1. This is a second appeal raising a question of some little importance. I understand that upon the ultimate decision of this case depends the result of a considerable number of other cases in which Municipal Boards are seeking to enforce statutory charges against land and houses in the hands of purchasers. The facts are very simple. In April 1936 the defendant, Lala Newal Kishore, purchased the property in question at an execution sale held by the Court. It does not matter what sort of an execution it was. It is sufficient that the defendant was an auction purchaser at a court sale. He was given the usual certificate of sale. On 12th April 1937 this suit was started against him by the Municipal Board of Agra claiming a sum of money representing arrears of house and water tax on the property for a period beginning with 1st April 1925 and ending with 31st March 1937 that is to say for a period of 12 years. The ground upon which the Municipal Board made this claim against the defendant was that they had a charge on the property in his hands under Section 177, Municipalities Act, 1916. That section says:
All sums due on account of a tax imposed on the annual value of building or lands or of both shall subject to the prior payment of the land revenue (if any) due to His Majesty thereupon, be a first charge upon such buildings or lands.
2. It was that charge which the municipality sought in this suit to enforce against the property in the hands of the defendant. The defendant's defence was that this was a case to which the proviso to Section 100, T.P. Act, 1882, applied and, accordingly, that the charge was one which could not be enforced against the property in his hands, inasmuch as it had been transferred to him for consideration and without notice of the charge. The actual words of the proviso, so far as they are material to this matter, are these:
and, save as otherwise expressly provided by any law for the time being in force, no charge shall be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of the charge.
3. There were, accordingly, two questions involved in this suit. The first was whether the proviso to Section 100, T. P. Act, applied to this property or not? If it did, then the charge could not be enforced against the property. The contention of the Municipal Board of Agra was that the proviso did not apply to this property, because the defendant was the purchaser of it at a court auction sale. The Board said that it did not apply to a court auction purchaser and, accordingly, that the property so purchased was just as much subject to the mischief of Section 100 of the Act as any other property. That was issue 1 in the suit. The other one was whether, assuming that Section 100, T. P. Act, applied to the property, whether even then, in the circumstances, a purchaser, who having made no enquiries as to its existence, found himself confronted with a statutory-charge under Section 177, Municipalities Act, could represent himself as a purchaser without notice of the charge. No body pretends in this case that he had actual notice, but the question was whether he ought, or ought not, to be deemed to have constructive notice of the statutory charge under Section 177, Municipalities Act. Both these questions present difficulties. On the first of them there is a direct conflict of authority in our own Court. A Bench of two Judges, consisting of Sir Edward Bennet and my learned brother Verma J. took the view in Indra Narain v. Mohammad Ismail , that it was 'clear that Section 100 as amended did not refer to auction sales or auction purchasers.' Those learned Judges held that the saving clause at the end of Section 100 did not apply to auction purchasers and, accordingly, that the statutory charge created by the earlier part of the section was capable of enforcement against property in the hands of a purchaser at a court auction sale. That was one view of the matter.
4. A diametrically opposite view seems to have been taken by another Bench, consisting of the late Chief Justice and my learned brother Ganga Nath J. in Municipal Board, Cawnpore v. Roop Chand Jain . In that case the earlier decision of Bennet and Verma JJ. was before them and was not, as far as I can see, in any way distinguished. This Bench held that the saving proviso at the end of Section 100, T. P. Act, applied to property in the hands of a purchaser of that property at a court auction sale, and, accordingly, that such property was not taken out of the operation of Section 100 of the Act, provided, of course, that the transfer took place without notice of the charge. In view of this obvious collision between two Benches of this Court, I think I have no alternative but to refrain from expressing a view of my own and. to ask the learned Acting Chief Justice to refer the disputed question to a Pull Bench.
5. That does not quite exhaust the matter, because, if it should be held that there is no distinction between an ordinary purchaser and a purchaser at a court auction sale for the purpose of the saving clause in Section 100, T. P. Act, it will still remain to be considered whether, in the circumstances of the present case, the defendant can be held to have been a transferee 'without notice of the charge.' This, to my mind, raises by far the more interesting question of the two. It raises in an interesting form the whole question of the doctrine of constructive notice as applied to the conditions obtaining in these provinces. As I have observed before, no one has suggested in this case that the defendant had any actual notice either of the arrears of taxes or of the charge which resulted from them. But what has been said -- and said with great force -- is that every purchaser of a property so situated as to be liable to attract taxes must be taken to know that unpaid taxes are under Section 177, Municipalities Act, liable to become charges on the property in favour of the municipal board. Such purchasers must be deemed to know the law, and, accordingly, it is said that when a purchaser purchases such a house, he ought, as a matter of ordinary prudence, to make a simple inquiry from the municipal board itself whether there are any outstanding taxes and whether the board claims any charge in respect of them. Had that been done in this case, there is no reason to suppose that an affirmative answer would not have been forthcoming. It is, therefore, contended on behalf of the board that a purchaser who neglects to take that precaution has constructive notice of any charge that may subsist and cannot escape upon the plea that he is a purchaser for value without notice.
