This article has been written by Jahnavi Mehta. The article has been edited by Khushi Sharma (Trainee Associate, Blog iPleaders) and Vanshika Kapoor (Senior Managing Editor, Blog iPleaders).
SECTION 43: Transfer by an unauthorised person who subsequently acquires interest in property transferred.—Where a person fraudulently or erroneously represents that he is authorised to transfer certain immovable 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.
illustration: A, a Hindu who has separated from his father B, sells to C three fields, X, Y and Z, representing that A is authorised to transfer the same. Of these fields Z does not belong to A, it having been retained by B on the partition; but on B’s dying A as heir obtains Z. C, not having rescinded the contract of sale, may require A to deliver Z to him.
The rule incorporated in this section governs transfers where the transferor, to begin with, has no capacity to transfer the property, yet has entered into the transaction with a misrepresentation with respect to his title to the property. He makes the other party act on this representation, and then acquires a good title to the same property in future. In such cases if the contract is subsisting and the property is available, then it gives the transferee the option to either go ahead with the transfer or rescind the same. If the transferee still wants the transferor to perform his part of the contract, he can exercise his option to validate this transfer that was imperfect to begin with and the transfer shall become valid on the exercise of such option by the transferee. Here the willingness of the transferor to go ahead with transfer is immaterial and it is solely on the wishes of the transferee, which he has to show by exercising the option that the transfer shall become valid, or in other words, Where a person having a limited interest in the property transfers a larger interest to the transferee on a representation and subsequently acquires the larger interest, the larger interest transfers to the transferee at the option of the latter
Analysis of section 43 and its essential ingredients
- The transferor makes a representation to the effect that he is competent to the transfer a particular piece of immovable property.
- This representation may be fraudulent or erroneous.
- This representation is not true.
- The transferee believes or is made to believe that the representation is correct and the transferor is competent to transfer the property, i.e he does not know of the defect in the title or lack of capacity thereof.
- The transferor professes to transfer the property for a consideration.
- The transferee acts on the representation and enters into the contract.
- The transferor subsequently acquires competency to transfer the same property.
- The contract is subsisting.
- The property is still with the transferor, i.e he has not transferred it to a bonafide purchaser who takes it without actual or constructive notice of this earlier contract between the transferor and transferee.
- The transferee exercises the option to signify his intention to go ahead with the contract.
The transfer shall become valid and enforceable in the court of law.
The rule of estoppel under the common law
This rule is based on two common law doctrines, i.e the doctrine of equity and doctrines of estoppel.
Following the doctrines of estoppel by deed, it prevents a person who promises more than what he can
perform from claiming his incompetence as a legitimate excuse to avoid his liabilities in a situation when he acquires competency to fulfill a promise, and following the equitable doctrines such a person is compelled to make good of his promise when he becomes competent to perform it. In fact without any further act of his, the transfer becomes good the moment he acquires competency to do so. This competency feeds the estoppel immediately. Under the common law if a person misrepresents to another that he is competent to convey a good title, professes to do so for consideration and making the other act on this representation, enters into a contract with him, on the transferor subsequently acquiring a good title to the property, the property instantaneously passes to the transferee. Common law therefore does not require the transferee to exercise the option, nor does it give any opportunity to the transferor to later mislead the transferee and introduce into the scenario, a bona fide purchase for the consideration so as to defeat the rights of the original transferee.
The only condition is that the contract should have been subsisting. In such cases, nothing else has to be done by the transferee, the transfer in his favour will be perfected the moment the transferor acquires competency. In India, the doctrine of feeding the grant by estoppel is only applicable where the transferee has been misled by a representation by the transferor and not otherwise. Thus the sine qua non for application of Section 43 is that at the initial stage the person should have fraudulently or erroneously represented that he is authorised to transfer certain immovable property for consideration. Only if the pre-condition is satisfied, the question of option of the transferee arises in the case the transferor acquires any interest in the property at any time during which the contract subsits.
Representation, Fraudulent or Erroneous
The representation under the Act may be fraudulent or even erroneous. Whether it is erroneousis a question of fact. It may involve a case where the transferor genuinely believed that he has the competency to transfer the property. Even in such cases, if due to his representation, for which he is not maliciously responsible, the other party has been made to act on it, s. 43 would apply.
On the other hand, it can also involve cases where he deliberately and with full knowledge of his incompetence and with a fraudulent motive, misleads the transferee and convinces him of his competency. What should be noted is that the original enactment applied only to erroneous representation-based transfers, and the rule of feeding the grant by estoppel did not apply in case the representation was fraudulent. In 1929, the term ‘fraudulent or’ were inserted by the Amending Act, 1929 (20 of 1929) to extend the application of s. 43 to these cases as well.
Exceptions to the doctrine of ‘feeding the grant by estoppel’
No application of rule in absence of representation by the transferor
Equity requires an erroneous or fraudulent representation from the transferor that he is competent to transfer the property. In absence of representation, the doctrine does not apply. However, that does not mean that if the transferor is silent about his capacity, when there is a duty to speak, he can escape the applicability of the rule of estoppel as against him. What is material is that the transferee must be misled. If there is no representation by the transferee, it means that the transferee was not misled but actually knew about the defect in the title. It is only when the transferee is led to believe of absolute interest or title on part of the transferor and acts on that representation, that he is entitled to take advantage of the fact that the transferor subsequently gets the full interest or becomes the owner of the property.
It connotes that the transferee is not aware of the facts and acts on the representation as there would be no estoppel if the truth is known to both the parties. Question of knowledge is very material and the other party must be given the chance of raising its defence if and when the doctrine is pleaded. Representation may be expressed or implied.
