G.K. Misra, C.J.
1. Plaintiff's case may be stated in short. The disputed properties consist of A and B Schedule of the plaint. Schedule A is homestead and comprises 0.13 acre in Khata No. 173 in village Balianta Schedule B consists of agricultural lands with an area of 1.07 acres in village Andilo, both the villages being in the district of Puri. The disputed properties belonged to one Chintamani Sahu who died in 1931 leaving behind a widow, Tulasi who died in 1964 a son (defendant 3 and D.W. 9), and a daughter Durga whose son is Madhab (defendant 1 and D.W. 1). Tusarkant (defendant 2) is the son of defendant 1. Defendant 4 is the maternal uncle of defendant 3 and defendant 5 is the son of defendant 4.
Though defendant 3 described himself as the adopted son of one Krushna Sahu in fact he had not been adopted away. Defendant 3, describing himself as the son of Chintamani, executed a registered sale deed, Ext. 2, on 5-12-59 in respect of the disputed lands in favour of the minor, defendant 6. Tulasi without having any right, title or interest in the disputed properties executed a registered deed of gift (Ext. D) in respect of Schedule A land in favour of defendant 1 and a registered sale deed, (Ext. E) in respect of Schedule B land in favour of defendant 2 on 3-11-61. Plaintiff (P.W. 7) purchased the disputed properties by a registered sale dead, Ext. 3, from defendants 4 and 5 on 14-1-65. It was admitted in the plaint that despite the sale deed, Ext, 2, executed by defendant 3, possession of A Schedule land (homestead and house) continued with Tulasi and after her death, defendant 1 is in forcible possession thereof. Delivery of possession of B Schedule land was, however, given under Ext. 2, end defendants 4 and 5 remained in possession from 5-12-59 till they transferred the same to the plaintiff on 14-1-65 when the plaintiff came into possession thereof. The suit was filed on 21-1-65, a week after the execution of Ext. 3, for declaration of plaintiff's title to the disputed properties, for recovery of possession of Schedule A lands and for confirmation of possession of Schedule B lands, in the alternative for recovery of possession.
2-3. Defendants 1 and 2 filed a joint written statement and defendant 3 filed a separate written statement supporting the case of defendants 1 and 2. Defendant 5 filed a written statement also supporting the case of the contesting defendants.
The case of the contesting defendants is that the original name of defendant 3 was Krushna. He was given away in adoption to another Krushna Sahu in 1043 whereafter his name was given as Madhusudan. There was dissension between defendant 3 and his wife which ultimately resulted in divorce. To screen the disputed properties from being proceeded against by the wife towards maintenance, a sham transaction was effected without consideration by executing Ext. 2 in favour of defendant 5 which did not convey any title in favour of the alleged vendee. Defendants 4 and 5 never took possession of the disputed properties under Ext. 2. After the adoption in 1943, Tulasi was the owner in possession of the disputed properties and title to the same passed to defendants 1 and 2 under Exts, D and E. Plaintiff, therefore, is not entitled to the reliefs claimed.
4. The learned trial court held that defendant 3 had been validly adopted away, and that after the adoption in 1943, the real heirs of Chintamani in respect of the disputed properties were Tulasi and her married daughter Durga, and that Ext. 2 conferred no title on defendant 5, and consequently the sale deed, Ext. 3, conferred no title on the plaintiff. He also held that Ext. 2 was executed in a nominal manner with an ulterior motive, and there was no intention of conferring any title on defendant 5. He held Exts. D and E to be genuine conferring valid title on defendants 1 and 2.
5. The learned lower appellate court confirmed the finding that there was a valid adoption of defendant 3. He, however, held that on the death, of Chintamani defendant-3 was the sole surviving coparcener, and the disputed properties having once vested in him, he was not divested of the same on adoption. Consequently, defendant-3 was entitled to alienate the disputed properties under ext. 2. He further held that ext. 2 was not for consideration and was benami. On his finding that ext. 3 was genuine and for consideration, he held that section 41 of the Transfer of Property Act was applicable, and as such, plaintiff derived a valid title under ext. 3. As to possession, he came to the conclusion that admittedly defendants 4 and 5 were never in possession of Schedule A property, and that the plaintiff failed to establish that delivery of possession of Schedule B property was effected under ext. 2 and defendants 4 and 5 were ever in possession thereof. Accordingly he decreed the suit for declaration of title and recovery of possession of the disputed properties.
