Each question consists of legal propositions/ principles (hereinafter referred to as 'principle') and facts. These principles have to be applied to the given facts to arrive at the most reasonable conclusion. Such principles may or may not be true in the real sense, yet you have to conclusively assume them to be true for the purposes of this section. In other words, in answering the following questions, you must not rely on any principles except the principles that are given herein below for every question. Further, you must not assume any facts other than those stated in the question. The objective of this section is to test your interest towards study of law, research aptitude and problem solving ability even if the 'most reasonable conclusion' arrived at may be unacceptable for any other reason. It is not the object of this section to test your knowledge of law.

PRINCIPLE: The transferor of goods cannot pass a better title than what he himself possesses.

FACTS: 'X' sells a stolen bike to 'Y'. 'Y' buys it in good faith.

As regards the title to bike, which of the following derivations is CORRECT?

The correct answer is: 'Y' will get no title, as transferor's (X's) title was defective.

To arrive at this conclusion, let us carefully break down the principle and apply it to the given facts step by step.

Step 1: Understand the Legal Principle

The governing principle here is a foundational rule of property law, often expressed by the Latin maxim nemo dat quod non habet, which means: "No one can give what they do not have."
In plain terms: A transferor (seller) can pass only as much title (legal ownership) as he himself possesses — no more, no less.

Step 2: Identify the Key Facts

- 'X' sells a bike to 'Y'.
- The bike is stolen, meaning 'X' acquired it illegally and holds no valid title to the bike.
- 'Y' purchases the bike in good faith (i.e., 'Y' is a bona fide buyer, unaware that the bike was stolen).

Step 3: Apply the Principle to the Facts

Since the bike was stolen, 'X' — the seller — has absolutely no legal title over it. 'X' is not the true owner; he merely has unlawful possession.

Now, applying the principle directly:
A transferor cannot pass a better title than what he himself has.
'X' has zero title (defective/void title).
Therefore, 'X' can transfer zero title to 'Y'.

Step 4: Address the Good Faith Argument

One might argue that since 'Y' bought the bike in good faith, he deserves protection. However, the principle as stated here does not create an exception for bona fide purchasers. The principle is absolute in this context — it makes no room for the buyer's innocence to cure the seller's defective title. 'Y's good faith cannot conjure a title out of nothing when 'X' had none to begin with.

Step 5: Evaluate Each Option

- "The real owner cannot get back the bike from 'Y'" — Incorrect. Since 'Y' received no valid title, the real owner retains the right to reclaim the bike.
- "'Y' will get no title, as transferor's (X's) title was defective" — Correct. This directly follows the principle: bad title in → bad (no) title out.
- "'Y' will get good title, as he is a bona fide buyer" — Incorrect. Good faith alone cannot override the principle; no exceptions for bona fide purchasers are mentioned in the given principle.
- "'Y' will get good title, as he has not committed any wrong" — Incorrect. 'Y's moral innocence is irrelevant to the question of legal title under this principle.

Conclusion

Since 'X' had a completely defective (void) title — having stolen the bike — he could not legally transfer any ownership rights to 'Y'. Regardless of 'Y's good faith, the principle mandates that 'Y' acquires no title whatsoever to the bike. The real owner's rights remain intact and superior.