MODULE 1

15 MARKS

Q. Explain the term ‘property’ and also discuss various kinds of property.

Property has a very wider meaning in its real sense. It not only includes money and other
tangible things of value, but also includes any intangible right considered as a source or
element of income or wealth. The right and interest which a man has in lands and chattels to
the exclusion of others. It is the right to enjoy and to dispose of certain things in the most
absolute manner as he pleases, provided he makes no use of them prohibited by law.

Property definition describes it as anything over which a business or a person has lawful
rights. They may have some enforceable privileges over the items. Most of the properties
contain present or future monetary value and that is why they are considered assets.

Meaning of property
In general sense, property is any physical or virtual entity that is owned by an individual or
jointly by a group of individuals. An owner of the property has the right. Human life is not
possible without property. It has economic, socio-political, sometimes religious and legal
implications. It is the legal domain, which institutes the idea of ownership. The basic
postulate of the idea is the exclusive control of an individual over some ‘thing’. Here the
most important aspect of the concept of ownership and property is the word ‘thing’, on
which a person has control for use. To consume, sell, rent, mortgage, transfer and exchange
his property. Property is any physical or intangible entity that is owned by a person or
jointly by a group of people. Depending on the nature of the property, an owner of property
has the right to consume, sell, rent, mortgage, transfer, exchange or destroy their property,
and/or to exclude others from doing these things.

There are some Traditional principles related to property rights which includes include:
1. Control over the use of the property.
2. Right to take any benefit from the property.
3. Right to transfer or sell the property.
4. Right to exclude others from the property.

Definition of property
There are different definitions are given in different act as per there uses and needs. But in
the most important act which exclusively talks about the property and rights related to
property transfer of property act 1882 has no definite definition of the term property. But it
is defined in some other act as per their use and need. Those definitions are as follows:

Section 2(c) of the Benami Transactions (Prohibition) Act, 1988 defines property as:
“Property” means property of any kind, whether movable or immovable, tangible or
intangible, and includes any right or interest in such property.
Section 2 (11) of the Sale of Good Act, 1930 defines property as:
“Property” means the general property in goods, and not merely a special property.

 Kinds of Property

Real property
The most familiar type of property is real property. It contains land, buildings
that occupy the land, as well as the privileges to use the land. The central point
of real estate is real property, and it deals with transactions such as buying,
renting and selling the property. It also deals with concerning the use of land
and buildings for commercial and residential purposes.

As there are different types of properties, there also exist various interests in
them. Freehold and non-freehold estates are some interests in real properties.
Freehold estate ownership contains no expiration and could be inherited. On the
other hand, non-free estates cannot be transferred and they have expirations as
well. Non-free estates include leases and some other agreements related to
rental property.

Personal property
We know the personal property as real property but it is different because real
estate is not included in it. Personal property could be transferred physically to
someone and it is not always attached to the land. It may include automobiles,
tools, clothing, etc.

Intangible assets for e.g., patents, and bank accounts are also included in
personal property. Even though they cannot be moved physically, the person
that is registered as its legal owner has the rights that make these items his
personal property.

Moveable property

Moveable Property, as the name suggests, in the general sense, means goods or things
belonging to someone which can be moved from one place to another. For example, jewelry,
table, etc. It is personal property and is movable. Personal property of any kind which can
be moved comes under the moveable property. It is defined under the following statutes in
Indian law :

(1) General Clause Act, 1977 – According to Section 3 (36) – “Movable property shall mean
the property of every description, except immovable property.”

Property that does not come under the category of immovable property is known as
moveable property. For instance, anything like cars, clothes, chairs, computers are moveable
property whereas land is an immovable property.
(2) Registration Act, 1908 – According to Section 2 (9) – ‘Moveable property’ includes
standing timber, growing crops and grass, fruit upon and juice in trees, and property of
every other description, except immovable property.”

Moveable Property includes standing timber like trees which are used for commercial
purposes like Bamboo, oak, neem tree, etc. growing crops and grass which can be harvested
from the land after cultivation comes under moveable property as it can be used for
commercial purposes. Fruits and juices and other products obtained from trees and bushes
are also moveable properties like – rubber, wax, fruits, etc. Things that can be used daily that
are moveable, irrespective of it growing on an immovable property like land are called
moveable property.

