Gujarat High Court
Judgename :A.A.DAVE
JESINGJI KHODAJI - Appellant
Versus
RAMESHCHANDRA KANTILAL SHAH - Respondent
First Appeal 479 of 1964
Decided On : 11/17/1971
Specific Relief Act 1877 – Sections 27, 27(b), 28(b) - Transfer of Property Act – Possession Breach of contract - It was contended on behalf of respondent No. 3 in all the appeals who were original defendants No. 3 in the suits that they being the bona fide purchasers for value without notice the sales executed in their favour by the receivers cannot be affected even if it was held that the receivers had committed a breach of the contract - Held, It follows that where a subsequent transferee has the knowledge of actual possession of a certain person as a tenant over the property he cannot be said to be a person purchasing the property without notice - It is the actual payment of the money and not a mere agreement to pay the money which alone confers the right so as to prevail over prior agreement of sale - In the light of the observations made by the courts in cases referred to above it is abundantly clear that unless the subsequent purchaser made an inquiry regarding the nature of possession of the person with regard to the property which he contemplated to purchase he would be imputed with a constructive notice about the existence of the previous contract - Thus the bald statement in his deposition before the court that he was the bona fide purchaser of the property for value without notice would not help him at all – Application ordered accordingly
( 1 ) [ His Lordship after discussing facts of the case held that: If pursuant to the order passed by the competent court the receiver negotiated with the tenants including the present plaintiffs and entered into an agreement of sale no subsequent order by the same court can be passed which may prejudicially affect the rights of the tenants who under the bona fide belief had entered into the contract. ]. . . . . . . . . . . . . . . . . . HIS Lordship further observed:
( 2 ) 18 Lastly it was contended on behalf of respondent No. 3 in all the appeals who were original defendants No. 3 in the suits that they being the bona fide purchasers for value without notice the sales. executed in their favour by the receivers cannot be affected even if it was held that the receivers had committed a breach of the contract. Reliance was placed on sec. 28 (b) of the Specific Relief Act 1877 wherein it is stated thatexcept as otherwise provided by this chapter specific performance of a contract may be enforced against (a) either party thereto; (B) any other person claiming under him by a title arising subsequently to the contract except a transferee for value who has paid his money in good faith and without notice of the original contract;it was urged on behalf of respondents No. 3 that they being the transferees for value who had paid money in good faith and without notice of the original contract their rights cannot be affected. On behalf of the appellants Mr. V. J. Desai urged that in order to seek protection under clause (b) of sec. 27 of the Specific Relief Act subsequent transferees have to prove that they had purchased the same bona fide and without notice of the previous contract. He submitted that the burden of proof lay on the subsequent transferees and this burden is not discharged by a bare statement that they were bona fide purchasers for value without notice. He urged that in the instant case the present plaintiffs were in actual possession of the rooms as tenants and if the subsequent purchasers had inquired from the plaintiffs regarding the nature of their possession they could have come to know about the existence of the agreement of sale which the receivers had entered with them. He urged that the very fact that the vendor viz. the owner of the property was not in possession and some other persons were in possession of the rooms should have put subsequent purchasers on their alert and before entering into any contract they should have made proper inquiry regarding the nature of possession of the tenants. If they had done so they could have found the existence of the contract. If they failed to make any inquiry they have to thank themselves and they will be imputed with a notice. In sec. 3 of the Transfer of Property Act it is stateda person is said to have notice of a fact when he actually knows that fact or when but for willful abstention from an inquiry or search which he ought to have made or gross negligence he would have known it. THUS in the instant case if the subsequent purchasers had not willfully abstained from making inquiry regarding the nature of possession of the present plaintiffs they could have come to know about the existence of the previous contract. Thus they could he imputed with notice of the fact of the previous contract. Explanation 2 saysany person acquiring any immovable 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. RELYING on this explanation the learned advocate for the respondents urged that at the most the present respondents if they had made any inquiry they would have come to know that the plaintiffs were in possession of the property as tenants but from such inquiry they would not necessarily come to know about the existence of the previous contract. In my opinion the explanation (II) appended to this section must be read with the first part of the defin
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