SEC 40- RESTRICTIVE COVENANTS

Covenant means written agreement or contract with respect to a property.

 Restrictive covenant are such contracts which restrict the use or enjoyment of the property.
 Condition may be affirmative or negative
 Sec 40 deals only with negative covenants and provide for its enforcement against
subsequent transfers.
 Covenant is for more beneficial enjoyment of transferors own land
 A B
Sells portion of a house- drain of house passes through
portion sold – B shall not close the drain – restrictive covenants are annexed to land and they run
with the land.
CASE LAW
TULK V. MOXHAY – Garden in between surrounded by homes – garden not to be altered- injunction
–valid

 Contractual obligations annexed to ownership

 A B

C
While contract is still in force A sells it to C. c was aware of the contract btw A and B. Thus B may enforce
contract against C.

 Restrictive covenants are enforceable only when covenantors ownership rights in the
property is already established. But contractual obligations arise out of contract, the person
need not be the owner of the property.
 Restrictive covenants and contractual obligation annexed to ownership both are
enforceable only where transfer or subsequent transfers are for value and transferee has
notice of restrictive covenant on that property. Not binding on transferee for value without
notice. Notice can be actual or constructive.
 applicable to gratuitous transfer even without any notice.
SEC 41 – OSTENSIBLE OWNER

 Ostensible owner is a person who apparently or seemingly appears to be the owner, though
in reality he is not. His behaviour and conduct appears to be that of the owner of the
property with the consent or conduct of the real owner. Eg, woman owns the property and
permits her husband to deal with it – paying taxes, who should be inducted as tenant and
wife does not object. Husband is the ostensible owner.
  This section enacts rule of estoppel against real owner of the property who;
1. By his conduct or consent make others believe that particular person has all the powers
over the property as that of the owner, including that of alienation.
2. Such person in fact is not authorised to alienate the property.
3. He alienates it as an ostensible owner.
4. Transfer is for value or consideration , i.e, not a gift.
5. Transferee acts bonafide and has taken reasonable care to ascertain that he is
competent to transfer.
6. Real owner prevented from disputing the validity of the transfer on ground that
transferor was not in fact competent to do so.
CASE LAW
Niras purve v. Tetri pasin
Husband was the owner. He effected a mutation in revenue records in favour of his wife and
went on a piligrimage. Meanwhile, wife sold land to X as ostensible owner. X made due
inquiries and paid the consideration. As land was subject to mortgage, X paid loan and
redeemed the mortgage. Husband on his return could not reclaim the land as by his conduct
had held his wife the ostensible owner.
Shafiquallah v. Samiulah

After death of the owner, property was in possession of his illegitimate sons, who in law
were ineligible for inheritance. Real heir filed suit for possession. However, possessors
retained the possession, entered their names in the revenue records and sold to C. suit was
decreed in favour of heir. Mortgagee claimed benefit of sec 41 but rejected on 2 grounds-
Possession was not in consent of real owner and suit already filed by heirs. Mortgage
affected while suit was pending.

 How to establish who is the real owner?

Source of purchase money, nature of possession after purchase, why property was purchased,
relationship btw parties, who took care of and custody of title deeds. Burden of proof on who is
claiming to be the real owner.
RAMCOOMAR KOONDOO V. MACQUEEN
ALEXANDER BUNNOO BIBEE(mistress) MACQUEEN(daughter)

RAMDHONE( son Ramcoomar)

Alexander purchased landed properties in Calcutta in name of his mistress bunnoo and she used to
manage the properties. During life of Alexandr, Bunnoo sold it to Ramdhone. After death of
bunnoo, Macqueen filed suit against ramdhone claiming father was the real owner and mother was
a benamidar. Ramdhone pleaded he was a bonafide purchaser. Calcutta high court decided in
favour of macqueen. On appeal to privy council judgement reversed in favour of ramcoomar. Since
Alexander had consented.

 Benami transactions (prohibition of the right to recover property)act, 1988

 Punishable with imprisonment for term extend to 3 years or fine or both – no retrospective
operation – prohibitory in nature – no person allowed to take plea under sec 41 that
property is in name of benamidar and he is the real owner.
 Exceptions – coparcener of hindu undivided family and trustee in fiduciary capacity.
 Property in name of wife or unmarried daughter for their benefit valid.
SEC 42 REVOCATION OF TRANSFER

Where a transfer is made subject to a reservation that transferor may revoke it and the transferor
exercising this right transfers the same property subsequently to another transferee for value, then
subsequent transfer operates as revocation of the first. Condition must be enforceable at law.

eg, A lets a house to B and reserves power to revoke the lease if in the opinion of surveyor B should
not make use detrimental to its value. A thinking that such use has been made lets house to C.
this operates as revocation of Bs lease subject to opinion of surveyor.

SEC 43 UNAUTHORISED PERSON SUBSEQUENTLY ACQUIRING INTEREST IN THE TRANSFERRED

PROPERTY.

A person who has no title or interest in an immovable property cannot transfer that property. If he
does he is estopped from denying the transfer when he subsequently acquires such authority.
It is based on following 2 principles
a. Common law doctrine of estoppel by deed and
b. Equitable principle that if a promises more than he can perform then he must fulfil the
promise when he gets ability to do so.
Eg. A a hindu who has separated from his father B sells to C three fields X, Y, Z representing A is
authorised to do so. Of these fields Z does not belong to A it having been retained by B on
partition but on Bs death A as heir obtains Z . C not havinf rescinded the contract of sale may
require A to deliver Z to him.

It can involve cases where he deliberately and with full knowledge of his incompetency and with
fraudulent motive misleads the transferee and convince him. It requires erroneous or
fraudulent representation from transferor otherwise this section does not apply.

Option of the transferee – transferee may or may not enforce his claim. Option is open only
during subsistence of the contract. If transferee repudiates the contract before transferor
acquires authority to transfer his option is extinguished.
Rights of second transfers
A is hindu , on partition property X to son and y goes to father B – representing he owns both
sold it to C. after B dies A became owner of both but before C could compel he sold Y to D. D
purchased in good faith. Thus property goes to D.
Conditions to make second transferee claim-
a. Good faith
b. Paid consideration
c. Without notice of option
d. Takes property before option is exercised
difference between sec 6(a) and sec 43

 Sec 6(a) enacts rule of substantive law while sec 43 incorporates a rule of estoppel.
 It is within the knowledge of both transferor and transferee. No misrepresentation. Sec 43
there is a express representation , fraudulent or erroneous and assured of good title.
 Applies to all kinds of transfers, consideration or gratuitous but sec 43 only for transfer for
consideration.
 It applies to both movable and immovable sec 43 applies only to immovable
 Status is void ab initio sec 43 is voidable at option of the transferee.
CASE LAW
Jumma masjid v. kodimaniandra devaiah

Heir apparent sold his share in property to masjid for 300/. Subsequently when the transferor
became entitled to his share masjid invoked sec 43 to compel him to pass on property to
masjid. It was contended by transferor that it was spes successionis so void. SC held that masjid
was entitled under sec 43. Coz he was misled no knowledge of spes successionis.
Difference between sec 41 and 43

 Sec 41 Top is complete though not by real owner. Sec 43 no Top the unauthorised only
contracts or profess to transfer.
 Sec 41 transferee besides having good faith must also exercise reasonable care in inquiring
the authority of the transferor. Sec 43 transferee need not exercise reasonable care
 Sec 41 estoppel works against the real owner. Sec 43 estoppel works against unauthorised
transferor.
ENGLISH LAW
When the transferor subsequently acquires interest estate passes on without any further act of
transferor or transferee. In India transferee has to exercise option for it.