OWNERSHIP BY ESTOPPEL UNDER TRANSFER OF PROPERTY ACT

INTRODUCTION

“Section 43 of the Transfer of Property Act, 1882”, incorporates the theory of feeding the grant
by estoppel. Estoppel and equity are two legal theories combined in the concept under study in
this note, both of which are intended to safeguard bona fide transferees in the event that the
transferors misrepresent the property’s ownership.1

“The idea of feeding the grant by estoppel is based on the principle ‘nemo dat quod nonhabit,’
which states that no one can give anything to someone that he does not possess himself.” Section
43 of the Transfer of Property Act states, “where a person fraudulently or mistakenly 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 the term of the
contract of transfer.” The legal concept on which the provisions of section 43 are based is a well-
established rule of estoppel, sometimes known as “feeding the grant by estoppel.”2

MEANING OF THE SECTION

The common law notion of “estoppel by deed” and the equity principle of “Equity regards things
to be done that ought to be done” form the foundation of the doctrine of “feeding the grant by
estoppel,” respectively. Estoppel fundamentally means that if the promisee has already taken
action on it, the maker of the promise is obligated to maintain it in the case where he has pledged
to carry out a specific conduct.

The doctrine is explicitly defined in the landmark decision of “Jumma Masjid Mercara v.
Kodimaniandra”3 as follows: “Whenever a person transfers property to which he has no title on a
representation that he has a present and transferable interest therein, and acting on that
representation, the transferee takes a transfer for consideration. The provision states that if these

1
Preet Choksi, Doctrine of feeding the grant by estoppel, 6 JOURNAL OF LEGAL STUDIES AND RESEARCH
121, 2 (2020), https://thelawbrigade.com/wp-content/uploads/2020/07/Preet-JLSR.pdf
2
Alisha Luthra, Doctrine of feeding the grant by estoppel, LAWTIMES JOURNAL (Aug. 20),
https://lawtimesjournal.in/doctrine-of-feeding-the-grant-by-estoppel/
3
A.I.R 1962 S.C. 847.

1
requirements are met, the transferee will be entitled to the property if the transferor subsequently
obtains it, provided that the transfer has not already been thrown out or cancelled and is still in
effect.”4

The concepts apply to mortgages, leases, charges, and exchanges in addition to sales. However,
they do not apply in situations where the transfer was prohibited by law or went against public
opinion, or when the sale was forced upon the court at the request of an execution creditor.

CASE LAWS

Three coparceners held the property jointly in Viraya v. Hanumanta5. “A, one of the coparceners,
sold the property to B, an alienee, but failed to deliver it because the transfer was made without
their consent. B brought legal action against A to have the contract enforced. One of the other
co-owners passed away while the lawsuit was pending, increasing A’s portion of the property to
one-half. The judge ruled that B was entitled to receive half of the assets that were A’s part of the
property.”6

In the case of “Rustom Ali v. Abdul Jabbar”, a Muslim gave his wife a field that belonged to his
sister S in lieu of paying her dower. “Therefore, it was a transfer made by someone who neither
had the right to transfer the property nor the title to it. The property was sold by S, who was
actually the owner, to X. But the husband eventually got a good title to the property by buying it
from X again.” According to the equity concept, the wife was entitled to the field, according to
the Calcutta High Court.

In the Kartar Singh case, the Supreme Court overturned a number of decisions, including Lord
Halsbury’s infamous assertion that section 43 does not impose the duty of care on the transferee.

ANALYSIS

4
Preet Choksi, Doctrine of feeding the grant by estoppel, 6 JOURNAL OF LEGAL STUDIES AND RESEARCH
121, 2 (2020), https://thelawbrigade.com/wp-content/uploads/2020/07/Preet-JLSR.pdf
5
14 Mad. 459.
6
Viraya v. Hanumanta, A.I.R 1962 S.C. 847.

2
 1. “The transferor represents himself as being qualified to transfer a certain piece of
immovable property. 

2. This representation may be fraudulent or erroneous.

3. The transferor professes to transfer the property for a consideration. 

4. The transferee acts on the representation and enters into the contract. 

5. The transferor subsequently acquires competency to transfer the same property.

6. The property is still with the transferor, i.e he has not transferred it to a bonafide
purchaser who takes it without actual or constructive notice of this earlier contract
between the transferor and transferee. 

