Report No. 70
Operation or Transfer
Assuming that the property is one which can be transferred and that the transferor and the transferee are competent to make the transfer or take under the transfer respectively, the next question to be considered is on what interest the transfer operates. Of course, since a transfer is the result of a contract, the answer primarily depends on the intention of the parties.
But it is well known that the parties do not always express their intention clearly in exhaustive terms, and it is also well known that the words which they employ in effecting the transfer may not be regarded as exhaustive. In aid of the presumed intention of the parties the Act, in section 8, makes a specific provision regarding the operation of the transfer. This provision is mainly intended to do away with clumsy and prolific conveyancing and to guard against the raising of frivolous pleas based on the supposed incompleteness of the formula employed by the transferor.
Three important propositions are laid down in the first paragraph of section 8. Unless a different intention is expressed or necessarily implied, it provides, in the first place, that a transfer of property passes all the interest which the transferor is then capable of passing in the property. In the second place, it provides that such passing of the interest takes place forthwith. In the third place, it provides that the legal incidents of the interest are also transferred forthwith.
15.2. Legal incidents.-
What the expression "legal incidents" comprises is dealt with in the remaining paragraphs, though not in an exhaustive manner. Those paragraphs deal separately with five kinds of property, namely-(1) land, (2) machinery, (3) house, (4) debt or actionable claim and (5) money or other property yielding income. Legal incidents of each are mentioned by an inclusive formula.
This part of section 8 reads-
"Such incidents include, where the property is land, the easements annexed thereto, the rents and profits thereof accruing after the transfer and all things attached to the earth;
and where the property is machinery attached to the earth, the movable parts thereof;
and, where the property is a house, the easements annexed thereto, the rent thereof accruing after the transfer, and the locks, keys, bars, doors, windows and all other things provided for permanent use therewith;
and, where the property is a debt or other actionable claim, the securities therefor (except where they are also for other debt or claims not transferred to the transferee), but not arrears of interest accrued before the transfer;
and, where the property is money or other property yielding income, the interest or income thereof accruing after the transfer takes effect."
15.3. Previous law.-
The provisions of section 8 closely conform to the corresponding provisions of the English Conveyancing and Law of Property Act, 1881 (section 63)-now the Law of Property Act, 1925 (section 163). Before the English Conveyancing Act, it was necessary to insert in each deed, under "general words" minute details of the property, easements and incidents intended to be conveyed. The prolix lengths to which deeds in consequence used to run often rendered them as imperspicuous as insensible.1 In Wood v. Saunders, 44 p Ch 514 (520), Hall, V.C. observed:
"General words we all know are almost always, if not always, unmeaning; and you can in fact only lay hold of them to sometimes extend the operation of instruments; as, for example, to easements which Shave become extinguished by unity of seisin of enjoyment, or in some other way. They have no operation, and the only wonder is, that they have been allowed to remain so long in the pigeonholes to be put in every deed, when in truth they have no meaning or effect at all."
Its provisions therefore, had the effect of not only cutting down the length of deeds, but of simplifying them by doing away with the "general words" which have now become a thing of the past. But they are of great assistance in interpreting the corresponding provisions of the Indian law, as, in drafting the Indian Act, the English Statute was before the Legislature and its advisers2 The marginal notes3 appended to the Bill of 1879 show that the principles embodied in the section were recognised in this country from before the Act.4-5
1. Wood v. Sounders, 44 p Ch 514 (520).
2. See Whitley Stokes, Introduction to the Act, in his Anglo-Indian Codes and Wutzler v. Sharp, ILR 5 All 270 (285).
3. The marginal notes cite the following cases as authorities on the section; Ram Dhone v. Ishanee, 2 WR 123 (125); Kishen Gir v. Busgeet Roy, 14 WR 379; Faqueer v. St. Khuderun, 2 NWPH CR 251 (252); Mahommed Ali v. Bolakee, 24 WR 330 (trees); "everything grown on it", Morley NS 259.
5. So a lease given in 1865 "with all rights" was held to comprise the minerals despite section 108(c) of this Act, which shows that the principle had even a wider application before its enactment here: Megh Lal v. Raj Kumar, ILR 34 Cal 358.
15.4. Privy Council.-
Referring to the law in force anterior to the enactment of this section, the Privy Council said:
"It is not necessary to decide whether the Transfer of Property Act enacts what was unquestionably the law before. The rule of law was that indefinite words of grant were calculated to convey all the interest of the grantor, but that it was necessary to read the whole instrument together the intention. It is a question to be decided when it arises, whether the framers of the Act have not consciously or otherwise so expressed themselves as to lay down a more positive rule in favour of absolute gifts."1
1. Kalidas Mullick v. Kanhaya Lal, ILR 11 Cal 121 (131) PC.
15.5. Principl-First maxim.-
The principle embodied in the section is one of universal application and may be found in the ancient legal maxims which have become a part of the common law of England. These maxims are (i) Eujus est solum, ejus est usque ad coelum ad inferos,1 (ii) Quicquid plantaur solo, solo cedit.2
Under the rule embodied in the first maxim, it has been laid down that, since land in its general signification has an indefinite extent both upwards and downwards, a conveyance of land is sufficient to pass all buildings, growing timber, emblements and water thereon as also mines and minerals thereunder: from which it follows that the owner cannot put erections on his own land so as to project on his neighbour's land, or throw the rain water from his roof on his neighbour's land, or grow trees so that their boughs overhand the adjoining land of another.3
The right of light and air is similarly traceable to the same rule. The owner of the soil having a right to subterranean springs can maintain a suit for its diversion under circumstances which would have given a right for action if the stream had been above-ground.4 On the other hand, he cannot dig on his own land, so as to undermine the foundation of his neighbour's building.5
1. "Whoever has the soil, has it even up to the firmament, and to the middle of the earth."
