Persons Competent to Transfer under Transfer of Property Act

The law relating to transfer of property plays a crucial role in regulating the ownership and possession of property in India. Among the many provisions of the Transfer of Property Act, 1882, Section 7 occupies a significant place as it defines the persons competent to transfer property. Understanding this provision is essential for legal practitioners, property owners, and buyers alike to ensure that property transactions are legally valid and enforceable.

This article aims to provide a comprehensive explanation of who is competent to transfer property under Section 7, what conditions must be satisfied, and how these requirements safeguard the interests of parties involved in property transactions.

Introduction to Section 7 of the Transfer of Property Act

Section 7 of the Transfer of Property Act, 1882 states:

“Every person competent to contract and entitled to transferable property, or authorised to dispose of transferable property not his own, is competent to transfer such property either wholly or in part and either absolutely or conditionally, in the circumstances, to the extent and in the manner, allowed and prescribed by any law for the time being in force.”

This section sets out two primary conditions that must be fulfilled for a person to be competent to transfer property:

• Competency to contract, as defined by the Indian Contract Act, 1872
• Entitlement or authority to transfer the property

Both conditions must be satisfied simultaneously for a transfer to be valid.

The Concept of Competency to Contract

To be competent to transfer property, a person must first be competent to contract. This competency is governed by the Indian Contract Act, 1872, specifically Section 11.

According to Section 11 of the Contract Act:

“Every person is competent to contract who is of the age of majority according to the law to which he is subject, who is of sound mind, and is not disqualified from contracting by any law to which he is subject.”

Let us understand each element of this competency:

Age of Majority

The age of majority is the age at which a person is considered legally capable of entering into contracts.

• The Majority Act, 1875 prescribes the age of majority in India as 18 years.
• The law to which the person is subject determines the exact age; personal laws may sometimes modify this.

A minor is generally not competent to contract. Therefore, a minor cannot transfer property as a transferor. However, a minor can be a transferee (person receiving the property), as Section 7 only requires the transferor to be competent to contract.

Sound Mind

Being of sound mind means the person must be capable of understanding the terms of the contract and making a rational judgment regarding its effects on their interests.

• Section 12 of the Indian Contract Act defines sound mind as being capable of understanding the nature and consequences of the contract at the time of making it.
• A contract made by a person of unsound mind is void.
• If a person who is usually of unsound mind is temporarily of sound mind at the time of contract, the contract made during that lucid interval is valid.

Not Disqualified by Law

Certain persons are disqualified from contracting by law, which also renders them incompetent to transfer property. These include:

• Alien enemies: Persons who are nationals of enemy countries during wartime.
• Undischarged insolvents: Persons declared insolvent who have not been legally released from insolvency.
• Persons disqualified by any other law, for instance, due to certain criminal convictions or legal disabilities.

Transferable Property

Before discussing who is competent to transfer, it is important to understand what property is transferable under the Act.

Section 6 of the Transfer of Property Act defines transferable property as property that can be transferred by law, including both movable and immovable property.

Types of Transferable Property

• Immovable property: Land, buildings, rights to use land (leaseholds), easements.
• Certain movable property: Shares, actionable claims, goodwill.

Property Not Transferable

Some rights and interests cannot be transferred. Section 6 specifically excludes:

• Sovereign rights: Powers such as the right to levy taxes.
• Public duties: Obligations owed to the public, such as polluting a public water source.
• Marriage rights: Rights arising solely from marriage or family relations.
• Non-transferable contracts: Certain rights or obligations that cannot be assigned or delegated.

Entitlement or Authority to Transfer

Merely being competent to contract is not sufficient. The person transferring property must also have:

• Ownership or title to the property, or
• Legal authority to transfer the property belonging to another.

Ownership or Title

• The transferor must hold the property either legally or equitably.
• This can include full ownership or lesser interests such as life estates or leaseholds.
• A person can only transfer the interest or estate they own.

Authority to Transfer Property Not Owned

In some cases, a person may transfer property they do not own, if legally authorised. Examples include:

• Guardians transferring property of a minor under guardianship laws.
• Executors and administrators transferring property of a deceased person’s estate.
• Power of attorney holders transferring property on behalf of the principal.
• Trustees transferring trust property as per the terms of the trust.
• Karta of a Hindu joint family transferring joint family property.

Scope of the Transfer

Section 7 also clarifies the manner in which a competent person may transfer property:

• The transfer may be wholly or partially—the entire property or part thereof.
• The transfer may be absolute or conditional—immediate vesting of ownership or subject to conditions such as age attainment or performance of certain acts.

Whole or Part Transfer

A transferor can transfer full ownership or a specific share/interest in the property. For example, a person owning 100 acres can transfer 50 acres to one party and 50 acres to another.

Absolute or Conditional Transfer

• Absolute transfer vests complete ownership in the transferee without conditions.
• Conditional transfer may impose conditions or limitations. For example, a transfer that vests ownership only when the transferee attains 21 years of age.

Special Considerations on Competency

Minors and Transfer

• A minor cannot transfer property because they are not competent to contract.
• A minor, however, can receive property (be a transferee).
• Transfer by guardians of minors often requires court sanction under applicable personal laws.

Persons of Unsound Mind

• Persons declared of unsound mind are incompetent to transfer.
• If a person is temporarily of sound mind, transfers made during that time may be valid.
• Transfers by court-appointed managers or guardians acting for such persons are recognised by law.

Disqualified Persons

• Alien enemies cannot transfer property during war.
• Insolvents and persons disqualified by statute are also incompetent to transfer.

Legal Formalities for Transfer

Even when a person is competent and entitled, compliance with statutory formalities is mandatory for certain transfers to be valid:

• Writing: Most transfers of immovable property must be in writing under the Indian Registration Act.
• Registration: Transfers of immovable property must be registered.
• Attestation and delivery: Signature and physical or constructive delivery may be required.

Failure to comply with these formalities may render the transfer invalid, regardless of competency.

Conclusion

Section 7 of the Transfer of Property Act, 1882 imposes clear and necessary conditions on who may transfer property in India. By combining the concepts of competency to contract and rightful entitlement or authority, the law protects parties from invalid or unauthorised transfers, preserving the sanctity of property rights.

For a transfer to be valid, the transferor must be:

• Of legal age and sound mind,
• Not disqualified by law,
• Owner or authorised to transfer the property,
• And must comply with the procedural requirements laid down by law.

Understanding these requirements helps ensure that property transactions are legally sound, minimise risks of disputes, and promote confidence in the property market.