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ANALYSIS OF TRANSFER OF LEGAL INCIDENTS

Author: ABHIJIT MAHADEV DURUNDE, II year of B.A.,LL.B.(Hons.) from MAHARASHTRA NATIONAL LAW UNIVERSITY , NAGPUR


The concept of transfer of legal incidents refers to the transfer of certain rights, duties, and obligations associated with a legal agreement or contract from one party to another. In other words, when one party transfers its rights or obligations to another party, the legal incidents associated with the agreement are transferred as well. Transfer of legal incidents can occur in various contexts. For example, in the context of a lease agreement, the landlord may transfer its interest in the property to a new owner, and as a result, the new owner assumes all of the rights and obligations of the landlord under the lease agreement. Similarly, in the context of a loan agreement, the lender may transfer the loan to a new lender, and the new lender assumes all of the rights and obligations of the original lender under the loan agreement. The transfer of legal incidents typically requires the consent of all parties involved and may involve the execution of a formal agreement or contract. It is important to ensure that all legal requirements are met when transferring legal incidents to avoid any potential legal disputes or challenges.

The transfer of legal incidents which mentioned in the section 8 of the transfer of property act,1882. Under what circumstances legal incidents should transferred and under what circumstances it’s not transfer it depends on the terms of the agreement. List of legal incidents which are transferred given under section 8 but this list is not exhaustive but correspond list given which legal incidents not transferred under section 6 of the transfer of property act,1882. The transfer of legal incidents is an important concept in property law. In property law, legal incidents refer to the various rights and obligations associated with ownership of property.Legal incidents basically refer to the rights and obligations attached to a particular property.

In my research project I am researching on four aspects of transfer of legal incidents which mentioned in the section 8 of the transfer of property act,1882. The four aspects of legal incidents are the concept of legal incidents, types of legal incidents in transfer, under what circumstances should legal incidents be transferred and when should they not be transferred, and which types of legal incidents are transferred or not.

Legal incidents in transfer

According to the Transfer of Property Act (TPA) in India, any property can be transferred from one person to another, including, Immovable property: This includes land, buildings, and any permanent fixtures attached to the land or buildings, such as trees, wells, or pipelines. Movable property: This includes property that can be physically moved, such as furniture, jewellery, and vehicles. property that is not in existence at the time of the transfer: This includes property that will come into existence in the future, such as the interest in a property that has not yet been constructed. And Property that is contingent or conditional: This includes property that is subject to certain conditions or contingencies, such as the transfer of property that will only occur if a certain event takes place. These types of properties are transferred under the TPA but when this property transferred along with these properties some legal incidents which attached with this property also transferred, this attached things known as legal incidents.

The transfer of legal incidents is an important concept in property law. In property law, legal incidents refer to the various rights and obligations associated with ownership of property.Legal incidents basically refer to the rights and obligations attached to a particular property. For example, if a piece of land with houses and trees on it is transferred from A to B, and A does not specify anything about the houses and trees during the transfer, then the houses and trees will also be transferred to the transferee along with the land because they are attached to the land. Legal incidents basically considered as in the transaction what things will be transfer along with the property.

According to the section 8 of the transfer of property act, 1882 it stated as, “Unless a different intention is expressed or necessarily implied, a transfer of property passes forthwith to the transferee all the interest which the transferor is then capable of passing in the property and in the legal incidents thereof. Such incidents include, when the property is land, the easements annexed thereto, the rents and profits thereof accruing after the transfer, and all things attached to the earth; and, where the property is machinery attached to the earth, the moveable parts thereof; and, where the property is a house, the easements annexed thereto, the rent thereof accruing after the transfer, and the locks, keys, bars, doors, windows, and all other things provided for the permanent use therewith; and, where the property is a debt or other actionable claim, the securities therefor (except where they are also for other debts or claims not transferred to the transferee), but not arrears of interest accrued before the transfer; and, where the property is money or other property yielding income, the interest or income thereof accruing after the transfer takes effect.”

