nemo dat quod non habet

Nemo dat quod non habet is a latin phrase for 'no one can give what he does not have'. Legally speaking, this term means that the purchase of a possession from someone who has no ownership right to it also denies the purchaser any ownership title. This rule is deemed to protect the rights of ownership. If no rule was to be created, the interest of the true owner of the stolen goods would be jeopardized.

There are however, a few exceptions to these rule:
1. The operation of estoppel (s. 27)
Subject to this Act and of any other law for the time being in force, where goods are sold by a person who is not the owner thereof, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell.

2. Sale by mercantile agent (s.27)
Provided that where a mercantile agent is, with the consent of the owner, in possession of the goods or of a document of title to the goods, any sale made by him when acting in the ordinary course of business of a mercantile agent shall be as valid as if he were expressly authorized by the owner of the goods to make the same; provided that the buyer acts in good faith and has not at the time of the contract of sale notice that the seller has no authority to sell.

3. Sale by one of joint owners (s.28)
If one of several joint owners of goods has the sole possession of them by permission of the co-owners, the property in the goods is transferred to any person who buys them of such joint owner in good faith and has not at the time of the contract of sale notice that the seller has no authority to sell.

4. Sale under a voidable title (s. 29)
Where the seller of goods has obtained possession thereof under a contract voidable under section 19 or 20 of the Contracts Act 1950, but the contract has not been rescinded at the time of the sale, the buyer acquires a good title to the goods provided he buys them in good faith and without notice of the seller’s defect
of title.

5. Sale by a seller in possession after sale (s. 30(1))
Where a person, having sold goods, continues or is in possession of the goods or of the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent acting for him, of the goods or documents of title under any sale,pledge or other disposition thereof to any person receiving the same in good faith and without notice of the previous sale shall have the same effect as if the person making the delivery or transfer were expressly authorized by the owner of the goods to make the same.

6. Sale by a buyer in possession (s. 30(2))
Where a person, having bought or agreed to buy goods, obtains, with the consent of the seller, possession of the goods or the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent acting for him of the goods or documents of title under any sale, pledge, or other disposition thereof to any person receiving the same in good faith and without notice of any lien or other right of the original seller in respect of the goods shall have effect as if such lien or right did not exist.

source: Sales of Goods Act 1957