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Report No. 70

11.6. Property.-

'Property', of course, is a wide term. Thus, it includes an interest of the lessor. The interest of a lessor is a reversion, a future estate capable of being reduced to possession on the termination of the existing lease, and can be validly transferred1 under section 5, while the lease is subsisting.

1. AIR 1957 AP 619.

11.7. Property in existence.-

The subject-matter should be property in existence. Where the section uses the words 'conveys property', in present or in future (to one or more other living persons), one should read the words 'in present or in future' with the word 'convey', and not with the word 'property'. In other words, in the contemplation of the section, the property must exist before the transfer can be effected.1-4

1. Jugal Kishore Saraf v. Raw Cotton Co., AIR 1955 SC 376: (1955) 1 SCR 1369 (1413).

2. Chief Controlling Revenue Authority v. Sudarsanam Picture, AIR 1968 Mad 319 (FB).

3. Moti Ram v. Khyali Ram, AIR 1967 All 484.

4. AIR 1955 Pat 402.

11.8. Effect of transfer of future property.-

This does not, of course, mean that it is illegal to transfer property to be acquired in future. Such a transfer is not prohibited by the Act in general terms, and all that can be said with reference to such a transfer is that it does not fall within the terms of this section. It may not be effective as an immediate transfer, but this is quite a different thing from saying that it is totally devoid of any legal effect.

Section 5 does not cover it, but such an instrument relating to property to be acquired in future may yet have certain legal consequences. It could, for example, bring into being contractual liabilities or rights similar to those recognised in England as equitable rights-same principles apply to property not in existence. This aspect of the matter is often overlooked by reason of the juxtaposition of the words in section 5, but the correct positions seems to as above.

While section 5 cannot be invoked to validate a transfer of future property, such transfer can create certain rights depending on the nature of the property, the relations between the parties and various ether circumstances relevant to the application of doctrines originating in equity. For example, the principle of section 43-if not the literal text thereof-could be invoked for giving effect to the instrument purporting to incorporate such a transfer.1

1. AIR 1960 Cal 609.

11.9. In an Allahabad case,1 section 18 of the Specific Relief Act, 187.-

Now section 13, 1963 Act- was also discussed. The old section 18 and the new section 13 are based on the well-known rule of estoppel, sometimes referred to as feeding the grant by estoppel. The effect of section 13, so far as is material, is to confer on the transferee, from a person having no title, certain rights if the transferor acquires any interest subsequently.

The Calcutta High Court in the case of Prem Sukh Gulgulia v. Habib Lillah, AIR 1945 Cal 355, held that transfers of non-existent or, as it is conveniently called, after-acquired property, provided they are not of the nature contemplated in section 6(a)-transfer of a mere chance-are perfectly valid. The transfer would be regarded in court of justice as a contract to transfer after the vendor had acquired title, and would fasten upon the property as soon as the vendor acquired it. A contract of sale of property which is not of the vendor's at the time of the contract, but which the vendor thinks of acquiring by purchase later on, is not bad in law.

1. Ehsanul Haq v. Mohd. Umar, AIR 1973 All 425 (426) (S. Malik, J.).

11.10. Sale of Goods Act.-

It may also be noted that section 6 of the Sale of Goods Act has a detailed provision1 as to transfer of goods not in existence-

"6. (1) The goods which form the subject of a contract of sale may be either existing goods, owned2 or possessed by the seller, or future goods.

(2) There may be a contract for the sale of goods the acquisition of which by the seller depends upon a contingency which may or may not happen.

(3) Where by a contract of sale the seller purports to effect a present sale of future goods, the contract operates an agreement to sell the goods."

1. Section 6, Sale of Goods Act, 1930.

2. e.g. shares.

11.11. Recommendations for amendment.-

The only amendment that we recommend in section 5 is transportation of the words "in present or in future" after the word "convey"1 and before the word "property".

1. Para. 11.7, supra.

The Transfer of Property Act, 1882 Back

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