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DR.

RAM MANOHAR LOHIYA NATIONAL LAW UNVERSITY,


LUCKNOW

FINAL DRAFT

PROPERTY LAW – I

SUBJECT: FOR VALID APPLICATION OF S.41, THE TRANSFER MUST BE FOR


VALID CONSIDERATION AND ALSO MADE IN GOOD FAITH

UNDER SUPERVISION OF: SUBMITTED BY:


DR. RADHESHYAM PRASAD Manu Pratap Singh
ASSISTANT PROFESSOR (LAW) Roll No. - 75
Dr. RMLNLU Sec- ‘A’.
ACKNOWLEDGEMENT

Without your great support Dr. Radheshyam Prasad Sir, it would not have been

possible for me to write this project. You have always been very responsive in

providing necessary information, you have always been my source of inspiration

and will remain forever I admit this too. Without your generous support I might not

have been able to complete this project.

I am very thankful to you and for your magnanimous support!

I would also like to thank the library staff of Dr. Ram Manohar Lohia National

Law University for providing me with all the necessary online databases and books

required for the completion of this project work.

Manu Pratap Singh

-Roll no. 75
TABLE OF CONTENTS
1. Introduction
2. Ostensible Owner
3. Principle
4. Consent
5. Implied Consent
6. Property Inquiry
7. Transferee to act honestly and in good faith
8. Burden of Proof
9. Transfer not Voidable
10. Case Laws related to Section 41, Transfer of Property act, 1882
11. Conclusion
12. Bibliography
INTRODUCTION

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.

OSTENSIBLE OWNER

“Ostensible” literally means “apparent” or “seeming”. An ostensible owner is a person who


apparently or seemingly appears to be the owner, though in reality he is not. He is a person
having all indicas of ownership having being real ownership.1 He is different from a mere
trespasser or a person in unlawful occupation of the property. His behavior and conduct appears
to be that of the owner of the property with the consent or conduct of the real owner.

In Mohamad Shakur v. Shah Jehan2 the real owners lived in a different village, and had
authorized a widow to use the property as she liked and afterwards she sold it. The real owner
lost the case and the transfer was a valid one.

PRINCIPLE

This section enacts a rule of estoppel as against the real owner of the property who:

i. By his conduct or consent or otherwise makes the other believe that a particular person
has all the powers over the property as that of the owner, including that of alienation;
ii. Such person in fact is not authorized to alienate the Property;
iii. He alienates it as an ostensible owner;
iv. The transfer is for value or consideration, ie, it is not a gift;

1
Kannashi Vershi v. Ratanashi Nensi, AIR 1952 Kutch 85
2
63 IC 125
v. The transferee acts bona fide and has taken reasonable care to ascertain that he is
competent to transfer, ie, the transferee does not have actual or constructive notice of the
real facts; and
vi. The real owner would be prevented from disputing the validity of the transfer on the
grounds that the transferor was not, in fact, competent to do so.

The principle underlying this section is that if two innocent persons of one defrauded or cheated
by one, who after transferring the property of one without his consent, to another, is no longer
present, and the two personas enter into litigation with respect to the property transferred, then
out of these two apparently innocent persons, the one who, by his conduct or consent enabled the
fraud to take place, will suffer.

In Niras Purve v Tetri Pasin3, a husband was the owner of the land. He effected a mutation in the
revenue records of the same in favour of the wife, and shortly thereafter went on a pilgrimage.
Meanwhile, the wife sold the land to C as an ostensible owner. C made due inquires and paid the
consideration. As the land was subject to a mortgage, C paid the loan and redeemed the
mortgage. The husband on his return could not reclaim the land as he, by the conduct, had held
out the wife as an ostensible owner.

CONSENT

The possession and ostensible ownership must be with the consent of the real owner of the
property. The real owner must also be capable of giving consent to transfer and should have
given it with free will. It would include a consent given on a mistake of fact but not one given on
a misapprehension of legal status. The transferor should be shown to have been the ostensible
owner with the express or implied consent of the true owner but the transfer itself need not be
with consent of the true owner.

