Second-year Law Notes & Flashcards

Introduction 

The Transfer of Property Act, 1882 governs the transfer of property in India and lays down the principles regulating voluntary and involuntary transfers. The Act came into force on 1st July 1882 and defines the circumstances under which property may be transferred and the conditions attached thereto.  

Under the Act, a transfer of property means an act by which a living person conveys property to one or more other living persons, or to himself and one or more other living persons, either in the present or in the future. The term “person” includes an individual, company, association, or body of individuals.  

Property capable of transfer may be: 

• Movable property, or
• Immovable property

“Immovable property” does not include standing timber, growing crops, or grass. Section 3(26) of the General Clauses Act, 1897 defines immovable property to include land, benefits arising out of land, and things attached to or permanently fastened to the earth. Similar emphasis is found in Section 2(6) of the Registration Act, 1908.  

Accordingly, land, buildings, hereditary allowances, rights to ways, lights, ferries, fisheries, and other benefits arising out of land are treated as immovable property, excluding standing timber, growing crops, and grass.  

Eligibility for Gift under the Transfer of Property Act 

Any person who is competent to contract is competent to transfer property, either wholly or in part. Such transfer may be made orally unless a specific law requires the transfer to be in writing.  

Where a person is physically incapable of signing but is mentally competent, execution may be done through a power of attorney.  

Property law in India is also governed by several allied legislations, including:  

• Trusts Act, 1882
• Specific Relief Act, 1963
• Easements Act, 1882
• Registration Act, 1908
• Stamp Act, 1899
• U.P. Stamp Act, 2008
• Limitation Act, 1963
• General Clauses Act, 1897
• Evidence Act, 1872
• Succession Act, 1925
• Partition Act, 1893
• Presidency Towns Insolvency Act, 1909
• Provincial Insolvency Act, 1920
• Recovery of Debts Due to Banks and Financial Institutions Act, 1993
• SARFAESI Act, 2002
• Contract Act, 1930
• Sale of Goods Act, 1930
• Negotiable Instruments Act, 1881
• Enemy Property Act

Concept of Gift under the Transfer of Property Act 

Section 122 of the Transfer of Property Act defines a gift as the transfer of any existing movable or immovable property made voluntarily and without consideration, by one person (donor) to another (donee), and accepted by or on behalf of the donee.  

Acceptance of Gift – When to be Made 

Acceptance of a gift must be made during the lifetime of the donor and while the donor is capable of giving. If the donee dies before acceptance, the gift becomes void.  

Section 122 contemplates an absolute gift (gift inter vivos). Other kinds of gifts include:  

Gift of personal property (Gift mortis causa) 

This gift is made in contemplation of the donor’s death and is conditional upon the donor dying as anticipated.  

Gifts by Will 

Gifts mortis causa are expressly excluded from the scope of the Transfer of Property Act by Section 129. Gifts by will are governed by the Indian Succession Act, 1925.  

Only gifts inter vivos, i.e., transfers between living persons that become absolute during the lifetime of both donor and donee, fall within the purview of the Transfer of Property Act.  

At the time of marriage of daughters or sisters, a transfer of land towards pasupu kumkum is not regarded as a gift under Section 122, as such transfer is considered both involuntary and supported by consideration, and hence falls outside the scope of the provision.  

Essential Ingredients of a Valid Gift Inter Vivos 

The essential elements of a valid gift under the Transfer of Property Act are:  

• Absence of consideration
• Existence of a donor
• Existence of a donee
• Subject matter (property gifted)
• Donative intention
• Delivery of property
• Acceptance by the donee

If the requirements of Section 122 of the Transfer of Property Act, read with Section 17 of the Registration Act, are fulfilled, the gift is considered valid.  

Gift or Will – Test of Distinction 

Whether an instrument constitutes a gift or a will depends upon the intention of the executant, gathered from:  

• The language used in the document
• The title of the document
• Registration
• Reservation of the power of revocation
• Use of present or future tense

Gift by Life Estate Holder 

A gift made by a life estate holder is valid only during the lifetime of the donor and is not binding upon the reversioners after the donor’s death.  

Property Capable of Being Gifted 

Only gifts of tangible property fall within the scope of the Act. A mere release of a security without consideration does not amount to a gift under the Act.  

An existing property is an essential requirement for a valid gift. Under Section 6, the property must be transferable, and the subject matter must be a certain movable or immovable property. Where a gift consists of a sum of money entered in books of account, such amount must be duly credited or debited in the firm’s accounts.  

Gift of Money 

A gift of money in cash does not require registration and need not comply with the formalities prescribed under Sections 122 and 123 of the Act.  

Gift to God 

Under Section 123 of the Transfer of Property Act, a transfer of property by a Hindu in favour of God is not treated as a valid gift. Such dedication may, therefore, be made without a registered instrument.  

Transfer of Gift – How Effected 

Gift of immovable property must be effected through a registered instrument, signed by or on behalf of the donor and attested by at least two witnesses.  

Gift of movable property may be effected either by a registered instrument or by delivery of possession.  

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