Section 5 of Transfer of Property provides that the expression "transfer of property" means an act by which a living person conveys property, in present or in future..... living persons......

Question: Section 5 of Transfer of Property provides that the expression "transfer of property" means an act by which a living person conveys property, in present or in future, to one or more living persons, or to himself and one or more other living persons:-
(i) Whether the family arrangement is transferred?
(ii) Whether surrender amounts to transfer?
(iii) Whether an Idol is a living person?
(i) Whether the family arrangement is transferred? [MPJS 2018]

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Answer

(i) Whether the family arrangement is transferred?

In Sahu Madho Das v. Mukand Ram, AIR 1955 SC 481, the court observed that "it is well settled that a compromise or family arrangement is based on the assumption that there is an antecedent title of some sort in the parties and the agreement acknowledges and defines what that title is, each party relinquishing all claims to property other than that falling to his share and recognising the right of the others, as they had previously asserted it, to the portions allotted to them respectively….”

The principles that emerge are:

1. A compromise or arrangement is based on the assumption that there is an antecedent title of some sort in the parties

2. In a family arrangement there is neither an alienation of property nor an exchange of property and the differences of parties having competing titles are resolved through a compromise

Thus, a family settlement entered into by the parties for the purpose of putting an end to the disputes among family members does not amount to transfer, not being an alienation it does not amount to the creation of an interest.

(ii) Whether surrender amounts to transfer?

Surrender is not a transfer as it is the merger of a lesser estate with a greater one. This was clarified in the case of Multhan Lal Saha v. Nagendra Nath Adhikari, (1933) 60 Cal 379.

For example, A is the landlord and B is his tenant. A as landlord has ownership of the house. Ownership or absolute interest is a larger interest. B as a tenant has an interest in A's house but A's interest is lesser interest because it is limited only to the right of enjoyment. Now, if B vacates the house before the expiry of the term of the tenancy, it would amount to surrendering his right of residence. Here, the lesser for smaller interest, of the landlord during tenancy, comes back to ownership (larger interest). There is no creation of any new title or interest in favour of the landlord. So, surrender doesn’t amount to transfer.

(iii) Whether an Idol is a living person? 

Section 5 defines the expression "transfer of property" as meaning 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.

The section further clarifies that '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 the transfer of property to or by companies, associations or bodies of individuals. This clarification was inserted in 1929.

The first important ingredient is that there must be a living person. This is explained in the second part of the section which expands its scope. But apart from that, it may be noted that the section therefore the Act in general does not apply to the conveyance of property to an entity which is recognised by law as having a personality in law but which does not have life. It is for this reason that a gift to God Almighty does not fall within the framework of the Act.