioned or ascertained in the sale deed

then even a registered sale deed may not be regarded as sale.

Price must be money consideration. If the ownership is

transferred in exchange of any other kind of consideration,

the transfer is not sale.

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4.CONVEYANCE: MODE OF TRANSFER:Sale is transfer of ownership of an immovable property.

Property therefore must be transferred from seller to the

buyer. Part two of section 54 provides two modes of transfer

of property:

1. Delivery of possession

2. Registration of sale deed

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SECTION 58: MORTGAGE DEFINED"Mortgage", “mortgagor", "mortgagee", "mortgage- money" and "mortgage-

deed" defined.-

(a)A mortgage is the transfer of an interest in specific immoveable property for

the purpose of securing the payment of money advanced or to be advanced by

way of loan, an existing or future debt, or the performance of an engagement

which may give rise to a pecuniary liability. The transferor is called a

mortgagor, the transferee a mortgagee; the principal money and interest of

which payment is secured for the time being are called the mortgage- money,

and the instrument (if any) by which the transfer is effected is called a

mortgage- deed.

Simple mortgage.- (b) Where, without delivering possession of the mortgaged

property, the mortgagor binds himself personally to pay the mortgage- money,

and agrees, expressly or impliedly, that, in the event of his failing to pay

according to his contract, the mortgagee shall have a right to cause the

mortgaged property to be sold and the proceeds of sale to be applied, so far as

may be necessary, in payment of the mortgage- money, the transaction is

called a simple mortgage and the mortgagee a simple mortgagee.

Mortgage by conditional sale. - (c) Where the mortgagor ostensibly sells the

mortgaged property-- on condition that on default of payment of the

mortgage- money on a certain date the sale shall become absolute, or on

condition that on such payment being made the sale shall become void, or on

condition that on such payment being made the buyer shall transfer the

property to the seller, the transaction is called a mortgage by conditional sale

and the mortgagee a mortgagee by conditional sale:

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Provided that no such transaction shall be deemed to be a mortgage, unless

the condition is embodied in the document which effects or purports to affect

the sale.

Usufructuary mortgage.- (d) Where the mortgagor delivers possession or

expressly or by implication binds himself to deliver possession of the

mortgaged property to the mortgagee, and authorizes him to retain such

possession until payment of the mortgage- money, and to receive the rents and

profits accruing from the property or any part of such rents and profits and to

appropriate the same in lieu of interest, or in payment of the mortgage-

money, or partly in lieu of interest or partly in payment of the mortgage-

money, the transaction is called an usufructuary mortgage and the mortgagee

an usufructuary mortgagee.

English mortgage.- (e) Where the mortgagor binds himself to re- pay the

mortgage- money on a certain date, and transfers the mortgaged property

absolutely to the mortgagee, but subject to a proviso that he will retransfer it

to the mortgagor upon payment of the mortgage- money as agreed, the

transaction is called an English mortgage.

Mortgage by deposit of title- deeds. - (f) Where a person in any of the following

towns, namely, the towns of Calcutta, Madras, and Bombay, and in any other

town which the State Government concerned may, by notification in the

Official Gazette, specify in this behalf, delivers to a creditor or his agent

documents of title to immoveable property, with intent to create a security

thereon, the transaction is called a mortgage by deposit of title- deeds.

Anomalous mortgage. - (g) A mortgage which is not a simple mortgage, a

mortgage by conditional sale, an usufructuary mortgage, an English mortgage

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or a mortgage by deposit of title- deeds within the meaning of this section is

called an anomalous mortgage.

A mortgage loan is a loan secured by real property through the

use of a mortgage note which evidences the existence of the

loan and the encumbrance of that realty through the granting

of a mortgage which secures the loan. However, the word

mortgage alone, in everyday usage, is most often used to mean

mortgage loan.

The term comes from the Old French “dead pledge,” apparently

meaning that the pledge ends (dies) either when the obligation

is fulfilled or the property is taken through foreclosure.

ESSENTIALS OF A MORTGAGE:Following essential elements are necessary in a mortgage:

1. There must be a transfer.

2. The interest transferred must be of some specific

immovable property.

