Doctrine of feeding the grant by

Estoppel
What does estoppel mean?
Estoppel means when a person claims something, he cannot go back on what he
so claimed.

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’.
Section 43 of the Transfer of Property Act lays down “where a person fraudulently or
erroneously represents that he is authorized 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”.

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 principle of law on which the provisions of sec.43 rest is a well known rule
of estoppel, sometimes referred to as ‘feeding the grant by estoppel’. This
means that if a person who although has no title to a property, yet grants it to
another by conveyance, fraudulently causing loss to the other, will loose his
subsequent interest in the property to the other, in case of any subsequent
transfer of such property in his favour. An estoppel arises against the transferor
for his conduct, and the law obliges him to ‘feed’ that estoppel by reason of his
subsequent acquisition. Thus the principle underlying this section is based
partly on doctrine of estoppel and partly on the equitable doctrine that a man
who had promised more than he can give, ought to give when he acquires what
he initially claimed

The doctrine of feeding the grant by estoppel compels a man to perform when the performance
becomes possible. It does give the transferor the option of going ahead with the transfer, it then
completely depends upon the transferee if he is still willing to go ahead with the transfer after
the transfer becomes a viable option.

In Ram Bhawan Singh v Jagdish [(1990) 4 SCC 309] the court observed that
“when a person having a limited interest in the property transfers a larger
interest to the transferee on a representation, and subsequently acquires the
larger interest, the larger interest passes to the transferee at the latter’s option.
This doctrine not only applies to sale but also applies to a mortgage, lease,
charge, and exchange. Where no grant or interest in immovable property is
involved, the doctrine would not apply. The doctrine also does not apply in
cases where the transferor has acquired interest not in the property which is the
subject matter of the transfer, but in some other property.

Essential Requisites of the doctrine of ‘feeding the grant by estoppel’ –

A fraudulent or erroneous representation of ownership

The estoppel rests on the representation(express or implied) made by the
transferor that he is authorized to transfer, which representation subsequently
turns out to be erroneous. It makes no difference that the transferor had no
interest whatsoever in the property or the interest therein that of an expectant
heir. Further, it is immaterial whether the transferor acts bona fide or
fraudulently in making the representation. What is material is that he did make a
representation and the transferee acted on it and thus has been misled. In other
words the doctrine applies only when the transferee has been misled into
believing a false representation and not otherwise. The doctrine also applies in
cases where the transferor has a duty to speak and he fails to do so. Where a
person sold the property as an agent of the widow, and later became her heir,
the doctrine did not apply, as there was no erroneous representation (Peyare Lal
v Misri AIR 1940 All 453)

A transfer for consideration

The doctrine of ‘feeding the grant by estoppel’ is applicableonly to the transfers
of properties for value. This section is not applicable where the transfer is
gratuitous, i.e. without consideration. Thus, the provisions of this section are not
applicable to transfer of property by way of a gift where the donor has no
present fixed right at the date of transfer, making it a void transaction.

At the option of the transferee

The transfer becomes valid when the transferee exercises the option and the title
of the transferor becomes perfect. Where the official receiver transfers property
before it vests in him, the implied covenant will be treated as erroneous
representation, and the purchaser’s title would be complete as soon as the
property vests in him( Muthiya Chettiar v Doraswami (AIR 1927 Mad 1091).
Similarly where a partner sells the property of a firm in his right and
subsequently on the dissolution of the firm is allotted the same property, the
transferee gets the benefit of such allotment (Syed Nurul Hossein v Sheosahai
(1893) ILR 20Cal 1).
Further, the interest acquired by the transferor does not automatically pass on to
the transferee but only when he claims his interest in such property

A subsisting contract of transfer

The option of the transfer can only be exercised in respect of an interest
acquired by the transferee whilst the contract of transfer “still subsists”. If the
transferee (purchaser) had repudiated or cancelled that transaction, or had
recovered his purchase money, or if the transaction were one of mortgage and
the mortgage money had been repaid, then the relation of the transferor and the
transferee has ceased to exist, and no claim in respect of the property can be
made by the latter.

Exceptions to the doctrine of ‘feeding the grant by estoppel’-

When the transferee is aware of the true transaction

The benefit of this section cannot be claimed by the transferee if he did not
believe in or act upon the representation. There doctrine of estoppel does not
operate when both the parties are aware of the true transaction. Accordingly, if
he is aware of the defect in title of the transferor, he cannot get the benefit of
Sec. 43. Thus, when an undivided Hindu father had two sons A and B. A who
was entitled only to 1/3 of property, mortgaged ½ of property to C, who knew
that A was entitled to 1/3.Later, A’s father died and A having become entitled to
a half share, C sued on the mortgage seeking to make A’s half share liable, it
was held that C could avail only 1/3 share.

When the transfer is forbidden by law

The provisions of sec. 43 does not apply if the transfer is invalid as being forbidden by law or
contrary to public policy. Section 43 does not operate on illegal transactions. Transfer by a
minor or lunatic also do not qualify for the application of sec. 43.
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When the second transferee acquires rights

The second paragraph of section 43 protects the rights of the second transferee
in good faith and for consideration who has no notice of the option in favour of
the first transferee. Thus, the only person who can defeat the right of an original
transferee is a subsequent transferee. Usually, the deed of transfer is registered,
which operates as a notice of the existence of such contract to the entire world.
If however, the deed is not registered, the original transferee is in a vulnerable
position.
Comparison with English Law
In English law, the subsequent estate passes to the transferee without any
further act of the transferor. But it departs from the English doctrine in two
respects. First, the estate does not pass instantly but at the option of the
transferee. Under English law, the transfer is automatically validated, without
the need for any other action on part of either the transferee or the transferor.
Under Indian law, for it’s validation, the option must be exercised by the
transferee, for which three conditions must be fulfilled; the contract should be
subsisting; the property should be available and, the transferee should be willing
to go ahead with the transfer. Second, the transferee maybe defeated by a
purchase for value without notice. Under English law, as the original transfer is
perfected the moment transferor acquires competency to transfer the property,
and the transfer is validated instantaneously, the scope of property not being
available due to the chances of the entry of a bona fide transferee for
consideration does not arise.

Illustrations
1. X, a Hindu wife executed a mortgage of her husband’s property as if it
belonged to her five years after he had disappeared. The mortgage was invalid,
as the presumption of death does not arise until seven years.

2. A and B, two sisters inherit property on the death of their father. A even
though entitled to only ½ share sells the entire property to C representing
himself to be the sole owner. B dies and inherits A’s share, C is now entitled to
claim interest in that share.

3. X a person sold the property as an agent of Y(a widow), and later became the
heir of X’s property. The doctrine does not apply in this situation as there is no
erroneous representation.

4. A and B entered into a contract with A falsely representing the facts. B after
knowing this terminated the contract. A later on claims interest in the subject of
the contract. The doctrine does not apply as the contract no longer subsists.

Conclusion

The Doctrine of estoppel is an important principle which protects people against fraud or
misrepresentation. There are several instances where an innocent person becomes a prey to
false representations made to them by some party. Sometimes the case may be such that
the plaintiff suffered huge losses. This doctrine avoids such situations and charges the person
for his wrongful conduct.
This legal principle gives an incentive to every one of those people who tries to make false
representations to other and induces them to act upon it by planting their faith in them, and
incur losses as a result of such false representations, by not performing such acts, else they
would be held liable.