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INDIAN INSTITUTE OF LEGAL STUDIES
ASSIGNMENT ON PROPERTY LAW
Case Study: Nageshar Prasad Vs. Pateshri (1915)
UNDER THE SUPERVISION OF :-
Ms. Kajal Kundalia
Asst. Prof. Of Law
SUBMITTED BY:
Name- Dipak Kumar Agarwal
Roll.No-69
Course- LL.B- 3yrs
Semester- 5th Sem
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ACKNOWLEDGEMENT
I extend my heartfelt gratitude to everyone who contributed to the successful completion of
Case Study: Nageshar Prasad Vs. Pateshri (1915)
First and foremost, I express my sincere thanks to my academic mentor and guide, Ms. Kajal
Kundalia, Asst Professor of Law for their invaluable guidance, constructive feedback, and
unwavering support throughout this research. Their expertise and insights have been
instrumental in shaping the direction of this study.
Special thanks are due to the library and administrative staff of Indian Institute of legal
Studies, whose assistance in sourcing materials and providing logistical support made this
research possible.
Finally, I am grateful to my family and friends for their encouragement and understanding
throughout this journey. Their support gave me the strength and determination to complete
this work.
This study would not have been possible without the collective efforts of all these individuals
and institutions. I am truly thankful for their contributions.
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Contents
Introduction ................................................................................................................................ 4
Case Study: Nageshar Prasad Vs. Pateshri (1915) ................................................................... 10
Facts of the Case: ................................................................................................................. 10
Legal Issues .......................................................................................................................... 11
Arguments ............................................................................................................................ 12
Analysis: .............................................................................................................................. 13
Conclusion ............................................................................................................................... 15
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Introduction
The Transfer of Property Act, 18821, was passed with the purpose of making transfer of
property easier and makes it accessible to the population at large. This Act lays down certain
general principles as to transfer of property which has to be followed. Transfer of a property
by and ostensible owner is such a concept which was incorporated to protect the rights of
innocent third parties vis-à-vis the property owners This principle was first used in the much
celebrated case of Ramcoomar Koondoo v. John and Maria McQueen2 by the Judicial
Committee.
Ramcoomar Koondoo v. John and Maria McQueen3 case
In this case, the plaintiff who had inherited a property by way of a will came to know that
someone else had already purchased this property in her name and subsequently sold this
property to a third person, by making him believe that he had good title over that property.
The whole transaction was a ‘benami’ transaction but was not known to anyone except the
person who sold the property. The plaintiff sued the third party for recovery of the possession
of the land but the committee held that:
“ 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 our 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 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.
S. 41 of the Act.
Section 41 of the Act deals with ostensible owner and it has been defined as:
1
Hereinafter referred to as ‘the Act’.
2
(1872) 11 Beng LR 46, p 52.
3
(1872) 11 Beng LR 46, p 52.
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“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.”4
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.5
• 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.6
• It goes without saying that this section is applicable only to transfer of immovable
property and not in case of movable property.
‘Ostensible owner’
Ostensible owner is not the real owner but who can represent himself as the real owner to the
3rd party for such dealings.7 He has acquired that right by the willful neglect or acquiesces by
the real owner of the property thereby making him an ostensible owner. A person who has
gone abroad for some years has given his property to his family relative for making use of it
for agricultural purpose and for all other purposes as he may deem fit. In this case the family
relative is the ostensible owner and if during that period he sells the property to a third party,
then the real owner after coming back cannot claim his property and say that the person was
not authorized to transfer his property. An alternative case can be when the property is in
wife’s name but husband used to take care of it and the other dealings related to the property.
If the husband thereby sells this property, the wife cannot claim her property back. Or as in
the Mohamad Shakur v Shah Jehan, in which the real owners lived in a different village, and
4
Section 41, Transfer of Property Act, 1882.
5
Abdul Gaffer v Nawab Ali, [1949] A.I.R. 17 (Assam).
6
Chandini Prasad Ganguly v Gadadhar Singh Roy, [1949] A.I.R. 666 (Cal).
7
Kannashi Vershi v Ratnashi Nenshi, [1952] A.I.R. 85 (Kutch).
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had authorized a widow to use the property as she liked and afterwards she sold it. The real
owner lost the case and the transfer was a valid one.
Consent from the real owner
The main purpose of this section is to protect the rights of the innocent third party who had
purchased the property, when the real owner was himself at fault by not protesting the
transfer.8 But a necessary requirement is that the real owner should have the capacity to give
the consent9 and that consent should not be obtained from any unlawful act. In the case of
minors, even if the ostensible owner claims that he has the consent of the minor, it will be
held to be no consent as minors do not have any capacity to give the required consent. And it
was10 laid down in the case of Satyanarayana Murthi vs. Pydayya11, that consent need not be
taken from the true owner and it might also be the case that the true owner had no knowledge
of the transfer.
