The Transfer of Property Act, 1882: Transfers by Operation of Law

Several legislations exist that govern conveyance of title of property, one of which is the The Transfer of Property Act (TPA), 1882. Prior to the existence of the said act, property transfers in India were primarily customary. So, the British Queen appointed the First Law Commission to draft an act as a codification to the various pre-existing property laws. Before being introduced, the first bill went through numerous changes before the redraft was presented before the Second Law Commission and later passed as an act. Some its provisions are taken from the English law of real property. Various amendments have been made in the act since it was first enacted. 

This act worked as a general principle to refer to in case a special legislation didn’t exist for a particular kind of transfer of property. The objective behind its introduction was to simply codify, define and amend the existing laws related to transfer of property by act of parties, and not to introduce any new principle of law. It primarily governs transfers by “act of the parties” and inter vivos  transfers. Therefore, transfers such as testamentary succession, sale in execution, Intestate transfers, insolvency, court auction and forfeiture, etc are beyond the scope of this act.

The preamble of TPA is similar to that of the Indian Contract Act of 1872. They are both non exhaustive in nature. InHarish Chandra Hegde v. State of Karnataka and Ors., there existed a conflict between Section 4,5 of Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfer of Certain Lands) Act and Section 51 of the TPA. The court held that the Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfer of Certain Lands) Act was a special statute enacted to provide support and protection to the underprivileged communities (SC, ST), whereas, the Transfer of Property act is a general legislation. Therefore, the former shall prevail. 

As stated in this case, TPA is simply a general act, whereas, special legislations and acts with regard to transfer of property are definite and have particular areas of focus. The TPA was not enacted to give shape to the existing legislations.Therefore, in cases where a special legislation exists with regard to transfer of property, the legislation prevails and not the act. 

Transfers by Operation of Law

Section 2 (d) of the act states that nothing that is contained in the act shall affect the save as which is provided by section 57 and Chapter IV of the said act. Further, it states that no provision mentioned under the act shall affect the save as provided by transfer which is made by operation of law or by, or in execution of, a decree or order of a Court of competent jurisdiction, and nothing stated in the second Chapter of the said act shall affect any rule of Muhammadan law.This section gives effect to the fact that provisions under TPA shall not govern transfers which are operated by law or by, or in execution of a decree or order of a Court of competent jurisdiction.

However, it acts as a saving clause by providing an exception to Section 57 and Chapter IV of the above mentioned act. Therefore, Section 57 and the sections which fall within Chapter IV would apply to transfers by operation of law. Moreover, in Bharat Petroleum Corp Ltd v P Kesavan, the court held: “As would appear from the preamble of the Transfer of Property Act, the same applies only to transfer by act of parties. A transfer by operation of law is not validated or invalidated by anything contained in the Act. Therefore, a transfer which takes place by operation of law, need not meet the requirement of the provisions of the Transfer of Property Act or the Indian Registration Act.” 

Operation of Law is “A way in which someone acquires certain rights or responsibilities automatically under the law, without taking individual action or being the subject of a court order.” Therefore, there is “no act or cooperation of his or her own, but merely by the application of the established legal rules to the particular transaction.” An example of this could be when an individual dies without a will and his/her legal heirs automatically inherit the property as they are entitled to it without act performed by parties.  

Certain High Courts over time have tried assuming that the Privy Council wanted to give an exhaustive definition of the kind of transfers that would fall within the purview of transfer of property by operation of law. However, in Sailendra Kumar Roy And Ors. vs Bank Of Calcutta, Ltd. the court suggested “that it would apply only in cases where certain events, not connected with any act on the part of anybody towards making a transfer, happen and the law, operating on those events, brings about a transfer” Consequently, the court in Jugalkishore Saraf vs Raw Cotton Co. Ltd. upheld the same.

