Internal assessment-2

Article:

Analysis on Transfer of Property by Ostensible

Owner

Submitted By: Submitted To:

DIVYANSHI RATHORE Mohd. Aadil Yar Chaudhary

Sir

B.A.LLB (Hons.) Fifth Semester

Section- B JLU ID: - jlu05897@student.jlu.edu.in

Roll No.: - 2020BALLB104

 Introduction
Property refers to all that is owned and held by a person who has a legal title over it. There are various
definitions for the term “PROPERTY” under various Acts but there is no definition under the Transfer of
Property Act, 1882 which deals with the most important aspects of property. "No one can give what he does not
have," is the Latin phrase nemodat quod non habet. This is one of the key tenets of the Transfer of Property Act,
and it states unequivocally that "A person cannot impart a better title than he himself holds." However, there are
a number of additional exceptions to this rule, one of which is the “OSTENSIBLE OWNER”, who is
recognised by law under the Transfer of Property Act of 1882. Ostensible literally translates as "looking to be
true." So, it goes without saying that the Ostensible Owner is someone who isn't actually the property's owner.
A person who has an interest in the real estate owner's immovable property with that owner's stated or inferred
assent is referred to as an ostensible owner1. As a result, an Ostensible Owner, who is not the actual owner of
the property, poses to third parties as the owner and holds all ownership rights to the property. For example- if
"A" is a person who owns property in India but resides in the United States and permits "B" to take care of the
property and to exercise all ownership rights, such as paying taxes and performing significant repairs, "B" is the
Ostensible Owner with the authority to sell the property. After returning from the USA, "A" cannot claim the
property back if "B" sells it. The Privy Council ruled in Ramcoomar Koondoo vs. Maria Macqueen &Ors 2 that
it is a natural justice principle that the transfer of ownership cannot be undone when a man A permits another
man B to hold his property and a third party purchases it for a fair price in the belief that B is the true owner
unless A has consented to any notice of opposition sent to the third Party prior to the transfer.

According to Section 41 of Transfer of Property 18823, “Where a person is the ostensible owner of
immovable property and transfers the property for consideration with the express or implied consent of the
persons interested in immovable property, the transfer shall not be voidable on the ground that the transferor
was not authorised 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.” Thus, the genuine owner will lose all
ownership rights to the property and won't be able to reverse the transfer. As the true owner who is holding out
his right and title to the property to another person as a result of which an innocent third party suffers, the
transferee is protected by the doctrine of holding out in this case.

Essentials of Section-41 of Transfer of Property, 1882:

 Transfer of Immovable Property: - The Property transferred must be an immoveable property and not
a movable property. Partial transfer is also a part of this section, like Mortgage i.e., transfer of rights;

