JUDGMENT : Mishrilal respondent-defendant had certain lands situated on the Station Road in the town of Mandsaur. He agreed with the plaintiff to sell a plot of land 80 ft. x 60 ft. to the plaintiff at the rate of 5 annas per square foot. Pursuant to this contract, a sum of Rs. 500/- was paid as advance towards the purchase price on 11-2-46. The plaintiffs case, now, is that when he called upon the defendant to complete the transaction and to execute the sale-deed, he met Shri Kacharsingh, defendants lawyer, and from him he came to know that the land was agricultural one and could not be used for building purposes. When the plaintiff entered into the contract with the defendant, he remained under the impression that it was defendants own land, but subsequently he found that the defendant was not the owner but only the Ryot Pattedar. He therefore, rescinded the contract and brought the suit for return of Rs. 500/- and claimed Rs. 240/- as interest at 12 per cent. per annum. In his written statement, the defendant stated that it was within the knowledge of the plaintiff that the lands were agricultural ones and the defendant was willing to sell the said plot of land at the contracted price. Because the plaintiff himself had committed the breach of contract, therefore, he was not entitled to a refund of Rs. 500/-. 2. The following two issues framed are material for deciding this appeal :- "Issue No. 1 Is the suit land an agricultural one, and, therefore, the contract has become impossible of performance and the plaintiff is entitled to a refund of Rs. 500-? "Issue No. 2. Was it not necessary for the defendant to inform the plaintiff that the suit land which was contracted to be sold to the plaintiff for building a house was only an agricultural one?" 3. It now appears that the suit land was an agricultural one and the transfer of it was governed by provisions embodied in S. 68 of the Gwalior State Kanoon Rayatwari of Samvat 1974. The owner of the land had power of transferring the land only for agricultural purposes, but S. 68 laid down that it could not be transferred for non-agricultural purposes without the permission of the Government. Then, from Ex. The owner of the land had power of transferring the land only for agricultural purposes, but S. 68 laid down that it could not be transferred for non-agricultural purposes without the permission of the Government. Then, from Ex. P-2, which is a letter (No. 6397) dated 27-2-1946) from the Revenue Minister of the Gwalior State to the Suba (Collector), District Mandsaur, it appears that the defendant Mishrilal Bapna had applied for using his land for non-agricultural purposes, that is, for building a house on the land, and the permission was granted but it was made explicit that this permission was "non-transferable". So issue No. 1 ought to have been modified and it ought to have been amended in the following form : "Whether the defendants title to the property agreed to be conveyed was defective so as to entitle the plaintiff to refuse to complete the contract and accept the conveyance?" I need not say that though the issue was not modified, yet the judgments of the two Courts below took the above question into their consideration and their judgments show that they had that question in mind when they decided the suit. The trial Court came to the conclusion that when there was already a permission of the Government, it was the plaintiffs duty to get the contract completed and then get the requisite permission for himself from the Revenue authorities. If permission had not been accorded only then it could be said that the contract had become impossible of performance. It was only then that the plaintiff was entitled to bring a suit for breach of contract and for the refund of Rs. 500/-. The trial Court, therefore, held that the suit was premature and dismissed it. The first appellate Court upheld this decree of the trial Court. In my opinion, both have gone wrong. Both ignored the relevant provisions of law. These provisions are embodied in S. 55, Transfer of Property Act, the material portion of which provides : "S. 55 :- In the absence of a contract to the contrary......... The first appellate Court upheld this decree of the trial Court. In my opinion, both have gone wrong. Both ignored the relevant provisions of law. These provisions are embodied in S. 55, Transfer of Property Act, the material portion of which provides : "S. 55 :- In the absence of a contract to the contrary......... (1) the seller is bound - (a) to disclose to the buyer any material defect in the property or in the sellers title thereto of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover." Clause (2) of the Section then provides : "The seller shall be deemed to contract with the buyer that the interest which the seller professes to transfer to the buyer subsists and that he has power to transfer the same." The concluding words of the Section then are : "An omission to make such disclosures as are mentioned in this Section, paragraph (1), clause (a)..........is fraudulent." The arguments before me have been based on this provision and as it is only a point of law, I need not send the case back for decision on this point. The main question, therefore, that ought to have been determined in this case was; whether the defendant, as the vendor, was bound to disclose to the vendee this non-transferable permission for building a house on the land which was granted by the Revenue authorities of the Gwalior State, and whether it was such a material defect in the sellers title to the property which the buyer could not with ordinary care discover? 