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A DETAILED ANANLYSIS OF OSTENSIBLE OWNER UNDER TRANSFER OF PROPERT ACT

A DETAILED ANANLYSIS OF OSTENSIBLE OWNER UNDER TRANSFER OF PROPERT ACT

Transfer of Ostensible owner defines under Section 41 of Transfer of Property Act, 1882.

It is also known as the Doctrine of Holding Out.

Ostensible Mean “look like the real owner but isn’t”– not a real owner but represent himself as the real owner to the third party.

Section 41 of TPA Act states, Where, with the consent, express or implied, of the persons interested in immovable  property, a person is the ostensible owner of such property and transfer the same for consideration, the transfer shall not be violable on the ground that the transferor was not authorized to make it:

It is provided that the transferee, after taking reasonable care to ascertain that the transferor had the power to make the transfer, has acted in good faith.

Essential of Ostensible Owner

  • The transfer must be an ostensible owner
  • The transfer of property to the ostensible owner must be with express or implied consent of the real owner.
  • The transfer by the ostensible owner must be for consideration.
  • The transfer must have acted in good faith taking reasonable care in ascertaining that the transferor has the power to make the transfer.

The exceptions to Section 41 of Transfer of Property Act, 1882.

“Nemo dat quod non habet” means when good not owned by someone, cannot be sold further.

The General principle of the law of transfer of property is that is no person can transfer to another a right or title greater than he possesses; this general rule has a certain exception:

If the true owner of property permits another to hold himself out as the real owner a third person who deals in good faith with that other person may acquire.

A good title to that property as against the truly other.

Example

A makes B authorized to perform all rights of ownership related to the property and leave for the U.K. In between B sells the property to C, now in future, A cannot claim back the said property from C. As C has believed B to be the owner of the property and has acted in good faith.

Burden of Proof

The burden of proof lies on the transferee to prove that the said transferor was the ostensible owner and had the consent to sell the said property, and also he needs to prove that he acted in the good faith and had taken the entire necessary step mentioned by law while buying the said property. In this way, he has to prove that he was not at fault and shift the burden of proof to the real owner of the property.

Ramcoomar koondoo V. John and Maria McQueen Case

In this case, the plaintiff who had inherited the property by the way of will came to know that someone else had already purchased the said property in her name and sold this property to a third person too, by making him believe that he had good title over the said property. The transaction was a “Benami” transaction but wasn’t known to anyone except the person who sold the property, now the plaintiff sued the third party for recovery of the possession of the land but the committee held that:

The plaintiff can’t take back the property from the third party and the transfer was legitimate in the eye of the law, the wording used in this case can be seen in section 41 of the TPA Act which deals with the ostensible owner.

Benamin Transaction

The law relating to the transfer of property by an ostensible owner under this section is now made subject to the provision of benamin transaction (prohibition of the right to cover property at 1988). In simple word, the people who purchase the property and pay the price for it does not purchase the property in his name, but in the name of any other person, the other person whose name is used as the owner of the property is known as benamidar or ostensible owner. In other words, the real owner now after the enforcement of this act cannot claim property from the benamidar by any suit claim or a section. The defence of being the real owner shall also not be allowed.

Conclusion

Section 41 act in protecting the interest of the innocent third party, although this section may seem a little biased towards the third party but this section mainly state that if the real owner is himself at fault,  then no one can simply say that he has now acquired the said property and he can’t be evicted now. Third-party has to take a lot of care while purchasing any property and the requirement which has been put up by law itself to reduce the misuse of this section by ostensible owner.

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Written by Saakshi Gupta

Saakshi Gupta is a BBA LLB student at the Fairfield Institute of Management and Technology (GGSIPU), New Delhi. Her passion for law and business brought her to pursue law. She has a keen interest in business law, environmental law and also wants to explore more in the field of law. Apart from legal academia, she is a volunteer at a govt. program (National Service Scheme).

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