Report No. 70
Transfers to More Than One Person
The arithmetical adjustment of interests in property becomes necessary where property is transferred to two or more persons and there is nothing in the contract between the parties to indicate what is the numerical extent of the share of each transferee in the property. Not the entire topic, but a few segments of it, are dealt with in section 45. The section is so framed that at the first sight, the situations dealt with in the section are not very clear.
However, by way of introduction, it may be stated that where there is a joint transfer for consideration-joint in the sense that there is more than one transferee-the section determines the arithmetical share of each transferee by having regard to the consideration paid by each. Such consideration might have been paid out of a common fund, or it may have been paid out of separate funds belonging to the various transferees.
The broad principle in those cases is that the amount of consideration paid by each measures the interest of each in the property bought.1 If the consideration is paid from a common fund, then their interests are measured, in the absence of a contract to the contrary, with reference to the interests to which they were respectively entitled in the fund.
If the consideration is paid out of separate funds belonging to them respectively, then, in the absence of a contract to the contrary, their interests are measured with reference to or in proportion to the shares of the consideration which they respectively advance. In other words, the fraction of the total amount of the consideration, as borne by each represents the fraction showing his interest in the property purchase therewith. In this sense, the section adopts the principle of substitution.
Cases may, however, arise where evidence as to the consideration paid by them is absent. For this situation the rule enacted in the section is that such persons-that is, the transferees-are presumed to be equally interested in the property. As every student of equity knows, equity leans towards equality and the rule in question is in consonance with this doctrine of equity, apart from the fact that it is the only just and practicable solution which can be adopted where the circumstances rule out evidence.
1. Arakal v. Domingoinas, 1911 ILR 34 Mad 80.
41.2. Scope for improvement by way of addition and structural changes.-
One can hardly quarrel with the substance of the section so far as it goes. But reported cases show that there are a few joints on which we can usefully add to the section. It would also appear that there is a structural defect in the framework of the section, in so far as it does not deal with the two situations in distinct paragraphs, so that the reader does not at the first sight easily get the sense of the section. We shall make our recommendations on both these aspects in due course.
413. Section 45.- This is the text of the present section-
"45. Where immovable property is transferred for consideration to two or more persons, and such consideration is paid out of a fund belonging to them in common, they are, in the absence of a contract to the contrary, respectively entitled to interests in such property identical, as nearly as may be, with the interests to which they are respectively entitled in the fund and where such consideration is paid out of separate funds belonging to them respectively, they are, in the absence of a contract to the contrary, respectively entitled to interests in such property in proportion to the shares of the consideration which they respectively advance.
In the absence of evidence as to the interests in the fund to which they were respectively entitled, or as to the shares which they respectively advance, such persons shall be presumed to be equally interested in the property."
A similar rule prevails for determining partners, mutual relations. The principle of section 45 applies to involuntary sales also.1
1. Reazaddi v. Yakub, AIR 1941 Cal 416.
The section, it has been stated,1 does well in sailing clear of the corresponding English nomenclature, and thus avoiding the technical and sometimes embarrassing distinctions drawn in that law between a joint tenant and a tenant in common. In India, where proprietary rights to property are recognised, to designate a co-owner as a joint-tenant, would have been singularly inapt and inaccurate, and yet such terms of English feudalism are often used in discussions on Indian law as if they had been part and parcel of Indian jurisprudence.
41.5. Position in England and India.-
The incidents of the law of joint tenancy have but limited application to the Indian co-sharer. In England, a joint contract for purchase by two persons with equal payments, creates a joint tenancy, which therefore carries with it the right of survivorship.1 But it is by no means necessarily so in India.2 Even in England, a tenancy-in-common is presumed if there are circumstances showing that the right of survivorship was not intended to be preserved, or if the proportions of the contribution are not equal or the parties have been dealing with the estate as tenants-in-common.3