Against the reversing decision of the tower appellate court, defendants 1 and 2 filed the second appeal which was dismissed by our learned brother. B.K. Ray, J. on his granting leave the A. H. O. has been filed by defendants 1 and 2.
6. The learned Single Judge proceeded to examine the second appeal after accepting the following findings which were either not assailed before him, or were pure findings of fact which cannot be assailed in second appeal.
Those findings are (i) Defendant-3 was validly adopted away in 1943 (ii) ext. 2 was a benami transaction, and (iii) defendants 4 and 5 never came into possesion of the disputed properties under ext 2.
The learned Single Judge examined two questions of law (i) whether defendant-3 was divested of the disputed properties on his adoption in 1943, and (ii) though ext 2 was benami whether plaintiff was entitled to the declaration of his title under ext. 3 on application of Section 41 of the T. P. Act.
Identical questions have been canvassed before us. We would now proceed to examine those two questions of law.
7. On Chintamani's death in 1931, the disputed properties vested in defendant-3 as the sole surviving copancener. He is an absolute, and not a limited, owner. Once a property vests in a sole surviving coparcener before adoption the same cannot be divested on adoption.
8. Mr. Pal contends that the theory of adaption involves the principle of a complete severance of the child adopted from the family in which he is born, both in respect of bis paternal and internal lines and his complete substitution into the adopter's family as if he was born in it and that the effect of adoption is to cut off all connections with the natural family in respect of the Gotra wealth, funeral obligations and Sradh and to transplant him in the adoptive family and the adoptee's status in the adoptive family cannot be altered by the adopter by any deed or instrument cancelling the adoption and that the adopted son has in his new family precisely the same rights as a natural son except when there is a question of competition between the natural and the adopted sons.
The aforesaid dictum is correct in law. It has, however, no application to leases where the properties have already become vested in person before adoption as an absolute owner, either as the sole surviving coparcener or by inheritance or by partition in his own natural family.
9. Mr. Pal's contention receives some support from AIR. 1916 Bom. 210 (Dattatrava v. Govind) and AIR 1966 Punj, 258 finder Singh v. Kartar Singh) with respect we are unable to accept them as laying down the correct law.
10. We are supported in our conclusion by (1906) ILR 29 Mad 437 (Narasimha Appa Row v. Rangayya Appa Row) and AIR 1946 Cal. 356 (Kakhalray Mandal v. Debendranath) which are in consonance with the Hindu juristic con- cept. Even the aforesaid Bombay line of cases were distinguished in AIR 1950 Bom 47. (Bahinabai Shravan Patil v. Kisanlal Kunjilal Sha) where their Lordships accepted the position that a share coming to a Hindu on partition belongs absolutely to him and on his being adopted such a share does not become divested.
We find no rational distinction between such a case and a case where the property vests in the sole surviving coparcener before adoption.
On the aforesaid analysis, the learned Single Judge took the correct view in holding that defendant-3 was not divested of the disputed properties after his adoption in 1943.
11. We now proceed to examine whether Section 41 of the T. P. Act is applicable to the facts of this case.
It is to be noted that there was no averment in the plaint relating to Section 41 and consequently there was no reply in the written statement, on its applicability. Accordingly no issue was framed thereon and the trial court did not deal with it. The point, for the first time, was raised before the lower appellate court
12. Two questions arise for consideration: (i) If there was no pleading under Section 41 and the contesting defendants did not get full opportunity to adduce evidence on the various elements involved in that section. Whether the plaintiff should be allowed to invoke such, a plea for the first time in the first appellate court; and (ii) even assuming that the plaintiff could be permitted to invoke Section 41 for the first time in the lower appellate court, whether all the elements involved in that section have been fulfilled in this case.
