SIKKIM GOVERNMENT LAW COLLEGE GANGTOK

LOWER BURTUK, EAST SIKKIM

TERM PAPER
ON
PROPERTY LAW
TOPICS;
THE DOCTRINE OF OSTENSIBLE OWNER

SUBMITTED TO; SUBMITTED BY

Dr. BINITA PRADHAN PEMPA TASHI SHERPA
ASST. PROFESSOR LAW 18GLB061
VII SEMESTER
SIKKIM UNIVERSITY 2022
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ABSTRACT
The doctrine of ostensible owner has been laid down under section 41 of the Transfer of Property
Act,1882. The term ostensible signifies something which is not real or true in nature and therefore
the term ostensible owner can be understood as someone who is not the real owner yet represents
as one during the transfer of the property to which he is an owner to.
The Doctrine of Ostensible Owner was established to protect the rights of 3rd party to whom the
property was to be transferred to. The Doctrine of Ostensible owner is based on 2 maxims, i.e.,
Nemo dat quod non habet and nemo plus juris and alium transferee potestquamipsa habet
However, there are certain essentials that needed to be fulfilled in order to be called as an ostensible
owner. Ever transfer authorized by an ostensible owner is valid according to section 41 of the
transfer of property act.
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TABLE OF CONTENT
S.L NO CONTENT PAGE NO

1 ABSTRACT 1

2 TABLE OF CONTENT 2

3 INTRODUCTION 3-4

4 Ram Commar v. Mc Queen (1872)18 5

Beng.L.R.46,52
5 MEANING OF OSTENSIBLE OWNER 6

6 ESSENTIALS OF SECTION 41 OF TRANSFER 6

OF PROPERTY ACT NO.4.1882
7 TEST TO DETERMINE AN OSTENSIBLE OF 7
OWNER
8 ROLE OF CONSENT 7-8
• CONSENT MAY BE EXPRESS OR
IMPLIED
9 PROTECTION TO AN OSTENSIBLE OWNER 9-10
• REASONABLE CARE
• GOOD FAITH
10 BURDEN OF PROOF 10

11 BENAMI TRANSACTIONS (PROHIBITION)

AMENDMENT ACT, 2016
10-11
• EXCEPTION UNDER THE ACT

12 CONCLUSION 12

13 REFERENCE 13
 3

INTRODUCTION
The provision of ostensible owner has been laid down under section 41 of transfer of property act
1882. The transfer of property act was established in order to make transfer of immovable property
easy, accessible and uniform considering the large population. Moreover, the concept of ostensible
owner was established in order to protect the rights of innocent third person party in a transfer.
According to Section 41 of The Transfer of Property Act, No.4 of 1882,“Where, with 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.” 1 In simpler words, section 41 states that,
1. With the consent (be it express or implied) of the person whose interest lies in the
immovable property,
2. Another person who is an ostensible owner of the same property
3. Transfers the said property in exchange of consideration.
4. Such transfer shall not be declared voidable on the ground that the person was not
authorized to do it.
5. Provided that the person to whom such transfer was made took reasonable care and acted
in good faith.
The concept of transfer by ostensible is based on 2 principles:
1. Nemo dat quod non habet:
According to this principle, no one has the right or power to confer or present a higher right over
the property than what he himself actually possess.
2. Nemo plus juris and alium transferee potest quam ipsa habet:
According to this principle, no person can transfer a title or right over the property greater than
what he actually himself has. The transfer which is made by the ostensible owner underlines the
principle of holding out.2
Section 41 of Transfer of Property Act No 4. OF 1882 deals with the t ransfer 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 transferor was not authorized
to make it. This section is, therefore, an exception to the general rule that a person cannot confer a

1 Dr. Swamy N. Maheshware “Law relating to Transfer of Property (including Easements &Wills)2nd Edition2013
ASIA LAW HOUSE, Sree Radha Graphics, Hyderabad
2 Saxena Divyanshi and Muniyal Gurusha “Transfer of Property by Ostensible owner” Volume 3 / Issue 6, 2020,

International Journal of Law Management & Humanities [ ISSN 2581-5369]

 4

better title than he himself has in the property transferred. The section based upon the following
passage from the judgement of the Privy Council in Ram Commar V. Mc Queen 3

3Shukla’s S.N. “Transfer of Property Act”13 th Edition,2020 Allahabad Law Agency Plot No. 33, 16/2, Mathura
Road, Faridabad (Haryana)_ 121002
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Ram Commar v. Mc Queen, (1872)18 Beng. L.R.46,52.

