Section 6 of The Transfer of Property Act, 1882 lays down the framework for property transfer in India. This section specifies what can and cannot be transferred from one person to another. Though it appears straightforward, it is essential to comprehend the nuances of this provision for Non Resident Indians (NRI) who may not have adequate knowledge about Indian laws.
Firstly, Section 6 states that anything that can be owned or possessed by a person is transferrable except for a few exceptions. These include:
1. A mere right to sue: This means that if a person has only the right to approach the court without actually having a claim on any specific property, they cannot transfer such rights.
2. An easement or a right restricted in its enjoyment to the owner of an immovable property: Easement refers to rights enjoyed by an individual over someone else’s land; however, these are not transferrable unless specified otherwise.
3. Public office and accompanying salary and emoluments: It would be against public policy to allow individuals holding public offices to sell their positions along with salaries as it may lead to corruption and malpractices.
4. Stipends allowed military officers or men for their maintenance or service: Such stipends given out as grants are non-transferable since they are meant solely for the welfare of the recipient.
5. Any interest arising out of hostility towards Government: Anything related directly/indirectly with issues causing harm/misunderstanding/disaffection towards government shall not be transferred.
The transferability clause underlines some critical aspects which must be considered while transferring properties/selling them off – especially when NRIs are involved- signifying retaining legality in whatever transaction takes place between parties involved where legal documents like General Power Of Attorney (GPA), Special power Of Attorney(SPA) should clearly mention all clauses laid down by law such as section-6 among others including capital gains tax, income tax returns as per Indian laws.
In the case of P.K. Ramachandran Nair vs. Pilakalukutty, AIR 2003 Ker 184, it was held that if an easement is a mere right to use someone else’s property and nothing more than that; then such rights are non-transferable under Section-6 of Transfer of Property Act.
According to the ruling in Smt Kalawatibai Bajirao Vs Narayanrao Shripatrao Deshpande And Another (AIR 1991 Bom 280), it was held that stipends allowed military officers/men could not be transferred since they were meant solely for their welfare & maintenance
The Supreme Court has clarified its stand in Jayaram Mudaliar v. Ayyasamy Selathambi [AIR 1978 SC1800] stating – “A mere right to sue” can be any civil or criminal claim by an individual/entity against another; however, only when there exists actual real ownership upon which claim is made and once established in court/a tribunal where transferability may be considered as enforceable after payment considerations etc being settled well within legal parameters clearly spelt out under section-6 so no point arguing otherwise unless shown evidence proving ownership and power to dispose off same.
Therefore, even if NRIs wish to sell/transact properties from India, they will have to take into account these provisions explicitly laid down under Section-6 of The Transfer of Property Act1892). It is essential for them to comply with all legal formalities before making such transactions/decisions since failure here can lead up-to consequences legally represented resulting either dispute litigation/or government authorities prosecuting individuals involved causing vexatious litigation problems at later points in time reducing value generation prospects over longer term periods.