Introduction

The rule incorporated in this section governs transfers where the transferor, to begin with, has
no capacity to transfer the property, yet has entered into the transaction with a
misrepresentation with respect to his title to the property. He makes the other party act on this
representation, and then acquires a good title to the same property in future. In such cases if
the contract is subsisting and the property is available, then it gives the transferee the option
to either go ahead with the transfer or rescind the same. If the transferee still wants the
transferor to perform his part of the contract, he can exercise his option to validate this
transfer that was imperfect to begin with and the transfer shall become valid on the exercise
of such option by the transferee. Here the willingness of the transferor to go ahead with
transfer is immaterial and it is solely on the wishes of the transferee, which he has to show by
exercising the option that the transfer shall become valid, or in other words, Where a person
having a limited interest in the property transfers a larger interest to the transferee on a
representation and subsequently acquires the larger interest, the larger interest transfers to the
transferee at the option of the latter

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Representation, Fraudulent or Erroneous

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The representation under the Act may be fraudulent or even erroneous. Whether it is

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erroneousis a question of fact. It may involve a case where the transferor genuinely believed
that he has the competency to transfer the property. Even in such cases, if due to his

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representation, for which he is not maliciously responsible, the other party has been made to
act on it, s. 43 would apply.

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For the validation of the transfer made by an unauthorised person under a representation, this
contract in the first place should not have been against any law in any form whatsoever, i.e.,
not only the parties should be competent to contract, but the purpose of the contract should be
Lawful, and not opposed to public policy or to defeat the rights of creditors or a provision of
Law, etc.

Thus if the transferor’s incompetency was owing to his minority or 0J insanity, S. 43 would not
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confer an option in favour of the transferee to validatetr-the
5H3Ktransfer on the minor’s attaining
majority or curing of insanity, as this is a statutory incompetency, that was appended to the
minor or an insane person, that prohibited him from transferring the property. Similarly, if a
particular piece of land has been declared by a statute to be specifically inalienable, such as
Bhumidhari land, S. 43 cannot apply to such a situation. However, where the property was
requisitioned by the military, and a lessee assigned his interest in this property conditional
upon the property being de-requisitioned by the military, the Court held that after the
property was so derequisitioned and the transferee acquired competency, he was required to
perform his part of the contract under the assignment.

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Transfer must be for Consideration

An essential factor to be considered in transfers by unauthorised transferors on

misrepresentations, and the option available under s. 43 is, that these transfers should be for
Consideration. Though it is not necessary to show that some monetary consideration has
already passed from the transferee to the transferor, but the transfer in essence is one
involving consideration, and there is a liability on part of the transferee to pay it. Thus, s. 43
does not apply to gratuitous transfers like gifts, etc.

Subsequent Acquisition of Interest by the Transferor

The transferee is entitled to the benefit of this doctrine only when the transferor subsequently
acquires an interest in the property that he originally represented as his. If the transferor does

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not acquire a further interest in the property transferred, or if such further interest is acquired

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not by the transferor but by his successor in interest, or where the heirs of the transferor

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acquire property in their own right and not as heirs of the transferor, this Section has no
application.

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For instance, A transferred property belonging to his wife, representing to X that he is
competent to transfer the same. His wife made a Will of her property in favour of her son S.
A died and then his wife died, and the son took the property under the Will. The transfer

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would not be valid at the option of X, as the heir had acquired the property in his own right.

