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Assignment on Transfer of

Property Law.
Course Code: 205

DATE OF SUBMISSION

December 25, 2018


Title of the Assignment

A Critical Analysis of the Doctrine of


Notice and Its Operation under
Tarnsfer of Property Act, 1882.1

1
Act No. IV of 1882.
Submitted to

Priyanka Bose Kanta


Lecturer

Department of Law
Univesity of Dhaka

Submitted by
Group No. 1
1. Muzahidul Islam. (Roll 01)
2. Md. Zobayer Akon. (Roll 02)
3. Md. Arafat Hossain. (Roll 03)
4. Faysal Ahmed. (Roll 04)
5. Bakirul Islam. (Roll 05)
6. Suraya Ferdous. (Roll 06)
7. Khandaker Shariful Islam. (Roll 07)
8. Jyotirmoy Gain. (Roll 08)
9. Nusrat Jahan. (Roll 09)
10.Abdullah Al Ahad Rafi. (Roll 10)
Acknowledgements:
We owe an enormous debt of gratitude to our course teacher Priyanka Bose Kanta2
for her masterful presentation of Transfer of Property Law and practice and also
for her helpful guidelines and inspirations on studying law in general have greately
shaped our understanding of legal reasoning and methods. In particular, her ardent
support and encouragement in various steps of this work, and constant guidance
and directions has relentless motivated us to complete the research.
We take this opportunity to express our thanks to Mr. Jamal Uddin Khan (our
favorite ‘Jamal Bhai’), Senior Administrative Officer at the Law Department Seminar
Library, who put up with our incessant demands and book issues with a tolerant
mind and helped us in collecting the relevant materials. Our gratitude must also
extend to the stuff of the Dhaka University Central Library, our classmates and
friends, and all those who has helped in any way in finishing this task. Thank you
all.

2
Lecturer, Department of Law, University of Dhaka
Table of Contents.

Topic Name Contributor Page No.

1. Acknowledgement. Md. Zobayer Akon. (Roll 02)

2. Introduction. Md. Zobayer Akon.

3. Initial Idea, Meaning and Bakirul Islam. (Roll 05)


Underlying Philosophy of
Notice.
4. Classification of Notice. Jyotirmoy Gain. (Roll 08)

5. Notice and Reasonable Abdullah Al Ahad Rafi. (Roll


Standard. 10)
6. Registration as Notice.
Nusrat Jahan. (Roll 09)

7. Actual Possession as Notice. Suraya Ferdous. (Roll 06)

8. Notice to the Agent. Khandaker Shariful Islam.


(Roll 07)
9. Notice under Section 53. Arafat Hossain. (Roll 03)

10. Notice under Sale and duty to Muzahidul Islam. (Roll 01)
disclouser of Material Facts.
11. Notice under Section 41. Faysal Ahmed. (Roll 04)

12. Conclusion. Md. Zobayer Akon.


1. Introduction:
The distinctive characteristic of the immovable propert is its transferability3 which
requires some knowledge from the part of both the transferor and the transferee.
The concrete knowlrdge regarding the transaction of any immovable property, not
any vague one4, is termed as notice in the Transfer of the Property Act.5 It is the
legal concept describing a requirement that a party be aware of the legal
process affecting therights, obligations or duties of the concerning parties.
Particularly it the knowledge of a fact can be obtained actually6 to the party or the
law assumes the party/parties to be aware of the fact.7 In case of the transfer of
any immovable property it is obligatory for the parties concerned to be informed
regarding the legal instrument of the property, legal effect of the transfer as wel as
it transferability otherwise his right might be extinguished by the act of third party.
The wilful nonchalance of any lethargic party could be an excuse that may incur
harm to others right arbitrarily. For these purposes the ‘notice’ binds the parties to
be vigilant of their proprietary rights and puts an alarm that an inertia can be
detrimental to the transaction.

The circumstances under which a person is presumed to have the notice of the fact
is described in the the interpretation-clause of the said Act i.e. section 3. It says a
person may actually knows the fact8 or the law imputes knowledge upon him on
his wilful abstention from a search9 or gross negligence10 from his part. So this
section classified knowledge as actual and constractive. Constructive knowledge
embraces any wilful abstention or gross negligence that deprives the person of the
knowledge as well as the registered instruments, actual possession and notice to
the agent.11

3
See section 5 of the Transfer of Property Act, 1880.
4
Ashiq Husain v Chaturbuj, AIR (1928) All 159.
5
Act No. IV of 1882.
6
Gobind Chunder v Doorgaparsaud (1874) 22 WR 248.
7
Ibid section 3.
8
Jones v Smith (1841)
9
Ibid
10
Biscow v Earl of Bombay (1976) 1 Ch. D. 287. Hudson v Viney (1921) 1 Ch. 98
11
Section 229 of the Contract Act,1872. (Agent)
Notice is an indispensable clause of the said Act12 as this terminology has been
effectively referred or its inferece is found in various sections i.e. in case of transfer
by ostinsable owner13, sale14 or in fraudulent transfer.15

In practice, why is it so important? The indispensable importance of it lies in itself.