(3) The Indian Penal Code – The Indian Penal Code also defines Moveable Property.
According to Section 22 – “The words “movable property” are intended to include corporeal
property of every description, except land and things attached to the earth or permanently
fastened to anything which is attached to the earth.”

Things that can be moved are moveable property unlike the things which are permanently
attached to the earth are moveable property. Substances that are grown on immovable
property and which are used legally for trade and other businesses come under a moveable
property. Things that cannot be moved and are permanently fastened to the earth are not
moveable properties.

(B) Immovable property

Immoveable Property, as the name suggests means property that cannot be moved or is
fixed permanently on the surface of the earth. By the surface of the earth, we usually mean
land or a real estate property. Therefore, the immovable property includes land and
substances permanently attached to the land. Various statutes define immovable property.

(1) Transfer of Property Act, 1882 – Section 3 of the Act defines Immovable Property as –
“immovable property” does not include standing timber, growing crops, or grass.

It explains that timber, grass, and growing crops are not considered immovable property.
This definition is given under the Transfer Of Property Act, 1882 is not exhaustive and does
not give a complete meaning of the term immovable property. It only defined what is not
considered as immovable property.

(2) General Clause Act, 1897 – To understand the definition of immovable property,
the General Clause Act, 1897 is referred which defines it as – Immovable Property shall
include land, benefits to arise out of the land and things attached to the earth or permanently
fastened to anything attached to the earth.
According to the definitions given under the Transfer of Property Act, 1882 and the General
Clause Act, 1897, Immovable Property is something attached to the earth permanently like
land and other substances except standing timber, growing crops, or grass.

Land

The term “land” is used in the definition which means a definite portion or piece of earth
above, on, or below the surface of the earth. The surface of the earth, the minerals found
inside the earth, or the river or land and water bodies on that surface of the earth are
considered as land. Apart from the natural features of a part of the surface of the earth, other
man-made inventions can also be a part of the land. If a house is built permanently on the
surface of the earth, it is considered as immovable property and called land. Substances
created through a human agency can also be a part of the land.

Benefits arise from the land

Property is usually claimed and treasured for the benefit of an individual. Immovable
property i.e. land also provides various benefits. The benefits acquired from the immovable
property are also considered immovable property. For instance, the rent acquired from a
property or money or interest gained from the property. Various activities including using
the land for physical work, or using the water body on the land for fishing, etc, are
considered as immovable property of the land.

Things attached to the earth

Things attached to the earth are considered immovable property. Now the question arises
for the classification of things as immovable property that are attached to the earth. Are all
the things attached to the earth immovable or are there any exceptions? To answer these
question, Section 3 of Transfer of Property Act, 1882 explains immovable property as (a)
rooted in the earth, as in the case of trees and shrubs; (b) imbedded in the earth, as in the
case of walls or buildings; or (c) attached to what is so imbedded for the permanent
beneficial enjoyment of that to which it is attached.

Things that are deep-rooted in the earth like trees, plants, shrubs, etc, are considered
immovable property. But this has certain exceptions. If the tree comes under the category of
standing timber then it cannot be considered as immovable property. For example, trees
which are grown to be cut for commercial purpose as wood and timber are not considered
as immovable property. Fruit-bearing trees are a part of immovable property.

For instance, if a tree is beneficial for both wood and timber, like mango, will it be
considered as movable or immovable property? This question was answered by the
case Shanta Bai Vs State of Bombay, 1958 AIR 532, 1959 SCR 265. It was held that the “real
intention” of growing the tree will determine it as moveable or immoveable property. If the
tree is grown for fruits, it is considered as immovable property and if it is grown for timber
then it is considered as moveable property.

In the case of Marshall Vs Green, it was held that the interest of the contract will determine
the tree as moveable property or immovable property. The Contract of sale will be
considered in such cases.

Things that are embedded in the earth are also considered immovable property. For
instance, the foundation of a house that is embedded in the earth will be considered as
immovable property. But not everything which is embedded in the earth is considered
immovable property. If a thing is fastened to the surface of the earth to remove it later in the
future, then it cannot be called an immovable property. The intention of the work done is
necessary for determining a property as moveable or immovable.

Things attached to the embedded property on the surface of the earth are considered
immovable property. For instance, the house built above the foundation which is embedded
in the surface of the earth is considered immovable property. Although, the real intentions
are necessary for this condition as well.

If a moveable property is attached to an immovable property then the real intentions are
considered to define the property as moveable or immoveable.

