Property Law Project

Transfer of property by Ostensible owner

Submitted by
Name: Alan C George
Roll Number: A3256117268
Section: D
LL.B (Semester-5)
Batch: 2017-20
Of Amity Law School,
Amity University, Noida
Submitted to Ms. Ruchi Lal
 ACKNOWLEDGEMENT

The success and final outcome of this project required a lot of guidance and
assistance from many people and I am extremely fortunate to have got this all
along the completion of my project work. Whatever I have done is only due to
such guidance and assistance and I would not forget to thank them.
I owe my profound gratitude to our project guide Ms. Ruchi Lal, who took keen
interest on our project work and guided us all along, till the completion of our
project work by providing all the necessary information for developing a good
system.
I am thankful to and fortunate enough to get constant encouragement, support
and guidance which helped me in successfully completing this project work.

Alan C George
Introduction
The Transfer of Property Act, 1882, was passed with the purpose of making transfer of property easier
and makes it accessible to the population at large. This Act lays down certain general principles as to
transfer of property which has to be followed. Transfer of a property by and ostensible owner is such a
concept which was incorporated to protect the rights of innocent third parties vis-à-vis the property
owners. This principle was first used in the much celebrated case of Ramcoomar Koondoo v. John
and Maria McQueen by the Judicial Committee.

Ramcoomar Koondoo v. John and Maria McQueen case

In this case, the plaintiff who had inherited a property by way of a will came to know that someone
else had already purchased this property in her name and subsequently sold this property to a third
person, by making him believe that he had good title over that property. The whole transaction was a
‘benami’ transaction but was not known to anyone except the person who sold the property. The
plaintiff sued the third party for recovery of the possession of the land but the committee held that:

“ It is a principle of natural equity, which must be universally applicable, that where one man allows
another to hold himself out as the owner of an estate, and a third person purchases it for value from
the apparent owner in the belief that he is the real owner, the man who so allows the other to hold
himself our shall not be permitted to recover upon his secret title, unless he can overthrow that of the
purchaser by showing, either that he had direct notice, or something which amounts to constructive
notice, of the real title, or that there existed circumstances which ought to have put him upon an
inquiry that, if prosecuted would have led to discovery of it.”

It was there by held that the plaintiff cannot take back the property form the third party and that the
transfer was a legitimate transfer in the eyes of the law. This wordings used in this case can be seen in
the S. 41 of the Act which deals with Ostensible owner.

S. 41 of the Act.

Section 41 of the Act deals with ostensible owner and it has been defined as:

“Transfer by Ostensible Owner: Where, with the consent, express or implies, of the persons interested
in immovable property, a person is the ostensible owner of such property and transfer the same for
consideration, the transfer shall not be voidable on the grounds that the transferor was not authorized
to make it: provided that the transferee, after taking reasonable care to ascertain that the transferor had
power to make the transfer, has acted in good faith.”

The section lays down certain requirements to avail the benefit of this section. They are:

 The primary condition is that the person who is transferring the property should be ostensible
owner.

 There should be consent form the real owner, which can be implied or express form.

 The ostensible owner should get some consideration in return of the property.

 Reasonable care has to be taken by the transferee about the authority of transferor to the
property and the transferee had acted in good faith.
  It goes without saying that this section is applicable only to transfer of immovable property
and not in case of movable property.

‘Ostensible owner’

Ostensible owner is not the real owner but who can represent himself as the real owner to the 3rd party
for such dealings. He has acquired that right by the willful neglect or acquiesces by the real owner of
the property thereby making him an ostensible owner. A person who has gone abroad for some years
has given his property to his family relative for making use of it for agricultural purpose and for all
other purposes as he may deem fit. In this case the family relative is the ostensible owner and if
during that period he sells the property to a third party, then the real owner after coming back cannot
claim his property and say that the person was not authorized to transfer his property. An alternative
case can be when the property is in wife’s name but husband used to take care of it and the other
dealings related to the property. If the husband thereby sells this property, the wife cannot claim her
property back. Or as in the Mohamad Shakur v Shah Jehan, in which the real owners lived in a
different village, and had authorized a widow to use the property as she liked and afterwards she sold
it. The real owner lost the case and the transfer was a valid one.

Consent from the real owner

The main purpose of this section is to protect the rights of the innocent third party who had purchased
the property, when the real owner was himself at fault by not protesting the transfer. But a necessary
requirement is that the real owner should have the capacity to give the consent and that consent should
not be obtained from any unlawful act. In the case of minors, even if the ostensible owner claims that
he has the consent of the minor, it will be held to be no consent as minors do not have any capacity to
give the required consent. And it was laid down in the case of Satyanarayana Murthi vs. Pydayya,
that consent need not be taken from the true owner and it might also be the case that the true owner
had no knowledge of the transfer.

The consent in such transactions can be express or implied.

