Detailed Study Notes for Unit II

Unit-II: Doctrine of Election, Covenants, Ostensible Owner, Feeding the Grant, Lis Pendens, Fraudulent Transfer & Part-Performance

1. Doctrine of Election (Section 35 of TPA)

A. Meaning and Principle

Definition: The Doctrine of Election is based on the equitable maxim that “a person cannot take under and against the same instrument.” If a transferor purports to transfer property which they do not own, and at the same time bestows some other property upon the true owner by the same instrument, the true owner must elect (choose) either to confirm the transfer or to dissent from it.
If they dissent, they must relinquish all benefits received under that particular instrument, and the benefit so relinquished reverts to the transferor or compensates the disappointed transferee.Illustration: A transfers his own property to B, and in the same deed, purports to transfer C’s land to B. C is given a gift of ₹50,000 in the same deed. C cannot keep the ₹50,000 gift and refuse to surrender his land. He must elect: either accept the whole deed (surrendering his land and keeping the ₹50,000) or reject the deed (returning the ₹50,000 and keeping his land).

2. Covenants Affecting Immovable Property (Sections 37 to 40)

A. Meaning and Kinds of Covenants

A covenant is an agreement or promise contained in a deed relating to immovable property.
Restrictive Covenants (Equity of Notice): Covenants restricting the use of land (e.g., agreeing not to build above a certain height) run with the land and bind subsequent purchasers who take the property with notice of the covenant (Tulk v. Moxhay rule).

3. Transfer by Ostensible Owner (Section 41)

A. Meaning and Principle (Benami Transactions / Ostensible Ownership)

Statutory Rule: 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 took reasonable care to ascertain that the transferor had power to make the transfer and acted in good faith.Illustration: A leaves his property in the name of his brother B (ostensible owner) while living abroad. B sells the property to C for valuable consideration. C makes reasonable inquiries and buys in good faith. A cannot later challenge C’s title, even though B was merely an ostensible owner.

4. Doctrine of Feeding the Grant by Estoppel (Section 43)

A. Meaning and Principle

Statutory Rule: Where a person fraudulently or erroneously represents that they are authorized to transfer immovable property and professes to transfer such property for consideration, such transfer shall, at the option of the transferee, operate on any interest which the transferor may acquire in such property at any time during which the contract of transfer subsists. Illustration: A, holding no title to a house, sells it to B claiming he owns it. Two years later, A inherits the exact same house from his father. B can compel A to deliver the property to him under Section 43. Subsequent acquisition of title “feeds” the earlier defective grant.

5. Doctrine of Lis Pendens (Section 52)

A. Meaning and Principle (Pendente lite nihil innovetur)

Definition: During the pendency of any suit or proceeding in a court of competent jurisdiction which is not collusive, immovable property cannot be transferred or otherwise dealt with by any party to the suit so as to affect the rights of any other party thereto, except under the authority of the court.
Purpose: Prevents parties from frustrating ongoing litigation by transferring the subject property to third parties midway through a trial. Any purchaser pendente lite takes the property subject to the final outcome of the suit.

6. Fraudulent Transfers (Section 53)

Every transfer of immovable property made with intent to defeat or delay creditors of the transferor shall be voidable at the option of any creditor so defeated or delayed.
Exception: Does not prejudice the rights of any transferee in good faith and for consideration (bona fide purchasers for value).

7. Doctrine of Part-Performance (Section 53A)

A. Meaning and Equitable Principle

Definition: Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf, and the transferee has, in part performance of the contract, taken possession of the property (or continues in possession in part performance) and has done some act in furtherance of the contract, and has performed or is willing to perform his part of the contract, then, notwithstanding that the transfer has not been completed in the manner prescribed by law (e.g., lack of registration), the transferor or any person claiming under him shall be debarred from enforcing against the transferee any right in respect of the property other than expressly provided by the contract.
Nature: Section 53A acts as a shield, not a sword (it can be used defensively to protect possession, but cannot be used affirmatively as a plaintiff to establish independent title without registration).

8. In-Depth Landmark Case Studies

Case Study 1: Application of Ostensible Ownership and Reasonable Inquiry

Case Title: Jay Dayal Poddar v. Bibi Hazra
Citation & Court: (1974) 1 SCC 3 : AIR 1973 SC 171 (Supreme Court of India)
Related Statutory Provisions: Section 41 of TPA (Transfer by ostensible owner).
The Story & Real-Line Background: A father purchased property in the name of his son (benami / ostensible owner). Later, the son mortgaged the property to a bank for a loan. The father challenged the mortgage, claiming he was the real owner and the son had no authority to mortgage it.
Legal Issues Involved: What constitutes “reasonable care” and “good faith” by a transferee dealing with an ostensible owner under Section 41?
Final Judgement & Ratio Decidendi:
- Ruling: The Supreme Court held that whether a transaction is benami depends on intention, source of purchase money, and custody of title deeds. However, to claim protection under Section 41, the transferee must prove that he made reasonable inquiries into the title and acted in absolute good faith. Since the bank failed to verify who held possession and title deeds, protection under Section 41 was denied.
- Ratio: Section 41 protects third-party transferees only when they establish proactive, diligent inquiries into the ostensible owner’s real authority.

Case Study 2: Defensive Scope of Doctrine of Part-Performance (Shield vs. Sword)

Case Title: Shrimant Shamrao Suryavanshi v. Pralhad BhAIya Suryavanshi
Citation & Court: (2002) 3 SCC 676 (Supreme Court of India)
Related Statutory Provisions: Section 53A of TPA (Part-performance).
The Story & Real-Line Background: A purchaser entered into an agreement to buy land, paid full consideration, took possession, and remained in possession for over 12 years. The sale deed was never formally registered. When the seller’s heirs filed a suit to eject him on the ground that no registered sale deed existed, the purchaser invoked Section 53A.
Legal Issues Involved: Whether a purchaser who has allowed the statutory limitation period for filing a specific performance suit to expire can still use Section 53A defensively to protect his possession.
Final Judgement & Ratio Decidendi:
- Ruling: The Supreme Court held that Section 53A is available as a shield to protect possession even if the limitation period for filing a suit for specific performance has expired, provided the transferee has performed his part of the contract and took possession in furtherance thereof.
- Ratio: Part-performance protects an innocent transferee in possession from eviction by the transferor, reinforcing equitable fairness against technical registration defects.

Quick Reference Guide: Unit-II Law of Property

Unit Number	Topic / Concept Name	Relevant TPA Provision	Core Description / Subject Matter
Unit-II	Doctrine of Election	Section 35	Cannot take under and against the same instrument; must choose either-or.
Unit-II	Ostensible Owner	Section 41	Protection of bona fide purchasers buying from apparent owners with consent.
Unit-II	Feeding the Estoppel	Section 43	Defective transfer validated if transferor subsequently acquires title.
Unit-II	Lis Pendens	Section 52	Property involved in active litigation cannot be transferred to defeat judgments.
Unit-II	Part-Performance	Section 53A	Defensive shield protecting unregistered transferees in possession who performed contract.