Balchand Mahton vs Bulaki Singh

Fazl Ali, J.—This is an appeal by defendants to 7 in a suit for the specific performance of a contract of sale in respect of 8-pies share in village Barkan gango in the district of Hazaribagh. The facts of the case are briefly these:

The plaintiffs and defendant 1 were both cosharers in village Barkan gango and as the defendant 1 used to live abroad he had entered into an arrangement with the plaintiffs by virtue of which the plaintiffs were in possession of the defendant''s share in the property and used to deliver to him every year half the produce of the lands. In Jeth 1980 (which corresponds to June 1923) defendant 1 entered into a contract with the plaintiffs for the sale of his 8-pies share to the plaintiffs and the plaintiff paid Rs. 200 by way of earnest money and got a receipt for the amount from him. On 5th October 1923, the defendant 1 sold his share to defendants 2 to 7. This gave rise to certain criminal cases and ultimately on 18th January 1924, the plaintiffs brought the suit out of which the present appeal arises for the specific performance of the contract of sale between himself and defendant 1.

The learned Munsif, before whom the suit had been brought dismissed it holding that the agreement relied upon had not been proved and the agreement for sale (Ex. I) was not genuine. The learned Munsif, however, observed that if he had held that the contract was proved he would have also found that the defendants must be affected with constructive notice of the contract inasmuch as the plaintiffs were in actual possession of the disputed lands at the time the kabala was executed in favour of defendants 3 to 7.

The plaintiffs thereupon appealed and their appeal was allowed by the Subordinate Judge before whom it came up for hearing.

The facts found by the lower appellate Court were that defendant 1 had entered into a valid contract Ali the sale of the property to the plaintiffs before he executed the kabala in favour of defendants 2 to 7 and that the plaintiffs were in possession of the property as sajhadars before the defendants 2 to 7 took conveyance in respect of the disputed property.

On these facts it was held by the lower appellate Court that the defendants 2 to 7 had constructive notice of the prior agreement in favour of the plaintiff, and in arriving at this conclusion the learned Subordinate Judge approved of the reasoning of the trial Court that the fact that a person other than the vendor was in possession of the property was sufficient to put the purchaser on inquiry as to the nature and extent of the vendor''s interest and if that inquiry yes not pursued by the purchaser he should be deemed to have constructive notice of the contract entered into by the plaintiff for the purchase of the disputed property.

The only point raised in this appeal on behalf of the appellant was that under the circumstances of the case the Court below should not have held that the appellant had constructive notice of the contract between the plaintiffs and the defendant 1. It is said that the plaintiffs being admittedly in possession as sajhadars and this fact being known to the defendants 2 to 7 they had no reason to suspect that the plaintiffs had acquired any other title and it was no business of theirs to direct an inquiry to find out in what capacity they were in possession, because they knew that the plaintiffs were in possession as sajhadars. It is therefore, contended that it would be stretching - the doctrine of constructive notice too far to hold in a case like this that the defendants 2 to 7 were under an obligation to make inquiries from the plaintiffs as to the nature of their possession and to hold that they must be affected with constructive notice merely, because they had not made any such inquiry.

Now, in a long series of English, as well as Indian decisions, it has been laid down that if the property to be sold is not in the possession of the vendor but of another person it is the duty of the purchaser to make inquiries from that person and that he is bound by all the equities which the party in possession may have in the property. In the case of Hunt v. Luck [1902] 1 Ch. 428 Vaughan-Williams, L.J. state the law on the subject as follows:

If a purchaser or a mortgagee had notice that the vendor or mortgagor is not in possession of the property he must make inquiries of the parson in possession of the tenant who is in possession and find out from him what his rights are. And if he does not choose to do that than whatever title ha acquires as purchaser or mortgagee will be subject to the title-or right of the tenant in possession.

This doctrine of constructive notice was applied in the case of Daniels v. Davison [1809] 16 Vas. 247, under circumstances which are not dissimilar to the circumstances of the present case. In that case the tenant in possession of a public house and garden had entered into a contract; for the purchase of the property and his-subsequent purchaser was held to have constructive notice of the contract as he-was held to have been bound to make inquiry from the tenant which would have led him to a knowledge of it. Lord Eldon while deciding the case observed as follows:

My opinion therefore considering this as depending upon notice is that this 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 inquiry as to the nature of his possession.