It can be by word of mouth or by a document. It is implied when the law makes it an implied term of the transfer. Where a person sold the property as an agent of the widow, and later became her heir, the doctrine did not apply, as there was no erroneous representation, but where the husband transfers the property of his wife without taking her consent and she challenges its validity in the Court but dies during its pendency and the husband inherits the same as her legal heir, the Apex Court held that if a person pretends to be the owner of the property and subsequently becomes the owner, the transfer by him conveys a good title.
Transfers in Absence of Representations
Though the Section speaks of erroneous or fraudulent representations, there may be a case where there is a transfer by a person who is incompetent to transfer the same, but he does that without making a representation, yet at the same time, the transferee is not aware of his incompetency. In such cases also, the presumption is that when a person says ‘he will transfer the property’, it means that what he is conveying to the other is that he is authorised to do so.
Even in such cases, the rule of estoppel will operate against the transferor, and on attaining competency, he will be stopped from denying his obligations under the contract.
In Viraya v. Hanumanta,three coparceners held the property jointly. One of them, A, sold the property to B, an alienee, but failed to deliver it as the transfer was effected without the consent of the other coparceners. B filed a suit against A for enforcement of the contract. During the pendency of the litigation one of the other coparceners died, and A’s share in the property increased to one half. The Court held that B was entitled to half of the property that was the share of A.
In Rustom Ali v. Abdul Jabbar, a Muslim transferred a field belonging to his sister, S, to his wife in lieu of her dower. It was, therefore, a transfer by a person who neither had the title to the property nor had the authorisation to transfer the same. S, who was the real owner of theproperty sold it to another person, X. The husband however, acquired a good title to the property by purchasing it back from X after some time. The Calcutta High Court held that the wife was entitled to the field under the equity doctrine.
Knowledge may be Actual or even Constructive
Knowledge on part of the transferee with respect to the defect in title of the transferor need not be actual knowledge. If the circumstances are such that as a reasonable, prudent person, the transferee, to safeguard his own interests had made sufficient inquiries that he ought to have made, or had been vigilant and upon doing so, he could have detected the lack of title, he would be deemed to have constructive notice of the lack of title, and s. 43 would not apply.
As a prospective purchaser he ought to have made reasonable inquiries that a normal prudent person would have made. If he fails to make such inquiries, he would be guilty of either gross negligence or willful abstention from making an inquiry, and constructive knowledge with respect to defect in title would be imputed on him. As the consequences of imputation of constructive notice are identical to the consequences that emanate if a person actually knew about it, he would lose the right to perfect the transfer once the transferor acquires the competency to do so.
The Supreme Court, in Kartar Singh’s case has overruled a plethora of Cases, including Lord Halsbury’s famous statement, wherein it was held that s. 43 does not impose upon the transferee, the duty to take care.
In Kartar Singh v. Harbans Kaur, a Hindu woman executed a sale deed of the lands belonging to her minor son in 1961. The son on attaining majority in 1975, filed a suit to the
effect that this sale was not binding on him, and was void. The Court passed a decree that this sale, executed by the mother of the properties belonging/owned by her minor son was void, and directed that the possession of these properties be restored to the son. Before the son could take the possession of the property, he died, and the mother as a class I heir succeeded to the property. The transferee, X, claimed the benefit of s. 43 and when the remedy was refused by the High Court went to the Supreme Court in appeal. The Court held that for the application of s. 43, two conditions must be satisfied. First, a fraudulent or erroneous representation made by the transferor to the transferee that he is authorised to transfer certain immovable property and in the purported exercise of authority professed to transfer such property for consideration.
Secondly, when it is discovered that the transferor acquired an interest in the transferred property, at the option of the transferee he is entitled to get the restitution of interest in property got by the transferor, provided the transferor acquires such interest in the property during which contract of transfer must subsist. As the primary distinguishing factor between the application of s. 43 and s. 6(a) is knowledge of the lack of title or incompetency on part of the transferee, the Court here tried to examine whether the transferee in the present case had knowledge of the fact whether, the mother was competent to transfer the property of her son.
The Court said:
The material time at which the knowledge has to be proved is the time of the conclusion of the contract. When we analyse the issue as to whether the transferee who is now seeking the beneficial protection of Section 43, had knowledge or notice of the incompetency of transferor or not, we must take note of the fact that even constructive notice on his part would bring the case under Section 6 (a). If by making some inquiries or verifying certain facts, as a normal reasonable prudent person, the transferee could have detected the incompetency of the transferor to transfer the property, but he failed to do that, law would impute constructive notice of the same on him, and as the consequences of actual and constructive notice are identical, in case of imputation of constructive notice also, the plea of misrepresentation, erroneous or fraudulent would not be accepted by the Court. In such a case, Section 6 (a) would be applicable under which this transfer would be considered void, and Section 43 will not apply.
Here, it is pertinent to note that when the mother transferred the property belonging to her son, the marginal note on the sale deed mentioned that the land had been acquired by her and by her minor son by exercising the right of pre-emption, and that she was executing the sale deed
in respect of her own share and acting as the guardian of her minor son in so far as his share is considered. Thus, the fact that she was acting as the guardian and the owner was in fact a minor, was apparent from a bare reading of the sale deed. In law, a guardian is not competent to transfer the properties of a minor, unless there is an authorisation from the Court.
The fact that she was a guardian and also acting as one, was the starting point of inquiry, and the transferee should have probed further. As a reasonable prudent man, he was expected to enquire whether on her own, the mother, as the guardian, was competent to alienate his share. The second requirement is that the contract should be subsisting at the time of the claim but here, the Court held that as right at the inception, the contract was void, because the transferee ought to have known about the incompetency of the transferor this void contract cannot be deemed to be subsisting at the time, when the mother due to inheritance acquired competency.
Thus, according to the Court, the transferee here knew the fact that the mother was not competent to effect a valid transfer and s. 43 would have no application. The litigation, which took 33 years, culminated later, with the Supreme Court pronouncing the verdict, that the transferee cannot acquire a valid title to the property because he was deemed to have knowledge of the defect in title in the first place.