4. There are several decisions on the point as to what a material defect is. The test of materiality was laid down by Tindall, C.J., in Flight v. Booth. (1834) 1 Bing (N.C.) 370 (A) and it has been followed by High Courts in India (see for example Lallubhai v. Mohanlal, AIR 1935 Bom 16 (B)). It has been held in the English case that a defect to be material must be of such a nature that it might be reasonably supposed that if the buyer had been aware of it, he ought not have entered into the contract at all, for he would be getting something different from what he contracted to buy. It has been held in the English case that a defect to be material must be of such a nature that it might be reasonably supposed that if the buyer had been aware of it, he ought not have entered into the contract at all, for he would be getting something different from what he contracted to buy. It was also observed in the above Bombay case that the buyers right is to a title free from reasonable doubt and that such title means a marketable title which can at all times be forced upon an unwilling purchaser. It was also held in this case that restrictive conditions imposed on the property in the nature of easements are material defects and the vendor is bound to disclose this fact to the buyer; his failure to do so would entitle the buyer to refuse to complete the sale. 5. It is now well settled that the material defect in the property would also include an encumbrance in the property and the existence of such an encumbrance not disclosed to the vendee would make the sale voidable if the vendee could not have discovered it by the exercise of ordinary care. Paragraph 1(a) of S. 55 of the Transfer of Property Act, clearly casts the duty on the seller to disclose material defects in the property which the buyer could not with ordinary care discover. Of course, where the vendee is perfectly aware of the existence of an encumbrance, there is no duty on the part of the seller to inform the buyer of that of which the latter is perfectly aware. 6. A case reported in J.W. Thomas v. Hanuman Prasad, AIR 1929 All 837 (C) is to certain extent relevant for the decision of the question before me. It laid down that where in a sale deed a person purports to be the owner in possession and to convey the title of an owner while he is a mere lease-holder having no right even to transfer the rights of lease-holder without sanction of Cantonment authority, there is clearly misrepresentation. In such a case, it was further held that, sub-cl. (2) of S. 55, Transfer of Property Act would apply and the seller professing to transfer interest not subsisting would be committing breach of implied contract. 7. In such a case, it was further held that, sub-cl. (2) of S. 55, Transfer of Property Act would apply and the seller professing to transfer interest not subsisting would be committing breach of implied contract. 7. In the case before me it is frankly admitted by the defendant that he had agreed to sell the suit land to the plaintiff so that the plaintiff may construct a building on it and that the plaintiff paid Rs. 500/- as advance towards the purchase price. It is also admitted by the defendant that he did not disclose to the plaintiff that the land was an agricultural one and that the permission from the Gwalior Government accorded to him for using his land for building a house on it was non-transferable. It is obvious that if this fact had been disclosed to the purchaser, he would not have gone for this plot at all. The purchaser would not like to apply to the Government for permission for constructing a building on it and await the decision for months together. In fact, it was the duty of the seller to disclose that if the purchaser wanted to construct a building, he would have to secure the permission from the Gwalior Government. As Fry, J., observed in In re Marsh and Earl Granville, (1883) 24 Ch D 11 (D), a vendor who desires to limit the rights of a purchaser must do so by explicit and plain conditions, and he must tell the truth, and all the truth, which is relevant to the matter in hand. The reason for this is two-fold. In the first place, the vendor knows the condition of the title and the purhcaser does not, and that puts upon the vendor the burden of being very explicit in his description. In the second place, the purchaser knows as much as is told him and no more, and, therefore, he ought to be put into possession of everything, so far as it is touched upon by the conditions of sale, which is likely to influence his mind in determining whether he will buy or not. 8. It is now contended by Mr. Rege, learned counsel for the respondent, that the fact that the suit land was an agricultural one would have come to the knowledge of the purchaser appellant if he had made reasonable enquiries and inspection of the place. 