DOCTRINE OF OSTENSIBLE OWNER

NOVEMBER 2020. ISSUE 02

11-NOV-2020

EVOLUTION

The right to property is guaranteed under Art.31 which was abolished by the 44th

amendment and subsequently made a constitutional right under Art.300A of the

Indian Constitution which states no person shall be deprived of his property except by

authority of law. The concept of ostensible owner is originated to protect the interest

of innocent third parties and property owners. The Transfer of Property Act, 1882 does

not deal with succession, testamentary, inheritance or gifts, etc, but provided

statutory laws in relation to the ostensible owner, real owner, and third parties relating

to the immovable property. It is the principle of natural equity.

MEANING

An ostensible owner means the apparent owner. The ostensible owner is not the real

owner but represents himself as the real owner to the third party for the transactions.

He has acquired the right from the real owner when there is wilful neglect or

acquiesces on the part of the real owner thereby making him the ostensible owner.

Sec.41 of the Transfer of Property Act deals with the ostensible owner. Wherewith the

consent express or implied of the person interested in immovable property, a person is

the ostensible owner of such property and transfer the same for consideration, the

transfer shall not be voidable because the transferor was not authorized to make it.

It is the general rule that no person can transfer to another a title or title greater than

what he himself posses. The maxim Nemo dat quod non-balet which means no one

can transfer better title than he himself has. Sec.41 of the Transfer of Property act is

the exception to this rule. This section does not apply to minors. Even if the minor’s

guardian transfers the property with the consent of the minor, he cannot be treated

as the ostensible owner. The transfer made by the ostensible owner cannot be

avoided on the ground that the transferor was not authorized subject to the condition

that the transferee should take reasonable care and act in good faith before a

benefit is claimed by him.

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CONDITIONS

The person transferring the property must be the ostensible owner.

The ostensible owner should be appointed with the consent of the real owner.

The consent may be express or implied.

The transfer is for consideration.

The transferee has acted in good faith taking reasonable care to ascertain that

the transferor has the power to transfer.

CASE LAWS

Case 1

Ramcoomar Koondoo And Another v. John And Maria Mcqueen, 1872 SCC ONLINE

CAL 54.

It is a principle of natural equity, which must be universally applicable that, where one

man allows another to hold himself out as the owner of an estate, and a third person

purchases it, for value, from the apparent owner in the belief that he is the real owner,

the man who so allows the other to hold himself out shall not be permitted to recover

upon his secret title, unless he can overthrow that of the purchaser by showing, either

that he had direct notice, or something which amounts to constructive notice, of the

real title; or that there existed circumstances which ought to have put him upon an

inquiry that, if prosecuted, would have led to a discovery of it.

Case 2

Hardev Singh v. Gurmail Singh (Dead) By Lrs., 2007 SCC 2 404.

Section 41 provides that a transfer by an ostensible owner cannot be avoided on the

ground that the transferor was not authorised therefore, subject to the condition that

the transferee should take reasonable care to ascertain that the transferor had the

power to make the transfer and to act in good faith before a benefit thereof is

claimed by him.

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Case 3

Sankara Hali & Sankara Institute Of Philosophy And Culture v. Kishori Lal Goenka And

Another, 1996 SCC 7 55.

This provision is clearly intended to protect the third party transferees who bona fide

and after due care and caution purchase the property from the ostensible owner

taking him to be the real owner. It may next be noted that even if it is so assumed, we

are of the opinion that in the instant case Surender Kumar having already released his

right, title and interest as ostensible owner of the property in favour of the firm, the firm

had acquired complete title over the property long before the Act came into force.

Such a transaction which preceded the coming into force of the Act has not been

voided by any specific provision in the Act.

Case 4

E.Yesodammal Petitioner v. E. Govindan, 2010 SCC ONLINE MAD 1388.

Where the real owner makes an attempt to enforce his right as against the ostensible

owner, quite against the letter and spirit of embargo found under Section 4 of the

said Act. The said provision would not have any application to a case where the

ostensible owner had relinquished his right in the property in favor of the real owner of

the property long prior to the coming into force of the present Act.

Case 5

State Of Punjab v. Surjit Kaur (Dead) Through Lrs. And Others, 2012 SCC 12 155

The widow can be ostensible owner to the extent that she has a right during her

lifetime. She ceased to be an ostensible owner after her death and cannot pass on a

better title than what she had. Admittedly, she had a life estate in the property and

after her death; the title in the land would revert to the State of Punjab.

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Case 6

Jote Singh v. Ram Das Mahto, (1996) 5 SCC 524.

As a doctrine, it is well established that where a person sells property of which he is

not the owner but of which he afterward becomes the owner, he is bound to make

good the sale to the purchaser out of his subsequently acquired an interest. It is also

well understood that neither the provisions of Section 41 nor that of Section 43 of the

Act are available for the benefit of the auction-purchasers, for these provisions come

to the rescue of transferees from ostensible owners or of transferees who purchase

property in good faith from unauthorised persons and who subsequently acquire

interest in the property transferred. These two provisions logically get engaged

involuntary transfers and not in involuntary transfers, like auction sales. There is no

question of the court ever playing the role of an ostensible owner or a representative

owner of the property when selling, so as to attract the provisions of Section 41 or 43

of the Act. In the face of these principles, it is difficult to hold that the High Court was

in error in not giving the benefit of the aforesaid two provisions to the auction-

purchaser, the appellant herein.

DISCLAIMER

This write up has been sent to you for information purposes only and is intended merely to highlight

legal maxim. The information and/or observations contained in this issue do not constitute legal advice

and should not be acted upon in any specific situation without appropriate legal advice. The views

expressed in this issue do not necessarily constitute the final opinion of M/s.Wallcliffs Law Firm and

should you have any queries in relation to any of the issues set out herein or on other areas of law,

please feel free to contact us on mail@wallcliffs.com.