Doctrine of Election | Property Law - CLAT PG PDF Download

Doctrine of Election

Doctrine of election, as outlined in Section 35 of the Transfer of Property Act, 1882, involves the choice between two alternative or inconsistent rights conferred under an instrument. It emphasizes that a person cannot take under and against the same instrument, requiring them to elect (choose) only one of the conflicting rights.

Principle Underlying the Doctrine of Election

• The principle underlying the doctrine of election is encapsulated in the Latin maxim "Allegans contraria non est audiendus," which means that one cannot be heard who alleges contradictory things. In the context of the doctrine of election, this principle implies that a person benefiting from a will or instrument must adhere to the terms of the instrument in its entirety.
• In the case of Cooper v. Cooper, Lord Hather illustrated this principle by stating that when someone derives benefit from a will or instrument, they are obligated to give full effect to its provisions. If the instrument attempts to deal with something beyond the donor's authority, the law imposes the duty on the beneficiary to enforce the instrument in its entirety.

Applicability

• Hindu Law: The doctrine was directly applied in the case of Mangaldas v. Runchhoddas.
• Mahomeden Law: The doctrine was applied by the Privy Council in the case of Sadik Hussain v. Hashim Ali.
• English Law: In English law, if a donee elects against the instrument, they do not forfeit the benefit conferred on them but are merely obligated to compensate the disappointed party.

Section 35 of Transfer of Property Act, 1882

• When a person attempts to transfer property they do not have the right to transfer and simultaneously confers a benefit on the owner of the property, the owner must choose to either confirm or reject the transfer. If the owner rejects the transfer, they must relinquish the benefit conferred, which will revert to the transferor or their representative as if it had not been disposed of. However, in cases of gratuitous transfers where the transferor has died or become incapable of making a fresh transfer before the election, and in all cases where the transfer is for consideration, the disappointed transferee is entitled to compensation.
• The rule applies regardless of whether the transferor believes the property they are transferring to be their own. A person who does not receive a benefit directly under a transaction but gains a benefit indirectly does not need to make an election. A person who benefits under a transaction in their own capacity may dissent from it in another capacity.
• Where a specific benefit is conferred on the owner of the property being transferred, and this benefit is expressed to be in lieu of the property, if the owner claims the property, they must relinquish the specific benefit. However, they are not required to relinquish any other benefits conferred upon them by the same transaction.
• Acceptance of the benefit by the person to whom it is conferred constitutes an election to confirm the transfer if the person is aware of their duty to elect and the circumstances influencing a reasonable person’s judgment in making an election, or if they waive inquiry into the circumstances. Such knowledge or waiver is presumed in the absence of evidence to the contrary if the person has enjoyed the benefit for two years without expressing dissent.
• Knowledge or waiver may be inferred from any act that makes it impossible to place the parties interested in the property being transferred in the same condition as if the act had not occurred.
• If the person does not indicate their intention to confirm or dissent from the transfer within one year from the date of the transfer, the transferor or their representative may require the person to make an election. If the person fails to comply with this requisition within a reasonable time, they will be deemed to have elected to confirm the transfer.
• In cases of disability, the election will be postponed until the disability ceases, or until the election is made by an authorized individual.

Analysis of the Section

• Essential Conditions: Before there can be an election, the following conditions must be met:
• Transfer of Property: There must be a transfer of property by a person who has no right to transfer it.
• Conferring Benefit: As part of the same transaction, the person must confer some benefit on the owner of the property.
• Election by Owner: The owner of the property must have the option to either confirm the transfer or dissent from it.

Effect of Election Against the Transfer

• Relinquishing Benefit: If the owner of the property dissents from the transfer, they must relinquish the benefit conferred upon them.
• Reversion of Benefit: The benefit intended for the owner will then revert to the transferor.

Exception

• General Rule: If a person elects against the instrument, they will forfeit the entire benefit received under it.
• Exception: If a person elects against the instrument, they will not forfeit the whole benefit but only the benefit attached in lieu of the property. This means that the election is limited to a part of the benefit.

Mode of Election

• Implied: Election can be implied through conduct.
• Express: When election is made in express words, it is final and conclusive.

Note

• If a person acts out of ignorance or mistake, the doctrine gives way. For example, a widow who enjoyed a provision made for her under a will in ignorance of her right of dower was held entitled to elect after a lapse of 16 years.

Two Years' Enjoyment

• The presumption of knowledge or waiver may be rebutted. If a person has enjoyed a benefit for two years without expressing dissent, it is presumed that they have knowledge of their rights and have waived any objections.

Knowledge

• The section allows for the inference of knowledge, which can be rebutted by evidence of circumstances that suggest otherwise.