One may fraudelently transfers a property to many other parties by dint of
misrepresentation. But if the other party does not make the necessary inquiry who
will bear the burden? For example, A makes a contract with B to sell his land takes
money. Then the same property sells to C.16 If C makes the necessary search before
the transaction the dispute won’t arise. The Court imposes the liability upon C for
not being aware of.17 By dint of this necessary and vigilant inquiries the frauduelnt
transaction will be definitely diminished.

In this assignment we found an opportunity to elucidate the meaning of ‘notice’


along with describing the meaning of gross negligence, wilful abestention,
registered instrument, as well as its underlying philosophy, the application of this
interpretation-clause in numerous sections (ss. 41, 53, 54 etc.) of the Act, notice to
the subsequent transferee and also its application to the leading cases decided by
the domestic Courts as well as the foreign decisions.

12
Act No. IV of 1882.
13
Ibid. section 41. Here the inference of notice is found in its words, ‘after taking reasonable care …’
14
Ibid. section 54.
15
Ibid. section 53.
16
Man Chand v Chandrawati, AIR (1979) All 182.
17
Ibid.
1.2. Reasonableness of notice:
A common concern in early employment contract law was ensuring agricultural
employers had sufficient labor to complete the harvest. Labor scarcity was of great
concern to employers. For that reason, an implied term developed whereby
contracts of employment were presumed to last at least one year. Consequently,
employees who quit prior to the end of the contract were in breach of contract,
and the sanction for many years (until 1875) for such a breach could include
imprisonment. This created a strong incentive for workers to complete their full
contract term. Etherington summed out the origins of ‘reasonable notice’ as
follows: “…most employers did not want employment at will or minute contracts.
They usually hired employees on weekly, biweekly, or monthly pay periods and the
courts often implied reasonable notice periods which corresponded to the pay
period. The notion of at will terminability was not sought by employers, nor was it
implied by courts in the face of silence, because the requirement for some period
of reasonable notice, albeit in most cases a very short period for industrial workers,
was vital in enabling employers to obtain judicial assistance to stem collective
action by workers.
The ability of common law judges to ‘imply’ contract terms’ gave the judges a way
to prevent strikes. This requirement for both sides to provide reasonable notice to
terminate the employment contract has survived in the common law to this day,
even though we have long had extensive labour legislation that governs the rights
of workers to unionize and engage in strikes. The length of reasonable notice has
expanded over the years, following criteria laid down in the famous 1960 decision
in Bardal v. Globe and Mail. Nonunion employees who today suddenly walk off the
job in protest are still in violation of the notice requirements of their employment
contract, and although we don’t throw employees in jail anymore, those workers
could lose their job and be ordered to pay damages to the employer. However,
today, we usually think of the requirement to provide reasonable notice to
terminate an employment contract as a court created employee benefit. But this
short history lesson suggests its early motivations were less about protecting
workers from sudden unemployment, and mostly about protecting employers and
quashing unions and collective bargaining.
2. Definition and Philosophy behind Doctrine of Notice:

Notice is the legal concept describing a requirement that a party be aware of legal
process affecting their rights, obligations or duties. There are several types of
notice: public notice (or legal notice), actual notice, constructive notice, and
implied notice.The word notice means to get knowledge. It means in law the
knowledge of a fact. A person is said to have a notice of a fact when he actually
knows that fact, or when, but for wilful abstention from an inquiry or search which
he sought to have made, or gross negligence, he would have known it. There are
two kinds of notice viz express and constructive. Express notice is the actual notice.
Here a person acquires actual knowledge or information of a fact. Constructive
notice is implied notice.

2.1More on constructive notice:

It is based on the law of presumption or it is presumed that in certain circumstances


that the person knows the fact. He cannot afterwards say against it. This type of
notice can be divided into five.
1. Notice imputed by wilful abstention from enquiry
2. Notice from gross negligence
3. Notice by registration
4. Notice by possession
5. Notice by agent

A legal notification or warning that is delivered in a written format or through a


formal announcement. An individual or party is considered liable if the party (1) has
knowledge of the the notice, (2) received the notice, (3) knows it through
experience, (4) has knowledge with regards to an associate fact and (5) could have
gained knowledge had an enquiry been undertaken.
At common law, notice is the fundamental principle in service of process. In this
case, the service of process puts the defendant "on notice" of the allegations
contained within the complaint, or other such pleading. Since notice is
fundamental, a court may rule a pleading defective if it does not put the defendant
on notice.

In a civil case, personal jurisdiction over a defendant is obtained by service of a


summons. Service can be accomplished by personal delivery of the summons or
subpoena to the person or an authorized agent of the person. Service may also be
made by substituted means; for example, in many jurisdictions, service of a
summons can be made on a person of suitable age and discretion at the residence
or place of business of the defendant. Jurisdiction over corporations can often be
obtained through a government body authorized to receive such process.

