doctrine of property law, Summaries of Property Law

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Important Doctrines

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)

• (^) 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.

• (^) 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.

• (^) “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.

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.

• (^) 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.