Transferable and Non-Transferable Property

The Transfer of Property Act, 1882, is a key legislation in Indian law that governs the transfer of property rights between living persons. Section 6 of the Act is particularly significant as it delineates which types of property can be transferred and which cannot. Understanding these distinctions is important for legal practitioners, property owners and potential buyers or transferees. This article provides an in-depth analysis of transferable and non-transferable property under the Transfer of Property Act, 1882, focusing on the provisions and exemptions laid out in Section 6.

Transferable Property

Transferable property refers to any property that can be legally transferred or assigned from one person to another. This transfer can occur through various legal mechanisms such as sale, gift or exchange. Section 6 of the Transfer of Property Act allows for the transfer of most types of property, subject to certain conditions and exceptions.

Types of Transferable Property

1. Real Estate: This includes land and buildings, which can be transferred through sale deeds, lease agreements or mortgages.
2. Movable Assets: These are tangible goods like vehicles, machinery and other physical items that can be transferred by delivery and documentation.
3. Intellectual Property: Patents, copyrights and trademarks can be transferred through licensing agreements or assignments.
4. Financial Instruments: Shares, bonds and other securities can be transferred through stock exchanges or direct agreements.

Non-Transferable Property

Non-transferable property consists of assets that cannot be legally transferred due to specific restrictions outlined in Section 6 and its sub-clauses. These restrictions ensure that certain properties, which hold unique or personal value, remain non-transferable to preserve their intended purpose or nature.

Key Provisions of Section 6 of Transfer of Property Act for Transferable and Non-Transferable Property

Section 6 lists several types of property that are not transferable. These include:

1. Spes Successionis: The chance of an heir apparent succeeding to an estate cannot be transferred. This concept, known as “spes successionis,” is addressed in Section 6(a) of the Act.
2. Personal Rights: Rights that are inherently personal to an individual, such as personal skills and abilities, cannot be transferred.
3. Future Maintenance: Any right to future maintenance, whether arising in any manner or determined, is non-transferable.
4. Mere Right to Sue: The mere right to sue is not transferable. This means that one cannot transfer their right to pursue legal action to another person.
5. Public Office: A public office and the salary associated with it, whether before or after it has become payable, cannot be transferred.
6. Stipends to Military/Naval/Air Force Personnel: Stipends allowed to military, naval or air force personnel are non-transferable.

Detailed Analysis of Exemptions Under Section 6: Transferable and Non-Transferable Property

Section 6: What May Be Transferred

Section 6 of the Transfer of Property Act specifies that property of any kind may be transferred, except as otherwise provided by this Act or by any other law for the time being in force. The section then lists various exceptions, which we will discuss in detail through its sub-sections.

Sub-Section (a): Transfer of Spes Successionis

Spes successionis or the chance of an heir apparent to succeed to an estate, is explicitly made void under Section 6(a). This provision ensures that an individual who stands to inherit property in the future cannot transfer their expected inheritance.

Example: Consider a family where Father Ram owns a property and his son Shyam is the heir apparent. As long as Ram is alive, he retains full ownership of the property. Shyam cannot sell or transfer the property without Ram’s consent. If Ram dies intestate (without a will), Shyam may inherit the property. However, if Shyam attempts to transfer his future inheritance while Ram is still alive, such a transfer would be void ab initio (void from the outset). This provision was upheld in the case of Official Assignee, Madras v. Sampath Naidu, where the court observed that a mortgage executed by an heir apparent is void even if he subsequently acquires the property as an heir.

Sub-Section (b): Right of Re-entry

The right of re-entry refers to the right to resume possession of land that has been given to another person for a certain period. This right is commonly seen in lease agreements, where the lessor can re-enter the premises if the lessee fails to pay rent or breaches other terms of the lease.

Example: In the case of Re Davis and Company, A purchased goods from B under a hire purchase agreement that included a right of re-entry clause. If A failed to pay the installments, B could enter A’s premises and reclaim the goods. However, the right of re-entry is a personal right and cannot be transferred by B to another party. Any attempt to transfer this right would be void.