Facts: Alexander Macdonald lived in Calcutta with his mistress Bunno Beebee and 2 children.
Maria married McQueen both of them being respondent of the case. The land in question was
given as sale deed out to bunno beebee. After the deed, it could not be said with certainty whether
Alexander lived on the said property. After death of Alexander, Bunno Beebee did live on that
property for a while and later rented it out. Later, Bunno Beebee sold the property to other party
where the other party raised certain buildings. Bunno Beebee died after this and the person
(Ramdhoone) who built building on the property let it out to respondent. The landlord
(Ramdhoone) here filed a case against tenants due to non -payment of rent. Later this, the
respondent also brought a suit against Ramdhoone (now appellant Ramcoomar son of Ramdhoone)
to eject his family from the property.
Issues:
1. Whether the property in question was of Macdonald's?
2. Whether the property came by his will to the respondent Maria McQueen?
3. Whether the appellants in the question had purchased bond fide for valuable consideration
without any notice?
Arguments raised:
The appellant denied the existence of any express or constructive notice about the title of bunno
Beebee. The respondent stated that the duty of appellant to take notice regarding every fact and
circumstances relating to the property was not fulfilled in the current case. The appellant contented
that his father bought property from Bunno Beebee without receiving any notice about her having
Benami title over the property and from the side of respondent it needs a stronger case to defeat
the title after them having such long procession over the property.
Judgement:
The court held that, “It indeed is a principle of natural equity which should be applied that where
one person allows an another person to hold himself as an owner of pr operty and a third person
buys it, for consideration, from the ostensible owner under the belief that he is actually the real
owner should not at all be permitted to recover under a secret title, unless and until he can
overthrow that the notice, or something similar to which can amounts to constructive notice which
must have to put him upon under an enquiry, that, if it would have been prosecuted then it would
have led to a discovery of it”.
Under this case it was held that the appellant cannot take back the property from the third party
since the sale of the property was valid in eyes of law. Through this case, the concept that arose
from this case can also be witnessed under section 41 of the transfer of property act. 4

4Shukla’s S.N. “Transfer of Property Act”13 th Edition,2020 Allahabad Law Agency Plot No. 33, 16/2, Mathura
Road, Faridabad (Haryana)_ 121002
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MEANING OF OSTENSIBLE OWNER

An ostensible owner is one who has all the indica of ownership without being the real owner.
Apparently, such an owner of a property looks like a real owner but if scrutinized minutely, it may
be found that although his name appears in the records and he also possesses the property, but he
never intended to own that property.
Ostensible owner in simpler sense is not even the real owner but someone who can represent
oneself as the real owner of the property in question to the 3rd party under the dealings. The
ostensible owner has attained that right over the property in question by certain willful neglect or
acquiesces from the real owner of the said property in question thereby making him a seemed or
ostensible owner.
If a person who has gone outside the country for certain years and had given his property to his
family relative for making use out of it for assuming an agricultural purpose and for any other
purposes that may deem fit to him or the circumstances. Under this case the family relative of the
person who went abroad are the ostensible owner and in case if during that period, the family
relative sells the property said property in question to any third party, then the real owner (here the
one who went abroad) after coming back cannot claim his property that he gave to his family
relative or cannot state the sale of property since it was authorized by him therefore the transfer is
not valid.
Another example to understand the concept can be when the property in question is under the
wife’s name however the husband used to take care or was in charge of the property as well as the
other dealings which were related to the property in question. In this case, if the husband in future
sells off this property in question, then the wife cannot claim her property back.
In the case of Mohamad Shakur v Shah Jehan,63IC 125. where the real owners of the property
lived in a different village from the property and they had authorized a widow to use the said
property in question the way she liked and afterwards in future she sold the said property in
question. Under this case, the real owner lost the claim over the property and the transfer was held
valid 5

ESSENTIALS OF SECTION 41 OF TRANSFER OF PROPERTY ACT

NO4.1882

The section requires the following conditions for its application;

1) The transferor is the ostensible owner:

2) He is so by the consent, express or implied, of the real owner;
3) The transfer is for consideration;
4) The transferee has acted in good faith and has taken reasonable care to find out that the
transferor had power to transfer.