The consent in such transactions can be express or implied.
Implied Consent
Implied consent can be made out from the conduct of the real owner. It is not required that
the real owner has to give express consent or give his consent in writing. Therefore, where
another person is dealing with the property of the real owner, as if the property was his own,
and the real owner knows about it, then it will said to be implied consent on the part of the
real owner. In the case of Shamsher Chand v Bakshi Meher Chand12, it was held that if a
party is not aware of his rights or is silent about them, then in such case it cannot be said that
the real owner had consented to the transfer of the property. It is required that a person who is
not aware of his rights could never have consented to that and such a transaction will not be
valid. It is not stated in the section that the real owner must have actually consented to the
transfer, because if that was the case, then the real owner could never have made any
objection to such transfer. It is just that the real owner is unaware of this transaction or is
8
Lickbarrow v. Mason, (1787) 5 Term Rep 683; In this case, it was held that where court has to choose between
two innocent parties, it will protect the rights of that party who had by no fault of his own has suffered. The
pther party who had the option to stop it or because of whose negligence this has happened will not be protected.
The same principle was also applied in the case of Root v French, (1835) 13 Wendell 570.
9
Sambhu Prasad v. Mahadeo Prasad, [1933] A.I.R. 493 (All).
10
This principle was followed in many cases such as Abdulla Khan v Bundi, (1912) ILR 34 All 22; Gadigeppa v
Balangauda, [1931] 741 (ILR 55 Bom).
11
[1943] A.I.R. 459 (Mad)
12
AIR 1947 Lah 147.
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negligent. Silence may amount to consent if the silence on the part of real owner leads the
third party to believe that the ostensible owner is the real owner of the property. But in the
case of Gurucharan Singh v. Punjab State Electricity Board Patiala13 , where the land in
contention was transferred to someone else and such person had perfected his right to the
property by paying the money. The new owner which is the real owner had not taken the
possession of the land and the previous owner after having waited for 12 years, sold the land
to third party. The real owner then comes forward and claim his right over the land and the
court said that the real owner was a minor at the time of transfer of land and therefore could
not take the possession of the land and therefore it would not amount to silence on the part of
the real owner as he could never have consented to the transfer. Therefore the subsequent
transfer was held to be invalid.
Consideration
Consideration is a must if there is a transfer by ostensible owner. He cannot give away the
property as a gift. As it has also been provided in the Indian Contract Act, 1872 that
consideration is necessary component of any contract and transfer of property by an
ostensible owner is done by way of contract only. Also it has been provided in S. 4 of the Act
that anything not expressly defined in this act shall be deduced form the general definitions
given under the Indian Contract Act, 1872.
Reasonable Care
Reasonable care can be understood as the care which a reasonable and ordinary man would
have taken. He has a duty to check the title of the transferor. Like in the case of Nageshar
Prasad v. Raja Pateshri14 where there was an error in the revenue records regarding the name
of the owner. The name written was of some other person and the real owner had already
made a complaint about this error. The person whose name was in the revenue records
subsequently sold it to a third person and the third person without making proper inquiries
took the property and the real owner afterwards objects to it. The court held that the third
party has not taken reasonable care which was required of him and therefore he will not be
protected by this section. The advice of solicitor will not be enough to prove that the third
party has taken reasonable care in determining the title of the property.[21] The third party is
required all the available documents which can possibly give some more information
13
[1989]A.I.R. 127 (P&H).
14
(1915) 265 , (20 Cal WN).
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regarding the title of the property and these documents may include police registers,
municipal registers apart from other documents.
There is also a safeguard for the real owner. In the case of Mathura v. Ambika, where the real
owner had sold the property to another person and got it registered before the transfer by the
ostensible owner could be registered, then it was held that the transfer by the real owner
would be held valid as he has a greater title over the property than the ostensible owner and
the rights of third person who had purchased this property from the ostensible would not be
protected under this section.