Tangible and Intangible property:

Tangible property
Tangible property refers to any type of property that can generally be moved (i.e., it is not
attached to real property or land), touched or felt. These generally include items such as
furniture, clothing, jewellery, art, writings, or household goods.

Intangible property:
Intangible property refers to personal property that cannot actually be moved, touched or
felt, but instead represents something of value such as negotiable instruments, securities,
service (economics), and intangible assets including chose in action

Intellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind
for which property rights are recognized—and the corresponding fields of law.

Property does not just comprise of tangible things like houses, cars, furniture, currency,
investments etc and such assets are not the only kind that can be protected by law. There are
many other forms of intangible property known as intellectual property that have been
recognized under the law and granted protection against infringement
Under intellectual property law, owners are granted certain exclusive rights to a variety of
intangible assets, such as musical, literary, and artistic works; discoveries and inventions;
and words, phrases, symbols, and designs. Patents, trademarks and copyrights, designs are
the four main categories of intellectual property.

EXISTING AND FUTURE PROPERTY (NOT YET FOUND).

Q. Role of property rights in social and economic development and discuss various kinds
of property (10)

Property rights play a pivotal role in shaping the trajectory of social and economic
development in societies around the world. The concept of property rights not only defines
the ownership of tangible and intangible resources but also governs how these resources can
be utilized and leveraged for the betterment of individuals, businesses, and governments.
This essay delves into the multifaceted impact of property rights on social and economic
development, exploring historical perspectives, positive contributions, potential challenges,
and drawbacks associated with property rights in the context of development.

Historically, property rights have been instrumental in driving development, particularly

with respect to land use and ownership. The Agrarian Revolution marked a significant
turning point in the evolution of property rights, leading to the enclosure of common lands
and the subsequent rise of private property ownership. This transition resulted in conflicts
between different landholders and impacted the distribution of property rights across
regions, shaping the consequences of the enclosures. Moreover, the management of
commons through cooperative action was integral in enabling individual proprietors to
engage in economic activities, highlighting the interconnectedness of property rights and
societal progress.

In contemporary society, property rights continue to exert a profound influence on social

and economic development. Secure land rights instill confidence in individuals and
businesses to invest in land, thereby laying the foundation for sustainable economic growth.
This confidence is further amplified by the role of property rights in facilitating access to
capital for private companies. Land and property titles serve as valuable collateral, enabling
businesses to secure financing for operational expansion and contributing to job creation. In
essence, property rights act as a catalyst for private sector development, economic
prosperity, and the generation of employment opportunities.

Furthermore, the impact of property rights extends to the empowerment of marginalized

groups, such as women and indigenous peoples. Secure property rights play a crucial role in
elevating the status of women by granting them ownership and control over assets, leading
to greater economic independence and social empowerment. Similarly, recognizing and
safeguarding the property rights of indigenous communities not only fosters social cohesion
but also upholds their cultural heritage and traditional practices. This inclusive approach to
property rights underscores its significance in fostering a more equitable and harmonious
societal landscape.

From an economic development perspective, property rights are indelibly linked to the
efficient functioning of markets and the facilitation of investment. The assurance of secure
property rights encourages investment in land and real estate, thereby driving urban
development and contributing to the overall economic progression of a region. Moreover,
property rights play a pivotal role in enabling governments to levy property taxes, which
are essential for financing infrastructure development and the provision of public services.
This underscores the integral role of property rights in sustaining the economic
infrastructure that underpins societal progress.

Notwithstanding the positive contributions of property rights, it is imperative to

acknowledge the potential challenges and drawbacks associated with their implementation
in the context of development. One such challenge stems from the complexity of the
relationship between property law and economic growth. The intricate interplay between
legal frameworks and economic dynamics necessitates a nuanced approach to property
rights to ensure their effective alignment with development goals. Additionally, the
imposition of property rights from external sources can lead to conflicts and resistance
within communities, underscoring the importance of context-sensitive approaches to
property rights reform.

Moreover, in the context of developing countries, the failure of formal property rights to
translate into collateral for private bank loans poses a significant obstacle. This shortfall
limits the ability of individuals and businesses to leverage their property rights as a means
of accessing financial resources for investment and growth. It also underscores the need for
comprehensive financial mechanisms that can effectively harness the potential of property
rights in driving economic development.

