2-THE TRANSFER OF PROPERTY BILL. Becossiz:39 in this Bill, which was origin ally drawn by the late Law Commission and has since been repeatedly revised, the most important of the measures laid before us, we have devoted to it perhaps an undue share of the limited time at our command. Although it has been objected to the Bill that it deals with subjects which at a later stage of the work of codification will have to be arranged under separate chapters, it has appeared to us convenient to retain for the present in a great measure the form in which it was originally drafted. Dealing generally with the transfer of property, its arrangement enables the legislature to determine to what general principles the law of transfer should conform, and to apply such principles consistently. Read with the Contract Act, this Bill covers almost the whole of the ground which could be profitably occupied by law relating to the transfer inter vicos, of interests in property; and for the convenience of the practitioner it could hardly be enacted in a more accessible form. This, it appears to us, justifies the introductory chapter, which, after declaring what rights are inalienable and by what persons transfers may be made, proceeds to declare restrictions of the transfer of property called for in the interests of society. These restrictions are identical with those which are already incorporated into the law of India in the Succession Act. In considering the necessity for these provisions, it must not be forgotten that the number of domiciled Europeans and Eurasians holding property in India has of late years greatly increased, and that the value of the property held by them in plantations of tea and coffee, in mills and machinery and in other investments, now amounts to many millions of pounds sterling. These persons and their estates are subject to the law of succession (Act X of 1865), and it will be obviously inconsistent that they should possess powers of creating estates in their property by transfers inter vivos which the legislature has declared they should not enjoy by testamentary disposition. Moreover, where the declared law is silent on the subject in respect of transfers inter vivos, the Courts may, and probably would consider themselves, bound to, recognize principles stamped with the assent of the legislature as conclusive of the question that transfers inter vivos creating estates in violation of these principles are invalid as opposed to public policy. The Privy Council has already ruled that estates cannot be created by Hindus in contravention of the principles which underlie the Thellusson Act, or subject to conditions which are void for repugnancy. The rules contained in sections 10 to 35 impugn, so far as our experience goes, no law or practice of Hindus, Muhammadans or other sects recognized in India as enjoying special personal laws, unless it may be the now obsolete practice among Muhammadans of devoting property to the maintenance of the family of a particular saint. But to avoid any disturbance of rights enjoyed under personal laws, sufficient provision is made in the Bill. The persons to whom the provisions we are now considering will in practice be found mainly applicable are property-holders who have been designated in former Acts as "persons to whom the English law applies," a phrase which gave rise to no little difficulty in the case of persons holding property in the mufassal. This class has now attained sufficient importance in numbers and wealth to demand at the hands of the legislature an explicit declaration of restrictions which may be imposed on their dealings with their property, and where these restrictions are founded on approved principles and not inconsistent with personal law, there is no reason why they should not be declared of general application. The sections from 36 to 53 embody rules already applied in the Courts of India, or flowing naturally from accepted principles. The rules relating to sales, mortgages, exchanges and gifts declare generally no more than is understood and applied as law in the Courts. The exceptions will be noticed in our detailed observations. Chapter I: Preliminary.-We would expressly save, in section 2, transfers by decree or order of Courts of competent jurisdiction. In the interpretation-clause (section 3) we would insert definitions of "ownership," and "property; we would extend the definition of "attached to the earth" so as to include trees and shrubs; and with reference to sections 40, 56, 78, 79 and 80 of the Bill as we have revised it, we would define " notice as follows: "A person is said to have 'notice' of a fact when he actually knows that fact, or when, but for wilful abstention from inquiry which he ought to have made or gross negligence, he would have known it, or when information of the fact is given to or obtained by his agent under the circumstances mentioned in the Indian Contract Act, section 229." We would declare that all chapters and sections of the Bill which relate to contracts should be taken as part of the Contract Act, 1872. When the body of substantive civil law enacted for India is rearranged in a more compact and convenient form than that of a series of fragmentary portions from time to time passed by the legislature,' the 1 This, we understand, is all that was intended by the Government of India in paragraph 18 of its Legislative despatch No. 34, dated 10th May, 1877, by the phrase "scientifically arranging the various chapters of the Civil Code thus produced," and some such rearrangement was contemplated by the late Indian Law Commissioners, who observe chapters on Sale, Mortgage, Lease and Exchange, contained in the present Bill, will probably be placed in close connection with the rules contained in the Contract Act. But till then they may fitly be left in a law containing what the Contract Act does not contain, namely, general rules regulating the transmission of property between living persons. Chapter II: Of Transfers of Immoveable Property.