Report No. 70
50.11. Intangible thing.-
The expression "intangible thing" is, in the context, to be taken as confined to immovable property, and not as covering movable property.1-2 It is for this reason that a licence to sell electricity.3 a permission to plant trees on land and to enter the land to gather the fruits,4 a copyright in books,5 a money decree or a decree for possession of immovable property,6 is not an "intangible thing" within section 54.
On the other hand, a right to rents and profits that may accrue in immovable property, or an interest under a deed of settlement by which a person is granted as income in future rent's and profits in immovable property and also a share in the proceeds of the sale of the property in future, would be within the section,7 since they relate to immovable property.
1. AIR 1939 All 305 (307);
AIR 1935 Pat 492 (493).
2. AIR 1935 Pat 492 (493).
3. AIR 1940 All 458 (460).
4. AIR 1952 Nag 321 (322).
5. AIR 1939 All 305 (307).
6. AIR 1935 Pat 492.
7. (a) AIR 1935 Pat 492 (493);
(b) AIR 1936 PC 230 (233, 234).
5.12. Recommendation as to second paragraph.-
It is proper to make it clear that in the second paragraph, when it speaks of reversion orother intangible thing, it is confined to immovable property as is shown by the decisions just now referred to.1 We recommend that the second paragraph should be suitably amended to bring this out.
1. Para. 50.11, supra.
50.13. Section 54, third mode, tangible and intangible property.-
This takes us to the third paragraph of section 54. Under the third paragraph, different modes of delivery on the sale of immovable property are prescribed. The modes prescribed consist of two alternatives. In the case of tangible immovable property of the value of one hundred rupees and upwards or in the case of a reversion or other intangible thing (irrespective of value), such transfer can be made only by a registered instrument. The word 'only' here indicate that delivery is ruled out as a mode of transfer.
In contrast, in the case of tangible immovable property of a value of less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property. It follows, therefore, that the law is more restrictive in the case of-(i) tangible immovable property exceeding the specified value, and (ii) reversion or other intangible, thing, since only a registered instrument is permissible.
We may state that this dichotomy between tangible and intangible immovable property becomes of basic importance where the mode of transfer adopted is not by a registered instrument, but by delivery. The question that arises in such case is whether delivery is sufficient as a mode of transfer. The answer would be in the negative if the case falls in the first category which, as already stated, is governed by a restrictive provision. The answer would be in the affirmative in the second situation.
50.14. Controversy caused where delivery is the mode adopted.-
Since the second situation (tangible immovable property of less than one hundred rupees)1 depends upon it being established that the property is tangible, controversies have arisen in particular cases where delivery was the only mode adopted. The adoption of a registered instrument raises no problems, since that mode is valid in both the cases, but the adoption of delivery raises problems, since it is permissible only in the second case.2
Those who would like to challenge the transfer would naturally argue that the mode of transfer adopted-delivery-. was not permissible, and that the property was not tangible immovable property. It is to be remembered that in the case of an "intangible thing", there is no question of value, minimum or maximum. Irrespective of value, the transfer can be made only by a registered instrument and not by delivery. Usually, this controversy3 arises where the mortgagor sells the property to the mortgagee for less than rupees one hundred by delivery and the court is then called upon to consider the question whether what is transferred is tangible property or intangible property. The meaning of "tangible" thus becomes crucial.
1. Para. 50.13, supra.
2. Para. 50.13, supra.
3. See para. 50.16, infra.
50.14A. Meaning of "tangible".-
Grammatically, the word "tangible" means something that can be appreciated by the senses, that is to say, a material object. Strictly speaking, all rights are intangible things, since what one owns is not a thing, but a bundle of rights in a thing.
50.14B. Meaning of "property and interest".-
Statutory language as employed in the Transfer of Property Act, however, does not go by this strict doctrine. Sometimes, it employs the expression "immovable property" as covering the bundle of rights which one can have in that property and in this context, the Act seems to have in mind the expression "immovable property" as applicable to the object as appearing in the external world, as well as the legal concept of the totality of rights.
But occasionally the Act speaks of "interest in immovable property", which would seem to show that it is possible to conceive of two different categories-"immovable property", being the wider and generic one, and "interest" in immovable property being the narrower and specific one. Thus, a person who has a lease in his favour has an interest, but he does not own the "property".
Of course, section 6 uses the expression "property" in a wide sense, because it says "property of any kind may be transferred", but it cannot be denied that in ordinary language-and sometimes in the Act als.-where the totality of rights is intended to be connoted, the expression "immovable property" is more often employed while where not the totality but a specific right is intended, the expression "interest" is more often employed.
50.15. Privy Council case.-
In Moolla Sons v. Official Assignee, Rangoon, AIR 1936 PC 230 (232), the Privy Council observed:
"for the reason that in the absence of registered instrument, delivery is to be required as a formality necessary to the completion of the transaction, section 54 divides its provisions as to immovable property according as the immovable property is 'tangible or intangible".
50.16. Equity of redemption whether intangible thing.-
There is no definition or explanation of the expression "tangible" JO intangible". This has created certain problems. For example, there is a conflict of decisions on the question whether an equity of redemption vested in the mortgagor is or is not an "intangible thing".
