Transfer of Property Act (TPA)
Person Competent to Transfer under Section 7: Competence to Contract, and Title or Authority to Dispose
Section 6 asks what may be transferred. Section 7 asks who may transfer it, and answers with two requirements that must be satisfied together. The transferor must be competent to contract, which imports the capacity rules of the Contract Act; and he must be entitled to the property, or authorised to dispose of property that is not his own. Capacity without title conveys nothing, because a man cannot give what he does not have. Title without capacity conveys nothing either, because the law will not recognise his act. Both keys must turn.
Figure 1: The two requirements of section 7, who may hold the second for somebody else, and what happens when either is missing
1. The Section
Section 7, TPA 'Every person competent to contract and entitled to transferable property, or authorised to dispose of transferable property not his own, is competent to transfer such property either wholly or in part, and either absolutely or conditionally, in the circumstances, to the extent and in the manner, allowed and prescribed by any law for the time being in force.' |
2. The First Requirement: Competence to Contract
The expression is not defined in this Act. It is taken from section 11 of the Indian Contract Act, 1872, under which a person is competent to contract if he is of the age of majority, of sound mind, and not disqualified from contracting by any law to which he is subject.
Element | Content |
|---|---|
Age of majority | Eighteen years, under the Indian Majority Act, 1875 |
Soundness of mind | Section 12, Indian Contract Act — capable, at the time of making the transfer, of understanding it and of forming a rational judgment as to its effect upon his interests |
Not disqualified by law | Persons disqualified by some statute or status — an insolvent whose estate has vested in the official assignee, an alien enemy, or a person under a statutory disability |
2.1 The minor as transferor
A transfer by a minor is void. The foundation is Mohori Bibee v. Dharmodas Ghose, (1903) 30 IA 114, where the Privy Council held that an agreement by a minor is void ab initio, and that a mortgage executed by him was therefore a nullity. Ratification on attaining majority cannot validate it, because there was nothing to ratify.
2.2 The minor as transferee
Section 7 tests the capacity of the person giving, not of the person receiving. A minor may therefore take under a transfer: he may be a purchaser, a donee or a mortgagee, provided the transaction casts no obligation on him. Where the consideration has been paid on his behalf and nothing remains for him to perform, the transfer in his favour is good and enforceable.
2.3 Transfers of a minor's property
A minor's property is dealt with by his guardian, and the guardian's powers are limited. Under section 8 of the Hindu Minority and Guardianship Act, 1956, a natural guardian may not transfer immoveable property of the minor by sale, gift, exchange or mortgage, or lease it beyond the periods prescribed, without the previous permission of the court; a transfer made in breach is voidable at the instance of the minor. The Guardians and Wards Act, 1890 contains corresponding restrictions for guardians appointed by the court.
3. The Second Requirement: Title or Authority
The transferor must be entitled to the property — that is, its owner, or the holder of the interest he purports to convey — or else authorised to dispose of property belonging to another.
Who may transfer another's property | Source and limits of the authority |
|---|---|
An agent under a power of attorney | The instrument itself; a power to manage does not carry a power to sell, and a power to sell must be construed strictly |
A trustee | The trust deed and the Indian Trusts Act, 1882 |
An executor or administrator | The will and the Indian Succession Act, 1925, for the purposes of administering the estate |
A guardian of a minor | Only with the previous permission of the court for immoveable property — section 8, Hindu Minority and Guardianship Act, 1956 |
The karta of a Hindu joint family | May alienate coparcenary property for legal necessity, for the benefit of the estate, or for indispensable religious duties |
A mortgagee exercising a power of sale | Section 69, TPA, in the cases and on the conditions there specified |
An official assignee or receiver, or a court-appointed receiver | The insolvency statute or the order of appointment |
4. When One Key Is Missing
The defect | Consequence |
|---|---|
Transfer by a minor | Void — Mohori Bibee; no ratification is possible |
Transfer by a person of unsound mind at the time of the transfer | Void, the capacity being tested at the moment of the transaction |
Transfer by a guardian of the minor's immoveable property without the court's permission | Voidable at the instance of the minor or any person claiming under him |
Transfer by a person with no title at all | Passes nothing — but see section 43, which feeds the grant by estoppel where the transferor fraudulently or erroneously represented that he was authorised to transfer and later acquires the interest |
Transfer by an ostensible owner | The transfer may stand against the real owner, under section 41, if the transferee took reasonable care to ascertain the transferor's power and acted in good faith |
Transfer by an agent exceeding his authority | Not binding on the principal, subject to the law of apparent authority and ratification under the Contract Act |
5. The Tail of the Section
The closing words repay attention. The transfer may be made wholly or in part, and absolutely or conditionally — so a competent owner may carve out a lesser interest, or attach a condition, subject to the limits in sections 10 to 34. But all of it is permitted only 'in the circumstances, to the extent and in the manner, allowed and prescribed by any law for the time being in force', which carries in the formalities of sections 54, 59, 107 and 123, the Registration Act, and any special statute restricting alienation.
Retention aid Capacity and title, and both at once. Section 11 of the Contract Act supplies the first; ownership or authority supplies the second. Then remember which way the section faces: it tests the person giving. A minor cannot transfer, but a minor may perfectly well receive. |
6. Landmark Cases
📖 Mohori Bibee v. Dharmodas Ghose, (1903) 30 IA 114 (PC) Held: An agreement by a minor is void ab initio. A mortgage executed by a minor is therefore a nullity, and the mortgagee cannot obtain repayment of the money advanced on the footing of the mortgage. A person seeking to enforce a transfer must show that the transferor was competent to contract. Ratio: A transfer by a minor is void, and cannot be ratified on his attaining majority. |
📖 Raghava Chariar v. Srinivasa Raghava Chariar, (1916) 40 Mad 308 (FB) Held: A minor may be a transferee. Where a mortgage is executed in favour of a minor who has paid the whole of the consideration, the mortgage is enforceable by him; the disability attaches to the transferor, not to a transferee who takes a benefit without undertaking any obligation. Ratio: Competence under the section is tested in the transferor; a minor may take as transferee. |
7. Related Topics and Provisions
- Transfer of Property, Sections 5 to 9 — where section 7 sits in the opening scheme
- What May Be Transferred, Section 6 — the question section 7 assumes has been answered
- Section 11, Indian Contract Act, 1872 — the capacity imported by section 7
- Sections 41 and 43, TPA — the ostensible owner, and feeding the grant by estoppel
- Section 8, Hindu Minority and Guardianship Act, 1956 — alienation of a minor's immoveable property
- Operation of Transfer, Section 8 — what passes once a competent person has transferred