Law regarding Transfer of Property in India

Transfer of Property Act, 1882 ("TPA") governs the transfer of movable or immovable property between two living parties in India. This act runs side by side with the Indian succession laws but both these laws are a bit different. The main difference is that for a property to be transferred under TPA, both the parties have to be alive whereas, for a property to be transferred under Succession Act, one of the parties has to be deceased.

Transfer of property is defined under Section 5 which means an act of conveyance of a property from one living person to another living person in the present or in the future. As per Section 6, any type of property can be transferred except for the following:

1. Succession of an heir-apparent to an estate, a relative obtaining legacy after the death of a kinsman or any other likely possibility which cannot be transferred;

2. A mere right of re-entry for breach of a condition cannot be transferred to anyone except the affected owner of the property;

3. An easement apart from the dominant heritage;

4. An interest in property restricted in its enjoyment to the owner;

5. Right to future maintenance whether secured or determined;

6. A mere right to sue;

7. Neither public office nor the salary of a public officer whether before or after it has become payable;

8. Stipends which are given to military, naval, air-force and civil pensioners of the Government and political pensions;

9. Any transfer opposed to the nature of the interest affected thereby;

10. An unlawful object or consideration within the meaning of Section 23 of the Indian Contract Act, 1872

11. To any person legally disqualified to receive such transfer.

There are different ways by which transfer of property can be done:

1. Gift

2. Exchange

3. Actionable Claim

4. Sale

5. Lease

6. Mortgage

Every person who is capable to enter into contracts and entitled to transferable property or authorised to dispose of transferable property which does not belong to him is competent to transfer such property as per TPA.  A property can be transferred orally unless the law expressly clears that a written transfer agreement has to be made to make the transfer. 

Property cannot be transferred directly to an unborn child. For a property to be transferred to an unborn child, the transferor should first transfer the property to a person who will be alive on the date of transfer. The property will be vested in the interest of this person till the child is born. After the child is born then will the property be transferred to that child. Basically, the property cannot be transferred without a prior vested interest in a living person.

Under this Act, there is a concept of conditional transfer. This means that if it is promised that the property will be transferred on a condition then the transfer will become invalid if that condition cannot be fulfilled due to it being impossible or because it is forbidden by law or due to fraud or because it causes injury to the person or the Court regards this as immoral etc.

There have been many amendments done to this Act to make it applicable to the changing times. The recent being the Supreme Court verdict stating that disputes between landlord and tenant can be resolved under arbitration. This verdict was given in the case of Vidya Drolia and others v. Durga Trading Corporation on 14th December 2020. This judgment will be very useful for the speedy disposal of these disputes instead of long years of pending litigation. These disputes can only be tried under arbitration if a clause regarding arbitration is mentioned in the rent agreement which depends on both parties. This judgment overrules a 2017 judgment given by the Supreme Court which stated that landlord-tenant disputes are governed by rent control laws and cannot be resolved through arbitration. The government and judiciary can approach lawyers who can take up alternative dispute resolution on a timely basis. This judgment will help in solving the problems which the landlord and tenant face in fulfilling the legal requirements during pending litigation.