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1904 DIGILAW 39 (ALL)

Mohammad Khan v. Mohammad Ibrahim

1904-03-10

BURKITT, STANLEY

body1904
JUDGMENT : STANLEY, J. 1. The suit, out of which this second appeal has arisen, was brought by the plaintiff to have it declared that certain house property situate in Agra, was not liable to be sold in execution of a decree obtained upon a mortgage executed by the plaintiff's son in favour of the defendants. The Court of first instance decreed the claim of the plaintiff, but upon appeal this decree was reversed, and the suit of the plaintiff was dismissed on the ground that the plaintiff's son was the ostensible owner of the property within the meaning of section 41 of the Transfer of Property Act, and that before the mortgage was executed, the defendants had taken reasonable care to ascertain that the mortgagor had power to execute the mortgage, and had acted in good faith. It is found that the plaintiff purchased the site of the house with its appurtenances on the 30th July, 1892, in the name of his son, Rustam Ali. The area so purchased was 2 bighas 12 biswas, and the price paid was Rs. 600. There was then no house upon the property. Rustam Ali was at this time of full age. Subsequently a house was built upon the property, and this house appears to have been occupied by Rustam Ali on, at least, some occasions. His name was recorded as owner, and, in 1897, when the defendants made the advance to him on the security of the mortgage, he appears to have been in occupation of the house, for we find that the deed of mortgage was registered at it. The plaintiff, it is to be observed, resides elsewhere, namely at Dholpur. Rustam Ali borrowed from the defendants Rs. 8,000, on the security of the property. The mortgagees instituted a suit, on foot of their mortgage for sale of the mortgaged property, and obtained a decree for sale on 31st of August, 1899. In consequence of that decree the present suit was instituted in order to restrain the defendants from selling the property. The answer of the defendants to the suit is that they obtained the mortgage of the property from the ostensible owner bona fide after taking reasonable care to ascertain that Rustam Ali was the owner of it. 2. In consequence of that decree the present suit was instituted in order to restrain the defendants from selling the property. The answer of the defendants to the suit is that they obtained the mortgage of the property from the ostensible owner bona fide after taking reasonable care to ascertain that Rustam Ali was the owner of it. 2. Now, as the learned Judge has pointed out, Rustam Ali was not merely a nominal owner recorded as such, but also occupied the house and had in his custody the deed of sale of the 30th July, 1892. There was nothing whatever, as he says, to suggest, to an intending lender that Rustam Ali was only a benamidar and not the real owner. Under such circumstances it cannot, we think, be successfully contended that the defendants did not take reasonable care to ascertain that Rustam Ali had power to execute the mortgage. The Privy Council has laid down the principle upon which section 41 of the Transfer of Property Act is founded in the case of Ram Coomar Koondoo v. John and Maria Mcqueen, [1873] 11 B.L.R., 46, at 52. Their Lordships say as follows:— ”It is a principle of natural equity, which must be universally applicable that, where one man allows another to hold himself out as the owner of the estate, and a third person purchases it, for value, from the apparent owner in the belief that he is the real owner, the man who so allows the other to hold himself out, shall not be permitted to recover upon his secret title unless he can overthrow that of the purchaser by showing either that lie had direct notice, or something which amounts to constructive notice, of the real title; or that there existed circumstances which ought to have put him upon an inquiry that, if prosecuted would have led to the discovery of it.” On the finding of the lower appellate Court it is impossible, we think, to say that the defendants in this suit either had constructive notice of the real title or that there existed any Circumstances which ought to have put them upon an enquiry, which if prosecuted, would have led to the discovery of it. On the contrary we are disposed to think that there a person is found in possession of property is recorded as owner and holds the title deeds of the property and deals with a third party in respect of it, there is nothing to suggest a want of good faith in such third party in dealing with him in respect of the property. We do not think that the defendant-respondents were called upon under the circumstances to communicate with the father of the mortgagor and inquire from him as to the title. For these reasons we do not see our way to differ from the learned District Judge. We think the case is one coming within the provisions of section 41 of the Transfer of Property Act, and that the defendants are protected by that section. We therefore dismiss the appeal with costs.