The concept of property occupies an important place in human life because it is virtually impossible to live without the use of material objects which constitute the subject matter of property.
In its widest sense, all animate or inanimate things belonging to a person are included within the meaning of the term property, for instance, a person’s life, liberty, and estate may also be considered as his property.
However, it has now become redundant to interpret the term property in this comprehensive sense.
The importance of property in the modern materialistic world hardly needs to be emphasised. Property is absolutely necessary for the subsistance and well being of human beings.
Everyone has a right to enjoy the fruits of labour and industry. Property is foremost requisite for a happy and contented life and therefore, its preservation and protection is one of the primary objects of the State. It is mainly the interest in property which keeps men united as members of society
Table of Contents
Meaning of Property
The term property in a looser sense may be described as the sum-total of a man’s fortune, including not only the objects of which he is the owner, but also the value of any claims which he may have against other persons, after deducting the amount of any claims which might be made good against him.
In a limited sense, property convers only a person’s proprietary rights as opposed to his personal rights. Thus land, chattels, shares and debts due to him constitute his property. This is the most usual sense in which the term is used in modem time.
In yet another sense, property includes only those rights which are proprietary rights in rem, e.g. patent copyright. But a debt or benefit of a contract is not included within the term ‘property’ n this sense.
According to Salmond, the substantive civil law, as opposed to the law of procedure, is divisible into three major parts, namely, the law of property, the law of obligations, and the law of status. The first deals with the proprietary rights in rem, the second with proprietary rights in personam, and the third deals with personal or non-proprietary rights, whether in rem or in personam.
In other words, the subject-matter of the law of property is proprietary rights while the subject matter of law of obligations is proprietary rights in personam.
The subject-matter of the law of status is all personal or non-proprietary rights, whether in rem or in personam.
Salmond observes that the term ‘property may have a variety of applications but in legal terms it refers to the following:
Defining property as a legal concept, the Supreme Court in Guru Dutt Sharma v. State of Bihar, observed that it is a bundle of rights and in the case of tangible property, it would include the right of possession, the right to enjoy, the right to retain ,the right to alienate and the right to destroy.
The term property also includes within its, goodwill of a business, which is an intangible asset. It includes not only immovable and movable object, but also patents, copyrights, shares, claims etc.
1. All legal rights: It includes a person’s legal rights of whatever description. A man’s property is all that is his in law. This ordinarily implies complete ownership of all things-material as well as incorporeal, Hobbes and Blackstone have supported the use of the term ‘property’ in this sense. But this usage has become obsolete in the present time.
2. Proprietary rights: It includes not all rights, but only a man’s proprietary rights as opposed to his personal rights. Thus if I sell my land to you, the property in it shall pass to you on your paying me the purchase money.
3. Corporeal Property: In this sense, property includes nothing more than corporeal things, that is, right of ownership in a material object such as a watch, land, horse, etc
According to Salmond, ownership of corporeal property is general, permanent and inheritable right of user of a thing.
Firstly, the ownership of a material object is a right to the general or aggregate use of the thing. The owner of the material object (thing) is entitled to its use except insofar as it is restricted by natural limits or restrictions arising from the effect of encumbrances.
Secondly, the right of ownership is permanent right existing so long as the material thing is in existence.
Thirdly, the ownership of a material object is inheritable and the right survives after the owner’s death.
Bentham, however, preferred to interpret the term ‘property in its narrowest sense. According to him, it includes nothing more than corporeal property, i.e., ownership of material objects alone.
Austin looks at property in its widest sense and suggests that property denotes the greatest right of enjoyment known to the law excluding servitudes.
Sometimes even servitudes are described as property in the sense that there is a legal title to them. Considered from this point of view, property means the whole of the assets of a man including both his proprietary as well as personal right.
‘Property’ as interpreted by the Supreme Court of India
The Supreme Court of India, in R.C. Cooper v. Union India, gave a very comprehensive definition of property and observed-
Property means the highest right a man can have to anything being that right which one has to lands or tenements, goods or chattels which does not depend on other’s courtesy; it includes ownership, estates and interests in corporeal things, and also rights such as trade marks, copyrights, patents and even rights in personam capable of transfer or transmission, such as debts; and signifies a beneficial right to or a thing considered as having money value, especially with reference to transfer or succession, and of their capacity of being acquired.
Most of the modern legal systems are using the term ‘property‘ in a comprehensive sense. In India, property has been given constitutional protection under Article 19(1) (f) of the Constitution of India so that the State may not interfere with a person’s right to property.
The importance of personal property is receding these days. This is why right to property had been dropped from the category of fundamental rights by Constitution Forty-fourth (Amendment) Act, 1978 and it has now become an ordinary legal right under Article 300-A.
State is under an obligation to protect the property right of its subjects. In a democratic country like India, nationalisation of means of production brought about a radical change in law of property.
Now-a-days greater importance is given to social property than individual property. Today, property has been developed as a social institution.
The effect of the constitutional amendment which took away the right to property from the category of fundamental rights and made it an ordinary legal right under Art. 300A, is that a person cannot invoke the writ jurisdiction of the Supreme Court under Art. 32 in case his right to property is violated.
The nature of right to property in the post 44th Amendment era came for consideration before the Supreme Court in Jilubhai Nanubhai Khachar v. State of Gujarat, wherein the Court observed :
…the right to property under Art. 300-A is not a basic structure of the Constitution. It is only a constitutional right-The deprivation of the property shall be only by authority of law, be it an Act of Parliament or State Legislature but not by executive fiat or an order.
Deprivation of property is possible by acquisition or requisition or taken possession of for the public purpose.
The modern judicial trend to interpret right to property in the light of Art 21 of the Constitution dealing with personal liberty also deserves mention this place. The Apex Court in a number of cases has expressed a view that Article 21 in its widest magnitude covers a variety of right (including right to property) which constitute the personal liberty of a man.