For a clear understanding of the legal position, the section may be extracted.
'41. Where, with the consent, express or implied, of the persons interested in immoveable property, a person is the ostensible owner of such property am transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorised to make it; provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith.'
The transferee (plaintiff) has to prove the following elements: (i) That the transferors (defendants 4 and 5) are the ostensible owners; (ii) That they are clothed with the insignia of ownership with the consent, express or implied, of the real owner (D-3); (iii) That the transfer was for consideration; and (iv) That the transferee (plaintiff) has acted in good faith, taking reasonable care to ascertain that the transferor had the power to transfer.
That the onus under Section 41 is on the transferee (plaintiff) is now concluded by AIR 1963 SC 1917 (Gurbaksh Singh V. Nikka Singh) and it is not necessary to refer to other decisions. In paragraph 7, their Lordships observed thus:
''(7) The general rule is that a person cannot confer a better title than he has. This Section is an exception to that rule. Being an exception the onus certainly is on the transferee to show that the transferor was the ostensible owner of the property and that he had after taking reasonable care to ascertain that the transferor had power to make the transfer, acted in good faith......'
13. In this case, admittedly defendant-3, the real owner of the disputed properties, exeteuted ext. 2 benami in favour of defendant-5. Thus, with the express consent of defendant-3 who is the person interested in the immoveable property-defendant-5 is the ostensible owner of such property. The first two conditions have been fulfilled. Plaintiff purchased the disputed properties from defendants 4 and 5 by ext 3 for consideration. The third condition is also fulfilled.
14. The only other condition, whether the transferee, after taking reasonable care to acertain that the transferor, had power to make the transfer, has acted in good faith, requires examination.
The finding of fact is that the sale-deed ext. 2 and the rent-receipts, ext. 1 series, which were made over by defen-dant-3 to defendant-4 at the time of execution of ext. 3, came from the custody of the plaintiff. Mr. Mohanty contends that the plaintiff was satisfied that defendants 4 and 5 had power to make the transfer of the disputed properties after examination of ext. 2 and the rent receipts and that fact is sufficient to hold that the plaintiff took reasonable care to ascertain the title of defendant-5, and that he acted in good faith, and that the plaintiff had no responsibility under Section 41 to make any further inquiry.
We are unable to accept this contention. The nature and extent of the inquiry to fulfil the fourth condition would vary according to the facts and circumstances of each case and no hard and fast rule can be laid down.
In this case, the finding of fact which is binding on us is that defendants 4 and 5 never came into possession of the disputed properties at any time subsequent to the purchase on 5-12-1959, and that they were not in possession on 14-1-1965 when ext. 3 was executed. Once the disputed properties were found not to be in possession of defendants 4 and 5 at the time of purchase by the plaintiff, the plaintiff was put to take reasonable care to ascertain as to how and why defendants 4 and 5 were transferring the property of which they were not in possession. If he had taken reasonable care to make inquiry he could have easily ascertained that ext. 2 was a benami trans-action and defendants 4 and 5 had no title to the disputed properties, and that the real owner was defendant-3. On his getting such knowledge, the plaintiff would not have entered into this transaction of sale under ext. 3. The plaintiff, therefore, cannot be said to have taken reasonable care to ascertain that defendants 4 and 5 had power to make the transfer and he did not act in good faith.
Both the lower appellate court and the learned Single Judge did not deal with this aspect of the matter, and they reached their conclusion only from the fact that ext. 2 and the rent-receipts came from the custody of the plaintiff which were transferred to him by defendants 4 and 5 and on examination of the same the plaintiff can be said to have acted in good faith after taking reasonable care to ascertain that defendants 4 and 5 had real title in the disputed oroperties.
Section 3 of the Transfer of Property Act defines as to when a person can be said to have notice of a fact; 'a person is said to have notice' of 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.
Explanation II to that definition says that any person acquiring any immoveable 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.
