Report No. 70
The last-mentioned proposition has been taken substantially from Mr. Swanston's note to one of the early English cases.1 The aspect of choice becomes significant in giving rise to the rule that for a binding election there must be a deliberate choice made with full knowledge of the rules relating to election and the relevant circumstances.2 This is on the principle that if we exclude a party on the basis of his own election, it is necessary to show that he knew all the facts.3 It is for this reason that an election made under a mistake of fact will not be binding .4
1. Dillon v. Parker, (1883) 1 Swanston's 394 Note (b): 1 Ct&F 303.
2. Wilson v. Thornburry, (1865) 10 Chancery Appeals 239.
3. Pread v. Norgan, 11 House of Lords Cases 588.
4. Kidney v. Conssmaker, (1806) 12 Vos 136.
32.7. Section 35.- In this background, we may now deal with the text of section 35, quoted below:
"35. Where a person professes to transfer property which he has no right to transfer, and as part of the same transaction confers any benefit on the owner of the property, such owner must elect either to confirm such transfer or to dissent from it; and in the latter case, he shall relinquish the benefit so conferred and the benefit so relinquished shall revert to the transferor or his representative as if it had not been disposed of subject nevertheless, where the transfer is gratuitous, and the transferor has, before the election, died or otherwise become incapable of making a fresh transfer, and in all cases where the transfer is for consideration, to the charge of making good to the disappointed transferee, the amount or value of the property attempted to be transferred to him.
The farm of Sultanpur is the property of C and worth Rs. 800. A by an instrument of gift professes to transfer it to B, giving by the same instrument Rs. 1,000 to C. C elects to retain the farm. He forfeits the gift of Rs. 1,000.
In the same case, A died before election. His representative must, out of the Rs. 1,000, pay Rs 800 to B.
The rule in the first paragraph of this section applies whether the transferor does or does not believe that which he professes to transfer to be his own.
A person taking no benefit directly under a transaction, but deriving a benefit under it indirectly need not elect.
A person who, in his own capacity, takes a benefit under the transaction, may in another, dissent therefrom.
Exception to the last preceding four rules.-Where a particular benefit is expressed to be conferred on the owner of the property which the transferor professes to transfer, and such benefit is expressed to be in lieu of that property, if such owner claim the property, he must relinquish the particular benefit but he is not bound to relinquish any other benefit conferred upon him by the same transaction.
Acceptance of the benefit by the person on whom it is conferred constitutes an election by him to confirm the transfer, if he is aware of his duty to elect and of those circumstances which would influence the judgment of a reasonable man in making an election, or if he waives inquiry into the circumstances.
Such knowledge or waiver shall, in the absence of evidence to the contrary, be presumed, if the person on whom the benefit has been conferred has enjoyed it for two years without doing any act to express dissent.
Such knowledge or waiver may be inferred from any act of his which renders it impossible to place the persons interested in the property professed to be transferred in the same condition as if such act had not been done.
A transfers to B an estate to which C is entitled, and as part of the same transaction gives C a coal-mine. C takes possession of the mine and exhausts it. He has thereby confirmed the transfer of the estate to B.
If he does not, within one year after the date of the transfer, signify to the transferor or his representatives his intention to confirm or to dissent from the transfer, the transferor or his representatives may, upon the expiration of that period, require him to make his election; and if he does not comply with such requisition within a reasonable time after he has received it, he shall be deemed to have elected to confirm the transfer.
In the case of disability, the election shall be postponed until the disability ceases, or until the election is made by some competent authority."
32.8. Compensation of forfeiture.-
It is sometimes stated that the doctrine of election as incorporated in section 35 is based on forfeiture, unlike the English law which is based upon compensation. This is true to a large extent; but it must also be pointed out that even under section 35-as is apparent from the third and fourth paragraphs-while forfeiture takes place from the point of view of the refractory donee, yet the transferor or his heirs must compensate the disappointed donee, in certain cases specified in the section.
The illustration to the fourth paragraph of the section makes this amply clear. In fact, the situations in which compensation is compulsory under the section cover most, if not all, of the situations in which justice requires that compensation ought to be made. The only difference is that the compensation is to be made by the transferor or his representative and not by the refractory donee, unlike the position in English law and the liability is confined to the specified situations.
32.9. Declaration of intention.-
It is to be pointed out that the general and presumed intention of the transferor may be repelled by a declaration in the instrument of a particular intention inconsistent with the presumed and general intention. This is the English law.1 Though section 35 does not provide for such a case, Mulla2 has expressed the view that the operation of the section can, in India, similarly be excluded by express words.3
One example of a provision giving effect to the contrary intention is already found in the Exception appearing after the 4th paragraph of the section, which corresponds to a similar provision in section 186 of the Indian Succession Act, 1925. The illustration to section 186, Succession Act, is as follows:
"Under A's marriage-settlement his wife is entitled, if she survives him, to the enjoyment of the estate of Sultanpur during her life. A by his will bequeaths to his wife an annuity of 200 rupees during her life, in lieu of her interest in the estate of Sultanpur, which estate he bequeaths to his son. He also gives his wife a legacy of 1,000 rupees. The widow elects to take what she is entitled to under the settlement. She is bound to relinquish the annuity, but not the legacy of 1,000 rupees".
A somewhat similar situation was also present in a Calcutta case.4
1. Vardon's Trusts (in re:),. (1885) 31 Ch D 275 (279).
2. Mulla, (1973), Comment on section 35.
3. Shephard and Brown Transfer of Property Act, note on section 35 referred to by Mulla.
4. Pramada v. Lokhi, 1885 ILK 12 Cal 60.
32.10 No change.- Indian case law on the section has been gone through and discloses no need for amending the section.