Transcript
Property Law Research Paper
DOCTRINE OF ELECTION
SUBMITTED BY: SAHIR BOPPANA ONS ) B.A., LL.B. ( H H ONS
National Academy of Legal Studies and Research Hyderabad
Table of Contents I NTRODUCTION ..............................................................................................................................................
3
DOCTRINE OF ELECTION ...............................................................................................................................
4
SECTION 35 OF THE TRANSFER OF PROPERTY ACT 1882 .............................................................................. 4 Rules for Election .....................................................................................................................................
4
Exceptions to the Rules .............................................................................................................................
6
Ingredients Necessary for the Doctrine of Election .................................................................................. CONCLUSION ...............................................................................................................................................
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13
I NTRODUCTION
The intention of enacting the Transfer of Property Act, 1882 was to define and amend the existing law, rather than introducing new principles.1 The Act utilizes principles of equity, justice and good conscience. The primary objectives of the Act were to initially convey the rules that regulate the transfer of property between living persons with accordance to the rules that affect devolution of property upon death. This provides for and complements the work commenced in framing the law of testamentary and intestate succession. The second objective was to complete the code of Contract Law as it would relate to immovable property2. The Doctrine of Election is applicable to both movable and immovable property. The foundational basis of the doctrine of election is that a person gaining a benefit under an instrument must also bear the consequential burden3, and that they may not take under and against the same instrument4, as held in Beepathumma v/s Kadambolithaya.5 Election is an obligation of having to choose one among two inconsistent or alternative rights in a situation where the grantor ’s intention is that the grantee should not receive both. Under any instrument if two rights are conferred on a person in such a manner that one right is lieu of the other, he is bound to elect only one of them. To illustrate this, suppose Adam offers Rs. 2 lakhs to Brad in lieu of transfer of his plot. Brad may elect only one of the two options; he may retain the money and transfer his plot or he may retain his plot and deny the money. He cannot enjoy both benefits. This project attempts to discuss the various nuances associated with the doctrine of election through the discussion of various landmark judgments. Special importance has been given to provide a true understanding of the required conditions for the election by the original owner to take place. The differences between the Indian Law perspective as well as the English Law perspective is brought out through critical analysis of the provisions i.e. Principle of forfeiture and Principle of compensation.
1
Tajjo Bibi v Bhagwan (1899) ILR 16 ALL 205 Whitley stokes, Anglo-Indian Codes, vol, p.721 3 Codrington v Lindsey 1873 ch 578 4 Dillon v Parkar (1818) 1 swan 359, p.394 5 Beepathumma v/s Kadambolithaya A.I.R.(1965)S.C.241 2
DOCTRINE OF ELECTION This doctrine is based on the equitable principle under which a person is cannot approve that of an instrument which is beneficial to him and disapprove the part that is to his disadvantage. This means that no one can approbate and reprobate in the same transaction. Courts hold that when a person accepts benefit and declines the burden at the same time frustrates the intention of the donor. The law presumes that the author of an instrument intended to give effect to every part of it. In Cooper v/s Cooper, it was held that the Doctrine of Election applies to every instrument and to every type of property, be it movable or immovable. 6
SECTION 35 OF THE TRANSFER OF PROPERTY ACT 1882 Section 35 of Transfer of Property Act, 1882 embodies the doctrine of election;
Rules for Election Rule 1: When a person professes to transfer some property which he has no right to transfer, conferring some benefit on the actual owner of the property, such owner is required to elect to either confirm the transfer or to dissent from it. In the case of dissent, he must give up the benefit so conferred, which would return to the transferor or his representative as if it had not been disposed of. There
is
a
requirement
of
three
parties
for
this
engagement;
1. The Real Owner: Real owner of the property must elect to either confirm or dissent from the transfer. If he chooses to dissent from the transfer, the real own er must give up the benefit. 2. Transferor: The party transferring the property does not have any right to transfer in the same transaction. The transferor confers benefit on the owner of the property
6
L.R.7,H.L 53 at page 69
