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Ramcoomar Koondoo v. Macqueen -A transfer by ostensible owner

Section 41 of the Act deals with ostensible owner and it has been defined as:

“Transfer by Ostensible Owner: Where, with the consent, express or implies, of the persons interested in immovable property, a person is the ostensible owner of such property and transfer the same for consideration, the transfer shall not be voidable on the grounds 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 section lays down certain requirements to avail the benefit of this section. They are:
• The primary condition is that the person who is transferring the property should be ostensible owner.

• There should be consent form the real owner, which can be implied or express form.

• The ostensible owner should get some consideration in return of the property. • Reasonable care has to be taken by the transferee about the authority of transferor to the property and the transferee had acted in good faith.

• It goes without saying that this section is applicable only to transfer of immovable property and not in case of movable property. The law incorporated in Section 41 is based on the rules laid down by Privy Council in the leading case Ramcoomar Koondoo v. Macqueen. The facts and law laid down in this case were as follows.

Alexander Macdonald, who lived in Calcutta, and cohabited with Bunnoo Bebee as his mistress, had two children by her, Alexander Macdonald, who is dead; and Maria, one of the respondents, who married Mr. McQueen, the other respondent. The father died in 1834.

The history of the property appears to be this:-
The land, which is perpetual leasehold, at a fixed rent, was conveyed in August 1831 by the then proprietor to Bunnoo Bebee by a deed of sale, and the price paid at that time was only Rs. 130. In the following September the deed was registered, and thereupon the zamindar granted a fresh pottah to Bunnoo Bebee, at the fixed rent of Rs. 35. It does not appear with any certainty that Macdonald, the father, was in possession of the land and the buildings. At all events, it is not clear upon the evidence that he ever resided upon the property. There are two witnesses who speak to his residence. One of them says that he did not live in the new bungalow, and the other says he did. The evidence is far from satisfactory to establish the fact that he really did reside upon the property.

But it is clear that, after his death, Bunnoo Bebee did go to reside upon it, and she resided there for some time. Afterwards she left the property and received rents from the tenants. Then, in June 1843, she sold the property to Ramdhone Koondoo, and conveyed it to him by a deed of sale. The price she obtained was Rs. 945, and there is nothing to show that that was not the full value of the property, At the time she sold, she made a surrender to the zamindar of the leasehold interest, and a fresh pottah was granted to the purchaser, under which undisputed possession was held for 24 years. During that time the purchaser erected important buildings upon the land, and increased the value to such an extent that the property is valued Rs. 40,000 at the time of institution of suit. Bunnoo Bebee died before the commencement of the present suit; there is a contest as to the time of her death, which was material only as regards the the price at which she sold the land was Rs 945, the original price having been Rs. 130 when the lease was bought by Macdonald. The zamindar accepted Ramdhone as lessee in her place, and he got possession.

He then built a house upon it, and let it to the male respondent, who, having married the female respondent, remained in possession, and having failed to pay the rent, Ramdhone brought an action of ejectment in the Supreme Court, which, being undefended, resulted in judgment against the casual ejector, and possession being obtained. Soon afterwards, Bebee Bunnoo being dead, the respondents brought the present suit as devisees in remainder to eject Ramdhone's family. The Calcutta High Court decided in favour of Macqueen whereupon Ramcoomar (son of Ramdhone who was then substituted in the place of his father) went in appeal to the Privy Council.

1. Whether the property was Macdonald's.
2. Whether it came by his will to Maria McQueen.
3. Whether the appellants purchased bond fide for valuable consideration without notice.

Arguments of appellants
With regards to whether the Koondoos bought bona fide and for valuable consideration, being induced to believe that the property was Bunnoo Bebee's own absolutely, by the fact that the conveyance and pottah were in her name, and after having made all enquiries which a prudent man would have made under the circumstances, and being without notice of any other title.

The appellants relied upon Varden Seth Ram v. Luckpathy Royjee Laltah, that stated that how much evidence or what sort of evidence the party must produce, will depend on the circumstances of the case; but at any rate it must be made quite clear that every possible source of evidence has been exhausted, and that every search has been made, and every effort used to show affirmatively the complete good faith of the purchaser. All such efforts were made by the appellant.

