Introduction:
The Transfer of Property Act[1], 1882, was passed with an aim to make the transfer of property easier and quick, thereby making it accessible to the population at large. In this act, several certain general principals are mentioned, which has to be followed while making an estate transfer. An estate transfer done by an ostensible owner was incorporated to protect the rights of the innocent third parties and also the estate owners.
The word ostensible[2] means something that does not exist in reality or is not true. Therefore, an ostensible owner is considered to be an owner of some land although not the real owner but represents being the third owner in case the transfers are made to the third party, but an ostensible owner cannot represent himself on his own as the real owner, but indeed has to take the consent from the actual owner. The consent that is taken, can either be expressed or implied. The ostensible owner is the full owner but an unqualified one, making the real owner as a qualified owner for that estate.
Not all people have the right to be the ostensible owners. The ones, who cannot become the ostensible owners are:
- Professor agents and managers
- Trustee
- Servants
- Co-sharer
- Guardians or any other individual acting in fiduciary relation[3] (a relationship where one party has special trust and confidence with the other party)
Illustration
If A owns land in India and instructs B to issue all the ownership rights while he was in the UK. Here B is the ostensible owner of the estate and all the acts done by him, will be considered the acts of A. If later, B sells his estate to C for consideration, then A cannot recover that estate from C later, as C believed that B is the real owner and he acted in the good faith.
The concept of ostensible owners was firstly used in the case Ramcoomar Koondoo v. John and Maria McQueen[4].
In this case, the estate inherited by the plaintiff by a will later came to know that, that estate was already purchased by someone else in her name and then sold that estate to the third party in good faith. The whole transaction for the estate was a “Benami” transaction but was known to any other individual except for the individual who sold it. The plaintiff sued the third party for recovery of the estate. It was held that the plaintiff could not take back the possession of the estate from the third party, as the transfer that was made was legitimate in the eyes of law.
The doctrine of the transfer of estate done by an ostensible owner holds an exception to the maxim “nemo dat quad non habet” which means that no one can possess a higher right on the land that he himself possesses. Section 41 of the transfer of estate act, protects the innocent parties from the wrongful acts of the third party. Thus, the loss that would be risen from such act shall fall on that individual who created or failed to avoid that fraudulent act.
Thus, section 41 of this act states “Transfer by Ostensible Owner: Where, with the consent, express or implies, of the individuals interested in immovable estate, an individual is the ostensible owner of such estate and transfer the same for consideration, the transfer shall not be voidable on the grounds 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[5].” Hence, an ostensible owner has the right of ownership which includes the right to title, possession, documents etc. He also has the right to transfer the estate to the transferee for any type of consideration, with the requirement that the transferee should act in good faith and must believe the ostensible owner to be the real owner for the estate. After the transfer is made the real owner cannot recover the estate later, therefore not making it voidable on the ground that an ostensible owner is not unauthorized to execute the transfer.
The real owner can only get the estate recovered if the real owner proves that the purchaser didn’t act in good faith and also has not taken reasonable care which a man takes while executing such estate transfer or proves that the purchaser had the knowledge of the title of the real owner. Benami transactions are considered to be the transfer done by the ostensible owners. Therefore, in such cases, the burden of proof lies on the individual who claims himself to be the real owner of that land.
Case: Mohamad Shakur v Shah Jehan[6]
In this case, the real owners lived in different villages and gave an authorization to a widow to use the estate as she wanted to and later, she sold the estate. Thus, the case was filed, where the plaintiff lost as the transfer done by the widow was considered to a valid one.
Essentials
There are several conditions for the transfer of the property by an ostensible owner. For a valid transfer, the essentials are:
1. The individual who is transferring the estate must be an ostensible owner of the estate
It is essential that if the estate is transferred by any other individual except the real owner, that individual needs to be an ostensible owner of the estate, as no other individual has the right to get the title of ownership of the land, the documents etc. Thus, if the individual is someone else who is not an ostensible owner or does not fall under the category of ostensible owners cannot transfer the estate to the third individual, and if so done, the transfer would be considered void.
2. He must transfer the estate with the consent (expressed or implied) of the real owner
The most essential condition for a valid transfer by an ostensible owner is to take consent from the real owner which is either expressed or implied[7]. The consent cannot be obtained by unlawful acts. The consent must be a free consent and must also be intelligent, ie, it need not be brought by misapprehending the legal rights. In case, if an ostensible owner is a minor, and he says that he already has taken the consent form the real owner, it would not be consent to have held the consent, as minors have no capacity to give any required consent[8].