Transfer must not be otherwise prohibited
For the validation of the transfer made by an unauthorised person under a representation, this contract in the first place should not have been against any law in any form whatsoever, i.e., not only the parties should be competent to contract, but the purpose of the contract should be Lawful, and not opposed to public policy or to defeat the rights of creditors or a provision of Law, etc.
Thus if the transferor’s incompetency was owing to his minority or insanity, S. 43 would not confer an option in favour of the transferee to validate the transfer on the minor’s attaining majority or curing of insanity, as this is a statutory incompetency, that was appended to the minor or an insane person, that prohibited him from transferring the property. Similarly, if a particular piece of land has been declared by a statute to be specifically inalienable, such as Bhumidhari land, S. 43 cannot apply to such a situation. However, where the property was requisitioned by the military, and a lessee assigned his interest in this property conditional upon the property being de-requisitioned by the military, the Court held that after the property was so derequisitioned and the transferee acquired competency, he was required to perform his part of the contract under the assignment.
Transfer must be for Consideration
An essential factor to be considered in transfers by unauthorised transferors on misrepresentations, and the option available under s. 43 is, that these transfers should be for Consideration. Though it is not necessary to show that some monetary consideration has already passed from the transferee to the transferor, but the transfer in essence is one involving consideration, and there is a liability on part of the transferee to pay it. Thus, s. 43 does not apply to gratuitous transfers like gifts, etc.
Subsequent Acquisition of Interest by the Transferor
The transferee is entitled to the benefit of this doctrine only when the transferor subsequently acquires an interest in the property that he originally represented as his. If the transferor does not acquire a further interest in the property transferred, or if such further interest is acquired not by the transferor but by his successor in interest, or where the heirs of the transferor acquire property in their own right and not as heirs of the transferor, this Section has no application.
For instance, A transferred property belonging to his wife, representing to X that he is competent to transfer the same. His wife made a Will of her property in favour of her son S. A died and then his wife died, and the son took the property under the Will. The transfer would not be valid at the option of X, as the heir had acquired the property in his own right. Where a son fraudulently transferred the property owned by his mother but never acquired any interest in it during his lifetime either by inheritance, succession or otherwise , the doctrine of feeding of grant by estoppel would not be applicable as against their heirs who succeeded stridhan properties of their grandmother. The petitioner in such cases cannot claim any benefit of subsequent acquisition
An essential condition for the application of s. 43, to the transfers by unauthorised transferors brought about by misrepresentations is that for the validation of such transfers at the option of the transferee the contract must be subsisting. It should not have been rescinded or otherwise brought to an end by the act of the parties. For instance, A, erroneously makes a representation to B, that he is competent to transfer a house X. The house originally belonged to his father F, but A did not know that F had bequeathed the house to his mother M, and she was the sole owner. B pays consideration, but later discovers that A was not the owner, and therefore not competent to transfer it. He rescinds the contract and asks for his money back. A pays him the entire consideration as per the terms of the contract. Two days later, M dies and A, as her sole heir, inherits the house. As the contract has already been brought to an end, it is ‘not subsisting’ and B cannot exercise his option to validate the transfer. On the other hand, in the same example, if after the transferee becomes aware of the defect in title, he chooses to wait, i.e., does not rescind the contract or sue for damages, and the contract is still subsisting when the mother dies, and A becomes the owner of the property, then B can exercise his option for validation of transfer. If he so wants, A would have to transfer the property in his favour and he cannot take the plea that at the time he had entered into the contract with B, he did not possess the title to the property.
Thus, for the application of the doctrine, the original contract must be subsisting in order for the transferee to exercise the option. Where the transferee obtains a decree on the contract or if the property has been sold, or the charge has been assigned, the doctrine would have no application. However in case of mortgage, a decree alone will not put an end to the contract as the mortgagor is entitled to redeem till the ultimate sale.
Application, Personal in Character
The application of this Section is personal in character with respect to the transferor and does not apply as against any other person, who may acquire this property in his own right or against any property that the transferor may acquire in future. The estoppel applies only against the transferor and with respect to the very property that was initially the subject of the contract.
(i) Representing that he is competent to sell the property, A sells a house belonging to his father to B. B discovers the defect in title but chooses to wait. A dies during his father’s lifetime. On the death of the father, his house that was the subject matter of the contract was inherited by A’s son, in his capacity as F’s heir. B cannot exercise his option to validate the transfer because this option can be exercised only against the transferor, and not against the successor in interest.
(ii) In the above illustration, if instead of A dying during the lifetime of his father, suppose his father sells the property to his friend X, B will have no remedy. But if later A purchases the same property from X for a consideration, B would be empowered to exercise his option to validate the transfer in his favour as against A. In short, if the transferor acquires the competency or interest, the option can be exercised; if he does not, it cannot be exercised, and if his heirs get the property surpassing him, such as under a will by the owner, or on his death, again the transferee would be without any remedy.
(iii) A sells his father’s property to B representing that he is authorised to transfer it. When B discovers the defect in title, he prefers to wait as the father was very old and sick. On the death of the father, it was discovered that the house was bequeathed to A’s son S. B cannot exercise the option against S.
The option is not only to be exercised personally with respect to the transferor, it can also be exercised only against that property that was the original subject of the contract.
(i) A coparcenary consists of father F and a son S, who together owned two fields, X and Y. In addition, F also owned Z as his separate property. S contracts with C to sell Z, that belonged to F. Later a partition took place, whereby the S got the property X. C cannot proceed against X, as this was not the subject matter of transfer
(ii) A owns three properties X, Y and Z. His son, without his permission, contracts to sell X to B. X is mortgaged during the lifetime of A, by A himself. As he was unable to repay the loan, X is sold through a Court auction. Then A dies, and his son inherits all of his properties as his heir. The transferee B cannot exercise his option against his other properties.