The section therefore will not apply if the real owner does not give the consent, and had in fact
challenged the occupation of the possessor. In Shafiquallah v. Samiuallah4, after the death of the

3
Niras Purve v Tetri Pasin, (1916) 20 Cal WN 103.
4
Shafiquallah v Samiuallah, AIR 1929 All 943.
owner, the property was in possession of his illegitimate sons, who, in law, were ineligible to
inherit his property. The real heir filed a suit for claiming the possession of the property as per
his entitlement under the laws of inheritance. However, the possessor retained the possession,
entered their names in the revenue records and later sold the property to a third party, C. The sale
was affected after the rightful heir had already filed the suit claiming possession of the property.
The suit was decreed in favour of the heir. The mortgage claimed the benefit of s 41 but his
claim was rejected on two grounds:

 The possession of the property was not with the consent of the real owners of the
property, rather a suit had already been instituted challenging their possession;
 The mortgage was affected while the suit with respect to this property was already
pending in a court. Thus the transferee/mortgagee had become a transferee who took the
property subject to the rule of lis pendens, and was bound by the decision of the court.

IMPLIED CONSENT
As aforesaid, the ostensible owner must be in possession of the property and holds himself out as
the owner with the consent of the real owner. Consent need not be express or in writing. It
includes implied consent as well. Where by conduct a person allows other to deal with his
property as his own, it would amount to implied consent, but a mere silence would not amount to
implied consent5, more so when a person is not aware of his rights, or unless there is a duty to
speak or it is to induce a belief that the party keeping silence has no rights. Negligence may
amount to implied consent.
In Zarifunnissa v. Sahfiquz-zaman Khan6 two women having husbands, who knew business,
allowed their brother to dissipate their of the property. Here, the brother is the ostensible owner
with the implied consent of the sisters.

In Shamsher Chand v. Bakshi Meher Chand,7 it was held that if a party is not aware of his rights
or is silent about them, then in such case it couldn’t be said that the real owner had consented to
the transfer of the property.

5
P Convent v. Subbana, AIR 1948 Mad 320
6
AIR 1928 PC 202
7
AIR 1947 Lah 147
Consent does not Include an Intention to Deceive
It is essential for the application of this principle that the ostensible ownership is with the consent
of the real owner of the property. However, this consent, express or implied, does not include an
intention to deceive the transferee on part of the real owner; nor is it essential to prove the same.
The real owner may be innocent in allowing the world at large to think that someone else is the
owner, but if the transferee has made proper inquiries and has acted in good faith, his interests
would be protected.

Transfer’ Does not Include an Involuntary Transfer


The term transfer under s 41 refers to a transfer by the ostensible owner and applies to voluntary
transfers by the act of parties. It does not apply to a transfer made by an order of the court, such
as an auction sale.

Transfer Includes a Partial Transfer


It is not necessary for the application of the section that there must be a transfer of property by
sale or exchange. As the term ‘transfer’ includes the transfer of an interest in the property,
therefore it would equally apply to a mortgage, and an ostensible mortgagee is treated as an
ostensible owner.

Transfer for consideration


The principle protecting a transferee applies only where the transfer is for consideration. A
gratuitous transferee is not protected. Thus the principle does not apply in case of gifts and other
transfers effected without any monetary consideration.

Transferee Must Take Reasonable Care


What is absolutely essential to show is that the transferee had taken such reasonable care as an
ordinary man of business would take. Even otherwise, there is always a duty imposed on an
ordinary prudent person, and hence the transferee is expected to be vigilant and protect his own
interests. Here, a duty is imposed on the transferee to make inquiries into the title of the
transferor unless the title is very clear, and he cannot absolve himself by stating that he entrusted
his duty to his solicitor or relied merely on the entries in the revenue or khewar municipal and
police registers. For evading the charge of willful abstention from making an inquiry and
consequently the imputation of constructive notice, there should be some starting point of
inquiry, which would lead to some result.

