SESSION: 2021-24

SUBJECT: TRANSFER OF PROPERTY

3 SEMESTER, L.LB, UILS
RD

TOPIC- MOVABLE AND IMMOVABLE

PROPERTY

SUBMITTED TO: SUBMITTED BY:

PREETINDER PAL SODHI VARUN DAHIYA
ASSOCIATE PROFESSOR UID –
21BLL1190
UILS, CHANDIGARH UNIVERSITY L.LB,3rd
SEM.(SEC B)

CHANDIGARH UNIVERSITY, MOHALI, PUNJAB.

 Transfer of Property

The object of the transfer of Property Act may be summarized as

under: -
(a) The Transfer of Property Act, 1882 provides a definite clear and
uniform law for transfer of immovable property by act of parties.
(b) The Act has modified and made changes in some of the rules
which existed before its enactment. The changes were made so that
the laws may be made suitable to the soci-economic conditions of
India.
(c) The Transfer of Property Act completed the code of law of
contract. Before the Act, although there was code for the contracts,
but there was no enacted law for transfers which used to take place in
furtherance of a contract.
(d) By making provisions for inter vivos (by act of parties) the
Transfer of property has enacted a law parallel to the already existing
laws of testamentary and intestate transfers i.e., the transfer of
property under wills and under the law of inheritance.
Scope of the Act
(1) Not exhaustive
(2) Transfers by way of law excluded
(3) Transfers mainly of immovable properties
(4) Act does not affect any inconsistent rule of Muslim personal law
(5) Saving of certain incidents and rights
(6) Territorial limitations
The word "Property" has not been defined in the Transfer of property
Act, 1882 but has been used in its widest and most generic sense,
Property is a legal term to denote every kind of interest or right which
has an economic content. Thus, it includes an actionable claim and a
right to a reconveyance of land, but not a power of appointment.
Property is broadly classified into movable and immovable property.
The Transfer of the two entails different forms and Procedure.
 NOTICE
Notice means knowledge or information of a fact. Where a person has
knowledge of any fact or it could be proved that under the
circumstances he must have knowledge of that fact, he is said to have
notice of that fact. If it is established before Court of law that a person
has notice of fact or transaction, the knowledge of the fact is binding
on him. He cannot deny the knowledge of that fact if it goes against
him. Notice may either be (actual i.e., express or constructive.)

1. Actual or Express Notice

A person is said to have actual (or express) notice of a fact when he
actually knows it.
An actual notice to constitute a binding notice, must be definite
information given by a person interested in the thing in respect of
which the notice is issued and it must be given in the same
transaction. Thus, vague or rumours or suspicion of the existence of a
fact will not amount to express notice. The party imputing notice must
show that the other party had knowledge which would operable upon
the mind of any rational man or a man of business, and make him act
with reference to the knowledge he has so acquired.

2. Constructive Notice
It is a notice which treats a person who ought to have known a fact as
if he actually does know it (rule of equity). in other words, a person
has constructive notice of all facts of which he would have acquired
actual notice had he made those enquiries which he ought reasonable
to have made. It is the knowledge which the court imputes to a person
upon a presumption so strong that it cannot be allowed to be rebutted
that knowledge must have been obtained.
The legal presumption of knowledge can arise in the following five
cases: -
(I) Wilful abstention from an inquiry or search
(II) Gross negligence
(III) Registration
(IV) Actual Possession
(V) Notice to agent
i) Wilful Abstention from an inquiry or search
Wilful abstention from an inquiry of search means deliberately
avoiding to take notice of a fact which a reasonable man would have
taken to normal course of life. If a person, refuses to accept a
registered envelope addressed to him, it is his wilful abstention from
taking notice of the contents of that envelop. In such a situation the
law presumes that he must have knowledge that the contents of the
letter are against his interest and because of this reason he is avoiding
to accept that letter.
Illustration

