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RECENT AMENDMENT TO TRANSFER OF PROPERTY ACT

The Importance and relevance of property in today’s materialistic world are undeniable. Property related disputes dominate the courts among strangers, former friends, and relations who fight tooth and nail with fret and fume wasting several precious years.[1] The Law Relating to the Transfer of Immovable Property is governed by the ‘Transfer of Property Act, 1882’. Before the commencement of this Act, there was a lot of chaos regarding the transfer of the immovable property due to the increase in commerce. The classical law relating to the transfer of property was purely customary. Before the advent of the British and their active intervention in the Indian legal system, Hindus and Muslims were governed by their respective law in relation to the transfer of property.[2] So there arises a need for a pragmatic law which governs the transfer of property, which also matches with the peculiar Indian society.


TRANSFER BY OSTENSIBLE OWNER :

‘Section 41, Transfer of Property Act, 1882’-

It deals with the transfer of property by an ostensible owner. The general rule is that all ostensible owners cannot pass on the title to the transferee, but if the conditions laid down in the section are fulfilled, ‘the transfer shall not be voidable on the ground that the transferor has no authority to make it’.


BENAMI TRANSACTIONS (PROHIBITION) AMENDMENT ACT, 2016:

This Act prohibited the transfer by ostensible owners (Benami transactions) & made it illegal with few exceptions.


EXCEPTIONS UNDER THE ACT:

According to ‘Section 2(9)A(b)’, under ‘Benami Transactions (Prohibition) Amendment Act, 2016’, Benami transactions are prohibited but there are certain exceptions to the rule & are as following -


(a) The property which is held by Karta (or) any other member in a Hindu Undivided Family & the property held for the benefit of other coparceners of the family and the consideration of which is given by the known sources of HUF will not amount to a Benami Transaction.

(b) The property held by a trustee (or) another person who, in a fiduciary capacity has the benefit of another person for whom he has a trustee will also normally not amount to a Benami transaction.

(c) The prohibition does not apply to an individual who buys property in the name of his spouse (or) in the name of any child. But the consideration has to be paid by the known sources of the individual.

(d) Where the property of a person is held jointly by brother (or) sister (or) lineal ascendant (or) descendant & the consideration is paid by the known sources of the individual.

These exceptions have been governed by ‘Section 41’, of the Transfer of Property Act, 1882 as these are excluded in the definition of Benami Transactions under ‘Section 2(9)(A)’, of Benami Transactions (Prohibition) Amendment Act, 2016.


‘Section 41’, of the Act has done an equitable task to safeguard the interest of the third innocent party involved in the transaction. This section enacts the rule of estoppel as against the real owner if there is some fault attached to him. And the transaction shall not be voidable on the ground that the transferor has no authority to make it. And the true character of the transaction was determined by the intention of the person who contributed the purchase money. The intention was determined based on the relationship of the parties, the motive for the transaction, the custody of the title deeds, the payment of consideration, and actual possession of the property in dispute.[3]


The concept of ostensible ownership is subjected to the provisions of the Benami Transactions Act, 1988 (now, it is Benami Transactions Amendment Act, 2016). The legislation of 1988 prohibits all the Benami Transactions subject to a few exceptions. It has made such transactions a criminal offense. The Act has prohibited Benami Transactions retrospectively and is intended to curb the menace of tax evasion, defrauding creditors, escaping from the statutes like ‘Abolition of Zamindari’ etc., And these exceptions have been governed by ‘Section 41’ of the Transfer of Property Act, 1882.

REFERENCES:

1. Dr. Poonam Pradhan Saxena, The Transfer of Property Act, 2nd Edition, 2011, LexisNexis ButterWorths, Introduction, p. XIII.

2. Mulla, The Transfer of Property Act, 10th Edition, Lexis Nexis ButterWorth, Introduction, p. XI.

3.Solil Paul, Mulla, The Transfer of Property Act 291 (1999).

ABOUT THE AUTHOR:


Sivapuram V.L. Thejaswini is currently pursuing a BBA LL.B (Hons.), from Alliance University, Batch of (2018-23). You can contact them at tejusvl2000@gmail.com

Edited by Rudra Prasad

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