The appellants contended that they purchased the land in dispute from Bunnoo Bebee as owner. The real owner looking on and actually dealt with them as owners, saw them build a large house, and now coming forward and saying that our vendor had only a benami title combined with a life-interest given by the person for whom she was benamidar. This cannot be allowed.

They neither had express notice nor constructive notice. The zamindar accepted Bamdhone as lessee, and there was nothing to cause even suspicion. Even the action of ejectment was not defended, or any doubt there thrown on the purchaser's title. Argument of Respondent- The counsel on behalf of respondent stated that duty to take notice of every fact relating to property has been neglected in the present case. Only two witnesses are called who speak at all to the circumstances under which the Koondoos purchased, Ram Kristo Banerjee, a karpardas (agent) of Ramdhone Koondoo and the person who wrote the documents, but they really proved nothing more than appears on the face of the documents.

They didn’t institute a very strict inquiry as to how Bunnoo Bebee became possessed of the property. The slightest investigation would have shown the appellants' father that the title was a doubtful one. It was notorious in the neighbourhood that Macdonald was the owner, and had built on the premises, and the wording of the conveyance that Bebee Bunnoo had had the consent of her family to convey must have shown that she had only a limited right

The answer of the appellants is that their father purchased the estate of Bunnoo Bebee without any notice of the benami title, and that they are entitled to hold it, notwithstanding there may have been, originally, a resulting trust in favor of Macdonald. It certainly would require a strong case, to be established on the part of the respondents, to defeat a possession for so long a period, of property for which full value had been given to the person in the apparent ownership of it.

The burden of proof lies very strongly on them in such a case. They have of course to establish, in the first instance, the fact that the purchase was really made by Macdonald, and with Macdonald's money, on his own behalf. The respondent failed to produce the evidence for this. Moreover, after Macdonald's death, Bunnoo Bibee treated the property as part of the estate of Macdonald. Their Lordships held that the appellants have established their right to hold the property against the benami title.

It is scarcely suggested that the purchaser had any notice that the title was other than or different from the apparent one. None of the documents give any notice whatever that the transaction was other than it appeared to be. On the contrary, all the documents are entirely consistent with the purchase having been made by Bunnoo Bebee herself, or by somebody for her benefit. Allowing the appeal of Ramcoomar, the Privy Council held that even assuming that Macdonald was the real owner and that Bunnoo Bibee was merely an apparent (ostensible) owner, Since Macdonald had allowed (i.e. given implied consent to) Bunnoo Bibee to hold herself out as the real owner, he or his representatives could not recover upon secret title unless they could prove Delivering its judgment the privy council made following well-known observation- “It is a principle of natural equity, which must be universally applicable that, where one man allows another to hold himself out 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 secret title unless he can overthrow that of the purchaser by showing, either that he had direct notice, or something which amounts to constructive notice, of the real title; or that there existed circumstances which ought to have put him upon an inquiry that, if prosecuted, would have led to a discovery of it.” It was there by held that the plaintiff cannot take back the property form the third party and that the transfer was a legitimate transfer in the eyes of the law. This wordings used in this case can be seen in the S. 41 of the Act which deals with Ostensible owner.

The principle entailed in S.41 of The Transfer of Property Act 1882 is against the general principle which states that no person can transfer title better than himself (nemo dat quad non habet). It is an exception to this principle because here the real owner is giving permission to ostensible owner or benamidar to portray himself as real owner. So the real owner cannot claim against the ostensible owner once he sells the property because the real owner allowed this situation to prevail in the first place.

The following three things must be there to make a transfer by an ostensible (apparent) owner valid:
• Transfer is with consideration- S.41 does not apply to gifts or gratuitous transfers. If the transfer is with consideration, it may be any kind of transfer of property eg. sale, exchange, mortgage or lease.

• Transferee acts in good-faith.- It is necessary that transferee acts in good faith, i.e. he has purchases the property in honest belief that transferor has power to transfer the property. Good-faith means bona fide intention. If the person purchasing the property knows that transferor is merely an apparent owner his intention is not bona fide and there is no good faith on his part. Thus he won’t be protected.

• Reasonable care by the transferee- The transferee must have exercised reasonable care in ascertaining the title and authority of transferor. Reasonable care means that care which a man of ordinary prudence should take while making inquiries regarding the title of and immovable property.

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