a) A registered lotter was sent by landlord A the contents By B

refuses to take delivery or the lotter. B has constructive notice of the
contents of the letter because he has willfully abstained from knowing
its contents.
b) A contract to sell his house B. The house is on rent and B knows
that the tenants have been paying the rents to C. B has constructive
notice of the right of C to take rents from the tenants.
c) A sell his house to B. The sale-deed mentioned that the house hack
fallen in As Share after a partition. The partition-deed has reserved a
right of pre-emption. B has constructive notice of the right of pre-
emption.
d) A mortgage his property to B and says that the title-deeds are
placed in the bank for safe custody. B, the mortgagee, does not make
any inquiry as to why the deed is placed in the bank and does not see
it. B shall be affected with notice of the pledge if it is proved that the
deed was placed in bank not for safe-custody but for pledge to the
bank.
It may be noted that the 'abstention from inquiry must be with some
purpose/design and due to a desire to avoid an inquiry which would
lead to ultimate knowledge. This sometimes happens when a person
thinks that he has struck a good bargain and wants to purchase the
property quickly lest other persons might come forward and complete
with him

ii) Gross-Negligence
Negligence means carelessness. It is the omission to do (i.e., not
doing of) something which a reasonable man guided by those
considerations which ordinarily regulate the conduct of human affairs,
would do and doing something which prudent and reasonable man
would not do. Mere negligence or ordinary carelessness in taking
notice of a fact is not 'gross-negligence or ordinary carelessness notice
is simply being negligent to take notice of a fact. But, if the
negligence is so grave or gross that a man of common prudence can
never be expected to do, the negligence is 'gross'. Gross negligence is
blameworthy under the law and is never excused. It means
carelessness of so aggravated nature as to indicate an attitude of
mental indifference to obvious risks.

Lloyds Bank Ltd. v. P.E. Guzder &Co., AIR 1930 Cal. 22

G deposited the title-deeds of his property with a bank N to secure his
overdraft (loan from bank). This was, therefore, mortgage by deposit
of title-deed by the person who gives money. After sometimes G
asked the bank I that he was intending to sell the property and the
purchaser wants to see the title-deeds and after inspection of the deed
by purchaser he would return the deed to bank. The bank N relying
upon this statement gave the title-deeds to G. But, after taking the
title-deed G deposited it in another bank L and took another loan.
Thus, it was second mortgage by G by depositing the same title-deed.
The question arose whether the prior loan given by N was to be
secured first or the second loan given by L which was at present in
possession of bank L.
Held: It was held that since this was a mortgage by deposit of title
deeds in which the only security for the repayment of loan is the
possession of title-deed, bank N committed gross-negligence in
parting with the title-deeds. N cannot be allowed to plead that it has
no notice that G would take the deeds and deposit it in another bank.
Thus, the mortgage of tank N was postponed to mortgage of bank L.

iii) Registration a Notice

Explanation I to Section 3 provides that registration of a document is
notice of all the facts stated in that document. Where a document has
been registered, it is presumed that all the persons property contents.

iv) Actual Possession as Notice of Title

Actual possession of an immovable property is regarded as
constructive notice of such title which the person in possession may
have. Explanation II to Section 3 provides that any person acquiring
any immovable property shall be deemed to have notice of the title, if
any, of any person who is for the time being in actual possession
thereof. For example, A contracts to sell land to B for Rs. 5,000/-, B
takes possession of the land. Afterwards A sells it to C for Rs. 6,000/-.
C makes no inquiry of B relating to his interest in land. B's
possessions sufficient to affect C with notice of his interest and B may
enforce specific performance of the contract against C. Thus, C
cannot say that he has no notice of B's interest in the land.
 Illustration
a) A leased a house and garden to B who takes possession of the
properties. A then sells the said properties to C. C is deemed to have
constructive notice of B's right over these properties i.e., C cannot
plead that he had no knowledge (notice) of the fact of B's possession
on the properties.
b) A agrees to sell his property to B. On the basis of this agreement B
puts his tenant in possession of that property. A afterwards sells the
property to C. Here C cannot be possession of that property. A
afterwards possession because B had no actual possession; the
possession was with B's tenant.
c) A sold his land to B but remains in possession of the land as tenant
of B. The sale-deed was not registered. A sold the same land to C
under a registered sale-deed.
C cannot be deemed to have constructive notice of B's rights over the
land because B was not in actual possession of the land. C had no
reason to believe that A was in possession of the land otherwise than
as owner.
d) A leased his land to B seven years on March 1901 to B for seven
years. In May, 1901
A entered into an agreement with B for the renewal of the lease on the
expiry of the term of the lease. In July 1901 A purported to settle the
same land with C for seven years from May 1908.C sued to take
possession of the land on the ground that lease to B was now expired.
Held, that C had constructive notice of the agreement because B was
in actual possession of the land. Therefore, C was not entitled to get
possession.