(a) One view on the subject is that the equity of resumption vested in the mortgagor is "tangible immovable property", whatever may be the nature of the mortgage-simple1 or usufructuary.2
(b) The second view is that in all cases the equity of redemption is an intangible thing.3
(c) The third view makes a distinction between various types of mortgages.4
1. Sohan Lal v. Mohan Lal, AIR 1928 All 726 (728, 729) (Majority view).
2. Sohon Lal v. Mohan Lal, AIR 1928 All 726 (728, 729) (FB).
Suraj Prasad v. Agula Devi, AIR 1959 Pat 153 (155).
Venkatasubbamma v. Subbayya, AIR 1964 AP 21 (22, 23) (Chandra Reddy, C.J. & Chandra Sekhar, J.).
Tukaram v. Atmaram, AIR 1939 Born 31 (33) (Broomfield & Macklin, JJ.).
3. (a) Sakharam v. Ramachandra, AIR 1917 Born 287 (Scott, C.J. & Shah, J.); (b) Lachman Prasad v. Fida Husain, AIR 1915 Oudh 149 (150).
4. Para. 50.21, infra.
50.17. Juristic views examined.-
A few juristic writings referred to in the Allahabad judgment may be referred to. Holland, in his "Elements of Jurisprudence", says:1
"It (ownership) may continue to subsist although stripped of almost every attribute which makes it valuable."
Later he says:
"One or more of the subordinate elements of ownership, such as a right of possession or user, may be granted out while the residuary right or ownership remains unimpaired."
The same author, further, talking of pledge, says:
"Probably the rudest method is that which involves an actual transfer of ownership in the thing from the debtor to the creditor and such is the English mortgage of lands or goods except in so far as its theory has been modified by the determination of the Court of Chancery and of the legislature to continue, as long as possible, to regard the mortgagor as the owner of the property."
Similarly, Salmond in his Jurisprudence says2:
"The right of the owner of a thing may be all but eaten up by the dominant rights of lessees, mortgagees and other encumbrances. His ownership may be reduced to a mere name rather than a reality. Yet, he nonetheless remains the owner of the thing, while all others own nothing more than 'rights' over it,. He, then, is the owner of a material object, who owns a right to the general or residuary uses of it, after the deduction of all special and limited rights of use vested by way of encumbrance in other persons."
"We must not suppose that all the powers of an owner need be exercisable at once or immediately; he may remain owner though he has parted with some of them for a:time. He may for a time even part with his whole powers of use and enjoyment and suspend his power of disposal, provided that he reserves for himself or his successors, the right of ultimately reclaiming the thing and being restored to his power."
These passages were relied upon by the majority judgment in the Allahabad case4 in support of the proposition that mortgagor's right, even in a possessory mortgage, is tangible property.
1. Holland Elements of Jurisprudence, (1924 Edn.), pp. 209, 223, 233, cited in Sohan Lal v. Mohan Ltd., AIR 1928 All 726.
2. Salmond Jurisprudence, (1924), p. 280, cited in Sohan Lal v. Mohan Lal, AIR 1928 All 726.
3. Pollock First Book of Jurisprudence, (1923), pp. 179, 180, cited in Sohan Lal v. Mohan Lal, AIR 1928 All 728.
4. Sohan Lal v. Mohan Lal, AIR 1928 All 728 (729) (Majority view).
50.18. The opinions of these distinguished jurists are, however, hardly of any relevance to the question under discussion. They merely deal with "ownership", and not with what is tangible property.
50.19 Case law as to equity of redemption.-
Let us now examine a few cases as to equity of redemption. In a Madras case,1 Bhashyam Ayyanagar, J., made the following observations:
"The equity of redemption in a usufructuary mortgage is only an intangible thing like a reversion which immediately precedes the expression 'or other intangible thing' (vide Williams on 'Real Property', 18th Edition, pages 30, 31), and it can be transferred by sale only by a registered instrument and not by delivery of the property.
Equity of Redemption in a simple mortgage may be tangible immovable property, and its sale can be effected, if its value be below Rs. 100, without registered instrument by mere delivery of the property. The right of a simple mortgagee in the property mortgaged is in my opinion only an intangible think like a charge on immovable property within the meaning of section 54."
In a Patna case,2 it was held that the mortgagor, though not remaining in possession, yet transfers the tangible property when he sells it, because what passes to the mortgagee is not ownership and therefore the mortgagor remains the owner. The mortgagee, even though in possession, cannot transfer the property itself. He can only transfer the interest which he has acquired in the property. Whether the mortgagee is or is not in possession cannot according to this view make a distinction for the purpose of determining whether the property is tangible or intangible.
1. Ramaswamy v. Chinna Asavi, 1901 ILR 24 Mad 449 (463).
2. Suraj Prasad v. Agufa Devi, AIR 1959 Pat 153. (V. Ramaswamy, C.J., R.K. Chowdhury Sr K. Sahai, JJ.).
50.20. In a Bombay Full Bench decision,1 Chagla, C.J., who delivered the judgment of the Court, was inclined to hold that a sale by mortgagor of immovable property in the possession of a mortgagee is a sale of tangible immovable property, but he left the question open and decided the case on another ground.
1. Bhikhabhai v. Chiman LA, AIR 1953 Born 437 (439).