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movable and immovable property

Movable and Immovable property

The term ‘property’ is very vast, and thus it is difficult to give it a simple definition. Before defining the term, we have to ask ourselves, in which context it is being used. As the law is ever-changing, the meaning of property is also not fixed and changes with time.  The term may have different sense depending on the connection in which it is used; its purpose should be gathered from then prevailing concepts as reflected by contemporaneous construction. the concept of movable and immovable property explained there under.

For Indian legislation, it is necessary to determine which property is movable and which is immovable. It is important because both of these properties are guided by different laws such as limitation period, registration, transfer of property.

Section 6 of TPA says that property of any kind may be transferred, but it neither talks about all types of property neither it is feasible to include all type of property. Much other legislation also uses the word “property”, but they haven’t given any comprehensive definition to it. It is neither feasible nor possible of doing so because every kind of interest or right which has an economic content is included under the terms “property”.

Property includes everything which may be owned and have a value. It denotes:

  1. Right in nature of the property
  2. The right of exclusive possession and enjoyment, short of ownership
  3. Merely rights, which do not involve possession, though they may include a use

According to TPA, the word ‘property’ includes not only the corpus or the physical thing but also all the rights which are attached to it.

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Interest in property/real right

There are many rights in a property such as the right of possession, the right of enjoying the usufruct. These all are subject rights, and the absolute right is of ownership. It is also known as interest in property according to TPA and real right in English law Thus these rights can vest in a different person. For example, the right of ownership may be in person X but he has given the property on lease and thus right of possession is in the hand of Y.

According to TPA, a property may be transferred by the way of

  1. Sale
  2. Mortgage
  3. Charge
  4. Lease
  5. Exchange
  6. Gift

According to most of the jurist, the term ‘property’ in summary forms means “the unrestricted and exclusive right to a thing, the right to dispose of a substance of a thing in every legal way; and to use and exclude everyone else from interacting with it.”

Immovable property

TPA has classified property into the movable property and immovable property unlike English law which has classified property as real and personal property.

The Privy Council observed: “The term ‘immovable property’ comprehends undoubtedly all that would be real property according to English law and possibly more.

Importance of nature of the property

It is essential to classify property as TPA has different rules of procedure for the movable and immovable property. Transfer of movable property may be completed by mere giving of possession, but for immovable property, it is necessary to have it registered.

Thus for a valid transfer, it is essential that the nature of property should be known.

Definition of immovable property in different statutes

The meaning of property is given in Transfer of property Act, general clauses act, Indian registration act.

Under TPA

Section 3 provides “”immovable property” does not include standing timber, growing crops or grass;” The definition is not comprehensive, and it just says that standing timber, growing crops and grass are not immovable property.

Under Indian Registration Act

Section 2 (6) says “”immovable property” includes land, buildings, hereditary allowances, rights to ways, lights, ferries, fisheries or any other benefit to arise out of land, and things attached to the earth, or permanently fastened to anything which is attached to the earth, but not standing timber, growing crops nor grass; (6) “immovable property” includes land, buildings, hereditary allowances, rights to ways, lights, ferries, fisheries or any other benefit to arise out of land, and things attached to the earth, or permanently fastened to anything which is attached to the earth, but not standing timber, growing crops nor grass;” thus the definition is not exhaustive, and it is somewhat related to definition of TPA

Under General Clauses Act:

Section 3 (26) says “immovable property” shall include land, benefits to arise out of the land, and things attached to the earth, or permanently fastened to anything attached to the earth;” thus according to this definition immovable property include

  1. Land
  2. Benefits arising out of the land
  3. Things attached to the earth

Combining all the 3 acts the meaning of the immovable property include

  1. Land
  2. Benefits arising out of the land
  3. Things attached to the earth
    1. Things Embedded in earth
    2. Things attached to what is so embedded in the earth
    3. Things rooted in the earth, except:-
      1. Standing timber,
      2. Growing crop
      3. Grass



Land

The land includes everything on the surface, below the surface and above the surface of the land. Anything, till it is not removed from the land, will be considered as the immovable land.

Benefits arising out of the land

 

Property may be classified as

  1. Tangible property/ corporeal property
  2. Intangible property/ incorporeal property

Tangible properties are all those properties which can be touched or which have physical existence. Intangible property is the exact opposite, and thus they have no physical existence and hence they cannot be touched and have no physical existence. They are in the form of some rights or benefits which a person gets from land. Therefore any right by which a person makes profit or gain is known as his beneficial rights.

