Essentials Of A Valid Transfer

DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

VISAKHAPATNAM, A.P., INDIA

PROJECT TITLE
ESSENTIALS OF A VALID TRANSFER

SUBJECT
DRAFTING, PLEADING AND CONVEYANCE (DPC)

SUBMITTED TO
DR. GANTA SATYANARAYANA
PROFESSOR, DSNLU

SUBMITTED BY
PALAK RAWAT
ROLL NO. - 2018059

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 Essentials Of A Valid Transfer

SEMESTER - VII

ACKNOWLEDGEMENT

I would sincerely like to put forward my heartfelt appreciation to our respected DPC subject
teacher Professor Ganta Satyanarayana Sir for giving me this golden opportunity to take up
the project work on Essentials of a Valid Transfer. It is because of his excellent knowledge,
experience and guidance, this project is made with great interest and effort. 

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 Essentials Of A Valid Transfer

TABLE OF CONTENTS

TITLE PAGE NO.

1. Introduction 4

2. Definition of Property 5

3. Attestation and Registration of 7

Transfer Deed

4. What may be transferred under 9

Section 6 of the TP act

5. Person must be competent to transfer 11

under Section 7

6. The transferor cannot convey a 14

better title to the transferee that the
transferor himself possess

7. Methods of transfer 15

8. There must not be any conditions 18

restraining alienation

9. The transfer must not be fraudulent 20

under section 53 of the TP act

10. Sample Transfer Agreement 21

11. Conclusion 24

12. Bibliography 25

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 Essentials Of A Valid Transfer

INTRODUCTION

The word “transfer” is defined with the reference to the word “convey”. This word in English
Law in its narrower and more usual sense refers to the transfer of an estate in land; but it is
sometimes used in a much wider sense to include any form of assurance inter vivos.
The word “conveys” in Section 5 of the Indian Act is used in the wider sense referred to
above. Transferor must have an interest in the property. He cannot sever himself from it and
yet convey it.1 A lease comes within the meaning of the word “transfer”.2
The words “living person” exclude transfers by Wills and the Will only operates after the
death of the testator.
In Ma Kyin Hone v. Ong Boon Hock,3 A single Judge of the Rangoon High Court said that
the word “transfer” is a word of very wide meaning and includes every transaction whereby a
party divests himself or is divested of a portion of his interest, that portion subsequently
vesting or being vested in another party. This meaning of transfer is supported by the
aforesaid definition in the Act.
The Legislature has not attempted to define the word “property”, but it is used in this Act in
its widest and most generic legal sense.4 Section 6 says that property of any kind may be
transferred etc. Thus an actionable claim is property5 and so is a right to a reconveyance of
land.6 Property is not only the thing which is the subject matter of ownership, but includes the
dominion or the right or ownership or of partial ownership, and as Lord Langdale said it is
the most comprehensive of all terms which can be used inasmuch as it is indicative and
descriptive of every possible interest which the party can have.7
It may be noted that property is essentially a bundle of rights and interests. When a property
is transferred, there may be transfer of all the rights in that property or only some of it. All the
rights in the property signify ownership or absolute interest. Only some rights or interests in a
property would mean partial or limited interest. In Sunil Siddharth Bhai v. Commissioner of
Income Tax,8 the Supreme Court rightly observed that in general, transfer of property means

1
Mulla, The Transfer of Property Act, 9 th Ed., LexisNexis Butterworths, 2004, p. 73.
2
Krishna Kumar Khemka v. Grindlays Bank PLC, AIR 1991 SC 899.
3
AIR 1937 Rang. 47.
4
Bansi Gopal v. V.K. Banerji, AIR 1949 All. 433.
5
6
Rudra Perkash v. Krishna, (1887) 14 Cal. 241, 244.
Narasingarji v. Panaganti, AIR 1921 Mad. 498.
7
Jones v. Skinner, (1835) 5 LJ Ch. 87, 90.
8
AIR 1986 SC 368.

4
 Essentials Of A Valid Transfer

passing of a right in the property from one person to another. In one case there may be
passing of the entire bundle of rights from transferor to transferee, but in another case there
may be transfer only some of such rights.
Illustration - Thus, if A makes a gift of his house to B, there is a transfer of absolute interest
of the house. It is a transfer of property. On the other hand, if A transfers the right of
enjoyment of his house to B for a certain period it is called a lease. It is a transfer of only
partial interest in the house but it is also a transfer of property.9

DEFINITION OF PROPERTY

Section 5 of the Transfer of Property Act defines transfer of property, 1882 as “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 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.
1. Living Persons
The words living person can only mean a human being, who is alive and conveys his
property to another person. A person, who disposes of his property by will, does not convey
it as a living person because the transfer takes effect after his death. There is no present
transfer.13
The words used as the transfer under the Act must be a deed inter vivos and not by will.
According to the Section, both the transferor and the transferee must be living, which
includes under Section 13 a person not in existence at the date of the transfer14. The
explanation to the section further includes in the phrase a company or association or body or
individuals whether incorporated or not. So does also “person” according to the General
Clauses Act, 1897. 15
In Bhupathi Nath v. Ram Lal,25 a full bench of the Calcutta High Court dealing with a Hindu