Option of the Transferee
The doctrine provides an additional remedy to the transferee besides a claim for damage, and enables him to get the property itself. The transfer shall become valid only when the transferee exercises the option to validate it and is capable to do the same. ‘At the option of the transferee’ means that the validation of the transfer depends purely on the transferee’s will and the transferor cannot force a transfer on him, after he acquires competency. If the transferee so desires, he can avoid this transfer which in the first place, was brought about by a misrepresentation. However, there is no automatic validation of the transfer,86 as no rights are vested in the transferee from the inception of this transfer.87 The option must be exercised by the transferee. There is no specific form of exercise of option and any indication is sufficient. It can be done verbally, through sending a notice to the transferor to execute a transfer deed in favour of the transferee or even by instituting a suit in a court of law to that effect. It is not necessary that a demand should be made. In a nutshell, the law does not provide any specific mode of exercising the option, but the intention should be clear.
The transfer becomes valid when the transferee exercises the option and the title of the transferor becomes perfect. Where the Official Receiver transfers property before it vests in him, the implied covenant will be treated as erroneous representation, and the title of the purchaser would be complete as soon as the property vests in him. Similarly, where a partner sells the property of a firm in his right and subsequently on the dissolution of the firm is allotted the same property, the transferee gets the benefit of such allotment. When the holder of sir land transfers land representing that he is authorised to transfer it, before he could obtain the certificate of bhumidari rights without which he was incompetent to transfer the same, but had deposited money to obtain it, and acquired the same later, the transfer is valid at the option of the transferee and the son of the transferor cannot challenge the validity of the sale.
Similarly, where on the death of the father the land is inherited by two sisters, and one of them having exclusive possession sells the same to the transferee, the transferee is entitled to get the benefit of the doctrine on the death of the other sister. Where a Hindu widow sells the property of her husband after five years of his disappearance and the transferee sues for possession after seven yearsor where lease or sale of the property is effected by one of the two owners or two of the three owners with their subsequent acquisition of full ownership, the transferee on the exercise of the option would be entitled to the interest.
Property should be Available with the Transferee
The second condition for validation of such a transfer that is based on a misrepresentation is that not only the contract should be subsisting, and the transferee willing to exercise the option, but the property must be available with the transferor. If the property is transferred by the transferor to another person, even before the transferee can exercise the option to validate the earlier transfer, the remedy of validation of transfer will be lost to the transferee, provided that the second transferee takes the property for consideration and has no notice, actual or constructive about the existence of the first contract.
For instance, A represents to B that he is competent to transfer a land X, which in fact belongs to his father. B acts on that representation and furnishes a consideration of Rs. 10 lakhs towards it. B later comes to know about A’s lack of title, but prefers to wait. A became the owner of the property on his father’s death. While B was contemplating the appropriate action to be taken, A sold the land to C, who as a bona fide purchaser, bought it without any notice of B’s claim over it. The only remedy that B has now is to claim compensation, damages or his money back. But he would lose all claims over the property as before he could exercise his option to validate the transfer, the property had already been transferred to a bona fide purchaser for value and without notice. The reason is that till the option is exercised by the first transferee, the validation of the transfer will not take place. Till the ownership of the transferor is not affected at all, he remains competent to transfer the same in favour of anyone.
However, once the transferee exercises the option, the transferor has to transfer the property to the original transferee, and if after that, he sells it to somebody else, the new entrant in the scenario will take the property subject to the rights of the transferee. It is only a bona fide transferee for consideration who takes the transfer in his favour before the option can be exercised by the transferee, who can defeat the rights of such transferee. Therefore, the option must be exercised without any delay by the transferee in order to prevent the property from passing into the hands of a bona fide transferee.
Bona Fide Transferee
As aforesaid, the validation of the transfer depends on the exercise of the option by the transferee and in the situation when the property is available. If the property is transferred before the option can be exercised by the transferee to another person, who takes it for consideration and without actual or constructive notice of the rights of the earlier transferee over it, the rights of the earlier transferee will be defeated. Thus, in order to defeat the right of the first transferee, it must be proved that:
(i) first, that the second transfer was for consideration. If it was a gratuitous transfer, i.e., by way of gift, the right of the second transferee would not be protected.
(ii) secondly, the subsequent transferee should not have actual or constructive notice of the first contract. If actual or constructive notice on his part can be proved, then his rights over the property would be subordinate to the first transferee and his interests in it will not be protected.
The doctrine therefore, does not impair the right of transferees in good faith for consideration, without notice of the existence of the said option,1 as the transferee cannot exercise his option with respect to the after acquired property against a bona fide purchaser without notice.2 However, if he is aware of the first transaction, he would be deemed to have notice of the option.
Application of the doctrine
The doctrine of feeding grant by estoppel compels a man to perform when the performance becomes possible. Transfer of non transferable holding and the subsequent removal of restriction , mortgage of a ghatwal land by zuripeshgi lease and the subsequent grant of permanent lease of the land, mortgage of restrictive tenure, the restriction later removed would require the transferor to make good the original transfer.
The doctrines not only applies to sale but also applies to mortgage, lease, charge and exchange but does not apply to a case where the sale was made through the court at the instance of an execution creditor and was therefore compulsory, or where the transfer is forbidden by law or was contrary to public policy. Transfer by a minor or a lunatic or where the transfer could be effected only with the prior permission of the collector and no such permission was obtained or where there is a statutory prohibition on the transfer do not qualify for the application of this doctrine.
