Mummidi Reddi Papannagiri Yella Reddi v. Salla Subbi Reddi
1954-07-16
CHANDRA REDDI
body1954
DigiLaw.ai
Judgment. — The fourth defendant has filed this appeal against the decree and judgment of the District Court, Cuddapah, confirming those of the District Munsif’s Court, Proddatur. The suit, which has given rise to this Second Appeal, was instituted for the specific performance of an oral agreement to sell a plot of land of an extent of four acres, entered into between defendants 1 to 3 and the plaintiff on 29th November, 1948 and also for an injunction restraining the fourth defendant from interfering with the plaintiff’s possession. The case for the plaintiff is that the suit land originally belonged to his family, that, in or about the year 1935, it was sold to the family of defendants I to 3 and that, despite this, he remained in possession of the land as a tenant till 29th November, 1948, when the agreement for sale of the land was entered into between the parties, notwithstanding that the lease in his favour had expired two years prior thereto. On account of enmity between the plaintiff and the appellant, the latter obtained a sale deed on 30th December, 1948, offering a higher price and with the knowledge of the agreement in favour of the plaintiff. The suit was contested inter alia on grounds that the agreement pleaded was untrue, that, in any event, the fourth defendant could not be affected by the agreement as he was a bona fide purchaser for value without notice and that lastly, section 48 of the Indian Registration Act saved the transaction in favour of the fourth defendant. The trial Court awarded the claim of the plaintiff holding that the oral agreement set up by the plaintiff was true, that the fourth defendant had notice of the agreement and that section 48 of the Indian Registration Act had no application to the case. On appeal, the learned District Judge of Cuddapah agreed with the findings of the trial Court and confirmed the decree of the learned District Munsif. It is that decision, that is now under appeal. In this appeal, the learned Advocate-General contests the propriety of the decree mainly on two grounds: namely, the finding as regards notice is in conflict with the evidence on record and secondly, the learned District Judge has failed to advert to the contention of the appellant, based on section 48 of the Indian Registration Act.
In this appeal, the learned Advocate-General contests the propriety of the decree mainly on two grounds: namely, the finding as regards notice is in conflict with the evidence on record and secondly, the learned District Judge has failed to advert to the contention of the appellant, based on section 48 of the Indian Registration Act. The learned Advocate-General did not canvass the finding regarding the truth of the oral agreement and rightly in my opinion, as there is ample material in support of that finding. No doubt, the judgment of the District Judge is very unsatisfactory but the matter has been exhaustively dealt with by the District Munsif and I have also gone through the record and satisfied myself that this finding is fully justified by the evidence on record. The learned Advocate-General further urged that there was no basis for the conclusion of the Courts below that the appellant was not a bona fide purchaser without notice of the suit agreement. It is true that there is no evidence to show that the appellant was aware of the oral agreement between the plaintiff and defendants 1 to 3, but the trial Court relied upon several circumstances indicating that the appellant had notice of the suit agreement, apart from the burden which rests on the appellant to prove that he had no notice thereof. The lower appellate Court expressed its agreement with this view, though the discussion even on this part of the case is not very helpful. That apart, there is the admitted fact that the plaintiff was in possession of the land in question, and that the appellant was aware of it and yet he did not institute any enquiry under what title the former was in possession of the land. The question for consideration is whether these facts constitute notice within the meaning of section 27(b) of the Specific Relief Act. It is urged by the Advocate-General that the notice contemplated by clause (b) of section 27 of the Specific Relief Act is the “actual notice” and not “constructive notice” and places reliance on section 3 of the Transfer of Property Act which says:.
