Transfer by Erroneous Representation of title will hold good if transferor acquires title later

Applying the principle of “feeding the grant by estoppel” under Section 43 of the Transfer of Property Act, the Supreme Court granted relief to a party, who was misled to purchase a property by erroneous representation of title by the vendor.

The said ruling was held in the matter of Tanu Ram Bora Vs. Promod Ch. Das through LR’s & others (Civil Appeal No. 1575 of 2019), decided on 08.02.2019.

Challenge

The appellant before the Supreme Court had instituted a title suit in 1995, seeking declaration of title over a plot. The plot was purchased by him on January 6, 1990, without noticing that it was declared as ceiling surplus land by the government two years ago. However, on September 14, 1990, the land was declared free of ceiling limit. Later, he effected mutation of the property in 1991.

Four years later, the vendor trespassed into the property and took over its possession. This led to the institution of the title suit. Although the trial court decreed the suit, the first appellate court reversed it, holding that the vendor had no marketable title on the day of conveyance. The first appellate Court also came to the conclusion that the defendants’ rights over the suit land also could not be established under Section 53A of the Transfer of Property Act. The judgment of first appellate court was confirmed by High Court in second appeal.

Held
Section 43 of the T.P. Act provides that 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, operates on any interest which the transferor may acquire in such property at any time during which the contract of transfer subsists.

The Apex Court observed that the intention behind Section 43 of the Transfer of Property Act, 1881 was based on the “principle of estoppel as well as the equity”. Further, the intention and objects seem to be that after procuring the sale consideration and transferring the land, the transferor is estopped from saying that though he has sold/transferred the property/land on payment of sale consideration, still the transfer is not binding to him. That is why Section 43 of the T.P. Act gives an option to the transferee and not the transferor.

Referring to the judgments in Ram Pyare vs. Ram Narain and Jumma Masjid vs. Kodimaniandra Deviah, the Court held that to apply Section 43 TP Act, it was immaterial whether the transferor acted bona fide or fraudulently in making the representation. It is only material to find out whether the transferee has been misled. Because, Section 43 uses the words “where a person fraudulently or erroneously represents“. Applying the principle in the case, the Court found that the vendor had acquired title over the property, when it was declared ceiling free after the sale.