1
Section 41 TPA, 1882
2
(1872) SCC Online PC 29
3
Section 41 of Transfer Property Act, 1882
 hence a transfer need not be in a way of Sale or Exchange alone. The transfer must be voluntary one
i.e., an order of court for transfer is not subject to this section. There must be Real Owner and Ostensible
Owner for application of this Section. The Real Owner should have purchased the property in the name
of another person and authorizes him to take care of the Property who will be called as an Ostensible
Owner. In the case of Mohammad Shakur v. Shah Jehan 4 it was held that the village-dwelling Real
Owners gave a widow permission to utilise the property, which was located outside of the village, as she
pleased. She subsequently sold the house. Real owners lost the case because the court determined that
the transfer was legal. As an alternative, if a husband purchases a property in his wife's name and
maintains it properly, the wife cannot recover the property if the husband sells the property.
 Expressed or Implied Consent of the Owner: - According to Section 41, the Real Owner must
expressly or implicitly agree to the transfer of an Ostensible Owner. First and foremost, the Real Owner
needs to be able to consent. The Indian Contract Act, 1872 requires that the consent be free and
intelligent, which means that it cannot be given under the mistaken belief that one has legal rights, as it
is well known that a minor lacks the mental capacity to offer consent. According to this clause, the Real
Owner is not permitted to contest the transfer based only on the competence of the transferor, who lacks
the necessary capacity. A crucial case to note here is Satyanarayana Murthi v. Pydayya 5, in which the
court determined that the Real Owner's agreement was not required because there was a possibility that
the Real Owner might not have been aware of the transfer itself.
 Transfer must be done for a Consideration: - The ostensible owner must give this portion some
thought before transferring it. A transfer made by an ostensible owner without receiving payment is
therefore invalid. As a result, any gift or other gratuitous transfer of a property by an ostensible owner is
not protected by this Section and is null and void. In the case of Padam Chand v. Lakshmi Devi 6In this
instance, the father, who was the ostensible owner, gave his daughter the property as a gift, and the
transfer was contested in court. The transfer is completely unlawful, the court said, and cannot be
protected under Section 41.
 Transferee must have taken reasonable care and should have acted in good faith: - A sensible man
of business and an Ordinary Prudent guy would take reasonable care, according to this definition 7. In the
case Nageshar Prasad v. Raja Pateshri8, the name of the owner was incorrectly recorded in the revenue
records. Regarding this, the Real owner has already filed a complaint. A person whose name was on the
registry eventually sold the property. The transfer was declared illegal by the court because the
transferee was required to conduct due diligence and use reasonable care before agreeing to the transfer.

4
63 Ind Cas 125
5
(1943) AIR 459 (Mad)
6
(2010) 173 DLT 604 (Delhi)
7
Fazal Husain vs. Muhammad Kazim and Ors. , [1934] A.I.R. 193 (All)
8
(1915) 265, (20 Cal WN)
 Transferee must have acted on Good Faith which means he should have honestly believed the Ostensible
Owner was the true owner after making proper inquiry about it, so that he can use this section as his
shield on the transfer.

Burden of Proof
The Transferee has the initial burden of proof because he is the one who will be impacted by the transaction. He
must demonstrate that the Transferor is an Ostensible Owner and that, in order to be protected by this Section,
he exercised reasonable care in his capacity as a wise man prior to the transfer. The burden of proof rests with
the Transferor who persuaded the transferee to enter into the transaction, according to Section 41 of the Transfer
of Property Act of 1882 and Section 115 of the Indian Evidence Act of 1872. The Delhi High Court ruled in
Mahinder Singh v. Pardaman Singh9 that the burden of proof is with the party asserting that they are the Real
Owner or that the transaction in question is illegal. The burden of proof will now vary depending on the
specifics of the case. Thus, Section 41 was passed in order to defend the innocent party who has been duped by
another party or parties in a "Suppresio Veri Suggestio Falsi" transaction.

Conclusion
The interests of the unknowing third party have been quite well protected under Section 41 of the Transfer of
Property Act. Even while it might seem like the section favours the third party, this is only true if the real owner
is at fault. No one may merely assert that he is the new owner of the property and is therefore immune from
eviction. These requirements were created by legislation to stop the ostensible owner and the third party from
misusing this clause, and the third party must exercise extreme prudence while purchasing the property. In a
way, this also safeguards the interests of the true owner. In a nutshell, Section 41 of the Act describes the
ostensible owner's transactions and outlines his authority. The most obvious characteristic of the apparent owner
is the authority granted by the owner of the property to participate into transactions on his behalf. According to
various important case laws, the consent for this authority may be verbally communicated or deemed to be
implied. Furthermore, lying cannot be used to gain permission. A property transfer is also final once it has been
completed, at the owner's option. This covers both whole and partial transfers of rights, such as sales and
exchanges, as well as partial transfers like mortgages and leases. In addition, the law places the burden of
proving that the transferor is the ostensible owner on the transferee. Additionally, he must operate honestly and
prudently while conducting the necessary research into the status of the property transfer.

9
1992 196 ITR 786 Delhi