6. Under English conveyancing practice, I have not a shadow of doubt but that a duty rests upon a purchaser to make enquiries from his vendor as to the possible existence of statutory charges of this kind; but I am also well aware that the art of conveyancing is not so highly developed in India as it has been in England, and that it would be misleading to apply the same tests to the consideration of a case in India as would be applicable in England. Moreover, we have in India a statutory definition of what 'constructive notice' is. Actually it does little more than to summarize the classic passage of Vice-chancellor Wigram in Jones v. Smith (1841-43) 1 Hare 43 a passage which has been approved by Stirling L. J. and Lindlay Bailey v. Barnes (1894) 1 Ch. 25 at pp. 31 and 35. The definition of 'notice' contained in Section 3, T. P. Act, is:
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.
7. What, therefore, has to be considered is whether the circumstance that a purchaser makes no inquiry of any sort or kind as to the possible existence of a statutory charge under Section 177, Municipalities Act, amounts to such neglect or carelessness as, according to the meaning of constructive notice in this country, to deprive him of the right of saying that he was not aware of that which by inquiry he might have found out. I should, I think, have been capable of deciding this question for myself, had I not met with some further difficulty in the authorities as between this Court and the Oudh Chief Court. In Municipal Board, Cawnpore v. Roop Chand Jain this question was considered in this Court in circumstances which are difficult to distinguish from the present circumstances. The learned Judges held that notice could not be imputed by construction to the purchaser. If I understand the judgment, they based that upon two grounds. First they said that an intending purchaser was not bound to presume that taxes on the property had not been paid. And, secondly, they said that, because the municipality itself had, or might have been, negligent in not enforcing payment of the arrears, that was a circumstance precluding the application of the doctrine of constructive notice. I confess, with the greatest respect, that I find some difficulty myself in following this reasoning. The learned Judges say:
No intending purchaser is bound to presume that the taxes upon the property which he contemplates purchasing have not been paid in the ordinary course in the absence of any special intimation by the Municipality. If there has been negligence in the present instance it has been on the part of the Corporation of Cawnpore. They should have taken steps long ago to recover the arrears of taxes from defendant 1 and; they certainly should have taken steps to intimate and proclaim at the auction sale to intending purchasers that they held a charge over the property in respect of these arrears.
8. It would perhaps be improper for me, sitting as a Single Judge, to make any further comment upon that. I find however that in a still more recent case, Municipal Board, Lucknow v. Ramji Lal ('41) 28 A.I.R. 1941 Oudh 305 two learned Judges of the Oudh Chief Court have felt constrained to say that, with the greatest respect, they are unable to accept the view expressed in this Court. They say:
In our opinion the question is not whether an intending purchaser is bound to presume that the taxes have not been paid but whether he is entitled to presume that they have been paid. We do not think that he is....
9. I feel that, in referring this case upon the first of the two questions I have mentioned to a Fall Bench, I ought at the same time draw attention to the possibility that, in view of the conflict between this Court and the Oudh Chief Court on the other point as well, it might be desirable that that point should be considered also. It would be improper of me to express any view of my own.
10. The two outstanding questions, therefore, which seem to me to call for an authoritative decision by a Full Bench are these : (1) Whether Section 100, T. P. Act, applies in the case of a charge against property in the hands of a purchaser who has bought the same at a court auction sale and to whom such property in pursuance of his said purchase has been transferred for consideration and without notice of the charge. (2) Whether in a case in which a statutory charge under Section 177, Municipalities Act, 1916, exists in favour of a municipality, a purchaser who has no actual notice of the existence of the charge but who omits or neglects to make any inquiries from the municipality or from any other source, has prima facie been guilty of negligence and, if so, whether such negligence is in any way mitigated or lessened by the circumstance that the taxes ultimately found to be outstanding have been outstanding for a long period.
11. Though I have set out in general terms the two questions which appear to arise, I propose to refer the whole case generally to the Acting Chief Justice of the Court with a request that he will constitute a Full Bench to deal with it. The matter as I have said, is one of some difficulty and of considerable importance in view of the many other cases which I am told depend upon its decision. At present the authorities on these questions appear to me conflicting and unsatisfactory.