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Immovable Property in Transfer of Property Act


Immovable Property

Content:-



The Preamble to the Act lays down that it is an Act to define and amend the law relating to transfer of property by act of parties (i.e. not by operation of law). The Act came into force on 1st July, 1882. The Act applies to the whole of India. 


“The chief objects of the Transfer of Property Act are two: first, to bring the rules which regulate the transmission of property between living persons into harmony with the rules affecting its devolution upon death, and thus to furnish the complement to the work commenced in framing the law of intestate and testamentary succession; and secondly, to complete the code of contract law, so far as it relates to immovable property.”


The Act is not, and does not purport to be, an exhaustive enactment. In other words, it does not cover the entire dimension of transfer of property.


The scope of the Act is confined to property transfers initiated by the actions of individuals, rather than those occurring automatically by law, such as through inheritance, insolvency, forfeiture, or court-ordered sales.


It specifically pertains to transfers between living parties, known as inter vivos transfers, and does not extend to property disposition through wills.


For instance, if X sells, mortgages, or gifts their house, it constitutes a voluntary transfer initiated by their action. However, if X becomes insolvent, their property is vested in the Official Assignee or Receiver. Similarly, if X's property is sold to satisfy a court decree, it occurs without X's consent, representing a transfer by operation of law.


Although primarily focused on voluntary transfers, certain provisions of the Transfer of Property Act may apply to transfers by operation of law, guided by principles of justice, equity, and conscience.


For movable property, the Sale of Goods Act applies, while the Transfer of Property Act governs immovable property. Notably, the Transfer of Property Act, as a codification of substantive rights rather than procedural law, lacks retrospective effect.



Meaning of Property 


The word “property” has not been defined in the Transfer of Property Act, 1882 but has been used in its widest and most generic sense. Property is a legal term to denote every kind of interest or right which has an economic content.


Thus it includes an actionable claim and a right to a reconveyance of land, but not a power of appointment. Property is broadly classified into movable and immovable property. The transfer of erent forms and procedures.the two entails diff


Immovable Property


The TP Act 1882 has not defined this term. Sec. 3 merely lays down that “immovable property” does not include standing timber, growing crops or grass. According to Sec. 3 (26) of the General Clauses Act, 1897, the “immovable property” shall include  land, benefits to arise  out of land, and things attached to the earth, or permanently fastened to anything to the earth.


A definition of immovable property is also to be found in the Indian Registration Act, where it is provided as follows: “Immovable property includes land, building, hereditary allowances, right to ways, lights, ferries, fisheries, or any other benefits to arise out of land and things attached to earth, but not standing timber, growing crops or grass.”

 

(a) Land — The land includes earth’s surface (may be covered by water),” the column of space above the surface and the ground beneath the surface. Thus, all objects which are on or under the surface in its natural state (e.g minerals) are included. And, so are the objects placed by human agency with the intention of permanent annexation (e.g buildings, walls and fences). 


(b) Benefits to arise out of land (‘Profits a prendre’) — Every benefit arising out of immovable property and every interest in such property is also regarded as immovable property. The Registration Act expressly includes as immovable property — benefits to arise out of land such as hereditary allowances, rights of ways, lights, ferries, and fisheries. In Ananda Bebera v State of Orissa (AIR 1956 SC 17), the right to catch away fish from Chilka lake, over a number of years, was held to be an equivalent of profits a prendre in England and a benefit to arise out of land in India,


It was thus held to be an immovable property. Similarly in Shanta Bai v State of Bombay (AIR 1959 SC 532), right to enter land, cut and carry away wood over a period of twelve years was held to be immovable property. The right to collect /c from trees is also immovable property. 


The term ‘profits a prendre’ thus implies that if X sells 2 forests to Y, the trees, rivers, minerals, etc. all forming part of the land or the benefit to arise out of land, will go with it.


Likewise, right to collect rent and profits of immovable property; right to collect dues from a fair or ‘hat’ or market on a piece of land, a debt secured by mortgage of immovable property and a corresponding equity of redemption in mortgagor; reversion in property leased; office of a hereditary priest of a temple; Hindu widow’s life-interest of the income of the husband’ property; property. 


Doctrine of fixtures

(c) Things attached to earth (Doctrine of fixtures) — Sec. 3, TPA, defines the expression “attached to the earth” as including —


(i) things rooted in the earth,


(ii) things imbedded in the earth,


(iii) are the instances of immovable things attached to what is so imbedded, and


(iv) attached to earth or building. A similar expression ‘fixture’ is used in England. 

The question arises as to how to determine whether any movable  property attached to the earth  or permanently fastened to anything so attached, has become immovable property.


If it has become, it is called a fixture. For this there are two well established tests in English law which are also applied in India by the courts. The two tests are:*


  1. Degree/ mode of annexation [rule in Holland v Hodgson (1872) LR7CP 328] - If the chattel (movable property) is resting on the land merely on its own weight, the presumption is that it is movable property, unless contrary is proved. However, if it is fixed to the land even slightly or it is caused to go deeper in the earth by external agency, then it is deemed to be immovable property (ie. part of the land), unless the contrary is proved. 

  2. Object/ purpose of annexation — i.e., whether the purpose was to enjoy the chattel itself, or to permanently benefit other immovable property. To become a fixture, a chattel should be attached to.immovable property for the “permanent beneficial enjoyment” of that to which it is attached (In the case of an owner, this is presumed to be the purpose, but in the case of a tenant, this presumption is not there).

  3. The doctrine of fixture thus stands modified to this extent; in England the law as to fixture is based on the maxim quic quid plantatur solo, solo credit (whatever is planted on the soil belongs to the soil).