Legal incidents are essentially the rights or interests that are attached to a property and affect its use or value. These can include easements, rights-of-way, rights to collect rent or other income from the property, and any other rights or interests that are attached to the property. These legal incidents may be attached to the property in various ways, such as through a contract, a will, or through the operation of law. When a property is sold or transferred from one person to another, these legal incidents may also be transferred along with the property itself. This means that the buyer of the property may acquire not just the physical property, but also any legal incidents attached to it. Section 8 of the Transfer of Property Act (TPA) provides a framework for understanding how legal incidents can be transferred. According to this section, any legal incident that is attached to a property at the time of its transfer can be transferred along with the property itself, unless a different intention is expressed or implied in the transfer. For example, if a property has an easement attached to it that allows a neighbouring property to access a shared driveway, this easement may be transferred to the buyer of the property when it is sold. Similarly, if a property has a lease attached to it that allows the landlord to collect rent from tenants, this lease may also be transferred to the buyer of the property. It's worth noting that legal incidents can be complex and vary depending on the specific property and legal framework that applies to it. If you have specific questions or concerns related to legal incidents and property transfers, it's a good idea to consult with a legal expert who can provide guidance based on your specific situation.


This section clearly stated that what types of legal incidents transferred during the transfer. Legal incidents are different and it may vary on the property and terms of the agreement.


Types of legal incidents

Section 8 of the Transfer of Property Act, 1882 of India defines the kinds of legal incidents that can be transferred. These include:

Absolute ownership, this refers to the complete ownership of a property, including the right to use, possess, and dispose of the property.Limited ownership, this refers to ownership of a property that is subject to certain limitations or conditions. For example, a property may be subject to a mortgage or a lease.Easements ,refer to the right to use another person's property for a specific purpose, such as the right of way or the right to use a water source.Profits a prendre,this refers to the right to take or remove something from another person's property, such as the right to harvest timber or to mine minerals.Charges, refer to the right to receive payment from another person’s property, such as a mortgage or a lien.

Overall, Section 8 of the Transfer of Property Act recognizes various types of legal incidents that can be transferred, including ownership, use rights, and financial interests. These legal incidents can be transferred through various legal mechanisms, such as sale, gift, or lease.

In the case of Bishwanath prasad Singh vs Rajendra Singh, 2006[1], in this case court stated that the object of the section 8 of the transfer of property act 1882[2], is to clearly define what are the legal incidents of each particular class of property which pass along with the property when it is transferred. The second clause refers to the land and defines what is included in its legal incidents. An incident is defined in Whartons law lexicon “as thing necessarily depending upon appertaining to, or following another that is more worthy - as rent is incidental to a reversion.” In this section there is list of the types of legal incidents that transfer. We will see them as follows.


1. Easement annexed thereto- Easements annexed thereto" refers to the legal concept of attaching an easement to a property. An easement is a legal right that allows someone to use another person's property for a specific purpose. For example, a property owner may grant an easement to their neighbour to use a portion of their land as a driveway or to access a shared water source. An easement is defined in section 4 of the Indian easements act, 1882[3]. The phrase easements annexed thereto refers to those easements which at and prior to the transfer were existing easements. It does not refer to an easement which first came into existence as a consequence of transfer. The words lock, keys, bars refer to permanent fixtures and fittings. The words other thing provided do not include a right of access by a staircase, when the ownership of the staircase itself is not claimed and the right of way is not an easement of necessity. At the time of transfer easements which attached with property which also transferred.


2. Rents and profits- Rents and profits accrue after the transfer of benefits arise out of the land and are, therefore, within the definition of immovable property. The rents and profits of property mortgaged by an English mortgage form part of the mortgagee's security." A buyer's right to rents and profits, therefore, accrues on the date of the transfer. This is made clear by section 55(4)(a) under which the seller is entitled to the rents and profits of the property until ownership passes to the buyer, and also s 55(6) (a) which declares the buyer entitled to rents and profits when the ownership of the property passes to him. At a court sale, the property vests at the date of sale and so the auction purchaser is entitled to the crops grown between the date of sale and the date of confirmation of the sale." If the vendor retains possession after the ownership has passed to the buyer, he may be charged for use and occupation. Rents and profits accruing due before the transfer are not legal incidents of the property transferred." Such arrears of rent are a debt or an actionable claim, and if they are to be transferred, they must be assigned separately." In the case of Official Assignee v. Rangaswami (1916)[4], In this case, it was held that a person can transfer his right to receive future rent, even though the lease agreement itself cannot be transferred.