9
Sinha, Dr. R.K., The Transfer of Property Act, 11 th Ed., Central Law Agency, Allahabad, 2010, p. 53.

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 Essentials Of A Valid Transfer

will, held that the principle of Hindu Law which invalidates a gift other than to a sentiment
being capable of accepting it does not apply to a bequest to the trustees for the establishment
of an image and the worship of a Hindu deity after the ancestor’s death nor does it make such
a bequest void. The Full Bench, after examining the Hindu texts and authorities observed that
according to the strict Hindu juridical notion there can be no gift in favour of the Gods for in
the case of deities there cannot be any acceptance and therefore necessarily any gift.
2. In present or in future
The words “In Present of in Future” mean that the conveyance may be one which takes effect
immediately on execution or at some distant date, that is to say, the interest of the transferee
arises immediately on the execution of the document at the date fixed by the parties.
A transfer of property may take place not only in the present, but also in the future,30 but the
property must be in existence. The words in present or in future qualify the word conveys
and not the word property.31 A transfer of property that is not in existence operates as a
contract to be performed in the future which may be specifically enforced as soon as the
property comes into existence.32

ATTESTATION AND REGISTRATION OF THE TRANSFER DEED

For the transfer of immovable property, the owner has to comply with three basic formalities:
● The execution of a proper written transfer deed is the first. It has to be executed i.e.
signed by the transferor.
● The second is that it should be properly attested.
● The third is that it should be duly registered. Till all three requisites are met, no title or
right would pass from the transferor to the transferee.
A. Execution of a Transfer Deed
There must be the execution of a transfer deed in a proper manner, i.e. in a prescribed format.
A sale deed, or any document through which the ownership rights are transferred, is a
document that gives evidence of an individual's ownership of a property. Rights in property
can be transferred only on execution and registration of a sale deed in favour of the buyer.
Agreement to sell precedes execution of a sale deed. The subsequent sale deed is based on the
agreement to sell. The agreement is signed and executed by the seller and buyer on a

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 Essentials Of A Valid Transfer

non-judicial stamp paper. As such, it has legal value and can be produced as evidence.
Agreement to sell is the base document on which the conveyance deed is drafted. Every
document of transfer of property by way of sale would be preceded by an agreement to sell.
The agreement to sell is also in writing.
A transfer deed can be of many types such as a sale deed, gift deed, relinquishment deed etc.
● Sale Deed
A sale deed acts as the main legal document for evidencing sale and transfer of ownership of
property in favour of the buyer, from the seller. Further, it also acts as the main document for
further sale by the buyer as it establishes his proof of ownership of the property.
The sale deed is executed subsequent to the execution of the sale agreement, and after
compliance of various terms and conditions detailed in the sale agreement as agreed upon
between the buyer and the seller.
The sale deed is the main document by which a seller transfers his right on the property to the
purchaser, who then acquires absolute ownership of the property. It is also referred to as the
conveyance deed.
● Gift Deed
This document allows you to gift your assets or transfer ownership without any exchange of
money. To give immovable property, you just have to draft the document on a stamp paper,
have it attested by two witnesses and register it. Registering a gift deed with the sub-registrar
of assurances is mandatory as per Section 17 of the Registration Act, 1908, failing which the
transfer will be invalid. Besides, such a transfer is irrevocable.
Once the property is gifted, it belongs to the beneficiary and you cannot reverse the transfer
or even ask for monetary compensation. However, if you want to gift movable property like
jewellery, registration is not compulsory. At the same time, a mere entry in an account book
is not sufficient to establish a transfer. Apart from physically handing over the property, you
need to back it with a gift deed. The process is slightly different if you are gifting company
shares. You will have to fill out the share transfer form and submit it to the company or
registrar, and the transfer agent of the firm. Once again, get a gift deed drawn and executed to
complete the transfer, but the document need not be registered.
● Relinquishment Deed
This document is quite different from a gift deed, though the legal implications are the same.
You can use this instrument if you want to transfer your rights in a particular property to

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 Essentials Of A Valid Transfer

another co-owner. Such a transfer is also irrevocable even if it is without any exchange of
money. As with all documents related to the transfer of immovable property, a relinquishment
deed needs to be signed by both parties and registered.
The stamp duty is similar to that for a gift deed. However there is no discount for relatives,
nor are there any tax benefits. Also, both stamp duty and tax will be applicable only on the
portion of the property that you relinquish, not on its total value. You can also use this deed to
transfer movable property without registration, but it is typically used for immovable
property.
B. Attestation of a Transfer Deed
A document is attested after its execution. Section 3 of the Transfer of Property Act, 1882
defines attestation. Section 69 of the Indian Evidence Act states that proof of execution of
a document needs to be attested. The essential condition of a valid attestation is that two or
more witnesses have seen the executant sign the instrument and the attesting witness pens
his/her signature for the purpose of attesting the signature of the executants. A party to the
deed cannot be an attesting witness nor the holder of a “Power of Attorney” when he/she
executes the document on behalf of the person who has given him the POA
Under Section 3 of the TP Act, the basic ingredients for a valid attestation are -
1) The document has been attested by two or more witnesses
2) They should have seen the executant putting his signature or mark, or some other
person doing the same in the presence of, and under the direction of the executant
3) If the document has already been executed or signed by the executant, then the
witnesses must receive a personal acknowledgement from none other than the
executant himself, of his signatures.
4) Witnesses must sing in the presence of the executant
5) It is not necessary that both the witnesses should be present at the same time
6) There is no specific form of attestation.
The TP act does not stipulate any qualification for the competency of a witness.10 Therefore,
an attesting witness must be a person who is competent to contract i.e. he must have attained
majority and be of sound mind. Religion, sex, caste, social and financial status are totally

