Transfer of Property Act (TPA)
TPA Transfer of Property Defined Section 5
Transfer of Property Defined under Section 5: Essentials of a Valid Transfer, Living Persons, and Present and Future Transfers
Section 5 is one sentence long and carries the whole Act. Every phrase in it does work: the act, the living transferor, the property conveyed, the timing, the transferee, and the curious third form in which a man transfers to himself. This topic takes the sentence apart phrase by phrase, sets out the essentials of a valid transfer that the courts have built on it, and deals with the two questions that generate most of the litigation — who counts as a living person, and what the words 'in present or in future' actually permit.
Figure 1: Section 5 dissected, with the definition of 'living person' that follows in the same section
1. The Section
Section 5, TPA 'In the following sections “transfer of property” means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself, or to himself and one or more other living persons; and “to transfer property” is to perform such act.' 'In this section “living person” includes a company or association or body of individuals, whether incorporated or not, but nothing herein contained shall affect any law for the time being in force relating to transfer of property to or by companies, associations or bodies of individuals.' |
2. The Essentials of a Valid Transfer
Section 5 read with sections 6 and 7 yields six requirements. A transaction that satisfies five of them is not a transfer under the Act.
- An act of conveyance. Something must be done by which property moves from one hand to another. A partition, a family settlement, a surrender or a relinquishment in favour of a co-owner recognises or extinguishes existing rights and conveys nothing.
- A living transferor. He must be alive when the instrument operates — which is why a will, operating from death, can never be a transfer under this Act.
- A living transferee. The person taking must exist at the date of the transfer. A conveyance to a dead person or to a company not yet incorporated is void.
- Transferable property. The subject matter must not fall within the nine exceptions in section 6, and must exist — future property cannot be transferred.
- A competent transferor. Section 7 requires competence to contract — majority, soundness of mind, no legal disqualification — and entitlement to the property or authority to dispose of it.
- The form the law prescribes. Writing, attestation and registration where sections 54, 59, 107, 123 or 130 require them; oral transfer otherwise, under section 9.
3. 'Living Person' — Who Qualifies
3.1 Transfer by and to an individual
The paradigm case. The individual must be alive and competent; if he is a minor or of unsound mind he cannot transfer, though he may ordinarily take as a transferee, since section 7 tests the capacity of the transferor and not of the transferee. Where a transfer is made to a minor, it is valid; where it is made by him, it is void.
3.2 Transfer by and to a company
A company is expressly a living person. Three qualifications follow from the saving clause, which preserves any other law relating to transfers to or by companies.
- Capacity is governed by company law. A transfer beyond the company's powers is challengeable on that footing, not under section 5.
- The company must be in existence. A conveyance in favour of a company that has not yet been incorporated has no transferee at all, and ratification after incorporation cannot supply the defect retrospectively.
- Formalities under other statutes survive. Registration of charges and the requirements of the Companies Act apply in addition to those of this Act.
3.3 Transfer by and to an association or body of individuals
The definition covers a body of individuals whether incorporated or not, so a firm, a club, a society or an unincorporated association may take and give. Two further categories complete the picture: a Hindu idol or deity, which the courts treat as a juristic person capable of holding property though it acts through a shebait or manager; and a trust, which takes in the name of its trustees.
4. 'In Present or in Future'
The point the examiner tests The words qualify the verb 'conveys', not the noun 'property'. A living person may make a conveyance to operate now or at a future time; but what he conveys must be property in existence and transferable at the date of the transfer. Jugalkishore Saraf v. Raw Cotton Co. Ltd., AIR 1955 SC 376 is the authority. A purported transfer of property not yet in existence operates at most as a contract to transfer, which equity may enforce when the property comes into existence — it is not itself a transfer. |
The transaction | Its character |
|---|---|
A sells his house to B today, title to pass at once | A present transfer — the ordinary case |
A transfers to B an interest to fall into possession on the death of C, who holds a life interest | A present transfer of a future interest — valid; the interest exists now, enjoyment is deferred |
A transfers the crop his field will bear next season | Not a transfer — future property; it operates as a contract, enforceable when the crop exists |
A, an heir apparent, transfers what he will inherit from his father | Void under section 6(a) — a mere possibility, not property at all |
A agrees today to sell whatever land he may buy next year | A contract to transfer, not a transfer |
The distinction to hold on to is between a future interest in existing property, which is transferable, and future property, which is not.
5. Transfer to Oneself, and to Oneself and Others
The third and fourth forms in the section are not redundancies.
- To himself. A person may convey property to himself in a different capacity — most obviously by declaring himself a trustee of it, so that he keeps the legal title while the beneficial interest passes to the beneficiary. The change is in the character in which the property is held, and that is a real change.
- To himself and one or more others. A sole owner may convey to himself and another, creating a co-ownership that did not exist before. This is how a settlor brings a co-trustee in, and how an owner creates a joint tenancy or tenancy in common with a spouse or partner.
- What it does not permit. A transfer to himself in the same capacity, changing nothing, is not a transfer; there must be some alteration in the character or the co-ownership of the holding.
6. Transactions That Fail Section 5
Transaction | Why it fails |
|---|---|
A will | Operates from death; the transferor is not then a living person |
A partition among coparceners | Each already has an antecedent title; partition severs, it does not convey — V.N. Sarin v. Ajit Kumar Poplai, AIR 1966 SC 432 |
A family settlement | It recognises and adjusts pre-existing rights — Kale v. Dy. Director of Consolidation, (1976) 3 SCC 119 |
A surrender by a lessee | The lesser interest merges in the greater; nothing is conveyed |
A relinquishment in favour of a co-owner | Generally an extinguishment enlarging the co-owner's existing share, though a release to a stranger may operate as a transfer in substance |
A charge created by a decree of the court | Created by the court, not by act of the parties |
A transfer to a deity or an idol | Valid — the deity is a juristic person; this one does not fail |
Retention aid Living to living, something conveyed, in praesenti or in futuro. Then remember the two traps: 'in future' attaches to the conveying, never to the property; and a company that does not yet exist cannot take, however genuine everyone's intentions were. |
7. Landmark Cases
📖 Jugalkishore Saraf v. Raw Cotton Co. Ltd., AIR 1955 SC 376 Held: The words 'in present or in future' in the definition of transfer qualify the word 'conveys' and not the word 'property'. A transfer of property not in existence at the date of the transfer operates at most as a contract to transfer, which equity may enforce when the property comes into existence. Ratio: Future property cannot be transferred; only a present conveyance of a future interest is possible. |
8. Related Topics and Provisions
- Transfer of Property, Sections 5 to 9 — where section 5 sits in the opening scheme of Chapter II
- Inter Vivos Transfer — the living-person requirement, and the unborn transferee
- What May Be Transferred, Section 6 — the filter that section 5 assumes
- Section 7, TPA — competence to transfer, and the capacity imported from the Contract Act
- Sections 13, 14 and 20, TPA — transfers for the benefit of an unborn person
- Jugalkishore Saraf v. Raw Cotton Co. Ltd., AIR 1955 SC 376 — 'in present or in future'