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Transferability of A Mere Right of Re-Entry For The Breach of A Condition Subsequent

The Transfer of Property Act, 1882 contains specific provisions regarding what constitutes transfer and the conditions attached to it. According to the Act, transfer of property means an act by which a living person conveys property to one or more other living persons, or to himself and one or more other living persons. The act of transfer may be done in present or in future. The living person includes an individual, company or association or body of individuals, whether incorporated or not and any kind of property may be transferred. For a valid transfer of property, the property must be transferable property. But, there are certain kinds of properties of which the transfer is not allowed under the law. Such properties are non-transferable property and any transfer of such property is void. Therefore transferability of property is the general rule; its non-transferability is an exception. Exceptions to the general rule that property of every kind may be transferred are given in Section 6[1] of the Transfer of Property Act. One such exception is Section 6(b) in which, “A mere right of re-entry for breach of a condition subsequent cannot be transferred to any one except the owner of the property affected thereby”.

The Right of re-entry means the right to resume possession, i.e., where a person gives the possession of his property to another for a certain period and is afterwards entitled to get it back, his right of entering into the possession of that property once again, is technically called as his right of re-entry. The Right of re-entry is a right connected or accompanied with interest in a land. The Right of re-entry apart from or without any interest in land is simply a personal license and personal license are not transferable under law. Mere right of re-entry means a right to resume possession not accompanied with any other interest in land. This transfer of mere right of re-entry is prohibited by Section 6(b)[2] of Transfer of Property Act, 1882 because it is a personal license. But if right of re-entry is coupled with any other interest in the land, such as the land itself is transferred or the lessee is given a permanent lease, the right of re-entry is transferable together with the interest.

Transfer of Right of Re-Entry

Section 6(b) - Under this clause, the right of re-entry refers to the right of a lessor or landlord to resume possession of the property from the lessee (tenant) upon the breach of the condition subsequent. A ‘mere right of re-entry’ refers to the right of re-entry which a transferor reserves to himself, after having parted with the whole estate, for breach of a condition subsequent. This is the right referred to in Section 111 (g)[3] which the lessor has against the lessee for breach of an express condition, which provides that on its breach the lessor may re-enter. Such a condition is a condition subsequent defined in Section 31[4] which divests an estate which has already vested.

The condition referred to in Section 31[5] is a condition subsequent which terminates an interest and reverts back it in the grantor or the transferor. It is not a conditional limitation, which creates an interest in a third person. This section applies only to a completed transfer of property creating an interest therein with a condition superadded for its cessor on a certain contingency, but has no application to a contract for transfer with a condition superadded thereto.

Thus, where in a sale deed it was provided that if the vendee did not pay the amount of the price retained by him to the creditor of the vendor within a certain time, the sale deed would be deemed to have been cancelled, and the vendee failed to pay the price to the creditor within time and the court gave him further time to pay, it was held that the contract of sale and the act of transfer were embodied in the same deed, and the condition was to be regarded as an integral condition of the contract for sale providing the date for completion of the contract by satisfaction of the balance of the contract price, and not as a condition superadded to the transfer itself, and, therefore, the transfer was not defeated. It was held that there was nothing in S.31, which merely declared that a limitation upon a condition subsequent is a lawful method of grant, to exclude the right of the court to give relief to the vendee who failed to make payment of the price by the date agreed upon in the contract of sale.[6] Therefore, when a property is transferred subsequent to which a condition is superadded, upon the breach of such condition the right of re-entry would revert back; then such condition shall fall under Section 31.

The expression ‘mere right of re-entry’, therefore, means a right of re-entry apart from any interest in the property. If not accompanied by an interest in property, it is a personal license and not transferable. This is illustrated by the case of Re Davis & Co, ex-parte Rawlings.[7] In that case, goods were delivered under a hire purchase agreement which gave the bailor a right to enter the premises where the goods were kept, and take possession in default of payment of any installment. The bailor assigned his rights under the agreement by way of security to his creditor; it was held that the creditor could not enforce the right of re-entry as it was only a personal license which was not assignable.

Whereas, the right of re-entry implies an estate of reversion, and cannot be transferred apart from the estate to which it belongs. The transfer of the reversion, i.e., of the lessor’s interest, carries with it the right of re-entry. The transfer of a lessor’s interest including a right of re-entry is not a transfer of a mere right of re-entry, and is valid.