2.2. Notice and knowledge:

Many statutes include that the accused knowingly have acted in violation. When a
party is "put on notice" that they are in violation, continued action in violation may
be sufficient to evidence knowledge.

3. Classification of Notice:

There are two kind of notice. They are 1. Express notice or Actual notice 2.
Constructive notice. Actual notice sometimes called direct notice and the
constructive notice is called indirect notice. Actual notice is the actual awareness
or direct notification of a specific fact or proceeding to a person but in case of
constructive notice it is assumed that the person has the knowledge. Now these
types of notice discussed below broadly:-

3.1 Actual or Express notice:

Express notice or actual notice is notice whereby a person acquires actual


knowledge of the fact. It must be define information given in the course of
negotiations by a person interested in the property as a person is not bound to
attemnd to vague rumours or statements by strenger.Notice must be given in the
same transaction, as notice given in a previous transaction may have been
forgotten. Mere casual conversion is not enough and in Lloyd v Banks, Lord cairns
said that an encumberance who alleges that a truste has notice of his incumbrance
must prove that the mind of the trustee has in some way been brought to an
intelligent apprehension of the nature of the encumbrance which has came upon
the properity, so that a reasonable man or an ordinary man of business, would act
upon the information and would regulate his conduct by it. A mere statement
either in court, or somewhere else, that some person claims title, is not sufficient
notice to an auction purchaser of a deed, if it is notvdisclosed at the auction
sale. However, when such an assertion is made to the intending purchaser, it is
sufficient to put him to further inquiry as to the interest or title claimed, and so, it
would amount to constructive notice of facts which such would have disclosed.

3.2. Constructive notice:

Constructive notice is the equity which treats a man who ought to have known a
fact, as if actually does know it. A well known case on the subject is Jones v Smith
where the following classic passage occurs in the judgment of Vice Chancellor
Wigram..
It is indeed scarcely possible to declare a priori what shall be deemed constructive
notice, because, unquestionably, that which would not affect one may be
abundantly sufficient to affect another. But I believe, I May, with sufficient accuracy
for my present purpose and without danger assert that the cases in which
constructive notice has been established resolve themselves into two classes . First,
cases in which the party charged has had actual notice that the property in dispute
was in fact charged, encumbered 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,
cumbrance or other circumstances affecting the property of which he had actual
notice.

Secondly, Cases in which the court has been satisfied from the evidence before it
that the party charged has designedly abstained from enquiry for the very purpose
of avoiding notice . A purpose which if proved, would clearly show that he had a
suspicion of the truth, and a fraudulent determination not to learn it

4. Actual Possession as Notice:

Explanation II of section 3 of “Transfer of Property Act-1882” says:

“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.”

4.1. What is Actual Possession?

Actual possession is what most of us think of as possession—that is, having physical


custody or control of an object18. Actual possession, also sometimes called
possession in fact, is used to describe immediate physical contact. For example, a
person wearing a watch has actual possession of the watch. Likewise, if a person
has wallet in his jacket pocket, he has actual possession of that wallet. This type of
possession, however, is by necessity very limited. Frequently, a set of facts clearly
indicate that an individual has possession of an object but that he or she has no
physical contact with it. To properly deal with these situations, courts have
broadened the scope of possession beyond actual possession.

According to Explanation II of section 3, in order to operate as constructive notice,


possession must be actual, i.e., de facto possession. It amounts to notice of title in
another, e.g., A leased a house and garden to B who takes possession of the
properties. A then sells the said properties to C. C is deemed to have constructive
notice of B’s rights over these properties, i.e., C cannot plead that he had no
knowledge (notice) of the fact of B’s possession on the properties19.

18
United States vs Nenadich 689F. Supp.285[S.D 1988]
19
Daniels v. Davison, (1809) 16 Ves 240
4.2. Discussion in Light of the Principle Established in “Daniels Vs Davison”:

The doctrine of “Daniels vs Davison” was applied in number of Indian case laws. In
“Hari Charan Kuar & Ors Vs Kaula Rai & Ors” court approvingly quoted “Daniels Vs
Davison” where the tenant in possession of a public house and garden had entered
into a contract for the purchase of the property and a subsequent purchaser was
held to have constructive notice of the contract, as he was bound to make inquiry
from the tenant which would have led him to a knowledge of it. In that case Lord
Eldon said:

“My opinion, therefore, considering this as depending upon notice, is, that this
tenant, being in possession under a lease with an agreement in his pocket to
become the purchaser, those circumstances altogether give him an equity, repelling
the claim of the subsequent purchaser, who made no enquiry as to the nature of
the possession.”

In Mancharji Sorabji Chulla Vs Kongseoo, it was held by the Chief Justice Couch that
the English Authorities on the question were applicable where a person bought an
estate of which some one, not the vendor, had the possession. Again the principle
of Daniels Vs Davison was applied in this case when the court agreed that where
there is a tenant is in possession under a lease, or an agreement, a person,
purchasing part of the estate, must be bound to inquire, on what terms the person
is in possession.