If there is no starting point of inquiry or clue to suggest that the transferor is not the real owner,
there is no duty to inquire further, but if he makes inquiries and finds out the defect, yet proceeds
to take the transfer in his favour, he will not be protected for want of good faith.
In the case of Mathura v. Ambika8 the real owner had sold the property to another person and got
it registered before the transfer by the ostensible owner could be registered, then it was held that
the transfer by the real owner would be held valid as he has a greater title over the property than
the ostensible owner and the rights of third person who had purchased this property from the
ostensible would not be protected under this section.

PROPERTY INQUIRIES
The transferee must show that he made such enquiries, as a reasonable prudent man would have
taken to safeguard his own interest. A finding on a question whether the transferee had made
proper inquiries before the purchase is question of fact, but from proper inquiries before the
purchase is a question of fact, but from that finding it can be said that reasonable and sufficient
inquiry was made by the transferee as to attract the application of the legal Provision is a
question of law, and unless such plea was taken in the pleadings and put in issue between the
parties, the party cannot raise the plea for the first time in school appeal. Whether a transferee
from an ostensible owner took reasonable care to ascertain that the transferor had power to make
the transfer has to be determined with reference to the circumstance of the particular case; the
test being whether he acted like a reasonable man of business and with ordinary prudence.
However, the question whether that test has been properly applied in any particular case cannot
be regarded as one of pure fact open to review in second appeal.

8
(1914) All LJ 993
TRANSFEREE TO ACT HONESTLY AND IN GOOD FAITH
In order to protect his own interests, the transferee should not only act honestly and in good faith
but must also establish that he made enquiries to confirm his faith. He cannot afford to ignore
true facts such as a defect in title, or be guided by misconceptions.

BURDEN OF PROOF
The burden of proving that the transferee was an ostensible owner is on the transferee who seeks
the protection of this section. He has to prove that the transferor is an ostensible owner, or that it
is benami transaction. Besides this, he must also prove that he took reasonable care to protect his
interest. However, the burden shifts on the person if he alleges the existence of facts leading to a
starting point of inquiry, which if pursued or investigates, would have led to the discovery of the
truth.
The basic principle in law is that the rights of the legal owner should, prima facie, be protected
unless he has done something to induce innocent purchases or pledges into the belief that the
immediate possessor is the true owner. Mere bona fide on part of the purchaser or the pledged is
not enough. He will have to prove that by some act or omission, the true owner has forfeited the
right to recover back his possession. It is therefore incumbent upon the party resisting the claim
of the favour or of the latches on the part of the owner, which have led him to advance his
money.

In Ramcoomar Koondoo v. John and Maria McQueen,9 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.

TRANSFER NOT VOIDABLE


Where the ostensible owner transfers the property, this section provides that the transfer shall not
be voidable on the ground that the transferee had acted in good faith after taking reasonable care.
The term ‘voidable’ does not mean voidable in its entirety. The principle applies where the

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IA Supp vol 40
whole transaction is not voidable. The purchaser acquires a title, which is voidable at the
instance of the real owner, and until his purchase is avoided, he can deal with the property.

CONCLUSION
Section 41 of the Act has done a fair job in protecting the interest of the innocent third party.
Though this section may seem to be a bit biased towards the third party but this is mainly if the
real owner is himself at some fault. No one can simply say that he has now acquired the property
and he cannot be evicted now. The third party has to take a lot of care while law itself to check
the misuse of this section by ostensible owner and the third party has put purchasing the property
and these necessary requirements. This, in a way protects the interest of the real owner also.
BIBLIOGRAPHY

Books

 Dr. T.P. Tripathi, Transfer of Property Act, 1882


 Dr. Poonam Pradhan Saxena, Transfer of Property Act, 1882
 Vepa P Sarathi, The Law of Transfer of Property
 Dr. Avatar Singh, The textbook on Law of Transfer of Property

Web Sources

 http://www.manupatrafast.com/search-results/
 http://www.lawoctopus.com/the-transfer-of-property-act-section-41/
 http://www.scconline.co.in/

Bare Acts

 Lawman’s The Transfer of Property Act, 1882