Such Right of re-entry is also explained in S. 111 (g)[8] under which; according to the general law and in cases where the tenancy is governed only by the provisions of Transfer of Property Act, once the tenancy comes to an end by determination of lease under S. 111, the right of the tenant to continue in possession of the premises comes to an end, and for any period thereafter, for which he continues to occupy the premises, he becomes liable to pay damages for use and occupation at the rate of which the landlord could have let out the premises on being vacated by the tenant.[9] This gives the lessor the right of forfeiture. The right of forfeiture is founded upon the existence of a lease, and the jural relationship of lessor and the lessee as contemplated under Section 105[10]. It is implicit that if the lease is in operation, the lessor had been given the right to determine such a lease for committing breach of a covenant or for disclaimer by the lessee or for the insolvency of the lessee, and the happening of any of the three specified events, ipso facto does not put an end to the lease, but it only exposes the lessee to the risk of forfeiting his lease, and gives a right to the lessor, if he so elects, to determine the lease.[11] According to this clause, as worded, two things, namely, the happening of any of the specified events, and the giving of the notice by the lessor amount to a forfeiture.[12]

The forfeiture of a lease requires the operation of two factors -

(1) A breach by the lessee of an express condition of the lease which provides for re-entry on such breach; and

(2) A notice by the lessor expressing his intention to determine the lease.[13]

The breach of condition of the lease only makes the lease voidable. Therefore, forfeiture is not complete unless and until the lessor gives a notice to the lessee that he wishes to exercise his option to determine the lease.[14] In Modern Hotel v. K Radhakrnaiah,[15] the lease was for 30 years, and did not stipulate a forfeiture clause in the lease, the Supreme Court held that the contractual tenancy would subsist under the provisions of the Transfer of Property Act, and eviction cannot be claimed against a contractual tenant during the subsistence of the lease.

In Faquir Chand v. Sri Ram Rattan Bhanot,[16] under the terms of the lease given by the Delhi Improvement Trust, the building erected on the land was to be used for residential purpose only and if it was used for any other purpose without approval of the lessor, the lease would become void. The landlord in violation of the terms of the lease, let out the building for commercial purpose. The Delhi Development Authority being the successor of the original lessor gave notice to the landlord that since the building was not permitted to be used for commercial purposes, the lease was liable to be terminated. It was held by the Supreme Court that the policy of the legislature, which enjoined that no person shall convert a residential building into a non-residential building except with the permission of the Rent Controller,[17] was put to end unauthorised use of the leased lands, rather than merely to enable the authorities to get back possession of the leased lands. The lease is not forfeited in such cases merely because the building put upon the leased land is put to unauthorised use.

Section 111(g) does not make any distinction between a condition, and a covenant, as made in English law.[18] Under English Law, a condition puts a bridle or restraint on the estate granted. Thus, in a lease which stipulated and conditioned that the lessee would not assign except to his wife and children,[19] these words indicated that the lease could be determined for breach of the conditions. But a covenant only imports an agreement. Thus, in a lease where the lessee ‘hereby agrees that he will not underlet the premises without the consent in writing of the landlord’, these words are a covenant, the breach of which gives the lessor only the right to recover damages or obtain an injunction.[20] But under Section 111(g), irrespective of whether the provision was a condition or a covenant, the lease ensures despite the breach, unless the lessor determines it. This he does by enforcing a right of re-entry.

The breach of a condition did not involve forfeiture, unless the lease expressly so provided.[21] In Nil Madhab v. Narattam,[22] there was an express condition against alienation, but its breach was held not to work a forfeiture in the absence of a provision giving a right of re-entry. Conditions making the lease void on their breach are also construed in English,[23] as well as Indian[24] cases as making the lease voidable at the option of the lessor. However, the condition or covenant must be an express condition. This has been said to mean so expressed that the court can be certain that it was part of the stipulation between the parties.[25] If the covenant to pay rent is ‘express and a proviso for re-entry is annexed, non-payment of rent will support a forfeiture.[26] But in the absence of such a proviso, forfeiture will not be incurred by the breach of an express covenant either to pay rent, or not to assign or sub-let.[27] The proviso for re-entry also gives the lessor the option whether he will exercise his right to determine the lease. But even if the condition makes the lease void on its breach, it is voidable, and not void,[28] and only the lessor can avoid it, for the lessee cannot avail himself of his own wrongful act.[29]

For a property to be transferable several conditions need to be satisfied. These include that of constituting a transfer; it to come within the definition of an immoveable property and it should not be amongst those items, which may not be transferred under Section 6 of the Transfer of Property Act.

In addition to this it is clear that there are several kinds of transfer that may take place. One such kind of transfer of right of re-entry has been explained, has different procedures and conditions, which need to be satisfied. Where by transfer of a ‘mere’ right of re-entry is meant as only, right to resume possession of land which has been given to another person apart from any other interest. The ‘right of re­entry’ is usually inserted in leases empowering the lessor to re-enter upon the demised premises if the rent is in arrear for a certain period or if there is a breach of covenants in the lease. The Section 6(b) lies down that the ‘mere right of re­entry’ for the breach of a condition subsequent is not transferable by itself apart from the land while right of re-entry if coupled with any other interest in the land, such as the land itself is transferred or the lessee is given a permanent lease; the right of re-entry is transferable together with the interest. These are hence the various elements that are required to be transferred for a property to be transferable.

