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Published : March 27, 2017 | Author : Ruchira
Category : Real estate laws | Total Views : 1998 | Rating :

  
Ruchira
Third Year Student at National Law University and Judicial Academy, Assam
 

Special Acts and the Transfer of Property Act, 1882 - Harish Chandra Hegde v. State of Karnataka

Before coming of the Transfer of Property Act in 1882, the laws relating to the transaction of property was customary. There did not exist any unified and codified form of regulations to govern the transfer of property. The first Law Commission prepared the draft Bill in 1870 regarding the transfer of property which was presented in the Legislative Assembly in 1877. This was based primarily on the English law of real estate. The Act after coming into force has been amended to suit the needs of time. The Act was last amended in 2002.

The Transfer of Property Act applies to and governs the transfers by ‘act of parties’. This has been mentioned in the preamble of the Act. One of the basic objectives of the Act is to harmoniously govern the transactions relating to property. However, the Act is not an exhaustive one. This has upheld in many cases by the judiciary.This means that the Act does not cover all the aspects of a transfer of any kind of property. Therefore, the transfers that occur by any other mode that is not mentioned in the Act can be interpreted by the Courts to settle such situations where the disputes do not fall under any express provision of the Act. Moreover, in cases where the provisions and law stated in the Act are in conflict with the special legislations the special laws would prevail, as has been given under Section 2 of the Act.

Therefore, the researcher would analyse the implications when there are conflicts in the laws laid down by the Transfer of Property Act and some special legislations which have been enacted for achieving a particular end. The case law of Harish Chandra Hegde v. State of Karnataka would be referred specifically in this context.

Transfer of Property and Special Laws
Under the provisions of Section 2 of the Transfer of Property Act, 1882, the transfer of property by operation of law has been excluded. It has been mentioned in the preamble to the Act that the Act operates only when the transfer is inter vivos and by act of parties. The transfer of property by act of parties is when the transfer takes place between living persons. By making this provision available, the Transfer of Property Act has been able to enact a law parallel to the already existing laws of testamentary and intestate transfers which are in essence transfers by operation of law. Therefore, the Act of 1882 is limited and not exhaustive. The limitation to the applicability of this Act is that it only covers transfers between two persons and does not incorporate all the other modes of transfer. In a transfer of property by act of parties, the property is transferred even though the transferor is not a living personor is not alive on the date of such transfer. The property is automatically transferred by the process of law. The act of the transferor or the transferee does not affect it in anyway. In the cases where the property is transferred by the will or by rules of inheritance, the propositus or the last holder of the property does nothing. It takes place through the application or by procedures worked out in the laws of inheritance. In this way, the transfers effectuated by the orders of the courts are by application and operation of law. This is because the transfer is not made by the owners of the property but happens by the execution of a court order.

Section 2 (d) reads as nothing in the Transfer of Property Act shall be deemed to affect – “save as provided by Section 57 and Chapter IV of this Act, any transfer by operation of law or by, or in execution of a decree or order of a court of competent jurisdiction." Therefore, Section 2(d) of the Act specifically provides that nothing in the Act shall have any effect on the transfers that operate through processes of law or by decrees passed in the Courts. The transfer of an immovable property by an auction sale that was ordered by the court was a transfer by operation of law. Therefore, no penalty was awarded by the Court under the Transfer of Property Act.
The provision under Section 2(d) means that if the laws under the Transfer of Property Act are in conflict with the other legislations, the other legislation would prevail. This is because the objective of the Act is to amend certain parts of property law in relation to the transfer of property by act of parties. It was enacted to giving definite meaning to the necessary parts which need clarity at that time. It was not intended to give shape to laws that already existed for the transfer of property. The scenario has changed from the time of enactment of the Transfer of Property act in 1882. Therefore, it becomes necessary for the new legislations or special legislations to over-ride the effect of Transfer of Property Act if they are in conflict. In the case of Mardia Chemicals v. Union of India it was held that what was conceived correct in the situation then prevailing may not be so in the present day situation. New institutions have come into being and as such the legislations are also framed in that situation. Therefore, these become more relevant. In this case, certain sections of the Transfer of Property Act, the general law on the subject, has been overridden by the special enactment namely the Securitisation Act. The rationale for this decision of the court was that Functions of different institutions including the banking and financial institutions have changed and new functions have been introduced for financing the industries etc. New economic and fiscal environment is around more than 100 years later after the enactment of the Transfer of Property Act. In this connection it has been pointed out on behalf of the respondents that Raj Mannar Committee was appointed by Government of India which submitted its report in 1977 indicating the effect of the changed situation and the relevance of the provisions of the Transfer of Property Act in context thereof. The necessity for suitable safeguards to banks and other financing institutions is greater than abiding by the enactments under the Transfer of Property Act. In 1882, the money lenders resorted to unscrupulous means but in the recent times The role of the unscrupulous money lenders dominating in the field of credit is no longer valid with the reliance on institutionalization of credit, the banks another financing institutions are the major moneylenders of credit today.