10
Pedda Sandla Narayanamma v. Peddassant Venkata Reddy AIR 2007 AP 137; B Rajegowda v. H.B.
Shankar Gowda AIR 2006 Kant 48

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 Essentials Of A Valid Transfer

irrelevant considerations. However, a party to a deed, a person who executes a deed as POA
or as an agent of another, are not competent attesting witnesses.
C. Registration of a Transfer Deed
The Indian Registration Act, 1902 specifies the documents that have to be compulsorily
registered and those that are not compulsorily registrable. This is further clarified under the
provisions of the Transfer of Property Act 1882. Apart from statutory reasons, in order to
create a permanent record, it is always advisable to register any document related to
immovable property. Documents to be compulsorily registered. There are certain documents,
which need to be compulsorily registered. These are specified under Section 17 of the Indian
Registration Act 1902. These include -
● Documents related to gift of immovable property. Any gift deed irrespective of the
value of the gifted property needs to be registered
● All non-testamentary documents which create interest, right, or title in immovable
property
● All non-testamentary documents which extinguish or cancel any right, interest, or title
in the immovable property
● All non-testamentary documents which declare, assign, limit or restrict the interest,
title, or right in immovable property
● All non-testamentary documents which acknowledge the receipt or payment of any
consideration on account of transactions pertaining to right, title, or interest in the
immovable property.
● All non-testamentary documents transferring or assigning any decree or order that
affects the interest, rights and title in an immovable property. Most types of mortgages
need registrations. However, mortgages created by depositing title deeds (also known
as the equitable mortgage) are not compulsorily registrable. Under the provisions of
Section 54 of the Transfer of Property Act 1882, the sale of immovable property, the
value of which is Rs 100 or more, should be registered. If the value of the immovable
property is less than Rs 100, the registration of sale deed is not compulsorily
registrable. So, effectively, all property sale deeds need to be registered.

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 Essentials Of A Valid Transfer

WHAT MAY BE TRANSFERRED UNDER SECTION 6 OF THE ACT

Section 6 of the TP Act lays down what may be transferred i.e. property of any kind may be
transferred, except eight exceptions as mentioned within Section 6 itself. Therefore, as a
general rule, property and property interests are transferable and this rule of transferability is
based on the maxim alienation rei prefertur juri accrescendi, which means that the law favors
alienation to accumulation. Therefore, any attempt to interfere with the power of the owner to
alienate his interest in the property is frowned upon by the law.
● Heir Apparent - clause (a)
The chance of an heir apparent succeeding to the property of an intestate; the chance of a
relation obtaining the legacy on the death of a kinsman, or any other possibility of that nature
cannot be transferred.11 Therefore, transfer of Spes Successions is void ab initio. Therefore,
the chance of an heir apparent to succeed to the property of an intestate therefore cannot be
transferred and this chance is referred to as Spes Successions. If a person transfers this
chance, it is void ab initio.12
● A right of re-entry - clause(b)
Property of any kind may be transferred13 but interest in property arising in future cannot be
transferred.14 A transfer of future property only amounts to a contract, which may be enforced
when the property comes into existence.15
The right of re-entry is a personal right of an individual and cannot be transferred by him. If
he transfers the right to entry, say, to his creditors, the same would be void.16
● Easement - clause(c)
An easement is a right which the owner or the occupier of certain land possess for the
beneficial enjoyment of that land, to do or to continue doing something, or to prevent and
continue to prevent something from being done, in or upon or in respect of certain others and
that is not his own.

11
Meek v. Kettlewell, (1843) 1 Ph 342;
12
Re Ellenborough, Towry Law vs. Burne (1903) 1 Ch 697
13
Except as provided by the TP Act or any other law for the time being in force.
14
Samsuddin v. Abdul Husein, (1909) 31 Bom 165
15
Rajah Sahib Prahlad v. Brudhoo, (1869) 12 MIA 275
16
Re Davis & Co. 22 QBD 194

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 Essentials Of A Valid Transfer

An easement cannot be transferred apart from dominant heritage to which by the nature of the
right, it is attached.17 The prohibition does not touch upon the creation of new easements.18
● Interest restricted to personal enjoyment - clause (d)
An interest in property restricted in its enjoyment to the owner personally cannot be
transferred by him.19 As the right is personal in character, it is transferable. If such a transfer
occurs, the same is held to be void. Similarly, a right to future maintenance in whatsoever
manner arising, secured or determined cannot be transferred.20 This term ‘whatsoever manner
arising secured or determined’ is very exhaustive and covers cases where this right has been
created either under a will, deed or compromise.
● Mere right to sue - clause (e)
A mere right to sue cannot be transferred.21 “Mere” means that the transferee has acquired no
interest other than a bare right to sue. A right to sue is a personal right that only an aggrieved
party can exercise to seek a remedy in a court of law. Therefore, it is not assignable.
However, there is a distinction between property, an interest in property and a right to sue. A
transfer of right to recover profits which arise out of land along with a transfer of land, is
assignable.22 Similarly, where the property is transferred along with a right to recover
damages or compensation in respect of the property, the assignment is valid.23 However, these
are mere exceptions. The general rule is that a right to sue for damages resulting from a
breach of contract, a right arising out of torts, a bare claim for past mesne profits are
unassignable.
● Offices and salaries - clause(f)
A public office cannot be transferred. Similarly, the salary of a public office cannot be
transferred whether before or after it has become payable. However, the term public office or
public officer has not been defined by the TP Act. By ‘public officer’ it means a person who
is appointed to discharge a public duty, and receives a monetary return for it in the form of a
salary. As the salary is a return for his personal services, it is neither transferable nor
attachable.