Proper Inquiry
As a person is required to make reasonable inquiries, sometimes it is difficult to make out
what will amount to proper inquiry. The courts in India have held that this being subjective, it
will depend on the facts and circumstances of each case and it can also be the case that what
amounts to proper inquiry in one case may not called proper inquiry in another case with
completely different facts. If the transfer is by Mahmomedans, it is a required of the
purchaser to inquire if there is any female heir also. In many cases it is such that only males
transfer the property without taking the consent of the females and this will not be a valid
transfer because they also have a share in the property and therefore the third person has to
inquire about such things.15 The ultimate test that is that the “transferee should show that he
acted like a reasonable man of business and with ordinary prudence.”16
Good Faith
Good faith simply means that the transferee should have honestly believed that the ostensible
owner is the true owner after all the proper inquiries conducted by him.17 But where after
proper inquiries the transferee has knowledge that the person selling him the property is not
the real owner but only the ostensible owner, the transferee cannot neglect true facts.18 This
is because of the fact that a person cannot take advantage of his own negligence and then
claim protection of this act. The rights of real owner also need to be safeguarded against such
persons.
15
Azima Bibi v Shamalanand, (1913) ILR 40 Cal 378.
16
Fazal Husain vs Muhammad Kazim And Ors. , [1934] A.I.R. 193 (All).
17
Layak Ram v. Dharmavati, [2010] A.I.R. 95 (P&H).
18
Laxman Sakharam Salvi And Others vs Balkrishna Balvant Ghatage, [1955] A.I.R. 190 (Bom).
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Burden of Proof
The burden of proof is on the transferee to prove that the transferor was actually the
ostensible owner and had the consent to sell the property.19 Also he has to prove that he
actually acted in good faith and had taken all reasonable care that was required from him
while taking the property.20 This is because he has to prove that he was not at fault while
taking the property and to shift the burden on the real owner. Alternatively, to shift his
burden, he can also prove that the transferor did not allow the transferee to know the real
facts and tried everything to suppress the facts.
19
Ram v. Muktinath, [1956] A.I.R. 154 (Assam).
20
Gurbaksh Singh v Nikka Singh, [1963] 1 SCR 55 (Supp).
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Case Study: Nageshar Prasad Vs. Pateshri (1915)
Case Study: Nageshar Prasad vs. Pateshri (1915)
Court: Allahabad High Court
Citation: AIR 1915 All 199
Judges: Justice Banerji and Justice Rafiq
Facts of the Case:
The case arose from a dispute concerning the validity of a mortgage executed by Rudra
Narain Singh in favor of Nageshar Prasad Pande. Rudra Narain Singh, who was in possession
of the property, acted as the ostensible owner and mortgaged it to the plaintiff. The plaintiff
sought to enforce the mortgage, claiming that Rudra Narain Singh's apparent ownership
justified the transaction.
Raja Pateshri Partab Narain Singh, the real owner of the property, challenged the
enforceability of the mortgage. He contended that Rudra Narain Singh had no authority to
mortgage the property and that he, as the real owner, had never given consent for Rudra
Narain Singh to act as an ostensible owner. The plaintiff argued that he had relied on Rudra
Narain Singh’s possession and apparent ownership when entering into the mortgage
agreement.
The central issue in the case was whether the mortgage executed by Rudra Narain Singh was
binding on the real owner under Section 41 of the Transfer of Property Act, 1882. This
section permits transfers by ostensible owners to bind the real owner if the transferee has
acted in good faith, paid consideration, and taken reasonable care to ascertain the transferor's
authority. The plaintiff claimed he had fulfilled these conditions, while the defendant argued
otherwise, asserting a lack of due diligence and good faith on the part of the plaintiff.
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Legal Issues
1. Was the mortgage executed by Rudra Narain Singh legally valid and enforceable
against the real owner, Raja Pateshri Partab Narain Singh?
2. Could Rudra Narain Singh, as an ostensible owner, validly transfer rights in the
property?
3. Were the conditions under Section 41 satisfied, including:
▪ Whether the real owner gave consent (express or implied) for the
ostensible ownership.
▪ Whether the transferee (plaintiff) acted in good faith.
▪ Whether the transferee took reasonable care to ascertain the authority
of the transferor.
4. Did Rudra Narain Singh have actual or apparent authority to mortgage the property,
making the transaction binding on the real owner?
5. Did the plaintiff, Nageshar Prasad Pande, take reasonable steps to verify Rudra Narain
Singh’s ownership and authority before entering into the mortgage agreement?
6. Was the mortgagee’s conduct consistent with the requirement of good faith under
Section 41?
7. Could the real owner (defendant) be held liable for the actions of the ostensible
owner, given the circumstances surrounding the mortgage transaction?
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Arguments
Plaintiff's Arguments:
Nageshar Prasad , the plaintiff, contended that the mortgage was valid and enforceable
because Rudra Narain Singh was in possession of the property and acted as the ostensible
owner. The plaintiff argued that he had entered into the mortgage transaction in good faith
and for valuable consideration, relying on the visible authority of Rudra Narain Singh. He
asserted that under Section 41 of the Transfer of Property Act, 1882, such transfers by
ostensible owners are binding on the real owner, provided the transferee has taken reasonable
care to ascertain the transferor's authority and acted in good faith.