In the case of Nandram v. Kanhaya Lal (1929)[5], this case dealt with the transfer of a right to receive future profits. The court held that such a right can be transferred, but the transfer will be subject to the condition that the future profits actually arise.


3. Attached to the earth- this phrase is defined in the sec 3 of the TPA[6], what is attached to the earth is immovable property within the definition of the term in the general clauses act. What is attached to the earth is part of the land and it passes with it on transfer without express intention.[7] In the case of lease the right to enjoy the tress and shrubs passes to the lessee. [8] trees on an occupancy holding which is inalienable are attached to the holding and cannot be transferred by the occupancy holder. If there is land and on land a hotel is constructed when interest of the land transfer it means ownership of hotel is not transferred unless there is express intention in agreement, if they are not mentioned it separately then hotel is transferred with the land. In the case of Jai Narayan Misra vs. Hashmathunnisa Begum (AIR 2002), the court rejected the argument that a clause in a partnership deed providing for a partnership to continue for a certain number of years was a license to use land. The partnership deed did not have the effect of a license, and one partner's contribution of land and the other partner's construction of a theatre constituted a partnership.[9] In the case of Ram Chandra vs. Kalyan Singh (AIR 2006), the seller objected to the transfer of standing trees on land in question in execution proceedings. However, the court held that the trees were capable of passing with the land under Section 8, which provides that any property that is capable of passing with the land also passes to the transferee. In simpler terms, if a property can be transferred with the land, it also becomes the property of the transferee.[10]

4. Minerals- Minerals are embedded in the earth, and pass on sale of the land. In Raja Anand v State of Uttar Pradesh[11], the Supreme Court observed that prima facie the owner of the surface is entitled ex jure to everything beneath the land, and held that a transfer of the right to the surface conveys the right to the minerals underneath, unless there is an express or implied reservation in the grant. Whether a lease passes a right to sub-soil minerals depends on the terms of the grant.In Raja Anand v State of Uttar Pradesh State, the Supreme Court applied the same general principle in construing a Sanad granted by the government creating a zamindari and held that as the object was to make the zamindar the owner of the soil, he was entitled to the minerals. It is submitted that this decision was given on the peculiar facts of the case, and was based on the language of the particular Sanad and the subsequent conduct of the parties, and does not affect the general principle stated in earlier editions of this work that if the grantor is the government, there is a presumption that mineral rights are reserved. Rights of the minerals depends on the grantor.


5. Machinery- The section assumes that the machinery is attached to the earth and is, therefore, a fixture, and then enacts that the movable parts of the machine, although they are detachable, pass with the land and the fixed machine. This is an illustration of the principle stated by Lord Hardwicke in Lawton v Lawton[12] that you shall not destroy the principal thing, by taking away the accessory to it.

6. House- The fourth clause merely repeats in regard to a house what has already been enacted in the first and second clauses as to property generally. If the property transferred is a house, the easements annexed to it will also pass not only under this section, but also under s 19 of the Easements Act 1882. The transferee is also entitled to rents and profits accruing after the transfer. Locks, bars, keys doors and windows have no separate existence from the house.


7. Debts- This fourth clause of section 8 deals with the transfer of debts and other things that can be sued for. When someone transfers a debt, it is presumed that the security for that debt has also been transferred. This means that the person who now holds the debt also holds any collateral or security that was put up for it. If someone assigns a debt to another person, that person will also have the right to any security that was put up for the debt, unless it's clear that they're not supposed to have it. This is known as the principle of omneprincipaletrahitadseaccessorium. When someone transfers a debt, they are transferring all their rights to try to get that debt paid back. This means that the new owner of the debt can try to collect the debt in the same way the original owner could. A promissory note is sometimes called a security for a debt, but that's not quite accurate. A promissory note is a conditional promise to pay the debt, rather than being the contract for the loan itself. If someone holds a mortgage and a promissory note for part of the debt, and then transfers the mortgage to someone else, they cannot sue on the note until a lawsuit for the mortgage is resolved. However, if someone buys the promissory note in good faith and without knowledge of the mortgage, they can sue on the note. If someone transfers the property in a promissory note, rather than the debt itself, this section of the law does not apply. It means debts also transferred as the legal incidents. In the case of Ganpat Rai vs. Sarupi (1878),[13] the court held that if a money-decree is obtained for a secured debt and then transferred, the securities do not automatically pass with the decree. Therefore, the purchaser of the decree cannot claim to enforce the securities. The rights of the parties in respect of the securities must be determined separately, and a separate suit may be required to enforce them. This decision highlights the importance of explicitly stating in any transfer or assignment agreement whether or not the security interest is also being transferred along with the debt or the decree.[14]


