Section 36: Apportionment of Periodical Payments on Transfer of Interest
Section 36 of the Transfer of Property Act, 1882 explains how recurring income is divided between a person transferring an interest and the person receiving that interest. The rule concerns the accrual of payments such as rent and annuities, and distinguishes accrual from the date when the payment actually becomes payable.
Text of Section 36 - Transfer of Property Act, 1882
36. Apportionment of periodical payments on determination of interest of person entitled. In the absence of a contract or local usage to the contrary, all rents, annuities, pensions, dividends and other periodical payments in the nature of income shall, upon the transfer of the interest of the person entitled to receive such payments, be deemed, as between the transferor and the transferee, to accrue due from day to day, and to be apportionable accordingly, but to be payable on the days appointed for the payment thereof.
Meaning and scope of Section 36
The expression apportionment means allocating income proportionately between successive holders of the right to receive it. When the entitlement to recurring income is transferred during a payment period, the statute generally treats that income as accumulating from day to day, even though it is collected only on an agreed payment date.
Payments covered
The section expressly refers to rents, annuities, pensions, dividends and other recurring payments having the nature of income. Its application depends on the transfer of the relevant entitlement and the nature of the payment; the section does not independently create a right to a pension or dividend where none otherwise exists.
Daily accrual and payment date
For allocating entitlement between transferor and transferee, income is treated as accruing day by day. However, the person liable to make the payment is not required by Section 36 alone to pay it daily. Payment remains due on the date fixed for that payment.
Illustrative example
Suppose monthly rent is Rs. 30,000 for a 30-day month and the right to receive rent is transferred after the first 10 days. Assuming Section 36 applies and there is no contrary contract or local usage, the transferor's share would be Rs. 10,000 for the first 10 days, and the transferee's share would be Rs. 20,000 for the remaining 20 days. The rent would still be payable on the agreed due date. This is an explanatory example, not a statutory illustration.
Contract and local usage take precedence
Section 36 begins with the words "In the absence of a contract or local usage to the contrary". Therefore, the parties' valid agreement or an applicable local usage may provide a different allocation. The relevant transfer document, payment arrangement and established usage should be checked before applying daily apportionment.
Related legal provisions
Section 37 addresses apportionment of the benefit of an obligation when property is divided. Unlike Section 36, which concerns successive entitlement to periodic income over time, Section 37 concerns allocation of benefits following severance of property. The Transfer of Property Act governs transfers subject to its provisions and other applicable laws.
Official legal source
For the current statutory text and amendments, consult the Transfer of Property Act, 1882 on India Code, the Government of India's legislation portal.
Frequently asked questions
Does Section 36 require daily payment of rent?
No. It treats eligible income as accruing daily for apportionment, but payment is due on the scheduled payment date.
Can the parties agree on a different method?
Yes. The section operates in the absence of a contrary contract or local usage.
Does the section govern the entire legal relationship with the payer?
No. It specifies apportionment as between transferor and transferee; other contractual and statutory rights and obligations must be considered separately.