The doctrine applies when the transferor interest is enlarged by acquisition of a right of the pre- emption or the removal of restriction on alienation or by discharge of an encumbrance or a prior mortgage or when maufi tenure ripens into proprietary right
No application of the doctrine in absence of transfers
Where no grant or interest in immovable property is involved, the doctrines of feeding the grant by estoppel would not apply Where the DDA auctioned a plot of land holding out to be a developed plot, which was set aside by the High Court on ground that the plot was situated in a green area, the acceptance of the bid and the deposit amount of 25% will not amount to transfer. Since the disability attached to the plot of land ceased to exist on the date of petition, the DDA would not be compelled to finalise the sale and delivery of the plot after 14 years of initial transaction will have no application in this case . The doctrine also does not apply in cases where the transferor has acquired interest not in the property which is the subject matter of the transfer, but in some other property.
In P. Chellamuthu v. Abhinaya Muthusamy, the property owned by A was under a notification to be acquired by the authorities. He challenged the said notification but lost. During the period of challenge, he executed a power of attorney in favour of B, who sold the property on the very same day to C. Next day A revoked the power of attorney issued in favour of B and instead sold the property to D. B, on the other hand, petitioned the authorities to cancel the land acquisition and accepting his case, the authorities reconveyed the land in favour of B, instead of A, the original owner from whom they had acquired the land.
Meanwhile C had also sold the property to three different persons at whose instance the suit was brought to the Court. On the issue of application of Section 43, the Court held that at the time when A had sold the property to D, he did not have any interest as the property was acquired by the government. On its re conveyance, the title in favour of C was perfected. B on the other hand had no right to have the land re conveyed in his favour as he was merely the power of attorney holder that was cancelled by the original owner.
The rule of feeding the grant by estoppel under S. 43 and spes successionis under S. 6(a)
Property of any kind may be transferred, except as otherwise provided by this Act or by any other law for the time being in force. The chance of an heir-apparent succeeding to an estate, the chance of a relation obtaining a legacy on the death of a kinsman, or any other mere possibility of a like nature.
As a general rule, property and interests in it are transferable. Law favours alienation to accumulation. However, it is important for the transferor to have a present and subsisting title in the property.
It means expectation of succession i.e. a possibility of getting property in future through succession i.e. through inheritance or will. Transfer of spes successionis is void ab initio. Except as otherwise provided by the Transfer of Property Act property of any kind may be transferred, so transferability of property is general rule and this rule obtains its enforcement from section 6. Exception to this general rule is provided by the provisions of Section 6 itself. Section 6(a) of the Transfer of Property Act restricts the transfer of a mere expectancy or chance of an heir-apparent succeeding to an estate, the possibility of a relation obtaining a legacy on the death of a kinsman, or any other mere possibility of alike nature.
So during the lifetime of a person his heir-apparent cannot transfer its mere expectancy of succeeding because it is not his right it’s only an expectation of getting a share, after the death of the principle, in future. A person having interest over a property which is spes successionis i.e. mere possibility to succeed to the property in future is not a right and is not capable of being transferred. Such a person cannot file a suit on the basis of such expectation of succession.
Section 6(a) of property made spes successionis an exception of rule of transferability as per the provision of section 6 spes successionis includes:
1). chance of an heir-apparent succeeding to an estate.
2). chance of a relation obtaining legacy on the death of a kinsman.
3). any other mere possibility of a like nature.
Chance of Heir Apparent
Heir Apparent-because there is no heir of a living person. It is a mere chance because if a person hopes to succeed to property of an intestate what and how much of it would be available can only be ascertained at the death of the intestate. This is so because no property may be left by the time
he dies, or he may have made a will with regard to it or that the heir apparent may die before person whose property he hopes to succeed to.
Thus, there is only a hope, expectancy or chance to succeed.
Eg. A family consist of a father (f) and son (s). S hopes to succeed to the property of F his father. He professes to transfer property X, with a conviction that he is the future owner of it and assures him that on the death of F he would deliver the possession of property to X. The next day X dies and S actually becomes the owner of those properties but refuses to deliver possession to X. X cannot press for delivery as the transfer was void ab initio.
Chance of a relation obtaining legacy on the death of a kinsman
Chance of a legacy is a mere possibility of getting certain estate in future under a will. It is the chance or expectation of any friend or relation to get property, under a will, after the death of the testator. Chance of an heir-apparent and chance of a legacy is very much alike because both possess no right in property and they are mere expectations. The chance of a relation or a friend receiving a legacy is a possibility even more remote than the chance of the succession of an heir, and non-transferable. A will only operates after the death of the testator and not on the date when it is written and if there is more than one will the last one prevail. So, for obtaining the entitlement over the property of the testator the person has to qualify two conditions (a) he has to survive the testator and (b) he must be the person who was mentioned in the last will. If two or more wills have been executed in favour of different persons, only the legatee under the last will is entitled to get the property. Before a will operates i.e. before the death of the testator, the legatee has only a mere hope of getting certain property under will, and is non-transferable.
Any other possibility of a nature
Any other possibility of the like nature would mean any other possible interest or property which is as uncertain as the chance of an heir-apparent or of a legatee. The central aim of section 6(a) is to prohibit the transfer of properties which are merely a future uncertain possible interest. Therefore, clause (a) of section 6 exclude not only the chance of an heir-apparent or of a legatee but also any other chance of getting future property which is not at present a fixed right of a transferor. The words of a ‘like nature’ indicate that the possibility referred to herein must belong to the same category as the chance of an heir-apparent or the chance of a relation obtaining legacy. In this case, the usual illustration of a possibility is the case of a fisherman’s net. There is no certainty that any fish will be caught, and the fisherman has no interest in the fish until they are caught. An agreement for the sale of Otkarnam lands is a possibility and therefore void.
The rule of feeding the grant by estoppel has to be compared and contrasted with the rule of specs successionis provided under section 6 (a) of the Act. They appear to relate to similar kinds of situations but with different consequences. In fact, not only do they relate to different situations, they are also inherently different.