Thus a benefit arising out of land will also be immovable property. It is so because it is incidental to earth and it cannot be served from it. Right to capture fishes from the lake is an example of benefit arising out of the land.

Profit a prendre

It is the English concept which is very similar to benefits arising out of the land

Things necessary for it includes

  1. The person claiming must have interest in the land
  2. It must respect of a procedure or profit of the soil.

Profit a prendre is a right to take something of another person’s land. It is right to enter another person’s property and to make some benefit from the soil.

The concept will be clearer by the help of various case laws

Anand Behra vs State of Orissa (AIR 1956 SC 17)

The court held that the right to enter the Chilka Lake and catch fish for five years is equivalent to profit a prendre in England and a benefit arising out of land in India and thus it is immovable property.

Facts of the case: The petitioners obtained oral licenses for catching and appropriating fish from specified sections of the Chilka Lake from its proprietor, the Raja of Parikud, on payment of vast sums and obtained receipts with the prevailing practice. This was before the passing of  the

Orissa Estates Abolition Act of 1951 by which ownership of the estate vested in the State of Orissa.   The licenses, however, were in respect of years after such vesting.  The State of Orissa refused to recognise them and was seeking to the reaction the rights of fishery.  The petitioners contended that it had thereby infringed or was about to violate their fundamental rights under Arts. 19(1)(f) and 31(1) of the Constitution and claimed that the transactions being sales of future goods, namely, the fish, the Act which was confined to had no application.

Held: Held, that the right sought to be acquired  by the  petitioners  by  their several  purchases was  not  in respect  of  any future goods as claimed by them but  was  a license  to enter on the land coupled with a grant to  catch and carry away the fish, in other words, a profit a  prendre which  is  immovable  property within  the  meaning  of  the Transfer  of Property Act read with s. 3(26) of the  General That as the sale of the profit a prendre in the present cage was valued at more than one hundred rupees and was effected without writing and registration it contravened s. 54 of the

Transfer of Property Act, and so no title or interest herein passed to the petitioners, and consequently, they had no fundamental rights to enforce.

 

SMT. Shantabai vs state of Bombay (AIR 1958 SC 532)

The court held that right to enter the land, cut and carry away wood over a period of 12 years is benefit arising out of land and hence immovable property.

Facts: By an unregistered document the husband of the petitioner granted her the right to take and appropriate all kinds of wood from undisturbed forests in his Zamindary.   With the passing of the  Madhya Pradesh Abolition of Proprietary Rights (Estates,  Mahals, Alienated Lands) Act,  1950,  all proprietary rights in land vested in the State under s. 3 Of that  Act and the petitioner could no longer cut any wood. She applied to the Deputy Commissioner and obtained from him an order under s.   6(2)  of the Act permitting her to work the forest and started cutting the trees.   The  Divisional Forest Officer took action against her and passed an order her name might be the cut materials forfeited.  She moved the State Government against this order but to no effect.

Issues:

  1. Whether A right to enter on land to cut and carrying away timber standing on it is a benefit arising out of land?
  2. Whether it will be regarded as immovable property according to section 3(26) of general clauses Act?
  3. What is the difference between standing timber and tree

Held: It is needed to be taken into consideration that the period of grant for cutting of trees is 12 years. Hence the trees which will be perfect for cutting after 12 years are not fit to cut right now. Thus it is not the mere sale of trees as wood but much more than that. Therefore it means that they are not to be converted into the timber on an early date and the intention is that they should continue to live and derive nourishment and benefit from the soil.

State of Orissa vs Titaghur paper mills (AIR 1985 SC 1293)

A contract for felling, cutting and removing bamboo from forest areas to convert the bamboo in paper pulp which several ancillary rights have been held to be benefits arising out of the land.

