1. This appeal is in a suit instituted by the respondents on 8th December, 1931 for declaration of their title to and for confirmation of possession in, in the alternative for recovery of possession of, a parcel of bustee land of about four bighas in area being premises No. 1/1 Kailasarak Lane in the suburbs of Calcutta but within its municipal limits. The property was purchased by Nawab Amir Begum, wife of Prince Kamar Kader Mirza Mohamed Abid Ali, (hereafter called the Prince) from the Ghoshals of Bhookailash for a sum of Rs. 16,722 only on 11th June, 1903. One of the questions, not very material, raised in the suit is whether Nawab Amir Begum was benamidar of the Prince or was herself the beneficial owner. In 1914, or may be a little before that year, one Shaheba Khatoon attracted the attention of the Prince. There was an estrangement between the latter and his wife, Nawab Amir Begum. The Prince lived separate from her and with Shaheba Khatoon till his death on 30th January 1919.
2. On 12th July 1916 the Prince granted a lease for a term of ten years of a large number of properties including No. 1/1 Railasarak Lane to Shaheba Khatoon at a monthly rent of Rs. 500 (Ex. N (2) II, 73), and it is the common case of the parties that Shaheba Khatoon went into possession as lessee or ijardar. In execution of a decree for costs obtained by the Secretary of State for India in Council against Nawab Amir Begum in a land acquisition case premises No. 1/1, Kailasarak Lane was put up to auction. The highest bid of Rs. 3200 was offered on behalf of Shaheba Khatoon at the sale held on 13th December 1916. She was declared the purchaser. The sale was confirmed on 16th January 1917 and the sale certificate was issued in her name. In this appeal one of the principal questions is whether Shaheba Khatoon was the benamidar of the Prince in the matter of the said purchase. The learned Subordinate Judge has held that she was so. This finding has been attacked before us by the respondents' advocate, Mr. Sen.
3. One Suprassana Roy alias Dr. Boy had monetary dealings with the respondents, who are bankers, and with others including Lloyds Bank Ltd. In 1921 his financial position was embarrassed. He was in debt to the Lloyds Bank for a large amount. Many persons had sued him in the Court of Small Causes at Calcutta and had recovered decrees. He had accepted four hundis of the total amount of Rs. 12,500 issued by the respondents. Those hundis had matured between 18th January and 1st February 1921. He could not honour them. On 5th March 1921 he got a conveyance from Shaheba Khatoon of premises No. 1/1, Kailasarak Lane. (Ex. 3-II-192.) He deposited this sale deed as well as other documents relating to premises No. 1/1 Kailasarak Lane with the respondents to secure his post liability of Rs. 12,500, due on the four dishonoured hundis and for a further sum of Rs. 32,500 said to have been advanced to him by respondents by way of loan between 13th March 1921 and 18th April 1921 when the formal memorandum of deposit of title deeds (Ex. 8 (a)-II-200) was executed by him. The respondents sued Dr. Roy on the mortgage thus created by deposit of title deeds in the year 1922 in the fourth Court of the Subordinate Judge, 24 Parganas, and obtained a final decree for sale for the sum of rupees sixty-three thousand and seven and annas four only on 12th April 1923. Shortly thereafter on 14th August 1923, Dr. Roy was on his application adjudicated an insolvent in the original side of this Court and the official assignee, Calcutta, was appointed receiver of his assets.
4. On the same date the official assignee obtained an order with the consent of the respondents to sell premises No. 1/1, Kailasarak Lane free from encumbrances, the respondents having been given the liberty to bid at the sale. The sale was postponed for sometime by reason of an injunction issued by the Munsif, First Court of 24 Parganas, in a suit instituted by Nawab Syed Ali, a son of the Prince, against the official assignee and Shaheba Khatoon in which he claimed possession of the property as wakf property on the basis of a wakf created by his father. At a later stage of the suits the respondents were made parties. That suit was dismissed by the trial Court on 22nd May 1927 and ultimately by this Court on 25th August 1930 (Ex. 26 (d)-II-286) on the ground that it was not maintainable in view of the provisions of Section 66, Civil P.C. After the discharge of the temporary injunction, the official assignee sold the property at auction and the respondents purchased the same on 19th April 1929 for Rs. 20,000 and the price was set off against their dues under the mortgage decree. The formal conveyance was executed in their favour by the official assignee on 27th May 1929 (Ex. 11.11.261). It is conceded by both parties that the affect of this purchase would be the same as if the respondents had purchased the property in execution of their mortgage decree and that their title to the property would depend upon the effect of their mortgage on the rights of the appellant.