5Khanchandani Harsh “Doctrine of Ostensible Owner: A critical Analysis” July 13,2021,

https://articles.manupatra.com visited at 2/2/2022
 7

TESTS TO DETERMINE AN OSTENSIBLE OWNER

According to the case of Jayadayal v. Bibi Hazra A.I.R(1974) S.C.171, the following practical
criteria can be used to evaluate whether a person is an ostensible owner or not:

• Firstly, the records pertaining to the property must be examined to determine whether or
not the name of the transferor appears as the owner.
• Secondly, whether or not the person whose name appears on the paperwork for the property
in question intends to purchase it.
• Thirdly, who has possession of the property and who enjoys it is the most important test
for determining if an individual is the ostensible owner.
• Lastly, the reason for it being given the ostensible ownership aspect, i.e., why the true
owner did not buy it in his own name6

ROLE OF CONSENT
The main rationale of Section 41 is to protect the rights of the innocent third party who had
purchased the property when the real owner was himself at fault by not protesting the transfer. But
a necessary requirement is that the real owner should have the capacity to give the consent and
that consent should not be obtained from any illegal or unlawful act. In the case of minor’s transfer,
even if the ostensible owner asserts that he has the consent of the minor, it will be held to be of no
consent as minors have no such capacity to give the required consent. This was established in the
case of Satyanarayana Murthi vs. Pydayya [1943] A.I.R. 459 (Mad) , that consent need not be taken
from the real owner and it might also be the case or possibility that the true owner had no such
knowledge of the transfer. The consent must be a real consent. It must not have been obtained by
fraud, coercion, force or undue influence practiced by the ostensible owner on the real o wner of
the property. The consent can be express or implied in such transactions.
Consent may be express or implied.

The real owner is not responsible, unless the apparent ownership of the transferor, has been
permitted or created by him. If he creates or permits the show of ownership either by express words
or consent, or by acts or conduct which imply consent, it is not necessary that acts should have
been influenced by a fraudulent intention, for his liability transferor in a position which enabled
him to commit fraud. This is on the rests upon his having put the principle that "when one or two
innocent persons has to suffer from the fraud of a third, he shall suffer who, by his indiscretion,
has enabled such third person to commit the fraud." The same principle was stated in Somewhat
wider terms by Ashurst, J., in Lickbarrow's case "that wherever one of two innocent persons must
suffer, by the act of a third, he who has enabled such person to occasion the loss, must sustain it." 7

In Nirus case (1916), a husband entered his land in the revenue records, in his wife's name and
went away on pilgrimage. Before his departure, he had allowed her to mortgage the land. After his

6 Khanchandani Harsh “Doctrine of Ostensible Owner: A critical Analysis” July 13,2021,

https://articles.manupatra.com visited at 2/2/2022
7 Dr. Tripathi G.P. “The transfer of Property Act”19 th edition 2016, Central Law Publications Law Publisher &

Booksellers 107 -Darbhanga Castle, Allahabad -211002(India)

 8

departure, she sold the land and the vendee paid off the mortgage. The husband on his return could
neither recover the land nor redeem the mortgage."

In Annoda Mohan's case (1922), A, a Hindu husband, purchased land in the name of his wife, B.
The land was then entered in B's name in the revenue records. After A's death B, the widow,
mortgaged the land to C who took the mortgage after due inquiry and believing in good faith that
B was the owner, C obtained a decree for sale on his mortgage and purchased the land. But D was
then in possession, for C had purchased the land in execution of a money decree against A. C's suit
against D for possession was decreed. D was the successor-in-interest of A, who had held out his
wife as the ostensible owner and could not defeat the mortgagee, who was a transferee in good
faith from the ostensible owner."

Implied consent is consent evidenced by conduct. Thus, if the real owner knows, that the person
is dealing with his property, as if, it were his own and acquiesces, his inaction, will imply consent.
When pardanashin ladies ordinarily leave the management of their property in the hands of the
male members of the family who deal with it without their active concurrence, the Privy Council
held, that their conduct had not been such as to mislead the mortgage of the property. But where
two Mohammedan sisters allowed a spend thrift brother to dissipate their shar of the property, the
Privy Council held that the brother was the ostensible owner with the implied consent of the sisters
and this was because both the sisters had husbands who understood business. It is essential, that
the person giving consent, must be aware of his right. 8

The consent must be free consent as defined in Section 14 of the Indian Contract Act. It has been
held that it must be an intelligent consent and not one brought about by a misapprehension of legal
right. But a consent based on a mistake of fact has been held to be within the section. Section 41
does not apply to minors, and a minor's guardian who transfers the property of a minor cannot be
treated as ostensible owner with the consent of the minor, for the minor by the reason of the
disability of infancy cannot give his consent. The doctrine of estoppel does not apply to minors
and still lies with the Court to hold an infant estopped by the acts and omissions of others. 9

A mortgage, contained so inaccurate a description of the property that a purchaser from the
mortgagor did not discover the mortgage did not discover the mortgage on a search of the register.
This inaccuracy was held to be due to gross negligence on the part of the mortgagee which enabled
the mortgagor to hold himself out as ostensible owner so that the purchaser acquired a title free
from the mortgage. But in a similar case, it was doubted whether such negligence would amount
to implied consent.

