Benefits of the Act available to the purchaser.

The third defendant, a woman is the appellant. The property in suit at one time belonged to the first defendant. On 14th October, 1926, he executed a usufructuary mortgage over it in favour of the plaintiff for a sum of Rs.1,250. Some sixteen years later, that is to say, on 29th September, 1942, the first defendant purported to sell the property to his daughter, the second defendant, for a sum of Rs.1,500. On 29th September, 1943, defendants 1 and 2 entered into an oral agreement to sell the property to the plaintiff for a sum of Rs.2,050, out of which Rs.1,250 was to be adjusted towards the usufructuary mortgage which the plaintiff held. There were certain execution proceedings in connection with this property which are not of present interest. On 3rd May, 1945, the first defendant sold the property to the third defendant for a sum of Rs.2,000. The very next day the plaintiff’s advocate sent a telegram to the third defendant informing her that she had made her purchase with notice of the contract of sale in favour of the plaintiff and intimating that a suit would be filed. Four days later the plaintiff brought the suit out of which the present second appeal arises for specific performance of the agreement of sale.

Both the Courts below have found that the oral agreement set up by the plaintiff is true. On the question whether the appellant had notice of the agreement in favour of the plaintiff the trial Court recorded a finding in the affirmative. The lower appellate Court did not record a clear finding on that point but concluded that the appellant must be deemed to have had notice and in this view dismissed the third defendant’s appeal. She has now come to this Court.

Mr. Ramachandra Aiyar, the learned advocate for the appellant based his principal argument on section 3 of the Transfer of Property Act:

“‘A person is said to have notice’ of a fact when he actually knows that fact, or when, but for wilful absention from an inquiry or search which he ought to have made, or gross negligence, he would have known it”.

Three explanations follow, the second of which reads thus:

“Any person acquiring any inmovable 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”.

Now argued Mr. Ramachandra Aiyar, the circumstances that the plaintiff was a usufructuary mortgagee of the property and as such in possession of it would put the appellant on notice only of his rights as a mortgagee and of no more and in consequence it will not be right to impute to her notice of any other rights which the plaintiff may have in the property, rights arising from a source other than as a usufructuary mortgagee. He sought support for this argument in certain observations appearing in Babasah v. Hajee Mahomed Akbar Sahib1, regarding cases where the property is in the possession of tenants or lessees.

“He is by their occupation not affected with notice of more than the terms on which they hold including any agreement collateral to their leases, but he is not bound to enquire, nor are they bound to answer, to whom they pay rent, so that the purchaser is not in such a case affected with notice of the tenant’s lessor’s title or rights .... The principle has been embodied in India in section 27 of the Specific Relief Act and section 3 of the Transfer of Property Act”.

The appellant admitted that she did not make any enquiry of the usufructuary mortgagee in order to ascertain from him whether he had any rights in the property other than as a usufructuary mortgage. The real question in this case, therefore, is whether her omission to do so can be said to amount to wilful abstention from an enquiry which she ought to have made or whether it amounts to gross negligence. The argument of Mr. Ramachandra Aiyar on this matter was that once it was known that the property was in the possession of a usufructuary mortgagee, there was nothing furthe