3. Transferee: It is the transferor’s responsibility to return to the transferee. If it is not properly done or the matter is not properly disposed of, the transferor will be liable. The transferee is allowed to file a suit against the transferor rather than against the real owner. To illustrate this, assume Jack profess to transfer a property owned by Jill to Jones. He confers a benefit of Rs. 1,00,000 to Jill. Here Jack is not transferring Jill’s property to Jones, but professes that property which he himself does not own. When the transfer is gratuitous, and the transferor has died or has otherwise become incapable of making a new transfer before the election, and when the transfer is for consideration, relinquishing of the benefit is subject to the charge of making good to the disappointed transferee the amount or value of the property that was to be transferred to him. Gift is one such gratuitous transfer. Sam gifts a house to Edward. Before the election, Sam dies and owner of the house dissents. It is not possible for a new transfer to take place. Here, it is Sam’s representative’s duty to pay the value of the house to Edward. A rose garden is the property of C and is worth Rs. 15,00,000 A, by instrument of gift, professes to transfer it to B, giving by the same instrument Rs. 20,00,000 to C. C elects to retain the farm forfeiting the gift of Rs. 20,00,000. Suppose A dies before the election. His representative must pay Rs. 15,00,000 out of the Rs. 20,00,000 to B. Assume, by a deed A provides for B a house having a place with C, and by a similar instrument gives another property having a place with himself to C. C qualifies for A's property just upon the association of C's adjusting to all the arrangement of the instrument by disavowing the privilege to his own property given for B; he should therefore settle on his decision, or as it is actually named "he is put to his election", to take either under or against the instrument, he should surrender for B his property given to B by A; and takes the property which is given to him by A. as expressed by Lord Hather in Cooper v. Cooper.7
7
L. R. 7 H L 53 p.69
Rule 2: The rule in the section involves whether or not the transferor believes the property which he professes to transfer to be his own. In a scenario of master and agent, there is no need for election. Rule 3: A person receiving an indirect benefit under a transaction rather than a direct benefit is not required to elect. If a benefit is received by the real owner’s relative, it is not required that they elect. In case the owner elects to dissent, it is not necessary to relinquish the benefit. Rule 4: A person who in his capacity receives a benefit under a transaction, may in another, dissent.
Exceptions to the Rules When a specific benefit is conveyed to be conferred on the real owner in lieu of his property that the transferor professes to transfer, and the owner decides to claim the property, he must return the benefit. However, he is not required to relinquish any other additional benefit conferred upon him, even if it is by the same transaction. Extra benefit that is separate and beyond the instrument is not to be returned. Particular benefit that is expressed to be received upon transfer of the property, is returnable in case of dissent. Exception 1: Acceptance of the benefit by the owner on whom it is conferred implies an election by him to confirm the transfer. It is confirmed if he is aware of his duty to elect and aware of those circumstances which would influence the judgment of a reasonable man in making an election, or if he waives enquiry into the circumstances. In a few cases, law assumes that election to be done, because the owner acts as if it he has elected, although no election direct had taken place. This includes acceptance of benefit, no enquiry into the circumstances; reading the document and receiving the money, or getting the money without the ability to read. Because a reasonable person would know the facts, the law assumes that election had been done and there is no opportunity to deny the contract.
For instance, Reza transfer a property Kahan which is owned by Saidur and gives benefit Saidur at the same instrument. Now Saidur accept benefit from Reza without confirming election and he also waives enquiry into the circumstances. So in this situation court presume that he approved the transaction and take benefit as election. Exception 2: Such knowledge or waiver shall, without contradicting evide nce, be presumed, if the person that received the benefit has enjoyed it for over two years without acting to express dissent. If the owner consumes the benefit without dissent for over two years, election would be assumed. The election would be exclusion. Exception 3: Such knowledge or waiver may be inferred from any act that makes it impossible to place the party interested in the property professed to be transferred in the original condition as if such act had not taken place. It is not possible to return the property, such as consumption of a land used for mining. Exception 4: If he does not indicate to the transferor or his representative, his intention to confirm or to dissent from the transfer even one year after the date of transfer, the transferor or his representative may after the expiration of that period, oblige him to make his election. If he does not comply with such requisition within a rational amount of time after receiving it, it would be presumed that he shall have elected to confirm the transfer.