For example, fixtures like wiring, lighting system, ceiling fans, etc. are fixed not for the enjoyment of thing themselves (e.g one cannot enjoy a window by itself), but for the permanent beneficial enjoyment of that to which it is attached (ie. room/house). Thus, if A transfers a house to B, such fixtures also go with the house.


However, if a tenant fixes such fixtures (e.g a fan), it will be treated as movable property as the tenant is presumed not to have the intention to permanently benefit the immovable property. The object could only have been to enjoy the machinery (fan). 


Everything therefore depends upon the circumstances of each case.’ If the intention is to make the articles as part of the land, they do become part of the land.


Thus, blocks of stones placed one on the top of another (without any mortar or cement) for the purpose of forming a dry stone wall would become part of the land, but not the stones deposited in a builder’s yard and for convenience sake stacked in the form of a wall Anchor of a ship will not be part of land howsoever deeper it may have gone in the earth, but if it is used to support the strain of suspension bridge it will become part of the land.


  1. Things rooted in the earth — It includes such things as trees and shrubs, except standing timber, growing crops and grass. If the parties intend that the tree should continue to have the benefit of further sustenance or nutriment by the soil (land), then such tree is immovable property. But if the intention is to withdraw or cut trees from the land, then it is movable property. 

  2. Things embedded in the earth — It includes such things as houses and buildings. However, an anchor embedded in the land to bold a ship is not immovable property. 

  3. Things attached to what is so embedded — The doors and windows of a house are attached to the house for the permanent enjoyment of the house. But if the attachment is not intended to be permanent, the things attached are not immovable property e.g electric fans or window blinds. 

  4. Chattel attached to earth or building — The degree, manner, extent and strength of attachment of the chattel to the earth Chattel attached to earth or building — The degree, manner, extent and strength of attachment of the chattel to the earth     



Leading Case Laws

In the landmark case of SHANTA BAI v STATE OF BOMBAY (AIR 1958 SC 532), the issue at hand was whether a lease granting the right to cut and appropriate wood from a Zamindari forest constituted a transfer of movable or immovable property.


Despite the lease's duration of 12 years, the Supreme Court elucidated that the grant encompassed not only standing timber but also trees to be felled gradually as they grew, thus classifying them as immovable property.


The intention behind the grant was not merely to convert the trees into timber at an early date, but to derive benefit from the ongoing growth of the trees.


Hence, the lease document was construed as a transfer of benefits arising from the land, namely the right to fell trees over a specified term, rather than a mere transfer of trees as movable property.


In the landmark case of STATE OF ORISSA v TITAGHUR PAPER MILLS CO. Ltd. (AIR 1985 SC 1291), the judiciary emphasised the comprehensive examination of contracts, urging a consideration of all terms and the rights they confer.


This principle underscores the importance of assessing contracts holistically rather than focusing on isolated terms or rights. The case revolved around a contract between the petitioner company and the State of Orissa.


This agreement granted the company the authority to fell, cut, and remove bamboo from forest areas for various purposes, including the production of paper pulp. Importantly, the court classified these rights as profit a prendre or benefits arising from land, thereby categorising them as immovable property.


The breadth of the company's entitlements under the contract was notable. They were granted access to all lands, roads, and streams within and outside the contract areas, facilitating unimpeded ingress and egress.


Furthermore, the company possessed the right to undertake extensive infrastructure projects such as constructing dams, canals, and other facilities necessary for their operations.


This encompassed not only the use of bamboo but also other forest resources. Crucially, the agreement spanned multiple years, with provisions for renewal, and covered not only existing bamboo but also future growth.


This expansive scope reinforced the court's determination that the contract constituted a single, indivisible entity inseparable from the immovable property it pertained to.


In its deliberations, the court overturned the precedent set by the State of M.P. v Orient Paper Mills Ltd. (AIR 1977 SC 687), deeming its principles legally flawed.


This decision reaffirmed the interpretation of the 'bamboo contract' as inherently tied to immovable property, aligning with the broader legal understanding of property rights and contracts.


The court's decision was influenced by similar cases, such as Ananda Behera v State of Orissa (AIR 1956 SC 17). Here, oral licences for fishing in Chilika Lake were deemed profit a prendre, classifying them as immovable property.


The court clarified that fish, unlike certain excluded property types, fell under immovable property. Reference was made to Firm Chhotabhai Jethabhai Patel & Co. v State of M.P. (AIR 1953 SC 108), where the right to gather tendu leaves was not considered an encumbrance.


However, the distinction was drawn due to the periodic nature of leaf collection, exempting it as a growing crop under the law, unlike the perpetual rights associated with the bamboo contract.


In Mahadeo v State of Bombay (AIR 1959 SC 735), agreements granting rights to forest produce were examined. Despite the petitioners' argument that they were mere licences, the court found they conferred more than just the right to gather produce, including land occupancy and other benefits. Thus, they were deemed interests in immovable property.


In Board of Revenue v A.M. Ansari (AIR 1976 SC 1813), agreements for forest produce auctioned by the Government of A.P. were considered licences, not leases. Key factors included short duration, lack of estate creation, and non-excl


In the State of M.P. v Orient Paper Mills Ltd. (AIR 1977 SC 687), an agreement termed as a lease granted the respondent rights to bamboo and salai wood for 20 years, extendable. Despite its label, the agreement did not transfer land possession.


It essentially granted the right to harvest specified timber, with ownership remaining with the state until felling. The term "royalty" was equated with timber price, indicating a purchase rather than a lease.


In the current case, the court disagreed with the interpretation from the Orient Paper Mills case. It cited Mahadeo v State of Bombay, emphasising that the entirety of the contract's terms must be considered. Bifurcating the Bamboo Contract into present and future goods isn't feasible. The contract entails more than just the right to harvest bamboo; it encompasses various rights, constituting an interest in immovable property.


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