2. "Whatever is planted on (or fixed to) the soil follows the soil."
4. Section 17(d), India Easement Act (V of 1882); Action v. Blundell, 12 M&W 324; Chasemore v. Richards, 7 HLC 349.
5. Pindu v. Johnai, ILR 24 Cal 260; Balabhai v. Balakbidas, 2 BLR 114; Woman v. Parasharam, 2 BLR 688; Deoki v. Dhian Singh, ILR 8 All 467.
15.6. The second maxim.-
The second maxim relates to accessories and things affixed to land. In a mortgage or lease of property, "a different intention" is necessarily implied, inasmuch as the transferor does not obviously intend to pass all his interest in the property, but only creates a limited interest in the transferee, the extent and nature of which forms the subject of two separate chapters of the Act.
Where the nature of the interest conveyed is defined by the transferor, the question depends upon the construction to be placed upon the document, the terms of which alone must then afford a basis for decision. But the relationship of the parties may also be material. In the absence of an express agreement to the contrary, the Act further provides rules for the construction of the presumed intention which depends upon the nature of the interest conveyed.1
1. Sale, section 55; mortgage, section 65; leases, section 108; exchange, section 119.
15.7. Rule of construction.-
The section lays down a rule of construction, which must be applied to the case of a transfer which, ex hypothesia, does not tell us whether any particular interest, possessed by the transferee, was meant to pass, by the conveyance or not. The object of the section is, therefore, to stabilize title and to remove, from the region of pure speculation, what passed in the mind of the transferor or the transferee at the date of the transfer.1
1. Fazal Ahmed v. Har Prasad, AIR 1929 All 465 (474)
15.8. Effect of transfer of debts on decrees subsequently passed.-
An important question with reference to section 8 concerns that part of the section which relates to debts or other actionable claims. The fifth paragraph of the section, so far as is material, provides that the incidents of a property include, "where the property is a debt or other actionable claim, the securities therefor".
The main paragraph of the section-first paragraph-so far as is material-provides that a transfer of property passes forthwith to the transferee the interest which the transferor is "then capable" of passing in the property and in the legal incidents thereof. The precise question to be considered is whether the transfer of a debt is to be construed (in the absence of a contrary intention) as also a transfer of a decree to be passed later in proceedings then pending at the instance of the transferor.
15.9. Supreme Court case.-
In Jugal Kishore1 a firm in the name of M/s. Habib & Sons of Bombay had filed a suit in the year 1948 against Jugal Kishore Saraf for the recovery of Rs. 7113. When the suit was still pending, the firm of M/s. Habib & Sons transferred their business to Raw Cotton Co. Ltd. in the year 1949 along with all debts due to the firm. In December 1949, a decree was passed in this suit for a total sum of Rs. 8428 in favour of M/s Habib & Sons.
In April, 1951, the Raw Cotton Co. Ltd. applied for the execution of the decree, which was opposed by Jugal Kishore Saraf on various grounds. One of the grounds was that the decree was not transferred to the respondent company (Raw Cotton Co. Ltd.) as the suit was still pending when the business of M/s. Habib & Sons was transferred to them and the decree had been passed subsequently. The executing court rejected this plea of the judgement-debtor and his appeal was also dismissed by the High Court. The matter came up before the Supreme Court under Article 133(1) of the Constitution of India.
Das J. held that under section 9 of the Transfer of Property Act, the true position is that at the date of the transfer of the debt to the respondent company, the transferors could not transfer the decree, because the decree did not exist. This section does not operate to pass any future property for the section passes all interest which the transferor can "then" i.e. at the date of transfer pass. He also held that under the Transfer of Property Act, there can be no transfer of property which is not in existence at the date of the transfer. Therefore the purported transfer of the decree that might be passed in future could only operate as a contract to transfer the decree to be performed in future i.e. after passing of the decree.
Bhagwati J., however, took a different view. He observed that section 8 of the Transfer of Property Act provides that unless a different intention is expressed or necessarily implied, a transfer of property passes forthwith to the transferee all the interest which the transferor is then capable of passing in the property and in the legal incidents thereof. These incidents include, where the property is an actionable claim, the "securities....but not arrears of interest accrued before the transfer".
In case of transfer of debts or property coming within the definition of actionable claim, there is, therefore, necessarily involved also a transfer of the transferor's right in a decree which may be passed in his favour in a pending litigation and the moment a decree is passed in his favour by the Court of Law, that decree is also automatically transferred in favour of the transferee by virtue of the written assignment already executed by the transferor.
The debt which is the subject-matter of the claim is merged in the decree and the transferee of the actionable claim becomes entitled by virtue of the assignment in writing in his favour, not only to the book dent but also to the decree in which it has merged. The transferee is, without anything more, entitled to the transfer of the decree passed by the Court of Law in favour of the transferee.
1. Jugal Kishore Saraf v. Raw Cotton Co., AIR 1955 SC 376 : (1955) 1 SCR 1369 (Das Bhagwati and Imam JJ.).
15.10. Judgments summed up.-
Das J. took1 the view that the subsequent decree is not transferred. Bhagwati J., however, took the view that the decree was transferred. He primarily based himself upon two propositions, namely-first, though there can be no transfer as such of future property, yet the transfer should, on equitable principles, be given effect as contract, and secondly, the decree merely represented the debt.
1. Per the view of Imam, J., see para. 15.15, infra.