Ingredients Necessary for the Doctrine of Election : 1) The transferor should not be owner of the property which he transfers. 2) The transferor must at the same time grant some of his own property to the owner of property, in the same instrument. 3) The two transfers must be made in the same transaction: Transfer of the property of the owner to the transferee and conferring the benefit on the owner of property. The doctrine of election is not applicable if the two transfers are made b y virtue of two distinct instruments.
4) It is necessary that the owner has proprietary interest in the property. A creditor is not involved in the election as he merely has a personal right to be paid by the debtor. 5) The owner that does not receive direct benefit under transaction, but getting a benefit under it indirectly, is not put to election. 6) Question of election does not arise when the be nefit is received by a person in different society8. The doctrine of election may be stated by Maitlandas follows:“ He
who
accepts
a
benefit
under
a
deed
or
will
or
other
instrument,
must
(a) adopt the whole contents of that instrument; (b) Contort to all its provisions; and (c) Renounce all right that is inconsistent with it.” 9
Case Laws The foundation of the doctrine of election is that person gaining benefit of an instrument must also bear the burden, imposed thereby and that he is not allowed to take under or against the same instrument. It is a contradiction to the general rule that one should not approbate or reprobate. In Cooper v. Cooper 10 it was decided that if the owner is allowed to retain his property, he must give up the respective benefit conferred to him. The court observed that a person cannot approbate and reprobate the same transaction. The doctrine is based on intended intention to this extent that the law presumes that the author of an instrument intended to give effect to every part of it. Of an instrument is in valid in part, what remains is sufficient to put a person to his election if he claims a benefit under it. Muhammad Kader Ali Fokir vs. Fakir Lakman Hakim11
8
Shafique Hossain, Transfer of property act, 1882, 1 st edition, p.40 9 Maitland’s Lectures on Equity-Lecture 18 10 L.R.7 H L 53 p.69 11 PLR 1956 Dacca 370
The beneficiary must give effect to the instrument as a whole. White and Tudor’s Leading case in Equit y, is as follows:“Election is the obligation imposed upon a party by court of Equity to choose between two inconsistent or alternative rights of climes in case where there is clear intention of the person from who derives one that the he should not enjoy both. That he who accepts a benefit under a deed or will must adopt the whole contents of the instrument.” 12 The India courts have applied this doctrine in several cases such as Ramakottaya v. vira ghavayya,13 , Bhau Ram v. Baij Nath Singh14 and Beepathuma v. Velasari Shankaranarayana Kad amguliaya15.
Effect of Election against transfer 16: Where the owner dissents from the transfer of property(1) He must give up the benefit; (2) The benefit intended originally for owner would then go back to the transfer. A gives a gift to B of a property that belongs to C and by the same deed gives Rs.10,000 to C. C does not agree to the transfer of his property to B, but cannot claim Rs.10,000 as it reverts to A. Compensation to disappoint transferee17: Where the transfer is gratuitous and the transferor has died before the election or is incapable of making a new transfer, the case is similar to that of a will. It is accordingly governed by same rules and the disappointed transferee can claim for compensation. In every case where he has given consideration for the transfer which is defeated by the election, the case involves a contract and he similarly has a consequent claim for compensation.
12
8DLR 112 (120re-h) AIR (1929) Mad 502 (f.B) l.R. 52 Md.556 14 AIR (1961) S.c 241; (1962)1s.R.358 15 AIR (1965) s.C. 241; (1964)5 16 Skula Dr. S.N, Transfer of property Act, 24 th ed; Allahabad law agency, p.86 17 Shukla Dr. S.N, Transfer of property Act, 24 th ed; Allahabad law agency, p.86 13
Subject only to these claims, it is provided that the benefit that the person who being put to his election and choosing to retain his property, declines to accept, “ shall revert to the transferor or his representative as if had not been disposed of.” Disability: In case of Disability, it is mentioned that the election shall be postponed until the disability ceases, or until the election is made by some competent authority. A minor’s election may be postponed until he reaches age of majority, or his guardian may elect for him18.
English Law and Indian Law The English law relies on the principle of compensation which implies that if the first proprietor does not approve the exchange, he can keep the property and furthermore the benefit collected, subject to compensation gave to the donee, to the degree of the property he had languished a misfortune over. Yet, in the Indian law setting, this doctrine is impacted by the guideline of forfeiture which expresses that if the first proprietor does not approve the exchange, the donee causes a forfeiture of the gave benefit which backpedals to the transferor.