Attestation does not by itself imply consent, but in India the ordinary practice is to require
attestation as token of consent. The consent must continue till the time of trans fer.10

8 ibid
9 ibid
10 Dr. Tripathi G.P. “The transfer of Property Act”19 th edition 2016, Central Law Publications Law Publisher &

Booksellers 107 -Darbhanga Castle, Allahabad -211002(India)

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PROTECTION TO AN OSTENSIBLE OWNER

The protection given to an 0stensible 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 2d) of Indian Contract Act, 1872
read with the principles contained in Sections 23-25 thereof.

PROVISO, -Section 41 adds a big rider to the protection accorded by it. It is that the transferee has
acted in good faith after taking reasonable care to ascertain as to what real position is? Who is the
real owner?

REASONABLE CARE_ WHAT DOES IT MEAN?

Reasonable care means such care as an ordinary man business would take. It is to be expected
from every one who claims to have purchased property free from any existing rights, 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 a particular transferee has acted so, must depend on circumstances of each
case. This question is a question of law and requires careful consideration. suspicion and would
call for detailed inquiry, while other circumstances, would make only nominal inquiry sufficient.
Where the ostensible owner has not only possession of the property, but also the title deed, the
transferee is not expected to make any searching enquiry, unless there is any ground of suspicion
on the basis of which the title of the owner, the possession of the transferor may be doubted. Thus,
the nature of enquiry by the transferee varies, according to the circumstances of each case.

Where there was absence of reasonable care and ordinary prudence on the part of transferee to
ascertain the power of transfer or for the purposes of making a valid transfer, the transferee will
not be protected under Section 41.

A purchaser from the ostensible owner cannot resist the real owner's title unless he can show that
he took reasonable care to ascertain that the transferring ostensible owner, had power to make the
transfer and that he (the purchaser) acted in good faith. It is necessary under this section to prove
not merely consideration but also good faith and due inquiry.

All who wish to take advantage of this section must be able to show that they have made an inquiry
about the transferor's title. Only those persons are entitled to claim protection under this section,
who, despite necessary inquiry, have not been able to discover who the real owner of property is,
and who have full belief that the person making a transfer in their favor is the person really entitled
to that property, taking the transfer from him. If the transferee has not made necessary inquiries
about the title of the real owners, protection afforded by this section is not available to him. No
purchaser can protect himself against the claim of a real owner, merely by saying that he had no
notice of the real owner's title. He must make some reasonable inquiry into the title before he can
 10

take advantage of the doctrine of purchaser for value without notice which could protect him
against an undiscoverable and hidden equitable interest. 11

GOOD FAITH

It must be shown that the transferee acted in good faith, i.e., honestly and in the real belief that
the ostensible owner was the real owner. Reasonable care is not enough if there is absence of good
faith.

The general rule is that a person is that a person cannot confer a better title than he has. Section 41
is an exception to this rule. Being an exception, the on us is certainly on the transferee to show that
the transferor-

(a) Was the Ostensible owner of the property; and

(b) Had, after taking reasonable care to ascertain that the transferor had power to make the
transfer, acted in good faith. In Gurbaksh Singh V Nikka Singh A.I.R. (1963) s.c.1917:(
1963) 2 s.c.r.285., it was held that where the facts establish beyond doubt that the purchaser
had the knowledge that the title of his transferor was in dispute and he had taken a risk in
purchaser had knowledge of the defect in the title, and, therefore, he had not purchased the
property in good faith 12

BURDEN OF PROOF-

The section is an exception to the general rule that no person can dispose of an interest in property
more than what is vested in him. The onus, therefore, is in the first place on the transferee to show
that the transferor was ostensible owner, and that he (the transferee) has acted in good faith and
with reasonable care. The onus is then shifted on the party seeking to defeat the transferee’s title
to show that there was something to call attention and invoke inquiry. This is because the real
owner having created to show of title in another person, it is incumbent on him, or on those who
derive title in some specific circumstances as the starting point of an inquiry which would have
led to the discovery of it. The same rule applies to the cases where the osten sible owner has a lien
on the property.13

11 Dr. Tripathi G.P. “The transfer of Property Act”19 th edition 2016, Central Law Publications Law Publisher &
Booksellers 107 -Darbhanga Castle, Allahabad -211002(India)
12 Shukla’s S.N. “Transfer of Property Act”13th edition 2020, Allahabad Law Agency Plot No. 33, 16/2, Mathura