3. The purpose of transfer of interest must be to secure

payment of any debt or, performance of an engagement

which may give rise to a pecuniary liability.

TYPES OF MORTAGAGE:1.SIMPLE MORTGAGE: Section 58(b)Section 58 of Transfer of property Act defines simple mortgage

to be a transaction where, without delivery of possession of

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the mortgaged property, the mortgagor bind himself personally

to pay the mortgage money and agrees expressly or impliedly

that in the event of his failing to pay, according to the

contract, the mortgagee shall have right to cause the

mortgaged property to be sold and the proceeds of the sale to

be applied so far as may be necessary in payment of mortgage

money.

2.MORTGAGE BY CONDITIONAL SALE: Section 58(c)It is defined in Section 58(c) of the above Act. There is a

person who wants to create a mortgage on his immovable

property as a security for the money received from a

mortgagee. When such a mortgagor executes a deed in favour of

a mortgagee containing the following terms and conditions, the

transaction becomes a mortgage by conditional sale. The

mortgagor states in the deed that he sells the immovable

property for the mortgage money as a consideration subject to

some conditions.

It is specifically provided that when the due date for

repayment of the money arises and the mortgagor defaults, the

sale becomes absolute and the mortgagee becomes the absolute

owner of the property. However, if the mortgagor makes the

repayment on the due date the sale of property becomes void

and automatically the absolute ownership of the immovable

property goes back to the mortgagor with possession. These

conditions have to be specifically provided in the mortgage

deed.

3.USUFRUCTUARY MORTGAGE: Section 58(d)

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It has been defined in Section 58(d) of the Transfer of

Property Act, 1882. The mortgagor, apart from executing the

deed in favour of the mortgagee on the property, also

physically delivers possession of the property to the

mortgagee. It will be specified in the mortgage deed that on

the payment of the mortgage money on the specified date, the

possession of the property shall be delivered back to the

mortgagor. The main point to be highlighted is that during the

continuance of the mortgage, the mortgagee will not only be in

possession of the property but also will be entitled to all

the rents and profits arising out of it in lieu of the

interest payable by the mortgagor to the mortgagee on the

property. These matters will be clearly specified in the

mortgage deed.

4.ENGLISH MORTGAGE: Section 58(e)It is a kind of a mortgage, where the possession of the

property from the mortgagor is transferred absolutely to the

mortgagee i.e., the mortgagee now has the actual possession of

the property till a certain specified date and can retain the

possession till the time the mortgagor pays back all his dues.

The mortgagee can also make improvements on the land as a

prudent man would have on his own discretion and any

additional increments or costs shall be borne by the

mortgagor. Thus, the mortgagor is liable to clear his dues and

along with it, has to also pay off additional costs to the

mortgagee.

5.MORTGAGE BY DEPOSIT OF TITLE DEEDS: Section 58(f)

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Section 58 of the Transfer of Property Act defines the

Mortgage by Deposit of Title Deeds and in this respect, it is

important to note the following.

(1) This mortgage by deposit of title deeds is available only

in the metropolitan cities of Kolkata, Mumbai, Chennai and

other towns which the State Governments concerned, by

notification in their official gazette, specify.

(2) When the debtor delivers the original documents of title

of his property which is mortgaged to the creditor or his

agent with the intention of creating a security on the same in

favour of the creditor, there is a mortgage by deposit of

title deeds created in favour of the creditor i.e., mortgagee.

(3) This is a mortgage which is largely resorted to, as the

legal formalities are simple and easy to perform.

(4) In this mortgage, no possession is given and there is only

a deposit of original documents of title.

(5) Normally, the matters relating to the deposits of title

deeds are covered by an agreement in writing.

6. ANOMALOUS MORTGAGE: Section 58(g)When a mortgage created does not fall into any one of the

aforesaid categories i.e., a Simple Mortgage, Mortgage by

Conditional Sale, Usufructuary Mortgage, English Mortgage and

Mortgage by Deposit of Title Deeds, it is termed as Anomalous

Mortgage. It can contain the usual terms relating to the

mortgaged debt, interest payable thereon, date of repayment,

and the legal remedy to the mortgagee to recover the debt in

the case of default by the mortgagor, with interest on the

specified date.

