Case Study 5 - Transfer of Property Act 1882

Question

Mr. A, a Hindu , who has separated from his father Mr. B, sells to Mr. C three fields , F1,F2 & F3 representing that he himself is authorized to transfer the same. Of these fields transferred F3 does not belong to Mr. A , it has been retained by his father Mr. B at the time of partition. On death of Mr. B , Mr. A being legal heir obtain the possession of field F3 and immediately sold the F3 to Mr. D.

Discuss rights of Mr. C & Mr. D.

Answer

Section 43 of Transfer of Property Act, 1882 provides that

Transfer by unauthorized person who subsequently acquires interest in property transferred.

Where a person fraudulently or erroneously represents that he is authorised to transfer certain immoveable 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.

Nothing in this section shall impair the right of transferees in good faith for consideration without notice of the existence of the said option.

The general rule of law is "nemodat quod non-habet"i.e. no one can transfer that which he himself does not have. If a person does not have title to property, he cannot transfer that property validly transfer to another person.

One of the exceptions to this rule is contained in Section 43 of the Act, 1882 as mentioned above.

The principle of this section is based on partly doctrine of estoppel and partly on the equitable doctrine that a man who has promised more than he can perform must make good his promise when he becomes capable of performance.
Under Section 43 the only person who can defeat the right of an original transferee is a subsequent transferee for consideration who does not have the notice of previous contract. Where transfer deed is registered , it is considered as a notice to the whole world.

In case where transfer deed is not registered , the subsequent transferee has below mentioned remedies;

i) He can file a case for breach of contract against the transferor and can obtain damages;
ii) He can file a criminal case of cheating against the transferor;
iii) He can claim the money paid by him to the transferor through appropriate action in a court.

We conclude as follow

1. In the given case Mr. A has mad a representation to Mr. C about his title to the filed F3, here the doctrine of estoppel becomes operational. In case the Sale Deed with Mr. C has been registered ,it operates as a Constructive Notice to Mr. D and the whole world related to filed F3 and Mr. D in this case cannot defeat right of Mr. C claiming for field F3.

2. Mr. D has right to file civil suit for recovery of his money against Mr. A or he has right to file a criminal case also.

3. If Sale Deed between Mr. A and Mr. C is not registered , Mr. D being subsequent transferee for consideration will defeat the right of Mr. C.

4. In this case Mr. C has same right to sue Mr. A for recovery of money in civil suit or file a criminal case also.

CONCLUSION

It is a well-established fact that a person cannot transfer to another person more than he has or a person cannot transfer to another person what he does not has at the time of transfer. The provisions of Section 43 also provides that in a case when a person subsequently acquired any right in a property transferred earlier ,then he is obliged to transfer the same to the transferee in case contract of transfer subsists.

DISCLAIMER: The case law presented here is only for information of readers. the views are personal. In case of necessity do consult with professionals.