8. Mortgage debts- Before 1900, when mortgage debts were considered "actionable claims," the assignment of a mortgage debt also meant that the mortgage security (the property that was mortgaged) was assigned along with it. However, since 1900, mortgage debts are no longer considered actionable claims, so section 8 no longer applies. This means that the word "debt" in section 8 only applies to debts that are included in the general definition of actionable claims. A mortgage is considered immovable property, so it can only be transferred by a registered legal document.[15] In simpler terms, if someone wants to transfer ownership of a property that has a mortgage on it, they need to use a specific legal document and register it with the appropriate authorities.


9. Debt secured by charge- A debt secured by a charge is different from a mortgage because it doesn't transfer ownership of the property. Instead, it gives the creditor the right to be paid from the specified property if the debtor can't pay the debt. Although an unregistered assignment of the debt can be transferred, the charge itself must be transferred by a registered instrument according to the Registration Act 1908.[16] This means that if the debt is transferred without the charge, the new creditor can collect the debt but cannot claim any rights over the property.


10. Money or other property yielding income- The sixth clause of the section 8 means that when someone transfers their ownership or right to receive income from something like rent or dividends, the new owner gets that income from the date of the transfer. This applies to things like shares, securities, promissory notes, and debt. If someone transfers a debt, the new owner gets the right to receive interest that accrues after the transfer, but not interest that was already due before the transfer. If the debt is too old or "time-barred," the court cannot award any interest because interest is a side effect of the debt and cannot exist without the debt itself.[17] In the case of Kedar Nath v. Gorie Mohammad (1886)[18],this case established that a debt can be transferred, and the transferee can recover interest that accrues after the date of the transfer, but not interest that was due before the transfer. In the case of Associated Cement Companies v. Commissioner of Income Tax (1965)[19],this case dealt with the transfer of a debt that had become time-barred. The court held that the transferee cannot recover interest on a time-barred debt because interest is a legal incident of the debt and cannot exist without the debt itself.


Under what circumstances should legal incidents be transferred and when should they not be transferred

The general assumption is that when a property is transferred, all of the transferor's interests are also transferred to the transferee, unless there is evidence to the contrary. For example, if A mortgages a mango tree on his land to B, and then sells the land to C without mentioning the mortgage in the sale deed, it is assumed that A's interest in the mango tree also passed to C. However, this presumption can be challenged by express words or by necessary implication. For instance, the words "lease" and "mortgage" inherently suggest that the transferor is not transferring all of their interests in the property. On the other hand, the words "mokarari lease with all rights" indicate that the lessee is getting all the rights that can be passed through a lease, but not an absolute title, and that the lessee would have permanent leasehold rights but not subsoil rights in minerals. In other words, a lease typically involves the use of the property without destroying or consuming it, and the lessee would need to be expressly granted rights to consume or extract parts of the property, like minerals.


Sometimes, the intention to reserve a right can be implied not only from the terms of the deed but also from the object of the grant. For example, a gift of property with the purpose of performing religious ceremonies and celebrating festivals, and providing for the recipient's support, was held to confer a life-estate, implying that the recipient had only a limited right to the property. Similarly, in a gift, where the grant is only for life, an intention to reserve mineral rights is implied. If a lease deed contains an unauthorised proviso that is void, but declaring it void will leave the rest of the deed intact, then the lease without the proviso is still valid. Furthermore, sometimes the intention may be to transfer an interest greater than the transferor possesses at the time of the transfer. If a property is sold free from encumbrances, the seller must still discharge any existing encumbrances on the property.


In a simple language we can say and it clearly stated in section 8 of the transfer of property act,1882 that in general, when property is transferred from one person to another, unless there is a clear indication to the contrary, the transferee will receive all of the interest that the transferor had in the property at the time of the transfer, including any legal rights or benefits that come with it. Legal incidents transfer when there is clear and unambiguous terms in agreement and if there is terms which intentions contrary which is expressed or implied then legal incidents transfer to the transferee accordingly.