—We think that chapter II should be extended to transfers of property, whether moveable or immoveable; that it should be entitled "Of Transfers of Property by act of Parties"; and that it should commence with two sections,-one defining "transfer," the other showing what may be transferred. The latter section should, we think, to some extent follow the analogy of the Code of Civil Procedure, section 266, clauses (e), (g), (h) and (k), as to property which may be attached. We also think that this chapter should contain a section declaring that a transfer may be made without writing in every case in which a writing is not expressly required by law. The Law Commissioners, by whom the original draft of this Bill was framed, observed that their chief object was 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 necessary complement of the work which they commenced in framing the law of Succession. With this view they inserted rules that conditions in restraint of alienation should be void; that conditions making an interest to cease on insolvency or attempted alienation should also be void; that restrictions should be placed on the power of tying up property by transactions inter vivos, similar to those imposed by the Indian Succession Act, sections 100 to 104, in the case of wills. They also proposed rules as to when certain interests created by transactions inter vivos should be deemed vested. And they applied mutatis mutandis, to transfers the rules of the Succession Act as to contingent bequests, conditional bequests and bequests with directions as to application and enjoyment. It seems to us that, subject to the following remarks, these rules are in themselves reasonable, and may properly be extended to the transactions inter vivos of all the inhabitants of India, whether they are or are not subject to the Succession Act. But as to the rule corresponding with section 100 of the Saccession Act, Sir Charles Turner and Mr. West think that the law should be modified so as not to exclude the unborn beneficiary in the case supposed, but to make void any limitation beyond his interest. As to the rule in their Sixth Report, referring to their rules relating to the transfer of property: "It is probable that several of these rules will eventually find a different place whenever a final distribution and rearrangement of the whole law shall have been effected; but some blending of subjects is unavoidable in a work which the Government has, for sufficient reasons, instructed us to submit to it in portions, as each portion is completed." 1 In view of the more general prohibition that no transfer can be made which is opposed to the nature of the interest affected thereby, Sir Charles Turner thinks it unnecessary to declare that "a strictly personal right, " &c., cannot be transferred. corresponding with section 102 of the Succession Act, they think that, where distinct interests are given to persons as members of a class, which interests are ascertainable within the term prescribed by the rule against perpetuity, those interests should not fail by reason of other interests failing through the operation of that rule; and as to the rule corresponding with section 103 of the Succession Act, they think that, where an intermediate interests fails, the subsequent interest should not fail, if it is ascertained and vested immediately on the death of the specified persons who were living at the time of the transferor's death. Mr. Stokes is averse to making any of the modifications thus suggested. As to the rule prohibiting accumulation, we all should prefer the more liberal enactments of the Thellusson Act (39 & 40 Geo. III, c. 98), which allow an accumulation for twenty-one years, and do not effect provisions for payment of debts or for raising portions. But as the rule embodied in the Succession Act, section 104, has now been in force for fourteen years, Mr. Stokes and Mr. West do not press its alteration. The Law Commissioners also proposed to extend to transactions inter vivos the rules as to election contained in Part XXVII of the Succession Act. We think that these rules also, founded as they are on principles of equity which are universally applicable, may also properly be inserted in the Bill. We think provision should be made for the satisfaction of a right arising in favour of several persons, where, in consequence of a transfer, property is divided, and held in several shares; and we have framed a section with this object. Mr. West is of opinion that a corresponding rule is necessary for the case of a division of the property burdened with an obligation, and that the rules should apply in all cases of legal division. Section 7 of the Bill treats of the title which the transferor of immoveable property can confer, and of the protection given to innocent transferees for value. We think that this matter should be dealt with in more detail, and have accordingly framed sections in substitution, providing for each of the following five cases :— (1) where there is a transfer for consideration by a person, such as a Hindu widow, authorized only under circumstances in their nature variable to dispose of immoveable property; (2) where a third person has a right to receive maintenance from the profits of immoveable property and such right does not amount to a charge; (3) where, for the more beneficial enjoyment of his own immoveable property, a third person has, independently of any interest in the immoveable property of another, a right to restrain the enjoyment of the latter property; 1 Sir Charles Turner would also urge that these enactments are frequently required by the circumstances of large zemindari properties. (4) where a third person is entitled to the benefit of an obligation arising out of a contract and annexed to the ownership of immoveable property, but not amounting to an interest or easement; and (5) where a person holds immoveable property as its ostensible owner with the consent of the other persons interested therein. We recommend, too, that the Bill should here provide for the following cases : (a) where a person, erroneously representing that he is authorized (b) where a transfer of immoveable property is made for consi- (d) where a person creates, by transfer at different times, rights in It seems to us that a clause resembling Act XI of 1855, section 2, which provides, in cases to which the English law is applicable, for improvements of immoveable property made by bona fide transferees who are subsequently evicted, may fitly be introduced into the Bill and applied to all persons in British India. We think, too, that such transferees should be allowed to remove growing crops which they have planted or sown on the property. We think that the section (10) relating to transfers of land pendente lite should not forbid such transfers when made under the authority of the Court and on such terms as it may impose, and that the section (10A) relating to fraudulent transfers may properly be extended to cases of fraudulent forfeitures and to cases where the persons defrauded are co-owners or creditors. Chapter III: Of Sales of Immoveable Property.--We think that "sale" should be defined as a transfer of ownership in exchange for a price paid or promised, or part-paid and part-promised. We entirely agree with Sir Henry Maine as to the desirability of rendering the system of transfer of immoveable property a system of public transfer. But we must remember that, in the absence of a much larger number of registration-offices that at present exist in India, the requirement of registration in the case of every petty transaction relating to land |