Therefore, despite the fact that the right to property as a fundamental right has been abrogated and replaced, this right may still be interpreted by the Court as an aspect of personal liberty under Art. 21.
Therefore, a law seeking to deprive a person his personal liberties relating to property must not only be reasonable but must also be ‘right just and fair‘ and consequently it must provide for just compensation.
Theories of Property
Jurists have differed in their views regarding the origin of property. They have advanced their own theories in this regard None of them, however, seems to be wholly correct but there is some truth in each one of them. These theories are discussed below:
Natural law Theory
This theory is based on the principle of natural reason derived from the nature of things. According to this theory, property was first acquired by occupation of an ownerless object- as a result of individual labour.
Grotius, Pufendorf. Locke and Blackstone have supported this theory.
Kant also upholds this theory in his classic work Philosophy of Law. As pointed out by Blackstone, by the law of nature and reason, he who first began to use a thing acquired therein a kind of transient property that lasted so long as he was using it and no longer”.
However, as the population increased, the meaning of property was extended not to the inordinate use only but to the substance of the thing to be used. Thus the theory of occupancy was the foundation of all property.
The natural theory of property has been criticised by Sir Henry Maine and Bentham. According to Henry Maine, it is erroneous to think that possession gives rise to title for there is no reasonable ground to support this contention.
Bentham holds that property has not originated by the first occupation of an ownerless thing, but it is a creation of law. He does not believe in the existence of property without the existence of law.
Labour Theory
This theory primarily believes that property can be claimed on the exclusive basis of one’s work, which produced that property. It recognises the role of labour for adequate rewards. When a person acquires property, he is entitled to hold it exclusively.
According to this theory, a thing (res) is the property of the person who reduces it or brings it into existence. However, this view has been criticised by Harold Laski on the ground that labour does not produce properly, it is only a means to earn property.
Notably, the Marxist theory of property is based on the predominance of labour in the economy of a country. This theory has lost significance in modern times because it has been shown that there may be many situations when a property can be acquired without labour. Eg: property obtained by inheritance or under a will.
The labour theory of property finds recognition even in the ancient texts of the Hindu law commentators notably, Yajnavalkya who underlined the principle that a person’s wages will be according to work done by him. Thus When wages have been fixed for a particular task, which was undertaken but not accomplished due to illness or other impediments, then wages would be paid in proportion to the work done.
Similarly, when more profits were made by reason of special knowledge or skill of the worker, then the master shall pay him an amount exceeding the fixed wages. by application of her intellectual ability or business skill or craftsmanship was Stridhana property of woman and pointed out that wealth earned by a woman her own special unt exceeding the fixed wages.
Katyayana recognized the stridhana property of woman and pointed out that wealth earned by a woman by application of her intellectual ability or business skill or craftsmanship was her own property over which she had the exclusive right of disposal. The profit earned by her in business, trade, or employment also her exclusive stridhana property.
The labour theory of property is also sometimes called as the positive theory. It was propounded by Spencer who founded it on the fundamental law of equal freedom of the individual. He asserted that property is the result of individual labour and therefore, no one has a moral right to property which he has not acquired by his personal labour.
Metaphysical Theory
This theory was propounded by Hegel and Kant. According to Hegel, “property is the objective manifestation of the personality of an individual.”
In other words, the property is the object on which a person has the liberty to direct his will. Kant has also supported the metaphysical theory of property and justify its existence and need for protection.
He observed that the law of property does not merely seek to protect possession where there is an actual physical relationship between the possessor and the object, but it goes beyond it and considers the personal will of the individual more important in the concept of property. This theory has been criticised on the ground that it is little concerned with realities and is based on theoretical assumptions.
Historical Theory
This theory believes that private property has its growth in three distinct stages. In the first stage, a tendency developed among people to take things into natural possession and exercise control over them independently of the law or of the State.
In the second stage, the juristic conception of possession gradually developed which meant possession in fact as well as in law.
In the third and the last stage, there was a development of ownership which is purely a legal conception having its origin in law. The law guarantees the owner of property, exclusive control, and enjoyment of property owned by him.
Henry Maine was the main supporter of the historical theory of the origin of property. He observed that property originally belonged not to individuals not even to isolated families, but to large societies composed on the patriarchal pattern.
It was at a later stage that collective property disintegrated and individual rights of property came into existence. Roscoe Pound also agrees that the earliest form of property was group property, which subsequently disintegrated into a family property, and finally, the concept of individual property evolved. The noted Italian jurist Miraglia has also supported the historical theory of property
Psychological Theory
According to this theory, property came into existence on account of the acquisitive tendency of human beings. Every one desires to own things and keep them in his possession and control.
Bentham has supported this theory of property and pointed out that property is altogether conception of mind. It is nothing more than an expectation to derive certain advantages from the object according to one’s capacity.
Roscoe Pound also supports Bentham and holds that the sole basis of the conception of property is the acquisitive instinct of individual which motivates him to assert his claim over objects in his possession and control.
This theory has been criticised for being Maine’s imaginative reconstruction based on Indian village communities and certain local customs prevailing in ancient Indian villages and therefore, it lacks the universal application.
Functional Theory
The functional theory considers property as a social interest for promoting general security and protection of individual interests in personality, domestic relations, and subsistence.
As pointed out by Roscoe Pound, interests of personality like the security of one privacy, honoru, reputation, etc. can be realized only through some access to property.
Interests in domestic relations are protected where parents, children, husbands, wives, and other dependents are well safeguarded by the support and protection of the family. Interests of subsistence include the right to property, economic advantages, freedom of association, and availability of employment opportunities.
As rightly suggested by Jenks the concept of property should not only be confined to private rights but it should be considered as a social institution securing the maximum interests of the society. No one can be allowed unrestricted use of his property to the detriment of others.
In his opinion, the use of property should conform to the rules of reason and welfare of the community.