17
Sital v. Delanney (1916) 20 Cal WN 1158, 34 IC 450
18
Bagwan v. Narasingh, AIR 361 All 612
19
Basangowda v. Irogowda, AIR 1923 Bom 276
20
Haliman v. Umadatunissa, AIR 1939 Pat 506
21
Venkatram v. Venkatswami, AIR 1921 Mad 56
22
Murlidhar v. Rupendra AIR 1953 Cal 231
23
Ganguraju v. Gopala AIR 1957 AP 190

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 Essentials Of A Valid Transfer

● Stipends - clause (g)

Stipends allowed to military, naval, air force and civil pensioners of the government and
political pensions are non-transferable.
What is made non-transferable is the stipend paid to civil pensioners and not the pension of a
civil pensioner. A bonus given by the government24, or an allowance made in lieu of a
presumed grant of lands25, or grant of land in lieu of pension is not pension26 and therefore,
transferable.
● Transfer opposed to the nature of interest - clause (h)
No transfer can be made insofar as it is opposed to the nature of the interest affected thereby.
Thus, things dedicated to public or religious uses, regalia, heirlooms, and debutter property27
or service inam28 cannot be transferred.
● Transfer for unlawful consideration
No transfer, which is for an unlawful object or consideration is permissible. The object
behind this provision is to prohibit transfers where the object is unlawful if the consideration
behind the transfers is for a purpose opposed to public policy. For instance, a transfer of
property so that it could be used as a brothel, a gambling den etc. It is also in consonance
with Section 23 of the Indian Contract Act, 1872 which provides that a consideration or
object is unlawful if -
(i) It is forbidden by law; or
(ii) Is of such a nature that it defeats the provisions of any law; or
(iii) Is fraudulent; or
(iv) Involves or implies injury to the person or property of another; or
(v) The court regards it is immoral; or
(vi) Is opposed to public policy; or
(vii) Is of sound mind29
Furthermore, a transfer to a person legally disqualified to be a transferee is not permitted.
Under Section 7, the transferee must be competent to contract and should not have been

24
Kasim v. Karlier, (1882) ILR 5 Mad 273
25
Shah Md. Habibul v. Abdul, AIR 1926 All 521
26
Ganpat Ro v. Anant Rao, (1910) ILR 32 All 148
27
Narayan v. Chintaman, (1881) ILR 5.
28
Anjaneyalu v. Devabrata, AIR 1949 Cal 278.
29
Section 12 of Indian Contract Act describes sound mind, which says that- A person is said to be of sound
mind for the purpose of making a contract, if, at the time when he makes it, he is capable of understanding it and
of forming a rational judgment as to its effect upon his interest.

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 Essentials Of A Valid Transfer

disqualified legally. While competency to contract involves the twin elements of attainment
of the age of majority and soundness of mind, legal disqualifications refers to certain
disabilities that have been imposed specifically by the statutes preventing certain categories
of persons to be transferees in certain cases and in specific capacity. For example, the TP Act
prohibits a judge, a legal practitioner, or an officer connected with a court from purchasing an
actionable claim.30

PERSON MUST BE COMPETENT TO TRANSFER - SECTION 7 OF

THE ACT

Section 7 lays down the perquisite as to who is competent to transfer, and if this essential is
not satisfied, then a valid transfer of property cannot take place.
Therefore, for a person who is competent to contract can validly transfer the property if -
i) he is the owner;
ii) if he is not the owner, then he must possess authority sustainable in law to transfer
the same.
In order for a person to be competent to contract, two things are necessary; i.e., he should
have attained majority and be of sound mind, and should not be disqualified to transfer
property under the law to which he is subject to.
The term ‘authority’ can be personal, under an agency or acquired under a law or statute or
under the direction or permission of the court. It can be in the shape of a power of attorney or
in the capacity of an agency. For eg. An executor or administrator can dispose of the property
of a deceased.31
In absence of a title, a person should have authority to transfer the property. For eg. An agent
managing the property of the principal32 or a de facto guardian of a minor33 is not competent
to sell the property.
● Competence of the transferee

30
TP Act Section 136.
31
Sadiq v. Jai Kishore, AIR 1928 PC 152
32
BC Mondal v. Indurekha Devi, AIR 1973 SC 782
33
K Kamamma v. Appanna, AIR 1973 SC 782

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 Essentials Of A Valid Transfer

Nowhere it is said that the transferee must be a competent person in respect of his age,
soundness of mind etc.-
(a) Only he must be alive at the time of transfer.
(b) Transferring to an unborn person requires creation of a prior interest.
Section 13 of Transfer of Property Act which reads as-
“Transfer for the benefit of unborn person - Where, on a transfer of property, an interest
therein is created for the benefit of a person not in existence at the date of transfer, subject to
a prior interest created by the same transfer, the interest created for the benefit of such person
shall not take effect, unless it extends the whole of the remaining interest of the transferor in
the property.”