Facts: On  December 29, 1977, the Orissa Sales Tax (Amendment) Ordinance, 1977 was promulgated amending the Orissa Act with effect from  January 1978.  With effect  from the same date two notifications  SRO No  900177 and  SRO No. 901177 were issued;

The first notification which was published under the provisions of section 3B and in supersession of all previous notifications on the subject declared that mentioned in  Column (2) of the schedule to the notification were liable to be taxed on the turnover of purchase with effect from  January 1,  1978. Entries  2  and  17 in the schedule of this notification specified “bamboos agreed to be severed”  and  “agreed to be severed” respectively. Notification No. 901/77 issued under section 5 (1) was  in supersession  of all  previous notifications  in that regard.  The State  Government, by this notification, directed that with January l 1978 the tax payable by a dealer under the  Orissa account of purchase of goods specified in column (2) of the schedule to the notification would be at the rate determined against it in column  (3) thereof. The price of purchase tax for bamboos agreed to be severed, and standing trees agreed to be severed prescribed at  10%.  The repealed and replaced by Orissa Sales Tax (Amendment) Act of 1978.       A large number of writ petitions were filed before the High Court impugning the notifications dated May 23, 1977, and December 29, 1977. One group of petitioners consisted of those who had entered into agreements with the State for the felling, cutting, obtaining and removing bamboos from forest areas for  the manufacture  of paper (bamboo contracts), and the other  group consisted  of those  who had  entered into agreements  for  the  purchase of  standing  trees  (Timber Contracts).

The bamboo contracts were a grant of exclusive right and license to fell, I cut and from the forest. Under the terms of the auction, the respondent was bound to pay a minimum royalty irrespective of the number of bamboos cut and removed.  The Governor of the State was called the  “grantor” of the licence. The bamboo contracts were in respect of different areas for periods ranging from 11 to  14 years with an option to renew the agreements for further periods.

Legal Issues: What falls to be determined is the subject-matter of the impugned provisions. Whether these contracts were related to immovable property or movable property?

Held: In addition to the rights to enter upon the land for the above purpose, other vital rights are flowing from the Bamboo contract which makes it clear that the Bamboo contract granted was a benefit arising out of the land which is immovable property.

Things attached to Earth

Things attached to earth includes

  1. Things rooted in earth
  2. Things embedded in earth
  3. Attached to what is so embedded for permanent beneficial enjoyment of that to which it is attached

Things rooted in Earth

General Rule: The general rule is that all the things that are attached to the earth are said to be attached to the earth. Thus all the plants, trees are permanently attached to the surface and will be considered as immovable property.

Exception: Growing crops, Grass and standing timber though rooted in the earth are considered as movable property.

Standing Timber vs Fruit bearing trees: Timber is useful for construction of houses, but for that, it has to be cut and served from the land and then only it can be used, that is why it is considered as movable property

On the other hand, trees bearing fruits are useful when they are rooted in the earth, and that is why they are regarded as immovable property.



Things embedded in the earth

Things which are fixed below the level, to which it will go by its weight are considered as things embedded in the earth. The concept intends to include those that are manually or mechanically put down deep in earth much beyond what would it otherwise go by its weight.

Where the things are just placed without the intention of making them part of the land, they are treated as movable property. The main thing that is needed to consider whether the property is movable or immovable is the intention of the parties.

The general rule is that what is annexed to the land becomes part of the land. But it is nearly impossible to accurately tell the degree on annexation required to consider it as immovable property.

Degree and mode of annexation

It is an essential factor to be considered, and it helps us to tell that if an object is movable or immovable. If a thing cannot be removed without causing severe damage to the land, then it is considered that the object has been embedded in perpetuity and it has to be treated as immovable property.

Object of annexation

It is a more critical element to determine whether the purpose is to be treated as movable property or immovable property. We have to gather the intention of the parties to decide it. Further, what is the object for which it has been done? If the purpose is to use it on a permanent basis, then it will be considered as immovable property.

Things attached to what is so embedded

The test for it is

  1. The thing must be attached permanently
  2. Must be attached for the beneficial enjoyment of house or building or to which it is attached

They have no separate existence of their own and form part of the house. The word ‘permanent’ and ‘beneficial enjoyment’ must be read together. The attachment must be permanent and for the beneficial enjoyment of the thing to which it is attached.

Doctrine of Fixtures

Under English law, by virtue of attachment, a thing becomes a part of the land and property of the owner of the soil. The doctrine of fixture, under English law can be explained with help of two maxims

  1. Quic quid plantatur solo solo credit: Whatever is planted in earth becomes part of the earth.
  2. Quic quid inaedificatur solo solo credit: whatever is built into or embedded into or attached to soil becomes part of the land.