The functional theory justifies acquisition of property by law and individual efforts. Its distribution, however, should be on an equitable basis.
Laski also support the functional theory of property. He observes, property is a social fact like any other and it is the character of social facts to keep on changing. Property, therefore, has assumed varied aspects and is further liable to changes with the changing norms of the society.
The roots of property as a social institution are traceable in the ancient Hindu philosophy of dharma which emphasized just relations in economic and property matters and not to encroach upon the right to the wealth of others.
It was the duty of the Karta of the family to maintain all the family members ensuring their social security and enjoyment of property.
The customs and practices through which property could be lawfully acquired included donations, gifts, payment of the price in case of purchase, seizure of property in war, lending of money on interest, wages, etc.
Any unjust acquisition of property was strictly prohibited and considered as a sinful act.
The joint family system in ancient India inspired members of a family with the unity of mind and heart with the result property right assumed a functional role of service to the community as a whole.
The central principle underlying property acquisition was social security and collectively of ownership. Mutual trust, good faith, and respect for others property rights refrained people from indulging in unjust enrichment for their selfish ends
Theory that Property is the creation of State
According to this theory the origin of property is to be traced back to the origin of law and the State.
Jenks observed that property and law were born together and would die together. This, in other words, means that property came into existence when laws were framed by the State.
In this context Rousseau observed. “it was to convert possession into property and usurpation into a right that law and State were founded”. He asserted that property was the creation of the State and it is nothing but a systematic expression of degrees and forms of control use and enjoyment of things by persons that are recognised and protected by law. There is, however, little truth in this theory because in fact both the State and property have their origin in the socio-economic forces therefore, one cannot be the source of origin of the other.
In the Indian context, the constitutional provisions contained in Articles 39 (b) and (c) clearly reflect the concern of the State against concentration of wealth in the hands of few to the detriment of societal interests.
Fair and equitable distribution of wealth so as to subserve the common interest of all sections of the society has been the guiding principle in the regulation of property by the State through the instrumentality of the law.
The focus has been on socialization of property rather than adopting a narrow individualist approach. The rule against unjust enrichment, the doctrine of perpetuity marshalling, subrogation, part performance, partition, etc. are incorporated in the property law with a view to ensuring just and fair enjoyment of property and protecting it against all kinds of exploitation
Kinds of Property
Broadly speaking the objects which are capable of becoming property those over which a person exercises a right and with reference to which another person owes a duty.
These objects maybe
(i) Material objects ie physical things (res corporales) such as house tree, field, horse, table, etc
(ii) Intellectual objects which are artificial things called res incorporales such as trademark, copyright, patent, easement rights. These are intangible things, which are treated by law as if they were material objects for the purpose of determining their holder’s right and duty of others against him.
Thus, it would be seen that property is mainly of two kinds, namely, corporeal, and Incorporeal. Corporeal property is the right of ownership in material things, whereas incorporeal property is any other proprietary right in rem, patent right, right of way.
Corporeal property is always visible and tangible while the incorporeal property is not. Both are, however, valuable rights inasmuch as they are legal rights recognised and enforced by law.
Corporeal property is of two kinds, movable and immovable:
Incorporeal property is further divisible into two kinds, namely, (i) jura in re aliena or encumbrances, whether over material or immaterial things.Eg:
lease, mortgages and servitude; and (ii) jura in re propria over immaterial things, such as patents, trademarks, copyright, etc.
Corporeal and Incorporeal Property
As stated earlier, the corporeal property is also called tangible property because it has a tangible existence in the world. It relates to material things, eg: land, house, money, ornaments gold, silver etc are corporeal property the existence of which be felt by the sense-organs.
Incorporeal property is also called intangible property because its existence is neither visible nor tangible. Eg: right of easement, copyright, patent, trademark, etc.
In Roman law, corporeal property is termed res corporalis and the incorporeal property is called as res incorporalis. Buckland, however, suggests that corporeal property under Roman law referred only to the ownership of the right of general user and all those things which could be valued in currency fell under the category of incorporeal property.
Movable and Immovable Property
All corporeal property is either movable or immovable. In English law, these are termed as chattels and land respectively. According to Salmond, immovable property (eg: land) has the following elements –
(1) A determinate portion of the earth’s surface:
(2)The ground beneath the surface down to the center of the earth;
(3) The column of space above the surface ad infinitum;
(4) All objects which are on or under the surface in its natural state.
eg., minerals, natural vegetation, or stones lying loose upon the surface.
(5) All objects placed by human agency on or under the surface of the land with the intention of permanent annexation. Eg: houses walls, fences, doors, etc.
These become part of the land and lose their identity as separate movable chattels. It must, however, be noted that physical attachment without the intent of permanent annexation does not make a change in the nature of the movable property.
For example, carpets or ornaments nailed to the floor or wall of a house or money buried in the ground are as much a chattel (movable property) as money in the owner’s pockets.
Immovable property has been defined in the General Clauses Act, 1897 to include land, benefits to arise out of the land, and things attached to the earth, or permanently fastened to anything attached to the earth.
The term is also defined in the Indian Registration Act, 1908, thus: “Immovable property includes land, buildings, hereditary allowances, right to way, light, ferries, fisheries or any other benefits to arise out of the land and things attached to the earth or permanently fastened to anything which is attached to the earth but not standing timber, growing crop or grass”.
The Transfer of Property Act, 1882 excludes standing timber, growing crops and grass from the definition of immovable property.
The following are judicially recognised as immovable property-
(1) right of way,
(2) right to collect the rent of the immovable property
(3) a right of ferry,
(4) a mortgagor’s right to redeem the mortgage,
(5) the interest of a mortgagee in immovable property.
(6) right of fishery
(7) right to collect lac from trees.
The following are not judicially recognised as immovable property:
(1) standing timber,
(2) growing crops,
(3) grass,
(4) a right to recover maintenance allowance even though it is charged through immovable property.