5. On 14th June 1917 the Prince executed a wakfnama (Ex. M-II-93). He appointed himself the first mutwali and his son Nawab Syed Ali alias Mohamed Said Bahadur, as the mutwali after his death. He included in the wakf premises No. 1/1, Kailasarak Lane. It is on the basis of this document that the appellant claims to retain possession of the property his case resting on his allegation that the Prince was the beneficial owner before the wakfnama, and Shaheba Khatoon was only his benamidar. The learned Subordinate Judge has held (i) that the property belonged to the Prince and that Shaheba Khatoon was his benamidar, (ii) that the conveyance by Shaheba Khatoon to Dr. Roy was a sham transaction - at least Dr. Roy was not a bona fide purchaser without notice of the real title, (iii) that the respondents were bona fide purchasers for value without notice who had taken the mortgage from Dr. Roy after reasonable care to ascertain that the latter had power to transfer the same to them, and (iv) that although Dr. Roy's purchase was not good against the Prince's representative, Nawab Syed Ali, the respondents' mortgage was good against the latter on the ground that they were bona fide transferees for value without notice.
6. The appellant's advocate has attacked the third finding of the learned Subordinate Judge as being incorrect and has also challenged his conclusions embodied in the fourth heading. The respondents have attacked before us the first finding but have not challenged the second finding. The points for consideration in this appeal are accordingly, (i) whether the Prince or Shaheba Khatoon was the beneficial owner of premises No. 1/1, Kailasarak Lane; (ii) if the Prince was the beneficial owner, (a) whether the respondents had acted in good faith and with reasonable care in the transaction of the mortgage from Dr. Roy, (b) is the learned Subordinate Judge right in holding that the respondents' mortgage is good against the appellant, though Dr. Roy had acquired no title which he could set up against him? (After considering evidence their Lordships continued.) We accordingly hold that the Prince was the beneficial owner and Shaheba Khatoon was merely his benamidar.
7. The learned Subordinate Judge has held that Dr. Roy was not a bona fide purchaser for value without notice. This finding has not been attacked by the respondents' advocate. We are further of opinion that the evidence on the record leads to the conclusion that the transaction between him and Shaheba Khatoon was a sham transaction, there being no consideration for the same. (Their Lordships then examined certain evidence and proceeded further.) Sailen's evidence is that he only searched the index of persons kept at the registration office from 1903 to 1916 and then from 1919. He does not remember whether searches were made for the years 1917 and 1918. The day book, however, does not contain any entry to show that searches were made for those years. No explanation is offered in the evidence as to why no search was made for the years 1917 and 1918. A suggestion has, however, been made in the course of argument in the lower Court that no search was necessary for the period after Amir Begum's title was extinguished by Shaheba Khatoon's purchase in December 1916 at the sale in the land acquisition execution proceedings and up till the time when the latter took possession at the end of 1919. The suggestion has no merits for clearly Shaheba Khatoon, might have transferred her title during that period eyen though she had not taken possession as owner. It is to be remembered too that she was herself the tenant ijardar at that time. Sailen also says definitely that he did not search for any year the place register, index II or the index of property. That is the most important index to be searched and is searched in all oases because it gives the history of the property. His explanation is that he did not search the property register or index II as that index maintained at the Alipore registration office was unsatisfactory. That is a false explanation. The Sub-Registrar's clerk, Ratneswar Mukherjee, D.W. 11, stated in cross-examination that the index registers are prepared simultaneously with the copies. It is enjoined by Section 54, Registration Act, itself that the entries in the indexes are to be made as far as practicable immediately after the registering officer has copied, or filed a memorandum of, the document to which it relates; and this is further emphasized in para. 124 of the Departmental Instructions of the Inspector-General of Registration at p. 205 of the Registration Manual to the effect that the contents of a register book shall be indexed as soon as a document has been copied into it, and that the preparation of original indexes shall on no account be allowed to fall into arrears. It is impossible to believe that in such an important district as Alipore index II would be kept incomplete or in arrears for any appreciable period of time. In fact extracts from that index have been produced in this case by the appellant and on looking into them the reason for not admit, ting search of those registers becomes at once apparent. They are exhibits Ex. R series.