The law of fixture does not strictly apply to India.

Bamdev vs Manorma AIR 1974 AP 226

Facts: Plaintiffs husband had obtained a possessory mortgage on a piece of land and was running a touring cinema on it. He had purchased a projector and diesel engine oil. The equipment was embedded into the land. The name of the cinema was “Kumar Touring Cinema”.  Finding no time to manage the cinema concern the entrusted the management of the trust and confidence in him. The defendant taking advantage of his position, as being the person in control, conspired with the Raja Saheb of Mandesa and got an endorsement, of discharge made on the mortgage bond dated 1-9-1957 and subsequently obtained the mortgage in his name on 6-3-1961. The plaintiff’s husband had issued a notice on 5-5-1961 calling upon the defendant to render a correct account of the management of the cinema concern and demanding from him the payment of Rs. 15,000/- previously advanced by him and to deliver possession of the entire cinema concern including the machinery, equipment, records etc., and also the site. The defendant, by his reply dated 2-6-1961, denied has liability either to account for the management of Kumar Touring Talkies or to the return of Rs. 15,000/- alleged to have been advanced by the plaintiff’s husband. Though the claim of the plaintiffs’ husband was denied categorically by the defendant as early as 2-6-1961, no suit had been filed by him during his lifetime for the recovery of possession of the cinema equipment or improvement of the amount advanced by him.

Submission of parties: the defendant/appellant contended that the pieces of equipment are movable property and they just do not become immovable just because they are embedded in the earth. They are embedded for the enjoyment of equipment and not of the land. Hence the suit is barred by the limitation that is three years for movable property. Cause of action arose in 1961 and lawsuit was filed in 1966

Issues: Whether limitation prohibits the suit? Thus whether the equipment is movable or immovable property

Held: the cinema built is a temporary cinema, and this can be gathered from the name of it that is ‘Kumar touring talkies’. Further, the land was of someone else, and it was just being used as mortgage land. Thus the submission of the defendant is accepted

 

Duncans Industries LTD vs State of UP (2000) 1 SCC 633

Facts:  Company A decided to sell its fertilisers business to company B. it included land and machinery. The sale agreement was executed. The stamp duty of 37 crores was levied. Aggrieved by the order, the parties went to the court

Issues: Whether the machinery and equipment are movable or immovable property?

Held: The machinery that is embedded in the earth is embedded as having permanent use of it. It is not possible to remove them without causing severe damage to the land. Hence it should be considered as immovable property.

Movable property’

Similar to immovable property the term ‘movable’ property has also not been clearly defined anywhere clearly.

TPA: It says that standing timer, growing crops and grass are not immovable hence movable property

General clauses Act: It says property of every description except immovable

Sales of goods act: Section 2 (7) states “goods” means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which is agreed to be severed before sale or under the contract of sale;

Standing Timber

Trees and shrubs are generally considered as immovable property, but when it is considered as standing timber, it becomes movable property. As explained above trees can be classified as fruit-bearing ad trees and standing timber.

Difference between standing timber and fruit bearing trees

Standing timber Fruit bearing trees
Intended to cut and then only able to use Not intended to cut
Doesn’t require a lot of nourishment require a lot of nourishment
Wood is ready to be used as timber It hasn’t reached that date yet. Tree is still growing
Movable property Immovable property

 

Growing Crops

It means crops are standing in the field and includes all the vegetables and fruits. They are considered as movable property because they can only be used once they are served from the land.

Grass

The grass is generally food for cattle, and hence it is also considered as movable property

Difference between movable and immovable property

Movable property Immovable property
According to sale of goods act Section 2 it includes stock and shares, growing crops, grass, and things attached to or forming part of the land which is agreed to be severed before sale or under the contract of sale According to section 3 of general clauses Act, it includes land, benefits arising out of land, and things attached to earth
If thing is resting within it’s own weight it is movable property If thing is fixed on land by external force, it is considered to be immovable property
It is generally used to enjoy the thing It is generally used to enjoy the land
No registration is required It requires registration

 

Books Referred

  1. Property Law, Singhal Law Publication
  2. Mulla: The Transfer of Property Act
  3. Property Law, Poonam Pradhan Saxena

 

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