1973 Supreme(Ori) 25
HIGH COURT OF ORISSA
S. Acharya, J.
DHRUBA CH. SAHU - Appellant
Versus
PURNA CH. PRADHAN - Respondent
Second Appeal 27 Of 1970
Decided On : MARCH 14, 1973
A.K.Padhi
A real owner who allows an ostensible owner to hold himself out as the owner of a property cannot recover the property from a third party who purchases it in good faith and for valuable consideration, unless the real owner can show that the third party had actual or constructive notice of the real title or that there were circumstances that should have put the third party on inquiry.
Headnote:
TRANSFER OF PROPERTY ACT, 1882 - SECTION 41 - SALE DEED - VALIDITY - PURCHASER'S GOOD FAITH - OSTENSIBLE OWNER - REAL OWNER'S CONSENT - NOTICE OF REAL TITLE - REASONABLE CARE TO ASCERTAIN TRANSFEROR'S POWER TO TRANSFER.
Fact of the Case:
Plaintiff No. 1, the real owner of the suit property, allowed plaintiff No. 2, his son, to hold himself out as the owner. Defendant No. 1, a third party, purchased the property from plaintiff No. 2 for valuable consideration, believing him to be the real owner. Plaintiff No. 1 filed a suit to cancel the sale deed, claiming that it was executed without consideration and through fraud.
Finding of the Court:
The courts below found that the sale deed was for consideration, there was no fraud or undue influence, and defendant No. 1 acted in good faith. They held that plaintiff No. 1, by his conduct, created the impression that plaintiff No. 2 was the real owner and that defendant No. 1 took reasonable care to ascertain plaintiff No. 2's power to transfer the property.
Issues: 1. Whether the sale deed was executed without consideration and through fraud. 2. Whether defendant No. 1 acted in good faith in purchasing the property. 3. Whether plaintiff No. 1's consent to the transfer was necessary under Section 41 of the Transfer of Property Act.
Ratio Decidendi: 1. Section 41 of the Transfer of Property Act protects a transferee who purchases property from an ostensible owner in good faith and for valuable consideration. 2. The real owner cannot recover the property from the transferee unless he can show that the transferee had actual or constructive notice of the real title or that there were circumstances that should have put the transferee on inquiry. 3. In this case, plaintiff No. 1, by his conduct, created the impression that plaintiff No. 2 was the real owner and that he had the power to transfer the property. Defendant No. 1 took reasonable care to ascertain plaintiff No. 2's power to transfer the property by purchasing it openly in the presence of plaintiff No. 1 and other persons. Therefore, defendant No. 1 acted in good faith and is protected under Section 41 of the Transfer of Property Act.
Final Decision: The appeal was dismissed.
S. ACHARYA, J.
( 1 ) THE unsuccessful plaintiff No. 1 in both the Courts below is the appellant in this second appeal.
( 2 ) PLAINTIFF No. 1' is the father of plaintiff No. 2. The plaintiffs filed the suit for a declaration that the sale deed executed by plaintiff No. 2 in favour of defendant no. 1 is not binding on the plaintiffs as the same is without consideration and was brought into existence through fraudulent means by taking advantage of the young age of plaintiff No. 2. It is the plaintiffs' case that the suit property originally belonged to Bramar Sahu (P. W. 3) and it was purchased by plaintiff No. 1 nominally in the name of his son, plaintiff No. 2 on 5-10-1953 as plaintiff No. 1 was then a leper. Plaintiff No. 1 paid the consideration money for the said purchase and he remained in possession of the land as well as the sale deed executed by Bhramar since the date of purchase. It is alleged that Radhamohan patnaik, defendant No. 2 (sister's husband of defendant No. 1) persuaded plaintiff no. 2 to execute a sale deed in respect of the suit property in favour of defendant no. 1 on the pretext that he (defendant No. 2) would take plaintiff No. 2 as a partner in his opium smuggling business and for that he (plaintiff No. 2) should nominally transfer his properties in the name of defendant No. 1 in order to avoid confiscation of the same in case he (plaintiff No. 2) would set involved in any case while taking part in the said smuggling business. Plaintiff No. 2, who was then an" inexperienced voung boy was lured by all that was told to him and so he executed a nominal sale deed in favour of defendant No. 1. But the said sale deed was not acted upon in any manner whatsoever. It is also stated that at the time of the execution of the sale deed plaintiff No. 2 was not pulling on well with his father, plaintiff No. 1 the real owner of the property, and so the defendants, taking advantage of the voung age and inexperience of plaintiff No. 2, could manage to set the sale deed Ext. A executed by plaintiff No. 2 without Payment of any consideration for the same. It is averred that the said sale deed is invalid and inoperative, and defendant No. 1 has not acquired any title to the same. Hence this suit for the cancellation of the sale deed Ext. A.
( 3 ) DEFENDANT No. 1 alone filed the written statement in this suit and the other defendant was set ex parte. Defendant No. 1 in his written statement has denied all the plaint allegations. His case in short is that plaintiff No. 2 was not a minor when he executed the sale deed Ext. A in favour of this defendant. It is also asserted that he purchased the suit property from plaintiff No. 2 without practising any fraud or inducement on plaintiff No. 2 and he executed the sale deed Ext. A on receipt of the full consideration money, and accordingly the sale in favour of defendant No. 1 is not a nominal one and is not invalid or inoperative on any consideration. It is further asserted that plaintiff No. 2 is the real owner of the property and plaintiff No. 1 is in no way interested in the same. Mostly on the above averments defendant No. 1 prayed for the dismissal of the suit.
( 4 ) THE trial court arrived at the following findings: Plaintiff No. 2 was not a minor at the time of the institution of the suit or at the time of the execution of the sale deed Ext. A in favour of defendant No. 1; the sale deed in favour of defendant No. 1 was not vitiated by fraud and undue influence as alleged by the plaintiffs: plaintiff No. 1 was the real owner of the suit property and with his express consent plaintiff No. 2 was the ostensible owner; the sale in favour of defendant No. 1 by plaintiff No. 2 was supported by payment of consideration; plaintiff No. 2 executed the sale deed after attaining majority and the said sale deed was drafted and executed in the presence of plaintiff No. 1 and he had knowledge about all that and accordingly the sale under Ext A was not voidable or inoperative and the tr