Time Limit for Election

• If an election has not taken place within one year from the date of the transfer, the transferor has the right to compel the person to make their election.
• If the person fails to comply with this requirement within a reasonable time, they will be deemed to have elected to confirm the transaction.

Suspension of Election

• If the donee is incapacitated due to reasons such as insanity or lunacy, the election will be postponed until the incapacity ceases.
• The election may also be made by a competent authority, such as a guardian of a minor.

Illustrations

• Illustration 1: A transfers an estate to B, which C is entitled to, and also gives C a coal-mine as part of the same transaction. C takes possession of the mine and exhausts it. By doing so, C confirms the transfer of the estate to B.
• Illustration 2: Aman owns a property worth Rs. 10 lakh. Bhanu, the transferor without rights over the property, offers Aman Rs. 15 lakh if he is willing to sell his property to Chandan. Aman, the real owner, can either accept the offer, receive the benefit, or reject the entire offer.
• Illustration 3: Ishaan owns a property worth Rs. 7 lakh. Anirudh, through a gift instrument, professes to transfer the property to Ria while giving Rs. 10 lakh to Ishaan. Ishaan elects to retain the farm but forfeits the gift of Rs. 10 lakh.
• Illustration 4: In cases of disability, the election will be postponed until the disability ceases, or until a competent authority makes the election. When a question of election arises, it is pertinent only when the transferee receives a benefit directly under the transaction. If the transferee derives any benefit indirectly, the question of election does not arise, as they cannot be considered to take under the deed.

Transfer by Ostensible Owner

• When a person is the ostensible owner of immovable property and transfers it with the express or implied consent of those interested in the property, the transfer is valid even if the transferor was not authorized to make it.
• For the transfer to be valid, the transferee must have acted in good faith and taken reasonable care to ensure that the transferor had the authority to make the transfer.

Ostensible Owner

• An ostensible owner is someone who appears to be the owner of a property to third parties, even though they may not be the actual owner. This status can arise from the real owner's neglect or acquiescence.
• For example, if a property is legally in a wife's name but her husband manages it and conducts transactions on her behalf, the husband may be considered the ostensible owner.

Principle of Ostensible Ownership

• The principle of ostensible ownership is based on natural equity. It applies when one person allows another to represent themselves as the owner of a property, and a third party purchases it from the apparent owner in good faith.
• The real owner cannot claim their rights unless they can prove that the purchaser had actual or constructive notice of the real title or that there were circumstances that should have prompted the purchaser to inquire about the true ownership.

Requirements for Application

• The transfer must involve an ostensible owner, as previously explained.
• There should be either express or implied consent from the actual owner of the property.
• The transfer should be for consideration, meaning something of value is exchanged.
• The transferee must take reasonable care regarding the transferor's authority and act in good faith.

Doctrine of Estoppel

• The doctrine of transfer by ostensible owner is rooted in estoppel. When the real owner presents someone as the owner to third parties, they cannot go back on this representation if third parties rely on it.
• This doctrine applies only to immovable property and not to movable property.

Practical Tests for Determining Ostensible Ownership

• Check the property documents to see if the transferor's name is listed as the owner.
• Determine if the person named in the property documents intends to purchase the property.
• The most crucial test is to see who is in possession of and enjoying the property. If the person named in the documents is not the one enjoying the property, the chances of ostensible ownership increase.
• Enjoyment of the property includes rights such as selling, leasing, and benefiting from the property. It is not limited to mere possession.
• Consider the reason why the real owner did not purchase the property in their own name.

Authority vs. Title

• In cases of ostensible ownership, authority is more important than title. The ostensible owner must have the authority to act on behalf of the real owner, regardless of legal ownership.
• An example of this is a benami transaction, where property is purchased in the name of another person without the intention to benefit them. The benamidar has no beneficial interest in the property and acts as a trustee for the real owner.
• In India, a benamidar is considered an ostensible owner. If someone purchases from a benamidar, the real owner cannot recover the property unless they prove that the purchaser had actual or constructive notice of the real title.

Consent and Authority

• The actions of the owner determine whether they have authorized someone as an ostensible owner. The consent of the owner is essential for this provision to apply.
• If an owner gives apparent authority to someone to enter into transactions on their behalf with free consent, that authority is treated as real authority.
• In the case of Ananthula Sudhakar v. Bucha Reddy, the acts of Damodar Rao impliedly consented to his sister Rukmanibai's representation as ostensible owner of the property, leading to the application of Section 41 of the Transfer of Property Act, 1882.