V) Notice to Agent is Notice to Principle

Notice or knowledge of a fact to any agent amounts to constructive
notice to his principal. The principal cannot deny that the notice of the
fact was to agent and not to him.
The rule that a principal was bound constructively with notice of
certain facts to his agent was added in Section 3 by Explanation III
under the Amending Act, 1929. Notice to an agent is also called as
imputed notice.
This provision corresponds to Section 229 of the Indian Contract Act
1872 which runs thus:
"Any notice given to or information obtained by the agent, provided it
be given or obtained in the course of the business transacted by him
for the principal, has the same legal consequence as if it had been
given to or obtained by the principal."
Following conditions are necessary for the applicability of the rule
that notice to agent is imputed notice to principal -
a) Notice must have been acquired by a person as an agent; not in any
their capacity.
Unless it could be shown that there exists relationship of agency
between two persons notice of one cannot be treated as imputed
notice to another (principal).
b) Notice to an agent is imputed notice to principal only with regard
to the particular business or transaction for which the agent has been
appointed. A solicitor appointed for a particular business is agent for
all matters related to that business and his knowledge or information
respecting that business is notice to his principal. But where a
solicitor is engaged only for writing a deed, his knowledge about the
transaction in deed cannot be treated as notice to principal because he
was appointed not for all dealings concerning that deed.
c) Notice must be acquired or obtained by an agent during the course
of agency.
Knowledge acquired by a person before his appointed as agent or
after the termination of agency is no knowledge and is not imputed
notice for the principal.
d) Notice acquired by an agent must be relevant or material to the
transaction. Any knowledge obtained or acquired by an agent during
the course of agency which is not material to the particular business
for which agency exists, shall not be regarded as notice to the
principal.
e) Notice must not have been fraudulently concealed by the agent.
Fraudulent concealment would mean that the agent has knowledge of
certain facts related to the business but he has not communicated it to
his principal with dishonest intention.
Partners of a firm are agent of one another. Accordingly, notice of a
fact to partner with regard to the business of the firm is imputed
notice to the firm.

IV. IMPORTANCE OF NOTICE

The doctrine of notice is an equitable doctrine. It protects the interests
of a transferee for value (without consideration) without notice. There
might be transfers in which there is some legal defect and the transfer
is void. Under a void transfer of property the transferee cannot get any
interest.
But, if it could be proved that transferee was a transferee for value
(i.e. he has paid money) and he had no notice of the legal defect, the
equity shall protect his interest under the doctrine of notice. For
example, if out of a property a person has right to be maintained and
that property is transferred, the transferee would get the property with
this liability. But, if it could be proved that transfer was for value and
the transferee had no notice (knowledge) of this liability then, under
Section 39 of the Act, the transferee would not be bound by the
liability to maintain that person out of the property purchased by him.
Other instances where under the Transfer of Property Act, interests of
transferees for value without notice have been protected under the
doctrine of notice are given in Sections 40, 41, 53, 53-A. It may be
noted that the doctrine of constructive notice is applicable also against
the Government.