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Dhadi Dalai Vs. Basudeb Satpathy and ors. - Court Judgment

LegalCrystal Citation
SubjectContract;Property
CourtOrissa High Court
Decided On
Case NumberSecond Appeal No. 100 of 1958
Judge
Reported inAIR1961Ori129
ActsSpecific Relief Act, 1877 - Sections 27
AppellantDhadi Dalai
RespondentBasudeb Satpathy and ors.
Appellant AdvocateM. Mohanty and ;B.K. Ray, Advs.
Respondent AdvocateB.K. Pal, Adv.
DispositionAppeal dismissed
Cases ReferredKanshi Ram v. Ishwardas
Excerpt:
.....might have no notice, actual or constructive, of the earlier contract for sale, he did not act in good faith, which is one of the conditions laid down under section 27 (b) of the specific relief act, for supporting the sale. 1 did not purchase the property in good faith. the expression 'good faith' has not been defined in the specific relief act. in the general clauses act, under section 3(22) it is provided that a 'thing shall be deemed to be done in 'good faith' where it is in fact done honestly, whether it is done negligently or not'.no doubt, the specific relief act was an act passed earlier to the general clauses act, and as such the definition in the general clauses act would not expressly apply to items in the specific relief act :but several judicial authorities have applied the..........court but lost in the first appeal, is the appellant here. defendant no. 1 is a purchaser of the suit property from) defendant no. 2, a widow, and her daughter defendant no. 3, through a registered instrument (ext. b) executed and registered on 18-8-54 for a consideration of rs. 1000/- paid in cash. defendant no. 2 inherited the suit property from her husband and was in possession thereof.on 25-7-54 the plaintiff got from defendant no. 2 an unregistered agreement for sale of the suit land for a consideration of rs. 1300/- on payment of rs. 300/- in cash and with a promise to pay the residual money later on. it was about 20 days after this agreement for sale in the plaintiffs favour, defendant no. 2 executed the registered sale deed in favour of defendant no. 1 with the concurrence of.....
Judgment:

J.K. Misra, J.

1. The plaintiff, who was successful in the trial Court but lost in the first appeal, is the appellant here. Defendant No. 1 is a purchaser of the suit property from) defendant No. 2, a widow, and her daughter defendant No. 3, through a registered instrument (Ext. B) executed and registered on 18-8-54 for a consideration of Rs. 1000/- paid in cash. Defendant No. 2 inherited the suit property from her husband and was in possession thereof.

On 25-7-54 the plaintiff got from defendant No. 2 an unregistered agreement for sale of the suit land for a consideration of Rs. 1300/- on payment of Rs. 300/- in cash and with a promise to pay the residual money later on. It was about 20 days after this agreement for sale in the plaintiffs favour, defendant No. 2 executed the registered sale deed in favour of defendant No. 1 with the concurrence of her only issue defendant No. 3. Shortly thereafter, the plaintiff brought a suit for specific performance.

Defendant No. 2 did not contest the suit. Defendant No. 3 supported the case of defendant No. 1. Defendant No. 1's case was that he had no notice of the earlier agreement for sale and ho was a bona fide purchaser for value. His further contention was that the agreement for,sale in favour of the plaintiff had been manufactured with the connivance of defendant.No. 2 after the sale deed was registered. He also sought to make out a case that earlier to the agreement for sale he was carrying on oral negotiation with defendant No. 3 for purchase of the suit land, and that the plaintiff was aware of that position when he entered into the agreement for sale.

Both the courts below have rejected defendant No. 1's case on the aforesaid two aspects. On the contrary, the plaintiff wanted to make out a case in his evidence, which was not alleged in the pleading, that prior to the registration of the sale deed, he himself had given notice of the agreement for sale, to defendant No. 1, and that defendant No. 1 had also got such notice from P. W. 5, the father of defendant No. 2. Both the Courts below also rejected this aspect of the plaintiff's case.

2. The trial court found that no permission was taken from the Khasmahal authorities prior to the purchase of the suit land, whereas under the rules, if no such permission was taken, it was 'com-petent to the Collector to re-enter upon the property and determine the lease or to levy a fine as the Collector chooses ; that the consent of the Pattadar landlord was also not taken prior to the purchase and it was only obtained some days after the plaint was filed.