In case of insolvency proceedings, the property of the insolvent vests in the Official Receiver. The vesting is not applicable as under the Transfer of Property Act. The vesting of the insolvent’s property in the Official Receiver is not through any formally registered sale-deed. However, the sale of the property is under the provisions of the sale as per the Transfer of Property Act thereby requiring a formal sale-deed.But in another case, contrasting view was held by the court. In the case of Wazirey v. Mathura Prasad Wazirey appellant was declared insolvent on the 31st October, 1927, and an official receiver was appointed to take charge of the assets of the insolvent. The official receiver on the 5th July, 1928, put in an application before the Insolvency Judge that he had put up to sale the two houses belonging to the insolvent and that the highest bid was of Rs.100 which may be accepted (vide Ex. 2), The Court on the 23rd August, 1928, passed an order that the sale was approved (Ex. 3). It appears that on the 11th October, 1928, the order of adjudication was annulled (vide Ex. A-1). But no order was passed as to what would become to the assets of the insolvent. The receiver executed the sale deed on the 17th March, 1929 {vide Ex. 1). It was registered on the 29th March, 1929. Mathura Prasad, respondent no. 1, filed the present suit on the 31st July, 1935, for possession of the two houses. The suit was contested on the grounds inter alia that the defendant was not bound by the sale deed executed by the receiver as he had no power to do so and that the houses belonged to his wife and mother. The trial Court dismissed the suit on the ground that as the sale deed was executed after the order of annulment, it was invalid under section 37 of the Provincial Insolvency Act (V of 1920). Here the court held that the Insolvency Act would prevail over the Transfer of Property Act.

The court was of the opinion that the case is covered by section 2(d) of the Transfer of Property Act. The words of the section applicable are “transfer by order of a Court of competent jurisdiction”. The Official Receiver’s sale falls within the words. It is in the nature of court sale and its validity really depends on the order of the Insolvency Court vesting the property in the Official Receiver and thus authorizing him to sell. Questions have arisen as to whether transfers between parties under orders issued under legislations such as the Essential Commodities Act are ‘sales’ within the meaning of the Transfer of Property Act. The Supreme Court has held in a case that a mere regulatory law if it circumscribes the area of free choice does not take away the basic character of the sale from the transaction.The clause of Section 2 does not specifically exclude transfers mentioned from the operation of the Act. It is only that the provisions of the Act would not affect them.Moreover, Section 136 is governed by Section 2(d) of the Act. As such a purchase by a pleader of a claim under a life insurance policy in execution of a decree is not invalid under Section 136.

Saving Clause

Section 57 and Chapter IV of the Transfer of Property Act has been exempted from the saving of Section 2(d). Section 57 of the Act deals with the discharge of encumbrances on sale by order of the court and Chapter IV deals with the mortgage and charges. Under section 57 the encumbrances are to be discharged by the order of the court. Therefore, such discharge is possible only by order of the court which amounts to ‘transfer by operation of law’. Had this section not been exempted then the section would have been in fructuous.

In the case of Smt. Laxmi v. Sethani Mukand Kanwar the relation between the sections has been explained, According to the court, Section 2(d) has a positive part which should prevail over Section 5.
 
Harish Chandra Hegde v. State of Karnataka and Ors., (2004) 9 SCC 780
Facts - On or about 1.5.1961, two acres of land in Survey No. 134/110 were granted by the Government of Karnataka in favour of one Smt. Gangamma. The appellant purchased the said land from her through a registered sale deed for valuable consideration on 13.9.1962 and allegedly invested a lot of money for improvement thereof. The Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfer of Certain Lands) Act, 1978 came into force w.e.f. 1.1.1979. By reason of Section 4 of the Act all the alienations made in contravention of the terms of Grant were declared as void and all such lands were resumed and restored to the original grantee in terms of Section 5 of the Act. On or about 11.9.1986, the original grantee made an application for initiation of a proceeding under Section 4 of the Act, in pursuance whereof the proceeding was initiated against the appellant. An order of restoration of the land in favour of the original grantee was made by the Assistant Commissioner on 29.5.1987. The appellant preferred an appeal before the Deputy Commissioner thereagainst which was also dismissed on 25.3.1989. The appellant thereafter filed a writ petition which was marked as Writ petition No. 23216 of 1990 for a declaration that any order passed by the Assistant Commissioner under Section 5 of the Act for restoration qf land would be subject to the right of the transferee to claim the value of the improvements as prescribed under Section 51 of the Transfer of Property Act. The said writ petition was dismissed by the learned Single Judge. The writ appeal filed by the appellant was also dismissed by reason of an order dated 16.2.1996. The pertinent question of law that was raised in this case was whether Section 51 of the Transfer of Property Act was applicable to the cases that were covered by Section 4 and Section 5 of the Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfer of Certain Lands) Act.

