Scope of applicability of section 43 and the relation among Section 41, section 43 and Section 53 of TPA

In this article, we will be discussing the doctrine of feeding the grant by estoppel, which is incorporated under Section 43 of TPA, 1882.  We will explain broadly the essential ingredients, the scope of applicability and the differences between the English principle and Section 43. Further, we will discuss its relation with the principles laid down in Section 41 and 53 of TPA, 1882.

Introduction

Section 43 of the TPA, 1882 deals with the transfer by an unauthorized person who subsequently obtains interest or title in the property transferred. This section embodies the general principle of estoppel. According to section 43, if a transferor/seller for value or consideration received, alienates what he does not own but subsequently, he obtains the title, which he alienated, then the transferee can enforce the alienation against him. This is the essence of the doctrine of feeding the grant by estoppel.

The Principles Laid Down in Section 43 of TPA, 1882

Section 43 can be divided into two parts.

  • The first part promulgates that, if on fraudulent or erroneous representation a person (transferor) who is unauthorized to transfer certain immovable property, proceeds to transfer the same for consideration or value received, then during the subsistence of the contract, the transferor’s right to the property accruing to him subsequent to his date of transfer enures to the advantage of the transferee. This rule is absolute and unqualified in its operation. It applies to all transfers and has no difference in its application. The subsequent acquisition of the title by the transferor may be by inheritance or by sale.
  • The second part of section 43 safeguards the rights of the second bona fide transferee in good faith and for consideration who has no notice of the option in favor of the first transferee. Thus, this section can be used as a shield in favor of the second transferee.

Essential Ingredients of Section 43 of TPA, 1882

The followings are the essential ingredients of section 43 of TPA, 1882.

Scope of Application of Section 43 of TPA, 1882

  • Where there is no evidence of erroneous or fraudulent representation and the real state of title of the property is known to both the parties, no question of estoppel arises. There is no estoppel if the transferee is conscious about the imperfect or defective title of the transferor. Thus, this section will not apply in such a situation.
  • This section will apply when the transferee has acted on or has been misled by the erroneous or fraudulent representation of the transferor. Whether the transferor has acted innocently or fraudulently in making the representation is not material.
  • This section will apply only to cases where the transfer of immovable property is for value or consideration. This section is not operative in cases of gratuitous transfers such as gifts.
  • Where in respect of transfer by sale, an erroneous representation is made by the seller/transferor that he has title in the property sold (although he solely has spes successionis,) then if he subsequently acquires title in that property, the previous transfer can operate on that title or interest.
  • This section applies when the contract of transfer subsists during the acquisition of title.
  • If the alienation of a particular property is forbidden by law, then this section will not apply.
  • When a sale of a property is made under the authority or power of a competent court to satisfy the debtor’s unpaid debts or obligations this is called execution sale. This section does not apply to execution sales due to the reason that the judgement debtor’s title is not guaranteed by the decree-holder.
  • This section applies to exchange as exchange stands on the same footing as sale.
  • This section also applies to leases.
  • If a person who is not authorized to alienate a certain property mortgage that property as his own, afterwards when he obtains title to the property by purchase or by inheritance, the property at the option of the mortgagee, becomes liable to the mortgage. Thus, this section applies to mortgages.
  • This section is not applicable to void sales. Void sales occur in respect of the non-transferable property under the meaning of section 6 of TPA, 1882.
  • Where a Muslim husband makes his wife accept an immovable property instead of her dower and persuaded her to marry him when the property does not belong to the husband rather it was his father’s property afterwards if he subsequently acquires the property by inheritance then the wife is entitled to enforce her claim against her husband under section 43 of TPA.

Difference Between English Law and Section 43 of TPA

According to English principle, the interest or title which is subsequently acquired by the transferor passes to the transfereewithout any further act of the transferor, in contrast, under section 43 the transfer does not pass automatically but only at the choice of the transferee means he has to claim it. Unlike English principle under section 43 the transferee may be defeated by a bona fide purchaser for value without notice.

Case References –

In the case of Radhasyam Gope v Aktarunnessa Begum it was observed that u/section 43 erroneous representation by the transferor is enough. The malicious or innocent intention behind the representation is not material.

In the case of Muhammad Hayat v Abdul Rahim it was declared that the conveyance of property contemplated u/section 43 must be a conveyance that is the fruit of a fraudulent or erroneous misrepresentation. Otherwise, this section will not apply.

Section 41 of the TPA, 1882

According to Black’s Law Dictionary, ‘ostensible ownership’ connotes to apparent ownership emanated from conducts or words. The concept of transfer by ostensible owner is incorporated under section 41 of the TPA, 1882.