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SECTION 105: LEASE DEFINEDA 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 such terms. Lessor,

lessee, premium and rent defined.- The transferor is called the lessor, the

transferee is called the lessee, the price is called the premium, and the money,

share, service or other thing to be so rendered is called the rent.

A lease is a contractual arrangement calling for the lessee

(user) to pay the lessor (owner) for use of an asset. A rental

agreement is a lease in which the asset is tangible property.

[2] Leases for intangible property could include use of a

computer program (similar to a license, but with different

provisions), or use of a radio frequency (such as a contract

with a cell-phone provider). A gross lease is when the tenant

pays a flat rental amount and the landlord pays for all

property charges regularly incurred by the ownership from

lawnmowers and washing machines to handbags and jewellery.

A cancellable lease is a lease that may be terminated solely

by the lessee or solely by the lessor. A non-cancellable lease

is a lease that cannot be so terminated. Commonly, “lease” may

imply a non-cancellable lease, whereas “rental agreement” may

connote a cancellable lease.

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The lease will either provide specific provisions regarding

the responsibilities and rights of the lessee and lessor, or

there will be automatic provisions as a result of local law.

In general, by paying the negotiated fee to the lessor, the

lessee (also called a tenant) has possession and use (the

rental) of the leased property to the exclusion of the lessor

and all others except with the invitation of the tenant. The

most common form of real property lease is a residential

rental agreement between landlord and tenant. The relationship

between the tenant and the landlord is called a tenancy, and

the right to possession by the tenant is sometimes called a

leasehold interest. A lease can be for a fixed period of time

(called the term of the lease) but (depending on the terms of

the lease) may be terminated sooner.

ESSENTIALS OF A LEASE:The essentials of lease are:

1. The parties i.e., transferor and the transferee or the

lessor and the lessee.

2. The demise i.e., right to enjoy immovable property.

3. The term i.e., the duration.

4. The consideration i.e., premium or rent.

1.THE PARTIES:

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In a lease two contracting parties are necessary. The parties

are the lessor and the lessee. Every lease is based on an

agreement between two persons competent to contract. Since one

cannot contract with himself therefore one cannot also grant

any lease to himself.

2.THE DEMISE:Lease is a transfer of right of enjoyment in an immovable

property. It is a partial transfer of interest. The essential

characteristics of a lease are that the subject is occupied

and enjoyed and the corpus of which does not, by reason of the

user, disappear. The right of enjoyment of property is

technically ‘leasehold estate’ and is transferred after being

separated from ownership. This right is a right in rem. In a

lease, the property must be immovable.

3.THE TERM:The right of enjoyment must be given to the lessee for a

certain period of time. The period for which the right to use

the property is transferred is called ‘term’ of the lease. The

term may be any period of time, longer or shorter, even for

perpetuity. The lease may commence immediately after the

execution of deed or, may commence with effect from a

specified future date. The date of commencement may also

depend on some future event. All that is required is that the

duration of lease is ascertainable; it should not be vague or

ambiguous.

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4.CONSIDERATION:The contract of lease must be supported with consideration.

Consideration in a lease may be premium or rent. Where the

whole amount to be recovered as consideration from the lessee

is paid by him lump sum, the consideration is called premium.

Consideration paid periodically is called rent of the lease.

Rent need not necessarily be in the form of money. Under this

section, rent may be paid in the form of services rendered by

lessee to lessor.

SECTION 118: EXCHANGE DEFINED:When two persons mutually transfer the ownership of one thing for the

ownership of another, neither thing or both things being money only, the

transaction is called an" exchange".

A transfer of property in completion of an exchange can be made only in

manner provided for the transfer of such property by sale.

Sec.118 of the Transfer of Property Act defines Exchange to

the effect that when two persons mutually transfer ownership

of one thing with the ownership of other thing being money or

both things being money only. The transaction is called an

Exchanged.

An important criterion for Exchange is that the properties to

be exchanged cannot be money. Immovable property can be

exchange for immovable property and /or immovable property.