(5) right of a purchaser to have the land registered in his name
(6) royalty,
(7) a decree of sale or sale of immovable property on a mortgage.
Movable property, on the other hand, maybe defined as any corporeal property which is not immovable property.
Real and Personal Property
The distinction between real and personal property is closely connected with but not identical to the distinction between movable and immovable property. The distinction, however, has no scientific basis.
It is mostly the product of the history of the law of action in England (Real property means all rights over land recognised by law. Personal property, on the other hand, means all other proprietary rights whether they are rights in rem or rights in personam.
Commenting on this distinction, Salmond observed, the law of real property is almost equivalent to the law of land while the law of personal property is almost identical with the law of movables”.
This distinction between real and personal property has been drawn from Roman law. The real property and immovable property form intersecting circles which are very nearly though not quite coincident.
Movable property is commonly termed as chattel which has three different meanings
(1) Any movable physical object such as table, money, dog, etc.
(2) Incorporeal proprietary rights such as debts, shares, and other rights in rem which are not rights over land.
(3) Personal property, whether movable or immovable, as opposed to real
property
Rights in re propria in Immaterial Things
Proprietary rights are both in relation to material and immaterial things.
Material things are physical objects and all other things which may be subject matter of a right are immaterial things. They are various immaterial products of human skill and labour. These immaterial forms of property are as follows:
Patents
The subject matter of a patent right is an invention such as the idea of a new process, instrument or manufacture. The person by whose skill labour the invention or a new process or manufacture is introduced’ has the elusive right of patent in it. This is granted to the inventor by the State.
The Indian Patents & Designs Act provides that a person who has registered a patent gets the exclusive right to make use or sell the patented invention for a period of fourteen years, and any person who, whether with or how the knowledge of the existence of the patent right infringes the same be restrained by injunction and if he knowingly infringes the patents, shall be liable also for damages.
Copyright
The subject matter of the right is the literary expression of facts or thought. This right may be available to writers, painters, engravers, sculptures, photographers, musical and dramatic personnel for their outstanding work.
When such a person does some creative work by utilising his intellect, skill, and labour, he is entitled to exclusive copyright which is an immaterial form of property. In short, copyright may be literary copyright or artistic copyright or musical and dramatic copyright.
Commercial Goodwill
Yet another form of immaterial property is commercial goodwill, trade marks and trade-names. The goodwill of commercial business is a valuable right acquired by the owner by his labour and skill.
He has exclusive right of use and profit from the business and anyone who seeks to make use of it by falsely representing to the public that he is himself carrying on the business in question, shall be violating this right.
Rights in re aliena (Encumbrances)
Rights in re aliena are also known as encumbrances. Encumbrances are the rights of specific or particular user as distinguished from ownership which is right of general user. Encumbrances prevent the owner from exercising some definite rights with regard to his property.
The main categories of rights in re aliena or encumbrances are-
(1) Leases, (2) Servitudes, (3) Securities, and (4) Trusts
Lease
A lease is that form of an encumbrance of property vested in one person by a right to the possession and use of it vested in another. Thus it is a transfer of right to the possession and use of property owned by some other person.
It is an outcome of the rightful separation of ownership from possession.
A lease may either be for a certain specified period or in perpetuity.
It is an encumbrance in which the lessor, ie, the owner of the property transfers his right of possession to the lessee. Thus if I own a house that is let out to a tenant, I have created a lease, i.e. I have detached my possession from my ownership.
I am still the owner of the house but the tenant i.e the lessee has the possession of it and he can use it so long as the lease subsists.
A lease of immovable property is, therefore, a transfer of a right to use and enjoy such property for a certain period, express or implied or in perpetuity in consideration of a price paid or promised, or (i) money, or (ii) share in crops, or (iv) service, or (v) any other thing of value to be rendered periodically or on specified occasions to the transferor by the transferee ( lessee) who accepts the transfer on such terms.
The price is called the premium’ and the money, share or produce or service rendered I called the rent, the transferor called the lesson and the transferee the lessee.
The Transfer of Property Act, 1882 defines a lease as a transaction in which a party owning the asset provides the asset for use over a certain period of time to another for consideration either in the form of periodic rent and/or in the form of down payment.
Since all lease agreements are governed by the Transfer of Property Act, it creates an interest in the property for the lessee for the duration of the lease. The lessee gets protection against eviction, inheritable tenancy rights, and protection against exorbitant rent increase by the landlord.
The landlord, on his part, would lease out his property with the full protection of law to ensure that he gets Vacant and unencumbered possession of the property upon expiry of the agreed term or otherwise as provided under law.
Lease may also defined as a contract between two parties for the hire of a specific asset wherein the lessor retains ownership of the asset while the lessee has the possession and use of the asset on payment of specified rent over a period of time.
A lease gets determined (terminated) on the happening of one of the events referred to in Section 111 of the T.P. Act.
The essentials of a lease may be summarised this –
(i)The lesson must be a person competent to contract and must have title or authority:
(ii) The lessee must also be competent to contract since a lease is to be executed by both lessor and the lessee
(iii) Subject matter of the lease must be immovable property;
(iv) Transfer of right of possession to use and enjoy such property,
(v) Duration of the lease may be express, implied or in perpetuity,
(vi) Consideration may be in the form of premium, rent or both.
As already stated, the premium is the price paid or promised in consideration of a transfer by way of lease.
Any payment by the lessee that is part of consideration of the lease is rent;
(vii) The lessee must accept the transfer; and
(viii) In certain cases, a lease must be made through a registered deed.
