Abstract
This article deals with the property aspect of the Bitcoin, as to how its transfer is replication of the real estate transfer, what are the Legal Aspects covering the same, and under what heads of law it is counted as property.
INTRODUCTION
Bitcoin is totally akin to the Real estate transfers covering basically all the aspects. There is much semblance in the transactional features, like the Buyer, Seller, a price to be paid ‘consideration’, and the endorsements. But it is interesting to note herein that there is dearth of Bitcoin, and they are not profound. However, like any real estate transfer in the Bitcoin transactions, too, there are public records. The public record is called as Bitcoin Database, wherein all transactions related to Bitcoins are maintained, and any person with an access to Computer could see any Bitcoin transaction, like one visits the Registrar’s office to know about the Title deeds.
But, remarkably, there is no governmental supervision over the, or the coordination with the activities, unlike property wherein government imposes stamp duty to give credence to the legality of the transfer.
AS 'PROPERTY' OR 'GOODS'
At the very basic level, that becomes the foundation for the Bitcoin are the computer codes, thus, the Bitcoin does not exist in physical/tangible form. Hence, the question that pops up is in order to regulate the Bitcoin transaction, could be deemed to be Movable property under the laws?
It is to be mentioned herein that the law that governs the property aspects is the Transfer of Property Act, 1882 (herein after called as “TPA”), and is the main legislation. However, this Act although covering the movable property aspects does not define what is movable property, it is necessary for knowing whether Bitcoin falls under the ambit of it or not. The movable property has been defined in General Clauses Act, 1897, and for all purposes definition is bought from herein. Section 3(36) of the Act defines movable property as-
"Movable property" shall mean property of every description, except immovable property.”[1]
The sweep of this definition is very wide and covers within its domain intangible properties as well. It is pertinent to mention herein the definition of goods, which is defined in Section 2(7) of the Sales of Goods, Act 1930 as-
"Goods means every kind of movable property, other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale"[2]
Therefore, it could be said that the Bitcoin are goods, as being the movable property. But the Judiciary has not pulled much of its cap for the purpose of ascertaining whether the intangible property applies in virtual domain too. However, in the case of Tata Consultancy Services v. State of Andhra Pradesh, the Hon’ble Supreme Court has opined that -
"Indian law does not make any distinction between tangible property and intangible property. A 'goods' may be a tangible property or an intangible one. It would become goods provided it has the attributes thereof having regard to (a) its utility; (b) capable of being bought and sold; and (c) capable of transmitted, transferred, delivered, stored and possessed. If a software whether customized or non-customized satisfies these attributes, the same would be goods.”[3]
Thus, given the existing legal framework about the intangible property, it could be concluded that the Bitcoin falls under the head of Intangible property.
Juxtaposition with American law for the Property
In the American Legal System, for ascertaining the existence of property right, three tests are mandated which are reproduced herein below as follows:
“(a) there is an interest capable of precise definition;
(b) it is capable of exclusive possession or control; and
(c) the putative owner has established a legitimate claim to exclusivity.”[4]
Appreciating these three tests vis-à-vis Bitcoin, it could be said that- Firstly, the person who purchases the Bitcoin has legitimate interest over it, and value of the interest could be calculated in terms of country currency. Secondly, there is no gainsaying that person who purchases the Bitcoins has possession of it, exclusive to others. It is like property, wherein the person with the Title Deeds could only deal with the property, likewise there are credentials in the Bitcoin. Lastly, but not the least, person has a legitimate claim over it, as when the Bitcoin is transacted it is maintained in the chain of network under Blockchain, therefore, ruling out the possibility of fraudulent transfer.
Thus, it could be said under that the American Legal System, there is recognition of the Bitcoin as the intangible property.
BITCOIN AS 'COMMODITY'
In the event when the Bitcoins have been deemed as intangible property, it becomes pertinent to know whether it also qualifies for the definition of the Commodity. Likewise, the movable property, the commodity is also not defined, neither there is any sort of legal jurisprudence on it. But as per the dictionary definition it means and includes “every movable thing that is bought and sold (except animals), an article of trade, and movable article of value or something that affords convenience or advantage especially in commerce.”[5]
Justice Sinha, in the case of Tata Consultancy (Supra), has opined that commodity colloquially means goods of any kind, or something of use or an article of commerce.
Thus, the Bitcoins also qualifies for the definition of Commodity, as intangible property, under Indian Legal Framework.
CRYPTO-CURRENCIES AS 'ASSET'
While the transactions as regards Bitcoins are yet unregulated, but the profits and gains made out of the Bitcoins transactions have been taxed by the Taxing Authorities. As a corollary, implying that since they are taxed it could be deemed as an asset.
Therefore, it could be said that as the government slowly pacing towards is aiming at the regulation of Bitcoin transactions,
CONCLUSION
Both across PAN India and the World there have been incessant surge in the investment in the Bitcoins. The fate of these investments is co-extensive with the fate of Bitcoins. Therefore, it becomes necessary to sermonize the Legal Aspects of the Bitcoins and its regulation. Based on the above legal position and authorities, it could be concluded that it fits best for the intangible property and the commodity. But the least could be said before any Judicial pronouncements by the court of law.
[1] General Clauses Act, 1897, Section 3(36) [2] Sales of Goods, Act, 1930, Section 2(7) [3] Tata Consultancy Services vs. State of Andhra Pradesh [2004] (271 ITR 401) [4] Rasmussen Associates Inc v. Kalitta Flying Service Inc, 958 F.2d [5] Dr. H. K. Saharay & P. M. Bakshi, "Judicial Dictionary of Words and Phrases", Thomson Reuters, 2nd Edition Volume I (2016)