The basic difference between Sale and Exchange is that in

Exchange the consideration for transferring one property will

be other property but not money. Money can be paid for the

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difference for equalising the price of the two properties

while in Sale the consideration is the form of money.

ESSENTIALS OF A VALID EXCHANGE:The characterstic features of exchange are:

1. Transfer of ownership

2. Properties need not be immovable

3. Exchange includes barter

4. Mode of transfer

1.TRANSFER OF OWNERSHIP:Exchange is a transfer of ownership in some existing property.

The ownership of one party must be exclusive of ownership of

the other.

2.PROPERTIES NEED NOT BE IMMOVABLE:Both properties which are the subject-matter of exchange need

not be movable. Ownership in an immovable property may be

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transferred in return of ownership in movable property.

Transfer of immovable with another immovable with some

movable, is also exchange. Similarly, where property is

transferred for consideration of another property and some

money is also paid for bringing out equality of valuation, the

transaction is exchange.

3.EXCHANGE INCLUDES BARTER:Transfer of ownership in some movable property in

consideration of transfer of ownership in another movable

property is called barter. Definition given in this section

includes barter.

4.MODE OF TRANSFER:Second paragraph of Section 118 provides that an exchange can

be made only in the manner in which a sale is affected. Thus,

transfer by way of exchange must be completed with the same

formalities as are required for completion of sale under the

Act.

Where both properties and are of the value exceeding Rs. 100,

registration of the document is compulsory.

Where immovable properties are valued less than Rs. 100,

registration is optional, it is not compulsory and the

delivery of possession is sufficient to complete the transfer.

However, it is not necessary that the word “exchange” is used

in the document.

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SECTION 122: GIFT DEFINED:"Gift" is the transfer of certain existing moveable or immoveable property

made voluntarily and without consideration, by one person, called the donor,

to another, called the donee, and accepted by or on behalf of the donee.

Acceptance when to be made. - Such acceptance must be made during the

lifetime of the donor and while he is still capable of giving. If the donee dies

before acceptance, the gift is void.

Gift is a transfer of property and is defined in Section 122

of the Transfer of Property Act, 1882. It is a unique transfer

of property in the sense that it involves no consideration.

The basic essence of a gift is the complete absence of

consideration. The law of gifts in India is governed by

Sections 122 to 129 of the Transfer of Property Act, 1882.

However Mohammedan gifts are subject to the rules of Muslim

Law and the Transfer of Property Act, 1882 is not applicable

to such gifts.

Gift is the transfer of certain existing movable or immovable

property made voluntarily and without consideration, by one

person, called the donor to another, called donee and accepted

by or on behalf of donee. Such acceptance must be made during

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the lifetime of the donor and while he is still capable of

giving. If the donee dies before acceptance, the gift is void.

ESSENTIALS OF A VALID GIFT:

The following are the essential elements of a gift:

1.VOLUNTARY AND WITHOUT CONSIDERATION:The transfer of movable or immovable property should be

voluntary and without consideration. The gift of property by

undue influence makes the gift voidable and a suit to set it

aside can be brought within three years prescribed by the

Limitation Act.

2.DONOR:The person transferring the property is called the donor and

everyone who is sui juris can dispose by way of gift of any

property or of any estate or interest in it to which he is

absolutely entitled.

3.DONEE:The person accepting the gift is the Donee. All persons

whether sui juris or not are competent to receive gifts. A

minor can accept the gift, other than where gift is onerous.

4.SUBJECT MATTER OF GIFT:All property, real and personal, corporeal and incorporeal may

be the subject of gift. A future property or mere expectancy,

such as an expectation of succession to property, as the

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possible heir or one of the possible next of kin of a living

person cannot be transferred by gift.

5.TRANSFER:The donor should transfer the property voluntarily and without

consideration.

6.ACCEPTANCE:The acceptance of gift should be made by the donee. The

acceptance may be express or may be inferred by the donee's

possession of the property or even the donee's possession of

the deed of gift within the meaning of section 123, Transfer

of Property Act, and therefore the gift became effectual,

subject to registration and it is immaterial that the deed was

not stamped.

