Transfer of Property Act (TPA)
Transfer for Consideration by Persons Having Distinct Interests: Section 46
Where several people, each holding a different interest in the same property, join in selling it for a single price, the buyer pays one sum and the sellers must divide it. Section 46 tells them how. If their interests were of equal value they share equally; if unequal, they share in proportion to the value of what each gave up. The section values interests rather than counting heads, which is why a life tenant selling with the reversioners may take the larger part of the price.
Figure 1: Interests of different value, and the share of the price each attracts
1. The Section
Section 46, TPA 'Where immoveable property is transferred for consideration by persons having distinct interests therein, the transferors are, in the absence of a contract to the contrary, entitled to share in the consideration equally, where their interests in the property were of equal value, and, where such interests were of unequal value, proportionately to the value of their respective interests.' |
2. The Act's Illustrations
Two worked divisions (a) Shares of different size. A, owning a moiety of a village, and B and C each a quarter, transfer the village to D for ₹1,000. A is entitled to receive ₹500, and B and C ₹250 each. (b) Interests of different kind. A is entitled to a life interest, and B and C to the reversion. They transfer the property for ₹1,000. The life interest is ascertained to be worth ₹600 and the reversion ₹400. A receives ₹600 of the purchase money, and B and C ₹400. |
The second illustration is the instructive one. The sellers' interests are not merely of different size but of different character, and the section requires them to be valued — a life interest according to the life expectancy and the income, the reversion according to what is left. Value, not the number of sellers, decides.
3. The Elements
- Immoveable property transferred for consideration. A gift by several owners raises no question of dividing a price.
- Several transferors having distinct interests in that property — co-owners with different shares, or persons holding interests of different kinds in the same property.
- A single consideration paid for the whole.
- No contract to the contrary. The sellers may agree among themselves on any division they please, and the section then has nothing to do.
4. What 'Distinct Interests' Covers
The sellers | How the price is divided |
|---|---|
Co-owners holding shares of different size | In proportion to the shares — illustration (a) |
Co-owners holding equal shares | Equally |
A life tenant and the reversioners | According to the valued worth of the life interest and the reversion — illustration (b) |
A mortgagor and a mortgagee joining in a sale | According to the value of the equity of redemption and of the mortgagee's interest, so far as the section applies |
A lessor and a lessee selling together | According to the value of the reversion and of the unexpired term |
5. The Character of the Section
- It concerns the sellers only. The buyer pays his price and takes the property; how it is divided among the sellers does not affect his title.
- It is a rule of default. The opening words — 'in the absence of a contract to the contrary' — mean that the section fills a gap the parties have left.
- It requires a valuation where the interests differ in kind. That is a question of fact, on evidence, and the section assumes it can be answered.
- It applies to immoveable property, in terms.
6. Sections 45 and 46 Distinguished
Point | Section 45 | Section 46 |
|---|---|---|
Who is being dealt with | The transferees — two or more buyers | The transferors — two or more sellers |
What is divided | The property bought | The consideration received |
The measure | The fund or the share of the price each buyer advanced | The value of the interest each seller gave up |
The default where nothing is shown | Equality is presumed | Equality where the interests were of equal value; otherwise proportionate to value |
Displaced by | A contract to the contrary | A contract to the contrary |
Retention aid Forty-five divides the property among the buyers; forty-six divides the price among the sellers. And in forty-six the measure is value, which is why a life tenant may walk away with more of the money than the reversioners. |
7. Related Topics and Provisions
- Joint Transfer for Consideration, Section 45 — the shares of joint transferees
- Transfer by Co-owners of a Share in Common Property, Section 47 — whose share bears the transfer
- Section 44, TPA — a transfer by one co-owner
- Vested and Contingent Interests, Sections 19 to 24 — the interests that have to be valued
- Section 8, TPA — what passes by the transfer the sellers have made
- Transfers in Special Circumstances, Sections 38 to 53A — the chapter scheme