The process by which ownership goes from one party to the other is referred to as “Transfer of property as between seller and buyer” and is covered in Sections 16 through 19 of the Sale of Goods Act of 1979. Nemo dat quod non habet, literally meaning “no one can give what they do not have”, is a legal rule, sometimes called the nemo dat rule, that states that the purchase of a possession from someone who has no ownership right to it also . denies the purchaser any ownership title. The term “Transfer of Title” refers to a variety of circumstances in which a seller who lacks ownership or who has a faulty title grants good title to his buyer and so defeats the claim of the genuine owner or the holder of a superior title. This only occurs under unusual situations.

A transfer his property to B, further, A transfer the same property to C, following the rule of Nemo Dat Quod Non Habet, B will get the right from A , thus, currently , B has the rights and A has none, so A cannot transfer property to C. The current owner should be able to trace his rights back in time to prove his legitimate acquisition. In Nitin Gupta vs. State of Meghalaya and others, Supreme Court has set aside the release of the stolen vehicle to the buyer on the principle of Nemo dat quod non-habet.

Exceptions

The above stated general rule contained in section 27, as stated in the opening words of the section itself, is “subject to the provisions of this Act and of any other law for the time being in force.” Various exceptions to this rule have been mentioned in this Act and the Indian Contract Act and in those exceptional situations, the seller of the goods may not be having a good title to the goods, yet the buyer of the goods gets a good title to them. The exceptions are as follows:

1. Sale under the implied authority of the owner, or transfer of title by estoppel (S. 27)
2. Sale by a mercantile agent (proviso to S. 27)
3. Sale by one of joint owners (S. 28)
4. Sale by a person in possession under a voidable contract (S. 29)
5. Sale by the seller in possession of goods, the property in which has passed to the buyer (S. 30(1))
6. Sale by the buyer in possession of the goods before the property in them has passed to him (S. 30(2))
7. Re-sale of the goods by an unpaid seller after he has exercised the right of lien or stoppage in transit (S. 54(3))
8. Sale by finder of goods (S. 169, Indian Contract Act)
9. Sale by a pawnee when the pawner makes a default in payment (S. 176, Indian Contract Act)

1. Sale under the implied authority of the owner, or transfer of title by estoppel (S. 27)

Estoppel by representation happens when the true owner of the good gives the impression that the seller is the rightful owner of the goods, or at the very least has the authority to sell them, through his words or actions. Owner cannot later claim the item. In estoppel situations, the buyer receives a greater title than the seller. If the owner is present at the sale or helps with the transaction, the estoppel may be established in a number of ways: a)The owner is present during the sale; b) He assists the sale process. c) He allows the transfer of possession goods to another person; or d) He has participated or acted in inducing the buyer

2. Sale by a mercantile agent (proviso to S. 27)

For the application of this provision, the following conditions are to be satisfied.

a)Seller is mercantile agent

b) He got possession of goods or documents of title to the goods with the consent of the owner, and in his capacity as a mercantile agent

c) While selling the goods he must have been acting the ordinary course of his business of a mercantile agent

D) The buyer of the goods must have acted in good faith without having any notice that such mercantile agent did not have an authority to sell

3. Sale by one of joint owners (S. 28)

If one of many joint owners of goods has sole possession of them with the consent of the other joint owners, the property in the goods passes to anybody who purchases them in good faith from that joint owner without being informed of the fact that the seller lacks the right to sell. It should be noted that without this clause, the buyer would simply have received the co-owners’ titles and would have remained merely a co-owner with them. Therefore, the clause is an exception to the maxim that “no one can give what he has not got.” For example, the three brothers A, B, and C. They share ownership of a cow. B and C give A the task of taking care of the cow and depart with the cow. A gives D the cow. D buys honestly and for a fair price. D is given a respectable title.

