Section 37 of Transfer of Property Act, 1882: Apportionment of Benefit of Obligation on Severance
Section 37 explains how obligations benefiting an entire property are dealt with when that property is divided among several owners after a transfer. It distinguishes divisible duties from indivisible duties and protects the person owing the duty until reasonable notice is given.
Full text of Section 37
37. When, in consequence of a transfer, a property is divided and held in several shares, and thereupon the benefit of any obligation relating to the property as a whole passes from one to several owners of the property, the corresponding duty shall, in the absence of a contract to the contrary amongst the owners, be performed in favour of each of such owners in proportion to the value of his share in the property, provided that the duty can be severed and that the severance does not substantially increase the burden of the obligation; but if the duty cannot be severed, or if the severance would substantially increase the burden of the obligation, the duty shall be performed for the benefit of such one of the several owners as they shall jointly designate for that purpose:
Provided that no person on whom the burden of the obligation lies shall be answerable for failure to discharge it in manner provided by this section, unless and until he has had reasonable notice of the severance.
Nothing in this section applies to leases for agricultural purposes unless and until the State Government by notification in the Official Gazette so directs.
Illustrations
(a) A sells to B, C and D a house situate in a village and leased to E at an annual rent of Rs. 30 and delivery of one fat sheep, B having provided half the purchase money and C and D one quarter each. E, having notice of this, must pay Rs. 15 to B, Rs. 7 1/2 to C, and Rs. 7 1/2 to D, and must deliver the sheep according to the joint direction of B, C and D.
(b) In the same case, each house in the village being bound to provide ten days' labour each year on a dyke to prevent inundation, E had agreed as a term of his lease to perform this work for A. B, C and D severally require E to perform the ten days' work due on account of the house of each. E is not bound to do more than ten days' work in all, according to such directions as B, C and D may join in giving.
Meaning and scope of Section 37
When a transfer divides property among several owners, an existing obligation relating to the entire property may also benefit those owners. Section 37 determines how the person bound by that obligation must perform it. The rule applies in the absence of a contrary contract among the owners and subject to the other conditions stated in the provision.
When can the obligation be apportioned?
- Division of property: The property must have been divided and held in several shares because of a transfer.
- Benefit passes to multiple owners: An obligation formerly benefiting the property as a whole must now benefit several owners.
- Divisible duty: If the duty can be divided without substantially increasing the obligor's burden, performance is proportionate to the value of each owner's share, not necessarily the physical area.
- Indivisible duty: If division is impossible or substantially increases the burden, the owners must jointly designate one owner for whose benefit the duty is to be performed.
- Notice: The person bearing the obligation must receive reasonable notice of severance before being answerable for failure to perform under the new arrangement.
Explanation of the statutory illustrations
Illustration (a): The money rent of Rs. 30 can be apportioned: B receives Rs. 15 and C and D each receive Rs. 7 1/2. A sheep, however, cannot be meaningfully divided as a single delivery; the tenant delivers it as jointly directed by the new owners.
Illustration (b): A duty to provide ten days of labour does not become thirty days merely because ownership is divided among three people. The owners must jointly direct the performance of the original ten-day obligation.
Exception for agricultural leases
The section expressly excludes leases for agricultural purposes unless the relevant State Government extends its application through a notification published in the Official Gazette. Whether any such notification applies must be checked for the relevant State and lease.
Difference between Sections 36 and 37
Section 36 concerns the day-to-day accrual and apportionment of periodical income payments upon transfer of an interest. Section 37 concerns the performance of obligations whose benefit is divided among several owners on severance of property. The two provisions address different situations.
Practical considerations
For a dispute under Section 37, examine the instrument of transfer, the shares and their respective values, the original obligation, whether division would materially increase the burden, any contract among the owners, and proof that reasonable notice reached the person bound to perform. The statutory rule should not be applied without considering the agricultural-lease exception.
Frequently asked questions
What is Section 37 of the Transfer of Property Act, 1882?
It governs how the benefit of an obligation relating to property is apportioned when the property is transferred and divided into several shares.
Can an indivisible duty be divided among co-owners?
No. If division is impossible or substantially increases the burden, the duty is performed for one owner jointly designated by the co-owners.
Must the person owing the duty be notified?
Yes. The person bearing the obligation is not answerable for failure to perform in the apportioned manner until reasonable notice of severance is received.
Does Section 37 automatically apply to agricultural leases?
No. It does not apply to leases for agricultural purposes unless the State Government directs otherwise by notification in the Official Gazette.
Official legal source
Refer to the Transfer of Property Act, 1882 on India Code for the Act and any applicable amendments. State-specific notifications should be checked separately where agricultural leases are involved.