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1920 Supreme(SC) 47
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD BUCKMASTER, LORD DUNEDIN, AND SIR JOHN EDGE.
TILAKDHARI LAL - Appellant
Versus
KHEDAN LAL - Respondents
On appeal from the High Court at Calcutta.
Decided On : July. 2. 1920.
Solicitors for appellants : Vallance & Vallance.
Solicitors for respondents: Chapman- Walker & Shephard.
Registration of a mortgage under the Indian Registration Act, 1877, does not constitute constructive notice to subsequent mortgagees per se. Notice is only imputed if there is actual knowledge, willful abstention from inquiry, or gross negligence in failing to search the register.
Headnote:(A) Indian Registration Act, 1877 - Sections 17, 49 and 50; Transfer of Property Act, 1882 - Sections 3, 43, 59 and 85 - Whether registration of a mortgage constitutes constructive notice to subsequent mortgagees - Registration of a deed does not by the mere fact of registration become presumptive notice to all mankind - Omission to search the register does not necessarily amount to gross negligence or willful abstention from inquiry under the statutory definition of notice - The purpose of registration is to allow parties to rely on the register to protect against prior transactions, but it does not impute notice to the world of every deed contained therein.
(B) Transfer of Property Act, 1882 - Section 43 - Doctrine of feeding the grant by estoppel - Where a person grants property without title and subsequently acquires an interest sufficient to satisfy the grant, the estate may pass to the grantee.
Facts of the case:
A dispute arose between two sets of mortgagees claiming priority over six mortgages granted by the same mortgagor. The appellants claimed priority over certain later mortgages based on the fact that their mortgages were registered. One of the properties had been purchased by the mortgagor at an auction sale, and the mortgage in favor of the appellants was executed before the sale was confirmed.
Findings of Court:
The court held that the respondents had no actual or constructive notice of the appellants' mortgages. The mere fact of registration does not constitute constructive notice. However, regarding the property purchased at auction, the court found that the doctrine of feeding the grant by estoppel might apply, which had not been fully examined by the lower courts.
Issues: Whether the registration of a mortgage under the Indian Registration Act, 1877, constitutes constructive notice to subsequent mortgagees; and whether the doctrine of feeding the grant by estoppel applies to a mortgage executed before the confirmation of an auction sale.
Ratio Decidendi: The court reasoned that the legislature did not expressly state that registration constitutes notice. Drawing parallels with other jurisdictions, it held that while a register provides the means to acquire knowledge, the failure to search it does not automatically constitute gross negligence. The requirement to search the register under Section 85 of the Transfer of Property Act is specific to the constitution of suits and does not establish a general principle of constructive notice for all dealings.
Result: Appeal dismissed with costs, except for the issue regarding the property purchased at auction, which was remitted to the lower court for further consideration.
Legal Category Hierarchy
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property law
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mortgages
- priority of mortgages
- registration of mortgages
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transfer of property
- constructive notice
- feeding the grant by estoppel
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mortgages
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practice and procedure
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civil procedure
- remand
-
civil procedure
Judgement
Consolidated Appeals from a judgment and two decrees of the High Court (June 1, 1915) affirming two judgments and decrees of the Additional Subordinate Judge of Bhagalpur (March 26, 1912).
The principal respondents instituted the first of the two suits giving rise to the present appeals upon four mortgages to them dated September 16, 1896, August 1, 1898, September 21, 1902, and November 10, 1904; they prayed that, after taking an account of what remained due under the mortgages, the properties mortgaged might be sold and the proceeds applied to discharge the mortgage debts. The mortgagors were the first party defendants. The present appellants who had two mortgages dated respectively April 5, 1899, and April 5, 1901, which related to properties included in those mortgaged to the principal respondents, were second party defendants. The appellants by their written statement claimed under their two mortgages priority over the third and fourth of the mortgages above mentioned as made to the principal respondents, and contribution in respect of the proceeds of certain of the properties. All the mortgages in question were duly registered under the Indian Registration Act, 1877. One of the properties—namely, Mauza Khagra—was in a different position to the others. That mauza had been purchased by the mortgagors at an auction sale in execution on March 25, 1901, and was included in the mortgage to the appellants of April 5, 1901, confirmation of the sale not having then taken place. It was also included in the third and fourth mortgages to the principal respondents after the sale had been confirmed.
The second suit was instituted by the appellants against the mortgagors (who did not contest it) and the principal respondents, the claim being to enforce the mortgages of April 5, 1899, and April 5, 1901. This suit raised the same questions as the first suit, and both suits were tried together.
The Subordinate Judge held that the principal respondents had neither actual nor constructive notice of the mortgages to the appellants ; and that with regard to Khagra they were entitled as mortgagees under their later mortgages. He accordingly made two preliminary decrees, specifying the rights of the parties respectively, and allowing the claim of the respondents to sell the properties. The preliminary decree in the first suit was made absolute on January 18, 1913.
The present appellants appealed to the High Court in each of the suits. The appeals were heard together, and were dismissed, the learned judges being of opinion that the respondents had not actual notice of the mortgages to the appellants, and holding (following earlier decisions of the Court) that the respondents had not constructive notice of the mortgages from the mere fact that they were registered.
1920. April 22, 23. Dunne K.C. and H. N. Sen for the appellants. Registration of the mortgages to the appellants was constructive notice of them to the respondents. The High Courts in India have taken different views upon that question. In Bombay it was held in Lakshmandas Sarupchand v. Dasrat (( 1880) I.L.R. 6 B. 168.) in 1880 that registration of a document under the Indian Registration Act, 1877, is constructive notice, and that decision has since been followed there in Dundaya v. Chenbasapa (( 1883) I.L.R. 9 B., 427.); Ramchandra v. Dareppa (( 1890) I.L.R. 14 B. 506.), Narayan Laksman v. Haibatrav (( 1892) I.L.R. 17 B. 741.); and other cases ; and the same view has been adopted at Allahabad Churaman v. Balli (( 1887) I.L.R. 9 A. 591.); Janki Prasad v. Kishen Dat . (( 1894) I.L.R. 16 A. 748.) A contrary view has been taken at Calcutta, the later decisions making the question turn upon the particular facts of the case Preonath v. Ghose (( 1899) I.L.R. 27 C 358.); Debendra Narayan Roy v. Ram Taran Banerjee (( 1903) I.L.R. 30 C. 599.) ; Monindra Chandra Nandy v. Troyluckho Nath Burat (( 1898) I.L.R. 2 Cal. W. N. 750.) ; Bunwari Jha v. Ramjee . (( 1902) I. L. R. 7 Cal. W. N.