Another facet of the challenge lies in the potential market failures that may arise from a lack
of clear property rights. When property rights are ambiguous or inadequately defined,
transactions may have unintended consequences for third parties that are not factored into
the existing property frameworks. This can lead to market inefficiencies and hinder the
overall development process.

In conclusion, property rights exert a far-reaching influence on social and economic

development, shaping the contours of progress and prosperity in diverse societies. The
historical underpinnings of property rights, their positive contributions to economic and
social development, and the attendant challenges underscore their significance as a linchpin
of development. As societies continue to grapple with the evolving dynamics of property
rights, it is imperative to adopt context-sensitive approaches and robust legal frameworks to
harness their transformative potential for the collective advancement of humanity.
Q. Doctirine of Notice.

Q. Write a detailed note on Doctrine of Notice. Distinguish between actual notice and
constructive notice. (10)

Doctrine of Notice

The foundation of the doctrine of notice is knowledge of a fact. Knowledge here is not
restricted to absolute certainty but is inclusive of such a belief in the existence of the fact in
question as would make a reasonable and prudent man act, in the ordinary affairs of life.
This knowledge can either be actually possessed by a person or may be imputed to him by
law. The doctrine of notice necessitates either knowledge of a fact or proof that under the
given circumstances, one must have had knowledge of that fact. However, it is pertinent to
note that knowledge is not synonymous to notice. There can be a notice without express
knowledge of that fact and there can exist situations where knowledge of the fact does not
amount to notice.

Thus, notice may be briefly defined as the legal cognizance of a fact.[1] In the Transfer of
Property Act, 1882 the doctrine of notice is essential to determine the claims of two or more
persons (against each other) who are involved in an unconscionable transaction. When
knowledge of a fact is actually possessed by the party, it is called actual notice and when
knowledge of a fact is not expressly given but can be imputed to the party under certain
circumstances, it is constructive notice.

Actual Notice

Direct or express knowledge or intimation of a fact to a person is said to be an actual notice

of the fact to that person. Actual notice is express or formal communication of a definite fact
relevant to the transaction to one party by another party interested in the transaction. An
actual notice is said to be binding upon a person only when the following procedural
requirements[2] are fulfilled:

1. Definite knowledge, it should not be hearsay or rumours.[3] The notice must be of

such a nature that it is expected out of a reasonable to take the notice seriously. It
must be the result of a formal communication and not a casual conversation between
individuals.

2. Given by a party interested in the transaction, it is a settled rule that a person is not
bound to attend to vague rumours or statements by mere strangers, and for a notice
to be binding, it must proceed from some persons interested in the transaction.

3. Relevant to the transaction, knowledge must be in relation to the transfer in question,

not general or irrelevant to the transaction. Also, the notice must relate to the same
 transaction[5], as any information imparted as part of any other transaction may be
forgotten and doctrine of notice being based on equity does not allow such.

Constructive Notice

When there is no express information, but knowledge of a fact is presumed owing to the
existence of certain circumstances, it is constructive notice. A person under constructive
notice is not in actual possession of the knowledge about a fact. In case of a constructive
notice, the court presumes that under the given circumstances, the person ought to have had
knowledge of the fact, and so the person is deemed to have knowledge of the fact, and a
notice of the fact is imputed on him.

Constructive notice is a legal presumption. In accordance with the provisions of the Transfer
of Property Act, 1882 a constructive notice is said to be imposed upon a person under the
following circumstances:

1. Wilful abstention from inquiry or search:

This presents a situation where a person deliberately avoids taking notice of a fact which a
reasonable man would have taken in the ordinary affairs of life. The principle underlying a
presumption of notice in this situation is that the existence of means of acquiring knowledge
is equivalent to actual knowledge.[6] This suggests that there existed circumstances which
ought to have put a person upon enquiry and if such enquiry had been reasonably
prosecuted, it would have led to the discovery of that knowledge. Wilful abstention is thus
construed to mean lack of a bona fide intention.[7] A constructive notice will not be inferred,
unless it is brought to the court�s view that the situation offered a starting point of an
inquiry, which if prosecuted would have led to the discovery of the fact.

2. Gross Negligence:

Negligence simply means want of care. Negligence involves either the doing of an act which
a reasonable man guided by prudence which regulate the general conduct of human affairs
would not do, or the omission of such an act. However, mere negligence to take cognizance
of a fact does not result in a presumption of notice. It is when the negligent act is so grave
that a man of ordinary prudence can never be expected to act in that way, it amounts to
gross negligence. A presumption of notice on account of gross negligence is taken when the
negligence is of such an aggravated nature that it is indicative of a mental indifference to
obvious risks.[8] It is to be noted here that in wilful abstention, opportunity of knowledge
might be an important factor, but under gross negligence, it is not relevant.

