Section 118 TPA: 'Exchange' defined

Section 118 of Transfer of Property Act: 'Exchange' defined

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

When two persons mutually transfer the ownership of one thing for the ownership of another, neither thing or both things being money only, the transaction is called an "exchange".

A transfer of property in completion of an exchange can be made only in manner provided for the transfer of such property by sale.

Statutory Defined Terms in this Section: (Click any term for official legal definition)

Sale Sec 54

Legal Commentary & Landmark Judgments: Section 118

Section 118 of the Transfer of Property Act, 1882 defines an 'exchange', regulating the mutual transfer of ownership of one thing for the ownership of another, neither thing or both things being money only.

Penal Consequences & Liability: Section 118 defines exchange: when two persons mutually transfer the ownership of one thing for the ownership of another, neither thing or both things being money only, the transaction is called an 'exchange'.
Procedural Mechanism: A transfer of property in completion of an exchange can be made only in the manner provided for the transfer of such property by sale (Section 54).
Statutory Rights & Obligations: Under Section 119, if any party to an exchange is deprived of the thing received by reason of defect in title, they are entitled to recover compensation or recover the property transferred in exchange if it remains in the hands of the other party.

Under Section 120, each party has the rights and liabilities of a seller as to what he gives, and of a buyer as to what he takes.

Key Landmark Precedents:

CIT v. Motors & General Stores (P) Ltd (AIR 1968 SC 200): The Supreme Court held that the presence of money consideration is the distinguishing feature between sale and exchange. If property is transferred for a cash price, it is a sale; if property is transferred for other property (even if money is paid as equality of exchange), it is an exchange under Section 118.
Hari Shanker Mishra v. Baila (AIR 1982 All 310): The Allahabad High Court affirmed that an exchange of immovable properties valued at ₹100 or more requires a registered deed under Section 118 read with Section 54; an unregistered exchange deed is void and conveys no title.

Legal Commentary:

Corporate amalgamations and land-pooling arrangements frequently involve exchanges of real estate parcels under Section 118. Drafters must ensure that the conveyance is registered and stamp duty paid as an exchange deed, which typically carries state stamp duty equivalent to a conveyance on the parcel of greater value.

Section 118: 'Exchange' defined

Section 118 of Transfer of Property Act: 'Exchange' defined

Legal Commentary & Landmark Judgments: Section 118