Transfer of Property by Ostensible Owner

In simple terms, 'ostensible' is something that appears true but is false. Therefore, the 'ostensible' owner of a property can't be its real owner. If he wants to prove his ownership of the property, all he needs to do is present himself to third parties or the general public as the real owner.

Despite possessing all rights of ownership, the ostensible owner of a property is not the real owner as such rights are acquired by him through the owner's consent whether explicitly or impliedly. An ostensible owner is an unqualified owner, and the real owner remains the qualified owner of the property.

Several provisions of the Transfer of Property Act of 1882 govern the transfer of property to an ostensible owner. This law stipulates that a person acting on the express or implied consent of a person with a vested interest in an immovable property is deemed as an 'ostensible owner.'

Transfer by Ostensible Owner

An ostensible owner is someone whose name appears on records and owns the property but never intended to do so. It is important to determine the source of the purchase money; it is meant to give a Benami color to possession of the property and to determine who is enjoying its benefits. This test not only separates the real owner from the apparent owner but also excludes the person who holds possession of the property in a fiduciary capacity, such as an agent or guardian.

Minors cannot consent, so their guardians cannot become ostensible owners since consent plays a crucial role in an ostensible owner. Thus, a person cannot claim ostensible ownership over the property if the real owner grants him a temporary domain. According to Section 41 of the Transfer of Property Act, 18822, an ostensible owner is defined as:

"In cases where the person who is the ostensible owner of an immovable property transfers it for consideration with the consent, express or implied, of those interested, the transfer shall not be invalidated because the transferor is not authorized to do so: as long as the transferee has taken reasonable care to determine that the transferor has the right to make the transfer, and is acting in good faith."

In general, a person cannot transfer property if they do not possess a good title to it themselves. But if section 41 is met, such a transfer can be void because the transferor was unable to make it due to incapacity.

Thus, section 41 is an exception to the above rule. It is intended to protect the purchaser from a situation where the real owner of the property tries to prevent the transfer by claiming the transferor was not authorized. Therefore, Section 41 of the Act eliminates the possibility of questioning a transfer based on the authority of the transferor if the conditions stipulated in the section are met.

To consider a person as an ostensible owner of the property, the two conditions outlined in Section 41 must be satisfied as well as some evidence to support that assumption.

The property will only be considered validly transferred under the capacity of an ostensible owner if the conditions mentioned in section 41 are fulfilled and some evidence supports such a position. During the case of NirasPurbe vs. MussamatTetriPasin5, a husband owned land and changed its revenue records into the name of his wife when on pilgrimage.

In the case, the land was sold to a third person by the wife in the absence of the husband. In due course and good faith, the purchaser investigated the land and the wife's capacity to sell the property and paid the transfer consideration. Because the land was subject to a mortgage, the purchaser paid off the loan and redeemed the mortgage as well. Upon his return, the husband was unable to claim the land back as, before leaving for pilgrimage, he had made his wife the ostensible owner of the property.

Requirements of Transfer by an Ostensible Owner

For a transfer of property from an ostensible owner certain requirements are needed to be fulfilled to consider it a lawful transfer:

• A person should be the ostensible owner of the property
• He or she must hold the right to property with the express or implied consent of the real owner
• Consideration must be involved
• Bona fide intentions should be there

It is pertinent to note that the transferee shall not have the right to property under this section until the above requirements are met and when the above requirements are met, the property shall stand transferred.  

Section 41 of The Transfer of Property Act, 1882

Express Consent

The consent is considered to be expressed when:

• The owner has clearly stated using spoken words that he has no interest in the property or that some other person has any interest in the property
• Any act by the owner that demonstrates his lack of interest in the property is a deed attesting that the owner has no interest in it, or a third party may have an interest in the property, such as getting the property renamed and disclaiming his interest in it. Inactivity or silence does not matter unless one is obligated to speak, or if it is comparable to speaking. 

Implied Consent

Implied consent can be inferred from a person's actions or behavior, for example, if a real owner is aware that someone else is handling his property and agrees to it, his silence or inaction might imply consent. For consent to be inferred, it must first be proven that the person delivering the consent knew he had a right, interest, or title to the property and nevertheless consented regardless. It is not precludeable for him to pursue a claim against the transferee even if he was unaware of his rights at that time.

Exceptions Given to Transferee for Ostensible Transfer

The transferee can claim protection under these grounds for an ostensible transfer:

• Degree of Care: Prudent degree of care must be taken while purchasing the property, proper degree of care must be there.
• Due Diligence: Obtaining and examining the title under which the transferee claims to be the owner is the conventional standard of diligence when determining whether the transferee has the power to effect the transfer. The issue needs to be investigated further if there is any indication in the document itself, that is produced as the title deed for the transferee's examination, to put the transferee on inquiry regarding the possibility of another document or incorrect ownership of the property. 
• Demonstration of usual title search: The transferee must have taken reasonable care to find out that the transferor has the right to transfer the property by conducting the standard title investigation.
• The title was obvious: An inquiry may not be conducted if the title is obvious. It is not necessary to establish that a third party acted mala fide in dealing with a person who appears to possess the property, is documented as its owner, maintains the title deeds, and talks to him about it when he appears to have it.
• No lack of Reasonable Care: Unless the lack of due care used in determining the facts is present, the transferee cannot take advantage of the Section's benefits.

Benami Transactions:

The Benami Transaction (Prohibition) Act of 1988 states that when a property is transferred to Benami (that is, under another person's name), that person becomes the real owner. Benamidars serve only as trustees for the real owners and act as their representatives.

A real owner can overcome the alienation effect by demonstrating that the property was acquired without his consent and that the buyer was aware of it. If a property is acquired under the guise of a benamidar, and the indicia of ownership are entrusted to him, the real owner is not able to overcome the alienation effect.

According to the Act, no litigation, action, or claim is permitted to enforce any right concerning a property held by Benami against the person in whose name the property is held, or any other person claiming ownership.

Accordingly, following the implementation of the Act, the actual owner is no longer able to reclaim their property from the benamidar through legal action.

Conclusion

The provisions of the Benami Transactions Act, of 1988 apply to the theory and concept of ostensible ownership. Based on our review of various case laws and the concept of ostensible ownership, we have concluded that Ostensible Ownership has its authenticity and validity derived from ideas of equity and natural justice, particularly the theory of estoppels.

It provides an exception to the rule of "Nemo dat quod non habet," allowing real ownership rights to be transferred upon the grounds of equity to bona fide transferees. There is a strong connection between Benami transactions and ostensible ownership. Under the Benami Transactions Amendment Act of 2016, Benami transactions are defined.