Introduction

• An ostensible owner is that person who is not the real owner of the property but someone who has all the indica of ownership (without being the real owner).
  • The word ‘ostensible’ literally means ‘apparent’ or ‘seeming’.
• He is the one who is apparently the unqualified and full owner and not a person who is a qualified owner like a mortgagee or hirer of goods.
• The provisions regarding transfer by ostensible owner are governed by section 41 of the Transfer of Property Act, 1882.

Provisions Related to Transfer by Ostensible Owner

• Section 41 of the Transfer of Property Act, 1882 deals with concept of transfer by ostensible owner. It states that -
  • Where with the consent (express or implied) of the persons interested in immovable property, a person is the ostensible owner of such property, and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorized to make it.
  • Provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith.
• The provision is an exception to the general principle of transfer of property which is Nemo dat quod non habet which means that no one can confer a higher right on property than what he himself possesses.
• The transfer by the ostensible owner underlines the doctrine of holding out.
  • The doctrine of holding out protects the transferee from an ostensible owner. And comes into play when the rights of two innocent parties come into conflict.

The privy council in Ram Coomar v. MacQueen (1872), in regard with transfer by ostensible owner held that ,“It is a principle of natural equity which must be applicable  where one man allows another to hold himself as the owner of an estate and a third person purchases it, for value, from the apparent owner in the belief that he is the real owner, the man who so allows the other to hold himself out shall not be permitted to recover upon his secrete title, unless he can overthrow that of the purchaser by showing a notice, or something which amounts to a constructive notice which ought to have put him upon an enquiry, that, if prosecuted would have led to a discovery of it.”

Essentials of Section 41

The following conditions are necessary for the applicability of this Section –

1. A person must be the ostensible owner of a property.
2. That person must be such owner with the consent (express or implied) of the real owner.
3. The transferee must purchase the property from such ostensible owner for the consideration.
4. The transferee must take reasonable care to ascertain that the transferor has the power to make the transfer.

The real owner is deprived of his rights in the property under this section only if the above essential conditions for the applicability of the section are satisfied.

Burden of Proof

• The burden of Proof signifies an obligation to prove a fact.
• The burden of proof is on the transferee to prove that the person making the transfer was in fact the ostensible owner and had the requisite authority for such transactions. He should at least prove that it is a Benami transaction.
• Also, he must prove that he took reasonable care to protect his interests.
• In Mahinder Singh v. Pardaman Singh (1992), the Delhi High Court said that when a transaction is Benami and transferor is ostensible owner, the burden to prove lies on a person who claims that he is the real owner.