4. Sale by a person in possession under a voidable contract (S. 29)

Sections 19 and 19-A of the Contract Act state that if a party’s assent was obtained through coercion, fraud, deception, or undue influence, that party has the right to dissolve the contract at their discretion. According to Section 29, if a person sells goods that they have obtained possession of as a result of a contract that is voidable under Sections 19 or 19-A of the Contract Act before the contract has been avoided by the party entitled to do so, the buyer of those goods will acquire a good title to them. However, it is important that such a buyer have done so in good faith and without knowledge of the seller’s title deficiency. Through false representation, A persuades B to sell and deliver a cow to him. Before B cancels the contract, A sells the cow to C. C buys the cow in good faith without being aware of the seller’s faulty title. C gains a respectable title.

5. Sale by the seller in possession of goods, the property in which has passed to the buyer (S. 30(1))

If a seller has sold the goods and the property in the goods has passed to the buyer, the seller cannot deal with such goods. The buyer may bring a conversion tort claim against him if he is still in possession of the goods and deals with them. However, according to Section 30 (1), if a seller who has sold the goods is still in possession of the goods or of the documents of title to them, the delivery or transfer of the goods or of the documents of title under any sale, pledge, or other disposition thereof by the seller or by a mercantile agent on his behalf will convey a good title to the buyer, provided the buyer has been acting in good faith and he is unaware of the prior sale.

6. Sale by the buyer in possession of the goods before the property in them has passed to him (S. 30(2))

a) The buyer must be in the possession of the goods.

b) But the ownership is still with the seller

c) The goods purchased by the second buyer must be done in a good faith.

these conditions are to be fulfilled then

7. Re-sale of the goods by an unpaid seller after he has exercised the right of lien or stoppage in transit (S. 54(3))

Section 54 (2) states that a seller who has not been paid may resale the goods after giving notice to the buyer if he has used his right of lien or halt in transport and the buyer has not paid him. If such a notice is not provided, the seller will not be able to hold the buyer liable for any losses incurred should the products sell for less than the agreed-upon price or benefit from a higher price. However, the new buyer’s title is unaffected by the lack of such a notice. According to section 54 (3), when an unpaid seller has exercised his right of lien or stoppage in transit and resells the goods, the buyer acquires a good title
thereto as against the original buyer, notwithstanding that no notice of the resale has been given to the original buyer.

8. Sale by Finder of Goods-

Indian Contract Act, Section 169 The Indian Contract’s section 71 states that the finder of the items is accountable in the same ways as the bailee. When the things are in his custody, he must take proper care of them and return them when the owner is located. However, in accordance with section 169 of the Indian Contract Act, the finder may sell the items if the owner cannot be located with reasonable diligence or if he refuses to pay the finder’s legal fees upon demand:

a) When the thing is in danger of perishing or of losing the greater part of its value, or,
b) When the lawful charges of the finder, in respect of the thing found, amount to two-thirds of its value.
When the finder of goods sells them under the circumstances stated above, the buyer of such goods gets a good title to them.

9. Sale by a pawnee when the pawner makes a default in payment (S. 176, Indian Contract Act)

If the loan guaranteed by the commodities is repaid to the pawnee, he is typically required to return the goods. He may keep those items until the obligation, interest on the debt, and other required costs he spent for custody or preservation of the pledged items are paid to him. According to section 176, the pawnee may sell the goods pledged after giving the pawnor sufficient notice of the sale or sue the pawnor for the debt if the pawnor defaults on making the payment. The buyer of such things obtains a fair title to them upon such a sale being made by the pawnee.

10. Sale in Market Overt
    English law recognizes an exception to the norm that states that when commodities are sold in an open market in accordance with custom, the buyer receives a good title to the items so long as he purchases them in good faith and without knowledge of any flaws or lack of title on the seller’s part.10 Such a sale refers to a public sale made by a person who frequently deals in such things. In such a deal, the buyer’s title is safeguarded even if the seller could be held accountable for the tort of conversion.