Ownership – Meaning and modes of acquiring

The term “ownership” literally means to have or hold a thing. The Black’s Law Dictionary defines ownership as “the bundle of rights allowing one to use, manage, and enjoy property, including the right to convey it to the other”. In the legal sense, the term “ownership” means right over a thing to the exclusion of all other persons, implying non-interference by others in the exercise of his rights and the same must be distinguished from a mere holding of a thing in one’s possession.

Austin defined ownership as “a right indefinite in point of user, unrestricted in point of disposition and unlimited in point of duration”. His definition thus implies three attributes viz.:

(i) Indefinite user – the owner of a thing is free to use or misuse the thing in a way he likes.

(ii) Unrestricted disposition – the power of disposition of the owner is unhampered by law meaning that he is absolutely free to dispose it to anyone.

(iii) Unlimited duration – ownership of a person cannot be cut short and the owner can continue to be the owner as long as he likes. 

The High Court of Calcutta, in its judgment in Jiban Roy Choudhury v. Taramoyee Debi1, has explained ownership and its incidents as follows:

11. In Salmond’s Jurisprudence (12th edn.) ownership is described as follows (Chapter 8):

“Ownership denotes the relation between a person and object forming the subject-matter of his ownership. It consists in a complex of rights, all of which are rights in rem being good against all the world and not merely against specified persons. Though in certain situation some of these rights may be absent, the normal cases of ownership can be expected to exhibit the following incidents.”

12. The incidents are (i) right to possess the thing though he may be wrongfully deprived of it or may have voluntarily divested himself of it; (ii) right to use and enjoy the thing owned, right to manage and use, to the income from it such right to possess being in fact liberties; (iii) right to consume or destroy as also to alienate or transfer the thing by will after death or by conveyance during lifetime; (iv) right of ownership being indeterminate in duration such interest being perpetual, determined neither by any set point (as the interest of a lessee or bailee) nor by owner’s death, as the property owned can descend to his heirs or while the new owner’s interest is to continue, if the property is sold to him prior to death, unaffected by such death; and (v) ownership is residuary in character and when the lesser rights are given away, their extinction revives all rights in the owner.

 Ingredients of ownership

Normally ownership comprises the following:

(i) Right to possess: The owner of a thing has a right to possess it, to the exclusion of all others i.e., the owner has exclusive control of a thing.

(ii) Right to use: The owner has right to use the subject-matter of ownership as per his own discretion.

(iii) Right to manage: The owner has the tight to manage i.e., he has the right to decide how and by whom the thing shall be used.

(iv) Right to the capital/alienation: The owner has exclusive right of alienating with the thing. A non-owner may possess a thing but he can not transfer its ownership.

(v) Right to income: The owner of a thing has the right to the income arising out of the thing within the limits, if any, laid down by any law.

 Types of ownership

The different types of ownership may be mentioned:

(i) Vested ownership: An ownership is vested when all the events essential to vest property in the owner have happened and the owner’s title is already perfect. For example, two people sharing ownership of a property. If one dies, the other gets the gain of vested ownership of the property.

(ii) Contingent ownership: The ownership is conditional. In this case, the transfer of ownership is subject to certain conditions. For example, a testator may leave property to his wife for her life and on her death to A, if he is then alive, but if A is dead to B. Here A and B are both owners of the property in question, but their ownership is merely contingent.

(iii) Sole and co-ownership: When the right of ownership is exclusively vested in one person, it is called sole ownership. When the property is jointly held by several persons at the same time, it is called co-ownership.

As per the English law, co-ownership is further sub-divided into joint tenancy and tenancy in common.

(iv) Corporeal ownership: The said ownership relates to corporeal property, moveable or immoveable. For example, ownership of land, goods, etc.

(v) Incorporeal ownership: The said ownership relates to intangible objects. For example, ownership of a right, patent, etc.

(vi) Legal and equitable ownership: Legal ownership originally meant the one having its origin in the rules of common law. For example, a lender who has lent money for a property is the legal owner of that property.

On the other hand, equitable ownership resulted from rules of equity different from common law.

(vii) Trust and beneficiary ownership: Trust is defined as an obligation annexed to the ownership of the property and arising out of a confidence reposed or declared. The person who reposes the trust is called “author”, the person accepting the confidence is called “beneficiary” and the subject-matter of the trust is called “trust property”. The person in whom the property vests is called the “trustee”, and he has the “trust or legal ownership” of the property. The person for whose benefit the property is held is called the “beneficiary”, and his ownership is termed as “beneficial ownership”.

