Section 41: Transfer by Ostensible Owner

Where, with the consent, express or implied, of the persons interested in immovable property,
a person is the ostensible owner of such property and transfers the same for consideration, the
transfer shall not be voidable on the ground 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.
This section deals with the transfer of property by an ostensible owner, that is one who is not
the real owner. The general rule is that all ostensible owners cannot pass on a good title to the
transferee, but if the conditions laid down in the section are fulfilled, the transfer shall not be
voidable on the ground that the TR was not authority to make it.
THIS SECTION IS EXCEPTION TO GENERAL RULE : THAT A PERSON CANNOT
CONFER A BETTER TITLE THAN HE HINSELF HAS IN THE PROPERTY
TRANSFERRED.
Requirements of this section :
1)
2)
3)
4)

The transferor is the OSTENSIBLE OWNER

He Is so by the consent express or implied, of the real owner
The transfer is for consideration
The TE has acted in good faith and has taken reasonable care to find out that the TR

had power to transfer.

POWER POINTS.
Where with the consent of the real owner (person interested in property) ;
Another person is ostensible owner of that property
OSTENSIBLE OWNER transfers that property for consideration
Such transfer shall not be voidable by the real owner
On the ground That the transferor was not authorised to make it.
Provided that the transferee- a) Takes reasonable care to find out that the TR had the
power to make that transfer and b) Had acted in good faith.

OSTENSIBLE OWNER: Is one who has all the attributes/indicia of ownership without being
the real owner. Apparently OSTENSIBLE OWNER looks like a real owner, but if scrutinized
minutely, it may be found that although his name appears in the records, and he also possess
the property but he never intended to own that property. The real test is : As to what is the
source of the purchase money, the motive behind giving the benaami colour, possession of
the property and as to who is enjoying the benefits of the property.

NOT OSTENSIBLE OWNER: Persons who hold possession of property as Agents,

Guardians or in any other fiduciary character . Examples:
A guardian of minor cannot be said to be OSTENSIBLE OWNER of minors property , as
minor cant give consent. Similarly, manager of HINDU FAMILY, cant be OSTENSIBLE
OWNER.
CONSENT OF TRUE OWNER :may be express or implied
The real owner is not responsible unless the apparent ownership of the TR , has been
permitted or created by him. If he creates or permits the show of ownership by either express
words or consent , or by acts or conduct which imply consent, it is not necessary that acts
should have been influenced by fraudulent intention, for his liability rests upon his having put
the TR in a position which enabled him to commit fraud.
PROTECTION to an OSTENSIBLE OWNER.
The protection given to an OSTENSIBLE OWNER applies to him only when transaction is
for consideration. It will not protect the OSTENSIBLE OWNER who holds the property
gratuitously and free. The consideration has been used in the sense as defined by section 2(d)
of ICA, 1872 .
REASONABLE CARE AND GOOD FAITH :
Reasonable Care means such care as an ordinary man of business would take. It is also
expected from everyone who claims to have purchased property free from any existing right,
equitable or legal ,over it and when the purchaser has failed to exercise it, he cannot claim
that real owner should be called on to prove or show that he acted like a reasonable man of
business with ordinary prudence. Whether the particular transferee has acted so, must depend
on circumstances of each case. Where there is absence of reasonable care and ordinary
prudence on part of TE to ascertain the power of transfer or for the purposes of making a
valid transfer, the TE will not be protected under section 41.
GOOD FAITH : These words mean that the TE has acted honestly and in the real belief that
the OSTENSIBLE OWNER is the real owner. Reasonable care is not enough if there is
absence of good faith. The TE to establish that he has acted in good faith, is to prove that he
has taken reasonable care to ascertain that the OSTENSIBLE OWNER has power to transfer
the property . ( state of bihar v. dundhulal)

BURDEN OF PROOF : This section is an exception to the general rule that no person can
dispose of an interest in property more that what is vested in him, The onus, is therefore is in
the first place on the TE to show that the TR was OSTENSIBLE OWNER, and the TE has
acted in good faith and with reasonable care. The onus is then shifted on the party seeking to
defeat the TEs title to show that there was something to call attention and invoke injury.
DOCTRINE OF HOLDING OUT :
A Transferee from the OSTENSIBLE OWNER is protected against the real owner, under the
Doctrine of Holding Out which is embodied in section 41. This section deals with a case
where the rights of two innocent parties come into conflict. If a property is owned by A, but B
is allowed by A to show as the owner in the eyes of the public, and taking the advantage of
this, B sells the property to a bona fide purchaser, then the question arises whether A can
recover the property from such purchaser. Since the owner rendered the fraud possible, by
holding out B as owner , he has to suffer..
CASE LAWS :
Ram Kumar v Mcqueen : Facts : Alexander McDonald lived in Calcutta, had a mistress
Bunnoo Bibee, had two children by her, One of them is respondent mcqueen. Property in
dispute was purchased in name of BB, sale deed stood in her name.She recd rent from the
tenants. She sold this property in june 1843 to Ram Kumars father.Subsequently purchaser
created important buildings upon the land. After death of BB,a suit was brought against ram
kumars father by Mcqueen, claiming under the will of McDonald, that the property though
in name of BB, McD was the real owner, but used her name.
Decision : McD though the real owner but he had allowed BB to hold herself out as the RO,
he or his representatives could not recover upon their secret title unless they could prove that
the purchaser had direct or constructive notice of the title.
Section 43. Transfer by unauthorised person who subsequently acquires interest in
property