It is true that the case of Daniels Vs Davison has been held to be an extreme case
beyond which the doctrine of constructive notice ought not to be extended but at
the same time it has been followed by the Indian courts in number of cases-
“Kobinda vs Nana Shidrao”, “Baburam Bag Vs Madhab Chandra Pallay, “Magu
Brahma Vs Bholi Das”, “Kandial Koovan Vengadam Pakkiri”.

4.3. What if there is no Actual possession?


If a tenant is not in the actual possession of the land, his occupation will not amount
to constructive notice.

For instance, A contracts to sell land to B who in pursuance of the contract puts his
tenant in possession. A sells the land to C. C is not affected with notice of B’s
interest.

5. Notice to agent:

Prior Rule: Explanation iii, added by the Amendment Act,1929, relates to notice to
an agent. .Prior to 1929 amendment, that part of section 3 which dealt with notice
to an agent ran as follows:
"A person is said to have notice of a fact -when the information of the fact is given
to, or obtained by, his agent under the circumstances mentioned in section 229 of
BD Contract Act 1872.”
The word " given to or obtained by his agent" used in the old definition suggested
that the rule was restricted to the facts of which the agent had actual knowledge
or, in the other words, had express notice. The agreement omits the words 'given
or obtained '.The effect of this omission is that the principal will be bound even if
his agent acquired constructive notice.

5.1. present rule:


The general principle of the agency law is that an agent stands in the place of the
principal for the purpose of the business in hand, his acts and knowledge, being
considered as the acts and knowledge of the principal. It is the general rule, settled
by an unbroken current
of authority, that notice to, or knowledge of, an agent while acting
within the scope of his authority and in reference to a matter over
which his authority extends, is notice to, or knowledge of, the
principal.
ILLUSTRATION S.-The cases in which this rule has
been applied are too numerous for specific statement, but the following cases will
serve as illustrations of the application of the rule. Thus, where an agent acts for
his principal in the purchase
of. property notice to the agent of unrecorded deeds3 or mortgages,
or of liens upon4 or equities5 against the property, or of defects or
infirmities in the title,6 will be imputed to the principal. So where
an agent acts for his principal in the loaning of money the principal
will be affected by the knowledge of the agent that money ostensibly loaned to the
wife'was not really loaned to her or for her use.7' So
where an agent authorized to purchase notes had notice that they
were tainted with usury so where an agent authorized to receive
money had notice that it was being withdrawn from a trust fund."9
So where an agent buying stock from a bank had notice of its
impaired condition where an agent doing business with a firm
had notice of the withdrawal of a partner".

5.2. The theory of the rule:-


Two general theories
prevail as to the foundation upon which, this rule is based, and the
results of these respective theories are not entirely alike. The first
finds the reason of the rule in the legal identity of the agent with the
principal during the continuance of the agency-in the fact that
the agent, while, keeping within the scope of his authority, is, as
to the matters embraced within it, for the time being the principal
himself, or, at all events, the alter ego of the principal-the principal's other self.
Whatever notice or knowledge, then, reaches the
agent during this time and under these circumstances, in law
reaches the principal, whether it does so in fact or not. It is the
legitimate and necessary result of this view, therefore, that only
such notice or knowledge as comes to the agent, while he is agent,
is thus binding upon the principal. 24
The other theory is based upon the rule that it is the duty of the
agent to disclose to his principal all notice or knowledge which he
may possess and which is necessary for the, principal's protection
or guidance. This duty the law presumes the agent to have performed, and,
therefore, imputes to the principal whatever notice or
knowledge the agent then possessed, whether he has in fact dis-closed it or not.23
According to this view it is immaterial when the
agent obtained the information, if he then possessed it.
The courts have not, however, always recognized these differences, nor have their
decisions in all cases been consistent with the
theory adopted.

5.3. Scope of the Rule:

This rule has certain limitations. The notice should have been recieved by the
agent (i) as an agent
(ii)during the agency
(iii) in the course of the agency business
(iv) in a matter material to the agency business.

Exception: fraudulent concealment of fact by agent:.


The knowledge of an agent will not be imputed to his principal if the agent
fraudulently conceals the facts.It is not sufficient to show that the agent conceal
the fact -it must be shown that the party charging the principal with notice was
party to to the fraud or otherwise knew of the fraud.
Case: Texas Company Limited v Bombay Banking Co. :
One V, who was an agent of the bank had an overdraft in his private banking
account which he discharged with money belonging to the texas company who
were his principal in an oil business. It was contended that as V was agent of the
bank, knowledge of the ownership of the money should be imputed to the bank.
But it was held by the Privy Council that it would be shining the doctrine of notice
beyond all reasonable limits to hold that in such circumstances money received in
absolute good faith should be earmarked with some independent ownership,
because the debtor ,who was also a servant of the company committed a fraud in
or to discharge his obligations.