In this case, defendants 4 and 5 were not in actual possession of the disputed properties. Either defendant-3 or defendants 1 and 2 were in possession on 14-1-1965 when ext. 3 was executed. By virtue of the statutory definition, the plaintiff must be deemed to have notice that the real title was in the person in actual possession. If with such statutory requirement the plaintiff did not make enquiry as to the factum of possession he cannot be said to have acted in good faith taking reasonable care to ascertain the real owner.
We have reached the aforesaid conclusion on an elementary analysis of the constituents of Section 41 and the definition of notice in Section 3 of the T. P. Act. The fourth and the most important condition prescribed in the section is not thus fulfilled.
15. We now proceed to examine some of the decisions which support our conclusion.
In AIR 1952 Orissa. 75 (Natabar Parichha v. Nimai Charan Misra) a Division Bench consisting of Ray. C. J. and Narasimham. J, by following AIR 1923 Cal. 240 (Baidya Nath v. Alef Jan), laid down that it was not enough to assert generally that enquiries should be made or that a prudent man would make enquiries and that some specific circumstances should be pointed out as the starting point of an enquiry which might be expected to lead to some result. On application of this principle to the present case, an inquiry regarding possession would have Led to the specific result of knowing that ext. 2 was benami.
In AIR 1954 Orissa 244 (Dolgovind v. Anathbandhu) a Division Bench consisting of Panigrahi. C. J. and Mohapatra. J observed thus:
'When the fact is that the lands in dispute were all along in possession of the plaintiff and not of the transferor defendants 2 and 3 being the residents of the same village, it is impossible to accept that they were not aware of the possession of the plaintiff. At least any little enquiry would have been sufficient to inform them of the real position regarding possession which is the very first step of a bona fide purchaser to enquire before finalising the transaction. As we get it from the judgment of the trial court, the defence version in evidence is that because defendant-1 is in possession of the lands they did not consider it necessary to make enquiries any further or to ask the title deeds of the latter. In this view, therefore it is not possible for us to accept them as bona fide purchasers having entered into the transaction in good faith.'
This decision directly applies to the facts of the present case.
In AIR 1923 Cal. 240. a Division Bench consisting of Sir Asutosh Mookerjee and Cuming, JJ. extracted the following observation of the Judicial Committee in (1872) Ind App SUP Vol. 40 (Ramcoomar Koondoo v. Mcqueen).
'It is a principle of natural equity which must be universally applicable that where one man allows another to hold himself out as the owner of an estate, and a third person purchases it for value from the apparent owner in the belief that he is the real owner, the man who so allows the other to hold himself out shall not be permitted to recover upon his secret title unless he can overthrow that of the purchaser by showing either that he had direct notice, or something which amounts to constructive notice, of the real title; or that there existed circumstances which ought to have put him upon an inquiry, that, if prosecuted would have led to a discovery of it.'
After referring to the aforesaid passage their Lordships observed thus:--
'With reference to the concluding portion of this passage, we may recall that it was explained in the judgment that in cases of this kind the circumstances which should prompt enquiry might be infinitely varied; but without laving down any general rule, it might be said that they must be of such specific character that the Court could place its finger on them and say that upon such facts some particular enquiry ought to have been made; it was not enough to assert generally that enquiries should be made or that a prudent man would make enquiries; some specific circumstance should be pointed out as the starting point of an enquiry which might be expected to lead to some result.'
We must say with respect, that this decision enunciates the correct principle. The specific fact in this case is the factum of possession which the transferors (defendants 4 and 5) had not on the date of sale. The plaintiff, therefore, was put to an enquiry as to the factum of possession, and that would have led to a specific result of discovering that defendants 4 and 5 had not the real title.
16. It is unnecessary to multiply authorities. Mr. Mohanty, however, placed reliance on AIR 1957 Orissa 157 (Arta Rout v. Bhagabat Baral) and AIR 1973 Orissa. 192 (Dhruba v. Purna) in support of his contention that mere examination of the title deed by the transferee would be enough to fulfil the requirements of Section 41 of the T. P. Act.