OPERATIONS OF A TRANSFER

Section 8 lays down the operations of a transfer and reads as “Unless a different intention is
expressed or necessarily implied, a transfer of property passes forthwith to the transferee all
the interest which the transferor is then capable of passing in the property and in the legal
incidents thereof.” Section 8 of Transfer of Property Act deals with the effect of transfer. It
says that a transfer of property passes forthwith to the transferee all the interest which the
transferor, then capable of passing in the property, and in the legal incidents thereof.
The transferor cannot convey a better title to the transferee that the transferor himself
possesses. Operation of transfer is considered complete on the date of execution of registered
instrument itself
Section 8 defined what legal incidents of each particular class of property are passed along
with the property when it is transferred-
(a) For land, the incidents are easements, rents, profits and all the things attached
to earth;
(b) For house, the easements, rents after transfer, locks, keys, bars, doors etc.,
which are provided with the house for permanent use;
(c) For machinery, its movable parts;
(d) For debt, it is security; and
(e) For money, it is interest after transfer.

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 Essentials Of A Valid Transfer

Therefore the clause ‘unless a different intention is expressed or necessarily implied’ shows
that the section operates in the absence of an express or implied contract between the parties
and if the contract provides otherwise, the provisions of this section would not have any
application.
If the transferor transfers all the interest that he possesses in the property that he possesses on
that date, the entire interest that he had, will pass. For example, A transfers land on which
there are trees or a well. If nothing contrary is specified, the trees or the week would pass
along with the land to the buyer.34
The general rule therefore is that whatever interest the transferor had in the property, passes
to the transferee with the transfer, unless a different intention is expressed.
● Easements, rents and profits
Where the property is land, the easements annexed thereto and the land and the minerals
beneath it will also pass with the transfer.35 For instance, in a sale of land, the purchaser
acquires use of water from a well on the land or a right of way, which the seller has.
● Things attached to the earth
All the things attached to the earth, like upon a transfer of the land, all structures upon it,
including the house, buildings, trees, including fruit trees, pass by necessary implication and
it is not necessary to mention them.36 However, the contrary may not be true, thus, transfer of
trees will not, by itself, justify the inference that land was also transferred.37
● Other annexations
Where the property is machinery attached to the earth the moveable parts and where the
property is a house the easements annexed and all other things are provided for permanent
use, will also pass.

METHODS OF TRANSFER - ORAL TRANSFER

Section 9 of the TP Act lays down that a transfer of property can be made orally and can be
made without writing in every case in which a writing is not required expressly by the law.

34
Arkkani v. Subramniam, AIR 2007 (NOC) 2118 (Mad).
35
Raja Anand v. State of Uttar Pradesh, AIR 1967 SC 1081.
36
Divisional Forest Officer v. Daut, AIR 1968 SC 612.
37
Vishwa Nath v. Ram Raj, AIR 1991 All 193.

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 Essentials Of A Valid Transfer

Under the TP Act, the transfer of every tangible property, reversion or other intangible thing
where its value is more than Rs. 100; by mortgage (other than a mortgage by deposit of title
deeds) where the principal money secured by way of a loan is more than Rs. 100, by gifts
irrespective of the value of the property, or lease for more than a year or where rent for more
than 12 months has to be taken in advance must be made in writing.
Where the law requires a transfer to be made in writing, an oral transfer will not convey any
right from the transferor to the transferee.38
An instrument of transfer is required to be in writing in the following cases -
a. Transfer of immovable property for a value of Rs.100 and above;
b. An interest in an estate that reverts to the grantor or his heirs at the end of some period
or other intangible thing;
c. Simple mortgage irrespective of the amount of security;
d. All other kinds of mortgages where the amount secured is Rs.100 or above.
e. Leases of immovable property from year to year, or for any term exceeding one year,
or reserving a yearly rent;
f. Exchange (where two persons mutually transfer the ownership for the ownership of
another);
g. Gift of immovable property; and
h. Transfer of actionable claim, that is, claim to any unsecured debt or any interest in any
immovable property which is not in the possession of the claimant.
For example, A sells his to B for Rs. 50,000 on the basis of an oral agreement, by delivery of
the keys for the same. B does not acquire a title as the consideration being more than Rs. 100,
the transfer must take place with the help of a written, attested, and registered document.
Similarly, A, an old man of 80 years, gives to his friend’s son B, the keys to all the rooms in
his house in which both of them were living, as the latter had looked after him when he was
sick. While handing over the keys, A expressly told him to retain the possession of the same,
as the owner in presence of all his relatives. This desire expressed by the owner, coupled with
the delivery of the keys as well as the property papers, would not make B the owner of the

38
Munnala v. Atmaram AIR 2008 (NOC) 843(MP); Kantaben Chandulal Shah v. Gagibem, AIR 2005 Guj 49;
Bishun Mahato v. Raho Khalifa, AIR 2005 Jhar 85.

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 Essentials Of A Valid Transfer

property as the gift of immovable property has to be executed with a written, attested and
registered document.39

SECTION 10 - NO CONDITIONS RESTRAINING ALIENATION

Section 10 lays down that it is essential that when property is transferred subject to a
condition or limitation absolutely restraining the transferee or any person claiming under him
from parting with or disposing off his interest in the property, the condition or limitation is
void except in the case of a lease where the condition is for the benefit of the lessor or those
claiming under him.
Hence, such conditions restraining alienation are barred by the law as the right of alienation is
one of the basic rights of the owner and cannot be unreasonably encroached upon by anyone
through a private agreement. This general rule is applicable despite there being an express
contract to the contrary, and prevents the transferor from controlling the power of alienation
of the transferee once the interest in the property is transferred.
For example, person A, who is the owner of house X, transfers it for consideration to B. In
the transfer deed, A puts a condition that B would not sell it to anyone, but would keep the
possession of the property to himself. B agrees to abide by this condition and pays
consideration. After the title passes and property vests in B, B sells it to C. A files a suit
claiming possession of the property on the ground that B has committed a breach of a
condition of the contract, and therefore, the sale in favour of C is void. Here. The suit of A
would fail, as he was attempting to restrain B from absolutely transferring the property even
when the interest has vested in B. Here, even if the transferee had expressly consented to
abide by the terms of the contract, this condition being void under s. 10 of the act, he is
entitled to ignore it as if it did not exist on paper. At the same time, a contravention of this
condition would not affect the validity of the original transfer through which the property was
acquired by the transferee.
Conditions repugnant to the estate previously given are void and for this reason the courts
have always leaned against a restraint on alienation.40 According to S. 10, therefore, a

