Report No. 70

39.6. Evidence Act.-

In the Evidence Act, section 115, the words used are "declaration, act or omission", while in section 43, the words used are "fraudulently or erroneously represents". However, it is generally understood that representation, within the meaning of section 43, would include not only an express declaration, but also an act or omission which amounts to an implied representation. In fact, the section is believed to be nothing but a branch of the law of estoppel.

39.7. Obscurity.-

There seems to be a certain amount of obscurity as to the application of section 43 to cases of after acquired property. The controversy becomes acute where the property is not yet in existence. The correct position would seem to be that the section should operate, unless, of course, the transfer of a particular property is prohibited by law on the ground of fundamental public policy.

An important question to be considered in this context is-where a person has only a hope of succeeding-section 6(a)-should section 43 apply? The proper view would seem to be that section 43 should apply if what is professed to be transferred is present property; this does not nullify section 6(a). Section 6(a) deals with certain kinds of expectations and prohibits a transfer simpliciter of such expectations.

On the other hand, section 43 deals with representations as to title or right to transfer, made by a transferor who had no such title or right at the time of the transfer. Section 6(a) enacts a rule of substantive law, while section 43 enacts a rule of estoppel. The two provisions operate in different manner. Where the transferee knows as a fact that the transferor does not possess the title which he professes to transfer, then, of course, he cannot be said to have acted on it when taking a transfer.

But there is a distinction between a transfer which is professedly one of a mere hope (reversion or expectancy) and a transfer of specific property which, the transferor erroneously represents, he is authorised to transfer though actually he has only the interest of a reversioner therein. The former transfer falls under section 6(a) and hence is void, but there is no reason why the latter transfer should not be given the benefit of section 43.1

The correct view is that section 43 applies even to cases of heirs if they profess to transfer the property itself and not only the right of succession. Where professedly there is a transfer of a mere hope of succeeding, section 6(a) would apply, but, where an erroneous representation is made by the transferor to the transferee that he is a full owner of the property and the property purporting to be transferred is not a mere chance of succession, and the transferee acts upon such erroneous representation, then, if the transferor subsequently happens to acquire an interest while the contract is still subsisting, the previous transfer can, at the option of the transferee, operate on the subsequently acquired interest according to the Allahabad view.2 To some extent, support for such construction can also be drawn from the illustration (a) to section 43.

Case law-The earlier case law on the subject was discussed in a case decided by the Madras High Court3 and need not be discussed in this Report.

1. Shyam Narain v. Mangol Prasad, AIR 1935 All 244 (246) (Sulaiman, C.J. and Rachhpal Singh, J.).

2. Shyam Narain v. Mongol Prasad, AIR 1935 All 247.

3. Jamma Masjid v. K. Devich, AIR 1953 Mad 637.

39.8. Supreme Court Case.-

It has been decided by the Supreme Court1 that where a person transfers property, representing that he has a present interest therein while in fact he has only a spes successionis, the transferee is entitled to the benefit of section 43. If he has taken the transfer on the faith of the representation and for consideration. This judgment of the Supreme Court settles the position. In view of the fact that a cursory reading of section 6(a) may give a different impression it seems to be desirable to state the true position in section 43 so that the section may be made self-contained. We shall make a recommendation on that point in due course.

Although the section is confined to immovable property, the principle should apply to movable property. The statement of the law in the leading case of Halroyd v. Marshall, (1862) 10 HLC 191, is not confined to real property. This is what Lord Westbury observed in that case-

"It a vendor or mortgagor agrees to sell or mortgage property real or personal, of which he is not possessed at the time and he receives the consideration for the contract and afterwards becomes possessed of property answering to the description in the contract, there is no doubt that the contract would in equity transfer the beneficial interest to the mortgagee or purchaser immediately on the property being acquired."

1. Jamma Masjid v. K. Deviah, AIR 1962 SC 847 (853), para. 18.

39.9. Section 43-Recommendation.-

For the reasons stated above, it seems to be desirable to add a provision in section 43 clarifying the position as regards the non-applicability of section 6(a). The best course would be to insert a subsection as follows:-

"(2) Where the case falls under this section, it shall not be a defence that the interest which the transferor had at the time of the transfer was of the nature referred to in clause (a) of section 6."

We recommend that the section should be so revised.

39.10. Acting on the representation-Recommendation to add.-

There is one important ingredient of estoppel, which does not find an express mention in the section. The section does not provide that the transferee seeking the protection of the section must have acted on the representation-whether fraudulent or erroneous-made by the transferor. If the transferee knows the truth and is in no way misled by the transferor's representation, what are his equities? On the one hand, it can be contended that the section operates on the interest acquired subsequently independently of the transferee's having acted on the representation, since the section contains no such restriction.

On the other hand, there can, in general, be no estoppel by a false or erroneous statement when the truth as to the matter state dis-known to both parties. If so, one should read into the section such a condition to be satisfied by the transferee. Although the point was not in issue before the Supreme Court in the Jamma Masjid case,1 the observations in the judgment support the narrower view, namely, that the transferee must have acted on the representation.

In a sense this position is implicit in the expression "represents", because it connotes a corresponding action on the part of the person to whom it was made. If the representation has not had any effect. It should have no significance. That, indeed, comes to be the rationale, underlying those judicial decisions which held that the expression of a non-committal opinion does not bring the equity into being. It appears to be desirable to state the position clearly in the section by adding after the words "for consideration", the words "and the transferee acts on the representation". We recommend accordingly.

1. Jamma Masjid v. K. Deviah, AIR 1962 SC 847.

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