8. Ex. R (II 63-64) shows that in 1917 a deed of trust in respect of No. 1/1, Kaliasarak Lane had been executed and registered in book I pp. 205-208 under Serial No. 1819. This is the deed of wakf executed by the Prince (Ex. M-II, 93). If this register had been searched it would have at once indicated that the Prince was dealing with the property as his own, though the sale certificate was issued in the name of his protege Shaheba Khatoon. Ex. R (1) (II 65) would have indicated that Shaheba was dealing with the property in 1919 by Ex. N (II 145) not as owner but as lessee of the Prince on the basis of the lease which the latter had granted to her in 1916. Ex. R. (2) (II 71) would have indicated that in 1920, Nawab Syed Ali, the mutwali of the Prince's wakf, was granting the property in lease by Ex. N (3) (II 153) as mutwali to one Sundar Mull with permission of the District Judge. It seems as if the index II was avoided intentionally, for a search into it would have fixed the respondents with express notice of the facts which would lead to the conclusion that the property belonged to the Prince and not to Shaheba. We cannot accept the respondents' contention that they must be taken to have acted in good faith and with reasonable care simply because they entrusted the enquiry into title to a solicitor whom they trusted and only completed the transaction after they were told by their solicitor that everything was right. A purchaser from the ostensible owner would in that case be able in every case to defeat the title of the real owner by simply employing a solicitor or lawyer no matter whether the latter discharged his duty properly or not. The contention if accepted would open a wide door to fraud, and would moreover render Section 41, T.P. Act, almost nugatory, for, in matter of purchases, mortgages and leases a solicitor or a lawyer is generally employed to search into title. We hold for the above reasons that respondents' mortgage is not good against the real owner and they cannot rely upon their purchase as against the appellant. Even if Rs. 32,500 had been further advanced by the respondents between 15th March and 18th April 1921, the appeal must be decreed and their suit dismissed on the ground that the respondents did not act with reasonable care. In this view of the matter the last question raised becomes redundant, but as the matter has been argued we proceed to pronounce our opinion briefly upon it.
9. The learned Advocate for the appellant urges that under the terms of Section 41, T.P. Act, the respondents would not have acquired any title as against his client, even if they had been bona fide purchasers for value and had taken reasonable care to ascertain that their transferor Dr. Soy had power to transfer. He has advanced his argument in a twofold manner. He says firstly that as Dr. Roy had acquired no title he could not pass any to the respondents. This argument assumes that a purchaser from the ostensible owner who purchases with notice of the real title acquires no title. This is not so on the terms of the section. He acquires a title which is voidable at the instance of the real owner and until his purchase is avoided, he can deal with the property. His second contention is that Section 41, T.P. Act, only provides for the first transferee from the ostensible owner and not for succeeding transferees, for the transferor must be made the ostensible owner with the express or implied consent of the real owner. He says a benamidar is the ostensible owner with the express consent of the real owner but a transferee from the latter does not hold the property with the express or implied consent of the real owner. It was also urged, though the argument was not pressed, that whatever may be said as to the position of the Prince, his successor, the defendent mutwali, has never given any consent to Shaheba Khatoon being the ostensible owner of the property in dispute. Section 41 is negative in form. The object of the Legislature was to define the limits of protection of a purchaser from an ostensible owner as well as the limits of the disability of the real owner.
10. The true principle is what has been formulated in Ram Coomar Koondoo v. MacQueen ('72) I.A. Sup Vol. 40. It is the principle that he who holds out another to the world as the owner must bear all the consequences of it when his right comes in conflict with an innocent purchaser for value who had taken reasonable care in-making the purchase. Section 41 itself may be limited in its terms to the position of th6 real owner as against the purchaser for consideration from the ostensible owner. In terms it does not apply either to voluntary transfers by the ostensible owner or to the rights of the successors-in-interest of the real owner or to the rights of subsequent purchasers from volunteers or from first transferees for consideration from the ostensible owner. The rights of such successors-in-interest or subsequent transferees are to be determined on general equitable principles. In making statutory provision for the equities relating to the rights of the first transferee from an ostensible owner and for the liabilities or disabilities of the real owner who gave consent to the transfer or being the ostensible owner it cannot have been intended to penalize subsequent transferees from the one or to benefit the successors-in-interest of the other. If the first transferee from the benamidar is a bona fide purchaser for value without notice, he acquires good title and any transferee from him with or without notice of the real title would in equity acquire a good title. If the first transferee be either a volunteer or a transferee for value but with notice, a bona fide transferee from him for value without notice would in equity be still protected on that principle. In Gholam Siddique v. Jogendra Nath ('26) 13 A.I.R. 1926 Cal 916 the view was taken that Section 41 itself applied to subsequent transferees. Though that judgment is open to criticism, in as much as reliance was placed upon the case in Baidya Nath v. Alefjan Bibi ('23) 10 A.I.R. 1923 Cal 240, a case not exactly of that type and distinguishable upon its special facts, we think that the effect of the law was formulated correctly therein. If the respondents had been bona fide purchasers and had taken reasonable care to ascertain if Dr. Roy had power to transfer, they would have succeeded, but as our finding on this point is against them the appeal must be allowed with costs throughout.