- (1.) THE following question has been referred to this Bench for decision: "does Section 43, T. P. Act, require that the transferee who can take advantage of it should be one to, whom not only a fraudulent or erroneous representation about the transferor's authority to transfer the property is made but should also be one who did not have knowledge of the true factual position and had merely acted on the belief of the erroneous or fraudulent representation made to him by the transferor?"
(2.) THE facts of the case briefly stated are as follows: One Bhagwati Prasad sold a shop, No. 89 in the city of Jhansi to Lachhman Hao Telang in the year 1936. The vendee could not obtain possession over the shop and so in 1946 filed a suit for recovery of possession. During the pendency of the suit he transferred his rights to one Parmanand, who was then substituted as plaintiff for him. The defence to the suit was that Bhagwati Prasad owned only half the shop in 1936, the other half belonging to his brother Bankey Behari Lal. In 1938 Bankey Behari Lal died and his share also was inherited by Bhagwati Prasad. The plaintiff, therefore, claimed that he was protected by Section 43, Transfer of Property Act. The defence, inter alia, was that the plaintiff could not take advantage of Section 43 as he knew of the true position, namely, that Bhagwati Prasad was owner of only one-half of the shop on the date of the sale deed. The trial Court held that the plaintiff knew that the vendor owned only a half share in the shop and that, therefore, it could not be said that he had acted upon the fraudulent, or erroneous representation made by the vendor. The plaintiff appealed to this Court and It was urged on his behalf that the vendor having made an erroneous representation that he was the owner of the entire shop and the transfer having been made of the entire shop, he was entitled to take advantage of Section 43, T. P. Act, and claim that such transfer shall operate on the interest which Bhagwati Prasad acquired by inheritance from Bankey Behari Lal. It has been held in a number of cases in this Court as well as in other Courts that a vendee, who knew the true facts, could not take advantage of Section 43, T. P. Act. The learned Judges before whom the First Appeal came up for hearing in the first instance were of opinion that these rulings require reconsideration and referred the question already mentioned to a larger Bench.
(3.) SECTION 43, T. P. Act, is in these terms: "where a person fraudulently or erroneously represents that he is authorised to transfer certain immoveable 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. Nothing in this section shall impair the right of transferee in good faith for, consideration without notice of the existence of the said option. " In order that benefit of the section may be taken by a transferee two conditions have to be satisfied, firstly, that there should have been, a fraudulent or erroneous representation by the transferor to the effect that he is authorised to transfer the property which he professes to transfer, and, secondly, that the transfer must be for consideration. If these two conditions are satisfied then if the transferor, who was not in fact authorised to transfer the whole or part of the property transferred by him, acquires such right thereafter, the transferee has an option to claim that the transfer shall operate on the interest which the transferor subsequently acquired in the property transferred. This option can be exercised at any time during which the contract of transfer subsists. There is one exception to this rule of law and that is that the option cannot be exercised so as to impair the right of a subsequent transferee from the vendor who has taken his transfer (1) in good faith; (2) for consideration; and (3) without notice of the existence of the said option.;