According to the trial Court, the above factors indicated that defendant No. 1 was proceeding with the purchase in hot haste. Defendant No. 1 admitted that in matter of the purchase he did not consult P. W. 5 (father of defendant No. 2) or any other mediator, and according to the trial court, by doing so, defendant No. i did not follow the ordinary rule of prudence. Defendant No. 1 examined no witness from the [neighbourhood of the disputed land to show that he had made any enquiry about any prior encumbrance of the suit property.

Nonet of the attesting witnesses to the sale deed belonged to the locality where the suit land situates, and they were also not known to defendant No. 1 at the time the sale deed was executed and registered. The trial Court observed, 'This goes to show that he has not consulted the local people at all. Had he consulted any local man, he would have certainly known the existence of contract in favour of the plaintiff. These circumstances go to show his gross neglect, and hence notice of the contract in favour of the plaintiff can well be imputed to him'.

The appellate Court did not accept the aforesaid circumstances as amounting to any constructive notice to the purchaser, and so reversed the decree passed by the trial court, holding that defendant No. 1 was a bona fide purchaser for value without notice.

3. The plaintiff, defendant No. 1 and defendant No. 2 were all residents of Dagarpara in Cuttack town where the suit property situates. The father of defendant No. 2 resides at Mansingpatna of Cuttack town, about one mile away from Dagarpara. Defendant No. 3 with her husband, who is the identifying witness in the sale deed, resides at Nuabazar of Cuttack town, about 4 to 5 miles away from Dagarpara. Though ordinarily defendant No. 2 was staying in the suit house, for some days prior to the sale, she had gone to her daughter's place at Nuabazar, and it is from there she came with her daughter and son-in-law to the Sub-Registrar's Office at Cuttack, executed the sale deed and received the consideration in cash.

Prior to the purchase, defendant No. 1 had made enquiries in the Registration office as to if there was any prior encumbrance. Defendant No. 2's possession of the suit house was one within his personal knowledge. No doubt defendant No. 1 made no enquiries from any of his neighbours in Dagarpara as to if the Suit property had been subject matter of any prior agreement; but there is nothing in the circumstances to infer that except the plaintiff (P. W. 1), P. W. 5 (father of defendant No. 2) and P. W. 3, an inhabitant of Dagarpara, anybody else knew of the earlier contract for sale,

Under Section 3 of the Transfer of Property Act, 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 wouldhave known it. Knowing as a neighbour that defendant No. 2 was in possession of the suit house, which she had inherited and further ascertaining from the registration office that the suit house had not been encumbered in any way, defendant No. 1 had nothing before him to anticipate any encumbrance that might affect his title, and so if he did not ask any of his neighbours to get some further information about the suit house, he cannot be said to have wilfully abstained from an enquiry which he ought to have made, or to have acted with gross negligence. As held in Kausalai Ammal y. Sankaramuthiah, AIR 1941 Mad 707,

'the word 'wilful' in Section 3 makes it clear that the abstention from inquiry should be designed and due to a desire to avoid an inquiry which would lead to ultimate knowledge. An omission to make inquiries is not sufficient to constitute constructive notice within the meaning of Section 3.'

What Section 3 lays down is that constructive notice is to be presumed if but for wilful abstention from enquiry or gross negligence one would have known the fact. In the present case, as I have observed, there is nothing to indicate that except P. Ws. 1, 3 and 5 anybody else in Dagarpara knew of the contract for sale, and in such a case even if defendant No, 1 would have enquired from some of his neighbours, he could not have known about the earlier contract for sale, unless, he could hit out P. Ws. 1 and 3, the residents of that locality, or P. W. 5 who lives one mile away.

4. Mr. Mohanty for the appellant sought to urge that even though defendant No. 1 might have no notice, actual or constructive, of the earlier contract for sale, he did not act in good faith, which is one of the conditions laid down under Section 27 (b) of the Specific Relief Act, for supporting the sale. The very circumstances which the trial Court relied upon for holding that there was a,case of constructive notice, were relied upon by Mr. Mohanty, to indicate that defendant No. 1 did not purchase the property in good faith.