6. “Notice”under section 41 of the Transfer of Property Act20,1882:

At first, we want to give an overview of this section. We know that section 41 of


the Transfer of Property Act, 1882 deals with the transfer by the ostensible owner.
An ostensible owner is not actually a real owner. There has a general rule that “a

20
Act NO. IV of 1882
person can not confer a better title than he himself has in the property
transferred”. But the transfer by ostensible owner is an exception to the general
rule. If the conditions laid down in this section are fulfilled, then the transfer shall
not voidable on the ground that the transferor was not the authority to make to
make it21.

This is also based on the equitable principle of estoppel which has been
enumerated in the section 110 of the Evidence Act22. In order to apply the section
, the transferee have to prove that the transferor was the ostensible owner of the
property with the consent of the owner or co-sharers and he took reasonable care
to ascertain whether the transferor had the power to make transfer of the full
interest23. The section says that…

“Where, with the consent, express or implied, of the persons interested in


immovable property, a person is the ostensible owner of such property and transfers
the same for consideration, the transfer shall not be voidable on the ground that
the transferor was not authorized 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”.

If we dissect the section, we will find the following condition for this section to be
applied…

a) The transferor is the ostensible owner.

b) He is so by the consent, express or implied, of the real owner.

c) The transfer is for consideration.

d) The transferee has acted in good faith and has taken reasonable care to find
out that the transferor had power to transfer.

21
Transfer of Property Act by Dr. S.N Shukla
22
Act No. I of 1872
23
Suraj Rattan Thirani vs Agamabad Tea Co. Ltd.
Now the question raised before us that to what extent “Notice” is used in the case
of transfer by an ostensible owner? If we dissect the meaning of “reasonable care
to find out the power of the transferor” of this section, then we will be able to co-
relate it with “Notice”.

6.1 Reasonable care to find out the power of the transferor and Notice:

We know that actual notice is whereby a person actually knows the fact and
constructive notice is where a person ought to have known the fact but he don’t
know and he would have known the fact, had he made enquiries which he would
have reasonably to have made24. The court given detailed about constructive notice
in Jones vs Smith25. On the other hand, Reasonable care means to take such care as
an ordinary man of prudence would take. It includes reasonable inquiry.

In the case of Hasan Ali vs Azamuddin26 the court said that “section 41 of the
Transfer of Property Act makes it incumbent on the transferee to act in good faith
and to take reasonable care to ascertain that the transferor had the power to make
the transfer. It is obvious that the first step which the transferee is expected to take
is to search the registration office to ascertain what transfer if any made by the
transferor. The transferee is not entitled to the benefit of the section if he fails to do
so.

So from this case it is crystal clear that the court assumed the search of registration
office is a constructive notice of the transferee. In Rabeya Khatun vs Moniruddin27,
the court also regarded reasonable inquiry as constructive notice. In case of transfer
without making inquiries as to whether there are other co-sharers is not amounted
to reasonable care28. Thus the court regarded it as constructive notice.

24
Transfer of Property by Dr. S.N Shukla
25
(1841) 1 Hare 43, 55
26
14 DLR 392
27
8 BLC(AD) 121
28
1934 ALJ 544
So we can say that “reasonable care” enshrined in the section 41 of the Transfer of
Property Act,1882 can be regarded as constructive notice. So there has existence of
“Notice” in the section 41 of the Transfer of Property Act.

7. Notice Under Sale: The relation between seller and purchaser in terms of
notice:

The equitable doctrine of notice which is entrenched in sec. 3 of Transfer of


Property Act 1882, casts some duty upon purchaser in a sale upon ascertainment
of some facts obtained by him in the course of negotiations. The courts of equity
made some classifications and enriched our ideas about the relation of notice with
seller and buyer. Definite information regarding the matter of the property
obtained by a person from another person interested in the property is termed as
express or actual notice.29

In Jones v. Smith, Wigram VC resolved constructive notice which treats a person


who ought to have known a fact as if he actually knows it, into two classes. First,
cases in which the party charged had actual notice and the court has thereby bound
him with constructive notice of facts and instruments, to a knowledge of which he
would have been led by inquiry of the the property of which he had actual notice.
Thus if a purchaser had actual notice of some kind of charge upon the sold
property, the court will bind him to the knowledge of the nature of the charge upon
the property which he would have obtained by making an inquiry. Secondly, the
cases in which evidence shows some designed abstention from inquiry on the part
of purchaser. Now, there is difference between willful blindness and mere want of
caution. The constructive notice doesn’t apply to the latter. It is to be determined
from case to case basis where there is designed purpose to avoid notice and where
there is mere want of caution. If the party seeking the benefit of the doctrine of

29
Barnhart v. Greenshields (1853)
constructive notice is guilty of fraud in the transaction, the doctrine of constructive
notice will not apply.30

