No person can transfer a better title than what he himself possesses! – Judicial Interpretation
Authored By : Syeda Khizra Rizvi
The Latin maxim ‘Nemo dat quod non habet’ means that no one can give what he doesn’t have. This is the basic principle regarding the transfer of title. As per Sections 27 to section 30 of the Sale of Goods Act, 1930 specify these laws about the transfer of title. The maxim is a legal rule and the basic principle regarding the transfer of title. Here the question is referred as whether someone purporting to give or sell a property has legal title or right to do so or not.
Buyer, Seller, Real owner, Possession.
The Section 27 of the Sale of Goods Act, 1930 states that whenever any goods are sold by a person who is not the real owner of the property and sells them without proper authority as well as consent from the real owner, the buyer acquires no better title to the goods than the seller had. Further, Section 27 also provides an exception to the rule, which protects the interest of the real owner.
Non-owner of goods can transfer a better title/possession to the buyer (scenario):
1)Sale by a Mercantile agent (Section 27)
A mercantile agent, who is in possession of the goods or a document to the title of the goods, with the knowledge of the owner. Such an agent can sell the goods when acting as in the ordinary course of business of a mercantile agent. The sale here must be valid provided the buyer acts in good faith and has no reason to believe that the seller doesn’t have any right to sell the goods. Thus, the transfer of title is valid in such a case.
2) Sale done by one of the Joint Owners (Section 28)
Many of the times goods are purchased in joint ownership, they are kept in the possession of one of these joint owners by the consent of the co-owners. When the person who has the sole possession of the goods sells the goods, the property in the goods is transferred to the person who buys it. This is provided the buyer acts in good faith and has no ground to believe that the seller does not have a right to sell the goods.
3) Sale done by a Person in Possession of Goods under a Voidable Contract (Section 29)
Illustration: A person who acquires possession of certain goods under a contract voidable on grounds of misrepresentation, fraud, coercion or undue influence. If that person sold the goods before the contract is terminated by the real owner of the goods, then the buyer acquires a good title to the goods.
4) Sale done by a Person who has already sold the Goods but Continues to have Possession [Section 30 (1)]
Illustration: A person who has sold goods but still having possession on them or of the documents of title to them then he/she might sell the goods to another buyer. If the second buyer acts in good faith and is unaware of the earlier sale, then he will have a good title to the goods even though the property is already passed to the first buyer
5) Sale done by Buyer obtaining possession before the Property in the Goods has Vested in him [Section 30 (2)]
Illustration: A buyer who obtains possession of the goods before the property in them is passed to him, with the permission of the seller. He may pledge, sell or dispose of the possession of goods to another person. If the second buyer gets the delivery of the goods in good faith and without notice of the lien or any other right of the original seller, he gets a good title to them.
If an owner of goods is barred by the conduct from denying the seller’s authority to sell, the buyer gets a good title. However, to get a good title by estoppel, it needs to be proved that the original owner had actively suffered or held out the seller in question as a person authorized to sell the goods.
7) Sale done by an Unpaid Seller [Section 54 (3)]
If any unpaid seller exercises his right of lien or stoppage in transit and sells the goods to another buyer, then the second buyer gets a good title to the goods as against the real buyer. So, in these a case transfer of title will occur.
8) Sale under the Provisions of other Acts
Sale by an Official Receiver also called Liquidator of the Company will give the purchaser a valid title. Purchase of goods from a finder of goods will afford a valid title under situation arises as per section 169 of the Indian Contract Act, 1872.
In the case of V.Chandrasekaran & Anr v Administrative Officer & Ors, the Supreme Court held that the general rule of law is undoubted, that no one can transfer a better title than he himself possesses i.e. Nemo dat quod non-habet. However, the transfer must be in good faith for value, and there must be no misrepresentation or fraud, which would render the transactions as void and also that the property is owned after taking reasonable care to ascertain that the transferee has the requisite power to transfer the said land, and finally that, the parties have acted in good faith.
The principle that no one can transfer a better title than what he himself possession as laid down by Willes J. as a rule of law in the case Whistler v. Forster is not an absolute right granted to the real owner of the goods. With time, this legal principle has developed certain exceptions through precedents that later became part of legislations to make profit the innocent buyer who used to suffer loss without any fault on his part due to this principle and expanded the ambit for the application of this principle.