ELECTION AND APPORTIONMENT (35-37) Flashcards
[s 36] Apportionment of periodical payments on determination of interest of person
entitled.
Apportionment literally means distribution in accordance with proportion. The present section relates to apportionment by time, and provides rules for distribution of the amount of periodical payments coming out of the property as between the transferor and the transferee, after the transfer has been effected.
It says that rents, annuities, pensions, dividends and other periodical payments in the nature of income after the transfer shall be deemed to accrue from day to day.
1) The section clearly lays down that all periodical income shall be accrued and apportioned on a day-to-day basis.
2) This section is applicable to inter vivos transfers (transfer between living persons) and does not apply to transfers by operation of law.
3) This rule can be excluded by a local usage or a contract to the country.
[s 37] Apportionment of benefit of obligation on severance.
The present section relates to apportionment by estate. It provides that if the tenant knows that property is bought by several co-sharers, he should not pay the rent to just one of them or to all of them in equal shares, but must pay rent to each of them in proportion to their contribution.
A tenant is therefore, under an obligation to pay rent to each sharer, his proportionate portion of the rent.
For instance, four brothers, A, B, C and D jointly purchase a house that is in occupation of the tenants for a consideration of Rs 12 lakhs. A and B give two lakhs each, while C and D contribute Rs 4 lakhs each. The tenant pays a rent of Rs 6000. He is to pay to A and B Rs 1000 each and to C and D Rs 2000 each.
Define the Doctrine of Election (Section 35)
“Election is the obligation imposed upon a party by courts of equity to choose between two inconsistent or alternative rights or claims in case where there is clear intention……… that he should not enjoy both. That he who accepts a benefit under a deed or will must adopt the whole contents of the instrument.
Election means choosing between two alternative rights or inconsistent rights. If an instrument confers two rights on a person in such a manner that one right is in lieu of the other, that person can choose or elect only one of them. A person cannot take under and against the same instrument.
The doctrine of election is based on the principle of equity that one cannot take what is
beneficial to him and disapprove that which is against him under the same instrument.
One cannot approbate and reprobate at the same time. In simple words, where a
person takes some benefit under a deed or instrument, he must also bear its
burden.
[s 35.2] Transferor Professes to Transfer Property not his Own
The section begins with the statement that “where a person professes to transfer property not his own”. The word “professes” means purports, claims or acknowledges.
Such a person is not the owner of the property, therefore, he cannot transfer the property but he can make arrangements for the transfer of the property which he does not own. If the property is such that the transferor can transfer it, then it will pass to the transferee without any election by the person who is given a benefit by the same instrument.
The necessary condition for the application of this doctrine is that there should be a claim under the instrument and also a claim dehors the instrument.
It is not necessary that the transferor should mention it that he is transferring the property which is not his own. The knowledge of the fact that the transferor has no authority to transfer the property is immaterial for the applicability of doctrine of election.
The second paragraph of the section says that the rule will apply whether the transferor does or does not believe that which he professes to transfer to be his own. In a case, A being entitled to one share of a house, transferred the entire house to B and conferred a benefit on the owner of the other share of the house. It was held that the transferor intended to give the whole house, it is immaterial from what cause this intention proceeded, whether he forgot or misunderstood his rights.
[s 35.3] Benefit Conferred on Owner of Property
The transferor in the same transaction of transfer of property confers some benefit on the owner of the property. The owner is given some benefit in compensation of his ownership. The owner is one who is put to election. The occasion for election arises only where a benefit is conferred directly on the owner of the property. Where benefit is
given indirectly, no duty to elect arises. For example, A professes to transfer the property of B to C and gives Rs 10,000 to the wife of B. This is not the case of direct benefit to B and thus, B has no duty to elect.
It is also necessary that the benefit and burden both must come from the same transaction. If they come from independent sources, the transferee need not elect.
However, it is not necessary that both should be transferred from the same instrument
of transfer. They must be parts of the same transaction.
[s 35.4] Part of the Same Transaction
It is necessary for making the rule of election to operate that both the transfer and benefit form part of the same transaction. Benefit must be given in lieu of transfer.
Benefit and transfer must be inseparable and interdependent. Where they are independent of each other they will not be considered as parts of the same transaction.
[s 35.5] Owner of Property must Elect
The next requirement of his section is that the owner of the property must elect either to confirm such transfer or to dissent from it. He may either accept the instrument with all its contents or reject it altogether. Where he accepts the instrument he becomes entitled to the benefit but he becomes bound to transfer the property.
If he does not accept the instrument, he retains the property and the benefit is not conferred on him.
The person electing must be the “owner” of the property. The word “owner” has been used in a very wide sense in this section. It includes not only those who have vested interest but also those who have contingent, reversionary and remote interest in the property.
The third paragraph of the section says that a person taking no benefit directly under a transaction, but deriving a benefit under it indirectly, need not elect.
This means that the benefit must be given directly to the owner in lieu of transfer of his property. For
example, if the lands of Sultanpur are settled upon C for life and after his death upon D, his only child. A bequeaths the land of Sultanpur to B and 1000 rupees to C. C dies intestate after the testator without making any election. D takes out administration to C and as administrator elects on behalf C’s estate to take under the Will. In that capacity he retains the legacy of Rs 1,000 and accounts to B for the rents of land of Sultanpur which accrued after the death of the testator and before the death of C.
