Before the Transfer of Property Act, which came into force in 1882, the transfers of India’s immovable properties were then governed by the various Principles of the English law and equity. In the absence of any of the statutory provisions, the courts have to fall back upon English law and equity.
In the absence of any statutory provisions, the courts have to fall back upon English law on real properties, sometimes forcing the courts to decide the disputes according to their notions of justice and fair play, resulting in confusion and conflicts. A Law Commission was appointed in England to prepare a code of substantive Law of Transfer of Properties in India. The Bill about Transfer of Property Act, 1882, was prepared for not less than seven times before the final Bill was passed, and it came into force with effect from 17th February, 1882, as Transfer of Property Act, 1882.
Table of Contents
SALE OF IMMOVABLE PROPERTY
Sale has been defined under Section 54 of the TPA, 1882, which deals with the sale of immovable property. The term ‘immovable property’ is not defined anywhere in the Transfer of Property Act,1882, and only says that “immovable property” doesn’t contain grass, growing crops, or standing timber. The definitions given in the Act are neither comprehensive nor exhaustive and only exclude certain things. Sale under Section 54 is defined as a transfer of ownership in exchange for a price paid or promised. There is a transfer of ownership in regards to the sale of immovable property [1]. All the interests, liabilities of the property are transferred to the new owner.
ESSENTIALS OF SALE
PARTIES
There shall be two parties in a sale agreement: the seller and the buyer. The seller and the buyer must be competent to enter into contract for a valid sale.
SUBJECT MATTER
The subject matter with regards the applicability of Section 54 of the TPA is an immovable property, irrespective of whether it is tangible, i.e., the one we can see or touch, or if it is intangible, i.e., we cannot see like rights in something.
PRICE OR CONSIDERATIONÂ
An essential for sale is the price, either paid or promised. Consideration may either be paid at the time of sale or during or after the sale. It may also be paid partly. And if consideration is not ascertained then the sale is void and not enforceable.
TRANSFER OR CONVEYANCE
When a sale deed is made, ownership rights must also absolutely be transferred, and the one who is the seller will no longer have any right on it once the deed is done.
If the property is tangible, having a value of one hundred rupees, and upwards, transfer can only be made by a registered instrument. If the property is tangible immovable property valuing fewer than one hundred rupees, its transfer may be made either by a registered instrument or by delivery of property [2]. Delivery of tangible immovable property occurs when the seller puts the buyer or such person as the buyer directs on this behalf in possession of the property.
AGREEMENT TO SALE
A sale agreement is quite different from an actual sale, which means that the property is due off to the seller after some time, and till then, he has no further right in the seller’s property. It can be defined as an agreement for the sale of property in terms agreed between the parties. A sale agreement creates a right to personam, which further means “against a person.” It also does not need any registration against provisions of sale where registration of property above 100 rupees is required.
DIFFERENCE BETWEEN SALE AND EXCHANGE
A sale is a transfer of ownership in exchange for a price or a consideration. A sale is a transaction between two or more parties in which the buyer receives tangible or intangible goods, services, and or assets in exchange for money. Exchange is defined as giving or receiving something in return for something else. The ownership of one thing is transferred for the ownership of another thing and the thing being money.
DEFINITIONÂ
A sale is defined under Section 54 of the TPA Act, 1882, as “a transfer of ownership in exchange for a price paid or promised or part paid or promised.”
Further, exchange is defined under Section 118 of Transfer of Property 1882, which goes as “When two persons mutually transfer the ownership of one thing for the ownership of another, neither thing nor both the things being money only, the transaction is called an exchange” [3].
TRANSFER OF OWNERSHIP
A sale is the permanent transfer of ownership for a price whereas an exchange is defined as the transfer of ownership without price.
CONDITIONS
In case of a sale, the price is always money or consideration. In case of an exchange, one thing’s ownership is transferred to another thing’s ownership, which may be money.
MODE
The mode of sale is the sale deed while the mode of exchange is through registered instruments.
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DIFFERENCE BETWEEN SALE AND MORTGAGE
- In a sale deed, there is a transfer of an exclusive right, title, interest, and ownership over the immovable property to the purchaser absolutely for a valid consideration. However, a mortgage deed is obtainable only in case of a loan against immovable property.
- In a sale deed, there is a total transfer of ownership and title in the sale of the goods made to the buyer. On the other hand, there is no transfer of absolute title and ownership in the case of mortgage.
- The purchaser here will stand in the vendor shoe and enjoy the absolute right over the property. There is a symbolic possession to the buyer for a specific temporary period.
HIRE PURCHASE AGREEMENT
Hire purchase agreement is defined as an arrangement for buying expensive consumer goods. The buyer at first makes an initial down payment and pays the remaining amount with interest in the installments. Hire purchase agreements are not seen as an extension of the credit. In this system, ownership is not transferred to the purchaser until all the payments are made. This system usually proved to be more expensive in the long run than purchasing an item outright. The hire purchase system cannot be seen as an extension to the credit system involved in the transaction because of the purchaser.
Hire purchase agreement must be in writing and must be signed by both the parties. The agreement here must contain:-
- Description of goods.
- Price of goods.
- The date of commencement of the agreement.
- The number of installments, amounts, and due dates.
DIFFERENCE BETWEEN SALE AND HIRE PURCHASE
TRANSFER OF OWNERSHIP
In hire purchase, the ownership of goods is not transferred to the buyer until he pays the final installment. Whereas in sale, the ownership of goods is transferred to the buyer immediately after the completion of the sale.
RIGHT OF THE SELLER
The seller has the right to take back the goods if the buyer defaults in the installment payment, in hire purchase. Whereas in sale, the sale is complete, and there are no rights to the goods sold.
POSITION OF PARTIES
In hire purchase, the buyer is the bailee of the goods until he has paid the final installment. The ownership till then is then the seller. The buyer is the owner of the goods after the sale, in sale.
PLEDGE OR SALE BY THE BUYER
If the buyer fails to pay an installment in a hire purchase agreement, he/she cannot pledge or sell the goods to pay the remaining amount. The buyer in sale can pledge or sell the goods; however he wants.
CONCLUSION
The provisions of the Act have revolutionized the system relating to the Property Laws in India. However, in view of the dynamic character of the society, there is a need for various amendments. The Transfer Of Property Act, 1882, as it is at this moment, is not beyond the periphery of supervision steps. It becomes necessary to understand the law so as to properly deal with the subject matter and to resolve loopholes and update the law so as to keep up with the changing times.
REFERENCES
[1]. Dr. R.K. Sinha, Textbook on Transfer of Property Act, 2002 (Central Law Agency, 20 edn., 2019).
[2]. Mayank Madhaw, Property Law (T.P.A) 2002 (Singhal’s edn., 2019).
[3]. Transfer of Property Act, 2002, [4 of 1882].
BY ASHISH NAGPAL | FAIRFIELD INSTITUTE OF MANAGEMENT AND TECHNOLOGY