1. Aveling v. Knipe, 19 Ves 441; Lake v. Gibson, 1 Eq Ca Ab 291; Rigden v. VaMar, 2 Ves 253.
2. Cf. Jogeswar v. Ramchandra, ILR 23 Cal 670 (PC).
3. Harlon v. Barton, 1 John&H 287; Bigden v. Valliar, 2 Ves 258.
41.6. Rights of co-owners.-
As to the rights and liabilities of co-owners, it may be generally presumed that as regards the possession and enjoyment of the quantum of interest, co-owners stand in the relation of partners to one another, and therefore any advantage secured by one1 by means of any dealings within the scope of the business,2 e.g. the renewal of a lease,3 or an abatement of incumbrances charged on the property,4 or a secret bonus from the vendor for effecting the sale5 ensures to the benefit of the others.
On the other hand, one co-owner cannot infringe the right of the other by either taking exclusive possession of the property or altering its condition materially, without his permission.6 He cannot exclude the other co-shares from equal enjoyment.7
In any of these cases he can be restrained by an injunction,8 or the aggrieved party may obtain redress by a suit for partition9 or for compensation 10-11 Relief by way of an injunction being discretionary, the Privy Council12 has held that where no specific rule exists, the courts are to act according to justice, equity, and good conscience, and if, in a case of share-holders holding lands in common, it should be found that one shareholder is in the act of cultivating a portion of the lands which is not being actually used by another, it would scarcely be consistent with the rule above indicated to restraint him from proceeding with his work, or to allow any shareholder to appropriate to himself the fruits of the other's labour and capital.
1. Somerville v. Mackay, 16 Ves 382.
2. Dean v. McDowell, 8 Ch D 345 (351).
3. Featherstonchough v. Febwick, 17 Ves 298; Clegg v. Fishwick, 1 M&G 294.
4. Carter v. Horne, 1 Eq Ca Ab 7 Dart 1051.
5. Beck v. Kantorowick, 3 K&J 230.
6. Lala Bishambhar Lal v. Rajaram, 3 BLR (App) 67; Nocury Lal v. Bindabun, ILR 8 Cal 708.
7. Shadi v. Anup Singh, ILR 12 All 436 (FB).
8. Rajendrolal v. Shama Charan, ILR 5 Cal 188; Holloway v. Wahid Ali, 12 BLR 191.
9. Parasram v. Sherjit, ILR 9 All 661; Shadi v. Anup Singh, ILR 12 All 436.
10. Watson & Co. v. Ramchand, ILR 18 Cal 10 (PC). Overruling Kamchand v. Watson & Co., ILR 15 Cal 15 Cal 214.
11. Case-law taken from Gour.
12. Watson & Co. v. Kamchand, ILR 18 Cal 10 (22).
41.7. Second paragraph.-
The second paragraph of section 45 is a rule of construction based upon the principle that in the absence of evidence to the contrary, which the party alleging inequality must adduce,1 all co-sharers are to be deemed to be equally interested in the property jointly acquired by them, otherwise, their shares will be proportionate to the consideration paid by each, or in the case of the consideration being paid out of a joint fund, to the interests to which the co-sharers were respectively entitled. The section does not declare that in such a case, the co-sharers would become joint-tenants or only tenants-incommon without the right of survivorship. The section defines only the quantum, and not the quality, of the interest of joint-transferees.2
1. Ladobram v. Bulloram Dev, ILR 26 Cal 281 (282).
2. Gobind Prasad v. Inavat Khan, ILR 27 All 310.
41.8. Nature of interest not dealt with.-
Section 45 thus deals only with the quantum of interest, and not with the mode of enjoyment or nature of interest. Whether the transferees take as "tenants-in-common" or "joint tenants", is not a point specifically dealt with in the section. Our use of these expressions should not be taken as implying that the use of these expressions should be perpetuated. They have come into vogue as convenient starting, points for discussion-pegs on which to hang the bases of classification.
