Norman Macleod, Kt., C.J.
1. This is an appeal from the decision of the First Class Subordinate Judge of Poona, in Original Suit No. 56 of 1917.
2. Certain lands in the village of Fulgaon originally belonged to one K.B. Dhavle, who, on the 25th June 1910, agreed to sell them to the plaintiff and hia brother defendant No. 4 for Rs. 8,000. Rs. 1,000 were paid as earnest money the balance of Rs. 7,000 was to be paid after a year. A Satekhat was; executed and registered. The contract, however, fell through as the plaintiff was unable to pay the balance within the agreed time. Dhavle then sold the lands to defendants Nos. 1 and 2 and executed in their favour a sale-deed, Exhibit 72, on 1st July 1912. Plaintiff and defendant No. 4 gave their consent relinquishing whatever right they may have had under their contract. The plaintiff, however, alleged that defendant No. 1 orally agreed to sell the lands to him for Rs. 8,000 out of which Rs. 1,500 were paid as part-payment and the balance of Rs. 6,500 was to be paid within five years. Plaintiff sued for specific performance of this agreement. The first defendant denied that any such agreement had been entered into but the learned Judge held the agreement proved and I see no reason for differing from him.
3. The terms of the agreement were that (1) plaintiff was to pay the expenses of the sale-deed; (2) plaintiff was to pay at once Rs. 1,500; (3) the balance of Rs. 6,500 was to be repaid within five years; (4) plaintiff was to remain in possession of the lands; (5) plaintiff was to pay the assessment; and(6) plaintiff was to pay interest at nine per cent, on Rs. 6,500. For that interest he passed a rent-note, Exhibit 27, for a term of five years. The evidence was sufficient to prove that the plaintiff paid Rs. 1,500; and the facts that plaintiff remained in possession throughout and that the sum of Rs. 585, the rent payable under the rent-note, was exactly nine percent. On Rs. 6,500 would certainly go very far to substantiate the plaintiff's case.
4. On the 7th November 1915, the first defendant sold the lands to the third defendant for Rs. 7,800. The sale-deed is Exhibit 73. Once the Court comes to the conclusion that the agreement set up by the plaintiff for the sale of the property to him has been proved it must follow that the sale by the first defendant was a fraud on the plaintiff, and the third defendant can only resist the plaintiff's claim to specific performance if he can show that he was a bona fide purchaser for value without notice. Defendant No. 3 had to admit that defendant No. 1 informed him that he was not in possession of the property, that plaintiff and defendant No. 4 were in possession as his tenants, and that he (defendant No. 3) made no inquiry of the plaintiff or the fourth defendant regarding the circumstances in which they were in possession.
5. The learned Judge held that it was the duty of defendant No, 3 to inquire of the plaintiff under what title he really held, and had he so inquired he would have discovered the plaintiff's oral agreement to purchase. It was no answer to that for the third defendant to say that as the plaintiff had passed the to defendant No. 1 relinquishing his rights under the original Satekhat, he was entitled to presume that the plaintiff was in possession under the rent-note and had not entered into any later contract to purchase.
6. The general principle as laid down by Batty J. in Tajudin v. Govind (1902) 5 Bom. L.R. 144. followed by Chandavarkar J. in Kondiba v. Nana (1903) 5 Bom L B. 269.R. 134. appears to be that no purchaser can protect himself merely by registering his document of title, against the title of a person in possession of the property, the subject-matter of his sale-deed, and if he ignores that possession and fails to make inquiry into its nature and origin, he will be affected by all the equities which the person in possession is proved to have. In Kondiba v. Nana the defendant No. 2 who was in possession of the suit property was found to have a title under an unregistered sale-deed which was not compulsorily registrable. In this case the plaintiff only had an oral agreement to sell which gave him no interest in the lands. But in Daniels v. Davison Ves. 433. the Lord Chancellor held that if a tenant was in possession '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 would not, therefore, be going much further to say that if the third defendant had made inquiries of the plaintiff as to the nature of his possession he would have been told that the plaintiff was paying interest on the unpaid balance of the purchase money as evidenced by the amount due on his rent-note being the equivalent amount of interest due on that balance, and as the third defendant made no inquiries he must be taken to have had constructive notice of the agreement. That being so, it is not necessary to consider whether the third defendant had actual notice. The learned Judge held on the evidence that he had, but if the matter was to be decided on the appreciation of that evidence, it does not seem to me to be so conclusive in favour of the plaintiff as the learned Judge thought it was.
7. I think that the appeal must be dismissed with costs. If the plaintiff has not paid the amount directed by the trial Court to be paid within three months from the date of the decree, it must be paid within three months from to day, The plaintiff of course must pay interest until the amount is paid.
8. I agree.