7.1. The Legal Presumption imputed upon purchaser

The legal presumption of knowledge by reason of doctrine of constructive notice


imposes upon some duty upon purchaser which if not fulfilled, the doctrine of
constructive notice applies. This legal presumption of knowledge arises on different
grounds-

Willful abstention from an enquiry and search: The courts construed the words “
willful abstention from an enquiry and search” to mean such abstention, showing
want of bona fides.31 This imposes a duty upon the purchaser to make such
enquiries as ought reasonably to have been made by an ordinary prudent person.
For instance, the court will presume that the purchaser knows such facts as would
be discovered by him upon proper investigation of the title of the property32 or
entries in the Record of Rights33. However, it must be looked into whether the
omission to make inquiry is designed and due to a desire to avoid the inquiry,
leading to the ultimate knowledge.34 A mere omision to make inquiry will not be
sufficient to constitute “willful abstention”.

Another principle falling under this sub-heading is that the title papers in one
transaction will not function as notice in subsequent and independent transaction,

30
Hormusji v. Mankuvarbai (1879)

31
Joshua v. Alliance Bank (1895)

32
Agra Bank v. Barry (1874)

33
Harilal v. Mulchand (1928)

34
Kausalai Ammal v. Sankara Muthiah (1941)
so as to affect the purchaser with constructive notice which was enunciated by Lord
Redesdale in Hamilton v. Royse.35 In ordinary course of transaction, constructive
notice to affect the purchase will not be inferred unless there exists some kind of
circumstances as starting point of inquiry, leading to the discovery of fact.36

Gross Negligence: The Courts of Equity invented the phrase ‘Gross Negligence’ to
extend their jurisdiction to where the purchaser willfully shuts his eyes to the
circumstances which called for inquiry.37 Wigram VC in Jones v. Smith said that
mere negligence is not penalized with constructive notice, rather the negligence
must be so gross as would be offending the ordinary man’s prudence. Lord
Cranworth declared in Ware v. Eqmont that when it is sought to affect a purchaser
with constructive notice, the question put forward before is not whether he had
the means of obtaining and might by prudent caution have obtained, the
knowledge in question, but whether not obtaining it was an act of gross negligence
.

Cases of gross negligence which bars a purchaser from denying a fact also fall under
the heading “Willful abstention from inquiry or search” and “Registration. Thus,
omission to search the title deeds deposited in a bank will amount to gross
negligence.38 Omission to search register kept under the Registration Act may
amount to gross negligence which is propounded by the Privy Council.39

35
Tressilan v. Caniffe (1855)

36
Ramcoomar v. McQueen (1873)

37
Martinez v. Cooper (1873)

38
Chaturbhuj v. Mansukhram (1925)

39
Tilkadhar Lal v. Khedan Lal (1920)
Registration as notice: In explanation I of sec. 3 of Transfer of Property Act 1882,
registration under the Registration Act has been given the effect of notice which
also adopted in England by sec. 198 of the Law of Property Act 1925. The chief
objective of registration is to provide a record on which every person dealing with
the property can rely on for a full account of all transactions by which his title may
be affected.40 It is mentionable that when a document is not compulsorily
registrable, its registration does not amount to constructive notice.41 Thus, the
registration is not notice when there is no duty to search register.42 For instance, in
case of movable property, registration is not required.

Registration operates as notice from the date of registration if it is not situated in


several sub-districts or if the registration has been effected under sec. 30(2) of the
Registration Act in which case the registered deed will not operate until
memorandum of such registration has been received and filed by Sub-Registrar of
the sub-district in which the property is situated under sec. 66 of the Registration
Act. It is to be mentioned that the purchaser will not be affected with the notice of
fact which has not been correctly entered into the registers.43 The purchaser will
only be affected with notice of facts which appear on the face of the deed or can
be inferred from its contents.44

Actual Possession as notice of the title: By Explanation II of sec. 3 of Transfer of


Property Act 1882, it is settled that actual possesson is such notice as the person in
actual possession has. Possession under a prior unregistered deed was notice to

40
Story, Equity Jursiprudence, Art. 534

41
Hirachand v. Kashinath (1942)

42
Backer Khorashanee v. Ahmed Kamil (1927)

43
Gordhandas v. Mohanlal (1921)

44
Rajaram v. Krishnasami (1893)
the holder of subsequent registered deed so as to deprive him of priority. 45 The
decisions of case laws from other jurisdiction was adopted which deems the
purchaser having notice of the title of the person in actual possession. This principle
was also shown in sec. 27(b) of Specific Relief Act 1877. Possession to operate as
notice must be actual possession.46 Constructive possession is not notice and the
possession of tenant is not the notice of title of lessor47 unless the purchaser had
knowledge the rent was in fact paid to him.48

