Saturday, 28 May 2022

Transfer by Operation of Law


The Transfer of Property Act, 1882 would not apply to transactions made by law. It only applies to transactions made by act of parties.  Clause (d) states that the following transfers are exempt from the provisions of this Act:

  1. by operation of law,

  2. by a decree or order of a Courts of competent jurisdiction,

  3. In execution of such a decree or order.

The exception in saving clause (d) was itself an exception. It states that this Act shall not be deemed to affect any transfer rendered by operation of law, by decree or order of a court of competent jurisdiction, or in its execution, except as provided by section 57 and Chapter IV of this Act. Section 57 deals with sales and the discharge of encumbrances on sales, while Chapter IV is for mortgages on immovable property.

Persons authorized to dispose of the Property

Any person who is authorized to dispose of the property is competent to transfer it too. A Will is also a method of transferring property. It is the testator's testament. It is a posthumous disposition of the testator's estate, directing the manner in which his estate would be distributed after his death. It is not an inter-vivos transfer. A Will has two basic characteristics: it is supposed to take effect only after the testator's death, and it is revocable at any point during the testator's lifetime. If the testator, who is not married, marries after making the Will, it is automatically revoked by operation of law (Sections 69 and 70 of the Succession Act, 1925). While the testator is alive, registration of a Will does not make it effective.

Inter Vivos Transfers

Inter Vivos transfer deals with transfers between transferor and transferee only. It has no application where third parties are involved.


Involuntary Transfers

Transfers by operation of law are known as involuntary transfers, for example, court sales. Section 52 applies to all types of pendente lite transfers. Previously, there was a controversy over whether Section 52 applied to involuntary transfers, but now it is clear that Section 52 applies to transfers made by operation of law as well.

Seller’s Right after Sale

When the ownership of the property has passed to the buyer before payment of the whole of the purchase-money, the seller becomes entitled to a charge upon the property. This is regarded as the seller's statutory charge for the unpaid price. The charge establishes a payment right against the specified property. It can be generated by a party's act or by the operation of law. The charge is made by operation of law under the sub-section, and the property defined for securing the money is sale-property. Since the seller is not allowed to keep possession under this right, the charge is referred to as a non-possessory lien.


A mortgage is the establishment of a security interest in a property for the purpose of repaying a debt. Once the mortgage debt is discharged by a person beneficially interested in equity of redemption, the mortgage comes to an end by operation of law. As a result, the relationship between the mortgagor and the mortgagee is no longer viable.

Transfer by Operation of Law by Velanati Jyothirmai @ Lex Cliq

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