Exchange under the transfer of property act.
The exchange has been defined under section 118 of the Transfer of Property Act, where 2 persons mutually transfer ownership of one thing for the ownership of another. Exchange is a transfer where a property is changed with another property. Transfer of ownership of a house in consideration of the transfer of ownership of agricultural land in exchange. The exchange may include a change of moveable property with another moveable property or change of moveable with the immovable property.
The characteristic features of the exchange are:
- Transfer of ownership – the exchange is a transfer of ownership in some existing property. Ownership of one party must be exclusive of the ownership of the other. Exchange is the transfer of absolute interest. Properties might be immoveable or moveable – the subject matter of exchange, need not be immoveable. Ownership in immovable property may be transferred in return of ownership in the moveable property. Transfer of immoveable with another immoveable plus some moveable is also an exchange.
- Exchange includes barter – barter system is a system, which generally involves the transfer of ownership in some moveable property in consideration of the transfer of ownership in another moveable property. Where both the properties are moveable, section 120 of the act, as well as sales of goods, act both are applicable.
- Mode of transfer- exchange can be made only in the manner in which sale is affected. so, all the essentials of section 54 should be completed while exchanging. An unregistered deed of exchange of immovable property is inadmissible as per section 118. In the state of Punjab, where Transfer of Property Act is not applicable, the exchange is guided by the principles of equity, justice, and good conscience.
Section 119 of the Act deals with the right of party deprived of the thing received in exchange. It gives certain rights to a party who does not get a perfect title in the property received by him. A person deprived of his right has 2 remedies: -
- He may claim the return of the property transferred by him to the other party provided the property is still in the possession of that party.
- He may claim compensation from the other party for the loss incurred due to such a defective title.
The right to sue the other party or any person claiming under him is available so long as they are in possession of the same. However, the rights of a party deprived of the defective titles are subject to any contract to the contrary.
Section 120 of the Act talks about the rights and liabilities of parties. Under the section, the rights and duties of the parties to an exchange of immovable property are the same as that of seller and buyer have given under section 55.
Section 121 of the Act talks about the exchange of money. Where the other party who is deprived of his right to get genuine money in return of his own genuine money, would be entitled to recover the money paid by him.
Thus, the exchange is a kind of transfer of ownership in which party gets back something in return in lieu of transfer and they have whole sets of rights and duties if the exchange does not go right or there is any kind of dispute regarding the title of the property or the subject- matter of the exchange.
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