The illustration to S. 43 says: A, a Hindu who has separated from his father B, sells to C three fields, X, Y and Z, representing that A is authorised to transfer the same. Of these fields Z does not belong to A, it having been retained by B on the partition; but on B’s dying A as heir obtains Z. C, not having rescinded the contract of sale, may require A to deliver Z to him.
This case to begin with, apparently resembles a transfer of spes successionis. When A sold Z to C, he had only a spes successionis in it, i.e, a bare chance of inheritance. But he having subsequently inherited it, C became entitled to it. Both sec 43 and 6(a) are fundamentally different, as the former relates to a situation where a person transfers a hope and expectancy, and the fact that it is a hope and expectancy is within the knowledge of the transferee as well. He has not been misled into believing something else, he knows that the transferor does not have a present or subsisting title to the property, but under s 43, there is a misrepresentation by the transferor to the transferee about his competency to transfer the property. This representation may be erroneous or even fraudulent, but the fact remains that there is not only misrepresentation but the transferee acts on it.
He is made to believe that the transferor is capable of conveying a good title. Further, as the transfer is for consideration, it also means that this transferor who has misled the transferee has taken a monetary benefit under this transfer. therefore , if during the subsistence of the contract this transferor, who had initially misled the transferee into believing that he has a good title to the property and he is capable to convey the same, infact acquires a competency to do the same, the transfer shall be valid at the option of the transferee. The transferee therefore is given a chance to either go ahead with the transfer by exercising the option to that effect or rescind the same. If he chooses to go ahead with the transfer, he has to indicate his willingness to do so and the transfer shall become valid and enforceable in a Court of law.
For example, in the above illustration when A becomes the owner of the property, C may indicate to A about his willingness to go ahead with the transfer and if A refuses or fails to do so, C may file a suit for specific performance of the contract, and with the help of the Court require A to deliver Z to him. But in the same illustration, If C knew that A is not competent to transfer Z in the first place, then upon A’s refusal to perform the contract, he would have no remedy, as this transfer would have been covered under S. 6 (a) and would have been void.
Distinction between spes succession and the rule of estoppel under S. 43
The primary difference between S. 6(a) and S. 43 are as follows:
- Section 6(a) enacts a rule of substantive law, while S. 43 incorporated a rule of estoppel.
- Section 43 applies only applies in those cases, where the transfer is for consideration, it does not apply on gratuitous transfer. It applies in cases where despite a misrepresentation, the transferor, either takes or seeks to take a monetary benefit from the transferee. It therefore would not apply to cases where a person transfers the property by way of gift. On the other hand, the prohibition under S. 6(a) applies to all kinds of transfers, irrespective of whether they are for consideration or gratuitous transfer. A gift of property that a person hopes to inherit is also void.
- Under S. 6(a) the fact that it is a transfer of spec successions is within the knowledge of both the transferee and transferor. There is no misrepresentation from the side of the transferor in regards to his competency to pass a good title in present to the transferee. Under S. 43, due to express representation, fraudulent or erroneous, the transferee, at the behest of the transferor, is assured a good title. Section 43, is very clear of the fact that its application will only cover those cases, where due to the making of a representation by the transferor, that he is competent to transfer a piece of property, the transferee has been expressly misled. The transferee had no knowledge about the defect or lack of title on part of the transferor, he is made to believe in the competency of the transferor to transfer the property.
- The status of a transfer under S. 6(a) is void in its inception, however under S. 43, the transfer is voidable at the option of the transferee provided two conditions are satisfied. First , that the contract should be subsisting at the time the transferor attains competency to transfer the property, i.e it should not have been rescinded and Secondly, that the property should be available with the transferor. It should not be in the hand of a bona fide transferee for value.
Jamma Masjid Mercara v. Kodimanidra Deviah
A Hindu joint family consisted of three brothers, BR1, BR2, BR3. In the year 1900, they collectively executed a usufructuary mortgage of the joint family property in favour of X. There was litigation and a compromise was arrived at the respect to it, according to the terms which for a period of 20 years, i.e till August 1920, the mortgagee was entitled to retain its possessions and after that the property was to revert back to the family. The family chart was as follows, out of the 3 brothers one died unmarried and the other two died one after another, leaving behind their widows W2 & W3 but no children.
They had a sister who had three grandsons A, B and C, who were the reversioners to their property. A was to get one half of the property and B and C, one fourth each, but on the death of two widows. Till the death of two widows, the interest that they had in the property was mere spes successionis, that according to S. 6(a) is non transferable. They represented to the transferee that this property belonged to the joint family and after the death of W2, it devolved to them as reversioners, and hence they were competent to transfer the same. They did not disclose the fact that W3 was still alive, and her very presence prevented them from getting a title in the property. The transferee on such representations of the reversioners gave them consideration, and filed a suit for possession of property, when the same was not delivered to them. W3 resisted this suit on the ground that till she was alive, no one else had the right to possess the property, as these were her husband’s self acquisitions and she, as his legal heir, was the owner of it.
The subordinate courts, the district court and even the judicial commissioner accepted her arguments. But before the second appeal at the level of the judicial commissioner could be finally disposed of W3 died and the transferee applied before the revenue authorities for transferring the patta for the property standing in the name of W3 to his name on the strength of the sale deed executed by the reversioners. At the time, Jumma Masjid intervened and contented that first the whole properties vested in them on the strength of a gift deed executed by W3 in their favour, and secondly they alleged that one of the reversioners, A, had relinquished his share in the property in their favour for consideration of 300 rupees. The revenue authorities rejected the claim of Jumma Masjid and the possession of the transferee was upheld. Jumma masjid filed a case for recovery of possession that went to the Supreme Court. The decision that came in favour of transferee was pronounced 42 years after the sale deed was executed in the favor of reversioners.