3. Registration as Notice:

Explanation I to section 3 of the Transfer of Property Act, 1882 provides for drawing a
presumption of notice of all the facts stated in a document or which can be reasonably
inferred from the contents of the document, when that document is registered. The
legislative intent behind this explanation was to make it clear that only for those documents
in which registration is a compulsory requirement, constructive notice of the document is to
be inferred on registration, as a general rule. On registration, the facts in the registered
document come in the public domain, so a reasonable notice to parties interested in the
transaction concerning that document is construed.

For registration of a document to serve as constructive notice, following requisites must be

fulfilled:

o The documents must be of a nature that they are compulsorily registrable, for
example, gift of immovable property is always done through a registered
deed under the Registration Act. Registration of documents concerned with
transfers where registration is optional, a mere registration will not serve as
constructive notice to the interested parties.

o A registration serves as constructive notice only when it has been completed

in accordance with the procedural requirements of registration under the
Registration Act.

o Registration serves as constructive notice only in a transfer done after the

registration has been completed, i.e., only to a subsequent transferee. Any
transfers made prior to the registration are not presumed to be guided by
constructive notice of the documents registered.

4. Actual Possession as Notice of Title:

Under Explanation II to section 3 of the Transfer of Property Act, 1882, actual possession of
an immovable property is considered to be constructive notice of such title or that much
interest which the person in possession may have. It is to be noted that title (here) is not
indicative of an ownership, instead it merely suggests a right to possess. In order to operate
as constructive notice, possession must be actual possession. Constructive possession does
not give rise to a presumption of notice.[9] When an actual or physical possession is proved,
the transferee cannot take the plea that he had no knowledge of the title held by the
possessor.

5. Notice to agent an Imputed notice to Principal:

Explanation III to section 3 of the Transfer of Property Act, 1882 deals with the situation
where a notice to an agent is treated as an imputed notice to the principal. The underlying
principle governing such inference of notice is that he who acts through another, is deemed
to act in person (qui facit per alium facit per se).
The doctrine of notice is based on the principle of equity. And thus, the presumption of
notice to agent being constructive notice to the principal is to ensure that no principal avoids
an unfavourable notice by simply appointing an agent.

The applicability of notice to an agent being an imputed notice to the principal rests on the
following conditions:

o Notice should be obtained by the agent in his capacity as an agent. Existence

of a principal-agent relationship is an essential condition for a presumption of
notice in this case.

o The agent should have been appointed for that specific transaction to which
the notice relates to. If the agent is appointed for transaction A and the notice
is pertaining to transaction B, for which he is not appointed, any notice to the
agent pertaining to transaction B will not be imputed notice to principal.

o The agent must have acquired the notice in the course of his employment as
an agent to the principal. Knowledge of any fact prior to appointment as an
agent and after the termination of appointment is not imputed notice to the
principal.

o Notice acquired by the agent must be material to the transaction or relevant

to that particular transaction for which the agent is appointed. Knowledge of
facts not related to the particular business for which the agency exists does
not result in an imputed notice to the principal.

o There must not have been any fraudulent concealment of facts from the
principal by the agent. When the agent, with a dishonest intention
deliberately conceals information from the principal, a notice of that fact is
imputed on the principal so long as the third party to whom the principal is
accountable, is not a party to the fraudulent concealment by the agent.

Actual and Constructive Notice: A Comparison

Nature: An actual notice is in the form of an express intimation whereas a constructive

notice is an assumption. In actual notice the person having notice is said to be consciously
aware of the existence of the fact, there is no assumption but an assurance of information on
the part of the person having an actual notice. Whereas, in case of a constructive notice,
knowledge of a fact is assumed on existence of certain circumstances.

There is no absolute conscious awareness of the fact, rather the knowledge is imputed to the
person. In accordance with Section 3 of the Transfer of Property Act, 1882 a constructive
notice upon the parties is deemed when there were means of acquiring knowledge and had
the means been rightly exhausted, the person would have received a conscious awareness
about the fact. Further, a similar notice (constructive) is deemed when the party has been
grossly negligent.