It is true that the case of Daniels v. Davison [1809] 16 Ves. 247 has been held to be an extreme case beyond which the doctrine of constructive notice'' ought not to be extended but at the same time it has been followed by the Indian Courts in a number of cases. Kondiba v. Nana [1903] 27 Bom. 408, Baburam Bag v. Madhab Chandra [1913] 40 Cal. 565, Magu Brahma v. Bholi Das [1913] 40 Cal. 565, Nandi Reddi v. Thimmahka [1914] 14 M.L.T. and Puthenpurayil v. Kandiyal [1916] 2 M.W.N. 34, In the case of Kondiba v. Nana [1903] 27 Bom. 408, the facts were as follows:

On 16th June 1876 one Revapuri mortgaged the lands in suit to the first-defendant with possession, and the latter on 26th June 1876, leased them to the second defendant for one year. Defendant 2 remained in possession as tenant after the year had expired. On 3rd December 1878 while defendant 2 was in possession of the lands as tenant, Revapuri sold to him (defendant 2) her equity of redemption. The deed o� sale was not compulsorily registrable under the Act then in force, and owing to the death of Revapuri it was not registered. On 8th December 1895, the heir of Ravapuri sold the equity of redemption in the mortgage of 1876 by a registered deed to the plaintiff. At the date of this sale to the plaintiff defendant 2 was still in actual possession. The plaintiff brought this suit to redeem the lands from the mortgagee (defendant l), and added defendant 2 as a party alleging that he was in possession as a tenant of the defendant 1. The lower Courts passed a decree for the plaintiff, holding that his registered deed gave him priority over defendant 2 whose deed was unregistered. It was held in these circumstances that the plaintiff''s suit should be dismissed and that possession in certain cases, for the purposes of notice, had the same effect as registration. It was further held that the plaintiff at the date of his purchase had notice of the possession of defendant 2, and that being so, it was the plaintiff''s duty to inquire of defendant 2 under what title he held, and if the plaintiff had done so, instead of assuming that defendant 2 was still holding merely as tenant, he would have discovered that defendant 2 had purchased the land. In the case of Magoo Brahma v. Balkrishna Das 18 C.W.N. 657, Mookerjee and Beachhcroft, JJ., disposed of an argument similar to that raised in the present case in the following passage:

In the case before us, the defendants and not the vendors of the plaintiff were admittedly in occupation of the land at the time of the execution of the conveyance in his favour it was consequently incumbent upon him to enquire under what title the defendants claimed to be in occupation. This he did not do, and in justification of his conduct it has been urged that he was entitled to assume that the defendants were in occupation as tenants, in other words, to assume that as they had entered into possession of the land as tenants, they had not subsequently acquired any other title. In our opinion, this position cannot possibly be supported.

he case of Puthenpurayil v. Kandiyal [1916] 2 M.W.N. 31 the facts were that the plaintiff was a mortgagee in respect of the disputed property and during the subsistence of the mortgage the mortgagor agreed to sell the property to him but subsequently sold it to other persons. The question arose whether the purchasers had notice of the contract of sale and the argument advanced for the appellant wag that the appellant was not bound to make any further inquiry and that he was entitled to assume that the plaintiff continued in possession as mortgagee and had not acquired any other title. The learned Judges, who decided this case, overruled this contention relying on the authority of Daniels v. Davison [1809] 16 Ves. 247, and certain Indian decisions. On the other hand in Hari Gharan Kuar v Hai Kanla [1917] 2 Pat. L.J. 513 the Court was asked to apply the doctrine laid down in Daniels v. Davison [1809] 16 Ves. 247, but Chamier, C.J., observed as follows:

There appears to be no case in the books in which the Courts have bean asked to apply the doctrine of Daniels v. Divison [1809] 16 Ves. 247 to a case like the one before us in which the parson who had the contract to purchase in his pocket was in possession not of the entire property sold to another but only of a small portion of that property.

The distinguishing feature of this case was that the person who relied on the contract to purchase was in possession o� only a few plots of land and not the entire property subsequently sold to another person, and under these come stances it was held that actual notice of the contract not having been proved it would be going too far to hold that mere possession of part of the property amounted to constructive notice of the contract of purchase in respect of a whole property. I have already observed that the facts of the present case bring it well within the rule laid down in Daniels v. Davison [1809] 16 Ves. 247, and a number of Indian decisions and so in my opinion the casa his been rightly decided by the lower appellate Court and I would dismiss the. appeal with costs.

Das, J.

I agree.