Generally speaking, a lease is always with respect to immovable property, t. land. The right involved in a lease is also called ‘tenancy, However, in jurisprudential terms a lease has a much wider meaning and may also include tenancy in the land, bailment of movable property, all encumbrances relating to incorporeal property, etc,
In this comprehensive sense, every right that can be possessed can be made the subject of a lease. Thus there can be a lease of copyright patent, right of way etc. In practice, however, lease ordinarily refers to a transfer of possession by the owner (lessor) to the lessee for certain consideration which may be premium or rent.
The Supreme Court in Pramod Kumar Jaiswal v. Bibi Husan Bano
observed that lease being a transaction involving immovable property requires the attention of law for it contains issues of public interest.
In this case, the Apex Court took a firm stand in protecting the rights of the landlord as against the conventional approach of showing an inclination towards the tenant’s right.
Servitude
A servitude is that form of encumbrance which consists in a right to the limited use of the place of land without the possession of it; for example, a right of way, a right to passage of light or water across the adjoining land, right of fishing etc.
A servitude, therefore, is a right to the limited use of a piece of land without ownership or possession thereof. There is no transfer of possession in case of servitude and this distinguishes it from a lease.
If a person secures exclusive possession of a piece of land without getting its ownership, he acquires a lease of that land but if he only acquires a right to use that piece of land without getting its ownership or possession, he acquires a servitude on that land.
Ordinarily, servitude exist with respect to land alone Servitude are of two kinds-Private or Public. A private servitude is vested in a determinate individual as in case of a right of way, of light or support vested in the owner of a piece of land over and adjoining piece of land.
A public servitude, on the other hand, is vested in the public at large or some class of indeterminate individuals such as the public right of navigation or fishing public right of way over land in private ownership or right of inhabitants of a village to use certain piece of land for recreation, cremation, etc.
Salmond has further classified servitudes as (i) appurtenant, or (ii) in gross.
A Servitude appurtenant (it is also called as praedial servitude) is one which is not merely an encumbrance of one piece of land but is also accessory to another piece of land. It is a right of using one piece of land for the benefit of another; as in the case of a right of support for a building.
The land which is burdened with such servitude is called the servient tenement and the land which has the benefit of it is called the dominant parent. The servitude runs with each of the tenants into the hands of successive owners and occupiers.
A servitude is said to be in gross when it is not so attached and accessory to any dominant tenement for whose benefit it exists, for example, a public right of way or navigation; or a private right of fishing or mining, etc.
Security
A Security is an encumbrance vested in a creditor over the property of his debtor for the purpose of securing the recovery of the debt in other words, it may be said to be a right to retain possession of a chattel unit the debt is paid.
Security on immovable property is called a mortgage’ and on movable property it is called a pledge.
According to Salmond, a security is an encumbrance the purpose of which is to ensure or facilitate the fulfilment or enjoyment of some other right (usually though not necessarily a debt) vested in the same person.
It will not be out of place to distinguish security from a surety. In case of security, a particular res is charged with the debt, but in the case of surety, the person giving surety is under an obligation to pay the debt of another if the latter fails to pay the debt himself.
Securities over property are of two kinds:
i) Mortgage; and (ii) Lien
Mortgage
Where immovable property is secured to another for consideration, the transaction is called a mortgage. It is called pledge if the property is movable.
A mortgage is the transfer of interest in specific immovable property for the purpose of securing:
(a) the payment of money advanced by way of loan,
(b) an existing or future debt, or
(e) the performance of an agreement which may give rise to a pecuniary liability
The transferor is called a mortgagor, and the transferee a mortgagee.
The instrument by which the transfer is effected is called a mortgage-deed.
There are six kinds of mortgages.
They are-(1) simple mortgage, (2) mortgage by conditional sale, (3) usufructuary mortgage, (4) English mortgage, (5) equitable mortgage (also known as mortgage by deposit of title deeds), and (6) anomalous mortgage.
These mortgages are explained in Section 58 (b) to (6) of the Transfer of Property Act, 1882, which reads as follows:
Simple Mortgage
Where, without delivering possession of the mortgaged property, the mortgagor binds himself personally to pay the mortgage money and agrees, expressly or impliedly, that in the event of his failure to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property sold and the proceeds of the sale to be applied so far may be necessary, in payment of mortgage money, the transaction is called a simple mortgage and the mortgagee as a simple mortgagee.
Mortgage by Conditional Sale
Where the mortgagor ostensibly sells the mortgaged property on condition that on default of payment of the mortgage money on a certain date, the sale shall become absolute or on condition that on such payment being made, the sale shall become void, or on condition that on such payment being made, the buyer shall transfer the property to the seller. Such a transaction is called mortgage by conditional sale.
Usufructuary Mortgage
Where mortgagor delivers possession expressly or by implication and binds himself to deliver possession of the mortgaged property to the mortgagee and authorises him to retain such possession until payment of the mortgage money, and to receive the rents and profits accruing from the property in view of interest, or in payment of mortgage money, or partly in lieu of interest or partly in payment of mortgage money, the transaction is called an usufructuary mortgage.
English Mortgage
Where the mortgagor binds himself to repay the mortgage-money on a certain date, and transfers the mortgaged property absolutely to the mortgagee but subject to the proviso that he will re-transfer it to the mortgagor upon payment of the mortgage-money as agreed, the transaction is called an English mortgage.
Mortgage by deposit of title-deeds
Where a person delivers to a creditor or his agent, documents of the title to immovable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title-deeds.
Anomalous Mortgage
A mortgage which is not a simple mortgage, a mortgage by conditional sale, an usufructuary mortgage, an English mortgage or a mortgage by deposit of title-deeds within the meaning of Section 58 of the Transfer of Property Act, 1882, is called an anomalous mortgage.
Lien
A lien is the right to hold property of another person as a security for the performance of an obligation. In other words, lien is a right of one man to retain that which is in his possession belonging to other until certain legitimate demands in respect of the person in possession are satisfied.
Thus a finder of a goods has a right to retain the goods against the owner till he receives from the owner, the compensation for trouble and expenses incurred by him, and also specific reward which the owner may have offered for the return of such goods. The finder is said to have a lien upon the goods so found.