When a transfer is made from one party to another, the transfer must be governed by some law in force. Therefore, transfer of property made by operation of law is done by operation of some statutory or personal law, which is in force with regard to the particular type of transfer, at the time being. Like, if a Hindu man dies without a will then his/her successors will get his estate by the force of his personal law i.e., the Hindu Succession Act. Similarly, if a Muslim or Christian man dies intestate then the property transfers are made by the operation of their personal laws which are in force at the time being. Transfer of property in case of testamentary succession, Insolvency and such other cases where operation of law applies, are also made by operation of their statutory law respectively. 

Operation of Law cannot be applied in cases where the property has been transferred from one living person to another. It solely applies in cases where the decree of transfer has been made by the force of some law at the time being. However, this leads to a question i,e., if an auction sale held in a partnership action made by the order of the court is inter vivos then why does the an execution sale fall within the purview of transfer by operation of law. Both these transfers are similar in the way that they are both made in invitum. In Periakatha Nadar vs Mahalingam Alias held that “as no particular form of assignment was prescribed for transfer, the order of the Court might be treated as an assignment in writing of the decree.”

However, in Jugalkishore Saraf vs Raw Cotton Co. Ltd. the the court questioned this reasoning and held “there was in that case a transfer by operation of law than that the Court acted as the agent of the partners and the order of the Court was the assignment in writing. The law authorised the Court in a partnership action to order the sale of the partnership assets and consequently the sale passed the interest of all the partners other than the purchasing partner in the decree solely to (1) A.I.R. 1936 Mad. 548. 179 the latter. I do not see why a transfer thus brought about should not, like a transfer effected by a Court sale in execution, be regarded as a transfer by operation of law”

Conflicting provisions

Section 5 of the said act defines “transfer of property” as an act which governs transfer of property from one “living person” to another (one or more) living person, either in present or in future. Under this act “living person” includes a body of individuals or a company or an association, either incorporated or otherwise. It further states that nothing under this act shall affect any law, in force at the time being, related to transfer of property to or by companies or bodies of Individuals  or associations.

As stated above, the act simply governs transfer of property made consensually between two or more parties inter vivos. Therefore, transfers made by the court, like auction sales, would be beyond the purview of this act. However, Clause (d) of Section 2 of the act seems to be in conflict with the effect of this provision. The court dealt with and answered this confusion in Smt. Laxmi Devi vs Sethani Mukand Kanwar. In this case, the court held that although the provision under Section 5 is in consistence with the provisions mentioned in the preamble of TPA, however, the provision under Section 2 (d) shall prevail.

The court further said “the purpose of the definition under Section 5 is to indicate the class of transfers to which the provisions of the Transfer of Property Act are intended to be applied; but a definition of this kind cannot over-ride the clear and positive direction contained in the specific words used by s.2(d). As we have already seen, the result of the saving clause enacted by s. 2(d) is to emphasise the fact that the provisions of s.57 and those contained in Chapter IV must apply to transfer by operation of law. Such a positive provision cannot be made to yield to what may appear to be the effect of the, definition prescribed by s.5,” Therefore, the provision under Section 2 (d) overrides the provisions mentioned under Section 5 by making an exception with regard to Section 57 and Chapter IV of the said act and further validating any transaction operated by the process of law and decree of the court.

Conclusion

Transfer of  property by operation of law is beyond the purview of Transfer of Property Act, 1882. TPA simple deals with properties by the act of parties and inter vivos transfers. It is a general legislation which exists to provide a shape to the pre-existing customary property laws which needed clarity. In case a special legislation exists, such legislation applies and not the act. Section 2 (d) of the act provides provisions as a saving clause to section 57 and Chapter IV of the act which are an exception to the rule that TPA does not govern transfers by operation of law.

The provisions under this section are in conflict with the provisions provided under section 5 of the act. However, it is seen that in case of a conflict 2(d) applies. Moreover, the paper states that transfer by operation of law is when a transfer takes place in absence of the act of a party i.e., the transfer takes place by application of some law in force. It further talks about how transfers by operation of law should be a transfer which is either governed by a statutory or a personal law which is in force when such transfer takes place. Moreover, it states how there is no definitive set of cases which fall within the purview of transfer by operation of law and how inter vivos transfers are surely beyond the scope of transfer by operation of law. 

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