The primary issue before the Court was whether a transfer of property for consideration made by a person who represents that he has a present and transferable interest therein, while he possesses in fact only a spes successionis, is within the protection of Sec 43 of the Act. The contention of Jumma Masjid was that S43 must be read as a subject to the provision of S. 6(a), that specifically prohibits the transfer of spes successionis and therefore s. 43 should apply only in cases other than those covered under S. 6(a). The Court rejected thi argument and drew a distinction between S. 6(a) and S. 43 pointing that they do not relate to the same spheres but different ones, and that there is no conflict between them. Section 43 clearly applies whenever a person transfers a property to which he has no title on the representation that he has a present and transferable interest, and acting on this the transferee takes transfer for consideration. When these conditions are satisfied the section enacts that if the transferor subsequently acquires the property, the transferee becomes entitled to it, if the transfer is subsisting.
There is an exception in the favour of the transferees for consideration in good faith and without notice of the rights under the prior transfer. Apart from this, the section is absolute and unqualified in its operation. It applies to all transfers which fulfill the conditions prescribed therein, and it makes no difference in its application whether the defect of title in the transferor arises by reason of his having no heir. Pointing out that there is no controversy on this issue the Court said:
S. 6(a) and S. 43 relate to two different subjects, and there is no necessary conflict between them.
S. 6(a) deals with certain kinds of interests in property mentioned therein and prohibits a transfer simpliciter of those interests. S. 43 deals with representations as to title made by a transferor who had no title at the time of transfer and provides that the transfer shall fasten itself on the title which the transferor subsequently acquires. Section 6(a) enacts a rule of substantive law while S 43 enacts a rule of estoppel, which is one of evidence. The two provisions operate on different fields and under different conditions and there is no ground for reading a conflict between them or cutting down the ambit of the one by reference to the other
The Court said that in its opinion, both of them can be given full effect on their own terms in their respective spheres, but to hold that transfers by person who have only a spes successionis at the date of transfer are not within the protection of S. 43, as it would destroy its utility to a large extent. S. 43 enacts rule of estoppel, it virtually enacts a special provision for the protection of transferees for consideration from the person that rules of estoppel cannot be resorted to for defeating or circumventing prohibitions enacted by statutes on grounds of public policy, but here it is not a ground of public policy alone by means of a specific provision in specific enactment. The Court therefore held that the transferee here entered into a transaction acting on the representation acquired title to the properties under S. 43 of the Act, when the reversioners that they were entitled to the property in present. He therefore acquired the title to properties under S 43 of the Act, when the reversioners become intitulo on the death of W3 and the subsequent dealing by the way of release did not operate to vest any title in Jumma Masjid.
In Official Assignee, Madras v. Sampath Naidu
Person A executed two mortgages over the properties, that he hoped to succeed on the death of his relatives, i.e in respect of which he had only spes successionis. On the death of the relative, he succeeded to those properties as the heir and sold them to B. A mortgagee claiming under B filed a suit for the a declaration that the initial mortgagee effected by A himself at the time when he had no title in the property was void in the light of S. 6(a). The Court accepted this contention and held that the initial mortgage was affected by A when he had only spes successionis, and this fact was within the knowledge of the mortgagee, the same was void and S. 43 would not apply. Consequently, the transfer in favour of B was valid.
In Alamanaya Kunigari Nabi Seb v. Murukuti Papiah
A son executed a mortgage of the properties belonging to his father. The mortgagee filed a suit to enforce the mortgage. During the pendency of this suit, the father died and the son, as the heir, inherited the property. The issue before the Court was whether the mortgagee could claim protection of S. 43. The son contended that such an interpretation of S. 43, would nullify S. 6(a). The Court rejected this argument and held:
This argument neglects the distinction between the purporting to transfer the chance of an heir apparent and erroneously representing that the transferor is authorised to transfer certain immovable properties. It is the latter course that was followed in the present case. It was represented to the transferee that the transferor was in presenti entitled to and thus authorised to transfer the property.
The Court ruled in favour of the mortgagee as against the son.
In Shyam Narain v. Mangal Prasad
The property belonged to a person A. On his death it vested in his daughter D, as A had no son. D had a son, DS, who sold these properties to X in 1910 when his mother D was alive. D died in 1926, and DS became the wonder of the properties as her heir. In 1927 he sold the same properties to Y, who claimed the estate on the ground of sale in 1910, conferred no title on X, as Ds had only a spes successionis, and in contrast, the transfer in their favour had taken place when DS had vested transferable title.
The Court rejected their argument and held that X had acquired good title, as they were entitled to benefit of S. 43 and observed:
S. 6(a) would therefore apply to cases where professedly there is no transfer of a mere spes successionis, the parties knowing that the transferor has no more right than that of a mere expectant heir. The result of course would be the same where the parties knowing the full facts fraudulently clothe the transaction in the garb of an out and out sale of the property and there is no erroneous representation made by the transferor to the transferee as to his ownership. But where an erroneous representation has been made by the transferor to the transferee that he is the full owner of the property transferred and is authorised to transfer it and the transferee acts upon such representation, then if the transferor happens later, before the contract of transfer comes to an end, to acquire an interest in that property, no matter whether by private purchase, gift, legacy or by inheritance or otherwise, the previous transfer can at the option of the transferee operate on the interest which has been subsequently acquired although it did not exist at the time of the transfer.
In Mahadeo v. Har Baksh
The husband of a Hindu woman disappeared, After 5 years of his disappearance, she executed a mortgage of his property as the owner of the same. Since the title was in the name of the husband, whose whereabouts were not known, the presumption of death in such cases arises after a period of 7 years of unexplained absence under the Indian Evidence Act, 1872. It is only after 7 years that he would be presumed dead and then only can the wife in the capacity of a widow, inherit his property. The mortgagee filed a suit after she had acquired the estate as a limited owner, the Court ruled in his favour.
