1. This is an appeal by the 2nd defendant in the suit which was brought for the specific performance of a contract of sale entered into by the 1st defendant with the plaintiff on 4th July 1910. The first defendant is the Jenmi of the property which was held on kanom by the plaintiff. The plaintiff's case was that the 1st defendant agreed to sell the property to him for Rs. 400. The 2nd defendant resisted the suit on the ground that he had purchased the property on 4th September 1910 from the 1st defendant without notice of the alleged agreement for sale. The lower Courts have found that the agreement set up by the plaintiff is true, and this finding cannot be questioned in second appeal. The Subordinate Judge held that there was no satisfactory evidence to show that the 2nd defendant had actual notice of the agreement to sell but that he must be deemed to have had constructive notice of the agreement since, although he was aware of the plaintiff's possession, he had abstained from making such enquiry of the plaintiff as he was bound to do. It appears that there was a proposal to sell the property to a man : named Kunhali but the transaction fell through. The 2nd defendant in his evidence admitted 'that he knew that the plaintiff was the kanomdar (mortgagee) of the plaint property; and that he did not ask plaintiff or Kunhali why they did not want to purchase the property, as he was afraid that, if he did so, he would not get the property.
2. The argument advanced by Mr. Rosario for the appellant, if we understand it correctly, was that the appellant was not bound to make any further enquiry and. that he was entitled to assume that the plaintiff continued in possession as mortgagee and had not acquired any other title. We do not think that this contention can be upheld. The question for decision is whether the appellant can claim to be a transferee without notice. Section 3 of the Transfer of Property Act enacts that 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.' In Jones v. Smith 1 Hare 43 Wigram, V.C., classified the cases of constructive notice as follows: First, cases in which the party charged had actual notice that the property in dispute was in fact charged, incumbered, or in some way affected, and the Court has thereupon bound him with constructive notice of facts and instruments to a knowledge of which he would have been led by an enquiry after the charge, incumbrance or other circumstance affecting the property of which he had actual notice: and, secondly, cases in which the Court has been satisfied from the evidence before it that the party charged had designedly abstained from enquiry for the very purpose of avoiding notice. Illustration 3 to Clause (6), Section 27, of the Specific Belief Act is in these terms: 'A contracts to sell land to B for Rs. 5,000. B takes possession of the land. Afterwards A sells it to C for Rs. 6,000. 0 makes no enquiry of B relating to his interest in the land. B's possession is sufficient to affect C with notice of his interest, and he may enforce specific performance of the contract against C.' It has been held that the fact that another person is in possession is sufficent to put a purchaser on enquiry as to the nature and extent of his interest and if that enquiry is not pursued, the purchaser will be affected with notice of the title, if any, under which possession is enjoyed or of any contract the person in possession may have entered into for the purchase of the property. See Barnhart v. Greenshields 9 Moore 18. If a person purchases and takes a conveyance of an estate which he knows to be in the occupation of a person other than the vendor, he is bound by all the equities which the person in such occupation may have in the land : for possession is prima facie seisin and the purchaser had actual notice of a fact by which the property was affected and he is bound to ascertain the truth. As observed by Justice Mookerjee in Magu Brahma v. Bholi Das 20 Ind. Cas. 195: 'The extreme length to which this doctrine has been carried is illustrated by the decision of Eldon, L. C, in Daniels v. Davison 10 R.R. 171 where it was ruled that the purchaser has constructive notice, not merely of the title of the tenant in occupation, but also of a contract into which he had entered for the purchase of the estate.' This doctrine has been applied by the Indian Courts in the cases of Kondiba v. Nona Shidrao 5 Bom. L.R. 269; Baburam Bag v. Madhab Chandra Pallay 19 Ind. Cas. 9; Magu Brahma v. Bholi Das 20 Ind. Cas. 195 and Nandi Reddy v. Thimmakka 14 M.L.T. 477, which were cited at the hearing by the Respondents' Vakil. In Magu Brahma v. Bholi Das 20 Ind. Cas. 195 it was held that 'when a person purchases property, where a visible state of things exists, which could not legally exist unless the property were subject to some burden, he is taken to have notice of the extent and nature of that burden. And thus if a person other than the vendor is in possession, it is sufficient to put a purchaser on enquiry as to the nature and extent of his interest and the purchaser is bound by all the equities which the person in such occupation may have in the land.' In Nandi Reddy v. Thimmakka 22 Ind. Cas. 250 Benson and Sundara Aiyar, JJ., held that where a lessee is in possession of the land, this in law is sufficient notice of the rights therein and the purchaser is bound to enquire of him regarding the nature of his right. Some arguments were addressed to us by the appellant's learned Vakil based on the provision in the last sentence in Section 54 of the Transfer of Property Act, which enacts that a contract for the sale of land does not, of itself, create any interest or charge on the land. Such a contract, however, gives the obligee (contracting purchaser) 'the benefit of an obligation arising out of contract and annexed to the ownership of immoveable property' 'though not amounting to an interest therein' (see Section 40 of the Transfer of Property Act) and the obligation (in this case the obligation to execute a conveyance) may be enforced against a transferee with notice of that obligation.
3. We think that the decision of the lower Court was right and that the ' appellant must be deemed to have purchased the property with notice of the agreement to sell and cannot resist the plaintiff's suit. The appeal fails and is dismissed with costs.