Case: Satyanarayana Murthi vs. Pydayya[9]
In this case, it was held that consent is not required from the real owner and also might be that the real owner has no knowledge of the transfer of the land.
Therefore, the consent in such situations can either be expressed or implied.
3. Transfer that is made must be for consideration
Consideration is necessary if the estate is transferred by an ostensible owner. He has no right to give away the estate as a gift to the third party. Under the Indian Contract Act, 1872, it is also necessary to have some kind of consideration when a contract is formed and so the transfer of estate by an ostensible owner is done in the form of a contract only.
4. Reasonable amount of care must be taken by the purchaser
Reasonable care should be taken by the purchaser and this reasonable amount of care should be done as a reasonable and an ordinary individual would have taken care of[10]. The purchaser has the duty to check the title of the transferor (the individual who is transferring the estate).
Case: Nageshar Prasad v. Raja Pateshri[11]
In this case, there was an error in the revenue records as to the name of the owner. The name was of someone else for which the real owner had already filed a complaint earlier. The individual whose name was there on the record sold it to any third individual and that individual without making any proper inquiries takes the estate for which the real owner objects later. Therefore, the court held that since the third party didn’t take reasonable care while acquiring the estate, so he won’t get any protection under this section. Hence, the third party is required to get all the available documents regarding the title of the estate and thus, the transfer is not valid.
5. The purchaser must act in good faith while purchasing the estate
Purchasing in good faith means that the purchaser of the land should purely believe that the ostensible owner is only the real owner with all the proper inquires done by him. But even after the purchaser getting all the information and inquires done, knows that the ostensible owner is not the real owner, then the true facts of who is the real owner cannot be neglected. The individual cannot take the advantage of his own negligence and later claim protection under this act. The rights of the real owner are also needed to be protected. The estate purchased under a malefide intention makes the transfer voidable. If the purchaser is clear with who is the real owner and who has the title of the estate, then no enquiry is required, as all the possession details, holder of the title deeds of the estate is already known.
6. Burden of proof
If any dispute is raised from the transfer of the estate, the burden of proof will lie upon the transferee and he has to prove that he purchased the estate in good faith and all the reasonable care was taken by ascertaining that the individual who transferred the estate was the real and the true owner of the estate and the proper inquiries were done before the estate was transferred to him.
Case: Shafiquallah v. Samiulah[12]
In this case, the owner of the estate died and after his death, the possession of the estate was given to his illegitimate sons who were not entitled to be given the legal title of the estate. So, the legal heirs filed a case against the illegitimate sons to recover the estate. But it was found that the illegitimate sons already transferred the estate to the third party, claiming to be the ostensible owners. The court held that the illegitimate sons didn’t have any consent of the actual owner in any form (expressed/implied) over the estate, thus, section 41 cannot be invoked, making the transfer of the estate voidable.
Case: Nirvas Purve v. Mst. Tetri Pasin[13]
In this case, the husband, while he was leaving for pilgrimage, added his wife’s name in the revenue records, thereby allowing her to mortgage the land. After the husband left, the wife sold the land the third party and the purchaser paid off the mortgage. The court held that the husband cannot recover his estate from the purchaser as the purchaser acted in good faith and took reasonable care to discover the title of the estate.
Conclusion
Hence, the doctrine of ostensible owner defines that an ostensible owner is an individual who is a real owner for the third party but not an actual owner. He has all the rights and the title deeds of the estate, and while transferring the estate to the third individual, he must take the consent of the real owner either expressed or implied. The third party also needs to take reasonable care and act in good faith, with proper consideration while acquiring the estate as the burden of proof lies over the purchaser if any legal dispute is raised.
References:
[1] https://www.lawctopus.com/academike/ostensible-owner-under-tpa/
[2] http://lawtimesjournal.in/ostensible-owner/
[3] https://www.merriam-webster.com/legal/fiduciary%20relationship
[4] http://www.legalserviceindia.com/legal/article-365-ramcoomar-koondoo-v-macqueen-a-transfer-by-ostensible-owner.html
[5] Section 41, Transfer of Estate Act, 1882.
[6] 63 IC 125
[7] Sambhu Prasad v. Mahadeo Prasad, [1933] A.I.R. 493 (All).
[8] This principle was followed in many cases such as Abdulla Khan v Bundi, (1912) ILR 34 All 22; Gadigeppa v Balangauda, [1931] 741 (ILR 55 Bom)
[9] [1943] A.I.R. 459 (Mad)
[10] Kanhu Lal v Palu Sahu, [1920] 5 Pat LJ 521
[11] (1915) 265 , (20 Cal WN)
[12] AIR 1929 All 943
[13] (1916) 20 Cal W.N. 103
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