Sub-Section (c): Easement

An easement is a right that the owner or occupier of certain land possesses for the beneficial enjoyment of that land. This right allows them to do something on another’s land or prevent something from being done. Easements include the principle of “profits à prendre,” which means the right to enjoy benefits arising from the land.

Example: If A has the right of way over B’s land to access his own property, this is an easement. Similarly, in Ganesh Prakash v. Khandu Baksh, it was held that the right to dry clothes over the roofs of shops constitutes an easement. Importantly, an easement cannot be transferred apart from the dominant heritage to which it is attached, as established in Sital v. Delanney.

Sub-Section (d): Restricted Interests

This clause states that a person cannot transfer an interest that is restricted to their enjoyment.

Example: Two brothers partition a property and grant each other a right of pre-emption, meaning if one wants to sell their share, they must first offer it to the other. This right is personal and non-transferable. In Shoilojanund v. Peary Charon, the court held that the right to receive voluntary and uncertain offerings at worship is a personal interest and cannot be transferred.

Non-transferable interests include:

• Services Tenure
• Religious Office
• Right of Pre-emption
• Emoluments attached to a priestly office

Sub-Section (dd): Right to Future Maintenance

The right to future maintenance is a personal benefit and cannot be transferred.

Example: A woman’s right to receive maintenance from her husband under a court decree or to receive a share of his property upon his death is personal. This right cannot be transferred or attached by a court’s decree, as upheld in Dhupnath v. Ramacharit.

Sub-Section (e): Mere Right to Sue

A mere right to sue cannot be transferred.

Example: In Sethupathi v. Chidambaram, the court held that a bare right to sue, where the transferee has no interest other than the right to sue, is non-transferable. For instance, if A contracts to buy goods from B and fails to take delivery, causing B a loss, B cannot transfer the right to recover damages to C. Such a transfer would be invalid.

Sub-Section (f): Public Office

A public office and the associated salary cannot be transferred.

Example: In Ananthayya v. Subba Rao, the court held that an agreement where a person agreed to pay a portion of his income to his brother in consideration of maintenance does not fall under this provision. Public offices and the salaries linked to them are non-transferable because they are personal remunerations for public duties.

Sub-Section (g): Pensions

Pensions are sums of money periodically payable by the government to ex-servicemen or retired employees. Pensions are non-transferable as long as they are unpaid and held by the government.

Example: In Saundariya Bai v. Union of India, the court held that pensions are non-transferable, distinguishing them from bonuses and rewards, which are transferable.

Sub-Section (h): Nature of Interest

No transfer can be made if it is opposed to the nature of the interest affected. This includes properties dedicated to public or religious uses.

Transfer for Unlawful Object or Consideration: Any transfer for an unlawful object or consideration is void. This is consistent with Section 23 of the Indian Contract Act, which states that an object or consideration is unlawful if it is fraudulent, opposed to public policy, forbidden by law or defeats the provisions of any law.

Transfer to Legally Disqualified Persons: A transfer to a person legally disqualified to be a transferee is not permitted. Under Section 7 of the Act, the transferee must be competent to contract and not legally disqualified.

Sub-Section (i): Statutory Prohibitions on the Transfer of Interest

This section clarifies that a tenant with an un-transferable right of occupancy cannot transfer their interest.

Example: In Shanti Prasad v. Bachchi Devi, the court held that an un-transferable right of occupancy cannot be transferred. However, the section also contains exceptions, indicating that while most tenancies are transferable, certain statutory provisions make specific leasehold interests or tenancies non-transferable.

Differences Between Transferable and Non-Transferable Property

Understanding the differences between transferable and non-transferable property is important for legal, financial and personal decision-making. Transferable properties offer flexibility in ownership and potential financial gains, while non-transferable properties often come with restrictions that preserve their unique value and purpose.

Conclusion

The Transfer of Property Act, 1882, particularly Section 6, provides a comprehensive framework for understanding which properties can be transferred and which cannot. By clearly defining transferable and non-transferable properties, the Act ensures legal clarity, protects individual rights and maintains the integrity of property transactions.