Source: Supreme Court  

Why in News? 

The Supreme Court ruled that a minor can receive immovable property through a sale deed, states that such transfer does not constitute a contract as defined under the Indian Contract Act,1872. The Court clarified that while minors cannot be transferors, they can be transferees, allowing for the legal transfer of property ownership to minors. 

• Justices CT Ravikumar and Sanjay Kumar held in the matter of Neelam Gupta & Ors v. Rajendra Kumar Gupta & Anr. 

What was the Background of Neelam Gupta & Ors v. Rajendra Kumar Gupta & Anr. Case? 

• Rajendra Kumar Gupta (plaintiff) filed Civil Suit No. 195A/95 on 24th December 1986 against Ashok Kumar Gupta and Rakesh Kumar Gupta (original defendants) for recovery of possession of a property and damages. 
• The suit property is 7.60 acres of land comprised in Khasra No. 867/1 of Mowa village in Tehsil and District Raipur. 
• Rajendra Kumar Gupta claimed he purchased the property through a registered sale deed dated 04th June 1968 from Late Sh. Sitaram Gupta, who was a common cousin of the plaintiff and defendants. 
• The plaintiff alleged he enjoyed peaceful possession of the property under Bhumiswami Rights until he was dispossessed by the defendants in July 1983. 
• The defendants contended that their father, Sh. Ramesh Chandra Gupta, and the plaintiff's father, Sh. Kailash Chandra Gupta, purchased the suit property in the name of their nephew Late Sh. Sitaram Gupta on 15th March 1963. 
• The defendants claimed their father had installed an electric pump, dug a well, and constructed three rooms on the property for dairy purposes. 
• The defendants admitted that upon the death of the plaintiff's father on 25th December 1967, the property was transferred to the plaintiff's name in 1968 and recorded in revenue records, but claimed they retained possession. 
• The defendants alleged that Ramesh Chandra Gupta and Kailash Chandra Gupta were members of a joint family with joint bangle businesses in Firozabad and Raipur. 
• The defendants claimed an oral partition took place on 31st March 1976 between their father and the plaintiff's family, dividing the properties and businesses. 
• The defendants raised pleas of adverse possession and limitation, claiming they had been in possession of the suit property for more than 12 years. 
• The case proceeded through multiple levels of courts, including the Trial Court, First Appellate Court, and High Court, with various findings and reversals at each level. 

What were the Court’s Observations? 

• The Supreme Court held that there is no bar to transferring immovable property in favor of a minor by way of a sale deed. 
• The Court observed that a minor can become the transferee/owner through a sale deed, as the conditions stated under Section 11 of the Indian Contract Act, 1872 regarding persons competent to contract do not apply, since a sale cannot be termed as a contract. 
• According to Section 54 of the Transfer of Property Act,1882 a sale is a transfer of ownership in exchange for consideration and is distinct from a contract. 
• The Court held that the conjoint reading of relevant provisions suggests that a minor can be a transferee, though not a transferor, of immovable property. 
• The Court clarified that once property is transferred to a minor, upon attaining majority, they would be competent to transfer said property to any other person. 
• The Court ruled that a transfer made by a person upon attaining majority cannot be challenged solely on the grounds that they were a minor when the property was initially transferred to them. 
• The Court observed that the starting point of limitation for adverse possession claims, under Article 65 of the Limitation Act 1963, commences from the date the defendant's possession becomes adverse, not from when the plaintiff's right of ownership arises. 

What are Legal Provisions Referred? 

Section 11 of the Indian Contract Act, 1872: 

• This section defines who is competent to enter into a contract in India.  
• According to this law, a person is competent to contract if they meet three criteria: 
  • Age of Majority: The person must have reached the age of majority according to the law applicable to them. In India, this is typically 18 years old under the Indian Majority Act, 1875. 
  • Sound Mind: The person must be of sound mind, meaning they should be capable of understanding the contract and forming a rational judgment about its effect on their interests. 
  • Not Disqualified by Law: The person must not be disqualified from contracting by any law to which they are subject.

Section 54 of the Transfer of Property Act, 1882:

• This section defines "sale" and deals with how a sale of property can be made. 
• Definition of Sale: A sale is defined as a transfer of ownership in exchange for a price that is paid, promised, or partly paid and partly promised. 
• Requirements for sale of immovable property: 
  • For tangible immovable property valued at 100 rupees or more, the sale must be made by a registered instrument. 
  • For tangible immovable property valued less than 100 rupees, the sale can be made either by a registered instrument or by delivery of the property. 
  • For intangible property or a reversion, a registered instrument is required regardless of value. 
• Delivery of Immovable property: This occurs when the seller places the buyer (or a person designated by the buyer) in possession of the property. 
• Contract for Sale: This is defined as an agreement that a sale will take place on terms agreed upon by the parties. However, a contract for sale does not, by itself, create any interest in or charge on the property.

Article 65 of the Limitation Act, 1963: 

• This article states the limitation period for filing a suit for possession of immovable property or any interest in it based on title.  
• Limitation Period: The time limit for filing such a suit is 12 years. 
• Commencement of Limitation Period: The 12-year period begins when the possession of the defendant becomes adverse to the plaintiff.  
  • Adverse possession occurs when someone occupies property openly, continuously, and without the owner's permission for a specified period. 
• These legal provisions are crucial in Indian property and contract law, governing the competency to enter contracts, the process of property sales, and the time limits for bringing legal action related to property possession.