No man can transfer better title than he himself has. The proverb of English Law is “nemo dat quod non habet”. i.e. no person can give to another that of which he was not the true owner. Thus, if a thief transfers to me for value a thing stolen by him, the true owner can claim it from me even though I paid value for it, and had no notice of the theft.
However, this rule has certain exceptions and one of them is that the transfer must be in a 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 purchased 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 as is required under Sections 41 of the Transfer of Property Act, 1882. [ V. Chandrasekaran v. Administrative Officer, (2012) 12 SCC 133].
In the instant case, a vehicle was stolen and sold to one ‘T’ who got it registered in his own name. during trial its registered owner ‘N’ and the purchaser ‘T’ both prayed for release of the vehicle in their favour but the same was rejected. The purchaser moved the High Court which ordered its release in his favour. The registered owner ‘N’ also moved the High Court but the vehicle had already been released. He approached the Supreme Court who applied this maxim and set aside the High Court order and ordered that the vehicle be released to its registered owner ‘N’. [Nitin Gupta v. State of Meghalaya, (2005) 13 SCC 686]. Yet in another case, a lady having only a life estate in a certain piece of land, transferred the said land for consideration which was held to be not valid as the said lady had a right only during her life time and after her death the title in the said land was to revert to the State of Punjab which had allotted the said land to the lady, the widow of a military officer. The vendees’ claim as bonafide purchasers for a consideration in good faith in view of Section 41 of the Transfer of Property Act, 1882 was held to be not valid. [State of Punjab v. Surjit Kaur, (2012) 12 SCC 155].
The Supreme Court observed that the assignee steps into the shoes of the assignor and is not only entitled to all the rights of the assignor but also is liable for some duties towards the insurer and the maxim nemo dat quod non habet (no man can transfer better title than he himself has) will apply. The Supreme Court held that the issuance of the insurance policy was on fraudulent, suppression of material facts by the assignor and because of that the insurer was discharged from performing his part of the contract and the assignee cannot stand on a better footing that of the assignor himself. The court added that the assignee cannot take benefit of the contract based on fraudulent suppression of material facts by the insured. [Mithoolal v. Life Insurance Corporation of India, AIR 1962 SC 184]. [Insurance Act].
[See also Atla Sidda Reddy v. Busi Subba Reddy, (2010) 6 SCC 666; Lachhman Das v. Jagat Ram, (2007) 10 SCC 448; Ramlal v. Phagua, (2006) I SCC 168; Saraswati Devi v. Delhi Development Authority, (2013) 3 SCC 571]