7. The transferee exercises the option to signify his intention to go ahead with the
contract.”
“The transfer shall become valid and enforceable in the court of law.7”

ESSENTIALS FOR THE DOCTRINE

Fraudulent or erroneous representation

This essential’s reach is sufficiently broad to cover transactions in which the transferor
erroneously thinks he is the rightful owner of the subject property. The transferee’s awareness,
not the transferor’s, is what determines whether or not the doctrine of feeding the grant by
estoppel can be used in this case. The theory only applies where one party misrepresents the
ownership of the property and the other party enters into the contract as a result, benefiting the
party that made the misrepresentation. “When applying this principle to any case, it is necessary
to determine whether the transferee approved the sale based on the transferor’s representations or
not. The idea does not apply if a person sells a property on behalf of a party only to subsequently
become that party’s successor.” This is true because the transferor did not make any false
representations.8

7
Jahnavi Mehta, “Rule of feeding grant by estoppel and its relation with specs successions, IPLEADERS ( Aug. 20,
2022, 10:40 AM), https://blog.ipleaders.in/rule-of-feeding-grant-by-estoppel-and-its-relation-with-specs-
successions/#Analysis_of_section_43_and_its_essential_ingredients ”
8
Id. at 1.

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The idea is also applicable when the transferor has a responsibility to speak but declines to do so.
There was no erroneous representation in the case of the individual who sold the property as the
widow’s agent and afterwards became her successor, hence the concept did not apply 9

Subsistence of the contract

This clause is crucial to the transaction since it is established legal doctrine that the contract will
be seen to have ended if the transferee has already chosen another remedy. As a result, the
transferee will not be eligible for protection under this concept. The contract will not be regarded
as being in subsistence if the transferee has secured a court order, cancelled the agreement,
returned the mortgage, or has not asserted their claim to the property in question. Consider the
situation where A (the transferor) gives a property to B (the transferee) even though C (the
owner), “A’s brother, actually owns it. Later, B learns that A is not the true owner of the property
and requests the consideration be returned. After a few months, A is able to repay B the
consideration sum. After the deal, C passes away, leaving the property to A. As the previous
contract expired on the day A returned the consideration to B, B is not able to validate it in this
situation.”10

Transfer for value

The doctrine of grant by estoppel does not provide protection for gratuitous transfers. This notion
does not apply to any transaction that is made possible by a gift or as a result of a court order,
i.e., without receiving anything in return.11

At the option of the transferee

“When the option is exercised by the transferee and the transferor’s title is perfected, the transfer
is said to have occurred. In cases when an official receiver transfers property before it vests in
him, the implied covenant will be viewed as a false representation, and the buyer’s title will be
complete after the property vests in him.” 12
Similar to this, when a partner sells a company’s

9
“Peyare Lal v. Misri, A.I.R 1940 All 453.
10
Id. at 4.
11
Jaggan Nath v. Dibbo, (1908) I.L.R. 31 All 53.”
12
“Muthiya Chettiar v. Doraswami, AIR 1927 Mad 1091.”

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property in his individual capacity and then receives the same property upon the firm’s
dissolution, the transferee benefits from the allotment.13

“Exceptions to the doctrine of ‘feeding the grant by estoppel”-

When the transferee is aware of the true transaction

The transferee cannot benefit from this clause if he did not take the representation seriously or
act on it. When both parties are aware of the actual transaction, the estoppel theory does not
apply. He cannot take use of Section 43 if he is aware of the transferor’s title defect.14

Transfer void ab initio

The transaction will not be protected by section 43 of the Act if the topic at hand is illegal or
unconstitutional. 15For instance, if a person’s tenancy rights were granted by a deed that was
defective from the start because another tenancy agreement already existed, the alleged future
tenant would not be entitled to protection under section 43 of the Act.

When the second transferee acquires rights

The rights of the second transferee making a good faith effort to acquire the property for
consideration but without being aware of the option in favour of the first transferee are protected
by section 43’s second paragraph. Therefore, a subsequent transferee is the only party who has
the power to revoke the rights of an original transferee. The transfer deed is often registered,
which serves as notice of the existence of such a deal to all parties worldwide. The original
transferee, though, is in a precarious situation if the deed is not registered.16

CONCLUSION

13
“Syed Nurul Hossein v. Sheosahai, (1893) I.L.R 20 Cal 1.”
14
“Alisha Luthra, Doctrine of feeding the grant by estoppels, LAWTIMES JOURNAL (Aug. 20),
https://lawtimesjournal.in/doctrine-of-feeding-the-grant-by-estoppel/”
15
“Ramasami v. Ramasami, (1907) I.L.R 30 Mad. 255.”
16
Id. at 10.

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Although feeding the gift by estoppel is based on English law, its validity in India can be
evaluated by analysing section 43 of the Transfer of Property Act, 1882. This doctrine has
evolved over time to protect persons harmed by misrepresentative transferors. The doctrine of
feeding the grant by estoppel protects the transferee’s rights when the transferor makes a false
statement. The preceding article provides an outline of doctrine’s application.