AIR 1957 Orissa. 157 is a decision of P. V. B. Rao. J sitting singly. The facts of that case may be noticed in short to appreciate whether the case was correctly decided. Plaintiff executed a registered sale-deed text. 1/a) for Rupees three hundred on 2-12-41 in favour of defendant-2. Defendant-2 in his turn executed the registered sale deed (ext. B/l) in favour of defendant-1 for a sum of Rs. One thousand on 29-4-50. Within a month thereof defendant-2 cancelled ext. B/l by another registered deed, ext. 2. The plaintiff asserted that the sale-deed, ext. 1/a was nominal and benami. The ultimate finding was that the sale was for consideration and not nominal or benami and even after the sale plaintiff continued in physical possession of the property and the sale deed ext. 1/a. On the finding that the sale was for 'Consideration, title passed to defendant-2 and defendant-2 became the real owner. Even though the custody of the document and possession were with the plaintiff defendant-2's title could not be resisted, and the learned Single Judge rightly dismissed the plaintiff's suit. On such a finding, the question of examination of Section 41 of the T. P. Act did not at all arise. If the sale-deed by the plaintiff in favour of defendant-2 had been held to be benami then alone defendant-2 would have been the ostensible owner and the question for consideration would have been if Section 41 of the T. P. Act had application to the facts and circumstances of the case.
Though the question did not arise, the learned Single Judge held that Section 41 was applicable. At page 159 he observed thus:
'The actual physical possession by the plaintiff of the suit properties situated in a different village is not shown to be to the knowledge of defendant No. 1 and even if defendant No. 1 was aware of the actual physical possession of the properties by the plaintiff, that possession is not inconsistent with the title of the properties in defendant No. 2 as the actual possession may be consistent with holding the lands as a lessee from defendant No. 2'
This observation was contrary to the facts of that case and to law. It was the positive case of defendant-1 that after purchase under ext. 1/a he himself was in possession, and it was neither pleaded nor proved by him that plaintiff was in possession of the land as a lessee under him. The factum of plaintiff's possession in that case put defendant-1 to an enquiry under Section 3 of the T. P. Act. Defendant-1 could not be said to have acted in good faith taking reasonable care to ascertain the title of the transferor. Thus, the view of the learned Single Judge in that case was not only obiter, but is contrary to law.
In AIR 1973 Orissa. 192. Acharya. J acted contrary to law in reiving upon this case in paragraph 11 of his judgment without noticing the error of law committed in that case. AIR 1973 Orissa 192 was, however, correctly decided on its own facts as were ultimately found in paragraph 12 of that judgment.
17. In view of our conclusion that on the materials on record Section 41 has no application, the further question whether in the absence of pleading and issue Section 41 should have been allowed to be canvassed by the lower appellate court and the learned Single Judge may not have been examined by us but as the suit is liable to be dismissed if this point is decided against the plaintiff we propose to examine the question which has been argued before us at length.
18. We would first indicate the correct legal principle on an elementary analysis.
Order VI, Rule 2 lays down that every pleading shall contain, and contain, only a statement in a concise form of the material facts on which the party pleading relies for his claim or defence, as the case may be, but not the evidence by which they are proved:
Order XIV, Rule 1 so far as material runs thus:
'(1) Issues arise when a material proposition of fact or law is affirmed by the one party and denied by the other.
(2) Material propositions are those propositions of law or fact which a plaintiff must allege in order to show a right to sue or a defendant must allege in order to constitute his defence.
(3) Each material proposition affirmed by one party and denied by the other shall form the subject of a distinct issue.'
It would thus appear from the aforesaid rules that material propositions of law or fact must be pleaded by the plaintiff in order to show a right to sue and to give full opportunity to the defendant to clearly plead his defence.