Road, Faridabad (HARYANA)-121002

13 Dr. Tripathi G.P. “The transfer of Property Act”19 th edition 2016, Central Law Publications Law Publisher &

Booksellers 107 -Darbhanga Castle, Allahabad -211002(India)

 11

BENAMI TRANSACTIONS (PROHIBITION) AMENDMENT ACT, 2016

This Act prohibits the transfer by an ostensible owner (referred as Benami Transactions) and has
made it illegal and unlawful with certain exceptions. As per Section 2(9)31 "benami transaction"
means, — (A) a transaction or an arrangement—

(a) where a property is being transferred to, or is held by, a person, and the consideration for
such property has been provided, or is paid by, another person; and

(b) the property is being held for the immediate or future benefit, direct or indirect, of the
person who has provided the consideration, there is a total prohibition against the real owner
affirming his ownership rights against the benami owner.32The property which is held and
owned in the name of the benami owner is liable to be acquired by the government through a
competent authority (appointed under the Act for this purpose) without paying any
remuneration whatsoever33. The burden of proof lies on the person who sets up the Benamidar.

EXCEPTION UNDER THE ACT

According, to Section 2(9) A (b) under The Benami Transactions (Prohibition) Amendment Act,
2016, Benami transactions is prohibited, but there are a few exceptions to this rule-

• The property which is held by a Karta or any other member in a Hindu Undivided Family
and the property is held for the gain or benefit of the other coparceners of the family and
the remuneration or consideration of which is given by the known sources of HUF will not
amount to a Benami transaction.
• The property that is held by a trustee or other person who, in a fiduciary capacity has the
benefit of another person for whom he has a trustee. This will not amount to a Benami
transaction. Fiduciary capacity means, being in a position of a trustee and being in a
position where the person can be affirmed to have duties of good faith, confidence, trust
and transparency and one who must exercise a high standard of care in managing another
person’s property or money
• The prohibition on benami transactions does not apply to an individual who buys property
in the name of his spouse or in the name of any child. But the consideration has to be paid
by the known provenances of the individual.
• Where the person’s property is held jointly by brother or sister or lineal ascendant or
descendant and the consideration is paid by the known sources of the individual.

These exceptions are governed by Section 41 of The Transfer of Property Act, 1882 as these are
not included in the definition of Benami Transactions under the Section 2(9) A of Benami
Transactions (Prohibition) Amendment Act, 2016. 14

14Saxena Divyanshi and Muniyal Gurusha “Transfer of Property by Ostensible owner” Volume 3 / Issue 6, 2020,
International Journal of Law Management & Humanities [ ISSN 2581-5369]
 12

CONCLUSION
The theory and concept of ostensible ownership is subjected to the provisions of Benami
Transactions Act, 1988 (Which is now, Benami Transactions Amendment Act, 2016). After
analyzing different case laws and concept of ostensible ownership, we reach to the conclusion that,
Ostensible Ownership is a concept that derives its authenticity and legitimacy from the ideas of
equity and natural justice, meticulously the doctrine of estoppels. It holds an exception to the
doctrine, “nemo dat quod non habet” as it does, for reasons of equity, allow ostensible owners to
deliver the rights of true ownership to the bone fide transferees.

Ostensible ownership is irretrievably linked with the concept of Benami transactions. Benami
transactions are defined under the Benami Transactions Amendment Act, 2016. The provisions of
this Act do not apply, in usual bona fide transactions where person purchases property in the name
of his wife or unmarried daughter. Therefore, after the passing of the Benami Transactions Act,
the scope of application of Section 41 has become very narrow.
 13

REFERENCE

• Dr. Swamy N. Maheshware “Law relating to Transfer of Property (including Easements &Wills)2 nd
Edition2013 ASIA LAW HOUSE, Sree Radha Graphics, Hyderabad
• Dr. Tripathi G.P. “The transfer of Property Act”19 th edition 2016, Central Law Publications Law
Publisher & Booksellers 107 -Darbhanga Castle, Allahabad -211002(India)
• Saxena Divyanshi and Muniyal Gurusha “Transfer of Property by Ostensible owner” Volume 3 /
Issue 6, 2020, International Journal of Law Management & Humanities [ ISSN 2581 -5369]
• Shukla’s S.N. “Transfer of Property Act”13 th edition 2020, Allahabad Law Agency Plot No. 33,
16/2, Mathura Road, Faridabad (HARYANA)-121002
• Khanchandani Harsh “Doctrine of Ostensible Owner: A critical Analysis” July 13,2021,
https://articles.manupatra.com visited at 2/2/2022