The point to be made is that if, in theory, the mode of enjoyment and other rights of co-owners could be of more than one species, then the section is non-committed about that. Since the section is silent, controversy arose in the past as to whether the transferees should be regarded as joint tenants or an tenants-in-common. We need not elaborate again the meaning of these two expressions-a matter which we have dealt with while considering section 44.1
But it is necessary to state here that notwithstanding repeated pronouncements from the highest Court, this obscurity does persist. The reported cases-some of them not very old-show this.2 Our law does not as a rule, favour joint-tenancy.3 In this position, it is hardly proper that such important points should be left to implication.
There may be cases-e.g. transfers to members of a joint Hindu family-where there may be room for application of some of the incidents of joint-tenancy. But, by and large, there is no room for the application of the technical concept of joint-tenancy in India. We shall make an appropriate recommendation on this point in due course. At this stage, a few theoretical matters relevant to the concept may be usefully dealt with.
1. See Chapter 40, supra.
2. e.g. (a) Mahomed Jusab v. Fatimabai, AIR 1948 Born 53; (b) Venkayya v. Subbarao, AIR 1957 AP 619.
3. Venkatakrishna v. Satyavathi, AIR 1968 SC 751.
41.9. Joint-tenancy not favoured in equity.-
Unlike the common law, equity did not favour joint tenancy,1 for equity often did not follow the law where it was merely feudal in character, and equity in this case was more concerned to achieve fairness than to simplify the tasks of conveyancers. Equity therefore preferred the certainty and equality of a tenancy in common to the chance of "all or nothing" which arose from the right of survivorship.2 "Equity leans against joint tenancy".
This maxim meant that a tenancy in common would exist in equity not only in those cases where it would have existed at law, but also in certain other cases where an intention to create a tenancy in common ought to be presumed. There were three such special cases, in all of which persons who were joint tenants at law were compelled by equity to hold the legal estate upon trust for themselves as equitable tenants in common. We are concerned with one of them-purchase money provided in unequal shares.
1. Gould v. Kemp, (1834) 2 My&K 304 (309).
2. "Survivorship is looked upon as odious in equity";
R. v. Williams, 1735 Bunb 342 (343), per cur; and see Woolley (in re:), (1903) 2 Ch 206 (211).
41.10. Purchase-money provided in unequal shares.-
If two or more persons together purchased property and provided the money in unequal shares, the purchasers were presumed to take beneficially as tenants in common in shares proportionate to the sums advanced.1 This, if A found one-third and B two-thirds of the price, they were presumed to be equitable tenants in common as to one-third and two thirds respectively.
If, on the other hand, the purchasers provided the money in equal shares, they were presumed joint tenants. This distinction has been criticised,2 but it has long been accepted as sound.3 The presumptions could be rebutted by evidence of circumstances showing that those providing the purchase-money equally intended to take as tenants in common,4 or vice versa.5
Further, the principle of proportionate division does not always apply as between husband and wife6 (as distinct from a man cohabiting with his mistress),7 for, in such cases, not only statute gives the court a wide discretion8 but also courts have adopted a different approach.9
1. Lake v. Gibson, (1729) 1 Eq Ca Abr 290 (291); Robinson (in re:), (1858) 4 K&J 505 (510); Bull v. Bull, (1955) 1 QB 234.
2. Jackson v. Jackson, (1804) 9 Ves 591 (604n).
3. See Lewin 131.
4. (a) Edwards v. Fashion, 1712 Prec Ch 332; (b) Ayeling v. Knipe, (1815) 19 Ves 441 (444);
5. Harris v. Fergusson, (1848) 16 Sim 308, as explained in Robinson v. Preston. (1858) 4 K&J 505 (516) (initial joint tendency held to extend to addition to it made with purchase-money provided unequally); Garrick v. Taylor, (1860) 29 Beav 79.
6. Rimmer v. Rimmer, (1953) 1 QB 63; Appleton v. Appleton, (1965) 1 WLR 25.
7. Diwell v. Fames, (1959) 1 WLR 624.
8. Married Women's Property Act, 1882, section 17.
9. Para. 41.17, infra.