transferred

Where a person fraudulently or erroneously represents that he is authorised to transfer certain

immovable property and professes to transfer such property for consideration, such transfer
shall, at the option of the transferee, operate on any interest which the transferor may acquire
in such property at any time during which the contract of transfer subsists.
Nothing in this section shall impair the right of transferees in good faith for consideration
without notice of the existence of the said option.

Illustration
A, a Hindu who has separated from his father B, sells to C three fields, X, Y and Z,
representing that A is authorised to transfer the same. Of these fields Z does not belong to A,
it having been retained by B on the partition; but on B's dying A as heir obtains Z. C, not
having rescinded the contract of sale, may require A to deliver Z to him.

POWER POINTS: Transfer is,

1. Based on (a) fraudulent or (b) erroneous representation;
2. There is representation;
3. As to the authority to transfer; and
4. Professes to transfer,
5. For consideration,
6. Such transfer shall operate,
7. At the option of the transferee, on
8. Any interest the transferor acquires subsequent thereto at any time,
9. Provided contract of transfer subsists,
10. Except wherein,
11. Bona fide purchaser for value without notice of option gets in.
FEEDING THE ESTOPPEL : The basis of the principle embodied in this section calling
upon the transferor to deliver the subsequently acquired property to TE who must have acted
upon his false representation and did harm to himself by paying money for what he could not
get, and thereby feed the estoppel created against him. If a person who alienated property to
which he has no present title may subsequently become entitled to , he must honour his
commitment.Since he cant derogate from his own grant, his subsequently acquired interest,
Feeds the estoppel, raised by the prior grant and perfects the title of the alienee.

Section 43 and Section 6(a)

There appears to be some conflict b/w S.43 and S.6(A) dealing with the non-transferability of
spes successionis.
SC IN JUMMA MASJID MERCARA V. KODIMANIANDRA, set at rest the controversy,
holding that both the provisions can be given full effect in their respective spheres. The court
held that when a person transfers property representing that he has present interest there in
whereas he has in fact, only a spes successionis, the transferee is entitled to the benefit of
Section 43 if he has taken the transfer on the faith of that representation and for consideration
. There is no conflict in S.41 and 43 and both can operate simultaneously.
FACTS: A heir apparent sold his would be share in a joint property to the masjid for 300/-.
Subsequently he got the property in his share. The masjid claimed the subsequent acquisition
under S.43 as the contract was not revoked. The argument of the transferor and was that
interest at the date of transfer was one of spes successionis and void ab initio under S.6(a). It
was argued further that a transfer void under S.6(a) cannot be validated by invoking S.43. SC
held that S.43 would apply and subsequent acquisition shall pass on to masjid. SC :S.6(a) a
rule of substantive law , S.43 rule of evidence. It is based on estoppel.

48.

Priority

of

rights

created

by

transfer

(DOCTRINE

OF

PRIORITY)

Where a person purports to create by transfer at different times rights in or over the same
immovable property, and such rights cannot all exist or be exercised to their full extent
together, each later created right shall, in the absence of a special contract or reservation
binding the earlier transferees, be subject to the rights previously created.
Ownership of a prop is a bundle of different rights which a person has in respect of it, and
that an owner of property can assign either all or any of his rights to another person. If he
transfers only a few of his rights, the remaining ones are still with him and he can deal with
all or any of them in any lawful manner he pleases. For instance, A mortgages his immovable
property to B, B would get a few rights over the property.But A still would remain the owner
and such as such he would have a power to redeem the mortgage and get the property back to
himself. Now, instead of redeeming the mortgage, A transfers the right to a third person
altogether either by sale or mortgage. If it is a sale, A will have no more interest in the
property, and the vendee would be entitled to redeem the property from B.If it is a mortgage
then it would be a mortgage of his remaining rights. In that event, there will be two
mortgages, one in favour of B, and the other in favour of such third person. An owner of an
immovable property can create , any number of transfers either at the same or at different

times in respect of the same property. Such transfers, need not be all of the same type.
Example : I may lease my house to B on an yearly tenancy.At any subsequent time, I may
mortgage in favour of C. And after that I may make a gift of that house to D subject to the
mortgages.
When transfer is of inconsistent types are created, no question of priority would arise. But
where they are of one type, the question as to which of them would precede the other arises.
In the above case, two mortgages have been created. For this in section 48 the rule laid down
is followed, until there is a contract to the contrary.
The principle of the above rule is based on equitable maxim, qui prior est tempore porior
est jure, which means that one which is first in time is better in law.Where there are
successive transfers of same property, the latter transfer will be subject to prior transfer.