Notice to an agent: Explanation III of sec. 3 of Transfer of Property Act 1882 bounds
the principal with the notice of the facts obtained through his agent in ordinary
course of business which is based on the principle qui facit per alium facit per se
(i.e. he who acts through another is deemed to act in person) and thus, agent
stands in the place of principal with reference to the business for which he is agent
so that his acts and knowledge are the acts and knowledge of the principal.49The
Privy Council have said that it is a rule of law that imputes the knowledge of the
agent to the principal for the agency extends to receiving notice on behalf of the
principal of whatever is material.50 If the notice to the agent would not be the
notice to the principal, notice would be avoided in every case by employing
agents.51

The rule of imputed notice to the principal is subject some limitations. Notice is to
be received by the agent (1) during the agency (2) in his capacity as agent (3) in the

45
Krishnamma v. Suranna (1893)

46
Ashburton v. Nocton (1915)

47
Banhart v. Greenshields (1853)

48
Hunt v. Luck (1902)

49
Mohori Bibee v. Dhurmodas Ghose (1903)

50
Rampal Singh v. Bal Baddar Singh

51
Berwick & Co. v. Price (1905)
course of agency business(4) in a matter material to the agency business (5) should
not have been fraudulently withheld from principal. The first four conditions are
implied by the words ‘whilst acting on his behalf in the course of the business to
which the fact is material.’ The fifth condition is given in the latter portion of the
Explanation III and will be deemed as separate.52

8. Operation of Notice under section 53 of the transfer of property Act:-

Section 53 of the transfer of property Act while empowering the creditors to avoid
a any transfer of immoveable property made by the debtor with intent to defeat or
delay the creditors, it also safeguards the rights of bona fide purchaser for value
without notice either actual or constructive. Section 53 of transfer of property Act53
runs as follows:-
“53.(1) Every transfer of immoveable property made with intent to defeat or delay
the creditors of the transferor shall be voidable at the option of any creditor so
defeated or delayed.
Nothing in this sub-section shall impair the rights of a transferee in good faith and
for consideration.
Nothing in this sub-section shall affect any law for the time being in force relating
to insolvency.
A suit instituted by a creditor (which term includes a decree-holder whether he has
or has not applied for execution of his decree) to avoid a transfer on the ground
that it has been made with intent to defeat or delay the creditors of the transferor,
shall be instituted on behalf, or for the benefit of, all the creditors.
(2) Every transfer of immoveable property made without consideration with intent
to defraud a subsequent transferee shall be voidable at the option of such
transferee.

52
Bowstead on Agency, 12th ed., Art. 107, p.212

53
Act no. 4 of 1882
For the purposes of this sub-section, no transfer made without consideration shall
be deemed to have been made with intent to defraud by reason only that a
subsequent transfer for consideration was made.”
It is Noticeable that the operation of notice is from the perspective of transferee.
If the transferee takes bona fide, but Transferor is mala fide, the transferee's right
is saved Under this section.
It was held in the seventh paragraph of Smt. Phoolan Devi vs Surendra Pakash54
that "the primary requirement of the applicability of the section is the existence of
a valid transfer. Where is is made that the transfer made by debtor was a sham and
fictitious transaction and there was no animus transferendi, i.e. When the real
intention of the parties was not to give effect to the supposed transfer al all and it
was merely to be used as a shield or facade for achieving solve ulterior purposes,
section 53 of the transfer of property Act cannot legitimately taken aid of. Policy of
law always has been to frown upon all attempts at fraudulent transfers. While law
favors the Exchanges of property as a natural right of a person to deal with it in a
normal manner, the law has always set its face against the privilege being abused
to the detriment of the innocent public creditors inclusive, who had dealt with
transferor on the faith of the security of their debtor. Any attempt by the debtor to
withdraw his assets from the control of his creditors therefore, has always received
just condemnation by The Courts of law who have compelled the debtor to make
good the representation on the faith of which presumably he had obtained credit,
in such circumstances, the Courts Have never been loath in setting aside such
transactions. Before Section 53 of The Transfer of Property Act can be applied, the
creditor Plaintiff must come to the Court In the premise that although the
transaction was genuine and effective, yet it was entered into with intent to delay
or defeat the creditors. It is only to such cases That Section 53 will in terms apply.
Intention of transferor and the transferee is paramount important to affect the
transfer. The transfer shall be affected if the both of the parties are guilty of fraud.
However if the transferee acquires the property for values and in good faith, that
is, without being a party to any design on the part of that transferor to defeat or
delay creditors, his rights will not be affected although the transfer's intention

54
A.I.R 1983 440
might have been fraudulent. In fact whenever section 53 is applied it is the
transferee who ultimately suffers provided they knew the fraudulent intention of
the transferor. The knowledge and intention of the transferee are the main factors.
In Palamalai vs The south Indian expert Co.55 A being in financial difficulties wished
to convert his property into cash so as to conceal it from the creditors. B being
aware of A's object assisted him by purchasing the property. The sale was voidable
under this section.

