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Rule of Election under The Transfer of Property Act, 1882

The blog is inscribed by Aakriti Sabharwal. The writer is a 3rd-year student at Amity University, Noida.

INTRODUCTION

‘Election’ is explained as a selection between two alternative things; it’s the choice between two different rights; which are inconsistent in nature. The rule of Election is somewhat based on this situation where a person is given a choice between two inconsistent rights. This doctrine is defined under The Transfer of Property Act (TPA), 1882 under section 35 which says, under any instrument such as Bills of Exchange, will or deed which grants two rights to an individual which are conflicting in nature or one right is in lieu of the other, that person can only choose one of them and has to let the other right forgo. The recipient shall have to decide between the two inconsistent rights and thus, cannot have both. This rule also has to stand under sections 180-190 of The Indian Succession Act.

This rule is an important aspect under TPA to settle property disputes between people. It is based on the Principle of Equity where the applicant cannot enjoy all the benefits and give out what’s only loss for him. He cannot keep both the property along with the benefit given; a choice has to be made. The basis of the rule being- Burden and benefit go hand in hand.

The doctrine is based on the legal maxim Allegans contraria non est audiendus meaning, “he is not to be heard who alleges things contradictory to each other”.

ILLUSTRATION

X promises to give Y Rs. 10,000 but on the condition that he shall sell his property to Z. In this case, Y is put to an election. If Y takes X’s offer he would then have to forgo his property to Z and if he does not transfer his property to Z he won’t get Rs. 10,000. Hence, he would have to make a choice; this is called the Rule of Election.

PRECONDITIONS OF SECTION 35 UNDER TPA, 1882

 The preconditions under the act are:

  • Where the transferor agrees to transfer estate on which he does not possess any right.
  • The transaction should be accepted as a whole and not a part thereof
  • The transferor must agree to give a benefit to the estate holder.

RIGHTS OF DISSAPOINTED TRANSFEREE

When the applicant chooses against the election, the transferor must do some good to the transferee in the following situations:

  • If the transferor had died or is unable of doing a fresh/new transfer in case of a voluntary transfer.
  • If the disappointed transferee/buyer is compensated.

ILLUSTRATION

A property at Jaipur belongs to Mr. Ram. Mr. Shyam by the way of a gift promises to give Mr. Dham Rs. 50,000. He accepts the gift but now Mr. Ram refuses to let go of his estate and now wants to retain it and Mr. Shyam forfeits the gift. During this time, Mr. Dham dies and now his representatives must pay Mr. Ram Rs. 50,000.

INDIRECT BENEFIT

In the case where a person is deriving benefit from the transactions, in an indirect manner and not in a direct way then that person need not elect, the rule will not be applicable. For example, if S promises to give Rs. 500 to T if his wife buys R’s estate for Rs. 1000. Now, T’s wife won’t be put to an election as T will be taking all the decisions.

EXCEPTION TO THE RULE

When a specified benefit is given to a transferor to transfer the property and if the transferor rejects the offer, he must waive off that specified benefit.

For e.g., P decides to give the benefit of Rs. 10,000 and a specified piece of land to Q in place of which, Q has to transfer that specified land to R, which is owned by Q. If Q proceeds to rejects the offer or decide to forgo the rule of the election then the specified land which was about to be transferred from P to Q shall be waived off.

MODES OF ELECTION UNDER TPA, 1882

The two modes of election being –

  1. DIRECT/ EXPRESS
  2. INDIRECT/ IMPLIED

Under the direct election, the selected choice is communicated directly to the transferor. But in the case of indirect election, the selection is shown by the conduct of the transferee. There are 3 conditions for assumption under implied election wherein, the benefit has been transferred and the person has enjoyed it for 2 years without any action to waive off that right or if the person has no knowledge of election and has accepted the benefit or if the person has not made any choice/ decision within 1 year after the transfer, he will be presumed to have elected his choice.

HINDU LAW V. ENGLISH LAW

This rule has always been a part of Hindu law, in Rungamma V. Atchamma[1], the transaction is to be accepted as a whole along with its merits and demerits. One cannot just accept the merits of the transaction and forgo the demerits.

Whereas, under English law, the disappointed person is duly compensated if the individual to whom the transfer is made, elects contrary to the transfer. The benefit is not lost as the principle of compensation is adopted by the English law and not forfeiture.

CASE LAWS

  1. Dhanpati V. Devi Prasad and ors.[2]

This case emphasizes the essential conditions of this doctrine, where

  • The transferor agrees to transfer property on which he does not possess any rights.
  • The transaction should be accepted as a whole and not a part thereof
  • The transferor must agree to give a benefit to the property holder.
  1. Kader Ali Fakir V. Lukman Hakim[3]

The ground norm of this rule of selection is that anyone who uses any legal benefit must also carry the burden with it and once the instrument is executed he shall have no option other than following the principles of the instrument. This rule presumes that anyone executing the instrument intends to give importance to every facet of the transaction. There is an obligation on the person acquiring benefit through any instrument or gift that has a duty to carry forward the further principles of the instrument. If under any circumstances, a part of the instrument is declared null or irrational, what interests the rule of election is the gain that the person has under that particular instrument.

  1. Beepathuma V. Kadambolithaya[4]

The transaction should be accepted as a whole, not in parts, and must adhere to all the provisions specified under the instrument. Where a property is bequeathed to A and to B, and A is also left with Rs. 500, it was held that A must decide between the property and the sum of Rs. 500. If A elects the sum, A won’t be able to impair the handover of the property to B.

CONCLUSION

With property disputes being highly common these days, such rules and doctrines are required to ensure proper functioning while transferring estate from one individual to another. The underlying fact of Section 35 is that an individual has to decide between two alternative rights which are inconsistent in nature. An individual cannot claim both the rights as it would be against the Principle of Equity which ensures that any right or liability is distributed amongst two parties in an equal ratio. When such benefits and losses are divided in proportionate manner chances of conflict and dispute are reduced drastically.  Basically, any individual taking a benefit/right must also bear its liability under any instrument.


References

[1] (1858) 4 Moo Ind.App 1:7 Suth WR 57

[2] AIR 1975 Pat 140

[3]  (1956) 8 DLR 112

[4] AIR 1965 SC 241

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