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Where a son fraudulently transferred the property owned by his mother but never acquired

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any interest in it during his lifetime either by inheritance, succession or otherwise , the

succeeded

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doctrine of feeding4Uof0S grant by estoppel would not be applicable as against their heirs who
properties of their grandmother. The petitioner in such cases cannot claim
any benefit of subsequent acquisition

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Contract Subsisting

An essential condition for the application of s. 43, to the transfers by unauthorised transferors
brought about by misrepresentations is that for the validation of such transfers at the option of
the transferee the contract must be subsisting. It shouldtr-not
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rescinded or otherwise
brought to an end by the act of the parties. For instance, A, erroneously makes a
representation to B, that he is competent to transfer a house X. The house originally belonged
to his father F, but A did not know that F had bequeathed the house to his mother M, and she
was the sole owner. B pays consideration, but later discovers that A was not the owner, and
therefore not competent to transfer it. He rescinds the contract and asks for his money back.
A pays him the entire consideration as per the terms of the contract. Two days later, M dies
and A, as her sole heir, inherits the house. As the contract has already been brought to an end,
it is ‘not subsisting’ and B cannot exercise his option to validate the transfer. On the other
hand, in the same example, if after the transferee becomes aware of the defect in title, he
chooses to wait, i.e., does not rescind the contract or sue for damages,4Uand
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0S the contract is still
subsisting when the mother dies, and A becomes the owner of the property, then B can
exercise his option for validation of transfer. If he so wants, A would have to transfer the
property in his favour and he cannot take the plea that at the time he had entered into the
contract with B, he did not possess the title to the property.

Thus, for the application of the doctrine, the original contract must be subsisting in order for
the transferee to exercise the option. Where the transferee obtains a decree on the contract or
if the property has been sold, or the charge has been assigned, the doctrine would have no
application. However in case of mortgage, a decree alone will not put an end to the contract
as the mortgagor is entitled to redeem till the ultimate sale.

Option of the Transferee

The doctrine provides an additional remedy to the transferee besides a claim for damage, and
enables him to get the property itself. The transfer shall become valid only when the

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transferee exercises the option to validate it and is capable to do the same. ‘At the option of
the transferee’ means that the validation of the transfer depends purely on the transferee’s
will and the transferor cannot force a transfer on him, after he acquires competency. If the

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transferee so desires, he can avoid this transfer which in the first place, was brought about by
a misrepresentation. However, there is no automatic validation of the transfer,86 as no rights
are vested in the transferee from the inception of this transfer.87 The option must be

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exercised by the transferee. There is no specific form of exercise of option and any indication
is sufficient. It can be done verbally, through sending a notice to the transferor to execute a

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transfer deed in favour of the transferee or even by instituting a suit in a court of law to that

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effect. It is not necessary that a demand should be made. In a nutshell, the law does not
provide any specific mode of exercising the option, but the intention should be clear.

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The Supreme Court, in Kartar Singh’s case has overruled a plethora of Cases, including
Lord Halsbury’s famous statement, wherein it was held that s. 43 does not impose upon the
transferee, the duty to take care.

In Kartar Singh v. Harbans Kaur, a Hindu woman executed a sale deed of the lands
belonging to her minor son in 1961. The son on attaining majority in 1975, filed a suit to the
effect that this sale was not binding on him, and was void. The Court 4J0J
passed a decree that this
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sale, executed by the mother of the properties belonging/owned by her minor son was void,
and directed that the possession of these properties be restored to the son. Before the son
could take the possession of the property, he died, and the mother as a class I heir succeeded
to the property. The transferee, X, claimed the benefit of s. 43 and when the remedy was
refused by the High Court went to the Supreme Court in appeal. The Court held that for the
application of s. 43, two conditions must be satisfied. First, a fraudulent or erroneous
representation made by the transferor to the transferee that he is authorised to transfer certain
immovable property and in the purported exercise of authority professed to transfer such
property for consideration.
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Secondly, when it is discovered that the transferor acquired
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an interest in the transferred
property, at the option of the transferee he is entitled to get the restitution of interest in
property got by the transferor, provided the transferor acquires such interest in the property
during which contract of transfer must subsist. As the primary distinguishing factor between
the application of s. 43 and s. 6(a) is knowledge of the lack of title or incompetency on part of
the transferee, the Court here tried to examine whether the transferee in the present case had
knowledge of the fact whether, the mother was competent to transfer the property of her son.