Shehammal vs. Hasan Khani Rawther & Ors on 2 August, 2011
Where it was held by Hon’ble Supreme Court of India that “There is little doubt that ordinarily there cannot be a transfer of spes successionis, but in the exceptions pointed out by this Court in Gulam Abbas’s case, the same can be avoided either by the execution of a family settlement or by accepting consideration for a future share. It could then operate as estoppel against the expectant heir to claim any share in the estate of the deceased on account of the doctrine of spes successionis. A testamentary disposition by a Mohammedan is binding upon the heirs if the heirs consent to the disposition of the entire property and such consent could either be expressed or implied.
Thus, a Mohammedan may also make a disposition of his entire property if all the heirs signified their consent to the same. In other words, the general principle that a Mohammedan cannot by Will dispose of more than a third of his estate after payment of funeral expenses and debts is capable of being avoided by the consent of all the heirs. In effect, the same also amounts to a right of relinquishment of future inheritance, which is on the one hand forbidden and on the other accepted in the case of testamentary disposition. Having accepted the consideration for having relinquished a future claim or share in the estate of the deceased, it would be against public policy if such a claimant be allowed the benefit of the doctrine of spes successionis. In such cases, we have no doubt in our mind that the principle of estoppel would be attractive.”
Shehammal v. Hassan Khani Rawther
There is no concept of jointness of ownership of the properties of a Muslim and his inheritors. Islamic jurisprudence does not contain the norm of relinquishment of future share by an expected heir. This principle has been recognized and reiterated by the judiciary on many occasions. However, if an heir expectant receives reasonable consideration or price of his probable share and relinquishes his right of probable inheritance, then he must not be allowed to claim the relinquished share as and when the right of inheritance arises. This has been recognized by the Supreme Court in Shehammal v. Hasan Khan Rawther:-
Naralava Rawther was the owner of some immovable properties. He helped all his children to settle down in his lifetime. His youngest son, namely, Hasan Khani Rawther, respondent no. 1, was staying with his father Maralavo Rawther even after his marriage, while all other children – two sons and three daughters – had moved out of the family house, either at the time of their marriage or soon thereafter. When each of his children left the family house, Meeralava Rawther used to get them to execute deeds of relinquishment on the receipt of some consideration. Each of them relinquished his/her respective claim to the properties belonging to Meeralava Rawther except Hasan Khani Rawther who was living with his father in the family house and was not required to execute the deed of relinquishment.
After the death of Meeralava Rawther, three separate suits were filed in the lower court. One was filed by respondent no. 1 for the declaration of title, possession and injunction in respect of the property of the deceased, basing his claim on an oral gift made by his deceased father in his favour. Second suit was instituted by Mohammad Rawther, one of the brothers, praying for injunction against his brother, that is, respondent no.1. Third suit was instituted by Shehammal, the daughter of the deceased and present petitioner claiming her 1/9th share in the estate of her father and seeking partition of the properties under dispute. The lower court dismissed the suit of respondent no. 1 claiming property on the basis of an oral gift for want of evidence. The suit of Shehammal was decreed and the suit filed by Mohammad Rawther was also dismissed.
The matter went to the High Court of Kerala where the single judge held that the plaintiff Hasan Khani Rawther could not be non-suited even if he had failed to prove the oral gift in his favour because he alone was having the rights over the property of Meeralava Rawther in view of various deeds of relinquishment executed by the other sons and daughters of Meeralava Rawther. So far as the applicability of law relating to the doctrine of renunciation of an expectant heir in the property, it was argued that the doctrine was based on the concept that the Muslim law did not contemplate inheritance by way of expectancy during the life time of the owner and that inheritance opened to the legal heirs descended in specific shares.
The Supreme Court was called upon to resolve three main controversies, namely (i) whether in view of the doctrine of spes successionis, a deed of relinquishment executed by an expectant heir could operate as estoppel to a claim that may be set up by the executor of such deed after inheritance opens on the death of the owner of the property; (ii) whether an execution of a deed of relinquishment after having received remuneration for such future share, the expectant heir could be stopped from claiming a share in the inheritance; and (iii) whether a Muslim, by means of a family settlement relinquishment, claim his right of spes successionis when he had still not acquired a right in the property.
The Supreme Court analysed the arguments based on the opinion of various jurists like Amir Ali and DF Mulla and the decisions in Gulam Abbas v. Haji Kayyum Al, Latafat Husain v. Hidayat Husain and Mt. Khannum Jan v. Mt. Janbibi. The Court reiterated its earlier views on the point under consideration and laid down:
(i) Rule of spes successionis has not been recognized by the Muslim Law since it entailed the giving up of something which had not yet come into existence.
(ii) Ordinarily there cannot be a transfer of spes successionsis.
(iii The binding force of the renunciation of a supposed right would depend upon the attendant circumstances and the whole course of conduct of which it forced a part.
(iv) Mere relinquishment of a right to be vested in future cannot be covered by the equitable doctrine of estoppel.
(v) Application of the rule embodies in the principle of spes successionis can be avoided either by the execution of a family settlement or by accepting consideration for a future share. Such circumstances attract the application of the rule of estoppels which is far from being opposed to any principle of Mohammedan law, is really in complete harmony with it.
(vi) A family arrangement would necessarily mean a decision assured at jointly by the members of a family and not between two individuals belonging to the family.
The Court ultimately held that the doctrine of estoppel was attracted so as to prevent a person receiving an advantage for giving up of his/her rights and yet claiming the same right subsequently. The Court enunciated that “being opposed to public policy, the heir expectant would be stopped under the general law from claiming a share in the property of the deceased”.
The Apex Court in the above case was not inclined to accept the methodology resorted to obtain relinquishment could not strictly be to be a family arrangement. The Court did not entertain the special leave petitions and the same were dismissed.
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