HIGH COURT OF ANDHRA PRADESH
CHANDRA REDDY, J.
Mummidi Reddi Papannagari Yella Reddy
Versus
Salla Subbi Reddy
Second Appeal No. 1660 of 1951 against the decree of Dist. J., Cuddappah, in A.S. No. 198 of 1950.
Decided On : 16-07-1954
SPECIFIC RELIEF ACT, 1877 - SECTION 27(B) - REGISTRATION ACT, 1908 - SECTION 48 - TRANSFER OF PROPERTY ACT, 1882 - SECTION 3 - ORAL AGREEMENT TO SELL - NOTICE - BONA FIDE PURCHASER - PRIORITY - CONSTRUCTIVE NOTICE - POSSESSION AS NOTICE - EFFECT OF REGISTERED DOCUMENT ON ORAL AGREEMENT.
Fact of the Case:
Plaintiff sued for specific performance of an oral agreement to sell land entered into between defendants 1 to 3 and the plaintiff on 29-11-1948 and for an injunction restraining the fourth defendant from interfering with the plaintiff's possession. The fourth defendant claimed to be a bona fide purchaser for value without notice of the agreement.
Finding of the Court:
The trial court and the lower appellate court found that the oral agreement was true, that the fourth defendant had notice of the agreement, and that S. 48, Registration Act, had no application to the case. The fourth defendant appealed.
Issues: 1. Whether the fourth defendant had notice of the oral agreement between the plaintiff and defendants 1 to 3? 2. Whether S. 48, Registration Act, overrides S. 27(b), Specific Relief Act?
Ratio Decidendi: 1. The court held that the fourth defendant had notice of the oral agreement because he was aware of the plaintiff's possession of the land and failed to inquire into the nature of that possession. The court relied on Explanation II to S. 3, Transfer of Property Act, which provides that a person acquiring immovable property is deemed to have notice of the title of any person who is in actual possession thereof. 2. The court held that S. 48, Registration Act, does not override S. 27(b), Specific Relief Act. The court reasoned that S. 48, Registration Act, is intended to protect bona fide purchasers for value who have no notice of a prior equitable interest, while S. 27(b), Specific Relief Act, protects a party who has an oral agreement to sell land against a subsequent purchaser who has notice of the agreement.
Final Decision: The court dismissed the appeal and held that the plaintiff's oral agreement prevailed over the fourth defendant's registered instrument.
2. The suit which has given rise to this second appeal was instituted for the specific performance of an oral agreement to sell a plot of land of an extent of 4 acres entered into between defendants 1 to 3, and the plaintiff on 29-11-1948, and also for an injunction restraining the fourth defendant from interfering with the plaintiffs possession. The case for the plaintiff is that the suit land originally belonged to his family, that, in or about the year 1935, it was sold to his family by defendants 1 to 3 and that despite this, he remained in possession of the land as a tenant till 29-11-1948 when the agreement for sale of the land was entered into between the parties, notwithstanding that the lease in his favour had expired two years prior thereto. On account of enmity between the plaintiff and the appellant, the latter obtained a sale-deed on 30-12-1948 offering a higher price and with the knowledge of the agreement in favour of the plaintiff. The suit, was contested, inter alia, on grounds that the agreement pleaded was untrue, that, in any event, the fourth defendant could not be affected by the agreement as he was a bona fide purchaser for value without notice, and that lastly S. 48, Registration Act, saved the transaction in favour, of the fourth defendant.
3. The trial Court awarded the claim of the plaintiff holding that the oral agreement set up by the plaintiff was true, that the fourth defendant had notice of the agreement and that S. 48, Registration Act, had no application to the case. On appeal, the learned District Judge of Cuddappah agreed with the findings of the trial Court and confirmed the decree of the learned District Munsif. It is that decision, that is now under appeal.
4. In this appeal, the learned Advocate-General contests the propriety of the decree mainly on two grounds, namely, the finding as regards notice as in conflict with the evidence on record, and secondly the learned District Judge has failed to advert to the contention of the appellant, based on S. 48, Registration Act. The learned Advocate-General did not canvass the finding regarding the truth of the oral agreement and rightly in my opinion, as there is ample material in support of that finding. No doubt the judgment of the District Judge is very unsatisfactory, but the matter has been exhaustively dealt with by the District Munsif and I have also gone through the record and satisfied myself that the finding is fully justified by the evidence on record.
5. The learned Advocate-General further urged that there was no basis for the conclusion of the Courts below that the appellant was not a bona fide purchaser without notice of the suit agreement. It is true that there is no evidence to show that the appellant was aware of the oral agreement between the plaintiff and defendants 1 to 3, but the trial Court relied on several circumstances indicating that the appellant had notice of the suit agreement, apart from the burden which rests upon the appellant to prove that he had no notice thereof. The lower appellate Court expressed its agreement with this view, though the discussion even on this part of the case is not very helpful.
That apart, there is the admitted fact that the plaintiff was in possession of the land in question and that the appellant was aware of it and yet he did not institute an enquiry under what title the former was in possession of the land. The question for consideration is, whether these facts constitute notice within the meaning of S. 27(b), Specific Relief Act. It is urged by the Advocate-General that the notice contemplated by Cl. (b) of S. 27, Specific Relief Act, is "actual notice", and not "constructive notice" an d places reliance on S. 3, Transfer of Property Act, which says :
"A person is said to have notice of a fact when he actually
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