Implied Consent

Implied consent can be made out from the conduct of the real owner. It is not required that the real
owner has to give express consent or give his consent in writing. Therefore, where another person is
dealing with the property of the real owner, as if the property was his own, and the real owner knows
about it, then it will said to be implied consent on the part of the real owner. In the case of Shamsher
Chand v Bakshi Meher Chand, it was held that if a party is not aware of his rights or is silent about
them, then in such case it cannot be said that the real owner had consented to the transfer of the
property. It is required that a person who is not aware of his rights could never have consented to that
and such a transaction will not be valid. It is not stated in the section that the real owner must have
actually consented to the transfer, because if that was the case, then the real owner could never have
made any objection to such transfer. It is just that the real owner is unaware of this transaction or is
negligent. Silence may amount to consent if the silence on the part of real owner leads the third party
to believe that the ostensible owner is the real owner of the property. But in the case of Gurucharan
Singh v. Punjab State Electricity Board Patiala, where the land in contention was transferred to
someone else and such person had perfected his right to the property by paying the money. The new
owner which is the real owner had not taken the possession of the land and the previous owner after
having waited for 12 years, sold the land to third party. The real owner then comes forward and claim
his right over the land and the court said that the real owner was a minor at the time of transfer of land
and therefore could not take the possession of the land and therefore it would not amount to silence on
the part of the real owner as he could never have consented to the transfer. Therefore the subsequent
transfer was held to be invalid.

Consideration

Consideration is a must if there is a transfer by ostensible owner. He cannot give away the property as
a gift. As it has also been provided in the Indian Contract Act, 1872 that consideration is necessary
component of any contract and transfer of property by an ostensible owner is done by way of contract
only. Also it has been provided in S. 4 of the Act that anything not expressly defined in this act shall
be deduced form the general definitions given under the Indian Contract Act, 1872.

Reasonable Care

Reasonable care can be understood as the care which a reasonable and ordinary man would have
taken. He has a duty to check the title of the transferor. Like in the case of Nageshar Prasad v. Raja
Pateshri where there was an error in the revenue records regarding the name of the owner. The name
written was of some other person and the real owner had already made a complaint about this error.
The person whose name was in the revenue records subsequently sold it to a third person and the third
person without making proper inquiries took the property and the real owner afterwards objects to it.
The court held that the third party has not taken reasonable care which was required of him and
therefore he will not be protected by this section. The advice of solicitor will not be enough to prove
that the third party has taken reasonable care in determining the title of the property. The third party is
required all the available documents which can possibly give some more information regarding the
title of the property and these documents may include police registers, municipal registers apart from
other documents.

There is also a safeguard for the real owner. In the case of Mathura v. Ambika, where the real owner
had sold the property to another person and got it registered before the transfer by the ostensible
owner could be registered, then it was held that the transfer by the real owner would be held valid as
he has a greater title over the property than the ostensible owner and the rights of third person who
had purchased this property from the ostensible would not be protected under this section.

Proper Inquiry

As a person is required to make reasonable inquiries, sometimes it is difficult to make out what will
amount to proper inquiry. The courts in India have held that this being subjective, it will depend on
the facts and circumstances of each case and it can also be the case that what amounts to proper
inquiry in one case may not called proper inquiry in another case with completely different facts. If
the transfer is by Mahmomedans, it is a required of the purchaser to inquire if there is any female heir
also. In many cases it is such that only males transfer the property without taking the consent of the
females and this will not be a valid transfer because they also have a share in the property and
therefore the third person has to inquire about such things. The ultimate test that is that the “transferee
should show that he acted like a reasonable man of business and with ordinary prudence.”

Good Faith

Good faith simply means that the transferee should have honestly believed that the ostensible owner is
the true owner after all the proper inquiries conducted by him. But where after proper inquiries the
transferee has knowledge that the person selling him the property is not the real owner but only the
ostensible owner, the transferee cannot neglect true facts. This is because of the fact that a person
cannot take advantage of his own negligence and then claim protection of this act. The rights of real
owner also need to be safeguarded against such persons.

Extent of rights of transferee

Likewise the privileges of the transferees making a buy from ostensible proprietor rely on the degree
to which the ostensible proprietor has rights in the said property. For the situation State of Punjab v.
Surjit Kaur, proprietor's dowager had a specialist over his bequest as an ostensible proprietor, in any
case it being restricted just to life intrigue. Henceforth the privileges of the transferee buying the
property from her eventual co-broad with her and subsequently will stop to exist with her life time.

Duties of Transferee during transaction

Segment 41 alongside saying nature of specialist of an ostensible proprietor additionally lays

Burden of Proof

The burden of proof is on the transferee to prove that the transferor was actually the ostensible owner
and had the consent to sell the property. Also he has to prove that he actually acted in good faith and
had taken all reasonable care that was required from him while taking the property. This is because he
has to prove that he was not at fault while taking the property and to shift the burden on the real
owner. Alternatively, to shift his burden, he can also prove that the transferor did not allow the
transferee to know the real facts and tried everything to suppress the facts.

The Transfer is not voidable at the option of owner

At the point when an exchange is made by ostensible proprietor this area gives that the exchange
should not be voidable on the ground that the transferor was not approved to make it ; gave the
transferee has taken due care and must have acted in good faith. The principle applies when the whole
transaction is not voidable.

Conclusion

Section 41 of the Act has done a fair job in protecting the interest of the innocent third party. Though
this section may seem to be a bit biased towards the third party but this is mainly if the real owner is
himself at some fault. No one can simply say that he has now acquired the property and he cannot be
evicted now. The third party has to take a lot of care while purchasing the property and these
necessary requirements has been put by law itself to check the misuse of this section by ostensible
owner and the third party. This, in a way protects the interest of the real owner also.