RESTRICTIONS ON TRANSFER OF IMMOVABLE PROPERTY

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Among various types of ownerships, the ownership of the immovable property is very important.  The ownership of the immovable property is classified into free hold and lease hold.  Free hold is absolute ownership, which means the owner has full freedom to deal with the property as he likes without any restrictions.

                               

The three important rights enjoyed by owner of property are: 1. Right to use, 2) Right to destroy and Right to transfer:

No Fundamental Right:

The important right is the right to transfer:  It may be noted that, this right to transfer is not absolute right, but it is subject to restrictions imposed by the law.  In this regard the first and foremost important restriction flows from the constitution of India.  Before 44^th amendment to the Indian Constitution, Right to property was fundamental right U/A 31 dealing with Right to own property and U/A 19 (1) (f) dealing with right to dispose and enjoy property.  These two rights were protected by Art 13 (1) (2) in the Indian Constitution, which provided that any law including rules regulations, notifications, ordinance etc., to the extent they violate fundamental right are void.

This protection has come to an end by 44^th Amendment, deleting Right to property in the chapter of Fundamental rights and placing it in the ordinary rights chapter i.e., Art 300 A.  Thus the right to property more so of immovable property is no more a fundamental right.

Agricultural land:

Various States have enacted laws, imposing restrictions on the rights of the owner of the property.  The government of Karnataka has prescribed certain ceiling on holding of the agricultural property by persons, companies, societies etc., under Karnataka land Reforms Act, 1961.  The limit prescribed depends upon the type of land.  If the holdings are in excess of prescribe limits, the excess holdings will vest with the government of Karnataka.  The Karnataka Land Reforms generally prohibits transfer of agricultural property to Non Agriculturists and Persons having source of income more than Rs. 2 lakh (average for last 5 year income) from non-agricultural sources.

Though agricultural property cannot be transferred to non-agriculturists.  Karnataka land Revenue Act provides for conversion of agricultural land to non-agricultural land such converted land can be transferred to non-agriculturists.

 

Land acquisition:

There is another important legislation i.e., Land Acquisition Act, 1898.  Which provides for acquisition of property for public purpose and for the purpose of company.  Once the government issues preliminary notification for the acquisition of such land, whether agricultural or non-agricultural, such property cannot be transferred to any other person, here again authorities competent to acquire property and Central or State Government and other government agencies like BDA, KIDB, KHB etc.,

Zonal regulation:

The comprehensive development plan has categorized the areas into various zones like residential, commercial, industrial, green belt area etc., and has also prescribed the various activities that can be carried out in such zones.  The owners have to comply with such prescribed area, permission from planning authorities required for any change.  In green belt area only agricultural and allied activities are permitted and the conversion of land is allowed. 

PTCL Act:

The important social welfare Act with regard to Transfer of property is “The Karnataka SC & ST (PTCL) Act, 1978, i.e., the preamble of the Act provides that “An Act to provide for the prohibition of transfer of certain lands granted by the government to persons belonging to the scheduled castes and scheduled tribes in the state, which means any land granted to the landless agricultural laborers belonging to scheduled castes and scheduled tribes cannot be purchased without the permission of Government.  Any one who purchases such property will not get clear and marketable title; such property will be acquired by Government and returned to original owner.”

These restrictions on the transfer of property are social in nature i.e., to give effect to importance Directive principle of State policy provided u/A 39(b) & 48 A of the Indian Constitution.  Art 39(b) of the Indian Constitution provides that:

1)       That the ownership and control of the material resources of the community are so distributed as best to sub serve the common good.  Article 48 A in the Indian constitution provides that.

2)       The state shall endeavor to protect and improve the environment and to safeguard the forests and wild life of the country.

Transfer of Property Act

In the Transfer of property Act there are certain partial restrictions on the transfer of property.

Sec. 52 – Doctrine of  lispendens  which provides that if any suit relating to immovable property is pending in competent court and during such pendency if, property is transferred such transfer is subject to decision given by the court.

Sec. 53 – which deals with fraudulent transfer, prohibits of transfer of property if the purpose and intention behind such transfer to defraud or delay the creditors of the transferor:

But Sec 10 in the T.P. Act provides that any condition imposed by Transferor to Transferee absolutely from parting with or disposing of his interest in the property is void.  This provision facilitates transfer of property by transfer without any restrictions.  However, the act allows temporary restrictions.  Various development authorities, societies restrict alienation for some period.  This freedom of transferee can be curtailed in case of lease for the benefit of lessor, property transferred to woman, for the benefit of woman not belonging to Hindu, Mohammedan or Buddhist so that she shall not have power during her marriage to transfer or charge the  same  or her beneficial interest thereon.

In T.P. Act very important restriction is transfer of property to unborn person, under section 5, where the transfer of property is between living persons only.  But Sec 13 provides for transfer of property to some other person for the benefit of such unborn person.

           

Purpose of imposing restrictions on Transfer of property in the Transfer of property Act, 1882 are for: To protect the interests of creditors, To protect the interest of persons having better title to the property.  To prevent property being removed from trade and commerce.  To sum up, broadly there are two kinds of restrictions on the transfer of property.  They are: 1. Restrictions to protect the society as a whole, (2) Restrictions to protect the interest of transferor creditors and people having better title.

The other restrictions are: Sect, 48A: Occupant of land under Karnataka land Reforms Act 1961, Sec: 77: Grantee of land under Karnataka Land Reforms Act 1961, Sec: 100: Occupancy not transferable without sanction of prescribed authority Karnataka Land Revenue Act 1961.

Purchase of property NRI / POI:

Lastly foreign national of non-Indian Origin resident outside India cannot purchase any immovable property in India.  Whereas Non resident Indians can purchase residential and commercial properties without any restriction on ceiling on the number of properties.  The only restriction on the non resident Indians is they cannot purchase agricultural, Farm / plantation property.  In this regard Non-resident of Indians need not have to send any document or statement to Reserve Bank of India, government of India or to any bank before, during or after such purchase.  This freedom is available to all non-residents who are either citizens of India (i.e., holding Indian Passports) or who are persons of Indian Origin.  This freedom is available for buying residential or commercial property.

Persons of Indian Origin means persons one who hold an Indian Passport any time earlier or whose father or grandfather was a citizen of India.