Transfer by ostensible owner – section 41 of Transfer of Property

Act

INTRODUCTION TO TRANSFER BY OSTENSIBLE OWNER

Ostensible Ownership is a term that enables family members to buy the Property in the
name of another family member for the future security of the person. The definition of the
ostensible owner is set out in Section 41 of the Transfer of Property Act. According to the
Black Law Dictionary, ‘Ostensible Ownership implies an evident Ownership resulting from
actions or words. The principle of ostensible ownership’ prevents the owner of the Land, who
clothes another with the obvious title of the latter, claiming his title against an innocent third
party who has been induced to negotiate with the apparent owner.

Ostensible simply means the presence, the appearance, or to seem.  Ostensible owner is a
person who is not the actual owner of the Land, though he appears to be the real owner. Thus
the only distinction between the real owner of the property and the ostensible owner of the
property is that the ostensible owner of the property does not wish to keep or buy the
property. In India, the ostensible owner is popularly known as ‘Benamidar,’ which literally
means a person who owns a property ‘without a name.’

ORIGIN OF OSTENSIBLE OWNERSHIP

According to the Law Commission of India, there may be four key reasons for the emergence
of Benami Transactions or the holding of an ostensible ownership in India.

1. The presence of a Joint Hindu Family Structure, which may have led to a willingness
to make hidden provisions, has led to the practise of Benami.

2. To deceive the creditors, when K.K. Bhattacharya observes that its root is due to the
deceptive intent of defrauding creditors of their just and legal dues.

3. A way to avoid taxes. It could be to stop paying taxes, to convert black money or to
cover up the income.
 4. According to Pollock, ‘activities of this kind naturally evolve in a state of society
where there is an appreciable risk, from generation to generation, of hostile defeat or
confiscation.

ESSENTIALS OF SECTION 41 OF TRANSFER OF PROPERTY ACT (TRANSFER

BY OSTENSIBLE OWNER)

The real owner shall be liable for the transfer of immovable property by the ostensible owner
if the following conditions are met –

1. A person must be the ostensible owner of the property,

2. That person must be the owner of the property with the consent, express or implied, of
the real owner;

3. For consideration, the transferee must purchase the property from such ostensible
owner.

4. Before taking the transfer, the transferee must take reasonable care to ascertain
whether the transferor has the power to make the transfer; in other words, transferor
must have acted in good faith.

The real owner is deprived of his property rights under this section only if the essential
conditions for the applicability of the section are met.