Lien is right to retain possession of goods and does not include right of ownership or sale. Liens may be of different kinds. They are :
(1) Possessory lien.- A possessory lien consists in the right to retain possession of chattels or other property of the debtor.
Examples are pledges of chattels and the lens of inn-keepers and vendors of goods.
(ii) Agent’s lien– In absence of any contract to the contrary, an agent is entitled to retain goods, papers and other property, whether movable or immovable, of the principal received by him, until the amount due to himself tor commission, disbursement and services in respect of the same has been paid or accounted for to him. This is provided in Section 221 of the Indian Contract.
(ii) Unpaid Vendor’s lien.-The unpaid seller goods who is in possession of them is entitled to retain possession of them until the payment or tender of the price
(iv) Power of forfeiture-The creditor has the power of destroying some adverse right vested in the debtor, eg, landlord’s right of re-entry on his land.
(v) Charges.- The creditor has a right to receive payment out of some specific fund from the proceeds of a specific property.
A charge may be created by an act of parties and it may also arise by the operation of law. In India, ‘charge is a right which in many respects resembles a mortgage but it is a lesser right than a mortgage. Section 100 of the Transfer of Property Act, 1882, defines a charge thus: “where an immovable property of one person is by an act of parties or by operation of law, made security for the payment of money to another and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property–“.
A charge may either be fixed or floating. When a charge pertains to some specific fixed property, it is called ‘fixed charge, but a floating charge is not so fixed; it may become fixed on the happening of some future event.
Distinction between Mortgage and Lien
(i)A mortgage is an independent and principal right and not a mere security but a lien is only a security for a debt. It is merely a right to retain Possession of chattel until payment is made.
(ii) The right of a mortgagee is vested in him conditionally and by way of will only whereas the right of lien is vested in the lienee absolutely and not merely as security.
(iii)A mortgage is created either by transfer or by encumbrance, but a lien is by way of an encumbrance only
(iv) A mortgagor has an infallible right of redemption of mortgage but there is nothing like redemption in case of a lien.
(v) In case of mortgage, encumbrance is created independent of debt whereas in a lien duration is dependent on the debt secured
(vi) in a mortgage by transfer of mortgaged property, the mortgagor (debtor) remains the equitable or beneficial owner of the property. On repayment of debt, the mortgagee holds property in trust for the mortgagor. In case of a lien, full legal and equitable ownership vests in the debtor and the creditor has only such limited rights which give sufficient protection to recover his debt
(vii) A mortgage presupposes a contract between the parties but existence of a contract is not always necessary in case of a lien
Trust
A trust is an encumbrance in which ownership of property is limited to deal with it for the benefit of some third person. In other words, a trust is an obligation annexed to the ownership of property.
It arises out of confidence reposed in and accepted by the owner. According to Salmond, a trust is ordinarily created for the benefit of unborn persons, infants, minors, lunatics and persons who suffer from some legal disability.
It is also created for the perfection of some disputed property or safeguarding the common interest of real persons. The law relating to trusts is contained in the Indian Trusts Act, 1882.
Thus in case of a trust although the property is legally vested in the trustee, he keeps it for the benefit of the beneficiary.
As regards the importance of trusts, Paton observed that it has proved useful in many ways.
Firstly, it has been used by associations as a means whereby their property is used for the desired purpose.
Secondly, it has facilitated endowments and gifts for charitable and religious purposes by vesting the property in trustees for purposes as desired by the settler.
Thirdly, the trust has great social importance in helping settlement of family property by protecting the interests of young persons and married women.
Trust distinguished from a Mortgage
Although the relation of mortgagor and mortgagee has some analogy to the fiduciary relation between trustee and the beneficiary, the two are not identical. A mortgagee is not a trustee for the mortgagor and he does not hold the legal estate for the benefit of the mortgagor as a trustee does for the beneficiary, i.e. cestui que trust.
Again, the mortgagee has not only the legal interest in the property mortgaged, but also a beneficial interest in it adverse to the mortgagor’s, which he can enforce by a suit against the mortgagor.
Ashburn points out that the mortgagee becomes a trustee only after he has been paid his debt-money. In the equity law, his right in the property does not extend beyond what is necessary to secure repayment of the money due to him.
If the mortgagee has been reimbursed by sale of mortgaged property, he shalt become the trustee of the surplus proceeds if any, for the person entitled to the equity of redemption.
Modes of Acquisition of Property
There are four distinct modes of the acquisition of property. It may be acquired by (1) possession, (2) prescription, (3) agreement, and (9) inheritance.
Possession
It has been stated earlier that possession is the objective realisation of ownership. It is prima facie evidence of ownership. The property which belongs to no one is res mullius, belongs to the first possessor of it and he acquires a valid title to it as against the world.
Thus the fish of the sea and the birds flying in open sky belong to one who first succeeds in obtaining possession of them and acquires an absolute title over them. This mode of acquisition has been called as occupation in Roman law.
A property that is already in possession of someone else, when acquired by possession gives a good title to the possessor against all third person except the true owner. Even as against the true owner, the possessor is entitled to maintain possession until evicted in due course by law.
In such a case of adverse possession, there are in fact two owners, the ownership of one is absolute and perfect while that of the other is relative and imperfect and often called possessory ownership by reason of its origin in possession.
If the person in adverse possession, i.e possessory owner is wrongfully deprived of the thing by a person other than the true owner, that person not set up the defence of jus tertii, that is, he cannot plead that the thing does not belong to the possessory owner either.
In other words, a possessory owner’s possession shall be protected against all except the true owner. This rule is justified on the ground of maintenance of peace and order and to prevent misuse of force.
Prescription
Prescription may be defined as the effect of lapse of time in the creation and extinction of a legal right. It is the operation of time as a vestitive fact. It has two aspects, namely, positive or acquisitive and negative or extinctive.