The guardian of a minor can accept the gift for him, although

he cannot incur an obligation.

The acceptance of gift must be in the lifetime of the donor

and if the donor dies before acceptance, there cannot be a

gift.

However, if the donor dies after acceptance of the gift, but

before the deed is registered, the transfer may be completed

by registration after the death of the donor.

In case of registered gift deed, where execution is not denied

by executor, proviso to section 68, Evidence Act is attracted

and formal proof of gift deed is not necessary.

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SECTION 130:

TRANSFER OF ACTIONABLE CLAIMS(1) The transfer of an actionable claim whether with or without consideration

shall be effected only by the execution of an instrument in writing signed by

the transferor or his duly authorized agent, shall be complete and effectual

upon the execution of such instrument, and thereupon all the rights and

remedies of the transferor, whether by way of damages or otherwise, shall vest

in the transferee, whether such notice of the transfer as is hereinafter

provided be given or not: Provided that every dealing with the debt or other

actionable claim by the debtor or other person from or against whom the

transferor would, but for such instrument of transfer as aforesaid, have been

entitled to recover or enforce such debt or other actionable claim, shall (save

where the debtor or other person is a party to the transfer or has received

express notice thereof as hereinafter provided) be valid as against such

transfer.

(2) The transferee of an actionable claim may, upon the execution of such

instrument of transfer as aforesaid, sue or institute proceedings for the same

in his own name without obtaining the transferor' s consent to such suit or

proceedings and without making him a party thereto.

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Exception.-- Nothing in this section applies to the transfer of a marine or fire

policy of insurance or affects the provisions of section 38 of the Insurance Act,

1938 (4 of 1938 ).

As per Section 3 of the Transfer of Property Act, 1882

"Actionable Claim is a claim to any debt, other than a debt secured by

mortgage of immovable property or by hypothecation or pledge of moveable

property, or to any beneficial interest in moveable property not in possession

either actual or constructive, of the claimant, which the civil courts recognise

as affording grounds of relief whether such debt or beneficial interest be

existent, accruing or conditional or contingent."

An actionable claim means any unsecured debt or any beneficial

interest in movable property, not in possession, actual or

constructive, of the claimant. It is a claim relating to a

simple debt for which there is no security of movable or

immovable property.

The mode of transfer or assignment of an actionable claim may

be, by way of sale, mortgage, gift or exchange. The assignment

of an actionable claim must be affected by an instrument in

writing signed by the transferor or his duly authorized agent.

The assignment need not be made by a separate document but

only an endorsement at the back of a document comprising the

actionable claim is enough.

The transfer or assignment shall take effect from the date of

the execution of the writing and its effect is to vest all the

rights and remedies of the transferor in the transferee.

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After the transfer, the transferee is subjected to all the

liabilities and equities to which the transferor was subjected

at the date of the transfer.

The transferee, in his own interest, must give notice of the

transfer to the debtor, as early as possible. Once the debtor

receives the notice of assignment, he becomes liable to pay

the debt only to the transferee. Such a notice must be in

writing and it must state the name and address of the

transferee. There is no time limit for giving the notice.

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BIBLIOGRAPHYhttp://en.wikipedia.org/wiki/Operation_of_law

http://www.sudhirlaw.com/Business5.html

http://jurisonline.in/2011/06/the-concept-of-movable-and-immovable-

property-under-the-transfer-of-property-act-1882-2/

http://www.hindu.com/pp/2007/01/27/stories/2007012700780300.htm

http://www.legallight.in/gift.html

http://en.wikipedia.org/wiki/Immovable_property

Dr. R. K. Sinha, The Transfer of Property Act, 11th Edn. Central

Law Agency,2010

Mulla, The Transfer of Property Act, 10th Edn. Lexis Nexis

Butterworths

Dr. Avatar Singh, A Textbook on The Transfer of Property Act, 2005

Edn. Universal Law Publishing Company

Dr. G.P. Tripathi, The Transfer of Property Act, 15th Edn. Central

Law Publications

H.N. Tiwari, Transfer of Property Act, 4th Edn. Allahabad Law Agency

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