The plaintiff emphasized that the possession and control exercised by Rudra Narain Singh
over the property created a legitimate belief that he had the authority to execute the mortgage.
This belief was further reinforced by the absence of any notice or public declaration by Raja
Pateshri Partab Narain Singh challenging Rudra Narain Singh’s actions as an ostensible
owner. Thus, the plaintiff maintained that he had no reason to doubt Rudra Narain Singh’s
authority and sought the enforcement of the mortgage against the property.
Defendant's Arguments:
Raja Pateshri Partab Narain Singh, the defendant, vehemently opposed the enforceability of
the mortgage. He argued that Rudra Narain Singh had no authority, actual or implied, to
mortgage the property. The defendant contended that he, as the real owner, had neither
explicitly nor implicitly given consent to Rudra Narain Singh to act as the ostensible owner
of the property. Without such consent, the requirements of Section 41 of the Transfer of
Property Act, 1882 could not be satisfied.
The defendant further argued that the plaintiff failed to take reasonable care to verify the
transferor’s authority. Given the local circumstances and the plaintiff’s familiarity with the
family’s history, it was alleged that the plaintiff had acted negligently by not investigating the
actual ownership of the property. The defendant also questioned the good faith of the
plaintiff, asserting that the latter had ignored obvious signs that Rudra Narain Singh did not
have the right to execute the mortgage.
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Analysis:
1. Applicability of Section 41 of the Transfer of Property Act, 1882:
The court examined the conditions under Section 41, which allows transfers by ostensible
owners to bind the real owner if:
• The ostensible owner acted with the consent (express or implied) of the real owner.
• The transferee took reasonable care to ascertain the transferor's authority.
• The transferee acted in good faith and for valuable consideration.
In this case, the defendant argued that there was no evidence to show that he, as the real
owner, had ever given explicit or implicit consent to Rudra Narain Singh to act as the
ostensible owner. Without such consent, the plaintiff could not invoke the protection of
Section 41. The court agreed, noting that possession alone is insufficient to constitute
ostensible ownership if the real owner has not conferred such authority.
2. Failure to Exercise Reasonable Care:
The plaintiff was required to demonstrate that he had exercised due diligence in verifying
Rudra Narain Singh’s authority to mortgage the property. The court found that the plaintiff
had failed to conduct any meaningful investigation into the ownership of the property. The
plaintiff’s knowledge of the local circumstances and the family’s history should have
prompted him to inquire further into Rudra Narain Singh’s authority, particularly as the
property was of significant value. The failure to exercise reasonable care undermined the
plaintiff’s reliance on Section 41.
3. Absence of Good Faith:
Good faith is a critical requirement for Section 41 to apply. The court found that the
plaintiff’s conduct did not meet this standard. Despite being familiar with the parties
involved, the plaintiff entered into the transaction without taking steps to ensure the
legitimacy of Rudra Narain Singh’s authority. This lack of good faith further weakened the
plaintiff’s case.
4. Binding Nature of the Mortgage:
The court ultimately held that the mortgage was not binding on the real owner, Raja Pateshri
Partab Narain Singh. Since the conditions of Section 41 were not met, the plaintiff could not
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enforce the mortgage against the property. The ostensible owner, Rudra Narain Singh, acted
without authority, and the real owner could not be held liable for his unauthorized actions.
5. Broader Implications:
This case underscores the importance of verifying ownership and authority in property
transactions. It reinforces the principle that the real owner cannot be held liable for the acts of
an ostensible owner unless the transferee acts in good faith, exercises due diligence, and
relies on authority that was conferred or implied by the real owner.
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Conclusion
In Nageshar Prasad Pande v. Raja Pateshri Partab Narain Singh and Another (1915), the court
concluded that the mortgage executed by Rudra Narain Singh was not binding on the real
owner, Raja Pateshri Partab Narain Singh. The court held that the requirements of Section 41
of the Transfer of Property Act, 1882, were not satisfied.
The plaintiff, Nageshar Prasad Pande, failed to demonstrate that:
The real owner had given express or implied consent for Rudra Narain Singh to act as the
ostensible owner.
He had exercised reasonable care to ascertain Rudra Narain Singh’s authority.
He had acted in good faith while entering into the transaction.
As a result, the mortgage was deemed invalid and unenforceable against the real owner. The
judgment reinforces the importance of due diligence, good faith, and verifying the authority
of an ostensible owner in property transactions. This decision serves as a precedent to protect
the rights of real property owners from unauthorized actions by individuals posing as
ostensible owners.