8.1. Burden of proof:-


When the creditors established that transfer was made with the object of defeating
them, the burden shifts on the transferee to prove:
1. That he had paid a fair price and
2. That he, was not a party to fraud
The term consideration as used in this section has the same meaning as it has been
in the contract Act and therefore excludes natural love and affection. Transfer for
natural love and affection as transfer without consideration.
Where the fraud on the part of transferor is established, the burden of proving that
the transferee falls within the exception is upon him, and in order to succeed, he
must establish that-

(a)he was not a party to the design of the transferor.


(b)he did not share his intention with which the transfer has been affected, and
(c)he took the sale honestly believing that the transfer was in the ordinary and
natural course of business.

When once the conclusion is reached that the transaction was affected with the
intent on the part of the transferor to convert the property into each so as to defeat
or delay his creditors, then the following circumstances prove that transferee
shared that intention.
The transferee and the transferor belong to same community, a small, compact and
well knit one, and they must obviously have known each other having been in trade

55
1910 (mad)334
in several years in common and must therefore have been well acquainted with the
financial and business affairs of each other.
2. The transferee admittedly had within him a copy of the deed of dissolution which
discloses the firm's business had resulted in losses and that it was greatly indebted.
Even when the plaintiff was fixed with notice that the firms business had been
running at a loss and had accumulated a very large volume of debts, the purchaser
did not insist that the consideration which he was paying should be utilized for the
discharge of at least some of the debts.

3. The property is situated in one District but the document of sale-deed was
registered in another District. This was a view to keep the transaction secret from
the creditor and the transferee was as much a party to the secrecy as the
transferor.
In these circumstances, it stands to reason that the plaintiff must be fixed with
notice of the design in pursuance of which transfer was affected. If the intention of
the transferor who is heavily indebted, was to convert his immoveable property
into cash for keeping it away from the creditor and knowing it, the transferee
helped him to achieve this purpose, it has naturally to be held that he shared that
intention and was himself a party to the fraud. Therefore it has to be held that the
plaintiff was not a transferee in good faith and that the transfer itself was a scheme
by the transferor with the knowledge and concurrence of the transferee to put
property out of the reach of creditors.

9. Registration as notice:

The action or process of registering or of being registered is widely known as


registration. According to registration act 1908 under s.17 the instrument of some
immovable property must be registered. According to s.49 of registration act “ if
any document is not registered which is required to be registered by law shall not
operate to create, extinguish, assign, limit, declare any right, title or interest,
whether vested or contingent and shall not confer any power to adopt.

9.1Objectives of registration:
The main purpose of registration of any document is to give information to people
regarding legal obligations arising or affecting a particular property and to
perpetuate documents which may afterwards be of legal importance, and also to
prevent fraud.

The objectives can be listed as follows:

I. The conservation of evidence


II. Assurance of title, publicity of documents and prevention of fraud
III. Registration ensures and safeguards the interest of the intending purchaser
So, registration acts as notice which is under constructive notice.

9.2. Legal provision:

Transfer of property act (amendment) 1929 recognized that registration acts as


notice.

9.3. History:

Privy council in tilakdhari v khedanlal 56 reviewed all the decision and approved the
decision of sir lawrence jenkins in monindra v troylucko nath ithat the question was
not of law but of fact.But after the transfer of property (amendment) act 1929
supplied the definite rule that registration acts as notice. Plea of bona fide
purchaser without notice isn’t permissible57

Where a document isn’t compulsorily registerable , it’s registration doesn’t


amount to constructive notice like testamentory document.

Registration is notice to transferees subsequent to the registration. 58

The registration of puisne mortgage isn’t notice to a prior mortgage. 59

Registration of sub-mortgage isn’t notice to the mortgagor 60

56
1921
57
1999
58
Baba Ramchandra vs Kondeo Jagna 184
59
Ram Narain vs Bandi Prasad 1904
60
Shaha Deb vs Sheikh Papa
9.4. Time from which registration operates as notice:

If the instrument has been registered in the same sub- district as that in which the
property is situated, it operates as notice from the date of registration .If the
property is situated in several sub-districts or registration has been effected under
s.30(2) of registration act 1908 is another district, the registration deed will not
operate as notice until memoranda of such registration has been received and filed
by the sub-register opf the sub district in which the property is situated under s.66
of the registration act. 61

9.5. Provisos to explanation 1:

1. Registration must be in accordance with law


2. A purchaser will not be affected with notice of any fact which hasn’t been
correctly entered in the registers and indexes kept by the sub- register.

10.Conclusion:
So we can conclude by saying that Notice has various uses in various sections in the
the Transfer of Property Law and. Actual notice is not as conflicting as constructive
notice because in case of constructive notiice the knowledge of the fact is assumed.
It contains wider importance for its multile applications in numerous sections of
the Act62 as well as in other statutory provisions. In case of negligence of the parties
court can hold guity the nonchalant party applying this doctrine. To understand the
property law it is indespensable for any law student to have proper knowledge over
notice.

61
Raju Kuer vs Brij Bihari Prasad
62
Act No. IV of 1882