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Judgment
Chandra Reddy, J.—The fourth Defendant has filed this appeal against the decree and judgment of the District Court, Cuddappah confirming those of the District Munsif''s Court of 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 4 acres entered into between Defendants 1 to 3, and the Plaintiff on 29-11-1948, 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 his family by Defendants 1 to 3 and that despite this, he remained in possession of the land as a tenant till 29-11-1948 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 30-12-1948 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, Registration Act, saved the transaction in favour of the fourth Defendant.
3.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, Registration Act, had no application. to the case. On appeal, the learned District Judge of Cuddappah 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.
4.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, 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 the 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 on several circumstances indicating that the appellant had notice of the suit agreement apart from the burden which rests upon 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 an 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), Specific Relief" Act. It is urged by the Advocate-General that the notice contemplated by Clause (b) of Section 27, Specific Relief Act, is "actual notice", and not "constructive notice" and places reliance on Section 3, 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 enquiry 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 Vs. Sankaramuthiah Pillai, 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 enquiry 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 Immovable property or any share or interest in any such property shall 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 an Explanation was introduced into the Transfer of Property Act by the Amending Act 21 of 1929. Even prior to this amendment, the law, as declared in decided cases, was that, when a person purchased 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 title under which possession is held, should be attributed to the purchaser. The leading case on the subject, relied on in a number of Indian decisions is - ''Daniels v. Davison (1809) 16 V J 249 (B). 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 - ''Mancharji Sorabji Chulla v. Kongseoo 6 Bom HCROC 59 (C). The law as stated therein has been accepted by the Bombay High Court in - ''Kondiba v. Nana 27 Bom 408 (D), wherein it was laid that possession, in certain cases, for the purpose of notice, had the same effect as registration. This principle was followed in - Faki Ibrahim Vs. Faki Gulam Mohindin, , 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 all the equities in favour of the latter.
The rule slated by the Calcutta High Court in - ''Baburam Bag v. Madhab Chandra Pollay'', 40 Cal 565 (F) is the same. It was held in that decision that possession of a property by a tenant normally affects 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 and Another Vs. J.B. Beattie and Co., It was observed by ''Rankin J. (as he then was) at p. 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 transferee.
That this principle has- been accepted as correct by the Madras High Court is evident from the decision in - S. Parthasarathy Aiyar Vs. M. Subbaroya Gramany and Another, The Lahore High Court also has shared this view vide - ''Ibrahim v. Yusuf AIR 1938 Lah 39 (I). In my opinion, it is to give effect to this statement of law that the Amending Act 21 of 1929, introducing Explanation (2) 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 purchased the properly without notice of the agreement in favour of the Plaintiff.
There remains the point argued by the learned Advocate-General that having regard to the provision of Section 48, Registration Act, as amended in 1929, it is not open to a party to set up an oral agreement to sell as against a registered document. According to him the section overrides Section 27(b), Specific Relief Act, and, when once a case falls within the purview of Section 48, 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. Krishnan 13 Mad 324 (J) that the provisions of Section 27, Specific Relief Act, do'' not override Section 48, Registration Act. In this 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 Muthuswamy 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. 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 preexisting 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 para 3 of Section 54 of Act 4 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 Muthuswamy Ayyar, J.
I do not think that the Legislature intended by enacting Section 48, Registration Act, to nullify the provision of Clause (b) of Section 27, Specific Relief Act. In my judgment, there is no conflict between Section 27(b), Specific Relief Act, and Section 48, Registration Act. I am of opinion that Section 48, Registration Act, does not govern a case which is covered by Section 27(b), Specific Relief Act, the underlying principle of the former section being that a registered document should prevail over an oral transaction and it 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 Krishnaji'' 4 Bom 126 (FB) at pp. 148, 149 (K), it was ruled that a person holding a registered document which was obtained in fraud of the party with the notice of the prior equitable title could not defeat the rights of such a party. At page 148, Westropp C.J. extracts with approval a passage from - ''Latouche v. Lord Dunsany'', 1 Sch & Lef 137 at p. 159 (L) which is as follows:
The intention was to make priority of registration the criterion of title to all intents and purposes whatever. But it this does not exclude anything which affects the conscience of the party himself who claims under a registered deed; it never was the intention of the Legislature to give a priority or right to commit a fraud; but its meaning was that, parties dealing fairly, priority should be given to him who had the registered document, 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. The principle is also found in a Bench decision of the Madras High Court in - ''Thimmajamma v. Abdulla Sahib 17 Mad LJ 319 (M). To the same effect is the decision of a single Judge of the Madras High Court in - Parvathathammal Vs. Sivasankara Bhattar and Others, . 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, 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 argument based upon Section 48, 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 cost in the Courts below.
No leave.