The creation of a right by the lapse of time is called the positive or acquisitive prescription whereas the extinction of a right by the lapse of time is called extinctive or negative prescription. The person who is in continuous long possession adverse to its owner for an uninterrupted period of twelve years, acquires ownership of the land and the owner loses his ownership after the lapse of this period.
Again, the extinction of a right to sue for a debt after three years from the time at which it first became payable is an example of a negative prescription.
The basis of prescription is to be found in the presumption of coincidence of possession and ownership.
The fact that a thing is possessed is de facto evidence that it is owned de jure and the fact that it is not possessed raises, a presumption that it is not owned. Thus want of possession is evidence of title possession for a long time is evidence of want of title, and as the time the evidence in favour of title also fades away and the presumption against it grows stronger.
Negative prescription is common to the law of property and obligations
according to Salmond, a negative or extinctive prescription is of two kinds, namely. (1) Perfect, and (2) Imperfect.
Perfect negative prescription results into Deduction of the principal right itself whereas imperfect prescription destroys only an accessory right of action. The destruction of ownership of land by adversary possession for an uninterrupted period of twelve years is an illustration perfect negative prescription.
The extinction of the right of recovery of debt after the expiry of three years from the date it first became due, is an example of imperfect negative prescription because it destroys the creditor’s right to sue for recovery of the debt but not the debt itself.
It is significant to note that the law of prescription is based on the general
the principle that law helps the vigilant and not the dormant.
Agreement
Property may also be acquired by agreement which is enforceable by law. Paton defines agreement as an expression by two or more persons communicated to each other, of a common intention to affect the legal relations between them.
It, therefore, follows that an agreement has four essential elements, namely,
1. it being a bilateral act, there should be two or more parties to an agreement;
2. mutual consent of the parties
3. it should be communicated; and
4. there should be common intention to affect the legal relationship.
As a proprietary right in rem, an agreement is of two kinds, namely (i) Assignment, and (ii) Grant
An assignment transfer the existing rights from one owner to another, eg.
assignment of a subsisting lease-hold from assignor to the assignee.
Under a grant, new rights are created by way of an encumbrance upon the existing rights of the grantor.
eg: grant of a lease of land is the creation of agreement between grantor and grantee.
Agreements may either be formal or informal. Formal agreements are written and require the formality of registration and attestation of the deed to be completed before they are effective. Informal agreements verbal and do not require any formality. The Roman law, however, required that an alienation during the lifetime of the person should not only be by an agreement between the parties but there should also be delivery of possession.
This, in other words, meant that alienation was conceived to consist of the essential element of transfer of possession. In English law, until the year 1845 conveyance of land was not possible without the delivery of possession and no deed of conveyance could be effective without delivery of possession.
But in actual practice, the rule was evaded for centuries by taking advantage of fictitious delivery of possession under the Statute of Uses. The Statute of the year 1845 however, modified this rule, and thereafter the ownership of land could be legally transferred without the possession of it.
As rightly pointed out by Salmond, it is an important principle of law of agreements that the title of an assignee or a grantee cannot be better than that of its assignor or grantee.
The general rule is that no one can transfer a better title than what he himself possesses. This is expressed in the Latin maxim nemo plus juris ad alium transferre potest, quam ipse habet.
This rule is, however, subject to following two exceptions:
(i) In case of a trust, the legal ownership is with the trustee and the equitable ownership is that of the beneficiary. Thus there exist two separate ownership due to separation of legal from equitable ownership. The trustee holds the property on behalf of the beneficiary, and not for himself, and therefore the obligation of this trusteeship is an encumbrance on trustees title.
If the trust property is sold to a bona fide purchaser for value and without notice, he shall acquire a better (unencumbered) title to the property so purchased. In simple words, if the third person (bona fide purchaser) purchases the trust property for value and without the knowledge of the existence of the trust, he shall acquire better title than the trustee according to the equitable doctrine of purchase for value without notice.
(ii) The second exception to the general rule that no one can transfer a better title than what he himself possesses is where the possession of a thing is in one man and the ownership of it is in another.
In such cases, the possessor is allowed to pass a good title to one who deals with him in good faith believing him to be the true owner. The most striking example of this is the case of negotiable instruments, a possessor of a bank-note may have no title to it, for he might have found it or stolen it; but he gives a good title to any one who takes it from him for value and in good faith. Likewise, mercantile agents, in possession of goods of their principals, can transfer the ownership of them whether they are authorised to sell them or not.
The acquisition of property by living persons is possible through possession, prescription, and agreement whereas property can be acquired by inheritance by the heirs and successors of the deceased.
Thus inheritance is also one of the modes of acquisition of property.
Inheritance.-
The right of inheritance is founded on the assumption that property serves as the best means of social security. Security of food, dwelling house, and means of living to the members in a joint family was the obligation of the Karta which barred him from alienating the family foremost obligation property except for legal necessity and family benefit or seeking relief from distress.
This, in turn, conferred the right of inheritance to the coparceners which included the right to be maintained out of the family property and to claim partition as co-owners. Even the illegitimate sons, who were not entitled to inherit property Chairs, were required to be maintained by their father. Mitakshara’s rules of succession regulated the law relating to inheritance applying the principle of scholarship.
The wife, widowed mother, minor sons and daughters as also a in mother’s womb (unborn) were entitled to inherit property as successors e deceased and they could not be deprived of this right by alienation or otherwise.
The death of the owner of the property could result in two kinds of rights, namely-(1) inheritable, and (2) un-inheritable rights.
A right is inheritable if it survives its owner and it is inheritable if it dies with him. Proprietary rights are inheritable and most personal rights are inheritable. But there are certain exceptions to this general rule.
For example, the right of action survives the death of both parties as a general rule. Proprietary rights may be inheritable in case of a lease for the life of the Jessee only or in case of joint-ownership.