(viii) Absolute and limited ownership: When all the rights of ownership i.e., possession, enjoyment and disposal, are vested in a person without any restriction except those imposed by law, his ownership is said to be absolute. On the other hand, where the ownership is subject to limitations on use or duration or disposal, the ownership is said to be limited.

The Patna High Court in the judgment of Hira Singh v. Sk. Mosaheb2,  regarding the ownership of property in lieu of dower held as under:

9. The learned Judge having quoted that passage came to the conclusion that, in all cases where a Muhammadan widow is found in possession of property in lieu of dower after her husband’s death, her position is that of a usufructuary mortgagee and that she is entitled to remain in possession merely as a mortgagee, in order that her claim for dower might be satisfied out of the rents and profits and that she is, in no case entitled to any larger interest. He came to the conclusion that, if her position was that of a mortgagee in possession she was clearly not entitled to execute a conveyance in respect of the property in favour of Defendant 1, and that, having regard to what her actual position was, namely, that of a mortgagee in possession, she could not acquire a title by adverse possession by having her name recorded as a kashikar in the record of rights, and that no act on her part could bar the right of the heirs of Teg Ali to sue for possession of the property as against the widow or her transferees on the ground that her claim for dower had been satisfied and that, therefore, they were entitled to the equity of redemption in the property … I can see no reason in law why the husband should not during his lifetime satisfy his liability to pay his wife’s dower just as much out of real property as out of personal property, such as money. The dower can be paid off at any time during the joint lifetime of the husband and wife. It can certainly be paid in money, although it may not be usual to do so, and I can see no reason why a conveyance of landed property should not be made to the wife as an out and out transfer of ownership for the purpose of satisfying the dower. In fact, in another passage in the work of the learned author to which reference has already been made, at p. 318 of the first edition, it is clearly stated that a gift by a husband to a wife during his lifetime by way of payment of her dower is a gift for which there is a good consideration and may be treated as a hibi-bil-iwaz. In these circumstances, it seems to me, although I agree with the learned Judge of this Court that the decision of the Subordinate Judge cannot stand because he assumed a presumption to exist, which, in my opinion, has no legal foundation, nevertheless, the matter is not concluded and ought to go back again to the Subordinate Judge for further consideration for him to determine upon the evidence already given and upon the surrounding circumstances of the case whether, in fact the transaction which took place shortly before the death of Teg Ali was an out and out gift to his wife, or was merely a transaction whereby she was put in possession of the property to satisfy herself for her arrears of dower out of the rents and profits of that property. 

  1. …With these directions, I think that the case should be remanded to the Subordinate Judge to arrive at a conclusion of fact upon the main question in the case without giving any weight to the consideration which influenced him in the first instance where he found that in such a case as this it is usually an absolute right which is given. There is no such presumption that it is usually an absolute right and therefore, that matter must be left out of consideration by the Subordinate Judge and must not be allowed to influence his judgment in any way.…

Modern modes of acquiring ownership

Under modern law, modes of acquiring ownership may be classified under two heads:

(i) original mode; and

(ii) derivative mode.

Original mode: The said mode is the result of some independent personal act of the acquirer himself. It is of following kinds:

(i) Absolute mode: In this mode, ownership is acquired over previously ownerless object.

(ii) Extinctive mode: In this mode, there is extinction of previous ownership by an independent adverse act on part of the acquirer.

 (iii) Accessory mode: In this mode, requisition of ownership is the result of accession.

Derivative mode: When ownership is derived from a previous owner, it is called derivative acquisition of ownership. It is derived by any of the following modes: 

(i) Title of prior owner: In agreement, a title is acquired with the consent of the previous owner. It is only limited to contracts but includes all bilateral acts which create an interest. Such agreement may be either by assignment or by grant.

(ii) Purchase: A contract for sale does not confer title in immoveable property. As per Section 54 of the Transfer of Property Act3, a contract for sale of immoveable property is a contract that such sale shall take place on terms settled between the parties. However, if a person has entered into possession under a contract for sale and is in peaceful and settled possession of the same with the consent of the person having the title thereto, he is entitled to protect his possession against the whole world.

