What is the impact of the doctrine of feeding the grant by estoppel on the purchaser’s rights against the vendor’s imperfect title? Refer to statutory provisions?

Question: What is the impact of the doctrine of feeding the grant by estoppel on the purchaser’s rights against the vendor’s imperfect title? Refer to statutory provisions? [H.R.J.S. 1998]

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Answer

Section 115 of the Indian Evidence Act deals with the rule of Estoppel which provides “When one person has by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed in any suit or proceeding between himself and such person or his representative to deny the truth of that thing.”

The Doctrine of ‘feeding the grant by estoppel’ is derived from the legal maxim ‘nemo dat quod non habit’ which means that no one can give something which he doesn’t himself possess to another person.

The legal principle of the doctrine of estoppel is viewed as a substantive rule of law as it has been described as a principle under the Indian Evidence Act, 1872. Section 115 of the Indian Evidence Act deals with the concept of estoppel which means a person said or represented something then he has to follow it, basically, he is stopped from denying it. Even if that commitment is false he has to fulfil it.

The statutory illustration given thereunder makes it clear that where A intentionally and falsely leads B to believe that certain land belongs to A and thereby induces B to buy and pay for it, the land afterwards becomes the property of A and A seeks to set aside the sale on the ground that at the time of the sale, he had no title, then he must not be allowed to prove his want of title.

The inference of estoppel can be drawn clearly that if a person promises something either intentionally or unintentionally, he has to fulfil it at the end. For example, A claims himself an owner of a house to be when we asked to purchase it actually misrepresented himself to be and concealed the fact that X was the real owner. But A has made an agreement although the claimed property was not in his possession.

During the next six months, received payment for the house from and hence B incurred the loss. As A made prior represented him so, now B is entitled to obtain house from A’s possession. He has to feed his grant by estoppel. If we have made a grant for any property, even if we don’t have it right now and in future, if we may acquire any interest in that house, we have to give that person to whom we promised. The estoppels must be fulfilled.

This doctrine also finds its place under section 43, part 5 of Transfer of Property Act, 1882 which says that where a person fraudulently or erroneously represents that he is authorised to transfer certain 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.

But the right of transferees in good faith for consideration without notice of the existence of the said option shall not be impaired. In such cases, the subsequent interest enuring to the benefit of the transferor is said to feed the estoppels which are subsisting in the transferee so as to preclude the transferor from contending that the transferee has no right to his subsequently acquired property as observed in Krishna Chandra Ghosh v. Rasik Lal Khan, (1916) 21 Cal WN 218. This principle applies in the case of a sale, mortgage, lease, or any such grant.

Impact of the doctrine on the purchaser’s rights against the vendor’s imperfect title:

The principle “feeding the estoppel” is based partly on common law, the doctrine of estoppel by deed and partly on an equitable doctrine that a man who has promised more than he can perform, must make good his contract when he acquires the power of performance. The right of the purchaser or lessee against the person with no title or imperfect title have been enumerated in Section 13 of the Specific Relief Act which lays down that:

Where a person contracts to sell or let certain immovable property having no title or only an imperfect title, the purchaser or lessee has the following rights, namely-

1. if the vendor or lessor has subsequently to the contract acquired any interest in the property, the purchaser or lessee may compel him to make good the contract out of such interest;
2. Where the concurrence of other person is necessary for validating the title, and they are bound to concur at the request of the vendor or lessor, the purchaser or lessee may compel him to procure such concurrence, and when a conveyance by another person is necessary to validate the title and they are bound to convey at the request of the vendor or lessor, the purchaser or lessee may compel him to procure such conveyance;
3. Where the vendor professes to sell unencumbered property, but the property is mortgaged for an amount not exceeding the purchase money and the vendor has in fact only a right to redeem it, the purchaser may compel him to redeem the mortgage and to obtain a valid discharge, and where necessary, also a conveyance from the mortgagee;
4. Where the vendor or lessor sues for specific performance of the contract and the suit is dismissed on the ground of his want of title or imperfect title, the defendant has a right to return of his deposit, if any, with interest thereon, to his costs of the suit, and to a lien for such deposit, interest and costs on the interest, if any, of the vendor or lessor in the property which is the subject matter of the contract.

To summarise the provision of section 13, SRA when there is a contract related to the sale or lease or hire and the seller or lessee doesn’t have the title to the property or has an imperfect title, he cannot pass a good title to the purchaser. For this, section 13 provides for certain remedies o the purchaser i.e.:

1. When the seller subsequently acquires a title, the buyer can compel them to perform the contract.
2. When the contact can be performed by the consent or transfer by another person then the seller can be compelled to do the same.
3. When the property to be sold under the contract had been mortgaged to a person, the buyer can compel the seller to get it redeemed by paying the mortgaged amount and getting it transferred in his name or by taking the possession back, as the case may be

In Kalyan Lime Works Ltd. v. State of Bihar, 1954 SCR 958 Supreme Court held that Section 13 (a) of Specific Relief Act gives no power to the court to reconstruct the contract but the court can enforce the contract only to the extent that it is possible in changed circumstance and to the extent, it is equitable to do so.

In the case of Panchanan Pal v. Nirode Kumar Biswas and Anr. [AIR 1962 Cal 12] observed that the doctrine of title by estoppel and the doctrine of feeding the grant by estoppel are linked with each Other as:

“The foundation of the doctrine, therefore, is that a mortgage of non-existent property, though inoperative as a conveyance, is operative as an executory agreement, which attaches to the property, the moment it is acquired, and in equity, transfers the beneficial interest to the mortgagee, without any new act done by the mortgagor to confirm the mortgage. This principle has been traced to two different sources.

In some cases, reliance is placed on the maxim that equity considers that done ought to be done. In other cases, the aid is invoked of the doctrine of estoppel, and it is said, that as soon as the property comes into existence, the mortgage operates by way of estoppel, the principle of which is explained in Section 43 of the Transfer of Property Act.”

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