Section 4 of the above Act was in regards to prohibition of transfer of lands granted and Section 5 was regarding the restitution of the granted lands. The Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfer of Certain Lands) Act was enacted with the object enshrined in the preamble of the Constitution including the directive principles of the State policy and was aimed at providing economic help and support to the communities belonging to ST/SC. The State by reason of the provisions of the Act has been empowered to resume the land and restore the same to the grantees in the event it is found that any transfer thereof has taken place in violation of the terms of the grant. Such order of resumption is required to be passed with a view to avoid unnecessary delay or protracting the proceedings. In this case the transferee has planted crops in the land that was granted. Now, vide Section 51 of the Transfer of Property Act which reads as “When the transferee of immovable property makes any improvement on the property, believing in good faith that he is absolutely entitled thereto, and he subsequently evicted therefrom by any person having a better title, the transferee has a right to require the person causing the eviction either to have the value of the improvement estimated and paid or secured to the transferee, or to sell interest in the property to transferee at the then market value thereof, irrespective of the value of such improvement. ”But under Section 4 and Section 5 of the other Act the transfer was illegal and the transferee does not have any right in the granted lands so transferred. Therefore, this conflict became a question of law before the court in this case.

Held - Tribal areas have their own problems. People belonging to such communities have historically been weaker sections of the society. They need the protection of the laws as they are gullible and fall pray to the tactics of unscrupulous people, and are susceptible to exploitation on account of their innocence, poverty and backwardness extending over centuries. The object sought to be achieved by the Constitution of India and the 1956 Regulations is to see that a member of an aboriginal tribe indefeatably continues to own the property which he acquires and every process known to law by which title in immovable property is extinguished in one person to vest in another person, should remain so confined in its operation in relation to tribals that the immovable property of one tribal may come to vest in another tribal but the title in immovable property vesting in any tribal must not come to vest in a non-tribal. This is for the protection of the interest of the people belonging to the tribal communities. The Court was further of the opinion that the transfer mentioned under Section 51 of the Transfer of Property Act, was not inclusive of the transfer of property by operation of law. The matter is governed by a special statute and therefore, the Transfer of Property Act, which in essence is a general legislation, would not be applicable in this case.
 
Conclusion
Under the provisions of Section 2 of the Transfer of Property Act, 1882, the transfer of property by operation of law has been excluded. The limitation to the applicability of this Act is that it only covers transfers between two persons and does not incorporate all the other modes of transfer. Section 2(d) of the Act specifically provides that nothing in the Act shall have any effect on the transfers that operate through processes of law or by decrees passed in the Courts. The provision under Section 2(d) means that if the laws under the Transfer of Property Act are in conflict with the other legislations, the other legislation would prevail. The circumstances and objective of the special legislations are for a particular purpose and deals with definite areas. As such the Transfer of Property Act which is a general law for regulation of all ordinary cases of transfer of property is superseded by the special laws.

One of the most important judgements in this regard is the case of Harish Chandra Hegde v. State of Karnataka. In this case certain sections of the Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfer of Certain Lands) Act were in conflict with Section 51 of the Transfer of Property Act. The Court held that the Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfer of Certain Lands) Act was enacted for the interests of a particular section of the society. The people of the Scheduled Caste and Scheduled Tribe were in need of protection and support. Therefore, in pursuance of the Directive Principles of State Policy, the said Act was passed. Therefore, it was of the nature of a special act. As such, the provisions of a general act would not be applicable to such an act. Therefore, Section 51 of the Transfer of Property Act did not cover the situation in this case.

End-notes
# R.K.Sinha, THE TRANSFER OF PROPERTY ACT, 17th edition, Central Law Agency, 2016, p. 4
# Ibid
# Ibid
# Section 2(d),Transfer of Property Act, 1882
# B. Arvind Kumar v. Government of India & Ors., (2007) 5 SCC 745
# Mardia Chemicals v. Union of India, (2004) 4 SCC 311
# Mardia Chemicals v. Union of India, (2004) 4 SCC 311
# Narasappa v. Hussain Sab, AIR 1935 Mad 55
# Wazirey v. Mathura Prasad, AIR 1939 Oudh 55
# Vishnu Agencies (Pvt) Ltd v. Commercial Tax Officer, (1978) 1 SCC 520
# Dr. Poonam Pradhan Saxena, MULLA ON TRANSFER OF PROPERTY, 11th edition, LexisNexis, 2011, p.42
# Laxmi v. Mukand Kanwar, AIR 1965 SC 834
# Smt. Laxmi v. Sethani Mukand Kanwar, 1965 SCR (1) 726
# Section 51, Transfer of Property Act, 1882
# Amrendra Pratap Singh v. Tej Bahadur Prajapati & Ors., JT (2003) 9 SC 201


Dr . Poonam Pradhan Saxena, MULLA ON TRANSFER OF PROPERTY, 11th edition, LexisNexis, 2011, p.1
Ibid, p.2
Jatendra v. Rangpur Tobacco Co., AIR 1924 Cal 990

 




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