Case Examples

• In the case of Shafiquallah v. Samiulah, after the death of a property owner, his illegitimate sons sold the property to a third party, claiming to be ostensible owners. However, the present legal position did not allow for Section 41 to apply since their possession was not with the consent of the legitimate owner.
• Consent should not be interpreted as an intention to deceive the transferee on the part of the real owner.

Voluntary vs. Involuntary Transfers

• Section 41 applies only to voluntary transfers and not to involuntary or legally mandated transfers, such as court-ordered sales.
• Transfer includes partial transfers, and the provision does not require a sale or exchange. It can involve transfers of interest such as mortgages or leases.

Consideration in Transactions

• The transactions entered by the ostensible owner must be for consideration. Gratuitous transfers are not contemplated by this section.
• The rights of transferees purchasing from an ostensible owner depend on the extent of the ostensible owner's rights in the property.
• In the case of State of Punjab v. Surjit Kaur, the rights of the transferee purchasing property from the owner's widow were limited to her life interest.

Duties of Transferee

• Section 41 emphasizes the intention of the transferee and the duty of care during the transaction. A transfer by an ostensible owner cannot be avoided on the grounds of lack of authorization by the transferor if the transferee has acted in good faith and taken reasonable care.

Burden of Proof

• The burden of proof lies with the transferee to demonstrate that the person making the transfer was the ostensible owner with the necessary authority. The transferee should also prove that the transaction is a Benami transaction and that they took reasonable care to protect their interests.

Transfer by Co-Owners

• When a property is owned by multiple individuals, these individuals are referred to as co-owners. Co-owners possess all the rights of ownership in a property, but these rights are held in proportion to their respective shares in the property.
• Co-owners have the right to use, dispose of, and possess the property. If a partition of the property occurs, the resulting owners from the partition are also considered co-owners.
• Co-ownership can take various forms, including joint tenancy, tenancy in common, and tenancy by the entirety.

Types of Co-owners

Joint Tenancy

• Joint tenancy involves two or more owners who share equal ownership in a property.
• When one joint owner dies, their share automatically passes to the surviving joint tenants.

Tenancy in Common

• In tenancy in common, co-owners have equal rights but their shares in the property may not be defined.
• When a co-owner dies, their share goes to their legal heir or as specified in their will.

Tenancy by Entirety

• Tenancy by entirety is exclusive to married couples.
• Neither spouse can transfer their interest to a third party; they can only transfer it to the other spouse.
• This form of co-ownership ends upon death, divorce, or mutual agreement.

Transfer by Co-owners under Transfer of Property Act 1882

Section 44 of the Act

• When one co-owner of immovable property transfers their share, the transferee acquires the rights of the transferor.
• The transferee gains rights such as joint possession and the right to partition, similar to the transferor's rights.
• The right of transfer applies to all transferees, including mortgagees and lessees.
• However, if a dwelling house owned by an undivided family is transferred by a non-family member, the transferee does not have rights to joint possession or other common enjoyment.

Case Law: Durga v. Debidas

• In this case, the Court ruled that using a property for a short period and specific purpose does not make it a dwelling house.
• A dwelling house is one where there is an ancestral dwelling, and family members have not abandoned it.

Principle Involved

• The section is based on the principle of subrogation and substitution.
• When immovable property is transferred, the transferee receives all the rights of the transferor.
• For example, if A, B, and C mortgage their field to X, and C transfers his share to D, D will have the right to joint possession and partition, but his share is still subject to the mortgage.

Transfer by Co-owners of Share in Common Property

Section 47

• When multiple co-owners of immovable property transfer a share without specifying the exact shares, the transfer takes effect equally among the transferors if the shares are equal.
• If the shares are unequal, the transfer takes effect proportionately based on the shares.

Illustration

• If A owns 80 units, and B and C own 40 units each in a property, and they transfer 20 units to D without specifying the shares, the transfer is proportionate to their holdings.
• For example, 10 units from A's share and 5 units from each of B and C's shares.

Case Law: Baldev Singh v. Darshani Dev

• The Court ruled that a co-owner must be in actual physical possession of the immovable property to transfer a valid legal title.
• If the co-owner is not in actual possession, the transferee is entitled to a share in the property or a decree for joint possession or compensation from the co-owner.

When is a Co-owner Legally Competent to Make a Transfer?

• According to Section 7 of the Transfer of Property Act, 1882, a person must be competent to contract, meaning they are of sound mind, a major, and not disqualified by law, to make a transfer.
• A co-owner or co-sharer can sell, mortgage, or lease their interest to another co-sharer or a stranger even if partition has not occurred physically.
• In some regions, a coparcener in a Hindu Joint Family can sell their share in Joint Family Property for consideration without needing consent from other coparceners.
• However, in certain Mitakshara coparcenaries, the consent of other coparceners is necessary for such a transfer.