39
Rajeshwar Prasad v. Bhupendra Narayan, AIR 1927 Cal 956; Keshrimal v. Sukan Ram, AIR 1933 Pat 264.
40
Stogden v. Lee (1891) 1 QB 661; Rosher v. Rosher (1884) 26 ChD 801; Re Elliot, Kelly v. Elliot (1862) 2
Ch 353.

17
 Essentials Of A Valid Transfer

condition incorporated in the transfer deed which absolutely restrains the transferee form
transferring his interest in the property is void.
● Categorisation of Restraints
Since alienation is the sole prerogative of the owner of the property, he is empowered to sell
it at any point of time, for any consideration, to any person and for any purpose. Restraints on
alienation can appear in the following ways -
1. Restraints on transfer for a particular time
Restrictions with respect to time i.e. the condition that the transferee would not sell it for five
years of ten years or for any time period whatsoever would be void, unless it is for a short
period of time and is coupled with the benefit to the transferor, such as an option of
re-purchase, at a consideration stipulated in the contract. This option of repurchase is
personal to the transferor and cannot be extended to anyone else.41
2. Restrictions with respect to persons
Restrictions directing the owner that the property or an interest in the property should be
transferred only after obtaining the prior permission or consent of specific persons would be
totally void but t a condition that it can be transferred to specific persons can be either partial
or absolute, depending upon the facts and circumstances of the case.
3. Restraints with respect to money
Where the transferor stipulates that he property can be sold by the transferee only at a fixed
price specified by him beforehand, or where he directs that the property should be transferred
for no consideration, or at market price only, or at any consideration deemed appropriate by
the owner, but out of sale proceeds, either something has to be paid to a specific person or
persons, or for a specific purpose, all these conditions would be restraints on alienation
through control of money and would be void.

CASE LAWS

In the case of In re Rosher. Rosher v. Rosher42, a testator devised an estate to his son in fee
subject to the proviso that if the son, his heirs or devisees, or any person claiming through or
under him or them, should desire to sell the estate, or any part or parts thereof during the

41
Loknath Khound v. Gunaram Kalita, AIR 1986 Gau 52.
42
(1884) 26 Ch. D. 801

18
 Essentials Of A Valid Transfer

lifetime of the testator's wife, she should be given the option to purchase the estate at the
price of £3,000 for the whole, and at a proportionate price for any part or parts thereof. The
selling value of the estate at the date of the will and at the time of the testator's death was
£15,000. It was held that the proviso compelling the son to sell at such an undervalue
amounted to an absolute restraint on alienation during the lifetime of the widow and was
consequently void.
The same principle was applied by Eve, J., in43 In re Cockerill: Mackaness v. Percival. In
that case a testator, by his will, devised land subject to the proviso that if within twenty years
of his death the devisee should desire to sell the land he was to give the governors of a certain
school the option of purchasing it at the price of £300 an acre. The total area was about 22
acres and was worth £670 an acre. It was held that the condition amounted to a restraint on
alienation and was void for repugnancy.
In Manohar Shivram Swami v. Mahadeo Guruling Swami A and B were first cousins. A
made a Will of his property in favour of B. On A’s death, B acquired the title of the property
and sold it to C, who was also the brother of A. The sale deed contained a condition that if C
wanted to sell the property, he would sell it to the seller’s Jangam (caste) family and not to
anybody else. The court held that the condition incorporated in the sale deed absolutely
restrained C from parting with his interest in the property and therefore was void. The court
upheld the validity of sale affected by C. This decision of Bombay High Court comes as a
surprise as the condition here in fact was not to sell out of the family, which in a number of
cases has been held to be a partial restraint, and binding on the parties.
The liability of the estate to be attached by creditors on a bankruptcy or judgment is an
incident of the estate, and no attempt to deprive it of that incident by direct prohibition would
be valid... An incident of the estate given, which cannot be directly taken away or prevented
by the donor, cannot be taken away indirectly by a condition which would cause the estate to
revert to the donor, or by a conditional limitation or executor device which would cause it to
shift to another person.

