The Transfer of Property Act 1882 is legislation that regulates the transfer of property in India. It defines the term "transfer of property" as an act in which a person conveys the property to one or more living persons or himself and one or more other persons. The act applies to both movable and immovable property and can take place in the form of a sale, exchange, gift, mortgage, lease, actionable claim, or charge.
The act also recognizes the distinction between absolute and conditional transfers. An absolute transfer is one in which the transferee becomes the unconditional owner of the property immediately, whereas a conditional transfer is dependent on a condition attached to it.
The relevant provisions of conditional transfer are explained in sections 25 to 34 of the act. A condition is something that makes the existence of a right dependent on the happening or not happening of a thing and can be either a condition precedent, condition subsequent, or conditional limitations.
Types of conditional transfer:
The Transfer of Property Act 1882 recognizes three types of conditional transfers:
- Condition Precedent: A condition precedent is a condition that must be fulfilled before the transfer of property becomes effective. For example, "A" agrees to transfer a piece of land to "B" on the condition that "B" builds a house on the land within a year. In this case, the transfer of the property will only become effective if "B" fulfills the condition of building the house within a year.
- Condition Subsequent: A condition subsequent is a condition that, if fulfilled, causes the transfer of property to become void. For example, "A" transfers a piece of land to "B" on the condition that "B" shall not use the land for commercial purposes. In this case, if "B" uses the land for commercial purposes, the transfer of the property will become void.
- Conditional Limitations: A conditional limitation is a condition that limits the right of the transferee to the property transferred. For example, "A" transfers a piece of land to "B" on the condition that "B" shall not transfer the land to anyone else for the next 10 years. In this case, the condition limits "B"'s right to transfer the land to someone else for the next 10 years
It's worth mentioning that, for the condition to be valid, it must not be illegal or against public policy, must not be impossible to fulfill, and should be clear.
Conditions on which transfer will fail or void
Section 25 of the Transfer of Property Act 1882 lays down six categories of conditions that should not be imposed while creating an interest in the transfer of property, as it renders the transfer void. These categories are:
Conditions that are impossible to perform
The case of Rajendra Lal v. Mrinalini Dassi is an example of how a condition that is impossible to perform can make a transfer of property void. In this case, the condition imposed in the bequest was that the legatee had to excavate a tank, which had already been excavated by the testator himself. This made the bequest void, as the possibility of performing the condition was impossible.
This case highlights one of the important points which is that a condition that is impossible to fulfill will cause the transfer to be void. This can include conditions that are physically impossible, such as a condition requiring a person to live forever, or conditions that are dependent on events that are impossible, such as a condition requiring a square circle.
So both parties need to be careful when specifying conditions for the transfer of property, ensuring that conditions are not impossible to fulfill, and not against the law, public policy, or the nature of the property, otherwise, it could render the transfer void or fail.
Conditions that are forbidden by law
Under the Transfer of Property Act 1882, a condition that is forbidden by law will make the transfer of property void. This means that a transfer of property will not be considered valid if the condition attached to it is illegal or goes against the law.
For example, if a person transfers a property on the condition that the recipient uses it for illegal activities, the transfer will be void as it is against the law. Similarly, a transfer of property with a condition that is against the provisions of any other law, for example, a condition that breaches the provisions of tax laws or labor laws would make the transfer void.
It's important for the parties involved in a transfer of property to ensure that the conditions attached to the transfer are legal and do not go against any existing laws. If the condition is found to be illegal, the transfer will be void and the property will not be transferred to the intended recipient.
Conditions involving or implying injury to the person and property of another
This case, Ramalinga Padayachi v. Natesa Padayachi, involved a situation in which a buyer of some property, identified as "A," was aware that the seller, "C," did not have a good title to the property, but went through with the purchase with the intent of causing trouble for the true owner. After a legal dispute over the property arose, "A" filed a suit to claim indemnity from "C" for losses incurred during the litigation. The court in this case ruled that the suit could not be maintained because "A" had purchased the property with the express intent of causing harm to the true owner.
Fraudulent conditions refer to a situation in which the condition for transfer of ownership is fraudulently created or misrepresented by the transferor (the person transferring the property) with the intent to deceive or defraud the transferee (the person receiving the property). For example, if the transferor states that the condition for transfer is the payment of a certain sum of money, but the transferor never intended to transfer the property even if the money was paid, it would be a fraudulent condition. In such cases, the transferee may have legal remedies available to them, such as the right to rescind the transfer or seek damages for any losses suffered as a result of the fraud.
Conditions that are regarded as immoral or opposed to public policy by the court
In the case of Wilkinson v. Wilkinson, it was held that an agreement between a person and a woman to provide money to enable her to divorce her husband and later marry the person who provided the money was against public policy and therefore void. This is because the agreement was considered to be immoral and contrary to the social norms and values of society. It should be noted that this specific case of the matter of Divorce is valid only under the jurisdiction of the court which passed the judgment and the laws of the country it was passed.
In Ram Sarup v. Bela, it was noted that a gift with an immoral condition attached to it is still considered a valid gift, but the condition is void. However, in Ghuman v. Ramchandra, the court held that a transfer of property in consideration of future immoral relations is void.
The conditions attached to the transfer of property can play a crucial role in determining the validity of the transfer. The Indian Contract Act, of 1872, through section 25, lays down certain conditions that, if imposed, would render the transfer void. These conditions include the transfer being in violation of law or public policy, or being fraudulent or imposed with the intent to deceive or defraud the transferee.
It is important to interpret the provisions related to conditional transfer with precision, as their complex nature can affect the rights and interests of both the transferor and transferee. The laws and regulations related to the conditional transfer of property are designed to protect the rights of both parties, and it is essential to take into account both their rights and interests in the transaction.
In addition, it is important to keep in mind that the laws and regulations related to the conditional transfer of property can vary depending on the jurisdiction, and it is always advisable to seek legal advice before engaging in such a transaction.