The essential elements to be pleaded under section 41 of the T. P. Act have been indicated in paragraph 12 of this judgment. The one material fact which the plaintiff should have pleaded in this case was that he acted in good faith taking reasonable care to ascertain that the transferor had the power to transfer. On such a pleading, defendants 1 and 2 would have averred that defendants 4 and 5 were not in actual physical possession of the disputed land, and the plaintiff did not take reasonable care to ascertain that either defendant-3 or defendants 1 & 2 were in actual physical possession, and that on making such enquiry plaintiff could have easily known that the transfer by defendant-3 in favour of defendants 4 and 5 was benami. Defendants 1 and 2 could have taken a further defence that plaintiff had knowledge of the fact that the purchase by defendants 4 and 5 from defendant-3 was benami and that defendants 4 and 5 were not the real owners. I
19. Despite absence of pleading and an issue on the relevant question, it is open to a court of fact to examine that issue, if all the materials are on record and no party has been prejudiced in producing evidence due to absence of the pleading and issue. If all the materials are on record, and none of the parties is prejudiced, in such a case an issue of fact may be for the first time, examined by the first appellate court. But where there is likelihood of prejudice, due to failure of one of the parties to adduce relevant evidence on account of absence of pleading and issue, then the question of law dependent upon determination of fact cannot be allowed to be raised for the first time in the first appellate court much less in the second appellate court.
AS has been already indicated, there was no prejudice caused to defendants 1 and 2 so far as their pleading the factum of possession is concerned. The finding is in their favour that defendants 4 and 5 where never in possession, and consequently, examination of such a question of fact for the first time under Section 41 of the Transfer of Property Act does not prejudice any of the parties. Defendants 1 and 2 would, however, be prejudiced if section 41 is resorted to for the first time in the first appellate court, as they have taken no defence 'that to the knowledge of the plaintiff the transfer by defendant-3 in favour of defendants 4 and 5 was benami. As defendants 1 and 2 got no opportunity to make such an averment and to adduce evidence on that point, the plaintiff cannot be permitted to resort to Section 41 of the T. P. Act for the first time in the first appellate court.
The learned lower appellate court end the learned Single Judge acted contrary to law in allowing Section 41 of the T. P. Act to be canvassed for the first time before the 1st. Appellate Court.
Our view is supported by AIR 1959 Cal. 69 (Sm. Parbati Devi v. Kashmirilal Sharma). AIR 1961 Pat 314 (Ramsaran v. Harihar Prasad) and AIR 1962 Pat, 392 (Gauri Shankar v. Jwalamukhi).
Mr. Mohantv, however, placed reliance on AIR 1949 Assam 17 (Abdul Gafur v. Nawab AH); AIR 1940 Lah. 252 (Jai Singh v. Wali Mohammad) and AIR 1969 SC 125 (Union of India v. M/s. Khas Kar-anpura Colliery Co. Ltd.) in support of his contention that even in the absence of pleading and issue questions of law dependant upon facts can be gone into.
These decisions do not support the broad proposition advanced by Mr. Mohanty. In AIR 1949 Assam 17 the question was allowed to be canvassed, issue no. 8 was as follows :
'Whether the plaintiff has acquired any right title and interest to and in the suit.'
It was under this issue the Courts below found that the plaintiff was entitled to the protection of Section 41 of the T. P. Act The lower appellate court held that applicability of Section 41 arose from the evidence recorded and it was covered under the aforesaid general issue. He observed that all the evidence necessary for the decision of the case was on the record and that he did not consider that any more evidence could be produced.
In the aforesaid circumstances the Assam case was correctly decided and no prejudice was occasioned to any one of the parties. The ratio of the Assam case is in accordance with the principles we have laid down.
In AIR 1949 Lah 252 the facts upon which such a plea would have been based were on the record of the trial court. There was therefore, no difficulty in exa-minining the question.
AIR 1969 SC 125 merely lays down that where the pleading on certain points was vague, but all the facts necessary for determination of the point were before the Court, the Court can examine the point raised. None of these decisions runs counter to the principles laid down by us.
20. On the aforesaid analysis, we are satisfied that the learned lower appellate court and the learned Single Judge should not have allowed Section 41 of the T. P. Act to be canvassed before them and that even the materials on record do not justify granting of a decree in favour of the plaintiff even if Section 41 is invoked.
21. In the result, the judgments of the lower appellate court and the learned Single Judge are set aside. Plaintiff's suit is dismissed with costs throughout and the appeal is allowed.
22. I agree.