43
(1929) 2 Ch. D. 131

19
 Essentials Of A Valid Transfer

SECTION 53 OF THE TP ACT - The Transfer Must Not Be Fraudulent

Fraudulent transfer law developed under the common law and was codified in the Statute of
Elizabeth.44 The Statute of Elizabeth provided for the avoidance and punishment of transfers
made to the end, purpose and intent, to delay, hinder or defraud creditors.45 Section 53 deals
with the subject known as fraudulent transfers of immovable property. A transfer is
fraudulent when it is made with intent to defeat or delay the creditors of the transferor or to
defraud a subsequent transferee.
The basic requisites for the applicability of S. 53 are:-
● there should be a transfer of immovable property;
● the transfer ought to have been made with intent to defeat or delay the
creditors;
● the suit must be brought by the creditor, acting on behalf of or for the benefit
of the entire body of creditors, for avoiding such transfer.
The primary requirement for the applicability of this section is the existence of a valid
transfer. Where it is claimed that the transfer made by the debtors was a sham and fictitious
transaction and there was no animus transfer end i.e. when the real intention of the parties
was not to give effect to the supposed transfer at all and it was merely to be used as a shield
or a facade for achieving some ulterior purpose, Section 53 cannot legitimately be taken aid
of.46 S. 53 presupposes a transfer, which is prima facie valid and operative.
This section consists of two parts. The first part lays down that every transfer of immovable
property made with intent to defeat or delay the creditors of the transferor shall be voidable at
the option of any creditor so defeated or delayed.
The second part of the section lays down that every transfer of immovable property made
without consideration with intent to defraud a subsequent transferee shall be voidable at the
option of such transferee, but that no presumption to defraud shall necessarily arise by reason
only that a subsequent transfer for consideration was made.
Section 53, while safeguarding the rights of transferee in good faith and for consideration,
empowers the creditors to avoid any transfer of immovable property made by the debtor with

44
13 Eliz., ch. 5 (1571) (Eng.). See also Glenn, supra note 9, SS 58- 62.
45
13 Eliz., ch. 5, S 1 (1571) (Eng.).
46
Phoolan Devi v. Surendra Prakash, AIR 1983 A1I 440 (442).

20
 Essentials Of A Valid Transfer

intent to defeat or delay the creditors. It, however, requires that such a suit must be instituted
either in a representative capacity or for the benefit of all the creditors.

SAMPLE TRANSFER AGREEMENT

ASSET TRANSFER AGREEMENT
BETWEEN

SHARDA NETWORKING CO., LTD

and
SINGH INFORMATION TECHNOLOGY (SHANGHAI) CO., LTD.
THIS AGREEMENT is made in Beijing, the People's Republic of China
("PRC") on this 18th day of February 2003 by and between

(1) SHARDA NETWORKING CO., LTD. (the "Transferor"), with its legal
address at 21st floor, Hua Rong Plaza, 1289 South Pudong Road, Shanghai,
PRC; and

(2) SINGH INFORMATION TECHNOLOGY (SHANGHAI) CO., LTD. (the

"Transferee"), with its legal address at Room 638-7, Building 2, 351
Guoshoujing Road, Zhangjiang Hi-Tech Park, Shanghai, PRC.
WHEREAS:
(A) The Transferor is a company primarily engaged in the operation of online games, with
assets including but not limited to those set forth in Annex 1 and Annex 2 hereof;
(B) The Transferor agrees to transfer to the Transferee, and the Transferee agrees to acquire
all assets owned by the Transferor other than those listed in Annex 1.
THEREFORE, THE PARTIES HEREBY AGREE as follows:
1. DEFINITIONS
Unless the context requires otherwise, the following terms shall have the meanings given to
them below when used in this Agreement:
"Assets" means all assets (other than those listed in Annex 1) which are owned by the
Transferor prior to the date hereof and are transferable under applicable laws, including but
not limited to those listed in Annex 2. To the extent permitted by applicable laws, the assets

21
 Essentials Of A Valid Transfer

listed in Annex 1 shall be re-transferred to the Transferee in a timely manner upon request
by the Transferee.
"Parties" means both the Transferor and the Transferee, and a "Party" means either one of
them.
2. TRANSFER OF ASSETS
2.1 The Transferor hereby agrees to transfer to the Transferee, and Transferee hereby agrees
to acquire, the Assets in accordance with the provisions of this Agreement.
2.2 The Parties agree that the price of the Assets to be transferred under this Agreement shall
be the RMB equivalent of three million US dollars.
2.3 The Parties agree that the assets to be transferred by the Transferor to the Transferee
under this Agreement shall include all assets owned by the Transferor other than those listed
in Annex 1, including without limitation, client data, business information and trade secrets
of various types owned by the Transferor.
2.4 The Transferor shall transfer the Assets to the Transferee in accordance with the
provisions of this Agreement.
3. CLOSING AND PAYMENT OF TRANSFER PRICE
3.1 The Transferor shall be responsible for completing all procedures relating to ownership
transfer and registration of the Assets. Within Sixty (60) days after the date of this
Agreement, the Transferor shall close the transaction with the Transferee of all relevant
assets hereunder, and thereafter, the Parties shall sign the Closing Acknowledgement Letter
as attached in Annex 2 hereof evidencing the completion of the Assets transfer.
3.2 Within Thirty (30) days after the transfer and delivery of the Assets to the Transferee, the
Transferee shall pay the Transfer price in RMB or in any other currency agreed upon by the
Parties.
4. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR
The Transferor represents and warrants to the Transferee that, on the date of this Agreement
as well as on the date of transfer of each of the Assets to the Transferee:
(a) It is a company duly organized and existing under the PRC laws and has good title,
use right and/or other rights to the Assets, and all the Assets are free of any lease, lien,
mortgage, pledge or other encumbrances;
(b) It has all corporate powers and authorizations and has taken all corporate actions
necessary for the transfer of the Assets hereunder;

