Notes on Doctrine of Notice, Part Performance, Lis
Pendens(Transfer of Property pending suit), Fraudulent Transfer uploaded seperately Valid Transfer – Title of • Transferor The requirements of a valid contract and valid transfer have already been discussed under S. 5, the most important is that the title of the transferor should have legal marketable title to the property. A person having a defective or no title to the property cannot pass on a better title to purchaser than what he has and the purchaser will acquire defective or no title. There are certain exceptions to this which are dealt in Transfer of Property Act. They are transfer by: – Ostensible owner (Doctrine of Holding Out) (S. 41) – Unauthorised person who subsequently acquires valid title. (S. 43) – The person authorized under certain circumstances only or Transfer by persons having limited powers (S. 38) Implied Transfer by Limited Owners (S. 38) • Various laws have prescribed limited rights to certain individuals to transfer that property, though they are not owners. Such transfers have to be done only under special circumstances enunciated in respective laws. Section 38 deals with this situation. Some of such persons are – The Kartha of a Mithakshara family – Executor – A mortgagee – A guardian of minor’s property. • It provides that where a transferor has limited power to transfer the immovable property, only if certain circumstances come into the picture then, transfer can only be made when such circumstances actually arise. • It further states that where a person transfers a property on the ground of the actual existence of such circumstances then the transfer shall stand valid even if such circumstances are not in existence. • The specific circumstances under which such person have authority to transfer the property is generally the ‘legal necessity' which may differ or vary from case to case. • If these persons as transferor allege the existence of such circumstances and the transferee has made an inquiry and after using reasonable cares has acted in good faith then it shall be sufficient and transferee will get a good title to the property. • In case of sale of minor’s property by his natural or legal guardian there should be a legal necessity for the transfer itself and court permission is necessary for any sale. The burden in all such cases is laid on the transferee to justify the transfer in his favour. The reason for this rule is that no transferee of immovable property can safely take a transfer of such property without enquiring into the title of the person who is his proposed transferor. If the latter’s title is perfect, then the question of enquiry becomes immaterial. But if it was dependent upon variable circumstances, then the transferee must justify his transfer. Transfer of Property out of which maintenance claims have to be met (S. 39) • It is an extension of limitation under S. 38. • Sec 39 of Transfer of Property Act, provides that a person shall not transfer the immovable property without the concurrence of wife and children who have a right to receive maintenance or a provision for advancement or marriage for the profits of immovable property. In case such property is transferred without concurrence it is not that transferee will not get a title, he will get a title but he is liable to give maintenance from the profits of immovable property which he acquired, and settle any other claims if he has notice of such rights or claims. In case if such transfer is gratuitous such rights or claims can be enforced against transferee. • In case of wife and children of transferor have right to maintenance over the transferred property then such wife and children are entitled to enforce right to maintenance against such transferee on that transferred property, u/s 39 or Transfer of Property Act. But this right is not exercisable against transferee for consideration and in cases where transferee does not have notice of such right. Ownership by Holding out - Transfer of property by an ostensible owner (S. 41) • 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, (1872) 11 Beng LR 46, p 52. 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. Remaining notes on Section 41 are being sent in a Word file. Feeding the Grant by Estoppel (S 43)
• Section 43 of Transfer of Property Act
1882 : "Transfer by unauthorised person who subsequently acquires interest in property transferred” • Based on the following Principles: • Common law doctrine of estoppel by deed • Equitable principle –if a person promises more than he can perform ,must fulfill the promise when he gets ability to do so. Essentials of Section 43 1. The transferor makes a false representation that he’s authorised to transfer a certain immovable property 2. This representation may be erroneous or fraudulent 3. The transferor professes to transfer the property; 4. For consideration; 5. The transferee enters into a contract, acting on that representation; 6. The transferor, later on, acquires some interest in the property while the contract is subsisting. 7. The transfer would operate on any such interest acquired, at the option of the transferee. 8. Provided that, there is no subsequent bona fide transferee, who has entered into the transfer without having any notice of the earlier contract between the transferor and the prior transferee. • The doctrine of feeding the grant by estoppel is based on the maxim ‘nemo dat quod nonhabet which implies that no one can give to another, which he himself does not possess’. • This general rule lays down that no property can be transferred by any person who is not authorised to do so. Thus if a person does not have a title to property, he cannot validly transfer the same to another. But this rule has been relaxed in practice due to “adjustment of equities” between such person and the transferee. One of such exceptions to this rule is provided in sec. 43, T.P. Act. The doctrine of feeding the grant by estoppel compels a man to perform when the performance becomes possible. • The Rule of Estoppel signifies that when a person makes a promise to another person, which is more than what he can perform or which he is incapable of performing, then he cannot later on claim incompetency as a legitimate excuse when he acquires the competency to fulfil his promise. • In simple words, he, later on, cannot claim incompetency to avoid his liabilities. Such a person would be compelled to fulfil the promise when he acquires the competency to perform it. This competency feeds the estoppel. • Also, the transferee must show that some representation was made to him, which may (not must) be erroneous or fraudulent. • Acting on the representation made by the transferor depicts the lack of knowledge on the part of the transferee. Hence, for there to be a representation, it is material that the transferee should be unaware or should not have the notice of the lack of competency on the part of the transferor to enter into the transaction. • In a case where the transferee knows about the defect in the title of the transferor at the time of the transfer, Section 43 or the Rule of Estoppel would not apply. • Absence of knowledge on the part of the transferee about the defect in the title of the transferor also means that the transferee took reasonable care to protect his interest and then believed the title of the transferor should be good. Hence, it is a duty on the part of the transferee to inquire before entering into the transaction as to the title of the transferor and protect his own interest. • Example: A represents to B that he is authorised to transfer the property X whereas in reality he is not and professes to transfer the same. Acting on that representation B provides consideration for the same. Now the transfer is inoperative as A had no authority to transfer the property. But later on, A acquires the property under the will of his Uncle, who was the owner of the property. • Now A can be compelled to complete the transfer. He cannot plead the transfer to be inoperative on the grounds that he had no authority at the time of transfer. • Section 6 & section 43 • Acc. To s.6(a) ’chance of heir apparent’ to get the property in future is a non transferable right (void ab initio however s.43 validates transfer made without title when the transferor subsequently acquires the property. • Jumma Masjid v.Kodimaniandra deviah (1962) supp(2) SCR 554- No conflict between s.6 & 43 both can operate simultaneously • Facts- heir apparent sold his would be share in joint property to M for Rs. 300, became entitled to property later-M invoked S. 43,other part contended its void ab initio Held –M entitled to get protection and SC observed that S.6(a)- rule of substantive law & s.43 based on estoppel (rule of evidence) • Thus, S. 6 (a) would be applicable generally and the transferee will not have a remedy if the transferor does not become entitled to the said share. However, in case transferor becomes entitled the doctrine of feeding the grant under s. 43 will become operative if the essentials are met.