The Principles Laid Down in Section 41

Section 41 addresses that ‘where the transferor is an ostensible owner of the property with the consent (express or implied) of the real owner and that ostensible owner transfers the property to a bona fide purchaser for consideration, if the purchaser in good faith, after taking reasonable care to ascertain whether the transferor had the power to make the transfer, has purchased the property then the transfer cannot be voidable due to the fact that the transferor is not authorized to make the transfer.’

Rule of Estoppel

Rule of Caveat Emptor

Essential Ingredients of Section 41 of TPA, 1882

The followings are the essential ingredients of section 41 of TPA, 1882.

If the above-mentioned conditions are fulfilled then the transfer is valid in the eye of law.

Relation between section 43 and 41 of TPA, 1882

  • The principle of estoppel is embodied under section 43 and 41. Both of these sections protect the bona fide purchaser for value. These two sections are founded on the principles of equity, justice and good conscience.
  • Both of these sections are originated from a maxim of equity namely, ‘Equity looks on that as done which ought to be done.’ Section 43 and Section 41 are exceptions to this Latin maxim ‘nemo dat quod non habet’ which means ‘no one can confer a better or higher right to property than what he himself possesses’.
  • Apart from similarity these two sections also have some differences. Under section 41 there is an ostensible owner but u/section 43 there is no such concept.
  • In section 43 there is an element of fraudulent or erroneous representation made by the transferor but in section 41 there is no such thing because the real owner freely gives his consent to the ostensible owner to hold the property out.
  • Under section 41 the transferee is under a legal obligation to purchase the property in good faith and to take reasonable care and to do inquiry before purchasing the property from an ostensible owner. Otherwise, he will not be entitled to the benefit of section 41. On the contrary, under section 43 if the transferee believed the transferor or acted upon or was misled by the erroneous/fraudulent representation of the transferor then it is sufficient to make him entitled for the benefit of section 43. Unlike section 41 there is no legal obligation on the transferee.  

Section 53 of the TPA, 1882

Section 53 addresses the concept of fraudulent transfer.

The Principles Laid Down by Section 53 

Section 53 can be divided into two parts.

  • The first part prescribes the principle that, where a transferor transfers his immovable property with the malicious intention to defeat or delay his creditors, that transfer shall be voidable at the option of any creditor so defeated or delayed.
  • Under section 53 the right of a bona fide purchaser will be protected provided that he acted in good faith and he purchases that property for consideration in spite of the fact that the transfer was made by the seller with intent to defeat or delay the creditors.
  • The second part of section 53 formulated the principle that, where a transfer of immovable property is made gratuitously or without consideration by the transferor with an intention to defraud the subsequent purchaser, such transfer shall be voidable at the option of such purchaser.

Essential Ingredients of Section 53 of TPA, 1882

Relation between section 43 and 53 of the TPA, 1882

  • Section 53 is applicable in case of debtor-creditor relationship. On the contrary, Section 43 of TPA, 1882 is absolute and unqualified in its operation. It applies to all transfers and has no difference in its application.
  • Under section 53 the malicious intention of the transferor to defeat or delay the creditors is the main concern. In contrast, under section 43 the representation made by the transferor can be either erroneous or fraudulent. The misleading of transferee by such representation is the main concern of section 43. The intention of the transferor may be innocent u/section 43 and it is immaterial.
  • Under section 43 there is a subsequent acquisition of interest by the unauthorized transferor of the property. On the contrary, under section 53 it is not necessary that the transferor should be unauthorized to transfer or he should have a defective title. The transferor may have a perfect title and still he can transfer fraudulently to defeat the creditors.
  • Both of these sections impose a legal obligation on the bona fide purchaser for consideration, to act in good faith and to inquire with reasonable care.
  • Under section 53 a creditor in order to avoid a fraudulent transfer of property must file the suit in a representative capacity. The benefit will be incurred in favor of all the creditors. No such provision is inserted under section 43 in respect of more than one transferee.
  • Section 53 applies in respect of all kinds of transfers whether for consideration or without consideration. On contrary, section 43 applies only in respect of transfers for consideration.

To understand the concepts of sections 41, 43 and 53 these sections must be read together. The statutory remedies provided by these sections are to some extent equitable in nature. These sections make the transfer of property law people-friendly to ensure justice.

We highly recommend you to read separately these sections. Here are the links

  1. The doctrine of Feeding the Grant by Estoppel
  2. Transfer by Ostensible Owner
  3. Fraudulent Transfer of Property

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