22
 Essentials Of A Valid Transfer

(c) The Assets to be transferred from the Transferor to the Transferee are transferable
under PRC laws.
5. INDEMNIFICATION
The Transferor agrees that, if it is found to be in breach of any representations and
warranties set forth in Article 4 hereof, it will indemnify the Transferee in full for and against
all losses, liabilities, costs, charges and expenses incurred by the Transferee because of such
breach.
6. WAIVER
A Party's failure to insist on strict and timely performance of any provision hereunder shall
not constitute a waiver of such right, nor shall a Party's waiver of such right constitute a
waiver with respect to subsequent breaches, similar or otherwise.
7. SEVERABILITY
If for any reason any provision of this Agreement becomes invalid or unenforceable in full
or in part, or is in violation of any applicable laws, such provision shall be deemed to have
been deleted herefrom, and to the extent permitted under the law and considered by the
Parties at the time of executing the Agreement
8. NOTICE
Notices and other communications between the Parties shall be prepared in Chinese in
writing, and sent to the following addresses:
Sharda Networking Co., Ltd.
Address - 21st floor, Hua Rong Plaza, 1289 Shanghai, PRC
Postal Code - 20012
Singh Information Technology (Shanghai) Co., Ltd.
Address - Room 638-7, Building 2, 351 Zhangjiang Hi-Tech Park, Shanghai, China
9. GOVERNING LAW AND SETTLEMENT OF DISPUTES
This Agreement shall be governed by and construed in accordance with the published laws
of the PRC.
All disputes arising from the execution of, or in connection with this Agreement shall be
settled through friendly consultation between the Parties. If no settlement can be reached
through consultation, the dispute shall be submitted to the China International Economic and
Trade Arbitration Commission (CIETAC) Shanghai Commission for arbitration in
accordance with its arbitration rules then in effect.

23
 Essentials Of A Valid Transfer

IN WITNESS WHEREOF, the Parties, acting through their duly authorized representatives,
have executed this Agreement in Shanghai, the PRC, as of the date first written above.
Transferor: Sharda Networking Co., Ltd.
Seal:
-----------------------------
Authorized representative
Transferee: Singh Information Technology (Shanghai) Co., Ltd.
Seal:
-----------------------------
Authorized representative

CONCLUSION

A transfer of property passes forthwith to the transferee all the interest which the transferor is
then capable of passing in the property, unless a different intention is expressed or implied.
According to Section 43 of the Transfer of Property Act 1882, in case a person either
fraudulently or erroneously represents that he is authorised to transfer certain immovable
property and does some acts to transfer such property for consideration, then such a transfer
will continue to operate in future. It will operate on any interest which the transferor may
acquire in such property. This will be at the option of the transferee and can be done during
the time during which the contract of transfer exists. As per this rule, the rights of a bona fide
transferee, who has no notice of the earlier transfer or of the option, are protected.
This rule embodies a rule of estoppel i.e. a person who makes a representation cannot later on
go against it. Every person, who is competent to contract, is competent to transfer property,
which can be transferred in whole or in part. He should be entitled to the transferable
property, or authorised to dispose of transferable property which is not his own. The right
may be either absolute or conditional, and the property may be movable or immovable,
present or future. Such a transfer can be made orally, unless a transfer in writing is
specifically required under any law. According to Section 6 of the Transfer of Property Act,
property of any kind may be transferred. The person insisting on non-transferability must
prove the existence of some law or custom which restricts the right of transfer. Unless there is

24
 Essentials Of A Valid Transfer

some legal restriction preventing the transfer, the owner of the property may transfer it.
However, in some cases there may be transfer of property by an unauthorised person who
subsequently acquires interest in such property.
In case the property is transferred subject to the condition which absolutely restrains the
transferee from parting with or disposing of his interest in the property, the condition is void.
The only exception is in the case of a lease where the condition is for the benefit of the lessor
or those claiming under him. Generally, only the person having interest in the property is
authorised to transfer his interest in the property and can pass on the proper title to any other
person. The rights of the transferees will not be adversely affected, provided: they acted in
good faith; the property was acquired for consideration; and the transferees had acted without
notice of the defect in title of the transferor. It should be noted that these conditions must be
satisfied: There must be a representation by the transferor that he has authority to transfer the
immovable property. The representation should be either fraudulent or erroneous.
The transferee must act on the representation in good faith. The transfer should be done for
consideration. The transferor should subsequently acquire some interest in the property he
had agreed to transfer. The transferee may have the option to acquire the interest which the
transferor subsequently acquires. The exercise of option must be during the period of
continuation of the contract and not afterwards. When all these conditions exist, the
transferee becomes entitled to the interest, which is subsequently acquired by the transferor. It
is to be noted that the transferee, acting upon the representation, has no right against any
subsequent bona fide transfer for consideration.

BIBLIOGRAPHY

BOOKS -
th
1. Mulla, The Transfer of Property Act, 9 Ed., LexisNexis Butterworths, 2004.
nd
2. Nandi, N., The Transfer of Property Act, 1882, 2 Ed, Dwivedi Law Agency,

Allahabad, 2010.
th
3. Row, Sanjiva, The Transfer of Property Act, 4 Ed., Vol. 1, The Law Book Company

(P) Ltd., Allahabad, 1989.

25
 Essentials Of A Valid Transfer

th
4. Sinha, Dr.R.K., The Transfer of Property Act, 11 Ed., Central Law Agency,

Allahabad, 2010.
5. Sohoni, Vishwas Shridhar, Transfer of Property Act, Premier Publishing Company,
Allahabad, 2008.
6. The Transfer of Property Act, 1882, Bare Act, Universal Law Publishing Co. Pvt.
Ltd., New Delhi, 2010.
nd
7. Vakil, Darashaw J., Commentaries on the Transfer of Property Act, 2 Ed., Wadhwa

and Company Nagpur, New Delhi, 2004.

26