Mohamedan law; The doctrine of election was applied to Mohamadens by the Privy council in the case of Sadik GHusain v Hasbim Ali(1916)19
Election limited to part of benefit:The fifth paragraph states an exception to the general rule in case a person elects against the instrument, he will thereby forfeit the benefit received under it.
18
Bharuka Dr.GC, Mulla The transfer of property Act 1882,10 th ed; p.242 19 Bharuka Dr.GC, Mulla The transfer of property Act 1882, 10 th ed; p.243
Suppose, A transfers a house belonging to B and by the same instrument confers benefits, a, b, and c on B and it is expressly stated that the benefit c is given to B in lieu of the house, then if B elects to retain the house, he will not be bound to relinquish all the benefits conferred on him by the instrument but only c which is expressed to be lieu of the house. Mode of election: As stated in these paragraphs, election may be expressed or implied by conduct. Where, the election is mentioned in express words, it is thereby final and conclusive. However if it is not so made, but the transferee (1) Is aware of his duty to elect (2) Having full knowledge of matters such as the value of properties, accepting the benefit given to him by the transaction Such action on his part creates an election in favor of the transaction20. Hence, if a person’s act is due to ignorance or mistake, the doctrine of election gives way.
Presumption as election:The question as to whether the benefit was accepted with the adequate knowledge of the circumstances would be a question of fact subject to the following rules21: (a) If the benefit has been enjoyed for more than two years without doing any act to express dissent, it shall be presumed that he had the appropriate knowledge or that he waived enquiry. (b) If it is impossible for real owner to go back th e previous position. Warning the real owner after certain period: If he does not indicate to the transferor or his representative, his in tention to confirm or to dissent from the transfer even one year after the date of transfer, the transferor or his representative may 20
Shukla Dr. S.N, Transfer of property Act, 24 th ed; Allahabad law agency, p.86 21 Shukla Dr. S.N, Transfer of Property Act, 24 th ed; Allahabad law agency, p.87
after the expiration of that period, oblige him to make his election. If he does not comply with such requisition within a rational amount of time after receiving it, it would be presumed that he shall have elected to confirm the transfer. Part of the same transition: This Doctrine may only be applied when the transfer and the benefit conferred are a part of and form the same transaction. This means that the benefit and transition are interdependent and inseparable as they form part of the same transition. Mohammad Afzal vs. Ghulam Kasim: Upon the death of Nawab of Tank, the Government transferred the chiefship to the eldest son and also transferred a portion of cash allowance to the younger son who had previously made a grant of two villages for maintenance. It was held by the Privy Council that the younger son had not put his election as the two grants were received separately from independent sources and not in the same transaction. 22
22
1903 ILR30
CONCLUSION: It is given in the Transfer of property Act, 18 82, in Section 35 that when one professes to transfer property over which he has no right, without having informed the owner, he must approach the owner to seek its disposal. The owner must decide whether or not to allow it. This implies that he has the right to exercise the doctrine of election to either confirm or dissent during a t ransaction. When the owner chooses to dissent, it is the transferor’s responsibility for if a new transfer is not possible, the money or the consideration value are to be returned. If it is a gratuitous transfer such as gift, he is to pay the property value and even in case of election before the transferor has died, his representative is to pay whole or exact value. In case the transferor or his representative does not pay or give the property, claim would be against the transferor rather than the real owner. Section 35 of Transfer of Property Act, 1882 provides the rules for making election. The owner receives some direct, specific benefit when he accepts the transfer and when he dissents, he must return the benefit. In case he receives indirect, extra benefit that is separate and beyond the instrument, it need not be relinquished. An exception to this is when confirmation is implied by the owner by acceptance of the benefit, by showing some requisite document or a reasonable person’s understanding of the matter. If the owner enjoys the benefit for more than two years without dissent, it is impossible for him to return to the original position. One year after receiving a notice from the transferor and passing of the prescriptive time limitation, the court automatically assumes that owner had accepted the transfer. If a person is disqualified for the election, it would be postponed until either the disability ceases or until the election is made by a competent authority such as in the case of disqualification due to the party being minor, lunacy, infancy.