(iii) Will: In this regard, as decided by Delhi High Court in Lakshmi Devi v. State of Delhi4; Rajinder Singh Chowdhary v. S. Manjit Singh Chowdhary5, husband of a testatrix cannot claim absolute ownership over the property after the death of his wife, and would have no authority to bequeath the same by way of will. The Court held as:

  1. The Full Bench of this Court in Rajinder Singh Chowdhary v. S. Manjit Singh Chowdhary6 was confronted almost with identical proposition of law and took the view that it is the intention of the testator that has to be found out on a reading of the will and there cannot be any hard and fast rule of uniform application to find out as to whether the grant was absolute or it was subject to any condition or stipulation.

20. The function of the Court is to minimise or eliminate fallacious or anomalous situation emanating from the document particularly the will and not to embroil the parties in imbroglio of legal jargon. If there are two clauses in a will which appear to be irreconcilable and cannot stand together, it is the last covenant or the clause that shall prevail as the last clause or the covenant of the will is the last intention of a person executing the will. If the preceding clause confers any right which may be either absolute or limited that may be out of close relationship as that of husband and wife or out of love and affection or to protect the interest during one’s life time. That is not the last intention of the testator. What is relevant, and material is the last intention which is given effect to as this is the sole intention which is to prevail. In this case, if the property was bequeathed by Lakshmi Devi in respect of Clause 5, then Clause 6 which is the main clause shall have no meaning in spite of the fact that it was the last clause and last intention of the testator.

(iv) Gift: As per Section 122 of the Transfer of Property Act, 18827, gift is defined as the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by one person, called the donor, to another, called the done and accepted by or on behalf of the donee. As per Section 1238 of the said Act, the transfer by way of gift must be affected by a registered instrument signed by or on behalf of donor and attested by at least two witnesses, or by way of delivery.

The Madras High Court in Madras State Bhoodan Yagna Board, Madurai v. Subramania Athithan9, held that there is no provision as per the Hindu Succession Act for making gift of his interest in joint family property by a manager of a joint family, and as such Section 3010 of the said Act does not apply. The Court held as under:

  1. Mr Alagiriswami, appearing for the appellant, contended that the gifts made by the first defendant would be valid at least to the extent of his share in the joint family properties. His submission is that under the Hindu Succession Act, the first defendant is entitled to make a will of his property and if, on the death of the first defendant, such a will can take effect, there is no reason for not applying the same principles to a case of gift by the first defendant. It is true that Section 30 of the Hindu Succession Act confers power upon a member of a joint family to make a will in respect of his interest in the joint family property. But that principle cannot be extended to a case of a gift, which is a transaction inter vivos, unless the statute itself specifically recognises it. Section 4 of that Act which sets out the overriding effect of that Act merely provides that any text, rule or interpretation of Hindu Law or any custom or usage as part of that law in force immediately before the commencement of that Act shall cease to have effect with respect to any matter for which provision is made in that Act. That Act has not made any provision for making a gift by a manager of a joint family of his interest in the joint family property and as such Section 30 does not avail to the appellant and we are clearly of the opinion that the gifts by the first defendant are invalid even as regards his interests in the joint family properties.

(v) Transfer of ownership: The rights of transferee from a co-owner are regulated by Section 4411 of the Transfer of Property Act, which provides that where one or more co-owners of the immoveable property transfers his share of such property or any interest therein, the transferee acquires the transferor’s right to joint possession or other common or part enjoyment of the property, and to enforce partition of the same, so far as necessary to give effect to the transfer, subject to conditions and liabilities affecting at the date of transfer.

(vi) Succession: In this regard, it has been held in several judgments that genuineness of will has to be established.

Further, inheritance is another method of acquisition of property. In respect of death of the owners, all rights belonging to the deceased are divisible into inheritable rights i.e., rights that survive their owner and devolve on his legal representative; and uninheritable rights i.e., rights which extinguish with the death of the person. Generally, devolution can take place wither by intestate succession, or by testamentary succession.

(vii) Exchange: Section 11812 of the Transfer of Property Act, 1882 defines exchange as a transaction where two persons mutually transfer the ownership of one thing for the ownership of another, neither thing or both things being define money only. Further, a transfer of property in completion of an exchange can be made only in manner provided for the transfer of such property by sale.

The Andhra Pradesh High Court in Emana Veeraraghavamma v. Gudiseva Subbarao13, held that when the property inherited by a female is no longer available at the time of her death, there is no necessity of any further enquiry, as the property might have been exchanged with another property or the consideration of the same might have been used for acquiring another property. The Court held as follows:

  1. Now, while interpreting the said clause (a), it must be borne in mind that the female inheriting a property from her father or mother becomes the absolute owner of such property and that she can deal with it in such manner as he likes. If she alienates the property inherited by her. It cannot then be said, on her death, that the property inherited by her, is still available for devolution. We are of the opinion that the expression “property inherited by a female Hindu from her father or mother” occurring in this sub-clause must be given a restricted meaning consistent with the absolute right of disposition of the female owner. The special rule of succession applies only in case the very “property” inherited by a female from her father or mother is still available at the time of her death, otherwise, the rule does not apply….