The expression 'good faith' has not been defined in the Specific Relief Act. In the General Clauses Act, under Section 3(22) it is provided that a 'thing shall be deemed to be done in 'good faith' where it is in fact done honestly, whether it is done negligently or not'. No doubt, the Specific Relief Act was an Act passed earlier to the General Clauses Act, and as such the definition in the General Clauses Act would not expressly apply to items in the Specific Relief Act : but several judicial authorities have applied the definitions in the-Specific Relief (General Clauses ?--Ed.) Act to earlier Acts On grounds of equity and good conscience. (Vide Moitheensa Rowthan v. Apsa Bivi, (11) ILR 36 Mad 194, Narayana Aiyar v. Sankaranarayana Aiyar, 24 Ind Cas 940 : (AIR 1914 Mad 107) and Kalyanji v. Ram Deen Lala, AIR 1925 Mad 609). Apart from that, in Oxford English Dictionary, Vol. IV, page 32, column 2, under item 11, 'Good faith' means fidelity, loyalty; esp. honesty of intention in entering into engagements, sincerity in profession, bona fides.

So honesty of intention is the essence of the expression 'good faith'. If a purchaser in Cuttack Town, where it is a notorious fact that lands arenot easily available for purchase, or where an intended purchase, if disclosed, would invite hot competition, takes the risk of not procuring the previous permission from the Khasmahal authorities, and proceeds in hot haste with the purchase, he cannot be accused of acting with any dishonest intention.

If he does not take care to have his neighbours as attesting witnesses to the sale deed, but depends upon strangers procured by the purchaser for the purpose, he might be doing a foolish act for taking a risk on himself, but he cannot be said to have acted dishonestly. Similarly, also after knowing the fact of possession and after making necessary enquiries from the registration office if he makes no further enquiries about any undisclosed types of encumbrance, which do not strike to his mind, he cannot be said to have acted without honesty.

Mr. Mohanty pointed out that in the sale deed there was not the usual clause that the suit property had been encumbered any way by the vendor, and that this purposeful omission was an indication of want of good faith. The sale deed carried the guarantee clause if for any defect of title the purchaser would lose the property, the vendor would compensate him fully, and in view of that if there was no mention of any encumbrance on the suit property created by the vendor, that could be no indication of want of good faith on the part cf the vendee.

5. Mr. Mohanty further sought to urge that apart from proving that consideration had been fully paid, defendant No. 1 should have specifically established that he purchased the property in good faith and that he had no notice, and that there was no evidence on his side to the said effect. No doubt, as laid down in Bhup Narain Singh v. Gokul Chand Mahton, AIR 1934 PC 68, the onus lies on the purchaser in such cases to establish the cur-cumstances which will allow him to retain the benefit of a transfer, which, prima facie, he had no right to get. .

Under Section 27 (b) of the Specific Relief Act, four things are required to be established (1) that the transfer is for value; (2) that the money has been paid : (3) that the purchase was done in good faith; and (4) that the purchase including payment of money was without the notice of the original contract. The first two elements are positive and the last two elements are negative in character. The onus of proving that the subsequent purchaser had no notice of a prior claim is ordinarily discharged by denial. As observed in Ramchander Singh v. Asghari Begam, AIR 1957 Pat 224,

'Very little evidence, and, in certain circumstances, a mere denial, regarding want of knowledge of the plaintiffs contract would discharge this onus and shift the onus on the plaintiff.'

It has been held in Kanshi Ram v. Ishwardas, AIR 1923 Lah 108 :

'Where the consideration is paid in full and the vendees are ignorant of the original contract, good faith must be presumed in the absence of evidence to the contrary.'

In the present case, defendant No. 1 pledged his own oath that he had mo notice of the earlier agree-ment for sale, and no apparent justification has been indicated to disbelieve the said denial. If by any positive act he was to prove his honesty of intention, he has established that he made enquiries from the registration office about any exists ing encumbance, and he further got the suit land identified by an amin, prior to the purchase. So, the contention, that the purchaser has not been able to discharge the onus, has to be rejected.

6. In the result, I find no merit in the present appeal which is accordingly dismissed with costs.


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