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2004 Supreme(Kar) 594

Karnataka High Court
Bhagawan - Appellant
Versus
Dwarakanath - Respondent
Decided On : 10-26-04
R.S.A. : 13 of 1999

Advocates:
F.V.PATIL, G.S.Bhat

The main legal point established in the judgment is that a subsequent purchaser must make inquiries about the nature of the possession of the property when a tenant is in possession, and failure to do so may result in constructive notice of any agreement of sale in favor of the tenant.

Headnote:

Notice - Specific Performance - Transfer of Property Act - Section 3, Section 19(b) - The court held that the purchaser had constructive notice of the agreement of sale executed by the previous owners in favor of the plaintiff. The court also discussed the legal provisions of notice under Section 3 of the Transfer of Property Act and the conditions under Section 19(b) for enforcing specific performance against a subsequent purchaser.

Fact of the Case:

The plaintiff brought a suit for specific performance of a contract of sale by registered sale deed, claiming possession of certain portions of the property. The defendants denied the agreement of sale and claimed that the subsequent purchaser was a bonafide purchaser without notice.

Finding of the Court:

The court found that the subsequent purchaser had constructive notice of the agreement of sale and reversed the decision of the first Appellate Court, granting specific performance to the plaintiff.

Issues: The main issue was whether the subsequent purchaser had notice of the agreement of sale, and whether specific performance should be granted to the plaintiff.

Ratio Decidendi: The court held that the subsequent purchaser had constructive notice of the agreement of sale, as he knew of the plaintiff's possession of the property and failed to make inquiries about the nature of that possession. The court also discussed the conditions under Section 19(b) of the Specific Relief Act for enforcing specific performance against a subsequent purchaser.

Final Decision: The appeal was allowed, and the judgment and decree of the first Appellate Court were set aside, restoring the judgment and decree passed by the Trial Court in favor of the plaintiff.

( 1 ) WHETHER a purchaser of property could be said to have deemed or constructive notice of the right of a person in possession of it or a portion of it and whether relief of specific performance be refused in such a case to that person claiming earlier right over the property, are the short points on which the result of this appeal depends.

( 2 ) BRIEF facts, giving rise to the present appeal, are:" (a) The appellant - plaintiff (hereinafter referred as plaintiff! brought suit in O. S. No. 40/90 before the Civil Judge Court at Hubli against respondents - defendants (hereinafter referred as defendants) for specific performance of contract of sale by registered sale deed stating that, on 21. 06. 1989, the defendants 1 to 3 have entered into an agreement of sale in his favour after receiving Rs. 35,000/- out of consideration of Rs. 80,000/- with regard to suit property, portion of which shown as EFGH (in the plaint sketch filed with the plaint) is in his possession as a tenant, though defendant nos. 4 to 6 had thrown out his belongings from the portion marked as ABCD (in the sketch) in his possession, when he was out of Hubli on 10. 03. 1990, after the suit property was purchased in the name of defendant no. 5 under registered sale deed from defendants 1 to 3 - owners inspite of having had knowledge of said agreement of sale in his favour and as such he is entitled to declaration that the sale deed made in favour of defendant no. 5 is null and void and not binding on him and also for possession of ABCD and IJKL portions shown in the sketch along with specific performance by execution of registered sale deed by defendants. (b) According to defendants 1 to 3, they did not enter into any agreement of sale with plaintiff nor they received any amount from him, but he was collecting rent from other tenants. When he pleaded that those tenants are not giving rent and want power of attorney, having had confidence in the plaintiff, they signed blank stamp paper brought to Bombay, which has been later converted by him into an agreement of sale by misusing the confidence; and denied agreement of sale and also the alleged dispossession from ABCD portion by them. They admit execution of a registered sale deed in favour of defendant No. 5 after receiving Rs. 83,000 as sale consideration and plead defendant No,5s possession over the suit property other than EFGH portion in occupation of the plaintiff as a tenant and consequently, prayed to dismiss the suit. (c) It is the case of defendants 4 to 6 that defendant No. 5 has purchased the suit property from defendants 1 to 3 for valuable consideration and he is in possession of the same except EFGH portion in possession of plaintiff, for which H. R. C. proceedings have been initiated but, the plaintiff, with malafide desire not to vacate said EFGH portion, has come forward with alleged agreement of sale, not executed by defendants 1 to 3. At any rate, according to them, as the defendant no. 5 is a bonafide purchaser for value without notice of the agreement of sale alleged, the plaintiff is not entitled to any relief claimed. Hence, they also requested to dismiss the suit of plaintiff. (d) The plaintiff examined himself and 4 witnesses in support of his case. None was examined for defendants 1 to 3. However, power of attorney holder of defendant No. 5 was examined as D. W. 1 besides one more witness for defendants 4 to 6. After hearing and considering the evidence adduced, the Trial Court decided following issue Nos. 5 to 11, additional issue Nos. 1 and 2 in favour, issue Nos. 2 and 3 against whereas, issue Nos. 1 and 5 partly in favour and against the plaintiff and decreed the suit of the plaintiff: 1. Whether the pliff prove that he is tenant of the two premises marked by letters ABCD and EFGH? 2. Whether pliff proves his forceful dispossession from ABCD portion on 1o. 3. 1990, when he had allegedly gone to dandeli as contended in para 9 of the plaint? 3. Whether pliff proves that the possession









































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