The Court said:

The material time at which the knowledge has to be proved is the time of the conclusion of
the contract. When we analyse the issue as to whether the transferee who is now seeking the
beneficial protection of Section 43, had knowledge or notice of the incompetency of
transferor or not, we must take note of the fact that even constructive notice on his part would
bring the case under Section 6 (a). If by making some inquiries or verifying certain facts, as a
normal reasonable prudent person, the transferee could have detected the incompetency of the
transferor to transfer the property, but he failed to do that, law would impute constructive

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notice of the same on him, and as the consequences of actual and constructive notice are

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identical, in case of imputation of constructive notice also, the plea of misrepresentation,

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erroneous or fraudulent would not be accepted by the Court. In such a case, Section 6 (a)

not apply.

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would be applicable under which this transfer would be considered void, and Section 43 will

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Here, it is pertinent to note that when the mother transferred the property belonging to her son,
the marginal note on the sale deed mentioned that the land had been acquired by her and by

deed

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her minor son by exercising the right of pre-emption, and that she was executing the sale

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of her own

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share and acting as the guardian of her minor son in so far as his share
is considered. Thus, the fact that she was acting as the guardian and the owner was in fact a

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minor, was apparent from a bare reading of the sale deed. In law, a guardian is not competent
to transfer the properties of a minor, unless there is an authorisation from the Court.

The fact that she was a guardian and also acting as one, was the starting point of inquiry, and
the transferee should have probed further. As a reasonable prudent man, he was expected to
enquire whether on her own, the mother, as the guardian, was competent to alienate his share.
The second requirement is that the contract should be subsisting at the time of the claim but
here, the Court held that as right at the inception, tr-the
5H3Kcontract
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transferee ought to have known about the incompetency of the transferor this void contract
cannot be deemed to be subsisting at the time, when the mother due to inheritance acquired
competency.

Thus, according to the Court, the transferee here knew the fact that the mother was not
competent to effect a valid transfer and s. 43 would have no application. The litigation, which
took 33 years, culminated later, with the Supreme Court pronouncing the verdict, that the
transferee cannot acquire a valid title to the property because he was deemed to have
knowledge of the defect in title in the first place.
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Distinction between spes succession and the rule of estoppel under S. 43
The primary difference between S. 6(a) and S. 43 are as follows:

1. Section 6(a) enacts a rule of substantive law, while S. 43 incorporated a rule of

estoppel.
2. Section 43 applies only applies in those cases, where the transfer is for
consideration, it does not apply on gratuitous transfer. It applies in cases where
despite a misrepresentation, the transferor, either takes or seeks to take a monetary
benefit from the transferee. It therefore would not apply to cases where a person
transfers the property by way of gift. On the other hand, the prohibition under S.

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6(a) applies to all kinds of transfers, irrespective of whether they are for

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consideration or gratuitous transfer. A gift of property that a person hopes to
inherit is also void.

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3. Under S. 6(a) the fact that it is a transfer of spec successions is within the
knowledge of both the transferee and transferor. There is no misrepresentation

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from the side of the transferor in regards to his competency to pass a good title in
present to the transferee. Under S. 43, due to express representation, fraudulent or

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erroneous, the transferee, at the behest of the transferor, is assured a good title.

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Section 43, is very clear of the fact that its application will only cover those cases,

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where due to the making of a representation by the transferor, that he is competent

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to transfer a piece of property, the transferee has been expressly misled. The

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transferor,
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transferee had no knowledge about the defect or lack of title on part of the
3U4P8S6N4U he is made to believe in the competency of the transferor to transfer the
property.
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4. The status of a transfer under S. 6(a) is void in its inception, however under S. 43,
the transfer is voidable at the option of the transferee provided two conditions are
satisfied. First , that the contract should be subsisting at the time the transferor
attains competency to transfer the property, i.e it should not have been rescinded
and Secondly, that the property should be available with the transferor. It should
not be in the hand of a bona fide transferee for value.
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