The rights which a dead man leaves behind him vest in his representatives or successors. But he has also to bear the liability of the deceased.
This liability is, however, limited to the amount of property which he has acquired from the deceased. Thus inheritance is some sort of legal and fictitious continuation of the personality of the dead man.
Succession to the property of a person may either be testate or it may be intestate, ie, by means of a will or without a will.
If the deceased had made a will succession would take place according to the terms to the will. But if there is no will, then succession will take place by the operation of law which is known as non-testamentary succession. In case there are no heirs of the deceased, his property shall vest in the State.
The power of a person to dispose of his property by testament (will) is subject to the following limitations –
(i)Limitation of time.– No person can be allowed to vest his property in perpetuity, that is, the testator cannot control the devolution of the estate in the property for an indefinite period. In Indian law, the property cannot be vested by the testator beyond the period of his life plus eighteen years. thereafter.
He must so order to dispose of his property that within this period the whole of it shall become vested absolutely in some one or more persons, free from all testamentary conditions and restrictions. Any testamentary devolution beyond the prescribed period mentioned above shall render the disposition wholly void under the English law, but in India, it shall be void only to the extent of the excessive period beyond the lifetime of the testator plus eighteen years.
(ii) Limitation of Quantum Amount.- In most legal systems, a testator cannot dispose of his estate, instead, he has to leave a certain portion of it for those to whom he owes a legal duty to support such as wife, children etc.
In other words, a testator can dispose of only a certain portion of his estate by a will and has to set aside the rest of the portion for those whom he is legally bound to support. The rule under Mohammedan law is that no Muslim can bequeath more than one-third of the surplus of the estate after providing for his funeral expenses and payment of debt unless the heir’s consent to the same is based on this limitation.
Hindu law permits a person only disposition of his self-acquired property and the ancestral property shall devolve in the heirs according to the rules of the Hindu Succession Act, 1956. The old texts of Hindu law also contain certain rules about the disposition of property which are akin to the modern concept of will.
Thus Katyayan states, “what a man has promised, in health or sickness, for religious purpose must be given and if he dies without giving it his son shall doubtless be compelled to deliver it”. How the concept of will gradually evolved has been elaborately discussed in Tagore v. Tagore.
Initially, the Hindu Wills Act was passed in 1870 which was replaced by the Indian Succession Act, 1925 and thereafter the Hindu Succession Act was enacted in 1956.
(iii) Limitation of Purpose.-A person while exercising the power of testamentary disposition may provide that his estate may be used by his heirs and successors for benefit of other persons who survive him.
However, he cannot validly leave any direction in the will which is against the public interest, nor can he withdraw the property from the use of the living persons. For example, he cannot leave a direction in his will that his money is buried in the grave along with his dead body or thrown into the sea. that his estate or land shall lie waste after his death. Such a testamentary disposition shall be wholly void.
In conclusion, it may be stated that the concept of property has a special significance in jurisprudence because the determination of proprietary rights such as ownership, title, etc. is solely based on the property.
The concepts of ownership and possession have also originated from the conception of property. Again, rights and duties are also closely related to property. It is for this reason that the law relating to property has been developed as an independent branch of law in jurisprudence. The estate or property for which there is no heir or successor, shall vest in the State.
The Rule Against unjust Enrichment
A person is said to have unjustly enriched himself when he takes or is some economic benefit to himself at the cost of another in contractual or party relations. Adverse possession is the best illustration of unjust itching.
In the English common law, the rule against unjust enrichment was oped as a principle of equity and good conscience in the realm of quasi contract.
Explaining the principle G.W. Paton observed that a person holding title to property is under an equitable duty to restore or convey it to another on the round that he would be unjustly enriched if he were permitted to retain it.
French law also forbids a man to enrich himself at the cost of another. The rule against unjust enrichment is also accepted in the Indian legal stem in order to remove imbalances in economic relations and ensure fair utilization of property as an instrument of social justice.
It seeks to ensure fairness in economic relations. The deletion of property right from Part II of the Constitution and placing it under Article 300-A as a legal right has also been done in the larger interests of social justice adopting a functional conscious approach to the law of property.
Right to Property in India
After the Indian independence when the Constitution of India came into force on 26th January 1950, the right to property was included as a
‘fundamental right’ under Article 19 (1) (t) and Article 31 in Part III, making it an enforceable right.
However, during the first decade of the independence era, it was felt that right to property as a fundamental right was a great impediment in ushering a just socio-economic order and a source of conflict when the State was to acquire private property for public purposes, particularly the expansion of railroad and industries, etc.
In order to get rid of this hurdle, the Supreme Court in the historic Kesavananda Bharti’s case held that right to property is no part of the basic structure of the Constitution and therefore, Parliament can acquire or take away private property of persons for concerning good and in the public interest.
Thereafter, the Parliament passed the Constitution (44th Amendment) Act, 1978 which repealed the right to property enshrined in Article 19 (1) (f) and Article 31 taking it away from the category of fundamental rights and made it as an ordinary legal right to be regulated by other law.
However, the Supreme Court in Bishamber Dayal Chandra Mohan v. State of Uttar Pradesh has made it clear that the executive cannot deprive a person of his right to property without the authority of law.
The State can acquire a person’s property for public purpose on payment of compensation, which need not be necessarily just equivalent of the value of the property so acquired, but such compensation must not be illusory and irrationally disproportionate.
The latest position with regard to property in India is well expressed by the Supreme Court of India in Indian Handicraft Emporium v. Union of India wherein the Court observed that “right to property is a human right as an also constitutional right under Article 300-A, but it is not a fundamental right, It indeed a statutory right but each and every claim to the property would not be property rights.
Users not registered with Strictlylegal can Email us their content and the same are posted through this account. In case of abuse, kindly let us know at Contact@strictlylegal.in