Acquisition by Government:

Acquisition means taking not be voluntary agreement, but by authority of an Act of Parliament and by virtue of the compulsory powers thereby conferred. On acquisition of land by the Government, the land vests in the State free from all encumbrances. A person having any interest in such land can only claim compensation either from the State Government or from any person who might have collected the compensation in relation to such interest in the land. Apart from that, he cannot have any other right, much less occupation right, in such land once the same has been acquired by the Government.

Ownership by adverse possession:

Adverse possession is that form of possession or occupancy of land which is inconsistent with the title of any person to whom the land rightfully belongs and tends to extinguish that person’s title.

Section 2714 of the Limitation Act, 1963 and Articles 64, 65 and 112 of the Schedule15 to the said Act prescribe the period for law of adverse possession. Though the general rule of the law of limitation is that it is not meant to destroy the rights of the parties but it only fixes time period for the applicable legal remedy, however, Section 27 is an exception to the said rule, as reiterated in Ravinder Kaur Grewal v.  Manjit Kaur16, by the Supreme Court as under:

  1. Law of adverse possession does not qualify only a defendant for the acquisition of title by way of adverse possession, it may be perfected by a person who is filing a suit. It only restricts a right of the owner to recover possession before the period of limitation fixed for the extinction of his rights expires. Once right is extinguished another person acquires prescriptive right which cannot be defeated by re-entry by the owner or subsequent acknowledgment of his rights. In such a case suit can be filed by a person whose right is sought to be defeated.
  1. We are not inclined to accept the submission that there is no conferral of right by adverse possession. Section 27 of the Limitation Act, 1963 provides for extinguishment of right on the lapse of limitation fixed to institute a suit for possession of any property, the right to such property shall stand extinguished. The concept of adverse possession as evolved goes beyond it on completion of period and extinguishment of right confers the same right on the possessor, which has been extinguished and not more than that. For a person to sue for possession would indicate that right has accrued to him in praesenti to obtain it, not in futuro. Any property in Section 27 would include corporeal or incorporeal property. Article 65 deals with immovable property. 
  1. The adverse possession requires all the three classic requirements to coexist at the same time, namely, nec vi i.e. adequate in continuity, nec clam i.e. adequate in publicity and nec precario i.e. adverse to a competitor, in denial of title and his knowledge. Visible, notorious and peaceful so that if the owner does not take care to know notorious facts, knowledge is attributed to him on the basis that but for due diligence he would have known it. Adverse possession cannot be decreed on a title which is not pleaded. Animus possidendi under hostile colour of title is required. Trespasser’s long possession is not synonymous with adverse possession. Trespasser’s possession is construed to be on behalf of the owner, the casual user does not constitute adverse possession. The owner can take possession from a trespasser at any point in time. Possessor looks after the property, protects it and in case of agricultural property by and the large concept is that actual tiller should own the land who works by dint of his hard labour and makes the land cultivable. The legislature in various States confers rights based on possession.

Advocate and a qualified Chartered Accountant, presently practising at Supreme Court and Delhi High Court.

1 1979 SCC OnLine Cal 83

2 1920 SCC OnLine Pat 328.

3 <http://www.scconline.com/DocumentLink/UR00Q4f7>.

4 2001 SCC OnLine Del 1217.

5 2000 SCC OnLine Del 724.

6 2000 SCC OnLine Del 724.

7 <http://www.scconline.com/DocumentLink/8C6FCxUV>.

8 <http://www.scconline.com/DocumentLink/1g2Ix5QR>.

9 1972 SCC OnLine Mad 152.

10 <http://www.scconline.com/DocumentLink/6akYcyAr>.

11 <http://www.scconline.com/DocumentLink/a8wzkp3R>.

12 <http://www.scconline.com/DocumentLink/DGt9M4i5>.

13 1975 SCC OnLine AP 179.

14 <http://www.scconline.com/DocumentLink/s1bzqM79>.

15 <http://www.scconline.com/DocumentLink/t2W6ff2x>.

16 (2019) 8 SCC 729.

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