Legal implications of transferring legal incidents

The transfer of legal incidents under the Transfer of Property Act, 1882 can have various legal implications for the parties involved. Some of the important legal implications are discussed below:


Change in Ownership: When legal incidents are transferred, there is a change in ownership of the property. This means that the transferee becomes the new owner of the property with all the rights and responsibilities associated with it. The transferor no longer has any legal right or interest in the property.


Creation of New Rights and Obligations: The transfer of legal incidents can create new rights and obligations for both the transferor and the transferee. For example, in the case of a lease, the transfer of the leasehold rights creates a new landlord-tenant relationship between the transferee and the lessor. The transferee becomes responsible for paying rent and maintaining the property during the lease period.


Legal Compliance: The transfer of legal incidents must comply with legal requirements and formalities. For example, the transfer of ownership of immovable property requires a registered deed. Failure to comply with legal requirements can make the transfer invalid, which can result in legal disputes and financial losses.


Transfer of Liabilities: The transfer of legal incidents may also involve the transfer of liabilities from the transferor to the transferee. For example, when a lease is transferred, the transferee becomes responsible for any outstanding rent, repair costs, or other liabilities associated with the lease.


Rights of Third Parties: The transfer of legal incidents can affect the rights of third parties, such as tenants or creditors. For example, when a mortgage is transferred, the rights of the mortgagor and the mortgagee are affected, but the rights of the tenant are not affected. It is important to consider the impact of the transfer on third parties to avoid legal disputes.


Taxation: The transfer of legal incidents can have tax implications. For example, the transfer of ownership of property can attract stamp duty and capital gains tax. It is important to consider the tax implications of the transfer to avoid legal and financial consequences.


In conclusion, the transfer of legal incidents under the Transfer of Property Act, 1882 has various legal implications for the parties involved. It is important to understand the legal requirements and limitations associated with the transfer to avoid legal disputes and financial losses.


Conclusion

Legal incidents refer to things that are attached to the property and cannot be separated from it. Section 8 of the Transfer of Property Act mentions legal incidents and specifies when they can and cannot be transferred. Legal incidents can be transferred if the agreement has clear and unambiguous terms, and if there are terms that express or imply contrary intentions, then the legal incidents transfer to the transferee accordingly. There are various types of legal which attached land such as machinery and its parts, easements etc. when legal incidents transferred there are some legal implications also. In this way we can understand the transfer of legal incidents consists various types of legal incidents which are some transferrable which are not transferrable and we also understood under what circumstances should legal incidents transferred and when should not be transferred.


References

· Books-

1. Mulla, Dinshaw F. (2017). Mulla's The Transfer of Property Act, 1882. Mumbai, India: LexisNexis.

2. Pradhan, Poonam. (2020). Property Law. New Delhi, India: LexisNexis.

3. Singh, Avatar. (2020). Property Law. Lucknow, India: Eastern Book Company.

· Acts

1. Transfer of property act, 1882.

2. Indian easements act, 1882.

· Webliography

[1]Bishwanath prasad Singh vs Rajendra Singh, 2006 [2]Transfer of property act,1882 [3]The Indian easements act, 1882. [4]Official Assignee v. Rangaswami (1916) [5] of Nandram v. Kanhaya Lal (1929) [6] The general clauses act. [7] Faqueer Sunera vs khuderson and fitarathussain vs liquatali. [8]Badam vs ganga 1897 [9] Jai Narayan Misra vs. Hashmathunnisa Begum (AIR 2002) [10] Ram Chandra vs. Kalyan Singh (AIR 2006), [11] Raja Anand v State of Untar Pradesh [12] Lawton vs Lawton [13]https://www.legalserviceindia.com/legal/article-522-transferable-and-non-transferable-property.html [14] Ganpat Rai vs. Sarupi (1878) [15] Perumal vs Perumal. [16] Imperial bank of India vs Bengal National Bank. [17]Dhondiram vs Taba (1903) [18] Kedar Nath v. Gorie Mohammad (1886) [19] Associated Cement Companies v. Commissioner of Income Tax (1965)

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