The fourth paragraph of the section says that a person who in his own capacity takes a benefit under the transaction may in another capacity dissent therefrom. For example, if the estate of Sultanpur is settled upon A for life and after his death upon B. A leaves the estate to D and Rs 2,000 to B and Rs 1,000 to C, who is B’s only child. B dies in testate without making any election shortly after the testator. C takes out administration to the estate B and as an administrator elects to keep the estate in opposition of the will and the relinquish the legacy of Rs 2,000. C may do this and yet claim under the will his legacy of Rs 1000.
Where the right of election was not offered to the plaintiff transferor in the sale deed, it was held that in the absence of the right of election, the transferor could not claim that he had elected for the alternative land in lieu of the disputed land.
[s 35.6] Where Person Elects to Dissent
Where the owner elects to dissent from the transfer, he shall relinquish the benefit so transferred to him and such benefit shall revert back to the transferor or his representative as if it had not been disposed of. When property so reverts back and
(i) the transfer is gratuitous and the transferor has before election died or otherwise became incapable of making a fresh transfer, and
(ii) in all cases where the transfer is for consideration,
it shall be the duty of the transferor or his representatives to compensate the disappointed transferee.
The amount of compensation shall be the amount or value of the property which was going to be transferred to him, if the option has been exercised
in favour of the transaction.
The farm of Sultanpur is the property of C and worth Rs 800. A by an instrument of gift professes to transfer it to B, giving by the same instrument Rs 1000 to C. C elects to retain the farm. He forfeits the gift of Rs 1000.
[s 35.7] Exception
If the transferor is deceased or unable to make a new transfer, the transferee may be required to pay the value of the property
If the owner chooses the property, they must give up the specific benefit, but they don’t have to give up any other benefits offered in the same transaction
If the person who received the benefit has enjoyed it for two years without expressing dissent, it is presumed that they accepted the benefit.
[s 35.8] Mode of Election
The section also deals with the mode of election. The owner has to choose one out of the two inconsistent rights. This choice may be express or implied from conduct.
Where the election is made by the owner in express words, it is an express election which is final and conclusive. But where the owner simply accepts the benefit without expressing anything in words, it is presumed that he has elected in favour of
transaction provided—
(i) he is aware of his duty to elect, and
(ii) of those circumstances which would influence the judgment of a reasonable
man in making an election, or
(iii) if he waves inquiry under the circumstances.
Where the owner of the property having full knowledge of the circumstances and being
aware of his duty to elect accepts the benefit, it means that he has chosen in favour of
the transaction. In two circumstances, there is presumption that he has knowingly
accepted the benefit:—
(1) Two years enjoyment:—Where the owner has enjoyed the benefit for two years without doing any act to express dissent.
(2) Impossibility:—Where the owner of the property has done some act which renders it impossible to place the parties (persons interested in the property) in the same condition in which they would have been as if such act had not been done.
For example, A transfers to B an estate to which C is entitled, and as part of the same transaction gives C a coal mine. C takes possession of the mine and exhausts it. He has thereby confirmed the transfer of the estate to B.
[s 35.9] Time Limit for Election
Time limit for the election has been prescribed by the ninth paragraph of the section.
The owner of the property has to signify his confirmation or dissent from the transfer within one year after the date of transfer. This section says that if the owner of the property does not, within one year after the date of transfer, signify to the transferor or
his representatives his intention to confirm or to dissent from the transfer, the transferor or his representatives may require him to make his election after the expiration of that period. But if he does not comply with such requisition within a reasonable time after he has received it, he shall be deemed to have elected to confirm the transfer.
[s 35.10] Election by the person under disability
Where the person making election suffers from some disability, the tenth paragraph of the section provides that in such a case, the election shall be postponed until the disability ceases or until the election is made by some competent authority on his behalf.
[s 35.10.1] Hindu Law.
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The principle underlying this section has always been applied to Hindus. In the case of Rungamma v Atchamma, the Privy Council referred to the rule that a party shall not at the same time affirm and disaffirm the same transaction—affirm it as far as it is for his benefit and disaffirm it as far as it is to his prejudice.
[s 35.10.3] English Law.—
Under English Law, a transferee by electing against the transfer does not lose his benefit but he becomes bound to make compensation out of it to the disappointed person.
Therefore, in English Law, doctrine of compensation applies in comparison to the Indian doctrine of forfeiture. Under English Law, the person electing against the transfer gets what remains after compensating the transferee disappointed.
Secondly, no time is fixed by English law for making an election, except when the time is limited by the instrument itself. In Indian law, a period of one year is given for making an election.
Apportionment of Periodical Payments (Section 36)
“Apportionment” means division. “Apportionment” is a division of a whole into parts proportionate to the rights of more claimants than one.
According to the Transfer of Property Act, 1882, apportionment is of two kinds:—
(i) Apportionment by time—Section 36 deals with apportionment of periodical payments as between the transferor and the transferee.
(ii) Apportionment by estate—Section 37 deals with apportionment of an obligation in the event of the division of property to which it relates