8. It is now contended by Mr. Rege, learned counsel for the respondent, that the fact that the suit land was an agricultural one would have come to the knowledge of the purchaser appellant if he had made reasonable enquiries and inspection of the place. Now, the record is silent as to whether the Station Road, Mandsaur, is within the municipal limits or not. There is nothing on record to indicate that if the plaintiff appellant had seen the site, he would have known that the suit land was an agricultural one. Considering, however, that the defendant had obtained permission from Gwalior Government for constructing a building on it, I do not think even by inspection the plaintiff could have come to the conclusion that the suit land was an agricultural one. The duty of the defendant was to show the permission to the plaintiff and tell him that the permission was non-transferable. Mr. Rege contends that if the plaintiff had made enquiries about it, he would have got this knowledge. Now it is well settled that a purchaser is not bound to be suspicious, but has only to take the ordinary precautions which men of business use. In Manji Karimbhai v. Hoorbai, ILR 35 Bom 342 (E), the following observations of Lindlay, J., Bailey v. Barnes. (1894) 1 Ch 25 (F) were cited and followed : "In dealing with real property, as in other matters of business, regard is had to the usual course of business; and a purchaser who wilfully departs from it in order to avoid acquiring a knowledge of his vendors title is not allowed to derive any advantage from his wilful ignorance of defects which would have come to his knowledge if he had transacted his business in the ordinary way." The relevant words in S. 55(1) (a), Transfer of Property Act are - "which the buyer could not with ordinary care discover" and they are important. It means such a care as an ordinary business man would use and not what a prudent businessman would use. The circumstances, in my opinion, must be such as to bring the case within what is laid down by Lord Cranworth in Ware v. Lord Egmont. It means such a care as an ordinary business man would use and not what a prudent businessman would use. The circumstances, in my opinion, must be such as to bring the case within what is laid down by Lord Cranworth in Ware v. Lord Egmont. (1854) 4 De G. M. and G. 460 at p. 473 (G) : "But where the purchaser has not actual notice, he ought not to be treated as if he had notice, unless the circumstances are such as enable the Court to say, not only that he might have acquired, but also, that he ought to have acquired, the notice with which it is sought to affect him - that he would have acquired it but for his gross negligence in the conduct of the business in question The question, when it is sought to affect a purchaser with constructive notice, is not whether he had the means of obtaining, and might by prudent caution have obtained, the knowledge in question, but whether the hot obtaining it was an act of gross or culpable negligence." 9. The question, therefore, appears to me to reduce itself to this - whether the not obtaining further information as to whether the lands were agricultural ones and whether the permission for constructing a building thereon granted by the Gwalior Government was non-transferable amounted to culpable negligence. I am definite that it did not. 10. From the evidence in this case, it seems to me that the inference is unavoidable that the plaintiff brought upon the faith of there being no restriction in constructing a building upon the suit land. If he had known that he would have to apply to the Revenue authorities for the requisite permission for constructing the building on the suit land, he would certainly not purchase it at all. I am, therefore, clear in my mind that there is such a misrepresentation tainting the whole of the contract as entitles the purchaser to rescind it and to have back his deposit. 11. Failure to fulfil an obligation under cl. (1) of S. 55, Transfer of Property Act amounts to a refusal to perform the contract for sale within the meaning of S. 39, Contract Act, and will entitle the other party to repudiate or put an end to the contract. In this view of the matter, the suit ought to have been decreed. 12. (1) of S. 55, Transfer of Property Act amounts to a refusal to perform the contract for sale within the meaning of S. 39, Contract Act, and will entitle the other party to repudiate or put an end to the contract. In this view of the matter, the suit ought to have been decreed. 12. In the end, Mr. Rege contended that the doctrine of caveat emptor (let the purchaser beware) would apply to this case. In view of the statutory provisions embodied in S. 55 of the Transfer of Property Act, I regret that that this doctrine cannot be made applicable. Clause (2) of S. 55 is an exception to the said doctrine so far as the sales of immovable property by act of parties are concerned. It implies a warranty of title in all sales. There is some conflict between the different High Court as to whether this covenant of title operates at the stage of agreement for sale or at the stage of the execution of the conveyance. But without going into the question and for a different purpose it was assumed in Abrahman v. Abdul Mahomed, AIR 1949 Bom 154 (H) that even in an agreement for sale, the vendor guarantees good title to the purchaser. 13. As the provisions of S. 55, T. P. Act are quite clear, I do not think it would be of any use to consider this point further. The last clause of S. 55, T. P. Act clearly enacts that an omission to make the disclosure of a material defect is fraudulent. This will also entitle the buyer to avoid the contract. 14. For reasons stated above, I allow the appeal and decree the suit for the sum of Rs. 500/-. The decree will carry interest at the rate of 4 per cent. per annum from the date of the judgment of the trial Court. The appellant will be entitled to costs throughout. The decrees of the Courts below are set aside.