[1]6. What may be transferred.—Property of any kind may be transferred, except as otherwise provided by this Act or by any other law for the time being in force,—
(a) The chance of an heir-apparent succeeding to an estate, the chance of a relation obtaining a legacy on the death of a kinsman, or any other mere possibility of a like nature, cannot be transferred;
(b) A mere right of re-entry for breach of a condition subsequent cannot be transferred to any one except the owner of the property affected thereby;
(c) An easement cannot be transferred apart from the dominant heritage;
(d) All interest in property restricted in its enjoyment to the owner personally cannot be transferred by him; [(dd) A right to future maintenance, in whatsoever manner arising, secured or determined, cannot be transferred;]
(e) A mere right to sue cannot be transferred;
(f) A public office cannot be transferred, nor can the salary of a public officer, whether before or after it has become payable;
(g) Stipends allowed to military [naval], [air-force] and civil pensioners of the [Government] and political pensions cannot be transferred;
(h) No transfer can be made (1) in so far as it is opposed to the nature of the interest affected thereby, or (2) [for an unlawful object or consideration within the meaning of section 23 of the Indian Contract Act, 1872 (9 of 1872)], or (3) to a person legally disqualified to be transferee;
[(i) Nothing in this section shall be deemed to authorise a tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the lessee of an estate, under the management of a Court of Wards, to assign his interest as such tenant, farmer or lessee.]
[2]6. What may be transferred.—Property of any kind may be transferred, except as otherwise provided by this Act or by any other law for the time being in force,—
(b) A mere right of re-entry for breach of a condition subsequent cannot be transferred to any one except the owner of the property affected thereby.
[3]111. Determination of lease.—A lease of immoveable property determines—
(g) by forfeiture; that is to say, (1) in case the lessee breaks an express condition which provides that, on breach thereof, the lessor may re-enter; or (2) in case the lessee renounces his character as such by setting up a title in a third person or by claiming title in himself; [or (3) the lessee is adjudicated an insolvent and the lease provides that the lessor may re-enter on the happening of such event]; and in [any of these cases] the lessor or his transferee [gives notice in writing to the lessee of] his intention to determine the lease;
[4]31. Condition that transfer shall cease to have effect in case specified uncertain event happens or does not happen.—Subject to the provisions of section 12, on a transfer of property an interest therein may be created with the condition superadded that it shall cease to exist in case a specified uncertain event shall happen, or in case a specified uncertain event shall not happen.
[5]Transfer of Property Act, 1882.
[6]Devendra Prasad Sukul v. Surendra Prasad Sukul, AIR 1936 PC 24.
[7][1889] 22 QBD 193.
[8]Transfer of Property Act, 1882.
[9]Atma Ram Properties (P) Ltd v. Federal Motors (P) Ltd, (2005) SCC 1 705, para 11.
[10]105. Lease defined.—A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. Lessor, lessee, premium and rent defined.—The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.
[11]Guru Amarjit Singh v. Rattan Chand (1993) 4 SCC 349, p 354.
[12]Govinda Swamy v. Palaniappa, AIR 1925 Mad 833.
[13]Rattan Lal v. Vardesh Chander, AIR 1976 SC 588.
[14]Meenakshi Jain v State, AIR 1998 MP 78.
[15]AIR 1989 SC 1510, p 1513.
[16]AIR 1973 SC 921, p 924.
[17]East Punjab Urban Rent Restriction Act, 1949, ss 11, 14.
[18]Peter Alan Basil v. East India Pharmaceutical Works Ltd, AIR 1976 Cal 182.
[19]Deo d Henniker v. Watt, (1828) 8 B&C 308.
[20]Shaw v. Coffin, (1863) 14 CB (NS) 372.
[21]Allah Ditta v. Farz Bibi, 23 IC 395.
[22](1890) ILR 17 Cal 826.
[23]Davenport v. The Queen, (1877) 3 App Cas 115.
[24]Hiranandhan Ojha v. Ramdhan Singh, (1922) ILR 1 Pat 363.
[25]Mussa Kutti v. Rangachariar, (1910) 8 Mad LT 238.
[26]Kristo Nath v. Brown, (1887) ILR 14 Cal 176, p 182.
[27]Tamaya v. Timapa, (1883) ILR 7 Bom 262, p 265.
[28]Bowser v. Colby, (1841) 1 Hare 109.
[29]Deo d Bryan v. Bancks, (1821) 4B & Ald 401, p 406.

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