It is urged by the Advocate-General that the notice contemplated by clause (b) of section 27 of the Specific Relief Act is the “actual notice” and not “constructive notice” and places reliance on section 3 of the Transfer of Property Act which says:. “A person is said to have notice of a fact when he actually knows that fact, or when, but for wilful abstention from an inquiry or search which he ought to have made, or gross negligence, he would have known it.” On the basis of this, it is contended by him that unless either of the two elements exists, a person cannot be said to have notice and that, in this case, it has not been proved that the appellant actually knew the fact that there was an agreement or that the appellant wilfully abstained from an enquiry and he called in aid a Bench ruling of the Madras High Court in Kausalai Ammal v. Sankara Muthiah1 which laid down that an omission to enquire would not be sufficient to constitute constructive notice within the meaning of section 3 and that abstention from inquiry should be actuated by a desire to avoid an enquiry which would disclose the true facts. This argument cannot be admitted for the reason that the present case is. governed by Explanation II which enacts: “Any person acquiring any immoveable property or any share or interest in any such property snail be deemed to have notice of the title, if any, of any person who is for the time being in actual possession thereof.” It may be mentioned here that this Explanation was introduced into the Transfer of Property Act by the Amending Act (Act XXI of 1929). Even prior to this amendment, the law, as declared in decided cases, was that, when a person purchases property from the owner knowing that it is in the possession of another, he is under a duty to inquire into the nature of that possession, and, in the absence of such inquiry, knowledge of the title under which possession is held, should be attributed to the purchaser. This leading case on the subject, relied on in a number of Indian decisions is Daniels v. Davison1.
This leading case on the subject, relied on in a number of Indian decisions is Daniels v. Davison1. The Lord Chancellor held that: “Where there is a tenant in possession under a lease, or an agreement, a person purchasing part of the estate must be bound to inquire on what terms that person is in possession..... that a tenant being in possession under a lease, with an agreement in his pocket to become the purchaser, those circumstances altogether give him an equity repelling the claim of a subsequent purchaser who made no enquiry as to the nature of his possession.” This decision was cited approvingly by Couch, C.J., in Mansharji Sorabji Chula v. Kongaseoo2. The law as stated therein has been accepted by the Bombay High Court in Kondira v. Nana3, wherein it was laid down that possession in certain cases, for the purpose of notice, had the same effect as registration. This principle was followed in Faki Ibrahim v. Faki Gulam4, wherein it was held that the subsequent purchaser having had knowledge of the possession of the mortgagee with whom the vendor had entered into an agreement for sale of the property, and having made no enquiry as to how the latter came into possession, must be fixed with notice of all the equities in favour of the latter. The rule stated by the Calcutta High Court in Baburam Bag v. Madhab Chandra Pollay5 is the same. It was held in that decision that possession of a property by a tenant normally affected a subsequent purchaser with notice of the tenant’s rights, and if the purchaser did not make any enquiry into the nature of that possession, he could not claim to be a transferee without notice. The same view was taken by another bench of the same Court in Tiloke Chand Surana v. J. B. Beattie & Co.6. It was observed by Rankin, J. (as he then was) at page 211 that where there was a tenant upon the property his open possession was notice both of the immediate terms of his tenancy and of the collateral agreement in the absence of all enquiry by the transferees. That this principle has been accepted as correct by the Madras High Court is evident from the decision in Parthasarathy Ayyar v. Subbarayagramani7. The Lahore High Court also has shared this view, vide Ibrahim v. Yusaf8.
That this principle has been accepted as correct by the Madras High Court is evident from the decision in Parthasarathy Ayyar v. Subbarayagramani7. The Lahore High Court also has shared this view, vide Ibrahim v. Yusaf8. In my opinion, it is to give effect to this statement of law that the Amending Act XXI of 1929 introducing Explanation II referred to above was enacted. It is thus clear that the doctrine of notice cannot be confined to actual notice, but extends to constructive notice as well. In this case it is not disputed that the plaintiff was in actual possession of the property in suit on the relevant date and the appellant was aware of it. It follows that the 4th defendant having had knowledge of the actual possession of the plaintiff cannot be said to be a person who registered document. According to him the section overrides section 27(b) of the Specific Relief Act, and, when once a case falls within the purview of section 48 of the Indian Registration Act, the registered document would have priority over an oral agreement to sell, even assuming that the purchaser could be imputed with the knowledge of the agreement. In support of this contention reliance is placed on the opinion of Handley, J., in Kannan v. Krishnan1that the provisions of section 27 of the Specific Relief Act do not override section 48 of the Indian Registration Act. In that case, it was found that the person setting up an oral agreement was in possession of the property subsequently sold. So it was not necessary to consider whether there was any conflict between the two provisions of law and therefore these observations were merely obiter. That apart Muttuswami Ayyar, J., who wrote the leading judgment, which is a very instructive one, took the opposite view. The position was summed up by the learned Judge in these words: “The Specific Relief Act is a special enactment prescribing rules as to the party against whom the remedy is available and the conditions subject to which it may be enforced against third parties who may claim an interest in the same property.
The position was summed up by the learned Judge in these words: “The Specific Relief Act is a special enactment prescribing rules as to the party against whom the remedy is available and the conditions subject to which it may be enforced against third parties who may claim an interest in the same property. It is provided by section 27, clause (b) that specific performance may be granted against a third party claiming under a title arising subsequently to the contract except a transferee for value who has paid his money in good faith and without notice of the original contract. The words used are transferee for value and they signify a person to whom the property is transferred for value which can alone be under a registered instrument when the value exceeds Rs. 100 The intention is to adopt the equitable doctrine of notice in suits for specific performance, to protect bona fide purchasers for value and to treat at the same time purchasers with notice as persons purchasing subject to the vendor’s pre-existing contractual obligation or with notice of a trust in favour of the party entitled to specific performance. Neither the Transfer of Property Act, nor the Registration Act overrides this provision of the Specific Relief Act. ****** Section 48 in protecting oral agreements accompanied with or followed by delivery of possession against the rule of priority contemplates oral alienations referred to in paragraph 3 of section 54 of Act IV of 1882 and has the effect of treating delivery of possession as equivalent to registration. But there is no trace in either enactment of an intention to override section 27 of Act I of 1877, and contracts of sale are expressly excluded from both as creating no present interest in immovable property.” With great respect, I express my accord with the opinion of Muttuswami Ayyar, J. I do not think that the legislature intended, by enacting section 48 of the Indian Registration Act to nullify the provisions of clause (b) of section 27 of the Specific Relief Act. In my judgment, there is no conflict between section 27 (b) of the Specific Relief Act and section 48 of the Indian Registration Act.
In my judgment, there is no conflict between section 27 (b) of the Specific Relief Act and section 48 of the Indian Registration Act. I am of opinion that section 48 of the Indian Registration Act does not govern a case which is covered by section 27 (b) of the Specific Relief Act, the underlying principle of the former section being that a registered instrument should prevail over an oral transaction and does not affect cases where a subsequent purchaser obtains a registered document in fraud of the right created in favour of a third party under the oral agreement. This view of mine is supported by decided cases. In Waman Ramachandra v. Dhondiba Krishnaji2, it was ruled that a person holding a registered document which was obtained in fraud of a party with notice of the prior equitable title could not defeat the rights of such a party. At page 148, Westropp, G.J., extracts with approval a passage from Lotowche v. Lord Dunsany3which is as follows: — “The intention was to make priority of registration the criterion of title to all intents and purposes whatever. But this does not exclude anything which affects the conscience of the party himself who claims under the registered deed; it never was the intention of the Legislature to give a priority of right to commit a fraud ; but its meaning was that, parties dealing fairly, priority should be given to him who had the registered instrument, and that in equity as well as at law.” The learned Judge then observed that the rule of equity in England and Ireland was that the person, who purchased an estate with notice of a prior equitable right, made himself a mala fide purchaser, and would not be enabled to defeat such prior equitable interest by getting in the legal estate, but would be regarded as a trustee for the benefit of the person whose right he sought to defeat. This principle is also found in a Bench decision of the Madras High Court in Thimmajamma v.Abdulla Saib1. To the same effect is the decision of a single Judge of the Madras High Court in Parvathammal v.Sivasankara Bhattar2. Mulla, in his commentary on the Indian Registration Act at page 179 has accepted this view as the correct one.
This principle is also found in a Bench decision of the Madras High Court in Thimmajamma v.Abdulla Saib1. To the same effect is the decision of a single Judge of the Madras High Court in Parvathammal v.Sivasankara Bhattar2. Mulla, in his commentary on the Indian Registration Act at page 179 has accepted this view as the correct one. The result of a reading of both the sections so as to reconcile them and the decided cases is that a case falling under the terms of section 27(b) does not attract the provisions of section 48 of the Indian Registration Act. It is a well-established canon of interpretation of statutes that, as far as possible meaning should be given to every provision of an enactment and the language of any statute should be construed as far as possible in accordance with the terms of other enactments which it does not repeal or modify expressly. I have, therefore, to repel the agreement based upon section 48 of the Specific Relief Act and hold that, as the appellant could not be treated as a purchaser without notice of the prior agreement in favour of the plaintiff, the plaintiff’s oral agreement prevails over the appellant’s registered instrument. It follows that the second appeal must be dismissed, but without costs. The respondents will have their costs in the Courts below. No leave. D.L.N. ------ Appeal dismissed.